BEVERLY ENTERPRISES INC /DE/, S-3, 1996-05-10

BEVERLY ENTERPRISES INC /DE/
S-3, 1996-05-10
SKILLED NURSING CARE FACILITIES

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 10, 1996
REGISTRATION NO. 333-
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------

BEVERLY ENTERPRISES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S> <C>
DELAWARE 95-4100309
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
</TABLE>

5111 ROGERS AVENUE, SUITE 40-A
FORT SMITH, ARKANSAS 72919-0155
(501) 452-6712
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------

ROBERT W. POMMERVILLE
EXECUTIVE VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
5111 ROGERS AVENUE, SUITE 40-A
FORT SMITH, ARKANSAS 72919-0155
(501) 452-6712
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------

THE COMMISSION IS REQUESTED TO SEND COPIES OF ALL COMMUNICATIONS TO:

GARY OLSON, ESQ.
LATHAM & WATKINS
633 WEST FIFTH STREET, SUITE 4000
LOS ANGELES, CALIFORNIA 90071
(213) 485-1234
------------------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:

From time to time after the effective date of this Registration Statement as
determined by market conditions.
------------------------

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, please 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, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement from 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
from the same offering. / /

If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. / /
------------------------

(Continued on following page)
<PAGE> 2

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
==========================================================================================================
PROPOSED
PROPOSED MAXIMUM
AMOUNT MAXIMUM AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED(1) REGISTERED(1) PER UNIT(2) PRICE(2)(3)(4) FEE(5)
<S> <C> <C> <C> <C>
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Debt Securities(6).................... -- (10) -- --
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Preferred Stock ($1 par value)(7)..... -- (10) -- --
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Common Stock ($.10 par value)(8)...... -- (10) -- --
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Common Stock Purchase Rights(9)....... -- (10) -- --
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Warrants.............................. -- (10) -- --
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Total................................. $200,000,000 (10) $200,000,000 $68,966
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==========================================================================================================
</TABLE>

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(1) Subject to Footnote (3), there are being registered hereunder (i) an
indeterminate amount of Common Stock, Preferred Stock, Debt Securities and
Warrants issuable in primary offerings, (ii) an indeterminate amount of
Common Stock and Preferred Stock issuable upon conversion of Debt
Securities and Preferred Stock registered hereunder, and (iii) an
indeterminate amount of Common Stock, Preferred Stock and Debt Securities
issuable upon exercise of Warrants registered hereunder.

(2) In U.S. dollars or the equivalent thereof in one or more foreign currencies
or composite currencies. The proposed maximum offering price per unit will
be determined from time to time by the Registrant in connection with the
issuance of the securities registered hereunder.

(3) Estimated solely for the purpose of calculating the registration fee. In no
event will the aggregate maximum offering price of all securities issued
under this Registration Statement exceed $200,000,000 or the equivalent
thereof in one or more foreign currencies or composite currencies or, if
any Debt Securities are issued with original issue discount, such greater
amount as shall result in proceeds of $200,000,000 to the Registrant.

(4) With respect to Debt Securities, excluding accrued interest and accrued
amortization of discount, if any, to the date of delivery.

(5) The registration fee has been calculated in accordance with Rule 457(o) of
the Securities Act.

(6) Debt Securities may be issued in primary offerings and/or upon exercise of
Warrants registered hereby.

(7) Shares of Preferred Stock may be issued in primary offerings, upon
conversion of Debt Securities registered hereby, and/or upon exercise of
Warrants registered hereby.

(8) Shares of Common Stock may be issued in primary offerings, upon conversion
of Debt Securities and/or Preferred Stock registered hereby, and/or upon
exercise of Warrants registered hereby. The aggregate amount of Common
Stock registered hereby is limited to that which is permissible under Rule
415(a)(4) under the Securities Act. Shares of Common Stock are accompanied
by the Company's Common Stock Purchase Rights which, until the occurrence
of any of certain prescribed events, are not exercisable, are evidenced by
the certificates for the Common Stock and will be transferred along with
and only with the Company's Common Stock.

(9) The Company's Common Stock Purchase Rights accompany shares of the
Company's Common Stock and, until the occurrence of any of certain
prescribed events, are not exercisable, are evidenced by the certificates
for the Common Stock and are transferred along with and only with the
Company's Common Stock.

(10) Omitted pursuant to General Instruction II(D) of Form S-3 under the
Securities Act.
------------------------

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 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE
ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY
DETERMINE.
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<PAGE> 3

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED MAY 10, 1996

PROSPECTUS

BEVERLY ENTERPRISES, INC.

Debt Securities, Preferred Stock,
Common Stock and Warrants

Beverly Enterprises, Inc. ("Beverly" or the "Company") may from time to
time offer in one or more series (i) secured or unsecured debt securities (the
"Debt Securities") which may be either senior debt securities ("Senior Debt
Securities") or subordinated debt securities ("Subordinated Debt Securities"),
(ii) shares of its preferred stock, par value $1 per share (the "Preferred
Stock"), (iii) shares of its common stock, par value $.10 per share (the "Common
Stock"), and (iv) warrants to purchase Common Stock (the "Warrants"), with an
aggregate initial public offering price of up to $200,000,000 on terms to be
determined at the time of sale. The Debt Securities, Preferred Stock, Common
Stock and Warrants (collectively, the "Offered Securities") may be offered,
separately or together, in separate series in amounts, at prices and on terms to
be set forth in a supplement to this Prospectus (a "Prospectus Supplement").

The specific terms of the Offered Securities in respect of which this
Prospectus is being delivered, such as, where applicable, (i) in the case of
Debt Securities, the specific designation, aggregate principal amount,
denominations, maturity, premium, rate and time of payment of interest, terms
for redemption at the option of the Company or repayment at the option of the
holder, terms for sinking fund payments, terms of subordination, terms for
security, terms for conversion or exchange into other securities and the initial
public offering price; (ii) in the case of Preferred Stock, the specific title
and stated value, any dividend, liquidation, redemption, conversion, voting and
other rights, the initial public offering price; (iii) in the case of Common
Stock, the initial public offering price; and (iv) in the case of Warrants,
where applicable, the duration, offering price, exercise price and
detachability, will be set forth in the accompanying Prospectus Supplement.

The Prospectus Supplement will also contain information, where applicable,
about certain United States federal income tax considerations relating to, and
any listing on a securities exchange of, the Offered Securities covered by the
Prospectus Supplement.

The Offered Securities may be offered directly, through agents designated
from time to time by the Company, or to or through underwriters or dealers. If
any agents or underwriters are involved in the sale of any of the Offered
Securities, their names, and any applicable fee, commission, purchase price or
discount arrangements with them will be set forth, or will be calculable from
the information set forth, in a Prospectus Supplement. See "Plan of
Distribution."

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.

THE DATE OF THIS PROSPECTUS IS , 1996.
<PAGE> 4

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE SECURITIES
OFFERED HEREBY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE AND THE
PACIFIC STOCK EXCHANGE (IN THE CASE OF COMMON STOCK), IN THE OVER-THE-COUNTER
MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME.
---------------------

AVAILABLE INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement (the "Registration Statement") (of which
this Prospectus is a part) under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the Offered Securities. This Prospectus does
not contain all of the information set forth in the Registration Statement,
certain portions of which have been omitted as permitted by the rules and
regulations of the Commission. Statements contained in this Prospectus as to the
contents of any contract or other document are not necessarily complete, and in
each instance reference is made to the copy of such contract or other document
filed as an exhibit to the Registration Statement, each such statement being
qualified in all respects by such reference and the exhibits and schedules
thereto. For further information regarding the Company and the Offered
Securities, reference is hereby made to the Registration Statement and such
exhibits and schedules which may be obtained from the Commission at its
principal office in Washington, D.C. upon payment of the fees prescribed by the
Commission.

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Commission. The Registration Statement, the exhibits and schedules forming a
part thereof and the reports, proxy statements and other information filed by
the Company with the Commission in accordance with the Exchange Act can be
inspected and copied at the Commission's Public Reference Section, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the following regional offices of
the Commission: Seven World Trade Center, 13th Floor, New York, New York 10048
and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
material can be obtained from the Public Reference Section of the Commission,
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. In
addition, the Company's Common Stock is listed on the New York and Pacific Stock
Exchanges and similar information concerning the Company can be inspected and
copied at the offices of the New York and Pacific Stock Exchanges.
---------------------

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The documents listed below have been filed by the Company with the
Commission and are incorporated herein by reference:

a. Annual Report on Form 10-K for the year ended December 31, 1995.

b. The Company's Proxy Statement dated May 2, 1996 (except for the
information under the captions "Compensation Committee Report on
Executive Compensation" and "Performance Graph").

c. Current Report on Form 8-K dated January 30, 1996.

d. All other reports filed by the Company pursuant to Section 13(a)
and 15(d) of the Exchange Act since the Company's year ended
December 31, 1995.

All documents filed by the Company pursuant to Section 13(a), 13(c), 14 and
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Offered Securities shall be deemed to be
incorporated by reference in this Prospectus and to be part hereof from the date
of filing such documents.

Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein,
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein, modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.

Copies of all documents which are incorporated herein by reference (not
including the exhibits to such information, unless such exhibits are
specifically incorporated by reference in such information) will be provided
without charge to each person, including any beneficial owner, to whom this
Prospectus is delivered, upon written or oral request. Copies of this
Prospectus, as amended or supplemented from time to time, and any other
documents (or parts of documents) that constitute part of this Prospectus under
Section 10(a) of the Securities Act will also be provided without charge to each
such person, upon written or oral request. Requests should be directed to
Beverly Enterprises, Inc., Attention: Robert W. Pommerville, Esq., 5111 Rogers
Avenue, Suite 40-A, Fort Smith, Arkansas 72919-0155, telephone (501) 452-6712.

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<PAGE> 5

THE COMPANY

The Company is the largest operator of nursing facilities in the United
States, providing care to more of the nation's elderly than any other long-term
care company in the United States. At March 31, 1996, the Company operated 666
nursing facilities with 73,432 licensed beds. The facilities are located in 33
states and the District of Columbia, and range in capacity from 20 to 355 beds.
At March 31, 1996, the Company also operated 53 institutional pharmacies and
pharmacy-related outlets, 33 assisted living centers (containing 927 units), 11
transitional hospitals (containing 601 beds), 11 hospices and four home health
care entities. The Company's facilities had average occupancy of 87.4% for the
three months ended March 31, 1996 and 88.1%, 88.5% and 88.5% during the years
ended December 31, 1995, 1994 and 1993, respectively.

Beverly was incorporated in Delaware on July 31, 1987, in connection with a
reorganization of its predecessor, Beverly Enterprises, a California corporation
incorporated in 1964, which became a subsidiary of Beverly and changed its name
to Beverly California Corporation ("Beverly California"). References herein to
"Beverly" or the "Company" are to Beverly, its subsidiaries and such
predecessor, or to any of them, depending on the context. The Company's
principal executive office is located at 5111 Rogers Avenue, Suite 40-A, Fort
Smith, Arkansas 72919-0155, telephone number (501) 452-6712.

RATIO OF EARNINGS TO FIXED CHARGES AND
TO COMBINED FIXED CHARGES AND PREFERRED DIVIDENDS

The Company's ratio of earnings to fixed charges for the quarters ended
March 31, 1996 and 1995 were 1.66 and 1.78, respectively, and for the years
ended December 31, 1994, 1993, 1992 and 1991 were 1.92, 1.63, 1.03 and 1.25,
respectively. Earnings were inadequate to cover fixed charges by $9,726,000 for
the year ended December 31, 1995. The Company's ratio of earnings to combined
fixed charges and preferred dividends for the quarters ended March 31, 1996 and
1995 were 1.66 and 1.62, respectively, and for the years ended December 31,
1994, 1993 and 1991 were 1.75, 1.51 and 1.21, respectively. Earnings were
inadequate to cover combined fixed charges and preferred dividends by
$19,836,000 and $7,391,000 for the years ended December 31, 1995 and 1992,
respectively.

For purposes of computing these ratios, earnings have been calculated by
adding fixed charges (excluding capitalized interest) to income (loss) before
income taxes, extraordinary charge and cumulative effect of change in accounting
for income taxes. Fixed charges consist of interest costs, whether expensed or
capitalized, the interest component of rental expense and amortization of debt
discounts and issue costs. Preferred dividends consist of cash dividend
requirements on Preferred Stock and the accretion in carrying value of the
Company's Preferred Stock, if any, to equal the redemption amount, each
increased to an amount representing the pretax earnings that would be required
to cover such requirement.

USE OF PROCEEDS

The Company currently has no specific plans for the use of the net proceeds
from the sale of Offered Securities. However, the Company currently anticipates
that any such proceeds would be used for general corporate purposes, which may
include, but are not limited to, working capital, capital expenditures,
repayment of indebtedness and acquisitions. When any Offered Securities are
offered, the Prospectus Supplement relating thereto will set forth the Company's
intended use for the net proceeds received from the sale of such Offered
Securities. [Pending the application of the net proceeds, the Company expects to
invest such proceeds in short-term, interest-bearing instruments or other
securities.]

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<PAGE> 6

DESCRIPTION OF DEBT SECURITIES

The following description of the terms of the Debt Securities sets forth
certain general terms and provisions of the Debt Securities to which any
Prospectus Supplement may relate. The particular terms of the Debt Securities
offered by any Prospectus Supplement and the extent, if any, to which such
general provisions may apply to the Debt Securities so offered will be described
in the Prospectus Supplement relating to such Debt Securities.

The Senior Debt Securities will either be issued under an Indenture (the
"Senior Indenture") to be entered into between the Company and a trustee (the
"Senior Trustee") or will be issued under an indenture (the "Note Indenture") to
be entered into between the Company and a trustee (the "Note Trustee") having
covenants described below under "-- Certain Covenants relating to Senior Debt
Securities Issued under the Note Indenture." The Subordinated Debt Securities
will be issued under an Indenture (the "Subordinated Indenture") to be entered
into between the Company and a trustee (the "Subordinated Trustee"). Copies of
such indentures are filed as exhibits to the Registration Statement. Unless the
context otherwise requires, each of the Senior Indenture, the Note Indenture and
the Subordinated Indenture is referred to herein as the "Indenture."

The following presents a summary of certain provisions of the Indenture.
Such summary does not purport to be complete and is subject to, and qualified in
its entirety by reference to, all of the provisions of the Indenture including
the definitions therein of certain terms. Wherever defined terms of the
Indenture are referred to, it is intended that such defined terms shall be
incorporated herein by reference.

The Debt Securities are obligations exclusively of the Company, which is a
holding company. Since the operations of the Company are currently conducted
through subsidiaries, the cash flow of the Company and the consequent ability to
service its debt, including the Debt Securities, are dependent upon the earnings
and cash flow of such subsidiaries and the distribution of those earnings to the
Company, or upon loans or other payments of funds by such subsidiaries to the
Company. The subsidiaries are separate and distinct legal entities and have no
obligation, contingent or otherwise, to pay any amounts due pursuant to the Debt
Securities or to make any funds available therefor, whether by dividends, loans
or other payments. In addition, the payment of dividends and certain loans and
advances to the Company by such subsidiaries may be subject to certain statutory
or contractual restrictions, are contingent upon the earnings of such
subsidiaries and are subject to various business considerations.

The Debt Securities will be effectively subordinated to all indebtedness
and other liabilities and commitments (including trade payables and lease
obligations) of the Company's subsidiaries. Any right of the Company to receive
assets of any of such subsidiaries upon the latter's liquidation or
reorganization (and the consequent right of the Holders of the Debt Securities
to participate in those assets) will be effectively subordinated to the claims
of that subsidiary's creditors, except to the extent that the Company is itself
recognized as a creditor of such subsidiary, in which case the claims of the
Company would still be subordinate to any security in the assets of such
subsidiary and any indebtedness of such subsidiary senior to that held by the
Company.

At December 31, 1995, there was approximately $535 million of trade
payables and other liabilities of consolidated subsidiaries and approximately
$338 million of undiscounted future minimum rental payments under
non-cancellable operating leases of consolidated subsidiaries, to which the Debt
Securities would be effectively subordinated. In addition, at December 31, 1995,
there was approximately $934 million of senior indebtedness (as defined) of the
Company, to which the Subordinated Debt Securities would be subordinated
pursuant to the terms of the Indenture.

GENERAL

The amount of any series of Debt Securities offered by this Prospectus will
be limited to the amount on the cover of the accompanying Prospectus Supplement.
The Indenture does not limit the aggregate principal amount of Debt Securities
that may be issued thereunder and provides that Debt Securities may be issued

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<PAGE> 7

from time to time in series. The Subordinated Debt Securities will be
subordinate in right of payment to senior indebtedness (as defined) of the
Company.

Reference is made to the Prospectus Supplement relating to the particular
series of Debt Securities for the terms of such Debt Securities, including,
where applicable: (1) the title of the Debt Securities; (2) any limit on the
aggregate principal amount of the Debt Securities; (3) the date or dates on
which the Debt Securities will mature; (4) the rate or rates per annum at which
the Debt Securities will bear interest, if any, or the formula or provision
pursuant to which such rate or rates are determined and the date from which such
interest, if any, will accrue; (5) the Person to whom any interest on a Debt
Security of the series shall be payable, if other than the Person in whose name
that Debt Security is registered at the close of business on the Regular Record
Date for such interest; (6) the place or places where the principal of and
premium, if any, and interest on any of such Debt Securities will be payable;
(7) the dates on which such interest, if any, on the Debt Securities will be
payable and the Regular Record Dates for such Interest Payment Dates; (8) any
mandatory or optional sinking fund or analogous provisions; (9) the date, if
any, after which and the price or prices at which the Debt Securities may,
pursuant to any optional or mandatory redemption provisions, be redeemed and the
other detailed terms and provisions of any such optional or mandatory redemption
provisions; (10) the denominations in which any of such Debt Securities will be
issuable, if other than denominations of $1,000 and any integral multiple
thereof; (11) if the amount of principal of or premium, if any, or interest on
any of such Debt Securities may be determined with reference to an index or
pursuant to a formula, the manner in which such amounts will be determined; (12)
if other than the currency of the United States of America, the currency,
currencies or currency units in which the principal of or premium, if any, or
interest on any of such Debt Securities may be determined with reference to an
index or pursuant to a formula, the manner in which such amounts will be
determined; (13) if other than the currency of the United States of America, the
currency, currencies or currency units in which the principal of or premium, if
any, or interest on any of such Debt Securities will be payable (and the manner
in which the equivalent of the principal amount thereof in the currency of the
United States of America is to be determined for any purpose, including for the
purpose of determining the principal amount deemed to be Outstanding at any
time); (14) if the principal of or premium, if any, or interest on any of such
Debt Securities is to be payable, at the election of the Company or the Holder
thereof, in one or more currencies or currency units other than those in which
such Debt Securities are stated to be payable, the currency, currencies or
currency units in which payment of any such amount as to which such election is
made will be payable, the periods within which and the terms and conditions upon
which such election is to be made and the amount so payable (or the manner in
which such amount is to be determined); (15) if other than the entire principal
amount thereof, the portion of the principal amount of any of such Debt
Securities which will be payable upon declaration of acceleration of the
Maturity thereof; (16) if the principal amount payable at the Stated Maturity of
any of such Debt Securities will not be determinable as of any one or more dates
prior to the Stated Maturity, the amount which will be deemed to be such
principal amount as of any such date for any purpose, including the principal
amount thereof which will be due and payable upon any Maturity other than the
Stated Maturity or which will be deemed to be Outstanding as of any such date
(or, in any such case, the manner in which such deemed principal amount is to be
determined); (17) if applicable, that such Debt Securities, in whole or any
specified part, are defeasible pursuant to the provisions of the Indenture
described under "-- Defeasance and Covenant Defeasance -- Defeasance and
Discharge" or "-- Defeasance and Covenant Defeasance -- Covenant Defeasance", or
under both such captions; (18) whether any of such Debt Securities will be
issuable in whole or in part in the form of one or more Global Securities and,
if so, the respective Depositaries for such Global Securities, the form of any
legend or legends to be borne by any such Global Security in addition to or in
lieu of the legend referred to under "-- Global Securities" and, if different
from those described under such caption, any circumstances under which any such
Global Security may be exchanged in whole or in part for Debt Securities
registered, any transfer of such Global Security in whole or in part may be
registered, in the names of Persons other than the Depositary for such Global
Security or its nominee; (19) any terms by which any Debt Securities and any
change in the right of the Trustee or the Holders to declare the principal
amount of any of such Debt Securities due and payable; (20) any addition to or
change in the covenants in the Indenture described under "Restrictive Covenants"
applicable to any of such Debt Securities; (21) whether

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<PAGE> 8

such Debt Securities are subordinate to any other unsecured indebtedness of the
Company; and (22) any other terms of the series of Debt Securities.

Debt Securities may be issued as Original Issue Discount Securities to be
sold at a substantial discount below their principal amount. Special Federal
income tax and other considerations applicable thereto will be described in the
Prospectus Supplement relating thereto.

FORM, EXCHANGE, REGISTRATION, TRANSFER AND PAYMENT

Unless otherwise indicated in the applicable Prospectus Supplement, the
Debt Securities will be issued only in fully registered form and in
denominations of $1,000 and integral multiples thereof. Debt Securities may be
presented for registration of transfer and exchange at the office or agency of
the Company designated as Registrar or co-Registrar and referred to in an
applicable Prospectus Supplement, without service charge and upon payment of all
taxes, assessments or other governmental charges as described in the Indenture.

Unless otherwise provided in the applicable Prospectus Supplement,
principal of, premium, if any, and interest on Debt Securities will be payable,
and the transfer of Debt Securities will be registrable, at the office of the
Trustee, except that, at the option of the Company, interest may be paid by
mailing a check to the address of the person entitled thereto as such address
appears on the Security Register.

DEFAULTS AND CERTAIN RIGHTS ON DEFAULT

The Indenture defines an Event of Default as, with respect to the Debt
Securities of any series: (i) default in payment of principal of, or premium, if
any, on any Debt Securities of such series at maturity; (ii) default for 30 days
in payment of principal of or premium, if any, of any Debt Securities of such
series upon redemption or purchase by the Company at the option of the Holder;
(iii) default for 30 days in payment of any interest on any Debt Securities of
such series; (iv) default for 60 days after notice of failure to perform any
other covenant in the Debt Securities of such series or contained in the
Indenture for the benefit of the Debt Securities of such series; (v) a default
not being contested by the Company in good faith on any other mortgage,
indenture or instrument under which there may be issued, secured or evidenced
any indebtedness of the Company in excess of an amount specified in the related
Prospectus Supplement, which amount shall have become due and payable as a
result of such default; or (vi) certain events of bankruptcy, insolvency,
receivership or reorganization.

The Indenture provides that, if an Event of Default shall have happened and
be continuing with respect to the Debt Securities of any series, either the
Trustee or the Holders of 25% in principal amount of the Debt Securities of such
series then Outstanding may declare the principal amount (or, if the Debt
Securities of that series are Original Issue Discount Notes, such portion of the
principal amount as may be specified in the terms of that series) of all the
Debt Securities of such series to be due and payable immediately. Upon certain
conditions such declaration may be annulled and past defaults (except, unless
theretofore cured, a default in payment of principal of, premium, if any, or
interest on the Debt Securities of such series) may be waived by the Holders of
a majority in principal amount of the Debt Securities of such series then
Outstanding.

SUBORDINATION TERMS

The payment of the principal of, premium, if any, and interest on any
series of Subordinated Debt Securities will, to the extent set forth in the
Subordinated Indenture relating thereto, be subordinated in right of payment, to
the extent set forth in the Indenture, to the prior payment in full of all
Senior Indebtedness (as defined below) of the Company. By reason of such
subordination, in the event of a distribution of assets upon insolvency, certain
general creditors of the Company may recover more, ratably, than the Holders of
the Subordinated Debt Securities. There are no restrictions in the Subordinated
Indenture on the amount of senior indebtedness or any other indebtedness that
may be issued by the Company, and it is expected that the Subordinated Debt
Securities will be subordinate to substantially all future indebtedness of the
Company. No payment on account of principal of, premium, if any, or interest on
the Subordinated Debt Securities may be made unless all amounts then due for
principal of, premium, if any, sinking fund requirements or interest on, any
Senior Indebtedness have been paid or duly provided for; and no payment on
account of principal of,

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<PAGE> 9

premium, if any, or interest on, the Subordinated Debt Securities may be made if
there shall exist at the time of payment or immediately after giving effect
thereto any event of default with respect to any Senior Indebtedness permitting
acceleration of maturity of such Senior Indebtedness (except redemption payments
if the mailing of notice of redemption was made prior to such default). Upon any
distribution of the assets of the Company upon any dissolution, winding up,
liquidation, or reorganization of the Company, the holders of Senior
Indebtedness will be entitled to receive payment in full before Holders of the
Subordinated Debt Securities are entitled to receive any payment.

Senior Indebtedness is defined in the Subordinated Indenture as the
principal of, premium, if any, and unpaid interest on (a) indebtedness for
borrowed money (other than the Company's 7 5/8% Convertible Subordinated
Debentures Due 2003 and the Company's 5 1/2% Convertible Subordinated Debentures
due 2018 with which the Subordinated Debt Securities will rank pari passu) for
the payment of which the Company is responsible or liable or the payment of
which the Company has guaranteed, whether such indebtedness is outstanding as of
the date of the Subordinated Indenture or thereafter created, incurred, assumed
or guaranteed by the Company, unless in the instrument creating or evidencing
the same or pursuant to which the same is outstanding it is specifically
provided that such indebtedness is not superior in right of payment to the
Subordinated Debt Securities, (b) capital lease obligations determined in
accordance with generally accepted accounting principles, (c) any obligation of
the Company to reimburse banks pursuant to letters of credit extended by such
banks, advances made by such banks and other credit arrangements entered into
with such banks in connection with tax exempt obligations issued for the benefit
of the Company, and (d) renewals, extensions, modifications and refundings of
any such indebtedness or obligations.

CERTAIN COVENANTS RELATING TO SENIOR DEBT SECURITIES ISSUED UNDER THE NOTE
INDENTURE

Right of Repurchase Upon Death. The Senior Debt Securities issued under the
Note Indenture (the "Notes") will provide that the Company, upon the death of
any holder of Notes, will repurchase such holder's Notes (up to the principal
amount per calendar year per holder set forth in the Prospectus Supplement
relating thereto, plus accrued interest), if (1) the Notes have been registered
in the holder's name since the original date of issuance or for a period of six
months prior to the date of such holder's death, whichever is less; (2) the
Company will not, after giving effect to such repurchase, have made repurchases
of deceased holders' Notes of such series in aggregate amount exceeding the
principal amount in any one calendar year period set forth in the Prospectus
Supplement relating thereto (if such aggregate principal amount exceeds such
amount, the Note Trustee will repay such Notes up to such aggregate principal
amount in the order in which such requests for repurchase were received); (3)
the Note Trustee has been notified in writing of the request for repurchase
within one year after the holder's death (and if less than all of such holder's
Notes are repurchased pursuant to such initial request, the Note Trustee has
been notified in writing of subsequent requests for repurchase of additional
Notes of such holder within one year after any such preceding notice); and (4)
the Company is not subject to any law, regulation, agreement or administrative
directive preventing such repurchase. Notes for which such repurchase is
requested shall, subject to the limitations described above, be repurchased at
100% of the principal amount thereof, together with interest accrued to the
Repayment Date, within 30 days following receipt by the Note Trustee of the
following: (i) a written request for repurchase signed by a duly authorized
representative of the deceased holder, which shall indicate the name of the
deceased holder, the date of death and the principal amount of the Notes to be
repurchased; (ii) the certificates representing the Notes to be repurchased; and
(iii) evidence satisfactory to the Note Trustee of the death of the deceased
holder and evidence of the authority of the representative to the extent
required by the Note Trustee. Authorized representatives of a deceased holder
shall include executors, administrators or other legal representatives of an
estate, trustees of a trust, joint owners of Notes owned in joint tenancy or
tenancy by the entirety, custodians, conservators, guardians, attorneys-in-fact
and other persons generally recognized as having legal authority to act on
behalf of another.

The death of a person owning a Note in joint tenancy or tenancy in the
entirety with another or others shall be deemed the death of the holder of the
Note, and the entire principal amount of the Note so held shall be subject to
repurchase, together with interest accrued thereon to the Repayment Date. The
death of a person owning a Note by tenancy in common shall be deemed the death
of a holder of a Note only with respect to the

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<PAGE> 10

deceased holder's interest in the Note so held by tenancy in common, except that
in the event a Note is held by husband and wife as tenants in common, the death
of either shall be deemed the death of the holder of the Note and the entire
principal amount of the Note so held shall be subject to repurchase, together
with interest accrued thereon to the Repayment Date. The death of a person who,
during his or her lifetime, was entitled to substantially all of the beneficial
interests of ownership of a Note, will be deemed the death of the holder thereof
for purposes of this provision, regardless of the registered holder, if such
beneficial interest can be established to the satisfaction of the Note Trustee.
Such beneficial interest will be deemed to exist in typical cases of nominee
ownership, ownership under the Uniform Gifts to Minors Acts, community property
or other joint ownership arrangements between a husband and wife, and trust
arrangements where one person has substantially all of the beneficial ownership
interests in the Note during his or her lifetime.

Repurchase of Notes at Option of Holder in Event of Fundamental Structural
Change. In the event that there shall occur a Fundamental Structural Change (as
defined below) of the Company, then each holder may present his Notes (or any
portion thereof which is $1,000 in amount or any integral multiple thereof) for
repurchase prior to maturity at 100% of their principal amount plus accrued
interest (but without any premium). Exercise of this repurchase option by a
holder is irrevocable and is not subject to any individual or aggregate
limitations on the holders' right of repurchase. Neither the Company nor the
Note Trustee have the ability to waive the Company's obligation to repurchase a
holder's Notes upon request in the event of a Fundamental Structural Change. The
Company shall give notice of the Fundamental Structural Change within 30 days of
its occurrence and, in order to exercise the repurchase option, a holder must
deliver to the Note Trustee by the 90th day after the occurrence of such change
(i) written notice of such holder's repurchase, in form satisfactory to the Note
Trustee, signed by the holder or his duly authorized representative and (ii) the
Notes to be repurchased, free and clear of any liens or encumbrances of any
kind. The Company shall repurchase the Notes on the date which is 100 days after
the occurrence of the Fundamental Structural Change which triggered the
repurchase option.

A "Fundamental Structure Change" shall occur if: (i) the Company shall
cease to be a reporting company under Sections 13 or 15(d) of the Exchange Act;
(ii) the Company or any other person which owns, directly or indirectly, a
majority of the Common Stock of the Company (each such person being a "Holding
Company") shall consolidate with or merge into any other corporation or
partnership, or convey, transfer or lease all or substantially all of its assets
to any person; (iii) any person shall consolidate with or merger into the
Company or any Holding Company pursuant to a transaction in which at least a
majority of the Common Stock of the Company or the common stock of such Holding
Company then outstanding is changed or exchanged; (iv) any person shall purchase
or otherwise acquire in one or more transactions beneficial ownership of 50% or
more of the Common Stock of the Company or of the common stock of any Holding
Company outstanding on the date immediately prior to the last such purchase or
other acquisition; (v) the Company or any subsidiary of the Company shall
purchase or otherwise acquire in one or more transactions during the 12-month
period preceding the date of the last such purchase or other acquisition an
aggregate of 30% or more of the Common Stock of the Company outstanding on the
date immediately prior to the last such purchase or acquisition; (vi) any
Holding Company or any subsidiary of such Holding Company (including the
Company) shall purchase or otherwise acquire in one or more transactions during
the 12-month period preceding the date of the last such purchase or other
acquisition an aggregate of 30% or more of the common stock of such Holding
Company outstanding on the date immediately prior to the last such purchase or
other acquisition; or (vii) the Company or any Holding Company shall make a
distribution of cash, property or securities to holders of common stock of such
person (including by means of dividend, reclassification or recapitalization)
which, together with all other such distributions during such 12-month period
preceding the date of such distribution, has an aggregate fair market value in
excess of 30% of the stockholders' equity of the Company or the stockholders'
equity of such person outstanding on the date immediately prior to such
distribution. Notwithstanding the foregoing, the occurrence of the events
described in (ii), (iii), (iv), (v), (vi) and (vii) will not be deemed a
"Fundamental Structural Change" unless the Company's consolidated stockholders'
equity after any such event shall be decreased to less than $400,000,000.

Although there is a developing body of case law interpreting the phrase
"substantially all," there is no precise established definition of the phrase
under applicable law. Accordingly, the ability of a Holder of Notes

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<PAGE> 11

to require the Company to repurchase such Notes as a result of conveyance,
transfer or lease of less than all of the Company's assets to another person may
be uncertain.

Except as may be provided in any Prospectus Supplement, the Note Indenture
does not contain any other provisions that permit the holders of the Notes to
require that the Company repurchase or redeem the Notes in the event of a
takeover or similar transaction. Accordingly, while the definition of a
"Fundamental Structural Change" covers a wide variety of arrangements which have
traditionally been used to effect highly leveraged transactions, the Note
Indenture does not afford the holders of Notes protection in all circumstances
from the adverse aspects of a highly leveraged transaction, reorganization,
restructuring, merger or similar transaction.

To the extent that this right of repurchase by a holder of Notes in the
event of a Fundamental Structural Change constitutes a tender offer under
Section 14(e) of the Exchange Act and the rules thereunder, the Company will
comply with all applicable tender offer rules.

CONVERSION RIGHTS

The Debt Securities may be convertible into Common Stock of the Company on
the terms and subject to the conditions set forth in the applicable Prospectus
Supplement. The right to convert Debt Securities called for redemption will
terminate at the close of business on the business day immediately preceding the
date fixed for redemption, unless the Company defaults in making the payment due
upon redemption, and will be lost if not exercised prior to that time. The
conversion price will be subject to adjustment in case of certain events,
including (i) the subdivision, combination or reclassification of the
outstanding Common Stock of the Company, (ii) the issuance of Common Stock as a
dividend or distribution on Common Stock, (iii) the issuance of rights or
warrants (expiring within 45 days after the record date) to all holders of
Common Stock entitling them to acquire shares of Common Stock (or securities
convertible into or exchangeable for Common Stock) at less than the then current
market price (as defined in the Indenture) of the Common Stock, (iv) the
distribution to all holders of Common Stock of shares of any class other than
Common Stock, or debt securities or assets (excluding regular quarterly cash
dividends or distributions) or rights or warrants to purchase assets or
securities of the Company (other than those referred to above), (v) the issuance
(with certain exceptions) of Common Stock or securities convertible into, or
exchangeable for, Common Stock at less than the current market price of the
Common Stock or (vi) certain mergers, consolidations or sales of assets. There
will be no upward adjustment in the conversion price except in the event of a
reverse stock split. The Company will not be required to make any adjustment in
the conversion price of less than 1% of such price, but the same will be carried
forward and taken into account in the computation of any subsequent adjustment.

The Company will not be required to issue fractional shares of Common Stock
but will pay a cash adjustment in lieu thereof. Debt Securities surrendered for
conversion during the period from the close of business on any Regular Record
Date next preceding any Interest Payment Date to the opening of business on such
Interest Payment Date (except Debt Securities called for redemption) must be
accompanied by payment of an amount equal to the interest thereon payable on
such Interest Payment Date. In the case of any Debt Security which has been
converted after any Regular Record Date but on or before the next Interest
Payment Date (except Debt Securities called for redemption within such period),
the interest payable on such Interest Payment Date shall be paid notwithstanding
such conversion, and such interest shall be paid to the Holder of such Debt
Security on such Regular Record Date. Except as described above, no interest on
converted Debt Securities will be payable by the Company on any Interest Payment
Date subsequent to the date of conversion. No other payment or adjustment for
interest or dividends is to be made upon conversion.

Conversion price adjustments or omissions in making such adjustments may,
under certain circumstances, be deemed to be distributions that could be taxable
as dividends under the Internal Revenue Code to Holders of Debt Securities or to
holders of Common Stock.

In case of any reclassification (excluding those referred to above),
merger, consolidation or sale of substantially all the assets of the Company, as
an entirety, the Holder of each Outstanding Debt Security shall have the right
to convert such Debt Security only into the kind and amount of shares of stock
and other

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<PAGE> 12

securities and property (including cash) receivable by a holder of the number of
shares of Common Stock into which such Debt Securities might have been converted
immediately prior to the effective date of the transaction.

MODIFICATION OF INDENTURE

With the consent of the Holders of at least a majority in aggregate
principal amount of the Outstanding Debt Securities of each series affected, the
Trustee and the Company may execute a supplemental indenture or indentures to
add provisions to, or change in any manner or eliminate any provisions of, the
Indenture or modify in any manner the rights of the Holders of the Debt
Securities; provided, however, that, without the consent of the Holder of each
Outstanding Debt Security affected thereby, no such supplemental indenture shall
(1) extend the stated maturity of any Debt Security or the date for repurchase
of any Debt Security at the option of the Holder, or reduce the rate or extend
the time of payment of interest thereon, or reduce the principal amount thereof
or any premium thereon or the amount payable thereon upon the redemption
thereof, or the amount payable thereon in the event of acceleration or the
amount payable thereof in bankruptcy, (2) reduce the aforesaid percentage of
Debt Securities of any series the Holders of which are required to consent to
any such supplemental indenture, or (3) make any change that adversely affects
the right to convert or the conversion price for any Debt Security; provided
further that no such supplemental indenture shall modify or eliminate the
subordination provisions of the Indenture in any manner that might terminate or
impair the subordination of the Debt Securities to senior indebtedness without
the prior written consent of the holders of the senior indebtedness.

CONSOLIDATION, MERGER AND SALE OF ASSETS

The Company, without the consent of the Holders of any of the Outstanding
Debt Securities under the Indenture, may consolidate or merge with or into, or
transfer or lease its assets substantially as an entirety to, any corporation
organized under the laws of any domestic jurisdiction, provided that the
successor corporation assumes the Company's obligations on the Debt Securities
and under the Indenture, that after giving effect to the transaction no Event of
Default, and no event which, after notice or lapse of time, or both would become
an Event of Default, shall have occurred and be continuing, and that certain
other conditions are met.

GLOBAL SECURITIES

Some or all of the Debt Securities of any series may be represented, in
whole or in part, by one or more Global Securities which will have an aggregate
principal amount equal to that of the Debt Securities represented thereby. Each
Global Security will be registered in the name of a Depositary or a nominee
thereof identified in the applicable Prospectus Supplement, will be deposited
with such Depositary or nominee or a custodian therefor and will bear a legend
regarding the restrictions on exchanges and registration of transfer thereof
referred to below and any such other matters as may be provided for pursuant to
the Indenture.

Notwithstanding any provision of the Indenture or any Debt Security
described herein, no Global Security may be exchanged in whole or in part for
Debt Securities registered, and no transfer of a Global Security in whole or in
part may be registered, in the name of any Person other than the Depositary for
such Global Security or any nominee of such Depositary unless (i) the Depositary
has notified the Company that it is unwilling or unable to continue as
Depositary for such Global Security or has ceased to be qualified to act as such
as required by the Indenture, (ii) there shall have occurred and be continuing
an Event of Default with respect to the Debt Securities represented by such
Global Security or (iii) there shall exist such circumstances, if any, in
addition to or in lieu of those described above as may be described in the
applicable Prospectus Supplement. All securities issued in exchange for a Global
Security or any portion thereof will be registered in such names as the
Depositary may direct.

As long as the Depositary, or its nominee, is the registered Holder of a
Global Security, the Depositary or such nominee, as the case may be, will be
considered the sole owner and Holder of such Global Security and the Debt
Securities represented thereby for all purposes under the Debt Securities and
the Indenture. Except in the limited circumstances referred to above, owners of
beneficial interests in a Global Security will not be

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<PAGE> 13

entitled to have such Global Security or any Debt Securities represented thereby
registered in their names, will not receive or be entitled to receive physical
delivery of certificated Debt Securities in exchange therefor and will not be
considered to be the owners or Holders of such Global Security or any Debt
Securities represented thereby for any purpose under the Debt Securities or the
Indenture. All payments of principal of and premium, if any, and interest on a
Global Security will be made to the Depositary or its nominee, as the case may
be, as the Holder thereof. The laws of some jurisdictions require that certain
purchasers of securities take physical delivery of such securities in definitive
form. These laws may impair the ability to transfer beneficial interests in a
Global Security.

Ownership of beneficial interests in a Global Security will be limited to
institutions that have accounts with the Depositary or its nominee
("participants") and to persons that may hold beneficial interests through
participants. In connection with the issuance of any Global Security, the
Depositary will credit, on its book-entry registration and transfer system, the
respective principal amounts of Debt Securities represented by the Global
Security to the accounts of its participants. Ownership of beneficial interests
in a Global Security will be shown only on, and the transfer of those ownership
interests will be effected only through, records maintained by the Depositary
(with respect to participants' interests) or any such participant (with respect
to interests of persons held by such participants on their behalf). Payments,
transfers, exchanges and others matters relating to beneficial interests in a
Global Security may be subject to various policies and procedures adopted by the
Depositary from time to time. None of the Company, the Trustee or any agent of
the Company or the Trustee will have any responsibility or liability for any
aspect of the Depositary's or any participant's records relating to, or for
payments made on account of, beneficial interests in a Global Security, or for
maintaining, supervising or reviewing any records relating to such beneficial
interests.

Secondary trading in notes and debentures of corporate issuers is generally
settled in clearing-house or next-day funds. In contrast, beneficial interests
in a Global Security may trade in the Depositary's same-day funds settlement
system, in which secondary market trading activity in those beneficial interests
would be required by the Depositary to settle in immediately available funds.
There is no assurance as to the effect, if any, that settlement in immediately
available funds would have on trading activity in such beneficial interests.
Also, settlement for purchases of beneficial interests in a Global Security upon
the original issuance thereof may be required to be made in immediately
available funds.

PAYMENT AND PAYING AGENTS

Unless otherwise indicated in the applicable Prospectus Supplement, payment
of interest on a Debt Security on any Interest Payment Date will be made to the
Person in whose name such Debt Security (or one or more Predecessor Securities)
is registered at the close of business on the Regular Record Date for such
interest.

Unless otherwise indicated in the applicable Prospectus Supplement,
principal of and premium, if any, and interest on the Debt Securities of a
particular series will be payable at the office of such Paying Agent or Paying
Agents as the Company may designate for such purpose from time to time, except
that at the option of the Company payment of any interest may be made by check
mailed to the address of the Person entitled thereto as such address appears in
the Security Register. Unless otherwise indicated in the applicable Prospectus
Supplement, the corporate trust office of the Trustee in the city of New York
will be designated as the Company's sole Paying Agent for payments with respect
to Debt Securities of each series. Any other Paying Agents initially designated
by the Company for the Debt Securities of a particular series will be named in
the applicable Prospectus Supplement. The Company may at any time designate
additional Paying Agents or rescind the designation of any Paying Agent or
approve a change in the office through which any Paying Agent acts, except that
the Company will be required to maintain a Paying Agent in each Place of Payment
for the Debt Securities of a particular series.

All moneys paid by the Company to a Paying Agent for the payment of the
principal of or premium, if any, or interest on any Debt Security which remain
unclaimed at the end of two years after such principal, premium or interest has
become due and payable will be repaid to the Company, and the Holder of such
Debt Security thereafter may look only to the Company for payment thereof.

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DEFEASANCE AND COVENANT DEFEASANCE

If and to the extent indicated in the applicable Prospectus Supplement, the
Company may elect, at its option at any time, to have the provisions relating to
defeasance and discharge of indebtedness or the provisions relating to
defeasance of certain restrictive covenants in the Indenture, applied to the
Debt Securities of any series, or to any specified part of a series.

Defeasance and Discharge. The Indenture will provide that, upon the
Company's exercise of its option (if any) to have the provisions relating to
defeasance and discharge of indebtedness applied to any Debt Securities, the
Company will be discharged from all its obligations, and, in the case of
Subordinated Debt Securities, the provisions of [Article Fifteen] of the
Subordinated Indenture relating to subordination will cease to be effective,
with respect to such Debt Securities (except for certain obligations to exchange
or register the transfer of Debt Securities, to replace stolen, lost or
mutilated Debt Securities, to maintain paying agencies and to hold moneys for
payment in trust) upon the deposit in trust for the benefit of the Holders of
such Debt Securities of money or U.S. Government Obligations, or both, which,
through the payment of principal and interest in respect thereof in accordance
with their terms, will provide money in an amount sufficient to pay the
principal of and premium, if any, and interest on such Debt Securities on the
respective Stated Maturities in accordance with the terms of the Indenture and
such Debt Securities. Such defeasance or discharge may occur only if, among
other things, the Company has delivered to the Trustee an Opinion of Counsel to
the effect that the Company has received from, or there has been published by,
the United States Internal Revenue Service a ruling, or there has been a change
in tax law, in either case to the effect that Holders of such Debt Securities
will not recognize gain or loss for federal income tax purposes as a result of
such deposit, defeasance and discharge and will be subject to federal income tax
on the same amount, in the same manner and at the same times as would have been
the case if such deposit, defeasance and discharge were not to occur.

Defeasance of Certain Covenants. The Indenture will provide that, upon the
Company's exercise of its option (if any) to have the provisions relating to the
defeasance of certain restrictive covenants apply to any Debt Securities, the
Company may omit to comply with certain restrictive covenants, including those
described under "Consolidation, Merger and Sale of Assets" and any that may be
described in the applicable Prospectus Supplement, and the occurrence of certain
Events of Default, will be deemed not to be or result in an Event of Default,
and in the case of Subordinated Debt Securities the provisions of [Article
Fifteen] of the Subordinated Indenture relating to subordination will cease to
be effective, in each case with respect to such Debt Securities. The Company, in
order to exercise such option, will be required to deposit, in trust for the
benefit of the Holders of such Debt Securities, money or U.S. Government
Obligations, or both, which, through the payment of principal and interest in
respect thereof in accordance with their terms, will provide money in an amount
sufficient to pay the principal of and premium, if any, and interest on such
Debt Securities on the respective Stated Maturities in accordance with the terms
of the Indenture and such Debt Securities. The Company will also be required,
among other things, to deliver to the Trustee an Opinion of Counsel satisfying
the requirements of the Indenture, to the effect that Holders of such Debt
Securities will not recognize gain or loss for federal income tax purposes as a
result of such deposit and defeasance of certain obligations and will be subject
to federal income tax on the same amount, in the same manner and at the same
times as would have been the case if such deposit and defeasance were not to
occur. In the event the Company exercised this option with respect to any Debt
Securities and such Debt Securities were declared due and payable because of the
occurrence of any Event of Default, the amount of money and U.S. Government
Obligations so deposited in trust would be sufficient to pay amounts due on such
Debt Securities at the time of their respective Stated Maturities but may not be
sufficient to pay amounts due on such Debt Securities at the time of any
acceleration resulting from such Event of Default. In such case, the Company
would remain liable for such payments.

REGARDING THE TRUSTEE

The Indenture requires the Company to file annually with the Trustee a
certificate either stating the absence of any default or specifying any default
that exists. The Indenture provides that the Trustee shall, within 90 days after
the occurrence of a default, give to the Holders of the Debt Securities of any
series notice

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<PAGE> 15

of all uncured defaults known to it; provided that, except in the case of
default in the payment of principal of, premium, if any, or interest on any of
the Debt Securities, the Trustee shall be protected in withholding such notice
if the Trustee in good faith determines that the withholding of such notice is
in the interest of the Holders of the Debt Securities. The term "default" for
the purpose of this provision only shall mean the happening of any of the Events
of Default specified below excluding any grace periods.

The Indenture contains a provision entitling the Trustee, subject to the
duty of the Trustee during default to act with the required standard of care, to
be indemnified by the Holders of the Debt Securities of any series before
proceeding to exercise any right or power under the Indenture at the request of
such Holders. The Indenture provides that the Holders of a majority in principal
amount of the Outstanding Debt Securities of any series may direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred on the Trustee, provided
that the Trustee may decline to act if such direction is contrary to law or if
the Trustee determines in good faith that the proceeding so directed would be
illegal or would involve it in personal liability or would be unjustly
prejudicial to the Holders of the Debt Securities of such series not consenting.

DESCRIPTION OF COMMON STOCK

COMMON STOCK

The following description of the Common Stock sets forth certain general
terms and provisions of the Common Stock to which any Prospectus Supplement may
relate, including a Prospectus Supplement providing that Common Stock will be
issuable upon conversion of Debt Securities or Preferred Stock by the Company.
The statements below describing the Common Stock are in general terms and are in
all respects subject to and qualified in their entirety by reference to the
applicable provisions of the Company's Restated Certificate of Incorporation, as
amended, and Amended By-laws.

The Company has the authority to issue 325,000,000 shares of capital stock,
of which 300,000,000 are Common Stock, par value $.10 per share, and 25,000,000
are Preferred Stock, par value $1 per share. At March 31, 1996, the Company had
outstanding 99,921,227 shares of Common Stock and no shares of Preferred Stock.

Holders of Common Stock are entitled to receive such dividends as are
declared by the Board of Directors, subject to the preference of any outstanding
series of Preferred Stock, and are entitled to cast one vote per share on all
matters voted upon by stockholders. There is no cumulative voting for the
election of directors and the Common Stock does not have any preemptive rights.
Upon liquidation of the Company, holders of Common Stock are entitled to share
equally and ratably in any assets available for distribution to them, after
payment or provision for liabilities and amounts owing with respect to any
outstanding series of Preferred Stock. Payment and declaration of dividends on
the Common Stock and purchases of shares thereof by the Company will be subject
to certain restrictions if the Company fails to pay dividends on any series of
Preferred Stock ranking prior to the Common Stock as to the payment of
dividends. See "Description of Preferred Stock." The Company is subject to
certain restrictions under its 9% Senior Notes due 2006 and under its banking
arrangements related to the payment of dividends on its Common Stock.

The Registrar and Transfer Agent for the Common Stock is The Bank of New
York.

COMMON STOCK PURCHASE RIGHTS

On September 29, 1994 pursuant to the Company's Stockholders Rights Plan,
as amended (the "Plan"), the Board of Directors declared a dividend of one right
(a "Right") for each share of Common Stock outstanding at the close of business
on November 2, 1994. Each Right entitles the holder to purchase from the Company
one share of Common Stock at a price of $70 per share, subject to adjustment.
The Rights do not become exercisable or transferable apart from the Common Stock
until the earlier of (i) ten (10) days following a public announcement that a
person or group of affiliated or associated persons (an "Acquiring Person") has
acquired, or obtained the right to acquire, beneficial ownership of fifteen
(15%) percent or more

13
<PAGE> 16

of the shares of Common Stock or (ii) ten (10) days following the commencement
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 fifteen (15%) percent or more of the shares of Common Stock (the
earlier of (i) and (ii) being called the "Distribution Date"). The Plan provides
that the Board of Directors may postpone the Distribution Date, but until the
Distribution Date, the Rights will be transferred, with and only with, the
shares of Common Stock.

If any person or group becomes an Acquiring Person or if the Company is the
surviving corporation in a merger with an Acquiring Person or any affiliate or
associate of an Acquiring Person and the Common Stock was not changed or
exchange, each holder of a Right, other than Rights that are or were acquired or
beneficially owned by the Acquiring Person (which Rights will thereafter be
void), will thereafter have the right to receive upon exercise, the number of
shares of Common Stock having a market value of two times the then current
exercise price of the Right. If, after the Rights have become exercisable, the
Company has been acquired in a merger or other business combination in which the
Company is not the surviving corporation or in which fifty (50%) percent or more
of the assets or earning power is sold, each holder of a Right (other than the
Acquiring Person and related persons) will be entitled to receive, upon
exercise, common stock of the acquiring company having a value of two times the
exercise price of one Right.

Redemption of the Rights (as well as elimination of the Plan) will be
submitted to a binding stockholder vote if an offer for all outstanding shares
meeting certain conditions, as described below, is made and within sixty (60)
days thereafter, the Board of Directors has not either redeemed the Rights or
approved a financially superior alternative transaction. The Board must redeem
the Rights in whole, but not in part, at a price of $.01 per Right if holders of
a majority of the outstanding Common Stock vote to request such redemption to
allow the completion of that offer or a financially superior offer, thereby
providing the stockholders the power to cause the redemption of the Rights to
allow completion of an offer meeting the specified conditions, regardless of the
Board of Directors' position on that offer.

The conditions of the offer that would trigger a stockholder referendum are
as follows: (i) the offer must be for all outstanding shares of Common Stock at
the same price; (ii) the portion of the offer that is for cash must be fully
financed; (iii) any portion of the offer that is non-cash consideration must be
in the form of New York Stock Exchange listed securities and the offer must
provide tax-deferred treatment for stockholders; and (iv) the offer cannot be
subject to financing, funding or due diligence conditions.

[According to publicly filed reports and other information available to the
Company, a majority of the outstanding Common Stock is currently beneficially
owned by institutional stockholders, thereby giving such institutional
stockholders effective control over any redemption decision. The Company is
unable to predict what percentage of the Company's outstanding Common Stock will
be held by institutional holders in the future, or how any of its stockholders,
including institutional holders, will vote on any proposed redemption submitted
for a stockholder vote under the Plan.]

The Plan expires at the 1998 annual meeting of the Company's stockholders
unless holders of a majority of the shares voting at such meeting vote
affirmatively to extend the term of the Plan. If the stockholders approve the
extension at such meeting, the Plan will expire at the 2001 annual meeting of
the Company's stockholders.

The Plan may discourage certain mergers, tender offers or other purchases
of Common Stock and certain proxy contests which some or even a majority of
stockholders might deem to be advantageous. The Plan may also discourage the
accumulation of substantial investments in the Common Stock by stockholders who
do not intend to affect a change in control of the Company. By deterring
possible changes in control, the Board of Directors and management may thus
benefit from a more secure tenure.

There is no provision contained in the Company's Restated Certificate of
Incorporation or Amended By-laws or in any applicable law which affords the
protection provided by the Plan in assuring that the Board of Directors can
negotiate with a bidder on the stockholders' behalf in order to prevent, among
other things, a person or group from accumulating a substantial block of the
Common Stock and then making a bid at an inadequate price for any remaining
shares of the Common Stock.

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<PAGE> 17

DESCRIPTION OF WARRANTS

The Company may issue Warrants for the purchase of Common Stock. Warrants
may be issued independently or together with any securities offered by any
Prospectus Supplement and may be attached to or separate from such securities.
Each series of Warrants will be issued under a separate warrant agreement (each
a "Warrant Agreement") to be entered into between the Company and a warrant
agent ("Warrant Agent"). The Warrant Agent will act solely as an agent of the
Company in connection with the 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 Warrants. The following sets forth certain general terms
and provisions of the Warrants offered hereby. Further terms of the Warrants and
the applicable Warrant Agreements are set forth in the applicable Prospectus
Supplement.

The applicable Prospectus Supplement will describe the terms of the
Warrants in respect of which this Prospectus is being delivered, including,
where applicable, the following: (1) the title of such Warrants; (2) the
aggregate number of such Warrants; (3) the price or prices at which such
Warrants will be issued; (4) the number of shares of Common Stock purchasable
upon exercise of such Warrants; (5) the designation and terms of the securities
with which such Warrants are issued and the number of such Warrants issued with
each such security; (6) if applicable, the date on and after which such Warrants
and the related securities will be separately transferable; (7) the price at
which the Common Stock purchasable upon exercise of such Warrants may be
purchased; (8) the date on which the right to exercise such Warrants shall
commence and the date on which such right shall expire; (9) the minimum or
maximum amount of such Warrants which may be exercised at any one time; (10)
information with respect to book-entry procedures, if any; (11) a discussion of
certain Federal income tax considerations; and (12) any other terms of such
Warrants, including terms, procedures and limitations relating to the exchange
and exercise of such Warrants.

DESCRIPTION OF PREFERRED STOCK

The Company is authorized to issue 25,000,000 shares of Preferred Stock,
par value $1 per share, none of which are outstanding.

Under the Company's Restated Certificate of Incorporation, the Board of
Directors may from time to time establish and issue one or more additional
series of Preferred Stock and fix the designations, powers, preferences and
rights of the shares of such series and the qualification, limitations or
restrictions thereon, including, but not limited to, the fixing of the dividend
rights, dividend rate or rates, conversion rights, voting rights, rights and
terms of redemption (including sinking fund provisions), the redemption price or
prices, and the liquidation preferences, in each case, if any, of any wholly
unissued series of shares of Preferred Stock. Any such series may rank junior
to, on a parity with or senior to any other then existing series of Preferred
Stock with respect to dividends, distributions and liquidation, and any such
series may have greater or lesser voting rights than any other series of
Preferred Stock.

Because the Company is a holding company, its rights, the rights of its
creditors and of its shareholders, including the holders of the shares of the
Preferred Stock, to participate in any distribution of the assets of any
subsidiary upon the latter's liquidation or recapitalization will be subject to
the prior claims of the subsidiary's creditors, except to the extent that the
Company may itself be a creditor with recognized claims against the subsidiary.
The principal sources of the Company's revenues are derived from its operating
subsidiaries. The subsidiaries are separate and distinct legal entities and have
no obligation, contingent or otherwise, to pay any amounts or to make any funds
available to the Company, whether by dividends, loans or other payments. In
addition, the payment of dividends and certain loans and advances to the Company
by such subsidiaries may be subject to certain statutory or contractual
restrictions, are contingent upon the earnings of such subsidiaries and are
subject to various business considerations.

The following description of the Preferred Stock sets forth certain general
terms and provisions of the Preferred Stock to which any Prospectus Supplement
may relate. The statements below describing the Preferred Stock are in general
terms and are in all respects subject to and qualified in their entirety by

15
<PAGE> 18

reference to the applicable provisions of the Company's Restated Certificate of
Incorporation (including the applicable Certificate of Designation) and Amended
By-laws.

DIVIDENDS

Holders of shares of the Preferred Stock of each series shall be entitled
to receive, when, as and if declared by the Board of Directors of the Company,
out of assets of the Company legally available for payment, cash dividends at
such rates and on such dates as will be set forth in the applicable Prospectus
Supplement. Each such dividend shall be payable to holders of record as they
appear on the stock books of the Company on such record dates as shall be fixed
by the Board of Directors of the Company.

Dividends on any series of the Preferred Stock may be cumulative or
non-cumulative, as provided in the applicable Prospectus Supplement. If the
Board of Directors of the Company fails to declare a dividend payable on a
dividend payment date on any series of the Preferred Stock for which dividends
are non-cumulative, then the holders of such series of the Preferred Stock will
have no right to receive a dividend in respect of the dividend period ending on
such dividend payment date, and the Company will have no obligation to pay the
dividend accrued for such period, whether or not dividends on such series are
declared payable on any future dividend payment date.

If shares of the Preferred Stock of any series are outstanding, no full
dividends shall be declared or paid or set apart for payment on the preferred
stock of the Company of any other series ranking, as to dividends, on a parity
with or junior to the Preferred Stock of any series for any period unless full
dividends (including accumulated dividends, if applicable) have been or
contemporaneously are declared and paid or declared and a sum sufficient for the
payment thereof set apart for such payment on the Preferred Stock of such series
for all dividend periods terminating on or prior to the date of payment of such
full dividends. When dividends are not paid in full upon the shares of Preferred
Stock of any series and the shares of any other series of preferred stock
ranking on a parity as to dividends with the Preferred Stock of such series, all
dividends declared upon shares of Preferred Stock of such series and any other
series of preferred stock ranking on a parity as to dividends shall be declared
pro rata so that the amount of dividends declared per share on the Preferred
Stock of such series and such other series of preferred stock shall in all cases
bear to each other the same ratio that accrued dividends (including accumulated
dividends, if applicable) per share on the shares of Preferred Stock of such
series and such other series of preferred stock bear to each other. Holders of
shares of Preferred Stock of any series shall not be entitled to any dividends,
whether payable in cash, property or stock, in excess of full dividends
(including accumulated dividends, if applicable), payable as herein provided, on
the Preferred Stock of such series and no interest, or sum of money in lieu of
interest, shall be payable in respect of any dividend payment or payments on
Preferred Stock of such series which may be in arrears. Except as provided in
the second preceding sentence, unless full dividends (including accumulated
dividends, if applicable) on the Preferred Stock of any series have been
declared and paid or set apart for payment for all past dividend periods, no
dividends (other than in Common Stock or another stock ranking junior to the
Preferred Stock of such series as to dividends and upon liquidation) shall be
declared or paid or set aside for payment or other distribution declared or made
upon the Common Stock or on any other stock of the Company ranking junior to or
on a parity with the Preferred Stock of such series as to dividends or upon
liquidation, nor shall any Common Stock or any other stock of the Company
ranking junior to or on a parity with the Preferred Stock of such series as to
dividends or upon liquidation 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 shares of any such stock) by the Company (except by
conversion into or exchange for stock of the Company ranking junior to the
Preferred Stock of such series as to dividends and upon liquidation).

Any dividend payment made on shares of a series of Preferred Stock shall
first be credited against the earliest accrued but unpaid dividend due with
respect to shares of such series which remains payable.

REDEMPTION

The shares of Preferred Stock will be redeemable at the option of the
Company, as a whole or in part, at the times and at the redemption prices set
forth in the applicable Prospectus Supplement.

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<PAGE> 19

Notwithstanding the foregoing, unless the full dividends (including
accumulated dividends, if applicable) on all outstanding shares of Preferred
Stock of any series shall have been paid or contemporaneously are declared and
paid for all past dividend periods, no shares of Preferred Stock of such series
shall be redeemed unless all outstanding shares of Preferred Stock of such
series are simultaneously redeemed; provided, however, that the foregoing shall
not prevent the purchase or acquisition of shares of Preferred Stock of such
series pursuant to a purchase or exchange offer made on the same terms to
holders of all outstanding shares of Preferred Stock of such series, and, unless
the full dividends (including accumulated dividends, if applicable) on all
outstanding shares of Preferred Stock of any series and any other stock of the
Company ranking on a parity with such series as to dividends and upon
liquidation shall have been paid or contemporaneously are declared and paid for
all past dividend periods, the Company shall not purchase or otherwise acquire
directly or indirectly any shares of Preferred Stock of such series (except by
conversion into or exchange for stock of the Company ranking junior to the
Preferred Stock of such series as to dividends and upon liquidation.)

Notice of redemption will be mailed at least 30 days but not more than 60
days before the redemption date to each holder of record of shares of Preferred
Stock to be redeemed at the address shown on the stock transfer books of the
Company. After the redemption date, dividends will cease to accrue on the shares
of Preferred Stock called for redemption and all rights of the holders of such
shares will terminate, except the right to receive the redemption price without
interest.

LIQUIDATION PREFERENCE

Upon any voluntary or involuntary liquidation, dissolution or winding up of
the affairs of the Company, then, before any distribution or payment shall be
made to the holders of any stock over which the Preferred Stock of any series
has preference or priority in the distribution of assets on any liquidation,
dissolution or winding up of the Company, the holders of such series of
Preferred Stock shall be entitled to be paid in full an amount equal to the
stated value per share (as set forth in the applicable Prospectus Supplement),
plus an amount equal to all dividends accrued and unpaid thereon. After payment
of the full amount of the liquidating distributions to which they are entitled,
the holders of Preferred Stock will have no right or claim to any of the
remaining assets of the Company. In the event that, upon any such voluntary or
involuntary liquidation, dissolution or winding up, the available assets of the
Company are insufficient to pay such amount on all outstanding shares of
Preferred Stock of any series and the corresponding amounts payable on all
shares of other classes or series of stock of the Company ranking on a parity
with the Preferred Stock of such series in the distribution of assets, then the
holders of the Preferred Stock of such series and of all other such classes or
series shall share ratably in any distribution of assets in proportion to the
full amounts to which they would otherwise be respectively entitled.

If such payment shall have been made in full to all holders of shares of
Preferred Stock, the remaining assets of the Company shall be distributed among
the holders of any other classes of stock ranking junior to the Preferred Stock
upon liquidation, dissolution or winding up, according to their respective
rights and preferences and in each case according to their respective number of
shares. For such purposes, the consolidation or merger of the Company with or
into any other corporation, or the sale, lease or conveyance of all or
substantially all of the property or business of the Company, shall not be
deemed to constitute a liquidation, dissolution or winding up of the Company.

VOTING RIGHTS

Holders of the Preferred Stock will not have any voting rights, except as
set forth below or as otherwise from time to time required by law or as
indicated in the applicable Prospectus Supplement.

So long as any shares of any series of Preferred Stock remain outstanding,
the Company shall not, without the affirmative vote or consent of the holders of
at least 66 2/3% of all shares of such series of Preferred Stock outstanding at
the time, given in person or by proxy, either in writing or at a meeting (such
series voting separately as a class), (i) authorize, create or issue, or
increase the authorized or issued amount of, any class or series of stock
ranking prior to such series of Preferred Stock with respect to payment of
dividends or the distribution of assets on liquidation, dissolution or winding
up or reclassify any authorized stock of the Company into any such shares, or
create, authorize or issue any obligation or security convertible into or
evidencing the right to purchase any such shares; or (ii) amend, alter or repeal
the provisions of the

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<PAGE> 20

Company's Restated Certificate of Incorporation, as amended, or of the
resolutions contained in the Certificate of Designation for such series of
Preferred Stock, whether by merger, consolidation or otherwise, so as to
materially and adversely affect any right, preference, privilege or voting power
of such series of Preferred Stock or the holders thereof; provided, however,
that any increase in the amount of the authorized preferred stock or the
creation or issuance of other series of preferred stock, or any increase in the
amount of authorized shares of such series or of any other series of preferred
stock, in each case ranking on a parity with or junior to the Preferred Stock of
such series, shall not be deemed to materially and adversely affect such rights,
preferences, privileges or voting powers.

The foregoing voting provisions will not apply if, at or prior to the time
when the act with respect to which such vote would otherwise be required shall
be effected, all outstanding shares of the Preferred Stock shall have been
redeemed or called for redemption and sufficient funds shall have been deposited
in trust to effect such redemption.

The Company's Restated Certificate of Incorporation may be amended to
increase the number of authorized shares of preferred stock without the vote of
the holders of outstanding shares of Preferred Stock.

CONVERSION RIGHTS

The Prospectus Supplement for any series of Preferred Stock will state
whether shares in that series are convertible into Common Stock. See
"Description of Common Stock," above. Unless otherwise provided in the
applicable Prospectus Supplement, if a series of Preferred Stock is convertible
into shares of Common Stock ("Convertible Preferred Stock"), holders of such
Convertible Preferred Stock will have the right, at their option and at any
time, to convert any of such Convertible Preferred Stock, initially at the
conversion price set forth in the Prospectus Supplement relating to such
Convertible Preferred Stock, provided that, if such series of Convertible
Preferred Stock is called for redemption, the conversion rights pertaining
thereto will terminate at the close of business on the business day immediately
preceding the date fixed for redemption. The Company will not be required to
issue fractional shares of Common Stock but will pay a cash adjustment in lieu
thereof.

Unless otherwise indicated in the applicable Prospectus Supplement, the
conversion price is subject to adjustment in certain events, including (i) the
subdivision, combination or reclassification of the outstanding Common Stock of
the Company, (ii) the issuance of Common Stock as a dividend or distribution on
Common Stock, (iii) the issuance of rights or warrants (expiring within 45 days
after the record date) to all holders of Common Stock entitling them to acquire
shares of Common Stock (or securities convertible into or exchangeable for
Common Stock) at less than the then current market price (as defined in the
Certificate of Designation for such series of Convertible Preferred Stock) of
the Common Stock, (iv) the distribution to all holders of Common Stock of shares
of any class other than Common Stock, or debt securities or assets (excluding
regular quarterly cash dividends or distributions) or rights or warrants to
purchase assets or securities of the Company (other than those referred to
above), (v) the issuance (with certain exceptions) of Common Stock or securities
convertible into, or exchangeable for, Common Stock at less than the current
market price of the Common Stock or (vi) certain mergers, consolidations or
sales of assets. There will be no upward adjustment in the conversion price
except in the event of a reverse stock split. The Company will not be required
to make any adjustment in the conversion price of less than 1% of such price,
but the same will be carried forward and taken into account in the computation
of any subsequent adjustment.

Shares of Preferred Stock surrendered for conversion during the period from
the close of business on any record date next preceding any dividend payment
date to the opening of business on such dividend payment date (except shares of
Preferred Stock called for redemption) must be accompanied by payment of an
amount equal to the dividend or distribution on such payment date on the shares
of Preferred Stock so converted. In the case of any shares of Preferred Stock
which have been converted after any record date but on or before the next
dividend payment date (except shares of Preferred Stock called for redemption
within such period), the dividend or distribution payable on such payment date
shall be paid notwithstanding such conversion, and such dividend shall be paid
or distribution made to the holder of such shares of Preferred Stock on such
record date. Except as described above, no dividend or distribution on converted
shares of Preferred Stock will be

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<PAGE> 21

payable by the Company on any dividend payment date subsequent to the date of
conversion. No other payment or adjustment for dividends or distributions is to
be made upon conversion.

Conversion price adjustments or omissions in making such adjustments may,
under certain circumstances, be deemed to be distributions that could be taxable
as dividends under the Internal Revenue Code to holders of Preferred Stock or to
holders of Common Stock.

In case of any reclassification (excluding those referred to above),
merger, consolidation or sale of substantially all the assets of the Company, as
an entirety, the holder of each outstanding share of Preferred Stock shall have
the right to convert such share only into the kind and amount of shares of stock
and other securities and property (including cash) receivable by a holder of the
number of shares of Common Stock into which such shares of Preferred Stock might
have been converted immediately prior to the effective date of the transaction.

PLAN OF DISTRIBUTION

The Company may sell the Offered Securities to one or more underwriters for
public offering and sale by them or may sell the Offered Securities to investors
directly or through agents. Any such underwriter or agent involved in the offer
and sale of the Offered Securities will be named in the Prospectus Supplement.

Underwriters may offer and sell the Offered Securities at a fixed price or
prices, which may be changed, from time to time at market prices prevailing at
the time of sale, at prices related to such prevailing market prices or at
negotiated prices. The Company also may offer and sell the Offered Securities in
exchange for one or more of its outstanding issues of debt or convertible debt
securities. The Company also may, from time to time, authorize underwriters
acting as the Company's agents to offer and sell the Offered Securities upon the
terms and conditions as are set forth in any Prospectus Supplement. In
connection with the sale of Offered Securities, underwriters may be deemed to
have received compensation from the Company 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 the Company 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 the Company, to indemnification against and contribution toward certain
civil liabilities, including liabilities under the Securities Act.

If so indicated in the Prospectus Supplement, the Company will authorize
dealers acting as the Company's agents to solicit offers by certain institutions
to purchase Offered Securities from the Company at the public offering price set
forth in the Prospectus Supplement pursuant to Delayed Delivery Contracts
("Contracts") providing for payment and delivery on the date or dates stated in
the 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
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 the Company.
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, the

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<PAGE> 22

Company 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 the Company and its
subsidiaries in the ordinary course of business.

LEGAL MATTERS

The validity of the Offered Securities will be passed upon for the Company
by Latham & Watkins, Los Angeles, California.

EXPERTS

The consolidated financial statements of Beverly Enterprises, Inc. at
December 31, 1995 and for each of the three years in the period ended December
31, 1995 appearing in Beverly Enterprises, Inc.'s Annual Report on Form 10-K for
the year ended December 31, 1995, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon included therein and
incorporated herein by reference. Such consolidated 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.

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<PAGE> 23

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The estimated expenses in connection with the issuance and distribution of
the securities being registered, other than underwriting discount, are as
follows:

<TABLE>
<S> <C>
Securities and Exchange Commission registration fee....................... $ 68,966
National Association of Securities Dealers, Inc. filing fee............... 20,500
Rating Agency fees........................................................
Printing and engraving expenses...........................................
Legal fees and expenses...................................................
Accounting fees and expenses..............................................
Blue Sky fees and expenses................................................
Trustees' fees and expenses...............................................
Miscellaneous.............................................................
--------
Total........................................................... $
========
</TABLE>

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the Delaware General Corporation Law provides that a
director, officer, employee or agent of a corporation (i) must be indemnified by
the corporation for all expenses actually and reasonably incurred in connection
with any action, suit or proceeding when such individual is successful on the
merits or otherwise in such litigation or proceedings, (ii) may be indemnified
by the corporation for the expenses, judgments, fines and amounts paid in
settlement actually and reasonably incurred in any action, suit or proceeding
(other than any action by or in the right of the corporation, which hereinafter
will be referred to as a "derivative action") even if such individual is not
successful, if he acted in good faith and in a manner such individual reasonably
believed to be in or not opposed to the best interests of the corporation (and,
in the case of a criminal proceeding, had no reasonable cause to believe his
conduct was unlawful), and (iii) may be indemnified by the corporation for
expenses actually and reasonably incurred in a derivative action, even if such
individual is not successful, if he or she acted in good faith and in a manner
such individual reasonably believed to be in or not opposed to the best
interests of the corporation, provided that indemnification may not be made in
the case of derivative actions if the director or officer is adjudged liable to
the corporation, unless and only to the extent the court determines that,
despite such adjudication but in view of all of the circumstances, such
individual is duly and reasonably entitled to indemnification of such expenses.
The indemnification described in (ii) and (iii) above may be made only upon a
determination by (i) a majority of a quorum of directors who are not parties to
such action, suit or proceeding, (ii) under certain circumstances, independent
legal counsel, or (iii) the stockholders, that indemnification is proper because
the applicable standard of conduct is met. Expenses incurred by a director or
officer in defending any civil, criminal, administrative or investigative
action, suit or proceeding may be advanced by the corporation prior to the final
disposition of such action, suit or proceeding upon receipt of an undertaking by
or on behalf of such director or officer to repay such expenses if it is
ultimately determined that the individual is not entitled to be indemnified in
connection with the proceeding to which the expenses relate. Under Section 145,
except in the case in which a director or officer is successful on the merits or
otherwise, indemnification is discretionary.

The Restated Certificate of Incorporation and the Amended By-Laws of
Beverly and the indemnification agreements between the Registrant and its
officers and directors (the "Indemnification Agreements") contain provisions
regarding the indemnification of officers and directors.

II-1
<PAGE> 24

The Restated Certificate of Incorporation of the Registrant ("Beverly" or the
"Corporation") states:

ARTICLE XIII

The Corporation shall indemnify to the full extent permitted by law (such
as it presently exists or may hereafter be amended) any person made, or
threatened to be made, a defendant or witness to any action, suit or proceeding
(whether civil, criminal, administrative or investigative), by reason of the
fact that such person is or was a director or officer of the Corporation or by
reason of the fact that such director or officer, at the request of the
Corporation, is or was serving any other corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise, in any capacity.

Any amendment, repeal, or modification of the foregoing paragraph shall not
adversely affect any right or protection of such person existing hereunder with
respect to any act or omission occurring prior to such amendment, repeal, or
modification.

The Amended By-Laws of Beverly state:

ARTICLE VI

INDEMNIFICATION

Section 1. Right to Indemnification. The Corporation shall indemnify and
hold harmless, to the fullest extent permitted by applicable law as it presently
exists or may hereafter be amended, any person who was or is made or is
threatened to be made a party or is otherwise involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative (a
"proceeding") by reason of the fact that he or she, or a person for whom he or
she is the legal representative, is or was a Director or Officer of the
Corporation (or a Director or Officer of Beverly Enterprises, a California
corporation ("Beverly California"), prior to the merger of Beverly Merger, Inc.,
a subsidiary of the Corporation organized under California law, into Beverly
California) or is or was serving at the request of the Corporation as a
Director, Officer, employee, fiduciary or agent of another corporation or of a
partnership, joint venture, trust, enterprise, or nonprofit entity, including
service with respect to employee benefit plans, against all liability and loss
suffered and expenses reasonably incurred by such person. The Corporation shall
indemnify a person in connection with a proceeding initiated by such person only
if the proceeding was authorized by the Board of Directors of the Corporation.

Section 2. Prepayment of Expenses. The Corporation shall pay the expenses
incurred in defending any proceeding in advance of its final disposition,
provided, however, that the payment of expenses incurred by a Director or
Officer in his or her capacity as a Director or Officer in advance of the final
disposition of the proceeding shall be made only upon receipt of an undertaking
by the Director or Officer to repay all amounts advanced if it should be
ultimately determined that the Director or Officer is not entitled to be
indemnified under this Article or otherwise.

Section 3. Claims. If a claim for indemnification or payment of expenses
under this Article VI is not paid in full within ninety (90) days after a
written claim therefor has been received by the Corporation, the claimant may
file suit to recover the unpaid amount of such claim and, if successful in whole
or in part, shall be entitled to be paid the expense of prosecuting such claim.
In any such action the Corporation shall have the burden of proving that the
claimant was not entitled to the requested indemnification or payment of
expenses under applicable law.

Section 4. Nonexclusivity of Rights. The rights conferred on any person by
this Article VI shall not be exclusive of any other rights which such person may
have or hereafter acquire under any statute, provision of the Restated
Certificate of Incorporation of the Corporation, these Amended By-Laws,
agreement, vote of stockholders or disinterested directors or otherwise.

Section 5. Contracts and Arrangements. The Corporation may enter into
contracts providing indemnification to the full extent authorized or permitted
by the General Corporation Law of the State of Delaware and may create a trust
fund, grant a security interest and/or use other means (including, without
limitation, letters

II-2
<PAGE> 25

of credit, surety bonds and other similar arrangements) to ensure the payment of
such amounts as may become necessary to effect indemnification pursuant to such
contracts or otherwise.

Section 6. Amendment or Repeal. Any repeal or modification of the foregoing
provisions of this Article VI shall not adversely affect any right or protection
of any person in respect of any act or omission occurring prior to the time of
such repeal or modification.

The Indemnification Agreements provide (a) for indemnification to the
fullest extent permitted by law against any and all expenses (including
attorneys' fees and all other costs and obligations of any nature whatever),
judgments, fines, penalties and amounts paid in settlement (including all
interest, assessments and other charges paid or payable in connection therewith)
of any claim, unless a person or body appointed by the Board of Directors of
Beverly, (or, under certain circumstances discussed below, Independent Legal
Counsel) determines that such indemnification is not permitted under applicable
law; (b) for the prompt advancement of expenses to the director or officer,
including attorneys' fees and all other costs, fees, expenses and obligations
paid or incurred in connection with investigating, defending, being a witness or
participating in, or preparing to defend, be a witness in or participate in any
threatened, pending or completed action, suit or proceeding, alternate dispute
resolution mechanism or any inquiry, hearing or investigation related to the
fact that such director or officer is or was a director, officer, employee,
agent or fiduciary of Beverly or is or was serving at the request of Beverly as
a director, officer, employee, trustee, agent or fiduciary of another
corporation, partnership, joint venture, employee benefit plan, trust or other
enterprise, and for repayment to Beverly if it is found that such director or
officer is not entitled to such indemnification under applicable law; (c) a
mechanism through which the director or officer may seek court relief in the
event the Board of Directors of Beverly (or other person or body appointed by
such Board) determines that the director or officer would not be permitted to be
indemnified under applicable law (and therefore is not entitled to
indemnification under the Indemnification Agreement); (d) indemnification
against expenses (including attorneys' fees) incurred in seeking to collect from
Beverly an indemnity claim or advancement of expenses to the extent successful;
(e) that after a change in control of Beverly all determinations by Beverly
regarding a right to indemnity and the right to advancement of expenses shall be
made by Independent Legal Counsel (as defined in the Indemnification Agreements)
to be selected by the director or officer and approved by the Board (which
approval cannot be unreasonably withheld); and (f) Beverly may create a trust
fund, grant a security interest and/or use other means (including, without
limitation, letters of credit, surety bonds and other similar agreements) to
ensure payment of indemnifiable amounts.

Among other things, the Indemnification Agreements provide the indemnified
directors and officers with a specific contractual assurance that the rights to
indemnification currently provided to them will remain available, regardless of,
among other things, any amendment to or revocation of the indemnification
provisions in the Restated Certificate of Incorporation or the Amended By-Laws
or any change in composition or philosophy of the Board of Directors of Beverly
such as might occur following an acquisition or change in control of Beverly.
The Indemnification Agreements ensure, in the event of a change of control, that
a determination of whether a director or officer is entitled to indemnification
and advancement of expenses will not be made by a possibly hostile board. If
court assistance to obtain such indemnity is required, the director or officer
can receive indemnity against costs incurred in pursuing his or her rights to
indemnification. In addition, the Indemnification Agreements guarantee to
directors and officers that they will realize the benefit of any subsequent
changes in Delaware law relating to indemnification.

The Indemnification Agreements impose upon Beverly if a change in control
has occurred, the burden of proving that the director or officer is not entitled
to indemnification in any particular case, and the Indemnification Agreements
negate certain presumptions which might otherwise be drawn against a director or
officer in connection with the termination of actions in certain circumstances.
The Indemnification Agreements also provide that a director's or officer's
rights thereunder are not exclusive of any other rights he or she may have under
Delaware law, directors' and officers' insurance, the Restated Certificate of
Incorporation, the Amended By-Laws or otherwise; however, the Indemnification
Agreements do prevent double payment. Notwithstanding the above discussion, all
terms and rights under the Indemnification Agreements exist only to the extent
permitted by applicable law.

II-3
<PAGE> 26

Beverly has in force directors' and officers' liability and company
reimbursement insurance covering liability for error, misstatement, misleading
statement, act or omission, and neglect or breach of duty claimed against them
solely by reason of their being directors or officers of Beverly.

ITEM 16. EXHIBITS

See Exhibit Index.

ITEM 17. UNDERTAKINGS

(a) The undersigned Registrant hereby undertakes:

(1) 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 of 1933, as amended (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 and 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 20 percent 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)(1)(i) and (a)(1)(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 with or furnished
to the Commission by the Registrant pursuant to Section 13 or Section 15(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
that are incorporated by reference in the Registration Statement.

(2) 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.

(3) 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.

(b) 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.

(c) 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

II-4
<PAGE> 27

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.

(d) The undersigned Registrant hereby undertakes that:

(1) 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.

(2) For the purpose 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.

II-5
<PAGE> 28

SIGNATURES

Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of 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 Fort Smith, State of Arkansas on May 10, 1996.

BEVERLY ENTERPRISES, INC.

By: /s/ DAVID R. BANKS
------------------------------
David R. Banks
Chairman of the Board
and Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints David R. Banks, Robert W. Pommerville, Scott M.
Tabakin and John W. MacKenzie, and each or any of them, his or her true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement or any subsequent registration
statement pursuant to Rule 462 (including amendments thereto), and to file the
same, with all exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he or she might
or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his substitutes or
substitute, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- -------------------------------- -------------
<C> <S> <C>
/s/ DAVID R. BANKS Chairman of the Board, Chief May 10, 1996
------------------------------------------- Executive Officer and Director
David R. Banks

/s/ BOYD W. HENDRICKSON President, Chief Operating May 10, 1996
------------------------------------------- Officer and Director
Boyd W. Hendrickson

/s/ SCOTT M. TABAKIN Senior Vice President, May 10, 1996
------------------------------------------- Controller, Chief Accounting
Scott M. Tabakin Officer and Acting Chief
Financial Officer
/s/ BERYL F. ANTHONY, JR. Director May 10, 1996
-------------------------------------------
Beryl F. Anthony, Jr.

/s/ JAMES R. GREENE Director May 10, 1996
-------------------------------------------
James R. Greene

/s/ EDITH E. HOLIDAY Director May 10, 1996
-------------------------------------------
Edith E. Holiday

/s/ JON E. M. JACOBY Director May 10, 1996
-------------------------------------------
Jon E. M. Jacoby
Director May , 1996
-------------------------------------------
Risa J. Lavizzo-Mourey

/s/ LOUIS W. MENK Director May 10, 1996
-------------------------------------------
Louis W. Menk

/s/ MARILYN R. SEYMANN Director May 10, 1996
-------------------------------------------
Marilyn R. Seymann

</TABLE>
<PAGE> 29

EXHIBIT INDEX

<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ---------- -----------------------------------------------------------------------------------
<C> <S> <C>
*1.1 -- Form of Underwriting Agreement for Debt Securities
*1.2 -- Form of Underwriting Agreement for Common Stock, Preferred Stock and
Warrants
4.1 -- Form of Senior Indenture
4.2 -- Form of Subordinated Indenture
*4.3 -- Form of Note Indenture
4.4 -- Form of Specimen Senior Debt Security (included in Exhibit 4.1)
4.5 -- Form of Specimen of Subordinated Debt Security (included in Exhibit
4.2)
*4.6 -- Form of Specimen of Note (included in Exhibit 4.3)
*4.7 -- Form of Warrant Agreement
4.8 -- Form of Common Stock Certificate (incorporated by reference
)
*4.9 -- Form of Preferred Stock Certificate
*4.10 -- Form of Warrant (included in Exhibit 4.7)
*5.1 -- Opinion of Latham & Watkins as to validity of Offered Securities
12.1 -- Computation of Ratio of Earnings to Fixed Charges and to Combined
Fixed Charges and Preferred Dividends
23.1 -- Consent of Ernst & Young LLP
*23.2 -- Consent of Latham & Watkins (included in its opinion filed as Exhibit
5.1)
24.1 -- Power of Attorney of Registrant's Directors and Officers
(incorporated in the signature page on page II-5 in this Registration
Statement)
*25.1 -- Statement of Eligibility of Trustee on Form T-1 with respect to
Senior Indenture
*25.2 -- Statement of Eligibility of Trustee on Form T-1 with respect to
Subordinated Indenture
*25.3 -- Statement of Eligibility of Trustee on Form T-1 with respect to Note
Indenture
</TABLE>

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

* To be filed by amendment or incorporated by reference in connection with the
offering of any Offered Securities.

<PAGE> 1
EXHIBIT 4.1

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

BEVERLY ENTERPRISES, INC.

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

SENIOR INDENTURE

Dated as of __________, 1996

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

[NAME OF TRUSTEE]

Trustee

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

<PAGE> 2
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
ARTICLE I

DEFINITIONS AND INCORPORATION BY REFERENCE . . . . . . . . . . . . . . . . . 1
SECTION 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2 Other Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 1.3 Incorporation by Reference of Trust Indenture Act . . . . . . . . . . . . . . . . . . . . 6
SECTION 1.4 Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

ARTICLE II

THE SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.1 Issuable in Series . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.2 Establishment of Terms of Series of Securities . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.3 Execution and Authentication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.4 Registrar and Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.5 Paying Agent to Hold Money in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.6 Securityholder Lists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.7 Transfer and Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.8 Mutilated, Destroyed, Lost and Stolen Securities . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.9 Outstanding Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.10 Treasury Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 2.11 Temporary Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 2.12 Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 2.13 Defaulted Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2.14 Global Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2.15 CUSIP Numbers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

ARTICLE III

REDEMPTION . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.1 Notice to Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.2 Selection of Securities to be Redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.3 Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 3.4 Effect of Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 3.5 Deposit of Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 3.6 Securities Redeemed in Part . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

ARTICLE IV

COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 4.1 Payment of Principal and Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 4.2 SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 4.3 Compliance Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 4.4 Stay, Extension and Usury Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 4.5 Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 4.6 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

ARTICLE V

SUCCESSORS . . . . . . . . . . . . . . . . . . . . . . . . . 21
</TABLE>

<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 5.1 When Company May Merge, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 5.2 Successor Corporation Substituted . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

ARTICLE VI

DEFAULTS AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 6.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 6.2 Acceleration of Maturity; Rescission and Annulment. . . . . . . . . . . . . . . . . . . . 24
SECTION 6.3 Collection of Indebtedness and Suits for Enforcement by Trustee . . . . . . . . . . . . . 25
SECTION 6.4 Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 6.5 Trustee May Enforce Claims Without Possession of Securities . . . . . . . . . . . . . . . 27
SECTION 6.6 Application of Money Collected . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 6.7 Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 6.8 Unconditional Right of Holders to Receive Principal and Interest . . . . . . . . . . . . . 28
SECTION 6.9 Restoration of Rights and Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 6.10 Rights and Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 6.11 Delay or Omission Not Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 6.12 Control by Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 6.13 Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 6.14 Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 6.15 Enforcement of Rights of Conversion by Holders . . . . . . . . . . . . . . . . . . . . . . 30

ARTICLE VII

CONVERSION . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 7.1 Conversion Privilege . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 7.2 Conversion Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 7.3 Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 7.4 Taxes on Conversion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 7.5 Company to Provide Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 7.6 Adjustment for Change in Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 7.7 Adjustment for Rights Issue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 7.8 Adjustment for Other Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 7.9 Current Market Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 7.10 When Adjustment May be Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 7.11 When No Adjustment Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 7.12 Notice of Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 7.13 Voluntary Reduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 7.14 Notice of Certain Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 7.15 Reorganization of Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 7.16 Company Determination Final . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 7.17 Trustee's Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

ARTICLE VIII

TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 8.1 Duties of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 8.2 Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 8.3 Individual Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 8.4 Trustee's Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
</TABLE>

<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 8.5 Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 8.6 Reports by Trustee to Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 8.7 Compensation and Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 8.8 Replacement of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 8.9 Successor Trustee by Merger, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 8.10 Eligibility; Disqualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 8.11 Preferential Collection of Claims Against Company . . . . . . . . . . . . . . . . . . . . 43

ARTICLE IX
SATISFACTION AND DISCHARGE . . . . . . . . . . . . . . . . . . . . . 44
SECTION 9.1 Satisfaction and Discharge of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 9.2 Application of Trust Funds; Indemnification . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 9.3 Satisfaction, Discharge and Defeasance of Securities of any Series . . . . . . . . . . . . 45
SECTION 9.4 Defeasance of Certain Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 9.5 Repayment to Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

ARTICLE X

AMENDMENTS AND WAIVERS . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 10.1 Without Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 10.2 With Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 10.3 Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 10.4 Compliance with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 10.5 Revocation and Effect of Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 10.6 Notation on or Exchange of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 10.7 Trustee Protected . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

ARTICLE XI

MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 11.1 Trust Indenture Act Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 11.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 11.3 Communication by Holders with Other Holders . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 11.4 Certificate and Opinion as to Conditions Precedent . . . . . . . . . . . . . . . . . . . . 54
SECTION 11.5 Statements Required in Certificate or Opinion . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 11.6 Rules by Trustee and Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 11.7 Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 11.8 No Recourse Against Others. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 11.9 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 11.10 Governing Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 11.11 No Adverse Interpretation of Other Agreements . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 11.12 Successors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 11.13 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 11.14 Table of Contents, Headings, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 11.15 Securities in a Foreign Currency or in ECU . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 11.16 Judgment Currency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

ARTICLE XII

SINKING FUNDS . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 12.1 Applicability of Article . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
</TABLE>

iii

<PAGE> 5
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 12.2 Satisfaction of Sinking Fund Payments with Securities . . . . . . . . . . . . . . . . . . 58
SECTION 12.3 Redemption of Securities for Sinking Fund . . . . . . . . . . . . . . . . . . . . . . . . 58
</TABLE>

<PAGE> 6
Indenture dated as of __________, 1996, between Beverly
Enterprises, Inc., a Delaware corporation ("Company"), and
_____________________ ("Trustee").

Each party agrees as follows for the benefit of the other party and
for the equal and ratable benefit of the Holders of the Securities issued under
this Indenture.

ARTICLE I

DEFINITIONS AND INCORPORATION BY REFERENCE

SECTION 1.1 Definitions.

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

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

"Authorized Newspaper" means a newspaper in an official language of
the country of publication customarily published at least once a day for at
least five days in each calendar week and of general circulation in the place
in connection with which the term is used. If it shall be impractical in the
opinion of the Trustee to make any publication of any notice required hereby in
an Authorized Newspaper, any publication or other notice in lieu thereof that
is made or given by the Trustee shall constitute a sufficient publication of
such notice.

"Bankruptcy Law" means title 11, U.S. Code or any similar Federal
or State law for the relief of debtors.

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

"Bearer Security" means any Security that does not provide for the
identification of the Holder thereof.

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

<PAGE> 7
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been adopted by the
Board of Directors or pursuant to authorization by the Board of Directors and
to be in full force and effect on the date of the certificate and delivered to
the Trustee.

"Business Day" means a day other than a Saturday, a Sunday or a day
which shall be in the City of New York a day on which banking institutions are
authorized or obligated by law or required by executive order to be closed.

"Capitalized Lease" means any lease of property where the
obligations of the lessee thereunder are required to be classified and
accounted for as a capitalized lease on a balance sheet of such lessee under
generally accepted accounting principles.

"Common Stock" means the Common Stock, $.01 par value per share, of
the Company.

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

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

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

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

"Custodian" means any receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.

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

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

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

<PAGE> 8
and payable upon declaration of acceleration of the maturity thereof pursuant
to Section 6.2.

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

"ECU" means the European Currency Unit as determined by the
Commission of the European Union.

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

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

"Foreign Government Securities" means with respect to Securities of
any Series that are denominated in a Foreign Currency, noncallable (i) direct
obligations of the government that issued such Foreign Currency for the payment
of which obligations 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 such government, the payment of which obligations is
unconditionally guaranteed as a full faith and credit obligation of such
government.

"Global Security" or "Global Securities" means a Security or
Securities, as the case may be, in the form established pursuant to Section 2.1
evidencing all or part of a Series of Securities, issued to the Depository for
such Series or its nominee, and registered in the name of such Depository or
nominee.

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

"Indebtedness" means, with respect to any person, and without
duplication:

(a) any liability of such person (A) for borrowed money,
or (B) for any letter of credit for the account of such person supporting
obligations of such person or other persons, or (C) evidenced by a bond,
note, debenture or similar instrument (including a purchase money
obligation) given in connection with the acquisition of any businesses,
properties or assets of any kind (other than a trade payable or a current
liability arising in the ordinary course of business), or (D) for the
payment of money relating to a Capitalized Lease;

(b) any liability of others described in the preceding
clause (a) that the person has guaranteed or that is otherwise its legal
liability; and

<PAGE> 9
(c) any amendment, supplement, modification, deferral,
renewal, extension or refunding of any liability of the types referred to
in clauses (a) and (b) above.

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

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

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

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

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

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

"principal" of a Security means the principal of the Security plus,
when appropriate, the premium, if any, on the Security.

"Responsible Officer" when used with respect to the Trustee, means
the chairman or the vice-chairman of the board of directors or trustees, the
chairman or vice-chairman of the executive committee of the board of directors
or trustees, the president, any vice-president, the treasurer, the secretary,
any trust officer, any second or assistant vice-president or any officer or
assistant officer of the Trustee other than those specifically above mentioned
customarily performing functions similar to those performed by the persons who
at the time shall be such officers, respectively, or to whom any corporate
trust matter is referred because of his knowledge of and familiarity with a
particular subject.

"SEC" means the Securities and Exchange Commission.

<PAGE> 10
"Securities" means the debentures, notes or other debt instruments
of the Company of any Series authenticated and delivered under this Indenture.

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

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

"Subsidiary" of any specified person means (i) a corporation a
majority of whose capital stock with voting power, under ordinary
circumstances, to elect directors is at the time, directly or indirectly, owned
by such person or by such person and a subsidiary or subsidiaries of such
person or by a subsidiary or subsidiaries of such person or (ii) any other
person (other than a corporation) in which such person or such person and a
subsidiary or subsidiaries of such person or a subsidiary or subsidiaries of
such person directly or indirectly, at the date of determination thereof has at
least majority ownership interest.

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

"Trustee" means the person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean or include each person who is then a Trustee hereunder,
and if at any time there is more than one such person, "Trustee" as used with
respect to the Securities of any Series shall mean the Trustee with respect to
Securities of that Series.

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

<PAGE> 11
(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 U.S. Government
Obligation evidenced by such depository receipt.

SECTION 1.2 Other Definitions.

<TABLE>
<CAPTION>
DEFINED IN
TERM SECTION
---- ----------
<S> <C>
"Event of Default" . . . . . . . . . . . . . . . . . . 6.1
"Journal" . . . . . . . . . . . . . . . . . . . . . . 11.15
"Judgment Currency" . . . . . . . . . . . . . . . . . 11.16
"Legal Holiday" . . . . . . . . . . . . . . . . . . . 11.7
"mandatory sinking fund payment" . . . . . . . . . . . 12.1
"Market Exchange Rate" . . . . . . . . . . . . . . . . 11.15
"New York Banking Day" . . . . . . . . . . . . . . . . 11.16
"optional sinking fund payment" . . . . . . . . . . . 12.1
"Paying Agent" . . . . . . . . . . . . . . . . . . . . 2.4
"Registrar" . . . . . . . . . . . . . . . . . . . . . 2.4
"Required Currency" . . . . . . . . . . . . . . . . . 11.16
"Service Agent" . . . . . . . . . . . . . . . . . . . 2.4
</TABLE>

SECTION 1.3 Incorporation by Reference of Trust Indenture Act.

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

"Commission" means the SEC.

"indenture securities" means the Securities.

"indenture security holder" means a Securityholder.

"indenture to be qualified" means this Indenture.

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

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

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

SECTION 1.4 Rules of Construction.

Unless the context otherwise requires:

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

<PAGE> 12
(b) an accounting term not otherwise defined has the
meaning assigned to it in accordance with generally accepted
accounting principles;

(c) references to "generally accepted accounting
principles" shall mean generally accepted accounting principles in
effect as of the time when and for the period as to which such
accounting principles are to be applied;

(d) "or" is not exclusive;

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

(f) provisions apply to successive events and
transactions.

ARTICLE II

THE SECURITIES

SECTION 2.1 Issuable in Series.

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

The Securities will rank equally with all other unsecured and
unsubordinated indebtedness of the Company.

SECTION 2.2 Establishment of Terms of Series of Securities.

At or prior to the issuance of any Securities within a Series,
the following shall be established (as to the Series generally, in the case of
Subsections 2.2.1 and 2.2.2 and either as to such Securities within the Series
or as to the Series generally in the case of Subsections 2.2.3 through 2.2.21)
by either a Board Resolution, a supplemental indenture hereto or an Officers'
Certificate pursuant to authority granted under a Board Resolution:

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

<PAGE> 13
2.2.2 any limit upon the aggregate principal
amount of the Securities of the Series which may be authenticated and
delivered under this Indenture (except for Securities authenticated
and delivered upon registration of transfer of, or in exchange for, or
in lieu of, other Securities of the Series pursuant to Section 2.7,
2.8 or 2.11);

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

2.2.4 the rate or rates at which the Securities of
the Series shall bear interest, if any, or the formula or provision
pursuant to which such rate or rates are determined including, but not
limited to, any commodity, commodity index, stock exchange index or
financial index, the date or dates from which such interest, if any,
shall accrue, the dates on which such interest, if any, shall be
payable and the record date for the interest payable on any interest
payment date;

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

2.2.6 the date, if any, after which the price or
prices at which and the terms and conditions upon which the Securities
of the Series may, pursuant to any optional or mandatory redemption
provisions, be redeemed and the other detailed terms and provisions of
any such optional or mandatory redemption provisions;

2.2.7 the person to whom any interest on the
Securities of the Series shall be payable, if other than the person in
whose name the Securities of the Series are registered at the close of
business on the record date for such interest.

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

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

2.2.10 if the amount of principal of or premium,
if any, or interest on any of such Securities of the Series may be
determined with reference to an index or pursuant to a formula, the
manner in which such amounts will be determined;

<PAGE> 14
2.2.11 if the principal amount payable at the
Stated Maturity of any of the Securities of the Series will not be
determinable as of any one or more dates prior to the stated maturity,
the amount which will be deemed to be such principal amount as of any
such date for any purpose, including the principal amount thereof
which will be due and payable upon any maturity other than the stated
maturity or which will be deemed to be outstanding as of any such date
(or, in any such case, the manner in which such deemed principal
amount is to be determined);

2.2.12 if applicable, that such Securities of the
Series, in whole or any specified part, are defeasible pursuant to
Article IX of this Indenture;

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

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

2.2.15 if other than the currency of the United
States, the designation of the currency or currencies in which payment
of the principal of, premium, if any, or interest on the Securities of
the Series will be made, and the designation, if any, of the currency
or currencies in which payment of the principal of, premium, if any,
or interest on the Securities of the Series, at the election of a
Holder thereof, may also be payable;

2.2.16 if the payments of principal of, premium, if
any, or interest on the Securities of the Series are to be made in a
Foreign Currency other than the currency in which such Securities are
denominated, the currency, currencies or currency units in which
payment of any such amount will be payable, the periods within which
and the terms and conditions upon which such election is to be made
and the amount so payable (or the manner in which such amount is to be
determined);

2.2.17 if other than currency of the United States
of America, the currency, currencies or currency units in which the
principal of, premium, if any, or interest on the Securities of the
Series may be determined with reference to an index, the manner in
which such amounts shall be determined and payable (and the manner in
which the equivalent of the principal amount thereof in the currency
of the United States of America is to be determined for any purpose,
including for

<PAGE> 15
the purpose of determining the principal amount deemed to be
outstanding at any time);

2.2.18 the forms of the Securities of the Series in
bearer or fully registered form (and, if in fully registered form,
whether the Securities will be issuable in the form of one or more
Global Securities); and

2.2.16 if issuable in the form of one or more
Global Securities, the respective depositaries for such Global
Securities, the form of any legend or legends to be borne by any such
Global Securities, any circumstances under which any such Global
Securities may be exchanged in whole or in part for Securities of the
Series registered, any transfer of such Global Securities in whole or
in part for Securities of the Series registered, any transfer of such
Global Securities in whole or in part may be registered, in the names
of Persons other than the depository for such Global Securities or its
nominee;

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

2.2.20 any terms by which any Securities of the
Series and any change in the right of the trustee of the Holders to
declare the principal amount of any of such Securities due and
payable; and

2.2.21 any other terms of the Securities of the
Series (including any additions to or changes in the covenants or the
Events of Default contained in this Indenture applicable to any of
such Securities of the Series).

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

SECTION 2.3 Execution and Authentication.

One Officer shall sign the Securities for the Company by
manual or facsimile signature. The Company's seal, which may be in facsimile
form, shall be reproduced on the Securities.

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

<PAGE> 16
A Security shall not be valid until authenticated by the
manual signature of the Trustee or an authenticating agent. The signature
shall be conclusive evidence that the Security has been authenticated under
this Indenture.

The Trustee shall at any time, and from time to time,
authenticate Securities for original issue in the principal amount provided in
the Board Resolution or Officers' Certificate detailing the adoption of terms
pursuant to the Board Resolution, upon receipt by the Trustee of a Company
Order. If provided for in such procedures, such Company Order may authorize
authentication and delivery pursuant to oral or electronic instructions from
the Company or its duly authorized agent or agents, which oral instructions
shall be promptly confirmed in writing. Each Security shall be dated the date
of its authentication unless otherwise provided by Board Resolution or
supplemental indenture hereto.

The aggregate principal amount of Securities of any Series
outstanding at any time may not exceed any limit upon the maximum principal
amount for such Series set forth in the Board Resolution or Officers'
Certificate or supplemental indenture hereto delivered pursuant to Section 2.2,
except as provided in Section 2.8.

Prior to the issuance of Securities of any Series, the Trustee
shall have received and (subject to Section 8.2) shall be fully protected in
relying on: (a) the Board Resolution or Officers' Certificate detailing the
adoption of terms pursuant to the Board Resolution or a supplemental indenture
hereto establishing the form of the Securities of that Series or of Securities
within that Series and the terms of the Securities of that Series or of
Securities within that Series, (b) an Officers' Certificate complying with
Section 11.4, and (c) an Opinion of Counsel complying with Section 11.4.

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

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

SECTION 2.4 Registrar and Paying Agent.

<PAGE> 17
The Company shall maintain, with respect to each Series of
Notes, at the place or places specified with respect to such Series pursuant to
Section 2.2, an office or agency where Securities of such Series may be
presented or surrendered for payment of principal, premium, if any, and
interest thereon (except that at the option of the Company, payment of any
interest may be made by check mailed to the address of the person entitled
thereto as such address appears in the security register) ("Paying Agent"),
where Securities of such Series may be surrendered for registration of transfer
or exchange ("Registrar") and where notices and demands to or upon the Company
in respect of the Securities of such Series and this Indenture may be served
("Service Agent"). The Registrar shall keep a register with respect to each
Series of Securities and to their transfer and exchange. The Company will give
prompt written notice to the Trustee of the name and address, and any change in
the name or address, of each Registrar, Paying Agent or Service Agent. If at
any time the Company shall fail to maintain any such required Registrar, Paying
Agent or Service Agent or shall fail to furnish the Trustee with the name and
address thereof, such presentations, surrenders, notices and demands may be
made or served at the Corporate Trust Office of the Trustee, and the Company
hereby appoints the Trustee as its agent to receive all such presentations,
surrenders, notices and demands.

The Company may also from time to time designate one or more
co-registrars, additional paying agents or additional service agents and may
from time to time rescind such designations; provided, however, that no such
designation or rescission shall in any manner relieve the Company of its
obligations to maintain a Registrar, Paying Agent and Service Agent in each
place so specified pursuant to Section 2.2 for Securities of any Series for
such purposes. The Company will give prompt written notice to the Trustee of
any such designation or rescission and of any change in the name or address of
any such co-registrar, additional paying agent or additional service agent.
The term "Registrar" includes any co-registrar; the term "Paying Agent"
includes any additional paying agent; and the term "Service Agent" includes any
additional service agent.

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

SECTION 2.5 Paying Agent to Hold Money in Trust.

<PAGE> 18
may require a Paying Agent to pay all money held by it to the Trustee. The
Company at any time may require a Paying Agent to pay all money held by it to
the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than
the Company or a Subsidiary) shall have no further liability for the money. If
the Company or a Subsidiary acts as Paying Agent, it shall segregate and hold
in a separate trust fund for the benefit of Securityholders of any Series of
Securities all money held by it as Paying Agent.

SECTION 2.6 Securityholder Lists.

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

SECTION 2.7 Transfer and Exchange.

Where Securities of a Series are presented to the Registrar or
a co-registrar with a request to register a transfer or to exchange them for an
equal principal amount of Securities of the same Series and date of maturity of
other denominations, the Registrar shall register the transfer or make the
exchange if its requirements for such transactions are met. To permit
registrations of transfers and exchanges, the Trustee shall authenticate
Securities at the Registrar's request. No service charge shall be made for any
registration of transfer or exchange (except as otherwise expressly permitted
herein), but the Company may require payment of a sum sufficient to cover any
transfer tax or similar governmental charge payable in connection therewith
(other than any such transfer tax or similar governmental charge payable upon
exchanges pursuant to Sections 2.11 or 10.6).

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

SECTION 2.8 Mutilated, Destroyed, Lost and Stolen Securities.

<PAGE> 19
If any mutilated Security is surrendered to the Trustee, the
Company shall execute and the Trustee shall authenticate and deliver in
exchange therefor a new Security of the same Series and of like tenor and
principal amount and bearing a number not contemporaneously outstanding.

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

In case any such mutilated, destroyed, lost or stolen Security
has become or is about to become due and payable, the Company in its discretion
may, instead of issuing a new Security, pay such Security (unless the Holder
elects conversion pursuant to Article VII).

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

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

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

SECTION 2.9 Outstanding Securities.

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

<PAGE> 20
If a Security is replaced pursuant to Section 2.8, it ceases
to be outstanding until the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.

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

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

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

SECTION 2.10 Treasury Securities.

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

SECTION 2.11 Temporary Securities.

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

SECTION 2.12 Cancellation.

The Company at any time may deliver Securities to the Trustee
for cancellation. The Registrar and the Paying Agent shall forward to the
Trustee any Securities surrendered to them for

<PAGE> 21
registration of transfer, exchange or payment. The Trustee shall cancel all
Securities surrendered for transfer, exchange, payment, replacement or
cancellation and shall destroy such cancelled Securities (subject to the record
retention requirement of the Exchange Act) and deliver a certificate of such
destruction to the Company, unless the Company otherwise directs. The Company
may not issue new Securities to replace Securities that it has paid or
delivered to the Trustee for cancellation.

SECTION 2.13 Defaulted Interest.

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

SECTION 2.14 Global Securities.

2.14.1 Terms of Securities. A supplemental indenture or a
Board Resolution (and, to the extent not set forth in the Board
Resolution, an Officers' Certificate detailing the adoption of terms
pursuant to the Board Resolution) shall establish whether the
Securities of a Series shall be issued in whole or in part in the form
of one or more Global Securities and the Depository for such Global
Security or Securities.

2.14.2 Transfer and Exchange. Notwithstanding any
provisions to the contrary contained in Section 2.7 of this Indenture
and in addition thereto, any Global Security shall be exchangeable
pursuant to Section 2.7 of this Indenture for securities registered in
the names of Holders other than the Depository for such Security or
its nominee only if (i) such Depository notifies the Company that it
is unwilling or unable to continue as Depository for such Global
Security or if at any time such Depository ceases to be a clearing
agency registered under the Exchange Act, and, in either case the
Company fails to appoint a successor Depository within 90 days of such
event, (ii) the Company executes and delivers to the Trustee an
Officers' Certificate to the effect that such Global Security shall be
so exchangeable, (ii) an event shall have happened and be continuing
which is or after notice or lapse of time or both, would be, an Event
of Default with respect to the Securities represented by such Global
Security, (iii) there shall exist such circumstances, if any, in
addition to or in lieu of those described above as may be described in
a supplemental indenture or a Board Resolution establishing the
Securities of a Series. Any Global Security

<PAGE> 22
that is exchangeable pursuant to the preceding sentence shall be
exchangeable for Securities registered in such names as the Depository
shall direct in writing in an aggregate principal amount equal to the
principal amount of the Global Security with like tenor and terms.

Except as provided in this Section 2.14.2, a Global Security
may not be transferred except as a whole by the Depository with
respect to such Global Security to a nominee of such Depository, by a
nominee of such Depository to such Depository or another nominee of
such Depository or by the Depository or any such nominee to a
successor Depository or a nominee of such a successor Depository.

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

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

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

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

2.14.6 Consents, Declaration and Directions. Except as
provided in Section 2.14.5, the Company, the Trustee and any Agent
shall treat a person as the Holder of such principal amount of
outstanding Securities of such Series represented by a Global Security
as shall be specified in a written statement of the Depository with
respect to such Global Security, for purposes of obtaining any
consents, declarations or directions required to be given by the
Holders pursuant to this Indenture.

SECTION 2.15 CUSIP Numbers.

<PAGE> 23
The Company in issuing the Securities may use "CUSIP" numbers
(if then generally in use), and, if so, the Trustee shall use "CUSIP" numbers
in notices of redemption as a convenience to Holders; provided that any such
notice may state that no representation is made as to the correctness of such
numbers either as printed on the Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other elements of
identification printed on the Securities, and any such redemption shall not be
affected by any defect in or omission of such numbers.

ARTICLE III

REDEMPTION

SECTION 3.1 Notice to Trustees.

The Company may, with respect to any Series of Securities,
reserve the right to redeem and pay the Series of Securities or may covenant to
redeem and pay the Series of Securities or any part thereof before maturity at
such time and on such terms as provided for in such Securities. If a Series of
Securities is redeemable and the Company wants or is obligated to redeem prior
to the Stated Maturity thereof all or part of the Series of Securities pursuant
to the terms of such Securities, it shall notify the Trustee of the redemption
date and the principal amount of Series of Securities to be redeemed. The
Company shall give the notice at least 60 days before the redemption date (or
such shorter notice as may be acceptable to the Trustee).

SECTION 3.2 Selection of Securities to be Redeemed.

Unless otherwise indicated for a particular Series by Board
Resolution or by a supplemental indenture hereto (or to the extent not set
forth in such Board Resolution or supplemental indenture, in an Officers'
Certificate so indicating pursuant to the Board Resolution), if less than all
the Securities of a Series are to be redeemed, the Trustee shall select the
Securities of the Series to be redeemed in any manner that the Trustee deems
fair and appropriate. The Trustee shall make the selection from Securities of
the Series outstanding not previously called for redemption. The Trustee may
select for redemption portions of the principal of Securities of the Series
that have denominations larger than $1,000. Securities of the Series and
portions of them it selects shall be in amounts of $1,000 or whole multiples of
$1,000 or, with respect to Securities of any Series issuable in other
denominations pursuant to Section 2.2.9, the minimum principal denomination for
each Series and integral multiples thereof. Provisions of this Indenture that
apply to Securities of a Series called for redemption also apply to portions of
Securities of that Series called for redemption.

<PAGE> 24
SECTION 3.3 Notice of Redemption.

Unless otherwise indicated for a particular Series by Board
Resolution or by a supplemental indenture hereto, at least 30 days but not more
than 60 days before a redemption date, the Company shall mail a notice of
redemption by first-class mail to each Holder whose Securities are to be
redeemed and if any Bearer Securities are outstanding, publish on one occasion
a notice in an Authorized Newspaper.

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

(a) the redemption date;

(b) the redemption price;

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

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

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

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

SECTION 3.4 Effect of Notice of Redemption.

Once notice of redemption is mailed or published as provided
in Section 3.3, Securities of a Series called for redemption (and not converted
in accordance with the provisions of Article VII by the close of business on
the Business Day immediately preceding the date of redemption fixed in the
notice) become due and payable on the redemption date and at the redemption
price. A notice of redemption may not be conditional. Upon surrender to the
Paying Agent, such Securities shall be paid at the redemption price plus
accrued interest to the redemption date.

SECTION 3.5 Deposit of Redemption Price.

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

SECTION 3.6 Securities Redeemed in Part.

<PAGE> 25
Upon surrender of a Security that is redeemed in part, the
Trustee shall authenticate for the Holder a new Security of the same Series and
the same maturity equal in principal amount to the unredeemed portion of the
Security surrendered.

ARTICLE IV

COVENANTS

SECTION 4.1 Payment of Principal and Interest.

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

SECTION 4.2 SEC Reports.

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

SECTION 4.3 Compliance Certificate.

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

The Company will, so long as any of the Securities are
outstanding, deliver to the Trustee within 90 days of becoming aware of (i) any
Default, Event of Default or default in the performance of any covenant,
agreement or condition contained in this Indenture or (ii) any event of default
referred to in Section 6.1(e), an Officers' Certificate specifying such
Default, Event of Default or default.

SECTION 4.4 Stay, Extension and Usury Laws.

<PAGE> 26
The Company covenants (to the extent that it may lawfully do
so) that it will not at any time insist upon, plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay, extension or
usury law wherever enacted, now or at any time hereafter in force, which may
affect the covenants or the performance of this Indenture; and the Company (to
the extent it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law, and covenants that it will not, by resort to any
such law, hinder, delay or impede the execution of any power herein granted to
the Trustee, but will suffer and permit the execution of every such power as
though no such law has been enacted.

SECTION 4.5 Corporate Existence.

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

SECTION 4.6 Taxes.

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

ARTICLE V

SUCCESSORS

SECTION 5.1 When Company May Merge, Etc.

The Company shall not consolidate or merge with or into, or
sell, lease, convey or otherwise dispose of all or substantially all of its
assets to, any person unless:

(a) the corporation formed by or surviving any such
consolidation or merger (if other than the Company), or to which such
sale, lease, conveyance or other disposition shall have been made,
assumes by supplemental indenture or Board Resolution, all the
obligations of the Company under the Securities and this Indenture;
and

(b) immediately after the transaction no Default or Event
of Default exists.

The Company shall deliver to the Trustee prior to the
consummation of the proposed transaction an Officers' Certificate

<PAGE> 27
to the foregoing effect and an Opinion of Counsel stating that the proposed
transaction and such supplemental indenture comply with this Indenture.

SECTION 5.2 Successor Corporation Substituted.

Upon any consolidation or merger, or any sale, lease,
conveyance or other disposition of all or substantially all of the assets of the
Company in accordance with Section 5.1, the successor corporation formed by such
consolidation or into or with which the Company is merged or to which such sale,
lease, conveyance or other disposition is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Indenture with the same effect as if such successor person has been named
as the Company herein; provided, however, that the predecessor Company in the
case of a sale, lease, conveyance or other disposition shall not be released
from the obligation to pay the principal of and interest on the Securities.

ARTICLE VI

DEFAULTS AND REMEDIES

SECTION 6.1 Events of Default.

"Event of Default," wherever used herein with respect to
Securities of any Series, means any one of the following events, except the
events set forth in clause (e) below, which shall not apply for the benefit of
Securities of a Series as to which, pursuant to Section 2.2.21 in the
establishing Board Resolution and Officers' Certificate or supplemental
indenture hereto, it is provided that such Series shall not have the benefit of
said Event of Default (whatever the reason for such Event of Default and
whether it shall be voluntary or involuntary or be effected by operation of law
or pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):

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

(b) default in the payment of principal, or premium, if
any, of any Security of that Series at its Stated Maturity; or

(d) default in the payment of principal, premium, if any,
of any Security of that Series within 30 days following redemption or
purchase by the Company at the option of Holder (if such redemption or
purchase provision is provided in the supplemental indenture or Board
Resolution applicable to the Securities of such Series; or

<PAGE> 28
(e) default in the deposit of any sinking fund payment,
when and as due by the terms of a Security of that Series; or

(f) default in the performance, or breach, of any
covenant or warranty of the Company in this Indenture (other than a
covenant or warranty a default whose performance or whose breach is
elsewhere in this Section specifically dealt with or which has
expressly been included in this Indenture solely for the benefit of
Series of Securities other than that Series), and continuance of such
default or breach for a period of 60 days after there has been given,
by registered or certified mail, to the Company by the Trustee or to
the Company and the Trustee by the Holders of at least 25% in
principal amount of the outstanding Securities of that Series a
written notice specifying such default or breach and requiring it to
be remedied and stating that such notice is a "Notice of Default"
hereunder; or

(g) a default, not being contested by the Company in good
faith, under any mortgage, indenture or instrument under which there
may be issued, secured or evidenced any Indebtedness for money
borrowed by the Company, whether such Indebtedness now exists or shall
be created hereafter, if (a) either (i) such default results from the
failure to pay any such Indebtedness at its stated final maturity or
(ii) relates to an obligation other than the obligation to pay such
Indebtedness at its stated final maturity and results in the holder or
holders of such Indebtedness causing such Indebtedness to become due
prior to its stated maturity and (b) the principal amount of such
Indebtedness, together with the principal amount of any other such
Indebtedness in default for failure to pay principal at stated final
maturity or the maturity of which has been so accelerated, aggregates
in excess of an amount specified in a supplemental indenture or a
Board Resolution applicable to the Securities of such Series; or

(h) the Company pursuant to or within the meaning of any
Bankruptcy Law:

(i) commences a voluntary case,

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

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

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

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

<PAGE> 29
(i) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:

(i) is for relief against the Company in an
involuntary case,

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

(iii) orders the liquidation of the Company,

and the order or decree remains unstayed and in effect for 60 days.

(j) any other Event of Default provided with respect to
Securities of that Series.

SECTION 6.2 Acceleration of Maturity; Rescission and Annulment.

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

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

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

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

(ii) the principal of any Securities of that
Series which have become due otherwise than by such
declaration

<PAGE> 30
of acceleration and interest thereon at the rate or rates
prescribed therefor in such Securities,

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

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

and
(b) all Events of Default with respect to Securities of
that Series, other than the non-payment of the principal of Securities
of that Series which have become due solely by such declaration of
acceleration, have been cured or waived as provided in Section 6.13.

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

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

The Company covenants that if

(a) default is made in the payment of any interest on any
Security when such interest becomes due and payable and such default
continues for a period of 60 days, or

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

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

<PAGE> 31
against the Company or any other obligor upon such Securities and collect the
moneys adjudged or deemed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon such Securities, wherever
situated.

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

SECTION 6.4 Trustee May File Proofs of Claim.

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

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

(b) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same,

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders,
to pay to the Trustee any amount due it for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel,
and any other amounts due the Trustee under Section 8.7.

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

<PAGE> 32
any Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Securities or the rights of any Holder thereof or to authorize
the Trustee to vote in respect of the claim of any Holder in any such
proceeding.

SECTION 6.5 Trustee May Enforce Claims Without Possession of Securities.

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

SECTION 6.6 Application of Money Collected.

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

First: To the payment of all amounts due the
Trustee under Section 8.7; and

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

Third: To the Company.

SECTION 6.7 Limitation on Suits.

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

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

(b) the Holders of not less than 25% in principal amount
of the outstanding Securities of that Series shall have made written
request to the Trustee to institute proceedings

<PAGE> 33
in respect of such Event of Default in its own name as Trustee
hereunder;

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

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

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

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

SECTION 6.8 Unconditional Right of Holders to Receive Principal and
Interest.

Notwithstanding any other provision in this Indenture, the
Holder of any Security shall have the right, which is absolute and
unconditional, to receive payment of the principal of and interest on such
Security on the Stated Maturity or Stated Maturities expressed in such Security
(or, in the case of redemption, on the redemption date) and to institute suit
for the enforcement of any such payment or to demand conversion of its
Securities pursuant to Article VII, and such rights shall not be impaired
without the consent of such Holder.

SECTION 6.9 Restoration of Rights and Remedies.

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

<PAGE> 34
SECTION 6.10 Rights and Remedies Cumulative.

Except as otherwise provided with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities in Section 2.8,
no right or remedy herein conferred upon or reserved to the Trustee or to the
Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.

SECTION 6.11 Delay or Omission Not Waiver.

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

SECTION 6.12 Control by Holders.

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

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

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

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

SECTION 6.13 Waiver of Past Defaults.

<PAGE> 35
of or interest on any Security of such Series, (2) under Article VII or (3) in
respect of a covenant or provision hereof which under Article X cannot be
modified or amended without the consent of the Holder of each outstanding
Security of such Series affected. Upon any such waiver, such Default shall
cease to exist, and any Event of Default arising therefrom shall be deemed to
have been cured, for every purpose of this Indenture; but no such waiver shall
extend to any subsequent or other Default or impair any right consequent
thereon.

SECTION 6.14 Undertaking for Costs.

All parties to this Indenture agree, and each Holder of any
Security by his acceptance thereof shall be deemed to have agreed, that any
court may in its discretion require, in any suit for the enforcement of any
right or remedy under this Indenture, or in any suit against the Trustee for
any action taken, suffered or omitted by it as Trustee, the filing by any party
litigant in such suit of an undertaking to pay the costs of such suit, and that
such court may in its discretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such suit, having due regard to
the merits and good faith of the claims or defenses made by such party
litigant; but the provisions of this Section shall not apply to any suit
instituted by the Company, to any suit instituted by the Trustee, to any suit
instituted by any Holder, or group of Holders, holding in the aggregate more
than 10% in principal amount of the outstanding Securities of any Series, to
any suit instituted by any Holder for the enforcement of the payment of the
principal of or interest on any Security on or after the Stated Maturity or
Stated Maturities expressed in such Security (or, in the case of redemption, on
or after the redemption date), or for the enforcement of the right to convert
the Securities of any Series as provided in Article VII.

SECTION 6.15 Enforcement of Rights of Conversion by Holders.

Anything in this Indenture to the contrary notwithstanding,
the Holder of the Securities of any Series, without reference to and without
the consent of either the Trustee or the Holder of any other Securities, in his
own behalf and for his own benefit may enforce, and may institute and maintain
any proceedings suitable to enforce, his right to convert his Securities into
Common Stock or other securities as provided in Article VII.

<PAGE> 36
ARTICLE VII

CONVERSION

SECTION 7.1 Conversion Privilege.

Holders of the Securities of any Series shall have the
conversion rights set forth in this Article VII if the supplemental indenture
or Board Resolution applicable to the Securities of such Series so designates.

A Holder of the Securities of any Series may convert such
Securities into Common Stock or any other securities specified in the
supplemental indenture or Board Resolution applicable to the Securities of such
Series at any time prior to the close of business on a date to be designated in
such supplemental indenture or Board Resolution. If Securities of any Series
are called for redemption, the Holder may convert such Securities at any time
before the close of business on the Business Day immediately preceding the
redemption date, unless the Company defaults in making the payment due upon
redemption.

The initial conversion price shall be set forth in the
applicable supplemental indenture or Board Resolution. The conversion price is
subject to adjustment.

"Common Stock" means the Company's common stock, $___ par
value per share, as it exists on the date of this Indenture as originally
signed.

SECTION 7.2 Conversion Procedure.

To convert the Securities of any Series, a Holder must (1)
complete and sign the conversion notice attached to the Securities, (2)
surrender the Securities to the Company at the office or agency to be
maintained by the Company, (3) furnish appropriate endorsements and transfer
documents if required by the Company, and (4) pay any transfer or similar tax
if required. The date on which the Holder satisfies all those requirements is
the conversion date. As soon as practical after the conversion date, the
Company shall deliver a certificate for the number of full shares of Common
Stock, or other Securities as applicable, issuable upon the conversion and a
check for any fractional share of Common Stock or other securities as
applicable. The person in whose name the certificate is registered shall be
treated as a stockholder of record on and after the conversion date.

<PAGE> 37
Section shall affect the right of a person in whose name the Securities of a
Series are registered at the close of business on any record date with respect
to any interest payment date to receive the interest payable thereon on such
interest payment date in accordance with the terms of the applicable
supplemental indenture or Board Resolution.

If a Holder converts more than one Security of a Series at
the same time, the number of full shares of Common Stock or other securities
issuable upon the conversion shall be based on the total principal amount of
the Securities converted.

Upon surrender of a Security of a Series that is converted
in part, the trustee shall authenticate for the Holder a new Security of a
Series equal in principal amount to the unconverted portion of the Security of
the Series surrendered.

SECTION 7.3 Fractional Shares.

The Company will not issue a fractional share of Common
Stock, or other securities as applicable, upon conversion of the Securities of
any Series. Instead the Company will deliver its check for the current market
value of the fractional share, or other securities as applicable. The current
market value of a fraction of a share, or other securities as applicable, is
determined by multiplying the current market price of a full share, or other
securities as applicable, by the fraction and rounding the result to the
nearest cent.

For purposes of this Section 7.3, but not of Sections 7.7
and 7.8 the current market price of a share of Common Stock is the last
reported sale price of the Common Stock on the New York Stock
Exchange--Composite Tape on the last trading day prior to the conversion date.
In the absence of such quotation, the Company shall determine the current
market price on the basis of such quotations as it considers appropriate.

SECTION 7.4 Taxes on Conversion.

Conversion price adjustments or omissions in making such
adjustments may, under certain circumstances, be deemed to be distributions
that could be taxable as dividends under the Internal Revenue Code to Holders
of Securities or holders of Common Stock.

If a Holder of the Securities of a Series converts its
Securities, the Company shall pay any documentary, stamp or similar issue or
transfer tax due on the issue of shares of Common Stock upon the conversion.
However, the Holder shall pay any such tax which is due.

SECTION 7.5 Company to Provide Stock.

The Company shall reserve out of its authorized but unissued
Common Stock or its Common Stock held in treasury enough

<PAGE> 38
shares of Common Stock to permit the conversion of the Securities of any
Series.

All shares of Common Stock which may be issued upon
conversion of the Securities of any Series shall be fully paid and
non-assessable.

The Company will endeavor to comply with all securities laws
regulating the offer and delivery of shares of Common Stock upon conversion of
the Securities of any Series and will endeavor to list such shares on each
national securities exchange on which the Common Stock is then listed.

SECTION 7.6 Adjustment for Change in Capital Stock.

The conversion price will be subject to adjustment in case
of certain events, including:

(a) the subdivision, combination or reclassification of the
outstanding Common Stock of the Company,

(b) the issuance of Common Stock as a dividend or
distribution on Common Stock,

(c) the issuance of rights or warrants (expiring within 45
days after the record date) to all holders of Common Stock entitling them to
acquire shares of Common Stock (or securities convertible into or exchangeable
for Common Stock) at less than the then current market price (as defined in the
supplemental indenture) of the Common Stock,

(d) the distribution to all holders of Common Stock of
shares of any class other than Common Stock, or debt securities or assets
(excluding regular quarterly cash dividends or distributions) or rights or
warrants to purchase assets or securities of the Company (other than those
referred to above),

(e) the issuance (with certain exceptions) of Common Stock
or securities convertible into, or exchangeable for, Common Stock at less than
the current market price of the Common Stock or

(f) certain mergers, consolidations or sales of assets.

The conversion privilege and the conversion price in effect
immediately prior to such action shall be adjusted so that the Holder of the
Securities of a Series thereafter converted may receive the number of shares of
capital stock of the Company which he would have owned immediately following
such action if he had converted the Securities immediately prior to such
action.

The adjustment shall become effective immediately after the
record date in the case of a dividend or distribution and immediately after the
effective date in the case of a subdivision, combination or reclassification.

<PAGE> 39
If after an adjustment a Holder of the Securities of any
Series upon conversion of such Securities may receive shares of two or more
classes of capital stock of the Company, the Company shall determine the
allocation of the adjusted conversion price between the classes of capital
stock. After such allocation, the conversion privilege and the conversion
price of each class of capital stock shall thereafter be subject to adjustment
on terms comparable to those applicable to Common Stock in this Article.

SECTION 7.7 Adjustment for Rights Issue.

If the Company (a) distributes any rights or warrants to all
holders of its Common Stock entitling them for a period expiring within 45 days
after the record date mentioned below to purchase shares of Common Stock or
securities convertible into or exchangeable for Common Stock at a price per
share (or having a conversion or exchange price per share) less than the
current market price (as defined in Section 7.9) per share on that record date,
or (b) issues shares of Common Stock for cash or securities convertible into or
exchangeable for Common Stock to any person at a price per share (or having a
conversion or exchange price per share) less than the current market price (as
defined in Section 7.9) per share on the date of issuance, the conversion price
shall be adjusted in accordance with the formula:

N x P
-----
O + M
C' = C x ----------
O + N

where:

C' = the adjusted conversion price.

C = the current conversion price.

O = the number of shares of Common Stock outstanding on
the record date or issuance date, as applicable.

N = the number of additional shares of Common Stock
offered or issuable upon conversion or exchange.

P = the offering, conversion or exchange price per share
of the additional shares.

M = the current market price per share of Common Stock on
the record date or issuance date as applicable.

Under clause (a) above, the adjustment shall become
effective immediately after the record date for the determination of
stockholders entitled to receive the rights or warrants. Under

<PAGE> 40
clause (b) above, the adjustment shall be made whenever any such securities are
issued and shall become effective on the date of such issuance.

SECTION 7.8 Adjustment for Other Distributions.

If the Company distributes to all holders of its Common
Stock any of its assets or debt securities or any rights or warrants to
purchase assets or securities of the Company, the conversion price shall be
adjusted in accordance with the formula:

M - F
C' = C X -----
M

where:

C' = the adjusted conversion price.

C = the current conversion price.

M = the current market price (as defined in Section 7.9)
per share of Common Stock on the record date
mentioned below.

F = the fair market value on the record date of the
assets, securities, rights or warrants applicable to
one share of Common Stock. The Company shall
determine the fair market value.

The adjustment shall become effective immediately after the
record date for the determination of stockholders entitled to receive the
distribution.

This Section does not apply to quarterly cash dividends or
cash distributions paid out of consolidated current or retained earnings as
shown on the books of the Company. Also, this Section does not apply to rights
or warrants referred to in Section 7.7.

SECTION 7.9 Current Market Price.

In Sections 7.7 and 7.8 the current market price per share
of Common Stock on any date is the average of the last reported sales prices of
the Common Stock on the New York Stock Exchange--Composite Tape for thirty
consecutive trading days commencing 45 trading days before the date in
question. In the absence of one or more such quotations, the Company shall
determine the current market price on the basis of such quotations as it
considers appropriate.

SECTION 7.10 When Adjustment May be Deferred.

No adjustment in the conversion price need be made unless
the adjustment would require a decrease or an increase (to

<PAGE> 41
the extent permitted by Section 7.11) of at least 1% in the conversion price.
Any adjustments that are not made shall be carried forward and taken into
account in any subsequent adjustment.

All calculations under this Article shall be made to the
nearest cent or to the nearest 1/100th of a share, as the case may be.

SECTION 7.11 When No Adjustment Required.

No upward adjustment in the conversion price will be made
except in the event of a reverse stock split.

No adjustment need be made for issuances of shares of Common
Stock (a) to officers, directors or employees of the Company pursuant to any
benefit plan now in existence or hereafter approved by the stockholders of the
Company or (b) pursuant to the Company's plan for reinvestment of dividends, as
now in effect and as the same may be amended in accordance with its terms.

No adjustment need be made in the conversion price of less
than 1% of such price, but the same will be carried forward and taken into
account in the computation of any subsequent adjustment.

No adjustment need be made for a change in the par value of
the Common Stock.

To the extent the Securities of a Series become convertible
into cash, no adjustment need be made thereafter as to the cash. Interest will
not accrue on the cash.

SECTION 7.12 Notice of Adjustment.

Whenever the conversion price is adjusted, the Company shall
promptly mail to Holders a notice of the adjustment. The Company shall file
with the Trustee a certificate from the Company's independent public
accountants briefly stating the facts requiring the adjustment and the manner
of computing it. The certificate shall be conclusive evidence that the
adjustment is correct.

SECTION 7.13 Voluntary Reduction.

The Company from time to time may reduce the conversion
price by any amount for any period of time if the period is at least 20 days
and if the reduction is irrevocable during the period.

Whenever the conversion price is reduced, the Company shall
mail to Holders a notice of the reduction. The Company shall mail the notice
at least 15 days before the date the reduced

<PAGE> 42
conversion price takes effect. The notice shall state the reduced conversion
price and the period it will be in effect.

A reduction of the conversion price does not change or
adjust the conversion price otherwise in effect for purposes of calculating the
adjustments required by Sections 7.6 through 7.8.

SECTION 7.14 Notice of Certain Transactions.

If:

(1) the Company takes any action that would require an
adjustment in the conversion price pursuant to Sections 7.6, 7.7 or
7.8,

(2) the Company takes any action that would require a
supplemental indenture or Board Resolution pursuant to Section 7.15,
or

(3) there is a liquidation or dissolution of the Company,

the Company shall mail to Holders a notice stating the proposed record date for
a dividend or distribution or the proposed effective date of a subdivision,
combination, reclassification, consolidation, merger, transfer, liquidation or
dissolution. The Company shall mail the notice at least 15 days before such
date. Failure to mail the notice or any defect in it shall not affect the
validity of the transaction.

SECTION 7.15 Reorganization of Company.

If the Company is a party to a transaction subject to
Section 5.1 or a merger which reclassifies or changes its outstanding Common
Stock, the person obligated to deliver securities, cash or other assets upon
conversion of the Securities of any Series shall enter into a supplemental
indenture. If the issuer of securities deliverable upon conversion of such
Securities is an Affiliate of the surviving or transferee corporation, that
issuer shall join in the supplemental indenture.

The applicable supplemental indenture or Board Resolution
shall provide that the Holder of a Security of any Series may convert it into
the kind and amount of securities, cash or other assets which he would have
owned immediately after the consolidation, merger or transfer if he had
converted the Security immediately before the effective date of the
transaction. The applicable supplemental indenture or Board Resolution shall
provide for adjustments which shall be as nearly equivalent as may be practical
to the adjustments provided for in this Article. The successor company shall
mail to Holders a notice briefly describing the supplemental indenture.

If this Section applies, Section 7.6 does not apply.

<PAGE> 43
SECTION 7.16 Company Determination Final.

Any determination that the Company or the Board of Directors
must make pursuant to Section 7.3, 7.6, 7.7, 7.8, 7.9 or 7.11 is conclusive.

SECTION 7.17 Trustee's Disclaimer.

The Trustee has no duty to determine when an adjustment
under this Article should be made, how it should be made or what it should be.
The Trustee has no duty to determine whether any provisions of a supplemental
indenture under Section 7.15 are correct. The Trustee makes no representation
as to the validity or value of any securities or assets issued upon conversion
of the Securities of any Series. The Trustee shall not be responsible for the
Company's failure to comply with this Article. Each conversion agent other
than the Company shall have the same protection under this Section as the
Trustee.

ARTICLE VIII

TRUSTEE

SECTION 8.1 Duties of Trustee.

(a) If an Event of Default has occurred and is
continuing, the Trustee shall exercise the rights and powers vested in
it by this Indenture and use the same degree of care and skill in
their exercise as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs.

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

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

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

<PAGE> 44
(c) The Trustee may not be relieved from liability for
its own negligent action, its own negligent failure to act or its own
willful misconduct, except that:

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

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

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

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

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

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

(g) No provision of this Indenture shall require the
Trustee to risk its own funds or otherwise incur any financial
liability in the performance of any of its duties, or in the exercise
of any of its rights or powers, if it shall have reasonable grounds
for believing that repayment of such funds or adequate indemnity
against such risk is not reasonably assured to it.

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

SECTION 8.2 Rights of Trustee.

(a) The Trustee may rely on and shall be protected in
acting or refraining from acting upon any

<PAGE> 45
document believed by it to be genuine and to have been signed or
presented by the proper person. The Trustee need not investigate any
fact or matter stated in the document.

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

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

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

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

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

SECTION 8.3 Individual Rights of Trustee.

The Trustee in its individual or any other capacity may
become the owner or pledgee of Securities and may otherwise deal with the
Company or an Affiliate with the same rights it would have if it were not
Trustee. Any Agent may do the same with like rights. However, the Trustee is
subject to Sections 8.10 and 8.11.

SECTION 8.4 Trustee's Disclaimer.

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

<PAGE> 46
SECTION 8.5 Notice of Defaults.

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

SECTION 8.6 Reports by Trustee to Holders.

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

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

SECTION 8.7 Compensation and Indemnity.

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

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

<PAGE> 47
officers, directors, employees, shareholders and agents of the Trustee.

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

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

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

SECTION 8.8 Replacement of Trustee.

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

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

(a) the Trustee fails to comply with Section 8.10;

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

(d) the Trustee becomes incapable of acting.

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

<PAGE> 48
If a successor Trustee with respect to the Securities of any
one or more Series does not take office within 60 days after the retiring
Trustee resigns or is removed, the retiring Trustee, the Company or the Holders
of at least 10% in principal amount of the Securities of the applicable Series
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.

If the Trustee with respect to the Securities of any one or
more Series fails to comply with Section 8.10, any Securityholder of the
applicable Series may petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.

A successor Trustee shall deliver a written acceptance of
its appointment to the retiring Trustee and to the Company. Immediately after
that, the retiring Trustee shall transfer all property held by it as Trustee to
the successor Trustee subject to the lien provided for in Section 8.7, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
with respect to each Series of Securities for which it is acting as Trustee
under this Indenture. A successor Trustee shall mail a notice of its
succession to each Securityholder of each such Series and if any Bearer
Securities are outstanding, publish such notice on one occasion in an
Authorized Newspaper. Notwithstanding replacement of the Trustee pursuant to
this Section 8.8, the Company's obligations under Section 8.7 hereof shall
continue for the benefit of the retiring trustee with respect to expenses and
liabilities incurred by it prior to such replacement.

SECTION 8.9 Successor Trustee by Merger, etc.

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

SECTION 8.10 Eligibility; Disqualification.

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

SECTION 8.11 Preferential Collection of Claims Against Company.

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

ARTICLE IX

<PAGE> 49
SATISFACTION AND DISCHARGE

SECTION 9.1 Satisfaction and Discharge of Indenture.

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

(a) either

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

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

(1) have become due and payable, or

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

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

(4) are deemed paid and discharged pursuant
to Section 9.3, as applicable;

and the Company, in the case of (1), (2) or (3) above, has
deposited or caused to be deposited with the Trustee as
trust funds in trust in an amount sufficient for the purpose
of paying and discharging the entire indebtedness on such
Securities not theretofore delivered to the Trustee for
cancellation, for principal and interest to the date of such
deposit (in the case of Securities which become due and
payable) or to the Stated Maturity or redemption date, as
the case may be;

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

(c) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all
conditions precedent herein provided for relating to

<PAGE> 50
the satisfaction and discharge of this Indenture have been complied
with.

Notwithstanding the satisfaction and discharge of this
Indenture, the obligations of the Company to the Trustee under Section 8.7,
and, if money shall have been deposited with the Trustee pursuant to clause (a)
of this Section or if money or obligations shall have been deposited with or
received by the Trustee pursuant to Section 9.3, the obligations of the Trustee
under Section 9.2 and Section 9.5 shall survive.

SECTION 9.2 Application of Trust Funds; Indemnification.

(a) Subject to the provisions of Section 9.5, all money
deposited with the Trustee pursuant to Section 9.1, all money and U.S.
Government Obligations or Foreign Government Securities deposited with
the Trustee pursuant to Section 9.3 or 9.4 and all money received by
the Trustee in respect of U.S. Government Obligations or Foreign
Government Securities deposited with the Trustee pursuant to Section
9.3 or 9.4, shall be held in trust and applied by it, in accordance
with the provisions of the Securities and this Indenture, to the
payment, either directly or through any Paying Agent (including the
Company acting as its own Paying Agent) as the Trustee may determine,
to the persons entitled thereto, of the principal and interest for
whose payment such money has been deposited with or received by the
Trustee or to make mandatory sinking fund payments or analogous
payments as contemplated by Sections 9.3 or 9.4.

(b) The Company shall pay and shall indemnify the Trustee
against any tax, fee or other charge imposed on or assessed against
U.S. Government Obligations or Foreign Government Securities deposited
pursuant to Sections 9.3 or 9.4 or the interest and principal received
in respect of such obligations other than any payable by or on behalf
of Holders.

(c) The Trustee shall deliver or pay to the Company from
time to time upon Company Request any U.S. Government Obligations or
Foreign Government Securities or money held by it as provided in
Sections 9.3 or 9.4 which, in the opinion of a nationally recognized
firm of independent certified public accountants expressed in a
written certification thereof delivered to the Trustee, are then in
excess of the amount thereof which then would have been required to be
deposited for the purpose for which such Obligations or Foreign
Government Securities or money were deposited or received. This
provision shall not authorize the sale by the Trustee of any U.S.
Government Obligations or Foreign Government Securities held under
this Indenture.

SECTION 9.3 Satisfaction, Discharge and Defeasance of Securities of any
Series.

<PAGE> 51
Unless this Section 9.3 is otherwise specified, pursuant to
Section 2.2.21, to be inapplicable to Securities of any Series, the Company
shall be deemed to have paid and discharged the entire indebtedness on all the
outstanding Securities of any such Series on the 91st day after the date of the
deposit referred to in subparagraph (d) hereof, and the provisions of this
Indenture, as it relates to such outstanding Securities of any such Series,
shall no longer be in effect (and the Trustee, at the expense of the Company,
shall, at Company Request, execute proper instruments acknowledging the same),
except as to:

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

(b) the Company's obligations with respect to such
Securities of such Series under Sections 2.4, 2.7 and 2.8; and

(c) the rights, powers, trust and immunities of the
Trustee hereunder and the duties of the Trustee under Section 9.2 and
the duty of the Trustee to authenticate Securities of such Series
issued on registration of transfer or exchange;

provided that, the following conditions shall have been satisfied:

(d) the Company shall have deposited or caused to be
deposited irrevocably with the Trustee as trust funds in trust for the
purpose of making the following payments, specifically pledged as
security for and dedicated solely to the benefit of the Holders of
such Securities (i) in the case of Securities of such Series
denominated in Dollars, cash in Dollars (or such other money or
currencies as shall then be legal tender in the United States) and/or
U.S. Government Obligations, or (ii) in the case of Securities of such
Series denominated in a Foreign Currency (other than a composite
currency), money and/or Foreign Government Securities in the same
Foreign Currency, which through the payment of interest and principal
in respect thereof, in accordance with their terms, will provide (and
without reinvestment and assuming no tax liability will be imposed on
such Trustee), not later than one day before the due date of any
payment of money, an amount in cash, sufficient, in the opinion of a
nationally recognized firm of independent public accountants expressed
in a written certification thereof delivered to the Trustee, to pay
and discharge each installment of principal, (including mandatory
sinking fund or analogous payments) of and any interest on all

<PAGE> 52
the Securities of such Series on the dates such installments of
interest or principal are due;

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

(f) such provision would not cause any outstanding
Securities of such Series then listed on the New York Stock Exchange
or other securities exchange to be delisted as a result thereof;

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

(h) the Company shall have delivered to the Trustee an
Opinion of Counsel to the effect that (i) the Company has received
from, or there has been published by, the Internal Revenue Service a
ruling, or (ii) since the date of execution of this Indenture, there
has been a change in the applicable Federal income tax law, in either
case to the effect that, and based thereon such opinion shall confirm
that, the Holders of the Securities of such Series will not recognize
income, gain or loss for Federal income tax purposes as a result of
such deposits, defeasance and discharge and will be subject to Federal
income tax on the same amount and in the same manner and at the same
times as would have been the case if such deposit, defeasance and
discharge had not occurred;

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

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

SECTION 9.4 Defeasance of Certain Obligations.

<PAGE> 53
failure to comply with any such provisions shall not constitute a Default or
Event of Default under Section 6.1) and the occurrence of any event described
in clause (e) of Section 6.1 shall not constitute a Default or Event of Default
hereunder, with respect to the Securities of such Series, provided that the
following conditions shall have been satisfied:

(a) With reference to this Section 9.4, the Company has
deposited or caused to be irrevocably deposited (except as provided in
Section 9.3) with the Trustee as trust funds in trust, specifically
pledged as security for, and dedicated solely to, the benefit of the
Holders of such Securities (i) in the case of Securities of such
Series denominated in Dollars, cash in Dollars (or such other money or
currencies as shall then be legal tender in the United States) and/or
U.S. Government Obligations, or (ii) in the case of Securities of such
Series denominated in a Foreign Currency (other than a composite
currency), money and/or Foreign Government Securities in the same
Foreign Currency, which through the payment of interest and principal
in respect thereof, in accordance with their terms, will provide (and
without reinvestment and assuming no tax liability will be imposed on
such Trustee), not later than one day before the due date of any
payment of money, an amount in cash, sufficient, in the opinion of a
nationally recognized firm of independent certified public accountants
expressed in a written certification thereof delivered to the Trustee,
to pay and discharge each installment of principal (including
mandatory sinking fund or analogous payments) and premium, if any, of
and any interest on all the Securities of such Series on the dates
such installments of interest or principal are due;

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

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

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

(e) the Company shall have delivered to the Trustee an
Officers' Certificate stating the deposit was not made by the Company
with the intent of preferring the Holders

<PAGE> 54
of the Securities of such Series over any other creditors of the
Company or with the intent of defeating, hindering, delaying or
defrauding any other creditors of the Company; and

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

SECTION 9.5 Repayment to Company.

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

ARTICLE X

AMENDMENTS AND WAIVERS

SECTION 10.1 Without Consent of Holders.

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

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

(b) to comply with Article V;

(c) to provide for uncertificated Securities in addition
to or in place of certificated Securities; provided that such
amendment or supplement does not adversely affect the rights of any
Securityholders;

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

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

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

<PAGE> 55
(g) to comply with requirements of the SEC in order to
effect or maintain the qualification of this Indenture under the TIA.

SECTION 10.2 With Consent of Holders.

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

It shall not be necessary for the consent of the Holders of
Securities under this Section 10.2 to approve the particular form of any
proposed supplemental indenture or waiver, but it shall be sufficient if such
consent approves the substance thereof. After a supplemental indenture or
waiver under this section becomes effective, the Company shall mail to the
Holders of Securities affected thereby and, if any Bearer Securities affected
thereby are outstanding, publish on one occasion in an Authorized Newspaper, a
notice briefly describing the supplemental indenture or waiver. Any failure by
the Company to mail or publish such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such supplemental
indenture or waiver.

SECTION 10.3 Limitations.

Without the consent of each Securityholder affected, an
amendment or waiver may not:

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

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

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

(d) waive a Default or Event of Default in the
payment of the principal of or interest on any Security (except a
recission of acceleration of the Securities of any Series by the
Holders of at least a majority in aggregate principal amount of the
then outstanding Securities of such

<PAGE> 56
Series and a waiver of the payment default that resulted from such
acceleration); or

(e) make the Security payable in currency other than that
stated in the Security; or

(f) make any change in Sections 6.8, 6.13, 10.3 (this
sentence), 11.15 or 11.16; or

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

(h) make any change that adversely affects the right to
convert or the conversion price of the Securities of any Series.

SECTION 10.4 Compliance with Trust Indenture Act.

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

SECTION 10.5 Revocation and Effect of Consents.

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

Any amendment or waiver once effective shall bind every
Securityholder of each Series affected by such amendment or waiver unless it is
of the type described in any of clauses (a) through (g) of Section 10.3. In
that case, the amendment or waiver shall bind each Holder of a Security who has
consented to it and every subsequent Holder of a Security or portion of a
Security that evidences the same debt as the consenting Holder's Security.

SECTION 10.6 Notation on or Exchange of Securities.

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

SECTION 10.7 Trustee Protected.

In executing, or accepting the additional trusts created by,
any supplemental indenture permitted by this Article or the

<PAGE> 57
modifications thereby of the trusts created by this Indenture, the Trustee
shall be entitled to receive, and (subject to Section 8.1) shall be fully
protected in relying upon, an Opinion of Counsel stating that the execution of
such supplemental indenture is authorized or permitted by this Indenture. The
Trustee shall sign all supplemental indentures, except that the Trustee need
not sign any supplemental indenture that adversely affects its rights.

<PAGE> 58
ARTICLE XI

MISCELLANEOUS

SECTION 11.1 Trust Indenture Act Controls.

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

SECTION 11.2 Notices.

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

if to the Company:

Beverly Enterprises, Inc.
5111 Rogers Avenue, Suite 40-A
Fort Smith, Arkansas 72919-0155
Attention: Robert W. Pommerville,
Executive Vice President,
General Counsel and Secretary

if to the Trustee:

[Name of Trustee]
[address]

Attention: ____________, [title]

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

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

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

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

<PAGE> 59
SECTION 11.3 Communication by Holders with Other Holders.

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

SECTION 11.4 Certificate and Opinion as to Conditions Precedent.

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

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

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

SECTION 11.5 Statements Required in Certificate or Opinion.

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

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

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

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

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

<PAGE> 60
SECTION 11.6 Rules by Trustee and Agents.

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

SECTION 11.7 Legal Holidays.

Unless otherwise provided by Board Resolution or
supplemental indenture hereto for a particular Series, a "Legal Holiday" is a
Saturday, a Sunday, or a day on which banking institutions are not required to
be open. If a payment date is a Legal Holiday at a place of payment, payment
may be made at that place on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period.

SECTION 11.8 No Recourse Against Others.

A director, officer, employee or stockholder, as such, of
the Company shall not have any liability for any obligations of the Company
under the Securities or this Indenture or for any claim based on, in respect of
or by reason of such obligations or their creation. Each Securityholder by
accepting a Security waives and releases all such liability. The waiver and
release are part of the consideration for the issue of the Securities.

SECTION 11.9 Counterparts.

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

SECTION 11.10 Governing Laws.

THE INTERNAL LAWS OF THE STATE OF NEW YORK SHALL GOVERN THIS
INDENTURE AND THE SECURITIES, WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISION
THEREOF.

SECTION 11.11 No Adverse Interpretation of Other Agreements.

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

SECTION 11.12 Successors.

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

<PAGE> 61
SECTION 11.13 Severability.

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

SECTION 11.14 Table of Contents, Headings, Etc.

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

SECTION 11.15 Securities in a Foreign Currency or in ECU.

Unless otherwise specified in an Officers' Certificate
delivered pursuant to Section 2.2 of this Indenture with respect to a
particular Series of Securities, whenever for purposes of this Indenture any
action may be taken by the Holders of a specified percentage in aggregate
principal amount of Securities of all Series or all Series affected by a
particular action at the time outstanding and, at such time, there are
outstanding Securities of any Series which are denominated in a coin or
currency other than Dollars (including ECUs), then the principal amount of
Securities of such Series which shall be deemed to be outstanding for the
purpose of taking such action shall be that amount of Dollars that could be
obtained for such amount at the Market Exchange Rate at such time. For
purposes of this Section 11.15, "Market Exchange Rate" shall mean the noon
Dollar buying rate in New York City for cable transfers of that currency as
published by the Federal Reserve Bank of New York; provided, however, in the
case of ECUs, Market Exchange Rate shall mean the rate of exchange determined
by the Commission of the European Union (or any successor thereto) as published
in the Official Journal of the European Union (such publication or any
successor publication, the "Journal"). If such Market Exchange Rate is not
available for any reason with respect to such currency, the Trustee shall use,
in its sole discretion and without liability on its part, such quotation of the
Federal Reserve Bank of New York or, in the case of ECUs, the rate of exchange
as published in the Journal, as of the most recent available date, or
quotations or, in the case of ECUs, rates of exchange from one or more major
banks in The City of New York or in the country of issue of the currency in
question or, in the case of ECUs, in Luxembourg or such other quotations or, in
the case of ECUs, rates of exchange as the Trustee, upon consultation with the
Company, shall deem appropriate. The provisions of this paragraph shall apply
in determining the equivalent principal amount in respect of Securities of a
Series denominated in currency other than Dollars in connection with any action
taken by Holders of Securities pursuant to the terms of this Indenture.

All decisions and determinations of the Trustee regarding
the Market Exchange Rate or any alternative determination

<PAGE> 62
provided for in the preceding paragraph shall be in its sole discretion and
shall, in the absence of manifest error, be conclusive to the extent permitted
by law for all purposes and irrevocably binding upon the Company and all
Holders.

SECTION 11.16 Judgment Currency.

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

ARTICLE XII

SINKING FUNDS

SECTION 12.1 Applicability of Article.

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

The minimum amount of any sinking fund payment provided for
by the terms of the Securities of any Series is herein referred to as a
"mandatory sinking fund payment" and any other amount

<PAGE> 63
provided for by the terms of Securities of such Series is herein referred to as
an "optional sinking fund payment." If provided for by the terms of Securities
of any Series, the cash amount of any sinking fund payment may be subject to
reduction as provided in Section 12.2. Each sinking fund payment shall be
applied to the redemption of Securities of any Series as provided for by the
terms of the Securities of such Series.

SECTION 12.2 Satisfaction of Sinking Fund Payments with Securities.

The Company may, in satisfaction of all or any part of any
sinking fund payment with respect to the Securities of such Series to be made
pursuant to the terms of such Securities (1) deliver outstanding Securities of
such Series to which such sinking fund payment is applicable (other than any of
such Securities previously called for mandatory sinking fund redemption) and
(2) apply as credit Securities of such Series to which such sinking fund
payment is applicable and which have been redeemed either at the election of
the Company pursuant to the terms of such Series of Securities (except pursuant
to any mandatory sinking fund) or through the application of permitted optional
sinking fund payments or other optional redemptions pursuant to the terms of
such Securities, provided that such Securities have not been previously so
credited. Such Securities shall be received by the Trustee, together with an
Officers' Certificate with respect thereto, not later than 15 days prior to the
date on which the Trustee begins the process of selecting Securities for
redemption, and shall be credited for such purpose by the Trustee at the price
specified in such Securities for redemption through operation of the sinking
fund and the amount of such sinking fund payment shall be reduced accordingly.
If as a result of the delivery or credit of Securities in lieu of cash payments
pursuant to this Section 12.2, the principal amount of Securities of such
Series to be redeemed in order to exhaust the aforesaid cash payment shall be
less than $100,000, the Trustee need not call Securities of such Series for
redemption, except upon receipt of a Company Order that such action be taken,
and such cash payment shall be held by the Trustee or a Paying Agent and
applied to the next succeeding sinking fund payment, provided, however, that
the Trustee or such Paying Agent shall from time to time upon receipt of a
Company Order pay over and deliver to the Company any cash payment so being
held by the Trustee or such Paying Agent upon delivery by the Company to the
Trustee of Securities of that Series purchased by the Company having an unpaid
principal amount equal to the cash payment required to be released to the
Company.

SECTION 12.3 Redemption of Securities for Sinking Fund.

Not less than 60 days (unless otherwise indicated in the
Board Resolution or Officers' Certificate or supplemental indenture in respect
of a particular Series of Securities) prior to each sinking fund payment date
for any Series of Securities, the Company will deliver to the Trustee an
Officers' Certificate specifying the amount of the next ensuing mandatory
sinking fund payment for that

<PAGE> 64
Series pursuant to the terms of that Series, the portion thereof, if any, which
is to be satisfied by payment of cash and the portion thereof, if any, which is
to be satisfied by delivering and crediting of Securities of that Series
pursuant to Section 12.2, and the optional amount, if any, to be added in cash
to the next ensuing mandatory sinking fund payment, and the Company shall
thereupon be obligated to pay the amount therein specified. Not less than 45
days (unless otherwise indicated in the Board Resolution or Officers'
Certificate or supplemental indenture in respect of a particular Series of
Securities) before each such sinking fund payment date the Trustee shall select
the Securities to be redeemed upon such sinking fund payment date in the manner
specified in Section 3.2 and cause notice of the redemption thereof to be given
in the name of and at the expense of the Company in the manner provided in
Section 3.3. Such notice having been duly given, the redemption of such
Securities shall be made upon the terms and in the manner stated in Sections
3.4, 3.5 and 3.6.

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.

BEVERLY ENTERPRISES, INC.

(SEAL) By:
----------------------------------
Name:
Attest: Title:

[NAME OF TRUSTEE]

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

<PAGE> 65
BEVERLY ENTERPRISES, INC.

Reconciliation and tie between Trust Indenture Act of 1939 and
Indenture, dated as of ________________, 1996

<TABLE>
<S> <C>
Section 310(a)(1) . . . . . . . . . . . . . . . . . . . . . . . 8.10
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . 8.10
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(a)(5) . . . . . . . . . . . . . . . . . . . . . . . . 8.10
(b) . . . . . . . . . . . . . . . . . . . . . . . . 8.10

Section 311(a) . . . . . . . . . . . . . . . . . . . . . . . . 8.11
(b) . . . . . . . . . . . . . . . . . . . . . . . . 8.11
(c) . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable

Section 312(a) . . . . . . . . . . . . . . . . . . . . . . . . 2.6
(b) . . . . . . . . . . . . . . . . . . . . . . . . 11.3
(c) . . . . . . . . . . . . . . . . . . . . . . . . 11.3

Section 313(a) . . . . . . . . . . . . . . . . . . . . . . . . 8.6
(b)(1) . . . . . . . . . . . . . . . . . . . . . . . . 8.6
(b)(2) . . . . . . . . . . . . . . . . . . . . . . . . 8.6
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . 8.6
(d) . . . . . . . . . . . . . . . . . . . . . . . . 8.6

Section 314(a) . . . . . . . . . . . . . . . . . . . . . . . . 4.2, 11.5
(b) . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . 11.4
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . 11.4
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(d) . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(e) . . . . . . . . . . . . . . . . . . . . . . . . 11.5
(f) . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable

Section 315(a) . . . . . . . . . . . . . . . . . . . . . . . . 8.1
(b) . . . . . . . . . . . . . . . . . . . . . . . . 8.5
(c) . . . . . . . . . . . . . . . . . . . . . . . . 8.1
(d) . . . . . . . . . . . . . . . . . . . . . . . . 8.1
(e) . . . . . . . . . . . . . . . . . . . . . . . . 6.14

Section 316(a) . . . . . . . . . . . . . . . . . . . . . . 2.10
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . 6.2
. . . . . . . . . . . . . . . . . . . . . . 6.12
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . 6.13
(b) . . . . . . . . . . . . . . . . . . . . . . 6.8
</TABLE>

<PAGE> 66
<TABLE>
<S> <C>
Section 317(a)(1) . . . . . . . . . . . . . . . . . . . . . . . 6.3
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . 6.4
(b) . . . . . . . . . . . . . . . . . . . . . . . 2.5

Section 318(a) . . . . . . . . . . . . . . . . . . . . . . . 11.1
</TABLE>

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

<PAGE> 1
EXHIBIT 4.2

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

BEVERLY ENTERPRISES, INC.

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

SUBORDINATED INDENTURE

Dated as of __________, 1996

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

[NAME OF TRUSTEE]

Trustee

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

<PAGE> 2
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
ARTICLE I

ARTICLE II

THE SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.1 Issuable in Series . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.2 Establishment of Terms of Series of Securities . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.3 Execution and Authentication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.4 Registrar and Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.5 Paying Agent to Hold Money in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.6 Securityholder Lists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.7 Transfer and Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.8 Mutilated, Destroyed, Lost and Stolen Securities . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.9 Outstanding Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 2.10 Treasury Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 2.11 Temporary Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2.12 Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2.13 Defaulted Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2.14 Global Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2.15 CUSIP Numbers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

ARTICLE III

REDEMPTION . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.1 Notice to Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.2 Selection of Securities to be Redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 3.3 Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 3.4 Effect of Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 3.5 Deposit of Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 3.6 Securities Redeemed in Part . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

ARTICLE IV

COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 4.1 Payment of Principal and Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 4.2 SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 4.3 Compliance Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 4.4 Stay, Extension and Usury Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 4.5 Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 4.6 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

ARTICLE V

SUCCESSORS . . . . . . . . . . . . . . . . . . . . . . . . . 22
</TABLE>

<PAGE> 3
<TABLE>
<CAPTION>
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<S> <C> <C>
SECTION 5.1 When Company May Merge, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 5.2 Successor Corporation Substituted . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

ARTICLE VI

DEFAULTS AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 6.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 6.2 Acceleration of Maturity; Rescission and Annulment. . . . . . . . . . . . . . . . . . . . 24
SECTION 6.3 Collection of Indebtedness and Suits for Enforcement by Trustee . . . . . . . . . . . . . 26
SECTION 6.4 Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 6.5 Trustee May Enforce Claims Without Possession of Securities . . . . . . . . . . . . . . . 27
SECTION 6.6 Application of Money Collected . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 6.7 Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 6.8 Unconditional Right of Holders to Receive Principal and Interest . . . . . . . . . . . . . 29
SECTION 6.9 Restoration of Rights and Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 6.10 Rights and Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 6.11 Delay or Omission Not Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 6.12 Control by Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 6.13 Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 6.14 Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 6.15 Enforcement of Rights of Conversion by Holders . . . . . . . . . . . . . . . . . . . . . . 31

ARTICLE VII

CONVERSION . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 7.1 Conversion Privilege . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 7.2 Conversion Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 7.3 Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 7.4 Taxes on Conversion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 7.5 Company to Provide Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 7.6 Adjustment for Change in Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 7.7 Adjustment for Rights Issue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 7.8 Adjustment for Other Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 7.9 Current Market Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 7.10 When Adjustment May be Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 7.11 When No Adjustment Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 7.12 Notice of Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 7.13 Voluntary Reduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 7.14 Notice of Certain Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 7.15 Reorganization of Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 7.16 Company Determination Final . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 7.17 Trustee's Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

ARTICLE VIII

TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 8.1 Duties of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 8.2 Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 8.3 Individual Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 8.4 Trustee's Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
</TABLE>

<PAGE> 4
<TABLE>
<CAPTION>
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<S> <C> <C>
SECTION 8.5 Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 8.6 Reports by Trustee to Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 8.7 Compensation and Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 8.8 Replacement of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 8.9 Successor Trustee by Merger, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 8.10 Eligibility; Disqualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 8.11 Preferential Collection of Claims Against Company . . . . . . . . . . . . . . . . . . . . 44

ARTICLE IX

SATISFACTION AND DISCHARGE . . . . . . . . . . . . . . . . . . . . . 44
SECTION 9.1 Satisfaction and Discharge of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 9.2 Application of Trust Funds; Indemnification . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 9.3 Satisfaction, Discharge and Defeasance of Securities of any Series . . . . . . . . . . . . 46
SECTION 9.4 Defeasance of Certain Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 9.5 Repayment to Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

ARTICLE X

AMENDMENTS AND WAIVERS . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 10.1 Without Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 10.2 With Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 10.3 Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 10.4 Compliance with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 10.5 Revocation and Effect of Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 10.6 Notation on or Exchange of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 10.7 Trustee Protected . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

ARTICLE XI

ARTICLE XII

SINKING FUNDS . . . . . . . . . . . . . . . . . . . . . . . . 57
</TABLE>

iii

<PAGE> 5
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 12.1 Applicability of Article . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 12.2 Satisfaction of Sinking Fund Payments with Securities . . . . . . . . . . . . . . . . . . 58
SECTION 12.3 Redemption of Securities for Sinking Fund . . . . . . . . . . . . . . . . . . . . . . . . 58

ARTICLE XIII

SUBORDINATION OF SECURITIES . . . . . . . . . . . . . . . . . . . . . 59
SECTION 13.1 Agreement to Subordinate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 13.2 Distribution on Dissolution, Liquidation and Reorganization; Subrogation of Securities . . 59
SECTION 13.3 No Payments on Securities in Event of Defaults on Senior Indebtedness . . . . . . . . . . 61
SECTION 13.4 No Payments on Securities in Event of Defaults on Senior Indebtedness . . . . . . . . . . 62
SECTION 13.5 Authorization of Holders to Trustee to Effect Subordination . . . . . . . . . . . . . . . 62
SECTION 13.6 Notice to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 13.7 Trustee as Holder of Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 13.8 Modification of Terms of Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 13.9 Trustee Not Fiduciary for Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . 63
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