HOMESTEAD VILLAGE INC
S-3, 1998-11-10
HOTELS & MOTELS
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<PAGE>
 
   AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 10, 1998
 
                                                     REGISTRATION NO. 333-
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
 
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
 
                                --------------
 
                                   FORM S-3
                            REGISTRATION STATEMENT
                                     UNDER
                          THE SECURITIES ACT OF 1933
 
                                --------------
 
                        HOMESTEAD VILLAGE INCORPORATED
            (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
 
                                --------------
 
               MARYLAND                              74-2770966
      (STATE OF INCORPORATION OR           (I.R.S. EMPLOYER IDENTIFICATION
             ORGANIZATION)                             NUMBER)
 
                            2100 RIVEREDGE PARKWAY
                            ATLANTA, GEORGIA 30328
                                (770) 303-2200
  (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
                   REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
 
                                --------------
 
                          JEFFREY A. KLOPF, SECRETARY
                        HOMESTEAD VILLAGE INCORPORATED
                              125 LINCOLN AVENUE
                          SANTA FE, NEW MEXICO 87501
                                (505) 982-9292
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
                             OF AGENT FOR SERVICE)
 
                                   COPY TO:
                             EDWARD J. SCHNEIDMAN
                              MICHAEL L. HERMSEN
                             MAYER, BROWN & PLATT
                           190 SOUTH LASALLE STREET
                            CHICAGO, ILLINOIS 60603
 
                                --------------
 
  APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the Registration Statement becomes effective.
 
  If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box: [_]
 
  If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act"), other than securities offered only in
connection with dividend or interest reinvestment plans, check the following
box: [X]
 
  If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of earlier
effective registration statement for the same offering. [_]
 
  If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
 
  If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
 
                        CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                      PROPOSED
                                       PROPOSED        MAXIMUM
 TITLE OF EACH CLASS OF    AMOUNT      MAXIMUM        AGGREGATE     AMOUNT OF
       SECURITIES          TO BE    OFFERING PRICE OFFERING PRICE  REGISTRATION
  TO BE REGISTERED (1)   REGISTERED  PER UNIT (2)        (2)           FEE
- -------------------------------------------------------------------------------
<S>                      <C>        <C>            <C>             <C>
Homestead Common Stock,
 par value $.01 per
 share (3)..............    (4)          (4)       $356,402,600(4)  $99,079.93
Homestead Preferred
 Stock..................
Homestead Debt
 Securities.............
Homestead Securities
 Warrants...............
- -------------------------------------------------------------------------------
</TABLE>
- -------------------------------------------------------------------------------
(1) Securities registered hereunder (the "Offered Securities") may be sold
    separately, together or as units with other Offered Securities registered
    hereunder. The Offered Securities registered hereunder also include such
    indeterminate number of shares of Common Stock that may be issued upon
    conversion of Homestead Preferred Stock and Homestead Debt and Homestead
    Preferred Securities, for which no separate consideration will be
    received.
(2) Estimated solely for purposes of determining the registration fee.
    Pursuant to Rule 429 under the Securities Act of 1933, the Prospectus
    constituting a part of this Registration Statement also relates to
    $143,597,400 of the Registrant's common stock and registered under
    Registration Statement No. 333-37803.
(3) Includes the Preferred Share Purchase Rights associated with the Common
    Stock.
(4) Pursuant to Rule 457(o) under the Securities Act of 1933, as amended,
    which permits the registration fee to be calculated on the basis of the
    maximum offering price of all the securities listed, the table does not
    specify by each class information as to the amount to be registered,
    proposed maximum offering price per unit or proposed maximum aggregate
    offering price.
 
                                --------------
 
  THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
 
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
 
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY +
+NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE     +
+SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN    +
+OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE +
+SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.             +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
                             SUBJECT TO COMPLETION
                 PRELIMINARY PROSPECTUS DATED NOVEMBER 10, 1998
 
PROSPECTUS
 
                         HOMESTEAD VILLAGE INCORPORATED
 
                                 $356,402,600*
 
                                 COMMON STOCK*
 
                                PREFERRED STOCK
 
                                DEBT SECURITIES
 
                              SECURITIES WARRANTS
 
                                     RIGHTS
 
                                  -----------
 
Homestead will provide specific terms of these securities in supplements to
this prospectus. You should carefully read this prospectus and any supplement
before you invest.
 
*Pursuant to Rule 429 under the Securities Act of 1933, as amended (the
"Securities Act"), this Prospectus also relates to an additional $143,597,400
of the Common Shares which were registered under a previous registration
statement.
 
                                  -----------
 
These securities have not been approved by the Securities and Exchange
Commission or any state securities commission nor have these organizations
determined that this prospectus is accurate or complete. Any representation to
the contrary is a criminal offense.
 
                                  -----------
 
                The date of this Prospectus is           , 1998.
<PAGE>
 
                             ABOUT THIS PROSPECTUS
 
This prospectus (the "Prospectus") is part of a registration statement that
Homestead Village Incorporated ("Homestead") filed with the Securities and
Exchange Commission (the "Commission") utilizing a "shelf" registration
process. Under this shelf process, Homestead may sell any combination of the
securities described in this Prospectus (the "Offered Securities") in one or
more offerings of preferred stock, debt securities and securities warrants up
to a total dollar amount of $356,402,600 and one or more offerings of common
stock up to a total dollar amount of $500,000,000. This Prospectus provides you
with a general description of the securities Homestead may offer. Each time
Homestead sells securities, Homestead will provide a prospectus supplement
(each supplement, a "Prospectus Supplement") that will contain specific
information about the terms of that offering. The Prospectus Supplement may
also add, update or change information contained in this Prospectus. You should
read both this Prospectus and any Prospectus Supplement together with the
additional information described under the heading "Where You Can Find More
Information".
 
                      WHERE YOU CAN FIND MORE INFORMATION
 
Homestead is subject to the reporting requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and files reports, proxy
statements and other information with the Commission. You may read and copy any
materials Homestead files with the Commission at the Commission's Public
Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. You may
obtain information on the operation of the Public Reference Room by calling the
Commission at 1-800-SEC-0330. In addition, the Commission maintains an Internet
site that contains reports, proxies, information statements, and other
information regarding issuers that file electronically and the address of that
site is http://www.sec.gov. Homestead's outstanding Common Shares are listed on
the New York Stock Exchange (the "NYSE") under the symbol "HSD" and all
reports, proxy statements and other information filed by Homestead with the
NYSE may be inspected at the NYSE's offices at 20 Broad Street, New York, New
York 10005.
 
Homestead has filed with the Commission a registration statement on Form S-3
(together with all amendments and exhibits, the "Registration Statement") under
the Securities Act, with respect to the Offered Securities. This Prospectus,
which constitutes part of the Registration Statement, does not contain all of
the information set forth in the Registration Statement. Certain parts of the
Registration Statement are omitted from the Prospectus in accordance with the
rules and regulations of the Commission. For further information, your
attention is directed to the Registration Statement. Statements made in this
Prospectus concerning the contents of any documents referred to herein are not
necessarily complete, and in each case are qualified in all respects by
reference to the copy of such document filed with the Commission.
 
The Commission allows Homestead to "incorporate by reference" the information
Homestead files with the Commission, which means that Homestead can disclose
important information to you by referring you to those documents. The
information incorporated by reference is an important part of this Prospectus,
and information that Homestead files later with the Commission will
automatically
 
                                       2
<PAGE>
 
update and supersede this information. Homestead incorporates by reference the
documents listed below:
 
  . Homestead's Annual Report on Form 10-K for the year ended December 31,
    1997;
 
  . Homestead's Quarterly Reports on Form 10-Q for the quarters ended March
    31, 1998 and June 30, 1998;
 
  . Homestead's Current Report on Form 8-K, dated January 1, 1998; and
 
  . Homestead's Registration Statement on Form 8-A, dated March 25, 1998.
 
The Commission has assigned file number 1-12269 to the reports and other
information that Homestead files with the Commission.
 
Homestead also incorporates by reference any future filings made with the
Commission under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act until
Homestead sells all of the Offered Securities. You should be aware that any
statement contained in this Prospectus or in a document incorporated by
reference may be modified or superseded by a document filed with the Commission
at a later date. Any statement which has been modified or superseded shall not
be considered to constitute a part of this Prospectus.
 
You may request a copy of each of these filing at no cost, by writing or
telephoning Homestead at the following address or telephone number:
 
    Chief Financial Officer
    Homestead Village Incorporated
    2100 RiverEdge Parkway, 9th Floor
    Atlanta, Georgia 30328
    (770) 303-2200.
 
You should rely only on the information included in this Prospectus or the
Prospectus Supplement or incorporated by reference in this Prospectus.
Homestead has not authorized anyone else to provide you with different
information. Homestead is not making an offer of the Offered Securities in any
state where the offer is not permitted. You should not assume that the
information in this Prospectus or any Prospectus Supplement is accurate as of
any date other than the date on the front of those documents.
 
                                       3
<PAGE>
 
                         HOMESTEAD VILLAGE INCORPORATED
 
Homestead is committed to creating significant shareholder value by becoming
the leading developer, owner and operator of moderate-priced, extended-stay
lodging properties throughout the United States. Homestead believes that the
extended-stay segment of the lodging industry offers excellent growth
opportunity because of:
 
  . growing customer demand for extended-stay accommodations,
 
  . the limited number of properties that have been purposely built for
    extended-stay lodging, and
 
  . rising consumer awareness of the extended-stay product.
 
Homestead believes it is well positioned to achieve significant market share in
the extended-stay industry by targeting markets that demonstrate strong
demographics and providing extended-stay customers with a consistently high
standard of service and value-conscious pricing.
 
Homestead offers a carefully designed, custom-built product targeted at the
business traveler on temporary assignment, undergoing relocation or in
training. Homestead Village(R) properties are designed to offer excellent
locations with convenient access to major employment centers and retail support
services, and a residential environment that is attractive, well landscaped and
secure.
 
The extended-stay segment of the lodging industry is a high-growth business,
and Homestead believes it is well positioned to become the leading provider of
moderate-priced, extended-stay lodging. Homestead has the people and the
processes in place to achieve significant market share. Homestead's strategy is
focused on
 
  . becoming the brand of choice for extended-stay corporate travelers,
 
  . increasing revenue per available room at the property level by matching
    its product to customers' expectations, and
 
  . improving operating margins through its proprietary operating systems.
 
Homestead believes that its product, locations, corporate commitment to
customer service and value-conscious pricing will help it meet its objectives.
 
The first Homestead Village(R) property was opened in 1992. As of September 30,
1998, Homestead operated 111 properties, had begun construction on 25
additional properties, and owned 18 development sites. Homestead's properties
are designed and built to uniform standards developed by Homestead.
 
Homestead is a Maryland corporation. Its executive offices are located at 2100
RiverEdge Parkway, Atlanta, Georgia 30328, and its telephone number is (770)
303-2200.
 
                                USE OF PROCEEDS
 
In general, the net proceeds from the sale of the Offered Securities will be
used for (1) the repayment of indebtedness, (2) the acquisition of sites and
the development of additional extended-stay lodging properties as suitable
opportunities arise, (3) for capital improvements to properties and (4) for
working capital purposes. The use of proceeds from each offering will be
described in the Prospectus Supplement relating to that offering.
 
                                       4
<PAGE>
 
                               RATIO INFORMATION
 
The ratio of earnings to fixed charges for each of the periods indicated is as
follows:
 
<TABLE>
<CAPTION>
                                                                 SIX MONTHS
                               PERIOD ENDED DECEMBER 31,       ENDED JUNE 30,
                         ------------------------------------- ---------------
                         1993(1) 1994(1) 1995  1996(1) 1997(1) 1997(1) 1998(1)
                         ------- ------- ----- ------- ------- ------- -------
<S>                      <C>     <C>     <C>   <C>     <C>     <C>     <C>
Ratio of earnings to
 fixed charges..........  .97x    .97x   1.14x  .88x    .11x    .07x    .59x
Ratio of earnings to
 fixed charges and
 preferred stock
 dividends..............  .97x    .97x   1.14x  .88x    .11x    .07x    .59x
</TABLE>
- --------
(1) Earnings for these periods (years ended December 31, 1993, 1994, 1996 and
    1997 and the six-month periods ended June 30, 1997 and 1998) were
    inadequate to cover fixed charges by $18,000, $65,000, $1,283,000,
    $63,976,000, $48,832,000 and $8,635,000, respectively.
 
For the purpose of computing these ratios, (a) "earnings" consist of earnings
plus fixed charges other than capitalized interest, and (b) "fixed charges"
consist of interest on borrowed funds (including capitalized interest) and
amortization of debt discount, premium and expense.
 
                           ADJUSTED RATIO INFORMATION
 
In the fourth quarter of 1996, in 1997 and in the first six months of 1998,
Homestead amortized financing costs and premium and discount related to certain
convertible mortgage notes over periods less than the stated term of the
mortgage notes. Such costs related to the mortgage note balances outstanding
under the mortgages before March 31, 1997 were amortized to interest on an
accelerated basis by March 31, 1997, the date of initial convertibility of the
mortgages. Costs related to subsequent fundings of the mortgages were amortized
to interest on the funding dates. All amounts available under the mortgage
notes were funded by June 30, 1998. The financing costs related to the
convertible mortgages did not require an expenditure of funds, but rather
originated from the difference in value between the exercise price of warrants
issued to obtain the mortgage funding commitments versus the fair value of
Homestead common stock and from the difference in value between the conversion
price of the mortgage notes versus the fair value of Homestead common stock.
The following adjusted ratios reflect adjustment for these amortization costs
on a pro forma basis by excluding such costs from interest.
 
<TABLE>
<CAPTION>
                                                                  SIX MONTHS
                                 PERIOD ENDED DECEMBER 31,      ENDED JUNE 30,
                            ----------------------------------- ---------------
                            1993(2) 1994(2) 1995  1996  1997(2) 1997(2) 1998(2)
                            ------- ------- ----- ----- ------- ------- -------
<S>                         <C>     <C>     <C>   <C>   <C>     <C>     <C>
Ratio of earnings to fixed
 charges..................   .97x    .97x   1.14x 1.07x  .38x    .51x    .65x
Ratio of earnings to fixed
 charges and Preferred
 Share dividends..........   .97x    .97x   1.14x 1.07x  .38x    .51x    .65x
</TABLE>
- --------
(2) Earnings for these periods (years ended December 31, 1993, 1994 and 1997
    and the six-month periods ended June 30, 1997 and 1998) were inadequate to
    cover fixed charges by $18,000, $65,000, $13,053,000, $3,428,000 and
    $6,641,000, respectively.
 
                                       5
<PAGE>
 
                          DESCRIPTION OF COMMON SHARES
 
GENERAL
 
The following description sets forth certain general terms and provisions of
the shares of Homestead's common stock, par value $.01 per share (the "Common
Shares"). This Registration Statement relates to Common Shares that Homestead
may issue to the public as well as Common Shares issuable pursuant to
subscription offerings or rights offerings, upon conversion or exchange of
preferred stock or debt securities, or upon the exercise of Common Share
warrants. The following description of the terms of the Common Shares is not
complete and is subject to and qualified in its entirety by reference to
Maryland law and to Homestead's Restated Charter (the "Charter") and its bylaws
("Bylaws"). We encourage you to read copies of the Charter and Bylaws which are
exhibits to our registration statement No. 333-4455. Directions on how you can
get copies are provided on page 3.
 
The authorized stock of Homestead consists of 249,822,502 Common Shares and
177,498 shares of preferred stock, $.01 par value per share. The Board of
Directors of Homestead (the "Board") may classify or reclassify any unissued
shares of stock from time to time by setting or changing the preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends and other distributions, qualifications or terms or conditions of
redemption of such stock. No holder of any class of stock of Homestead has any
preemptive right to subscribe to any securities of Homestead, except as may be
granted by the Board in authorizing the issuance of a class of preferred stock.
Under Maryland law, stockholders are generally not liable for a company's debts
or obligations. You should read "Certain Provisions of Maryland Law and of
Homestead's Charter and Bylaws" for a description of certain provisions that
could have the effect of delaying, deferring or preventing a change in control
of Homestead.
 
The outstanding Common Shares are fully paid and nonassessable. Each Common
Share entitles the holder to one (1) vote on all matters requiring a vote of
shareholders, including the election of directors. Shareholders do not have the
right to cumulate their votes in the election of directors, which means that
the holders of a majority of the outstanding Common Shares can elect all of the
directors then standing for election. Shareholders are entitled to such
dividends as may be authorized from time to time by the directors out of assets
legally available therefor.
 
In the event of any liquidation, dissolution or winding-up of the affairs of
Homestead, holders of Common Shares are entitled, subject to the preferential
rights of holders of preferred stock, if any, to share ratably in the assets of
Homestead remaining after provision for payment of liabilities to creditors.
 
All Common Shares have equal distribution, liquidation and other rights, and
have no preference, appraisal, conversion or exchange rights. As of November 1,
1998, 38,262,996 Common Shares were issued and outstanding.
 
The transfer agent and registrar for the Common Shares is BankBoston, N.A., 150
Royall Street, Canton, Massachusetts 02021.
 
                                       6
<PAGE>
 
PURCHASE RIGHTS
 
On May 16, 1996, the Board authorized a dividend of one (1) purchase right
("Purchase Right") for each Common Share outstanding at the close of business
on May 16, 1996 (the "Rights Record Date"). The dividend was paid on the Rights
Record Date. The holders of any Common Shares issued after the Rights Record
Date and before the redemption or expiration of the Purchase Rights are also be
entitled to one (1) Purchase Right for each such additional Common Share. Each
Purchase Right entitles the registered holder, under certain circumstances, to
purchase from Homestead one-hundredth (1/100) of a Participating Preferred
Share of Homestead at a price of $50.00 per one-hundredth (1/100) of a
Participating Preferred Share (the "Purchase Price"), subject to adjustment.
The description and terms of the Purchase Rights are set forth in the Rights
Agreement dated as of May 16, 1996 between Homestead and BankBoston, N.A., as
rights agent (the "Rights Agreement"). We encourage you to read a copy of the
Rights Agreement which is an exhibit to our registration statement No. 333-
4455. Directions on how you can get copies are provided on page 3.
 
The Purchase Rights will be exercisable and will be evidenced by separate
certificates only after the earliest to occur of:
 
  (1) ten (10) business days following a public announcement that a person or
  group of affiliated or associated persons (excluding certain affiliates of
  Homestead) has acquired beneficial ownership of twenty percent (20%) or
  more of the outstanding Common Shares (thereby becoming an "Acquiring
  Person");
 
  (2) fifteen (15) business days (or such later date as may be determined by
  action of the Board prior to such time as any person or group of affiliated
  persons becomes an Acquiring Person) following the commencement of, or
  announcement of an intention to make, a tender offer or exchange offer the
  consummation of which would result in the beneficial ownership by a person
  or group of persons (excluding certain affiliates of Homestead) of twenty-
  five percent (25%) or more of the outstanding Common Shares; or
 
  (3) ten (10) business days (or such later date as may be determined by
  action of the Board prior to such time as any person becomes an Acquiring
  Person) after the date of filing by any person of, or the first public
  announcement of the intention of any person to file, any application,
  request, submission or other document with any federal or state regulatory
  authority seeking approval of, attempting to rebut any presumption of
  control upon, or otherwise indicating an intention to enter into, any
  transaction or series of transactions (other than a transaction in which
  newly issued Common Shares are issued directly by Homestead) the
  consummation of which would result in any person (excluding certain
  affiliates of Homestead) becoming the beneficial owner of Common Shares
  aggregating twenty-five percent (25%) or more of the then outstanding
  Common Shares (the first to occur of such dates being called the "Rights
  Distribution Date").
 
With respect to any of the stock certificates outstanding as of the Rights
Record Date, until the Rights Distribution Date the Purchase Rights will be
evidenced by such stock certificate. Until the Rights Distribution Date (or
earlier redemption or expiration of the Purchase Rights), new stock
certificates issued after the Rights Record Date upon transfer or new issuance
of Common Shares
 
                                       7
<PAGE>
 
will contain a notation incorporating the Rights Agreement by reference.
However, if the Board in good faith determines that a person has become an
Acquiring Person under the Rights Agreement inadvertently, and such person
divests as promptly as practicable a sufficient number of Common Shares so that
such person would no longer be an Acquiring Person, then such person shall not
be deemed to be an Acquiring Person for purposes of the Rights Agreement.
 
The Purchase Rights expire on May 16, 2006 (the "Final Expiration Date"),
unless the Final Expiration Date is extended or unless the Purchase Rights are
earlier redeemed or exchanged by Homestead, in each case as described below.
 
The Purchase Price payable, and the number of Participating Preferred Shares or
other securities or property issuable, upon exercise of the Purchase Rights are
subject to adjustment under certain circumstances from time to time to prevent
dilution. With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least one
percent (1%) in such Purchase Price.
 
Participating Preferred Shares purchasable upon exercise of the Purchase Rights
will not be redeemable. Each Participating Preferred Share will be entitled to
a minimum preferential quarterly distribution payment equal to the greater of
(1) $1 per share or (2) one hundred (100) times the distribution declared per
Common Share. Each Participating Preferred Share will have one hundred (100)
votes, voting together with the Common Shares. If dividends payable on
Participating Preferred Shares are in arrears in an amount equal to at least
six (6) full quarterly dividends (whether or not declared and whether or not
consecutive), the holders of record of the outstanding Participating Preferred
Shares shall have the exclusive right, voting separately as a single class, to
elect two (2) directors of Homestead until such time as all arrears in
dividends (whether or not declared) on the Participating Preferred Shares shall
have been paid or declared and set apart for payment. In the event of
liquidation, the holders of the Participating Preferred Shares will be entitled
to a minimum preferential liquidation payment of $1 per share (plus any accrued
and unpaid dividends), but will be entitled to an aggregate payment of one
hundred (100) times the payment made per Common Share. In the event of any
merger, consolidation or other transaction in which Common Shares are
exchanged, each Participating Preferred Share will be entitled to receive one
hundred (100) times the amount received per Common Share. In the event of
issuance of Participating Preferred Shares upon exercise of the Purchase
Rights, in order to facilitate trading, a depositary receipt may be issued for
each one-hundredth ( 1/100) of a Participating Preferred Share. The Purchase
Rights will be protected by customary antidilution provisions.
 
In the event that any person or group of affiliated or associated persons
becomes an Acquiring Person, proper provision will be made so that each holder
of a Purchase Right, other than Purchase Rights beneficially owned by the
Acquiring Person (which will thereafter be void), will thereafter have the
right to receive upon exercise a number of Common Shares having a market value
(determined in accordance with the Rights Agreement) of twice the Purchase
Price. In lieu of the issuance of Common Shares upon the exercise of Purchase
Rights, the Board may, under certain circumstances, and if there is an
insufficient number of Common Shares authorized but unissued or held by
Homestead to permit the exercise in full of the Purchase Rights, the Board is
required to, take such action as may be necessary to cause Homestead to issue
or pay upon the exercise of
 
                                       8
<PAGE>
 
Purchase Rights, cash (including by way of a reduction of purchase price),
property, other securities or any combination of the foregoing having an
aggregate value equal to that of the Common Shares which otherwise would have
been issuable upon exercise of Purchase Rights.
 
In the event that, after any person or group becomes an Acquiring Person,
Homestead is acquired in a merger or other business combination transaction or
fifty percent (50%) or more of its consolidated assets or earning power are
sold, proper provision will be made so that each holder of a Purchase Right
will thereafter have the right to receive, upon the exercise thereof at the
then current Purchase Price, a number of shares of common stock of the
acquiring company having a market value (determined in accordance with the
Rights Agreement) of twice the Purchase Price.
 
At any time after any person or group becomes an Acquiring Person and prior to
the acquisition by that person or group of fifty percent (50%) or more of the
outstanding Common Shares, the Board may exchange the Purchase Rights (other
than Purchase Rights owned by that person or group which will have become
void), in whole or in part, at an exchange ratio of one (1) Common Share (or
one-hundredth ( 1/100) of a Participating Preferred Share) per Purchase Right
(subject to adjustment).
 
As soon as practicable after a Rights Distribution Date, Homestead is obligated
to use its best efforts to file a registration statement under the Securities
Act relating to the securities issuable upon exercise of Purchase Rights and to
cause such registration statement to become effective as soon as practicable.
 
At any time prior to the time a person or group of persons becomes an Acquiring
Person, the Board may redeem the Purchase Rights in whole, but not in part, at
a price of $0.01 per Purchase Right (the "Redemption Price"), payable in cash,
Common Shares or any other form of consideration deemed appropriate by the
Board. The redemption of the Purchase Rights may be made effective at such
time, on such basis and with such conditions as the Board in its sole
discretion may establish. Immediately upon the effectiveness of any redemption
of the Purchase Rights, the right to exercise the Purchase Rights will
terminate and the only right of the holders of Purchase Rights will be to
receive the Redemption Price.
 
The terms of the Purchase Rights may be amended by the Board without the
consent of the holders of the Purchase Rights, except that from and after the
time any person or group of affiliated or associated persons becomes an
Acquiring Person no such amendment may adversely affect the interests of the
holders of the Purchase Rights and in no event shall any such amendment change
the twenty percent (20%) threshold at which a person acquiring beneficial
ownership of Common Shares becomes an Acquiring Person.
 
The Purchase Rights have certain anti-takeover effects. The Purchase Rights
will cause substantial dilution to a person or group that attempts to acquire
Homestead on terms not approved by the Board, except pursuant to an offer
conditioned on a substantial number of Purchase Rights being acquired. The
Purchase Rights should not interfere with any merger or other business
combination approved by the Board since the Purchase Rights may be redeemed by
Homestead at the Redemption Price prior to the time that a person or group has
acquired beneficial ownership of twenty percent (20%) or more of the Common
Shares. The Rights Agreement specifying the terms of the Purchase Rights has
been incorporated by reference into the Registration Statement (of which this
Prospectus forms a part) and is incorporated herein by reference. The foregoing
description of the Purchase
 
                                       9
<PAGE>
 
Rights is not complete and is subject to, and is qualified in its entirety by
reference to, the Rights Agreement, including the definitions therein of
certain terms.
 
                        DESCRIPTION OF PREFERRED SHARES
 
PREFERRED STOCK
 
The Board is empowered by the Charter, without the approval of shareholders, to
cause shares of preferred stock to be issued in one or more series ("Preferred
Shares") and to determine, among other things, the number of Preferred Shares
of each series and the rights, preferences, powers and limitations of each
series which may be senior to the rights of Common Shares. The issuance of
Preferred Shares could have the effect of delaying, deferring or preventing a
change in control of Homestead and may adversely affect the voting and other
rights of shareholders. Homestead has not issued any Preferred Shares.
 
The following description sets forth certain general terms and provisions of
the Preferred Shares which Homestead may issue. The following description of
the general terms of the Preferred Shares is not complete and is subject to and
qualified in its entirety by reference to the Charter and Bylaws. In addition,
you should carefully review a Prospectus Supplement relating to an offering of
Preferred Shares for the specific terms of such Preferred Shares, including,
but not limited to, the following:
 
  (1) The designation of such Preferred Shares;
 
  (2) The number of Preferred Shares offered, the liquidation preference per
  share and the initial public offering price per share;
 
  (3) The dividend rate(s), period(s) and/or payment date(s) or method(s) of
  calculation thereof applicable to such Preferred Shares;
 
  (4) The date from which dividends on such Preferred Shares will cumulate,
  if applicable;
 
  (5) The procedures for the auction and remarketing, if any, for such
  Preferred Shares;
 
  (6) The provisions for a sinking fund, if any, for such Preferred Shares;
 
  (7) The terms and conditions of redemption, if applicable, of such
  Preferred Shares;
 
  (8) Any listing of such Preferred Shares on any securities exchange;
 
  (9) The terms and conditions on which such Preferred Shares will be
  convertible into Common Shares, if applicable, including the conversion
  price (or manner of calculation thereof);
 
  (10) Whether interests in such Preferred Shares will be represented by
  global securities;
 
  (11) A discussion of Federal income tax considerations applicable to such
  Preferred Shares;
 
  (12) The relative ranking and preferences of such Preferred Shares as to
  dividends and in the distribution of assets;
 
  (13) Any limitations on issuance of any series of Preferred Shares ranking
  senior to or on a parity with such Preferred Shares as to dividends and in
  the distribution of assets;
 
  (14) Any limitations on direct or beneficial ownership and restrictions on
  transfer of such Preferred Shares, in each case in accordance with the
  terms of the Charter; and
 
  (15) Any other specific preferences, rights, voting powers, restrictions,
  limitations as to dividends or qualifications of such Preferred Shares.
 
                                       10
<PAGE>
 
RANKING
 
As to dividends and in the distribution of assets, each series of Preferred
Shares will rank:
 
  (1) senior to all classes or series of Common Shares and to all other
  equity securities ranking junior to such series of Preferred Shares;
 
  (2) on a parity with all equity securities issued by Homestead the terms of
  which specifically provide that such equity securities rank on a parity
  with such series of Preferred Shares; and
 
  (3) junior to all equity securities issued by Homestead the terms of which
  specifically provide that such equity securities rank senior to such series
  of Preferred Shares.
 
The Prospectus Supplement relating to an offering of Preferred Shares will
describe any differences from these terms. The term "equity securities" in the
preceding sentence does not include convertible debt securities. The rights of
the holders of each series of Preferred Shares will be subordinate to those of
Homestead's general creditors.
 
DIVIDENDS
 
The holders of each series of Preferred Shares will be entitled to receive,
when, as and if declared by the Board, out of funds legally available for that
purpose, cash dividends at such rates and on such dates as will be set forth in
the applicable Prospectus Supplement relating to an offering of Preferred
Shares. Such rates may be fixed or variable or both. Dividends will be payable
to holders of record as they appear in the stock records of Homestead on the
record dates.
 
Dividends on any series of Preferred Shares may be cumulative or non-
cumulative. Dividends, if cumulative, will begin to accrue and will be fully
cumulative from the date set forth in the applicable Prospectus Supplement. If
the Board fails to declare a dividend payable on a dividend payment date on any
series of Preferred Shares for which dividends are non-cumulative, then the
holders of such Preferred Shares will have no right to receive a dividend in
respect of the dividend period ending on such dividend payment date, and
Homestead will have no obligation to pay the dividend accrued for such period,
whether or not dividends on such Preferred Shares are declared payable on any
future dividend payment date. No interest, or sum of money in lieu of interest,
will be payable in respect of any dividend payment or payments on any series of
Preferred Shares which may be in arrears.
 
So long as any Preferred Shares of a series are outstanding, no full dividends
may be declared or paid or set apart for payment on any shares of any other
stock of Homestead ranking on a parity with such series of Preferred Shares as
to dividends ("Dividend Parity Shares") for any period unless
 
  (1) if such series of Preferred Shares has a cumulative dividend, full
  cumulative dividends have been or contemporaneously are paid or declared
  and a sum sufficient for the payment thereof set apart for such payments
  for all past dividend periods and the then current dividend period with
  respect to such series of Preferred Shares, or
 
  (2) if such series of Preferred Shares does not have a cumulative dividend,
  full dividends have been or contemporaneously are paid or declared and a
  sum sufficient for the payment thereof set apart for such payments for the
  then current dividend period with respect to such series of Preferred
  Shares.
 
                                       11
<PAGE>
 
When dividends are not paid in full, or a sum sufficient for the payment
thereof is not set apart for payment, on any series of Preferred Shares and any
Dividend Parity Shares, all dividends declared on such series of Preferred
Shares and such Dividend Parity Shares will be declared ratably in proportion
to the amount of dividends accrued and unpaid on such series of Preferred
Shares (which will not include any cumulation in respect of unpaid dividends
for past dividend periods if such series of Preferred Shares does not have a
cumulative dividend) and on such Dividend Parity Shares.
 
So long as any Preferred Shares of a series are outstanding, except as provided
in the immediately preceding paragraph, no dividends (other than in Common
Shares or other shares of stock of Homestead ranking junior to such series of
Preferred Shares as to dividends and in the distribution of assets ("Fully
Junior Shares")) may be declared or paid or set apart for payment or other
distribution may be declared or made on the Common Shares or any other shares
of stock of Homestead ranking junior to such series of Preferred Shares as to
dividends or in the distribution of assets ("Junior Shares"), nor may any
Junior Shares be redeemed, purchased or otherwise acquired for any
consideration (or any moneys be paid to or made available for a sinking fund
for the redemption of any Junior Shares) by Homestead (except by conversion
into or exchange for Fully Junior Shares) unless
 
  (1) if such series of Preferred Shares has a cumulative dividend, full
  cumulative dividends have been or contemporaneously are paid or declared
  and a sum sufficient for the payment thereof set apart for such payments
  for all past dividend periods and the then current dividend period with
  respect to such series of Preferred Shares, or
 
  (2) if such series of Preferred Shares does not have a cumulative dividend,
  full dividends have been or contemporaneously are paid or declared and a
  sum sufficient for the payment thereof set apart for such payments for the
  then current dividend period with respect to such series of Preferred
  Shares.
 
Any dividend payment made on a series of Preferred Shares will first be
credited against the earliest accrued but unpaid dividend due with respect to
such series of Preferred Shares which remains payable.
 
REDEMPTION
 
If so provided in the applicable Prospectus Supplement, a series of Preferred
Shares will be subject to mandatory redemption or redemption at the option of
Homestead, in whole or in part, in each case on the terms, at the times and at
the redemption prices set forth in such Prospectus Supplement relating to an
offering of Preferred Shares.
 
The Prospectus Supplement relating to an offering of a series of Preferred
Shares which is subject to mandatory redemption will specify the number of
Preferred Shares of such series which will be redeemed by Homestead in each
year commencing after a specified date, and the redemption price per share
which will include all dividends thereon accrued and unpaid, if any, to the
date fixed for redemption, without interest (which will not include any
cumulation in respect of unpaid dividends for past dividend periods if such
series of Preferred Shares does not have a cumulative dividend). The redemption
price may be payable in cash or other property. If the redemption price for any
series of Preferred Shares is payable solely out of the sale proceeds of stock
of Homestead, the terms of
 
                                       12
<PAGE>
 
such series of Preferred Shares may provide that, if no such stock has been
issued or to the extent the sale proceeds from such stock are insufficient to
pay in full the aggregate redemption price then due, Preferred Shares of such
series will automatically and mandatorily be converted into shares of the
applicable stock of Homestead pursuant to conversion provisions specified in
the applicable Prospectus Supplement. If fewer than all the outstanding
Preferred Shares of any series are to be redeemed, the shares to be redeemed
will be selected by Homestead by lot or pro rata or by any other method
determined by Homestead.
 
However, unless
 
  (1) if such series of Preferred Shares has a cumulative dividend, full
  cumulative dividends have been or contemporaneously are paid or declared
  and a sum sufficient for the payment thereof set apart for such payments
  for all past dividend periods and the then current dividend period with
  respect to such series of Preferred Shares and any shares of any other
  stock of Homestead ranking on a parity with such series of Preferred Shares
  as to distributions and in the distribution of assets ("Parity Shares"), or
 
  (2) if such series of Preferred Shares does not have a cumulative dividend,
  full dividends have been or contemporaneously are paid or declared and a
  sum sufficient for the payment thereof set apart for such payments for the
  then current dividend period with respect to such series of Preferred
  Shares and any Parity Shares,
 
the Preferred Shares of such series may not be redeemed and Homestead may not
purchase or otherwise acquire any Preferred Shares of such series, except
pursuant to a purchase or exchange offer made on the same terms to all holders
of outstanding Preferred Shares of such series or by conversion into or
exchange for Fully Junior Shares.
 
Notice of the redemption of any Preferred Shares of any series will be mailed
not less than thirty (30) days nor more than ninety (90) days prior to the
redemption date to each holder of record of such series of Preferred Shares at
the address of such holder as shown on Homestead's stock records. Each notice
will state:
 
  (1) the redemption date;
 
  (2) the number of Preferred Shares of such series to be redeemed;
 
  (3) the redemption price;
 
  (4) the place or places at which certificates representing such Preferred
  Shares are to be surrendered;
 
  (5) that dividends on such Preferred Shares will cease to accrue on such
  redemption date; and
 
  (6) the date on which the holder's conversion rights, if any, as to such
  Preferred Shares will terminate.
 
If fewer than all the Preferred Shares of any series are to be redeemed, the
notice mailed to each such holder will also specify the number of Preferred
Shares of such series to be redeemed from such holder. If notice of redemption
of any Preferred Shares has been mailed and if Homestead has deposited the
funds necessary for such redemption in trust, for the benefit of the holders of
the Preferred Shares so called for redemption, then from and after the
redemption date, dividends will cease to accrue on such Preferred Shares, such
Preferred Shares will no longer be deemed
 
                                       13
<PAGE>
 
outstanding, and all rights of the holders of such Preferred Shares will
terminate, except the right to receive the redemption price.
 
LIQUIDATION PREFERENCE
 
Upon any liquidation, dissolution or winding up of Homestead, whether voluntary
or involuntary, before any payment or distribution is made to or set apart for
the holders of any Common Shares or any shares of any other stock of Homestead
ranking junior to such series of Preferred Shares in the distribution of assets
("Liquidation Junior Shares"), the holders of each series of Preferred Shares
will be entitled to receive out of the assets of Homestead legally available
for that purpose, liquidating distributions in the amount of the liquidation
preference per share, plus an amount equal to all dividends (whether or not
earned or declared) thereon accrued and unpaid, if any (which will not include
any cumulation in respect of unpaid dividends for past dividend periods if such
series of Preferred Shares does not have a cumulative dividend); but the
holders of such series of Preferred Shares will not be entitled to any further
payment. If, upon any liquidation, dissolution or winding up of Homestead, the
assets of Homestead are insufficient to pay in full such preferential amount
with respect to such series of Preferred Shares and the corresponding amounts
with respect to all other stock of Homestead ranking on a parity with such
series of Preferred Shares in the distribution of assets ("Liquidation Parity
Shares"), then such assets will be distributed among the holders of such series
of Preferred Shares and such Liquidation Parity Shares in proportion to the
full liquidating distributions to which they would otherwise be respectively
entitled.
 
Subject to the rights of the holders of any class or series of stock of
Homestead ranking on a parity with or senior to such series of Preferred Shares
in the distribution of assets, upon any liquidation, dissolution or winding up
of Homestead, whether voluntary or involuntary, after payment has been made in
full to all holders of a series of Preferred Shares, the remaining assets of
Homestead will be distributed among the holders of any Liquidation Junior
Shares, according to their respective rights and preferences and in each case
according to their respective number of shares.
 
For the above purposes, a consolidation or merger of Homestead with or into any
other entity, a sale, transfer, lease or conveyance of all or substantially all
of Homestead's assets, property or business or a statutory share exchange will
not be deemed to be a liquidation, dissolution or winding up of Homestead.
 
VOTING RIGHTS
 
Holders of each series of Preferred Shares will not have any voting rights,
except as set forth below or in the applicable Prospectus Supplement or as
otherwise required by applicable law. The following is a summary of the voting
rights that, unless provided otherwise in the applicable Prospectus Supplement,
will apply to each series of Preferred Shares.
 
If and whenever six (6) quarterly dividends (whether or not consecutive)
payable on any series of Preferred Shares or any Parity Shares are in arrears,
whether or not earned or declared, the number of directors then constituting
the Board will be increased by two (2), and the holders of such series of
Preferred Shares, together with the holders of any such Parity Shares, voting
as a single class, will have the right to elect two (2) additional directors to
serve on the Board at the next annual meeting
 
                                       14
<PAGE>
 
of shareholders or a special meeting of the holders of such series of Preferred
Shares and such Parity Shares and at each subsequent annual meeting of
shareholders until all such dividends in arrears have been paid and a sum
sufficient for the payment thereof has been set apart for payment of the
distribution for the current distribution period with respect to such series of
Preferred Shares and such Parity Shares. The term of office of all directors so
elected will terminate with the termination of such voting rights. For so long
as Homestead and certain of its affiliates beneficially own in excess of ten
percent (10%) of the outstanding Common Shares, in any such vote by holders of
such series of Preferred Shares and such Parity Shares, any Preferred Shares of
such series and Parity Shares beneficially owned by Homestead and such
affiliates will be voted in the same percentages as Preferred Shares of such
series and Parity Shares which are not beneficially owned by Homestead and such
affiliates.
 
The approval of two-thirds ( 2/3) of the outstanding Preferred Shares of any
series and all series of Parity Shares similarly affected, voting as a single
class, will be necessary in order to
 
  (1) amend the Charter to materially and adversely affect the voting powers,
  rights or preferences of the holders of such series of Preferred Shares,
 
  (2) enter into a share exchange which affects such series of Preferred
  Shares, consolidate with or merge into another entity, or permit another
  entity to consolidate with or merge into Homestead, unless in each such
  case, each Preferred Share of such series remains outstanding without a
  material and adverse change to its terms and rights or is converted into or
  exchanged for preferred stock of the surviving entity having preferences,
  conversion or other rights, voting powers, restrictions, limitations as to
  dividends, qualifications and terms or conditions of redemption identical
  to those of a Preferred Share of such series (except for changes which do
  not materially and adversely affect the holders of such series of Preferred
  Shares), or
 
  (3) authorize, reclassify, create or increase the authorized amount of any
  class of stock ranking senior to such series of Preferred Shares in the
  payment of dividends or in the distribution of assets.
 
However, Homestead may create additional classes and series of Parity Shares,
Junior Shares and Fully Junior Shares, increase the authorized number of shares
of such stock and issue additional series of such stock without the consent of
any holder of such series of Preferred Shares.
 
Except as provided above and as required by law, the holders of each series of
Preferred Shares will not be entitled to vote on any merger or consolidation
involving Homestead or a sale of all or substantially all of the assets of
Homestead.
 
CONVERSION RIGHTS
 
The terms and conditions, if any, on which any series of Preferred Shares will
be convertible into Common Shares will be set forth in the applicable
Prospectus Supplement relating to an offering of Preferred Shares. Such terms
will include the number of shares of Common Shares into which each share of
such series of Preferred Shares is convertible, the conversion price (or manner
of calculation thereof), the conversion period, provisions as to whether
conversion will be at the option of the holders of such series of Preferred
Shares or Homestead, the events requiring an adjustment of the conversion price
and provisions affecting conversion upon the redemption of such series of
Preferred Shares.
 
                                       15
<PAGE>
 
                       DESCRIPTION OF SECURITIES WARRANTS
 
Homestead may issue warrants for the purchase of debt securities ("Debt
Securities Warrants"), Preferred Shares ("Preferred Share Warrants") or Common
Shares ("Common Share Warrants" and collectively with the Debt Securities
Warrants and Preferred Share Warrants, the "Securities Warrants"). Securities
Warrants may be issued independently or together with any other Offered
Securities and may be attached to or separate from such Offered Securities.
Each series of Securities Warrants will be issued under a separate warrant
agreement (each, a "Warrant Agreement") to be entered into between Homestead
and a warrant agent specified in the applicable Prospectus Supplement (the
"Warrant Agent") relating to an offering of Securities Warrants. The Warrant
Agent will act solely as an agent of Homestead in connection with the
Securities Warrants of such series and will not assume any obligation or
relationship of agency or trust for or with any holders or beneficial owners of
Securities Warrants. The following summaries of certain provisions of a
Securities Warrant Agreement and the Securities Warrants are not complete and
are subject to, and are qualified in their entirety by reference to, all the
provisions of a Warrant Agreement and the Securities Warrant certificates
relating to each series of Securities Warrants which will be filed with the
Commission at or prior to the time of the issuance of such series of Securities
Warrants. The Prospectus Supplement relating to an offering of Securities
Warrants will advise you where you can obtain copies of the Warrant Agreement
and Securities Warrant.
 
If Debt Securities Warrants are offered, the applicable Prospectus Supplement
will describe the terms of such Debt Securities Warrants, including (but not
limited to), the following where applicable:
 
  (1) the offering price;
 
  (2) the denominations and terms of the series of debt securities
  purchasable upon exercise of such Debt Securities Warrants;
 
  (3) the designation and terms of any series of debt securities with which
  such Debt Securities Warrants are being offered and the number of such Debt
  Securities Warrants being offered with such debt securities;
 
  (4) the date, if any, on and after which such Debt Securities Warrants and
  the related series of debt securities will be transferable separately;
 
  (5) the principal amount of the series of debt securities purchasable upon
  exercise of each such Debt Securities Warrant and the price at which such
  principal amount of debt securities of such series may be purchased upon
  such exercise;
 
  (6) the date on which the right to exercise such Debt Securities Warrants
  shall commence and the date on which such right shall expire (the
  "Expiration Date");
 
  (7) the terms, if any, on which Homestead may accelerate the date by which
  the Debt Securities Warrants must be exercised; and
 
  (8) any other material terms of such Debt Securities Warrants.
 
In the case of Preferred Share Warrants or Common Share Warrants, the
applicable Prospectus Supplement will describe the terms of such Securities
Warrants, including (but not limited to) the following where applicable:
 
  (1) the offering price;
 
                                       16
<PAGE>
 
  (2) the aggregate number of shares purchasable upon exercise of such
  Securities Warrants, the exercise price, and in the case of Preferred Share
  Warrants, the designation, aggregate number and terms of the series of
  Preferred Shares purchasable upon exercise of such Preferred Share
  Warrants;
 
  (3) the designation and terms of any series of Preferred Shares with which
  such Preferred Share Warrants are being offered and the number of such
  Preferred Share Warrants being offered with such Preferred Shares;
 
  (4) the date, if any, on and after which such Securities Warrants and the
  related series of Preferred Shares or Common Shares will be transferable
  separately;
 
  (5) the date on which the right to exercise such Securities Warrants shall
  commence and the Expiration Date; and
 
  (6) any other material terms of such Securities Warrants.
 
Securities Warrant certificates may be exchanged for new Securities Warrant
certificates of different denominations, may (if in registered form) be
presented for registration of transfer, and may be exercised at the corporate
trust office of the Securities Warrant Agent or any other office indicated in
the applicable Prospectus Supplement. Prior to the exercise of any Debt
Securities Warrant, holders of such Debt Securities Warrant will not have any
of the rights of holders of the debt securities purchasable upon such exercise,
including the right to receive payments of principal, premium, if any, or
interest, if any, on such debt securities or to enforce covenants in the
applicable indenture. Prior to the exercise of any Securities Warrants to
purchase Preferred Shares or Common Shares, holders of such Securities Warrants
will not have any rights of holders of such Preferred Shares or Common Shares,
including the right to receive payments of dividends, if any, on such Preferred
Shares or Common Shares, or to exercise any applicable right to vote.
 
EXERCISE OF SECURITIES WARRANTS
 
Each Securities Warrant will entitle the holder thereof to purchase such
principal amount of debt securities or number of Preferred Shares or Common
Shares, as the case may be, at such exercise price as shall be set forth in, or
calculable from, the Prospectus Supplement relating to the offered Securities
Warrants. After the close of business on the Expiration Date (or such later
date to which such Expiration Date may be extended by Homestead), unexercised
Securities Warrants will become void.
 
Securities Warrants may be exercised by delivering to the Securities Warrant
Agent payment as provided in the applicable Prospectus Supplement of the amount
required to purchase the debt securities, Preferred Shares or Common Shares, as
the case may be, purchasable upon such exercise together with certain
information set forth on the reverse side of the Securities Warrant
certificate. Securities Warrants will be deemed to have been exercised upon
receipt of payment of the exercise price, subject to the receipt within five
(5) business days, of the Securities Warrant certificate evidencing such
Securities Warrants. Upon receipt of such payment and the Securities Warrant
certificate properly completed and duly executed at the corporate trust office
of the Securities Warrant Agent or any other office indicated in the applicable
Prospectus Supplement, Homestead will, as soon as practicable, issue and
deliver the debt securities, Preferred Shares or Common
 
                                       17
<PAGE>
 
Shares, as the case may be, purchasable upon such exercise. If fewer than all
of the Securities Warrants represented by such Securities Warrant certificate
are exercised, a new Securities Warrant certificate will be issued for the
remaining amount of Securities Warrants.
 
AMENDMENTS AND SUPPLEMENTS TO WARRANT AGREEMENT
 
The Warrant Agreements may be amended or supplemented without the consent of
the holders of the Securities Warrants issued thereunder to effect changes that
are not inconsistent with the provisions of the Securities Warrants and that do
not adversely affect the interests of the holders of the Securities Warrants.
 
ADJUSTMENTS
 
Unless otherwise indicated in the applicable Prospectus Supplement, the
exercise price of, and the number of Common Shares covered by, a Common Shares
Warrant is subject to adjustment in certain events, including
 
  (1) payment of a dividend on the Common Shares payable in Common Shares and
  share splits, combinations or reclassification of the Common Shares;
 
  (2) issuance to all holders of Common Shares of rights or warrants to
  subscribe for or purchase Common Shares at less than their current market
  price (as defined in the Warrant Agreement for such series of Common Shares
  Warrants); and
 
  (3) certain distributions of evidences of indebtedness or assets (including
  securities but excluding cash dividends or distributions paid out of
  consolidated earnings or retained earnings or dividends payable in Common
  Shares) or of subscription rights and warrants (excluding those referred to
  above).
 
No adjustment in the exercise price of, and the number of Common Shares covered
by, a Common Shares Warrant will be made for regular quarterly or other
periodic or recurring cash dividends or distributions or for cash dividends or
distributions to the extent paid from consolidated earnings or retained
earnings. No adjustment will be required unless such adjustment would require a
change of at least one percent (1%) in the exercise price then in effect.
Except as stated above, the exercise price of, and the number of Common Shares
covered by, a Common Shares Warrant will not be adjusted for the issuance of
Common Shares or any securities convertible into or exchangeable for Common
Shares, or carrying the right or option to purchase or otherwise acquire the
foregoing, in exchange for cash, other property or services.
 
In the event of any
 
  (1) consolidation or merger of Homestead with or into any entity (other
  than a consolidation or a merger that does not result in any
  reclassification, conversion, exchange or cancellation of outstanding
  Common Shares);
 
  (2) sale, transfer, lease or conveyance of all or substantially all of the
  assets of Homestead; or
 
  (3) reclassification, capital reorganization or change of the Common Shares
  (other than solely a change in par value or from par value to no par
  value),
 
                                       18
<PAGE>
 
then any holder of a Common Shares Warrant will be entitled, on or after the
occurrence of any such event, to receive on exercise of such Common Shares
Warrant the kind and amount of shares of beneficial interest or other
securities, cash or other property (or any combination thereof) that the holder
would have received had such holder exercised such holder's Common Shares
Warrant immediately prior to the occurrence of such event. If the consideration
to be received upon exercise of the Common Shares Warrant following any such
event consists of common shares of the surviving entity, then from and after
the occurrence of such event, the exercise price of such Common Shares Warrant
will be subject to the same anti-dilution and other adjustments described in
the second preceding paragraph, applied as if such common shares were Common
Shares.
 
                             DESCRIPTION OF RIGHTS
 
Homestead may sell the Offered Securities to investors directly through
shareholder purchase rights entitling owners of Common Shares to subscribe for
and purchase Common Shares, Preferred Shares or debt securities ("Rights"). If
Offered Securities are to be sold through Rights, such Rights will be
distributed as a dividend to Homestead's shareholders for which such
shareholders will pay no separate consideration. The Prospectus Supplement with
respect to the Rights offering will set forth the relevant terms of the Rights,
including
 
  (1) the kind and number of Offered Securities which will be offered
  pursuant to the Rights,
 
  (2) the period during which and the price at which the Rights will be
  exercisable,
 
  (3) the number of Rights to be issued,
 
  (4) any provisions for changes to or adjustments in the exercise price of
  the Rights, and
 
  (5) any other material terms of the Rights.
 
                         DESCRIPTION OF DEBT SECURITIES
 
The following description sets forth certain general terms and provisions of
the debt securities (the "Debt Securities") to which this Prospectus and any
applicable Prospectus Supplement may relate. The senior Debt Securities
("Senior Debt Securities ") will be issued under an Indenture, as amended or
supplemented from time to time (the "Senior Indenture"), between Homestead and
State Street Bank and Trust Company, as trustee (the "Trustee"). The
subordinated Debt Securities ("Subordinated Debt Securities") will be issued
under an Indenture, as amended or supplemented from time to time (the
"Subordinated Indenture") between Homestead and the Trustee. The Senior
Indenture and the Subordinated Indenture are sometimes referred to herein
collectively as the "Indentures" and each individually as an Indenture. We
encourage you to read copies of the Indentures which are exhibits to the
Registration Statement. Directions on how you can get copies are provided on
page 3. In addition, you can get copies of the Indenture from the corporate
trust office of the Trustee at Two International Place, Boston, Massachusetts
02110. The Indentures are subject to, and governed by, the Trust Indenture Act
of 1939, as amended (the "Trust Indenture Act"). The statements made hereunder
relating to the Indentures and the Debt Securities to be issued thereunder are
summaries of certain provisions thereof, are not complete and are subject to,
and are qualified in their entirety by reference to, all provisions of the
Indentures and such Debt Securities. All section references appearing herein
are to sections of the applicable Indenture, and capitalized terms used but not
defined herein have the respective meanings set forth in the applicable
Indenture.
 
                                       19
<PAGE>
 
GENERAL
 
The Debt Securities will be direct obligations of Homestead and will constitute
Senior Debt Securities and/or Subordinated Debt Securities. The Debt Securities
effectively will be subordinated to any secured indebtedness of Homestead and
the indebtedness and other liabilities of Homestead's subsidiaries and
companies in which Homestead has a direct or indirect investment to the extent
of the assets of those subsidiaries and companies. Homestead and its
subsidiaries may incur additional indebtedness, subject to provisions limiting
the incurrence of additional indebtedness contained in specific Debt
Securities, as described in any applicable Prospectus Supplement.
 
The Indentures provide that the Debt Securities may be issued without limit as
to aggregate principal amount, in one or more series, in each case as
established from time to time in or pursuant to authority granted by a
resolution of the Board or as established in one or more indentures
supplemental to the Indentures.
 
Reference is made to the Prospectus Supplement relating to the Debt Securities
offered thereby for the specific terms of such Debt Securities, including, but
not limited to, the following:
 
  (1) the title of such Debt Securities;
 
  (2) any limit on the aggregate principal amount of such Debt Securities;
 
  (3) the date or dates, or the method for determining such date or dates, on
  which the principal of such Debt Securities will be payable and the amount
  of principal payable thereon;
 
  (4) the rate or rates, or the method by which such rate or rates will be
  determined, at which such Debt Securities will bear interest, if any, and
  the date or dates, or the method for determining such date or dates, from
  which any such interest will accrue, the Interest Payment Dates (as
  defined) on which any such interest will be payable, the Regular Record
  Dates (as defined), if any, for such Interest Payment Dates, or the method
  by which such dates will be determined, and the basis on which interest
  will be calculated if other than a 360-day year comprised of twelve (12)
  30-day months;
 
  (5) the place or places where the principal of (and premium or Make-Whole
  Amount (as defined), if any, on) and interest and Additional Amounts (as
  defined), if any, on such Debt Securities will be payable, where such Debt
  Securities may be surrendered for registration of transfer or exchange and
  where notices or demands to or on Homestead in respect of such Debt
  Securities and the Indentures may be served;
 
  (6) the period or periods within which, the price or prices (including the
  premium or Make-Whole Amount, if any) at which, the currency or currencies,
  currency unit or units or composite currency or currencies in which, and
  the other terms and conditions on which, such Debt Securities may be
  redeemed, in whole or in part, at the option of Homestead, if Homestead is
  to have such an option;
 
  (7) the obligation, if any, of Homestead to redeem, repay or purchase such
  Debt Securities pursuant to any sinking fund or analogous provision or at
  the option of a Holder thereof, and the period or periods within which, the
  date or dates on which, the price or prices at which, the currency or
  currencies, currency unit or units or composite currency or currencies in
  which, and the other terms and conditions on which, such Debt Securities
  will be redeemed, repaid or purchased, in whole or in part, pursuant to
  such obligation;
 
                                       20
<PAGE>
 
  (8) if other than denominations of $1,000 and any integral multiple
  thereof, the denomination in which such Debt Securities will be issuable;
 
  (9) if other than the Trustee, the identity of the Security Registrar (as
  defined) and Paying Agent (as defined);
 
  (10) the percentage of the principal amount at which such Debt Securities
  will be issued and, if other than the full principal amount thereof, the
  portion of the principal amount thereof payable upon declaration of
  acceleration of the maturity thereof, or the method for determining such
  portion;
 
  (11) if other than U.S. dollars, the currency or currencies in which the
  principal of (and premium or Make-Whole Amount, if any, on) or interest or
  Additional Amounts, if any, on such Debt Securities are denominated and
  payable;
 
  (12) whether the amount of payments of the principal of (and premium or
  Make-Whole Amount, if any, on) or interest or Additional Amounts, if any,
  on such Debt Securities may be determined with reference to an index,
  formula or other method (which index, formula or method may be based,
  without limitation, on one or more currencies, currency units, composite
  currency or currencies, commodities, equity indices or other indices) and
  the manner in or which such amounts will be determined;
 
  (13) if such Debt Securities are to be issued upon the exercise of Debt
  Securities Warrants, the time, manner and place for such Debt Securities to
  be authenticated and delivered;
 
  (14) the terms, if any, upon which Debt Securities may be convertible into
  Common Shares, Preferred Shares or Debt Securities of another series of
  Homestead and the terms and conditions upon which such conversion will be
  effected, including, without limitation, the initial conversion price or
  rate and the conversion period;
 
  (15) whether the principal of (and premium or Make-Whole Amount, if any,
  on) or interest or Additional Amounts, if any, on such Debt Securities are
  to be payable, at the election of Homestead or a Holder, in a currency or
  currencies, currency unit or units or composite currency or currencies,
  other than that in which such Debt Securities are denominated or stated to
  be payable, the period or periods within which, and the terms and
  conditions on which, such election may be made, and the time and manner of,
  and identity of the exchange rate agent with responsibility for,
  determining the exchange rate between the currency or currencies in which
  such Debt Securities are denominated or stated to be payable and the
  currency or currencies, currency unit or units or composite currency or
  currencies in which such Debt Securities are to be so payable;
 
  (16) provisions, if any, granting special rights to the Holders of such
  Debt Securities upon the occurrence of such events as may be specified;
 
  (17) any deletions from, modifications of or additions to the terms of such
  Debt Securities with respect to the Events of Default or covenants set
  forth in the Indentures;
 
  (18) whether such Debt Securities are to be issuable in permanent global
  form, and, if so, whether beneficial owners of interests in any such
  permanent Global Security (as defined) may exchange such interests for Debt
  Securities of such series and of like tenor of any authorized form and
  denomination and the circumstances under which any such exchanges may
  occur, and the identity of the Depository (as defined) for such series;
 
                                       21
<PAGE>
 
  (19) the Person to whom any interest on any Debt Security is payable, if
  other than the Person in whose name such Debt Security is registered at the
  close of business on the Regular Record Date for such interest;
 
  (20) the applicability, if any, of the defeasance and covenant defeasance
  provisions of Article Fourteen of the Indentures to such Debt Securities
  and any provisions in modification thereof, in addition thereto or in lieu
  thereof;
 
  (21) if such Debt Securities are to be issuable in definitive form only
  upon receipt of certificates, documents or conditions, the form and terms
  of such certificates, documents or conditions;
 
  (22) whether and under what circumstances Homestead will pay Additional
  Amounts as contemplated in the Indentures on such Debt Securities to any
  Holder who is not a U.S. person in respect of any tax, assessment or
  governmental charge and, if so, whether Homestead will have the option to
  redeem such Debt Securities rather than pay such Additional Amounts (and
  the terms of any such option);
 
  (23) the ranking of such Debt Securities;
 
  (24) whether the Debt Securities will be secured by collateral and, if so,
  the terms thereof;
 
  (25) any other terms of such Debt Securities not inconsistent with the
  provisions of the Indentures (Section 301), including financial covenants,
  if any.
 
The Debt Securities may provide for less than the entire principal amount
thereof to be payable upon declaration of acceleration of the maturity thereof
or bear no interest or bear interest at a rate which at the time of issuance is
below market rates ("Original Issue Discount Securities"). Special U.S. Federal
income tax, accounting and other considerations applicable to Original Issue
Discount Securities will be described in the applicable Prospectus Supplement.
 
Under the Indentures, Homestead will have the ability, in addition to the
ability to issue Debt Securities with terms different from those of Debt
Securities previously issued, without the consent of the Holders, to reopen a
previous issue of a series of Debt Securities and issue additional Debt
Securities of such series (Section 301).
 
Except as described in any applicable Prospectus Supplement, the Indentures do
not contain any other provisions which would limit the ability of Homestead to
incur indebtedness or which would afford Holders of Debt Securities protection
in the event of
 
  (1) a highly leveraged or similar transaction involving Homestead, the
  management of Homestead, or any affiliate of any such party,
 
  (2) a change of control, or
 
  (3) a reorganization, restructuring, merger or similar transaction
  involving Homestead which may adversely affect the Holders of the Debt
  Securities.
 
You should carefully read the applicable Prospectus Supplement relating to an
offering of Debt Securities for information with respect to any deletions from,
modifications of or additions to the Events of Default or covenants of
Homestead which are described below, including any addition of a covenant or
other provision providing event risk or similar protection.
 
                                       22
<PAGE>
 
DENOMINATIONS
 
Unless otherwise described in the applicable Prospectus Supplement, the Debt
Securities of any series issued in registered form, other than Debt Securities
issued in global form (which may be in any denomination), will be issued only
in denominations of $1,000 and integral multiples thereof (Section 302).
 
PRINCIPAL AND INTEREST
 
Unless otherwise specified in the applicable Prospectus Supplement, the
principal of (and premium or Make-Whole Amount, if any, on) and interest on any
series of Debt Securities will be payable at the corporate trust office of the
Trustee, initially located at Two International Place, Boston, Massachusetts
02110; provided that, at the option of Homestead, payment of interest may be
made by check mailed to the address of the Person entitled thereto as it
appears in the Security Register or by wire transfer of funds to such Person at
an account maintained within the U.S. (Sections 301, 305, 306, 307 and 1002).
 
If any Interest Payment Date, Principal Payment Date or the Maturity Date (as
such terms are defined) falls on a day which is not a Business Day, the
required payment will be made on the next Business Day and no interest will
accrue on the amount so payable for the period from and after such Interest
Payment Date, Principal Payment Date or Maturity Date, as the case may be,
through and including such next Business Day (Section 113). "Business Day"
means any day, other than a Saturday or Sunday, on which banks in Boston,
Massachusetts are not required or authorized by law or executive order to
close. Any interest not punctually paid or duly provided for on any Interest
Payment Date with respect to a Debt Security ("Defaulted Interest") will
forthwith cease to be payable to the Holder on the applicable Regular Record
Date and either may be paid to the person in whose name such Debt Security is
registered at the close of business on a special record date (the "Special
Record Date") for the payment of such Defaulted Interest to be fixed by the
Trustee, notice of which will be given to the Holder of such Debt Security not
less than ten (10) days prior to such Special Record Date, or may be paid at
any time in any other lawful manner, all as more completely described in the
Indentures (Section 307).
 
MERGER, CONSOLIDATION OR SALE OF ASSETS
 
The Indentures provide that Homestead will not consolidate or merge with or
into (whether or not Homestead is the surviving corporation), or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of the
properties or assets of Homestead in one or more related transactions, to
another Person unless
 
  (1) the surviving Person or the Person formed by or surviving that
  consolidation or merger (if other than Homestead) or to which that sale,
  assignment, transfer, lease, conveyance or other disposition was made (the
  "Surviving Entity") is a corporation organized or existing under the laws
  of the United States, any state thereof or the District of Columbia;
 
  (2) the Surviving Entity assumes all the obligations of Homestead under the
  Debt Securities and the Indenture pursuant to supplemental indentures in
  form reasonably satisfactory to the Trustee; and
 
                                       23
<PAGE>
 
  (3) immediately before and after giving effect to that transaction and
  treating any indebtedness which becomes an obligation of Homestead as a
  result of that transaction as having been incurred by Homestead at the time
  of the transaction, no Event of Default and no event which, after notice or
  the lapse of time, or both, would become an Event of Default has occurred
  and is continuing; and
 
  (4) an officer's certificate and legal opinion covering such conditions are
  delivered to the Trustee (Sections 801 and 803).
 
CERTAIN COVENANTS
 
Existence. Except as described under "Merger, Consolidation or Sale," Homestead
will 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 Homestead will not be required to preserve any right or
franchise if it determines that the preservation thereof is no longer desirable
in the conduct of its business and that the loss thereof is not disadvantageous
in any material respect to the Holders of the Debt Securities (Section 1004).
 
Maintenance of Properties. Homestead will cause all of its 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 will cause to be made all necessary repairs,
renewals, replacements, betterments and improvements thereof, all as in the
judgment of Homestead may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all times;
provided, however, that Homestead and its Subsidiaries are not prevented from
selling or otherwise disposing of their properties for value in the ordinary
course of business (Section 1005).
 
Insurance. Homestead will, and will cause each of its Subsidiaries to, keep all
of its insurable properties insured against loss or damage at least equal to
their full insurable value with financially sound and reputable insurance
companies (Section 1006).
 
Payment of Taxes and Other Claims. Homestead will pay or discharge or cause to
be paid or discharged, before the same becomes delinquent, (i) all taxes,
assessments and governmental charges levied or imposed on it or any Subsidiary
or on the income, profits or property of Homestead or any Subsidiary and (ii)
all lawful claims for labor, materials and supplies which, if unpaid, might by
law become a lien on the property of Homestead or any Subsidiary; provided,
however, that Homestead will 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 (Section 1007).
 
Reports. The Indentures provide that, whether or not required by the rules and
regulations of the Commission, so long as any of the Debt Securities are
outstanding, Homestead will furnish to Holders of such Debt Securities
 
  (1) all quarterly and financial information which would be required to be
  contained in a filing with the Commission on Forms 10-Q and 10-K if
  Homestead were required to file those Forms, including "Management's
  Discussion and Analysis of Financial Condition and Results of Operations"
  and, with respect to the annual information only, a report thereon by
  Homestead's independent public accountants, and
 
                                       24
<PAGE>
 
  (2) all current reports which would be required to be filed with the
  Commission on Form 8-K if Homestead were required to file those reports.
 
In addition, whether or not required by the rules and regulations of the
Commission, Homestead will file a copy of all such information and reports with
the Commission for public availability and make such information available to
securities analysts and prospective investors upon request. Homestead's
obligations to provide financial information and reports will be deemed
satisfied to the extent Homestead provides the Trustee with a sufficient number
of reports for the Trustee to provide or make available such reports to the
Holders. The Trustee, at Homestead's expense and written direction, shall
promptly mail copies or otherwise make available to the Holders all such
reports (Section 1008).
 
ADDITIONAL COVENANTS AND/OR MODIFICATIONS TO THE COVENANTS DESCRIBED ABOVE
 
Any additional covenants of Homestead and/or modifications to the covenants
described above with respect to any Debt Securities or series thereof will be
set forth in a supplement to the applicable Indenture and described in the
Prospectus Supplement relating thereto.
 
EVENTS OF DEFAULT, NOTICE AND WAIVER
 
The Indentures provide that the following events are "Events of Default" with
respect to any series of Debt Securities issued thereunder:
 
  (1) default which continues for thirty (30) days in the payment of any
  installment of interest or Additional Amounts payable on any Debt Security
  of such series;
 
  (2) default in the payment of the principal of (or premium or Make-Whole
  Amount, if any, on) any Debt Security of such series at its Maturity;
 
  (3) default in making any sinking fund payment as required for any Debt
  Security of such series;
 
  (4) default in the performance, or breach, of any other covenant or
  warranty of Homestead contained in the Indenture (other than a covenant
  added to the Indenture solely for the benefit of a series of Debt
  Securities issued thereunder other than such series), continued for sixty
  (60) days after written notice as provided in such Indenture;
 
  (5) any default occurs under any mortgage, indenture or instrument under
  which there may be issued or by which there may be secured or evidenced any
  indebtedness for money borrowed by Homestead or any Significant Subsidiary
  of Homestead (or the payment of which is guaranteed by Homestead or any
  Significant Subsidiary of Homestead), whether that indebtedness or
  guarantee exists on the date of the Indenture or is thereafter created,
  which default after the termination of any applicable grace or cure period,
 
    (a) constitutes a Payment Default or
 
    (b) results in the acceleration of that indebtedness prior to its
    express maturity and, in each case, the principal amount of any
    indebtedness, together with the principal amount of any other such
    indebtedness under which there has been a Payment Default or which has
    been so accelerated, aggregates $25 million or more; provided that, in
    calculating the aggregate principal amount of any such Indebtedness,
    the Hedging Obligations of any Person under which there has been a
    Payment Default or which has been so accelerated shall not be netted
    against any other Hedging Obligation of that Person;
 
                                       25
<PAGE>
 
  (6) failure by Homestead or any Significant Subsidiary of Homestead to pay
  final judgments aggregating in excess of $25 million, which judgments are
  not paid, discharged or stayed for a period of sixty (60) days;
 
  (7) certain events of bankruptcy or insolvency with respect to Homestead or
  any Significant Subsidiary of Homestead; and
 
  (8) any other Event of Default provided with respect to a particular series
  of Debt Securities (Section 501).
 
The term "Significant Subsidiary" means a Subsidiary which otherwise meets the
tests ascribed to the term in Regulation S-X promulgated by the Commission
under the Securities Act, except that the tests therein shall be based on
twenty percent (20%) of total assets or income instead of ten percent (10%)
unless Homestead owns or controls, directly or indirectly, at least seventy-
five percent (75%) of the voting power of the Subsidiary's shares of Capital
Stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees thereof (with that percentage
to be calculated on a fully diluted basis), in which case the tests shall be
based on ten percent (10%) of total assets or income.
 
If an Event of Default under either of the Indentures with respect to Debt
Securities of any series at the time Outstanding occurs and is continuing, then
in every such case, unless the principal of all of the Outstanding Debt
Securities of such series has already become due and payable, the Trustee or
the Holders of not less than twenty-five percent (25%) in principal amount of
the Outstanding Debt Securities of such series may declare the principal (or,
if the Debt Securities of such series are Original Issue Discount Securities or
Indexed Securities, such portion of the principal as may be specified in the
terms thereof) of, and the Make-Whole Amount, if any, on, all of the Debt
Securities of such series to be due and payable immediately by written notice
thereof to Homestead and to the Trustee (if given by the Holders). However, in
the case of an Event of Default described in clause (7) of the preceding
paragraph, acceleration is automatic.
 
At any time after such a declaration of acceleration with respect to Debt
Securities of such series has been made, but before a judgment or decree for
payment of the money due has been obtained by the Trustee, the Holders of a
majority in principal amount of the Outstanding Debt Securities of such series
may rescind and annul such declaration and its consequences if
 
  (1) Homestead has paid or deposited with the Trustee all required payments
  of the principal of (and premium or Make-Whole Amount, if any, on) and
  interest and Additional Amounts, if any, on the Debt Securities of such
  series, plus reasonable compensation, expenses, disbursements and advances
  of the Trustee and
 
  (2) all Events of Default, other than the nonpayment of accelerated
  principal (or premium or Make-Whole Amount, if any) or interest or
  Additional Amounts, if any, with respect to Debt Securities of such series
  have been cured or waived as provided in the applicable Indenture (Section
  502).
 
Each of the Indentures also provides that the Holders of not less than a
majority in principal amount of the Outstanding Debt Securities of any series
may waive any past default with respect to such series and its consequences,
except a default (i) in the payment of the principal of (or premium or
 
                                       26
<PAGE>
 
Make-Whole Amount, if any, on) or interest or Additional Amounts, if any, on
any Debt Security of such series, or (ii) in respect of a covenant or provision
contained in the applicable Indenture which cannot be modified or amended
without the consent of the Holder of each Outstanding Debt Security affected
thereby (Section 513).
 
The Trustee is required to give notice to the Holders of Debt Securities within
ninety (90) days of a default under the applicable Indenture; provided,
however, that the Trustee may withhold notice to the Holders of any series of
Debt Securities of any default with respect to such series (except a default in
the payment of the principal of (or premium or Make-Whole Amount, if any, on)
or interest or Additional Amounts, if any, on any Debt Security of such series
or in the payment of any sinking fund installment in respect of any Debt
Security of such series) if a Responsible Officer of the Trustee considers such
withholding to be in the interest of such Holders (Section 601).
 
The Indentures provide that no Holders of Debt Securities of any series may
institute any proceedings, judicial or otherwise, with respect to the
Indentures or for any remedy thereunder, except in the case of failure of the
Trustee, for sixty (60) days, to act after it has received a written request to
institute proceedings in respect of an Event of Default from the Holders of not
less than twenty-five percent (25%) in principal amount of the Outstanding Debt
Securities of such series, as well as an offer of reasonable indemnity (Section
507). This provision will not prevent, however, any Holder of Debt Securities
from instituting suit for the enforcement of payment of the principal of (and
premium or Make-Whole Amount, if any, on) and interest and Additional Amounts,
if any, on such Debt Securities on or after the respective due dates thereof
(Section 508).
 
Subject to provisions in the Indentures relating to its duties in case of
default, the Trustee is under no obligation to exercise any of its rights or
powers under the Indentures at the request or direction of any Holders of any
series of Debt Securities then Outstanding under the Indentures, unless such
Holders have offered to the Trustee reasonable security or indemnity (Section
602). The Holders of not less than a majority in principal amount of the
Outstanding Debt Securities of any series will have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee, or of exercising any trust or power conferred on the Trustee.
However, the Trustee may refuse to follow any direction which is in conflict
with any law or the Indentures, which may involve the Trustee in personal
liability or which may be unduly prejudicial to the Holders of Debt Securities
of such series not joining therein (Section 512).
 
Within one hundred thirty-five (135) days after the end of each fiscal year,
Homestead must deliver to the Trustee a certificate, signed by one of several
specified officers, stating whether or not such officer has knowledge of any
default under the Indentures and, if so, specifying each such default and the
nature and status thereof (Section 1009).
 
MODIFICATION OF THE INDENTURES
 
Modifications of and amendments to the Indentures may be made with the consent
of the Holders of not less than a majority in principal amount of all
Outstanding Debt Securities which are affected by such modification or
amendment; provided, however, that no such modification or amendment may,
without the consent of the Holder of each such Debt Security affected thereby,
 
  (1) change the Stated Maturity of the principal of (or premium or Make-
  Whole Amount, if any, on), or any installment of principal of or interest
  or Additional Amounts, if any, on, any such Debt Security;
 
                                       27
<PAGE>
 
  (2) reduce the principal amount of, or the rate or amount of interest on,
  or any premium or Make-Whole Amount payable upon redemption of, or any
  Additional Amounts payable with respect to, any such Debt Security, or
  reduce the amount of principal of an Original Issue Discount Security or
  Make-Whole Amount, if any, which would be due and payable upon declaration
  of acceleration of the maturity thereof or would be provable in bankruptcy,
  or adversely affect any right of repayment of the Holder of any such Debt
  Security;
 
  (3) change the Place of Payment, or the currency, for payment of the
  principal of (or premium or Make-Whole Amount, if any, on) or interest or
  Additional Amounts, if any, on any such Debt Security;
 
  (4) impair the right to institute suit for the enforcement of any payment
  on or with respect to any such Debt Security;
 
  (5) reduce the above-stated percentage of Outstanding Debt Securities of
  any series necessary to modify or amend the applicable Indenture, to waive
  compliance with certain provisions thereof or certain defaults and
  consequences thereunder or to reduce the quorum or voting requirements set
  forth in the applicable Indenture; or
 
  (6) modify any of the foregoing provisions or any of the provisions
  relating to the waiver of certain past defaults or certain covenants,
  except to increase the required percentage to effect such action or to
  provide that certain other provisions may not be modified or waived without
  the consent of the Holder of such Debt Security (Section 902).
 
The Holders of at least a majority in principal amount of each series of
Outstanding Debt Securities have the right to waive compliance by Homestead
with certain covenants in the Indentures (Section 1011).
 
Modifications of and amendments to the Indentures may be made by Homestead and
the Trustee without the consent of any Holder of Debt Securities for any of the
following purposes:
 
  (1) to evidence the succession of another Person to Homestead as obligor
  under the applicable Indenture;
 
  (2) to add to the covenants of Homestead for the benefit of the Holders of
  all or any series of Debt Securities or to surrender any right or power
  conferred on Homestead in the applicable Indenture;
 
  (3) to add Events of Default for the benefit of the Holders of all or any
  series of Debt Securities;
 
  (4) to add or change any provisions of the applicable Indenture to
  facilitate the issuance of, or to liberalize certain terms of, Debt
  Securities in bearer form, or to permit or facilitate the issuance of Debt
  Securities in uncertificated form, provided that such action may not
  adversely affect the interests of the Holders of the Debt Securities of any
  series in any material respect;
 
  (5) to change or eliminate any provisions of the applicable Indenture,
  provided that any such change or elimination will become effective only
  when there are no Debt Securities Outstanding of any series created prior
  thereto which are entitled to the benefit of such provision;
 
  (6) to secure the Debt Securities;
 
  (7) to establish the form or terms of Debt Securities of any series;
 
  (8) to provide for the acceptance of appointment by a successor Trustee or
  facilitate the administration of the trusts under the applicable Indenture
  by more than one Trustee;
 
                                       28
<PAGE>
 
  (9) to cure any ambiguity in the applicable Indenture, correct or
  supplement any provision in the applicable Indenture which may be defective
  or inconsistent or make any other changes with respect to matters or
  questions arising under the Indenture, provided that such action may not
  adversely affect the interests of Holders of Debt Securities of any series
  in any material respect;
 
  (10) to close the applicable Indenture with respect to the authentication
  and delivery of additional series of Debt Securities or to qualify, or
  maintain qualification of, the applicable Indenture under the Trust
  Indenture Act; or
 
  (11) to supplement any of the provisions of the applicable Indenture to the
  extent necessary to permit or facilitate defeasance and discharge of any
  series of such Debt Securities, provided that such action may not adversely
  affect the interests of the Holders of the Debt Securities of any series in
  any material respect (Section 901).
 
The Indentures provide that, in determining whether the Holders of the
requisite principal amount of Outstanding Debt Securities of a series have
concurred in any request, demand, authorization, direction, notice, consent or
waiver thereunder or whether a quorum is present at a meeting of Holders of
Debt Securities,
 
  (1) the principal amount of an Original Issue Discount Security which is
  deemed Outstanding is the amount of the principal thereof which would be
  due and payable as of the date of such determination upon declaration of
  acceleration of the maturity thereof;
 
  (2) the principal amount of a Debt Security denominated in a foreign
  currency which is deemed Outstanding is the U.S. dollar equivalent,
  determined on the issue date for such Debt Security, of the principal
  amount (or, in the case of an Original Issue Discount Security, the U.S.
  dollar equivalent on the issue date of such Debt Security of the amount
  determined as provided in clause (1) above);
 
  (3) the principal amount of an Indexed Security which is deemed Outstanding
  is the principal face amount of such Indexed Security at original issuance,
  unless otherwise provided with respect to such Indexed Security pursuant to
  Section 301 of the applicable Indenture; and
 
  (4) Debt Securities owned by Homestead or any other obligor on the Debt
  Securities or any Affiliate of Homestead or of such other obligor are
  disregarded (Section 101).
 
The Indentures contain provisions for convening meetings of the Holders of Debt
Securities of a series (Section 1501). A meeting may be called at any time by
the Trustee, and also, upon request, by Homestead or the Holders of at least
ten percent (10%) in principal amount of the Outstanding Debt Securities of
such series, in any such case upon notice given as provided in the Indenture
(Section 1502). Except for any consent which must be given by the Holder of
each Debt Security affected by certain modifications of and amendments to the
Indenture, any resolution presented at a meeting or adjourned meeting duly
reconvened at which a quorum is present may be adopted by the affirmative vote
of the Holders of a majority in principal amount of the Outstanding Debt
Securities of such series. However, except as referred to above, any resolution
with respect to any request, demand, authorization, direction, notice, consent,
waiver or other action which may be made, given or taken by the Holders of a
specified percentage, which is less than a majority, in principal amount of the
Outstanding Debt Securities of a series may be adopted at a meeting duly called
or adjourned meeting duly reconvened at which a quorum is present by the
affirmative vote of the Holders of such
 
                                       29
<PAGE>
 
specified percentage in principal amount of the Outstanding Debt Securities of
such series. Any resolution passed or decision taken at any meeting of Holders
of Debt Securities of any series duly held in accordance with the applicable
Indenture will be binding on all Holders of Debt Securities of such series. The
quorum at any meeting called to adopt a resolution, and at any reconvened
meeting, will be Persons holding or representing a majority in principal amount
of the Outstanding Debt Securities of a series. However, if any action is to be
taken at such meeting with respect to a consent or waiver which may be given by
the Holders of not less than a specified percentage in principal amount of the
Outstanding Debt Securities of a series, the Persons holding or representing
such specified percentage in principal amount of the Outstanding Debt
Securities of such series will constitute a quorum (Section 1504).
 
Notwithstanding the foregoing provisions, if any action is to be taken at a
meeting of Holders of Debt Securities of any series with respect to any
request, demand, authorization, direction, notice, consent, waiver or other
action which the applicable Indenture expressly provides may be made, given or
taken by the Holders of a specified percentage in principal amount of all
Outstanding Debt Securities affected thereby, or of the Holders of such series
and one or more additional series:
 
  (1) there will be no minimum quorum requirement for such meeting; and
 
  (2) the principal amount of the Outstanding Debt Securities of such series
  which vote in favor of such request, demand, authorization, direction,
  notice, consent, waiver or other action will be taken into account in
  determining whether such request, demand, authorization, direction, notice,
  consent, waiver or other action has been made, given or taken under the
  applicable Indenture (Section 1504).
 
Any request, demand, authorization, direction, notice, consent, waiver or other
action provided by the applicable Indenture to be given or taken by a specified
percentage in principal amount of the Holders of any or all series of Debt
Securities may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such specified percentage of Holders in
person or by agent duly appointed in writing; and, except as otherwise
expressly provided in the applicable Indenture, such action will become
effective when such instrument or instruments are delivered to the Trustee.
Proof of execution of any instrument or of a writing appointing any such agent
will be sufficient for any purpose of the applicable Indenture and (subject to
Article Six of the Indentures) conclusive in favor of the Trustee and
Homestead, if made in the manner specified above (Section 1507).
 
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
 
Homestead may discharge certain obligations to Holders of any series of Debt
Securities which have not already been delivered to the Trustee for
cancellation by irrevocably depositing with the Trustee, in trust, funds in
such currency or currencies, currency unit or units or composite currency or
currencies in which such Debt Securities are payable in an amount sufficient to
pay the entire indebtedness on such Debt Securities in respect of principal
(and premium or Make-Whole Amount, if any) and interest and Additional Amounts,
if any, payable to the date of such deposit (if such Debt Securities have
become due and payable) or to the Stated Maturity or Redemption Date, as the
case may be (Sections 1401, 1402, 1403 and 1404).
 
                                       30
<PAGE>
 
The Indentures provide that, if the provisions of Article Fourteen are made
applicable to the Debt Securities of or within any series pursuant to Section
301 of the Indentures, Homestead may elect either
 
  (1) to defease and discharge itself from any and all obligations with
  respect to such Debt Securities (except for the obligation to pay
  Additional Amounts, if any, upon the occurrence of certain events of tax,
  assessment or governmental charge with respect to payments on such Debt
  Securities and the obligations to register the transfer or exchange of such
  Debt Securities, to replace temporary or mutilated, destroyed, lost or
  stolen Debt Securities, to maintain an office or agency in respect of such
  Debt Securities and to hold moneys for payment in trust) ("defeasance")
  (Section 1402) or
 
  (2) to release itself from its obligations with respect to such Debt
  Securities under Sections 1004 to 1009, inclusive, of the applicable
  Indenture (being the restrictions described under "--Certain Covenants")
  and, if provided pursuant to Section 301 of the applicable Indenture, their
  obligations with respect to any other covenant, and any omission to comply
  with such obligations will not constitute a default or an Event of Default
  with respect to such Debt Securities ("covenant defeasance") (Section
  1403),
 
in either case upon the irrevocable deposit by Homestead with the Trustee, in
trust, of an amount, in such currency or currencies, currency unit or units or
composite currency or currencies in which such Debt Securities are payable at
Stated Maturity, or Governmental Obligations (as defined below), or both,
applicable to such Debt Securities which through the scheduled payment of
principal and interest in accordance with their terms will provide money in an
amount sufficient to pay the principal of (and premium or Make-Whole Amount, if
any, on) and interest and Additional Amounts, if any, on such Debt Securities,
and any mandatory sinking fund or analogous payments thereon, on the scheduled
due dates therefor (Section 1404).
 
Such a trust may only be established if, among other things, Homestead has
delivered to the Trustee an Opinion of Counsel (as specified in the applicable
Indenture) to the effect that the Holders of such Debt Securities will not
recognize income, gain or loss for U.S. Federal income tax purposes as a result
of such defeasance or covenant defeasance and will be subject to U.S. Federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such defeasance or covenant defeasance had not
occurred, and such Opinion of Counsel, in the case of defeasance, must refer to
and be based on a ruling of the Internal Revenue Service (the "IRS") or a
change in applicable U.S. Federal income tax law occurring after the date of
the Indenture (Section 1404).
 
Unless otherwise provided in the applicable Prospectus Supplement, if after
Homestead has deposited funds and/or Government Obligations to effect
defeasance or covenant defeasance with respect to Debt Securities of any
series,
 
  (1) the Holder of a Debt Security of such series is entitled to, and does,
  elect pursuant to Section 301 of the applicable Indenture or the terms of
  such Debt Security to receive payment in a currency, currency unit or
  composite currency other than that in which such deposit has been made in
  respect of such Debt Security or
 
  (2) a Conversion Event (as defined below) occurs in respect of the
  currency, currency unit or composite currency in which such deposit has
  been made,
 
                                       31
<PAGE>
 
the indebtedness represented by such Debt Security will be deemed to have been,
and will be, fully discharged and satisfied through the payment of the
principal of (and premium or Make-Whole Amount, if any, on) and interest and
Additional Amounts, if any, on such Debt Security as they become due out of the
proceeds yielded by converting the amount so deposited in respect of such Debt
Security into the currency, currency unit or composite currency in which such
Debt Security becomes payable as a result of such election or Conversion Event
based on the applicable market exchange rate (Section 1405). "Conversion Event"
means the cessation of use of (i) a currency (other than the ECU or other
currency unit) both by the government of the country which issued such currency
and for the settlement of transactions by a central bank or other public
institutions of or within the international banking community, (ii) the ECU
both within the European Monetary System and for the settlement of transactions
by public institutions of or within the European Communities or (iii) any
currency unit or composite currency other than the ECU for the purposes for
which it was established.
 
If Homestead effects covenant defeasance with respect to any Debt Securities
and such Debt Securities are declared due and payable because of the occurrence
of any Event of Default other than the Event of Default described in clause (4)
under "--Events of Default, Notice and Waiver" with respect to Sections 1004
through 1008, inclusive, of the applicable Indenture (which Sections would no
longer be applicable to such Debt Securities) as to which there has been
covenant defeasance, the amount in such currency, currency unit or composite
currency in which such Debt Securities are payable, plus Government Obligations
on deposit with the Trustee, will be sufficient to pay amounts due on such Debt
Securities at the time of their Stated Maturity but may not be sufficient to
pay amounts due on such Debt Securities at the time of the acceleration
resulting from such Event of Default. However, Homestead would remain liable to
make payment of such amounts due at the time of acceleration.
 
The applicable Prospectus Supplement may further describe the provisions, if
any, permitting such defeasance or covenant defeasance, including any
modifications to the provisions described above, with respect to the Debt
Securities of or within a particular series.
 
REGISTRATION AND TRANSFER
 
Subject to certain limitations imposed on Debt Securities issued in book-entry
form, the Debt Securities of any series will be exchangeable for other Debt
Securities of the same series and of a like aggregate principal amount and
tenor of different authorized denominations upon surrender of such Debt
Securities at the corporate trust office of the Trustee. In addition, subject
to certain limitations imposed on Debt Securities issued in book-entry form,
the Debt Securities of any series may be surrendered for conversion or
registration of transfer thereof at the corporate trust office of the Trustee.
Every Debt Security surrendered for registration of transfer or exchange must
be duly endorsed or accompanied by a written instrument of transfer. No service
charge will be made for any registration of transfer or exchange of any Debt
Securities, but Homestead may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith (Section 305).
Homestead may at any time designate one or more offices or agencies where Debt
Securities of any series may be presented or surrendered for payment or
surrendered for registration of transfer or exchange. If Homestead has
designated such an office or agency, Homestead may at
 
                                       32
<PAGE>
 
any time rescind the designation or approve a change in the location of such
office or agency, except that Homestead will be required to maintain such an
office or agency in each Place of Payment for such Debt Securities (Section
1002).
 
Neither Homestead nor the Trustee will be required to
 
  (1) issue, register the transfer of or exchange Debt Securities of any
  series during a period beginning at the opening of business fifteen (15)
  days before any selection of Debt Securities of such series to be redeemed
  and ending at the close of business on the day of mailing of the relevant
  notice of redemption;
 
  (2) register the transfer of or exchange any Debt Security, or portion
  thereof, called for redemption, except the unredeemed portion of any Debt
  Security being redeemed in part; or
 
  (3) issue, register the transfer of or exchange any Debt Security which has
  been surrendered for repayment at the option of the Holder, except the
  portion, if any, of such Debt Security not to be so repaid (Section 305).
 
SUBORDINATION OF DEBT SECURITIES
 
The Senior Debt Securities will constitute part of the Senior Indebtedness (as
defined below) of Homestead and will rank pari passu with all outstanding
senior debt. Except as set forth in the Prospectus Supplement, the Debt
Securities will be subordinated, in right of payment, to the prior payment in
full of the Senior Indebtedness, including the Senior Debt Securities, whether
outstanding at the date of the Subordinated Indenture or thereafter incurred,
assumed or guaranteed. The term "Senior Indebtedness" means
 
  (1) the principal of and premium, if any, and unpaid interest on
  indebtedness for money borrowed,
 
  (2) purchase money and similar obligations,
 
  (3) obligations under capital leases,
 
  (4) guarantees, assumptions or purchase commitments relating to, or other
  transactions as a result of which Homestead is responsible for the payment
  of, such indebtedness of others,
 
  (5) renewals, extensions and refunding of any such indebtedness,
 
  (6) interest or obligations in respect of any such indebtedness accruing
  after the commencement of any insolvency or bankruptcy proceedings and
 
  (7) obligations associated with derivative products such as interest rate
  and currency exchange contracts, foreign exchange contracts, commodity
  contracts, and similar arrangements,
 
unless, in each case, the instrument by which Homestead incurred, assumed or
guaranteed the indebtedness or obligations described in clauses (1) through (7)
hereof expressly provides that such indebtedness or obligation is not senior in
right of payment to the Subordinated Debt Securities.
 
Under any distribution of assets of Homestead in connection with any
dissolution, winding up, liquidation or reorganization of Homestead, whether in
a bankruptcy, insolvency, reorganization or receivership proceeding or upon an
assignment for the benefit of creditors or any other marshalling of the assets
and liabilities of Homestead or otherwise, except a distribution in connection
with a
 
                                       33
<PAGE>
 
merger or consolidation or a conveyance or transfer of all or substantially all
of the properties of Homestead in accordance with the Subordinated Indenture,
the holders of all Senior Indebtedness shall first be entitled to receive
payment of the full amount due thereon, or provision shall be made for such
payment in money or money's worth, before the holders of any of the
Subordinated Debt Securities are entitled to receive any payment in respect of
the Subordinated Debt Securities.
 
In the event that a payment default shall have occurred and be continuing with
respect to the Senior Indebtedness, the holders of all Senior Indebtedness
shall first be entitled to receive payment of the full amount due thereon, or
provision shall be made for such payment in money or money's worth, before the
holders of any of the Subordinated Debt Securities are entitled to receive any
payment in respect of the Subordinated Debt Securities. In the event that the
principal of the Subordinated Debt Securities of any series shall have been
declared due and payable pursuant to the Subordinated Indenture and such
declaration shall not have been rescinded and annulled, the holders of all
Senior Indebtedness outstanding at the time of such declaration shall first be
entitled to receive payment of the full amount due thereon, or provision shall
be made for such payment in money or money's worth, before the holders of any
of the Subordinated Debt Securities are entitled to receive any payment in
respect of the Subordinated Debt Securities.
 
This subordination will not prevent the occurrence of any event of default with
respect to the Subordinated Debt Securities. There is no limitation on the
issuance of additional Senior Indebtedness in the Subordinated Indenture.
 
PAYMENT
 
Unless otherwise specified in the applicable Prospectus Supplement, the
principal of (and applicable premium or Make-Whole Amount, if any) and interest
on any series of Debt Securities will be payable at the corporate trust office
of the Trustee, the address of which will be stated in the applicable
Prospectus Supplement; provided that, at the option of Homestead, payment of
interest may be made by check mailed to the address of the person entitled
thereto as it appears in the applicable register for such Debt Securities or by
wire transfer of funds to such person at an account maintained within the
United States.
 
All moneys paid by Homestead to a paying agent or a Trustee for the payment of
the principal of or any premium or interest on any Debt Security which remain
unclaimed at the end of two (2) years after such principal, premium or interest
has become due and payable will be repaid to Homestead, and the Holder of such
Debt Security thereafter may look only to Homestead for payment thereof.
 
BOOK-ENTRY SECURITIES
 
Unless otherwise provided in the applicable Prospectus Supplement, the Debt
Securities of each series will be represented by one or more certificates (the
"Global Securities"). The Global Security representing Debt Securities will be
deposited with, or on behalf of, The Depository Trust Company ("DTC"), or
another successor depository appointed by Homestead (DTC or such other
depository being the "Depository") and registered in the name of the Depository
or its nominee. Unless otherwise provided in the applicable Prospectus
Supplement, Debt Securities will not be issued in definitive form. If the
aggregate principal amount of any issue exceeds $200 million, one certificate
will be issued with respect to each $200 million of principal amount and an
additional certificate will be issued with respect to any remaining principal
amount of such issue.
 
                                       34
<PAGE>
 
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities which its participants ("Participants") deposit with DTC. DTC
also facilitates the settlement among Participants of securities transactions,
such as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Direct Participants
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations ("Direct Participants"). DTC is
owned by a number of its Direct Participants and by the NYSE, the American
Stock Exchange, Inc. and the National Association of Securities Dealers, Inc.
Access to the DTC system is also available to others such as securities brokers
and dealers, banks and trust companies which clear through or maintain a
custodial relationship with a Direct Participant, either directly or indirectly
("Indirect Participants"). The rules applicable to DTC and its Participants are
on file with the Commission.
 
Upon issuance by Homestead of Debt Securities represented by a Global Security,
purchases of Debt Securities under the DTC system must be made by or through
Direct Participants, which will receive a credit for the Debt Securities on
DTC's records. The ownership interest of each actual purchaser of each Debt
Security ("Beneficial Owner") will in turn be recorded on the Direct and
Indirect Participants' records. Beneficial Owners will not receive written
confirmation from DTC of their purchase, but Beneficial Owners are expected to
receive written confirmations providing details of the transaction, as well as
periodic statements of their holdings, from the Direct or Indirect Participant
through which the Beneficial Owner entered into the transaction. Transfers of
ownership interests in the Debt Securities will be accomplished by entries made
on the books of Participants acting on behalf of Beneficial Owners. Beneficial
Owners will not receive certificates representing their ownership interests in
Debt Securities, except if use of the book-entry system for the Debt Securities
is discontinued. The laws of some states require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
limits and such laws may impair the ability to own, pledge or transfer
beneficial interests in a Global Security.
 
So long as the Depository for a Global Security, or its nominee, is the
registered owner of such Global Security, such Depository or such nominee, as
the case may be, will be considered the sole owner or holder of the Debt
Securities represented by such Global Security for all purposes under the
Indentures. Except as provided below, owners of beneficial interests in Debt
Securities represented by a Global Security will not be entitled to have Debt
Securities represented by such Global Security registered in their names, will
not receive or be entitled to receive physical delivery of Debt Securities in
definitive form and will not be considered the owners or holders thereof under
the Indentures.
 
To facilitate subsequent transfers, all Debt Securities deposited by
Participants with DTC are registered in the name of DTC's partnership nominee,
Cede & Co. The deposit of Debt Securities with DTC and their registration in
the name of Cede & Co. effect no change in beneficial ownership. DTC has no
knowledge of the actual Beneficial Owners of the Debt Securities; DTC's records
reflect only the identity of the Direct Participants to whose accounts such
Debt Securities are credited,
 
                                       35
<PAGE>
 
which may or may not be the Beneficial Owners. The Participants will remain
responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants,
by Direct Participants to Indirect Participants, and by Direct Participants and
Indirect Participants to Beneficial Owners will be governed by arrangements
among them, subject to any statutory or regulatory requirements as may be in
effect from time to time.
 
Neither DTC nor Cede & Co. will consent or vote with respect to Debt
Securities. Under its usual procedures, DTC will mail an omnibus proxy to
Homestead as soon as possible after the record date. The omnibus proxy will
assign Cede & Co.'s consenting or voting rights to those Direct Participants to
whose accounts the Debt Securities are credited on the record date (identified
in a listing attached to the omnibus proxy).
 
Payments of principal of (and premium and Make-Whole Amount, if any, on) and
interest and Additional Amounts, if any, on the Debt Securities represented by
a Global Security registered in the name of DTC or its nominee will be made by
Homestead through the Trustee under the Indentures or a paying agent (the
"Paying Agent"), which may also be the Trustee under the Indentures, to DTC or
its nominee, as the case may be, as the registered owner of such Global
Security. None of Homestead, the Trustee, the Paying Agent or the Security
Registrar for such Global Security will have any responsibility or liability
for any aspect of the records relating to or payments made on account of
beneficial ownership interests in such Global Security or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
 
Homestead has been advised that DTC, upon receipt of any payment of principal,
premium, Make-Whole Amount or interest in respect of a Global Security, will
credit Direct Participants' accounts on the payable date in accordance with
their respective holdings shown on DTC's records unless DTC has reason to
believe that it will not receive payment on the payable date. Payments by
Participants to Beneficial Owners will be governed by standing instructions and
customary practices, as is the case with securities held for the accounts of
customers in bearer form or registered in "street name," and will be the
responsibility of such Participant and not of DTC, the Paying Agent or
Homestead, subject to any statutory or regulatory requirements as may be in
effect from time to time. Payment of principal, premium and interest to DTC is
the responsibility of the Paying Agent or Homestead, as the case may be,
disbursement of such payments to Direct Participants is the responsibility of
DTC, and disbursement of such payments to the Beneficial Owners is the
responsibility of Direct and Indirect Participants.
 
If the Depository with respect to a Global Security is at any time unwilling or
unable to continue as Depository and a successor Depository is not appointed by
Homestead within ninety (90) days, Homestead will issue certificated notes in
exchange for the Debt Securities represented by such Global Security.
 
The information in this section concerning the Depository and the Depository's
book-entry system has been obtained from sources which Homestead believes to be
reliable.
 
                                       36
<PAGE>
 
NO PERSONAL LIABILITY OF SHAREHOLDERS, OFFICER OR DIRECTORS
 
The Indentures provide that no recourse may be had against any past, present or
future stockholder, officer or director of Homestead, or any successor entity
under or upon any obligation, covenant or agreement contained in the Indentures
or in any Offered Security, or because of any indebtedness evidenced thereby
(Section 111).
 
TRUSTEE
 
The Indentures provide that there may be more than one Trustee thereunder, each
with respect to one or more series of Debt Securities. Any Trustee under the
Indentures may resign or be removed with respect to one or more series of Debt
Securities, and a successor Trustee may be appointed to act with respect to
such series (Section 608). If two (2) or more Persons are acting as Trustee
with respect to different series of Debt Securities, each such Trustee will be
a Trustee of a trust under the applicable Indenture separate and apart from the
trust administered by any other Trustee, and, except as otherwise indicated
herein, any action described herein to be taken by the Trustee may be taken by
each such Trustee with respect to, and only with respect to, the one or more
series of Debt Securities for which it is Trustee under the applicable
Indenture (Section 609).
 
CERTAIN DEFINITIONS
 
"Capital Stock" means (i) in the case of a corporation, corporate stock; (ii)
in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock; (iii) in the case of a partnership, partnership interests
(whether general or limited); and (iv) any other interest or participation
which confers on a Person the right to receive a share of the profits and
losses of, or distributions of assets of, the issuing Person.
 
"Government Obligations" means securities which are (i) direct obligations of
the United States of America, for the payment of which its full faith and
credit is pledged, or (ii) obligations of a person controlled or supervised by
and acting as an agency or instrumentality of the United States of America, the
payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America which, in either case, are not
callable or redeemable at the option of the issuer thereof, and also includes a
depository receipt issued by a bank or trust company as custodian with respect
to any such Government Obligation or a specific payment of interest on or
principal of any such Government Obligation held by such custodian for the
account of the holder of a depository receipt, provided that (except as
required by law) such custodian is not authorized to make any deduction from
the amount payable to the holder of such depository receipt from any amount
received by the custodian in respect of the Government Obligation or the
specific payment of interest on or principal of the Government Obligation
evidenced by such depository receipt (Section 101).
 
"Hedging Obligations" means, with respect to any Person, the greater of (a) the
net obligations of that Person under (i) interest rate swap agreements,
interest rate cap agreements and interest rate collar agreements, (ii) foreign
exchange contracts or currency swap agreements, and (iii) other agreements or
arrangements designed to protect that Person against fluctuations in interest
rates or currency values, or (b) zero.
 
                                       37
<PAGE>
 
"Payment Default" means any failure to pay any scheduled installment of
principal of, premium, if any, or interest on any indebtedness within the grace
period provided for that payment in the documentation governing that
indebtedness.
 
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than fifty percent (50%) of
the total equity capital and more than fifty percent (50%) of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by that
Person or one or more of the other Subsidiaries of that Person (or a
combination thereof), and (ii) any partnership (a) the sole general partner or
the managing general partner of which is that Person or a Subsidiary of that
Person, or (b) the only general partners of which are that Person or one or
more Subsidiaries of that Person (or any combination thereof).
 
                   DESCRIPTION OF CONVERTIBLE MORTGAGE NOTES
 
At September 30, 1998, Homestead owed convertible mortgage notes to Archstone
Communities Trust ("Archstone"), an affiliate, in the amount of $221,333,620.
The notes are collateralized by 54 Homestead properties. The notes accrue
interest at 9.0% on the principal amount, and require interest only payments
every six months on May 28 and November 28. The notes are due October 31, 2006,
and are callable on or after May 28, 2001. The notes are convertible, at the
option of Archstone, into Common Shares at a conversion ratio equal to one
Common Share for every $11.50 of principal amount outstanding.
 
On July 6, 1998, Homestead entered into a mortgage loan purchase agreement with
Security Capital Atlantic Incorporated ("Atlantic") and Merrill Lynch Mortgage
Capital Inc. ("MLMC") whereby $98 million of convertible mortgage notes held by
Atlantic were modified to, among other things, eliminate their convertibility
feature. The notes were then sold by Atlantic to MLMC. On August 7, 1998,
Homestead converted the $98 million of mortgage notes and $24 million of
convertible subordinated debentures into a $122 million mortgage of a newly
formed, wholly-owned, subsidiary of Homestead. The $122 million mortgage note
matures June 30, 1999 and provides for interest only monthly payments of LIBOR
plus 1.70% through September 30, 1998, LIBOR plus 2% from October 1, 1998
through November 30, 1998 and LIBOR plus 2.25% thereafter. MLMC has the
exclusive right to give notice by December 15, 1998 to extend the maturity of
the mortgage note to June 30, 2001 (the "2 Year Extension Notice") or give
notice by June 10, 1999 to extend the maturity of the mortgage note to at least
June 30, 2006 or as late as June 30, 2009. If extended, the mortgage note will
bear interest at LIBOR plus 2.5% (3.5% if the collateral properties do not
generate net operating income of $18 million for the twelve month period ended
June 30, 1999). Homestead may prepay the mortgage note, in whole or in part,
prior to June 30, 1999 or, if the 2 Year Extension Notice is given, Homestead
may prepay the mortgage note, in whole or in part, prior to June 30, 2001.
 
                                       38
<PAGE>
 
                   CERTAIN PROVISIONS OF MARYLAND LAW AND OF
                         HOMESTEAD'S CHARTER AND BYLAWS
 
The following paragraphs summarize certain provisions of Maryland law and the
Charter and Bylaws. The summary is not complete and is subject to and qualified
in its entirety by reference to Maryland law, the Charter and Bylaws, copies of
which have been incorporated by reference as exhibits to the Registration
Statement.
 
CLASSIFICATION OF THE BOARD
 
Homestead's Bylaws provide that the number of directors may be established by
the Board, but may not be fewer than three (3) nor more than fifteen (15). Any
vacancy will be filled, at any regular meeting or at any special meeting called
for that purpose, by a majority of the remaining directors, except that a
vacancy resulting from an increase in the number of directors will be filled by
a majority of the entire Board. Pursuant to the Charter, the directors are
divided into three (3) classes. At the 1997 annual meeting of shareholders, one
class was elected to hold office initially for a term expiring at the annual
meeting of shareholders held in 1998, another class was elected to hold office
initially for a term expiring at the annual meeting of shareholders to be held
in 1999, and another class was elected to hold office initially for a term
expiring at the annual meeting of shareholders to be held in 2000. As the term
of each class expires, directors in that class will be elected for a term of
three (3) years and until their successors are duly elected and qualify.
Homestead believes that the above-described classification of the Board will
help to assure the continuity and stability of Homestead's business strategies
and policies as determined by the Board.
 
The classified director provision could have the effect of making the
replacement of incumbent directors more time-consuming and difficult, which
could discourage a third party from making a tender offer or otherwise
attempting to obtain control of Homestead, even though such an attempt might be
beneficial to Homestead and its shareholders. At least two (2) annual meetings
of shareholders, instead of one (1), will generally be required to effect a
change in a majority of the Board. Thus, the classified board provision could
increase the likelihood that incumbent directors will retain their positions.
 
DIRECTOR LIABILITY LIMITATION AND INDEMNIFICATION
 
Maryland law permits a Maryland corporation to include in its charter a
provision limiting the liability of its directors and officers to the
corporation and its stockholders for money damages except to liability
resulting from (i) actual receipt of an improper benefit or profit in money,
property or services, or (ii) active and deliberate dishonesty established by a
final judgment as being material to the cause of action. The Charter contains
such a provision which eliminates such liability to the maximum extent
permitted by Maryland law.
 
Homestead's officers and directors are, and will be, indemnified under the
Charter against certain liabilities. The Charter provides that Homestead will,
to the maximum extent permitted by Maryland law in effect from time to time,
indemnify and pay or reimburse reasonable expenses in advance of final
disposition of a proceeding to (i) any individual who is a present or former
director or officer of Homestead, or (ii) any individual who, while a director
of Homestead and at the request of
 
                                       39
<PAGE>
 
Homestead, serves or has served another corporation, partnership, joint
venture, trust, employee benefit plan or any other enterprise as a director,
officer, partner or trustee of such corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise. Homestead has the power, with
the approval of the Board, to provide such indemnification and advancement of
expenses to a person who served a predecessor of Homestead in any of the
capacities described in (i) or (ii) above and to any employee or agent of
Homestead or its predecessors.
 
Maryland law requires a corporation (unless its charter provides otherwise,
which the Charter does not) to indemnify a director or officer who has been
successful, on the merits or otherwise, in the defense of any proceeding to
which he or she is made a party by reason of his or her service in that
capacity. Maryland law permits a corporation to indemnify its present and
former directors and officers, among others, against judgments, penalties,
fines, settlements and reasonable expenses actually incurred by them in
connection with any proceeding to which they may be made a party by reason of
their service in those or other capacities, unless it is established that
 
  (1) the act or omission of the director or officer was material to the
  matter giving rise to the proceeding and
 
    (a) was committed in bad faith or
 
    (b) was the result of active and deliberate dishonesty,
 
  (2) the director or officer actually received an improper personal benefit
  in money, property or services, or
 
  (3) in the case of any criminal proceeding, the director or officer had
  reasonable cause to believe that the act or omission was unlawful.
 
However, a Maryland corporation may not indemnify for an adverse judgment in a
suit by or in the right of the corporation. Maryland law permits a corporation
to advance reasonable expenses to a director or officer upon such corporation's
receipt of (i) a written affirmation by the director or officer of his or her
good faith belief that he or she has met the standard of conduct necessary for
indemnification by such corporation as authorized by its bylaws and (ii) a
written statement by or on his or her behalf to repay the amount paid or
reimbursed by such corporation if it shall ultimately be determined that the
standard of conduct was not met.
 
Additionally, Homestead has entered into indemnity agreements with each of its
officers and directors which provide for reimbursement of all expenses and
liabilities of such officer or director, arising out of any lawsuit or claim
against such officer or director due to the fact that he or she was or is
serving as an officer or director, except for such liabilities and expenses (i)
the payment of which is judicially determined to be unlawful, (ii) relating to
claims under Section 16(b) of the Exchange Act, or (c) relating to judicially
determined criminal violations.
 
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers or persons controlling Homestead pursuant
to the foregoing provisions, Homestead has been informed that, in the opinion
of the Commission, such indemnification is against public policy as expressed
in the Securities Act and is therefore unenforceable.
 
                                       40
<PAGE>
 
BUSINESS COMBINATIONS
 
Under the Maryland General Corporation Law ("MGCL"), certain "business
combinations" (including a merger, consolidation, share exchange or, in certain
circumstances, an asset transfer or issuance or reclassification of equity
securities) between a Maryland corporation and any person who beneficially owns
ten percent (10%) or more of the voting power of the corporation's shares or an
affiliate of the corporation who, at any time within the two (2)-year period
prior to the date in question, was the beneficial owner of ten percent (10%) or
more of the voting power of the then-outstanding voting stock of the
corporation (an "Interested Stockholder") or an affiliate of such an Interested
Stockholder are prohibited for five (5) years after the most recent date on
which the Interested Stockholder becomes an Interested Stockholder. Thereafter,
any such business combination must be recommended by the board of directors of
such corporation and approved by the affirmative vote of at least (a) eighty
percent (80%) of the votes entitled to be cast by holders of outstanding voting
shares of the corporation and (b) two-thirds ( 2/3) of the votes entitled to be
cast by holders of outstanding voting shares of the corporation other than
shares held by the Interested Stockholder with whom (or with whose affiliate)
the business combination is to be effected, unless, among other conditions, the
corporation's common stockholders receive a minimum price (as defined in the
MGCL) for their shares and the consideration is received in cash or in the same
form as previously paid by the Interested Stockholder for its shares. These
provisions of the MGCL do not apply, however, to business combinations that are
approved or exempted by the board of directors of the corporation prior to the
time that the Interested Stockholder becomes an Interested Stockholder. The
Board has exempted from these provisions of the MGCL any business combination
with Security Capital Group Incorporated ("Security Capital") and its
affiliates and successors. As a result, Security Capital and its affiliates and
successors may be able to enter into business combinations with Homestead that
may not be in the best interests of its shareholders without compliance by
Homestead with the super-majority vote requirements and other provisions of the
statute.
 
CONTROL SHARE ACQUISITIONS
 
Maryland law provides that "Control Shares" of a Maryland corporation acquired
in a "Control Share acquisition" have no voting rights except to the extent
approved by a vote of two-thirds ( 2/3) of the votes entitled to be cast on the
matter, excluding shares of stock owned by the acquiror or by officers or
directors who are employees of the corporation. "Control Shares" are voting
shares of stock which, if aggregated with all other such shares of stock
previously acquired by the acquiror, or in respect of which the acquiror is
able to exercise or direct the exercise of voting power, would entitle the
acquiror to exercise voting power in electing directors within one of the
following ranges of voting power (except solely by virtue of a revocable
proxy): (i) one-fifth ( 1/5) or more but less than one-third ( 1/3), (ii) one-
third ( 1/3) or more but less than a majority, or (iii) a majority or more of
all voting power. Control Shares do not include shares the acquiring person is
then entitled to vote as a result of having previously obtained stockholder
approval. A "Control Share acquisition" means the acquisition of Control
Shares, subject to certain exceptions.
 
A person who has made or proposes to make a Control Share acquisition, upon
satisfaction of certain conditions (including an undertaking to pay expenses),
may compel the board of directors to call a special meeting of stockholders to
be held within fifty (50) days of demand to consider the voting rights of the
shares. If no request for a meeting is made, the corporation may itself present
the question at any stockholders meeting.
 
                                       41
<PAGE>
 
If voting rights are not approved at the meeting or if the acquiring person
does not deliver an acquiring person statement as required by the statute,
then, subject to certain conditions and limitations, the corporation may redeem
any or all of the Control Shares (except those for which voting rights have
previously been approved) for fair value determined, without regard to the
absence of voting rights for the Control Shares, as of the date of the last
Control Share acquisition or of any meeting of stockholders at which the voting
rights of such shares are considered and not approved. If voting rights for
Control Shares are approved at a stockholders meeting and the acquiror becomes
entitled to vote a majority of the shares entitled to vote, all other
stockholders may exercise appraisal rights. The fair value of the shares as
determined for purposes of such appraisal rights may not be less than the
highest price per share paid by the acquiror in the Control Share acquisition.
 
The Control Share acquisition statute does not apply to shares acquired in a
merger, consolidation or share exchange if the corporation is a party to the
transaction or to acquisitions approved or exempted by the charter or bylaws of
the corporation.
 
Homestead's Bylaws contain a provision exempting Security Capital and its
affiliates and successors from the provisions of the Control Share acquisition
statute.
 
ADVANCE NOTICE PROVISIONS
 
For nominations or other business to be properly brought before an annual
meeting of shareholders by a shareholder, the Bylaws require such shareholder
to deliver a notice to the Secretary, absent specified circumstances, not less
than sixty (60) days nor more than ninety (90) days prior to the first
anniversary of the preceding year's annual meeting setting forth:
 
  (1) as to each person whom the stockholder proposes to nominate for
  election or reelection as a director, all information relating to such
  person that is required to be disclosed in solicitations of proxies for the
  election of directors, pursuant to Regulation 14A of the Exchange Act;
 
  (2) as to any other business that the shareholder proposed to bring before
  the meeting, a brief description of the business desired to be brought
  before the meeting, the reasons for conducting such business at the meeting
  and any material interest in such business of such shareholder and of the
  beneficial owner, if any, on whose behalf the nomination or proposal is
  made; and
 
  (3) as to the shareholder giving the notice and beneficial owner, if any,
  on whose behalf the nomination or proposal is made,
 
    (a) the name and address of such shareholder as they appear on the
    books, and of such beneficial owner and
 
    (b) the number of shares of each class of stock of Homestead which are
    owned beneficially and of record by such shareholder and such
    beneficial owner, if any.
 
                              PLAN OF DISTRIBUTION
 
Homestead may sell the Offered Securities to one or more underwriters or
dealers for public offering and sale by them or may sell the Offered Securities
to investors directly or through agents, which agents may be affiliated with
Homestead. Direct sales to investors may be accomplished through subscription
offerings or through subscription rights distributed to Homestead shareholders
and direct
 
                                       42
<PAGE>
 
placements to third parties. In connection with subscription offerings or the
distribution of subscription rights to shareholders, if all the underlying
Offered Securities are not subscribed for, Homestead may sell such unsubscribed
Offered Securities to third parties directly or through agents and, in
addition, whether or not all of the underlying Offered Securities are
subscribed for, Homestead may concurrently offer additional Offered Securities
to third parties directly or through agents, which agents may be affiliated
with Homestead. Any underwriter, dealer or agent involved in the offer and sale
of the Offered Securities will be named in the applicable Prospectus
Supplement.
 
The distribution of the Offered Securities may be effected from time to time in
one or more transactions at a fixed price or prices, which may be changed, at
prices related to the prevailing market prices at the time of sale or at
negotiated prices (any of which may represent a discount from the prevailing
market price). Homestead also may, from time to time, authorize underwriters
acting as Homestead's agents to offer and sell the Offered Securities upon the
terms and conditions set forth in the applicable Prospectus Supplement. In
connection with the sale of Offered Securities, underwriters may be deemed to
have received compensation from Homestead in the form of underwriting discounts
or commissions and may also receive commissions from purchasers of Offered
Securities for whom they may act as agent. Underwriters may sell Offered
Securities to or through dealers, and such dealers may receive compensation in
the form of discounts, concessions or commissions from the underwriters and/or
commissions from the purchasers for whom they may act as agent.
 
Any underwriting compensation paid by Homestead to underwriters or agents in
connection with the offering of Offered Securities, and any discounts,
concessions or commissions allowed by underwriters to participating dealers,
will be set forth in the applicable Prospectus Supplement. Underwriters,
dealers and agents participating in the distribution of the Offered Securities
may be deemed to be underwriters, and any discounts and commissions received by
them and any profit realized by them on resale of the Offered Securities may be
deemed to be underwriting discounts and commissions, under the Securities Act.
Underwriters, dealers and agents may be entitled, under agreements entered into
with Homestead, to indemnification against and contribution toward certain
civil liabilities, including liabilities under the Securities Act. Any such
indemnification agreements will be described in the applicable Prospectus
Supplement.
 
If so indicated in the applicable Prospectus Supplement, Homestead will
authorize dealers acting as Homestead's agents to solicit offers by certain
institutions to purchase Offered Securities from Homestead at the public
offering price set forth in such Prospectus Supplement pursuant to Delayed
Delivery Contracts ("Contracts") providing for payment and delivery on the date
or dates stated in such Prospectus Supplement. Each Contract will be for an
amount not less than, and the aggregate principal amount of Offered Securities
sold pursuant to Contracts shall be not less nor more than, the respective
amounts stated in the applicable Prospectus Supplement. Institutions with whom
Contracts, when authorized, may be made include commercial and savings banks,
insurance companies, pension funds, investment companies, educational and
charitable institutions, and other institutions but will in all cases be
subject to the approval of Homestead. Contracts will not be subject to any
conditions except (i) the purchase by an institution of the Offered Securities
covered by its Contracts shall not at the time of delivery be prohibited under
the laws of any jurisdiction in the United States to which such institution is
subject, and (ii) if the Offered Securities are being sold to underwriters,
Homestead
 
                                       43
<PAGE>
 
shall have sold to such underwriters the total principal amount of the Offered
Securities less the principal amount thereof covered by Contracts.
 
Certain of the underwriters and their affiliates may be customers of, engage in
transactions with and perform services for Homestead and its subsidiaries and
affiliates in the ordinary course of business.
 
                                    EXPERTS
 
The consolidated balance sheets as of December 31, 1997, and the consolidated
statements of operations, shareholders' equity, and cash flows for the year
then ended, have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in
giving said reports.
 
With respect to the unaudited interim financial information for the quarters
ended March 31, 1998 and June 30, 1998, Arthur Andersen, LLP has applied
limited procedures in accordance with professional standards for review of that
information. However, their separate reports thereon state that they did not
audit and they do not express an opinion on that interim financial information.
Accordingly, the degree of reliance on their reports on that information should
be restricted in light of the limited nature of the review procedures applied.
In addition, the accountants are not subject to the liability provisions of
Section 11 of the Securities Act for their reports on the unaudited interim
financial information because those reports are not "reports" or a "part" of
the Registration Statement prepared or certified by the accountants within the
meaning of Sections 7 and 11 of the Securities Act.
 
The financial statements of Homestead as of and for the year ended December 31,
1996 appearing in Homestead's Annual Report on Form 10-K for the year ended
December 31, 1997, have been audited by Ernst & Young, LLP, independent
auditors, as set forth in their report thereon included therein and
incorporated herein by reference. Such financial statements are incorporated
herein by reference in reliance upon such report given upon the authority of
such firm as experts in accounting and auditing.
 
The combined statements of operations, owners' equity and cash flows of PTR-
Homestead Village Group (the predecessor to Homestead) for the year ended
December 31, 1995 appearing in Homestead's Annual Report on Form 10-K for the
year ended December 31, 1997 have been incorporated by reference herein and in
the Registration Statement in reliance upon the report of KPMG Peat Marwick
LLP, independent certified public accountants, incorporated by reference
herein, and upon the authority of said firm as experts in accounting and
auditing.
 
                         VALIDITY OF OFFERED SECURITIES
 
The validity of the Offered Securities will be passed upon for Homestead by
Mayer, Brown & Platt, Chicago, Illinois. Mayer, Brown & Platt has in the past
represented and is currently representing Homestead, certain of its affiliates,
including Security Capital.
 
                                       44
<PAGE>
 
                                    PART II
 
                     INFORMATION NOT REQUIRED IN PROSPECTUS
 
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
 
The expenses to be paid in connection with the issuance and distribution of the
securities being registered are estimated as follows and will be borne by the
registrant:
 
<TABLE>
      <S>                                                              <C>
      SEC Registration Fee............................................ $ 99,100
      Accounting fees and expenses....................................   75,000
      Legal fees and expenses.........................................  150,000
      Blue sky fees and expenses (including legal fees)...............    5,000
      Printing and duplicating expenses...............................  150,000
      Trustee and transfer agent fees (including counsel fees)........   25,000
      Miscellaneous expenses..........................................   25,000
                                                                       --------
          Total....................................................... $529,100
                                                                       ========
</TABLE>
 
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
 
Article Seventh of the Registrant's Charter provides as follows with respect to
indemnification of its directors and officers:
 
  "The Corporation shall have the power, to the maximum extent permitted by
  Maryland law in effect from time to time, to obligate itself to indemnify
  and to pay or reimburse reasonable expenses in advance of final disposition
  of a proceeding to (a) any individual who is a present or former director
  or officer of the Corporation or (b) any individual who, while a director
  or officer of the Corporation and at the request of the Corporation, serves
  or has served as a director, officer, partner or trustee of another
  corporation, partnership, joint venture, trust, employee benefit plan or
  any other enterprise from and against any claim or liability which such
  person may incur by reason of his or her status as a present or former
  director or officer of the Corporation. The Corporation shall have the
  power, with the approval of its Board of Directors, to provide such
  indemnification and advancement of expenses to a person who served a
  predecessor of the Corporation in any of the capacities described in (a) or
  (b) above and to any employee or agent of the Corporation or a predecessor
  of the Corporation."
 
Article Eleventh of the Registrant's Charter provides as follows with respect
to limitation of liability of its directors and officers:
 
  "To the maximum extent that Maryland law in effect from time to time
  permits limitation of the liability of directors and officers of a Maryland
  corporation, no director or officer of the Corporation shall be liable to
  the Corporation or its stockholders for money damages. Neither the
  amendment nor repeal of this Article ELEVENTH, nor the adoption or
  amendment of any other provision of the charter or Bylaws of the
  Corporation inconsistent with this Article ELEVENTH, shall apply to or
  affect in any respect the applicability of the preceding sentence with
  respect to any act or failure to act which occurred prior to such
  amendment, repeal or adoption."
 
Article XII of the Registrant's Bylaws provides as follows with respect to
indemnification of its directors and officers:
 
                                      II-1
<PAGE>
 
  "To the maximum extent permitted by Maryland law in effect from time to
  time, the Corporation, without requiring a preliminary determination of the
  ultimate entitlement to indemnification, shall indemnify and shall pay or
  reimburse reasonable expenses in advance of final disposition of a
  proceeding to (a) any individual who is a present or former director or
  officer of the Corporation and who is made a party to the proceeding by
  reason of his service in that capacity or (b) any individual who, while a
  director of the Corporation and at the request of the Corporation, serves
  or has served another corporation, partnership, joint venture, trust,
  employee benefit plan or any other enterprise as a director, officer,
  partner or trustee of such corporation, partnership, joint venture, trust,
  employee benefit plan or other enterprise and who is made a party to the
  proceeding by reason of his service in that capacity. The Corporation may,
  with the approval of its Board of Directors, provide such indemnification
  and advance for expenses to a person who served a predecessor of the
  Corporation in any of the capacities described in (a) or (b) above and to
  any employee or agent of the Corporation or a predecessor of the
  Corporation."
 
  "Neither the amendment nor repeal of this Article, nor the adoption or
  amendment of any other provision of the Bylaws or charter of the
  Corporation inconsistent with this Article, shall apply to or affect in any
  respect the applicability of the preceding paragraph with respect to any
  act or failure to act which occurred prior to such amendment, repeal or
  adoption."
 
Maryland law permits a Maryland corporation to include in its charter a
provision limiting the liability of its directors and officers to the
corporation and its stockholders for money damages except for liability
resulting from (a) actual receipt of an improper benefit or profit in money,
property or services or (b) active and deliberate dishonesty established by a
final judgment as being material to the cause of action. The Charter contains
such a provision which limits such liability to the maximum extent permitted by
Maryland law.
 
Maryland law requires a corporation (unless its charter requires otherwise,
which the Charter does not) to indemnify a director or officer who has been
successful, on the merits or otherwise, in the defense of any proceeding to
which he or she is made a party by reason of his or her service in that
capacity. Maryland law permits a corporation to indemnify its present and
former directors and officers, among others, against judgments, penalties,
fines, settlements and reasonable expenses actually incurred by them in
connection with any proceeding to which they may be made party by reason of
their service in those or other capacities unless it is established that (a)
the act or omission of the director or officer was material to the matter
giving rise to the proceeding and (i) was committed in bad faith or (ii) was
the result of active and deliberate dishonesty, (b) the director or officer
actually received an improper personal benefit in money, property or services,
or (c) in the case of any criminal proceeding, the director or officer had
reasonable cause to believe that the act or omission was unlawful. However, a
Maryland corporation may not indemnify for an adverse judgment in a suit by or
in the right of the corporation or for a judgment of liability on the basis
that personal benefit was improperly received, unless in either case a court
orders indemnification and then only for expenses. In addition, Maryland law
permits a corporation to advance reasonable expenses to a director or officer
upon the corporation's receipt of (a) a written affirmation by the director of
officer of his or her good faith belief that he or she has met the standard of
conduct necessary for indemnification by the corporation, and (b) a written
statement by or on his or her
 
                                      II-2
<PAGE>
 
behalf to repay the amount paid or reimbursed by the corporation if it shall
ultimately be determined that the standard of conduct was not met.
 
In addition, the Registrant has entered into indemnity agreements with each of
its officers and Directors which provide for reimbursement of all expenses and
liabilities of such officer or Director, arising out of any lawsuit or claim
against such officer or Director due to the fact that he was or is serving as
an officer or Director, except for such liabilities and expenses (a) the
payment of which is judicially determined to be unlawful, (b) relating to
claims under Section 16(b) of the Exchange Act, or (c) relating to judicially
determined criminal violations.
 
ITEM 16. EXHIBITS.
 
See the Exhibit Index which is hereby incorporated herein by reference.
 
ITEM 17. UNDERTAKINGS.
 
The undersigned registrant hereby undertakes:
 
  (a) To file, during any period in which offers or sales are being made, a
  post-effective amendment to this Registration Statement:
 
    (i) To include any prospectus required by Section 10(a)(3) of the
    Securities Act;
 
    (ii) To reflect in the prospectus any facts or events arising after the
    effective date of the Registration Statement (or the most recent post-
    effective amendment thereof) which, individually or in the aggregate,
    represent a fundamental change in the information set forth in the
    Registration Statement. Notwithstanding the foregoing, any increase or
    decrease in volume of securities offered (if the total dollar value of
    securities offered would not exceed that which was registered) and any
    deviation from the low or high end of the estimated maximum offering
    range may be reflected in the form of prospectus filed with the
    Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
    volume and price represent no more than a 20% change in the maximum
    aggregate offering price set forth in the "Calculation of Registration
    Fee" table in the effective Registration Statement;
 
    (iii) To include any material information with respect to the plan of
    distribution not previously disclosed in the Registration Statement or
    any material change to such information in the Registration Statement;
 
  Provided, however, that paragraphs (a)(i) and (a)(ii) do not apply if the
  information required to be included in a post-effective amendment by those
  paragraphs is contained in periodic reports filed by the registrant
  pursuant to Section 13 or 15(d) of the Exchange Act that are incorporated
  by reference in the Registration Statement.
 
  (b) That, for the purpose of determining any liability under the Securities
  Act, each such post-effective amendment shall be deemed to be a new
  registration statement relating to the securities offered therein, and the
  offering of such securities at that time shall be deemed to be the initial
  bona fide offering thereof.
 
  (c) To remove from registration by means of a post-effective amendment any
  of the securities being registered which remain unsold at the termination
  of the offering.
 
                                      II-3
<PAGE>
 
The undersigned registrant hereby undertakes that, for purposes of determining
any liability under the Securities Act, each filing of the registrant's annual
report pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Exchange Act) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
 
The undersigned registrant hereby undertakes to supplement the prospectus,
after the expiration of any subscription period, to set forth the results of
the subscription offer, the transactions by the underwriters during the
subscription period, the amount of unsubscribed securities to be purchased by
the underwriters, and the terms of any subsequent reoffering thereof. If any
public offering by the underwriters is to be made on terms differing from those
set forth on the cover page of the prospectus, a post-effective amendment will
be filed to set forth the terms of such offering.
 
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Commission such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
 
The undersigned registrant hereby undertakes that: (a) for purposes of
determining any liability under the Securities Act, the information omitted
from the form of prospectus filed as part of this registration statement in
reliance upon Rule 430A and contained in a form of prospectus filed by the
registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act
shall be deemed to be part of this registration statement as of the time it was
declared effective; (b) for the purposes of determining any liability under the
Securities Act, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
 
                               POWER OF ATTORNEY
 
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors and
officers of Homestead Village Incorporated, hereby constitutes and appoints
David C. Dressler, Jr., Michael D. Cryan, Robert C. Aldworth, Bryan J.
Flanagan, Jeffrey A. Klopf and Mark W. Pearson, and each of them, its or his
true and lawful attorneys-in-fact and agents, for it or him and in its or his
name, place and stead, in any and all capacities, (unless revoked in writing),
to sign any and all amendments to this registration statement (including post-
effective amendments thereto, and other documents in
 
                                      II-4
<PAGE>
 
connection therewith), to sign a registration statement filed with the
Commission pursuant to Rule 462(b) promulgated under the Securities Act, as
amended, and any and all amendments thereto, and to file each such registration
statement or amendment, with all exhibits thereto, with the Commission, and
hereby grants to such attorneys-in-fact and agents, and each of them, full
power and authority to do and perform any and all acts and things requisite and
necessary to be done, as fully and to all intents and purposes as it or he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, may lawfully do or cause to be
done by virtue hereof.
 
                                      II-5
<PAGE>
 
                                   SIGNATURES
 
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, HOMESTEAD VILLAGE
INCORPORATED CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS
ALL THE REQUIREMENTS FOR FILING ON
FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY
THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF ATLANTA, STATE OF
GEORGIA, ON
THE 9TH DAY OF NOVEMBER, 1998.
 
                                          Homestead Village Incorporated
 
                                                   /s/ Michael D. Cryan
                                          By __________________________________
                                                     Michael D. Cryan
                                              Co-Chairman and Chief Operating
                                                          Officer
 
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THIS REGISTRATION STATEMENT
HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE
DATES INDICATED.
 
<TABLE>
<CAPTION>
             SIGNATURE                           TITLE                    DATE
             ---------                           -----                    ----
 
 
<S>                                  <C>                           <C>
      /s/ Michael D. Cryan           Co-Chairman, Chief Operating   November 9, 1998
____________________________________  Officer and Director
          Michael D. Cryan
 
   /s/ David C. Dressler, Jr.        Co-Chairman, President,        November 9, 1998
____________________________________  Chief Investment Officer
       David C. Dressler, Jr.         and Director
 
   /s/ Manuel A. Garcia, III         Director                       November 9, 1998
____________________________________
       Manuel A. Garcia, III
 
    /s/ John P. Frazee, Jr.          Director                       November 9, 1998
____________________________________
        John P. Frazee, Jr.
 
     /s/ John C. Schweitzer          Director                       November 9, 1998
____________________________________
         John C. Schweitzer
 
     /s/ Robert C. Aldworth          Senior Vice President and      November 9, 1998
____________________________________  Chief Financial Officer
         Robert C. Aldworth           (Principal Financial
                                      Officer)
 
     /s/ Bryan J. Flanagan           Senior Vice President and      November 9, 1998
____________________________________  Controller (Principal
         Bryan J. Flanagan            Accounting Officer)
 
</TABLE>
 
                                      II-6
<PAGE>
 
                                 EXHIBIT INDEX
 
<TABLE>
<CAPTION>
 EXHIBIT
 NUMBER                        DOCUMENT DESCRIPTION
 -------                       --------------------
 <C>     <S>                                                                <C>
  1.1    Form of Proposed Underwriting Agreement for Common Stock (to be
         filed as an exhibit to a Form 8-K in reference to the specific
         offering of Common Shares, if any, to which it relates).
  1.2    Form of Proposed Underwriting Agreement for Preferred Stock (to
         be filed as an exhibit to a Form 8-K in reference to the
         specific offering of Preferred Shares, if any, to which it
         relates).
  1.3    Form of Proposed Underwriting Agreement for Debt Securities (to
         be filed as an exhibit to a Form 8-K in reference to the
         specific offering of Debt Securities, if any, to which it
         relates).
  4.1    Restated Homestead Charter (incorporated by reference to Exhibit
         3.1 to Homestead's Form S-4 Registration Statement (File No.
         333-4455, the "Homestead S-4")).
  4.2    Amended and Restated Bylaws of Homestead (incorporated by
         reference to Exhibit 3.2 to the Homestead S-4).
  4.3    Form of Indenture for the Senior Debt Securities.
  4.4    Form of Indenture for the Subordinated Debt Securities.
  4.5    Rights Agreement, dated as of May 16, 1996, between Homestead
         and BankBoston, N.A., as Rights Agent, including form of rights
         certificate (incorporated by reference to Exhibit 4.2 to the
         Homestead S-4).
  4.6    Amended and Restated Promissory Note by PTR Homestead Village
         Incorporated in favor of Security Capital Pacific Trust ("PTR")
         (incorporated by reference to Exhibit 4.3 to Homestead's Form
         10-Q for the quarter ended September 30, 1996 (File No. 1-12269,
         the "Homestead Form 10-Q")).
  4.7    Amended and Restated Promissory Note by PTR Homestead Village
         Limited Partnership in favor or PTR (incorporated by reference
         to Exhibit 4.4 to the Homestead Form 10-Q).
  4.8    Form of stock certificate for shares of common stock of
         Homestead (incorporated by reference to Exhibit 4.8 to the
         Homestead Form S-4).
  5.1    Opinion of Mayer, Brown & Platt as to the validity of the
         Offered Securities being registered.
 12.1    Ratio Information.
 15.1    Letter of Arthur Andersen LLP regarding unaudited interim
         financial information.
 23.1    Consent of Mayer, Brown & Platt (included in the opinion filed
         as Exhibit 5.1 to this Registration Statement).
 23.2    Consent of Arthur Andersen LLP.
 23.3    Consent of Ernst & Young LLP.
 23.4    Consent of KPMG Peat Marwick LLP.
 24.1    Power of Attorney pursuant to which amendments to this
         Registration Statement may be filed (included on page II-4 of
         this Registration Statement).
 25.1    Form T-1 Statement of Eligibility under the Trust Indenture Act
         of 1939, as amended, of State Street Bank and Trust Company, as
         Trustee, under the Senior Indenture.
 25.2    Form T-1 Statement of Eligibility under the Trust Indenture Act
         of 1939, as amended, of State Street Bank and Trust Company, as
         Trustee, under the Subordinated Indenture.
</TABLE>

<PAGE>
 
                                                                     Exhibit 4.3


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


                        HOMESTEAD VILLAGE INCORPORATED



                                      TO

                      STATE STREET BANK AND TRUST COMPANY
                                   (Trustee)


                            _______________________



                                    INDENTURE

                           Dated as of _________, 1998


                            _______________________


                             Senior Debt Securities


================================================================================
<PAGE>
 
                               TABLE OF CONTENTS

<TABLE> 
<CAPTION> 
                                                                                                 Page
                                                                                                 ----
<S>                                                                                              <C> 
RECITALS........................................................................................    1
                                                                                                    
                             ARTICLE ONE                                              
     DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION                                        
     SECTION 101. Definitions...................................................................    1
          Act...................................................................................    2
          Additional Amounts....................................................................    2
          Affiliate.............................................................................    2
          Authenticating Agent..................................................................    2
          Authorized Newspaper..................................................................    2
          Bankruptcy Law........................................................................    2
          Bearer Security.......................................................................    2
          Board of Directors....................................................................    2
          Board Resolution......................................................................    3
          Business Day..........................................................................    3
          Capital Stock.........................................................................    3
          CEDEL.................................................................................    3
          Commission............................................................................    3
          Common Depositary.....................................................................    3
          Common Shares.........................................................................    3
          Company...............................................................................    3
          Company Certificate...................................................................    3
          Company Request" and "Company Order...................................................    3
          Conversion Event......................................................................    4
          Corporate Trust Office................................................................    4
          corporation...........................................................................    4
          coupon................................................................................    4
          covenant defeasance...................................................................    4
          Custodian.............................................................................    4
          Defaulted Interest....................................................................    4
          defeasance............................................................................    4
          Dollar" or "$.........................................................................    4
          DTC...................................................................................    4
          ECU...................................................................................    4
          Euroclear.............................................................................    4
          European Communities..................................................................    4
          European Monetary System..............................................................    4
          Event of Default......................................................................    4
          Exchange Act..........................................................................    5
</TABLE> 

                                       i
<PAGE>
 
<TABLE> 
<CAPTION> 
                                                                                                 Page
                                                                                                 ----
          <S>                                                                                    <C> 
          Exchange Date.........................................................................    5
          Foreign Currency......................................................................    5
          GAAP..................................................................................    5
          Government Obligations................................................................    5
          Hedging Obligations...................................................................    5
          Holder................................................................................    5
          Indenture.............................................................................    5
          Indexed Security......................................................................    6
          interest .............................................................................    6
          Interest Payment Date.................................................................    6
          Make-Whole Amount.....................................................................    6
          mandatory sinking fund payment........................................................    6
          Maturity .............................................................................    6
          Notice of Default.....................................................................    6
          Opinion of Counsel....................................................................    6
          optional sinking fund payment.........................................................    6
          Original Issue Discount Security......................................................    7
          Outstanding...........................................................................    7
          Paying Agent..........................................................................    8
          Payment Default.......................................................................    8
          Permitted Investments.................................................................    8
          Person................................................................................    9
          Place of Payment......................................................................   10
          Predecessor Security..................................................................   10
          Qualified GIC.........................................................................   10
          Redemption Date.......................................................................   11
          Redemption Price......................................................................   11
          Registered Security...................................................................   11
          Regular Record Date...................................................................   11
          Repayment Date........................................................................   11
          Repayment Price.......................................................................   11
          Required Filing Dates.................................................................   11
          Responsible Officer...................................................................   11
          Securities Act........................................................................   11
          Security .............................................................................   11
          Security Register" and "Security Registrar............................................   11
          Significant Subsidiary................................................................   11
          Special Record Date...................................................................   12
          Stated Maturity.......................................................................   12
          Subsidiary............................................................................   12
          Trust Indenture Act...................................................................   12 
</TABLE> 

                                      ii
<PAGE>
 
<TABLE> 
<CAPTION> 
                                                                                                 Page
                                                                                                 ----
     <S>                                                                                         <C> 
          Trustee...............................................................................   12
          United States.........................................................................   12
          United States person..................................................................   13
          Yield to Maturity.....................................................................   13
     SECTION 102. Compliance Certificates and Opinions..........................................   13
     SECTION 103. Form of Documents Delivered to Trustee........................................   13
     SECTION 104. Acts of Holders...............................................................   14
     SECTION 105. Notices to Trustee and Company................................................   16
     SECTION 106. Notice to Holders; Waiver.....................................................   16
     SECTION 107. Effect of Headings and Table of Contents......................................   17
     SECTION 108. Successors and Assigns........................................................   17
     SECTION 109. Separability Clause...........................................................   17
     SECTION 110. Benefits of Indenture.........................................................   17
     SECTION 111. No Personal Liability.........................................................   18
     SECTION 112. Governing Law.................................................................   18
     SECTION 113. Legal Holidays................................................................   18
     SECTION 114. Counterparts..................................................................   18 

                                     ARTICLE TWO
                                   SECURITIES FORMS

     SECTION 201. Forms of Securities...........................................................   18
     SECTION 202. Form of Trustee's Certificate of Authentication...............................   19
     SECTION 203. Securities Issuable in Global Form............................................   19 

                                     ARTICLE THREE
                                    THE SECURITIES

     SECTION 301. Amount Unlimited; Issuable in Series..........................................   20
     SECTION 302. Denominations.................................................................   24
     SECTION 303. Execution, Authentication, Delivery and Dating................................   24
     SECTION 304. Temporary Securities..........................................................   26
     SECTION 305. Registration, Registration of Transfer and Exchange...........................   29
     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..................................................................   36
     SECTION 310. Computation of Interest.......................................................   36 
</TABLE> 

                                      iii
<PAGE>
 
<TABLE> 
<CAPTION> 
                                                                                                 Page
                                                                                                 ----
     <S>                                                                                         <C> 
                                      ARTICLE FOUR
                               SATISFACTION AND DISCHARGE

         SECTION 401. Satisfaction and Discharge of Indenture...................................   37              
         SECTION 402. Application of Trust Funds................................................   38              
                                                                                                                   
                                      ARTICLE FIVE                                                                     
                                        REMEDIES                                                                       
                                                                                                                   
         SECTION 501. Events of Default.........................................................   38              
         SECTION 502. Acceleration of Maturity; Rescission and Annulment........................   40              
         SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee...........   42              
         SECTION 504. Trustee May File Proofs of Claim..........................................   42              
         SECTION 505. Trustee May Enforce Claims Without Possession of
                            Securities or Coupons...............................................   43
         SECTION 506. Application of Money Collected............................................   43
         SECTION 507. Limitation on Suits.......................................................   44
         SECTION 508. Unconditional Right of Holders to Receive Principal, Premium
                            or Make-Whole Amount, Interest and Additional Amounts...............   44
         SECTION 509. Restoration of Rights and Remedies........................................   45
         SECTION 510. Rights and Remedies Cumulative............................................   45
         SECTION 511. Delay or Omission Not Waiver..............................................   45
         SECTION 512. Control by Holders of Securities..........................................   45
         SECTION 513. Waiver of Past Defaults...................................................   46
         SECTION 514. Waiver of Usury, Stay or Extension Laws...................................   46
         SECTION 515. Undertaking for Costs.....................................................   46 
         
                                       ARTICLE SIX
                                       THE TRUSTEE
         
         SECTION 601. Notice of Defaults........................................................   47
         SECTION 602. Certain Rights of Trustee.................................................   47
         SECTION 603. Not Responsible for Recitals or Issuance of Securities....................   48
         SECTION 604. May Hold Securities.......................................................   49
         SECTION 605. Money Held in Trust; Permitted Investments................................   49
         SECTION 606. Compensation and Reimbursement............................................   49
         SECTION 607. Trustee Eligibility; Conflicting Interests................................   50
         SECTION 608. Resignation and Removal; Appointment of Successor.........................   50
         SECTION 609. Acceptance of Appointment by Successor....................................   52
         SECTION 610. Merger, Conversion, Consolidation or Succession to Business...............   53
</TABLE> 

                                      iv
                                         
<PAGE>
 
<TABLE> 
<CAPTION> 
                                                                                                 Page
                                                                                                 ----
     <S>                                                                                         <C> 
     SECTION 611. Appointment of Authenticating Agent...........................................   53
                                                                                                    
                                 ARTICLE SEVEN                                                         
                HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY                                       
                                                                                                    
     SECTION 701. Disclosure of Names and Addresses of Holders..................................   55
     SECTION 702. Reports by Trustee............................................................   55
     SECTION 703. Company to Furnish Trustee Names and Addresses of Holders.....................   55
                                                                                                    
                                 ARTICLE EIGHT                                                         
                CONSOLIDATION, MERGER, SALE, LEASE OR CONVEYANCE                                        

     SECTION 801. Consolidations and Mergers of Company and Sales,                                  
                      Leases and Conveyances....................................................   56
     SECTION 802. Rights and Duties of Successor Entity.........................................   56
     SECTION 803. Company Certificate and Opinion of Counsel....................................   57
                                                                                                    
                                  ARTICLE NINE                                                          
                             SUPPLEMENTAL INDENTURES                                                    
                                                                                                    
     SECTION 901. Supplemental Indentures Without Consent of Holders............................   57
     SECTION 902. Supplemental Indentures with Consent of Holders...............................   59
     SECTION 903. Execution of Supplemental Indentures..........................................   60
     SECTION 904. Effect of Supplemental Indentures.............................................   60
     SECTION 905. Conformity with Trust Indenture Act...........................................   60
     SECTION 906. Reference in Securities to Supplemental Indentures............................   60
     SECTION 907. Notice of Supplemental Indentures.............................................   60
                                                                                                    
                                                                                                     
                                   ARTICLE TEN                                                          
                                    COVENANTS                                                           
                                                                                                    
     SECTION 1001. Payment of Principal, Premium or Make-Whole Amount,                              
                      Interest and Additional Amounts...........................................   61
     SECTION 1002. Maintenance of Office or Agency..............................................   61
     SECTION 1003. Money for Securities Payments to Be Held in Trust............................   63
     SECTION 1004. Existence....................................................................   64
     SECTION 1005. Maintenance of Properties....................................................   64
     SECTION 1006. Insurance....................................................................   64
     SECTION 1007. Payment of Taxes and Other Claims............................................   64
     SECTION 1008. Reports......................................................................   65
     SECTION 1009. Statement as to Compliance...................................................   66
</TABLE> 

                                       v
<PAGE>
 
<TABLE> 
<CAPTION> 
                                                                                                 Page
                                                                                                 ----
     <S>                                                                                         <C> 
     SECTION 1010. Additional Amounts...........................................................   66
     SECTION 1011. Waiver of Certain Covenants..................................................   67
     SECTION 1012. Seniority of Securities......................................................   67
                                                                                                    
                                 ARTICLE ELEVEN                                                         
                            REDEMPTION OF SECURITIES                                                    
                                                                                                    
     SECTION 1101. Applicability of Article.....................................................   67
     SECTION 1102. Election to Redeem; Notice to Trustee........................................   68
     SECTION 1103. Selection by Trustee of Securities to Be Redeemed............................   68
     SECTION 1104. Notice of Redemption.........................................................   68
     SECTION 1105. Deposit of Redemption Price..................................................   70
     SECTION 1106. Securities Payable on Redemption Date........................................   70
     SECTION 1107. Securities Redeemed in Part..................................................   71
                                                                                                    
                                 ARTICLE TWELVE                                                         
                                  SINKING FUNDS                                                         
                                                                                                    
     SECTION 1201. Applicability of Article.....................................................   71
     SECTION 1202. Satisfaction of Sinking Fund Payments with Securities........................   71
     SECTION 1203. Redemption of Securities for Sinking Fund....................................   72
                                                                                                    
                                ARTICLE THIRTEEN                                                        
                       REPAYMENT AT THE OPTION OF HOLDERS                                               
                                                                                                    
     SECTION 1301. Applicability of Article.....................................................   72
     SECTION 1302. Repayment of Securities......................................................   72
     SECTION 1303. Exercise of Option...........................................................   73
     SECTION 1304. When Securities Presented for Repayment Become Due                               
                      and Payable...............................................................   73
     SECTION 1305. Securities Repaid in Part....................................................   74
                                                                                                    
                                ARTICLE FOURTEEN                                                        
                       DEFEASANCE AND COVENANT DEFEASANCE                                               
                                                                                                    
     SECTION 1401. Applicability of Article; Company's Option to Effect                             
                      Defeasance or Covenant Defeasance.........................................   74
     SECTION 1402. Defeasance and Discharge.....................................................   75
     SECTION 1403. Covenant Defeasance..........................................................   75 
     SECTION 1404. Conditions to Defeasance or Covenant Defeasance..............................   76 
</TABLE> 

                                      vi
<PAGE>
 
<TABLE> 
<CAPTION> 
                                                                                                 Page
                                                                                                 ----
     <S>                                                                                         <C> 
     SECTION 1405. Deposited Money and Government Obligations to Be Held in                         
                      Trust; Other Miscellaneous Provisions....................................   78
                                                                                                    
                                 ARTICLE FIFTEEN                                                        
                        MEETINGS OF HOLDERS OF SECURITIES                                               
                                                                                                    
     SECTION 1501. Purposes for Which Meetings May Be Called....................................   79
     SECTION 1502. Call, Notice and Place of Meetings...........................................   79
     SECTION 1503. Persons Entitled to Vote at Meetings.........................................   79
     SECTION 1504. Quorum; Action...............................................................   80
     SECTION 1505. Determination of Voting Rights; Conduct and Adjournment of                       
                      Meetings..................................................................   81
     SECTION 1506. Counting Votes and Recording Action of Meetings..............................   82
     SECTION 1507. Evidence of Action Taken by Holders..........................................   82
     SECTION 1508. Proof of Execution of Instruments............................................   82
</TABLE> 

TESTIMONIUM
SIGNATURES AND SEALS
ACKNOWLEDGMENTS
EXHIBIT A - FORMS OF CERTIFICATION

                                      vii
<PAGE>
 
                        Reconciliation and tie between
     Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"),
                                 and Indenture


     Trust Indenture Act Section                           Indenture Section
     ---------------------------                           -----------------

     310(a)(1), (2) and (5)                                607(a)
     310(a)(3) and (4)                                     Not applicable
     310(b)                                                608(d)
     310(c)                                                Not applicable
     311                                                   Not applicable
     312(a)                                                704
     312(b)                                                Not applicable
     312(c)                                                701
     313(a) and (c)                                        702
     313(b)                                                Not applicable
     314(a)(1), (2) and (3)                                1008
     314(a)(4)                                             1008
     314(b)                                                Not applicable
     314(c) and (e)                                        102
     314(d)                                                Not applicable
     315(a), (c), (d) and (e)                              Not applicable
     315(b)                                                601
     316(a) (last sentence)                                101 ("Outstanding")
     316(a)(1)(A)                                          512
     316(a)(1)(B)                                          513
     316(a)(2) and (c)                                     Not applicable
     316(b)                                                508
     317(a)(1)                                             503
     317(a)(2)                                             504
     317(b)                                                Not applicable
     318(a)                                                112

NOTE:     This reconciliation and tie shall not, for any purpose, be deemed to
          be a part of the Indenture.
          
          Attention should also be directed to Section 318(c) of the Trust
          Indenture Act, which provides that the provisions of Sections 310 to
          and including 317 of the Trust Indenture Act are a part of and govern
          every qualified indenture, whether or not physically contained
          therein.

                                     viii
<PAGE>
 
                                   INDENTURE


     INDENTURE, dated as of __________, 1998, from HOMESTEAD VILLAGE
INCORPORATED, a Maryland corporation (hereinafter called the "Company"), having
                                                             -------- 
its principal office at 125 Lincoln Avenue, Santa Fe, New Mexico 87501, to STATE
STREET BANK AND TRUST COMPANY, a Massachusetts trust company, as Trustee
hereunder (hereinafter called the "Trustee"), currently having its Corporate
                                   -------
Trust Office at Two International Place, Corporate Trust Division, Boston,
Massachusetts 02110.


                                   RECITALS

     The Company deems it necessary to issue from time to time for its lawful
purposes senior debt securities (hereinafter called the "Securities") evidencing
its unsecured and unsubordinated indebtedness, and has duly authorized the
execution and delivery of this Indenture to provide for the issuance from time
to time of the Securities, unlimited as to aggregate principal amount, to bear
interest at the rates or formulas, to mature at such times and to have such
other provisions as shall be fixed therefor as hereinafter provided.

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

     This Indenture is subject to the provisions of the Trust Indenture Act (as
herein defined) and the rules and regulations of the Commission (as herein
defined) promulgated thereunder which are required to be part of this Indenture
and, to the extent applicable, shall be governed by such provisions.

     NOW, THEREFORE, THIS INDENTURE WITNESSETH:

     For and in consideration of the premises and the purchase of the Securities
by the Holders (as herein defined) thereof, it is mutually covenanted and
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 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;

                                       1
<PAGE>
 
          (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, and the terms "cash transaction" and "self-
                                              ----------------       -----
     liquidating paper," as used in Section 311 of the Trust Indenture Act,
     -----------------
     shall have the meanings assigned to them in the rules of the Commission
     adopted under the Trust Indenture Act;

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

     "Act" has the meaning specified in Section 104(a).
      ---                               --------------

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

     "Affiliate" when used with respect to any Person, means any other Person
      ---------
directly or indirectly controlling or controlled by or under direct or indirect
common control with such 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.
- ------------       ----------

     "Authenticating Agent" means any authenticating agent appointed by the
      --------------------
Trustee pursuant to Section 611.
                    ----------- 
     "Authorized Newspaper" means a newspaper, printed in the English language
      --------------------
or in an official language of the country of publication, customarily published
on each Business Day, whether or not published on Saturdays, Sundays or
holidays, and of general circulation in each place in connection with which the
term is used or in the financial community of each such place. Whenever
successive publications are required to be made in Authorized Newspapers, the
successive publications may be made in the same or in different Authorized
Newspapers in the same city meeting the foregoing requirements and in each case
on any Business Day.

     "Bankruptcy Law" has the meaning specified in Section 501.
      --------------                               -----------

     "Bearer Security" means a Security which is payable to bearer.
      ---------------

     "Board of Directors" means the board of directors of the Company, the
      ------------------
executive committee or any other committee of such board duly authorized to act
for it in respect hereof.

                                       2
<PAGE>
 
     "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" when used with respect to any Place of Payment or any other
       ------------
particular location referred to in this Indenture or in the Securities, means,
unless otherwise specified with respect to any Securities pursuant to Section
                                                                      -------  
301, any day, other than a Saturday or Sunday, which is neither a legal holiday
- ---
nor a day on which banking institutions in such Place of Payment or particular
location are authorized or required by law, regulation or executive order to
close.

     "Capital Stock" means (i) in the case of a corporation, corporate stock,
      -------------
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership, partnership interests
(whether general or limited) and (iv) any other interest or participation which
confers on a Person the right to receive a share of the profits and losses of,
or distributions of assets of, the issuing Person.

     "CEDEL" means Centrale de Livraison de Valeurs Mobilieres, S.A., or its
      -----
successor.
     
     "Commission" means the Securities and Exchange Commission, as from time to
      ----------
time constituted, created under the Exchange Act, or, if at any time after
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 on such date.

     "Common Depositary" has the meaning specified in Section 304(b).
      -----------------                               --------------  

     "Common Shares" means the shares of common stock, par value $.01 per share,
      -------------
of the Company.

     "Company" means the Person named as the "Company" in the first paragraph of
      -------
this Indenture until a successor corporation has become such pursuant to the
applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor corporation, and any other obligor on the Securities.

     "Company Certificate" means a certificate signed by the Chairman or a Co-
      -------------------
Chairman, Managing Director, Senior Vice President or Vice President of the
Company and by the Treasurer, an Assistant Treasurer, the Secretary or an
Assistant Secretary of the Company, and delivered to the Trustee.

     "Company Request" and "Company Order" mean, respectively, a written request
      ---------------       -------------
or order signed in the name of the Company by the Chairman or a Co-Chairman,
Managing Director, Senior Vice President or Vice President of the Company and by
the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary
of the Company, and delivered to the Trustee.

                                       3
<PAGE>
 
     "Conversion Event" means the cessation of use of (i) a Foreign Currency
      ----------------
(other than the ECU or other currency unit) both by the government of the
country which issued such currency and for the settlement of transactions by a
central bank or other public institutions of or within the international banking
community, (ii) the ECU both within the European Monetary System and for the
settlement of transactions by public institutions of or within the European
Communities or (iii) any currency unit (or composite currency) other than the
ECU for the purposes for which it was established.

     "Corporate Trust Office" means the office of the Trustee at which, at any
      ----------------------
particular time, its corporate trust business is principally administered, which
office at the date hereof is located at Two International Place, Corporate Trust
Division, Boston, Massachusetts 02110.

     "corporation" includes corporations, associations, companies, real estate
      -----------
investment trusts and business trusts.

     "coupon" means any interest coupon appertaining to a Bearer Security.
      ------

     "covenant defeasance" has the meaning specified in Section 1403.
      -------------------                               ------------

     "Custodian" has the meaning specified in Section 501.
      ---------                               -----------

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

     "defeasance" has the meaning specified in Section 1402.
      ----------                               ------------

     "Dollar" or "$" means a dollar or other equivalent unit in such coin or
      ------      -
currency of the United States of America as at the time is legal tender for the
payment of public and private debts.

     "DTC" means The Depository Trust Company.
      ---

     "ECU" means the European Currency Unit as defined and revised from time
      ---
to time by the Council of the European Communities.

     "Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
      ---------
Office, or its successor as operator of the Euroclear System.

     "European Communities" means the European Economic Community, the European
      --------------------
Coal and Steel Community and the European Atomic Energy Community.

     "European Monetary System" means the European Monetary System established
      ------------------------
by the Resolution of December 5, 1978 of the Council of the European
Communities.

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

                                       4
<PAGE>
 
     "Exchange Act" means the Securities Exchange Act of 1934, as amended, and
      ------------
the rules and regulations promulgated thereunder by the Commission.

     "Exchange Date" has the meaning specified in Section 304(b).
      -------------                               -------------- 

     "Foreign Currency" means any currency, currency unit or composite currency,
      ----------------
including, without limitation, the ECU issued by the government of one or more
countries other than the United States of America or by any recognized
confederation or association of such governments.

     "GAAP" means generally accepted accounting principles as used in the United
      ----
States applied on a consistent basis as in effect from time to time, provided
                                                                     --------
that, solely for purposes of calculating any financial covenants, "GAAP" shall
mean generally accepted accounting principles as used in the United States on
the date hereof, applied on a consistent basis.

     "Government Obligations" means securities which are (i) direct obligations
      ----------------------
of the United States of America or the government which issued the Foreign
Currency in which the Securities of a particular series are payable, for the
payment of which its full faith and credit is pledged, or (ii) obligations of a
Person controlled or supervised by and acting as an agency or instrumentality of
the United States of America or such government which issued the Foreign
Currency in which the Securities of such series are payable, the payment of
which is unconditionally guaranteed as a full faith and credit obligation by the
United States of America or such other government, which, in either case, are
not callable or redeemable at the option of the issuer thereof, and also
includes a depository receipt issued by a bank or trust company as custodian
with respect to any such Government Obligation or a specific payment of interest
on or principal of any such Government Obligation held by such custodian for the
account of the holder of a depository receipt, provided that (except as required
                                               --------
by law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depository receipt from any amount received by the
custodian in respect of the Government Obligation or the specific payment of
interest on or principal of the Government Obligation evidenced by such
depository receipt.

     "Hedging Obligations" means, with respect to any Person, the greater of (a)
      -------------------
the net obligations of such Person under (i) interest rate swap agreements,
interest rate cap agreements and interest rate collar agreements, (ii) foreign
exchange contracts or currency swap agreements, and (iii) other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates or currency values, or (b) zero.

     "Holder" when used with respect to a Registered Security, means the Person
      ------
in whose name such Registered Security is registered in the Security Register
and, when used with respect to a Bearer Security or any coupon, means the bearer
thereof.

     "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, and includes
the terms of particular series of Securities established as contemplated by
Section 301; provided, however, that, if at any time more than one Person is
- -----------  --------  -------

                                       5
<PAGE>
 
acting as Trustee under this instrument, "Indenture" when used with respect to
any one or more series of Securities with respect to which such Person is acting
as Trustee, shall mean 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 and shall
include the terms of those particular series of Securities with respect to which
such Person is acting as Trustee established as contemplated by Section 301,
                                                                -----------
exclusive, however, of any provisions or terms which relate solely to other
series of Securities with respect to which such Person is not acting as Trustee,
regardless of when such terms or provisions were adopted, and exclusive of any
provisions or terms adopted by means of one or more indentures supplemental
hereto executed and delivered after such Person had become such Trustee but to
which such Person, as such Trustee, was not a party.

     "Indexed Security" means a Security the terms of which provide that the
      ----------------
principal amount thereof payable at Stated Maturity may be more or less than the
principal face amount thereof at original issuance.

     "interest" when used with respect to an Original Issue Discount Security
      --------
which by its terms bears interest only after Maturity, means interest payable
after Maturity, and, when used with respect to a Security which provides for the
payment of Additional Amounts pursuant to Section 1010, includes such Additional
                                          ------------
Amounts.

     "Interest Payment Date" when used with respect to any Security, means the
      ---------------------
Stated Maturity of an installment of interest on such Security.

     "Make-Whole Amount" means the amount, if any, in addition to principal
      -----------------
which is required by a Security, under the terms and conditions specified
therein or as otherwise specified as contemplated by Section 301, to be paid by
                                                     -----------
the Company to the Holder thereof in connection with any optional redemption or
accelerated payment of such Security.

     "mandatory sinking fund payment" has the meaning specified in Section 1201.
                                                                   ------------

     "Maturity" when used with respect to any Security, means the date on which
      --------
the principal of such Security or an installment of principal become due and
payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, notice of redemption, notice of option to elect
repayment, repurchase or otherwise.

     "Notice of Default" has the meaning specified in Section 501.
      -----------------                               -----------

     "Opinion of Counsel" means a written opinion of counsel, who may be an
      ------------------
employee of or counsel for the Company or other counsel satisfactory to the
Trustee.

     "optional sinking fund payment" has the meaning specified in Section 1201.
      -----------------------------                               ------------

                                       6
<PAGE>
 
     "Original Issue Discount Security" means any Security which provides for an
      --------------------------------
amount less than the principal amount thereof to be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section 502.
                                                                -----------

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

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

          (2)  Securities, or portions thereof, for whose payment or redemption
     or repayment at the option of the Holder 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 is acting as its own Paying Agent) for the holders of such
     Securities and any coupons appertaining thereto, provided that, if such
                                                      --------
     Securities are to be redeemed, notice of such redemption has been duly
     given pursuant to this Indenture or other provision therefor satisfactory
     to the Trustee has been made;

          (3)  Securities, except solely to the extent provided in Section 401,
                                                                   -----------
     1402 or 1403, as applicable, with respect to which the Company has effected
     ----    ----
     defeasance and/or covenant defeasance as provided in Article Four or
                                                          ------------
     Fourteen; and
     --------

          (4)  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 has 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 required
- --------  -------
principal amount of the Outstanding Securities have concurred in any request,
demand, authorization, direction, notice, consent or waiver hereunder or are
present at a meeting of Holders for quorum purposes, and for the purpose of
making the calculations required by Section 313 of the Trust Indenture Act, (i)
the principal amount of an Original Issue Discount Security which may be counted
in making such determination or calculation and which shall be deemed
Outstanding for such purpose shall be equal to the amount of principal thereof
which would be (or has been declared to be) due and payable, at the time of such
determination, upon a declaration of acceleration of the maturity thereof
pursuant to Section 502, (ii) the principal amount of any Security denominated
            -----------
in a Foreign Currency which may be counted in making such determination or
calculation and which shall be deemed Outstanding for such purpose shall be
equal to the Dollar equivalent, determined pursuant to Section 301 as of the
                                                       -----------
date such Security is originally issued by the Company, of the principal amount
(or, in the case of an Original Issue Discount Security, the Dollar equivalent
as of such date of original issuance of the amount determined as provided in
clause (i) above) of such Security, (iii) the principal amount of any Indexed
Security which may be counted in making such determination or calculation and

                                       7
<PAGE>
 
which shall be deemed Outstanding for such purpose shall be equal to the
principal face amount of such Indexed Security at original issuance, unless
otherwise provided with respect to such Indexed Security pursuant to Section
                                                                     -------
301, and (iv) Securities owned by the Company or any other obligor on the
- ---
Securities or any Affiliate of the Company or of such other obligor shall be
disregarded and deemed not Outstanding, except that, for the purposes of
determining whether the Trustee is protected in making such calculation or in
relying on any such request, demand, authorization, direction, notice, consent
or waiver, only Securities which the Trustee knows are so owned shall be so
disregarded. Securities so owned which have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Securities and that
the pledgee is not the Company or any other obligor on 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 or Make-Whole Amount, if any, on) and interest and
Additional Amounts, if any, on any Securities or coupons on behalf of the
Company, or if no such Person is authorized, the Company.

     "Payment Default" means any failure to pay any scheduled installment of
      ---------------
principal of, premium, if any, or interest on any indebtedness within the grace
period provided for such payment in the documentation governing such
indebtedness.

     "Permitted Investments" means:
      ---------------------

          (1)  Government Obligations;

          (2)  Direct obligations and fully guaranteed certificates of
     beneficial interest of the Export-Import Bank of the United States;
     consolidated debt obligations and letter of credit-backed issues of the
     Federal Home Loan Banks; participation certificates and senior debt
     obligations of the Federal Home Loan Mortgage Corporation; debentures of
     the Federal Housing Administration; mortgage-backed securities (except
     stripped mortgage securities which are valued greater than par on the
     portion of unpaid principal) and senior debt obligations of the Federal
     National Mortgage Association; participation certificates of the General
     Services Administration; guaranteed mortgage-backed securities and
     guaranteed participation certificates and guaranteed pool certificates of
     the Small Business Administration; debt obligations and letter of credit-
     backed issues of the Student Loan Marketing Association; local authority
     bonds of the U.S. Department of Housing and Urban Development; guaranteed
     Title XI financing of the U.S. Maritime Administration; guaranteed transit
     bonds of the Washington Metropolitan Area Transit Authority; or Resolution
     Funding Corporation securities;

          (3)  Direct obligations of any state of the United States of America
     or any subdivision or agency thereof whose unsecured, uninsured and
     unguaranteed general obligation debt is rated, at the time of purchase, at
     least as high as the rating then in effect on the Securities by Standard &
     Poor's Rating Services, or any obligation fully and unconditionally
     guaranteed by any state, subdivision or agency whose unsecured, uninsured

                                       8
<PAGE>
 
     and unguaranteed general obligation debt is rated, at the time of purchase,
     at least as high as the rating then in effect on the Securities by Standard
     & Poor's Rating Services;

          (4)  Commercial paper (having original maturities of not more than 270
     days) rated, at the time of purchase, "A-1+" by Standard & Poor's Rating
     Services or "P-1" by Moody's Investors Services, Inc.;

          (5)  Federal funds, unsecured certificates of deposit, time deposits
     or bankers acceptances (in each case having maturities of not more than 365
     days) of any domestic bank (including the Trustee in its commercial
     capacity), including a branch office of a foreign bank which branch office
     is located in the United States, provided that written legal opinions in
                                      --------
     form acceptable to the Trustee are received to the effect that full and
     timely payment of such deposit or similar obligation is enforceable against
     the principal office or any branch of such bank, which, at the time of
     purchase, has a rating of "A-1+" by Standard & Poor's Rating Services or 
     "P-1" by Moody's Investors Services, Inc.;

          (6)  Deposits of any bank or savings and loan association which has
     combined capital, surplus and undivided profits of not less than
     $3,000,000, provided that such deposits are continuously and fully insured
                 --------
     by the Federal Deposit Insurance Corporation, including, without
     limitation, an insured money market account of the Trustee;

          (7)  Investments in money-market funds rated in the highest rating
     category by Standard & Poor's Rating Services or Moody's Investors
     Services, Inc.; such funds may include those for which the Trustee or an
     affiliate of the Trustee provides services for a fee, whether as investment
     advisor, custodian, transfer agent, sponsor, distributor or otherwise;

          (8)  Shares of an open-end, diversified investment company which is
     registered under the Investment Company Act of 1940, as amended, and which
     (i) invests exclusively in permitted investments of the type set forth in
     clauses (1) through (7) above; (ii) seeks to maintain a constant net asset
     value per share in accordance with regulations of the Commission; and (iii)
     has aggregate net assets of at least $50,000,000 on the date of purchase;
     and

          (9)  Qualified GICs.

Any investment made in accordance with this Indenture may (i) be executed by the
Trustee or the Company with or through the Trustee or its affiliates and (ii) be
made in securities of any entity for which the Trustee or any of its affiliates
serves as offeror, distributor, advisor or other service provider.

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

                                       9
<PAGE>
 
     "Place of Payment" when used with respect to the Securities of or within
      ----------------
any series, means the Corporate Trust Office of the Trustee and any place or
places which the Company may from time to time designate as the place or places
where the principal of (and premium or Make-Whole Amount, if any, on) and
interest and Additional Amounts, if any, on such Securities are payable as
specified as contemplated by Sections 301 and 1002 and presentations,
                             ------------     ----
surrenders, notices and demands with respect to such Securities and this
Indenture may be made.

     "Predecessor Security" when used with respect to any particular Security,
      --------------------
means every previous Security evidencing all or a portion of the same debt as
evidenced by such 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 or a Security to which a
mutilated, destroyed, lost or stolen coupon appertains shall be deemed to
evidence the same debt as the mutilated, destroyed, lost or stolen Security or
the Security to which the mutilated, destroyed, lost or stolen coupon
appertains.

     "Qualified GIC" means an investment contract providing for the investment
      -------------
of funds held by the Trustee and insuring a minimum or fixed rate of return on
investments of such funds, which contract shall:

          (1)  be an obligation of an insurance company or bank whose senior
     long-term debt obligations are rated in one of the two highest rating
     categories by both Moody's Investors Services, Inc. and Standard & Poor's
     Rating Services;

          (2)  provide that the Trustee may exercise all of the rights under
     such contract without the necessity of the taking of action by any other
     person;

          (3)  provide that, if at any time the then current credit standing of
     the obligor under such guaranteed investment contract has been lowered or
     withdrawn by Moody's Investors Services, Inc. or Standard & Poor's Rating
     Services, the Trustee may terminate such contract without penalty and be
     entitled to the return of all funds previously invested thereunder,
     together with accrued interest thereon at the interest rate provided under
     such contract through the date of delivery of such funds to the Trustee;

          (4)  provide that interest shall be payable not less than annually;

          (5)  provide that the Trustee may withdraw funds invested without
     penalty at any time and from time to time to be applied for the purposes
     described therein;

          (6)  be accompanied by an enforceability opinion from counsel to the
     obligor under such guaranteed investment contract in form and substance
     satisfactory to the Trustee; and

          (7)  provide that the Trustee's interest thereunder shall be
     transferable to any successor Trustee hereunder.

                                       10
<PAGE>
 
         "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.

         "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.

         "Registered Security" means any Security which is registered in the
          -------------------
Security Register.

         "Regular Record Date" when used with respect to an installment of
          -------------------
interest payable on any Interest Payment Date on the Registered Securities of or
within any series, means the date specified for that purpose as contemplated by
Section 301, whether or not a Business Day.
- -----------

         "Repayment Date" when used with respect to any Security to be repaid or
          --------------
repurchased at the option of the Holder, means the date fixed for such repayment
or repurchase by or pursuant to this Indenture.

         "Repayment Price" when used with respect to any Security to be repaid
          ----------------
or repurchased at the option of the Holder, means the price at which it is to be
repaid or repurchased by or pursuant to this Indenture.

         "Required Filing Dates" has the meaning specified in Section 1008.
          ---------------------                               ------------

         "Responsible Officer" when used with respect to the Trustee, means any
          -------------------
vice president (whether or not designated by numbers or words added before or
after said title), any assistant vice president, any assistant secretary or any
other officer or assistant officer of the Trustee in the corporate trust
department or similar group of the Trustee or, with respect to any particular
matter arising hereunder, any officer of the Trustee to whom such matter has
been assigned.

         "Securities Act" means the Securities Act of 1933, as amended, and the
          --------------
rules and regulations promulgated thereunder by the Commission.

         "Security" has the meaning specified in the first recital of this
          --------   
Indenture and, more particularly, means any Security or Securities authenticated
and delivered under this Indenture; provided, however, that, if at any time
                                    --------  -------
there is more than one Person acting as Trustee under this Indenture,
"Securities" when used with respect to the Indenture with respect to which such
Person is acting as Trustee, shall have the meaning stated in the first recital
of this Indenture and shall more particularly mean Securities authenticated and
delivered under this Indenture, exclusive, however, of Securities of or within
any series with respect to which such Person is not acting as Trustee.

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

         "Significant Subsidiary" means a Subsidiary which otherwise meets the
          ----------------------
tests ascribed to the term in Regulation S-X promulgated by the Commission under
the Securities Act, except that the

                                       11
<PAGE>
 
tests therein shall be based on 20% of total assets or income instead of 10%,
unless the Company owns or controls, directly or indirectly, at least 75% of the
total voting power of such Subsidiary's shares of Capital Stock entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof (such percentage to be calculated on a
fully diluted basis), in which case the tests shall be based on 10% of total
assets or income.

         "Special Record Date" when used with respect to the payment of any
          -------------------
Defaulted Interest on the Registered Securities of or within any series, means a
date fixed by the Trustee pursuant to Section 307.
                                      -----------  

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

         "Subsidiary" means, with respect to any Person, (i) any corporation,
          ----------
association or other business entity of which more than 50% of the total equity
capital and more than 50% of the total voting power of shares of Capital Stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by such Person or one or more of the other
Subsidiaries of that Person (or a combination thereof) and (ii) any partnership
(a) the sole general partner or the managing general partner of which is such
Person or a Subsidiary of such Person or (b) the only general partners of which
are such Person or one or more Subsidiaries of such Person (or any combination
thereof).

         "Surviving Entity" has the meaning specified in Section 801.
          ----------------                               -----------    

         "Trust Indenture Act" means the Trust Indenture Act of 1939, as amended
          -------------------
and as in force at the date as of which this Indenture was executed, except as
provided in Section 905.
            -----------   
         "Trustee" means the Person named as the "Trustee" in the first
          -------
paragraph of this Indenture until a successor Trustee has become such pursuant
to the applicable provisions of this Indenture, and thereafter "Trustee" shall
mean or include each Person who is then acting as a Trustee hereunder; provided,
                                                                       --------
however, that, if at any time there is more than one such Person, "Trustee" when
- -------
used with respect to the Securities of or within any series, shall mean only the
Trustee with respect to the Securities of such series, and no Trustee of
Securities for any series shall be responsible for the acts or omissions of a
Trustee for any other series of Securities.

         "United States" means, unless otherwise specified with respect to any
          -------------
Securities pursuant to Section 301, the United States of America (including the
                       -----------  
states and the District of Columbia), its territories, its possessions and other
areas subject to its jurisdiction.

                                       12
<PAGE>
 
         "United States person" means, unless otherwise specified with respect
          --------------------
to any Securities pursuant to Section 301, an individual who is a citizen or
                              -----------
resident of the United States, a corporation, partnership or other entity
created or organized in or under the laws of the United States or an estate or
trust the income of which is subject to United States federal income taxation
regardless of its source.

         "Yield to Maturity" means the yield to maturity, computed at the time
          -----------------
of issuance of a Security (or, if applicable, at the most recent redetermination
of interest on such Security) and as set forth in such Security in accordance
with generally accepted United States bond yield computation principles.

         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 a Company
Certificate stating that all conditions precedent, if any, provided for in this
Indenture (including any covenants, compliance with which constitute conditions
precedent) relating to the proposed action have been complied with and an
Opinion of Counsel stating that, in the opinion of such counsel, all such
conditions precedent, if any, have been complied with, except that, in the case
of any such application or request as to which the furnishing of such documents
is specifically required by any provision of this Indenture relating to such
particular application or request, no additional certificate or opinion need be
furnished.

         Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than certificates
provided pursuant to Section 1009) shall include:
                     ------------

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

                  (2) a brief statement as to the nature and scope of the
         examination or investigation on 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 or she has made such examination or investigation as is necessary to
         enable him or her to express an informed opinion as to whether or not
         such condition or covenant has been complied with; and

                  (4) a statement as to whether or not, 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 in
                      --------------------------------------   
which 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

                                       13
<PAGE>
 
give an opinion as 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, on an Opinion of Counsel, or a
certificate or representations by counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the opinion, certificate or
representations with respect to the matters on which his or her certificate or
opinion is based are erroneous. Any such Opinion of Counsel or certificate or
representations may be based, insofar as it relates to factual matters, on a
certificate or opinion of, or representations by, an officer or officers of the
Company stating that the information as to such factual matters is in the
possession of the Company, unless such counsel knows that the certificate or
opinion or representations as to such matters are erroneous.

         If 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.
                      ---------------
    
                  (a) Any request, demand, authorization, direction, notice,
         consent, waiver or other action provided by this Indenture to be given
         or taken by Holders of the Outstanding Securities of all series or one
         or more series, as the case may be, may be embodied in and evidenced by
         one or more instruments of substantially similar tenor signed by such
         Holders in person or by agents duly appointed in writing. If Securities
         of a series are issuable as Bearer Securities, any request, demand,
         authorization, direction, notice, consent, waiver or other action
         provided by this Indenture to be given or taken by Holders of the
         Outstanding Securities of such series may, alternatively, be embodied
         in and evidenced by the record of such Holders voting in favor thereof,
         either in person or by proxies duly appointed in writing, at any
         meeting of such Holders duly called and held in accordance with the
         provisions of Article Fifteen, or a combination of such instruments and
                       ---------------
         any such record. Except as herein otherwise expressly provided, such
         action shall become effective when such instrument or instruments or
         record or both are delivered to the Trustee and, if expressly required
         herein, to the Company. Such instrument or instrument and any such
         record (and the action embodied therein and evidenced thereby) are
         herein sometimes referred to as the "Act" of the Holders signing such
                                              ---
         instrument or instruments or so voting at any such meeting. Proof of
         execution of any such instrument or of a writing appointing any such
         agent, or of the holding by any Person of a Security, shall be
         sufficient for any purpose of this Indenture and conclusive in favor of
         the Trustee and the Company and any agent of the Trustee or the
         Company, if made in the manner provided in this Section. The record of
         any meeting of Holders of Securities shall be proved in the manner
         provided in Section 1506.
                     ------------

                  (b) The fact and date of the execution by any Person of any
         such instrument or writing may be proved 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

                                       14
<PAGE>
 
         writing acknowledged to him or her the execution thereof or by any
         other means acceptable to the Trustee. If 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 reasonable manner which the Trustee deems
         sufficient.

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

                  (d)    The ownership of Bearer Securities may be proved by the
         production of such Bearer Securities or by a certificate executed, as
         depositary, by any trust company, bank, banker or other depositary,
         wherever situated, if such certificate is deemed by the Trustee to be
         satisfactory, showing that at the date therein mentioned such Person
         had on deposit with such depositary, or exhibited to it, the Bearer
         Securities therein described; or such facts may be proved by the
         certificate or affidavit of the Person holding such Bearer Securities,
         if such certificate or affidavit is deemed by the Trustee to be
         satisfactory. The Trustee and the Company may assume that such
         ownership of any Bearer Security continues until (i) another
         certificate or affidavit bearing a later date issued in respect of the
         same Bearer Security is produced, (ii) such Bearer Security is produced
         to the Trustee by some other Person, (iii) such Bearer Security is
         surrendered in exchange for a Registered Security or (iv) such Bearer
         Security is no longer Outstanding. The ownership of Bearer Securities
         may also be proved in any other manner which the Trustee deems
         sufficient.

                  (e)    If the Company shall solicit from the Holders of
         Registered Securities any request, demand, authorization, direction,
         notice, consent, waiver or other Act, the Company may, at its option,
         in or pursuant to a Board Resolution, fix in advance a record date for
         the determination of Holders entitled to give such request, demand,
         authorization, direction, notice, consent, waiver or other Act, but the
         Company shall not be obligated to do so. Notwithstanding Section 316(c)
         of the Trust Indenture Act, such record date shall be the record date
         specified in or pursuant to such Board Resolution, which shall be a
         date not earlier than the date thirty (30) days prior to the first
         solicitation of Holders generally in connection therewith and not later
         than the date such solicitation is completed. If such a record date is
         fixed, such request, demand, authorization, direction, notice, consent,
         waiver or other Act may be given before or after such record date, but
         only the Holders of record at the close of business on such record date
         shall be deemed to be Holders for the purpose of determining whether
         Holders of the requisite proportion of Outstanding Securities have
         authorized or agreed or consented to such request, demand,
         authorization, direction, notice, consent, waiver or other Act, and for
         that purpose the Outstanding Securities shall be computed as of such
         record date; provided that no such authorization, agreement or consent
                      --------
         by the Holders on such record date shall be deemed effective unless it
         shall become effective pursuant to the provisions of this Indenture not
         later than eleven (11) months after the record date.

                                       15
<PAGE>
 
                  (f)  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, any Security Registrar,
         any Paying Agent, any Authenticating Agent or the Company in reliance
         thereon, whether or not notation of such action is made on such
         Security.

         SECTION 105. Notices 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 on, given or
furnished to, or filed with:

                  (1)    the Trustee by any Holder or the Company shall be
         sufficient for every purpose hereunder if in writing and mailed, first
         class postage prepaid, to the Trustee addressed to it at the address of
         its Corporate Trust Office specified in the first paragraph of this
         Indenture, Attention: Corporate Trust Administration; or

                  (2)    the Company by the Trustee or 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 Indenture or at any
         other address previously furnished in writing to the Trustee by the
         Company.

         SECTION 106. Notice to Holders; Waiver. When this Indenture provides
                      -------------------------
for notice of any event to Holders of Registered Securities by the Company or
the Trustee, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage prepaid, to
each such Holder affected by such event, at such Holder's address as it appears
in the Security Register, not later than the latest date, and not earlier than
the earliest date, prescribed for the giving of such notice. In any case in
which notice to Holders of Registered Securities 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 of Registered Securities or the sufficiency of any notice to
Holders of Bearer Securities given as provided herein. Any notice mailed to a
Holder in the manner herein prescribed shall be conclusively deemed to have been
received by such Holder, whether or not such Holder actually receives such
notice.

         If, by reason of the suspension of or irregularities in regular mail
service or by reason of any other cause, it is impracticable to give such notice
by mail, then such notification to Holders of Registered Securities as is made
with the approval of the Trustee shall constitute a sufficient notification to
such Holders for every purpose hereunder.

         Except as otherwise expressly provided herein or otherwise specified
with respect to any Securities pursuant to Section 301, when this Indenture
                                           -----------
provides for notice to Holders of Bearer Securities of any event, such notices
shall be sufficiently given if published in an Authorized

                                       16
<PAGE>
 
Newspaper in The City of New York and in such other city or cities as may be
specified in such Securities and, if the Securities of such series are listed on
any securities exchange outside the United States, in any place at which such
Securities are listed on a securities exchange to the extent that such
securities exchange so requires, on a Business Day, such publication to be not
later than the latest date, and not earlier than the earliest date, prescribed
for the giving of such notice. Any such notice shall be deemed to have been
given on the date of such publication or, if published more than once, on the
date of the first such publication.

         If, by reason of the suspension of publication of any Authorized
Newspaper or Authorized Newspapers or by reason of any other cause, it is
impracticable to publish any notice to Holders of Bearer Securities as provided
above, then such notification to Holders of Bearer Securities as is given with
the approval of the Trustee shall constitute sufficient notice to such Holders
for every purpose hereunder. Neither the failure to give notice by publication
to any particular Holder of Bearer Securities as provided above, nor any defect
in any notice so published, shall affect the sufficiency of such notice with
respect to other Holders of Bearer Securities or the sufficiency of any notice
to Holders of Registered Securities given as provided herein.

         Any request, demand, authorization, direction, notice, consent or
waiver required or permitted under this Indenture shall be in the English
language, except that any published notice may be in an official language of the
country of publication.

         When 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 on such waiver.

         SECTION 107. 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 108. 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 109. Separability Clause. In case any provision in this
                      -------------------   
Indenture or in any Security or any coupon 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 110. Benefits of Indenture. Nothing in this Indenture or in any
                      ---------------------
Security or any coupon, express or implied, shall give to any Person, other than
the parties hereto, any Security Registrar, any Paying Agent, any Authenticating
Agent and their successors hereunder and the Holders any benefit or any legal or
equitable right, remedy or claim under this Indenture.

                                       17
<PAGE>
 
         SECTION 111. No Personal Liability. No recourse under or on any
                      ---------------------
obligation, covenant or agreement contained in this Indenture or in any Security
or any coupon, or because of any indebtedness evidenced thereby, shall be had
against any promoter, as such or, against any past, present or future director,
officer, employee or shareholder, as such, of the Company or of any successor,
either directly or through the Company or any successor, under any rule of law,
statute or constitutional provision or by the enforcement of any assessment or
by any legal or equitable proceeding or otherwise, all such liability being
expressly waived and released by the acceptance of the Securities by the Holders
thereof and as part of the consideration for the issue of the Securities.

         SECTION 112. Governing Law. THIS INDENTURE AND THE SECURITIES AND ANY
                      -------------
COUPONS SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE
STATE OF NEW YORK. THIS INDENTURE IS SUBJECT TO THE PROVISIONS OF THE TRUST
INDENTURE ACT WHICH, BY THE PROVISIONS THEREOF, ARE DEEMED OR REQUIRED TO BE
PART OF THIS INDENTURE AND SHALL, TO THE EXTENT APPLICABLE, BE GOVERNED BY SUCH
PROVISIONS. IF ANY PROVISION OF THIS INDENTURE LIMITS, QUALIFIES OR CONFLICTS
WITH THE DUTIES IMPOSED BY OPERATION OF SECTION 318(C) OF THE TRUST INDENTURE
ACT, THE IMPOSED DUTIES SHALL CONTROL.

         SECTION 113. Legal Holidays. In any case in which any Interest Payment
                      --------------   
Date, Redemption Date, Repayment Date, sinking fund payment date, Stated
Maturity or Maturity of any Security is not a Business Day at any Place of
Payment, then (notwithstanding any other provision of this Indenture or any
Security or any coupon other than a provision in the Securities of any series
which specifically states that such provision shall apply in lieu hereof),
payment of the principal of (and premium or Make-Whole Amount, if any, on) or
interest or Additional Amounts, if any, on such Security need not be made at
such Place of Payment on such date, but may be made on the next succeeding
Business Day at such Place of Payment with the same force and effect as if made
on the Interest Payment Date, Redemption Date, Repayment Date or sinking fund
payment date, or at the Stated Maturity or Maturity; provided, however, that no
                                                     --------  -------  
interest shall accrue on the amount so payable for the period from and after
such Interest Payment Date, Redemption Date, Repayment Date, sinking fund
payment date, Stated Maturity or Maturity, as the case may be.

         SECTION 114. Counterparts. This Indenture may be executed in several
                      ------------
counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.

                                  ARTICLE TWO
                               SECURITIES FORMS

         SECTION 201. Forms of Securities. The Registered Securities, if any, of
                      -------------------
each series and the Bearer Securities, if any, and any coupons of each series,
shall be in substantially the forms as are established in or pursuant to one or
more indentures supplemental hereto or Board Resolutions, shall have such
appropriate insertions, omissions, substitutions and other variations as are
required or permitted by this Indenture or any indenture supplemental hereto,
and may have such letters, numbers or other marks of identification or
designation and such legends or endorsements placed thereon as the Company may
deem appropriate and as are not inconsistent with the provisions of this

                                       18
<PAGE>
 
Indenture, or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which the Securities may be listed, or to conform to usage.

         Unless otherwise specified as contemplated by Section 301, Bearer
                                                       -----------
Securities shall have interest coupons attached.

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

         SECTION 202. Form of Trustee's Certificate of Authentication. Subject
                      -----------------------------------------------
to Section 611, the Trustee's certificate of authentication shall be in
   -----------  
substantially the following form:

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


                                   STATE STREET BANK AND TRUST
                                     COMPANY,
                                   as Trustee


                                   By:_________________________________________
                                          Authorized Officer

         SECTION 203. Securities Issuable in Global Form. If Securities of or
                      ----------------------------------
within a series are issuable in global form, as specified as contemplated by
Section 301, then, notwithstanding clause (8) of Section 301 and the provisions
- -----------                                      -----------
of Section 302, any such Security shall represent such of the Outstanding
   -----------
Securities of such series as are specified therein and may provide that it shall
represent the aggregate amount of Outstanding Securities of such series from
time to time endorsed thereon and that the aggregate amount of Outstanding
Securities of such series represented thereby may from time to time be increased
or decreased to reflect exchanges. Any endorsement of a Security in global form
to reflect the amount, or any increase or decrease in the amount, of Outstanding
Securities represented thereby shall be made by the Trustee in the manner and in
accordance with instructions given by such Person or Persons specified therein
or in the Company Order to be delivered to the Trustee pursuant to Section 303
                                                                   -----------
or 304. Subject to the provisions of Section 303 and, if applicable, Section
   ---                               -----------                     -------
304, the Trustee shall deliver and redeliver any Security in permanent global
- ---
form in the manner and in accordance with instructions given by the Person or
Persons specified therein or in the applicable Company Order. If a Company Order
pursuant to Section 303 or 304 has been, or simultaneously is, delivered, any
            -----------    ---
instructions by the Company with respect to endorsement or delivery or
redelivery of a Security in global form shall be in writing but need not comply
with Section 102 and need not be accompanied by an Opinion of Counsel.
     -----------

                                       19
<PAGE>
 
         The provisions of the last sentence of Section 303 shall apply to any
                                                -----------
Security represented by a Security in global form if such Security was never
issued and sold by the Company and the Company delivers to the Trustee the
Security in global form together with written instructions (which need not
comply with Section 102 and need not be accompanied by an Opinion of Counsel)
            -----------
with regard to the reduction in the principal amount of Securities represented
thereby, together with the written statement contemplated by the last sentence
of Section 303.
   -----------

         Notwithstanding the provisions of Section 307, unless otherwise
                                           -----------
specified as contemplated by Section 301, payment of principal of (and premium
                             -----------
or Make-Whole Amount, if any, on) and interest and Additional Amounts, if any,
on any Security in permanent global form shall be made to the Person or Persons
specified therein.

         Notwithstanding the provisions of Section 308 and except as provided in
                                           -----------
the preceding paragraph, the Company, the Trustee and any agent of the Company
or the Trustee shall treat as the Holder of such principal amount of Outstanding
Securities represented by a permanent global Security (i) in the case of a
permanent global Security in registered form, the Holder of such permanent
global Security in registered form, or (ii) in the case of a permanent global
Security in bearer form, Euroclear or CEDEL.


                                 ARTICLE THREE
                                THE SECURITIES

         SECTION 301. Amount Unlimited; Issuable in Series. The aggregate
                      ------------------------------------
principal amount of Securities which may be authenticated and delivered under
this Indenture is unlimited.

         The Securities may be issued in one or more series. There shall be
established in or pursuant to one or more Board Resolutions, or indentures
supplemental hereto, prior to the issuance of Securities of any series, any or
all of the following, as applicable (each of which (except for the matters set
forth in clauses (1), (2) and (15) below), if so provided, may be determined
from time to time by the Company with respect to unissued Securities of or
within the series when issued from time to time):

                  (1)    the title of the Securities of or within the series
         (which shall distinguish the Securities of such series from all other
         series of Securities);

                  (2)    any limit on the aggregate principal amount of the
         Securities of or within the series which may be authenticated and
         delivered under this Indenture (except for Securities authenticated and
         delivered upon registration of transfer of, or in exchange for, or in
         lieu of, other Securities of or within the series pursuant to Section
                                                                       -------
         304, 305, 306, 906, 1107 or 1305);
         ---  ---  ---  ---  ----    ---- 

                                       20
<PAGE>
 
                  (3)  the date or dates, or the method by which such date or
         dates will be determined, on which the principal of the Securities of
         or within the series shall be payable and the amount of principal
         payable thereon;

                  (4)  the rate or rates at which the Securities of or within
         the series shall bear interest, if any, or the method by which such
         rate or rates shall be determined, the date or dates from which such
         interest shall accrue or the method by which such date or dates shall
         be determined, the Interest Payment Dates on which such interest will
         be payable and the Regular Record Date, if any, for the interest
         payable on any Registered Security on any Interest Payment Date, or the
         method by which such date shall be determined, and the basis on which
         interest shall be calculated if other than a 360-day year comprised of
         twelve (12) 30-day months;

                  (5)  the place or places, if any, other than or in addition to
         the Corporate Trust Office where the principal of (and premium or Make-
         Whole Amount, if any, on) and interest and Additional Amounts, if any,
         on Securities of or within the series shall be payable, any Registered
         Securities of or within the series may be surrendered for registration
         of transfer, exchange or conversion and notices or demands to or on the
         Company in respect of the Securities of or within the series and this
         Indenture may be served;

                  (6)  the period or periods within which, the price or prices
         (including the premium or Make-Whole Amount, if any) at which, the
         currency or currencies, currency unit or units or composite currency or
         currencies in which, and other terms and conditions upon which
         Securities of or within the series may be redeemed, in whole or in
         part, at the option of the Company, if the Company is to have the
         option;

                  (7)  the obligation, if any, of the Company to redeem, repay
         or purchase Securities of or within the series pursuant to any sinking
         fund or analogous provision or at the option of a Holder thereof, and
         the period or periods within which or the date or dates on which, the
         price or prices at which, the currency or currencies, currency unit or
         units or composite currency or currencies in which, and other terms and
         conditions upon which Securities of or within the series shall be
         redeemed, repaid or purchased, in whole or in part, pursuant to such
         obligation;

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

                  (9)  if other than the Trustee, the identity of each Security
         Registrar and/or Paying Agent;

                  (10) the percentage of the principal amount at which
         Securities will be issued and, if other than the principal amount
         thereof, the portion of the principal amount of Securities

                                       21
<PAGE>
 
         of or within the series which shall be payable upon declaration of
         acceleration of the Maturity thereof pursuant to Section 502, or, if
                                                          -----------
         applicable, the portion of the principal amount of Securities which is
         convertible in accordance with the provisions of this Indenture, or the
         method by which such portion shall be determined;

                  (11) if other than Dollars, the Foreign Currency or Currencies
         in which payment of the principal of (and premium or Make-Whole Amount,
         if any, on) or interest or Additional Amounts, if any, on the
         Securities of or within the series shall be payable or in which the
         Securities of or within the series shall be denominated;

                  (12) whether the amount of payments of the principal of (and
         premium or Make-Whole Amount, if any, on) or interest or Additional
         Amounts, if any, on the Securities of or within the series may be
         determined with reference to an index, formula or other method (which
         index, formula or method may be based, without limitation, on one or
         more currencies, currency units, composite currencies, commodities,
         equity indices or other indices), and the manner in which such amounts
         shall be determined;

                  (13) whether the principal of (and premium or Make-Whole
         Amount, if any, on) or interest or Additional Amounts, if any, on the
         Securities of or within the series are to be payable, at the election
         of the Company or a Holder thereof, in a currency or currencies,
         currency unit or units or composite currency or currencies other than
         that in which such Securities are denominated or stated to be payable,
         the period or periods within which (including the Election Date), and
         the terms and conditions upon which, such election may be made, and the
         time and manner of, and identity of the exchange rate agent with
         responsibility for, determining the exchange rate between the currency
         or currencies, currency unit or units or composite currency or
         currencies in which such Securities are denominated or stated to be
         payable and the currency or currencies, currency unit or units or
         composite currency or currencies in which such Securities are to be so
         payable;

                  (14) provisions, if any, granting special rights to the
         Holders of Securities of or within the series on the occurrence of such
         events as may be specified;

                  (15) any deletions from, modifications of or additions to the
         Events of Default or covenants of the Company with respect to
         Securities of or within the series, whether or not such Events of
         Default or covenants are consistent with the Events of Default or
         covenants set forth herein;

                  (16) whether Securities of or within the series are to be
         issuable as Registered Securities, Bearer Securities (with or without
         coupons) or both, any restrictions applicable to the offer, sale or
         delivery of Bearer Securities and the terms upon which Bearer
         Securities of or within the series may be exchanged for Registered
         Securities of or within the series and vice versa (if permitted by
         applicable laws and regulations), whether any Securities of or within
         the series are to be issuable initially in temporary global form and
         whether any Securities of or within the series are to be issuable in
         permanent global form (with or without

                                       22
<PAGE>
 
         coupons) and, if so, whether beneficial owners of interests in any such
         permanent global Security may exchange such interests for Securities of
         such series and of like tenor of any authorized form and denomination
         and the circumstances under which any such exchanges may occur, if
         other than in the manner provided in Section 305, and, if Registered
                                              -----------
         Securities of or within the series are to be issuable as a global
         Security, the identity of the depositary for such series, and as of
         which any Bearer Securities of or within the series and any temporary
         global Security representing Outstanding Securities of or within the
         series shall be dated if other than the date of original issuance of
         the first Security of the series to be issued;

                  (17) the Person to whom any interest on any Registered
         Security of the series shall be payable, if other than the Person in
         whose name such Security (or one or more Predecessor Securities) is
         registered at the close of business on the Regular Record Date for such
         interest, the manner in which, or the Person to whom, any interest on
         any Bearer Security of the series shall be payable, if otherwise than
         upon presentation and surrender of the coupons appertaining thereto as
         they severally mature, and the extent to which, or the manner in which,
         any interest payable on a temporary global Security on an Interest
         Payment Date will be paid if other than in the manner provided in
         Section 304;
         -----------

                  (18) the applicability, if any, of Sections 1402 and/or 1403
                                                     -------------        ----
         to the Securities of or within the series and any provisions in
         modification of, in addition to or in lieu of any of the provisions of
         Article Fourteen;
         ----------------

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

                  (20) if the Securities of or within the series are to be
         issued upon the exercise of debt warrants, the time, manner and place
         for such Securities to be authenticated and delivered;

                  (21) whether and under what circumstances the Company will pay
         Additional Amounts as contemplated by Section 1010 on the Securities of
                                               ------------
         or within the series to any Holder who is not a United States person
         (including any modification to the definition of such term) in respect
         of any tax, assessment or governmental charge and, if so, whether the
         Company will have the option to redeem such Securities rather than pay
         such Additional Amounts (and the terms of any such option);

                  (22) the obligation, if any, of the Company to permit the
         conversion of the Securities of such series into Common Shares or other
         securities of the Company, and the terms and conditions on which such
         conversion shall be effected (including, without limitation, the
         initial conversion price or rate, the conversion period, any adjustment
         of the

                                       23
<PAGE>
 
         applicable conversion price and any requirements relative to the
         reservation of such shares for purposes of conversion; and

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

         All Securities of any one series and the coupons appertaining to any
Bearer Securities of such series, if any, shall be substantially identical
except, in the case of Registered or Bearer Securities issued in global form, as
to denomination and except as may otherwise be provided in or pursuant to such
Board Resolution or in any such indenture supplemental hereto. All Securities of
any one series need not be issued at the same time and, unless otherwise
provided, a series may be reopened, without the consent of the Holders, for
issuances of additional Securities of such series.

         If any of the terms of the Securities of any series are established by
action taken pursuant to one or more Board Resolutions or supplemental
indentures, a copy of an appropriate record of such action(s) shall be certified
by the Secretary or an Assistant Secretary of the Company and delivered to the
Trustee at or prior to the delivery of the Company Order for authentication and
delivery of such Securities.

         SECTION 302.  Denominations.  The Securities of each series shall be
                       -------------
issuable as Bearer Securities, as Registered Securities or in any combination
thereof, and in such denominations and amounts as are specified as contemplated
by Section 301. With respect to any series denominated in Dollars, in the
   -----------
absence of any such provisions with respect to the Securities of any series, the
Registered Securities of such series, other than Registered Securities issued in
global form (which may be of any denomination), shall be issuable in
denominations of $1,000 and any integral multiple thereof and the Bearer
Securities of such series, other than Bearer Securities issued in global form
(which may be of any denomination), shall be issuable in denominations of
$5,000.

         SECTION 303.  Execution, Authentication, Delivery and Dating.  The
                       ----------------------------------------------
Securities and any coupons shall be executed on behalf of the Company by the
Chairman or a Co-Chairman, Managing Director, Senior Vice President, Vice
President or the Treasurer of the Company, under the Company's corporate seal
reproduced thereon, and attested by the Company's Secretary or one of its
Assistant Secretaries. The signature of any of these officers on the Securities
and any coupons may be manual or facsimile signatures of the present or any
future such authorized officer and may be imprinted or otherwise reproduced on
the Securities and such coupons.

         Any Securities or any coupons 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
or any coupons.

         At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Securities of any series, together with
any coupons, executed by the Company, to the Trustee for authentication,
together with a Company Order for the authentication

                                       24
<PAGE>
 
and delivery of such Securities, and the Trustee shall authenticate and deliver
such Securities in accordance with the Company Order; provided, however, that,
                                                      --------  -------
in connection with its original issuance, no Bearer Security shall be mailed or
otherwise delivered to any location in the United States; and provided, further,
                                                              --------  -------
that, unless otherwise specified with respect to any series of Securities
pursuant to Section 301, a Bearer Security may be delivered in connection with
            -----------
its original issuance only if the Person entitled to received such Bearer
Security has furnished a certificate to Euroclear or CEDEL, as the case may be,
in the form set forth in Exhibit A-1 to this Indenture or such other certificate
                         -----------
as may be specified with respect to any series of Securities pursuant to Section
                                                                         -------
301, dated no earlier than fifteen (15) days prior to the earlier of the date on
- ---
which such Bearer Security is delivered and the date on which any temporary
Security first becomes exchangeable for such Bearer Security in accordance with
the terms of such temporary Security and this Indenture.

         Except as permitted by Section 306, the Trustee shall not authenticate
                                -----------
and deliver any Bearer Security unless all appurtenant coupons for interest then
matured have been detached and canceled. If all of the Securities of any series
are not to be issued at one time and if the Board Resolution or supplemental
indenture establishing such series so permits, such Company Order may set forth
procedures acceptable to the Trustee for the issuance of such Securities and
determining the terms of particular Securities of such series, such as the
interest rate or formula, maturity date, date of issuance and date from which
interest shall accrue.

         In authenticating such Securities, and accepting the additional
responsibilities under this Indenture in relation to such Securities and any
coupons appertaining thereto, the Trustee shall be entitled to receive, and
(subject to Section 315(a) through 315(d) of the Trust Indenture Act) shall be
fully protected in relying on:

                  (1)  an Opinion of Counsel complying with Section 102 and
                                                            -----------
         stating that:

                       (A) the form or forms of such Securities and any coupons
                  appertaining thereto have been, or will have been upon
                  compliance with such procedures as may be specified therein,
                  established in conformity with the provisions of this
                  Indenture;

                       (B) the terms of such Securities and any coupons
                  appertaining thereto have been, or will have been upon
                  compliance with such procedures as may be specified therein,
                  established in conformity with the provisions of this
                  Indenture; and

                       (C) such Securities, together with any coupons
                  appertaining thereto, when executed by the Company, completed
                  pursuant to such procedures as may be specified therein and
                  delivered by the Company to the Trustee for authentication in
                  accordance with this Indenture, authenticated and delivered by
                  the Trustee in accordance with this Indenture and issued by
                  the Company in the manner and subject to any conditions
                  specified in such Opinion of Counsel, will constitute legal,
                  valid and binding obligations of the Company, enforceable in
                  accordance with their terms, subject to applicable bankruptcy,
                  insolvency, reorganization and other similar laws of general
                  applicability relating to or affecting the enforcement of
                  creditors' rights

                                       25
<PAGE>
 
                  generally and to general equitable principles and to such
                  other matters as may be specified therein; and

                  (2)  a Company Certificate complying with Section 102 and
                                                            -----------
         stating that all conditions precedent provided for in this Indenture
         relating to the issuance of such Securities have been, or will have
         been upon compliance with such procedures as may be specified therein,
         complied with and that, to the best of the knowledge of the signers of
         such certificate, no Event of Default with respect to such Securities
         has occurred and is continuing.

The Trustee shall not be required to authenticate such Securities if the issue
of such Securities pursuant to this Indenture will affect the Trustee's own
rights, duties, obligations or immunities under the Securities and this
Indenture or otherwise in a manner which is not reasonably acceptable to the
Trustee.

         Notwithstanding the provisions of Section 301 and of the preceding
                                           -----------
paragraph, if all the Securities of any series are not to be issued at one time,
it shall not be necessary to deliver a Company Order, an Opinion of Counsel or a
Company Certificate otherwise required pursuant to the preceding paragraph at
the time of issuance of each Security of such series, but such order, opinion
and certificate with appropriate modifications to cover such future issuances,
shall be delivered at or before the time of issuance of the first Security of
such series.

         Each Registered Security shall be dated the date of its authentication
and each Bearer Security shall be dated as of the date specified as contemplated
by Section 301.
   -----------

         No Security or coupon shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose unless there appears on such
Security or the Security to which such coupon appertains a certificate of
authentication substantially in the form provided for herein duly executed by
the Trustee by manual signature of an authorized officer, and such certificate
on any Security shall be conclusive evidence, and the only evidence, that such
Security has been duly authenticated and delivered hereunder and is entitled to
the benefits of this Indenture. Notwithstanding the foregoing, if any Security
has been authenticated and delivered hereunder but never issued and sold by the
Company, and the Company delivers such Security to the Trustee for cancellation
as provided in Section 309 together with a written statement (which need not
               -----------
comply with Section 102 and need not be accompanied by an Opinion of Counsel)
            -----------
stating that such Security has never been issued or sold by the Company, for all
purposes of this Indenture such Security shall be deemed never to have been
authenticated and delivered hereunder and shall never be entitled to the
benefits of this Indenture.

         SECTION 304. Temporary Securities.
                      --------------------

                  (a)  Pending the preparation of definitive Securities of any
         series, the Company may execute, and upon a Company Order the Trustee
         shall authenticate and deliver, temporary Securities which are printed,
         lithographed, typewritten, mimeographed or

                                       26
<PAGE>
 
         otherwise produced, in any authorized denomination, substantially of
         the tenor of the definitive Securities in lieu of which they are
         issued, in registered form, or, if authorized, in bearer form (with or
         without coupons), and with such appropriate insertions, omissions,
         substitutions and other variations as the officers executing such
         Securities may determine, as conclusively evidenced by their execution
         of such Securities. In the case of Securities of any series, such
         temporary Securities may be in global form.

                  Except in the case of temporary Securities in global form
         (which shall be exchanged in accordance with Section 304(b) or as
                                                      --------------
         otherwise provided in or pursuant to a Board Resolution), if temporary
         Securities of any series are issued, the Company shall cause definitive
         Securities of such series to be prepared without unreasonable delay.
         After the preparation of definitive Securities of such series, the
         temporary Securities of such series shall be exchangeable for
         definitive Securities of such series upon surrender of the temporary
         Securities of such series at the office or agency of the Company in a
         Place of Payment for such series, without charge to the Holder. Upon
         surrender for cancellation of any one or more temporary Securities of
         any series, together with any non-matured coupons appertaining thereto,
         the Company shall execute and the Trustee shall authenticate and
         deliver in exchange therefor a like principal amount of definitive
         Securities of the same series of authorized denominations; provided,
                                                                    --------
         however, that no definitive Bearer Security shall be delivered in
         -------
         exchange for a temporary Registered Security; and provided, further,
                                                           --------  -------
         that a definitive Bearer Security shall be delivered in exchange for a
         temporary Bearer Security only in compliance with the conditions set
         forth in Section 303. Until so exchanged, the temporary Securities or
                  -----------
         coupons appertaining thereto of any series shall in all respects be
         entitled to the same benefits under this Indenture as definitive
         Securities or coupons appertaining thereto of such series.

                  (b)  Unless otherwise provided as contemplated in Section 301,
                                                                    -----------
         this Section 304(b) shall govern the exchange of temporary Securities
              --------------
         issued in global form other than through the facilities of DTC. If any
         such temporary Security is issued in global form, then such temporary
         global Security shall, unless otherwise provided therein, be delivered
         to the London office of a depositary or common depositary (the "Common
                                                                         ------
         Depositary"), for the benefit of Euroclear and CEDEL.
         ----------

                  Without unnecessary delay but in any event not later than the
         date specified in, or determined pursuant to the terms of, any such
         temporary global Security (the "Exchange Date"), the Company shall
                                         -------------
         deliver to the Trustee definitive Securities, in an aggregate principal
         amount equal to the principal amount of such temporary global Security,
         executed by the Company. On or after the Exchange Date, such temporary
         global Security shall be surrendered by the Common Depositary to the
         Trustee, as the Company's agent for such purpose, to be exchanged, in
         whole or from time to time in part, for definitive Securities without
         charge, and the Trustee shall authenticate and deliver, in the name of
         Euroclear or CEDEL, as the case may be, in exchange for each portion of
         such temporary global Security, an equal aggregate principal amount of
         definitive Securities of or within the same series of authorized
         denominations and of like tenor as the portion of such temporary global
         Security

                                       27
<PAGE>
 
         to be exchanged. The definitive Securities to be delivered in exchange
         for any such temporary global Security shall be in bearer form,
         registered form, permanent global bearer form or permanent global
         registered form, or any combination thereof, as specified as
         contemplated by Section 301, and, if any combination thereof is so
                         -----------
         specified, as requested by the Common Depository; provided, however,
                                                           --------  ------
         that, unless otherwise specified in such temporary global Security,
         upon such presentation by the Common Depositary, such temporary global
         Security shall be accompanied by a certificate dated the Exchange Date
         or a subsequent date and signed by Euroclear as to the portion of such
         temporary global Security held for its account then to be exchanged and
         a certificate dated the Exchange Date or a subsequent date and signed
         by CEDEL as to the portion of such temporary global Security held for
         its account then to be exchanged, each in the form set forth in Exhibit
                                                                         -------
         A-2 to this Indenture or in such other form as may be established
         ---
         pursuant to Section 301; and provided, further, that definitive Bearer
         Securities shall be delivered in exchange for a portion of a temporary
         global Security only in compliance with the requirements of Section
                                                                     -------
         303.
         ---

                  Unless otherwise specified in such temporary global Security,
         the interest of a beneficial owner of Securities of a series in a
         temporary global Security shall be exchanged for definitive Securities
         of the same series and of like tenor following the Exchange Date when
         the account holder instructs Euroclear or CEDEL, as the case may be, to
         request such exchange on his behalf and delivers to Euroclear or CEDEL,
         as the case may be, a certificate in the form set forth in Exhibit A-1
                                                                    -----------
         to this Indenture (or in such other form as may be established pursuant
         to Section 301), dated no earlier than fifteen (15) days prior to the
            -----------
         Exchange Date, copies of which certificate shall be available from the
         offices of Euroclear and CEDEL, the Trustee, any Authenticating Agent
         appointed for such series of Securities and each Paying Agent. Unless
         otherwise specified in such temporary global Security, any such
         exchange shall be made free of charge to the beneficial owners of such
         temporary global Security, except that a Person receiving definitive
         Securities must bear the cost of insurance, postage, transportation and
         the like unless such Person takes delivery of such definitive
         Securities in person at the offices of Euroclear or CEDEL. Definitive
         Securities in bearer form to be delivered in exchange for any portion
         of a temporary global Security shall be delivered only outside the
         United States.

                  Until exchanged in full as hereinabove provided, the temporary
         Securities of any series shall in all respects be entitled to the same
         benefits under this Indenture as definitive Securities of the same
         series and of like tenor authenticated and delivered hereunder, except
         that, unless otherwise specified as contemplated by Section 301,
                                                             -----------
         interest payable on a temporary global Security on an Interest Payment
         Date for Securities of such series occurring prior to the applicable
         Exchange Date shall be payable to Euroclear and CEDEL on such Interest
         Payment Date upon delivery by Euroclear and CEDEL to the Trustee of a
         certificate or certificates in the form set forth in Exhibit A-2 to
                                                              -----------
         this Indenture (or in such other forms as may be established pursuant
         to Section 301), for credit without further interest on or after such
            -----------
         Interest Payment Date to the respective accounts of Persons who are the
         beneficial owners of such temporary global Security on such Interest
         Payment Date and who

                                       28
<PAGE>
 
         have each delivered to Euroclear or CEDEL, as the case may be, a
         certificate dated no earlier than fifteen (15) days prior to the
         Interest Payment Date occurring prior to such Exchange Date in the form
         set forth in Exhibit A-1 to this Indenture (or in such other forms as
                      -----------
         may be established pursuant to Section 301). Notwithstanding anything
                                        -----------
         to the contrary herein contained, the certifications made pursuant to
         this paragraph shall satisfy the certification requirements of the
         preceding two paragraphs of this Section 304(b) and of the third
                                          --------------
         paragraph of Section 303 of this Indenture and the interests of the
                      -----------
         Persons who are the beneficial owners of the temporary global Security
         with respect to which such certification was made will be exchanged for
         definitive Securities of the same series and of like tenor on the
         Exchange Date or the date of certification if such date occurs after
         the Exchange Date, without further act or deed by such beneficial
         owners. Except as otherwise provided in this paragraph, no payments of
         principal or interest owing with respect to a beneficial interest in a
         temporary global Security will be made unless and until such interest
         in such temporary global Security has been exchanged for an interest in
         a definitive Security. Any interest so received by Euroclear and CEDEL
         and not paid as herein provided shall be returned to the Trustee prior
         to the expiration of two (2) years after such Interest Payment Date in
         order to be repaid to the Company.

         SECTION 305.  Registration, Registration of Transfer and Exchange. The
                       ---------------------------------------------------
Company shall cause to be kept at the Corporate Trust Office of the Trustee or
in any office or agency of the Company in a Place of Payment a register for each
series of Securities (the registers maintained in such office or in any such
office or agency of the Company in a Place of Payment being herein sometimes
referred to collectively as the "Security Register") in which, subject to such
                                 -----------------
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Registered Securities and of transfers of Registered Securities.
The Security Register shall be in written form or any other form capable of
being converted into written form within a reasonable time. The Trustee, at its
Corporate Trust Office, is hereby initially appointed "Security Registrar" for
                                                       ------------------
the purpose of registering Registered Securities and transfers of Registered
Securities on such Security Register as herein provided. In the event that the
Trustee ceases to be Security Registrar, it shall have the right to examine the
Security Register at all reasonable times.

         Subject to the provisions of this Section 305, upon surrender for
                                           -----------
registration of transfer of any Registered Security of any series at any office
or agency of the Company in a Place of Payment for such series, the Company
shall execute, and the Trustee shall authenticate and deliver, in the name of
the designated transferee or transferees, one or more new Registered Securities
of the same series, of any authorized denominations and of a like aggregate
principal amount, being a number not contemporaneously outstanding, and
containing identical terms and provisions.

         Subject to the provisions of this Section 305, at the option of the
                                           -----------
Holder, Registered Securities of any series may be exchanged for other
Registered Securities of the same series, of any authorized denomination or
denominations and of a like aggregate principal amount, containing identical
terms and provisions, upon surrender of the Registered Securities to be
exchanged at any such office or agency. Whenever any such Registered Securities
are so surrendered for exchange, the Company shall execute, and the Trustee
shall authenticate and deliver, the Registered Securities

                                       29
<PAGE>
 
which the Holder making the exchange is entitled to receive. Unless otherwise
specified with respect to any series of Securities as contemplated by Section
                                                                      -------
301, Bearer Securities may not be issued in exchange for Registered Securities.
- ---

         If (but only if) permitted as contemplated by Section 301, at the
                                                       -----------
option of the Holder, Bearer Securities of any series may be exchanged for
Registered Securities of the same series of any authorized denominations and of
a like aggregate principal amount and tenor, upon surrender of the Bearer
Securities to be exchanged at any such office or agency, with all unmatured
coupons and all matured coupons in default appertaining thereto. If the Holder
of a Bearer Security is unable to produce any such unmatured coupon or coupons
or matured coupon or coupons in default, any such permitted exchange may be
effected if the Bearer Securities are accompanied by payment in funds acceptable
to the Company in an amount equal to the face amount of such missing coupon or
coupons, or the surrender of such missing coupon or coupons may be waived by the
Company and the Trustee if there is furnished to them such security or indemnity
as they may require to save each of them and any Paying Agent harmless. If
thereafter the Holder of such Bearer Security surrenders to any Paying Agent any
such missing coupon in respect of which such a payment has been made, such
Holder shall be entitled to receive the amount of payment; provided, however,
                                                           --------  -------
that, except as otherwise provided in Section 1002, interest represented by a
                                      ------------
coupon shall be payable only upon presentation and surrender of such coupons at
an office or agency located outside the United States. Notwithstanding the
foregoing, in case a Bearer Security of any series is surrendered at any such
office or agency in a permitted exchange for a Registered Security of the same
series and like tenor after the close of business at such office or agency on
(i) any Regular Record Date and before the opening of business at such office or
agency on the relevant Interest Payment Date or (ii) any Special Record Date and
before the opening of business at such office or agency on the related proposed
date for payment of Defaulted Interest, such Bearer Security shall be
surrendered without the coupon relating to such Interest Payment Date or
proposed date for payment, as the case may be, and interest or Defaulted
Interest, as the case may be, will not be payable on such Interest Payment Date
or proposed date for payment, as the case may be, in respect of the Registered
Security issued in exchange for such Bearer Security, but will be payable only
to the Holder of such coupon when due in accordance with the provisions of this
Indenture. 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.

         Notwithstanding the foregoing, except as otherwise specified as
contemplated by Section 301, any permanent global Security shall be exchangeable
                -----------
only as provided in this paragraph. If the depositary for any permanent global
Security is DTC, then, unless the terms of such global Security expressly permit
such global Security to be exchanged in whole or in part for definitive
Securities, a global Security may be transferred, in whole but not in part, only
to a nominee of DTC, or by a nominee of DTC to DTC, or to a successor to DTC for
such global Security selected and approved by the Company or to a nominee of
such successor to DTC. If at any time DTC notifies the Company that it is
unwilling or unable to continue as depositary for the applicable global Security
or Securities or if at any time DTC ceases to be a clearing agency registered
under the Exchange Act if so required by applicable law or regulation, the
Company shall appoint a successor depositary with respect to such global
Security or Securities. If (i) a successor depositary for such global

                                       30
<PAGE>
 
Security or Securities is not appointed by the Company within ninety (90) days
after the Company receives such notice or becomes aware of such unwillingness,
inability or ineligibility, (ii) an Event of Default has occurred and is
continuing and the beneficial owners representing a majority in principal amount
of the applicable series of Securities represented by such global Security or
Securities advise DTC to cease acting as depositary for such global Security or
Securities or (iii) the Company, in its sole discretion, determines at any time
that all Outstanding Securities (but not less than all) Securities of any series
issued or issuable in the form of one or more global Securities shall no longer
be represented by such global Security or Securities (provided, however, that
                                                      --------  -------
the Company may not make such determination during the forty (40)-day restricted
period provided by Regulation S under the Securities Act or during any other
similar period during which the Securities must be held in global form as may be
required by the Securities Act), then, upon surrender of the global Security or
Securities appropriately endorsed, the Company shall execute, and the Trustee
shall authenticate and deliver definitive Securities of like series, rank, tenor
and terms in definitive form in an aggregate principal amount equal to the
principal amount of such global Security or Securities. If any beneficial owner
of an interest in a permanent global Security is otherwise entitled to exchange
such interest for Securities of such series and of like tenor and principal
amount of another authorized form and denomination, as specified as contemplated
by Section 301 and provided that any applicable notice provided in the permanent
global Security has been given, then without unnecessary delay but in any event
not earlier than the earliest date on which such interest may be so exchanged,
upon surrender of the global Security or Securities appropriately endorsed, the
Company shall execute, and the Trustee shall authenticate and deliver definitive
Securities in aggregate principal amount equal to the principal amount of such
beneficial owner's interest in such permanent global Security. On or after the
earliest date on which such interests may be so exchanged, such permanent global
Security shall be surrendered for exchange by DTC or such other depositary as is
specified in the Company Order with respect thereto to the Trustee, as the
Company's agent for such purpose; provided, however, that no such exchanges may
                                  --------  -------
occur during a period beginning at the opening of business fifteen (15) days
before any selection of Securities to be redeemed and ending on the relevant
Redemption Date if the Security for which exchange is requested may be among
those selected for redemption; and provided, further, that no Bearer Security
                                   --------  -------
delivered in exchange for a portion of a permanent global Security shall be
mailed or otherwise delivered to any location in the United States. If a
Registered Security is issued in exchange for any portion of a permanent global
Security after the close of business at the office or agency where such exchange
occurs on (i) any Regular Record Date and before the opening of business at such
office or agency on the relevant Interest Payment Date or (ii) any Special
Record Date and before the opening of business at such office or agency on the
related proposed date for payment of Defaulted Interest, interest or Defaulted
Interest, as the case may be, will not be payable on such Interest Payment Date
or proposed date for payment, as the case may be, in respect of such Registered
Security, but will be payable on such Interest Payment Date or proposed date for
payment, as the case may be, only to the Person to whom interest in respect of
such portion of such permanent global Security is payable in accordance with the
provisions of this Indenture.

         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.

                                       31
<PAGE>
 
         Every Registered Security presented or surrendered for registration of
transfer or for exchange or redemption 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 which may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 304, 906, 1107 or 1305 not involving any transfer.
                      -----------  ---  ----    ----

         The Company or the Trustee, as applicable, shall not be required (i) to
issue, register the transfer of or exchange any Security if such Security may be
among those selected for redemption during a period beginning at the opening of
business fifteen (15) days before selection of the Securities to be redeemed
under Section 1103 and ending at the close of business on (A) if such Securities
      ------------
are issuable only as Registered Securities, the day of the mailing of the
relevant notice of redemption, and (B) if such Securities are issuable as Bearer
Securities, the day of the first publication of the relevant notice of
redemption or, if such Securities are also issuable as Registered Securities and
there is no publication, the day of the mailing of the relevant notice of
redemption, or (ii) to register the transfer of or exchange any Registered
Security so selected for redemption in whole or in part, except, in the case of
any Registered Security to be redeemed in part, the portion thereof not to be
redeemed, or (iii) to exchange any Bearer Security so selected for redemption
except that such a Bearer Security may be exchanged for a Registered Security of
such series and like tenor, provided that such Registered Security is
                            --------
simultaneously surrendered for redemption, or (iv) to issue, register the
transfer of or exchange any Security which has been surrendered for repayment at
the option of the Holder, except the portion, if any, of such Security not to be
so repaid.

         SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities. If any
                      ------------------------------------------------
mutilated Security or a Security with a mutilated coupon appertaining thereto is
surrendered to the Trustee or the Company, together with, in proper cases, such
security or indemnity as may be required by the Company or the Trustee to save
each of them or any of their agents harmless, the Company shall execute and the
Trustee shall authenticate and deliver in exchange therefor a new Security of
the same series and principal amount, containing identical terms and provisions
and bearing a number not contemporaneously outstanding, with coupons
corresponding to the coupons, if any, appertaining to the surrendered Security.

         If there is delivered to the Company and the Trustee (i) evidence to
their satisfaction of the destruction, loss or theft of any Security or coupon,
and (ii) such security or indemnity as may be required by them to save each of
them and any of their agents harmless, then, in the absence of notice to the
Company or the Trustee that such Security or coupon has been acquired by a bona
fide purchaser, the Company shall execute, and upon Company Request the Trustee
shall authenticate and deliver, in lieu of any such destroyed, lost or stolen
Security or in exchange for the Security to which a destroyed, lost or stolen
coupon appertains (with all appurtenant coupons not destroyed, lost or stolen),
a new Security of the same series and principal amount, containing identical
terms and

                                       32
<PAGE>
 
provisions and bearing a number not contemporaneously outstanding, with coupons
corresponding to the coupons, if any, appertaining to such destroyed, lost or
stolen Security or to the Security to which such destroyed, lost or stolen
coupon appertains.

         Notwithstanding the provisions of the previous two paragraphs, in case
any such mutilated, destroyed, lost or stolen Security or coupon has become or
is about to become due and payable, the Company in its discretion may, instead
of issuing a new Security, with coupons corresponding to the coupons, if any,
appertaining to such destroyed, lost or stolen Security or to the Security to
which such destroyed, lost or stolen coupon appertains, pay such Security or
coupon; provided, however, that payment of principal of (and premium or Make-
        --------  -------
Whole Amount, if any, on) and interest and Additional Amounts, if any, on any
Bearer Securities shall, except as otherwise provided in Section 1002, be
                                                         ------------
payable only at an office or agency located outside the United States and,
unless otherwise specified as contemplated by Section 301, any interest on
                                              -----------
Bearer Securities shall be payable only upon presentation and surrender of the
coupons appertaining thereto.

         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 which may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.

         Every new Security of any series and any coupons appertaining thereto
issued pursuant to this Section in lieu of any destroyed, lost or stolen
Security, or in exchange for a Security to which a destroyed, lost or stolen
coupon appertains, shall constitute an original additional contractual
obligation of the Company, whether or not the destroyed, lost or stolen Security
and any coupons appertaining thereto or the destroyed, lost or stolen coupon are
at any time enforceable by anyone, and shall be entitled to all the benefits of
this Indenture equally and proportionately with any and all other Securities of
such series and any coupons appertaining thereto 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 or coupons.

         SECTION 307. Payment of Interest; Interest Rights Preserved. Except as
                      ----------------------------------------------
otherwise specified with respect to a series of Securities in accordance with
the provisions of Section 301, interest on any Registered 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 such Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest at the office or agency of the Company maintained
for such purpose pursuant to Section 1002; provided, however, that each
                             ------------  --------  -------
installment of interest on any Registered Security may at the Company's option
be paid by (i) mailing a check for such interest, payable to or upon the written
order of the Person entitled thereto pursuant to Section 308, to the address of
                                                 -----------
such Person as it appears on the Security Register, or (ii) transfer to an
account maintained by the payee located inside the United States.

                                       33
<PAGE>
 
         Unless otherwise provided as contemplated by Section 301 with respect
                                                      -----------
to the Securities of any series, payment of interest may be made, in the case of
a Bearer Security, by transfer to an account maintained by the payee with a bank
located outside the United States.

         Unless otherwise provided as contemplated by Section 301, every
                                                      -----------
permanent global Security will provide that interest, if any, payable on any
Interest Payment Date will be paid to DTC, Euroclear and/or CEDEL, as the case
may be, with respect to that portion of such permanent global Security held for
its account by Cede & Co. or the Common Depositary, as the case may be, for the
purpose of permitting such party to credit the interest received by it in
respect of such permanent global Security to the accounts of the beneficial
owners thereof.

         In case a Bearer Security of any series is surrendered in exchange for
a Registered Security of such series after the close of business (at an office
or agency in a Place of Payment for such series) on any Regular Record Date and
before the opening of business (at such office or agency) on the next succeeding
Interest Payment Date, such Bearer Security shall be surrendered without the
coupon relating to such Interest Payment Date and interest will not be payable
on such Interest Payment Date in respect of the Registered Security issued in
exchange for such Bearer Security, but will be payable only to the Holder of
such coupon when due in accordance with the provisions of this Indenture.

         Except as otherwise specified with respect to a series of Securities in
accordance with the provisions of Section 301, any interest on any Registered
                                  -----------
Security of any series which is payable, but is not punctually paid or duly
provided for, on any Interest Payment Date ("Defaulted Interest") shall
                                             ------------------
forthwith cease to be payable to the registered Holder thereof upon 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, as provided in paragraph
(1) or (2) below:

                  (1) The Company may elect to make payment of any Defaulted
         Interest to the Persons in whose names the Registered Securities of
         such series (or their respective Predecessor Securities) are registered
         at the close of business on a Special Record Date for the payment of
         such Defaulted Interest, which shall be fixed in the following manner.
         The Company shall notify the Trustee in writing of the amount of
         Defaulted Interest proposed to be paid on each Registered Security of
         such series and the date of the proposed payment (which shall not be
         less than twenty (20) days after such notice is received by the
         Trustee), and at the same time the Company shall deposit with the
         Trustee an amount of money in the currency or currencies, currency unit
         or units or composite currency or currencies in which the Securities of
         such series are payable (except as otherwise specified pursuant to
         Section 301 for the Securities of such series) 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 on
         or 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 provided in this paragraph. Thereupon, the
         Trustee shall fix a Special Record Date for the payment of such
         Defaulted Interest which shall be not more than fifteen (15) days and
         not less than ten (10) days prior to the date of the proposed payment
         and not less than ten (10)

                                       34
<PAGE>
 
         days after the receipt by the Trustee of the notice of the proposed
         payment. The Trustee shall promptly notify the Company of such Special
         Record Date and, in the name and at the expense of the Company shall
         cause notice of the proposed payment of such Defaulted Interest and the
         Special Record Date therefor to be mailed, first-class postage prepaid,
         to each Holder of Registered Securities of such series at such Holder's
         address as it appears in the Security Register not less than ten (10)
         days prior to such Special Record Date. The Trustee may, in its
         discretion, in the name and at the expense of the Company cause a
         similar notice to be published at least once in an Authorized Newspaper
         in each place of payment, but such publications shall not be a
         condition precedent to the establishment of such Special Record Date.
         Notice of the proposed payment of such Defaulted Interest and the
         Special Record Date therefor having been mailed as aforesaid, such
         Defaulted Interest shall be paid to the Persons in whose names the
         Registered Securities of such series (or their respective Predecessor
         Securities) are registered at the close of business on such Special
         Record Date and shall no longer be payable pursuant to paragraph (2)
         below. In case a Bearer Security of any series is surrendered at the
         office or agency in a Place of Payment for such series in exchange for
         a Registered Security of such series after the close of business at
         such office or agency on any Special Record Date and before the opening
         of business at such office or agency on the related proposed date for
         payment of Defaulted Interest, such Bearer Security shall be
         surrendered without the coupon relating to such proposed date of
         payment and Defaulted Interest will not be payable on such proposed
         date of payment in respect of the Registered Security issued in
         exchange for such Bearer Security, but will be payable only to the
         Holder of such coupon when due in accordance with the provisions of
         this Indenture.

                  (2) The Company may make payment of any Defaulted Interest on
         the Registered Securities of any series in any other lawful manner not
         inconsistent with the requirements of any securities exchange on which
         such Securities may be listed, and on 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 paragraph, such manner of payment
         is deemed practicable by the Trustee.

         Subject to the foregoing provisions of this Section and Section 305,
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.  Prior to due presentment of a
                       --------------------- 
Registered Security for registration of transfer, the Company, the Trustee and
any agent of the Company or the Trustee may treat the Person in whose name such
Registered Security is registered as the owner of such Security for the purpose
of receiving payment of principal of (and premium or Make-Whole Amount, if any,
on) and (subject to Sections 305 and 307) interest and Additional Amounts, if
                    ------------     ---
any, on such Registered Security and for all other purposes whatsoever, whether
or not such Registered 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.

                                       35
<PAGE>
 
         Title to any Bearer Security and any coupons shall pass by delivery.
The Company, the Trustee and any agent of the Company or the Trustee may treat
the Holder of any Bearer Security and the Holder of any coupon as the absolute
owner of such Security or coupon for the purpose of receiving payment thereof or
on account thereof and for all other purposes whatsoever, whether or not such
Security or coupon 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.

         None of the Company, the Trustee, any Paying Agent or the Security
Registrar shall have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests of a Security in global form or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.

         Notwithstanding the foregoing, with respect to any global Security,
nothing herein shall prevent the Company, the Trustee, or any agent of the
Company or the Trustee, from giving effect to any written certification, proxy
or other authorization furnished by any depositary, as a Holder, with respect to
such global Security or impair, as between such depositary and owners of
beneficial interests in such global Security, the operation of customary
practices governing the exercise of the rights of such depositary (or its
nominee) as Holder of such global Security.

         SECTION 309.  Cancellation.  All Securities and coupons surrendered for
                       ------------
payment, redemption, repayment at the option of the Holder, registration of
transfer or exchange or for credit against any sinking fund payment shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee,
and any such Securities and coupons and any Securities and coupons surrendered
directly to the Trustee for any such purpose shall be promptly canceled 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 may deliver to the Trustee (or
to any other Person for delivery to the Trustee) for cancellation any Securities
previously authenticated hereunder which the Company has not issued and sold,
and all Securities so delivered shall be promptly canceled by the Trustee. If
the Company so acquires any of the Securities, however, such acquisition shall
not operate as a redemption or satisfaction of the indebtedness represented by
such Securities unless and until the same are surrendered to the Trustee for
cancellation. No Securities shall be authenticated in lieu of or in exchange for
any Securities canceled as provided in this Section, except as expressly
permitted by this Indenture. Canceled Securities and coupons held by the Trustee
shall be destroyed by the Trustee and the Trustee shall deliver a certificate of
such destruction to the Company unless the Company delivers a Company Order
which directs their return to it.

         SECTION 310.  Computation of Interest.  Except as otherwise specified
                       -----------------------
as contemplated by Section 301 with respect to Securities of any series,
                   -----------
interest on the Securities of each series shall be computed on the basis of a
360-day year consisting of twelve (12) 30-day months.

                                       36
<PAGE>
 
                                 ARTICLE FOUR
                          SATISFACTION AND DISCHARGE

         SECTION 401.  Satisfaction and Discharge of Indenture.  This Indenture
                       ---------------------------------------
shall, upon Company Request, cease to be of further effect with respect to any
series of Securities specified in such Company Request (except as to any
surviving rights of registration of transfer or exchange of Securities of such
series herein expressly provided for and any right to receive Additional
Amounts, as provided in Section 1010), and the Trustee, upon receipt of a
Company Order and at the expense of the Company, shall execute proper
instruments acknowledging satisfaction and discharge of this Indenture as to
such series when:

                  (1)  either:

                       (A) all Securities of such series theretofore
                  authenticated and delivered and any coupons appertaining
                  thereto (other than (i) coupons appertaining to Bearer
                  Securities surrendered for exchange for Registered Securities
                  and maturing after such exchange, whose surrender is not
                  required or has been waived as provided in Section 305, (ii)
                                                             -----------
                  Securities of such series and coupons appertaining thereto
                  which have been destroyed, lost or stolen and which have been
                  replaced or paid as provided in Section 306, (iii) coupons
                                                  -----------
                  appertaining to Securities called for redemption and maturing
                  after the relevant Redemption Date, whose surrender has been
                  waived as provided in Section 1106, and (iv) Securities of
                                        ------------
                  such series and coupons appertaining thereto 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 Securities of such series and, in the case of
                  clauses (i) and (ii) below, any coupons appertaining thereto
                  not theretofore delivered to the Trustee for cancellation:

                           (i)   have become due and payable,

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

                           (iii) if redeemable at the option of the Company, are
                       to be called for redemption within one (1) 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 clause (i), (ii) or (iii)
                  above, has irrevocably deposited or caused to be deposited
                  with the Trustee funds in trust for the purpose,

                                       37
<PAGE>
 
                  in the currency or currencies, currency unit or units or
                  composite currency or currencies in which the Securities of
                  such series are payable, and in an amount sufficient to pay
                  and discharge the entire indebtedness on such Securities and
                  such coupons not theretofore delivered to the Trustee for
                  cancellation, for the principal (and premium or Make-Whole
                  Amount, if any) and interest and Additional Amounts, if any,
                  to the date of such deposit (in the case of Securities which
                  have become due and payable) or the Stated Maturity or
                  Redemption Date, as the case may be;

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

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

Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee and any predecessor Trustee under
Section 606, the obligations of the Company to any Authenticating Agent under
- -----------
Section 611 and, if money has been deposited with and held by the Trustee
- -----------
pursuant to subparagraph (B) of paragraph (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 Funds.  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, the coupons 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 or Make-Whole Amount, if any)
and interest and Additional Amounts, if any, for the payment of which such money
has been deposited with or received by the Trustee, but such money need not be
segregated from other funds except to the extent required by law.


                                 ARTICLE FIVE
                                   REMEDIES

         SECTION 501. Events of Default. Subject to any modifications, additions
                      -----------------
or deletions relating to any series of Securities as contemplated pursuant to
Section 301, "Event of Default," whenever used herein with respect to any
- -----------   ----------------
particular series of Securities, means any one of the following events (whatever
the reason for such Event of Default and whether or not it is voluntary or
involuntary or 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 on or any
         Additional Amounts payable in respect of any Security of or within such
         series or of any coupon appertaining thereto,

                                       38
<PAGE>
 
         when such interest, Additional Amounts or coupon becomes due and
         payable, and continuance of such default for a period of thirty (30)
         days;

                  (2)  default in the payment of the principal of (or premium or
         Make-Whole Amount, if any, on) any Security of such series when due and
         payable at its Maturity;

                  (3)  default in the deposit of any sinking fund payment, when
         and as due by the terms of any Security of such series;

                  (4)  default in the performance, or breach, of any covenant or
         warranty of the Company in this Indenture with respect to any Security
         of such series (other than a covenant or warranty a default in the
         performance of which or the breach of which is elsewhere specifically
         provided for in this Section), and continuance of such default or
         breach for a period of sixty (60) days after there has been given, by
         registered or certified mail, to the Company by the Trustee or to the
         Company and the Trustee by the Holders of at least twenty-five percent
         (25%) in principal amount of the Outstanding Securities of such series,
         a written notice specifying such default or breach and requiring it to
         be remedied and stating that such notice is a "Notice of Default"
                                                        -----------------
         hereunder;

                  (5)  default under any bond, debenture, note or other evidence
         of indebtedness of the Company or under any mortgage, indenture or
         other instrument of the Company (including a default with respect to
         Securities of any series other than such series) under which there may
         be issued or by which there may be secured any indebtedness of the
         Company (or by any Significant Subsidiary, the repayment of which the
         Company has guaranteed or for which the Company is directly responsible
         or liable as obligor or guarantor), whether such indebtedness now
         exists or is hereafter created, which, after the termination of any
         applicable grace or cure period, (a) constitutes a Payment Default or
         (b) results in the acceleration of such indebtedness prior to its
         express maturity and, in each case, the principal amount of any
         indebtedness, together with the principal amount of any other such
         indebtedness under which there has been a Payment Default or which has
         been so accelerated, aggregates [$25,000,000] or more; provided that,
         in calculating the aggregate principal amount of any such indebtedness,
         the Hedging Obligations of any Person under which there has been a
         Payment Default or which has been so accelerated shall not be netted
         against any other Hedging Obligation of such Person, within a period of
         ten (10) 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 ten percent (10%) in principal amount of the
         Outstanding Securities of such series a written notice specifying such
         default and requiring the Company to cause such indebtedness to be
         discharged or cause such acceleration to be rescinded or annulled and
         stating that such notice is a "Notice of Default" hereunder;
                                        -----------------

                  (6) the entry by a court of competent jurisdiction of one or
         more final judgments, orders or decrees against the Company or any
         Significant Subsidiary of the Company in an aggregate amount (excluding
         amounts covered by insurance) in excess of [$25,000,000] and

                                       39
<PAGE>
 
         such judgments, orders or decrees remain undischarged, unstayed and
         unsatisfied in an aggregate amount (excluding amounts covered by
         insurance) in excess of [$25,000,000] for a period of sixty (60)
         consecutive days;

                  (7)  the Company or any Significant Subsidiary of the Company,
         pursuant to or within the meaning of any Bankruptcy Law:

                       (A) commences a voluntary case,

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

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

                       (D) makes a general assignment for the benefit of its
                  creditors;

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

                       (A) is for relief against the Company or any Significant
                  Subsidiary of the Company in an involuntary case,

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

                       (C) orders the liquidation of the Company or any
                  Significant Subsidiary of the Company,

         and the order or decree remains unstayed and in effect for ninety (90)
days; or

                  (9)  any other Event of Default provided with respect to
         Securities of such series.

As used in this Section 501, the term "Bankruptcy Law" means Title 11, U.S. Code
                -----------            --------------
or any similar Federal or state law for the relief of debtors and the term
"Custodian" means any receiver, trustee, assignee, liquidator or other similar
 ---------
official under any Bankruptcy Law.

         SECTION 502. Acceleration of Maturity; Rescission and Annulment. If an
                      --------------------------------------------------
Event of Default (other than an Event of Default set forth in Section 501(7) or
                                                              --------------
(8)) with respect to Securities of any series at the time Outstanding occurs and
- ---
is continuing, then and in every such case, unless the principal of all of the
Outstanding Securities of such series already has become due and payable, the
Trustee or the Holders of not less than twenty-five percent (25%) in principal
amount of the Outstanding Securities of such series may declare the principal
(or, if any Securities are Original Issue Discount Securities or Indexed
Securities, such portion of the principal as may be specified

                                       40
<PAGE>
 
in the terms thereof) of, and the Make-Whole Amount, if any, on, all the
Securities of such series to be due and payable immediately, by a notice in
writing to the Company (and to the Trustee if given by the Holders), and upon
any such declaration such principal or specified portion thereof shall become
immediately due and payable. If an Event of Default set forth in Section 501(7)
                                                                 --------------
or (8) occurs and is continuing with respect to the Securities of any series,
   ---
then in each such case, the principal of, and the Make-Whole Amount, if any, on,
all the Securities of such series shall be due and payable immediately, without
notice to the Company.

         At any time after such a declaration of acceleration with respect to
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter
provided in this Article, the Holders of a majority in principal amount of the
Outstanding Securities of such series, 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, in the currency, currency unit or composite
         currency in which the Securities of such series are payable (except as
         otherwise specified pursuant to Section 301 for the Securities of such
                                         -----------
         series):

                         (A)  all overdue installments of interest on and any
                  Additional Amounts payable in respect of all Outstanding
                  Securities of such series and any coupons appertaining
                  thereto;

                         (B)  the principal of (and premium or Make-Whole
                  Amount, if any, on) any Outstanding Securities of such series
                  which have become due otherwise than by such declaration of
                  acceleration and interest thereon at the rate or rates borne
                  by or provided for in such Securities;

                         (C)  to the extent that payment of such interest is
                  lawful, interest on overdue installments of interest and any
                  Additional Amounts at the rate or rates borne by or provided
                  for in such 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 with respect to Securities of
         such series, other than the nonpayment of the principal of (or premium
         or Make-Whole Amount, if any, on) or interest or Additional Amounts, if
         any, on Securities of such series 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
resulting therefrom.

                                       41
<PAGE>
 
         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 installment of
         interest or Additional Amounts, if any, on any Security of any series
         or any coupon appertaining thereto when such interest or Additional
         Amount becomes due and payable and such default continues for a period
         of thirty (30) days, or

               (2)  default is made in the payment of the principal of (or
         premium or Make-Whole Amount, if any, on) any Security of any series at
         its Maturity,

then the Company shall, upon demand of the Trustee, pay to the Trustee, for the
benefit of the Holders of the Securities of such series and any such coupons,
the whole amount then due and payable on such Securities and any such coupons
for principal (and premium or Make-Whole Amount, if any) and interest and
Additional Amounts, if any, with interest on any overdue principal (and premium
or Make-Whole Amount, if any) and, to the extent that payment of such interest
is legally enforceable, on any overdue installments of interest or Additional
Amounts, if any, at the rate or rates borne by or provided for in such
Securities, and, in addition thereto, such further amount as is sufficient to
cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel.

         If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, and may
prosecute such proceeding to judgment or final decree, and may enforce the same
against the Company or any other obligor on the Securities of such series and
collect the moneys adjudged or decreed to be payable in the manner provided by
law out of the property of the Company or any other obligor on the Securities of
such series, wherever situated.

         If an Event of Default with respect to Securities of any series occurs
and is continuing, the Trustee may in its discretion proceed to protect and
enforce its rights and the rights of the Holders of Securities of such series
and any coupons appertaining thereto by such appropriate judicial proceedings as
the Trustee deems 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 the pendency
                      --------------------------------
of any receivership, insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition or other judicial proceeding relative to
the Company or any other obligor on the Securities of such series or the
property of the Company or of such other obligor or their creditors, the Trustee
(irrespective of whether the principal of the Securities of any series is then
due and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Trustee has made any demand on the Company for the
payment of overdue principal, premium or Make- Whole Amount, if any, or interest
or Additional Amounts, if any) shall be entitled and empowered, by intervention
in such proceeding or otherwise:

                                       42
<PAGE>
 
               (1)  to file and prove a claim for the whole amount, or such
         lesser amount as may be provided for in the Securities of such series,
         of principal (and premium or Make-Whole Amount, if any) and interest
         and Additional Amounts, if any, owing and unpaid in respect of the
         Securities of such series and to file such other papers or documents
         and take such other action, including participating as a member of any
         official creditors committee appointed in the matter, as it may deem
         necessary or advisable in order to have the claims of the Trustee
         (including any claim for the reasonable compensation, expenses,
         disbursements and advances of the Trustee, its agents and counsel) and
         of the Holders allowed in such judicial proceeding, and

               (2)  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 of Securities of such series and any coupons appertaining thereto to
make such payments to the Trustee, and in the event that the Trustee consents to
the making of such payments directly to the Holders, to pay to the Trustee any
amount due to it for the reasonable compensation, expenses, disbursements and
advances of the Trustee and any predecessor Trustee, their agents and counsel,
and any other amounts due the Trustee or any predecessor Trustee under Section
                                                                       -------
606.
- ---

         Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder of a Security
or coupon any plan of reorganization, arrangement, adjustment or composition
affecting the Securities or coupons or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Holder of a
Security or coupon in any such proceeding.

         SECTION 505. Trustee May Enforce Claims Without Possession of
                      ------------------------------------------------   
Securities or Coupons. All rights of action and claims under this Indenture or
- ---------------------
any of the Securities or any coupons may be prosecuted and enforced by the
Trustee without the possession of any of the Securities or coupons 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 and coupons in respect of which such judgment has been
recovered.

         SECTION 506. Application of Money Collected. Any money collected by the
                      ------------------------------
Trustee pursuant to this Article shall be applied in the following order, at the
date or dates fixed by the Trustee and, in case of the distribution of such
money on account of principal (or premium or Make- Whole Amount, if any) or
interest or Additional Amounts, if any, on presentation of the Securities or
coupons, or both, as the case may be, and the notation thereon of the payment if
only partially paid and upon surrender thereof if fully paid:

                                       43
<PAGE>
 
                  (1) to the payment of all amounts due the Trustee and any
         predecessor Trustee under Section 606;
                                   -----------

                  (2) to the payment of the amounts then due and unpaid on the
         Securities and coupons for principal (and premium or Make-Whole Amount,
         if any) and interest and Additional Amounts, if any, payable, 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 aggregate amounts due and payable on such Securities
         and coupons for principal (and premium or Make-Whole Amount, if any)
         and interest and Additional Amounts, if any, respectively; and

                  (3) to the payment of the remainder, if any, to the Company.

         SECTION 507. Limitation on Suits. No Holder of any Security of any
                      -------------------
series or any coupon appertaining thereto 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 with respect to the Securities
         of such series;

                  (2) the Holders of not less than twenty-five percent (25%) in
         principal amount of the Outstanding Securities of such series 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 sixty (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 sixty (60)-day period by the
         Holders of a majority in principal amount of the Outstanding Securities
         of such series;

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

         SECTION 508. Unconditional Right of Holders to Receive Principal,
                      ---------------------------------------------------
Premium or Make-Whole Amount, Interest and Additional Amounts. Notwithstanding
- -------------------------------------------------------------
any other provision in this

                                       44
<PAGE>
 
Indenture, the Holder of any Security or coupon shall have the right which is
absolute and unconditional to receive payment of the principal of (and premium
or Make-Whole Amount, if any, on ) and (subject to Sections 305 and 307)
                                                   -----------      ---
interest and Additional Amounts, if any, on such Security or payment of such
coupon on or after the respective due dates expressed in such Security or coupon
(or, in the case of redemption, on the Redemption Date) and to institute suit
for the enforcement of any such payment, and such rights shall not be impaired
or affected without the consent of such Holder.

         SECTION 509. Restoration of Rights and Remedies. If the Trustee or any
                      ----------------------------------
Holder of a Security or coupon 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 the Company, the Trustee and the
Holders of Securities and coupons shall, subject to any determination in such
proceeding, 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 or coupons in the last paragraph of Section 306, no
                                                              -----------
right or remedy herein conferred on or reserved to the Trustee or to the Holders
of Securities or coupons is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall 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 or coupon 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 of Securities or coupons, as the
case may be.

         SECTION 512. Control by Holders of Securities. The Holders of not less
                      --------------------------------
than a majority in principal amount of the Outstanding Securities of any series
shall have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred on the Trustee with respect to the Securities of such series,
provided that:

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

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

                                       45
<PAGE>
 
                  (3) the Trustee need not take any action which might involve
         it in personal liability or be unduly prejudicial to the Holders of
         Securities of such series not joining therein (but the Trustee shall
         have no obligation as to the determination of such undue prejudice).

         SECTION 513. Waiver of Past Defaults. The Holders of at least a
                      -----------------------
majority in principal amount of the Outstanding Securities of any series may, on
behalf of the Holders of all the Securities of such series and any coupons
appertaining thereto, waive any past default hereunder with respect to such
series and its consequences, except a default:

                  (1) in the payment of the principal of (or premium or Make-
         Whole Amount, if any, on) or interest or Additional Amounts, if any, on
         any Security of such series or any coupons appertaining thereto, 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 of such series affected thereby.

         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 Event of Default or impair any right resulting therefrom.

         SECTION 514. Waiver of Usury, Stay or Extension Laws. The Company
                      ---------------------------------------
covenants (to the extent which it may lawfully do so) that it shall not at any
time insist on, or plead, or in any manner whatsoever claim or take the benefit
or advantage of, any usury, 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 which it may lawfully do so)
hereby expressly waives all benefit or advantage of any such law, and covenants
that it shall not hinder, delay or impede the execution of any power herein
granted to the Trustee, but shall suffer and permit the execution of every such
power as though no such law had been enacted.

         SECTION 515. Undertaking for Costs. All parties to this Indenture
                      ---------------------
agree, and each Holder of any Security by such Holder's acceptance thereof shall
be deemed to have agreed, that any court may in its discretion require, in any
suit for the enforcement of any right or remedy under this Indenture, or in any
suit against the Trustee for any action taken or omitted by it as Trustee, the
filing by any party litigant in such suit of any undertaking to pay the costs of
such suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit
having due regard to the merits and good faith of the claims or defenses made by
such party litigant; but the provisions of this Section shall not apply to any
suit instituted by the Trustee, to any suit instituted by any Holder, or group
of Holders, holding in the aggregate more than ten percent (10%) in principal
amount of the Outstanding Securities, or to any suit instituted by any Holder
for the enforcement of the payment of the principal of (or premium or Make-Whole
Amount, if any, on) or interest or Additional Amounts, if any, on any Security
on or

                                       46
<PAGE>
 
after the respective Stated Maturities expressed in such Security (or, in the
case of redemption, on or after the Redemption Date).


                                  ARTICLE SIX
                                  THE TRUSTEE

         SECTION 601. Notice of Defaults. Within ninety (90) days after the
                      ------------------
occurrence of any default hereunder with respect to the Securities of any
series, the Trustee shall give to the Holders of the Securities of such series,
in the manner and to the extent provided in Section 313(c) of the Trust
Indenture Act, notice of such default hereunder known to the Trustee, unless
such default has been cured or waived; provided, however, that, except in the
                                       --------  -------
case of a default in the payment of the principal of (or premium or Make-Whole
Amount, if any, on) or interest or Additional Amounts, if any, on any Security
of such series, or in the payment of any sinking fund installment with respect
to the Securities of such series, the Trustee shall be protected in withholding
such notice if and so long as Responsible Officers of the Trustee in good faith
determine that the withholding of such notice is in the interests of the Holders
of the Securities and coupons of such series; and provided, further, that in the
                                                  --------  -------
case of any default or breach of the character specified in clause (4) of
Section 501 with respect to the Securities of such series and any coupons
- -----------
appertaining thereto, no such notice to Holders shall be given until at least
sixty (60) days after the occurrence thereof. For the purposes 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 with respect to the Securities of such
series.

         SECTION 602. Certain Rights of Trustee. Subject to the provisions of
                      -------------------------
Section 315(a) through 315(d) of the Trust Indenture Act:

                  (1) the Trustee shall perform only such duties as are
         expressly undertaken by it to perform under this Indenture;

                  (2) 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, coupon or other paper or document
         believed by it to be genuine and to have been signed or presented by
         the proper party or parties;

                  (3) any request or direction of the Company mentioned herein
         shall be sufficiently evidenced by a Company Request or Company Order
         (other than delivery of any Security, together with any coupons
         appertaining thereto, to the Trustee for authentication and delivery
         pursuant to Section 303, which shall be sufficiently evidenced as
                     -----------
         provided therein) and any resolution of the Board of Directors shall be
         sufficiently evidenced by a Board Resolution;

                  (4) whenever, in the administration of this Indenture, the
         Trustee deems it desirable that a matter be proved or established prior
         to taking, suffering or omitting any

                                       47
<PAGE>
 
         action hereunder, the Trustee (unless other evidence is specifically
         prescribed herein) may, in the absence of bad faith on its part, rely
         on a Company Certificate;

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

                  (6)  the Trustee shall be under no obligation to exercise any
         of the rights or powers vested in it by this Indenture at the request
         or direction of any of the Holders of Securities of any series or any
         coupons appertaining thereto pursuant to this Indenture, unless such
         Holders 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;

                  (7)  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, coupon 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 determines 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;

                  (8)  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;

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

                  (10) The Trustee shall not be deemed to have knowledge of any
         event or fact upon the occurrence of which it may be required to take
         action hereunder unless a Responsible Officer of the Trustee has actual
         knowledge of the occurrence of such event or fact; and

                  (11) The Trustee shall not be required 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 has reasonable grounds for believing that repayment of
         such funds or adequate indemnity against such risk or liability is not
         reasonably assured to it.

         SECTION 603. Not Responsible for Recitals or Issuance of Securities.
                      ------------------------------------------------------
The recitals contained herein and in the Securities, except the Trustee's
certificate of authentication, and in any coupons shall be taken as the
statements of the Company and neither the Trustee nor any Authenticating

                                       48
<PAGE>
 
Agent assumes any responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Securities or any coupons, except that the Trustee represents that it is duly
authorized to execute and deliver this Indenture, authenticate the Securities
and perform its obligations hereunder. Neither the Trustee nor any
Authenticating Agent shall be accountable for the use or application by the
Company of Securities or the proceeds thereof.

         SECTION 604. May Hold Securities. The Trustee, any Paying Agent,
                      -------------------
Security Registrar, 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 coupons and, subject to Sections 310(b) and 311 of the Trust
Indenture Act, 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 605. Money Held in Trust; Permitted Investments. 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, or investment of, any money received by it hereunder except as otherwise
agreed with and for the sole benefit of the Company.

         Pending their use under this Indenture, moneys held by the Trustee
hereunder may be invested in Permitted Investments maturing or redeemable at the
option of the holder at or before the time when such moneys are expected to be
needed by the Trustee and shall be so invested pursuant to a Company Order if no
Event of Default known to the Trustee then exists under this Indenture and
otherwise at the discretion of the Trustee. Any investment pursuant to this
Section 605 shall be held by the Trustee as a part of the moneys held by the
- -----------
Trustee hereunder, as applicable, and shall be sold or redeemed to the extent
necessary to make payments or transfers or anticipated payments from such
moneys.

         The Trustee shall be entitled to rely on all written investment
instructions provided by the Company hereunder, and shall have no duty to
monitor the compliance thereof with the restrictions set forth herein. The
Trustee shall have no responsibility or liability for any depreciation in the
value of any investment or for any loss, direct or indirect, resulting from any
investment made in accordance with a Company Order. The Trustee shall be without
liability to the Company or any Holder or any other person in the event that any
investment made in accordance with a Company Order shall cause any person to
incur any liability or rebates or other monies payable pursuant to the Internal
Revenue Code of 1986, as amended.

         Any interest realized on investments and any profit realized upon the
sale or other disposition thereof shall be credited to moneys held by the
Trustee hereunder and any loss shall be charged thereto.

         SECTION 606. 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);

                                       49
<PAGE>
 
                  (2) except as otherwise expressly provided herein, to
         reimburse each of the Trustee and any predecessor Trustee upon its
         request for all reasonable expenses, disbursements and advances
         incurred or made by it in connection with its administration of the
         trust hereunder (including the reasonable compensation and the expenses
         and disbursements of its agents and counsel), except to the extent any
         such expense, disbursement or advance may be attributable to its
         negligence or bad faith; and

                  (3) to indemnify each of the Trustee and any predecessor
         Trustee for, and to hold it harmless against, any loss, liability or
         expense, arising out of or in connection with the acceptance or
         administration of the trust or trusts or the performance of its duties
         hereunder, including the costs and expenses of defending itself against
         any claim or liability in connection with the exercise or performance
         of any of its powers or duties hereunder except to the extent any such
         loss, liability or expense may be attributable to its own negligence or
         bad faith.

         As security for the performance of the obligations of the Company under
this Section, the Trustee shall have a lien prior to the Securities on all
property and funds held or collected by the Trustee as such, except funds held
in trust for the payment of principal of (or premium or Make- Whole Amount, if
any, on) or interest or Additional Amounts, if any, on particular Securities or
any coupons.

         The provisions of this Section shall survive the termination of this
Indenture.

         SECTION 607. Trustee Eligibility; Conflicting Interests. There shall at
                      ------------------------------------------
all times be a Trustee hereunder which is eligible to act as Trustee under
Section 310(a)(1) of the Trust Indenture Act and has a combined capital and
surplus of at least [$50,000,000]. If such Trustee publishes reports of
condition at least annually, pursuant to law or the requirements of Federal,
State, Territorial or District of Columbia supervising or examining authority,
then for the purposes of this Section, the combined capital and surplus of such
Trustee shall be deemed to be its combined capital and surplus as set forth in
its most recent report of condition so published. No obligor on the Securities
or Affiliate of any such obligor shall serve as Trustee on such Securities. If
at any time the Trustee ceases 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 608. 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 in accordance with the applicable requirements of Section 609.
                                                                   -----------

                  (b) The Trustee may resign at any time with respect to the
         Securities of one or more series by giving written notice thereof to
         the Company. If an instrument of acceptance by a successor Trustee has
         not been delivered to the Trustee within thirty (30) days after the

                                       50
<PAGE>
 
         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 with respect to the
         Securities of any series by Act of the Holders of a majority in
         principal amount of the Outstanding Securities of such series delivered
         to the Trustee and the Company.

                  (d)      If at any time:

                           (1) the Trustee fails to comply with the provisions
                  of Section 310(b) of the Trust Indenture Act after written
                  request therefor by the Company or any Holder of a Security
                  who has been a bona fide Holder of a Security for at least six
                  (6) months,

                           (2) the Trustee ceases to be eligible under Section
                                                                       -------
                  607 and fails to resign after written request therefor by the
                  ---  
                  Company or any Holder of a Security who has been a bona fide
                  Holder of a Security for at least six (6) months, or

                           (3) the Trustee becomes incapable of acting or is
                  adjudged a bankrupt or insolvent or a receiver of the Trustee
                  or of its property is appointed or any public officer takes
                  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 or pursuant to a Board
         Resolution, may remove the Trustee and appoint a successor Trustee with
         respect to all Securities, or (ii) subject to Section 315(e) of the
         Trust Indenture Act, any Holder of a Security who has been a bona fide
         Holder of a Security for at least six (6) months may, on behalf of such
         Holder and all others similarly situated, petition any court of
         competent jurisdiction for the removal of the Trustee with respect to
         all Securities and the appointment of a successor Trustee or Trustees.

                  (e) If the Trustee resigns, is removed or becomes incapable of
         acting, or if a vacancy occurs in the office of Trustee for any cause
         with respect to the Securities of one or more series, the Company, by
         or pursuant to a Board Resolution, shall promptly appoint a successor
         Trustee or Trustees with respect to the Securities of such series (it
         being understood that any such successor Trustee may be appointed with
         respect to the Securities of one or more or all of such series and that
         at any time there shall be only one Trustee with respect to the
         Securities of any particular series). If, within one (1) year after
         such resignation, removal or incapability, or the occurrence of such
         vacancy, a successor Trustee with respect to the Securities of any
         series is appointed by Act of the Holders of a majority in principal
         amount of the Outstanding Securities of such series delivered to the
         Company and the retiring Trustee, the successor Trustee so appointed
         shall, forthwith upon its acceptance of such appointment, become the
         successor Trustee with respect to the Securities of such series and to
         that extent supersede the successor Trustee appointed by the Company.
         If no successor Trustee with respect to the Securities of any series
         has been so appointed by

                                      51
<PAGE>
 
         the Company or the Holders of Securities and accepted appointment in
         the manner hereinafter provided, any Holder of a Security who has been
         a bona fide Holder of a Security of such series for at least six (6)
         months may, on behalf of such Holder and all others similarly situated,
         petition any court of competent jurisdiction for the appointment of a
         successor Trustee with respect to Securities of such series.

                  (f) The Company shall give notice of each resignation and each
         removal of the Trustee with respect to the Securities of any series and
         each appointment of a successor Trustee with respect to the Securities
         of any series in the manner provided for notices to the Holders of
         Securities in Section 106. Each notice shall include the name of the
                       -----------  
         successor Trustee with respect to the Securities of such series and the
         address of its Corporate Trust Office.

         SECTION 609. Acceptance of Appointment by Successor.
                      --------------------------------------   

                  (a)  In case of the appointment hereunder of a successor
         Trustee with respect to all Securities, every such successor Trustee
         shall execute, acknowledge and deliver to the Company and 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,
         subject nevertheless to its claim, if any, provided for in Section 606.
                                                                    -----------
         
                  (b)  In case of the appointment hereunder of a successor
         Trustee with respect to the Securities of one or more (but not all)
         series, the Company, the retiring Trustee and each successor Trustee
         with respect to the Securities of one or more series shall execute and
         deliver an indenture supplemental hereto, pursuant to Article Nine,
                                                               ------------  
         wherein each successor Trustee shall accept such appointment and which
         (i) shall contain such provisions as are necessary or desirable to
         transfer and confirm to, and to vest in, each successor Trustee all the
         rights, powers, trusts and duties of the retiring Trustee with respect
         to the Securities of such series to which the appointment of such
         successor Trustee relates, (ii) if the retiring Trustee is not retiring
         with respect to all Securities, shall contain such provisions as are
         necessary or desirable to confirm that all the rights, powers, trusts
         and duties of the retiring Trustee with respect to the Securities of
         such series as to which the retiring Trustee is not retiring shall
         continue to be vested in the retiring Trustee, and (iii) shall add to
         or change any of the provisions of this Indenture as are necessary to
         provide for or facilitate the administration of the trusts hereunder by
         more than one Trustee, it being understood that nothing herein or in
         such supplemental indenture shall constitute such Trustees co-trustees
         of the same trust and that each such Trustee shall be trustee of a
         trust or trusts hereunder separate and apart from any trust or trusts
         hereunder administered by any other such Trustee;

                                      52
<PAGE>
 
         and, upon the execution and delivery of such supplemental indenture,
         the resignation or removal of the retiring Trustee shall become
         effective to the extent provided therein and each such successor
         Trustee, without any further act, deed or conveyance, shall become
         vested with all the rights, powers, trusts and duties of the retiring
         Trustee with respect to the Securities of such series to which the
         appointment of such successor Trustee relates; but, on request of the
         Company or any successor Trustee, such retiring Trustee shall duly
         assign, transfer and deliver to such successor Trustee all property and
         money held by such retiring Trustee hereunder with respect to the
         Securities of such series to which the appointment of such successor
         Trustee relates.

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

                  (d) No 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  610.  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 of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided that 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 or coupons 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 or coupons so
authenticated with the same effect as if such successor Trustee had itself
authenticated such Securities or coupons. In case any Securities or coupons have
not been authenticated by such predecessor Trustee, any such successor Trustee
may authenticate and deliver such Securities or coupons, in either its own name
or that of its predecessor Trustee, with the full force and effect which this
Indenture provides for the certificate of authentication of the Trustee.

         SECTION 611. Appointment of Authenticating Agent. At any time when any
                      -----------------------------------
of the Securities remain Outstanding, the Trustee may appoint an Authenticating
Agent or Agents with respect to one or more series of Securities which shall be
authorized to act on behalf of the Trustee to authenticate Securities of such
series issued upon exchange, registration of transfer or partial redemption or
repayment thereof, 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. Any such appointment shall be
evidenced by an instrument in writing signed by a Responsible Officer of the
Trustee, a copy of which instrument shall be promptly furnished to the Company.
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 reference shall be

                                      53
<PAGE>
 
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, except as may otherwise be provided pursuant to
Section 301, shall at all times be a bank or trust company or corporation
- -----------
organized and doing business and in good standing under the laws of the United
States of America or of any State 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 or District of Columbia authorities. If such Authenticating
Agent publishes reports of condition at least annually, pursuant to law or the
requirements of the aforesaid 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. In case at any
time an Authenticating Agent ceases 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 corporation 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
is 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 corporation is otherwise eligible under this
Section, without the execution or filing of any paper or further act on the part
of the Trustee or the Authenticating Agent.

         An Authenticating Agent for any series of Securities may at any time
resign by giving written notice of resignation to the Trustee for such series
and the Company. The Trustee for any series of Securities may at any time
terminate the agency of an Authenticating Agent by giving written notice of
termination to such Authenticating Agent and the Company. Upon receiving such a
notice of resignation or upon such a termination, or in case at any time such
Authenticating Agent ceases to be eligible in accordance with the provisions of
this Section, the Trustee for such series may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall give notice of such
appointment to all Holders of Securities of or within the series with respect to
which such Authenticating Agent will serve in the manner set forth 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 herein. 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 including reimbursement of its reasonable expenses
for its services under this Section.

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

                                      54
<PAGE>
 
certificate of authentication, an alternate certificate of authentication
substantially in the following form:

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


                                             STATE STREET BANK AND TRUST
                                              COMPANY,
                                             as Trustee


                                             By:_______________________________,
                                             as Authenticating Agent


                                             By:_______________________________
                                                     Authorized Officer


                                 ARTICLE SEVEN
                HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY

         SECTION 701. Disclosure of Names and Addresses of Holders. Every Holder
                      --------------------------------------------   
of Securities or coupons, by receiving and holding the same, agrees with the
Company and the Trustee that neither the Company nor the Trustee nor any
Authenticating Agent nor any Paying Agent nor any Security Registrar shall be
held accountable by reason of the disclosure of any information as to the names
and addresses of the Holders of Securities in accordance with Section 312 of the
Trust Indenture Act, regardless of the source from which such information was
derived, and that the Trustee shall not be held accountable by reason of mailing
any material pursuant to a request made under Section 312(b) of the Trust
Indenture Act.

         SECTION 702. Reports by Trustee. Within sixty (60) days after [February
                      ------------------
1] of each year commencing with the first [February 1] after the first issuance
of Securities pursuant to this Indenture, the Trustee shall transmit by mail to
all Holders of Securities as provided in Section 313(c) of the Trust Indenture
Act a brief report dated as of such [February 1] if required by Section 313(a)
of the Trust Indenture Act.

         SECTION 703. Company to Furnish Trustee Names and Addresses of Holders.
                      ---------------------------------------------------------
The Company shall furnish or cause to be furnished to the Trustee:

                  (a) semi-annually, not later than fifteen (15) days after the
         Regular Record Date for interest for each series of Securities, a list,
         in such form as the Trustee may reasonably require, of the names and
         addresses of the Holders of Registered Securities of such series as of
         such Regular Record Date, or if there is no Regular Record Date for
         interest for such

                                      55
<PAGE>
 
         series of Securities, semi-annually, on such dates as are set forth in
         the Board Resolution or indenture supplemental hereto authorizing such
         series, and

                  (b) at such other times as the Trustee may request in writing,
         within thirty (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
         fifteen (15) days prior to the time such list is furnished;

provided, however, that, so long as the Trustee is the Security Registrar, no
- -------- --------
such list shall be required to be furnished.


                                  ARTICLE EIGHT
                CONSOLIDATION, MERGER, SALE, LEASE OR CONVEYANCE

         SECTION 801.  Consolidations and Mergers of Company and Sales, Leases
                       -----------------------------------------------------  
and Conveyances. The Company will not consolidate or merge with or into (whether
or not the Company is the surviving corporation), or sell, assign, transfer,
lease, convey or otherwise dispose of all or substantially all of its properties
or assets in one or more related transactions, to another Person unless (i) the
surviving Person or the Person formed by or surviving such consolidation or
merger (if other than the Company) or to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made (the "Surviving
                                                                  ---------
Entity") is a corporation organized or existing under the laws of the United
- ------
States, any state thereof or the District of Columbia; (ii) the Surviving Entity
assumes all the obligations, including the due and punctual payment of the
principal of (and premium or Make-Whole Amount, if any, on) and interest and
Additional Amounts, if any, on all Securities, according to their tenor, and the
due punctual performance and observance of all covenants and conditions, of the
Company under the Securities and the Indenture pursuant to a supplemental
Indenture in form reasonably satisfactory to the Trustee; and (iii) immediately
before and after giving effect to such transaction and treating any indebtedness
which becomes an obligation of the Company as a result of such transaction as
having been incurred by the Company at the time of the transaction, no Event of
Default and no event which, after notice or the lapse of time or both, would
become an Event of Default shall have occurred and be continuing.

         SECTION 802. Rights and Duties of Successor Entity. In case of any such
                      -------------------------------------
consolidation, merger, sale, lease or conveyance and upon any such assumption by
the successor entity, such successor entity shall succeed to and be substituted
for the Company, with the same effect as if it had been named herein as the
party of the first part, and the predecessor entity, except in the event of a
lease, shall be relieved of any further obligation under this Indenture and the
Securities. Such successor entity thereupon may cause to be signed, and may
issue either in its own name or in the name of the Company, any or all of the
Securities issuable hereunder which theretofore have not been signed by the
Company and delivered to the Trustee; and, upon the order of such successor
entity, instead of the Company, and subject to all the terms, conditions and
limitations in this Indenture prescribed, the Trustee shall authenticate and
shall deliver any Securities which previously have been signed and delivered by
the officers of the Company to the Trustee for authentication, and any
Securities which such successor entity thereafter shall cause to be signed and
delivered to the

                                      56
<PAGE>
 
Trustee for that purpose. All the Securities so issued shall in all respects
have the same legal rank and benefit under this Indenture as the Securities
theretofore or thereafter issued in accordance with the terms of this Indenture
as though all of such Securities had been issued at the date of the execution
hereof.

         In case of any such consolidation, merger, sale, lease or conveyance,
such changes in phraseology and form (but not in substance) may be made in the
Securities thereafter to be issued as may be appropriate.

         SECTION 803. Company Certificate and Opinion of Counsel. Any
                      ------------------------------------------
consolidation, merger, sale, lease or conveyance permitted under Section 801 is
                                                                 -----------
also subject to the condition that the Trustee receive a Company Certificate and
an Opinion of Counsel to the effect that any such consolidation, merger, sale,
lease or conveyance, and the assumption by any successor entity, complies with
the provisions of this Article and that all conditions precedent herein provided
for relating to such transaction have been complied with.


                                 ARTICLE NINE
                            SUPPLEMENTAL INDENTURES

         SECTION 901. Supplemental Indentures Without Consent of Holders.
                      --------------------------------------------------   
Without the consent of any Holders of Securities or coupons, the Company, when
authorized by or pursuant to 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 contained herein and in the Securities;

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

                  (3) to add any additional Events of Default for the benefit of
         the Holders of all or any series of Securities (and if such Events of
         Default are to be for the benefit of less than all series of
         Securities, stating that such Events of Default are expressly being
         included solely for the benefit of such series); provided, however,
                                                          --------  -------
         that, in respect of any such additional Events of Default, such
         supplemental indenture may provide for a particular period of grace
         after default (which period may be shorter or longer than that allowed
         in the case of other defaults) or may provide for an immediate
         enforcement upon such default or may limit the remedies available to
         the Trustee upon such default or may limit the right of

                                      57
<PAGE>
 
         the Holders of a majority in aggregate principal amount of such series
         of Securities to which such additional Events of Default apply to waive
         such default;

                  (4) to add to or change any of the provisions of this
         Indenture to provide that Bearer Securities may be registrable as to
         principal, to change or eliminate any restrictions on the payment of
         the principal of (or premium or Make-Whole Amount, if any, on) or
         interest or Additional Amounts, if any, on Bearer Securities, to permit
         Bearer Securities to be issued in exchange for Registered Securities,
         to permit Bearer Securities to be issued in exchange for Bearer
         Securities of other authorized denominations or to permit or facilitate
         the issuance of Securities in uncertificated form, provided that any
                                                            --------
         such action shall not adversely affect the interests of the Holders of
         Securities of any series or any coupons appertaining thereto in any
         material respect;

                  (5) to change or eliminate any of the provisions of this
         Indenture, provided that any such change or elimination shall become
                    --------
         effective only when there is no Security Outstanding of any series
         created prior to the execution of such supplemental indenture which is
         entitled to the benefit of such provision;

                  (6) to secure the Securities;

                  (7) to establish the form or terms of Securities of any series
         and any coupons appertaining thereto as permitted by Sections 201 and
                                                              ------------   
         301, including the provisions and procedures, if applicable, for the
         --- 
         conversion of such Securities into Common Shares or other securities of
         the Company;

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

                  (9) to cure any ambiguity, to correct or supplement any
         provision hereof which may be defective or inconsistent with any other
         provision hereof, 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 or to make any other
         changes, provided that, in each case, such provisions shall not
                  --------   
         adversely affect the interests of the Holders of Securities of any
         series or any coupons appertaining thereto in any material respect;

                  (10) to close this Indenture with respect to the
         authentication and delivery of additional series of Securities or to
         qualify, or maintain qualification of, this Indenture under the Trust
         Indenture Act; or

                  (11) to supplement any of the provisions of this Indenture to
         such extent as are necessary to permit or facilitate the defeasance and
         discharge of any series of Securities pursuant to Sections 401, 1402
                                                           ------------ -----
         and 1403; provided that, in each case, any such action shall
             ----  --------

                                      58
<PAGE>
 
         not adversely affect the interests of the Holders of Securities of such
         series and any coupons appertaining thereto or any other series of
         Securities in any material respect.

         SECTION 902. Supplemental Indentures with Consent of Holders. With the
                      -----------------------------------------------
consent of the Holders of not less than a majority in principal amount of all
Outstanding Securities affected by such supplemental indenture, by Act of such
Holders delivered to the Company and the Trustee, the Company (when authorized
by or pursuant to a Board Resolution) and the Trustee may enter into an
indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or of modifying in any manner the rights of the Holders of
Securities and coupons 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 premium
         or Make-Whole Amount, if any, on) or any installment of principal of or
         interest on, any Security; or reduce the principal amount thereof or
         the rate or amount of interest thereon or any Additional Amounts
         payable in respect thereof, or any premium or Make-Whole Amount payable
         upon the redemption thereof, or change any obligation of the Company to
         pay Additional Amounts pursuant to Section 1010 (except as contemplated
                                            ------------ 
         by clause (1) of Section 801 and permitted by clause (1) of Section
                          -----------                                -------
         901), or reduce the amount of the principal of an Original Issue
         --- 
         Discount Security or Make-Whole Amount, if any, which would be due and
         payable upon a declaration of acceleration of the Maturity thereof
         pursuant to Section 502 or the amount thereof provable in bankruptcy
                     -----------
         pursuant to Section 504; or adversely affect any right of repayment at
                     -----------
         the option of the Holder of any Security, or change any Place of
         Payment where, or the currency or currencies, currency unit or units or
         composite currency or currencies in which, the principal of any
         Security or any premium or Make-Whole Amount or any Additional Amounts
         payable in respect thereof or the 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 or repayment at the option of the Holder, on or after the
         Redemption Date or the Repayment Date, as the case may be);

                  (2)  reduce the percentage in principal amount of the
         Outstanding Securities of any series, the consent of the Holders of
         which is required for any such supplemental indenture, or the consent
         of the Holders of which is required for any waiver with respect to such
         series (or compliance with certain provisions of this Indenture or
         certain defaults hereunder and their consequences) provided for in this
         Indenture, or reduce the requirements of Section 1504 for quorum or
         voting; or

                  (3) modify any of the provisions of this Section,  Section 513
                                                                     -----------
         or Section 1011,  except to increase the required  percentage to effect
            ------------   
         such  action  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.

                                      59
<PAGE>
 
         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 approves the substance thereof.

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

         SECTION 903.  Execution of Supplemental Indentures. In executing, or
                       -------------------------------------
accepting the additional trusts created by, any supplemental indenture permitted
by this Article or the modification thereby of the trusts created by this
Indenture, the Trustee shall be entitled to receive, and shall be fully
protected in relying on, 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 and of any coupon appertaining
thereto 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 as then in effect.

         SECTION  906.  Reference in Securities to Supplemental Indentures.
                        -------------------------------------------------- 
Securities of any series authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall, if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company so determines, new
Securities of any series so modified as to conform, in the opinion of the
Trustee and the Company, to any such supplemental indenture may be prepared and
executed by the Company and authenticated and delivered by the Trustee in
exchange for Outstanding Securities of such series.

         SECTION 907.  Notice of Supplemental Indentures. Promptly after the
                       ---------------------------------  
execution by the Company and the Trustee of any supplemental indenture pursuant
to the provisions of Section 902, the Company shall give notice thereof to the
                     -----------
Holders of each Outstanding Security affected, in the manner provided for in
Section 106, setting forth in general terms the substance of such supplemental
- -----------
indenture.

                                      60
<PAGE>
 
                                   ARTICLE TEN
                                    COVENANTS

         SECTION  1001.  Payment of Principal, Premium or Make-Whole Amount,
                         ---------------------------------------------------
Interest and Additional Amounts. The Company covenants and agrees for the
- -------------------------------
benefit of the Holders of each series of Securities that it shall duly and
punctually pay to the Trustee prior to 12:00 noon on the applicable date of
payment the principal of (and premium or Make-Whole Amount, if any, on) and
interest and Additional Amounts, if any, on the Securities of such series in
accordance with the terms of such series of Securities, any coupons appertaining
thereto and this Indenture. Unless otherwise specified as contemplated by
Section 301 with respect to any series of Securities, any interest and
- -----------
Additional Amounts, if any, on Bearer Securities on or before Maturity, other
than Additional Amounts, if any, payable as provided in Section 1010 in respect
                                                        ------------    
of principal of (or premium or Make-Whole Amount, if any, on) such a Security,
shall be payable only upon presentation and surrender of the several coupons for
such interest installments as are evidenced thereby as they severally mature.
Unless otherwise specified with respect to Securities of any series pursuant to
Section 301, at the option of the Company, all payments of principal may be paid
- -----------
by check to the registered Holder of the Registered Security or other person
entitled thereto against surrender of such Security.

         SECTION  1002.  Maintenance of Office or Agency. If Securities of a
                         -------------------------------
series are issuable only as Registered Securities, the Company shall maintain in
each Place of Payment for any series of Securities an office or agency where
Securities of such series may be presented or surrendered for payment, where
Securities of such series may be surrendered for registration of transfer or
exchange and where notices and demands to or on the Company in respect of the
Securities of such series and this Indenture may be served. If Securities of a
series are issuable as Bearer Securities, the Company shall maintain: (i) in the
city of [Boston, Massachusetts], an office or agency where any Registered
Securities of such series may be presented or surrendered for payment, where any
Registered Securities of such series may be surrendered for exchange, where
notices and demands to or on the Company in respect of the Securities of such
series and this Indenture may be served and where Bearer Securities of such
series and any coupons appertaining thereto may be presented or surrendered for
payment in the circumstances described in the following paragraph (and not
otherwise); (ii) subject to any laws or regulations applicable thereto, in a
Place of Payment for such series which is located outside the United States, an
office or agency where Securities of such series and any coupons appertaining
thereto may be presented and surrendered for payment (including payment of any
Additional Amounts payable on Securities of such series pursuant to Section
                                                                    -------
1010); provided, however, that if the Securities of such series are listed on
- ----   --------  -------
the Luxembourg Stock Exchange, The International Stock Exchange or any other
stock exchange located outside the United States and such stock exchange so
requires, the Company shall maintain a Paying Agent for the Securities of such
series in Luxembourg, London or any other required city located outside the
United States, as the case may be, so long as the Securities of such series are
listed on such exchange; and (iii) subject to any laws or regulations applicable
thereto, in a Place of Payment for such series located outside the United States
an office or agency where any Securities of such series may be surrendered for
registration of transfer, where Securities of such series may be surrendered

                                      61 
<PAGE>
 
for exchange and where notices and demands to or on the Company in respect of
the Securities of such series and this Indenture may be served. The Company
shall give prompt written notice to the Trustee of the location, and any change
in the location, of each such office or agency. If at any time the Company fails
to maintain any such required office or agency or fails 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, except that
Bearer Securities of such series and the related coupons may be presented and
surrendered for payment (including payment of any Additional Amounts payable on
Bearer Securities of such series pursuant to Section 1010) at the offices
                                             ------------
specified in the Security, in London, England, and the Company hereby appoints
the same as its agent to receive all such presentations, surrenders, notices and
demands, and the Company hereby appoints the Trustee as its agent to receive all
such presentations, surrenders, notices and demands.

     Unless otherwise specified with respect to any Securities pursuant to
Section 301, no payment of the principal of (or premium or Make-Whole Amount, if
- -----------
any, on) or interest or Additional Amounts, if any, on Bearer Securities shall
be made at any office or agency of the Company in the United States or by check
mailed to any address in the United States or by transfer to an account
maintained with a bank located in the United States; provided, however, that, if
                                                     --------  -------  
the Securities of a series are payable in Dollars, payment of the principal of
(and premium and Make- Whole Amount, if any, on) and interest and Additional
Amounts, if any, on any Bearer Security shall be made at the office of the
Company's Paying Agent in the city of [Boston, Massachusetts] if (but only if)
payment in Dollars of the full amount of such principal, premium, Make-Whole
Amount, interest or Additional Amounts, as the case may be, at all offices or
agencies outside the United States maintained for the purpose by the Company in
accordance with this Indenture, is illegal or effectively precluded by exchange
controls or other similar restrictions.

     The Company may from time to time designate one or more other offices or
agencies where the Securities of one or more series and any coupons appertaining
thereto may be presented or surrendered for any or all of 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 accordance with the requirements
set forth above for Securities of any series for such purposes. The Company
shall 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.
Unless otherwise specified with respect to any Securities pursuant to Section
                                                                      -------
301, the Company hereby designates as a Place of Payment for each series of
- ---
Securities the office or agency of the Company in the city of [Boston,
Massachusetts], and initially appoints the Trustee at its Corporate Trust Office
as Paying Agent in such city and as its agent to receive all such presentations,
surrenders, notices and demands.

     Unless otherwise specified with respect to any Securities pursuant to
Section 301, if and so long as the Securities of any series (i) are denominated
- -----------
in a Foreign Currency or (ii) may be payable in a Foreign Currency, or so long
as it is required under any other provision of the Indenture, then the Company
shall maintain with respect to each such series of Securities, or as so
required, at least one exchange rate agent.

                                      62
<PAGE>
 
          SECTION 1003. Money for Securities Payments to Be Held in Trust. If
                        -------------------------------------------------  
the Company at any time acts as its own Paying Agent with respect to any series
of any Securities and any coupons appertaining thereto, it shall, on or before
each due date of the principal of (and premium or Make- Whole Amount, if any,
on) or interest or Additional Amounts, if any, on any of the Securities of such
series, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum in the currency or currencies, currency unit or units or composite
currency or currencies in which the Securities of such series are payable
(except as otherwise specified pursuant to Section 301 for the Securities of
                                           -----------
such series) sufficient to pay the principal (and premium or Make-Whole Amount,
if any) or interest or Additional Amounts, if any, so becoming due until such
sums shall be paid to such Persons or otherwise disposed of as herein provided,
and shall promptly notify the Trustee of its action or failure so to act.

         Whenever the Company has one or more Paying Agents for any series of
Securities and any coupons appertaining thereto, it shall, on or before each due
date of the principal of (and premium or Make-Whole Amount, if any, on) or
interest or Additional Amounts, if any, on any Securities of such series,
deposit with a Paying Agent a sum (in the currency or currencies, currency unit
or units or composite currency or currencies described in the preceding
paragraph) sufficient to pay the principal (and premium or Make-Whole Amount, if
any) or interest or Additional Amounts, if any, so becoming due, such sum to be
held in trust for the benefit of the Persons entitled to such principal,
premium, Make-Whole Amount, interest or Additional Amounts and (unless such
Paying Agent is the Trustee) the Company shall 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 shall:

                  (1) hold all sums held by it for the payment of principal of
         (and premium or Make-Whole Amount, if any, on) or interest or
         Additional Amounts, if any, on Securities in trust for the benefit of
         the Persons entitled thereto until such sums shall be paid to such
         Persons or otherwise disposed of as herein provided;

                  (2) give the Trustee notice of any default by the Company (or
         any other obligor on the Securities) in the making of any such payment
         of principal (and premium or Make-Whole Amount, if any) or interest or
         Additional Amounts, if any; and

                  (3) at any time during the continuance of any such default, on
         the written request of the Trustee, forthwith pay to the Trustee all
         sums so held in trust by such Paying Agent.

         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
on the same trusts as those on 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
sums.

                                      63
<PAGE>
 
         Except as otherwise provided in the Securities of any series, 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 or Make-Whole Amount, if
any, on) or interest or Additional Amounts, if any, on any Security of any
series and remaining unclaimed for two (2) years after such principal (and
premium or Make-Whole Amount, if any) interest or Additional Amounts, if any,
has become due and payable shall be paid to the Company upon 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 of the principal of (and premium or Make- Whole
Amount, if any, on) and interest and any Additional Amounts, if any, on any
Security of such series, without interest thereon, and all liability of the
Trustee or such Paying Agent with respect to such trust money, and all liability
of the Company as trustee thereof, shall thereupon cease; provided, however,
                                                          --------  -------  
that the Trustee or such Paying Agent, before being required to make any such
repayment, may at the expense of the Company cause to be published once, in an
Authorized Newspaper, notice that such money remains unclaimed and that, after a
date specified therein, which shall not be less than thirty (30) days from the
date of such publication, any unclaimed balance of such money then remaining
will be repaid to the Company.

         SECTION 1004. 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 the existence, rights (charter and statutory) and franchises of the
Company and its Subsidiaries; provided, however, that the Company shall not be
                              --------  -------
required to preserve any right or franchise if the Board of Directors determines
that the preservation thereof is no longer desirable in the conduct of the
business of the Company and its Subsidiaries as a whole and that the loss
thereof is not disadvantageous in any material respect to the Holders of
Securities of any series.

         SECTION 1005. Maintenance of Properties. The Company shall cause all of
                       -------------------------  
its 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 or any Subsidiary from selling or otherwise disposing for value its
properties in the ordinary course of its business.

         SECTION 1006. Insurance. The Company shall, and shall cause each of its
                       ---------  
Subsidiaries to, keep all of its insurable properties insured against loss or
damage at least equal to their then full insurable value with financially sound
and reputable insurance companies.

         SECTION 1007. Payment of Taxes and Other Claims. The Company shall pay
                       ---------------------------------
or discharge or cause to be paid or discharged, before the same become
delinquent, (i) all taxes, assessments and governmental charges levied or
imposed on the Company or any Subsidiary or on the income, profits or property
of the Company or any Subsidiary, and (ii) all lawful claims for labor,
materials and supplies which, if unpaid, might by law become a lien on the
property of the Company or any Subsidiary; provided, however, that the Company
                                           --------  -------
shall not be required to pay or discharge or cause

                                      64
<PAGE>
 
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.

         SECTION 1008. Reports.
                       -------  
                  (1) So long as any Securities of any series are outstanding,
         the Company will furnish to Holders of Securities of such series,
         within forty-five (45) days of the filing thereof with the Commission
         copies of the annual reports on Form 10-K, within twenty (20) days of
         the filing thereof with the Commission copies of the quarterly reports
         on Form 10-Q and within fifteen (15) days after the filing thereof with
         the Commission copies of the other information, documents and other
         reports (or copies of such portions of any of the foregoing as the
         Commission may by rules and regulations prescribe) that the Company is
         required to file with the Commission pursuant to Section 13 or 15(d) of
         the Exchange Act, provided that the Company's obligation to furnish
         such reports will be deemed satisfied to the extent the Company
         complies with Section 1008(2) and (4). All obligors on the Securities
                       ---------------     ---   
         shall comply with the provisions of Section 314(a) of the Trust
         Indenture Act. Notwithstanding that the Company may not be subject to
         the reporting requirements of Section 13 or 15(d) of the Exchange Act
         or otherwise report on an annual and quarterly basis on forms provided
         for such annual and quarterly reporting pursuant to rules and
         regulations promulgated by the Commission, the Company shall file with
         the Commission and provide to the Trustee (i) within one hundred thirty
         five (135) days after the end of each fiscal year, annual reports on
         Form 10-K (or any successor or comparable form) containing the
         information required to be contained therein (or required in such
         successor or comparable form), including a "Management's Discussion and
         Analysis of Financial Condition and Results of Operations" and a report
         thereon by the Company's certified public accountants; (ii) within
         sixty-five (65) days after the end of each of the first three (3)
         fiscal quarters of each fiscal year, reports on Form 10-Q (or any
         successor or comparable form) containing the information required to be
         contained therein (or required in any successor or comparable form),
         including a "Manage ment's Discussion and Analysis of Financial
         Condition and Results of Operations"; and (iii) promptly from time to
         time after the occurrence of an event required to be therein reported,
         such other reports on Form 8-K (or any successor or comparable form)
         containing the information required to be contained therein (or
         required in any successor or comparable form); provided, however, that
         the Company shall not be in default of the provisions of this Section
                                                                       -------
         1008(1) for any failure to file reports with the Commission solely by
         ------- 
         the refusal of the Commission to accept the same for filing. Each of
         the financial statements contained in such reports shall be prepared in
         accordance with GAAP.

                  (2) The Company's obligations under this Section 1008 will be
                                                           ------------ 
         deemed satisfied to the extent the Company provides the Trustee with a
         sufficient number of annual reports, information, documents and reports
         for the Trustee to provide or make available such annual reports,
         information, documents and reports to the Holders. The Trustee, at the
         Company's expense and written direction, shall promptly mail copies of
         all such annual reports, information, documents and other reports
         provided to the Trustee pursuant to Section 1008(1) hereof to the
                                             ---------------
         Holders at their addresses appearing in the Security Register.

                                      65
<PAGE>
 
                  (3) Whether or not required by the rules and regulations of
         the Commission, the Company shall file a copy of all such information
         and reports with the Commission for public availability and make such
         information available to securities analysts and prospective investors
         upon request.

                  (4) The Company shall provide the Trustee with a sufficient
         number of copies of all reports and other documents and information
         which the Trustee may be required to deliver to the Holders under this
         Section 1008.
         ------------ 
         
                  (5) Delivery of such reports, information and documents to the
         Trustee is for informational purposes only and the Trustee's receipt of
         such shall not constitute constructive notice of any information
         contained therein or determinable from information contained therein,
         including the Company's compliance with any of its covenants hereunder
         (as to which the Trustee is entitled to rely exclusively on Officers'
         Certificates) .

         SECTION 1009. Statement as to Compliance. The Company shall deliver to
                       --------------------------  
the Trustee, within one hundred thirty-five (135) days after the end of each
fiscal year, a brief certificate from the principal executive officer, principal
financial officer or principal accounting officer as to his or her knowledge of
the Company's compliance with all conditions and covenants under this Indenture
verified in the case of conditions precedent compliance with which is subject to
verification by accountants by the certificate or opinion of an accountant and,
in the event of any noncompliance, specifying such noncompliance and the nature
and status thereof. For purposes of this Section 1009, such compliance shall be
                                         ------------
determined without regard to any period of grace or requirement of notice
provided under this Indenture.

         SECTION 1010. Additional Amounts. If any Securities of a series provide
                       ------------------  
for the payment of Additional Amounts, the Company covenants and agrees for the
benefit of the Holders of Securities of such series that it shall pay to the
Holder of any Security of such series or any coupon appertaining thereto
Additional Amounts as may be specified as contemplated by Section 301. Whenever
                                                          -----------  
in this Indenture there is mentioned, in any context except in the case of
clause (1) of Section 502, the payment of the principal of or of any premium,
              ----------- 
Make-Whole Amount or interest on, or in respect of, any Security of any series
or payment of any coupon or the net proceeds received on the sale or exchange of
any Security of any series, such mention shall be deemed to include mention of
the payment of Additional Amounts provided by the terms of such series
established pursuant to Section 301 to the extent that, in such context,
                        ----------- 
Additional Amounts are, were or would be payable in respect thereof pursuant to
such terms and express mention of the payment of Additional Amounts (if
applicable) in any provisions hereof shall not be construed as excluding
Additional Amounts in those provisions hereof in which such express mention is
not made.

         Except as otherwise specified as contemplated by Section 301, if the
                                                          -----------  
Securities of a series provide for the payment of Additional Amounts, at least
ten (10) days prior to the first Interest Payment Date with respect to
Securities of such series (or if the Securities of such series will not bear
interest prior to Maturity, the first day on which a payment of principal and
any premium is made), and at least ten (10) days prior to each date of payment
of principal and any premium or

                                      66
<PAGE>
 
Make-Whole Amount or interest, if there has been any change with respect to the
matters set forth in the below-mentioned Company Certificate, the Company shall
furnish the Trustee and the principal Paying Agent or Paying Agents, if other
than the Trustee, with a Company Certificate instructing the Trustee and such
Paying Agent or Paying Agents whether such payment of principal of and any
premium or Make-Whole Amount or interest on the Securities of such series shall
be made to Holders of Securities of such series or any coupons appertaining
thereto who are not United States persons without withholding for or on account
of any tax, assessment or other governmental charge described in the Securities
of or within the series. If any such withholding is required, then such Company
Certificate shall specify by country the amount, if any, required to be withheld
on such payments to such Holders of Securities of such series or any coupons
appertaining thereto and the Company shall pay to the Trustee or such Paying
Agent the Additional Amounts required by the terms of such Securities. In the
event that the Trustee or any Paying Agent, as the case may be, shall not so
receive the above-mentioned certificate, then the Trustee or such Paying Agent
shall be entitled (i) to assume that no such withholding or deduction is
required with respect to any payment of principal or interest with respect to
any Securities of such series or any coupons appertaining thereto until it has
received a certificate advising otherwise, and (ii) to make all payments of
principal and interest with respect to the Securities of such series or any
coupons appertaining thereto without withholding or deductions until otherwise
advised. The Company covenants to indemnify the Trustee and any Paying Agent
for, and to hold them harmless against, any loss, liability or expense
reasonably incurred without negligence or bad faith on their part arising out of
or in connection with actions taken or omitted by any of them or in reliance on
any Company Certificate furnished pursuant to this Section or in reliance on the
Company's not furnishing such a Company Certificate.

         SECTION 1011. Waiver of Certain Covenants. The Company may omit in any
                       ---------------------------
particular instance to comply with any term, provision or condition set forth in
Sections 1004 to 1008, inclusive, and with any other term, provision or
- -------------    ----
condition with respect to the Securities of any series specified in accordance
with Section 301 (except any such term, provision or condition which could not
     -----------
be amended without the consent of all Holders of Securities of such series
pursuant to Section 902), if before or after the time for such compliance the
            -----------
Holders of at least a majority in principal amount of all outstanding Securities
of such series, by Act of such Holders, either waive such compliance in such
instance or generally waive compliance with such covenant or condition, but no
such waiver shall extend to or affect such covenant or condition except to the
extent so expressly waived, and, until such waiver shall become effective, the
obligations of the Company and the duties of the Trustee in respect of any such
term, provision or condition shall remain in full force and effect.

         SECTION 1012. Seniority of Securities. The Company covenants and agrees
                       -----------------------  
that the indebtedness represented by the Securities is hereby expressly made
senior to any indebtedness represented by any securities now outstanding or ever
issued or to be issued pursuant to the Indenture dated ___________, 1998 between
the Company and State Street Bank and Trust Company, as trustee, in respect of
subordinated debt securities or any amendments or supplements thereto.

                                      67
<PAGE>
 
                                ARTICLE ELEVEN
                           REDEMPTION OF SECURITIES

         SECTION 1101. Applicability of Article. Securities of any series which
                       ------------------------  
are redeemable before their Stated Maturity shall be redeemable in accordance
with their terms and (except as otherwise specified as contemplated by Section
                                                                       -------
301 for Securities of any series) in accordance with this Article.
- ---
         SECTION 1102. Election to Redeem; Notice to Trustee. The election of
                       -------------------------------------  
the Company to redeem any Securities shall be evidenced by or pursuant to a
Board Resolution. In case of any redemption at the election of the Company of
less than all of the Securities of any series, the Company shall, at least
thirty (30) days prior to the giving of the notice of redemption in Section 1104
                                                                    ------------
(unless a shorter notice shall be satisfactory to the Trustee), notify the
Trustee of such Redemption Date and of the principal amount of Securities of
such series to be redeemed. In the case of any redemption of Securities prior to
the expiration of any restriction on such redemption provided in the terms of
such Securities or elsewhere in this Indenture, the Company shall furnish the
Trustee with a Company Certificate evidencing compliance with such restriction.

         SECTION 1103. Selection by Trustee of Securities to Be Redeemed. If
                       -------------------------------------------------  
less than all the Securities of any series issued on the same day with the same
terms are to be redeemed, the particular Securities to be redeemed shall be
selected not more than sixty (60) days prior to the Redemption Date by the
Trustee, from the Outstanding Securities of such series issued on such date with
the same terms not previously called for redemption, by such method as the
Trustee deems fair and appropriate and which may provide for the selection for
redemption of portions (equal to the minimum authorized denomination for
Securities of such series or any integral multiple thereof) of the principal
amount of Securities of such series of a denomination larger than the minimum
authorized denomination for Securities of such series.

         The Trustee shall promptly notify the Company and the Security
Registrar (if other than itself) 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 Security redeemed or to be redeemed only in part, to the
portion of the principal amount of such Security which has been or is to be
redeemed.

         SECTION 1104. Notice of Redemption. Notice of redemption shall be given
                       --------------------  
in the manner provided in Section 106, not less than thirty (30) days nor more
                          -----------
than sixty (60) days prior to the Redemption Date, unless a shorter period is
specified by the terms of such series established pursuant to Section 301, to
                                                              -----------   
each Holder of Securities to be redeemed, but failure to give such notice in the
manner herein provided to the Holder of any Security designated for redemption
as a whole

                                      68
<PAGE>
 
or in part, or any defect in the notice to any such Holder, shall not affect the
validity of the proceedings for the redemption of any other such Security or
portion thereof.

         Any notice which is mailed to the Holders of Registered Securities in
the manner herein provided shall be conclusively presumed to have been duly
given, whether or not the Holder receives the notice.

         All notices of redemption shall state:

                  (1) the Redemption Date;

                  (2) the Redemption Price, accrued interest to the Redemption
         Date payable as provided in Section 1106, if any, and Additional
                                     ------------
         Amounts, if any;

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

                  (4) in case any Security is to be redeemed in part only, the
         notice which relates to such Security shall state that on and after the
         Redemption Date, on surrender of such Security, the holder will
         receive, without a charge, a new Security or Securities of authorized
         denominations for the principal amount thereof remaining unredeemed;

                  (5) that on the Redemption Date, the Redemption Price and
         accrued interest to the Redemption Date payable as provided in Section
                                                                        -------
         1106, if any, will become due and payable on each such Security, or the
         ---- 
         portion thereof, to be redeemed and, if applicable, that interest
         thereon shall cease to accrue on and after such date;

                  (6) the Place or Places of Payment where such Securities,
         together in the case of Bearer Securities with all coupons appertaining
         thereto, if any, maturing after the Redemption Date, are to be
         surrendered for payment of the Redemption Price and accrued interest,
         if any;

                  (7) that the redemption is for a sinking fund, if such is the
         case;

                  (8) that, unless otherwise specified in such notice, Bearer
         Securities of any series, if any, surrendered for redemption must be
         accompanied by all coupons appertaining thereto maturing subsequent to
         the date fixed for redemption or the amount of any such missing coupon
         or coupons will be deducted from the Redemption Price, unless security
         or indemnity satisfactory to the Company, the Trustee for such series
         and any Paying Agent is furnished;

                  (9) if Bearer Securities of any series are to be redeemed and
         any Registered Securities of such series are not to be redeemed, and if
         such Bearer Securities may be

                                      69
<PAGE>
 
         exchanged for Registered Securities not subject to the redemption on
         this Redemption Date pursuant to Section 305 or otherwise, the last
                                          -----------   
         date, as determined by the Company, on which such exchanges may be
         made; and

                  (10) the CUSIP number of such Security, if any, provided that
                                                                  --------
         neither the Company nor the Trustee shall have any responsibility for
         any such CUSIP number.

         Notice of redemption of Securities to be redeemed 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 1105. Deposit of Redemption Price. At least one (1) Business
                       ---------------------------  
Day 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, which
it may not do in the case of a sinking fund payment under Article Twelve,
                                                          --------------
segregate and hold in trust as provided in Section 1003) an amount of money in
                                           ------------  
the currency or currencies, currency unit or units or composite currency or
currencies in which the Securities of such series are payable (except as
otherwise specified pursuant to Section 301 for the Securities of such series)
                                -----------   
sufficient to pay on the Redemption Date the Redemption Price of, and (except if
the Redemption Date is an Interest Payment Date) accrued interest on, all the
Securities or portions thereof which are to be redeemed on such date.

         SECTION  1106.  Securities Payable on Redemption Date. Notice of
                         -------------------------------------
redemption having been given as provided above, the Securities so to be redeemed
shall, on the Redemption Date, become due and payable at the Redemption Price
therein specified in the currency or currencies, currency unit or units or
composite currency or currencies in which the Securities of such series are
payable (except as otherwise specified pursuant to Section 301 for the
                                                   -----------
Securities of such series) (together with accrued interest, if any, to the
Redemption Date), and from and after such date (unless the Company defaults in
the payment of the Redemption Price and accrued interest) such Securities shall,
if the same were interest-bearing, cease to bear interest and the coupons for
such interest appertaining to any Bearer Securities so to be redeemed, except to
the extent provided below, shall be void. Upon surrender of any such Security
for redemption in accordance with such notice, together with any coupons
appertaining thereto maturing after the Redemption Date, such Security shall be
paid by the Company at the Redemption Price, together with accrued interest, if
any, to the Redemption Date; provided, however, that installments of interest on
                             --------  ------- 
Bearer Securities whose Stated Maturity is on or prior to the Redemption Date
shall be payable only at an office or agency located outside the United States
(except as otherwise provided in Section 1002) and, unless otherwise specified
                                 ------------  
as contemplated by Section 301, only upon presentation and surrender of coupons
                   ----------- 
for such interest; and provided, further, that, installments of interest on
                       --------  -------  
Registered Securities 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 Bearer Security surrendered for redemption is not accompanied by
all coupons  appertaining  thereto  maturing  after the  Redemption  Date,  such
Security may be paid after  deducting from the Redemption  Price an amount equal
to the face amount of all such missing coupons, or the

                                      70
<PAGE>
 
surrender of such missing coupon or coupons may be waived by the Company and the
Trustee if there is furnished to them such security or indemnity as they may
require to save each of them and any Paying Agent harmless. If thereafter the
Holder of such Security surrenders to the Trustee or any Paying Agent any such
missing coupon in respect of which a deduction has been made from the Redemption
Price, such Holder shall be entitled to receive the amount so deducted;
provided, however, that interest represented by a coupon shall be payable only
- --------  -------
at an office or agency located outside the United States (except as otherwise
provided in Section 1002) and, unless otherwise specified as contemplated by
            ------------
Section 301, only upon presentation and surrender of such coupon.
- -----------

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

         SECTION 1107.  Securities Redeemed in Part. Any Security which is to be
                        ---------------------------
redeemed only in part (pursuant to the provisions of this Article or of Article
                                                                        -------
Twelve) shall be surrendered at a Place of Payment therefor (with, if the
- ------
Company or the Trustee so requires, due endorsement by, or a written instrument
of transfer in form satisfactory to the Company and the Trustee duly executed
by, the Holder thereof or his attorney duly authorized in writing and
accompanied by appropriate evidence of genuineness and authority) 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
the same series, 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
                                 SINKING FUNDS

         SECTION 1201.  Applicability of Article. The provisions of this Article
                        ------------------------
shall be applicable to any sinking fund for the retirement of Securities of a
series except as otherwise specified as contemplated by Section 301 for
                                                        -----------
Securities of such series.

         The minimum amount of any sinking fund payment provided for by the
terms of Securities of any series is herein referred to as a "mandatory sinking
                                                              ----------------- 
fund payment," and any payment in excess of such minimum amount provided for by
- ------------
the terms of such Securities of any series is herein referred to as an "optional
                                                                        --------
sinking fund payment." If provided for by the terms of any Securities of any
- --------------------
series, the cash amount of any mandatory sinking fund payment may be subject to
reduction as provided in Section 1202. Each sinking fund payment shall be
                         ------------
applied to the redemption of Securities of any series as provided for by the
terms of Securities of such series.

         SECTION 1202.  Satisfaction of Sinking Fund Payments with Securities.
                        -----------------------------------------------------
The Company may, in satisfaction of all or any part of any mandatory sinking
fund with respect to the Securities of a series, (i) deliver Outstanding
Securities of such series (other than any previously called for redemption),
together in the case of any Bearer Securities of such series with all unmatured
coupons

                                       71
<PAGE>
 
appertaining thereto, and (ii) apply as a credit Securities of such series which
have been redeemed either at the election of the Company pursuant to the terms
of such Securities or through the application of permitted optional sinking fund
payments pursuant to the terms of such Securities, as provided for by the terms
of such Securities, or which have otherwise been acquired by the Company,
provided that such Securities so delivered or applied as a credit have not been
- --------
previously so credited. Such Securities shall be received and credited for such
purpose by the Trustee at the applicable Redemption Price specified in such
Securities for redemption through operation of the sinking fund and the amount
of such mandatory sinking fund payment shall be reduced accordingly.

         SECTION 1203. Redemption of Securities for Sinking Fund. Not less than
                       -----------------------------------------
sixty (60) days prior to each sinking fund payment date for Securities of any
series, the Company shall deliver to the Trustee a Company Certificate
specifying the amount of the next ensuing mandatory sinking fund payment for
such series pursuant to the terms of such series, the portion thereof, if any,
which is to be satisfied by payment of cash in the currency or currencies,
currency unit or units or composite currency or currencies in which the
Securities of such series are payable (except as otherwise specified pursuant to
Section 301 for the Securities of such series) and the portion thereof, if any,
- ----------- 
which is to be satisfied by delivering and crediting Securities of such series
pursuant to Section 1202, and the optional amount, if any, to be added in cash
            ------------ 
to the next ensuing mandatory sinking fund payment, and shall also deliver to
the Trustee any Securities to be so delivered and credited. If such Company
Certificate specifies an optional amount to be added in cash to the next ensuing
mandatory sinking fund payment, the Company shall thereupon be obligated to pay
the amount therein specified. Not less than thirty (30) days before each such
sinking fund payment date the Trustee shall select the Securities to be redeemed
on such sinking fund payment date in the manner specified in Section 1103 and
                                                             ------------
cause notice of the redemption thereof to be given in the name of and at the
expense of the Company in the manner provided in Section 1104. Such notice
                                                 ------------
having been duly given, the redemption of such Securities shall be made upon the
terms and in the manner stated in Sections 1106 and 1107.
                                  -------------     ----

                               ARTICLE THIRTEEN
                      REPAYMENT AT THE OPTION OF HOLDERS

         SECTION 1301. Applicability of Article. Repayment of Securities of any
                       ------------------------
series before their Stated Maturity at the option of Holders thereof shall be
made in accordance with the terms of such Securities, if any, and (except as
otherwise specified by the terms of such series established pursuant to Section
                                                                        ------- 
301) in accordance with this Article.
- ---

         SECTION 1302. Repayment of Securities. Securities of any series subject
                       -----------------------
to repayment in whole or in part at the option of the Holders thereof will,
unless otherwise provided in the terms of such Securities, be repaid at a price
equal to the principal amount thereof, together with interest, if any, thereon
accrued to the Repayment Date specified in or pursuant to the terms of such
Securities. The Company covenants that at least one Business Day prior to the
Repayment Date it shall deposit with the Trustee or with a Paying Agent (or, if
the Company is acting as it own Paying Agent, segregate and hold in trust as
provided in Section 1003) an amount of money in the currency or
            ------------  

                                       72
<PAGE>
 
currencies, currency unit or units or composite currency or currencies in which
the Securities of such series are payable (except as otherwise specified
pursuant to Section 301 for the Securities of such series) sufficient to pay the
            -----------
principal (or, if so provided by the terms of the Securities of any series, a
percentage of the principal) of, and (except if the Repayment Date is an
Interest Payment Date) accrued interest on, all the Securities or portions
thereof, as the case may be, to be repaid on such date.

         SECTION 1303.  Exercise of Option. Securities of any series subject to
                        ------------------
repayment at the option of the Holders thereof will contain an "Option to Elect
Repayment" form on the reverse of such Securities. In order for any Security to
be repaid at the option of the Holder, the Trustee must receive at the Place of
Payment therefor specified in the terms of such Security (or at such other place
or places of which the Company shall from time to time notify the Holders of
such Securities), not earlier than sixty (60) days nor later than thirty (30)
days prior to the Repayment Date, (i) the Security so providing for such
repayment together with the "Option to Elect Repayment" form on the reverse
thereof duly completed by the Holder (or by the Holder's attorney duly
authorized in writing), or (ii) a telegram, telex, facsimile transmission or a
letter from a member of a national securities exchange, or the National
Association of Securities Dealers, Inc., or a commercial bank or trust company
in the United States setting forth the name of the Holder of the Security, the
principal amount of the Security, the principal amount of the Security to be
repaid, the CUSIP number, if any, or a description of the tenor and terms of the
Security, a statement that the option to elect repayment is being exercised
thereby and a guarantee that the Security to be repaid, together with the duly
completed form entitled "Option to Elect Repayment" on the reverse of the
Security, will be received by the Trustee not later than the fifth Business Day
after the date of such telegram, telex, facsimile transmission or letter;
provided, however, that such telegram, telex, facsimile transmission or letter
- --------  ------- 
shall only be effective if such Security and form duly completed are received by
the Trustee by such fifth Business Day. If less than the entire principal amount
of such Security is to be repaid in accordance with the terms of such Security,
the principal amount of such Security to be repaid, in increments of the minimum
denomination for Securities of such series, and the denomination or
denominations of the Security or Securities to be issued to the Holder for the
portion of the principal amount of such Security surrendered which is not to be
repaid, must be specified. The principal amount of any Security providing for
prepayment at the option of the Holder thereof may not be repaid in part if,
following such repayment, the unpaid principal amount of such Security would be
less than the minimum authorized denomination of Securities of or within the
series of which such Security to be repaid is a part. Except as otherwise may be
provided by the terms of any Security providing for repayment at the option of
the Holder thereof, exercise of the repayment option by the Holder shall be
irrevocable unless waived by the Company.

         SECTION 1304. When Securities Presented for Repayment Become Due and
                       ------------------------------------------------------
Payable. If Securities of any series providing for repayment at the option of
- -------
the Holders thereof have been surrendered as provided in this Article and as
provided by or pursuant to the terms of such Securities, such Securities or the
portions thereof, as the case may be, to be repaid shall become due and payable
and shall be paid by the Company on the Repayment Date therein specified, and on
and after such Repayment Date (unless the Company defaults in the payment of
such Securities on such Repayment Date) such Securities shall, if the same were
interest-bearing, cease to bear interest and

                                       73
<PAGE>
 
the coupons for such interest appertaining to any Bearer Securities so to be
repaid, except to the extent provided below, shall be void. Upon surrender of
any such Security for repayment in accordance with such provisions, together
with any coupons appertaining thereto maturing after the Repayment Date, the
principal amount of such security so to be repaid shall be paid by the Company,
together with accrued interest, if any, to the Repayment Date; provided,
                                                               --------
however, that coupons whose Stated Maturity is on or prior to the Repayment Date
- -------
shall be payable only at an office or agency located outside the United States
(except as otherwise provided in Section 1002) and, unless otherwise specified
                                 ------------ 
pursuant to Section 301, only upon presentation and surrender of such coupons;
            -----------
and provided, further, that, in the case of Registered Securities, installments
    --------  -------
of interest, if any, whose Stated Maturity is on or prior to the Repayment Date
shall be payable (but without interest thereon, unless the Company defaults in
the payment thereof) 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 Bearer Security surrendered for repayment is not accompanied by
all coupons appertaining thereto maturing after the Repayment Date, such
Security may be paid after deducting from the amount payable therefor as
provided in Section 1302 an amount equal to the face amount of all such missing
            ------------
coupons, or the surrender of such missing coupon or coupons may be waived by the
Company and the Trustee if there is furnished to them such security or indemnity
as they may require to save each of them and any Paying Agent harmless. If
thereafter the Holder of such Security surrenders to the Trustee or any Paying
Agent any such missing coupon in respect of which a deduction has been made as
provided in the preceding sentence, such Holder shall be entitled to receive the
amount so deducted; provided, however, that interest represented by a coupon
                    --------  ------- 
shall be payable only at an office or agency located outside the United States
(except as otherwise provided in Section 1002) and, unless otherwise specified
                                 ------------
as contemplated by Section 301, only upon presentation and surrender of such
                   -----------
coupon.

         If the principal amount of any Security surrendered for repayment shall
not be so repaid upon surrender thereof, such principal amount (together with
interest, if any, thereon accrued to such Repayment Date) shall, until paid,
bear interest from the Repayment Date at the rate of interest or Yield to
Maturity (in the case of Original Issue Discount Securities) set forth in such
Security.

         SECTION 1305. Securities Repaid in Part. Upon surrender of any
                       -------------------------
Registered Security which is to be repaid in part only, the Company shall
execute and the Trustee shall authenticate and deliver to the Holder of such
Security, without service charge and at the expense of the Company, a new
Registered Security or Securities of the same series, of any authorized
denomination specified by the Holder, in an aggregate principal amount equal to
and in exchange for the portion of the principal of such Security so surrendered
which is not to be repaid.

                                       74
<PAGE>
 
                               ARTICLE FOURTEEN
                      DEFEASANCE AND COVENANT DEFEASANCE

         SECTION  1401.  Applicability of Article; Company's Option to Effect
                         ----------------------------------------------------
Defeasance or Covenant Defeasance. If, pursuant to Section 301, provision is
- ---------------------------------                  -----------
made for either or both of (i) defeasance of the Securities of or within a
series under Section 1402, or (ii) covenant defeasance of the Securities of or
             ------------
within a series under Section 1403 to be applicable to the Securities of any
                      ------------   
series, then the provisions of such Section or Sections, as the case may be,
together with the other provisions of this Article (with such modifications
thereto as may be specified pursuant to Section 301 with respect to any
                                        -----------
Securities), shall be applicable to such Securities and any coupons appertaining
thereto, and the Company may at its option by Board Resolution, at any time,
with respect to such Securities and any coupons appertaining thereto, elect to
defease such Outstanding Securities and any coupons appertaining thereto
pursuant to Section 1402 (if applicable) or Section 1403 (if applicable) upon
            ------------                    ------------
compliance with the conditions set forth below in this Article.

         SECTION 1402. Defeasance and Discharge. Upon the Company's exercise of
                       ------------------------
the above option applicable to this Section with respect to any Securities of or
within a series, the Company shall be deemed to have been discharged from its
obligations with respect to such Outstanding Securities and any coupons
appertaining thereto on the date the conditions set forth in Section 1404 are
                                                             ------------
satisfied (hereinafter, "defeasance"). For this purpose, such defeasance means
                         ----------
that the Company shall be deemed to have paid and discharged the entire
indebtedness represented by such Outstanding Securities and any coupons
appertaining thereto, which shall thereafter be deemed "Outstanding" only for
the purposes of Section 1405 and the other Sections of this Indenture referred
                ------------
to in clauses (i) and (ii) below, and to have satisfied all of its other
obligations under such Securities and any coupons appertaining thereto and this
Indenture insofar as such Securities and any coupons appertaining thereto are
concerned (and the Trustee, at the expense of the Company, shall execute proper
instruments acknowledging the same), except for the following which shall
survive until otherwise terminated or discharged hereunder: (i) the rights of
Holders of such Outstanding Securities and any coupons appertaining thereto to
receive, solely from the trust fund described in Section 1404 and as more fully
                                                 ------------ 
set forth in such Section, payments in respect of the principal of (and premium
or Make-Whole Amount, if any, on) and interest and Additional Amounts, if any,
on such Securities and any coupons appertaining thereto when such payments are
due; (ii) the Company's obligations with respect to such Securities under
Sections 305, 306, 1002 and 1003 and with respect to the payment of Additional
- ------------  ---  ----     ---- 
Amounts, if any, on such Securities as contemplated by Section 1010; (iii) the
                                                       ------------
rights, powers, trusts, duties and immunities of the Trustee hereunder; and (iv)
this Article. Subject to compliance with this Article Fourteen, the Company may
                                              ----------------
exercise its option under this Section notwithstanding the prior exercise of its
option under Section 1403 with respect to such Securities and any coupons
             ------------
appertaining thereto.

         SECTION 1403. Covenant Defeasance. Upon the Company's exercise of the
                       -------------------
above option applicable to this Section with respect to any Securities of or
within a series, the Company shall be released from its obligations under
Sections 1004 to 1008, inclusive, and, if specified pursuant to Section 301, its
- -------------    ----                                           -----------
obligations under any other covenant, with respect to such Outstanding
Securities and any coupons appertaining thereto on and after the date the
conditions set forth in Section 1404

                                       75
<PAGE>
 
are satisfied (hereinafter, "covenant defeasance"), and such Securities and any
                             -------------------
coupons appertaining thereto shall thereafter be deemed not "Outstanding" for
the purposes of any direction, waiver, consent or declaration or Act of Holders
(and the consequences of any thereof) in connection with Sections 1004 to 1008,
                                                         -------------    ----
inclusive, or such other covenant, but shall continue to be deemed "Outstanding"
for all other purposes hereunder. For this purpose, such covenant defeasance
means that, with respect to such Outstanding Securities and any coupons
appertaining thereto, the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
Section or such other covenant, whether directly or indirectly, by reason of any
reference elsewhere herein to any such Section or such other covenant or by
reason of reference in any such Section or such other covenant to any other
provision herein or in any other document and such omission to comply shall not
constitute a default or an Event of Default under clause (4) or (9) of Section
                                                                       -------
501 or otherwise, as the case may be, but, except as specified above, the
- ---
remainder of this Indenture and such Securities and any coupons appertaining
thereto shall be unaffected thereby.

         SECTION 1404.  Conditions to Defeasance or Covenant Defeasance. The
                        -----------------------------------------------
following shall be the conditions to application of Section 1402 or Section 1403
                                                    ------------    ------------
to any Outstanding Securities of or within a series and any coupons appertaining
thereto:

                  (a)   The Company has irrevocably deposited or caused to be
         deposited with the Trustee (or another trustee satisfying the
         requirements of Section 607 who shall agree to comply with the
                         -----------
         provisions of this Article Fourteen applicable to it) funds in trust
                            ----------------
         for the purpose of making the following payments, specifically pledged
         as security for, and dedicated solely to, the benefit of the Holders of
         such Securities and any coupons appertaining thereto: (i) an amount in
         such currency or currencies, currency unit or units or composite
         currency or currencies in which such Securities and any coupons
         appertaining thereto are then specified as payable at Stated Maturity,
         or (ii) Government Obligations applicable to such Securities and any
         coupons appertaining thereto (determined on the basis of the currency
         or currencies, currency unit or units or composite currency or
         currencies in which such Securities and any coupons appertaining
         thereto are then specified as payable at Stated Maturity) which through
         the scheduled payment of principal and interest in respect thereof in
         accordance with their terms will provide, not later than one (1) day
         before the due date of any payment of principal of (and premium or 
         Make-Whole Amount, if any, on) and interest and Additional Amounts, if
         any, on such Securities and any coupons appertaining thereto, money in
         an amount, or (iii) a combination thereof in an amount, sufficient,
         without consideration of any reinvestment of such principal and
         interest, in the opinion of a nationally recognized firm of independent
         public accountants expressed in a written certification thereof
         delivered to the Trustee, to pay and discharge, and which shall be
         applied by the Trustee (or other qualifying trustee) to pay and
         discharge, (A) the principal of (and premium or Make-Whole Amount, if
         any, on) and interest and Additional Amounts, if any, on such
         Outstanding Securities and any coupons appertaining thereto on the
         Stated Maturity of such principal or installment of principal or
         interest, and (B) any mandatory sinking fund payments or analogous
         payments applicable to such Outstanding Securities and any coupons
         appertaining thereto on the day on which such payments are due and
         payable in accordance with the terms of this Indenture and of such
         Securities and any coupons

                                       76
<PAGE>
 
         appertaining thereto, provided that the Trustee has been irrevocably
                               --------
         instructed to apply such money or the proceeds of such Government
         Obligations to such payments with respect to such Securities. Before
         such a deposit, the Company may give to the Trustee, in accordance with
         Section 1102, a notice of its election to redeem all or any portion of
         ------------ 
         such Outstanding Securities at a future date in accordance with the
         terms of the Securities of such series and Article Eleven, which notice
         shall be irrevocable. Such irrevocable redemption notice, if given,
         shall be given effect in applying the foregoing.

                  (b) Such defeasance or covenant defeasance shall not result in
         a breach or violation of, or constitute a default under, this Indenture
         or any other material agreement or instrument to which the Company is a
         party or by which it is bound (and shall not cause the Trustee to have
         a conflicting interest pursuant to Section 310(b) of the Trust
         Indenture Act with respect to any Security of the Company).

                  (c) No Event of Default or event which with notice or lapse of
         time or both would become an Event of Default with respect to such
         Securities and any coupons appertaining thereto has occurred and is
         continuing on the date of such deposit or, insofar as clauses (7) and
         (8) of Section 501 are concerned, at any time during the period ending
                -----------
         on the ninety-first (91st) day after the date of such deposit (it being
         understood that this condition shall not be deemed satisfied until the
         expiration of such period).

                  (d) In the case of an election under Section 1402, the Company
                                                       ------------ 
         has delivered to the Trustee an Opinion of Counsel stating that (i) the
         Company has received from, or there has been published by, the Internal
         Revenue Service a ruling, or (ii) since the date of execution of this
         Indenture, there has been a change in the applicable federal income tax
         law, in either case to the effect that, and based thereon such opinion
         shall confirm that, the Holders of such Outstanding Securities and any
         coupons appertaining thereto will not recognize income, gain or loss
         for federal income tax purposes as a result of such defeasance and will
         be subject to federal income tax on the same amounts, in the same
         manner and at the same times as would have been the case if such
         defeasance had not occurred.

                  (e) In the case of an election under Section 1403, the Company
                                                       ------------
         has delivered to the Trustee an Opinion of Counsel to the effect that
         the Holders of such Outstanding Securities and any coupons appertaining
         thereto will not recognize income, gain or loss for Federal income tax
         purposes as a result of such covenant defeasance and will be subject to
         Federal income tax on the same amounts, in the same manner and at the
         same times as would have been the case if such covenant defeasance had
         not occurred.

                  (f)  The Company has delivered to the Trustee a Company
         Certificate and an Opinion of Counsel, each stating that all conditions
         precedent to the defeasance under Section 1402 or the covenant
                                           ------------
         defeasance under Section 1403 (as the case may be) have been complied
                          ------------
         with and an Opinion of Counsel to the effect that either (i) as a
         result of a deposit pursuant to paragraph (a) above and the related
         exercise of the Company's option under Section 1402 or Section 1403 (as
                                                ------------    ------------
         the case may be), registration is not required under the

                                       77
<PAGE>
 
         Investment Company Act of 1940, as amended, by the Company with respect
         to the trust funds representing such deposit or by the Trustee for such
         trust funds, or (ii) all necessary registrations under such Act have
         been effected.

                  (g) After the ninety-first (91st) day following the deposit,
         the trust funds will not be subject to the effect of any applicable
         bankruptcy, insolvency, reorganization or similar laws affecting
         creditors' rights generally.

                  (h) Notwithstanding any other provisions of this Section, such
         defeasance or covenant defeasance shall be effected in compliance with
         any additional or substitute terms, conditions or limitations which may
         be imposed on the Company in connection therewith pursuant to Section
         301.

         SECTION 1405. Deposited Money and Government Obligations to Be Held in
                       --------------------------------------------------------
Trust; Other Miscellaneous Provisions. Subject to the provisions of the last
- -------------------------------------
paragraph of Section 1003, all money and Government Obligations (or other
             ------------
property as may be provided pursuant to Section 301) (including the proceeds
                                        -----------
thereof) deposited with the Trustee (or other qualifying trustee) pursuant to
Section 1404 in respect of any Outstanding Securities of any series and any
coupons appertaining thereto shall be held in trust and applied by the Trustee
or such other qualifying trustee, in accordance with the provisions of such
Securities and any coupons appertaining thereto 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 or such other qualifying trustee
may determine, to the Holders of such Securities and any coupons appertaining
thereto of all sums due and to become due thereon in respect of principal (and
premium or Make-Whole Amount, if any) and interest and Additional Amounts, if
any, but such money need not be segregated from other funds except to the extent
required by law.

         Unless otherwise specified with respect to any Security pursuant to
Section 301, if, after a deposit referred to in Section 1404(a) has been made,
- -----------                                     ------------
(i) the Holder of a Security in respect of which such deposit was made is
entitled to, and does, elect pursuant to Section 301 or the terms of such
Security to receive payment in a currency, currency unit or composite currency
other than that in which the deposit pursuant to Section 1404(a) has been made
                                                 ---------------
in respect of such Security, or (ii) a Conversion Event occurs in respect of the
currency, currency unit or composite currency in which the deposit pursuant to
Section 1404(a) has been made, the indebtedness represented by such Security and
- ---------------
any coupons appertaining thereto shall be deemed to have been, and will be,
fully discharged and satisfied through the payment of the principal of (and
premium or Make-Whole Amount, if any, on), and interest and Additional Amounts,
if any, on such Security as the same become due out of the proceeds yielded by
converting (from time to time as specified below in the case of any such
election) the amount or other property deposited in respect of such Security
into the currency, currency unit or composite currency in which such Security
becomes payable as a result of such election or Conversion Event based on the
applicable market exchange rate for such currency, currency unit or composite
currency in effect on the second Business Day prior to each payment date,
except, with respect to a Conversion Event, for such currency, currency unit or
composite currency in effect (as nearly as feasible) at the time of the
Conversion Event.

                                       78
<PAGE>
 
         The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the Government Obligations deposited
pursuant to Section 1404 or the principal and interest received in respect
            ------------
thereof other than any such tax, fee or other charge which by law is for the
account of the Holders of such Outstanding Securities and any coupons
appertaining thereto.

         Anything in this Article to the contrary notwithstanding, the Trustee
or such other qualifying trustee shall deliver or pay to the Company, from time
to time upon Company Request, any money or Government Obligations (or other
property and any proceeds therefrom) held by it as provided in Section 1404
                                                               ------------
which, in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee or such other qualifying trustee, are in excess of the amount thereof
which would then be required to be deposited to effect a defeasance or covenant
defeasance, as applicable, in accordance with this Article.


                                ARTICLE FIFTEEN
                       MEETINGS OF HOLDERS OF SECURITIES

         SECTION 1501.  Purposes for Which Meetings May Be Called. A meeting of
                        -----------------------------------------
Holders of Securities of any series may be called at any time and from time to
time pursuant to this Article to make, give or take any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be made, given or taken by Holders of Securities of such
series.

         SECTION 1502. Call, Notice and Place of Meetings.
                       ----------------------------------

                  (1) The Trustee may at any time call a meeting of Holders of
         Securities of any series for any purpose specified in Section 1501, to
                                                               ------------
         be held at such time and at such place in the city of Boston,
         Massachusetts, as the Trustee determines. Notice of every meeting of
         Holders of Securities of any series, setting forth the time and the
         place of such meeting and in general terms the action proposed to be
         taken at such meeting, shall be given, in the manner provided in
         Section 106, not less than twenty-one (21) nor more than one hundred
         -----------
         eighty (180) days prior to the date fixed for the meeting.

                  (2) In case at any time the Company, pursuant to a Board
         Resolution, or the Holders of at least ten percent (10%) in principal
         amount of the Outstanding Securities of any series have requested the
         Trustee to call a meeting of the Holders of Securities of such series
         for any purpose specified in Section 1501, by written request setting
                                      ------------
         forth in reasonable detail the action proposed to be taken at the
         meeting, and the Trustee has not made the first publication of the
         notice of such meeting within twenty-one (21) days after receipt of
         such request or does not thereafter proceed to cause the meeting to be
         held as provided herein, then the Company or the Holders of Securities
         of such series in the amount above specified, as the case may be, may
         determine the time and the place in the city of [Boston,
         Massachusetts], for such meeting and may call such meeting for such
         purposes by giving notice thereof as provided in paragraph (a) above.

                                       79
<PAGE>
 
         SECTION 1503.  Persons Entitled to Vote at Meetings. To be entitled to
                        ------------------------------------
vote at any meeting of Holders of Securities of any series, a Person shall be
(i) a Holder of one or more Outstanding Securities of such series, or (ii) a
Person appointed by an instrument in writing as proxy for a Holder or Holders of
one or more Outstanding Securities of such series by such Holder or Holders. The
only Persons who shall be entitled to be present or to speak at any meeting of
Holders of Securities of any series are the Persons entitled to vote at such
meeting and their counsel, any representatives of the Trustee and its counsel,
and any representatives of the Company and its counsel.

         SECTION 1504.  Quorum; Action. The Persons entitled to vote a majority
                        --------------
in principal amount of the Outstanding Securities of a series shall constitute a
quorum for a meeting of Holders of Securities of such series; provided, however,
                                                              --------  -------
that if any action is to be taken at such meeting with respect to a consent or
waiver which this Indenture expressly provides may be given by the Holders of
not less than a specified percentage in principal amount of the Outstanding
Securities of a series, the Persons entitled to vote such specified percentage
in principal amount of the Outstanding Securities of such series shall
constitute a quorum. In the absence of a quorum within thirty (30) minutes after
the time appointed for any such meeting, the meeting shall, if convened at the
request of Holders of Securities of such series, be dissolved. In any other case
the meeting may be adjourned for a period of not less than ten (10) days as
determined by the chairman of the meeting prior to the adjournment of such
meeting. In the absence of a quorum at any such adjourned meeting, such
adjourned meeting may be further adjourned for a period of not less than ten
(10) days as determined by the chairman of the meeting prior to the adjournment
of such adjourned meeting. Notice of the reconvening of any adjourned meeting
shall be given as provided in Section 1502(a), except that such notice need be
                              ---------------
given only once not less than five (5) days prior to the date on which the
meeting is scheduled to be reconvened. Notice of the reconvening of any
adjourned meeting shall state expressly the percentage, as provided above, of
the principal amount of the Outstanding Securities of such series which shall
constitute a quorum.

         Except as limited by the proviso to Section 902, any resolution
                                             -----------
presented to a meeting or adjourned meeting duly reconvened at which a quorum is
present as aforesaid may be adopted by the affirmative vote of the Holders of a
majority in principal amount of the Outstanding Securities of such series;
provided, however, that, except as limited by the proviso to Section 902, any
- --------  -------                                            -----------
resolution with respect to any request, demand, authorization, direction,
notice, consent, waiver or other action which this Indenture expressly provides
may be made, given or taken by the Holders of a specified percentage, which is
less than a majority, in principal amount of the Outstanding Securities of a
series may be adopted at a meeting or an adjourned meeting duly reconvened and
at which a quorum is present as aforesaid by the affirmative vote of the Holders
of such specified percentage in principal amount of the Outstanding Securities
of such series.

         Any  resolution  passed or decision  taken at any meeting of Holders of
Securities  of any series duly held in  accordance  with this  Section  shall be
binding  on all the  Holders  of  Securities  of  such  series  and any  coupons
appertaining thereto, whether or not present or represented at the meeting.

         Notwithstanding  the foregoing  provisions of this Section 1504, if any
                                                            ------------
action is to be taken at a meeting of Holders of  Securities  of any series with
respect to any request, demand,

                                       80
<PAGE>
 
authorization,  direction,  notice,  consent,  waiver or other action which this
Indenture  expressly  provides  may be made,  given or taken by the Holders of a
specified percentage in principal amount of all Outstanding  Securities affected
thereby, or of the Holders of such series and one or more additional series;

                  a. there shall be no minimum quorum requirement for such
         meeting; and

                  b. the principal amount of the Outstanding  Securities of such
         series  which  vote in favor of such  request,  demand,  authorization,
         direction,  notice, consent, waiver or other action shall be taken into
         account in  determining  whether such request,  demand,  authorization,
         direction, notice, consent, waiver or other action has been made, given
         or taken under this Indenture.

         SECTION 1505. Determination of Voting Rights; Conduct and Adjournment
                       -------------------------------------------------------
                       of Meetings.
                       -----------

                  (1)  Notwithstanding  any  provisions of this  Indenture,  the
         Trustee may make such  reasonable  regulations as it may deem advisable
         for any meeting of Holders of Securities of a series in regard to proof
         of the holding of Securities of such series and of the  appointment  of
         proxies and in regard to the  appointment  and duties of  inspectors of
         votes,  the submission and  examination  of proxies,  certificates  and
         other evidence of the right to vote, and such other matters  concerning
         the conduct of the meeting as it deems appropriate. Except as otherwise
         permitted  or  required  by  any  such  regulations, the  holding  of
         Securities  shall be proved in the manner  specified in Section 104 and
                                                                 -----------  
         the appointment of any proxy shall be proved in the manner specified in
         Section 104 or by having the  signature of the Person executing the
         -----------
         proxy  witnessed or  guaranteed  by any trust company, bank or banker
         authorized by Section 104 to certify to the holding of Bearer
         Securities. Such regulations may provide that written instruments
         appointing proxies, regular on their face, may be presumed valid and
         genuine without the proof specified in Section 104 or other proof.
                                                -----------         

                  (2)  The Trustee shall, by an instrument in writing appoint a
         temporary chairman of the meeting, unless the meeting has been called
         by the Company or by Holders of Securities as provided in Section
                                                                   -------   
         1502(b), in which case the Company or the Holders of Securities of or
         -------
         within the series calling the meeting, as the case may be, shall in
         like manner appoint a temporary chairman. A permanent chairman and a
         permanent secretary of the meeting shall be elected by vote of the
         Persons entitled to vote a majority in principal amount of the
         Outstanding Securities of such series represented at the meeting.

                  (3)  At any meeting each Holder of a Security of such series
         or proxy shall be entitled to one (1) vote for each $1,000 principal
         amount of the Outstanding Securities of such series held or represented
         by such Holder; provided, however, that no vote shall be cast or
                         --------  -------
         counted at any meeting in respect of any Security challenged as not
         Outstanding and ruled by the chairman of the meeting to be not
         Outstanding. The chairman of the meeting shall have no right to vote,
         except as a Holder of a Security of such series or proxy.

                                       81
<PAGE>
 
                  (4)  Any meeting of Holders of Securities of any series duly
         called pursuant to Section 1502 at which a quorum is present may be
                            ------------ 
         adjourned from time to time by Persons entitled to vote a majority in
         principal amount of the Outstanding Securities of such series
         represented at the meeting, and the meeting may be held as so adjourned
         without further notice.

         SECTION 1506. Counting Votes and Recording Action of Meetings. The vote
                       -----------------------------------------------
on any resolution submitted to any meeting of Holders of Securities of any
series shall be by written ballots on which shall be subscribed the signatures
of the Holders of Securities of such series or of their representatives by proxy
and the principal amounts and series numbers of the Outstanding Securities of
such series held or represented by them. The permanent chairman of the meeting
shall appoint two (2) inspectors of votes who shall count all votes cast at the
meeting for or against any resolution and who shall make and file with the
secretary of the meeting their verified written reports in duplicate of all
votes cast at the meeting. A record, at least in duplicate, of the proceedings
of each meeting of Holders of Securities of any series shall be prepared by the
secretary of the meeting and there shall be attached to such record the original
reports of the inspectors of votes on any vote by ballot taken thereat and
affidavits by one or more persons having knowledge of the fact, setting forth a
copy of the notice of the meeting and showing that such notice was given as
provided in Section 1502 and, if applicable, Section 1504. Each copy shall be
            ------------                     ------------
signed and verified by the affidavits of the permanent chairman and secretary of
the meeting and one (1) such copy shall be delivered to the Company and another
to the Trustee to be preserved by the Trustee, the latter to have attached
thereto the ballots voted at the meeting. Any record so signed and verified
shall be conclusive evidence of the matters therein stated.

         SECTION 1507. Evidence of Action Taken by Holders. Any request, demand,
                       -----------------------------------
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by a specified percentage in principal
amount of the Holders of any or all series may be embodied in and evidenced by
one or more instruments of substantially similar tenor signed by such specified
percentage of Holders in person or by agent duly appointed in writing; and,
except as otherwise expressly provided herein, such action shall become
effective when such instrument or instruments are delivered to the Trustee.
Proof of execution of any instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Indenture and (subject to Article
                                                                      -------
Six) conclusive in favor of the Trustee and the Company, if made in the manner
- ---
provided in this Article.

         SECTION 1508. Proof of Execution of  Instruments.  Subject to Article
                       ----------------------------------              -------
Six, the  execution of any  instrument  by a Holder or his agent or proxy may be
- ---
proved in  accordance  with such  reasonable  rules  and  regulations  as may be
prescribed  by the  Trustee or in such  manner as shall be  satisfactory  to the
Trustee.

                                       82
<PAGE>
 
         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.

                                   HOMESTEAD VILLAGE INCORPORATED



                                   By:______________________________

                                   Name:________________________
                                   Title:_______________________

[SEAL]

Attest:


__________________________
Secretary


                                   STATE STREET BANK AND TRUST COMPANY,
                                   As Trustee


                                   By:______________________________

                                   Name:_______________________
[SEAL]                             Title:______________________

Attest:


__________________________
Secretary

                                       83
<PAGE>
 
STATE OF NEW MEXICO                         )
                                            ) ss:
COUNTY OF________                           )

         On the day of , 1998, before me personally came , to me known, who,
being by me duly sworn, did depose and say that he resides at , that he is a of
Homestead Village Incorporated, one of the entities described in and which
executed the foregoing instrument; that he knows the seal of such entity; that
the seal affixed to such instrument is such seal; that it was so affixed by
authority of the Board of Directors of such entity, and that he signed his name
thereto by like authority.

[Notarial Seal]

                                        ______________________________________
                                        Notary Public
                                        Commission Expires


[STATE OF MASSACHUSETTS]            )
                                    ) ss:
[COUNTY OF SUFFOLK]                 )

         On  the   _____   day  of    ,   1998, before   me   personally   came
____________________,  to me known,  who, being by me duly sworn, did depose and
say that _____ resides at  ________________________________________,  that _____
is a  ____________________  of State Street Bank and Trust  Company,  one of the
entities  described in and which executed the foregoing  instrument;  that _____
knows the seal of such entity;  that the seal affixed to such instrument is such
seal;  that it was so affixed by  authority  of the Board of  Directors  of such
entity, and that _____ signed _____ name thereto by like authority.

[Notarial Seal]

                                   ___________________________________
                                   Notary Public
                                   Commission Expires

                                       84
<PAGE>
 
                                   EXHIBIT A

                            FORMS OF CERTIFICATION


                                  EXHIBIT A-1

              FORM OF CERTIFICATE TO BE GIVEN BY PERSON ENTITLED
               TO RECEIVE BEARER SECURITY OR TO OBTAIN INTEREST
                      PAYABLE PRIOR TO THE EXCHANGE DATE

                                  CERTIFICATE

[INSERT TITLE OR SUFFICIENT DESCRIPTION OF SECURITIES TO BE DELIVERED]

         This is to certify that, as of the date hereof, and except as set forth
below, the above-captioned Securities held by you for our account (i) are owned
by person(s) which are not citizens or residents of the United States, domestic
partnerships, domestic corporations or any estate or trust the income of which
is subject to United States federal income taxation regardless of its source
("United States person(s)"), (ii) are owned by United States person(s) which are
(a) foreign branches of United States financial institutions (financial
institutions, as defined in United States Treasury Regulations Section 1.165-
12(c)(1)(v) are herein referred to as "financial institutions") purchasing for
their own account or for resale, or (b) United States person(s) who acquired the
Securities through foreign branches of United States financial institutions and
who hold the Securities through such United States financial institutions on the
date hereof (and in either case (a) or (b), each such United States financial
institution hereby agrees, on its own behalf or through its agent, that you may
advise Homestead Village Incorporated or its agent that such financial
institution will provide a certificate within a reasonable time stating that it
agrees to comply with the requirements of Section 165(j)(3)(A), (B) or (C) of
the United States Internal Revenue Code of 1986, as amended, and the regulations
thereunder), or (iii) are owned by a financial institution for purposes of
resale during the restricted period (as defined in United States Treasury
Regulations Section 1.163-5(c)(2)(i)(D)(7)), and, such financial institution
described in clause (iii) above (whether or not also described in clause (i) or
(ii)), certifies that it has not acquired the Securities for purposes of resale
directly or indirectly to a United States person or to a person within the
United States or its possessions.

         As used herein, "United States" means the United States of America
(including the States and the District of Columbia); and its "possessions"
include Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island
and the Northern Mariana Islands.

         We undertake to advise you promptly by tested telex on or prior to the
date on which you intend to submit your certification relating to the above-
captioned Securities held by you for our account in accordance with your
Operating Procedures if any applicable statement herein is not correct on such
date, and in the absence of any such notification it may be assumed that this
certification applies as of such date.
<PAGE>
 
         This certificate excepts and does not relate to [U.S.$] _______________
of such  interest in the  above-captioned  Securities in respect of which we are
not able to certify and as to which we understand an exchange for an interest in
a  Permanent  Global  Security  or an exchange  for and  delivery of  definitive
Securities (or, if relevant, collection of any interest) cannot be made until we
do so certify.

         We understand that this  certificate may be required in connection with
certain  tax  legislation  in the  United  States.  If  administrative  or legal
proceedings   are  commenced  or  threatened  in  connection   with  which  this
certificate  is or would be relevant,  we  irrevocably  authorize you to produce
this certificate or a copy thereof to any interested party in such proceedings.


Dated: __________ ___, 19___
[To be dated no earlier than the 15th day prior
to the earlier of (i) the Exchange Date or
(ii) the relevant Interest Payment Date occurring
prior to the Exchange Date, as applicable]

                                        [Name of Person Making Certification]



                                        _____________________________________
                                        (Authorized Signatory)
                                        Name:
                                        Title:
<PAGE>
 
                                  EXHIBIT A-2

                 FORM OF CERTIFICATE TO BE GIVEN BY EUROCLEAR
               AND CEDEL S.A. IN CONNECTION WITH THE EXCHANGE OF
                A PORTION OF A TEMPORARY GLOBAL SECURITY OR TO
              OBTAIN INTEREST PAYABLE PRIOR TO THE EXCHANGE DATE

                                  CERTIFICATE

[INSERT TITLE OR SUFFICIENT DESCRIPTION OF SECURITIES TO BE DELIVERED]

         This is to certify that, based solely on written certifications that we
have received in writing, by tested telex or by electronic transmission from
each of the persons appearing in our records as persons entitled to a portion of
the principal amount set forth below (our "Member Organizations") substantially
in the form attached hereto, as of the date hereof, [U.S.$] _______________
principal amount of the above-captioned Securities (i) is owned by person(s)
which are not citizens or residents of the United States, domestic partnerships,
domestic corporations or any estate or trust the income of which is subject to
United States Federal income taxation regardless of its source ("United States
person(s)"), (ii) is owned by United States persons(s) which are (a) foreign
branches of United States financial institutions (financial institutions, as
defined in United States Treasury Regulations Section 1.165-12(c)(1)(v) are
herein referred to as "financial institutions") purchasing for their own account
or for resale, or (b) United States person(s) who acquired the Securities
through foreign branches of United States financial institutions and who hold
the Securities through such United States financial institutions on the date
hereof (and in either case (a) or (b), each such financial institution has
agreed, on its own behalf or through its agent, that we may advise Homestead
Village Incorporated or its agent that such financial institution will provide a
certificate within a reasonable time stating that it agrees to comply with the
requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of
1986, as amended, and the regulations thereunder), or (iii) is owned by a
financial institution for purposes of resale during the restricted period (as
defined in United States Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7)),
and that such financial institutions described in clause (iii) above (whether or
not also described in clause (i) or (ii)) have certified that they have not
acquired the Securities for purposes of resale directly or indirectly to a
United States person or to a person within the United States or its possessions.

         As used herein, "United States" means the United States of America
(including the States and the District of Columbia); and its "possessions"
include Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island
and the Northern Mariana Islands.

         We further certify that (i) we are not making available herewith for
exchange (or, if relevant, collection of any interest) any portion of the
temporary global Security representing the above-captioned Securities excepted
in the above-referenced certificates of Member Organizations and (ii) as of the
date hereof we have not received any notification from any of our Member
Organizations to the effect that the statements made by such Member
Organizations with respect to any portion of
<PAGE>
 
the part  submitted  herewith for exchange  (or, if relevant,  collection of any
interest) are no longer true and cannot be relied on as of the date hereof.

         We understand that this certification is required in connection with
certain tax legislation in the United States. If administrative or legal
proceedings are commenced or threatened in connection with which this
certificate is or would be relevant, we irrevocably authorize you to produce
this certificate or a copy thereof to any interested party in such proceedings.


Dated: __________ ___, 19___
[To be dated no earlier than the earlier of
the Exchange Date or the relevant Interest
Payment Date occurring prior to the Exchange
Date, as applicable]

                          [Morgan Guaranty Trust Company of New York,
                          Brussels Office,] as Operator of the Euroclear System
                          [Cedel S.A.]


                          By:________________________

<PAGE>
 
                                                                     Exhibit 4.4


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


                        HOMESTEAD VILLAGE INCORPORATED



                                      TO

                      STATE STREET BANK AND TRUST COMPANY
                                   (Trustee)


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



                                   INDENTURE

                          Dated as of _________, 1998


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



                         Subordinated Debt Securities


================================================================================
<PAGE>
 
                                TABLE OF CONTENTS

<TABLE> 
<CAPTION> 
                                                                                                                    Page
<S>                                                                                                                 <C> 
RECITALS..........................................................................................................   1
                                                                                                                     
                                               ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION          

         SECTION 101. Definitions.................................................................................   1
                  Act.............................................................................................   2
                  Additional Amounts..............................................................................   2
                  Affiliate.......................................................................................   2
                  Authenticating Agent............................................................................   2
                  Authorized Newspaper............................................................................   2
                  Bankruptcy Law..................................................................................   2
                  Bearer Security.................................................................................   2
                  Board of Directors..............................................................................   2
                  Board Resolution................................................................................   3
                  Business Day....................................................................................   3
                  Capital Stock...................................................................................   3
                  CEDEL...........................................................................................   3
                  Commission......................................................................................   3
                  Common Depositary...............................................................................   3
                  Common Shares...................................................................................   3
                  Company.........................................................................................   3
                  Company Certificate.............................................................................   3
                  Company Request and Company Order...............................................................   3
                  Conversion Event................................................................................   4
                  Corporate Trust Office..........................................................................   4
                  corporation.....................................................................................   4
                  coupon..........................................................................................   4
                  covenant defeasance.............................................................................   4
                  Custodian.......................................................................................   4
                  Defaulted Interest..............................................................................   4
                  defeasance......................................................................................   4
                  Dollar or $.....................................................................................   4
                  DTC.............................................................................................   4
                  ECU.............................................................................................   4
                  Euroclear.......................................................................................   4
                  European Communities............................................................................   4
                  European Monetary System........................................................................   4
                  Event of Default................................................................................   4
</TABLE> 

                                       i
<PAGE>
 
<TABLE> 
<CAPTION> 
                                                                                                                     Page
                                                                                                                     ----
                  <S>                                                                                                <C> 
                  Exchange Act....................................................................................    5
                  Exchange Date...................................................................................    5
                  Foreign Currency................................................................................    5
                  GAAP............................................................................................    5
                  Government Obligations..........................................................................    5
                  Hedging Obligations.............................................................................    5
                  Holder..........................................................................................    5
                  Indenture.......................................................................................    5
                  Indexed Security................................................................................    6
                  interest........................................................................................    6
                  Interest Payment Date...........................................................................    6
                  Make-Whole Amount...............................................................................    6
                  mandatory sinking fund payment..................................................................    6
                  Maturity .......................................................................................    6
                  Notice of Default...............................................................................    6
                  Opinion of Counsel..............................................................................    6
                  optional sinking fund payment...................................................................    6
                  Original Issue Discount Security................................................................    7
                  Outstanding.....................................................................................    7
                  Paying Agent....................................................................................    8
                  Payment Default.................................................................................    8
                  Permitted Investments...........................................................................    8
                  Person..........................................................................................    9
                  Place of Payment...............................................................................    10
                  Predecessor Security...........................................................................    10
                  Qualified GIC..................................................................................    10
                  Redemption Date................................................................................    11
                  Redemption Price...............................................................................    11
                  Registered Security............................................................................    11
                  Regular Record Date............................................................................    11
                  Repayment Date.................................................................................    11
                  Repayment Price................................................................................    11
                  Required Filing Dates..........................................................................    11
                  Responsible Officer............................................................................    11
                  Securities Act.................................................................................    11
                  Security ......................................................................................    11
                  Security Register and Security Registrar.......................................................    11
                  Significant Subsidiary.........................................................................    12
                  Special Record Date............................................................................    12 
                  Stated Maturity................................................................................    12
                  Subsidiary.....................................................................................    12
</TABLE> 

                                       ii
<PAGE>
 
<TABLE> 
<CAPTION> 
                                                                                                                   Page 
                                                                                                                   ----
<S>                                                                                                                <C> 
                  Trust Indenture Act............................................................................   12
                  Trustee  ......................................................................................   13
                  United States..................................................................................   13
                  United States person...........................................................................   13
                  Yield to Maturity..............................................................................   13
         SECTION 102. Compliance Certificates and Opinions.......................................................   13
         SECTION 103. Form of Documents Delivered to Trustee.....................................................   14
         SECTION 104. Acts of Holders............................................................................   14
         SECTION 105. Notices to Trustee and Company.............................................................   16
         SECTION 106. Notice to Holders; Waiver..................................................................   16
         SECTION 107. Effect of Headings and Table of Contents...................................................   17
         SECTION 108. Successors and Assigns.....................................................................   17
         SECTION 109. Separability Clause........................................................................   18
         SECTION 110. Benefits of Indenture......................................................................   18
         SECTION 111. No Personal Liability......................................................................   18
         SECTION 112. Governing Law..............................................................................   18
         SECTION 113. Legal Holidays.............................................................................   18
         SECTION 114. Counterparts...............................................................................   18
                                                                                                                      
                                               ARTICLE TWO 
                                             SECURITIES FORMS 

         SECTION 201. Forms of Securities........................................................................   19
         SECTION 202. Form of Trustee's Certificate of Authentication............................................   19
         SECTION 203. Securities Issuable in Global Form.........................................................   19
                                                                                                                      
                                               ARTICLE THREE 
                                               THE SECURITIES 

         SECTION 301. Amount Unlimited; Issuable in Series.......................................................   20
         SECTION 302. Denominations..............................................................................   24
         SECTION 303. Execution, Authentication, Delivery and Dating.............................................   24
         SECTION 304. Temporary Securities.......................................................................   27
         SECTION 305. Registration, Registration of Transfer and Exchange........................................   29
         SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities...........................................   32
         SECTION 307. Payment of Interest; Interest Rights Preserved.............................................   34
         SECTION 308. Persons Deemed Owners......................................................................   36
         SECTION 309. Cancellation...............................................................................   36
         SECTION 310. Computation of Interest....................................................................   37 
</TABLE> 

                                      iii
<PAGE>
 
<TABLE> 
<CAPTION> 
                                                                                                                    Page
                                                                                                                    ----


                                               ARTICLE FOUR
                                        SATISFACTION AND DISCHARGE

         <S>                                                                                                        <C> 
         SECTION 401. Satisfaction and Discharge of Indenture....................................................    37
         SECTION 402. Application of Trust Funds.................................................................    38
                                                                                                                       
                                               ARTICLE FIVE
                                                 REMEDIES  
                                 
         SECTION 501. Events of Default..........................................................................    39
         SECTION 502. Acceleration of Maturity; Rescission and Annulment.........................................    41
         SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee............................    42
         SECTION 504. Trustee May File Proofs of Claim...........................................................    43
         SECTION 505. Trustee May Enforce Claims Without Possession of                                                 
                                    Securities or Coupons........................................................    43
         SECTION 506. Application of Money Collected.............................................................    44
         SECTION 507. Limitation on Suits........................................................................    44
         SECTION 508. Unconditional Right of Holders to Receive Principal, Premium                                     
                                    or Make-Whole Amount, Interest and Additional Amounts........................    45
         SECTION 509. Restoration of Rights and Remedies.........................................................    45
         SECTION 510. Rights and Remedies Cumulative.............................................................    45
         SECTION 511. Delay or Omission Not Waiver...............................................................    45
         SECTION 512. Control by Holders of Securities...........................................................    46
         SECTION 513. Waiver of Past Defaults....................................................................    46
         SECTION 514. Waiver of Usury, Stay or Extension Laws....................................................    46
         SECTION 515. Undertaking for Costs......................................................................    47
                                                                                                                       
                                               ARTICLE SIX 
                                               THE TRUSTEE 
                                               
         SECTION 601. Notice of Defaults.........................................................................    47
         SECTION 602. Certain Rights of Trustee..................................................................    47
         SECTION 603. Not Responsible for Recitals or Issuance of Securities.....................................    49
         SECTION 604. May Hold Securities........................................................................    49
         SECTION 605. Money Held in Trust; Permitted Investments.................................................    49
         SECTION 606. Compensation and Reimbursement.............................................................    50
         SECTION 607. Trustee Eligibility; Conflicting Interests.................................................    50
         SECTION 608. Resignation and Removal; Appointment of Successor..........................................    51
         SECTION 609. Acceptance of Appointment by Successor.....................................................    52
         SECTION 610. Merger, Conversion, Consolidation or Succession to Business................................    53
         SECTION 611. Appointment of Authenticating Agent........................................................    54 
</TABLE> 

                                       iv
<PAGE>
 
<TABLE> 
<CAPTION> 
                                                                                                                   Page 
                                                                                                                   ----
                                               ARTICLE SEVEN
                            HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY

<S>                                                                                                                <C> 
         SECTION 701. Disclosure of Names and Addresses of Holders...............................................   55
         SECTION 702. Reports by Trustee.........................................................................   56
         SECTION 703. Company to Furnish Trustee Names and Addresses of Holders..................................   56
                                                
                                               ARTICLE EIGHT 
                            CONSOLIDATION, MERGER, SALE, LEASE OR CONVEYANCE 

         SECTION 801. Consolidations and Mergers of Company and Sales,                                                
                                    Leases and Conveyances.......................................................   56
         SECTION 802. Rights and Duties of Successor Entity......................................................   57
         SECTION 803. Company Certificate and Opinion of Counsel.................................................   57

                                               ARTICLE NINE 
                                         SUPPLEMENTAL INDENTURES 
                                                   
         SECTION 901. Supplemental Indentures Without Consent of Holders.........................................   57
         SECTION 902. Supplemental Indentures with Consent of Holders............................................   59
         SECTION 903. Execution of Supplemental Indentures.......................................................   60
         SECTION 904. Effect of Supplemental Indentures..........................................................   60
         SECTION 905. Conformity with Trust Indenture Act........................................................   60
         SECTION 906. Reference in Securities to Supplemental Indentures.........................................   60
         SECTION 907. Notice of Supplemental Indentures..........................................................   61

                                               ARTICLE TEN 
                                                COVENANTS 
                                            
         SECTION 1001. Payment of Principal, Premium or Make-Whole Amount,                                            
                                    Interest and Additional Amounts..............................................   61
         SECTION 1002. Maintenance of Office or Agency...........................................................   61
         SECTION 1003. Money for Securities Payments to Be Held in Trust.........................................   63
         SECTION 1004. Existence.................................................................................   64
         SECTION 1005. Maintenance of Properties.................................................................   64
         SECTION 1006. Insurance.................................................................................   65
         SECTION 1007. Payment of Taxes and Other Claims.........................................................   65
         SECTION 1008. Reports...................................................................................   65
         SECTION 1009. Statement as to Compliance................................................................   66
         SECTION 1010. Additional Amounts........................................................................   66 
</TABLE> 

                                       v
<PAGE>
 
<TABLE> 
<CAPTION> 
                                                                                                                   Page
                                                                                                                   ----
<S>                                                                                                                <C>  
         SECTION 1011. Waiver of Certain Covenants...............................................................   67

                                              ARTICLE ELEVEN 
                                         REDEMPTION OF SECURITIES 
                                                     
         SECTION 1101. Applicability of Article..................................................................   68
         SECTION 1102. Election to Redeem; Notice to Trustee.....................................................   68
         SECTION 1103. Selection by Trustee of Securities to Be Redeemed.........................................   68
         SECTION 1104. Notice of Redemption......................................................................   68
         SECTION 1105. Deposit of Redemption Price...............................................................   70
         SECTION 1106. Securities Payable on Redemption Date.....................................................   70
         SECTION 1107. Securities Redeemed in Part...............................................................   71
                                         
                                              ARTICLE TWELVE
                                               SINKING FUNDS
                                               
         SECTION 1201. Applicability of Article..................................................................   71
         SECTION 1202. Satisfaction of Sinking Fund Payments with Securities.....................................   72
         SECTION 1203. Redemption of Securities for Sinking Fund.................................................   72
                                             
                                              ARTICLE THIRTEEN
                                     REPAYMENT AT THE OPTION OF HOLDERS 
                                               
         SECTION 1301. Applicability of Article..................................................................   72
         SECTION 1302. Repayment of Securities...................................................................   72
         SECTION 1303. Exercise of Option........................................................................   73
         SECTION 1304. When Securities Presented for Repayment Become Due                                             
                                    and Payable..................................................................   73
         SECTION 1305. Securities Repaid in Part.................................................................   74

                                              ARTICLE FOURTEEN 
                                       DEFEASANCE AND COVENANT DEFEASANCE 
                                                          
         SECTION 1401. Applicability of Article; Company's Option to Effect                                           
                                    Defeasance or Covenant Defeasance............................................   75
         SECTION 1402. Defeasance and Discharge..................................................................   75
         SECTION 1403. Covenant Defeasance.......................................................................   75
         SECTION 1404. Conditions to Defeasance or Covenant Defeasance...........................................   76
         SECTION 1405. Deposited Money and Government Obligations to Be Held in                                       
                                    Trust; Other Miscellaneous Provisions........................................   78 
</TABLE> 

                                       vi
<PAGE>
 
<TABLE> 
<CAPTION> 
                                                                                                                   Page
                                                                                                                   ----
                                             ARTICLE FIFTEEN
                                     MEETINGS OF HOLDERS OF SECURITIES
<S>                                                                                                                <C> 
         SECTION 1501. Purposes for Which Meetings May Be Called.................................................   79
         SECTION 1502. Call, Notice and Place of Meetings........................................................   79
         SECTION 1503. Persons Entitled to Vote at Meetings......................................................   80
         SECTION 1504. Quorum; Action............................................................................   80
         SECTION 1505. Determination of Voting Rights; Conduct and Adjournment of                                     
                                    Meetings.....................................................................   81
         SECTION 1506. Counting Votes and Recording Action of Meetings...........................................   82
         SECTION 1507. Evidence of Action Taken by Holders.......................................................   82
         SECTION 1508. Proof of Execution of Instruments.........................................................   82
                               
                                             ARTICLE SIXTEEN 
                                        SUBORDINATION OF SECURITIES 
                                                       
         SECTION 1601.  Securities Subordinated to Senior Indebtedness...........................................   83
         SECTION 1602.  Subrogation..............................................................................   84
         SECTION 1603.  Obligation of the Company Unconditional..................................................   84
         SECTION 1604.  Payments on Securities Permitted.........................................................   85
         SECTION 1605.  Effectuation of Subordination by Trustee.................................................   85
         SECTION 1606.  Knowledge of Trustee.....................................................................   85
         SECTION 1607.  Trustee May Hold Senior Indebtedness.....................................................   85
         SECTION 1608.  Rights of Holders of Senior Indebtedness Not Impaired....................................   86 
</TABLE> 

TESTIMONIUM
SIGNATURES AND SEALS
ACKNOWLEDGMENTS
EXHIBIT A - FORMS OF CERTIFICATION

                                      vii
<PAGE>
 
                        Reconciliation and tie between
     Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"),
                                 and Indenture


         Trust Indenture Act Section                     Indenture Section
         ---------------------------                     -----------------
         
         310(a)(1), (2) and (5)                          607(a)
         310(a)(3) and (4)                               Not applicable
         310(b)                                          608(d)
         310(c)                                          Not applicable
         311                                             Not applicable
         312(a)                                          704
         312(b)                                          Not applicable
         312(c)                                          701
         313(a) and (c)                                  702
         313(b)                                          Not applicable
         314(a)(1), (2) and (3)                          1008
         314(a)(4)                                       1008
         314(b)                                          Not applicable
         314(c) and (e)                                  102
         314(d)                                          Not applicable
         315(a), (c), (d) and (e)                        Not applicable
         315(b)                                          601
         316(a) (last sentence)                          101 ("Outstanding")
         316(a)(1)(A)                                    512
         316(a)(1)(B)                                    513
         316(a)(2) and (c)                               Not applicable
         316(b)                                          508
         317(a)(1)                                       503
         317(a)(2)                                       504
         317(b)                                          Not applicable
         318(a)                                          112

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

         Attention should also be directed to Section 318(c) of the Trust
         Indenture Act, which provides that the provisions of Sections 310 to
         and including 317 of the Trust Indenture Act are a part of and govern
         every qualified indenture, whether or not physically contained therein.

                                      viii
<PAGE>
 
                                   INDENTURE

     INDENTURE, dated as of __________, 1998, from HOMESTEAD VILLAGE
INCORPORATED, a Maryland corporation (hereinafter called the "Company"), having
                                                              -------          
its principal office at 125 Lincoln Avenue, Santa Fe, New Mexico 87501, to STATE
STREET BANK AND TRUST COMPANY, a Massachusetts trust company, as Trustee
hereunder (hereinafter called the "Trustee"), currently having its Corporate
                                   -------                                  
Trust Office at Two International Place, Corporate Trust Division, Boston,
Massachusetts 02110.

                                   RECITALS

     The Company deems it necessary to issue from time to time for its lawful
purposes subordinated debt securities (hereinafter called the "Securities")
                                                               ---------- 
evidencing its unsecured and subordinated indebtedness, and has duly authorized
the execution and delivery of this Indenture to provide for the issuance from
time to time of the Securities, unlimited as to aggregate principal amount, to
bear interest at the rates or formulas, to mature at such times and to have such
other provisions as shall be fixed therefor as hereinafter provided.

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

     This Indenture is subject to the provisions of the Trust Indenture Act (as
herein defined) and the rules and regulations of the Commission (as herein
defined) promulgated thereunder which are required to be part of this Indenture
and, to the extent applicable, shall be governed by such provisions.

     NOW, THEREFORE, THIS INDENTURE WITNESSETH:

     For and in consideration of the premises and the purchase of the Securities
by the Holders (as herein defined) thereof, it is mutually covenanted and
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 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;

                                       1
<PAGE>
 
          (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, and the terms "cash transaction" and "self-
                                              ----------------       ----
     liquidating paper," as used in Section 311 of the Trust Indenture Act,
     -----------------                                                     
     shall have the meanings assigned to them in the rules of the Commission
     adopted under the Trust Indenture Act;

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

     "Act" has the meaning specified in Section 104(a).
      ---                               -------------- 

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

     "Affiliate" when used with respect to any Person, means any other Person
      ---------                                                              
directly or indirectly controlling or controlled by or under direct or indirect
common control with such 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.
 -----------       ----------                                             

     "Authenticating Agent" means any authenticating agent appointed by the
      --------------------                                                 
Trustee pursuant to Section 611.
                    ----------- 

     "Authorized Newspaper" means a newspaper, printed in the English language
      --------------------                                                    
or in an official language of the country of publication, customarily published
on each Business Day, whether or not published on Saturdays, Sundays or
holidays, and of general circulation in each place in connection with which the
term is used or in the financial community of each such place. Whenever
successive publications are required to be made in Authorized Newspapers, the
successive publications may be made in the same or in different Authorized
Newspapers in the same city meeting the foregoing requirements and in each case
on any Business Day.

     "Bankruptcy Law" has the meaning specified in Section 501.
      --------------                               ----------- 

     "Bearer Security" means a Security which is payable to bearer.
      ---------------                                              

     "Board of Directors" means the board of directors of the Company, the
      ------------------                                                 
executive committee or any other committee of such board duly authorized to act
for it in respect hereof.

                                       2
<PAGE>
 
     "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" when used with respect to any Place of Payment or any other
      ------------                                                             
particular location referred to in this Indenture or in the Securities, means,
unless otherwise specified with respect to any Securities pursuant to Section
                                                                      -------
301, any day, other than a Saturday or Sunday, which is neither a legal holiday
- ---                                                                            
nor a day on which banking institutions in such Place of Payment or particular
location are authorized or required by law, regulation or executive order to
close.

     "Capital Stock" means (i) in the case of a corporation, corporate stock,
      -------------                                                          
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership, partnership interests
(whether general or limited) and (iv) any other interest or participation which
confers on a Person the right to receive a share of the profits and losses of,
or distributions of assets of, the issuing Person.

     "CEDEL" means Centrale de Livraison de Valeurs Mobilieres, S.A., or its
      -----                                                                 
successor.

     "Commission" means the Securities and Exchange Commission, as from time to
      ----------                                                               
time constituted, created under the Exchange Act, or, if at any time after
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 on such date.

     "Common Depositary" has the meaning specified in Section 304(b).
      -----------------                               -------------- 

     "Common Shares" means the shares of common stock, par value $.01 per
      -------------                                                      
share, of the Company.

     "Company" means the Person named as the "Company" in the first paragraph
      -------                                                                
of this Indenture until a successor corporation has become such pursuant to the
applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor corporation, and any other obligor on the Securities.

     "Company Certificate" means a certificate signed by the Chairman or a Co-
      -------------------                                                    
Chairman, Managing Director, Senior Vice President or Vice President of the
Company and by the Treasurer, an Assistant Treasurer, the Secretary or an
Assistant Secretary of the Company, and delivered to the Trustee.

     "Company Request" and "Company Order" mean, respectively, a written request
      ---------------       -------------                               
or order signed in the name of the Company by the Chairman or a Co-Chairman,
Managing Director, Senior Vice President or Vice President of the Company and by
the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary
of the Company, and delivered to the Trustee.

                                       3
<PAGE>
 
     "Conversion Event" means the cessation of use of (i) a Foreign Currency
      ----------------                                                      
(other than the ECU or other currency unit) both by the government of the
country which issued such currency and for the settlement of transactions by a
central bank or other public institutions of or within the international banking
community, (ii) the ECU both within the European Monetary System and for the
settlement of transactions by public institutions of or within the European
Communities or (iii) any currency unit (or composite currency) other than the
ECU for the purposes for which it was established.

     "Corporate Trust Office" means the office of the Trustee at which, at any
      ----------------------
particular time, its corporate trust business is principally administered, which
office at the date hereof is located at Two International Place, Corporate Trust
Division, Boston, Massachusetts 02110.

     "corporation" includes corporations, associations, companies, real estate
      -----------                                                            
investment trusts and business trusts.

     "coupon" means any interest coupon appertaining to a Bearer Security.
      ------                                                             

     "covenant defeasance" has the meaning specified in Section 1403.
      -------------------                               ------------ 

     "Custodian" has the meaning specified in Section 501.
      ---------                               ----------- 

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

     "defeasance" has the meaning specified in Section 1402.
      ----------                               ------------ 

     "Dollar" or "$" means a dollar or other equivalent unit in such coin or
      ------      -                                                         
currency of the United States of America as at the time is legal tender for the
payment of public and private debts.

     "DTC" means The Depository Trust Company.
      ---                                     

     "ECU" means the European Currency Unit as defined and revised from time to
      ---                                                                      
time by the Council of the European Communities.

     "Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
      ---------                                                           
Office, or its successor as operator of the Euroclear System.

     "European Communities" means the European Economic Community, the European
      --------------------                                                     
Coal and Steel Community and the European Atomic Energy Community.

     "European Monetary System" means the European Monetary System established
      ------------------------                                                
by the Resolution of December 5, 1978 of the Council of the European
Communities.

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

                                       4
<PAGE>
 
     "Exchange Act" means the Securities Exchange Act of 1934, as amended, and
      ------------                                                            
the rules and regulations promulgated thereunder by the Commission.

     "Exchange Date" has the meaning specified in Section 304(b).
      -------------                               -------------- 

     "Foreign Currency" means any currency, currency unit or composite currency,
      ----------------                                                
including, without limitation, the ECU issued by the government of one or more
countries other than the United States of America or by any recognized
confederation or association of such governments.

     "GAAP" means generally accepted accounting principles as used in the United
      ----                                                               
States applied on a consistent basis as in effect from time to time, provided
                                                                     --------
that, solely for purposes of calculating any financial covenants, "GAAP" shall
mean generally accepted accounting principles as used in the United States on
the date hereof, applied on a consistent basis.

     "Government Obligations" means securities which are (i) direct obligations
      ----------------------                                                   
of the United States of America or the government which issued the Foreign
Currency in which the Securities of a particular series are payable, for the
payment of which its full faith and credit is pledged, or (ii) obligations of a
Person controlled or supervised by and acting as an agency or instrumentality of
the United States of America or such government which issued the Foreign
Currency in which the Securities of such series are payable, the payment of
which is unconditionally guaranteed as a full faith and credit obligation by the
United States of America or such other government, which, in either case, are
not callable or redeemable at the option of the issuer thereof, and also
includes a depository receipt issued by a bank or trust company as custodian
with respect to any such Government Obligation or a specific payment of interest
on or principal of any such Government Obligation held by such custodian for the
account of the holder of a depository receipt, provided that (except as required
                                               --------                         
by law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depository receipt from any amount received by the
custodian in respect of the Government Obligation or the specific payment of
interest on or principal of the Government Obligation evidenced by such
depository receipt.

     "Hedging Obligations" means, with respect to any Person, the greater of (a)
      -------------------                                                   
the net obligations of such Person under (i) interest rate swap agreements,
interest rate cap agreements and interest rate collar agreements, (ii) foreign
exchange contracts or currency swap agreements, and (iii) other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates or currency values, or (b) zero.

     "Holder" when used with respect to a Registered Security, means the Person
      ------                                                                   
in whose name such Registered Security is registered in the Security Register
and, when used with respect to a Bearer Security or any coupon, means the bearer
thereof.

     "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, and includes
the terms of particular series of Securities established as contemplated by
Section 301; provided, however, that, if at any time more than one Person is
- -----------  --------  -------                                              

                                       5
<PAGE>
 
acting as Trustee under this instrument, "Indenture" when used with respect to
any one or more series of Securities with respect to which such Person is acting
as Trustee, shall mean 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 and shall
include the terms of those particular series of Securities with respect to which
such Person is acting as Trustee established as contemplated by Section 301,
                                                                ----------- 
exclusive, however, of any provisions or terms which relate solely to other
series of Securities with respect to which such Person is not acting as Trustee,
regardless of when such terms or provisions were adopted, and exclusive of any
provisions or terms adopted by means of one or more indentures supplemental
hereto executed and delivered after such Person had become such Trustee but to
which such Person, as such Trustee, was not a party.

     "Indexed Security" means a Security the terms of which provide that the
      ----------------                                                      
principal amount thereof payable at Stated Maturity may be more or less than the
principal face amount thereof at original issuance.

     "interest" when used with respect to an Original Issue Discount Security
      --------                                                               
which by its terms bears interest only after Maturity, means interest payable
after Maturity, and, when used with respect to a Security which provides for the
payment of Additional Amounts pursuant to Section 1010, includes such Additional
                                          ------------                          
Amounts.

     "Interest Payment Date" when used with respect to any Security, means the
      ---------------------                                                   
Stated Maturity of an installment of interest on such Security.

     "Make-Whole Amount" means the amount, if any, in addition to principal
      -----------------                                                    
which is required by a Security, under the terms and conditions specified
therein or as otherwise specified as contemplated by Section 301, to be paid by
                                                     -----------               
the Company to the Holder thereof in connection with any optional redemption or
accelerated payment of such Security.

     "mandatory sinking fund payment" has the meaning specified in Section 1201.
      ------------------------------                               -------

     "Maturity" when used with respect to any Security, means the date on which
      --------                                                                 
the principal of such Security or an installment of principal become due and
payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, notice of redemption, notice of option to elect
repayment, repurchase or otherwise.

     "Notice of Default" has the meaning specified in Section 501.
      -----------------                               ----------- 

     "Opinion of Counsel" means a written opinion of counsel, who may be an
      ------------------                                                   
employee of or counsel for the Company or other counsel satisfactory to the
Trustee.

     "optional sinking fund payment" has the meaning specified in Section 1201.
      -----------------------------                               ------------ 

                                       6
<PAGE>
 
     "Original Issue Discount Security" means any Security which provides for
      --------------------------------                                       
an amount less than the principal amount thereof to be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section 502.
                                                                ----------- 

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

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

          (2) Securities, or portions thereof, for whose payment or redemption
     or repayment at the option of the Holder 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 is acting as its own Paying Agent) for the holders of such
     Securities and any coupons appertaining thereto, provided that, if such
                                                      --------              
     Securities are to be redeemed, notice of such redemption has been duly
     given pursuant to this Indenture or other provision therefor satisfactory
     to the Trustee has been made;

          (3) Securities, except solely to the extent provided in Section 401,
                                                                  ----------- 
     1402 or 1403, as applicable, with respect to which the Company has effected
     ----    ----                                                               
     defeasance and/or covenant defeasance as provided in Article Four or
                                                          ------------   
     Fourteen; and
     --------     

          (4) 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 has 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 required
- --------  -------                                                         
principal amount of the Outstanding Securities have concurred in any request,
demand, authorization, direction, notice, consent or waiver hereunder or are
present at a meeting of Holders for quorum purposes, and for the purpose of
making the calculations required by Section 313 of the Trust Indenture Act, (i)
the principal amount of an Original Issue Discount Security which may be counted
in making such determination or calculation and which shall be deemed
Outstanding for such purpose shall be equal to the amount of principal thereof
which would be (or has been declared to be) due and payable, at the time of such
determination, upon a declaration of acceleration of the maturity thereof
pursuant to Section 502, (ii) the principal amount of any Security denominated
            -----------                                                       
in a Foreign Currency which may be counted in making such determination or
calculation and which shall be deemed Outstanding for such purpose shall be
equal to the Dollar equivalent, determined pursuant to Section 301 as of the
                                                       -----------          
date such Security is originally issued by the Company, of the principal amount
(or, in the case of an Original Issue Discount Security, the Dollar equivalent
as of such date of original issuance of the amount determined as provided in
clause (i) above) of such Security, (iii) the principal amount of any Indexed
Security which may be counted in making such determination or calculation and

                                       7
<PAGE>
 
which shall be deemed Outstanding for such purpose shall be equal to the
principal face amount of such Indexed Security at original issuance, unless
otherwise provided with respect to such Indexed Security pursuant to Section
                                                                     -------
301, and (iv) Securities owned by the Company or any other obligor on the
- ---
Securities or any Affiliate of the Company or of such other obligor shall be
disregarded and deemed not Outstanding, except that, for the purposes of
determining whether the Trustee is protected in making such calculation or in
relying on any such request, demand, authorization, direction, notice, consent
or waiver, only Securities which the Trustee knows are so owned shall be so
disregarded. Securities so owned which have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Securities and that
the pledgee is not the Company or any other obligor on 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 or Make-Whole Amount, if any, on) and interest and
Additional Amounts, if any, on any Securities or coupons on behalf of the
Company, or if no such Person is authorized, the Company.

     "Payment Default" means any failure to pay any scheduled installment of
      ---------------                                                       
principal of, premium, if any, or interest on any indebtedness within the grace
period provided for such payment in the documentation governing such
indebtedness.

     "Permitted Investments" means:
      ---------------------        

          (1) Government Obligations;

          (2) Direct obligations and fully guaranteed certificates of beneficial
     interest of the Export-Import Bank of the United States; consolidated debt
     obligations and letter of credit-backed issues of the Federal Home Loan
     Banks; participation certificates and senior debt obligations of the
     Federal Home Loan Mortgage Corporation; debentures of the Federal Housing
     Administration; mortgage-backed securities (except stripped mortgage
     securities which are valued greater than par on the portion of unpaid
     principal) and senior debt obligations of the Federal National Mortgage
     Association; participation certificates of the General Services
     Administration; guaranteed mortgage-backed securities and guaranteed
     participation certificates and guaranteed pool certificates of the Small
     Business Administration; debt obligations and letter of credit-backed
     issues of the Student Loan Marketing Association; local authority bonds of
     the U.S. Department of Housing and Urban Development; guaranteed Title XI
     financing of the U.S. Maritime Administration; guaranteed transit bonds of
     the Washington Metropolitan Area Transit Authority; or Resolution Funding
     Corporation securities;

          (3) Direct obligations of any state of the United States of America or
     any subdivision or agency thereof whose unsecured, uninsured and
     unguaranteed general obligation debt is rated, at the time of purchase, at
     least as high as the rating then in effect on the Securities by Standard &
     Poor's Rating Services, or any obligation fully and unconditionally
     guaranteed by any state, subdivision or agency whose unsecured, uninsured

                                       8
<PAGE>
 
     and unguaranteed general obligation debt is rated, at the time of purchase,
     at least as high as the rating then in effect on the Securities by Standard
     & Poor's Rating Services;

          (4) Commercial paper (having original maturities of not more than 270
     days) rated, at the time of purchase, "A-1+" by Standard & Poor's Rating
     Services or "P-1" by Moody's Investors Services, Inc.;

          (5) Federal funds, unsecured certificates of deposit, time deposits or
     bankers acceptances (in each case having maturities of not more than 365
     days) of any domestic bank (including the Trustee in its commercial
     capacity), including a branch office of a foreign bank which branch office
     is located in the United States, provided that written legal opinions in
                                      --------                               
     form acceptable to the Trustee are received to the effect that full and
     timely payment of such deposit or similar obligation is enforceable against
     the principal office or any branch of such bank, which, at the time of
     purchase, has a rating of "A-1+" by Standard & Poor's Rating Services or
     "P-1" by Moody's Investors Services, Inc.;

          (6) Deposits of any bank or savings and loan association which has
     combined capital, surplus and undivided profits of not less than
     $3,000,000, provided that such deposits are continuously and fully insured
                 --------                                                      
     by the Federal Deposit Insurance Corporation, including, without
     limitation, an insured money market account of the Trustee;

          (7) Investments in money-market funds rated in the highest rating
     category by Standard & Poor's Rating Services or Moody's Investors
     Services, Inc.; such funds may include those for which the Trustee or an
     affiliate of the Trustee provides services for a fee, whether as investment
     advisor, custodian, transfer agent, sponsor, distributor or otherwise;

          (8) Shares of an open-end, diversified investment company which is
     registered under the Investment Company Act of 1940, as amended, and which
     (i) invests exclusively in permitted investments of the type set forth in
     clauses (1) through (7) above; (ii) seeks to maintain a constant net asset
     value per share in accordance with regulations of the Commission; and (iii)
     has aggregate net assets of at least $50,000,000 on the date of purchase;
     and

          (9) Qualified GICs.

Any investment made in accordance with this Indenture may (i) be executed by the
Trustee or the Company with or through the Trustee or its affiliates and (ii) be
made in securities of any entity for which the Trustee or any of its affiliates
serves as offeror, distributor, advisor or other service provider.

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

                                       9
<PAGE>
 
     "Place of Payment" when used with respect to the Securities of or within
      ----------------                                                       
any series, means the Corporate Trust Office of the Trustee and any place or
places which the Company may from time to time designate as the place or places
where the principal of (and premium or Make-Whole Amount, if any, on) and
interest and Additional Amounts, if any, on such Securities are payable as
specified as contemplated by Sections 301 and 1002 and presentations,
                             ------------     ----                   
surrenders, notices and demands with respect to such Securities and this
Indenture may be made.

     "Predecessor Security" when used with respect to any particular Security,
      --------------------                                                    
means every previous Security evidencing all or a portion of the same debt as
evidenced by such 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 or a Security to which a
mutilated, destroyed, lost or stolen coupon appertains shall be deemed to
evidence the same debt as the mutilated, destroyed, lost or stolen Security or
the Security to which the mutilated, destroyed, lost or stolen coupon
appertains.

     "Qualified GIC" means an investment contract providing for the investment
      -------------                                                           
of funds held by the Trustee and insuring a minimum or fixed rate of return on
investments of such funds, which contract shall:

          (1) be an obligation of an insurance company or bank whose senior
     long-term debt obligations are rated in one of the two highest rating
     categories by both Moody's Investors Services, Inc. and Standard & Poor's
     Rating Services;

          (2) provide that the Trustee may exercise all of the rights under such
     contract without the necessity of the taking of action by any other person;

          (3) provide that, if at any time the then current credit standing of
     the obligor under such guaranteed investment contract has been lowered or
     withdrawn by Moody's Investors Services, Inc. or Standard & Poor's Rating
     Services, the Trustee may terminate such contract without penalty and be
     entitled to the return of all funds previously invested thereunder,
     together with accrued interest thereon at the interest rate provided under
     such contract through the date of delivery of such funds to the Trustee;

          (4) provide that interest shall be payable not less than annually;

          (5) provide that the Trustee may withdraw funds invested without
     penalty at any time and from time to time to be applied for the purposes
     described therein;

          (6) be accompanied by an enforceability opinion from counsel to the
     obligor under such guaranteed investment contract in form and substance
     satisfactory to the Trustee; and

          (7) provide that the Trustee's interest thereunder shall be
     transferable to any successor Trustee hereunder.

                                       10
<PAGE>
 
     "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.

     "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.

     "Registered Security" means any Security which is registered in the 
      -------------------                                               
Security Register.

     "Regular Record Date" when used with respect to an installment of interest
      -------------------                                                      
payable on any Interest Payment Date on the Registered Securities of or within
any series, means the date specified for that purpose as contemplated by Section
                                                                         -------
301, whether or not a Business Day.
- ---                                

     "Repayment Date" when used with respect to any Security to be repaid or
      --------------                                                        
repurchased at the option of the Holder, means the date fixed for such repayment
or repurchase by or pursuant to this Indenture.

     "Repayment Price" when used with respect to any Security to be repaid or
      ---------------                                                        
repurchased at the option of the Holder, means the price at which it is to be
repaid or repurchased by or pursuant to this Indenture.

     "Required Filing Dates" has the meaning specified in Section 1008.
      ---------------------                               ------------ 

     "Responsible Officer" when used with respect to the Trustee, means any vice
      -------------------                                                  
president (whether or not designated by numbers or words added before or after
said title), any assistant vice president, any assistant secretary or any other
officer or assistant officer of the Trustee in the corporate trust department or
similar group of the Trustee or, with respect to any particular matter arising
hereunder, any officer of the Trustee to whom such matter has been assigned.

     "Securities Act" means the Securities Act of 1933, as amended, and the 
      --------------                                                       
rules and regulations promulgated thereunder by the Commission.

     "Security" has the meaning specified in the first recital of this Indenture
      --------                                                        
and, more particularly, means any Security or Securities authenticated and
delivered under this Indenture; provided, however, that, if at any time there is
                                --------  -------                      
more than one Person acting as Trustee under this Indenture, "Securities" when
used with respect to the Indenture with respect to which such Person is acting
as Trustee, shall have the meaning stated in the first recital of this Indenture
and shall more particularly mean Securities authenticated and delivered under
this Indenture, exclusive, however, of Securities of or within any series with
respect to which such Person is not acting as Trustee.

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

     "Senior Indebtedness" means (i) the principal of and premium, if any, and
      -------------------                                                     
unpaid interest on indebtedness for money borrowed, (ii) purchase money and
similar obligations, (iii) obligations

                                      11
<PAGE>
 
under capital leases, (iv) guarantees, assumptions or purchase commitments
relating to, or other transactions as a result of which the Company is
responsible for the payment of, such indebtedness of others, (v) renewals,
extensions and refunding of any such indebtedness, (vi) interest or obligations
in respect of any such indebtedness accruing after the commencement of any
insolvency or bankruptcy proceedings, and (vii) obligations associated with
derivative products such as interest rate and currency exchange contracts,
foreign exchange contracts, commodity contracts, and similar arrangements,
unless, in each case, the instrument by which the Company incurred, assumed or
guaranteed the indebtedness or obligations described in clauses (i) through
(vii) hereof expressly provides that such indebtedness or obligation is not
senior in right of payment to the Securities.

     "Significant Subsidiary" means a Subsidiary which otherwise meets the tests
      ----------------------                                              
ascribed to the term in Regulation S-X promulgated by the Commission under the
Securities Act, except that the tests therein shall be based on 20% of total
assets or income instead of 10%, unless the Company owns or controls, directly
or indirectly, at least 75% of the total voting power of such Subsidiary's
shares of Capital Stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
(such percentage to be calculated on a fully diluted basis), in which case the
tests shall be based on 10% of total assets or income.

     "Special Record Date" when used with respect to the payment of any 
      -------------------                                              
Defaulted Interest on the Registered Securities of or within any series, means a
date fixed by the Trustee pursuant to Section 307.
                                      ----------- 

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

     "Subsidiary" means, with respect to any Person, (i) any corporation,
      ----------                                                         
association or other business entity of which more than 50% of the total equity
capital and more than 50% of the total voting power of shares of Capital Stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by such Person or one or more of the other
Subsidiaries of that Person (or a combination thereof) and (ii) any partnership
(a) the sole general partner or the managing general partner of which is such
Person or a Subsidiary of such Person or (b) the only general partners of which
are such Person or one or more Subsidiaries of such Person (or any combination
thereof).

     "Surviving Entity" has the meaning specified in Section 801.
      ----------------                               ----------- 

     "Trust Indenture Act" means the Trust Indenture Act of 1939, as amended and
      -------------------                                                   
as in force at the date as of which this Indenture was executed, except as
provided in Section 905.
            ----------- 

                                      12
<PAGE>
 
     "Trustee" means the Person named as the "Trustee" in the first paragraph of
      -------                                                                
this Indenture until a successor Trustee has become such pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" shall mean or
include each Person who is then acting as a Trustee hereunder; provided, 
                                                               -------- 
however, that, if at any time there is more than one such Person, "Trustee" when
- -------                                                                         
used with respect to the Securities of or within any series, shall mean only the
Trustee with respect to the Securities of such series, and no Trustee of
Securities for any series shall be responsible for the acts or omissions of a
Trustee for any other series of Securities.

     "United States" means, unless otherwise specified with respect to any
      -------------                                                       
Securities pursuant to Section 301, the United States of America (including the
                       -----------                                             
states and the District of Columbia), its territories, its possessions and other
areas subject to its jurisdiction.

     "United States person" means, unless otherwise specified with respect to
      --------------------                                                   
any Securities pursuant to Section 301, an individual who is a citizen or 
                           -----------                                   
resident of the United States, a corporation, partnership or other entity
created or organized in or under the laws of the United States or an estate or
trust the income of which is subject to United States federal income taxation
regardless of its source.

     "Yield to Maturity" means the yield to maturity, computed at the time of
      -----------------                                                      
issuance of a Security (or, if applicable, at the most recent redetermination of
interest on such Security) and as set forth in such Security in accordance with
generally accepted United States bond yield computation principles.

     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 a Company Certificate
stating that all conditions precedent, if any, provided for in this Indenture
(including any covenants, compliance with which constitute conditions precedent)
relating to the proposed action have been complied with and an Opinion of
Counsel stating that, in the opinion of such counsel, all such conditions
precedent, if any, have been complied with, except that, in the case of any such
application or request as to which the furnishing of such documents is
specifically required by any provision of this Indenture relating to such
particular application or request, no additional certificate or opinion need be
furnished.

     Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (other than certificates provided
pursuant to Section 1009) shall include:
            ------------                

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

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

                                      13
<PAGE>
 
          (3)  a statement that, in the opinion of each such individual, he or
     she has made such examination or investigation as is necessary to enable
     him or her to express an informed opinion as to whether or not such
     condition or covenant has been complied with; and

          (4)  a statement as to whether or not, 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 in which
                   --------------------------------------                      
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 as 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, on an Opinion of Counsel, or a
certificate or representations by counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the opinion, certificate or
representations with respect to the matters on which his or her certificate or
opinion is based are erroneous. Any such Opinion of Counsel or certificate or
representations may be based, insofar as it relates to factual matters, on a
certificate or opinion of, or representations by, an officer or officers of the
Company stating that the information as to such factual matters is in the
possession of the Company, unless such counsel knows that the certificate or
opinion or representations as to such matters are erroneous.

     If 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.
                   --------------- 

          (a)  Any request, demand, authorization, direction, notice, consent,
     waiver or other action provided by this Indenture to be given or taken by
     Holders of the Outstanding Securities of all series or one or more series,
     as the case may be, may be embodied in and evidenced by one or more
     instruments of substantially similar tenor signed by such Holders in person
     or by agents duly appointed in writing. If Securities of a series are
     issuable as Bearer Securities, any request, demand, authorization,
     direction, notice, consent, waiver or other action provided by this
     Indenture to be given or taken by Holders of the Outstanding Securities of
     such series may, alternatively, be embodied in and evidenced by the record
     of such Holders voting in favor thereof, either in person or by proxies
     duly appointed in writing, at any meeting of such Holders duly called and
     held in accordance with the provisions of Article Fifteen, or a combination
                                               ---------------                  
     of such instruments and any such record. Except as herein otherwise
     expressly provided, such action shall become effective when such instrument
     or instruments or record or both are delivered to the Trustee and, if
     expressly required herein, to the Company. Such instrument or instrument
     and any such record (and

                                      14
<PAGE>
 
     the action embodied therein and evidenced thereby) are herein sometimes
     referred to as the "Act" of the Holders signing such instrument or
                         ---                                           
     instruments or so voting at any such meeting. Proof of execution of any
     such instrument or of a writing appointing any such agent, or of the
     holding by any Person of a Security, shall be sufficient for any purpose of
     this Indenture and conclusive in favor of the Trustee and the Company and
     any agent of the Trustee or the Company, if made in the manner provided in
     this Section. The record of any meeting of Holders of Securities shall be
     proved in the manner provided in Section 1506.
                                      ------------ 

          (b)  The fact and date of the execution by any Person of any such
     instrument or writing may be proved 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 or her the execution thereof or by any other means
     acceptable to the Trustee. If 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 reasonable
     manner which the Trustee deems sufficient.

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

          (d)  The ownership of Bearer Securities may be proved by the
     production of such Bearer Securities or by a certificate executed, as
     depositary, by any trust company, bank, banker or other depositary,
     wherever situated, if such certificate is deemed by the Trustee to be
     satisfactory, showing that at the date therein mentioned such Person had on
     deposit with such depositary, or exhibited to it, the Bearer Securities
     therein described; or such facts may be proved by the certificate or
     affidavit of the Person holding such Bearer Securities, if such certificate
     or affidavit is deemed by the Trustee to be satisfactory. The Trustee and
     the Company may assume that such ownership of any Bearer Security continues
     until (i) another certificate or affidavit bearing a later date issued in
     respect of the same Bearer Security is produced, (ii) such Bearer Security
     is produced to the Trustee by some other Person, (iii) such Bearer Security
     is surrendered in exchange for a Registered Security or (iv) such Bearer
     Security is no longer Outstanding. The ownership of Bearer Securities may
     also be proved in any other manner which the Trustee deems sufficient.

          (e)  If the Company shall solicit from the Holders of Registered
     Securities any request, demand, authorization, direction, notice, consent,
     waiver or other Act, the Company may, at its option, in or pursuant to a
     Board Resolution, fix in advance a record date for the determination of
     Holders entitled to give such request, demand, authorization, direction,
     notice, consent, waiver or other Act, but the Company shall not be
     obligated to do so. Notwithstanding Section 316(c) of the Trust Indenture
     Act, such record date shall be the record date specified in or pursuant to
     such Board Resolution, which shall be a date not earlier than the date
     thirty (30) days prior to the first solicitation of Holders generally in
     connection therewith and not later than the date such solicitation is
     completed. If such a

                                      15
<PAGE>
 
     record date is fixed, such request, demand, authorization, direction,
     notice, consent, waiver or other Act may be given before or after such
     record date, but only the Holders of record at the close of business on
     such record date shall be deemed to be Holders for the purpose of
     determining whether Holders of the requisite proportion of Outstanding
     Securities have authorized or agreed or consented to such request, demand,
     authorization, direction, notice, consent, waiver or other Act, and for
     that purpose the Outstanding Securities shall be computed as of such record
     date; provided that no such authorization, agreement or consent by the
           --------                                                        
     Holders on such record date shall be deemed effective unless it shall
     become effective pursuant to the provisions of this Indenture not later
     than eleven (11) months after the record date.

          (f)  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, any Security Registrar, any Paying Agent, any Authenticating Agent
     or the Company in reliance thereon, whether or not notation of such action
     is made on such Security.

     SECTION 105.  Notices 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 on, given or
furnished to, or filed with:

          (1)  the Trustee by any Holder or the Company shall be sufficient for
     every purpose hereunder if in writing and mailed, first class postage
     prepaid, to the Trustee addressed to it at the address of its Corporate
     Trust Office specified in the first paragraph of this Indenture, Attention:
     Corporate Trust Administration; or

          (2)  the Company by the Trustee or 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 Indenture or at any other address previously furnished in
     writing to the Trustee by the Company.

     SECTION 106.  Notice to Holders; Waiver. When this Indenture provides for
                   -------------------------                                  
notice of any event to Holders of Registered Securities by the Company or the
Trustee, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage prepaid, to
each such Holder affected by such event, at such Holder's address as it appears
in the Security Register, not later than the latest date, and not earlier than
the earliest date, prescribed for the giving of such notice. In any case in
which notice to Holders of Registered Securities 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 of Registered Securities or the sufficiency of any notice to
Holders of Bearer Securities given as provided herein. Any notice mailed to a
Holder in the manner herein prescribed shall be

                                      16
<PAGE>
 
conclusively deemed to have been received by such Holder, whether or not such
Holder actually receives such notice.

     If, by reason of the suspension of or irregularities in regular mail
service or by reason of any other cause, it is impracticable to give such notice
by mail, then such notification to Holders of Registered Securities as is made
with the approval of the Trustee shall constitute a sufficient notification to
such Holders for every purpose hereunder.

     Except as otherwise expressly provided herein or otherwise specified with
respect to any Securities pursuant to Section 301, when this Indenture provides
                                      -----------                              
for notice to Holders of Bearer Securities of any event, such notices shall be
sufficiently given if published in an Authorized Newspaper in The City of New
York and in such other city or cities as may be specified in such Securities
and, if the Securities of such series are listed on any securities exchange
outside the United States, in any place at which such Securities are listed on a
securities exchange to the extent that such securities exchange so requires, on
a Business Day, such publication to be not later than the latest date, and not
earlier than the earliest date, prescribed for the giving of such notice. Any
such notice shall be deemed to have been given on the date of such publication
or, if published more than once, on the date of the first such publication.

     If, by reason of the suspension of publication of any Authorized Newspaper
or Authorized Newspapers or by reason of any other cause, it is impracticable to
publish any notice to Holders of Bearer Securities as provided above, then such
notification to Holders of Bearer Securities as is given with the approval of
the Trustee shall constitute sufficient notice to such Holders for every purpose
hereunder. Neither the failure to give notice by publication to any particular
Holder of Bearer Securities as provided above, nor any defect in any notice so
published, shall affect the sufficiency of such notice with respect to other
Holders of Bearer Securities or the sufficiency of any notice to Holders of
Registered Securities given as provided herein.

     Any request, demand, authorization, direction, notice, consent or waiver
required or permitted under this Indenture shall be in the English language,
except that any published notice may be in an official language of the country
of publication.

     When 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 on such waiver.

     SECTION 107.  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 108.  Successors and Assigns. All covenants and agreements in this
                   ----------------------                                      
Indenture by the Company shall bind its successors and assigns, whether so
expressed or not.

                                      17
<PAGE>
 
     SECTION 109.  Separability Clause. In case any provision in this Indenture
                   -------------------                                         
or in any Security or any coupon 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 110.  Benefits of Indenture. Nothing in this Indenture or in any
                   ---------------------                                     
Security or any coupon, express or implied, shall give to any Person, other than
the parties hereto, any Security Registrar, any Paying Agent, any Authenticating
Agent and their successors hereunder and the Holders any benefit or any legal or
equitable right, remedy or claim under this Indenture.

     SECTION 111.  No Personal Liability. No recourse under or on any 
                   ---------------------                             
obligation, covenant or agreement contained in this Indenture or in any Security
or any coupon, or because of any indebtedness evidenced thereby, shall be had
against any promoter, as such or, against any past, present or future director,
officer, employee or shareholder, as such, of the Company or of any successor,
either directly or through the Company or any successor, under any rule of law,
statute or constitutional provision or by the enforcement of any assessment or
by any legal or equitable proceeding or otherwise, all such liability being
expressly waived and released by the acceptance of the Securities by the Holders
thereof and as part of the consideration for the issue of the Securities.

     SECTION 112.  Governing Law. THIS INDENTURE AND THE SECURITIES AND ANY 
                   -------------                                           
COUPONS SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE
STATE OF NEW YORK. THIS INDENTURE IS SUBJECT TO THE PROVISIONS OF THE TRUST
INDENTURE ACT WHICH, BY THE PROVISIONS THEREOF, ARE DEEMED OR REQUIRED TO BE
PART OF THIS INDENTURE AND SHALL, TO THE EXTENT APPLICABLE, BE GOVERNED BY SUCH
PROVISIONS. IF ANY PROVISION OF THIS INDENTURE LIMITS, QUALIFIES OR CONFLICTS
WITH THE DUTIES IMPOSED BY OPERATION OF SECTION 318(C) OF THE TRUST INDENTURE
ACT, THE IMPOSED DUTIES SHALL CONTROL.

     SECTION 113.  Legal Holidays. In any case in which any Interest Payment 
                   --------------                                           
Date, Redemption Date, Repayment Date, sinking fund payment date, Stated
Maturity or Maturity of any Security is not a Business Day at any Place of
Payment, then (notwithstanding any other provision of this Indenture or any
Security or any coupon other than a provision in the Securities of any series
which specifically states that such provision shall apply in lieu hereof),
payment of the principal of (and premium or Make-Whole Amount, if any, on) or
interest or Additional Amounts, if any, on such Security need not be made at
such Place of Payment on such date, but may be made on the next succeeding
Business Day at such Place of Payment with the same force and effect as if made
on the Interest Payment Date, Redemption Date, Repayment Date or sinking fund
payment date, or at the Stated Maturity or Maturity; provided, however, that no
                                                     --------  -------         
interest shall accrue on the amount so payable for the period from and after
such Interest Payment Date, Redemption Date, Repayment Date, sinking fund
payment date, Stated Maturity or Maturity, as the case may be.

     SECTION 114.  Counterparts. This Indenture may be executed in several
                   ------------                                           
counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.

                                      18
<PAGE>
 
                                  ARTICLE TWO
                               SECURITIES FORMS

     SECTION 201.  Forms of Securities. The Registered Securities, if any, of 
                   -------------------                                    
each series and the Bearer Securities, if any, and any coupons of each series,
shall be in substantially the forms as are established in or pursuant to one or
more indentures supplemental hereto or Board Resolutions, shall have such
appropriate insertions, omissions, substitutions and other variations as are
required or permitted by this Indenture or any indenture supplemental hereto,
and may have such letters, numbers or other marks of identification or
designation and such legends or endorsements placed thereon as the Company may
deem appropriate and as are not inconsistent with the provisions of this
Indenture, or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which the Securities may be listed, or to conform to usage.

     Unless otherwise specified as contemplated by Section 301, Bearer 
                                                   -----------
Securities shall have interest coupons attached.

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

     SECTION 202.  Form of Trustee's Certificate of Authentication. Subject to
                   -----------------------------------------------         
Section 611, the Trustee's certificate of authentication shall be in 
- -----------                                                         
substantially the following form:

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


                                        STATE STREET BANK AND TRUST
                                         COMPANY,
                                        as Trustee


                                        By:_________________________________
                                             Authorized Officer

     SECTION 203.  Securities Issuable in Global Form. If Securities of or 
                   ----------------------------------                     
within a series are issuable in global form, as specified as contemplated by
Section 301, then, notwithstanding clause (8) of Section 301 and the provisions
- -----------                                      -----------                   
of Section 302, any such Security shall represent such of the Outstanding
   -----------                                                           
Securities of such series as are specified therein and may provide that it shall
represent the aggregate amount of Outstanding Securities of such series from
time to time endorsed thereon and that the aggregate amount of Outstanding
Securities of such series represented thereby may from time to time be increased
or decreased to reflect exchanges. Any endorsement of a

                                      19
<PAGE>
 
Security in global form to reflect the amount, or any increase or decrease in
the amount, of Outstanding Securities represented thereby shall be made by the
Trustee in the manner and in accordance with instructions given by such Person
or Persons specified therein or in the Company Order to be delivered to the
Trustee pursuant to Section 303 or 304. Subject to the provisions of Section 303
                    -----------    ---                               -----------
and, if applicable, Section 304, the Trustee shall deliver and redeliver any
                    -----------                                             
Security in permanent global form in the manner and in accordance with
instructions given by the Person or Persons specified therein or in the
applicable Company Order. If a Company Order pursuant to Section 303 or 304 has
                                                         -----------    ---    
been, or simultaneously is, delivered, any instructions by the Company with
respect to endorsement or delivery or redelivery of a Security in global form
shall be in writing but need not comply with Section 102 and need not be
                                             -----------                
accompanied by an Opinion of Counsel.

     The provisions of the last sentence of Section 303 shall apply to any 
                                            -----------                   
Security represented by a Security in global form if such Security was never
issued and sold by the Company and the Company delivers to the Trustee the
Security in global form together with written instructions (which need not
comply with Section 102 and need not be accompanied by an Opinion of Counsel)
            -----------                                                      
with regard to the reduction in the principal amount of Securities represented
thereby, together with the written statement contemplated by the last sentence
of Section 303.
   ----------- 

     Notwithstanding the provisions of Section 307, unless otherwise specified
                                       -----------                            
as contemplated by Section 301, payment of principal of (and premium or Make-
                   -----------                                              
Whole Amount, if any, on) and interest and Additional Amounts, if any, on any
Security in permanent global form shall be made to the Person or Persons
specified therein.

     Notwithstanding the provisions of Section 308 and except as provided in the
                                       -----------                              
preceding paragraph, the Company, the Trustee and any agent of the Company or
the Trustee shall treat as the Holder of such principal amount of Outstanding
Securities represented by a permanent global Security (i) in the case of a
permanent global Security in registered form, the Holder of such permanent
global Security in registered form, or (ii) in the case of a permanent global
Security in bearer form, Euroclear or CEDEL.


                                 ARTICLE THREE
                                THE SECURITIES

     SECTION 301.  Amount Unlimited; Issuable in Series. The aggregate principal
                   ------------------------------------                         
amount of Securities which may be authenticated and delivered under this
Indenture is unlimited.

     The Securities may be issued in one or more series. There shall be
established in or pursuant to one or more Board Resolutions, or indentures
supplemental hereto, prior to the issuance of Securities of any series, any or
all of the following, as applicable (each of which (except for the matters set
forth in clauses (1), (2) and (15) below), if so provided, may be determined
from time to time by the Company with respect to unissued Securities of or
within the series when issued from time to time):

                                      20
<PAGE>
 
          (1)  the title of the Securities of or within the series (which shall
     distinguish the Securities of such series from all other series of
     Securities);

          (2)  any limit on the aggregate principal amount of the Securities of
     or within the series which may be authenticated and delivered under this
     Indenture (except for Securities authenticated and delivered upon
     registration of transfer of, or in exchange for, or in lieu of, other
     Securities of or within the series pursuant to Section 304, 305, 306, 906,
                                                    -----------  ---  ---  --- 
     1107 or 1305);
     ----    ----  

          (3)  the date or dates, or the method by which such date or dates will
     be determined, on which the principal of the Securities of or within the
     series shall be payable and the amount of principal payable thereon;

          (4)  the rate or rates at which the Securities of or within the series
     shall bear interest, if any, or the method by which such rate or rates
     shall be determined, the date or dates from which such interest shall
     accrue or the method by which such date or dates shall be determined, the
     Interest Payment Dates on which such interest will be payable and the
     Regular Record Date, if any, for the interest payable on any Registered
     Security on any Interest Payment Date, or the method by which such date
     shall be determined, and the basis on which interest shall be calculated if
     other than a 360-day year comprised of twelve (12) 30-day months;

          (5)  the place or places, if any, other than or in addition to the
     Corporate Trust Office where the principal of (and premium or Make-Whole
     Amount, if any, on) and interest and Additional Amounts, if any, on
     Securities of or within the series shall be payable, any Registered
     Securities of or within the series may be surrendered for registration of
     transfer, exchange or conversion and notices or demands to or on the
     Company in respect of the Securities of or within the series and this
     Indenture may be served;

          (6)  the period or periods within which, the price or prices
     (including the premium or Make-Whole Amount, if any) at which, the currency
     or currencies, currency unit or units or composite currency or currencies
     in which, and other terms and conditions upon which Securities of or within
     the series may be redeemed, in whole or in part, at the option of the
     Company, if the Company is to have the option;

          (7)  the obligation, if any, of the Company to redeem, repay or
     purchase Securities of or within the series pursuant to any sinking fund or
     analogous provision or at the option of a Holder thereof, and the period or
     periods within which or the date or dates on which, the price or prices at
     which, the currency or currencies, currency unit or units or composite
     currency or currencies in which, and other terms and conditions upon which
     Securities of or within the series shall be redeemed, repaid or purchased,
     in whole or in part, pursuant to such obligation;

                                      21
<PAGE>
 
          (8)  if other than denominations of $1,000 and any integral multiple
     thereof, the denominations in which any Registered Securities of or within
     the series shall be issuable and, if other than the denomination of $5,000,
     the denomination or denominations in which any Bearer Securities of or
     within the series shall be issuable;

          (9)  if other than the Trustee, the identity of each Security
     Registrar and/or Paying Agent;

          (10) the percentage of the principal amount at which Securities will
     be issued and, if other than the principal amount thereof, the portion of
     the principal amount of Securities of or within the series which shall be
     payable upon declaration of acceleration of the Maturity thereof pursuant
     to Section 502, or, if applicable, the portion of the principal amount of
        -----------                                                           
     Securities which is convertible in accordance with the provisions of this
     Indenture, or the method by which such portion shall be determined;

          (11) if other than Dollars, the Foreign Currency or Currencies in
     which payment of the principal of (and premium or Make-Whole Amount, if
     any, on) or interest or Additional Amounts, if any, on the Securities of or
     within the series shall be payable or in which the Securities of or within
     the series shall be denominated;

          (12) whether the amount of payments of the principal of (and premium
     or Make-Whole Amount, if any, on) or interest or Additional Amounts, if
     any, on the Securities of or within the series may be determined with
     reference to an index, formula or other method (which index, formula or
     method may be based, without limitation, on one or more currencies,
     currency units, composite currencies, commodities, equity indices or other
     indices), and the manner in which such amounts shall be determined;

          (13) whether the principal of (and premium or Make-Whole Amount, if
     any, on) or interest or Additional Amounts, if any, on the Securities of or
     within the series are to be payable, at the election of the Company or a
     Holder thereof, in a currency or currencies, currency unit or units or
     composite currency or currencies other than that in which such Securities
     are denominated or stated to be payable, the period or periods within which
     (including the Election Date), and the terms and conditions upon which,
     such election may be made, and the time and manner of, and identity of the
     exchange rate agent with responsibility for, determining the exchange rate
     between the currency or currencies, currency unit or units or composite
     currency or currencies in which such Securities are denominated or stated
     to be payable and the currency or currencies, currency unit or units or
     composite currency or currencies in which such Securities are to be so
     payable;

          (14) provisions, if any, granting special rights to the Holders of
     Securities of or within the series on the occurrence of such events as may
     be specified;

          (15) any deletions from, modifications of or additions to the Events
     of Default or covenants of the Company with respect to Securities of or
     within the series, whether or not

                                      22
<PAGE>
 
     such Events of Default or covenants are consistent with the Events of
     Default or covenants set forth herein;

          (16) whether Securities of or within the series are to be issuable as
     Registered Securities, Bearer Securities (with or without coupons) or both,
     any restrictions applicable to the offer, sale or delivery of Bearer
     Securities and the terms upon which Bearer Securities of or within the
     series may be exchanged for Registered Securities of or within the series
     and vice versa (if permitted by applicable laws and regulations), whether
     any Securities of or within the series are to be issuable initially in
     temporary global form and whether any Securities of or within the series
     are to be issuable in permanent global form (with or without coupons) and,
     if so, whether beneficial owners of interests in any such permanent global
     Security may exchange such interests for Securities of such series and of
     like tenor of any authorized form and denomination and the circumstances
     under which any such exchanges may occur, if other than in the manner
     provided in Section 305, and, if Registered Securities of or within the
                 -----------                                                
     series are to be issuable as a global Security, the identity of the
     depositary for such series, and the date as of which any Bearer Securities
     of or within the series and any temporary global Security representing
     Outstanding Securities of or within the series shall be dated if other than
     the date of original issuance of the first Security of the series to be
     issued;

          (17) the Person to whom any interest on any Registered Security of the
     series shall be payable, if other than the Person in whose name such
     Security (or one or more Predecessor Securities) is registered at the close
     of business on the Regular Record Date for such interest, the manner in
     which, or the Person to whom, any interest on any Bearer Security of the
     series shall be payable, if otherwise than upon presentation and surrender
     of the coupons appertaining thereto as they severally mature, and the
     extent to which, or the manner in which, any interest payable on a
     temporary global Security on an Interest Payment Date will be paid if other
     than in the manner provided in Section 304;
                                    ----------- 

          (18) the applicability, if any, of Sections 1402 and/or 1403 to the
                                             -------------        ----       
     Securities of or within the series and any provisions in modification of,
     in addition to or in lieu of any of the provisions of Article Fourteen;
                                                           ---------------- 

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

          (20) if the Securities of or within the series are to be issued upon
     the exercise of debt warrants, the time, manner and place for such
     Securities to be authenticated and delivered;

          (21) whether and under what circumstances the Company will pay
     Additional Amounts as contemplated by Section 1010 on the Securities of or
                                           ------------                        
     within the series to any

                                      23
<PAGE>
 
     Holder who is not a United States person (including any modification to the
     definition of such term) in respect of any tax, assessment or governmental
     charge and, if so, whether the Company will have the option to redeem such
     Securities rather than pay such Additional Amounts (and the terms of any
     such option);

          (22) the obligation, if any, of the Company to permit the conversion
     of the Securities of such series into Common Shares or other securities of
     the Company, and the terms and conditions on which such conversion shall be
     effected (including, without limitation, the initial conversion price or
     rate, the conversion period, any adjustment of the applicable conversion
     price and any requirements relative to the reservation of such shares for
     purposes of conversion; and

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

     All Securities of any one series and the coupons appertaining to any Bearer
Securities of such series, if any, shall be substantially identical except, in
the case of Registered or Bearer Securities issued in global form, as to
denomination and except as may otherwise be provided in or pursuant to such
Board Resolution or in any such indenture supplemental hereto. All Securities of
any one series need not be issued at the same time and, unless otherwise
provided, a series may be reopened, without the consent of the Holders, for
issuances of additional Securities of such series.

     If any of the terms of the Securities of any series are established by
action taken pursuant to one or more Board Resolutions or supplemental
indentures, a copy of an appropriate record of such action(s) shall be certified
by the Secretary or an Assistant Secretary of the Company and delivered to the
Trustee at or prior to the delivery of the Company Order for authentication and
delivery of such Securities.

     SECTION 302.  Denominations. The Securities of each series shall be 
                   -------------                                        
issuable as Bearer Securities, as Registered Securities or in any combination
thereof, and in such denominations and amounts as are specified as contemplated
by Section 301. With respect to any series denominated in Dollars, in the 
   -----------                                                           
absence of any such provisions with respect to the Securities of any series, the
Registered Securities of such series, other than Registered Securities issued in
global form (which may be of any denomination), shall be issuable in
denominations of $1,000 and any integral multiple thereof and the Bearer
Securities of such series, other than Bearer Securities issued in global form
(which may be of any denomination), shall be issuable in denominations of
$5,000.

     SECTION 303.  Execution, Authentication, Delivery and Dating. The 
                   ----------------------------------------------     
Securities and any coupons shall be executed on behalf of the Company by the
Chairman or a Co-Chairman, Managing Director, Senior Vice President, Vice
President or the Treasurer of the Company, under the Company's corporate seal
reproduced thereon, and attested by the Company's Secretary or one of its
Assistant Secretaries. The signature of any of these officers on the Securities
and any coupons may be manual or facsimile signatures of the present or any
future such authorized officer and may be imprinted or otherwise reproduced on
the Securities and such coupons.

                                      24
<PAGE>
 
     Any Securities or any coupons 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 or any coupons.

     At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Securities of any series, together with any
coupons, 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 shall authenticate and deliver such Securities in accordance with
the Company Order; provided, however, that, in connection with its original
                   --------  -------                                       
issuance, no Bearer Security shall be mailed or otherwise delivered to any
location in the United States; and provided, further, that, unless otherwise
                                   --------  -------                        
specified with respect to any series of Securities pursuant to Section 301, a
                                                               -----------   
Bearer Security may be delivered in connection with its original issuance only
if the Person entitled to received such Bearer Security has furnished a
certificate to Euroclear or CEDEL, as the case may be, in the form set forth in
Exhibit A-1 to this Indenture or such other certificate as may be specified with
- -----------                                                                     
respect to any series of Securities pursuant to Section 301, dated no earlier
                                                -----------                  
than fifteen (15) days prior to the earlier of the date on which such Bearer
Security is delivered and the date on which any temporary Security first becomes
exchangeable for such Bearer Security in accordance with the terms of such
temporary Security and this Indenture.

     Except as permitted by Section 306, the Trustee shall not authenticate and
                            -----------                                        
deliver any Bearer Security unless all appurtenant coupons for interest then
matured have been detached and canceled. If all of the Securities of any series
are not to be issued at one time and if the Board Resolution or supplemental
indenture establishing such series so permits, such Company Order may set forth
procedures acceptable to the Trustee for the issuance of such Securities and
determining the terms of particular Securities of such series, such as the
interest rate or formula, maturity date, date of issuance and date from which
interest shall accrue.

     In authenticating such Securities, and accepting the additional
responsibilities under this Indenture in relation to such Securities and any
coupons appertaining thereto, the Trustee shall be entitled to receive, and
(subject to Section 315(a) through 315(d) of the Trust Indenture Act) shall be
fully protected in relying on:

          (1)  an Opinion of Counsel complying with Section 102 and stating 
                                                    -----------                 
               that:

               (A)  the form or forms of such Securities and any coupons
          appertaining thereto have been, or will have been upon compliance with
          such procedures as may be specified therein, established in conformity
          with the provisions of this Indenture;

               (B)  the terms of such Securities and any coupons appertaining
          thereto have been, or will have been upon compliance with such
          procedures as may be specified therein, established in conformity with
          the provisions of this Indenture; and

                                      25
<PAGE>
 
               (C)  such Securities, together with any coupons appertaining
          thereto, when executed by the Company, completed pursuant to such
          procedures as may be specified therein and delivered by the Company to
          the Trustee for authentication in accordance with this Indenture,
          authenticated and delivered by the Trustee in accordance with this
          Indenture and issued by the Company in the manner and subject to any
          conditions specified in such Opinion of Counsel, will constitute
          legal, valid and binding obligations of the Company, enforceable in
          accordance with their terms, subject to applicable bankruptcy,
          insolvency, reorganization and other similar laws of general
          applicability relating to or affecting the enforcement of creditors'
          rights generally and to general equitable principles and to such other
          matters as may be specified therein; and

          (2)  a Company Certificate complying with Section 102 and stating that
                                                   -----------                 
     all conditions precedent provided for in this Indenture relating to the
     issuance of such Securities have been, or will have been upon compliance
     with such procedures as may be specified therein, complied with and that,
     to the best of the knowledge of the signers of such certificate, no Event
     of Default with respect to such Securities has occurred and is continuing.

The Trustee shall not be required to authenticate such Securities if the issue
of such Securities pursuant to this Indenture will affect the Trustee's own
rights, duties, obligations or immunities under the Securities and this
Indenture or otherwise in a manner which is not reasonably acceptable to the
Trustee.

     Notwithstanding the provisions of Section 301 and of the preceding
                                       -----------                     
paragraph, if all the Securities of any series are not to be issued at one time,
it shall not be necessary to deliver a Company Order, an Opinion of Counsel or a
Company Certificate otherwise required pursuant to the preceding paragraph at
the time of issuance of each Security of such series, but such order, opinion
and certificate with appropriate modifications to cover such future issuances,
shall be delivered at or before the time of issuance of the first Security of
such series.

     Each Registered Security shall be dated the date of its authentication and
each Bearer Security shall be dated as of the date specified as contemplated by
Section 301.
- ----------- 

     No Security or coupon shall be entitled to any benefit under this Indenture
or be valid or obligatory for any purpose unless there appears on such Security
or the Security to which such coupon appertains a certificate of authentication
substantially in the form provided for herein duly executed by the Trustee by
manual signature of an authorized officer, and such certificate on any Security
shall be conclusive evidence, and the only evidence, that such Security has been
duly authenticated and delivered hereunder and is entitled to the benefits of
this Indenture. Notwithstanding the foregoing, if any Security has been
authenticated and delivered hereunder but never issued and sold by the Company,
and the Company delivers such Security to the Trustee for cancellation as
provided in Section 309 together with a written statement (which need not comply
            -----------                                                         
with Section 102 and need not be accompanied by an Opinion of Counsel) stating
     -----------                                                              
that such Security

                                      26
<PAGE>
 
has never been issued or sold by the Company, for all purposes of this Indenture
such Security shall be deemed never to have been authenticated and delivered
hereunder and shall never be entitled to the benefits of this Indenture.

     SECTION 304.  Temporary Securities.
                   -------------------- 

          (a)  Pending the preparation of definitive Securities of any series,
     the Company may execute, and upon a 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, in registered form, or, if
     authorized, in bearer form (with or without coupons), and with such
     appropriate insertions, omissions, substitutions and other variations as
     the officers executing such Securities may determine, as conclusively
     evidenced by their execution of such Securities. In the case of Securities
     of any series, such temporary Securities may be in global form.

          Except in the case of temporary Securities in global form (which shall
     be exchanged in accordance with Section 304(b) or as otherwise provided in
                                     --------------                            
     or pursuant to a Board Resolution), if temporary Securities of any series
     are issued, the Company shall cause definitive Securities of such series to
     be prepared without unreasonable delay. After the preparation of definitive
     Securities of such series, the temporary Securities of such series shall be
     exchangeable for definitive Securities of such series upon surrender of the
     temporary Securities of such series at the office or agency of the Company
     in a Place of Payment for such series, without charge to the Holder. Upon
     surrender for cancellation of any one or more temporary Securities of any
     series, together with any non-matured coupons appertaining thereto, the
     Company shall execute and the Trustee shall authenticate and deliver in
     exchange therefor a like principal amount of definitive Securities of the
     same series of authorized denominations; provided, however, that no
                                              --------  -------         
     definitive Bearer Security shall be delivered in exchange for a temporary
     Registered Security; and provided, further, that a definitive Bearer
                              --------  -------                          
     Security shall be delivered in exchange for a temporary Bearer Security
     only in compliance with the conditions set forth in Section 303. Until so
                                                         -----------          
     exchanged, the temporary Securities or coupons appertaining thereto of any
     series shall in all respects be entitled to the same benefits under this
     Indenture as definitive Securities or coupons appertaining thereto of such
     series.

          (b)  Unless otherwise provided as contemplated in Section 301, this
                                                           -----------      
     Section 304(b) shall govern the exchange of temporary Securities issued in
     --------------                                                            
     global form other than through the facilities of DTC. If any such temporary
     Security is issued in global form, then such temporary global Security
     shall, unless otherwise provided therein, be delivered to the London office
     of a depositary or common depositary (the "Common Depositary"), for the
                                                -----------------           
     benefit of Euroclear and CEDEL.

          Without unnecessary delay but in any event not later than the date
     specified in, or determined pursuant to the terms of, any such temporary
     global Security (the "Exchange
                           --------

                                      27
<PAGE>
 
     Date"), the Company shall deliver to the Trustee definitive Securities, in
     ----                                                                      
     an aggregate principal amount equal to the principal amount of such
     temporary global Security, executed by the Company. On or after the
     Exchange Date, such temporary global Security shall be surrendered by the
     Common Depositary to the Trustee, as the Company's agent for such purpose,
     to be exchanged, in whole or from time to time in part, for definitive
     Securities without charge, and the Trustee shall authenticate and deliver,
     in the name of Euroclear or CEDEL, as the case may be, in exchange for each
     portion of such temporary global Security, an equal aggregate principal
     amount of definitive Securities of or within the same series of authorized
     denominations and of like tenor as the portion of such temporary global
     Security to be exchanged. The definitive Securities to be delivered in
     exchange for any such temporary global Security shall be in bearer form,
     registered form, permanent global bearer form or permanent global
     registered form, or any combination thereof, as specified as contemplated
     by Section 301, and, if any combination thereof is so specified, as
        -----------                                                     
     requested by the Common Depository; provided, however, that, unless 
                                         --------  -------              
     otherwise specified in such temporary global Security, upon such
     presentation by the Common Depositary, such temporary global Security shall
     be accompanied by a certificate dated the Exchange Date or a subsequent
     date and signed by Euroclear as to the portion of such temporary global
     Security held for its account then to be exchanged and a certificate dated
     the Exchange Date or a subsequent date and signed by CEDEL as to the
     portion of such temporary global Security held for its account then to be
     exchanged, each in the form set forth in Exhibit A-2 to this Indenture or
                                              -----------                     
     in such other form as may be established pursuant to Section 301; and
                                                          -----------     
     provided, further, that definitive Bearer Securities shall be delivered in
     --------  -------                                                         
     exchange for a portion of a temporary global Security only in compliance
     with the requirements of Section 303.
                              ----------- 

          Unless otherwise specified in such temporary global Security, the
     interest of a beneficial owner of Securities of a series in a temporary
     global Security shall be exchanged for definitive Securities of the same
     series and of like tenor following the Exchange Date when the account
     holder instructs Euroclear or CEDEL, as the case may be, to request such
     exchange on his behalf and delivers to Euroclear or CEDEL, as the case may
     be, a certificate in the form set forth in Exhibit A-1 to this Indenture 
                                                -----------                  
     (or in such other form as may be established pursuant to Section 301),
                                                              -----------  
     dated no earlier than fifteen (15) days prior to the Exchange Date, copies
     of which certificate shall be available from the offices of Euroclear and
     CEDEL, the Trustee, any Authenticating Agent appointed for such series of
     Securities and each Paying Agent. Unless otherwise specified in such
     temporary global Security, any such exchange shall be made free of charge
     to the beneficial owners of such temporary global Security, except that a
     Person receiving definitive Securities must bear the cost of insurance,
     postage, transportation and the like unless such Person takes delivery of
     such definitive Securities in person at the offices of Euroclear or CEDEL.
     Definitive Securities in bearer form to be delivered in exchange for any
     portion of a temporary global Security shall be delivered only outside the
     United States.

          Until exchanged in full as hereinabove provided, the temporary
     Securities of any series shall in all respects be entitled to the same
     benefits under this Indenture as definitive

                                      28
<PAGE>
 
     Securities of the same series and of like tenor authenticated and delivered
     hereunder, except that, unless otherwise specified as contemplated by
     Section 301, interest payable on a temporary global Security on an Interest
     -----------                                                                
     Payment Date for Securities of such series occurring prior to the
     applicable Exchange Date shall be payable to Euroclear and CEDEL on such
     Interest Payment Date upon delivery by Euroclear and CEDEL to the Trustee
     of a certificate or certificates in the form set forth in Exhibit A-2 to
                                                               -----------   
     this Indenture (or in such other forms as may be established pursuant to
     Section 301), for credit without further interest on or after such Interest
     -----------                                                                
     Payment Date to the respective accounts of Persons who are the beneficial
     owners of such temporary global Security on such Interest Payment Date and
     who have each delivered to Euroclear or CEDEL, as the case may be, a
     certificate dated no earlier than fifteen (15) days prior to the Interest
     Payment Date occurring prior to such Exchange Date in the form set forth in
     Exhibit A-1 to this Indenture (or in such other forms as may be established
     -----------                                                                
     pursuant to Section 301). Notwithstanding anything to the contrary herein
                 -----------                                                  
     contained, the certifications made pursuant to this paragraph shall satisfy
     the certification requirements of the preceding two paragraphs of this
     Section 304(b) and of the third paragraph of Section 303 of this Indenture
     --------------                               -----------                  
     and the interests of the Persons who are the beneficial owners of the
     temporary global Security with respect to which such certification was made
     will be exchanged for definitive Securities of the same series and of like
     tenor on the Exchange Date or the date of certification if such date occurs
     after the Exchange Date, without further act or deed by such beneficial
     owners. Except as otherwise provided in this paragraph, no payments of
     principal or interest owing with respect to a beneficial interest in a
     temporary global Security will be made unless and until such interest in
     such temporary global Security has been exchanged for an interest in a
     definitive Security. Any interest so received by Euroclear and CEDEL and
     not paid as herein provided shall be returned to the Trustee prior to the
     expiration of two (2) years after such Interest Payment Date in order to be
     repaid to the Company.

     SECTION 305.  Registration, Registration of Transfer and Exchange. The
                   ---------------------------------------------------      
Company shall cause to be kept at the Corporate Trust Office of the Trustee or
in any office or agency of the Company in a Place of Payment a register for each
series of Securities (the registers maintained in such office or in any such
office or agency of the Company in a Place of Payment being herein sometimes
referred to collectively as the "Security Register") in which, subject to such
                                 -----------------                            
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Registered Securities and of transfers of Registered Securities.
The Security Register shall be in written form or any other form capable of
being converted into written form within a reasonable time. The Trustee, at its
Corporate Trust Office, is hereby initially appointed "Security Registrar" for
                                                       ------------------     
the purpose of registering Registered Securities and transfers of Registered
Securities on such Security Register as herein provided. In the event that the
Trustee ceases to be Security Registrar, it shall have the right to examine the
Security Register at all reasonable times.

     Subject to the provisions of this Section 305, upon surrender for
                                       -----------                    
registration of transfer of any Registered Security of any series at any office
or agency of the Company in a Place of Payment for such series, the Company
shall execute, and the Trustee shall authenticate and deliver, in the name of
the designated transferee or transferees, one or more new Registered Securities
of the same

                                      29
<PAGE>
 
series, of any authorized denominations and of a like aggregate principal
amount, being a number not contemporaneously outstanding, and containing
identical terms and provisions.

     Subject to the provisions of this Section 305, at the option of the Holder,
                                       -----------                              
Registered Securities of any series may be exchanged for other Registered
Securities of the same series, of any authorized denomination or denominations
and of a like aggregate principal amount, containing identical terms and
provisions, upon surrender of the Registered Securities to be exchanged at any
such office or agency. Whenever any such Registered Securities are so
surrendered for exchange, the Company shall execute, and the Trustee shall
authenticate and deliver, the Registered Securities which the Holder making the
exchange is entitled to receive. Unless otherwise specified with respect to any
series of Securities as contemplated by Section 301, Bearer Securities may not
                                        -----------                           
be issued in exchange for Registered Securities.

     If (but only if) permitted as contemplated by Section 301, at the option of
                                                   -----------                  
the Holder, Bearer Securities of any series may be exchanged for Registered
Securities of the same series of any authorized denominations and of a like
aggregate principal amount and tenor, upon surrender of the Bearer Securities to
be exchanged at any such office or agency, with all unmatured coupons and all
matured coupons in default appertaining thereto. If the Holder of a Bearer
Security is unable to produce any such unmatured coupon or coupons or matured
coupon or coupons in default, any such permitted exchange may be effected if the
Bearer Securities are accompanied by payment in funds acceptable to the Company
in an amount equal to the face amount of such missing coupon or coupons, or the
surrender of such missing coupon or coupons may be waived by the Company and the
Trustee if there is furnished to them such security or indemnity as they may
require to save each of them and any Paying Agent harmless. If thereafter the
Holder of such Bearer Security surrenders to any Paying Agent any such missing
coupon in respect of which such a payment has been made, such Holder shall be
entitled to receive the amount of payment; provided, however, that, except as
                                           --------  -------                 
otherwise provided in Section 1002, interest represented by a coupon shall be
                      ------------                                           
payable only upon presentation and surrender of such coupons at an office or
agency located outside the United States. Notwithstanding the foregoing, in case
a Bearer Security of any series is surrendered at any such office or agency in a
permitted exchange for a Registered Security of the same series and like tenor
after the close of business at such office or agency on (i) any Regular Record
Date and before the opening of business at such office or agency on the relevant
Interest Payment Date or (ii) any Special Record Date and before the opening of
business at such office or agency on the related proposed date for payment of
Defaulted Interest, such Bearer Security shall be surrendered without the coupon
relating to such Interest Payment Date or proposed date for payment, as the case
may be, and interest or Defaulted Interest, as the case may be, will not be
payable on such Interest Payment Date or proposed date for payment, as the case
may be, in respect of the Registered Security issued in exchange for such Bearer
Security, but will be payable only to the Holder of such coupon when due in
accordance with the provisions of this Indenture. 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.

     Notwithstanding the foregoing, except as otherwise specified as
contemplated by Section 301, any permanent global Security shall be exchangeable
                -----------                                                     
only as provided in this paragraph. If the

                                      30
<PAGE>
 
depositary for any permanent global Security is DTC, then, unless the terms of
such global Security expressly permit such global Security to be exchanged in
whole or in part for definitive Securities, a global Security may be
transferred, in whole but not in part, only to a nominee of DTC, or by a nominee
of DTC to DTC, or to a successor to DTC for such global Security selected and
approved by the Company or to a nominee of such successor to DTC. If at any time
DTC notifies the Company that it is unwilling or unable to continue as
depositary for the applicable global Security or Securities or if at any time
DTC ceases to be a clearing agency registered under the Exchange Act if so
required by applicable law or regulation, the Company shall appoint a successor
depositary with respect to such global Security or Securities. If (i) a
successor depositary for such global Security or Securities is not appointed by
the Company within ninety (90) days after the Company receives such notice or
becomes aware of such unwillingness, inability or ineligibility, (ii) an Event
of Default has occurred and is continuing and the beneficial owners representing
a majority in principal amount of the applicable series of Securities
represented by such global Security or Securities advise DTC to cease acting as
depositary for such global Security or Securities or (iii) the Company, in its
sole discretion, determines at any time that all Outstanding Securities (but not
less than all) Securities of any series issued or issuable in the form of one or
more global Securities shall no longer be represented by such global Security or
Securities (provided, however, that the Company may not make such determination
            --------  -------                                                  
during the forty (40)-day restricted period provided by Regulation S under the
Securities Act or during any other similar period during which the Securities
must be held in global form as may be required by the Securities Act), then,
upon surrender of the global Security or Securities appropriately endorsed, the
Company shall execute, and the Trustee shall authenticate and deliver definitive
Securities of like series, rank, tenor and terms in definitive form in an
aggregate principal amount equal to the principal amount of such global Security
or Securities. If any beneficial owner of an interest in a permanent global
Security is otherwise entitled to exchange such interest for Securities of such
series and of like tenor and principal amount of another authorized form and
denomination, as specified as contemplated by Section 301 and provided that any
                                              -----------                      
applicable notice provided in the permanent global Security has been given, then
without unnecessary delay but in any event not earlier than the earliest date on
which such interest may be so exchanged, upon surrender of the global Security
or Securities appropriately endorsed, the Company shall execute, and the Trustee
shall authenticate and deliver definitive Securities in aggregate principal
amount equal to the principal amount of such beneficial owner's interest in such
permanent global Security. On or after the earliest date on which such interests
may be so exchanged, such permanent global Security shall be surrendered for
exchange by DTC or such other depositary as is specified in the Company Order
with respect thereto to the Trustee, as the Company's agent for such purpose;
provided, however, that no such exchanges may occur during a period beginning at
- --------  -------                                                               
the opening of business fifteen (15) days before any selection of Securities to
be redeemed and ending on the relevant Redemption Date if the Security for which
exchange is requested may be among those selected for redemption; and provided,
                                                                      -------- 
further, that no Bearer Security delivered in exchange for a portion of a
- -------                                                                  
permanent global Security shall be mailed or otherwise delivered to any location
in the United States. If a Registered Security is issued in exchange for any
portion of a permanent global Security after the close of business at the office
or agency where such exchange occurs on (i) any Regular Record Date and before
the opening of business at such office or agency on the relevant Interest
Payment Date or (ii) any Special Record Date and before the opening of business
at such office or agency on the related proposed date for

                                       31
<PAGE>
 
payment of Defaulted Interest, interest or Defaulted Interest, as the case may
be, will not be payable on such Interest Payment Date or proposed date for
payment, as the case may be, in respect of such Registered Security, but will be
payable on such Interest Payment Date or proposed date for payment, as the case
may be, only to the Person to whom interest in respect of such portion of such
permanent global Security is payable in accordance with the provisions of this
Indenture.

     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 Registered Security presented or surrendered for registration of
transfer or for exchange or redemption 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 which may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 304, 906, 1107 or 1305 not involving any transfer.
                      -----------  ---  ----    ----                            

     The Company or the Trustee, as applicable, shall not be required (i) to
issue, register the transfer of or exchange any Security if such Security may be
among those selected for redemption during a period beginning at the opening of
business fifteen (15) days before selection of the Securities to be redeemed
under Section 1103 and ending at the close of business on (A) if such Securities
      ------------                                                              
are issuable only as Registered Securities, the day of the mailing of the
relevant notice of redemption, and (B) if such Securities are issuable as Bearer
Securities, the day of the first publication of the relevant notice of
redemption or, if such Securities are also issuable as Registered Securities and
there is no publication, the day of the mailing of the relevant notice of
redemption, or (ii) to register the transfer of or exchange any Registered
Security so selected for redemption in whole or in part, except, in the case of
any Registered Security to be redeemed in part, the portion thereof not to be
redeemed, or (iii) to exchange any Bearer Security so selected for redemption
except that such a Bearer Security may be exchanged for a Registered Security of
such series and like tenor, provided that such Registered Security is
                            --------                                 
simultaneously surrendered for redemption, or (iv) to issue, register the
transfer of or exchange any Security which has been surrendered for repayment at
the option of the Holder, except the portion, if any, of such Security not to be
so repaid.

      SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities. If any
                   ------------------------------------------------        
mutilated Security or a Security with a mutilated coupon appertaining thereto is
surrendered to the Trustee or the Company, together with, in proper cases, such
security or indemnity as may be required by the Company or the Trustee to save
each of them or any of their agents harmless, the Company shall execute and the
Trustee shall authenticate and deliver in exchange therefor a new Security of
the same series and principal amount, containing identical terms and provisions
and bearing a number

                                       32
<PAGE>
 
not contemporaneously outstanding, with coupons corresponding to the coupons, if
any, appertaining to the surrendered Security.

     If there is delivered to the Company and the Trustee (i) evidence to their
satisfaction of the destruction, loss or theft of any Security or coupon, and
(ii) such security or indemnity as may be required by them to save each of them
and any of their agents harmless, then, in the absence of notice to the Company
or the Trustee that such Security or coupon has been acquired by a bona fide
purchaser, the Company shall execute, and upon Company Request the Trustee shall
authenticate and deliver, in lieu of any such destroyed, lost or stolen Security
or in exchange for the Security to which a destroyed, lost or stolen coupon
appertains (with all appurtenant coupons not destroyed, lost or stolen), a new
Security of the same series and principal amount, containing identical terms and
provisions and bearing a number not contemporaneously outstanding, with coupons
corresponding to the coupons, if any, appertaining to such destroyed, lost or
stolen Security or to the Security to which such destroyed, lost or stolen
coupon appertains.

     Notwithstanding the provisions of the previous two paragraphs, in case any
such mutilated, destroyed, lost or stolen Security or coupon has become or is
about to become due and payable, the Company in its discretion may, instead of
issuing a new Security, with coupons corresponding to the coupons, if any,
appertaining to such destroyed, lost or stolen Security or to the Security to
which such destroyed, lost or stolen coupon appertains, pay such Security or
coupon; provided, however, that payment of principal of (and premium or Make-
        --------  -------                                                   
Whole Amount, if any, on) and interest and Additional Amounts, if any, on any
Bearer Securities shall, except as otherwise provided in Section 1002, be
                                                         ------------    
payable only at an office or agency located outside the United States and,
unless otherwise specified as contemplated by Section 301, any interest on
                                              -----------                 
Bearer Securities shall be payable only upon presentation and surrender of the
coupons appertaining thereto.

     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 which may be imposed in relation thereto and any other expenses
(including the fees and expenses of the Trustee) connected therewith.

     Every new Security of any series and any coupons appertaining thereto
issued pursuant to this Section in lieu of any destroyed, lost or stolen
Security, or in exchange for a Security to which a destroyed, lost or stolen
coupon appertains, shall constitute an original additional contractual
obligation of the Company, whether or not the destroyed, lost or stolen Security
and any coupons appertaining thereto or the destroyed, lost or stolen coupon are
at any time enforceable by anyone, and shall be entitled to all the benefits of
this Indenture equally and proportionately with any and all other Securities of
such series and any coupons appertaining thereto 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 or coupons.

                                       33
<PAGE>
 
      SECTION 307. Payment of Interest; Interest Rights Preserved. Except as
                   ----------------------------------------------           
otherwise specified with respect to a series of Securities in accordance with
the provisions of Section 301, interest on any Registered 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 such Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest at the office or agency of the Company maintained
for such purpose pursuant to Section 1002; provided, however, that each
                             ------------  --------  -------           
installment of interest on any Registered Security may at the Company's option
be paid by (i) mailing a check for such interest, payable to or upon the written
order of the Person entitled thereto pursuant to Section 308, to the address of
                                                 -----------                   
such Person as it appears on the Security Register, or (ii) transfer to an
account maintained by the payee located inside the United States.

     Unless otherwise provided as contemplated by Section 301 with respect to
                                                  -----------                
the Securities of any series, payment of interest may be made, in the case of a
Bearer Security, by transfer to an account maintained by the payee with a bank
located outside the United States.

     Unless otherwise provided as contemplated by Section 301, every permanent
                                                  -----------                 
global Security will provide that interest, if any, payable on any Interest
Payment Date will be paid to DTC, Euroclear and/or CEDEL, as the case may be,
with respect to that portion of such permanent global Security held for its
account by Cede & Co. or the Common Depositary, as the case may be, for the
purpose of permitting such party to credit the interest received by it in
respect of such permanent global Security to the accounts of the beneficial
owners thereof.

     In case a Bearer Security of any series is surrendered in exchange for a
Registered Security of such series after the close of business (at an office or
agency in a Place of Payment for such series) on any Regular Record Date and
before the opening of business (at such office or agency) on the next succeeding
Interest Payment Date, such Bearer Security shall be surrendered without the
coupon relating to such Interest Payment Date and interest will not be payable
on such Interest Payment Date in respect of the Registered Security issued in
exchange for such Bearer Security, but will be payable only to the Holder of
such coupon when due in accordance with the provisions of this Indenture.

     Except as otherwise specified with respect to a series of Securities in
accordance with the provisions of Section 301, any interest on any Registered
                                  -----------                                
Security of any series which is payable, but is not punctually paid or duly
provided for, on any Interest Payment Date ("Defaulted Interest") shall
                                             ------------------        
forthwith cease to be payable to the registered Holder thereof upon 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, as provided in paragraph
(1) or (2) below:

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

                                       34
<PAGE>
 
     to be paid on each Registered Security of such series and the date of the
     proposed payment (which shall not be less than twenty (20) days after such
     notice is received by the Trustee), and at the same time the Company shall
     deposit with the Trustee an amount of money in the currency or currencies,
     currency unit or units or composite currency or currencies in which the
     Securities of such series are payable (except as otherwise specified
     pursuant to Section 301 for the Securities of such series) 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 on
     or 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 provided in this paragraph. Thereupon, the Trustee shall fix a
     Special Record Date for the payment of such Defaulted Interest which shall
     be not more than fifteen (15) days and not less than ten (10) days prior to
     the date of the proposed payment and not less than ten (10) days after the
     receipt by the Trustee of the notice of the proposed payment. The Trustee
     shall promptly notify the Company of such Special Record Date and, in the
     name and at the expense of the Company shall cause notice of the proposed
     payment of such Defaulted Interest and the Special Record Date therefor to
     be mailed, first-class postage prepaid, to each Holder of Registered
     Securities of such series at such Holder's address as it appears in the
     Security Register not less than ten (10) days prior to such Special Record
     Date. The Trustee may, in its discretion, in the name and at the expense of
     the Company cause a similar notice to be published at least once in an
     Authorized Newspaper in each place of payment, but such publications shall
     not be a condition precedent to the establishment of such Special Record
     Date. Notice of the proposed payment of such Defaulted Interest and the
     Special Record Date therefor having been mailed as aforesaid, such
     Defaulted Interest shall be paid to the Persons in whose names the
     Registered Securities of such series (or their respective Predecessor
     Securities) are registered at the close of business on such Special Record
     Date and shall no longer be payable pursuant to paragraph (2) below. In
     case a Bearer Security of any series is surrendered at the office or agency
     in a Place of Payment for such series in exchange for a Registered Security
     of such series after the close of business at such office or agency on any
     Special Record Date and before the opening of business at such office or
     agency on the related proposed date for payment of Defaulted Interest, such
     Bearer Security shall be surrendered without the coupon relating to such
     proposed date of payment and Defaulted Interest will not be payable on such
     proposed date of payment in respect of the Registered Security issued in
     exchange for such Bearer Security, but will be payable only to the Holder
     of such coupon when due in accordance with the provisions of this
     Indenture.

          (2) The Company may make payment of any Defaulted Interest on the
     Registered Securities of any series in any other lawful manner not
     inconsistent with the requirements of any securities exchange on which such
     Securities may be listed, and on 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 paragraph, such manner of payment is
     deemed practicable by the Trustee.

     Subject to the foregoing provisions of this Section and Section 305, each
                                                             -----------      
Security delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other

                                       35
<PAGE>
 
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. Prior to due presentment of a
                   ---------------------                               
Registered Security for registration of transfer, the Company, the Trustee and
any agent of the Company or the Trustee may treat the Person in whose name such
Registered Security is registered as the owner of such Security for the purpose
of receiving payment of principal of (and premium or Make-Whole Amount, if any,
on) and (subject to Sections 305 and 307) interest and Additional Amounts, if
                    ------------     ---                                     
any, on such Registered Security and for all other purposes whatsoever, whether
or not such Registered 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.

     Title to any Bearer Security and any coupons shall pass by delivery. The
Company, the Trustee and any agent of the Company or the Trustee may treat the
Holder of any Bearer Security and the Holder of any coupon as the absolute owner
of such Security or coupon for the purpose of receiving payment thereof or on
account thereof and for all other purposes whatsoever, whether or not such
Security or coupon 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.

     None of the Company, the Trustee, any Paying Agent or the Security
Registrar shall have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests of a Security in global form or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.

     Notwithstanding the foregoing, with respect to any global Security, nothing
herein shall prevent the Company, the Trustee, or any agent of the Company or
the Trustee, from giving effect to any written certification, proxy or other
authorization furnished by any depositary, as a Holder, with respect to such
global Security or impair, as between such depositary and owners of beneficial
interests in such global Security, the operation of customary practices
governing the exercise of the rights of such depositary (or its nominee) as
Holder of such global Security.

      SECTION 309. Cancellation. All Securities and coupons surrendered for
                   ------------                                            
payment, redemption, repayment at the option of the Holder, registration of
transfer or exchange or for credit against any sinking fund payment shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee,
and any such Securities and coupons and any Securities and coupons surrendered
directly to the Trustee for any such purpose shall be promptly canceled 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 may deliver to the Trustee (or
to any other Person for delivery to the Trustee) for cancellation any Securities
previously authenticated hereunder which the Company has not issued and sold,
and all Securities so delivered shall be promptly canceled by the Trustee. If
the Company so acquires any of the Securities, however, such acquisition shall
not operate as a redemption or satisfaction of the indebtedness represented by
such Securities unless and until the same are surrendered to the Trustee for
cancellation. No Securities shall be authenticated in lieu of or in

                                       36
<PAGE>
 
exchange for any Securities canceled as provided in this Section, except as
expressly permitted by this Indenture. Canceled Securities and coupons held by
the Trustee shall be destroyed by the Trustee and the Trustee shall deliver a
certificate of such destruction to the Company unless the Company delivers a
Company Order which directs their return to it.

      SECTION 310. Computation of Interest. Except as otherwise specified as
                   -----------------------                                  
contemplated by Section 301 with respect to Securities of any series, interest
                -----------                                                   
on the Securities of each series shall be computed on the basis of a 360-day
year consisting of twelve (12) 30-day months.


                                 ARTICLE FOUR
                          SATISFACTION AND DISCHARGE

      SECTION 401. Satisfaction and Discharge of Indenture. This Indenture
                   ---------------------------------------                
shall, upon Company Request, cease to be of further effect with respect to any
series of Securities specified in such Company Request (except as to any
surviving rights of registration of transfer or exchange of Securities of such
series herein expressly provided for and any right to receive Additional
Amounts, as provided in Section 1010), and the Trustee, upon receipt of a
                        ------------                                     
Company Order and at the expense of the Company, shall execute proper
instruments acknowledging satisfaction and discharge of this Indenture as to
such series when:

          (1)  either:

               (A) all Securities of such series theretofore authenticated and
          delivered and any coupons appertaining thereto (other than (i) coupons
          appertaining to Bearer Securities surrendered for exchange for
          Registered Securities and maturing after such exchange, whose
          surrender is not required or has been waived as provided in Section
                                                                      -------
          305, (ii) Securities of such series and coupons appertaining thereto
          ---                                                                 
          which have been destroyed, lost or stolen and which have been replaced
          or paid as provided in Section 306, (iii) coupons appertaining to
                                 -----------                               
          Securities called for redemption and maturing after the relevant
          Redemption Date, whose surrender has been waived as provided in
          Section 1106, and (iv) Securities of such series and coupons
          ------------                                                
          appertaining thereto 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 Securities of such series and, in the case of clauses (i)
          and (ii) below, any coupons appertaining thereto not theretofore
          delivered to the Trustee for cancellation:

                   (i)  have become due and payable,

                                       37
<PAGE>
 
                   (ii)  will become due and payable at their Stated Maturity
               within one year, or

                   (iii) if redeemable at the option of the Company, are to be
               called for redemption within one (1) 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 clause (i), (ii) or (iii) above, has
          irrevocably deposited or caused to be deposited with the Trustee funds
          in trust for the purpose, in the currency or currencies, currency unit
          or units or composite currency or currencies in which the Securities
          of such series are payable, and in an amount sufficient to pay and
          discharge the entire indebtedness on such Securities and such coupons
          not theretofore delivered to the Trustee for cancellation, for the
          principal (and premium or Make-Whole Amount, if any) and interest and
          Additional Amounts, if any, to the date of such deposit (in the case
          of Securities which have become due and payable) or the Stated
          Maturity or Redemption Date, as the case may be;

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

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

Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee and any predecessor Trustee under
Section 606, the obligations of the Company to any Authenticating Agent under
- -----------                                                                  
Section 611 and, if money has been deposited with and held by the Trustee
- -----------                                                              
pursuant to subparagraph (B) of paragraph (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 Funds. 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, the coupons 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 or Make-Whole Amount, if any) and interest and
Additional Amounts, if any, for the payment of which such money has been
deposited with or received by the Trustee, but such money need not be segregated
from other funds except to the extent required by law.

                                       38
<PAGE>
 
                                 ARTICLE FIVE
                                   REMEDIES

          SECTION 501. Events of Default. Subject to any modifications,
                       -----------------                               
additions or deletions relating to any series of Securities as contemplated
pursuant to Section 301, "Event of Default," whenever used herein with respect
            -----------   ----------------                                    
to any particular series of Securities, means any one of the following events
(whatever the reason for such Event of Default and whether or not it is
voluntary or involuntary or 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 on or any Additional
     Amounts payable in respect of any Security of or within such series or of
     any coupon appertaining thereto, when such interest, Additional Amounts or
     coupon becomes due and payable, and continuance of such default for a
     period of thirty (30) days;

          (2) default in the payment of the principal of (or premium or Make-
     Whole Amount, if any, on) any Security of such series when due and payable
     at its Maturity;

          (3) default in the deposit of any sinking fund payment, when and as
     due by the terms of any Security of such series;

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

          (5) default under any bond, debenture, note or other evidence of
     indebtedness of the Company or under any mortgage, indenture or other
     instrument of the Company (including a default with respect to Securities
     of any series other than such series) under which there may be issued or by
     which there may be secured any indebtedness of the Company (or by any
     Significant Subsidiary, the repayment of which the Company has guaranteed
     or for which the Company is directly responsible or liable as obligor or
     guarantor), whether such indebtedness now exists or is hereafter created,
     which, after the termination of any applicable grace or cure period, (a)
     constitutes a Payment Default or (b) results in the acceleration of such
     indebtedness prior to its express maturity and, in each case, the principal
     amount of any indebtedness, together with the principal amount of any other
     such indebtedness under which there has been a Payment Default or which has
     been so accelerated, aggregates [$25,000,000] or more; provided that, in
     calculating the aggregate principal amount of any such indebtedness, the
     Hedging Obligations of any Person under

                                       39
<PAGE>
 
     which there has been a Payment Default or which has been so accelerated
     shall not be netted against any other Hedging Obligation of such Person,
     within a period of ten (10) 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 ten percent (10%) in principal amount of
     the Outstanding Securities of such series a written notice specifying such
     default and requiring the Company to cause such indebtedness to be
     discharged or cause such acceleration to be rescinded or annulled and
     stating that such notice is a "Notice of Default" hereunder;
                                    -----------------            

          (6)  the entry by a court of competent jurisdiction of one or more
     final judgments, orders or decrees against the Company or any Significant
     Subsidiary of the Company in an aggregate amount (excluding amounts covered
     by insurance) in excess of [$25,000,000] and such judgments, orders or
     decrees remain undischarged, unstayed and unsatisfied in an aggregate
     amount (excluding amounts covered by insurance) in excess of [$25,000,000]
     for a period of sixty (60) consecutive days;

          (7)  the Company or any Significant Subsidiary of the Company,
     pursuant to or within the meaning of any Bankruptcy Law:

               (A)  commences a voluntary case,

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

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

               (D) makes a general assignment for the benefit of its creditors;

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

               (A) is for relief against the Company or any Significant
          Subsidiary of the Company in an involuntary case,

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

               (C) orders the liquidation of the Company or any Significant
          Subsidiary of the Company,

     and the order or decree remains unstayed and in effect for ninety (90)
     days; or

          (9)  any other Event of Default provided with respect to Securities of
     such series.

                                       40
<PAGE>
 
As used in this Section 501, the term "Bankruptcy Law" means Title 11, U.S. Code
                -----------            --------------                           
or any similar Federal or state law for the relief of debtors and the term
"Custodian" means any receiver, trustee, assignee, liquidator or other similar
- ----------                                                                    
official under any Bankruptcy Law.

     SECTION 502. Acceleration of Maturity; Rescission and Annulment. If an
                  --------------------------------------------------       
Event of Default (other than an Event of Default set forth in Section 501(7) or
                                                              --------------   
(8)) with respect to Securities of any series at the time Outstanding occurs and
- ---                                                                             
is continuing, then and in every such case, unless the principal of all of the
Outstanding Securities of such series already has become due and payable, the
Trustee or the Holders of not less than twenty-five percent (25%) in principal
amount of the Outstanding Securities of such series may declare the principal
(or, if any Securities are Original Issue Discount Securities or Indexed
Securities, such portion of the principal as may be specified in the terms
thereof) of, and the Make-Whole Amount, if any, on, all the Securities of such
series to be due and payable immediately, by a notice in writing to the Company
(and to the Trustee if given by the Holders), and upon any such declaration such
principal or specified portion thereof shall become immediately due and payable.
If an Event of Default set forth in Section 501(7) or (8) occurs and is
                                    --------------    ---              
continuing with respect to the Securities of any series, then in each such case,
the principal of, and the Make-Whole Amount, if any, on, all the Securities of
such series shall be due and payable immediately, without notice to the Company.

     At any time after such a declaration of acceleration with respect to
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter
provided in this Article, the Holders of a majority in principal amount of the
Outstanding Securities of such series, 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, in the currency, currency unit or composite currency in
     which the Securities of such series are payable (except as otherwise
     specified pursuant to Section 301 for the Securities of such series):
                           -----------                                    

               (A) all overdue installments of interest on and any Additional
          Amounts payable in respect of all Outstanding Securities of such
          series and any coupons appertaining thereto;

               (B) the principal of (and premium or Make-Whole Amount, if any,
          on) any Outstanding Securities of such series which have become due
          otherwise than by such declaration of acceleration and interest
          thereon at the rate or rates borne by or provided for in such
          Securities;

               (C) to the extent that payment of such interest is lawful,
          interest on overdue installments of interest and any Additional
          Amounts at the rate or rates borne by or provided for in such
          Securities; and

                                       41
<PAGE>
 
               (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 with respect to Securities of such series,
     other than the nonpayment of the principal of (or premium or Make-Whole
     Amount, if any, on) or interest or Additional Amounts, if any, on
     Securities of such series 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
resulting therefrom.

     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 installment of interest or
     Additional Amounts, if any, on any Security of any series or any coupon
     appertaining thereto when such interest or Additional Amount becomes due
     and payable and such default continues for a period of thirty (30) days, or

          (2)  default is made in the payment of the principal of (or premium or
     Make-Whole Amount, if any, on) any Security of any series at its Maturity,

then the Company shall, upon demand of the Trustee, pay to the Trustee, for the
benefit of the Holders of the Securities of such series and any such coupons,
the whole amount then due and payable on such Securities and any such coupons
for principal (and premium or Make-Whole Amount, if any) and interest and
Additional Amounts, if any, with interest on any overdue principal (and premium
or Make-Whole Amount, if any) and, to the extent that payment of such interest
is legally enforceable, on any overdue installments of interest or Additional
Amounts, if any, at the rate or rates borne by or provided for in such
Securities, and, in addition thereto, such further amount as is sufficient to
cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel.

     If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, and may
prosecute such proceeding to judgment or final decree, and may enforce the same
against the Company or any other obligor on the Securities of such series and
collect the moneys adjudged or decreed to be payable in the manner provided by
law out of the property of the Company or any other obligor on the Securities of
such series, wherever situated.

     If an Event of Default with respect to Securities of any series occurs and
is continuing, the Trustee may in its discretion proceed to protect and enforce
its rights and the rights of the Holders of Securities of such series and any
coupons appertaining thereto by such appropriate judicial proceedings as the
Trustee deems most effectual to protect and enforce any such rights, whether for

                                       42
<PAGE>
 
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 the pendency of
                  --------------------------------                            
any receivership, insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition or other judicial proceeding relative to
the Company or any other obligor on the Securities of such series or the
property of the Company or of such other obligor or their creditors, the Trustee
(irrespective of whether the principal of the Securities of any series is then
due and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Trustee has made any demand on the Company for the
payment of overdue principal, premium or Make-Whole Amount, if any, or interest
or Additional Amounts, if any) shall be entitled and empowered, by intervention
in such proceeding or otherwise:

          (1)  to file and prove a claim for the whole amount, or such lesser
     amount as may be provided for in the Securities of such series, of
     principal (and premium or Make-Whole Amount, if any) and interest and
     Additional Amounts, if any, owing and unpaid in respect of the Securities
     of such series and to file such other papers or documents and take such
     other action, including participating as a member of any official creditors
     committee appointed in the matter, as it may deem necessary or advisable in
     order to have the claims of the Trustee (including any claim for the
     reasonable compensation, expenses, disbursements and advances of the
     Trustee, its agents and counsel) and of the Holders allowed in such
     judicial proceeding, and

          (2)  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 of Securities of such series and any coupons appertaining thereto to
make such payments to the Trustee, and in the event that the Trustee consents to
the making of such payments directly to the Holders, to pay to the Trustee any
amount due to it for the reasonable compensation, expenses, disbursements and
advances of the Trustee and any predecessor Trustee, their agents and counsel,
and any other amounts due the Trustee or any predecessor Trustee under Section
                                                                       -------
606.
- --- 

     Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder of a Security
or coupon any plan of reorganization, arrangement, adjustment or composition
affecting the Securities or coupons or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Holder of a
Security or coupon in any such proceeding.

     SECTION 505. Trustee May Enforce Claims Without Possession of Securities
                  -----------------------------------------------------------
or Coupons. All rights of action and claims under this Indenture or any of the
- ----------                                                                    
Securities or any coupons may be prosecuted and enforced by the Trustee without
the possession of any of the Securities or coupons or the production thereof in
any proceeding relating thereto, and any such proceeding instituted by

                                       43
<PAGE>
 
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 and coupons in respect of which such judgment has been recovered.

     SECTION 506. Application of Money Collected. Any money collected by the
                  ------------------------------                            
Trustee pursuant to this Article shall be applied in the following order, at the
date or dates fixed by the Trustee and, in case of the distribution of such
money on account of principal (or premium or Make-Whole Amount, if any) or
interest or Additional Amounts, if any, on presentation of the Securities or
coupons, or both, as the case may be, and the notation thereon of the payment if
only partially paid and upon surrender thereof if fully paid:

          (1)  to the payment of all amounts due the Trustee and any predecessor
     Trustee under Section 606;
                   ----------- 

          (2)  to the payment of the amounts then due and unpaid on the
     Securities and coupons for principal (and premium or Make-Whole Amount, if
     any) and interest and Additional Amounts, if any, payable, 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 aggregate
     amounts due and payable on such Securities and coupons for principal (and
     premium or Make-Whole Amount, if any) and interest and Additional Amounts,
     if any, respectively; and

          (3)  to the payment of the remainder, if any, to the Company.

     SECTION 507. Limitation on Suits. No Holder of any Security of any series
                  -------------------                                         
or any coupon appertaining thereto 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 with respect to the Securities of such
     series;

          (2)  the Holders of not less than twenty-five percent (25%) in
     principal amount of the Outstanding Securities of such series 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 sixty (60) days after its receipt of such notice,
     request and offer of indemnity has failed to institute any such proceeding;
     and

                                       44
<PAGE>
 
          (5)  no direction inconsistent with such written request has been
     given to the Trustee during such sixty (60)-day period by the Holders of a
     majority in principal amount of the Outstanding Securities of such series;

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

     SECTION 508. Unconditional Right of Holders to Receive Principal, Premium
                  ------------------------------------------------------------
or Make-Whole Amount, Interest and Additional Amounts. Notwithstanding any other
- -----------------------------------------------------                           
provision in this Indenture, the Holder of any Security or coupon shall have the
right which is absolute and unconditional to receive payment of the principal of
(and premium or Make-Whole Amount, if any, on ) and (subject to Sections 305 and
                                                                ------------    
307) interest and Additional Amounts, if any, on such Security or payment of
- ---                                                                         
such coupon on or after the respective due dates expressed in such Security or
coupon (or, in the case of redemption, on the Redemption Date) and to institute
suit for the enforcement of any such payment, and such rights shall not be
impaired or affected without the consent of such Holder.

     SECTION 509. Restoration of Rights and Remedies. If the Trustee or any
                  ----------------------------------                       
Holder of a Security or coupon 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 the Company, the Trustee and the
Holders of Securities and coupons shall, subject to any determination in such
proceeding, 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 or coupons in the last paragraph of Section 306, no right or
                                                      -----------             
remedy herein conferred on or reserved to the Trustee or to the Holders of
Securities or coupons is intended to be exclusive of any other right or remedy,
and every right and remedy shall, to the extent permitted by law, be cumulative
and in addition to every other right and remedy given hereunder or now or
hereafter existing at law or in equity or otherwise. The assertion or employment
of any right or remedy hereunder, or otherwise, shall 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 or coupon 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 of Securities or coupons, as the
case may be.

                                       45
<PAGE>
 
     SECTION 512. Control by Holders of Securities. The Holders of not less than
                  --------------------------------                         
a majority in principal amount of the Outstanding Securities of any series shall
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee, or exercising any trust or power
conferred on the Trustee with respect to the Securities of such series, provided
                                                                        --------
that:

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

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

          (3)  the Trustee need not take any action which might involve it in
     personal liability or be unduly prejudicial to the Holders of Securities of
     such series not joining therein (but the Trustee shall have no obligation
     as to the determination of such undue prejudice).

     SECTION 513. Waiver of Past Defaults. The Holders of at least a majority
                  -----------------------                                    
in principal amount of the Outstanding Securities of any series may, on behalf
of the Holders of all the Securities of such series and any coupons appertaining
thereto, waive any past default hereunder with respect to such series and its
consequences, except a default:

          (1)  in the payment of the principal of (or premium or Make-Whole
     Amount, if any, on) or interest or Additional Amounts, if any, on any
     Security of such series or any coupons appertaining thereto, 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 of such series affected thereby.

     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 Event of Default or impair any right resulting therefrom.

     SECTION 514. Waiver of Usury, Stay or Extension Laws. The Company covenants
                  ---------------------------------------             
(to the extent which it may lawfully do so) that it shall not at any time insist
on, or plead, or in any manner whatsoever claim or take the benefit or advantage
of, any usury, 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 which it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
shall not hinder, delay or impede the execution of any power herein granted to
the Trustee, but shall suffer and permit the execution of every such power as
though no such law had been enacted.

                                       46
<PAGE>
 
     SECTION 515. Undertaking for Costs. All parties to this Indenture agree,
                  ---------------------                                      
and each Holder of any Security by such Holder's acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture, or in any suit
against the Trustee for any action taken or omitted by it as Trustee, the filing
by any party litigant in such suit of any undertaking to pay the costs of such
suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit
having due regard to the merits and good faith of the claims or defenses made by
such party litigant; but the provisions of this Section shall not apply to any
suit instituted by the Trustee, to any suit instituted by any Holder, or group
of Holders, holding in the aggregate more than ten percent (10%) in principal
amount of the Outstanding Securities, or to any suit instituted by any Holder
for the enforcement of the payment of the principal of (or premium or Make-Whole
Amount, if any, on) or interest or Additional Amounts, if any, on any Security
on or after the respective Stated Maturities expressed in such Security (or, in
the case of redemption, on or after the Redemption Date).


                                  ARTICLE SIX
                                  THE TRUSTEE

     SECTION 601. Notice of Defaults. Within ninety (90) days after the
                  ------------------                                   
occurrence of any default hereunder with respect to the Securities of any
series, the Trustee shall give to the Holders of the Securities of such series,
in the manner and to the extent provided in Section 313(c) of the Trust
Indenture Act, notice of such default hereunder known to the Trustee, unless
such default has been cured or waived; provided, however, that, except in the
                                       --------  -------                     
case of a default in the payment of the principal of (or premium or Make-Whole
Amount, if any, on) or interest or Additional Amounts, if any, on any Security
of such series, or in the payment of any sinking fund installment with respect
to the Securities of such series, the Trustee shall be protected in withholding
such notice if and so long as Responsible Officers of the Trustee in good faith
determine that the withholding of such notice is in the interests of the Holders
of the Securities and coupons of such series; and provided, further, that in the
                                                  --------  -------             
case of any default or breach of the character specified in clause (4) of
Section 501 with respect to the Securities of such series and any coupons
- -----------                                                              
appertaining thereto, no such notice to Holders shall be given until at least
sixty (60) days after the occurrence thereof. For the purposes 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 with respect to the Securities of such
series.

     SECTION 602. Certain Rights of Trustee. Subject to the provisions of
                  -------------------------                              
Section 315(a) through 315(d) of the Trust Indenture Act:

          (1)  the Trustee shall perform only such duties as are expressly
     undertaken by it to perform under this Indenture;

          (2)  the Trustee may rely and shall be protected in acting or
     refraining from acting upon any resolution, certificate, statement,
     instrument, opinion, report, notice, request,

                                       47
<PAGE>
 
     direction, consent, order, bond, debenture, note, coupon or other paper or
     document believed by it to be genuine and to have been signed or presented
     by the proper party or parties;

          (3)  any request or direction of the Company mentioned herein shall be
     sufficiently evidenced by a Company Request or Company Order (other than
     delivery of any Security, together with any coupons appertaining thereto,
     to the Trustee for authentication and delivery pursuant to Section 303,
                                                                ----------- 
     which shall be sufficiently evidenced as provided therein) and any
     resolution of the Board of Directors shall be sufficiently evidenced by a
     Board Resolution;

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

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

          (6)  the Trustee shall be under no obligation to exercise any of the
     rights or powers vested in it by this Indenture at the request or direction
     of any of the Holders of Securities of any series or any coupons
     appertaining thereto pursuant to this Indenture, unless such Holders 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;

          (7)  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, coupon 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 determines 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;

          (8)  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;

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

                                       48
<PAGE>
 
          (10) The Trustee shall not be deemed to have knowledge of any event or
     fact upon the occurrence of which it may be required to take action
     hereunder unless a Responsible Officer of the Trustee has actual knowledge
     of the occurrence of such event or fact; and

          (11) The Trustee shall not be required 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
     has reasonable grounds for believing that repayment of such funds or
     adequate indemnity against such risk or liability is not reasonably assured
     to it.

     SECTION 603. Not Responsible for Recitals or Issuance of Securities. The
                  ------------------------------------------------------     
recitals contained herein and in the Securities, except the Trustee's
certificate of authentication, and in any coupons shall be taken as the
statements of the Company and neither the Trustee nor any Authenticating Agent
assumes any responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Securities or any coupons, except that the Trustee represents that it is duly
authorized to execute and deliver this Indenture, authenticate the Securities
and perform its obligations hereunder. Neither the Trustee nor any
Authenticating Agent shall be accountable for the use or application by the
Company of Securities or the proceeds thereof.

     SECTION 604. May Hold Securities. The Trustee, any Paying Agent, Security
                  -------------------                                         
Registrar, 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 coupons and, subject to Sections 310(b) and 311 of the Trust Indenture Act,
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 605. Money Held in Trust; Permitted Investments. 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,
or investment of, any money received by it hereunder except as otherwise agreed
with and for the sole benefit of the Company.

     Pending their use under this Indenture, moneys held by the Trustee
hereunder may be invested in Permitted Investments maturing or redeemable at the
option of the holder at or before the time when such moneys are expected to be
needed by the Trustee and shall be so invested pursuant to a Company Order if no
Event of Default known to the Trustee then exists under this Indenture and
otherwise at the discretion of the Trustee. Any investment pursuant to this
Section 605 shall be held by the Trustee as a part of the moneys held by the
- -----------                                                                 
Trustee hereunder, as applicable, and shall be sold or redeemed to the extent
necessary to make payments or transfers or anticipated payments from such
moneys.

     The Trustee shall be entitled to rely on all written investment
instructions provided by the Company hereunder, and shall have no duty to
monitor the compliance thereof with the restrictions set forth herein. The
Trustee shall have no responsibility or liability for any depreciation in the
value of any investment or for any loss, direct or indirect, resulting from any
investment made in accordance with a Company Order. The Trustee shall be without
liability to the Company or any

                                       49
<PAGE>
 
Holder or any other person in the event that any investment made in accordance
with a Company Order shall cause any person to incur any liability or rebates or
other monies payable pursuant to the Internal Revenue Code of 1986, as amended.

     Any interest realized on investments and any profit realized upon the sale
or other disposition thereof shall be credited to moneys held by the Trustee
hereunder and any loss shall be charged thereto.

     SECTION 606. 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 each
     of the Trustee and any predecessor Trustee upon its request for all
     reasonable expenses, disbursements and advances incurred or made by it in
     connection with its administration of the trust hereunder (including the
     reasonable compensation and the expenses and disbursements of its agents
     and counsel), except to the extent any such expense, disbursement or
     advance may be attributable to its negligence or bad faith; and

          (3)  to indemnify each of the Trustee and any predecessor Trustee for,
     and to hold it harmless against, any loss, liability or expense, arising
     out of or in connection with the acceptance or administration of the trust
     or trusts or the performance of its duties hereunder, including the costs
     and expenses of defending itself against any claim or liability in
     connection with the exercise or performance of any of its powers or duties
     hereunder except to the extent any such loss, liability or expense may be
     attributable to its own negligence or bad faith.

     As security for the performance of the obligations of the Company under
this Section, the Trustee shall have a lien prior to the Securities on all
property and funds held or collected by the Trustee as such, except funds held
in trust for the payment of principal of (or premium or Make-Whole Amount, if
any, on) or interest or Additional Amounts, if any, on particular Securities or
any coupons.

     The provisions of this Section shall survive the termination of this
Indenture.

     SECTION 607. Trustee Eligibility; Conflicting Interests. There shall at
                  ------------------------------------------                
all times be a Trustee hereunder which is eligible to act as Trustee under
Section 310(a)(1) of the Trust Indenture Act and has a combined capital and
surplus of at least [$50,000,000]. If such Trustee publishes reports of
condition at least annually, pursuant to law or the requirements of Federal,
State, Territorial or District of Columbia supervising or examining authority,
then for the purposes of this Section, the combined capital and surplus of such
Trustee shall be deemed to be its combined capital and surplus as set forth in
its most recent report of condition so published. No obligor on the Securities
or

                                       50
<PAGE>
 
Affiliate of any such obligor shall serve as Trustee on such Securities. If at
any time the Trustee ceases 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 608. 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 in accordance with the
     applicable requirements of Section 609.
                                ----------- 

          (b) The Trustee may resign at any time with respect to the Securities
     of one or more series by giving written notice thereof to the Company. If
     an instrument of acceptance by a successor Trustee has not been delivered
     to the Trustee within thirty (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 with respect to the
     Securities of any series by Act of the Holders of a majority in principal
     amount of the Outstanding Securities of such series delivered to the
     Trustee and the Company.

          (d) If at any time:

              (1) the Trustee fails to comply with the provisions of Section
          310(b) of the Trust Indenture Act after written request therefor by
          the Company or any Holder of a Security who has been a bona fide
          Holder of a Security for at least six (6) months,

              (2) the Trustee ceases to be eligible under Section 607 and fails
                                                          -----------          
          to resign after written request therefor by the Company or any Holder
          of a Security who has been a bona fide Holder of a Security for at
          least six (6) months, or

              (3) the Trustee becomes incapable of acting or is adjudged a
          bankrupt or insolvent or a receiver of the Trustee or of its property
          is appointed or any public officer takes 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 or pursuant to a Board
     Resolution, may remove the Trustee and appoint a successor Trustee with
     respect to all Securities, or (ii) subject to Section 315(e) of the Trust
     Indenture Act, any Holder of a Security who has been a bona fide Holder of
     a Security for at least six (6) months may, on behalf of such Holder and
     all others similarly situated, petition any court of competent jurisdiction
     for the removal of the Trustee with respect to all Securities and the
     appointment of a successor Trustee or Trustees.

                                       51
<PAGE>
 
          (e) If the Trustee resigns, is removed or becomes incapable of acting,
     or if a vacancy occurs in the office of Trustee for any cause with respect
     to the Securities of one or more series, the Company, by or pursuant to a
     Board Resolution, shall promptly appoint a successor Trustee or Trustees
     with respect to the Securities of such series (it being understood that any
     such successor Trustee may be appointed with respect to the Securities of
     one or more or all of such series and that at any time there shall be only
     one Trustee with respect to the Securities of any particular series). If,
     within one (1) year after such resignation, removal or incapability, or the
     occurrence of such vacancy, a successor Trustee with respect to the
     Securities of any series is appointed by Act of the Holders of a majority
     in principal amount of the Outstanding Securities of such series delivered
     to the Company and the retiring Trustee, the successor Trustee so appointed
     shall, forthwith upon its acceptance of such appointment, become the
     successor Trustee with respect to the Securities of such series and to that
     extent supersede the successor Trustee appointed by the Company. If no
     successor Trustee with respect to the Securities of any series has been so
     appointed by the Company or the Holders of Securities and accepted
     appointment in the manner hereinafter provided, any Holder of a Security
     who has been a bona fide Holder of a Security of such series for at least
     six (6) months may, on behalf of such Holder and all others similarly
     situated, petition any court of competent jurisdiction for the appointment
     of a successor Trustee with respect to Securities of such series.

          (f) The Company shall give notice of each resignation and each removal
     of the Trustee with respect to the Securities of any series and each
     appointment of a successor Trustee with respect to the Securities of any
     series in the manner provided for notices to the Holders of Securities in
     Section 106. Each notice shall include the name of the successor Trustee
     -----------                                                             
     with respect to the Securities of such series and the address of its
     Corporate Trust Office.

     SECTION 609. Acceptance of Appointment by Successor.
                  -------------------------------------- 

          (a) In case of the appointment hereunder of a successor Trustee with
     respect to all Securities, every such successor Trustee shall execute,
     acknowledge and deliver to the Company and 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, subject nevertheless to its claim, if any,
     provided for in Section 606.
                     ----------- 

          (b) In case of the appointment hereunder of a successor Trustee with
     respect to the Securities of one or more (but not all) series, the Company,
     the retiring Trustee and each successor Trustee with respect to the
     Securities of one or more series shall execute and

                                       52
<PAGE>
 
     deliver an indenture supplemental hereto, pursuant to Article Nine, wherein
                                                           ------------         
     each successor Trustee shall accept such appointment and which (i) shall
     contain such provisions as are necessary or desirable to transfer and
     confirm to, and to vest in, each successor Trustee all the rights, powers,
     trusts and duties of the retiring Trustee with respect to the Securities of
     such series to which the appointment of such successor Trustee relates,
     (ii) if the retiring Trustee is not retiring with respect to all
     Securities, shall contain such provisions as are necessary or desirable to
     confirm that all the rights, powers, trusts and duties of the retiring
     Trustee with respect to the Securities of such series as to which the
     retiring Trustee is not retiring shall continue to be vested in the
     retiring Trustee, and (iii) shall add to or change any of the provisions of
     this Indenture as are necessary to provide for or facilitate the
     administration of the trusts hereunder by more than one Trustee, it being
     understood that nothing herein or in such supplemental indenture shall
     constitute such Trustees co-trustees of the same trust and that each such
     Trustee shall be trustee of a trust or trusts hereunder separate and apart
     from any trust or trusts hereunder administered by any other such Trustee;
     and, upon the execution and delivery of such supplemental indenture, the
     resignation or removal of the retiring Trustee shall become effective to
     the extent provided therein and each such successor Trustee, without any
     further act, deed or conveyance, shall become vested with all the rights,
     powers, trusts and duties of the retiring Trustee with respect to the
     Securities of such series to which the appointment of such successor
     Trustee relates; but, on request of the Company or any successor Trustee,
     such retiring Trustee shall duly assign, transfer and deliver to such
     successor Trustee all property and money held by such retiring Trustee
     hereunder with respect to the Securities of such series to which the
     appointment of such successor Trustee relates.

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

          (d) No 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 610. 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 of the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder, provided that 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 or coupons 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 or coupons so authenticated with
the same effect as if such successor Trustee had itself authenticated such
Securities or coupons. In case any Securities or coupons have not been
authenticated by such predecessor Trustee, any such successor Trustee may
authenticate

                                       53
<PAGE>
 
and deliver such Securities or coupons, in either its own name or that of its
predecessor Trustee, with the full force and effect which this Indenture
provides for the certificate of authentication of the Trustee.

     SECTION 611. Appointment of Authenticating Agent. At any time when any of
                  -----------------------------------                         
the Securities remain Outstanding, the Trustee may appoint an Authenticating
Agent or Agents with respect to one or more series of Securities which shall be
authorized to act on behalf of the Trustee to authenticate Securities of such
series issued upon exchange, registration of transfer or partial redemption or
repayment thereof, 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. Any such appointment shall be
evidenced by an instrument in writing signed by a Responsible Officer of the
Trustee, a copy of which instrument shall be promptly furnished to the Company.
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 reference 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, except as may
otherwise be provided pursuant to Section 301, shall at all times be a bank or
                                  -----------                                 
trust company or corporation organized and doing business and in good standing
under the laws of the United States of America or of any State 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 or District of Columbia
authorities. If such Authenticating Agent publishes reports of condition at
least annually, pursuant to law or the requirements of the aforesaid 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. In case at any time an Authenticating Agent ceases 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 corporation 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
is 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 corporation is otherwise eligible under this
Section, without the execution or filing of any paper or further act on the part
of the Trustee or the Authenticating Agent.

     An Authenticating Agent for any series of Securities may at any time resign
by giving written notice of resignation to the Trustee for such series and the
Company. The Trustee for any series of Securities may at any time terminate the
agency of an Authenticating Agent by giving written notice of termination to
such Authenticating Agent and the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent ceases to be eligible in accordance with the provisions of
this Section, the Trustee for such series

                                       54
<PAGE>
 
may appoint a successor Authenticating Agent which shall be acceptable to the
Company and shall give notice of such appointment to all Holders of Securities
of or within the series with respect to which such Authenticating Agent will
serve in the manner set forth 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 herein. 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 including reimbursement of its reasonable expenses for
its services under this Section.

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

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

                              STATE STREET BANK AND TRUST
                                COMPANY,
                              as Trustee


                              By:____________________________,
                              as Authenticating Agent


                              By:____________________________
                                    Authorized Officer


                                 ARTICLE SEVEN
               HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY

     SECTION 701. Disclosure of Names and Addresses of Holders. Every Holder of
                  --------------------------------------------                 
Securities or coupons, by receiving and holding the same, agrees with the
Company and the Trustee that neither the Company nor the Trustee nor any
Authenticating Agent nor any Paying Agent nor any Security Registrar shall be
held accountable by reason of the disclosure of any information as to the names
and addresses of the Holders of Securities in accordance with Section 312 of the
Trust Indenture Act, regardless of the source from which such information was
derived, and that the Trustee shall not be held accountable by reason of mailing
any material pursuant to a request made under Section 312(b) of the Trust
Indenture Act.

                                       55
<PAGE>
 
     SECTION 702. Reports by Trustee. Within sixty (60) days after [FEBRUARY 1]
                  ------------------                                           
of each year commencing with the first [FEBRUARY 1] after the first issuance of
Securities pursuant to this Indenture, the Trustee shall transmit by mail to all
Holders of Securities as provided in Section 313(c) of the Trust Indenture Act a
brief report dated as of such [FEBRUARY 1] if required by Section 313(a) of the
Trust Indenture Act.

     SECTION 703. Company to Furnish Trustee Names and Addresses of Holders.
                  --------------------------------------------------------- 
The Company shall furnish or cause to be furnished to the Trustee:

          (a) semi-annually, not later than fifteen (15) days after the Regular
     Record Date for interest for each series of Securities, a list, in such
     form as the Trustee may reasonably require, of the names and addresses of
     the Holders of Registered Securities of such series as of such Regular
     Record Date, or if there is no Regular Record Date for interest for such
     series of Securities, semi-annually, on such dates as are set forth in the
     Board Resolution or indenture supplemental hereto authorizing such series,
     and

          (b) at such other times as the Trustee may request in writing, within
     thirty (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 fifteen (15)
     days prior to the time such list is furnished;

provided, however, that, so long as the Trustee is the Security Registrar, no
- --------  -------                                                            
such list shall be required to be furnished.


                                 ARTICLE EIGHT
               CONSOLIDATION, MERGER, SALE, LEASE OR CONVEYANCE

     SECTION 801. Consolidations and Mergers of Company and Sales, Leases and
                  -----------------------------------------------------------
Conveyances.  The Company will not consolidate or merge with or into (whether or
- -----------                                                                     
not the Company is the surviving corporation), or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions, to another Person unless (i) the
surviving Person or the Person formed by or surviving such consolidation or
merger (if other than the Company) or to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made (the "Surviving
                                                                  ---------
Entity") is a corporation organized or existing under the laws of the United
- ------                                                                      
States, any state thereof or the District of Columbia; (ii) the Surviving Entity
assumes all the obligations, including the due and punctual payment of the
principal of (and premium or Make-Whole Amount, if any, on) and interest and
Additional Amounts, if any, on all Securities, according to their tenor, and the
due punctual performance and observance of all covenants and conditions, of the
Company under the Securities and the Indenture pursuant to a supplemental
Indenture in form reasonably satisfactory to the Trustee; and (iii) immediately
before and after giving effect to such transaction and treating any indebtedness
which becomes an obligation of the Company as a result of such transaction as
having been incurred by the Company at the time of the transaction, no Event of
Default and no event which, after notice or the lapse of time or both, would
become an Event of Default shall have occurred and be continuing.

                                       56
<PAGE>
 
     SECTION 802. Rights and Duties of Successor Entity. In case of any such
                  -------------------------------------                     
consolidation, merger, sale, lease or conveyance and upon any such assumption by
the successor entity, such successor entity shall succeed to and be substituted
for the Company, with the same effect as if it had been named herein as the
party of the first part, and the predecessor entity, except in the event of a
lease, shall be relieved of any further obligation under this Indenture and the
Securities. Such successor entity thereupon may cause to be signed, and may
issue either in its own name or in the name of the Company, any or all of the
Securities issuable hereunder which theretofore have not been signed by the
Company and delivered to the Trustee; and, upon the order of such successor
entity, instead of the Company, and subject to all the terms, conditions and
limitations in this Indenture prescribed, the Trustee shall authenticate and
shall deliver any Securities which previously have been signed and delivered by
the officers of the Company to the Trustee for authentication, and any
Securities which such successor entity thereafter shall cause to be signed and
delivered to the Trustee for that purpose. All the Securities so issued shall in
all respects have the same legal rank and benefit under this Indenture as the
Securities theretofore or thereafter issued in accordance with the terms of this
Indenture as though all of such Securities had been issued at the date of the
execution hereof.

     In case of any such consolidation, merger, sale, lease or conveyance, such
changes in phraseology and form (but not in substance) may be made in the
Securities thereafter to be issued as may be appropriate.

     SECTION 803. Company Certificate and Opinion of Counsel. Any consolidation,
                  ------------------------------------------     
merger, sale, lease or conveyance permitted under Section 801 is also subject to
                                                  -----------   
the condition that the Trustee receive a Company Certificate and an Opinion of
Counsel to the effect that any such consolidation, merger, sale, lease or
conveyance, and the assumption by any successor entity, complies with the
provisions of this Article and that all conditions precedent herein provided for
relating to such transaction have been complied with.


                                 ARTICLE NINE
                            SUPPLEMENTAL INDENTURES

     SECTION 901. Supplemental Indentures Without Consent of Holders. Without
                  --------------------------------------------------         
the consent of any Holders of Securities or coupons, the Company, when
authorized by or pursuant to 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
     contained herein and in the Securities;

          (2) to add to the covenants of the Company for the benefit of the
     Holders of all or any series of Securities (and if such covenants are to be
     for the benefit of less than all

                                       57
<PAGE>
 
     series of Securities, stating that such covenants are expressly being
     included solely for the benefit of such series) or to surrender any right
     or power herein conferred on the Company;

          (3) to add any additional Events of Default for the benefit of the
     Holders of all or any series of Securities (and if such Events of Default
     are to be for the benefit of less than all series of Securities, stating
     that such Events of Default are expressly being included solely for the
     benefit of such series); provided, however, that, in respect of any such
                              --------  -------                              
     additional Events of Default, such supplemental indenture may provide for a
     particular period of grace after default (which period may be shorter or
     longer than that allowed in the case of other defaults) or may provide for
     an immediate enforcement upon such default or may limit the remedies
     available to the Trustee upon such default or may limit the right of the
     Holders of a majority in aggregate principal amount of such series of
     Securities to which such additional Events of Default apply to waive such
     default;

          (4) to add to or change any of the provisions of this Indenture to
     provide that Bearer Securities may be registrable as to principal, to
     change or eliminate any restrictions on the payment of the principal of (or
     premium or Make-Whole Amount, if any, on) or interest or Additional
     Amounts, if any, on Bearer Securities, to permit Bearer Securities to be
     issued in exchange for Registered Securities, to permit Bearer Securities
     to be issued in exchange for Bearer Securities of other authorized
     denominations or to permit or facilitate the issuance of Securities in
     uncertificated form, provided that any such action shall not adversely
                          --------                                         
     affect the interests of the Holders of Securities of any series or any
     coupons appertaining thereto in any material respect;

          (5) to change or eliminate any of the provisions of this Indenture,
     provided that any such change or elimination shall become effective only
     --------                                                                
     when there is no Security Outstanding of any series created prior to the
     execution of such supplemental indenture which is entitled to the benefit
     of such provision;

          (6) to secure the Securities;

          (7) to establish the form or terms of Securities of any series and any
     coupons appertaining thereto as permitted by Sections 201 and 301,
                                                  ------------     --- 
     including the provisions and procedures, if applicable, for the conversion
     of such Securities into Common Shares or other securities of the Company;

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

          (9) to cure any ambiguity, to correct or supplement any provision
     hereof which may be defective or inconsistent with any other provision
     hereof, or to make any other provisions with respect to matters or
     questions arising under this Indenture which shall not

                                       58
<PAGE>
 
     be inconsistent with the provisions of this Indenture or to make any other
     changes, provided that, in each case, such provisions shall not adversely
              --------                                                        
     affect the interests of the Holders of Securities of any series or any
     coupons appertaining thereto in any material respect;

          (10) to close this Indenture with respect to the authentication and
     delivery of additional series of Securities or to qualify, or maintain
     qualification of, this Indenture under the Trust Indenture Act; or

          (11) to supplement any of the provisions of this Indenture to such
     extent as are necessary to permit or facilitate the defeasance and
     discharge of any series of Securities pursuant to Sections 401, 1402 and
                                                       ------------  ----    
     1403; provided that, in each case, any such action shall not adversely
     ----  --------                                                        
     affect the interests of the Holders of Securities of such series and any
     coupons appertaining thereto or any other series of Securities in any
     material respect.

     SECTION 902. Supplemental Indentures with Consent of Holders. With the
                  -----------------------------------------------          
consent of the Holders of not less than a majority in principal amount of all
Outstanding Securities affected by such supplemental indenture, by Act of such
Holders delivered to the Company and the Trustee, the Company (when authorized
by or pursuant to a Board Resolution) and the Trustee may enter into an
indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or of modifying in any manner the rights of the Holders of
Securities and coupons 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 premium or
     Make-Whole Amount, if any, on) or any installment of principal of or
     interest on, any Security; or reduce the principal amount thereof or the
     rate or amount of interest thereon or any Additional Amounts payable in
     respect thereof, or any premium or Make-Whole Amount payable upon the
     redemption thereof, or change any obligation of the Company to pay
     Additional Amounts pursuant to Section 1010 (except as contemplated by
                                    ------------                           
     clause (1) of Section 801 and permitted by clause (1) of Section 901), or
                   -----------                                -----------     
     reduce the amount of the principal of an Original Issue Discount Security
     or Make-Whole Amount, if any, which would be due and payable upon a
     declaration of acceleration of the Maturity thereof pursuant to Section 502
                                                                     -----------
     or the amount thereof provable in bankruptcy pursuant to Section 504; or
                                                              -----------    
     adversely affect any right of repayment at the option of the Holder of any
     Security, or change any Place of Payment where, or the currency or
     currencies, currency unit or units or composite currency or currencies in
     which, the principal of any Security or any premium or Make-Whole Amount or
     any Additional Amounts payable in respect thereof or the 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 or repayment at the option of the Holder, on or after the
     Redemption Date or the Repayment Date, as the case may be);

          (2)  reduce the percentage in principal amount of the Outstanding
     Securities of any series, the consent of the Holders of which is required
     for any such supplemental

                                       59
<PAGE>
 
     indenture, or the consent of the Holders of which is required for any
     waiver with respect to such series (or compliance with certain provisions
     of this Indenture or certain defaults hereunder and their consequences)
     provided for in this Indenture, or reduce the requirements of Section 1504
                                                                   ------------
     for quorum or voting; or

          (3) modify any of the provisions of this Section, Section 513 or
                                                            -----------   
     Section 1011, except to increase the required percentage to effect such
     ------------                                                           
     action 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 approves the substance thereof.

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

     SECTION 903. Execution of Supplemental Indentures. In executing, or
                  ------------------------------------                  
accepting the additional trusts created by, any supplemental indenture permitted
by this Article or the modification thereby of the trusts created by this
Indenture, the Trustee shall be entitled to receive, and shall be fully
protected in relying on, 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 and of any coupon appertaining
thereto 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 as then in effect.

     SECTION 906. Reference in Securities to Supplemental Indentures.
                  -------------------------------------------------- 
Securities of any series authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall, if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company so determines, new
Securities of any series so modified as to conform, in the opinion of the
Trustee and the Company,

                                       60
<PAGE>
 
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 of such series.

      SECTION 907.  Notice of Supplemental Indentures. Promptly after the
                    ---------------------------------                    
execution by the Company and the Trustee of any supplemental indenture pursuant
to the provisions of Section 902, the Company shall give notice thereof to the
                     -----------                                              
Holders of each Outstanding Security affected, in the manner provided for in
                                                                            
Section 106, setting forth in general terms the substance of such supplemental
- -----------                                                                   
indenture.


                                  ARTICLE TEN
                                   COVENANTS

      SECTION 1001. Payment of Principal, Premium or Make-Whole Amount, Interest
                    ------------------------------------------------------------
and Additional Amounts. The Company covenants and agrees for the benefit of the
- ----------------------                                                         
Holders of each series of Securities that it shall duly and punctually pay to
the Trustee prior to 12:00 noon on the applicable date of payment the principal
of (and premium or Make-Whole Amount, if any, on) and interest and Additional
Amounts, if any, on the Securities of such series in accordance with the terms
of such series of Securities, any coupons appertaining thereto and this
Indenture. Unless otherwise specified as contemplated by Section 301 with
                                                         -----------     
respect to any series of Securities, any interest and Additional Amounts, if
any, on Bearer Securities on or before Maturity, other than Additional Amounts,
if any, payable as provided in Section 1010 in respect of principal of (or
                               ------------                               
premium or Make-Whole Amount, if any, on) such a Security, shall be payable only
upon presentation and surrender of the several coupons for such interest
installments as are evidenced thereby as they severally mature. Unless otherwise
specified with respect to Securities of any series pursuant to Section 301, at
                                                               -----------    
the option of the Company, all payments of principal may be paid by check to the
registered Holder of the Registered Security or other person entitled thereto
against surrender of such Security.

      SECTION 1002. Maintenance of Office or Agency. If Securities of a series
                    -------------------------------                           
are issuable only as Registered Securities, the Company shall maintain in each
Place of Payment for any series of Securities an office or agency where
Securities of such series may be presented or surrendered for payment, where
Securities of such series may be surrendered for registration of transfer or
exchange and where notices and demands to or on the Company in respect of the
Securities of such series and this Indenture may be served. If Securities of a
series are issuable as Bearer Securities, the Company shall maintain: (i) in the
city of [BOSTON, MASSACHUSETTS], an office or agency where any Registered
Securities of such series may be presented or surrendered for payment, where any
Registered Securities of such series may be surrendered for exchange, where
notices and demands to or on the Company in respect of the Securities of such
series and this Indenture may be served and where Bearer Securities of such
series and any coupons appertaining thereto may be presented or surrendered for
payment in the circumstances described in the following paragraph (and not
otherwise); (ii) subject to any laws or regulations applicable thereto, in a
Place of Payment for such series which is located outside the United States, an
office or agency where Securities of such series and any coupons appertaining
thereto may be presented and surrendered for payment (including

                                       61
<PAGE>
 
payment of any Additional Amounts payable on Securities of such series pursuant
to Section 1010); provided, however, that if the Securities of such series are
   ------------   --------  -------                                           
listed on the Luxembourg Stock Exchange, The International Stock Exchange or any
other stock exchange located outside the United States and such stock exchange
so requires, the Company shall maintain a Paying Agent for the Securities of
such series in Luxembourg, London or any other required city located outside the
United States, as the case may be, so long as the Securities of such series are
listed on such exchange; and (iii) subject to any laws or regulations applicable
thereto, in a Place of Payment for such series located outside the United States
an office or agency where any Securities of such series may be surrendered for
registration of transfer, where Securities of such series may be surrendered for
exchange and where notices and demands to or on the Company in respect of the
Securities of such series and this Indenture may be served. The Company shall
give prompt written notice to the Trustee of the location, and any change in the
location, of each such office or agency. If at any time the Company fails to
maintain any such required office or agency or fails 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, except that Bearer
Securities of such series and the related coupons may be presented and
surrendered for payment (including payment of any Additional Amounts payable on
Bearer Securities of such series pursuant to Section 1010) at the offices
                                             ------------                
specified in the Security, in London, England, and the Company hereby appoints
the same as its agent to receive all such presentations, surrenders, notices and
demands, and the Company hereby appoints the Trustee as its agent to receive all
such presentations, surrenders, notices and demands.

     Unless otherwise specified with respect to any Securities pursuant to
Section 301, no payment of the principal of (or premium or Make-Whole Amount, if
- -----------                                                                     
any, on) or interest or Additional Amounts, if any, on Bearer Securities shall
be made at any office or agency of the Company in the United States or by check
mailed to any address in the United States or by transfer to an account
maintained with a bank located in the United States; provided, however, that, if
                                                     --------  -------          
the Securities of a series are payable in Dollars, payment of the principal of
(and premium and Make-Whole Amount, if any, on) and interest and Additional
Amounts, if any, on any Bearer Security shall be made at the office of the
Company's Paying Agent in the city of [BOSTON, MASSACHUSETTS] if (but only if)
payment in Dollars of the full amount of such principal, premium, Make-Whole
Amount, interest or Additional Amounts, as the case may be, at all offices or
agencies outside the United States maintained for the purpose by the Company in
accordance with this Indenture, is illegal or effectively precluded by exchange
controls or other similar restrictions.

     The Company may from time to time designate one or more other offices or
agencies where the Securities of one or more series and any coupons appertaining
thereto may be presented or surrendered for any or all of 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 accordance with the requirements
set forth above for Securities of any series for such purposes. The Company
shall 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.
Unless otherwise specified with respect to any Securities pursuant to Section
                                                                      -------
301, the Company hereby designates as a Place of Payment for each series of
- ---                                                                        
Securities the office or agency of the Company in the city of [BOSTON,
MASSACHUSETTS], and initially appoints the Trustee

                                       62
<PAGE>
 
at its Corporate Trust Office as Paying Agent in such city and as its agent to
receive all such presentations, surrenders, notices and demands.

     Unless otherwise specified with respect to any Securities pursuant to
Section 301, if and so long as the Securities of any series (i) are denominated
- -----------                                                                    
in a Foreign Currency or (ii) may be payable in a Foreign Currency, or so long
as it is required under any other provision of the Indenture, then the Company
shall maintain with respect to each such series of Securities, or as so
required, at least one exchange rate agent.

     SECTION 1003.  Money for Securities Payments to Be Held in Trust. If the
                    -------------------------------------------------        
Company at any time acts as its own Paying Agent with respect to any series of
any Securities and any coupons appertaining thereto, it shall, on or before each
due date of the principal of (and premium or Make-Whole Amount, if any, on) or
interest or Additional Amounts, if any, on any of the Securities of such series,
segregate and hold in trust for the benefit of the Persons entitled thereto a
sum in the currency or currencies, currency unit or units or composite currency
or currencies in which the Securities of such series are payable (except as
otherwise specified pursuant to Section 301 for the Securities of such series)
                                -----------                                   
sufficient to pay the principal (and premium or Make-Whole Amount, if any) or
interest or Additional Amounts, if any, so becoming due until such sums shall be
paid to such Persons or otherwise disposed of as herein provided, and shall
promptly notify the Trustee of its action or failure so to act.

     Whenever the Company has one or more Paying Agents for any series of
Securities and any coupons appertaining thereto, it shall, on or before each due
date of the principal of (and premium or Make-Whole Amount, if any, on) or
interest or Additional Amounts, if any, on any Securities of such series,
deposit with a Paying Agent a sum (in the currency or currencies, currency unit
or units or composite currency or currencies described in the preceding
paragraph) sufficient to pay the principal (and premium or Make-Whole Amount, if
any) or interest or Additional Amounts, if any, so becoming due, such sum to be
held in trust for the benefit of the Persons entitled to such principal,
premium, Make-Whole Amount, interest or Additional Amounts and (unless such
Paying Agent is the Trustee) the Company shall 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 shall:

          (1)  hold all sums held by it for the payment of principal of (and
     premium or Make-Whole Amount, if any, on) or interest or Additional
     Amounts, if any, on Securities in trust for the benefit of the Persons
     entitled thereto until such sums shall be paid to such Persons or otherwise
     disposed of as herein provided;

          (2)  give the Trustee notice of any default by the Company (or any
     other obligor on the Securities) in the making of any such payment of
     principal (and premium or Make-Whole Amount, if any) or interest or
     Additional Amounts, if any; and

                                       63
<PAGE>
 
          (3)  at any time during the continuance of any such default, on the
     written request of the Trustee, forthwith pay to the Trustee all sums so
     held in trust by such Paying Agent.

     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 on the
same trusts as those on 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 sums.

     Except as otherwise provided in the Securities of any series, 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 or Make-Whole Amount, if
any, on) or interest or Additional Amounts, if any, on any Security of any
series and remaining unclaimed for two (2) years after such principal (and
premium or Make-Whole Amount, if any) interest or Additional Amounts, if any,
has become due and payable shall be paid to the Company upon 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 of the principal of (and premium or Make-Whole
Amount, if any, on) and interest and any Additional Amounts, if any, on any
Security of such series, without interest thereon, and all liability of the
Trustee or such Paying Agent with respect to such trust money, and all liability
of the Company as trustee thereof, shall thereupon cease; provided, however,
                                                          --------  ------- 
that the Trustee or such Paying Agent, before being required to make any such
repayment, may at the expense of the Company cause to be published once, in an
Authorized Newspaper, notice that such money remains unclaimed and that, after a
date specified therein, which shall not be less than thirty (30) days from the
date of such publication, any unclaimed balance of such money then remaining
will be repaid to the Company.

     SECTION 1004.  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 the existence, rights (charter and statutory) and franchises of the
Company and its Subsidiaries; provided, however, that the Company shall not be
                              --------  -------                               
required to preserve any right or franchise if the Board of Directors determines
that the preservation thereof is no longer desirable in the conduct of the
business of the Company and its Subsidiaries as a whole and that the loss
thereof is not disadvantageous in any material respect to the Holders of
Securities of any series.

     SECTION 1005.  Maintenance of Properties. The Company shall cause all of
                    -------------------------                                
its 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 or any Subsidiary from selling or otherwise disposing for value its
properties in the ordinary course of its business.

                                       64
<PAGE>
 
     SECTION 1006.  Insurance. The Company shall, and shall cause each of its
                    ---------                                                
Subsidiaries to, keep all of its insurable properties insured against loss or
damage at least equal to their then full insurable value with financially sound
and reputable insurance companies.

     SECTION 1007.  Payment of Taxes and Other Claims. The Company shall pay or
                    ---------------------------------                          
discharge or cause to be paid or discharged, before the same become delinquent,
(i) all taxes, assessments and governmental charges levied or imposed on the
Company or any Subsidiary or on the income, profits or property of the Company
or any Subsidiary, and (ii) all lawful claims for labor, materials and supplies
which, if unpaid, might by law become a lien on 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.

     SECTION 1008.  Reports.
                    ------- 

          (1)  So long as any Securities of any series are outstanding, the
     Company will furnish to Holders of Securities of such series, within forty-
     five (45) days of the filing thereof with the Commission copies of the
     annual reports on Form 10-K, within twenty (20) days of the filing thereof
     with the Commission copies of the quarterly reports on Form 10-Q and within
     fifteen (15) days after the filing thereof with the Commission copies of
     the other information, documents and other reports (or copies of such
     portions of any of the foregoing as the Commission may by rules and
     regulations prescribe) that the Company is required to file with the
     Commission pursuant to Section 13 or 15(d) of the Exchange Act, provided
     that the Company's obligation to furnish such reports will be deemed
     satisfied to the extent the Company complies with Section 1008(2) and (4).
                                                       ---------------     --- 
     All obligors on the Securities shall comply with the provisions of Section
     314(a) of the Trust Indenture Act. Notwithstanding that the Company may not
     be subject to the reporting requirements of Section 13 or 15(d) of the
     Exchange Act or otherwise report on an annual and quarterly basis on forms
     provided for such annual and quarterly reporting pursuant to rules and
     regulations promulgated by the Commission, the Company shall file with the
     Commission and provide to the Trustee (i) within one hundred thirty-five
     (135) days after the end of each fiscal year, annual reports on Form 10-K
     (or any successor or comparable form) containing the information required
     to be contained therein (or required in such successor or comparable form),
     including a "Management's Discussion and Analysis of Financial Condition
     and Results of Operations" and a report thereon by the Company's certified
     public accountants; (ii) within sixty-five (65) days after the end of each
     of the first three (3) fiscal quarters of each fiscal year, reports on Form
     10-Q (or any successor or comparable form) containing the information
     required to be contained therein (or required in any successor or
     comparable form), including a "Management's Discussion and Analysis of
     Financial Condition and Results of Operations"; and (iii) promptly from
     time to time after the occurrence of an event required to be therein
     reported, such other reports on Form 8-K (or any successor or comparable
     form) containing the information required to be contained therein (or
     required in any successor or comparable form); provided, however, that the
     Company shall not be in default of the provisions of this Section 1008(1)
                                                               ---------------
     for any failure to file reports with the Commission solely by the refusal
     of

                                       65
<PAGE>
 
     the Commission to accept the same for filing. Each of the financial
     statements contained in such reports shall be prepared in accordance with
     GAAP.

          (2)  The Company's obligations under this Section 1008 will be deemed
                                                    ------------               
     satisfied to the extent the Company provides the Trustee with a sufficient
     number of annual reports, information, documents and reports for the
     Trustee to provide or make available such annual reports, information,
     documents and reports to the Holders.  The Trustee, at the Company's
     expense and written direction, shall promptly mail copies of all such
     annual reports, information, documents and other reports provided to the
     Trustee pursuant to Section 1008(1) hereof to the Holders at their
                         ---------------                               
     addresses appearing in the Security Register.

          (3)  Whether or not required by the rules and regulations of the
     Commission, the Company shall file a copy of all such information and
     reports with the Commission for public availability and make such
     information available to securities analysts and prospective investors upon
     request.

          (4)  The Company shall provide the Trustee with a sufficient number of
     copies of all reports and other documents and information which the Trustee
     may be required to deliver to the Holders under this Section 1008.
                                                          ------------ 

          (5)  Delivery of such reports, information and documents to the
     Trustee is for informational purposes only and the Trustee's receipt of
     such shall not constitute constructive notice of any information contained
     therein or determinable from information contained therein, including the
     Company's compliance with any of its covenants hereunder (as to which the
     Trustee is entitled to rely exclusively on Officers' Certificates).

     SECTION 1009.  Statement as to Compliance. The Company shall deliver to the
                    --------------------------                                  
Trustee, within one hundred thirty-five (135) days after the end of each fiscal
year, a brief certificate from the principal executive officer, principal
financial officer or principal accounting officer as to his or her knowledge of
the Company's compliance with all conditions and covenants under this Indenture
verified in the case of conditions precedent compliance with which is subject to
verification by accountants by the certificate or opinion of an accountant and,
in the event of any noncompliance, specifying such noncompliance and the nature
and status thereof. For purposes of this Section 1009, such compliance shall be
                                         ------------                          
determined without regard to any period of grace or requirement of notice
provided under this Indenture.

     SECTION 1010.  Additional Amounts. If any Securities of a series provide
                    ------------------                                       
for the payment of Additional Amounts, the Company covenants and agrees for the
benefit of the Holders of Securities of such series that it shall pay to the
Holder of any Security of such series or any coupon appertaining thereto
Additional Amounts as may be specified as contemplated by Section 301. Whenever
                                                          -----------          
in this Indenture there is mentioned, in any context except in the case of
clause (1) of Section 502, the payment of the principal of or of any premium,
              -----------                                                    
Make-Whole Amount or interest on, or in respect of, any Security of any series
or payment of any coupon or the net proceeds received on the sale or exchange of
any Security of any series, such mention shall be deemed to

                                       66
<PAGE>
 
include mention of the payment of Additional Amounts provided by the terms of
such series established pursuant to Section 301 to the extent that, in such
                                    -----------                            
context, Additional Amounts are, were or would be payable in respect thereof
pursuant to such terms and express mention of the payment of Additional Amounts
(if applicable) in any provisions hereof shall not be construed as excluding
Additional Amounts in those provisions hereof in which such express mention is
not made.

     Except as otherwise specified as contemplated by Section 301, if the
                                                      -----------        
Securities of a series provide for the payment of Additional Amounts, at least
ten (10) days prior to the first Interest Payment Date with respect to
Securities of such series (or if the Securities of such series will not bear
interest prior to Maturity, the first day on which a payment of principal and
any premium is made), and at least ten (10) days prior to each date of payment
of principal and any premium or Make-Whole Amount or interest, if there has been
any change with respect to the matters set forth in the below-mentioned Company
Certificate, the Company shall furnish the Trustee and the principal Paying
Agent or Paying Agents, if other than the Trustee, with a Company Certificate
instructing the Trustee and such Paying Agent or Paying Agents whether such
payment of principal of and any premium or Make-Whole Amount or interest on the
Securities of such series shall be made to Holders of Securities of such series
or any coupons appertaining thereto who are not United States persons without
withholding for or on account of any tax, assessment or other governmental
charge described in the Securities of or within the series. If any such
withholding is required, then such Company Certificate shall specify by country
the amount, if any, required to be withheld on such payments to such Holders of
Securities of such series or any coupons appertaining thereto and the Company
shall pay to the Trustee or such Paying Agent the Additional Amounts required by
the terms of such Securities. In the event that the Trustee or any Paying Agent,
as the case may be, shall not so receive the above-mentioned certificate, then
the Trustee or such Paying Agent shall be entitled (i) to assume that no such
withholding or deduction is required with respect to any payment of principal or
interest with respect to any Securities of such series or any coupons
appertaining thereto until it has received a certificate advising otherwise, and
(ii) to make all payments of principal and interest with respect to the
Securities of such series or any coupons appertaining thereto without
withholding or deductions until otherwise advised. The Company covenants to
indemnify the Trustee and any Paying Agent for, and to hold them harmless
against, any loss, liability or expense reasonably incurred without negligence
or bad faith on their part arising out of or in connection with actions taken or
omitted by any of them or in reliance on any Company Certificate furnished
pursuant to this Section or in reliance on the Company's not furnishing such a
Company Certificate.

     SECTION 1011.  Waiver of Certain Covenants. The Company may omit in any
                    ---------------------------                             
particular instance to comply with any term, provision or condition set forth in
Sections 1004 to 1008, inclusive, and with any other term, provision or
- -------------    ----                                                  
condition with respect to the Securities of any series specified in accordance
with Section 301 (except any such term, provision or condition which could not
     -----------                                                              
be amended without the consent of all Holders of Securities of such series
pursuant to Section 902), if before or after the time for such compliance the
            -----------                                                      
Holders of at least a majority in principal amount of all outstanding Securities
of such series, by Act of such Holders, either waive such compliance in such
instance or generally waive compliance with such covenant or condition, but no
such waiver shall extend to or affect such covenant or condition except to the
extent so expressly

                                       67
<PAGE>
 
waived, and, until such waiver shall become effective, the obligations of the
Company and the duties of the Trustee in respect of any such term, provision or
condition shall remain in full force and effect.


                                ARTICLE ELEVEN
                           REDEMPTION OF SECURITIES

     SECTION 1101.  Applicability of Article. Securities of any series which are
                    ------------------------                                    
redeemable before their Stated Maturity shall be redeemable in accordance with
their terms and (except as otherwise specified as contemplated by Section 301
                                                                  -----------
for Securities of any series) in accordance with this Article.

     SECTION 1102.  Election to Redeem; Notice to Trustee. The election of the
                    -------------------------------------                     
Company to redeem any Securities shall be evidenced by or pursuant to a Board
Resolution. In case of any redemption at the election of the Company of less
than all of the Securities of any series, the Company shall, at least thirty
(30) days prior to the giving of the notice of redemption in Section 1104
                                                             ------------
(unless a shorter notice shall be satisfactory to the Trustee), notify the
Trustee of such Redemption Date and of the principal amount of Securities of
such series to be redeemed. In the case of any redemption of Securities prior to
the expiration of any restriction on such redemption provided in the terms of
such Securities or elsewhere in this Indenture, the Company shall furnish the
Trustee with a Company Certificate evidencing compliance with such restriction.

     SECTION 1103.  Selection by Trustee of Securities to Be Redeemed. If less
                    -------------------------------------------------         
than all the Securities of any series issued on the same day with the same terms
are to be redeemed, the particular Securities to be redeemed shall be selected
not more than sixty (60) days prior to the Redemption Date by the Trustee, from
the Outstanding Securities of such series issued on such date with the same
terms not previously called for redemption, by such method as the Trustee deems
fair and appropriate and which may provide for the selection for redemption of
portions (equal to the minimum authorized denomination for Securities of such
series or any integral multiple thereof) of the principal amount of Securities
of such series of a denomination larger than the minimum authorized denomination
for Securities of such series.

     The Trustee shall promptly notify the Company and the Security Registrar
(if other than itself) 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 Security redeemed or to be redeemed only in part, to the portion of
the principal amount of such Security which has been or is to be redeemed.

     SECTION 1104.  Notice of Redemption. Notice of redemption shall be given in
                    --------------------                                        
the manner provided in Section 106, not less than thirty (30) days nor more than
                       -----------                                              
sixty (60) days prior to the

                                       68
<PAGE>
 
Redemption Date, unless a shorter period is specified by the terms of such
series established pursuant to Section 301, to each Holder of Securities to be
                               -----------                                    
redeemed, but failure to give such notice in the manner herein provided to the
Holder of any Security designated for redemption as a whole or in part, or any
defect in the notice to any such Holder, shall not affect the validity of the
proceedings for the redemption of any other such Security or portion thereof.

     Any notice which is mailed to the Holders of Registered Securities in the
manner herein provided shall be conclusively presumed to have been duly given,
whether or not the Holder receives the notice.

     All notices of redemption shall state:

          (1)  the Redemption Date;

          (2)  the Redemption Price, accrued interest to the Redemption Date
     payable as provided in Section 1106, if any, and Additional Amounts, if
                            ------------                                    
     any;

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

          (4)  in case any Security is to be redeemed in part only, the notice
     which relates to such Security shall state that on and after the Redemption
     Date, on surrender of such Security, the holder will receive, without a
     charge, a new Security or Securities of authorized denominations for the
     principal amount thereof remaining unredeemed;

          (5)  that on the Redemption Date, the Redemption Price and accrued
     interest to the Redemption Date payable as provided in Section 1106, if
                                                            ------------    
     any, will become due and payable on each such Security, or the portion
     thereof, to be redeemed and, if applicable, that interest thereon shall
     cease to accrue on and after such date;

          (6)  the Place or Places of Payment where such Securities, together in
     the case of Bearer Securities with all coupons appertaining thereto, if
     any, maturing after the Redemption Date, are to be surrendered for payment
     of the Redemption Price and accrued interest, if any;

          (7)  that the redemption is for a sinking fund, if such is the case;

          (8)  that, unless otherwise specified in such notice, Bearer
     Securities of any series, if any, surrendered for redemption must be
     accompanied by all coupons appertaining thereto maturing subsequent to the
     date fixed for redemption or the amount of any such missing coupon or
     coupons will be deducted from the Redemption Price, unless security or
     indemnity satisfactory to the Company, the Trustee for such series and any
     Paying Agent is furnished;

                                       69
<PAGE>
 
          (9)  if Bearer Securities of any series are to be redeemed and any
     Registered Securities of such series are not to be redeemed, and if such
     Bearer Securities may be exchanged for Registered Securities not subject to
     the redemption on this Redemption Date pursuant to Section 305 or
                                                        -----------   
     otherwise, the last date, as determined by the Company, on which such
     exchanges may be made; and

          (10) the CUSIP number of such Security, if any, provided that neither
                                                          --------             
     the Company nor the Trustee shall have any responsibility for any such
     CUSIP number.

     Notice of redemption of Securities to be redeemed 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 1105.  Deposit of Redemption Price. At least one (1) Business Day
                    ---------------------------                               
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, which it
may not do in the case of a sinking fund payment under Article Twelve, segregate
                                                       --------------           
and hold in trust as provided in Section 1003) an amount of money in the
                                 ------------                           
currency or currencies, currency unit or units or composite currency or
currencies in which the Securities of such series are payable (except as
otherwise specified pursuant to Section 301 for the Securities of such series)
                                -----------                                   
sufficient to pay on the Redemption Date the Redemption Price of, and (except if
the Redemption Date is an Interest Payment Date) accrued interest on, all the
Securities or portions thereof which are to be redeemed on such date.

     SECTION 1106.  Securities Payable on Redemption Date. Notice of redemption
                    -------------------------------------                      
having been given as provided above, the Securities so to be redeemed shall, on
the Redemption Date, become due and payable at the Redemption Price therein
specified in the currency or currencies, currency unit or units or composite
currency or currencies in which the Securities of such series are payable
(except as otherwise specified pursuant to Section 301 for the Securities of
                                           -----------                      
such series) (together with accrued interest, if any, to the Redemption Date),
and from and after such date (unless the Company defaults in the payment of the
Redemption Price and accrued interest) such Securities shall, if the same were
interest-bearing, cease to bear interest and the coupons for such interest
appertaining to any Bearer Securities so to be redeemed, except to the extent
provided below, shall be void. Upon surrender of any such Security for
redemption in accordance with such notice, together with any coupons
appertaining thereto maturing after the Redemption Date, such Security shall be
paid by the Company at the Redemption Price, together with accrued interest, if
any, to the Redemption Date; provided, however, that installments of interest on
                             --------  -------                                  
Bearer Securities whose Stated Maturity is on or prior to the Redemption Date
shall be payable only at an office or agency located outside the United States
(except as otherwise provided in Section 1002) and, unless otherwise specified
                                 ------------                                 
as contemplated by Section 301, only upon presentation and surrender of coupons
                   -----------                                                 
for such interest; and provided, further, that, installments of interest on
                       --------  -------                                   
Registered Securities 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.
- ---

                                       70
<PAGE>
 
     If any Bearer Security surrendered for redemption is not accompanied by all
coupons appertaining thereto maturing after the Redemption Date, such Security
may be paid after deducting from the Redemption Price an amount equal to the
face amount of all such missing coupons, or the surrender of such missing coupon
or coupons may be waived by the Company and the Trustee if there is furnished to
them such security or indemnity as they may require to save each of them and any
Paying Agent harmless. If thereafter the Holder of such Security surrenders to
the Trustee or any Paying Agent any such missing coupon in respect of which a
deduction has been made from the Redemption Price, such Holder shall be entitled
to receive the amount so deducted; provided, however, that interest represented
                                   --------  -------                           
by a coupon shall be payable only at an office or agency located outside the
United States (except as otherwise provided in Section 1002) and, unless
                                               ------------             
otherwise specified as contemplated by Section 301, only upon presentation and
                                       -----------                            
surrender of such coupon.

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

     SECTION 1107.  Securities Redeemed in Part. Any Security which is to be
                    ---------------------------                             
redeemed only in part (pursuant to the provisions of this Article or of Article
                                                                        -------
Twelve) shall be surrendered at a Place of Payment therefor (with, if the
- ------                                                                   
Company or the Trustee so requires, due endorsement by, or a written instrument
of transfer in form satisfactory to the Company and the Trustee duly executed
by, the Holder thereof or his attorney duly authorized in writing and
accompanied by appropriate evidence of genuineness and authority) 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
the same series, 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
                                 SINKING FUNDS

     SECTION 1201.  Applicability of Article. The provisions of this Article
                    ------------------------                                
shall be applicable to any sinking fund for the retirement of Securities of a
series except as otherwise specified as contemplated by Section 301 for
                                                        -----------    
Securities of such series.

     The minimum amount of any sinking fund payment provided for by the terms of
Securities of any series is herein referred to as a "mandatory sinking fund
                                                     ----------------------
payment," and any payment in excess of such minimum amount provided for by the
- -------                                                                       
terms of such Securities of any series is herein referred to as an "optional
                                                                    --------
sinking fund payment." If provided for by the terms of any Securities of any
- --------------------                                                        
series, the cash amount of any mandatory sinking fund payment may be subject to
reduction as provided in Section 1202. Each sinking fund payment shall be
                         ------------                                    
applied to the redemption of Securities of any series as provided for by the
terms of Securities of such series.

                                       71
<PAGE>
 
      SECTION 1202. Satisfaction of Sinking Fund Payments with Securities. The
                    -----------------------------------------------------     
Company may, in satisfaction of all or any part of any mandatory sinking fund
with respect to the Securities of a series, (i) deliver Outstanding Securities
of such series (other than any previously called for redemption), together in
the case of any Bearer Securities of such series with all unmatured coupons
appertaining thereto, and (ii) apply as a credit Securities of such series which
have been redeemed either at the election of the Company pursuant to the terms
of such Securities or through the application of permitted optional sinking fund
payments pursuant to the terms of such Securities, as provided for by the terms
of such Securities, or which have otherwise been acquired by the Company,
provided that such Securities so delivered or applied as a credit have not been
- --------                                                                       
previously so credited. Such Securities shall be received and credited for such
purpose by the Trustee at the applicable Redemption Price specified in such
Securities for redemption through operation of the sinking fund and the amount
of such mandatory sinking fund payment shall be reduced accordingly.

      SECTION 1203. Redemption of Securities for Sinking Fund. Not less than
                    -----------------------------------------               
sixty (60) days prior to each sinking fund payment date for Securities of any
series, the Company shall deliver to the Trustee a Company Certificate
specifying the amount of the next ensuing mandatory sinking fund payment for
such series pursuant to the terms of such series, the portion thereof, if any,
which is to be satisfied by payment of cash in the currency or currencies,
currency unit or units or composite currency or currencies in which the
Securities of such series are payable (except as otherwise specified pursuant to
Section 301 for the Securities of such series) and the portion thereof, if any,
- -----------                                                                    
which is to be satisfied by delivering and crediting Securities of such series
pursuant to Section 1202, and the optional amount, if any, to be added in cash
            ------------                                                      
to the next ensuing mandatory sinking fund payment, and shall also deliver to
the Trustee any Securities to be so delivered and credited. If such Company
Certificate specifies an optional amount to be added in cash to the next ensuing
mandatory sinking fund payment, the Company shall thereupon be obligated to pay
the amount therein specified. Not less than thirty (30) days before each such
sinking fund payment date the Trustee shall select the Securities to be redeemed
on such sinking fund payment date in the manner specified in Section 1103 and
                                                             ------------    
cause notice of the redemption thereof to be given in the name of and at the
expense of the Company in the manner provided in Section 1104. Such notice
                                                 ------------             
having been duly given, the redemption of such Securities shall be made upon the
terms and in the manner stated in Sections 1106 and 1107.
                                  -------------     ---- 


                               ARTICLE THIRTEEN
                      REPAYMENT AT THE OPTION OF HOLDERS

      SECTION 1301. Applicability of Article. Repayment of Securities of any
                    ------------------------                                
series before their Stated Maturity at the option of Holders thereof shall be
made in accordance with the terms of such Securities, if any, and (except as
otherwise specified by the terms of such series established pursuant to Section
                                                                        -------
301) in accordance with this Article.
- ---                                  

      SECTION 1302. Repayment of Securities. Securities of any series subject to
                    -----------------------                                     
repayment in whole or in part at the option of the Holders thereof will, unless
otherwise provided in the terms of such Securities, be repaid at a price equal
to the principal amount thereof, together with interest, if

                                       72
<PAGE>
 
any, thereon accrued to the Repayment Date specified in or pursuant to the terms
of such Securities. The Company covenants that at least one Business Day prior
to the Repayment Date it shall deposit with the Trustee or with a Paying Agent
(or, if the Company is acting as it own Paying Agent, segregate and hold in
trust as provided in Section 1003) an amount of money in the currency or
                     ------------                                       
currencies, currency unit or units or composite currency or currencies in which
the Securities of such series are payable (except as otherwise specified
pursuant to Section 301 for the Securities of such series) sufficient to pay the
            -----------                                                         
principal (or, if so provided by the terms of the Securities of any series, a
percentage of the principal) of, and (except if the Repayment Date is an
Interest Payment Date) accrued interest on, all the Securities or portions
thereof, as the case may be, to be repaid on such date.

      SECTION 1303. Exercise of Option. Securities of any series subject to
                    ------------------                                     
repayment at the option of the Holders thereof will contain an "Option to Elect
Repayment" form on the reverse of such Securities. In order for any Security to
be repaid at the option of the Holder, the Trustee must receive at the Place of
Payment therefor specified in the terms of such Security (or at such other place
or places of which the Company shall from time to time notify the Holders of
such Securities), not earlier than sixty (60) days nor later than thirty (30)
days prior to the Repayment Date, (i) the Security so providing for such
repayment together with the "Option to Elect Repayment" form on the reverse
thereof duly completed by the Holder (or by the Holder's attorney duly
authorized in writing), or (ii) a telegram, telex, facsimile transmission or a
letter from a member of a national securities exchange, or the National
Association of Securities Dealers, Inc., or a commercial bank or trust company
in the United States setting forth the name of the Holder of the Security, the
principal amount of the Security, the principal amount of the Security to be
repaid, the CUSIP number, if any, or a description of the tenor and terms of the
Security, a statement that the option to elect repayment is being exercised
thereby and a guarantee that the Security to be repaid, together with the duly
completed form entitled "Option to Elect Repayment" on the reverse of the
Security, will be received by the Trustee not later than the fifth Business Day
after the date of such telegram, telex, facsimile transmission or letter;
provided, however, that such telegram, telex, facsimile transmission or letter
- --------  -------                                                             
shall only be effective if such Security and form duly completed are received by
the Trustee by such fifth Business Day. If less than the entire principal amount
of such Security is to be repaid in accordance with the terms of such Security,
the principal amount of such Security to be repaid, in increments of the minimum
denomination for Securities of such series, and the denomination or
denominations of the Security or Securities to be issued to the Holder for the
portion of the principal amount of such Security surrendered which is not to be
repaid, must be specified. The principal amount of any Security providing for
prepayment at the option of the Holder thereof may not be repaid in part if,
following such repayment, the unpaid principal amount of such Security would be
less than the minimum authorized denomination of Securities of or within the
series of which such Security to be repaid is a part. Except as otherwise may be
provided by the terms of any Security providing for repayment at the option of
the Holder thereof, exercise of the repayment option by the Holder shall be
irrevocable unless waived by the Company.

      SECTION 1304. When Securities Presented for Repayment Become Due and
                    ------------------------------------------------------
Payable. If Securities of any series providing for repayment at the option of
- -------                                                                      
the Holders thereof have been surrendered as provided in this Article and as
provided by or pursuant to the terms of such

                                       73
<PAGE>
 
Securities, such Securities or the portions thereof, as the case may be, to be
repaid shall become due and payable and shall be paid by the Company on the
Repayment Date therein specified, and on and after such Repayment Date (unless
the Company defaults in the payment of such Securities on such Repayment Date)
such Securities shall, if the same were interest-bearing, cease to bear interest
and the coupons for such interest appertaining to any Bearer Securities so to be
repaid, except to the extent provided below, shall be void. Upon surrender of
any such Security for repayment in accordance with such provisions, together
with any coupons appertaining thereto maturing after the Repayment Date, the
principal amount of such security so to be repaid shall be paid by the Company,
together with accrued interest, if any, to the Repayment Date; provided,
                                                               -------- 
however, that coupons whose Stated Maturity is on or prior to the Repayment Date
- -------                                                                         
shall be payable only at an office or agency located outside the United States
(except as otherwise provided in Section 1002) and, unless otherwise specified
                                 ------------                                 
pursuant to Section 301, only upon presentation and surrender of such coupons;
            -----------                                                       
and provided, further, that, in the case of Registered Securities, installments
    --------  -------                                                          
of interest, if any, whose Stated Maturity is on or prior to the Repayment Date
shall be payable (but without interest thereon, unless the Company defaults in
the payment thereof) 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 Bearer Security surrendered for repayment is not accompanied by all
coupons appertaining thereto maturing after the Repayment Date, such Security
may be paid after deducting from the amount payable therefor as provided in
Section 1302 an amount equal to the face amount of all such missing coupons, or
- ------------                                                                   
the surrender of such missing coupon or coupons may be waived by the Company and
the Trustee if there is furnished to them such security or indemnity as they may
require to save each of them and any Paying Agent harmless. If thereafter the
Holder of such Security surrenders to the Trustee or any Paying Agent any such
missing coupon in respect of which a deduction has been made as provided in the
preceding sentence, such Holder shall be entitled to receive the amount so
deducted; provided, however, that interest represented by a coupon shall be
          --------  -------                                                
payable only at an office or agency located outside the United States (except as
otherwise provided in Section 1002) and, unless otherwise specified as
                      ------------                                    
contemplated by Section 301, only upon presentation and surrender of such
                -----------                                              
coupon.

     If the principal amount of any Security surrendered for repayment shall not
be so repaid upon surrender thereof, such principal amount (together with
interest, if any, thereon accrued to such Repayment Date) shall, until paid,
bear interest from the Repayment Date at the rate of interest or Yield to
Maturity (in the case of Original Issue Discount Securities) set forth in such
Security.

     SECTION 1305.  Securities Repaid in Part. Upon surrender of any Registered
                    -------------------------                                  
Security which is to be repaid in part only, the Company shall execute and the
Trustee shall authenticate and deliver to the Holder of such Security, without
service charge and at the expense of the Company, a new Registered Security or
Securities of the same series, of any authorized denomination specified by the
Holder, in an aggregate principal amount equal to and in exchange for the
portion of the principal of such Security so surrendered which is not to be
repaid.

                                       74
<PAGE>
 
                               ARTICLE FOURTEEN
                      DEFEASANCE AND COVENANT DEFEASANCE

     SECTION 1401.  Applicability of Article; Company's Option to Effect
                    ----------------------------------------------------
Defeasance or Covenant Defeasance. If, pursuant to Section 301, provision is
- ---------------------------------                  -----------              
made for either or both of (i) defeasance of the Securities of or within a
series under Section 1402, or (ii) covenant defeasance of the Securities of or
             -------------                                                    
within a series under Section 1403 to be applicable to the Securities of any
                      ------------                                          
series, then the provisions of such Section or Sections, as the case may be,
together with the other provisions of this Article (with such modifications
thereto as may be specified pursuant to Section 301 with respect to any
                                        -----------                    
Securities), shall be applicable to such Securities and any coupons appertaining
thereto, and the Company may at its option by Board Resolution, at any time,
with respect to such Securities and any coupons appertaining thereto, elect to
defease such Outstanding Securities and any coupons appertaining thereto
pursuant to Section 1402 (if applicable) or Section 1403 (if applicable) upon
            ------------                    ------------                     
compliance with the conditions set forth below in this Article.

      SECTION 1402. Defeasance and Discharge. Upon the Company's exercise of the
                    ------------------------                                
 above option applicable to this Section with respect to any Securities of or
within a series, the Company shall be deemed to have been discharged from its
obligations with respect to such Outstanding Securities and any coupons
appertaining thereto on the date the conditions set forth in Section 1404 are
                                                             ------------    
satisfied (hereinafter, "defeasance"). For this purpose, such defeasance means
                         ----------                                           
that the Company shall be deemed to have paid and discharged the entire
indebtedness represented by such Outstanding Securities and any coupons
appertaining thereto, which shall thereafter be deemed "Outstanding" only for
the purposes of Section 1405 and the other Sections of this Indenture referred
                ------------                                                  
to in clauses (i) and (ii) below, and to have satisfied all of its other
obligations under such Securities and any coupons appertaining thereto and this
Indenture insofar as such Securities and any coupons appertaining thereto are
concerned (and the Trustee, at the expense of the Company, shall execute proper
instruments acknowledging the same), except for the following which shall
survive until otherwise terminated or discharged hereunder: (i) the rights of
Holders of such Outstanding Securities and any coupons appertaining thereto to
receive, solely from the trust fund described in Section 1404 and as more fully
                                                 ------------                  
set forth in such Section, payments in respect of the principal of (and premium
or Make-Whole Amount, if any, on) and interest and Additional Amounts, if any,
on such Securities and any coupons appertaining thereto when such payments are
due; (ii) the Company's obligations with respect to such Securities under
Sections 305, 306, 1002 and 1003 and with respect to the payment of Additional
- ------------  ---  ----     ----                                              
Amounts, if any, on such Securities as contemplated by Section 1010; (iii) the
                                                       ------------           
rights, powers, trusts, duties and immunities of the Trustee hereunder; and (iv)
this Article. Subject to compliance with this Article Fourteen, the Company may
                                              ----------------                 
exercise its option under this Section notwithstanding the prior exercise of its
option under Section 1403 with respect to such Securities and any coupons
             ------------                                                
appertaining thereto.

      SECTION 1403. Covenant Defeasance. Upon the Company's exercise of the
                    -------------------                                    
above option applicable to this Section with respect to any Securities of or
within a series, the Company shall be released from its obligations under
                                                                         
Sections 1004 to 1008, inclusive, and, if specified pursuant to Section 301, its
- -------------    ----                                           -----------     
obligations under any other covenant, with respect to such Outstanding
Securities and any coupons appertaining thereto on and after the date the
conditions set forth in Section 1404
                        ------------

                                       75
<PAGE>
 
are satisfied (hereinafter, "covenant defeasance"), and such Securities and any
                             -------------------                               
coupons appertaining thereto shall thereafter be deemed not "Outstanding" for
the purposes of any direction, waiver, consent or declaration or Act of Holders
(and the consequences of any thereof) in connection with Sections 1004 to 1008,
                                                         -------------    ---- 
inclusive, or such other covenant, but shall continue to be deemed "Outstanding"
for all other purposes hereunder. For this purpose, such covenant defeasance
means that, with respect to such Outstanding Securities and any coupons
appertaining thereto, the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
Section or such other covenant, whether directly or indirectly, by reason of any
reference elsewhere herein to any such Section or such other covenant or by
reason of reference in any such Section or such other covenant to any other
provision herein or in any other document and such omission to comply shall not
constitute a default or an Event of Default under clause (4) or (9) of Section
                                                                       -------
501 or otherwise, as the case may be, but, except as specified above, the
- ---                                                                      
remainder of this Indenture and such Securities and any coupons appertaining
thereto shall be unaffected thereby.

      SECTION 1404. Conditions to Defeasance or Covenant Defeasance. The
                    -----------------------------------------------     
following shall be the conditions to application of Section 1402 or Section 1403
                                                    ------------    ------------
to any Outstanding Securities of or within a series and any coupons appertaining
thereto:

          (a)  The Company has irrevocably deposited or caused to be deposited
     with the Trustee (or another trustee satisfying the requirements of Section
                                                                         -------
     607 who shall agree to comply with the provisions of this Article Fourteen
     ---                                                       ----------------
     applicable to it) funds in trust for the purpose of making the following
     payments, specifically pledged as security for, and dedicated solely to,
     the benefit of the Holders of such Securities and any coupons appertaining
     thereto: (i) an amount in such currency or currencies, currency unit or
     units or composite currency or currencies in which such Securities and any
     coupons appertaining thereto are then specified as payable at Stated
     Maturity, or (ii) Government Obligations applicable to such Securities and
     any coupons appertaining thereto (determined on the basis of the currency
     or currencies, currency unit or units or composite currency or currencies
     in which such Securities and any coupons appertaining thereto are then
     specified as payable at Stated Maturity) which through the scheduled
     payment of principal and interest in respect thereof in accordance with
     their terms will provide, not later than one (1) day before the due date of
     any payment of principal of (and premium or Make-Whole Amount, if any, on)
     and interest and Additional Amounts, if any, on such Securities and any
     coupons appertaining thereto, money in an amount, or (iii) a combination
     thereof in an amount, sufficient, without consideration of any reinvestment
     of such principal and interest, in the opinion of a nationally recognized
     firm of independent public accountants expressed in a written certification
     thereof delivered to the Trustee, to pay and discharge, and which shall be
     applied by the Trustee (or other qualifying trustee) to pay and discharge,
     (A) the principal of (and premium or Make-Whole Amount, if any, on) and
     interest and Additional Amounts, if any, on such Outstanding Securities and
     any coupons appertaining thereto on the Stated Maturity of such principal
     or installment of principal or interest, and (B) any mandatory sinking fund
     payments or analogous payments applicable to such Outstanding Securities
     and any coupons appertaining thereto on the day on which such payments are
     due and payable in accordance with the terms of this Indenture and of such
     Securities and any coupons

                                       76
<PAGE>
 
     appertaining thereto, provided that the Trustee has been irrevocably
                           --------                                      
     instructed to apply such money or the proceeds of such Government
     Obligations to such payments with respect to such Securities. Before such a
     deposit, the Company may give to the Trustee, in accordance with Section
                                                                      -------
     1102, a notice of its election to redeem all or any portion of such
     ----                                                               
     Outstanding Securities at a future date in accordance with the terms of the
     Securities of such series and Article Eleven, which notice shall be
     irrevocable. Such irrevocable redemption notice, if given, shall be given
     effect in applying the foregoing.

          (b)  Such defeasance or covenant defeasance shall not result in a
     breach or violation of, or constitute a default under, this Indenture or
     any other material agreement or instrument to which the Company is a party
     or by which it is bound (and shall not cause the Trustee to have a
     conflicting interest pursuant to Section 310(b) of the Trust Indenture Act
     with respect to any Security of the Company).

          (c)  No Event of Default or event which with notice or lapse of time
     or both would become an Event of Default with respect to such Securities
     and any coupons appertaining thereto has occurred and is continuing on the
     date of such deposit or, insofar as clauses (7) and (8) of Section 501 are
                                                                -----------    
     concerned, at any time during the period ending on the ninety-first (91st)
     day after the date of such deposit (it being understood that this condition
     shall not be deemed satisfied until the expiration of such period).

          (d)  In the case of an election under Section 1402, the Company has
                                               ------------                 
     delivered to the Trustee an Opinion of Counsel stating that (i) the Company
     has received from, or there has been published by, the Internal Revenue
     Service a ruling, or (ii) since the date of execution of this Indenture,
     there has been a change in the applicable federal income tax law, in either
     case to the effect that, and based thereon such opinion shall confirm that,
     the Holders of such Outstanding Securities and any coupons appertaining
     thereto will not recognize income, gain or loss for federal income tax
     purposes as a result of such defeasance and will be subject to federal
     income tax on the same amounts, in the same manner and at the same times as
     would have been the case if such defeasance had not occurred.

          (e)  In the case of an election under Section 1403, the Company has
                                               ------------                 
     delivered to the Trustee an Opinion of Counsel to the effect that the
     Holders of such Outstanding Securities and any coupons appertaining thereto
     will not recognize income, gain or loss for Federal income tax purposes as
     a result of such covenant defeasance and will be subject to Federal income
     tax on the same amounts, in the same manner and at the same times as would
     have been the case if such covenant defeasance had not occurred.

          (f)  The Company has delivered to the Trustee a Company Certificate
     and an Opinion of Counsel, each stating that all conditions precedent to
     the defeasance under Section 1402 or the covenant defeasance under Section
                          ------------                                  --------
     1403 (as the case may be) have been complied with and an Opinion of Counsel
     ----
     to the effect that either (i) as a result of a deposit pursuant to
     paragraph (a) above and the related exercise of the Company's option under
     Section
     -------
     1402 or Section 1403 (as the case may be), registration is not required
     ----    ------------                                                   
     under the

                                       77
<PAGE>
 
     Investment Company Act of 1940, as amended, by the Company with respect to
     the trust funds representing such deposit or by the Trustee for such trust
     funds, or (ii) all necessary registrations under such Act have been
     effected.

          (g)  After the ninety-first (91st) day following the deposit, the
     trust funds will not be subject to the effect of any applicable bankruptcy,
     insolvency, reorganization or similar laws affecting creditors' rights
     generally.

          (h)  Notwithstanding any other provisions of this Section, such
     defeasance or covenant defeasance shall be effected in compliance with any
     additional or substitute terms, conditions or limitations which may be
     imposed on the Company in connection therewith pursuant to Section 301.
                                                                ----------- 

     SECTION 1405.  Deposited Money and Government Obligations to Be Held in
                    --------------------------------------------------------
Trust; Other Miscellaneous Provisions. Subject to the provisions of the last
- -------------------------------------                                       
paragraph of Section 1003, all money and Government Obligations (or other
             ------------                                                
property as may be provided pursuant to Section 301) (including the proceeds
                                        -----------                         
thereof) deposited with the Trustee (or other qualifying trustee) pursuant to
Section 1404 in respect of any Outstanding Securities of any series and any
coupons appertaining thereto shall be held in trust and applied by the Trustee
or such other qualifying trustee, in accordance with the provisions of such
Securities and any coupons appertaining thereto 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 or such other qualifying trustee
may determine, to the Holders of such Securities and any coupons appertaining
thereto of all sums due and to become due thereon in respect of principal (and
premium or Make-Whole Amount, if any) and interest and Additional Amounts, if
any, but such money need not be segregated from other funds except to the extent
required by law.

     Unless otherwise specified with respect to any Security pursuant to Section
                                                                         -------
301, if, after a deposit referred to in Section 1404(a) has been made, (i) the
- ---                                     ---------------                       
Holder of a Security in respect of which such deposit was made is entitled to,
and does, elect pursuant to Section 301 or the terms of such Security to receive
                            -----------                                         
payment in a currency, currency unit or composite currency other than that in
which the deposit pursuant to Section 1404(a) has been made in respect of such
                              ---------------                                 
Security, or (ii) a Conversion Event occurs in respect of the currency, currency
unit or composite currency in which the deposit pursuant to Section 1404(a) has
                                                            ---------------    
been made, the indebtedness represented by such Security and any coupons
appertaining thereto shall be deemed to have been, and will be, fully discharged
and satisfied through the payment of the principal of (and premium or Make-Whole
Amount, if any, on), and interest and Additional Amounts, if any, on such
Security as the same become due out of the proceeds yielded by converting (from
time to time as specified below in the case of any such election) the amount or
other property deposited in respect of such Security into the currency, currency
unit or composite currency in which such Security becomes payable as a result of
such election or Conversion Event based on the applicable market exchange rate
for such currency, currency unit or composite currency in effect on the second
Business Day prior to each payment date, except, with respect to a Conversion
Event, for such currency, currency unit or composite currency in effect (as
nearly as feasible) at the time of the Conversion Event.

                                       78
<PAGE>
 
     The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the Government Obligations deposited
pursuant to Section 1404 or the principal and interest received in respect
            ------------                                                  
thereof other than any such tax, fee or other charge which by law is for the
account of the Holders of such Outstanding Securities and any coupons
appertaining thereto.

     Anything in this Article to the contrary notwithstanding, the Trustee or
such other qualifying trustee shall deliver or pay to the Company, from time to
time upon Company Request, any money or Government Obligations (or other
property and any proceeds therefrom) held by it as provided in Section 1404
                                                               ------------
which, in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee or such other qualifying trustee, are in excess of the amount thereof
which would then be required to be deposited to effect a defeasance or covenant
defeasance, as applicable, in accordance with this Article.


                                ARTICLE FIFTEEN
                       MEETINGS OF HOLDERS OF SECURITIES

      SECTION 1501. Purposes for Which Meetings May Be Called. A meeting of
                    -----------------------------------------              
Holders of Securities of any series may be called at any time and from time to
time pursuant to this Article to make, give or take any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be made, given or taken by Holders of Securities of such
series.

      SECTION 1502. Call, Notice and Place of Meetings.
                    ---------------------------------- 

          (1) The Trustee may at any time call a meeting of Holders of
     Securities of any series for any purpose specified in Section 1501, to be
                                                           ------------       
     held at such time and at such place in the city of Boston, Massachusetts,
     as the Trustee determines. Notice of every meeting of Holders of Securities
     of any series, setting forth the time and the place of such meeting and in
     general terms the action proposed to be taken at such meeting, shall be
     given, in the manner provided in Section 106, not less than twenty-one (21)
                                      -----------                               
     nor more than one hundred eighty (180) days prior to the date fixed for the
     meeting.

          (2) In case at any time the Company, pursuant to a Board Resolution,
     or the Holders of at least ten percent (10%) in principal amount of the
     Outstanding Securities of any series have requested the Trustee to call a
     meeting of the Holders of Securities of such series for any purpose
     specified in Section 1501, by written request setting forth in reasonable
                  ------------                                                
     detail the action proposed to be taken at the meeting, and the Trustee has
     not made the first publication of the notice of such meeting within twenty-
     one (21) days after receipt of such request or does not thereafter proceed
     to cause the meeting to be held as provided herein, then the Company or the
     Holders of Securities of such series in the amount above specified, as the
     case may be, may determine the time and the place in the city of [BOSTON,
     MASSACHUSETTS], for such meeting and may call such meeting for such
     purposes by giving notice thereof as provided in paragraph (a) above.

                                       79
<PAGE>
 
      SECTION 1503. Persons Entitled to Vote at Meetings. To be entitled to vote
                    ------------------------------------                        
at any meeting of Holders of Securities of any series, a Person shall be (i) a
Holder of one or more Outstanding Securities of such series, or (ii) a Person
appointed by an instrument in writing as proxy for a Holder or Holders of one or
more Outstanding Securities of such series by such Holder or Holders. The only
Persons who shall be entitled to be present or to speak at any meeting of
Holders of Securities of any series are the Persons entitled to vote at such
meeting and their counsel, any representatives of the Trustee and its counsel,
and any representatives of the Company and its counsel.

      SECTION 1504. Quorum; Action. The Persons entitled to vote a majority in
                    --------------                                            
principal amount of the Outstanding Securities of a series shall constitute a
quorum for a meeting of Holders of Securities of such series; provided, however,
                                                              --------  ------- 
that if any action is to be taken at such meeting with respect to a consent or
waiver which this Indenture expressly provides may be given by the Holders of
not less than a specified percentage in principal amount of the Outstanding
Securities of a series, the Persons entitled to vote such specified percentage
in principal amount of the Outstanding Securities of such series shall
constitute a quorum. In the absence of a quorum within thirty (30) minutes after
the time appointed for any such meeting, the meeting shall, if convened at the
request of Holders of Securities of such series, be dissolved. In any other case
the meeting may be adjourned for a period of not less than ten (10) days as
determined by the chairman of the meeting prior to the adjournment of such
meeting. In the absence of a quorum at any such adjourned meeting, such
adjourned meeting may be further adjourned for a period of not less than ten
(10) days as determined by the chairman of the meeting prior to the adjournment
of such adjourned meeting. Notice of the reconvening of any adjourned meeting
shall be given as provided in Section 1502(a), except that such notice need be
                              ---------------                                 
given only once not less than five (5) days prior to the date on which the
meeting is scheduled to be reconvened. Notice of the reconvening of any
adjourned meeting shall state expressly the percentage, as provided above, of
the principal amount of the Outstanding Securities of such series which shall
constitute a quorum.

     Except as limited by the proviso to Section 902, any resolution presented
                                         -----------                          
to a meeting or adjourned meeting duly reconvened at which a quorum is present
as aforesaid may be adopted by the affirmative vote of the Holders of a majority
in principal amount of the Outstanding Securities of such series; provided,
                                                                  -------- 
however, that, except as limited by the proviso to Section 902, any resolution
- -------                                            -----------                
with respect to any request, demand, authorization, direction, notice, consent,
waiver or other action which this Indenture expressly provides may be made,
given or taken by the Holders of a specified percentage, which is less than a
majority, in principal amount of the Outstanding Securities of a series may be
adopted at a meeting or an adjourned meeting duly reconvened and at which a
quorum is present as aforesaid by the affirmative vote of the Holders of such
specified percentage in principal amount of the Outstanding Securities of such
series.

     Any resolution passed or decision taken at any meeting of Holders of
Securities of any series duly held in accordance with this Section shall be
binding on all the Holders of Securities of such series and any coupons
appertaining thereto, whether or not present or represented at the meeting.

     Notwithstanding the foregoing provisions of this Section 1504, if any
                                                      ------------        
action is to be taken at a meeting of Holders of Securities of any series with
respect to any request, demand,

                                       80
<PAGE>
 
authorization, direction, notice, consent, waiver or other action which this
Indenture expressly provides may be made, given or taken by the Holders of a
specified percentage in principal amount of all Outstanding Securities affected
thereby, or of the Holders of such series and one or more additional series;

          a.  there shall be no minimum quorum requirement for such meeting; and

          b.  the principal amount of the Outstanding Securities of such series
     which vote in favor of such request, demand, authorization, direction,
     notice, consent, waiver or other action shall be taken into account in
     determining whether such request, demand, authorization, direction, notice,
     consent, waiver or other action has been made, given or taken under this
     Indenture.

      SECTION 1505. Determination of Voting Rights; Conduct and Adjournment of
                    ----------------------------------------------------------
Meetings.
- -------- 

          (1)  Notwithstanding any provisions of this Indenture, the Trustee may
     make such reasonable regulations as it may deem advisable for any meeting
     of Holders of Securities of a series in regard to proof of the holding of
     Securities of such series and of the appointment of proxies and in regard
     to the appointment and duties of inspectors of votes, the submission and
     examination of proxies, certificates and other evidence of the right to
     vote, and such other matters concerning the conduct of the meeting as it
     deems appropriate. Except as otherwise permitted or required by any such
     regulations, the holding of Securities shall be proved in the manner
     specified in Section 104 and the appointment of any proxy shall be proved
                  -----------                                                 
     in the manner specified in Section 104 or by having the signature of the
                                -----------                                  
     Person executing the proxy witnessed or guaranteed by any trust company,
     bank or banker authorized by Section 104 to certify to the holding of
                                  -----------                             
     Bearer Securities. Such regulations may provide that written instruments
     appointing proxies, regular on their face, may be presumed valid and
     genuine without the proof specified in Section 104 or other proof.
                                            -----------                

          (2)  The Trustee shall, by an instrument in writing appoint a
     temporary chairman of the meeting, unless the meeting has been called by
     the Company or by Holders of Securities as provided in Section 1502(b), in
     which case the Company or the Holders of Securities of or within the series
     calling the meeting, as the case may be, shall in like manner appoint a
     temporary chairman. A permanent chairman and a permanent secretary of the
     meeting shall be elected by vote of the Persons entitled to vote a majority
     in principal amount of the Outstanding Securities of such series
     represented at the meeting.

          (3)  At any meeting each Holder of a Security of such series or proxy
     shall be entitled to one (1) vote for each $1,000 principal amount of the
     Outstanding Securities of such series held or represented by such Holder;
     provided, however, that no vote shall be cast or counted at any meeting in
     --------  -------                                                         
     respect of any Security challenged as not Outstanding and ruled by the
     chairman of the meeting to be not Outstanding. The chairman of the meeting
     shall have no right to vote, except as a Holder of a Security of such
     series or proxy.

                                       81
<PAGE>
 
          (4) Any meeting of Holders of Securities of any series duly called
     pursuant to Section 1502 at which a quorum is present may be adjourned from
                 ------------                                                   
     time to time by Persons entitled to vote a majority in principal amount of
     the Outstanding Securities of such series represented at the meeting, and
     the meeting may be held as so adjourned without further notice.

     SECTION 1506. Counting Votes and Recording Action of Meetings. The vote on
                   -----------------------------------------------             
any resolution submitted to any meeting of Holders of Securities of any series
shall be by written ballots on which shall be subscribed the signatures of the
Holders of Securities of such series or of their representatives by proxy and
the principal amounts and series numbers of the Outstanding Securities of such
series held or represented by them. The permanent chairman of the meeting shall
appoint two (2) inspectors of votes who shall count all votes cast at the
meeting for or against any resolution and who shall make and file with the
secretary of the meeting their verified written reports in duplicate of all
votes cast at the meeting. A record, at least in duplicate, of the proceedings
of each meeting of Holders of Securities of any series shall be prepared by the
secretary of the meeting and there shall be attached to such record the original
reports of the inspectors of votes on any vote by ballot taken thereat and
affidavits by one or more persons having knowledge of the fact, setting forth a
copy of the notice of the meeting and showing that such notice was given as
provided in Section 1502 and, if applicable, Section 1504. Each copy shall be
            ------------                     ------------                    
signed and verified by the affidavits of the permanent chairman and secretary of
the meeting and one (1) such copy shall be delivered to the Company and another
to the Trustee to be preserved by the Trustee, the latter to have attached
thereto the ballots voted at the meeting. Any record so signed and verified
shall be conclusive evidence of the matters therein stated.

     SECTION 1507. Evidence of Action Taken by Holders. Any request, demand,
                   -----------------------------------                      
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by a specified percentage in principal
amount of the Holders of any or all series may be embodied in and evidenced by
one or more instruments of substantially similar tenor signed by such specified
percentage of Holders in person or by agent duly appointed in writing; and,
except as otherwise expressly provided herein, such action shall become
effective when such instrument or instruments are delivered to the Trustee.
Proof of execution of any instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Indenture and (subject to Article
                                                                      -------
Six) conclusive in favor of the Trustee and the Company, if made in the manner
- ---                                                                           
provided in this Article.

     SECTION 1508. Proof of Execution of Instruments. Subject to Article Six,
                   ---------------------------------             ----------- 
the execution of any instrument by a Holder or his agent or proxy may be proved
in accordance with such reasonable rules and regulations as may be prescribed by
the Trustee or in such manner as shall be satisfactory to the Trustee.

                                       82
<PAGE>
 
                                ARTICLE SIXTEEN
                          SUBORDINATION OF SECURITIES

     SECTION 1601.  Securities Subordinated to Senior Indebtedness. The Company
                    ----------------------------------------------      
covenants and agrees, and each Holder of Securities, by his/her/its acceptance
thereof, likewise covenants and agrees, that the indebtedness represented by the
Securities and the payment of any and all amounts payable in respect of each and
all of the Securities is hereby expressly subordinated, to the extent and in the
manner hereinafter set forth, in right of payment to the prior payment in full
of Senior Indebtedness, whether outstanding on the date of this Indenture or
thereafter incurred, assumed or guaranteed.

     In the event (a) of any distribution of assets of the Company upon any
dissolution, winding up, liquidation or reorganization of the Company whether in
a bankruptcy, insolvency, reorganization or receivership proceeding or upon an
assignment for the benefit of creditors or any other marshalling of the assets
and liabilities of the Company or otherwise, except a distribution in connection
with a merger or consolidation or a conveyance or transfer of all or
substantially all of the properties of the Company which complies with the
requirements of Article Eight, or (b) that a default shall have occurred and be
                -------------                                                  
continuing with respect to the payment of any amount payable in respect of any
Senior Indebtedness, or (c) that the principal of the Securities of any Series
shall have been declared due and payable pursuant to Section 502 and such
                                                     -----------         
declaration shall not have been rescinded and annulled as provided in Section
                                                                      -------
502, then:
- ---       

     (1)  in a circumstance described in the foregoing clause (a) or (b) the
Holders of all Senior Indebtedness, and in the circumstance described in the
foregoing clause (c) the Holders of all Senior Indebtedness outstanding at the
time the principal of such Securities (or in the case of Original Issue Discount
Securities, such portion of the principal amount) shall have been so declared
due and payable, shall first be entitled to receive payment of the full amount
due thereon, or provision shall be made for such payment in money or money's
worth, before the Holders of any of the Securities are entitled to receive any
payment in respect of the indebtedness evidenced by the Securities;

     (2)  any payment by, or distribution of assets of, the Company of any kind
or character, whether in cash, property or securities (other than securities of
the Company as reorganized or readjusted or securities of the Company or any
other corporation provided for by a plan of reorganization or readjustment the
payment of which is subordinate, at least to the extent provided in this Article
with respect to the Securities, to the payment of all Senior Indebtedness,
provided that the rights of the holders of the Senior Indebtedness are not
altered by such reorganization or readjustment), to which the Holders of any of
the Securities would be entitled except for the provisions of this Article shall
be paid or delivered by the person making such payment or distribution, whether
a trustee in bankruptcy, a receiver or liquidating trustee or otherwise,
directly to the holders of such Senior Indebtedness or their representative or
representatives or to the trustee or trustees under any indenture under which
any instrument evidencing any of such Senior Indebtedness may have been issued,
ratably according to the aggregate amounts remaining unpaid on account of such
Senior Indebtedness held or represented by each, to the extent necessary to make
payment in full of all Senior Indebtedness remaining unpaid after giving effect
to any concurrent 

                                       83
<PAGE>
 
payment or distribution (or provision therefor) to the holders of such Senior
Indebtedness, before any payment or distribution is made to the Holders of the
indebtedness evidenced by the Securities under this Indenture; and

     (3)  in the event that, notwithstanding the foregoing, any payment by, or
distribution of assets of, the Company or any kind of character, whether in
cash, property or securities (other than securities of the Company as
reorganized or readjusted or securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment the payment of which is
subordinate, at least to the extent provided in this Article with respect to the
Securities, to the payment of all Senior Indebtedness, provided that the rights
of the holders of Senior Indebtedness are not altered by such reorganization or
readjustment), shall be received by the Holders of any of the Securities before
all Senior Indebtedness is paid in full, such payment or distribution shall be
paid over to the holders of such Senior Indebtedness or their representative or
representatives or to the trustee or trustees under any indenture under which
any instruments evidencing any of such Senior Indebtedness may have been issued,
ratably as aforesaid, for application to the payment of all Senior Indebtedness
remaining unpaid until all such Senior Indebtedness shall have been paid in
full, after giving effect to any concurrent payment or distribution (or
provision therefor) to the holders of such Senior Indebtedness.

     SECTION 1602.  Subrogation. Subject to the payment in full of all Senior
                    ------------                    
Indebtedness to which the indebtedness evidenced by the Securities is in the
circumstances subordinated as provided in Section 1601, the Holders of the
                                          ------------   
Securities shall be subrogated to the rights of the holders of such Senior
Indebtedness to receive payments or distributions of cash, property or
securities of the Company applicable to such Senior Indebtedness until all
amounts owing on the Securities shall be paid in full, and, as between the
Company, its creditors other than holders of such Senior Indebtedness, and the
Holders of the Securities, no such payment or distribution made to the holders
of such Senior Indebtedness by virtue of this Article which otherwise would have
been made to the Holders of the Securities shall be deemed to be a payment by
the Company on account of such Senior Indebtedness, it being understood that the
provisions of this Article are and are intended solely for the purpose of
defining the relative rights of the Holders of the Securities, on the one hand,
and the holders of Senior Indebtedness.

     SECTION 1603.  Obligation of the Company Unconditional. Nothing contained
                    ---------------------------------------          
in this Article or elsewhere in this Indenture or in the Securities is intended
to or shall impair, as between the Company, its creditors other than the holders
of Senior Indebtedness, and the Holders of the Securities, the obligation of the
Company, which is absolute and unconditional, to pay to the Holders of the
Securities the principal of and interest on and any additional amounts owing in
respect of the Securities as and when the same shall become due and payable in
accordance with their terms, or is intended to or shall affect the relative
rights of the Holders of the Securities and creditors of the Company other than
the holders of Senior Indebtedness nor shall anything herein or therein prevent
the Trustee or the Holder of any Security from exercising all remedies otherwise
permitted by applicable law upon default under this Indenture, subject to the
rights, if any, under this Article of the holders of Senior Indebtedness in
respect of cash, property or securities of the Company received upon the
exercise of any such remedy. 

                                       84
<PAGE>
 
     Upon any payment or distribution of assets of the Company referred to in
this Article, the Trustee and the Holders of the Securities shall be entitled to
rely upon any order or decree made by any court of competent jurisdiction in
which any such dissolution, winding up, liquidation or reorganization proceeding
affecting the affairs of the Company is pending or upon a certificate of the
trustee in bankruptcy, receiver, assignee for the benefit of creditors,
liquidating trustee or agent or other person making any payment or distribution,
delivered to the Trustee or to the Holders of the Securities, for the purpose of
ascertaining the persons entitled to participate in such payment or
distribution, the holders of the Senior Indebtedness and other indebtedness of
the Company, the amount thereof or payable thereon, the amount paid or
distributed thereon and all other facts pertinent thereto or to this Article.

     SECTION 1604.  Payments on Securities Permitted. Nothing contained in this
                    --------------------------------                       
Article or elsewhere in this Indenture, or in any of the Securities, shall
affect the obligation of the Company to make, or prevent the Company from
making, payment of the principal of or interest on or any additional amounts
owing in respect of the Securities in accordance with the provisions hereof and
thereof, except as otherwise provided in this Article.

     SECTION 1605.  Effectuation of Subordination by Trustee. Each Holder of
                    ----------------------------------------              
Securities, by his acceptance thereof, authorizes and directs the Trustee in his
behalf to take such action as may be necessary or appropriate to effectuate the
subordination provided in this Article and appoints the Trustee his attorney-in-
fact for any and all such purposes.

     SECTION 1606.  Knowledge of Trustee. Notwithstanding the provisions of this
                    --------------------                                 
Article or any other provisions of this Indenture, the Trustee shall not be
deemed to owe any fiduciary duty to the holders of Senior Indebtedness and shall
not be charged with knowledge of the existence of any facts which would prohibit
the making of any payment of moneys to or by the Trustee, or the taking of any
other action by the Trustee, unless and until the Trustee shall have received
written notice thereof from the Company, any Holder of Securities, any paying or
conversion agent of the Company or the holder or representative of any class of
Senior Indebtedness; provided, however, that if the Trustee shall not have
received the notice provided for in this Section at least three (3) 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 or interest on, or additional amounts owing in respect of, any
Security) then, anything herein contained to the contrary notwithstanding, the
Trustee shall have all 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 during or
after such three (3) Business Day period.

     SECTION 1607.  Trustee May Hold Senior Indebtedness. The Trustee in its
                    ------------------------------------                 
individual capacity shall be entitled to all the rights set forth in this
Article with respect to any Senior Indebtedness at the time held by it, to the
same extent as any other holder of Senior Indebtedness, and nothing in Section
313 of the Trust Indenture Act or elsewhere in this Indenture shall deprive the
Trustee of any of its rights as such holder.

                                       85
<PAGE>
 
     Nothing in this Article shall subordinate any claims of, or payments to,
the Trustee (under or pursuant to Section 606) to Senior Indebtedness.
                                  -----------                         

     SECTION 1608.  Rights of Holders of Senior Indebtedness Not Impaired. No
                    -----------------------------------------------------  
right of any present or future holder of any Senior Indebtedness to enforce the
subordination herein shall at any time or in any way be prejudiced or impaired
by any act or failure to act on the part of the Company or by any non-compliance
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.

                                       86
<PAGE>
 
     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.

                                   HOMESTEAD VILLAGE INCORPORATED



                                   By:____________________________________

                                   Name:__________________________________
                                   Title:_________________________________


[SEAL]

Attest:

______________________________ 

Secretary


                                   STATE STREET BANK AND TRUST COMPANY,
                                   As Trustee


                                   By:____________________________________

                                   Name:__________________________________
[SEAL]                             Title:_________________________________

Attest:

______________________________ 

Secretary

                                       87
<PAGE>
 
STATE OF NEW MEXICO            )
                               ) ss:
COUNTY OF__________________    )

     On the _____ day of ________________, 1998, before me personally came
______________________, to me known, who, being by me duly sworn, did depose and
say that he resides at ____________________________________________, that he is
a ____________________ of Homestead Village Incorporated, one of the entities
described in and which executed the foregoing instrument; that he knows the seal
of such entity; that the seal affixed to such instrument is such seal; that it
was so affixed by authority of the Board of Directors of such entity, and that
he signed his name thereto by like authority.

[Notarial Seal]

                                   ____________________________________
                                   Notary Public
                                   Commission Expires


[STATE OF MASSACHUSETTS])
                                 ) ss:
[COUNTY OF SUFFOLK]  )

     On the _____ day of _______________, 1998, before me personally came
____________________, to me known, who, being by me duly sworn, did depose and
say that _____ resides at ________________________________________, that _____
is a ____________________ of State Street Bank and Trust Company, one of the
entities described in and which executed the foregoing instrument; that _____
knows the seal of such entity; that the seal affixed to such instrument is such
seal; that it was so affixed by authority of the Board of Directors of such
entity, and that _____ signed _____ name thereto by like authority.

[Notarial Seal]

                                   ____________________________________
                                   Notary Public
                                   Commission Expires

                                       88
<PAGE>
 
                                   EXHIBIT A

                            FORMS OF CERTIFICATION


                                  EXHIBIT A-1

              FORM OF CERTIFICATE TO BE GIVEN BY PERSON ENTITLED
               TO RECEIVE BEARER SECURITY OR TO OBTAIN INTEREST
                      PAYABLE PRIOR TO THE EXCHANGE DATE

                                  CERTIFICATE

[INSERT TITLE OR SUFFICIENT DESCRIPTION OF SECURITIES TO BE DELIVERED]

     This is to certify that, as of the date hereof, and except as set forth
below, the above-captioned Securities held by you for our account (i) are owned
by person(s) which are not citizens or residents of the United States, domestic
partnerships, domestic corporations or any estate or trust the income of which
is subject to United States federal income taxation regardless of its source
("United States person(s)"), (ii) are owned by United States person(s) which are
(a) foreign branches of United States financial institutions (financial
institutions, as defined in United States Treasury Regulations Section 1.165-
12(c)(1)(v) are herein referred to as "financial institutions") purchasing for
their own account or for resale, or (b) United States person(s) who acquired the
Securities through foreign branches of United States financial institutions and
who hold the Securities through such United States financial institutions on the
date hereof (and in either case (a) or (b), each such United States financial
institution hereby agrees, on its own behalf or through its agent, that you may
advise Homestead Village Incorporated or its agent that such financial
institution will provide a certificate within a reasonable time stating that it
agrees to comply with the requirements of Section 165(j)(3)(A), (B) or (C) of
the United States Internal Revenue Code of 1986, as amended, and the regulations
thereunder), or (iii) are owned by a financial institution for purposes of
resale during the restricted period (as defined in United States Treasury
Regulations Section 1.163-5(c)(2)(i)(D)(7)), and, such financial institution
described in clause (iii) above (whether or not also described in clause (i) or
(ii)), certifies that it has not acquired the Securities for purposes of resale
directly or indirectly to a United States person or to a person within the
United States or its possessions.

     As used herein, "United States" means the United States of America
(including the States and the District of Columbia); and its "possessions"
include Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island
and the Northern Mariana Islands.

     We undertake to advise you promptly by tested telex on or prior to the date
on which you intend to submit your certification relating to the above-captioned
Securities held by you for our account in accordance with your Operating
Procedures if any applicable statement herein is not correct on such date, and
in the absence of any such notification it may be assumed that this
certification applies as of such date.
<PAGE>
 
     This certificate excepts and does not relate to [U.S.$] _______________ of
such interest in the above-captioned Securities in respect of which we are not
able to certify and as to which we understand an exchange for an interest in a
Permanent Global Security or an exchange for and delivery of definitive
Securities (or, if relevant, collection of any interest) cannot be made until we
do so certify.

     We understand that this certificate may be required in connection with
certain tax legislation in the United States. If administrative or legal
proceedings are commenced or threatened in connection with which this
certificate is or would be relevant, we irrevocably authorize you to produce
this certificate or a copy thereof to any interested party in such proceedings.


Dated: __________ ___, 19___
[To be dated no earlier than the 15th day prior
to the earlier of (i) the Exchange Date or
(ii) the relevant Interest Payment Date occurring
prior to the Exchange Date, as applicable]

                                        [Name of Person Making Certification]



                                        ______________________________________
                                        (Authorized Signatory)
                                        Name:
                                        Title:
<PAGE>
 
                                  EXHIBIT A-2

                 FORM OF CERTIFICATE TO BE GIVEN BY EUROCLEAR
               AND CEDEL S.A. IN CONNECTION WITH THE EXCHANGE OF
                A PORTION OF A TEMPORARY GLOBAL SECURITY OR TO
              OBTAIN INTEREST PAYABLE PRIOR TO THE EXCHANGE DATE

                                  CERTIFICATE

[INSERT TITLE OR SUFFICIENT DESCRIPTION OF SECURITIES TO BE DELIVERED]

     This is to certify that, based solely on written certifications that we
have received in writing, by tested telex or by electronic transmission from
each of the persons appearing in our records as persons entitled to a portion of
the principal amount set forth below (our "Member Organizations") substantially
in the form attached hereto, as of the date hereof, [U.S.$] _______________
principal amount of the above-captioned Securities (i) is owned by person(s)
which are not citizens or residents of the United States, domestic partnerships,
domestic corporations or any estate or trust the income of which is subject to
United States Federal income taxation regardless of its source ("United States
person(s)"), (ii) is owned by United States persons(s) which are (a) foreign
branches of United States financial institutions (financial institutions, as
defined in United States Treasury Regulations Section 1.165-12(c)(1)(v) are
herein referred to as "financial institutions") purchasing for their own account
or for resale, or (b) United States person(s) who acquired the Securities
through foreign branches of United States financial institutions and who hold
the Securities through such United States financial institutions on the date
hereof (and in either case (a) or (b), each such financial institution has
agreed, on its own behalf or through its agent, that we may advise Homestead
Village Incorporated or its agent that such financial institution will provide a
certificate within a reasonable time stating that it agrees to comply with the
requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of
1986, as amended, and the regulations thereunder), or (iii) is owned by a
financial institution for purposes of resale during the restricted period (as
defined in United States Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7)),
and that such financial institutions described in clause (iii) above (whether or
not also described in clause (i) or (ii)) have certified that they have not
acquired the Securities for purposes of resale directly or indirectly to a
United States person or to a person within the United States or its possessions.

     As used herein, "United States" means the United States of America
(including the States and the District of Columbia); and its "possessions"
include Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island
and the Northern Mariana Islands.

     We further certify that (i) we are not making available herewith for
exchange (or, if relevant, collection of any interest) any portion of the
temporary global Security representing the above-captioned Securities excepted
in the above-referenced certificates of Member Organizations and (ii) as of the
date hereof we have not received any notification from any of our Member
Organizations to the effect that the statements made by such Member
Organizations with respect to any portion of
<PAGE>
 
the part submitted herewith for exchange (or, if relevant, collection of any
interest) are no longer true and cannot be relied on as of the date hereof.

     We understand that this certification is required in connection with
certain tax legislation in the United States. If administrative or legal
proceedings are commenced or threatened in connection with which this
certificate is or would be relevant, we irrevocably authorize you to produce
this certificate or a copy thereof to any interested party in such proceedings.


Dated: __________ ___, 19___
[To be dated no earlier than the earlier of
the Exchange Date or the relevant Interest
Payment Date occurring prior to the Exchange
Date, as applicable]

                                   [Morgan Guaranty Trust Company of New York, 
                                   Brussels Office,] as Operator of the 
                                   Euroclear System [Cedel S.A.]


                                   By:______________________________________

<PAGE>
 
                                                                     Exhibit 5.1

                        Mayer, Brown & Platt letterhead




                               November 10, 1998


Homestead Village Incorporated
2100 RiverEdge Parkway
Atlanta, Georgia 30328

          Re:  Registration Statement on Form S-3

Ladies and Gentlemen:

     We have acted as counsel to Homestead Village Incorporated, a Maryland
corporation ("Homestead Village"), in connection with the proposed sale of the
following securities (the "Securities") of Homestead Village, as set forth in
the Form S-3 Registration Statement filed with the Securities and Exchange
Commission on the date hereof (the "Registration Statement"): (i) one or more
series of debt securities (the "Debt Securities"), which may be senior debt
securities or subordinated debt securities, (ii) one or more series of preferred
stock, par value $.01 per share (the "Preferred Shares"), (iii) common stock,
par value $.01 per share (the "Common Shares"), and (iv) one or more series of
warrants to purchase Debt Securities, Preferred Shares or Common Shares (the
"Securities Warrants").

     Each series of the Debt Securities will be issued under an Indenture (an
"Indenture") to be entered into between Homestead Village and State Street Bank
and Trust Company, as Trustee. Each series of the Preferred Shares will be
issued under Homestead Village's charter, as amended and supplemented (the
"Charter"), and Articles Supplementary to be filed with the Maryland State
Department of Assessments and Taxation (the "Maryland SDAT").  The Common Shares
will be issued under the Charter.  The Securities Warrants will be issued under
one or more warrant agreements (each, a "Warrant Agreement"), each to be entered
into between Homestead Village and a financial institution identified therein as
a warrant agent (each, a "Warrant Agent").  Certain terms of the Securities to
be issued by Homestead Village from time to time will be approved by the Board
of Directors of Homestead Village or a committee thereof as part of the
corporate action taken and to be taken in connection with the authorization of
the issuance of the Securities (the "Corporate Proceedings").
<PAGE>
 
Page 2


     As counsel to Homestead Village, we have examined originals or copies
certified to our satisfaction of Homestead Village's Charter, Homestead
Village's Bylaws, resolutions of Homestead Village's Board of Directors and such
records, certificates and other documents and such questions of law as we
considered necessary or appropriate for the purpose of this opinion.  As to
certain facts material to our opinion, we have relied, to the extent we deem
such reliance proper, upon certificates of public officials and officers of
Homestead Village.  In rendering such opinion, we have assumed the genuineness
of all signatures, the authenticity of all documents submitted to us as
originals and the conformity to authentic original documents of all documents
submitted to us as copies.

     Based upon and subject to the foregoing and to the assumptions, conditions
and limitations set forth herein, we are of the opinion that:

     (1)  when the Registration Statement has become effective under the
Securities Act of 1933, as amended (the "Act"), and upon the completion of the
Corporate Proceedings relating to a series of the Debt Securities, the due
execution, authentication, issuance and delivery of the Debt Securities of such
series, and the due execution and delivery of the Indenture, the Debt Securities
of such series, when sold in exchange for the consideration set forth in the
Prospectus contained in the Registration Statement and any Prospectus Supplement
relating to such series of the Debt Securities, will be duly authorized and will
be binding obligations of Homestead Village enforceable in accordance with their
terms and entitled to the benefits of the Indenture, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally and subject to general
principles of equity;

     (2)  when the Registration Statement has become effective under the Act and
upon the completion of the Corporate Proceedings relating to a series of the
Preferred Shares, the execution, delivery and filing with, and recording by, the
Maryland SDAT of Articles Supplementary relating to such series of the Preferred
Shares and the due execution, countersignature and delivery of certificates
representing the shares of the Preferred Shares of such series, the Preferred
Shares of such series, when sold in exchange for the consideration set forth in
the Prospectus and any Prospectus Supplement relating to such series of the
Preferred Shares, will be duly authorized, legally issued, fully paid and
nonassessable;

     (3)  when the Registration Statement has become effective under the Act and
upon the completion of the Corporate Proceedings relating to the Common Shares
and the due execution, countersignature and delivery of certificates
representing the Common Shares, the Common Shares, when sold in exchange for the
consideration set forth in the Prospectus and any Prospectus Supplement relating
to the Common Shares, will be duly authorized, legally issued, fully paid and
nonassessable; and
<PAGE>
 
Page 3


     (4)  when the Registration Statement has become effective under the Act and
when a series of the Securities Warrants has been duly established pursuant to
the relevant Warrant Agreement and upon the completion of the Corporate
Proceedings relating to such series of the Securities Warrants and the due
execution, authentication, issuance and delivery of the Securities Warrants of
such series, the Securities Warrants of such series, when sold in exchange for
the consideration set forth in the Prospectus and any Prospectus Supplement
relating to such series of the Securities Warrants, will be duly authorized and
will be binding obligations of Homestead Village enforceable against Homestead
Village in accordance with their respective terms, except as such enforceability
may be limited by bankruptcy, insolvency, reorganization or similar laws
affecting creditors' rights generally and subject to general principles of
equity.

     To the extent that the obligations of Homestead Village under each Warrant
Agreement may be dependent upon such matters, we assume for purposes of this
opinion that the Warrant Agent will be duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization; that the
Warrant Agent will be duly qualified to engage in the activities contemplated by
the Warrant Agreement; that the Warrant Agreement will be duly authorized,
executed and delivered by the Warrant Agent and will constitute the legal, valid
and binding obligation of the Warrant Agent enforceable against the Warrant
Agent in accordance with its terms; that the Warrant Agent will be in
compliance, generally with respect to acting as a Warrant Agent under the
Warrant Agreement, with all applicable laws and regulations; and that the
Warrant Agent will have the requisite organizational and legal power and
authority to perform its obligations under the Warrant Agreement.

     We consent to the filing of this opinion as an exhibit to the Registration
Statement and to the reference to us under the caption "Validity of Offered
Securities."


                                             Very truly yours,



                                             MAYER, BROWN & PLATT

<PAGE>
 
                                                                    Exhibit 12.1

                         Homestead Village Incorporated
               Computation of Ratio of Earnings to Fixed Charges
                         (Dollar amounts in thousands)
<TABLE>
<CAPTION>
                                                                                           Six Months
                                                       Year Ended December 31,           Ended June 30,
- --------------------------------------------------------------------------------------------------------
                                               1993    1994    1995    1996     1997     1997     1998
                                               -----  ------  ------  -------  -------  -------  -------
<S>                                            <C>    <C>     <C>     <C>      <C>      <C>      <C>
Earnings                                       $ 409  $  974  $2,851  $ 3,082  $ 5,771  $ 3,618  $ 5,062
Add: Interest expense                            255   1,409   2,958    5,971    2,190        0    7,119
                                               -----  ------  ------  -------  -------  -------  -------
Earnings as adjusted                             664   2,383   5,809    9,053    7,961    3,618   12,181
                                               -----  ------  ------  -------  -------  -------  -------
Fixed charges:                         
    Interest expense                             255   1,409   2,958    5,971    2,190        0    7,119
    Capitalized interest                         427   1,039   2,143    4,365   69,747   52,450   13,697
                                               -----  ------  ------  -------  -------  -------  -------
          Total fixed charges                  $ 682  $2,448  $5,101  $10,336  $71,937  $52,450  $20,816
                                               -----  ------  ------  -------  -------  -------  -------
Ratio of earnings to fixed                                                                               
 charges (and ratio of earnings                                                                          
 to fixed charges and preferred        
 stock dividends)                               0.97    0.97    1.14     0.88     0.11     0.07     0.59
                                               -----  ------  ------  -------  -------  -------  ------- 
</TABLE> 

           Computation of Ratio of Earnings to Adjusted Fixed Charges
                         (Dollar amounts in thousands)
<TABLE>
<CAPTION>
                                                                                           Six Months
                                                       Year Ended December 31,           Ended June 30,
- --------------------------------------------------------------------------------------------------------
                                               1993    1994    1995    1996     1997     1997     1998
                                               -----  ------  ------  -------  -------  -------  -------
<S>                                            <C>    <C>     <C>     <C>      <C>      <C>      <C>    
Earnings as adjusted                           $ 664  $2,383  $5,809  $ 9,053  $ 7,961  $ 3,618  $12,181
                                               -----  ------  ------  -------  -------  -------  -------
Adjusted fixed charges:
    Interest expense                             255   1,409   2,958    5,971    2,190        0    7,119
    Capitalized interest                         427   1,039   2,143    4,365   69,747   52,450   13,697
                                               -----  ------  ------  -------  -------  -------  -------
        Total fixed charges                    $ 682  $2,448  $5,101  $10,336  $71,937  $52,450  $20,816
                                               -----  ------  ------  -------  -------  -------  -------
Less convertible mortgage
 premium/discount and financing costs:
    Premium/discount amortization                  0       0       0      121    8,547    9,872      743
    Financing costs amortization                   0       0       0    1,730   42,376   35,532    1,251
                                               -----  ------  ------  -------  -------  -------  -------
        Adjustments to fixed charges               0       0       0    1,850   50,923   45,404    1,994
                                               -----  ------  ------  -------  -------  -------  -------
Total adjusted fixed charges                   $ 682  $2,448  $5,101  $ 8,486  $21,014  $ 7,046  $18,822
 
Ratio of earnings to adjusted fixed charges                                                              
 (and ratio of earnings to adjusted fixed                                                                
 charges and preferred stock dividends)         0.97    0.97    1.14     1.07     0.38     0.51     0.65
                                               -----  ------  ------  -------  -------  -------  ------- 
</TABLE>

<PAGE>
 
                                                                    EXHIBIT 15.1
 
                                                                NOVEMBER 6, 1998
 
Homestead Village Incorporated:
 
We are aware that Homestead Village Incorporated has incorporated by reference
in this Registration Statement its Form 10-Q for the quarter ended March 31,
1998, which includes our report dated April 24, 1998, and its Form 10-Q for the
quarter ended June 30, 1998, which includes our report dated August 7, 1998,
covering the unaudited interim financial information contained therein.
Pursuant to Regulation C of the Securities Act of 1933, these reports are not
considered a part of the registration statement prepared or certified by our
firm or reports prepared or certified by our firm within the meaning of Section
7 or 11 of the Act.
 
                                          Very truly yours,
 
                                          Arthur Andersen LLP

<PAGE>
 
                                                                    EXHIBIT 23.2
 
                        CONSENT OF INDEPENDENT AUDITORS
 
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated January 30, 1998
included in Homestead Village Incorporated's Form 10-K for the year ended
December 31, 1997 and to all references to our firm included in this
registration statement.
 
                                          Arthur Andersen LLP
 
November 6, 1998

<PAGE>
 
                                                                    EXHIBIT 23.3
 
                        CONSENT OF INDEPENDENT AUDITORS
 
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Homestead Village
Incorporated for the registration of the offered securities and to the
incorporation by reference therein of our report dated February 24, 1997, with
respect to the financial statements of Homestead Village Incorporated as of and
for the year ended December 31, 1996 included in its Annual Report (Form 10-K)
for the year ended December 31, 1997, filed with the Securities and Exchange
Commission.
 
                                          Ernst & Young LLP
 
Dallas, Texas
November 5, 1998

<PAGE>
 
                                                                    EXHIBIT 23.4
 
                        CONSENT OF INDEPENDENT AUDITORS
 
The Board of Directors of
Homestead Village Incorporated:
 
We consent to the incorporation by reference in this Registration Statement on
Form S-3 of Homestead Village Incorporated of our report dated May 1, 1996,
relating to the combined statements of operations, owners' equity and cash
flows for the year ended December 31, 1995 of PTR-Homestead Village Group (the
predecessor to Homestead Village Incorporated) and to the reference to our firm
under the heading "Experts" in the Registration Statement.
 
                                          KPMG Peat Marwick LLP
 
Chicago, Illinois
November 9, 1998

<PAGE>
 
                                                                    Exhibit 25.1

                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549

                                   FORM T-1
                                   _________

                      STATEMENT OF ELIGIBILITY UNDER THE
                       TRUST INDENTURE ACT OF 1939 OF A
                   CORPORATION DESIGNATED TO ACT AS TRUSTEE

               Check if an Application to Determine Eligibility
                  of a Trustee Pursuant to Section 305(b)(2)

                      STATE STREET BANK AND TRUST COMPANY
              (Exact name of trustee as specified in its charter)

     Massachusetts                                04-1867445

     (Jurisdiction of                          (I.R.S. Employer
     incorporation or                          Identification No.)
organization if not a U.S.
      national bank)


     225 Franklin Street, Boston, Massachusetts             02110
       (Address of principal executive offices)          (Zip Code)

  Maureen Scannell Bateman, Esq. Executive Vice President and General Counsel
               225 Franklin Street, Boston, Massachusetts  02110
                                (617) 654-3253
           (Name, address and telephone number of agent for service)

                        HOMESTEAD VILLAGE INCORPORATED
              (Exact name of obligor as specified in its charter)


          MARYLAND                                74-2770966

(State or other jurisdiction                   (I.R.S. Employer
    of incorporation or                       Identification No.)
       organization)

                            2100 RIVEREDGE PARKWAY
                            ATLANTA, GEORGIA  30328
             (Address of principal executive offices)  (Zip Code)
                                        
                            SENIOR DEBT SECURITIES

                        (Title of indenture securities)
<PAGE>
 
                                    GENERAL

  ITEM 1.  GENERAL INFORMATION.

       FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:

       (A)  NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISORY AUTHORITY TO WHICH
  IT IS SUBJECT.

            Department of Banking and Insurance of The Commonwealth of
            Massachusetts, 100 Cambridge Street, Boston, Massachusetts.

            Board of Governors of the Federal Reserve System, Washington, D.C.,
            Federal Deposit Insurance   Corporation, Washington, D.C.
 
       (B)  WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.

            Trustee is authorized to exercise corporate trust powers.

  ITEM 2.  AFFILIATIONS WITH OBLIGOR.

       IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
  AFFILIATION.

            The obligor is not an affiliate of the trustee or of its parent,
            State Street Corporation.

            (See note on page 2.)

  ITEM 3. THROUGH ITEM 15.  NOT APPLICABLE.

  ITEM 16.  LIST OF EXHIBITS.

       LIST BELOW ALL EXHIBITS FILED AS PART OF THIS STATEMENT OF ELIGIBILITY.

       1.   A COPY OF THE ARTICLES OF ASSOCIATION OF THE TRUSTEE AS NOW IN
  EFFECT.

            A copy of the Articles of Association of the trustee, as now in
            effect, is on file with the Securities and Exchange Commission as
            Exhibit 1 to Amendment No. 1 to the Statement of Eligibility and
            Qualification of Trustee (Form T-1) filed with the Registration
            Statement of Morse Shoe, Inc. (File No. 22-17940) and is
            incorporated herein by reference thereto.
<PAGE>
 
       2.   A COPY OF THE CERTIFICATE OF AUTHORITY OF THE TRUSTEE TO COMMENCE
  BUSINESS, IF NOT CONTAINED IN THE   ARTICLES OF ASSOCIATION.

            A copy of a Statement from the Commissioner of Banks of
            Massachusetts that no certificate of authority for the trustee to
            commence business was necessary or issued is on file with the
            Securities and Exchange Commission as Exhibit 2 to Amendment No. 1
            to the Statement of Eligibility and Qualification of Trustee 
            (Form T-1) filed with the Registration Statement of Morse Shoe, Inc.
            (File No. 22-17940) and is incorporated herein by reference thereto.
 
       3.   A COPY OF THE AUTHORIZATION OF THE TRUSTEE TO EXERCISE CORPORATE
       TRUST POWERS, IF SUCH AUTHORIZATION IS NOT CONTAINED IN THE DOCUMENTS
       SPECIFIED IN PARAGRAPH (1) OR (2), ABOVE.

            A copy of the authorization of the trustee to exercise corporate
            trust powers is on file with the Securities and Exchange Commission
            as Exhibit 3 to Amendment No. 1 to the Statement of Eligibility and
            Qualification of Trustee (Form T-1) filed with the Registration
            Statement of Morse Shoe, Inc.(File No. 22-17940) and is incorporated
            herein by reference thereto.

       4.   A COPY OF THE EXISTING BY-LAWS OF THE TRUSTEE, OR INSTRUMENTS
  CORRESPONDING THERETO.

            A copy of the by-laws of the trustee, as now in effect, is on file
            with the Securities and Exchange Commission as Exhibit 4 to the
            Statement of Eligibility and Qualification of Trustee (Form T-1)
            filed with the Registration Statement of Eastern Edison Company
            (File No. 33-37823) and is incorporated herein by reference thereto.

       5.   A COPY OF EACH INDENTURE REFERRED TO IN ITEM 4. IF THE OBLIGOR IS IN
  DEFAULT.

            Not applicable.

       6.   THE CONSENTS OF UNITED STATES INSTITUTIONAL TRUSTEES REQUIRED BY
  SECTION 321(B) OF THE ACT.

            The consent of the trustee required by Section 321(b) of the Act is
            annexed hereto as Exhibit 6 and made a part hereof.
<PAGE>
 
       7.   A COPY OF THE LATEST REPORT OF CONDITION OF THE TRUSTEE PUBLISHED
  PURSUANT TO LAW OR THE REQUIREMENTS OF ITS SUPERVISING OR EXAMINING AUTHORITY.

            A copy of the latest report of condition of the trustee published
            pursuant to law or the requirements of its supervising or examining
            authority is annexed hereto as Exhibit 7 and made a part hereof.


                                     NOTES

       In answering any item of this Statement of Eligibility which relates to
  matters peculiarly within the knowledge of the obligor or any underwriter for
  the obligor, the trustee has relied upon information furnished to it by the
  obligor and the underwriters, and the trustee disclaims responsibility for the
  accuracy or completeness of such information.

       The answer furnished to Item 2. of this statement will be amended, if
  necessary, to reflect any facts which differ from those stated and which would
  have been required to be stated if known at the date hereof.


                                   SIGNATURE

       Pursuant to the requirements of the Trust Indenture Act of 1939, as
  amended, the trustee, State Street Bank and Trust Company, a corporation
  organized and existing under the laws of The Commonwealth of Massachusetts,
  has duly caused this statement of eligibility to be signed on its behalf by
  the undersigned, thereunto duly authorized, all in the City of Boston and The
  Commonwealth of Massachusetts, on the OCTOBER 19, 1998.


                              STATE STREET BANK AND TRUST COMPANY


                              By:  /s/ Carolina D. Altomare          
                                   --------------------------------  
                              NAME  CAROLINA D. ALTOMARE
                              TITLE ASSISTANT VICE PRESIDENT
<PAGE>
 
                                   EXHIBIT 6


                            CONSENT OF THE TRUSTEE

       Pursuant to the requirements of Section 321(b) of the Trust Indenture Act
  of 1939, as amended, in connection with the proposed issuance by HOMESTEAD
  VILLAGE INCORPORATED. of its SENIOR DEBT SECURITIES,  we hereby consent that
  reports of examination by Federal, State, Territorial or District authorities
  may be furnished by such authorities to the Securities and Exchange Commission
  upon request therefor.

                              STATE STREET BANK AND TRUST COMPANY


                              By:  /s/ Carolina D. Altomare          
                                   -------------------------------   
                              NAME  CAROLINA D. ALTOMARE
                              TITLE ASSISTANT VICE PRESIDENT


  DATED:  OCTOBER 19, 1998
<PAGE>
 
                                   EXHIBIT 7

  Consolidated Report of Condition of State Street Bank and Trust Company,
  Massachusetts and foreign and domestic subsidiaries, a state banking
  institution organized and operating under the banking laws of this
  commonwealth and a member of the Federal Reserve System, at the close of
  business June 30, 1998, published in accordance with a call made by the
           -------------                                                 
  Federal Reserve Bank of this District pursuant to the provisions of the
  Federal Reserve Act and in accordance with a call made by the Commissioner of
  Banks under General Laws, Chapter 172, Section 22(a).

<TABLE>
<CAPTION>
 
                                                                                Thousands of
ASSETS                                                                          Dollars
<S>                                                                        <C> 
  Cash and balances due from depository institutions:
       Noninterest-bearing balances and currency and coin................   1,553,703
       Interest-bearing balances.........................................  12,440,716
  Securities.............................................................   9,436,138
  Federal funds sold and securities purchased
       under agreements to resell in domestic offices
       of the bank and its Edge subsidiary...............................   8,785,353
  Loans and lease financing receivables:
       Loans and leases, net of unearned income .........................   6,633,608
       Allowance for loan and lease losses...............................      92,999
       Allocated transfer risk reserve...................................           0
       Loans and leases, net of unearned income and allowances...........   6,540,609
  Assets held in trading accounts........................................  1, 267,679
  Premises and fixed assets..............................................     491,928
  Other real estate owned................................................         100
  Investments in unconsolidated subsidiaries.............................       1,278
  Customers' liability to this bank on acceptances outstanding...........      68,312
Intangible assets........................................................     231,294
Other assets.............................................................   1,667,282
                                                                           ----------
Total assets.............................................................  42,484,392
                                                                           ==========

  LIABILITIES

  Deposits:
       In domestic offices...............................................  12,553,371
            Noninterest-bearing .........................................  10,204,405
            Interest-bearing ............................................   2,348,966
       In foreign offices and Edge subsidiary............................  16,961,571
            Noninterest-bearing .........................................     154,792
            Interest-bearing ............................................  16,806,779
  Federal funds purchased and securities sold under
       agreements to repurchase in domestic offices of
       the bank and of its Edge subsidiary...............................   8,182,794
  Demand notes issued to the U.S. Treasury and Trading Liabilities.......           0
  Trading liabilities....................................................     883,096
  Other borrowed money...................................................     361,141
  Subordinated notes and debentures......................................           0
  Bank's liability on acceptances executed and outstanding...............      68,289
  Other liabilities......................................................   1,017,284
  Total liabilities......................................................  40,027,546
                                                                           ----------

  EQUITY CAPITAL
  Perpetual preferred stock and related
  surplus................................................................           0
  Common stock...........................................................      29,931
  Surplus................................................................     455,288
  Undivided profits and capital reserves/Net unrealized holding gains 
   (losses)..............................................................   1,964,924
  Net unrealized holding gains (losses) on available-for-sale securities.      15,557
  Cumulative foreign currency translation adjustments....................      (8,854)
  Total equity capital...................................................   2,456,846
                                                                           ----------
</TABLE> 
<PAGE>
 
<TABLE> 
  <S>                                                                      <C> 
  Total liabilities and equity capital...................................  42,484,392
                                                                           ----------
</TABLE> 

  I, Rex S. Schuette, Senior Vice President and Comptroller of the above named
  bank do hereby declare that this Report of Condition has been prepared in
  conformance with the instructions issued by the Board of Governors of the
  Federal Reserve System and is true to the best of my knowledge and belief.

                                      Rex S. Schuette


  We, the undersigned directors, attest to the correctness of this Report of
  Condition and declare that it has been examined by us and to the best of our
  knowledge and belief has been prepared in conformance with the instructions
  issued by the Board of Governors of the Federal Reserve System and is true and
  correct.

                                      David A. Spina
                                      Marshall N. Carter
                                      Truman S. Casner

<PAGE>
 
                                                                    Exhibit 25.2

                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                   FORM T-1

                                   ---------

                      STATEMENT OF ELIGIBILITY UNDER THE
                       TRUST INDENTURE ACT OF 1939 OF A
                   CORPORATION DESIGNATED TO ACT AS TRUSTEE

               Check if an Application to Determine Eligibility
                  of a Trustee Pursuant to Section 305(b)(2)

                      STATE STREET BANK AND TRUST COMPANY
              (Exact name of trustee as specified in its charter)


                 Massachusetts                   04-1867445

              (Jurisdiction of              (I.R.S. Employer
              incorporation or            Identification No.)
         organization if not a U.S.
                national bank)

           225 Franklin Street, Boston, Massachusetts           02110
            (Address of principal executive offices)          (Zip Code)

          Maureen Scannell Bateman, Esq. Executive Vice President and
                                General Counsel
               225 Franklin Street, Boston, Massachusetts 02110
                                (617) 654-3253
           (Name, address and telephone number of agent for service)

                        HOMESTEAD VILLAGE INCORPORATED
              (Exact name of obligor as specified in its charter)

                  MARYLAND                          74-2770966

        (State or other jurisdiction             (I.R.S. Employer
            of incorporation or                Identification No.)
               organization)

                            2100 RiverEdge Parkway
                            Atlanta, Georgia 30328
              (Address of principal executive offices) (Zip Code)

                         SUBORDINATED DEBT SECURITIES

                        (Title of indenture securities)
<PAGE>
 
                                    GENERAL

Item 1. General Information.

         Furnish the following information as to the trustee:

         (a)  Name and address of each examining or supervisory
authority to which it is subject.

              Department of Banking and Insurance of The Commonwealth of
              Massachusetts, 100 Cambridge Street, Boston, Massachusetts.

              Board of Governors of the Federal Reserve System,  Washington,
              D.C., Federal Deposit Insurance Corporation, Washington, D.C.

         (b)  Whether it is authorized to exercise corporate
trust powers.

              Trustee is authorized to exercise corporate trust powers.

Item 2. Affiliations with Obligor.

         If the Obligor is an affiliate of the trustee, describe each such
affiliation.

              The obligor is not an affiliate of the trustee or of its parent,
              State Street Corporation.

              (See note on page 2.)

Item 3. through Item 15. Not applicable.

Item 16. List of Exhibits.

         List below all exhibits filed as part of this statement of eligibility.

         1.   A copy of the articles of association of the
trustee as now in effect.

              A copy of the Articles of Association of the
              trustee, as now in effect, is on file with the
              Securities and Exchange Commission as Exhibit 1 to
              Amendment No. 1 to the Statement of Eligibility
              and Qualification of Trustee (Form T-1) filed with
              the Registration Statement of Morse Shoe, Inc.
              (File No. 22-17940) and is incorporated herein by
              reference thereto.
<PAGE>
 
         2.   A copy of the certificate of authority of the trustee to commence
business, if not contained in the articles of association.

              A copy of a Statement from the Commissioner of Banks of
              Massachusetts that no certificate of authority for the trustee to
              commence business was necessary or issued is on file with the
              Securities and Exchange Commission as Exhibit 2 to Amendment No. 1
              to the Statement of Eligibility and Qualification of Trustee (Form
              T-1) filed with the Registration Statement of Morse Shoe, Inc.
              (File No. 22-17940) and is incorporated herein by reference
              thereto.

         3. A copy of the authorization of the trustee to exercise corporate
trust powers, if such authorization is not contained in the documents specified
in paragraph (1) or (2), above.

              A copy of the authorization of the trustee to exercise corporate
              trust powers is on file with the Securities and Exchange
              Commission as Exhibit 3 to Amendment No. 1 to the Statement of
              Eligibility and Qualification of Trustee (Form T-1) filed with the
              Registration Statement of Morse Shoe, Inc.(File No. 22-17940) and
              is incorporated herein by reference thereto.

         4.   A copy of the existing by-laws of the trustee, or instruments
corresponding thereto.

              A copy of the by-laws of the trustee, as now in effect, is on file
              with the Securities and Exchange Commission as Exhibit 4 to the
              Statement of Eligibility and Qualification of Trustee (Form T-1)
              filed with the Registration Statement of Eastern Edison Company
              (File No. 33-37823) and is incorporated herein by reference
              thereto.

         5.   A copy of each indenture referred to in Item 4. if the obligor is
in default.

              Not applicable.

         6.   The consents of United States institutional trustees required by
Section 321(b) of the Act.

              The consent of the trustee required by Section 321(b) of the Act
              is annexed hereto as Exhibit 6 and made a part hereof.
<PAGE>
 
         7.   A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or examining authority.

              A copy of the latest report of condition of the trustee published
              pursuant to law or the requirements of its supervising or
              examining authority is annexed hereto as Exhibit 7 and made a part
              hereof.

                                     NOTES

         In answering any item of this Statement of Eligibility which relates to
matters peculiarly within the knowledge of the obligor or any underwriter for
the obligor, the trustee has relied upon information furnished to it by the
obligor and the underwriters, and the trustee disclaims responsibility for the
accuracy or completeness of such information.

         The answer furnished to Item 2. of this statement will be amended, if
necessary, to reflect any facts which differ from those stated and which would
have been required to be stated if known at the date hereof.

                                   SIGNATURE

         Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, State Street Bank and Trust Company, a corporation
organized and existing under the laws of The Commonwealth of Massachusetts, has
duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of Boston and The
Commonwealth of Massachusetts, on the October 19, 1998.


                                            STATE STREET BANK AND TRUST COMPANY


                                            By: /s/ Carolina D. Altomare
                                                --------------------------------
                                            NAME  Carolina D. Altomare
                                            TITLE   Assistant Vice President
<PAGE>
 
                                   EXHIBIT 6

                            CONSENT OF THE TRUSTEE

         Pursuant to the requirements of Section 321(b) of the Trust Indenture
Act of 1939, as amended, in connection with the proposed issuance by Homestead
Village Incorporated. of its Subordinated Debt Securities, we hereby consent
that reports of examination by Federal, State, Territorial or District
authorities may be furnished by such authorities to the Securities and Exchange
Commission upon request therefor.

                                            STATE STREET BANK AND TRUST COMPANY


                                            By: /s/ Carolina D. Altomare
                                            ------------------------------------
                                            NAME  Carolina D. Altomare
                                            TITLE   Assistant Vice President


Dated:  October 19, 1998
<PAGE>

                                                                       EXHIBIT 7

  Consolidated Report of Condition of State Street Bank and Trust Company,
  Massachusetts and foreign and domestic subsidiaries, a state banking
  institution organized and operating under the banking laws of this
  commonwealth and a member of the Federal Reserve System, at the close of
  business June 30, 1998, published in accordance with a call made by the
           -------------                                                 
  Federal Reserve Bank of this District pursuant to the provisions of the
  Federal Reserve Act and in accordance with a call made by the Commissioner of
  Banks under General Laws, Chapter 172, Section 22(a).

<TABLE>
<CAPTION>
 
                                                                                Thousands of
ASSETS                                                                          Dollars
<S>                                                                        <C> 
Cash and balances due from depository institutions:
       Noninterest-bearing balances and currency and coin................   1,553,703
       Interest-bearing balances.........................................  12,440,716
Securities...............................................................   9,436,138
Federal funds sold and securities purchased
       under agreements to resell in domestic offices
       of the bank and its Edge subsidiary...............................   8,785,353
Loans and lease financing receivables:
       Loans and leases, net of unearned income .........................   6,633,608
       Allowance for loan and lease losses...............................      92,999
       Allocated transfer risk reserve...................................           0
       Loans and leases, net of unearned income and allowances...........   6,540,609
Assets held in trading accounts..........................................   1,267,679
Premises and fixed assets................................................     491,928
Other real estate owned..................................................         100
Investments in unconsolidated subsidiaries...............................       1,278
Customers' liability to this bank on acceptances outstanding.............      68,312
Intangible assets........................................................     231,294
Other assets.............................................................   1,667,282
                                                                           ----------
Total assets.............................................................  42,484,392
                                                                           ==========

LIABILITIES

Deposits:
       In domestic offices...............................................  12,553,371
            Noninterest-bearing .........................................  10,204,405
            Interest-bearing ............................................   2,348,966
       In foreign offices and Edge subsidiary............................  16,961,571
            Noninterest-bearing .........................................     154,792
            Interest-bearing ............................................  16,806,779
Federal funds purchased and securities sold under
       agreements to repurchase in domestic offices of
       the bank and of its Edge subsidiary...............................   8,182,794
Demand notes issued to the U.S. Treasury and Trading Liabilities.........           0
Trading liabilities......................................................     883,096

Other borrowed money.....................................................     361,141
Subordinated notes and debentures........................................           0
Bank's liability on acceptances executed and outstanding.................      68,289
Other liabilities........................................................   1,017,284

Total liabilities........................................................  40,027,546
                                                                           ----------

EQUITY CAPITAL
Perpetual preferred stock and related
   surplus...............................................................           0
Common stock.............................................................      29,931
Surplus..................................................................     455,288
Undivided profits and capital reserves/Net unrealized holding gains 
   (losses)..............................................................   1,964,924
Net unrealized holding gains (losses) on available-for-sale securities...      15,557
Cumulative foreign currency translation adjustments......................      (8,854)
Total equity capital.....................................................   2,456,846
                                                                           ----------
</TABLE>  

<PAGE>
 
Total liabilities and equity capital..............................   42,484,392
                                                                   ------------ 

I, Rex S. Schuette, Senior Vice President and Comptroller of the above named 
bank do hereby declare that this Report of Condition has been prepared in 
conformance with the instructions issued by the Board of Governors of the 
Federal Reserve System and is true to the best of my knowledge and belief.

                                                       Rex S. Schuette

We, the undersigned directors, attest to the correctness of this Report of 
Condition and declare that it has been examined by us and to the best of our 
knowledge and belief has been prepared in conformance with the instructions 
issued by the Board of Governors of the Federal Reserve System and is true and 
correct.


                                                       David A. Spina       
                                                       Marshall N. Carter  
                                                       Truman S. Casner      


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