VANTIVE CORP, S-3, 1997-11-18

VANTIVE CORP
S-3, 1997-11-18
PREPACKAGED SOFTWARE

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<PAGE> 1
As filed with the Securities and Exchange Commission on November 18, 1997
REGISTRATION NO. 333-

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------

DELAWARE THE VANTIVE CORPORATION 77-0266662
(State or Other (Exact Name of Registrant (I.R.S. Employer
Jurisdiction of as Specified in its Charter) Identification No.)
Incorporation or
Organization)

2455 Augustine Drive
Santa Clara, California 95054
(408) 982-5700
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
------------------
JOHN R. LUONGO
President, Chief Executive Officer,
THE VANTIVE CORPORATION
2455 Augustine Drive
Santa Clara, California 95054
(408) 982-5700
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent For Service)
---------------------
Copy to:
Gregory M. Gallo, Esq.
Thomas W. Furlong, Esq.
William R. Schreiber, Esq.
William A. Rodoni, Esq.
GRAY CARY WARE & FREIDENRICH
400 Hamilton Avenue
Palo Alto, California 94301
(415) 328-6561
---------------------

Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to a 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, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.[ ]
If this Form is a post-effective Act amendment filed pursuant to Rule 462(c)
under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.[ ]

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Proposed Proposed
Title of Each Maximum Maximum
Class of Amount Aggregate Aggregate Amount of
Securities to to be Price Per Offering Price Registration
be Registered Registered Security (1) (1) Fee
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
4.75% Convertible $69,000,000 100% $69,000,000 $20,910
Subordinated Notes
due 2002
- -------------------------------------------------------------------------------------------------------
Common Stock, 1,645,600 shares(2) ---- ---- ----
$.001 par value(2)
- -------------------------------------------------------------------------------------------------------
</TABLE>

(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(i) under the Securities Act of 1933, as amended. (2)
Such number represents the number of shares of Common Stock as are initially
issuable upon conversion of the 4.75% Convertible Subordinated Notes due
2002 registered hereby and, pursuant to Rule 416 under the Securities Act of
1933 as amended, such indeterminate number of shares of Common Stock as may
be issued from time to time upon conversion of the Notes as a result of the
antidilution provisions thereof. Pursuant to Rule 457(i), no registration
fee is required for these shares.

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

The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.

<PAGE> 2
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 NOVEMBER 18, 1997

$69,000,000

THE VANTIVE CORPORATION

4.75% CONVERTIBLE SUBORDINATED NOTES DUE 2002

This Prospectus relates to the 4.75% Convertible Subordinated Notes due
2002 (the "Notes") of The Vantive Corporation, a Delaware corporation ("Vantive"
or the "Company"), sold under the Securities Act of 1933, as amended (the
"Securities Act"), and the shares of the Company's common stock, par value $.001
(the "Shares") issuable upon conversion of the Notes. The Notes were issued and
sold on August 21, 1997 (the "Original Offering") in transactions exempt from
the registration requirements of the Securities Act to persons reasonably
believed by Deutsche Morgan Grenfell Inc., Hambrecht & Quist LLC and BancAmerica
Robertson Stephens as the initial purchasers (the "Initial Purchasers") of the
Notes, to be either "qualified institutional buyers" (as defined by Rule 144A
under the Securities Act), institutional "accredited investors" (as defined in
Rule 501(a)(1), (2), (3) or (7) under Regulation D of the Securities Act), or
non-U.S. persons in compliance with the provisions of Regulation S under the
Securities Act. The Notes and the Shares may be offered and sold from time to
time by the holders named herein or by their transferees, pledgees, donees or
their successors (collectively, the "Selling Holders") pursuant to this
Prospectus. The Registration Statement of which this Prospectus is a part has
been filed with the Securities and Exchange Commission pursuant to a
registration rights agreement dated as of August 21, 1997 (the "Registration
Agreement" or the "Registration Rights Agreement") by and between the Company
and the Initial Purchasers, entered into in connection with the Original
Offering.

The Notes are convertible into shares of Common Stock at any time on or
prior to the close of business on the maturity date, unless previously redeemed
or repurchased, at a conversion price of $41.93 per share (equivalent to a
conversion rate of 23.85 shares per $1,000 principal amount of Notes), subject
to adjustment in certain events.

Interest on the Notes is payable on September 1 and March 1 of each
year, commencing on March 1, 1998. Principal and interest payments will be made
without any deduction for U.S. withholding taxes, except to the extent described
under "Description of Notes--Payment of Additional Amounts." The Notes are
redeemable (a) in the event of certain developments involving U.S. withholding
taxes (as described under "Description of Notes-- Redemption--Redemption for
Taxation Reasons"), at a redemption price of 100% of the principal amount of the
Notes to be redeemed, plus accrued interest to, but excluding, the Redemption
Date and (b) at the option of the Company, on or after September 6, 2000, in
whole or in part, at the redemption prices and under the circumstances set forth
herein, plus accrued interest to, but excluding, the Redemption Date. See
"Description of Notes--Redemption." The Notes are not entitled to any sinking
fund. The Notes will mature on September 1, 2002. The Notes issued and sold in
the Original Offering in reliance on 144A have been designated for trading on
the Portal Market of the National Association of Securities Dealers, Inc. and
are listed on the Luxembourg Stock Exchange. Notes sold pursuant to the
Registration Statement of which this Prospectus forms a part will not remain
eligible for trading in the Portal Market.

In the event of a Fundamental Change, subject to certain limitations,
each holder of Notes may require the Company to repurchase the Notes, in whole
or from time to time, in part, at the applicable repurchase price set forth in
this Prospectus.

The Notes are general, unsecured obligations, subordinated in right of
payment to all existing and future Senior Indebtedness of the Company. As of
September 30, 1997, there was no indebtedness of the Company that would have
constituted Senior Indebtedness. The Indenture does not restrict the Company or
its subsidiaries from incurring additional Senior Indebtedness or other
indebtedness. See "Description of Notes-- Subordination."

The Notes and the Shares may be sold by the Selling Holders from time to
time directly to purchasers or through agents, underwriters or dealers. See
"Selling Holders" and "Plan of Distribution." If required, the names of any such
agents or underwriters involved in the sale of the Notes and the Shares in
respect of which this Prospectus is being delivered and the applicable agent's
commission, dealer's purchase price or underwriter's discount, if any, will be
set forth in an accompanying supplement to this prospectus (the "Prospectus
Supplement").

<PAGE> 3
The Selling Holders will receive all of the net proceeds from the sale
of the Notes and the Shares and will pay all underwriting discounts and selling
commissions, if any, applicable to the sale of the Notes and the Shares. The
Company is responsible for payment of all other expenses incident to the offer
and sale of the Notes and the Shares.

The Selling Holders and any broker-dealers, agents or underwriters which
participate in the distribution of the Notes and the Shares may be deemed to be
"underwriters" within the meaning of the Securities Act, and any commission
received by them and any profit on the resale of the Notes and the Shares
purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act. See "Plan of Distribution" for a description of
indemnification arrangements.

THE NOTES AND SHARES HAVE NOT BEEN REGISTERED FOR SALE UNDER THE
SECURITIES LAWS OF ANY STATE OR JURISDICTION AS OF THE DATE OF THIS PROSPECTUS.
BROKERS OR DEALERS EFFECTING TRANSACTIONS IN THE NOTES AND SHARES SHOULD CONFIRM
THE REGISTRATION OF THE NOTES AND SHARES UNDER THE SECURITIES LAWS OF THE STATES
IN WHICH SUCH TRANSACTIONS OCCUR, OR THE EXISTENCE OF ANY EXEMPTIONS FROM SUCH
REGISTRATION.

The Company's Common Stock is quoted on The Nasdaq National Market. On
November 14, 1997, the last sales price of the Company's Common Stock as
reported on The Nasdaq National Market was $25.00.

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

SEE "RISK FACTORS" BEGINNING ON PAGE 7 FOR INFORMATION
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF
THE NOTES AND SHARES OFFERED HEREBY.
--------------------------------------

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 November _____, 1997.

<PAGE> 4
AVAILABLE INFORMATION

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 Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company can be inspected and
copied at the Commission's public reference room at 450 Fifth Street, N.W.,
Washington, D.C. 20549, as well as at the Regional Offices of the Commission
located at Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60611 and 7 World Trade Center, Suite 1300, New York, New York
10048. Copies of such material can also be obtained by mail from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, upon payment of the fees prescribed by the Commission. The Company's
Common Stock is traded on The Nasdaq National Market. Reports and other
information concerning the Company can also be inspected at the offices of the
National Association of Securities Dealers, Inc., Market Listing Section, 1735 K
Street, N.W., Washington, D.C. 20006. Such reports and other information may
also be inspected without charge at a Web site maintained by the Commission. The
address of the site is http://www.sec.gov.

The Company has also filed with the Commission a Registration Statement
on Form S-3 (together with all amendments and exhibits thereto, the
"Registration Statement") under the Securities Act. This Prospectus does not
contain all of the information set forth in the Registration Statement, certain
parts of which are omitted in accordance with the rules and regulations of the
Commission. For further information, reference is made to the Registration
Statement, copies of which may be obtained from the Public Reference Section of
the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, upon payment of
the fees prescribed by the Commission.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents filed by the Company with the Commission
pursuant to the Exchange Act are incorporated herein by reference:

1. The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A filed on August 9,
1995;

2. Annual Report on Form 10-K for the year ended December 31, 1996;

3. Quarterly Reports on Form 10-Q for the three-month periods ended
March 31, 1997, June 30, 1997 and September 30, 1997.

4. Current Reports on Form 8-K and 8-K/A filed on August 15, 1997,
September 5, 1997, September 26, 1997 and November 4, 1997.

All documents and reports subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Prospectus and prior to the termination of this offering shall be deemed to be
incorporated by reference herein and to be a part hereof from the date of filing
of such documents or reports. Any statement contained in a document incorporated
by reference 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 statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus. The Company will provide without charge to each person to whom this
Prospectus is delivered, upon written or oral request, a copy of any or all of
the foregoing documents incorporated by reference in this Prospectus (other than
any exhibits thereto). Requests for such documents should be submitted in
writing to The Vantive Corporation, 2455 Augustine Drive, Santa Clara,
California 95054, Attention: Chief Financial Officer, or by telephone at (408)
982-5700.

3
<PAGE> 5
THE COMPANY

This Prospectus contains forward-looking statements within the meaning
of Section 27A of the Securities Act and Section 21E of the Securities Exchange
Act. Actual results could differ materially from those projected in these
forward-looking statements as a result of a variety of factors, including those
set forth below and elsewhere in this Prospectus.

Vantive is a leading provider of Front Office Automation software that
enables businesses to attract, acquire, retain, and leverage customers by
automating marketing and sales, customer support, defect tracking, field service
and internal help desk functions. These tightly integrated Customer Asset
Management applications, called the Vantive Enterprise, are based on a
multi-tiered client/server architecture and a common data model. The Company's
Front Office Automation applications may also be used through a Web-based
browser, thereby providing the applications directly to the end-user outside the
boundaries of the business. The software can be used independently or as part of
an integrated, enterprise-wide Front Office Automation information system. The
Company believes businesses implementing a Front Office Automation information
system can better manage relationships by leveraging valuable customer
information that is shared throughout the organization. The Company's software
applications have been deployed by businesses in a broad range of industries,
including software, communications, consumer products, finance,
outsourcing/services, personal computer hardware, healthcare, manufacturing,
medical projects, public sector/regulated industry, online services, consumer
goods and retail.

Vantive Enterprise, a complete set of Web-enabled, client/server
software applications, is the Company's integrated Front Office Automation
information system. Vantive Enterprise currently includes Vantive Sales, Vantive
Support, Vantive HelpDesk, Vantive Quality, and Vantive FieldService. These
applications, each of which can be purchased separately or integrated in any
combination, enable businesses to leverage customer information on an
enterprise-wide basis, ensuring that the right customer information goes to the
right person at the right time. Each component provides easy-to-use, "best of
breed" functionality for each of the respective segments of the Front Office
Automation market. The Company has designed its solution to be fully expandable
through the enterprise by sharing a common database and application architecture
along with common facilities of intelligent workflow routing, advanced problem
solving and measurement reporting. By building the applications using a
three-tier application architecture, Vantive believes its applications are made
scaleable and easier to maintain than competing two-tier implementations. This
architecture also results in a smaller client footprint, less network traffic
and more efficient use of database resources. This three-tier architecture is
also well-suited for Web-based applications. The Company markets and sells its
software and services in the United States primarily through a direct sales
organization consisting of approximately 182 employees, including 65 quota
carrying salespeople, as of September 30, 1997. The Company markets its products
outside of the United States through wholly-owned subsidiaries and independent
distributors.

The Company was incorporated in California on October 25, 1990 and
reincorporated in Delaware on August 10, 1995. The Company's principal executive
offices are located at 2455 Augustine Drive, Santa Clara, California 95054, and
its telephone number is (408) 982-5700.

4
<PAGE> 6
THE OFFERING

<TABLE>
<S> <C>
Securities Offered.................... $69,000,000 aggregate principal amount of 4.75%
Convertible Subordinated Notes due 2002 issued under
the Indenture.

Interest Payment Dates................ September 1 and March 1, commencing March 1, 1998.

Conversion............................ The Notes will be convertible into Common Stock at
any time prior to the close of business on the
maturity date, unless previously redeemed or
repurchased, at a conversion price of $41.93 per
share (equivalent to a conversion rate of
approximately 23.85 shares per $1,000 principal
amount of Notes), subject to adjustment.

Subordination......................... The Notes are subordinated in right of payment to all
existing and future Senior Indebtedness. As of
September 30, 1997, there was no outstanding Senior
Indebtedness. The Indenture does not restrict the
incurrence of additional Senior Indebtedness or other
indebtedness by the Company.

Optional Redemption................... Except as described below under "Additional Amounts
and Redemption for Taxation Reasons," the Notes are
not redeemable by the Company prior to September 6,
2000. On or after September 6, 2000, the Notes may
be redeemed at the option of the Company in whole, or
from time to time, in part, at the redemption prices
set forth in this Prospectus plus accrued interest.
See "Description of Notes--Redemption--Optional
Redemption."

Additional Amounts and Redemption
for Taxation Reasons............. The Company will pay Additional Amounts, subject to
certain exceptions, in order that the Non-U.S.
Holders of Notes receive the full amount of the
principal, premium, if any, and interest specified
therein (including any amount payable upon a
repurchase of the Notes as described immediately
below under "Repurchase at Option of Holders Upon a
Fundamental Change") without deduction for or on
account of U.S. withholding taxes. In the event that
the Company must pay such Additional Amounts as a
result of a change in law, the affected Notes will be
redeemable at the option of the Company, as a whole
but not in part, at 100% of the principal amount
thereof, plus any accrued interest and any Additional
Amounts then payable.

Repurchase at Option of Holders Upon
a Fundamental Change............. In the event of a Fundamental Change, each Holder of
Notes may require the Company to repurchase its
Notes, in whole or in part, for cash at the
repurchase prices set forth in this Prospectus,
subject to adjustment in certain events as described
herein, plus accrued interest. See "Description of
Notes--Repurchase at Option of Holders Upon a
Fundamental Change."
</TABLE>

5
<PAGE> 7
<TABLE>
<S> <C>
Use of Proceeds....................... The Company will not receive any of the proceeds from
the sale of the Notes or the Shares.

Registration Rights................... Upon any failure by the Company to comply with
certain of its obligations under the Registration
Rights Agreement, additional interest will be payable
on the Notes.

Listing............................... The Notes issued in the Original Offering are designated
for trading on The Portal Market and are also listed
on the Luxembourg Stock Exchange. Notes sold pursuant
to the Registration Statement of which this Prospectus
forms a part will not remain eligible for trading in the
Portal Market, and application will be made to list the
Notes sold pursuant to this Registration Statement on the
Luxembourg Stock Exchange.

</TABLE>

6
<PAGE> 8
RISK FACTORS

The following risk factors should be considered in conjunction with the
other information included and incorporated by reference in its Prospectus
before purchasing the Notes or the Common Stock issuable upon conversion of the
Notes offered hereby.

FUTURE OPERATING RESULTS UNCERTAIN

The Company has experienced significant period-to-period fluctuations in
revenues and operating results and anticipates that such fluctuations will
continue. These fluctuations may be attributable to a number of factors,
including the size, timing and recognition of revenue from significant orders,
increased competition, the timing of new product releases by the Company and its
competitors, market acceptance of the Company's products, changes in the
Company's and its competitors' pricing policies, the mix of license and service
revenue, budgeting cycles of its customers, seasonality, the mix of direct and
indirect sales, changes in operating expenses, changes in Company strategy,
personnel changes, foreign currency exchange rates and general economic factors.
The future operating results of the Company may fluctuate as a result of these
and other factors, including demand for the Company's products, the level of
product and price competition, the ability of the Company to develop and market
new products and to control costs, the ability of the Company to expand its
direct sales force and indirect distribution channels and the ability to attract
and retain key personnel.

A significant portion of the Company's revenues in any quarter are
typically derived from non-recurring sales to a limited number of customers.
Accordingly, revenues in any one quarter are not indicative of revenues in any
future period. In addition, like many software applications businesses, the
Company has generally recognized a substantial portion of its revenues in the
last month of each quarter, with these revenues concentrated in the last weeks
of the quarter. Any significant deferral of purchases of the Company's products
could have a material adverse effect on the Company's business, results of
operations and financial condition in any particular quarter, and to the extent
that significant sales occur earlier than expected, operating results for
subsequent quarters may be adversely affected. Product revenues are also
difficult to forecast because the market for Front Office Automation software
products is rapidly evolving. The Company's sales cycle is typically six to nine
months and varies substantially from customer to customer. The Company expects
that sales derived through indirect channels, which are harder to predict and
may have lower margins than direct sales, will increase as a percentage of total
revenues. The Company operates with little order backlog because its products
are typically shipped shortly after orders are received. As a result of these
factors, quarterly revenues for any future quarter are not predictable with any
significant degree of certainty. The Company's expense levels are based, in
part, on its expectations as to future revenues. In particular, the Company is
currently investing, and intends to continue to invest, significant resources to
develop its sales strategy, which includes hiring significant numbers of direct
sales personnel, and developing relationships with high-end integrators and
resellers. If revenues are below expectations, operating results are likely to
be adversely affected. Net income may be disproportionately affected by a
reduction in revenues, because a significant portion of the Company's expenses
do not vary with revenues. The Company may also choose to reduce prices or
increase spending in response to competition or to pursue new market
opportunities. In particular, if new competitors, technological advances by
existing competitors, or other competitive factors require the Company to invest
significantly greater resources in research and development efforts, the
Company's operating margins in the future may be adversely affected. The
foregoing statements regarding the Company's future revenues and net income are
forward-looking statements, and actual results may vary substantially depending
upon a variety of factors described in this paragraph and elsewhere in this
Prospectus.

Because of these factors, the Company believes that period-to-period
comparisons of its results of operations are not necessarily meaningful and that
such comparisons should not be relied upon as indications of future performance.
Due to all of the foregoing factors, it is likely that in some future quarter
the Company's operating results will be below the expectations of public market
analysts and investors. In such event, the price of the Notes and the Common
Stock into which they are convertible would likely be materially adversely
affected.

7
<PAGE> 9
RAPID TECHNOLOGICAL CHANGE AND PRODUCT DEVELOPMENT RISKS

The Front Office Automation Market is subject to rapid technological
change, changing customer needs, frequent new product introductions and evolving
industry standards that may render existing products and services obsolete. As a
result, the Company's position in its existing markets or other markets that it
may enter could be eroded rapidly by product advances. The life cycles of the
Company's products are difficult to estimate. The Company's growth and future
financial performance will depend in part upon its ability to enhance existing
applications, develop and introduce new applications that keep pace with
technological advances, meet changing customer requirements, respond to
competitive products and achieve market acceptance. For example, the Company's
customers have adopted a wide variety of hardware, software, database,
Internet-based and networking platforms, and as a result, to gain broad market
acceptance, the Company must continue to support and maintain its products on a
variety of such platforms. The Company's future success will depend on its
ability to address the increasingly sophisticated needs of its customers by
supporting existing and emerging hardware, software, database, Internet-based
and networking platforms and by developing and introducing enhancements to its
products and new products on a timely basis that keep pace with technological
developments, evolving industry standards and changing customer requirements.
The success of the Company's products may also depend, in part, on the ability
of the Company to effectively distribute its products through the Internet.
There can be no assurance that the Company will be able to successfully change
other aspects of its business, such as its distribution channels or cost
structure, if technological changes in its market require such change. The
Company's product development efforts are expected to require, from time to
time, substantial investments by the Company in product development and testing.
There can be no assurance that the Company will have sufficient resources to
make the necessary investments. The Company has in the past experienced
development delays, and there can be no assurance that the Company will not
experience such delays in the future. There can be no assurance that the Company
will not experience difficulties that could delay or prevent the successful
development, introduction or marketing of new or enhanced products, including
but not limited to, Vantive Version 7.0, Vantive Version 7.5, Vantive On the Go,
and Vantive VanWeb. In addition, there can be no assurance that such products
will meet the requirements of the marketplace and achieve market acceptance or
that the Company's current or future products will conform to industry
requirements. If the Company is unable, for technological reasons, to develop
and introduce new and enhanced products in a timely manner, the Company's
business, results of operations and financial condition could be materially
adversely affected.

Software products as complex as those offered by the Company may contain
errors that may be detected at any point in the products' life cycles. The
Company has in the past discovered software errors in certain of its products
and has experienced delays in shipment of products during the period required to
correct these errors. There can be no assurance that, despite testing by the
Company and by current and potential customers, errors will not be found,
resulting in loss of, or delay in, market acceptance and sales, diversion of
development resources, injury to the Company's reputation, or increased service
and warranty costs, any of which could have a material adverse effect on the
Company's business, results of operations and financial condition.

NEED TO EXPAND DISTRIBUTION CHANNELS AND SUCCESSFULLY LEVERAGE THIRD PARTY
RELATIONSHIPS

An important element of the Company's distribution strategy is to expand its
direct sales force, to create additional relationships with third parties and to
dedicate certain direct sales resources and leverage third party relationships
toward key vertical markets. An important element of the Company's product
development strategy is to integrate with applications from Enterprise Resource
Planning ("ERP") vendors. The Company is currently investing, and intends to
continue to invest, significant resources toward these strategies, which could
adversely affect the Company's operating margins. In this regard, the Company
has recently hired and continues to hire significant numbers of direct sales
personnel. Competition for sales personnel is intense, and there can be no
assurance that the Company can retain its existing sales personnel or that it
can attract, assimilate and retain additional highly qualified sales personnel
in the future. The strategy also depends, in large part, on attracting and
retaining beneficial third party relationships. In this regard, the Company has
developed relationships with several high-end integrators and resellers,
including EDS, Deloitte & Touche, Price Waterhouse, KPMG Peat Marwick, HBO and
Company, Lucent Technologies, and announced a strategic relationship with
PeopleSoft, an ERP vendor. There also can be no assurance that the Company will
be able to attract and retain appropriate high-end

8
<PAGE> 10
integrators, resellers, other third party distributors or ERP vendors. The
Company's agreements with these third parties are not exclusive and, in many
cases, may be terminated by either party without cause. In addition, many of
these third parties sell or co-market competing product lines. Therefore, there
can be no assurance that any of these parties will continue to represent or
recommend the Company's products. There also can be no assurance that the
Company will effectively identify key vertical markets. The inability to
recruit, or the loss of, important direct sales personnel, high-end integrators,
resellers, other third party distributors or ERP vendors, or the failure to
effectively identify key vertical markets, could have a material adverse effect
on the Company's business, results of operations and financial condition.

INTERNATIONAL OPERATIONS, FOREIGN CURRENCY FLUCTUATIONS

The Company believes that its continued growth and profitability will
require further expansion of its international operations. To successfully
expand international sales, the Company must establish additional foreign
operations, hire additional personnel and recruit additional international
resellers. To the extent that the Company is unable to do so in a timely manner,
the Company's growth in international sales, if any, will be limited, and the
Company's business, results of operations and financial condition could be
materially adversely affected. In addition, as European revenues increase as a
percentage of overall revenues, the Company's business, results of operations
and financial condition may be adversely affected by the seasonality of European
procurement cycles. As the Company continues to expand its international
operations, significant costs may be incurred ahead of any anticipated
international revenues, which could have a material adverse effect on the
Company's business, results of operations and financial condition. In addition,
future increases in the value of the U.S. dollar could make the Company's
products less competitive in foreign markets. As the Company increases its
foreign sales, it may be materially and adversely affected by fluctuations in
currency exchange rates, increases in duty rates, exchange or price controls or
other restrictions on foreign currencies. Additional risks inherent in the
Company's international business activities generally include economic
conditions in each country, unexpected changes in regulatory requirements,
tariffs and other trade barriers, costs of localizing products for foreign
countries, lack of acceptance of localized products in foreign countries, longer
accounts receivable payment cycles, difficulties in managing international
operations, potentially adverse tax consequences including restrictions on the
repatriation of earnings and the burdens of complying with a wide variety of
foreign laws. There can be no assurance that such factors will not have a
material adverse effect on the Company's future international sales and,
consequently, the Company's business, results of operations and financial
condition. There can be no assurances that the Company will be able to
successfully address each of these challenges.

COMPETITION

The Front Office Automation Market is intensely competitive, highly
fragmented and subject to rapid change. Because the Company offers multiple
software applications which can be purchased separately or integrated as part of
Vantive Enterprise, the Company competes with a variety of other businesses
depending on the target market for their applications software products. These
competitors include a select number of businesses targeting the enterprise level
and department level Front Office Automation markets, such as the Baan Company,
Scopus Technology, and Siebel Systems, Inc. some of which have only recently
entered these markets. The Company also competes with a substantial number of
small private businesses and certain public businesses which offer products
targeted at one or more specific markets, including the customer support market,
the help desk market, the quality assurance market and the sales and marketing
automation market, such as Remedy Corporation, Onyx Software, and Software
Artistry, Inc. In addition, the Company believes that existing competitors and
new market entrants such as Oracle will attempt to develop fully integrated
front office information systems. The Company also competes with third party
professional service organizations that develop custom software and with
internal information technology departments of customers, which develop customer
interaction applications. Among the Company's current and potential competitors
are also a number of large hardware and software businesses that may develop or
acquire products that compete with the Company's products. In this regard, SAP
AG, the Baan Company, and Oracle have each introduced a customer support module
as part of their application suites. In addition, Oracle has recently announced
a sales force automation application, customer support products, as well as the
creation of a network of third party dealers that will sell Oracle's

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<PAGE> 11
application suites exclusively to medium-sized businesses. These competitors
have significantly greater financial, technical, marketing and other resources
than the Company.

The Company also expects that competition will increase as a result of
software industry consolidations. Current and potential competitors have
established or may establish cooperative relationships among themselves or with
third parties to increase the ability of their products to address the needs of
the Company's prospective customers. Accordingly, it is possible that new
competitors or alliances among competitors may emerge and rapidly acquire
significant market share. The Company also expects that competition may increase
as a result of both new software start ups entering the market as well as
existing software industry vendors which may be planning to enter the market for
Front Office Automation applications. Increased competition is likely to result
in price reductions, reduced operating margins and loss of market share, any of
which could materially adversely affect the Company's business, results of
operations and financial condition. Many of the Company's current and potential
competitors have significantly greater financial, technical, marketing and other
resources than the Company. As a result, they may be able to respond more
quickly to new or emerging technologies and changes in customer requirements, or
to devote greater resources to the development, promotion and sale of their
products than can the Company. There can be no assurance that the Company will
be able to compete successfully against current and future competitors or that
competitive pressures faced by the Company will not materially adversely affect
its business, results of operations and financial condition.

The Company believes that the principal competitive factors affecting
its market include product features such as adaptability, scalability, ability
to integrate with products produced by other vendors, functionality, ease of
use, product reputation, quality, performance, price, customer service and
support, the effectiveness of sales and marketing efforts and company
reputation. Although the Company believes that its products currently compete
favorably with respect to such factors, there can be no assurance that the
Company can maintain its competitive position against current and potential
competitors, especially those with significantly greater financial, marketing,
service, support, technical and other resources.

MANAGEMENT OF EXPANDING OPERATIONS; DEPENDENCE UPON KEY PERSONNEL

The Company's ability to compete effectively and to manage future
growth, if any, will require the Company to continue to improve its financial
and management controls, reporting systems and procedures on a timely basis and
expand, train and manage its employee workforce. There can be no assurance that
the Company will be able to do so successfully. The Company's failure to do so
could have a material adverse effect upon the Company's business, results of
operations and financial condition. The Company has recently hired a significant
number of employees, including senior sales, marketing, research and
development, and finance personnel, and in order to maintain its ability to grow
in the future, the Company will be required to significantly increase its total
headcount.

In addition, the Company's future performance depends in significant
part upon attracting and retaining key technical, sales, senior management and
financial personnel. In particular, delays in hiring sales or research and
development personnel may have a material adverse effect on the Company's
business, results of operations and financial condition. The loss of the
services of one or more of the Company's executive officers or the inability to
recruit other additional senior management could have a material adverse effect
on the Company's business, results of operations and financial condition.
Competition for such personnel is intense, and the inability to retain its key
technical, sales, senior management and financial personnel or to attract,
assimilate or retain other highly qualified technical, sales, senior management,
and financial personnel in the future on a timely basis could have a material
adverse effect on the Company's business, results of operations and financial
condition.

INCREASED USE OF THIRD PARTY SOFTWARE

The Company currently markets a proprietary application development
environment for its customers to tailor its applications. This application
development environment is also used by the Company to build and modify its
applications products. While the Company believes, based on interactions with
its customers and potential customers, that it currently derives significant
competitive advantage from this proprietary application

10
<PAGE> 12
development environment, it believes that competitive pressures, technological
changes demanded by customers, and significant advances in the sophistication of
third party application development tools such as Visual Basic will require the
Company to make greater use of third party software in the future. In
particular, the Company has recently announced that Vantive Encyclopedia, a
Web-based marketing encyclopedia based on FirstFloor's Java-based server, and
configuration capabilities, based on Calico Technology's configuration engine,
are available with Vantive Version 7.0. The Company has also announced that it
has entered into a strategic relationship with PeopleSoft with the goal of
jointly developing product integrations between the Vantive Front Offict
Automation and PeopleSoft ERP systems. The greater use of third party software
could require the Company to invest significant resources in rewriting some or
all of its software applications products utilizing third party software and/or
to enter into license arrangements with third parties which could result in
higher royalty payments and a loss of product differentiation. There can be no
assurance that the Company would be able to successfully rewrite its
applications or enter into commercially reasonable licenses, and the costs of,
or inability or delays in, doing so could have a material adverse effect on the
Company's business, results of operations and financial condition.

DEPENDENCE ON EMERGING MARKETS FOR FRONT OFFICE AUTOMATION SOFTWARE; PRODUCT
CONCENTRATION

The Company's future financial performance will depend in large part on
the growth in demand for individual Front Office Automation applications as well
as the number of organizations adopting comprehensive Front Office Automation
information systems for their client/server and Web computing environments. To
date, much of the Company's license revenues have resulted from sales of
individual applications, particularly Vantive Support and Vantive HelpDesk. The
markets for these applications are relatively new and undeveloped, and failure
of these markets to develop would have a material adverse effect on the
Company's business, results of operations and financial condition. Additionally,
the Company is investing in the sales, field service and quality automation
markets. Should these markets fail to develop, not accept the Company's
products, or cause the company to lose new business and or customers in its
traditional markets, the Company would experience an adverse effect on the
Company's business, results of operations and financial condition.

The Company believes that an important competitive advantage for its
software applications is their ability to be integrated with one another and
with back office applications software produced by third party software vendors
into a Customer Asset Management information system. If the demand for
integrated suites of Customer Asset Management applications fails to develop, or
develops more slowly than the Company currently anticipates, it could have a
material adverse effect on the demand for the Company's applications and on its
business, results of operations and financial condition. In addition, any other
factors adversely affecting the demand for the Company's existing applications,
particularly Vantive Support, Vantive HelpDesk and Vantive Quality, or newer
applications such as Vantive-On-The-Go, Vantive VanWeb, Vantive Sales, Vantive
FieldService, or the Company's recent acquisition of the ICC product "Pinnacle"
for spare parts management could have a material adverse effect on the Company's
business, results of operations and financial condition.

LEVERAGE; SUBORDINATION AND ABSENCE OF FINANCIAL COVENANTS

In connection with the sale of the Notes, the Company incurred $69.0
million of indebtedness by the Company in the Original Offering. The Company's
principal and interest obligations have increased substantially as a result of
the Original Offering. The degree to which the Company is leveraged could
materially and adversely affect the Company's ability to obtain financing for
working capital, acquisitions or other purposes and could make it more
vulnerable to industry downturns and competitive pressures. The Company's
ability to meet its debt service obligations is dependent upon the Company's
future performance, which will be subject to financial, business and other
factors affecting the operations of the Company, many of which are beyond its
control.

The Notes are unsecured and subordinated in right of payment in full to
all Senior Indebtedness of the Company. As a result of such subordination, in
the event of bankruptcy, liquidation or reorganization of the Company or certain
other events, the assets of the Company will be available to pay obligations on
the Notes only after all Senior Indebtedness has been paid in full in cash, and
there may not be sufficient assets remaining to pay amounts due on any or all of
the Notes then outstanding. The Indenture does not prohibit or limit the
incidence of Senior Indebtedness or the incurrence of other indebtedness and
other liabilities by the Company, and the

11
<PAGE> 13
incurrence of any such additional indebtedness or liabilities could adversely
affect the Company's ability to pay its obligations on the Notes. As of
September 30, 1997, the Company had no Senior Indebtedness outstanding. The
Company anticipates that from time to time it may incur additional indebtedness,
including Senior Indebtedness, and that it will from time to time incur other
additional indebtedness and liabilities. See "Description of
Notes--Subordination."

The Indenture does not contain any financial covenants or restrictions
on the payment of dividends, the incurrence of indebtedness, including Senior
Indebtedness, by the Company or the issuance or repurchase of securities by the
Company. The Indenture contains no covenants or other provisions to afford
protection to holders of the Notes in the event of a highly leveraged
transaction or a change in control of the Company except to the extent described
under "Description of Notes--Repurchase at Option of Holders Upon a Fundamental
Change."

RISKS ASSOCIATED WITH POTENTIAL ACQUISITIONS

The Company recently completed the acquisition of Innovative Computer
Concepts, Inc. ("ICC") to expand its operations and offer complementary
products, services, and technology. These areas are relatively new to the
Company's product development and sales and marketing personnel. The ICC
acquisition and any future acquisitions or investments will be accompanied by
the risks commonly encountered in acquisitions of businesses. Such risks
include, among other things, difficulties in assimilation of acquired
operations, technologies and products, diversion of management's attention to
other business concerns, risks of entering markets in which the Company has no
or limited prior experience and potential loss of key employees of acquired
organizations. No assurance can be given as to the ability of the Company to
successfully integrate the business, products, technologies or personnel of ICC
or those that might be acquired in the future, the potential disruption of the
Company's ongoing business, the inability of management to maximize the
financial and strategic position of the Company, the maintenance of uniform
standards, controls, procedures, and policies and the impairment of
relationships with employees and clients as a result of any integration of new
management personnel. While the Company believes that the ICC product,
"Pinnacle" for spare parts management, offers complementary architecture to the
Company's existing products, there can be no assurance that the Company won't
need to, upon further investigation, rewrite portions or all of the ICC product
using Vantive tools, and the related costs, or risk of product delays in, doing
so could have a material adverse effect on the Company's business, results of
operations and financial condition.

In addition, future acquisitions by the Company could result in
potentially dilutive issuances of equity securities, the incurrence of debt and
contingent liabilities or amortization expenses related to goodwill and other
intangible assets, any of which could materially adversely affect the Company's
operating results and/or the price of the Company's Common Stock. These factors
could have a material adverse effect on the Company's business, results of
operations or financial condition. Further, there is no assurance that the
Company will compete effectively or will generate significant revenues in these
new areas.

DEPENDENCE ON LICENSED TECHNOLOGY

Vantive licenses technology on a non-exclusive basis from several
businesses for use with its products and anticipates that it will continue to do
so in the future. The inability of the Company to continue to license these
products or to license other necessary products for use with its products or
substantial increases in royalty payments under third party licenses could have
a material adverse effect on its business, results of operations and financial
condition. In addition, the effective implementation of the Company's products
depends upon the successful operation of these licensed products in conjunction
with the Company's products, and therefore any undetected errors in such
licensed products may prevent the implementation or impair the functionality of
the Company's products, delay new product introductions and/or injure the
Company's reputation. Such problems could have a material adverse effect on the
Company's business, results of operations and financial condition.

12
<PAGE> 14
DEPENDENCE ON PROPRIETARY TECHNOLOGY; RISKS OF INFRINGEMENT

The Company's success is heavily dependent upon proprietary technology.
The Company relies primarily on a combination of copyright, trademark and trade
secrets laws, as well as confidentiality procedures and contractual provisions
to protect its proprietary rights. There can be no assurance that such measures
will be adequate to protect the Company from infringement of its technology. The
Company presently has no patents or patent applications pending. Despite the
Company's efforts to protect its proprietary rights, attempts may be made to
copy aspects of the Company's products or to obtain and use information that the
Company regards as proprietary. In particular, as the Company provides its
licensees with access to the data model and other proprietary information
underlying the Company's licensed applications, there can be no assurance that
licensees or others will not develop products which infringe the Company's
proprietary rights. Policing unauthorized use of the Company's products is
difficult, and while the Company is unable to determine the extent to which
piracy of its software products exists, software piracy can be expected to be a
persistent problem. In addition, the laws of some foreign countries do not
protect the Company's proprietary rights to as great an extent as do the laws of
the United States. There can be no assurance that the Company's means of
protecting its proprietary rights will be adequate or that the Company's
competitors will not independently develop similar technology. The Company is
not aware that any of its products infringe the proprietary rights of third
parties, although the Company has in the past, and may in the future, receive
communications alleging possible infringement of third party intellectual
property rights. The Company expects that software product developers will
increasingly be subject to infringement claims as the number of products and
competitors in the Company's target markets grows and the functionality of
products in such markets overlaps. Any such claims, with or without merit, could
be time-consuming, result in costly litigation, cause product shipment delays or
require the Company to enter into royalty or licensing agreements. Such royalty
or licensing agreements, if required, may not be available on terms acceptable
to the Company or at all, which could have a material adverse effect upon the
Company's business, results of operations and financial condition.

PRODUCT LIABILITY

The Company's license agreements with its customers typically contain
provisions intended to limit the Company's exposure to potential product
liability claims. It is possible that the limitation of liability provisions
contained in the Company's agreements may not be effective. Although the Company
has not experienced any product liability claims to date, the sale and support
of products by the Company and the incorporation of products from other
businesses may entail the risk of such claims. A successful product liability
action brought against the Company could have a material adverse effect upon the
Company's business, results of operations and financial condition.

ANTI-TAKEOVER EFFECTS OF RESTATED CERTIFICATE OF INCORPORATION, BYLAWS AND
DELAWARE LAW

Certain provisions of the Company's Restated Certificate of
Incorporation and Bylaws and of Delaware law could discourage potential
acquisition proposals and could delay or prevent a change control of the
Company. Such provisions could diminish the opportunities for a stockholder to
participate in tender offers, including tender offers at a price above the then
current market value of the Common Stock. Such provisions may also inhibit
increase in the market price of the Common Stock that could result from takeover
attempts. In addition, the Restated Certificate of Incorporation authorizes
2,000,000 shares of undesignated preferred stock. The Board of Directors of the
Company, without further stockholder approval, may issue this preferred stock
with such terms as the Board of Directors may determine, which could have the
effect of delaying or preventing a change in control of the Company. The
issuance of preferred stock could also adversely affect the voting power of the
holders of Common Stock, including the loss of voting control. Such preferred
Stock could be utilized to implement, without stockholder approval, a
stockholders' right plan that could be triggered by certain change in control
transactions, which could delay or prevent a change in control of the Company or
could impede a merger, consolidation, takeover or other business Combination
involving the Company, or discourage a potential acquiror from making a tender
offer or otherwise attempting to obtain control of the Company. The Company's
Bylaws and indemnity agreements provide that the Company will indemnify officers
and directors against losses that they may incur in legal proceedings resulting
from their service to the Company. In addition, the Restated Certificate of

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<PAGE> 15
Incorporation and Bylaws eliminate the right of stockholders to take action by
written consent. Moreover, Section 203 of the Delaware General Corporation Law
restricts certain business combinations with "interested stockholders" as
defined by that statute. The provisions of the Restated Certificate of
Incorporation and Bylaws and of Delaware law are intended to encourage potential
acquirers to negotiate with the Company and allow the Board of Directors the
opportunity to consider alternative proposals in the interest of maximizing
stockholder value. However, such provisions may also have the effect of
discouraging acquisition proposals or delaying or preventing a change in control
of the Company, which in turn may have an adverse effect on the market price of
the Company's Common Stock.

POSSIBLE VOLATILITY OF NOTES AND COMMON STOCK PRICE

The market price of the Company's common stock has historically
experienced significant fluctuations and may continue to fluctuate
significantly. Such fluctuations could affect the market price of the Notes.
Future announcements concerning the Company or its competitors, quarterly
variations in operating results, announcements of technological innovations, the
introduction of new products or changes in product pricing policies by the
Company or its competitors, proprietary rights or other litigation, changes in
earnings estimates by analysts or other factors could cause the market price of
the Notes and the Common Stock into which they are convertible to fluctuate
substantially, particularly on a quarterly basis. In addition, stock prices for
many technology companies fluctuate widely for reasons which may be unrelated to
operating results of such companies. These fluctuations, as well as general
economic, market and political conditions such as recessions or military
conflicts, may materially and adversely affect the market price of the Company's
Notes and the Common Stock. In the past, following periods of volatility in the
market price of a company's securities, securities class action litigation has
often been instituted against such companies. Such litigation could result in
substantial costs and a diversion of management's attention and resources, which
could have a material adverse effect on the Company's business, results of
operations and financial condition.

LIMITATIONS ON REPURCHASE OF NOTES

Upon a Fundamental Change, each Holder of Notes will have certain
rights, at the Holder's option, to require the Company to repurchase all or a
portion of such Holder's Notes. If a Fundamental Change were to occur, there can
be no assurance that the Company would have or be able to obtain sufficient
funds to pay the repurchase price for all Notes tendered by the Holders thereof.
Any future credit agreements or other agreements relating to other indebtedness
(including other Senior Indebtedness) to which the Company becomes a party may
contain restrictions and provisions which prohibit the Company from repurchasing
or redeeming any Notes or provide that a Fundamental Change would constitute an
event of default thereunder. In the event a Fundamental Change occurs at a time
when the Company is prohibited from repurchasing or redeeming Notes, the Company
could seek the consent of its lenders to the repurchase of Notes or could
attempt to refinance the borrowings that contain such prohibition. If the
Company does not obtain such a consent or repay such borrowings, the Company
would remain prohibited from repurchasing or redeeming Notes. In such case, the
Company's failure to repurchase tendered Notes may constitute an Event of
Default under the Indenture, which may, in turn, constitute a further default
under the terms of other indebtedness that the Company may enter into from time
to time, including under any Senior Indebtedness. In such circumstances, the
subordination provisions in the Indenture would likely prohibit the repurchase
of the Notes. See "Description of Notes--Repurchase at Option of Holders upon a
Fundamental Change."

ABSENCE OF PUBLIC MARKET FOR THE NOTES AND RESTRICTIONS ON TRANSFER

Prior to the Original Offering of the Notes, there has been no trading
market for the Notes. Although the Initial Purchasers have advised the Company
that they intend to make a market in the Notes, they are not obligated to do so
and may discontinue such market making at any time without notice. In addition,
such market making activity will be subject to the limits imposed by the
Securities Act and the Exchange Act. Accordingly, there can be no assurance that
any market for the Notes will be maintained. If an active market for the Notes
fails to develop or be sustained, the trading price of such Notes could be
materially adversely affected. The Notes issued in the Original Offering are
designated for trading on The Portal Market and the Notes have been listed on
The Luxembourg Stock Exchange. Notes sold pursuant to the Registration Statement
of which this Prospectus forms a part will not remain eligible for trading in
the Portal Market, and application will be made to list the Notes sold pursuant
to this Registration Statement on the Luxembourg Stock Exchange.

<PAGE> 16
RATIO OF EARNINGS TO FIXED CHARGES

The ratio of earnings to fixed charges is computed by dividing earnings
before taxes plus fixed charges by fixed charges. Fixed charges consist of
interest expense and the estimated portion of rental expense deemed by the
Company to be a reasonable approximation of the interest factor of rental
payments under operating leases. For the year ended December 31, 1994, earnings
were insufficient to cover fixed charges by approximately $770,000.

<TABLE>
<CAPTION>
Nine Months
Ended
Year Ended December 31, September 30,
------------------------------------------ --------------
1992 1993 1994 1995 1996 1996 1997
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to
fixed charges.......... -- -- -- 7.7x 25.3.x -- --

</TABLE>

USE OF PROCEEDS

The Company will not receive any proceeds form the sale of the Notes or
the Common Stock issuable upon conversion thereof by the Selling Holders.

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<PAGE> 17

DESCRIPTION OF NOTES

The Notes were issued under an indenture dated as of August 15, 1997
(the "Indenture") between the Company and Deutsche Bank AG, New York Branch, as
trustee (the "Trustee"). A copy of the form of the Indenture and the
Registration Rights Agreement (as defined below) has been filed as an exhibit to
the Registration Statement of which this Prospectus forms a part. The following
summaries of certain provisions of the Notes, the Indenture and the Registration
Rights Agreement do not purport to be complete and are subject to, and are
qualified in their entirety by reference to, all of the provisions of the Notes,
the Indenture and the Registration Rights Agreement, including the definitions
therein of certain terms which are not otherwise defined in this Prospectus.
Wherever particular provisions or defined terms of the Indenture (or the form of
Note which is a part thereof) or the Registration Rights Agreement are referred
to, such provisions or defined terms are incorporated herein by reference.
References in this section to the "Company" are solely to The Vantive
Corporation, a Delaware corporation, and not its subsidiaries.

GENERAL

The Notes are unsecured subordinated obligations of the Company, will
mature on September 1, 2002 and are payable at a price of 100% of the principal
amount thereof. The Notes bear interest at the rate of 4 3/4% per annum from
August 21, 1997, payable semiannually on March 1 and September 1 of each year,
commencing on March 1, 1998.

The Notes are convertible into Common Stock initially at the conversion
price of $41.93 per share (equivalent to a conversion rate of 23.85 shares per
$1,000 principal amount of Notes), subject to adjustment upon the occurrence of
certain events described under "--Conversion," at any time prior to the close of
business on the maturity date, unless previously redeemed or repurchased.

The Notes are redeemable (a) at the option of the Company in the event
of certain developments involving U.S. withholding taxes as described below
under "--Redemption--Redemption for Taxation Reasons" at a redemption price of
100% of the principal amount of the Notes to be redeemed, plus accrued interest
to, but excluding, the Redemption Date and (b) at the option of the Company
under the circumstances and at the redemption prices set forth below under
"Redemption--Optional Redemption," plus accrued interest to, but excluding, the
Redemption Date.

The Indenture does not contain any financial covenants or restrictions
on the payment of dividends by the Company, the incurrence of indebtedness,
including Senior Indebtedness, by the Company or the issuance or repurchase of
securities by the Company. The Indenture contains no covenants or other
provisions to afford protection to Holders of the Notes in the event of a highly
leveraged transaction or a change in control of the Company except to the extent
described below under "--Repurchase at Option of Holders Upon a Fundamental
Change."

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<PAGE> 18

CONVERSION

The Holder of any Note has the right at the Holder's option to convert
any Note (in denominations of $1,000 or any multiple thereof) into shares of
Common Stock at any time prior to the close of business on the maturity date,
unless previously redeemed or repurchased, at a conversion price of $41.93 per
share (equivalent to a conversion rate of approximately 23.85 shares per $1,000
principal amount of Notes). The conversion price is subject to adjustment from
time to time as described below. The right to convert a Note called for
redemption or delivered for repurchase terminates at the close of business on
the Business Day prior to the Redemption Date for such Note or the Repurchase
Date, as the case may be.

Beneficial owners of interests in a Note held in Global Form may
exercise their right of conversion by delivering to the Depository Trust Company
("DTC") the appropriate instruction form for conversion pursuant to DTC's
conversion program. To convert a Note held in certificated form into shares of
Common Stock, a Holder must (i) complete and manually sign the conversion notice
on the back of the Note (or complete and manually sign a facsimile thereof) and
deliver such notice to the Trustee in New York, New York or the Conversion Agent
in Luxembourg, (ii) surrender the Note to the Trustee in New York, New York or
to the Conversion Agent in Luxembourg, as the case may be, (iii) if required,
furnish appropriate endorsements and transfer documents, (iv) if required, pay
all transfer or similar taxes, and (v) if required, pay funds equal to interest
payable on the next interest payment date. Pursuant to the Indenture, the date
on which all of the foregoing requirements have been satisfied is the date of
surrender for conversion. Such notice of conversion can be obtained from the
Trustee at the Corporate Trust Office or the office of any Conversion Agent. As
promptly as practicable on or after the conversion date, the Company will issue
and deliver to the Trustee a certificate or certificates for the number of full
shares of Common Stock issuable upon conversion, together with payment in lieu
of any fraction of a share in an amount determined as set forth below. Such
certificate will be sent by the Trustee to the appropriate Conversion Agent for
delivery to the Holder. Such

17
<PAGE> 19
Common Stock issuable upon conversion of the Notes will be fully paid and
nonassessable. Any Note surrendered for conversion during the period from the
close of business on any Regular Record Date to the opening of business on the
next succeeding Interest Payment Date (except Notes called for redemption on a
Redemption Date or to be repurchased on a Repurchase Date during such period)
must be accompanied by payment of an amount equal to the interest payable on
such Interest Payment Date on the principal amount of Notes being surrendered
for conversion. In the case of any Note which has been converted after any
Regular Record Date, but on or before the next Interest Payment Date, interest
the Stated Maturity of which is on such Interest Payment Date shall be payable
on such Interest Payment Date notwithstanding such conversion. Such interest
shall be paid to the Holder of such Note on such Regular Record Date. As a
result, a Holder that surrenders Notes for conversion on a date that is not an
Interest Payment Date will not receive any interest for the period from the
Interest Payment Date next preceding the date of conversion to the date of
conversion or for any later period, even if the Notes are surrendered after a
notice of redemption (except for the payment of interest on Notes called for
redemption on a Redemption Date or to be repurchased on a Repurchase Date
between a Regular Record Date and the Interest Payment Date to which it
relates). No other payment or adjustment for interest, or for any dividends in
respect of Common Stock, will be made upon conversion. Holders of Common Stock
issued upon conversion will not be entitled to receive any dividends payable to
holders of Common Stock as of any record time before the close of business on
the conversion date. No fractional shares will be issued upon conversion but, in
lieu thereof, an appropriate amount will be paid in cash by the Company based on
the market price of Common stock on the day of conversion.

A Holder delivering a Note for conversion will not be required to pay
any taxes or duties in respect of the issue or delivery of Common Stock on
conversion but will be required to pay any tax or duty which may be payable in
respect of any transfer involved in the issue or delivery of the Common Stock in
a name other than that of the Holder of the Note. Certificates representing
Common Stock will not be issued or delivered unless all taxes and duties, if
any, payable by the Holder have been paid.

The initial conversion price of $41.93 per share of Common Stock
(equivalent to a conversion rate of approximately 23.85 shares per $1,000
principal amount of the Notes) is subject to adjustment (under formulae set
forth in the Indenture) in certain events, including: (i) the issuance of Common
Stock as a dividend or distribution on Common Stock; (ii) certain subdivisions
and combinations of the Common Stock; (iii) the issuance to all holders of
Common Stock of certain rights or warrants to purchase Common Stock (provided
that the conversion price will be readjusted to the extent that such rights or
warrants are not exercised prior to the expiration thereof); (iv) the
distribution to all holders of Common Stock of shares of capital stock of the
Company (other than Common Stock) or evidences of indebtedness of the Company or
assets (including securities, but excluding those rights, warrants, dividends
and distributions referred to above or paid in cash); (v) distributions
consisting of cash, excluding any quarterly cash dividend on the Common Stock to
the extent that the aggregate cash dividend per share of Common Stock in any
quarterly period does not exceed the greater of (x) the amount per share of
Common Stock of the next preceding quarterly cash dividend on the Common Stock
to the extent that such preceding quarterly dividend did not require an
adjustment of the conversion price pursuant to this clause (v), and (y) 3.75% of
the average of the daily Closing Prices of the Common Stock for the ten
consecutive Trading Days immediately prior to the date of declaration of such
dividend, and excluding any dividend or distribution in connection with the
liquidation, dissolution or winding up of the Company; (vi) payment in respect
of a tender or exchange offer by the Company for the Common Stock to the extent
that the cash and value of any other consideration included in such payment per
share of Common Stock exceeds the Current Market Price per share of Common Stock
on the Trading Day next succeeding the last date on which tenders or exchanges
may be made pursuant to such tender or exchange offer; and (vii) payment in
respect of a tender offer or exchange offer by a person other than the Company
in which, as of the closing date of the offer, the Board of Directors is not
recommending rejection of the offer. If an adjustment is required to be made as
set forth in clause (v) above as a result of a distribution that is a quarterly
dividend, such adjustment would be based upon the amount by which such
distribution exceeds the amount of quarterly cash dividend permitted to be
excluded pursuant to such clause (v). In the event of a distribution to
substantially all holders of Common Stock of rights to subscribe for additional
shares of the Company's capital stock as provided in clause (iii) above, the
Company may, instead of making any adjustment in the conversion price, make
proper provision so that each Holder of a Note who converts such Note after the
record date for such distribution and prior to the expiration or redemption of
such rights shall be entitled to receive upon such conversion, in addition to
shares of Common Stock, an appropriate number of such

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<PAGE> 20
rights. If an adjustment is required to be made as set forth in clause (v) above
as a result of a distribution that is not a quarterly dividend, such adjustment
would be based upon the full amount of the distribution. The adjustment referred
to in clause (vii) above will only be made if the tender offer or exchange offer
is for an amount which increases that person's ownership of Common Stock to more
than 25% of the total shares of Common Stock outstanding and if the cash and
value of any other consideration included in such payment per share of Common
Stock exceeds the Current Market Price per share of Common Stock on the business
day next succeeding the last date on which tenders or exchanges may be made
pursuant to such tender or exchange offer. The adjustment referred to in clause
(vii) above will not be made, however, if, as of the closing of the offer, the
offering documents with respect to such offer disclose a plan or an intention to
cause the Company to engage in a consolidation or merger of the Company or a
sale of all or substantially all of the Company's assets. So long as the Notes
are listed on the Luxembourg Stock Exchange and the rules of the Luxembourg
Stock Exchange so require, notice of any adjustment of the conversion price will
be given to Holders of the Notes by publication in a daily newspaper of general
circulation in Luxembourg (which is expected to be the Luxembourg Wort) or, if
publication in Luxembourg is not practical, in Western Europe.

In case of any consolidation or merger of the Company with or into
another Person or any merger of another Person into the Company (other than a
merger which does not result in any reclassification, conversion, exchange or
cancellation of the Common Stock), or in case of any sale or transfer of all or
substantially all of the assets of the Company, each Note then outstanding will,
without the consent of the Holder of any Note, become convertible only into the
kind and amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer by a holder of the number of Common
Stock into which such Note was convertible immediately prior thereto (assuming
such holder of Common Stock failed to exercise any rights of election and that
such Note was then convertible).

The Company from time to time may to the extent permitted by law reduce
the conversion price by any amount for any period of at least 20 days, in which
case the Company shall give at least 15 days' notice of such reduction, if the
Board of Directors of the Company has made a determination that such reduction
would be in the best interests of the Company which determination shall be
conclusive. The Company may, at its option, make such reductions in the
conversion price, in addition to those set forth above, as the Board of
Directors of the Company deems advisable to avoid or diminish any income tax to
holders of Common Stock resulting from any dividend or distribution of stock (or
rights to acquire stock) or from any event treated as such for income tax
purposes.

No adjustment in the conversion price will be required unless such
adjustment would require a change of at least 1% in the conversion price then in
effect; provided that any adjustment that would otherwise be required to be made
shall be carried forward and taken into account in any subsequent adjustment.
Except as stated above, the conversion price will not be adjusted for the
issuance of Common Stock or any securities convertible into or exchangeable for
Common Stock or carrying the right to purchase any of the foregoing.

SUBORDINATION

The indebtedness evidenced by the Notes is subordinated in right of
payment to the extent provided in the Indenture to the prior payment in full of
all Senior Indebtedness. Upon any distribution of assets of the Company upon any
dissolution, winding up, liquidation or reorganization (including any of the
foregoing as a result of bankruptcy or moratorium of payment), the payment on
account of the principal of, redemption of, liquidated damages, if any, or
premium, if any, and interest on the Notes (including on account of a
Fundamental Change) is to be subordinated to the extent provided in the
Indenture in right of payment to the prior payment in full in cash of all Senior
Indebtedness. In the event of any acceleration of the Notes because of an Event
of Default, the holders of any Senior Indebtedness then outstanding would be
entitled to payment in full in cash of all obligations in respect of such Senior
Indebtedness before the Holders of the Notes are entitled to receive any payment
or other

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<PAGE> 21
distribution in respect thereof. The Indenture requires that the Company
promptly notify holders of Senior Indebtedness if payment of the Notes is
accelerated because of an Event of Default.

The Company also may not make any payment upon, redemption of, or
payment of liquidated damages, if any, on or purchase or otherwise acquire the
Notes if (i) a default in the payment of the principal of, premium, if any,
interest, rent or other obligations in respect of Senior Indebtedness occurs and
is continuing beyond any applicable period of grace or (ii) any other default
occurs and is continuing with respect to Designated Senior Indebtedness that
permits the holders of the Designated Senior Indebtedness as to which such
default relates to accelerate its maturity and the Trustee receives a notice of
such default (a "Payment Blockage Notice") from the Company or other person
permitted to give such notice under the Indenture. Payments on the Notes may and
shall be resumed (a) in case of a payment default, upon the date on which such
default is cured or waived or ceases to exist and (b) in case of a nonpayment
default, the earlier of the date on which such nonpayment default is cured or
waived or ceases to exist or 179 days after the date on which the applicable
Payment Blockage Notice is received if the maturity of the Designated Senior
Indebtedness has not been accelerated. No new period of payment blockage may be
commenced pursuant to a Payment Blockage Notice unless and until 365 days have
elapsed since the effectiveness of the immediately prior Payment Blockage
Notice. No nonpayment default that existed or was continuing on the date of
delivery of any Payment Blockage Notice to the Trustee shall be, or be made, the
basis for a subsequent Payment Blockage Notice.

By reason of the subordination provisions described above, in the event
of the Company's bankruptcy, dissolution or reorganization, holders of Senior
Indebtedness may receive more, ratably, and Holders of the Notes may receive
less, ratably, than the other creditors of the Company. Such subordination will
not prevent the occurrence of any Event of Default under the Indenture.

In the event that, notwithstanding the foregoing, the Trustee or any
Holder of Notes receives any payment or distribution of assets of the Company of
any kind in contravention of any of the subordination provisions of the
Indenture, whether in cash, property or securities, including, without
limitation, by way of set-off or otherwise, in respect of the Notes before all
Senior Indebtedness is paid in full, then such payment or distribution will be
held by the recipient in trust for the benefit of holders of Senior Indebtedness
of the Company or their representative or representatives to the extent
necessary to make payment in full of all Senior Indebtedness of the Company
remaining unpaid, after giving effect to any concurrent payment or distribution,
or provision therefor, to or for the holders of Senior Indebtedness of the
Company.

As of September 30, 1997, the Company had no indebtedness outstanding
that would have constituted Senior Indebtedness. The Indenture does not prohibit
or limit the incurrence of Senior Indebtedness or the incurrence of other
indebtedness and other liabilities by the Company, and the incurrence of any
such additional indebtedness and other liabilities could adversely affect the
Company's ability to pay its obligations on the Notes. The Company expects that
it will from time to time incur additional indebtedness, including Senior
Indebtedness, and other liabilities. See "Risk Factors--Leverage; Subordination
and Absence of Financial Covenants."

The Company is obligated to pay reasonable compensation to the Trustee
and to indemnify the Trustee against any losses, liabilities or expenses
incurred by it in connection with its duties relating to the Notes. The
Trustee's claims for such payments will be senior to those of Holders of the
Notes in respect of all funds collected or held by the Trustee.

The term "Senior Indebtedness" means the principal of, premium, if any,
interest (including all interest accruing subsequent to the commencement of any
bankruptcy or similar proceeding, whether or not a claim for post-petition
interest is allowable as a claim in any such proceeding) and rent payable on or
in connection with, and all fees, costs, expenses and other amounts accrued or
due on or in connection with, Indebtedness of the Company, whether outstanding
on the date of the Indenture or thereafter created, incurred, assumed,
guaranteed or in effect guaranteed by the Company (including all deferrals,
renewals, extensions or refundings of, or amendments, modifications or
supplements to, the foregoing), unless in the case of any particular
Indebtedness the instrument creating or evidencing the same or the assumption or
guarantee thereof expressly provides that such Indebtedness shall not be senior
in right of payment to the Notes or expressly provides that such Indebtedness is

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<PAGE> 22
pari passu or "junior" to the Notes. Notwithstanding the foregoing, Senior
Indebtedness shall not include Indebtedness of the Company to any Subsidiary of
the Company.

The term "Indebtedness" means, with respect to any Person, and without
duplication, (a) all indebtedness, obligations and other liabilities (contingent
or otherwise) of such Person for borrowed money (including obligations of the
Person in respect of overdrafts, foreign exchange contracts, currency exchange
agreements, interest rate protection agreements, and any loans or advances from
banks, whether or not evidenced by notes or similar instruments) or evidenced by
bonds, debentures, notes or similar instruments (whether or not the recourse of
the lender is to the whole of the assets of such Person or to only a portion
thereof) other than any account payable or other accrued current liability or
obligation incurred in the ordinary course of business in connection with the
obtaining of materials or services, (b) all reimbursement obligations and other
liabilities (contingent or otherwise) of such Person with respect to letters of
credit, bank guarantees or bankers' acceptances, (c) all obligations and
liabilities (contingent or otherwise) in respect of leases of such Person
required, in conformity with generally accepted accounting principles, to be
accounted for as capitalized lease obligations on the balance sheet of such
Person and all obligations and other liabilities (contingent or otherwise) under
any lease or related document (including a purchase agreement) in connection
with the lease of real property or improvements thereon which provides that such
Person is contractually obligated to purchase or cause a third party to purchase
the leased property and thereby guarantee a minimum residual value of the leased
property to the lessor and the obligations of such Person under such lease or
related document to purchase or to cause a third party to purchase such leased
property, (d) all obligations of such Person (contingent or otherwise) with
respect to an interest rate or other swap, cap or collar agreement or other
similar instrument or agreement or foreign currency hedge, exchange, purchase or
similar instrument or agreement, (e) all direct or indirect guaranties or
similar agreements by such Person in respect of, and obligations or liabilities
(contingent or otherwise) of such Person to purchase or otherwise acquire or
otherwise assure a creditor against loss in respect of, indebtedness,
obligations or liabilities of another Person of the kind described in clauses
(a) through (d), (f) any indebtedness or other obligations described in clauses
(a) through (d) secured by any mortgage, pledge, lien or other encumbrance
existing on property which is owned or held by such Person, regardless of
whether the indebtedness or other obligation secured thereby shall have been
assumed by such Person, and (g) any and all deferrals, renewals, extensions and
refundings of, or amendments, modifications or supplements to, any indebtedness,
obligation or liability of the kind described in clauses (a) through (f).

The term "Designated Senior Indebtedness," means any particular Senior
Indebtedness in which the instrument creating or evidencing the same or the
assumption or guarantee thereof (or related agreements or documents to which the
Company is a party) expressly provides that such Senior Indebtedness shall be
"Designated Senior Indebtedness" for purposes of the Indenture (provided that
such instrument, agreement or other document may place limitations and
conditions on the right of such Senior Indebtedness to exercise the rights of
Designated Senior Indebtedness).

REDEMPTION

Optional Redemption

At any time on or after September 6, 2000, the Notes will be redeemable
at the Company's option on at least 20 and not more than 60 days' notice, in
whole, or from time to time, in part, at the following prices (expressed as
percentages of the principal amount), together with accrued interest to, but
excluding, the Redemption Date.

If redeemed during the 12-month period beginning September 1 (beginning
September 6, 2000 and ending August 31, 2001, in the case of the first such
period):

REDEMPTION
YEAR PRICE
---- ----------
2000............................. 101.90%
2001............................. 100.95%

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<PAGE> 23
and 100% at September 1, 2002; provided that any semi-annual payment of interest
becoming due on the Redemption Date shall be payable to the Holders of record on
the Regular Record Date of the Notes being redeemed.

If fewer than all the Notes are to be redeemed, the Trustee will select
the Notes to be redeemed by lot. If any Note is to be redeemed in part only, a
new Note or Notes in principal amount equal to the unredeemed principal portion
thereof will be issued at the Corporate Trust Office of the Trustee in The City
of New York or the Note Registrar in Luxembourg. If a portion of a Holder's
Notes is selected for partial redemption and such Holder converts a portion of
such Notes, such converted portion shall be deemed to be taken from the portion
selected for redemption.

There is no sinking fund provided for the Notes.

Redemption for Taxation Reasons

If, as a result of any change in, or amendment to, the laws or
regulations prevailing in the U.S. or any political subdivision or taxing
authority thereof or therein, which change or amendment becomes effective on or
after the date of this Offering Memorandum or as a result of any application or
official interpretation of such laws or regulations not generally known before
that date (a "Tax Law Change") the Company is or would be required on the next
succeeding Interest Payment Date to pay Additional Amounts, and such requirement
or obligation cannot be avoided by the Company taking reasonable measures
available to it, the Company may redeem the affected Notes in whole, but not in
part, at any time, on giving not less than 20 days' notice, at a redemption
price equal to 100% of the principal amount thereof plus accrued interest to,
but excluding, the Redemption Date and any Additional Amounts then payable,
provided that no such notice of redemption shall be given earlier than 90 days
prior to the earliest date on which the Company would be obligated to withhold
or pay additional amounts were a payment in respect of the Notes then made.

Prior to the publication of any notice of redemption with respect to a
Tax Law Change, the Company shall deliver to the Trustee (a) a certificate
stating that the Company is entitled to effect such redemption and setting forth
a statement of facts showing that the conditions precedent to the right of the
Company so to redeem have occurred and (b) an opinion of counsel selected by the
Company and reasonably acceptable to the Trustee, to the effect that the Company
has or will become obligated to pay such Additional Amounts as a result of a Tax
Law Change. The Company's right to redeem the affected Notes shall continue as
long as the Company is obligated to pay Additional Amounts, notwithstanding that
the Company shall have theretofore made payments of Additional Amounts.

PAYMENT AND CONVERSION

The principal of Notes will be payable in U.S. dollars, against
surrender thereof at the Corporate Trust Office of the Trustee in The City of
New York, or, subject to any applicable laws and regulations, at the office of
any Paying Agent, by dollar check drawn on, or by transfer to a dollar account
(such transfer to be made only to Holders of an aggregate principal amount of
Notes in excess of $2,000,000) maintained by the Holder with, a bank in The City
of New York. Payment of any installment of interest on Notes will be made to the
Person in whose name such Notes or any predecessor Note is registered at the
close of business on February 15 or August 15 (whether or not a Business Day)
immediately preceding the relevant Interest Payment Date (a "Regular Record
Date"). Payments of such interest will be made by a dollar check drawn on a bank
in The City of New York mailed to the Holder at such Holder's registered address
or, upon application by the Holder thereof to the Trustee not later than the
applicable Regular Record Date, by transfer to a dollar account (such transfer
to be made only to Holders of an aggregate principal amount of Notes in excess
of $2,000,000) maintained by the Holder with a bank in The City of New York. No
transfer to a dollar account will be made unless the Trustee has received
written wire instructions not less than 15 days prior to the relevant payment
date.

Any payment on the Notes due on any day which is not a Business Day need
not be made on such day, but may be made on the next succeeding Business Day
with the same force and effect as if made on such due date, and

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<PAGE> 24
no interest shall accrue on such payment for the period from and after such
date. "Business Day," when used with respect to any place of payment, place of
conversion or any other place, as the case may be, means each Monday, Tuesday,
Wednesday, Thursday and Friday which is not a day on which banking institutions
in such place of payment, place of conversion or other place, as the case may
be, are authorized or obligated by law or executive order to close; provided,
however, that a day on which banking institutions in New York, New York or
Luxembourg are authorized or obligated by law or executive order to close shall
not be a Business Day for certain purposes.

Notes may be surrendered for conversion, subject to any applicable laws
and regulations, at the office of any Conversion Agent outside the United
States. In addition, Notes may be surrendered for conversion at the Corporate
Trust Office of the Trustee in The City of New York. Notes surrendered for
conversion must be accompanied by appropriate notices and any payments in
respect of interest or taxes, as applicable, as described above under
"--Conversion."

The Company has initially appointed as Paying Agent and Conversion Agent
the Trustee at its Corporate Trust Office in The City of New York and Banque de
Luxembourg as the Paying Agent and Conversion Agent in Luxembourg. The Company
may at any time terminate the appointment of any Paying Agent or Conversion
Agent and appoint additional or other Paying Agents and Conversion Agents,
provided that until the Notes have been delivered to the Trustee for
cancellation, or moneys sufficient to pay the principal of, premium, if any, and
interest on the Notes have been made available for payment and either paid or
returned to the Company as provided in the Indenture, it will maintain offices
or agencies in The City of New York, and so long as the Notes are listed on the
Luxembourg Stock Exchange, in Luxembourg for payments with respect to the Notes
and for the surrender of Notes for conversion. Notice of any such termination or
appointment and of any change in the office through which any Paying Agent or
Conversion Agent will act will be given in accordance with "Notices" below.

Interest payable on Notes on any Redemption Date or Repurchase Date that
is an Interest Payment Date will be paid to the Holders of record as of the
immediately preceding Regular Record Date.

All moneys deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of principal of, premium, if any, or
interest on any Notes which remain unclaimed at the end of the earlier of the
date on which such money escheats to the state or two years after such payment
has become due and payable will be repaid to the Company, and the Holder of such
Note will thereafter look only to the Company for payment thereof.

PAYMENT OF ADDITIONAL AMOUNTS

The Company will pay to a Non-U.S. Holder (as defined in "Certain
Federal Income Tax Considerations" below) of any Note such additional amounts
("Additional Amounts") as may be necessary in order that every net payment of
the principal of, premium, if any, and interest on such Note, after deduction or
withholding for or on account of any present or future tax, assessment or
governmental charge imposed upon or as a result of such payment by the United
States or any political subdivision or taxing authority thereof or therein, will
not be less than the amount provided for in such Note to be then due and
payable; provided however, that the foregoing obligation to pay Additional
Amounts will not apply to:

(a) any tax, assessment or other governmental charge which
would not have been so imposed but for (i) the existence of any present
or former connection between such Non-U.S. Holder (or between a
fiduciary, settlor, beneficiary, member, shareholder of or possessor of
a power over such Non-U.S. Holder, if such Non-U.S. Holder is a trust,
an estate, a partnership or a corporation) and the United States or any
political subdivision or taxing authority thereof or therein, including,
without limitation, such Non-U.S. Holder (or such fiduciary, settlor,
beneficiary, member, shareholder or possessor) being or having been a
citizen, domiciliary or resident of the United States or treated as a
resident thereof, or being or having been engaged in trade or business
or present therein, or having or having had a permanent establishment
therein; or (ii) such Non-U.S. Holder's present or former status as a
personal holding company, a foreign personal holding company with
respect to the United States, a controlled foreign

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<PAGE> 25
corporation, a passive foreign investment company, or a foreign private
foundation or foreign tax exempt entity for United States tax purposes,
or a corporation which accumulates earnings to avoid United States
federal income tax;

(b) any tax, assessment or other governmental charge which
would not have been so imposed but for the presentation by the Non-U.S.
Holder of such Notes for payment on a date more than 15 days after the
date on which such payment became due and payable or the date on which
payment thereof is duly provided for, whichever occurs later;

(d) any tax, assessment or other governmental charge which
would not have been imposed but for the failure to comply with any
certification, identification or other reporting requirement concerning
the nationality, residence, identity or connection with the United
States of such Non-U.S. Holder (or beneficial owner of such Note), if
compliance is required or imposed by a statute, treaty, regulation or
administrative practice of the United States as a precondition to
exemption from all or part of such tax, assessment or other governmental
charge;

(e) any tax, assessment or other governmental charge which
is payable otherwise than by deduction or withholding from payments of
principal of, premium, if any, or interest on such Note;

(f) any tax, assessment or other governmental charge imposed
on interest received by a Non-U.S. Holder actually or constructively
holding 10% or more of the total combined voting power of all classes of
stock of the Company entitled to vote;

(g) any tax, assessment or other governmental charge imposed
on a Non-U.S. Holder that is a partnership or a fiduciary or other than
the sole beneficial owner of such payment, but only to the extent that
any beneficial owner or member of the partnership or beneficiary or
settlor with respect to the fiduciary would not have been entitled to
the payment of Additional Amounts had the beneficial owner, member,
beneficiary or settlor directly been the holder of the Note; or

(h) any combination of items (a), (b), (c), (d), (e), (f)
and (g).

Notwithstanding the foregoing, the Company shall not be obligated to pay
Additional Amounts in respect of payments becoming due on the Notes more than 15
days after the Redemption Date with respect to any redemption of the Notes
described in the first paragraph under "Redemption--Redemption for Taxation
Reasons" to the extent that the Company's obligation to pay such Additional
Amounts arises from the Tax Law Change that resulted in such redemption.

REPURCHASE AT OPTION OF HOLDERS UPON A FUNDAMENTAL CHANGE

If a Fundamental Change occurs, each Holder of Notes shall have the
right, at the Holder's option, to require the Company to repurchase all of such
Holder's Notes, or any portion of a Note that is $1,000 or an integral multiple
of $1,000 in excess thereof, on the date (the "Repurchase Date") that is 45 days
after the date of the Company Notice, at a price (the "Repurchase Price")
(expressed as a percentage of the principal amount) equal to (i) 104.75% if the
Repurchase Date is during the 12-month period beginning September 1, 1997, (ii)
103.80% if the Repurchase Date is during the 12-month period beginning September
1, 1998, (iii) 102.85% if the Repurchase Date is during the 12-month period
beginning September 1, 1999 and (iv) thereafter at the redemption price set
forth under "--Redemption--Optional Redemption" which would be applicable to a
redemption at the option of the Company on the Repurchase Date; provided that,
if the Applicable Price is less than the Reference Market Price, the Company
shall repurchase such Notes at a price equal to the foregoing redemption price
multiplied by the fraction obtained by dividing the Applicable Price by the
Reference Market Price. In each case, the Company

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<PAGE> 26
shall also pay accrued interest on the redeemed Notes to, but excluding, the
Repurchase Date. Any Notes repurchased by the Company shall be canceled.

Within 30 days after the occurrence of a Fundamental Change, the Company
is obligated to give to all Holders of the Notes notice, as provided in the
Indenture (the "Company Notice"), of the occurrence of such Fundamental Change
and of the repurchase right arising as a result thereof. The Company must also
deliver a copy of the Company Notice to the Trustee. To exercise the repurchase
right, a Holder of Notes must deliver on or before the 30th day after the date
of the Company Notice irrevocable written notice to the Trustee or any Paying
Agent of the Holder's exercise of such right, together with the Notes with
respect to which the right is being exercised. Beneficial owners of an interest
in a Global Note may exercise the repurchase right by delivering the appropriate
instruction form for repurchases at the election of Holders pursuant to the DTC
book-entry repurchase program.

The term "Fundamental Change" means the occurrence of any transaction or
event in connection with which all or substantially all of the Common Stock
shall be exchanged for, converted into, acquired for or constitute solely the
right to receive, consideration (whether by means of an exchange offer,
liquidation, tender offer, consolidation, merger, combination, reclassification,
recapitalization or otherwise) which is not all or substantially all common
stock or shares which are (or, upon consummation of or immediately following
such transaction or event, will be) listed on a United States national
securities exchange or approved for quotation on the Nasdaq National Market or
any similar United States system of automated dissemination of quotations of
securities prices. The term "Applicable Price" means: (i) in the event of a
Fundamental Change in which the holders of Common Stock receive only cash, the
amount of cash received by the holder of one share of Common Stock and (ii) in
the event of any other Fundamental Change, the average of the last reported sale
price for the Common Stock during the ten Trading Days prior to the record date
for the determination of the holders of Common Stock entitled to receive cash,
securities, property or, other assets in connection with such Fundamental Change
or, if no such record date exists, the date upon which the holders of the Common
Stock shall have the right to receive such cash, securities, property or other
assets in connection with the Fundamental Change. The term "Reference Market
Price" shall initially mean $21.50 (which is equal to 66 2/3% of the last bid
price of the Common Stock on August 14, 1997) and in the event of any adjustment
to the conversion price described above pursuant to the provisions of the
Indenture, the Reference Market Price shall also be adjusted so that the ratio
of the Reference Market Price to the conversion price after giving effect to any
such adjustment shall always be the same as the ratio of $21.50 to the
conversion price of $41.93 (without regard to any adjustment thereto).

Rule 13e-4 under the Securities Exchange Act of 1934 requires the
dissemination of certain information to security holders in the event of an
issuer tender offer and may apply in the event that the repurchase option
becomes available to Holders of the Notes. The Company will comply with this
rule and any other securities laws to the extent applicable at that time.

Upon a Fundamental Change, each Holder of Notes will have certain
rights, at the Holder's option, to require the Company to repurchase all or a
portion of such Holder's Notes. If a Fundamental Change were to occur, there can
be no assurance that the Company would have or be able to obtain sufficient
funds to pay the purchase price for all Notes tendered by the Holders thereof.
Any future credit agreements or other agreements relating to other indebtedness
(including other Senior Indebtedness) to which the Company becomes a party may
contain restrictions and provisions which prohibit the Company from repurchasing
or redeeming any Notes or provide that a Fundamental Change would constitute an
event of default thereunder. In the event a Fundamental Change occurs at a time
when the Company is prohibited from repurchasing or redeeming Notes, the Company
could seek the consent of its lenders to the repurchase of Notes or could
attempt to refinance the borrowings that contain such prohibition. If the
Company does not obtain such a consent or repay such borrowings, the Company
would remain prohibited from repurchasing or redeeming Notes. In such case, the
Company's failure to repurchase tendered Notes would constitute an Event of
Default under the Indenture, which could, in turn, constitute a further default
under the other Indebtedness that the Company may enter into from time to time.
In such circumstances, the subordination provisions in the Indenture would
likely restrict payments to the Holders of Notes.

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The repurchase option upon a Fundamental Change feature of the Notes may
in certain circumstances make more difficult or discourage a takeover of the
Company and, thus, the removal of incumbent management. The Fundamental Change
repurchase feature, however, is not the result of management's knowledge of any
specific effort to accumulate the Company's stock or to obtain control of the
Company by means of a merger, tender offer, solicitation or otherwise, or part
of a plan by management to adopt a series of anti-takeover provisions. Instead,
the Fundamental Change repurchase feature is a result of negotiations between
the Company and Initial Purchasers in the Original Offering. Management has no
present intention to engage in a transaction involving a Fundamental Change,
although it is possible that the Company could decide to do so in the future.
Subject to the limitations on mergers, consolidations and sale of assets
described herein, the Company could, in the future, enter into certain
transactions, including acquisitions, refinancings or other recapitalizations,
that would not constitute a Fundamental Change under the Indenture, but that
could increase the amount of indebtedness (including Senior Indebtedness)
outstanding at such time or otherwise affect the Company's capital structure or
credit ratings. The payment of the repurchase price in the event of a
Fundamental Change is subordinated to the prior payment of Senior Indebtedness
as described under "- Subordination" above.

The term "Fundamental Change" is limited to certain specified
transactions and may not include other events that might adversely affect the
financial condition of the Company nor would the requirement that the Company
offer to repurchase the Notes upon a Fundamental Change necessarily afford
holders of the Notes protection in the event of a highly leveraged transaction,
reorganization, merger or similar transaction involving the Company.

MERGERS AND SALES OF ASSETS BY THE COMPANY

The Company may not consolidate with or merge into any other Person (in
a transaction in which the Company is not the surviving entity) or transfer or
lease its properties and assets substantially as an entirety to any Person
unless (i) the Person formed by such merger or into which the Company is merged
or the Person to which the properties and assets of the Company are so
transferred or leased shall expressly assume the payment of the principal of,
premium, if any, and interest on the Notes, (ii) no default and no Event of
Default shall have occurred and be continuing as a result of such consolidation,
merger, transfer or lease and (iii) the performance of the other covenants of
the Company under the Indenture and certain other conditions are met.

EVENTS OF DEFAULT

The following will be Events of Default under the Indenture: (a) failure
to pay principal of or premium, if any, on any Note when due; (b) failure to pay
any interest on, or Additional Amounts with respect to, any Note when due,
continuing for 30 days; (c) failure to perform any other covenant of the Company
in the Indenture, continuing for 60 days after written notice as provided in the
Indenture; and (d) certain events of bankruptcy, insolvency or reorganization.
Subject to the provisions of the Indenture relating to the duties of the Trustee
in case an Event of Default shall occur and be continuing, the Trustee will be
under no obligation to exercise any of its rights or powers under the Indenture
at the request or direction of any of the Holders, unless such Holders shall
have offered to the Trustee reasonable indemnity. Subject to such provisions
providing for the indemnification of the Trustee, the Holders of a majority in
aggregate principal amount of the Outstanding Notes will 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.

If an Event of Default (other than as specified in clause (d) above)
shall occur and be continuing, either the Trustee or the Holders of at least 25%
in aggregate principal amount of the Outstanding Notes may accelerate the
maturity of all Notes; provided, however, that after such acceleration, but
before a judgment or decree based on acceleration, the Holders of a majority in
aggregate principal amount of Outstanding Notes may, under certain
circumstances, rescind and annul such acceleration if all Events of Default,
other than the non-payment of accelerated principal, have been cured or waived
as provided in the Indenture. If an Event of Default as specified in clause (d)
above occurs and is continuing, then the principal of, and accrued interest on,
all the Notes shall ipso facto become immediately due and payable without any
declaration or other act on the part of the Holders of the Notes or the Trustee.
For information as to waiver of defaults, see "-- Meetings, Modification and
Waiver."

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No Holder of any Note will have any right to institute any proceeding
with respect to the Indenture or for any remedy thereunder unless such Holder
shall have previously given to the Trustee written notice of a continuing Event
of Default and the Holders of at least 25% in aggregate principal amount of the
Outstanding Notes shall have made written request, and offered reasonable
indemnity, to the Trustee to institute such proceeding as Trustee, and the
Trustee shall not have received from the Holders of a majority in aggregate
principal amount of the Outstanding Notes a direction inconsistent with such
request and shall have failed to institute such proceeding within 60 days.
However, such limitations do not apply to a suit instituted by a Holder of a
Note for the enforcement of payment of the principal of, premium, if any, or
interest on such Note on or after the respective due dates expressed in such
Note or of the right to convert such Note in accordance with the Indenture.

The Company will be required to furnish to the Trustee annually a
statement as to the performance by the Company of certain of its obligations
under the Indenture and as to any default in such performance.

MEETINGS, MODIFICATION AND WAIVER

The Indenture contains provisions for convening meetings of the Holders
of Notes to consider matters affecting their interests.

Modifications and amendments of the Indenture may be made, and certain
past defaults by the Company may be waived, either (i) with the written consent
of the Holders of not less than a majority in aggregate principal amount of the
Notes at the time outstanding or (ii) by the adoption of a resolution, at a
meeting of Holders of the Notes at which a quorum is present, by the Holders of
at least the lesser of a majority in aggregate principal amount of the Notes at
the time outstanding and 66 2/3% of the aggregate principal amount of the Notes
represented and entitled to vote at such meeting. However, no such modification
or amendment may, without the consent of the Holder of each Outstanding Note,
(a) change the Stated Maturity of the principal of, or any installment of
interest on, any Note, (b) reduce the principal amount of, or the premium, if
any, or any installment of interest on, any Note, (c) reduce the amount payable,
upon a redemption or repurchase, (d) modify the provisions with respect to the
repurchase right of the Holders in a manner adverse to the Holders, (e) change
the obligation of the Company to pay Additional Amounts described above in a
manner adverse to the Holders, (f) change the place or currency of payment of
principal of, or premium, if any, or interest on, any Note, (g) impair the right
to institute suit for the enforcement of any payment on or with respect to any
Note, (h) modify the obligation of the Company to maintain an office or agency
in The City of New York and in a Western European city, (i) adversely affect the
right to convert Notes, (j) modify the subordination provisions in a manner
adverse to the Holders of the Notes, (k) reduce the above-stated percentage of
Outstanding Notes necessary to modify or amend the Indenture, (l) reduce the
percentage of aggregate principal amount of Outstanding Notes necessary for
waiver of compliance with certain provisions of the Indenture or for waiver of
certain defaults, (m) reduce the percentage in aggregate principal amount of
Outstanding Notes required for the adoption of a resolution or the quorum
required at any meeting of Holders of Notes at which a resolution is adopted, or
(n) modify the obligation of the Company to deliver information required under
Rule 144A to permit resales of Notes and Common Stock issuable upon conversion
thereof in the event the Company ceases to be subject to certain reporting
requirements under the United States securities laws. The quorum at any meeting
called to adopt a resolution will be persons holding or representing a majority
in aggregate principal amount of the Notes at the time outstanding and, at any
reconvened meeting adjourned for lack of a quorum, 25% of such aggregate
principal amount.

The Indenture may also be modified or amended without the consent of the
Holders: (i) to evidence the succession of another Person to the Company as
otherwise permitted by the Indenture; (ii) to add to the covenants of the
Company for the benefit of the Holders of the Notes or to surrender any power
conferred upon the Company; (iii) to add any Events of Default; (iv) to secure
the Notes; (v) to make provision with respect to the conversion and repurchase
rights of Holders in accordance with the provisions of the Indenture; (vi) to
comply with the requirements of the Trust Indenture Act; or (vii) to cure any
ambiguity, to correct or supplement any provision which may be inconsistent with
any other provision or to make any other provisions with respect to matters or
questions arising under the Indenture, provided such action shall not adversely
affect the interest of Holders of Notes in any material respect.

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<PAGE> 29
The Holders of a majority in aggregate principal amount of the
Outstanding Notes may waive compliance by the Company with certain restrictive
provisions of the Indenture by written consent. The Holders of a majority in
aggregate principal amount of the Outstanding Notes also may waive any past
default under the Indenture, except a default in the payment of principal,
premium, if any, or interest, by written consent.

REGISTRATION RIGHTS

The Company has entered into the Registration Rights Agreement with the
Initial Purchasers pursuant to which the Company agreed to at the Company's
expense for the benefit of the holders of the Notes and the Common Stock
issuable upon conversion thereof (together, the "Registrable Securities"), (i)
file with the Commission within 90 days after the date of original issuance of
the Notes, a registration statement (the "Shelf Registration Statement")
covering resales of the Registrable Securities, (ii) use its reasonable efforts
to cause the Shelf Registration Statement to be declared effective under the
Securities Act within 180 days after the date of original issuance of the Notes
and (iii) use its reasonable efforts to keep effective the Shelf Registration
Statement until the second anniversary of the last date of original issuance of
Notes or such earlier date as all Registrable Securities shall have been
disposed of or on which all Registrable Securities held by Persons that are not
affiliates of the Company may be resold without registration pursuant to Rule
144(k) under the Securities Act (the "Effectiveness Period"). The Registration
Statement of which this Prospectus forms a part has been filed by the Company
pursuant to the Registration Rights Agreement. The Company will be permitted to
suspend the use of the prospectus which is part of the Shelf Registration
Statement in connection with the sales of the Registrable Securities during
certain periods of time under certain circumstances relating to pending
corporate developments, public filings with the Commission and other events.

In the event that during the Effectiveness Period the Shelf Registration
Statement ceases to be effective for more than 90 days or the Company suspends
the use of the prospectus which is a part thereof for more than 90 days, whether
or not consecutive, during any 12-month period, then the interest rate borne by
Notes will increase by an additional one-half of one percent (0.50%) per annum
from the 91st day of the applicable 12-month period such Shelf Registration
Statement ceases to be effective or the Company suspends the use of the
prospectus which is a part thereof, as the case may be, until the earlier of
such time as (i) the Shelf Registration Statement again becomes effective, (ii)
the use of the related prospectus ceases to be suspended or (iii) the
Effectiveness Period expires. The Company has agreed in the Registration Rights
Agreement to use its reasonable efforts to cause such Common Stock issuable upon
conversion of the Notes to be quoted on the Nasdaq National Market, or, if the
Common Stock is not then quoted on the Nasdaq National Market, to be listed on
such exchange or market in the United States as the Common Stock is then listed,
upon effectiveness of the Shelf Registration Statement.

This summary of certain provisions of the Registration Rights Agreement
does not purport to be complete and is subject to, and qualified in its entirety
by reference to, all the provisions of the Registration Rights Agreement, a copy
of which has been filed as an exhibit to the Registration Statement of which
this Prospectus forms a part.

TRANSFER AND EXCHANGE

At the option of the Holder upon request confirmed in writing, the Notes
will be exchangeable at any time into an equal aggregate principal amount of
Notes of different authorized denominations.

Notes may be presented for registration of transfer (with the form of
transfer endorsed thereon duly executed) or exchange, at the office of the Note
Registrar, without service charge but, in the case of a transfer, upon payment
of any taxes and other governmental charges as described in the Indenture. Any
registration of transfer or exchange will be effected upon the Note Registrar
being satisfied with the documents of title and identity of the Person making
the request, and subject to such reasonable regulations as the Company may from
time to time agree upon with the Note Registrar, all as described in the
Indenture. Notes may be transferred in whole or in part in authorized
denominations at the Corporate Trust Office of the Trustee in The City of New
York or the Note Registrar in Luxembourg. Upon any transfer or exchange of any
Note (or portion thereof), a new Note may be

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obtained at the Corporate Trust Office of the Trustee in The City of New York or
the Note Registrar in Luxembourg.

The Company has initially appointed the Trustee as Note Registrar in New
York, New York and Banque de Luxembourg as Note Registrar in Luxembourg. The
Company reserves the right to vary or terminate the appointment of the Note
Registrar or to appoint additional or other Note Registrars or to approve any
change in the office through which any Note Registrar acts, provided that
so long as the Notes are listed on the Luxembourg Stock Exchange and the rules
of the Luxembourg Stock Exchange shall require, there shall at all times be a
Note Registrar in Luxembourg.

In the event of a redemption of less than all of the Notes for any of
the reasons set forth above under "-- Redemption," the Company will not be
required (a) to register the transfer or exchange of Notes for a period of 15
days immediately preceding the date notice is given identifying the serial
numbers of the Notes called for such redemption or (b) to register the transfer
of or exchange any Note, or portion thereof, called for redemption.

The Company may at any time purchase the Notes in the open market or
otherwise at any price, subject to applicable U.S. securities laws.

PAYMENT OF STAMP AND OTHER TAXES

The Company will pay all stamp and other duties, if any, which may be
imposed by the United States or any political subdivision thereof or taxing
authority thereof or therein with respect to the issuance of Common Stock upon
any conversion of Notes. Except as described under "-- Payment of Additional
Amounts," the Company will not be required to make any payment with respect to
any other tax, assessment or governmental charge imposed by any government or
any political subdivision thereof or taxing authority thereof or therein.

GOVERNING LAW

The Indenture, the Notes and the Registration Rights Agreement are
governed by and construed in accordance with the laws of the State of New York,
United States of America.

INFORMATION CONCERNING THE TRUSTEE

Deutsche Bank AG, New York Branch is the Trustee under the Indenture.
The Company may maintain deposit accounts and conduct other banking transactions
with the Trustee and its affiliates in the normal course of business.

In case an Event of Default shall occur (and shall not be cured or
waived in a timely manner) under the Indenture, the Trustee will be required to
use the degree of care of a prudent person in the conduct of his own affairs in
the exercise of its powers. Subject to such provisions, the Trustee will be
under no obligation to exercise any of its rights or powers under the Indenture
at the request of any of the Holders of Notes, unless they shall have offered to
the Trustee reasonable security or indemnity.

CERTAIN FEDERAL INCOME TAX CONSIDERATIONS

The following is a general discussion of certain U.S. federal income tax
considerations relevant to holders of the Notes and Common Stock into which the
Notes may be converted. This discussion is based upon the Internal Revenue Code
of 1986, as amended (the "Code"), Treasury Regulations, Internal Revenue Service
("IRS") rulings and judicial decisions now in effect, all of which are subject
to change (possibly with retroactive effect) or different interpretations. There
can be no assurance that the IRS will not challenge one or more of the tax
consequences described herein, since the Company has not obtained, nor does it
intend to obtain, a ruling from the IRS with respect to the U.S. federal income
tax consequences of acquiring, holding or disposing of the Notes or Common
Stock. This discussion does not purport to deal with all aspects of U.S. federal
income taxation that may be relevant to a particular holder in light of the
holder's circumstances (for example, persons subject to the

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alternative minimum tax provisions of the Code). Also, it is not intended to be
wholly applicable to all categories of investors, some of which (such as dealers
in securities, banks, insurance companies, tax-exempt organizations, and persons
holding Notes or Common Stock as part of a hedging or conversion transaction or
straddle, persons deemed to sell Notes or Common Stock under the constructive
sale provisions of the Code, U.S. Holders (as defined below) whose functional
currency is not the U.S. dollar or persons who have ceased to be U.S. citizens
or to be taxed as resident aliens) may be subject to special rules. The
discussion also does not discuss any aspect of state, local or foreign law as
applicable to either or both of both U.S. holders (as defined below) and
non-U.S. Holders (as defined below), or U.S. federal estate and gift tax law as
applicable to U.S. Holders (as defined below). In addition, this discussion is
limited to purchasers of Notes who hold the Notes and will hold the Common Stock
(assuming a Conversion occurs) as "capital assets" within the meaning of Section
1221 of the Code.

ALL PROSPECTIVE PURCHASERS OF THE NOTES ARE ADVISED TO CONSULT THEIR OWN
TAX ADVISORS REGARDING THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF
THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE NOTES AND THE COMMON STOCK.

U.S. HOLDERS

As used herein, the term "U.S. Holder" means the beneficial holder of a
Note or Common Stock that for United States federal income tax purposes is (i) a
citizen or resident (as defined in Section 7701(b) of the Code) of the United
States, (ii) a corporation, partnership or other entity formed under the laws of
the United States or any political subdivision thereof, (iii) an estate the
income of which is subject to U.S. federal income taxation regardless of its
source, (iv) in general, a trust subject to the primary supervision of a court
within the United States and the control of a United States fiduciary as
described in Section 7701(a)(30) of the Code and (v) any other person whose
income or gain with respect to a Note or Common Stock is effectively connected
with the conduct of a United States trade or business. A "Non-U.S. Holder" is
any holder other than a U.S. Holder.

Interest

Stated interest on the Notes will generally be includable in a U.S.
Holder's gross income and taxable as ordinary income for U.S. federal income tax
purposes at the time it is paid or accrued, in accordance with the U.S. Holder's
regular method of accounting.

Market Discount

A U.S. Holder acquiring a Note at a "market discount" (defined below)
must generally treat as ordinary income any gain realized on the disposition or
retirement of the Note (among other events) to the extent that the market
discount has accrued during the U.S. Holder's period of ownership. Any accrued
market discount not previously taken into income prior to a conversion of a Note
may carry over to the Common Stock received upon conversion and be treated as
ordinary income upon a subsequent disposition of such Common Stock to the extent
of any gain recognized on such disposition.

A "market discount" exists if the stated redemption price at maturity of
the Note exceeds the purchase price of the Note by more than a statutorily
defined de minimis amount. The market discount accrued during the U.S. Holder's
period of ownership will generally equal a ratable portion of the Note's market
discount, based on the number of days the U.S. Holder has held the Note at the
time of such disposition or retirement, as a percentage of the number of days
from the date the U.S. Holder acquired the Note to its date of maturity.

Subject to certain limitations, a U.S. Holder may elect to include the
market discount in gross income during the period of ownership (rather than upon
disposition, retirement or certain other events) based on a constant yield
method, taking into account compounding of interest. Any such election will also
constitute an election to include market discount in income currently on all
other bonds and notes acquired by such U.S. Holder on or after the first day of
the first taxable year to which the election applies. A U.S. Holder who
purchases a Note at a market discount and who does not elect to include market
discount in income as it accrues may be required to

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defer the deduction of all or a portion of the interest expense on any
indebtedness incurred or maintained to purchase or carry the Note.

Market Premium

A U.S. Holder acquiring a Note for an amount that is greater than the
amount payable at maturity may generally elect to amortize the "market premium"
(defined below) using a constant yield method over the remaining term of the
Note (or, if shorter, over the period from the date of purchase to the date of
an assumed redemption option exercise). The market premium is the excess of the
U.S. Holder's tax basis in the Note (reduced by an amount equal to the value of
the conversion option) over the amount payable on maturity (or on an earlier
Company redemption date if it results in a smaller amortizable market premium).

For purposes of determining the market premium and the amortization
period, the Company will be deemed to exercise the Optional Redemption in a
manner that maximizes the U.S. Holder's yield on the Note. A Note which is
redeemed prior to the time at which it is assumed that the Note would be
redeemed may result in the U.S. Holder deducting the remaining bond premium at
the time of redemption.

The amortized market premium may offset interest otherwise required to
be included in respect of the note during any taxable year by the amortized
amount of such market premium. An election to amortize bond premium applies to
all taxable debt obligations then owned and thereafter acquired by the U.S.
Holder and may be revoked only with the consent of the IRS.

Conversion of Notes Into Common Stock

In general, no gain or loss will be recognized for U.S. federal income
tax purposes on a conversion of Notes into Common Stock. However, cash paid in
lieu of a fractional share of Common Stock will result in taxable gain (or
loss), which will be capital gain (or loss), to the extent that the amount of
such cash exceeds (or is exceeded by) the portion of the adjusted basis of the
Note allocable to such fractional share. The adjusted basis of shares of Common
Stock received on conversion will equal the adjusted basis of the Note
converted, reduced by the portion of adjusted basis allocated to any fractional
share of Common Stock exchanged for cash. The holding period of the Common Stock
received on conversion will generally include the period during which the
converted Notes were held.

The conversion price of the Notes is subject to adjustment under certain
circumstances. If, and to the extent that certain adjustments in the conversion
price that may occur in limited circumstances (particularly an adjustment to
reflect a taxable dividend to holders of Common Stock) increase the
proportionate interest of a holder of Notes, in the fully diluted Common Stock,
whether or not such holder ever exercises its conversion privilege. Section 305
of the Code and the Treasury Regulations issued thereunder may treat the holders
of the Notes as having received a constructive distribution, resulting in
ordinary income (subject to a possible dividends received deduction in the case
of corporate holders) to the extent of the Company's current and/or accumulated
earnings and profits. Moreover, if there is not a full adjustment to the
conversion ratio of the Notes to reflect a stock dividend or other event
increasing the proportionate interest of the holders of outstanding Common Stock
in the assets or earnings and profits of the Company, then such increase in the
proportionate interest of the holders of the Common Stock generally will be
treated as a distribution to such holders, taxable as ordinary income (subject
to a possible dividends received deduction in the case of corporate holders) to
the extent of the Company's current and/or accumulated earnings and profits.

Sale, Exchange or Retirement of the Notes

Each U.S. Holder generally will recognize gain or loss upon the sale,
exchange, redemption, retirement or other disposition of Notes measured by the
difference (if any) between (i) the amount of cash and the fair market value of
any property received (except to the extent that such cash or other property is
attributable to the payment of accrued interest not previously included in
income, which amount will be taxable as ordinary income) and

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(ii) such holder's adjusted tax basis in the Notes. A U.S. Holder's adjusted tax
basis in a Note generally will equal such U.S. Holder's initial investment in
the Note increased by any accrued market discount, if any, the U.S. Holder has
included in income and decreased by any principal payments received and any
amortizable bond premium taken with respect to such Note. Any such gain or loss
recognized on the sale, exchange, redemption, retirement or other disposition of
a Note should be capital gain or loss and will generally be long-term capital
gain or loss if the Note is a capital asset and has been held or deemed held for
more than one year at the time of the sale or exchange. On August 5, 1997,
legislation was enacted which, among other changes made to the federal income
tax law, reduced to 20% the maximum rate of tax on long-term capital gains on
most capital assets held by an individual for more than 18 months. Gain on most
capital assets held by an individual more than one year and up to 18 months is
subject to tax at a maximum rate of 28%.

The Common Stock

Distributions, if any, paid on the Common Stock received on a conversion
of the Notes, to the extent made from current or accumulated earnings and
profits of the Company, as determined for U.S. federal income tax purposes, will
be included in a U.S. Holder's income as ordinary income. Gain or loss realized
on the sale or exchange of that Common Stock will equal the difference between
the amount realized on such sale or exchange and the U.S. Holder's adjusted tax
basis in such Common Stock. Such gain or loss will generally be long-term
capital gain or loss if the holder has held or is deemed to have held the Common
Stock for more than one year. On August 5, 1997, legislation was enacted which,
among other changes to the federal income tax law, reduced to 20% the maximum
rate of tax on long-term capital gains on most capital assets held by an
individual for more than 18 months. Gain on most capital assets held by an
individual more than one year and up to 18 months is subject to tax at a maximum
rate of 28%.

Information Reporting and Backup Withholding

A U.S. holder of Notes or Common-Stock may be subject to "backup
withholding" at a rate of 31% with respect to certain "reportable payments,"
including interest payments, dividend payments and, under certain circumstances,
principal payments on the Notes. These backup withholding rules apply if the
holder (i) fails to furnish a social security number or other taxpayer
identification number ("TIN") certified under penalties of perjury within a
reasonable time after the request therefor, (ii) furnishes an incorrect TIN,
(iii) fails to report properly interest or dividends, or (iv) under certain
circumstances, fails to provide a certified statement, signed under penalties of
perjury, that the TIN furnished is the correct number and that such holder is
not subject to backup withholding. A holder who does not provide the Company
with a correct TIN also may be subject to penalties imposed by the IRS. Any
amount withheld from a payment to a holder under the backup withholding rules is
creditable against the holder's federal income tax liability, provided that the
required information is furnished to the IRS. Backup withholding will not apply,
however, with respect to payments made to certain holders, including
corporations, tax-exempt organizations and certain foreign persons, provided
their exemptions from backup withholding are properly established.

The Company will report to the U.S. Holders of Notes and Common Stock
and to the IRS the amount of any "reportable payments" for each calendar year
and the amount of tax withheld, if any, with respect to such payments.

NON-U.S. HOLDERS

The following discussion is limited to the U.S. federal income tax
consequences relevant to a Non-U.S. Holder.

For purposes of withholding tax on interest and dividends discussed
below, a Non-U.S. Holder (as defined above) includes a non-resident fiduciary of
an estate or trust. For purposes of the following discussion, interest,
dividends and gain on the sale, exchange or other disposition of a Note or
Common Stock will be considered to be "U.S. trade or business income" if such
income or gain is (i) effectively connected with the conduct of a U.S. trade

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or business or (ii) in the case of a treaty resident,
attributable to a permanent establishment (or, in the case of an individual, a
fixed base) in the United States.

Stated Interest

Generally any interest paid to a Non-U.S. Holder of a Note that is not
U.S. trade or business income will not be subject to U.S. tax if the interest
qualifies as "portfolio interest." Generally interest on the Notes will qualify
as portfolio interest if (i) the Non-U.S. Holder does not actually or
constructively own 10% or more of the total voting power of all voting stock of
the Company and is not a "controlled foreign corporation" with respect to which
the Company is a "related person" within the meaning of the Code, (ii) the
beneficial owner, under penalty of perjury, certifies that the beneficial owner
is not a U.S. person and such certificate provides the beneficial owner's name
and address, (iii) the Non-U.S. Holder is not a bank receiving interest on an
extension of credit made pursuant to a loan agreement made in the ordinary
course of its trade or business, and (iv) the Notes are in registered form.

The gross amount of payments of interest to a Non-U.S. Holder that do
not qualify for the portfolio interest exemption and that are not U.S. trade or
business income will be subject to U.S. federal income tax at the rate of 30%,
unless a U.S. income tax treaty applies to reduce or eliminate withholding. U.S.
trade or business income will be taxed at regular U.S. rates rather than the 30%
gross rate. In the case of a Non-U.S. Holder that is a corporation, such U.S.
trade or business income may also be subject to the branch profits tax (which is
generally imposed on a foreign corporation on the actual or deemed repatriation
from the United States of earnings and profits attributable to U.S. trade or
business income) at a 30% rate. The branch profits tax may not apply (or may
apply at a reduced rate) if a recipient is a qualified resident of certain
countries with which the United States has an income tax treaty. To claim the
benefit of a tax treaty or to claim exemption from withholding because the
income is U.S. trade or business income, the Non-U.S. Holder must provide a
properly executed Form 1001 or 4224 (or such successor forms as the IRS
designates), as applicable, prior to the payment of interest. These forms must
be periodically updated. Under regulations issued by the Treasury Department on
October 6, 1997 (the "New Regulations"), generally effective with respect to
payments made after December 31, 1998, the Forms 1001 and 4224 will be replaced
by Form W-8. Under the New Regulations, a Non-U.S. Holder who is claiming the
benefits of a treaty may be required to obtain a U.S. taxpayer identification
number which may require providing certain documentary evidence issued by
foreign governmental authorities to prove residence in the foreign country.
Certain special procedures are provided in the New Regulations for payments
through qualified intermediaries.

Dividends

In general, dividends paid to a Non-U.S. Holder of Common Stock will be
subject to withholding of U.S. federal income tax at a 30% rate unless such is
reduced by an applicable income tax treaty. Dividends that are connected with
such holder's conduct of a trade or business in the United States (U.S. trade or
business income) are generally subject to U.S. federal income tax at regular
rates, but are not generally subject to the 30% withholding tax if the Non-U.S.
Holder files the appropriate form with the payor, as discussed above. Any U.S.
trade or business income received by a Non-U.S. Holder that is a corporation may
also, under certain circumstances, be subject to an additional "branch profits
tax" at a 30% rate or such lower rate as may be applicable under an income tax
treaty. Dividends paid to an address in a foreign country generally are presumed
(absent actual knowledge to the contrary) to be paid to a resident of such
country for purposes of the withholding discussed above and for purposes of
determining the applicability of a tax treaty rate. Under the New Regulations,
not generally in effect until after December 31, 1998, however, a Non-U.S.
Holder of Common Stock who wishes to claim the benefit of an applicable treaty
rate would be required to satisfy applicable certification and other
requirements, which would include the requirement that the Non-U.S. Holder
provide a Form W-8 which contains, among other items of information, the
holder's name and address and U.S. taxpayer identification number (if required).

A Non-U.S. Holder of Common Stock that is eligible for a reduced rate of
U.S. withholding tax pursuant to an income treaty may obtain a refund of any
amounts currently withheld by filing an appropriate claim for a refund with the
IRS.

33
<PAGE> 35
Conversion

A Non-U.S. Holder generally will not be subject to U.S. federal income
tax on the conversion of Notes into Common-Stock, except with respect to cash
(if any) received in lieu of a fractional share or interest which does not
qualify for the portfolio interest exemption, is not U.S. trade or business
income and has not previously included in income. Cash received in lieu of a
fractional share may give rise to gain that would be subject to the rules
described below for the sale of Notes. Cash or Common Stock treated as issued
for accrued interest would be treated as interest under the rules described
above.

Sale, Exchange or Redemption of Notes or Common Stock

Except as described below and subject to the discussion concerning
backup withholding, any gain realized by a Non-U.S. Holder on the sale, exchange
or redemption of a Note generally will not be subject to U.S. federal income
tax, unless (i) such gain is U.S. trade or business income, (ii) subject to
certain exceptions, the Non-U.S. Holder is an individual who holds the Note as a
capital asset and is present in the United States for 183 days or more in the
taxable year of the disposition, (iii) the Non-U.S. Holder is subject to tax
pursuant to the provisions of U.S. tax law applicable to certain U.S.
expatriates (including certain former citizens or residents of the United
States, or (iv) in the case of the disposition of Common Stock, the Company is a
U.S. real property holding corporation. The Company does not believe that it is
currently a "United States real property holding corporation," or that it will
become one in the future.

Federal Estate Tax

Notes held (or treated as held) by an individual who is not a citizen or
resident of the United States (for federal estate tax purposes) at the time of
his or her death will not be subject to U.S. federal estate tax provided that
the interest thereon qualifies as portfolio interest and was not U.S. trade or
business income. Common Stock owned or treated as owned by an individual who is
not a citizen or resident of the United States (for federal estate tax purposes)
will be included in such individual's estate for U.S. federal income tax
purposes unless an applicable estate tax treaty otherwise applies.

Information Reporting and Backup Withholding

The Company must report annually to the IRS and to each Non-U.S. Holder
any interest or dividend that is subject to withholding or is exempt from U.S.
withholding tax pursuant to a tax treaty, or interest that is exempt from U.S.
tax under the portfolio interest exception. Copies of these information returns
may also be made available under the provisions of a specific treaty or
agreement to the tax authorities of the country in which the Non-U.S. Holder
resides.

Treasury Regulations provide that backup withholding and additional
information reporting will not apply to payments of principal on the Notes by
the Company to a Non-U.S. Holder if the holder certifies as to its Non-U.S.
status under penalties of perjury or otherwise establishes an exemption
(provided that neither the Company nor its Paying Agent has actual knowledge
that the holder is a U.S. person or that the conditions of any other exemption
are not, in fact, satisfied).

The payment of the proceeds from the disposition of Notes or Common
Stock to or through the U.S. office of any broker, U.S. or foreign, will be
subject to information reporting and possible backup withholding unless the
owner certifies as to its Non-U.S. Holder status under penalty of perjury or
otherwise establishes an exemption, provided that the broker does not have
actual knowledge that the holder is a U.S. person or that the conditions of any
other exemption are not, in fact, satisfied. The payment of the proceeds from
the disposition of a Note to or through a non-U.S. office of a non-U.S. broker
that is not a U.S. related person will not be subject to information reporting
or backup withholding. For this purpose, a "U.S. related person" is (i) a
"controlled foreign corporation" for U.S. federal income tax purposes or (ii) a
foreign person 50% or more of whose gross income from all sources for the
three-year period ending with the close of its taxable year preceding the
payment (or for such part of the

34
<PAGE> 36
period that the broker has been in existence) is derived from activities that
are effectively connected with the conduct of a U.S. trade or business.

In the case of the payment of proceeds from the disposition of Notes or
Common Stock to or through a non-U.S. office of a broker that is either a U.S.
person or a U.S. related person, information reporting is required on the
payment unless the broker has documentary evidence in the files that the owner
is a Non-U.S. Holder and the broker has no knowledge to the contrary. Backup
withholding will not apply to payments made through foreign offices of a broker
that is not a U.S. person or a U.S. related person (absent actual knowledge that
the payee is a U.S. person).

The New Regulations, not currently in effect, make certain modifications
to the withholding, backup withholding and information reporting rules described
above. The New Regulations generally attempt to unify certification requirements
and modify reliance standards. Prospective investors are urged to consult their
own tax advisors regarding the New Regulations.

Any amounts withheld under the backup withholding rules from a payment
to a Non-U.S. Holder will be allowed as a refund or a credit against such
Non-U.S. Holder's U.S. federal income tax liability, provided that the requisite
procedures are followed.

THE PRECEDING DISCUSSION OF CERTAIN UNITED STATES FEDERAL INCOME AND
ESTATE TAX CONSEQUENCES IS FOR GENERAL INFORMATION ONLY AND IS NOT TAX ADVICE.
ACCORDINGLY, EACH INVESTOR SHOULD CONSULT ITS OWN TAX ADVISER AS TO PARTICULAR
TAX CONSEQUENCES TO IT OF PURCHASING, HOLDING AND DISPOSING OF THE NOTES AND THE
COMMON STOCK OF THE COMPANY, INCLUDING THE APPLICABILITY AND EFFECT OF ANY
STATE, LOCAL OR FOREIGN TAX LAWS, AND OF ANY PROPOSED CHANGES IN APPLICABLE
LAWS.

SELLING HOLDERS

The Notes offered hereby were issued by the Company and sold by the
Initial Purchasers in the Original Offering, in a transaction exempt from the
registration requirements of the Securities Act, to persons reasonably believed
by the Initial Purchasers to be either (i) "qualified institutional buyers" (as
defined in Rule 144A under the Securities Act), (ii) other institutional
"accredited investors" (as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act) or (iii) non-U.S. persons pursuant to Regulation S of the
Securities Act. The Selling Holders (which term includes their transferees,
pledgees, donees or their successors) may from time to time offer and sell
pursuant to this Prospectus any or all of the Notes and Common Stock issued upon
conversion of the Notes.

The following table sets forth information, as of November 7, 1997,
with respect to the Selling Holders and the respective principal amounts of
Notes beneficially owned by each Selling Holder that may be offered pursuant to
this Prospectus. Such information has been obtained from the Selling Holders.
None of the Selling Holders has, or within the past three years has had, any
position, office or other material relationship with the Company or any of its
predecessors or affiliates, except as noted below. Because the Selling Holders
may offer all or some portion of the Notes or the Common Stock issuable upon
conversion thereof pursuant to this Prospectus, no estimate can be given as to
the amount of the Notes or the Common Stock issuable upon conversion thereof
that will be held by the Selling Holders upon termination of any such sales. In
addition, the Selling Holders identified below may have sold, transferred or
otherwise disposed of all or a portion of their Notes since the date on which
they provided the information regarding their Notes in transactions exempt from
the registration requirements of the Securities Act.

35
<PAGE> 37
<TABLE>
<CAPTION>
Principal Amount Number of Shares of Common Stock
of Notes --------------------------------
Beneficially Owned Beneficially Offered
Selling Stockholder(1) and Offered Hereby Owned(1)(2) Hereby(2)
- -------------------------------------------------------------------- ------------------ ------------ ---------
<S> <C> <C> <C>
Merrill Lynch, Pierce, Fenner & Smith, Inc. ........................ $ 4,500,000 107,321 107,321
Deutsche Morgan Grenfell Inc.(3).................................... $ 4,465,000 106,487 106,487
Mainstay Convertible Fund(4)........................................ $ 3,350,000 79,895 79,895
Societe Generale Securities Corporation............................. $ 3,000,000 71,547 71,547
CFW-C, L.P. ........................................................ $ 3,000,000 71,547 71,547
Husic Capital Management as a Discretionary
Asset Manager for the Ameritech Pension Plan..................... $ 2,000,000 47,698 47,698
BancAmerica Robertson Stephens(5)................................... $ 1,875,000 44,717 44,717
New York Life Separate Account #7................................... $ 1,500,000 35,773 35,773
Lincoln National Convertible Securities Fund........................ $ 1,010,000 24,087 24,087
Surfboard & Co.(6).................................................. $ 1,000,000 23,849 23,849
Declaration of Trust for the Defined Benefit Plan
of ICI American Holdings, Inc. .................................. $ 1,000,000 23,849 23,849
Lincoln National Life Insurance..................................... $ 1,000,000 23,849 23,849
Thermo Electron Balanced Investment Fund............................ $900,000 21,464 21,464
Declaration of Trust for the Defined Benefit Plan
of ZENECA Holdings, Inc. ........................................ $750,000 17,886 17,886
The J.W. McConnell Family Foundation................................ $750,000 17,886 17,886
Van Kampen American Capital Convertible Securities Fund(7).......... $475,000 11,328 11,328
First Church of Christ, Scientist-Endowment......................... $300,000 7,154 7,154
Christian Science Trustees for Gifts & Endowments................... $300,000 7,154 7,154
Swiss Bank Corporation-London Branch(8)............................. $300,000 7,154 7,154
Weirton Trust....................................................... $280,000 6,677 6,677
Walker Art Center................................................... $150,000 3,577 3,577
United National Insurance........................................... $60,000 1,430 1,430
Any other Selling Holder of Notes or future transferee
from any such holder(9)(10)...................................... $37,035,000 883,271 883,271
----------- --------- ---------
Total......................................................... $69,000,000 1,645,600 1,645,600
=========== ========= =========
</TABLE>

(1) Information concerning the Selling Holders may change from time to time
and any such changed information will be set forth in supplements to this
Prospectus if and when necessary. In addition, the per share conversion
price, and therefor the number of shares issuable upon conversion of the
Notes, is subject to adjustment under certain circumstances. Accordingly,
the aggregate principal amount of Notes and the number of shares of Common
Stock issuable upon conversion thereof offered hereby may increase or
decrease.

(2) Assumes a conversion price of $41.93 per share, and a cash payment in lieu
of any fractional share interest.

(3) Deutsche Bank AG, New York Branch acts as the Trustee of the Notes.
Deutsche Morgan Grenfell acted as an Initial Purchaser in the Original
Offering. Deutsche Morgan Grenfell Inc. is a market maker for the Company's
Common Stock, and its research department publishes research on the
Company.

(4) Mainstay Convertible Fund owns 12,800 shares of the Company's Common Stock.

(5) BancAmerica Robertson Stephens acted as an Initial Purchaser in the
Original Offering.

(6) Surfboard & Co. is the beneficial owner of 497,100 shares of the Company's
Common Stock.

(7) Van Kampen American Capital Asset Management, Inc., as the investment
advisor of Van Kampen American Capital Convertible Securities Fund, has
discretionary authority to make investment decisions with respect to such
Fund's portfolio.

(8) SBC Warburg Dillon Read Inc. acts as an investment advisor for Swiss Bank
Corporation--London Branch.

(9) Information concerning other Selling Holders will be set forth in
Prospectus Supplements from time to time, if required.

(10) Assumes that any other holders of Notes or any future transferee from any
such holder does not beneficially own any Common Stock other than the
Common Stock issuable upon conversion of the Notes at the initial
conversion rate.

36
<PAGE> 38
PLAN OF DISTRIBUTION

The Notes and Common Stock offered hereby may be sold from time to time
to purchasers directly by the Selling Holders. Alternatively, the Selling
Holders may from time to time offer the Notes and Common Stock to or through
underwriters, broker/dealers or agents, who may receive compensation in the form
of underwriting discounts, concessions or commissions from the Selling Holders
or the purchasers of Notes and Common Stock for whom they may act as agents. The
Selling Holders and any underwriters, broker/dealers or agents that participate
in the distribution of Notes and Common Stock my be deemed to be "underwriters"
within the meaning of the Securities Act and any profit on the sale of Notes and
Common Stock by them and any discounts, commissions, concessions or other
compensation received by any such underwriter, broker/dealer or agent may be
deemed to be underwriting discounts and commissions under the Securities Act.

The Notes and Common Stock offered hereby may be sold from time to time
in one or more transactions at fixed prices, at prevailing market prices at the
time of sale, any varying prices determined at the time of sale or at negotiated
prices. The sale of the Notes and the Common Stock issuable upon conversion
thereof may be effected in transactions (which may involve crosses or block
transactions) (i) on any national securities exchange or quotation service on
which the Notes or the Common Stock may be listed or quoted at the time of sale,
(ii) in the over-the-counter market or (iii) in transactions otherwise than on
such exchanges or in the over-the-counter market. At the time a particular
offering of the Notes and the Common Stock is made, a Prospectus Supplement, if
required, will be distributed which will set forth the aggregate amount and type
of Notes and Common Stock being offered and the terms of the offering, including
the name or names of any underwriters, broker/dealers or agents, if any, any
discounts, commissions and other terms constituting compensation from the
Selling Holders and any discounts, commissions or concessions allowed or
reallowed or paid to broker/dealers.

To comply with the securities laws of certain jurisdictions, if
applicable, the Notes and Common Stock will be offered or sold in such
jurisdictions only through registered or licensed brokers or dealers. In
addition, in certain jurisdictions the Notes and Common Stock may not be offered
or sold unless they have been registered or qualified for sale in such
jurisdictions or any exemption from registration or qualification is available
and is complied with.

The Selling Holders will be subject to applicable provisions of the
Exchange Act and the rules and regulations thereunder, which provisions may
limit the timing of purchases and sales of any of the Notes and Common Stock by
the Selling Holders. The foregoing may affect the marketability of the Notes and
the Common Stock.

Pursuant to the Registration Rights Agreement, all expenses of the
registration of the Notes and Common Stock will be paid by the Company,
including, without limitation, Commission filing fees and expenses of compliance
with state securities or "blue sky" laws; provided, however, that the Selling
Holders will pay all underwriting discounts and selling commissions, if any. The
Selling Holders will be indemnified by the Company against certain civil
liabilities, including certain liabilities under the Securities Act, or will be
entitled to contribution in connection therewith.

LEGAL MATTERS

The legality of the Shares is being passed upon by Gray Cary Ware &
Freidenrich, A Professional Corporation, Palo Alto, California.

The legality of the Notes is being passed upon by Dewey Ballantine LLP.

37
<PAGE> 39
EXPERTS

The audited financial statements and schedules incorporated by reference
in this Prospectus and elsewhere in the Registration Statement to the extent and
for the periods indicated in their reports have been audited by Arthur Andersen
LLP, independent public accountants, and are included herein in reliance upon
the authority of said firm as experts in giving said reports.

38
<PAGE> 40
================================================================================

NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION
OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERING DESCRIBED HEREIN,
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, ANY SELLING SHAREHOLDER OR BY ANY
UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, ANY SECURITIES OTHER THAN THE REGISTERED
SECURITIES TO WHICH IT RELATES, OR AN OFFER TO SELL, OR A SOLICITATION OF AN
OFFER TO BUY, IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF.

TABLE OF CONTENTS

PAGE

Available Information.................. 3

Incorporation of Certain
Documents by Reference.............. 3

The Company............................ 4

Risk Factors........................... 7

Ratio of Earnings to Fixed Charges..... 15

Use of Proceeds........................ 15

Description of Notes................... 16

Selling Holders........................ 35

Plan of Distribution................... 37

Legal Matters.......................... 37

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

PROSPECTUS

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

$69,000,000

THE VANTIVE CORPORATION

4.75% CONVERTIBLE
SUBORDINATED NOTE DUE
2002

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

November ____, 1997

================================================================================
<PAGE> 41
PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the various expenses in connection with
the sale and distribution of the securities being registered, other than
underwriting discounts and commissions. All of the amounts shown are estimates
except the Securities and Exchange Commission registration and listing and
filing fees.

To be Paid
By The Registrant
-----------------

Securities and Exchange Commission registration fee....... $20,910
Nasdaq National Market Additional Listing Fee............. $17,500
Accounting fees and expenses.............................. $5,000
Legal fees and expenses................................... $20,000
Miscellaneous expenses.................................... $1,590
-------

Total $65,000
=======

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the Delaware General Corporation Law ("Delaware Law")
permits indemnification of officers, directors, and other corporate agents under
certain circumstances and subject to certain limitations. The Registrant's
Certificate of Incorporation (Exhibit 3.1) and Bylaws (Exhibit 3.3) provide that
the Registrant shall indemnify its directors, officers, employees, and agents to
the full extent permitted by Delaware Law, including in circumstances in which
indemnification is otherwise discretionary under Delaware law. In addition, the
Registrant has entered into separate indemnification agreements (Exhibit 10.1)
with its directors and officers which would require the Registrant, among other
things, to indemnify them against certain liabilities which may arise by reason
of their status or service (other than liabilities arising from willful
misconduct of a culpable nature) and to maintain directors' and officers'
liability insurance, if available on reasonable terms. The Registrant currently
has directors' and officers' liability insurance with up to $5.0 million
coverage per occurrence.

These indemnification provisions may be sufficiently broad to permit
indemnification of the Registrant's officers and directors for liabilities
(including reimbursement of expenses incurred) arising under the Securities Act
of 1933, as amended (the "Securities Act").

The Registration Rights Agreement (Exhibit 4.3) provides for
indemnification by the Holders of Registerable Securities of the Registrant and
its officers and directors for certain liabilities arising under the Securities
Act, or otherwise.

II-1
<PAGE> 42
ITEM 16. EXHIBITS

Exhibit No. Description of Document
----------- -----------------------

4.1 Indenture, dated as of August 15, 1997, between the Company
and Deutsche Bank AG, New York Branch, as trustee

4.2 Form of Notes included in Exhibit 4.1

4.3 Registration Rights Agreement dated August 14, 1997, between
the Company and Deutsche Morgan Grenfell Inc., Hambrecht &
Quist LLC and Robertson, Stephens & Company LLC

5.1 Opinion and Consent of Gray Cary Ware & Freidenrich, A
Professional Corporation.

5.2 Opinion of Dewey Ballantine LLP

12.1 Statement Regarding Computation of Ratios

23.1 Consent of Arthur Andersen LLP, Independent Public
Accountants

23.2 Consent of Gray Cary Ware & Freidenrich, A Professional
Corporation. Reference is made to Exhibit 5.1

23.3 Consent of Dewey Ballantine LLP. Reference is made to
Exhibit 5.2

24.1 Power of Attorney (see signature page)

25.1 Form T-1, Statement of Eligibility and Qualification of
Trustee

27.1 Financial Data Schedule (EDGAR Format only).

II-2
<PAGE> 43
ITEM 17. UNDERTAKINGS.

The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, as amended (the
"Securities Act"), each filing of the registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as
amended (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.

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 Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer, or controlling person of the registrant
in the successful defense of any action, suit, or proceeding) is asserted by
such director, officer, or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.

The undersigned registrant hereby undertakes that:

(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.

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;

(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) of the Securities Act of 1933,
if, in the aggregate, the changes in volume and price represent no more than a
20% change in the maximum aggregate offering price set forth in the "Calculation
of Registration Fee" table in the effective registration statement;

(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;

II-3
<PAGE> 44
Provided, however, that paragraphs (1)(i) and (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 by the registrant
pursuant to section 13 or section 15(d) of the Exchange Act of 1934, 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.

II-4
<PAGE> 45
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Santa
Clara, State of California, on November 18, 1997.

THE VANTIVE CORPORATION

By: /s/ John R. Luongo
--------------------------------------
John R. Luongo
President and Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints each of Kathleen A. Murphy and Michael Loo his or
her true and lawful attorney-in-fact and agent, with full power of each to act
alone, with full powers 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) or supplements to this
Registration Statement, 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, with full power of
each to act alone, full power and authority to do and perform each and every act
and thing requisite and necessary to be done in connection therewith, as fully
for 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 his or
her substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and the date indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------ ---------------------------------- -------------------
<S> <C> <C>

/s/ John R. Luongo President, Chief Executive Officer November 18, 1997
- ------------------------------------ and Director
John R. Luongo (Principal Executive Officer)

/s/ Kathleen A. Murphy Vice President, Finance and November 18, 1997
- ------------------------------------ Administration, Chief Financial
Kathleen A. Murphy Officer and Secretary (Principal
Financial Officer)

/s/ Michael M. Loo Vice President, Finance (Principal November 18, 1997
- ------------------------------------ Accounting Officer)
Michael M. Loo

/s/ Roger J. Sippl Chairman of the Board of Directors November 18, 1997
- ------------------------------------
Roger J. Sippl

Director November __, 1997
- ------------------------------------
Aneel Bhusri

/s/ William H. Davidow Director November 18, 1997
- ------------------------------------
William H. Davidow

/s/ Kevin G. Hall Director November 18, 1997
- ------------------------------------
Kevin G. Hall
</TABLE>

II-5
<PAGE> 46
<TABLE>
<S> <C> <C>
/s/ Raymond L. Ocampo Jr. Director November 18, 1997
- ------------------------------------
Raymond L. Ocampo Jr.

/s/ Peter A. Roshko Director November 18, 1997
- ------------------------------------
Peter A. Roshko
</TABLE>

II-6
<PAGE> 47

Exhibit No. Description of Document
----------- -----------------------

4.1 Indenture, dated as of August 15, 1997, between the Company
and Deutsche Bank AG, New York Branch, as trustee

4.2 Form of Notes included in Exhibit 4.1

4.3 Registration Rights Agreement dated August 14, 1997, between
the Company and Deutsche Morgan Grenfell Inc., Hambrecht &
Quist LLC and Robertson, Stephens & Company LLC

5.1 Opinion and Consent of Gray Cary Ware & Freidenrich, A
Professional Corporation.

5.2 Opinion of Dewey Ballantine LLP

12.1 Statement Regarding Computation of Ratios

23.1 Consent of Arthur Andersen LLP, Independent Public
Accountants

23.2 Consent of Gray Cary Ware & Freidenrich, A Professional
Corporation. Reference is made to Exhibit 5.1

23.3 Consent of Dewey Ballantine LLP. Reference is made to
Exhibit 5.2

24.1 Power of Attorney (see signature page)

25.1 Form T-1, Statement of Eligibility and Qualification of
Trustee

27.1 Financial Data Schedule (EDGAR Format only).

<PAGE> 1
EXHIBIT 4.1

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

THE VANTIVE CORPORATION

COMPANY

DEUTSCHE BANK AG,
NEW YORK BRANCH

TRUSTEE

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

INDENTURE

DATED AS OF AUGUST 15, 1997

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

4.75% CONVERTIBLE SUBORDINATED NOTES DUE 2002

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

<PAGE> 2
Certain Sections of this Indenture relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939:

<TABLE>
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TRUST INDENTURE INDENTURE
ACT SECTION SECTION
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Section 310(a)(1) ............................................................ 6.8
(a)(2) ............................................................ 6.8
(a)(3) ............................................................ Not Applicable
(a)(4) ............................................................ Not Applicable
(b) ............................................................ 6.13
............................................................ 6.9
Section 311(a) ............................................................ 6.14
(b) ............................................................ 6.14
Section 312(a) ............................................................ 15.1
............................................................ 15.3(a)
(b) ............................................................ 15.3(b)
(c) ............................................................ 15.3(c)
Section 313(a) ............................................................ 15.4(a)
(a)(4) ............................................................ 1.1
(b) ............................................................ 15.4(a)
(c) ............................................................ 15.4(a)
(d) ............................................................ 15.4(b)
Section 314(a) ............................................................ 15.5
(b) ............................................................ Not Applicable
(c)(1) ............................................................ 1.2
(c)(2) ............................................................ 1.2
(c)(3) ............................................................ Not Applicable
(d) ............................................................ Not Applicable
(e) ............................................................ 1.2
Section 315(a) ............................................................ 6.1
(b) ............................................................ 6.2
(c) ............................................................ 6.1
(d) ............................................................ 6.1
(e) ............................................................ 5.14
Section 316(a) ............................................................ 1.1
(a)(1)(A) ............................................................ 5.2
............................................................ 5.12
(a)(1)(B) ............................................................ 5.13

Note: This table of contents shall not, for any purpose, be deemed to be a part of the Indenture.
</TABLE>

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<TABLE>
<S> <C>
(a)(2) ............................................................ Not Applicable
(b) ............................................................ 5.8
(c) ............................................................ 1.4(e)
Section 317(a)(1) ............................................................ 5.3
(a)(2) ............................................................ 5.4
(b) ............................................................ 10.3
Section 318(a) ............................................................ 1.13

Note: This table of contents shall not, for any purpose, be deemed to be a part of the Indenture.
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TABLE OF CONTENTS

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RECITALS......................................................................................... 1

ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION............................. 1

SECTION 1.1. Definitions................................................................... 1

Act .................................................................................... 2
Additional Amounts...................................................................... 2
Affiliate............................................................................... 2
Applicable Price........................................................................ 2
Authenticating Agent.................................................................... 2
Authorized Newspaper.................................................................... 2
Board of Directors" or "Board".......................................................... 2
Board Resolution........................................................................ 2
Business Day............................................................................ 2
Cedel................................................................................... 3
Closing Price........................................................................... 3
Code.................................................................................... 3
Commission.............................................................................. 3
Common Stock............................................................................ 3
Company................................................................................. 3
Company Order........................................................................... 3
Company Notice.......................................................................... 3
Constituent Person...................................................................... 3
Conversion Agent........................................................................ 4
Conversion Price........................................................................ 4
Corporate Trust Office.................................................................. 4
corporation............................................................................. 4
Custodian............................................................................... 4
Defaulted Interest...................................................................... 4
Depositary.............................................................................. 4
Designated Senior Indebtedness.......................................................... 4
Dollar" or "U.S.$"...................................................................... 4
DTC .................................................................................... 4
Euroclear............................................................................... 4
Event of Default........................................................................ 4
Exchange Act............................................................................ 5

Note: This table of contents shall not, for any purpose, be deemed to be a part of the Indenture.
</TABLE>

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TABLE OF CONTENTS
(CONTINUED)

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Fundamental Change...................................................................... 5
Global Security......................................................................... 5
Holder.................................................................................. 5
Indebtedness............................................................................ 5
Indenture............................................................................... 6
Initial Purchasers...................................................................... 6
Interest Payment Date................................................................... 6
Liquidated Damages...................................................................... 6
Maturity................................................................................ 6
Non-electing Share...................................................................... 6
Non-U.S. Holder......................................................................... 6
Note Register........................................................................... 6
Note Registrar.......................................................................... 6
Officer................................................................................. 6
Officers' Certificate................................................................... 6
Opinion of Counsel...................................................................... 7
Outstanding............................................................................. 7
Paying Agent............................................................................ 7
Payment Blockage Notice................................................................. 8
Person.................................................................................. 8
Place of Conversion..................................................................... 8
Place of Payment........................................................................ 8
Predecessor Security.................................................................... 8
Purchase Agreement...................................................................... 8
Purchased Shares........................................................................ 8
Record Date............................................................................. 8
Redemption Date......................................................................... 8
Redemption Price........................................................................ 8
Reference Market Price.................................................................. 8
Registration Rights Agreement........................................................... 8
Regular Record Date..................................................................... 9
Regulation S............................................................................ 9
Regulation S Global Security............................................................ 9
Representative.......................................................................... 9
Repurchase Date......................................................................... 9
Repurchase Price........................................................................ 9
Responsible Officer..................................................................... 9

Note: This table of contents shall not, for any purpose, be deemed to be a part of the Indenture.
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TABLE OF CONTENTS
(CONTINUED)

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Rule 144A............................................................................... 9
Rule 144A Global Security............................................................... 9
Rule 144A Information................................................................... 9
Securities.............................................................................. 9
Securities Act.......................................................................... 9
Senior Indebtedness..................................................................... 9
Special Record Date.................................................................... 10
Stated Maturity........................................................................ 10
Subsidiary............................................................................. 10
Successor Security..................................................................... 10
Tax Affected Security.................................................................. 10
Taxing Jurisdiction.................................................................... 10
Tax Law Change......................................................................... 10
Trading Day............................................................................ 10
Trust Indenture Act.................................................................... 11
Trustee................................................................................ 11
United States.......................................................................... 11
U.S. Holder............................................................................ 11
Western Europe......................................................................... 11

SECTION 1.2. Compliance Certificates and Opinions......................................... 11
SECTION 1.3. Form of Documents Delivered to the Trustee................................... 12
SECTION 1.4. Acts of Holders of Securities................................................ 12
SECTION 1.5. Notices, Etc., to Trustee and Company........................................ 14
SECTION 1.6. Notice to Holders of Securities; Waiver...................................... 15
SECTION 1.7. Effect of Headings and Table of Contents..................................... 16
SECTION 1.8. Successors and Assigns....................................................... 16
SECTION 1.9. Separability Clause.......................................................... 16
SECTION 1.10. Benefits of Indenture....................................................... 16
SECTION 1.11. Governing Law............................................................... 16
SECTION 1.12. Legal Holidays.............................................................. 16
SECTION 1.13. Conflict with Trust Indenture Act........................................... 17
SECTION 1.14. Jurisdiction................................................................ 17
SECTION 1.15. Indenture and Securities Solely Corporate Obligations....................... 18
SECTION 1.16. Luxembourg Obligations...................................................... 18

ARTICLE TWO SECURITY FORMS..................................................................... 18

Note: This table of contents shall not, for any purpose, be deemed to be a part of the Indenture.
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TABLE OF CONTENTS
(CONTINUED)

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SECTION 2.1. Forms Generally.............................................................. 18
SECTION 2.2. Form of Security............................................................. 19
SECTION 2.3. Assignment Form and Certificate of Transfer.................................. 32
SECTION 2.4. Form of Election of Holder to Require Repurchase............................. 34
SECTION 2.5. Form of Conversion Notice.................................................... 35

ARTICLE THREE THE SECURITIES................................................................... 37

SECTION 3.1. Title and Terms.............................................................. 37
SECTION 3.2. Denominations................................................................ 38
SECTION 3.3. Execution, Authentication, Delivery and Dating............................... 38
SECTION 3.4. Registration, Registration of Transfer and Exchange; Restrictions on Transfer 39
SECTION 3.5. Temporary Securities......................................................... 47
SECTION 3.6. Mutilated, Destroyed, Lost or Stolen Securities.............................. 47
SECTION 3.7. Payment of Interest; Interest Rights Preserved............................... 48
SECTION 3.8. Persons Deemed Owners........................................................ 49
SECTION 3.9. Cancellation................................................................. 50
SECTION 3.10. Computation of Interest..................................................... 50
SECTION 3.11. CUSIP Numbers............................................................... 50

ARTICLE FOUR SATISFACTION AND DISCHARGE........................................................ 50

SECTION 4.1. Satisfaction and Discharge of Indenture...................................... 50
SECTION 4.2. Application of Trust Money................................................... 52

ARTICLE FIVE REMEDIES.......................................................................... 52
SECTION 5.1. Events of Default............................................................ 52
SECTION 5.2. Acceleration of Maturity; Rescission and Annulment........................... 53
SECTION 5.3. Collection of Indebtedness and Suits for Enforcement by Trustee.............. 54
SECTION 5.4. Trustee May File Proofs of Claim............................................. 55
SECTION 5.5. Trustee May Enforce Claims Without Possession of Securities.................. 56
SECTION 5.6. Application of Money Collected............................................... 56
SECTION 5.7. Limitation on Suits.......................................................... 56
SECTION 5.8. Unconditional Right of Holders to Receive Principal, Premium and Interest and
to Convert................................................................ 57
SECTION 5.9. Restoration of Rights and Remedies........................................... 57
SECTION 5.10. Rights and Remedies Cumulative.............................................. 58

Note: This table of contents shall not, for any purpose, be deemed to be a part of the Indenture.
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(CONTINUED)

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SECTION 5.11. Delay or Omission Not Waiver................................................ 58
SECTION 5.12. Control by Holders of Securities............................................ 58
SECTION 5.13. Waiver of Past Defaults..................................................... 58
SECTION 5.14. Undertaking for Costs....................................................... 59
SECTION 5.15. Waiver of Stay, Extension and Usury Laws.................................... 59

ARTICLE SIX THE TRUSTEE........................................................................ 59

SECTION 6.1. Certain Duties and Responsibilities.......................................... 59
SECTION 6.2. Notice of Defaults........................................................... 60
SECTION 6.3. Certain Rights of Trustee.................................................... 61
SECTION 6.4. Not Responsible for Recitals or Issuance of Securities....................... 62
SECTION 6.5. May Hold Securities, Act as Trustee Under Other Indentures................... 62
SECTION 6.6. Money Held in Trust.......................................................... 62
SECTION 6.7. Compensation and Reimbursement............................................... 63
SECTION 6.8. Corporate Trustee Required; Eligibility...................................... 64
SECTION 6.9. Resignation and Removal; Appointment of Successor............................ 64
SECTION 6.10. Acceptance of Appointment by Successor...................................... 65
SECTION 6.11. Merger, Conversion, Consolidation or Succession to Business................. 65
SECTION 6.12. Authenticating Agents....................................................... 66
SECTION 6.13. Disqualification; Conflicting Interests..................................... 67
SECTION 6.14. Preferential Collection of Claims Against Company........................... 67

ARTICLE SEVEN CONSOLIDATION, MERGER, TRANSFER OR LEASE......................................... 67

SECTION 7.1. Company May Consolidate, Etc., Only on Certain Terms......................... 67
SECTION 7.2. Successor Substituted........................................................ 68

ARTICLE EIGHT SUPPLEMENTAL INDENTURES.......................................................... 68

SECTION 8.1. Supplemental Indentures Without Consent of Holders of Securities............. 68
SECTION 8.2. Supplemental Indentures with Consent of Holders of Securities................ 69
SECTION 8.3. Execution of Supplemental Indentures......................................... 70
SECTION 8.4. Effect of Supplemental Indentures............................................ 71
SECTION 8.5. Reference in Securities to Supplemental Indentures........................... 71
SECTION 8.6. Notice of Supplemental Indentures............................................ 71

Note: This table of contents shall not, for any purpose, be deemed to be a part of the Indenture.
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ARTICLE NINE MEETINGS OF HOLDERS OF SECURITIES................................................. 71

SECTION 9.1. Purposes for Which Meetings May Be Called.................................... 71
SECTION 9.2. Call, Notice and Place of Meetings........................................... 72
SECTION 9.3. Persons Entitled to Vote at Meetings......................................... 72
SECTION 9.4. Quorum; Action............................................................... 72
SECTION 9.5. Determination of Voting Rights; Conduct and Adjournment of Meetings.......... 73
SECTION 9.6. Counting Votes and Recording Action of Meetings.............................. 74

ARTICLE TEN COVENANTS.......................................................................... 74

SECTION 10.1. Payment of Principal, Premium and Interest.................................. 74
SECTION 10.2. Maintenance of Offices or Agencies.......................................... 74
SECTION 10.3. Money for Security Payments To Be Held in Trust............................. 75
SECTION 10.4. Additional Amounts.......................................................... 76
SECTION 10.5. Corporate Existence......................................................... 77
SECTION 10.6. Statement by Officers as to Default......................................... 77
SECTION 10.7. Delivery of Certain Information............................................. 78

ARTICLE ELEVEN REDEMPTION OF SECURITIES........................................................ 78

SECTION 11.1. Right of Redemption......................................................... 78
SECTION 11.2. Applicability of Article.................................................... 78
SECTION 11.3. Election to Redeem; Notice to Trustee....................................... 78
SECTION 11.4. Selection by Trustee of Securities to Be Redeemed........................... 79
SECTION 11.5. Notice of Redemption........................................................ 79
SECTION 11.6. Deposit of Redemption Price................................................. 80
SECTION 11.7. Securities Payable on Redemption Date....................................... 81
SECTION 11.8. Securities Redeemed in Part................................................. 81
SECTION 11.9. Conversion Arrangement on Call for Redemption............................... 81

ARTICLE TWELVE CONVERSION OF SECURITIES........................................................ 82

SECTION 12.1. Conversion Privilege and Conversion Price................................... 82
SECTION 12.2. Exercise of Conversion Privilege............................................ 82
SECTION 12.3. Fractions of Shares......................................................... 84

Note: This table of contents shall not, for any purpose, be deemed to be a part of the Indenture.
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TABLE OF CONTENTS
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SECTION 12.4. Adjustment of Conversion Price.............................................. 84
SECTION 12.5. Notice of Adjustments of Conversion Price................................... 92
SECTION 12.6. Notice of Certain Corporate Action.......................................... 93
SECTION 12.7. Company to Provide Common Stock............................................. 94
SECTION 12.8. Taxes on Conversions........................................................ 94
SECTION 12.9. Company Covenant as to Common Stock......................................... 94
SECTION 12.10. Cancellation of Converted Securities....................................... 94
SECTION 12.11. Provision in Case of Consolidation, Merger, or Sale of Assets
of the Company ........................................................................ 94
SECTION 12.12. Responsibility of Trustee for Conversion Provisions........................ 95

ARTICLE THIRTEEN SUBORDINATION OF SECURITIES................................................... 96

SECTION 13.1. Agreement of Subordination.................................................. 96
SECTION 13.2. Payments to Holders......................................................... 96
SECTION 13.3. Subrogation of Securities................................................... 99
SECTION 13.4. Authorization to Effect Subordination...................................... 100
SECTION 13.5. Notice to Trustee.......................................................... 100
SECTION 13.6. Trustee's Relation to Senior Indebtedness of the Company................... 101
SECTION 13.7. No Impairment of Subordination............................................. 102
SECTION 13.8. Article Applicable to Paying Agents........................................ 102
SECTION 13.9. Senior Indebtedness of the Company Entitled to Rely........................ 102
SECTION 13.10. Certain Conversions Deemed Payment........................................ 102

ARTICLE FOURTEEN REPURCHASE OF SECURITIES AT THE OPTION OF THE HOLDER
UPON A FUNDAMENTAL CHANGE................................................................. 103

SECTION 14.1. Right to Require Repurchase................................................ 103
SECTION 14.2. Notices; Method of Exercising Repurchase Right, Etc........................ 104
SECTION 14.3. Merger, Consolidation, etc................................................. 105

ARTICLE FIFTEEN HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY.............................. 106

SECTION 15.1. Company to Furnish Trustee Names and Addresses of Holders.................. 106
SECTION 15.2. Trustee to Furnish Company Names and Addresses of Holders.................. 106
SECTION 15.3. Preservation of Information................................................ 107

Note: This table of contents shall not, for any purpose, be deemed to be a part of the Indenture.
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SECTION 15.4. Reports by Trustee......................................................... 107
SECTION 15.5. Reports by Company......................................................... 108
SECTION 15.6. Reports with Respect to Registration of Securities......................... 108

EXHIBIT A

Note: This table of contents shall not, for any purpose, be deemed to be a part of the Indenture.
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<PAGE> 12
INDENTURE, dated as of August 15, 1997, between The Vantive Corporation, a
Delaware corporation (herein called the "Company"), and Deutsche Bank AG, New
York Branch, as Trustee hereunder (herein called the "Trustee").

RECITALS

The Company has duly authorized the creation of an issue of its 4.75%
Convertible Subordinated Notes due 2002 (herein called the "Securities") in an
aggregate principal amount not to exceed $69,000,000, and to provide therefor
the Company has duly authorized the execution and delivery of this Indenture.

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

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, the Company and the Trustee mutually covenant
and agree, for the equal and proportionate benefit of all Holders of the
Securities as follows:

ARTICLE ONE

DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION

SECTION 1.1. Definitions.

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

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

(2) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles in the United States, and, except as otherwise herein expressly
provided, the term "generally accepted accounting principles" with respect
to any computation required or permitted hereunder shall mean such
accounting principles as are generally accepted at the date of such
computation, other than for the purpose of the definition of Indebtedness
and Senior Indebtedness set forth herein; and

<PAGE> 13
(3) the words "herein", "hereof" and "hereunder" and other words
of similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision.

"Act", when used with respect to any Holder of a Security, has the meaning
specified in Section 1.4.

"Additional Amounts" has the meaning specified in Section 2.2.

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

"Applicable Price" means (i) in the event of a Fundamental Change in which
the holders of Company's Common Stock receive only cash, the amount of cash
received by the holder of one share of Common Stock and (ii) in the event of any
other Fundamental Change, the arithmetic average of the Closing Price for the
Company's Common Stock during the ten Trading Days prior to the record date for
the determination of the holders of Common Stock entitled to receive cash,
securities, property or other assets in connection with such Fundamental Change,
or, if there is no such record date, the date upon which the holders of the
Common Stock shall have the right to receive such cash, securities, property or
other assets in connection with the Fundamental Change.

"Authenticating Agent" means any Person authorized by the Trustee pursuant
to Section 6.12 to act on behalf of the Trustee to authenticate Securities.

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

"Board of Directors" or "Board" means either the board of directors of the
Company or any committee of that board empowered to act for it with respect to
this Indenture.

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

"Business Day", when used with respect to any Place of Payment, Place of
Conversion or any other place, as the case may be, means each Monday, Tuesday,
Wednesday, Thursday and Friday which

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is not a day on which banking institutions in such Place of Payment, Place of
Conversion or other place, as the case may be, are authorized or obligated by
law or executive order to close; provided, however, that a day on which banking
institutions in either New York, New York or Luxembourg are authorized or
obligated by law or executive order to close shall not be a Business Day for
purposes of Section 10.1, 10.3, 11.6 or 13.5.

"Cedel" means Cedel Bank, societe anonyme.

"Closing Price" has the meaning specified in Section 12.4(8)(a).

"Code" means the United States Internal Revenue Code of 1986, as amended.

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

"Common Stock" includes any stock or shares of any class of the Company
which has no preference in respect of dividends or of amounts payable in the
event of any voluntary or involuntary liquidation, dissolution or winding up of
the Company and which is not subject to redemption by the Company; provided,
however, subject to the provisions of Section 12.11, shares issuable on
conversion of Securities shall include only shares of the class designated as
Common Stock of the Company at the date of this Indenture or shares of any class
or classes resulting from any reclassification or reclassifications thereof and
which have no preference in respect of dividends or of amounts payable in the
event of any voluntary or involuntary liquidation, dissolution or winding up of
the Company and which are not subject to redemption by the Company; provided,
further, however, that if at any time there shall be more than one such
resulting class, the shares of each such class then so issuable shall be
substantially in the proportion which the total number of shares of such class
resulting from all such reclassifications bears to the total number of shares of
all such classes resulting from all such reclassifications.

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

"Company Order" or "Company Request" means a written order or request
signed in the name of the Company by its Chairman of the Board, its Vice
Chairman of the Board, its Chief Executive Officer, its President or a Senior
Vice President or a Vice President, and by its principal financial officer, its
Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and
delivered to the Trustee.

"Company Notice" has the meaning specified in Section 14.2.

"Constituent Person" has the meaning specified in Section 12.11.

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"Conversion Agent" means any Person authorized by the Company to convert
Securities in accordance with Article Twelve. The Company has initially
appointed (i) the Trustee as its Conversion Agent, in the Borough of Manhattan,
The City of New York, New York, and (ii) so long as the Securities are listed on
the Luxembourg Stock Exchange and the rules of the Luxembourg Stock Exchange
shall require that a Conversion Agent be maintained in Luxembourg, Banque de
Luxembourg, as its Conversion Agent in Luxembourg.

"Conversion Price" has the meaning specified in Section 12.1.

"Corporate Trust Office" means the office of the Trustee at which at any
particular time its corporate trust business shall be principally administered
(which at the date of this Indenture is located at 31 West 52nd Street, New
York, NY 10019), except that with respect to presentation of securities for
payment or for registration of transfer or exchange, such term shall mean the
office or agency of the Trustee at which at any particular time, its corporate
agency business shall be conducted.

"Corporation" means a corporation or company, including, without
limitation, a limited liability company, association, joint-stock company or
business trust.

"Custodian" shall mean Deutsche Bank AG, New York Branch, as custodian
with respect to a Global Security, or any successor entity thereto.

"Defaulted Interest" has the meaning specified in Section 3.7.

"Depositary" means, with respect to any Securities issued in whole or in
part in the form of one or more Global Securities, the clearing agency that is
registered under the Exchange Act and designated to act as Depositary for such
Securities, as contemplated by Section 3.4, or any successor clearing agency
registered under the Exchange Act as contemplated by Section 3.4.

"Designated Senior Indebtedness" means the Company's obligations under any
particular Senior Indebtedness of the Company in which the instrument creating
or evidencing the same or the assumption or guarantee thereof (or related
agreements or documents to which the Company is a party) expressly provides that
such Senior Indebtedness shall be "Designated Senior Indebtedness" for purposes
of the Indenture (provided that such instrument, agreement or other document may
place limitations and conditions on the right of such Senior Indebtedness to
exercise the rights of the Designated Senior Indebtedness).

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

"DTC" means The Depository Trust Company, a New York corporation.

"Euroclear" means Euroclear System.

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"Event of Default" has the meaning specified in Section 5.1.

"Exchange Act" means the United States Securities Exchange Act of 1934, as
amended from time to time.

"Fundamental Change" means the occurrence of any transaction or event in
connection with which all or substantially all of the Common Stock shall be
exchanged for, converted into, acquired for or constitute solely the right to
receive, consideration (whether by means of an exchange offer, liquidation,
tender offer, consolidation, merger, combination, reclassification,
recapitalization or otherwise) which is not all or substantially all common
stock or shares which are (or, upon consummation of or immediately following
such transaction or event, will be) listed on a United States national
securities exchange or approved for quotation on the Nasdaq National Market or
any similar United States system of automated dissemination of quotations of
securities prices.

"Global Security" means any Security issued in the form set forth in
Section 2.2 and registered in the Note Register in the name of a Depositary or a
nominee thereof.

"Holder", when used with respect to any Security, means the Person in
whose name the Security is registered in the Note Register.

"Indebtedness" means, with respect to any Person, and without duplication,
(a) all indebtedness, obligations and other liabilities (contingent or
otherwise) of the Person for borrowed money (including obligations of the Person
in respect of overdrafts, foreign exchange contracts, currency exchange
agreements, interest rate protection agreements, and any loans or advances from
banks, whether or not evidenced by notes or similar instruments) or evidenced by
bonds, debentures, notes or similar instruments (whether or not the recourse of
the lender is to the whole of the assets of the Person or to only a portion
thereof) (other than any account payable or other accrued current liability or
obligation incurred in the ordinary course of business in connection with the
obtaining of materials or services), (b) all reimbursement obligations and other
liabilities (contingent or otherwise) of the Person with respect to letters of
credit, bank guarantees or bankers' acceptances, (c) all obligations and
liabilities (contingent or otherwise) in respect of leases of the Person
required, in conformity with generally accepted accounting principles, to be
accounted for as capitalized lease obligations on the balance sheet of the
Person and all obligations and other liabilities (contingent or otherwise) under
any lease or related document (including a purchase agreement) in connection
with the lease of real property which provides that the Person is contractually
obligated to purchase or cause a third party to purchase the leased property or
pay an agreed upon residual value of the leased property to the lessor and the
obligations of the Person under such lease or related document to purchase or to
cause a third party to purchase such leased property, (d) all obligations of the
Person (contingent or otherwise) with respect to an interest rate or other swap,
cap or collar agreement or other similar instrument or agreement or foreign
currency hedge, exchange, purchase or similar instrument or agreement, (e) all
direct or indirect guaranties or similar agreements by the Person in respect of,
and obligations or liabilities (contingent or otherwise) of the Person to
purchase or otherwise acquire or otherwise assure a creditor against loss in
respect of, indebtedness, obligations or liabilities of another Person of the
kind described in clauses (a) through (d),

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<PAGE> 17
(f) any indebtedness or other obligations described in clauses (a) through (d)
secured by any mortgage, pledge, lien or other encumbrance existing on property
which is owned or held by the Person, regardless of whether the indebtedness or
other obligation secured thereby shall have been assumed by the Person and (g)
any and all deferrals, renewals, extensions, refinancings and refundings of, or
amendments, modifications or supplements to, any indebtedness, obligation or
liability of the kind described in clauses (a) through (f).

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

"Initial Purchasers" means Deutsche Morgan Grenfell Inc., Hambrecht &
Quist LLC and Robertson, Stephens & Company LLC.

"Institutional Accredited Investor" means an institutional "accredited
investor" within the meaning of Rule 501(a)(1), (2), (3) or (7) under the
Securities Act.

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

"Liquidated Damages" has the meaning specified in the Registration Rights
Agreement.

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

"Non-electing Share" has the meaning specified in Section 12.11.

"Non-U.S. Holder" means any Holder other than a U.S. Holder.

"Note Register" shall have the meaning specified in Section 3.4.

"Note Registrar" has the meaning specified in Section 2.2. The Company has
initially appointed (i) the Trustee as its Note Registrar in New York and (ii),
so long as the Securities are listed on the Luxembourg Stock Exchange and the
Luxembourg Stock Exchange shall require, Banque de Luxembourg, as its Note
Registrar in Luxembourg for the purpose of registering Securities and transfers
and exchange of Securities as provided herein.

"Officer" with respect to the Company, means the Chairman of the Board, a
Vice Chairman of the Board, the Chief Executive Officer, the President or a
Senior Vice President or a Vice President, the principal financial officer, the
Treasurer, or Assistant Treasurer, the Secretary or an Assistant Secretary.

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"Officers' Certificate" means a certificate signed by the Chairman of the
Board, a Vice Chairman of the Board, the Chief Executive Officer, the President
or a Senior Vice President or a Vice President and by the principal financial
officer, the Treasurer, an Assistant Treasurer, the Secretary or an Assistant
Secretary of the Company and delivered to the Trustee.

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

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

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

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

(iii) Securities which have been paid pursuant to Section 3.6 or in
exchange for or in lieu of which other Securities have been authenticated and
delivered pursuant to this Indenture, other than any such Securities in respect
of which there shall have been presented to the Trustee proof satisfactory to it
that such Securities are held by a bona fide purchaser in whose hands such
Securities are valid obligations of the Company; and

(iv) Securities converted into Common Stock pursuant to Article
Twelve;

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

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<PAGE> 19
"Paying Agent" means any Person authorized by the Company to pay the
principal of or interest on any Securities on behalf of the Company and, except
as otherwise specifically set forth herein, such term shall include the Company
if it shall act as its own Paying Agent. The Company has initially appointed (i)
the Trustee as its Paying Agent in New York, and (ii) so long as the Securities
are listed on the Luxembourg Stock Exchange and the rules of the Luxembourg
Stock Exchange shall require that a Paying Agent be maintained in Luxembourg,
Banque de Luxembourg, as its Paying Agent in Luxembourg.

"Payment Blockage Notice" has the meaning specified in Section 13.2.

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

"Place of Conversion" has the meaning specified in Section 3.1.

"Place of Payment" has the meaning specified in Section 3.1.

"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 3.6 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.

"Purchase Agreement" means the Purchase Agreement, dated August 14, 1997,
between the Company and the Initial Purchasers, as such agreement may be amended
from time to time.

"Purchased Shares" has the meaning specified in Section 12.4(6).

"QIB" shall mean a "qualified institutional buyer" as defined in Rule
144A.

"Record Date" means any Regular Record Date or Special Record Date.

"Redemption Date", when used with respect to any Security to be redeemed
in whole or in part, means the date fixed for such redemption by or pursuant to
this Indenture.

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

"Reference Market Price" means $21.50 and in the event of any adjustment
to the Conversion Price pursuant to Section 12.4, the Reference Market Price
shall also be adjusted so that the ratio of the Reference Market Price to the
Conversion Price after giving effect to any such adjustment shall always be the
same as the ratio of $21.50 to the initial Conversion Price specified in Section
12.1 (without regard to any adjustment thereto).

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<PAGE> 20
"Registration Rights Agreement" means the Registration Rights Agreement,
dated as of August 14, 1997, between the Company and the Initial Purchasers, as
such agreement may be amended from time to time.

"Regular Record Date" for interest payable in respect of any Security on
any Interest Payment Date means the February 15 or August 15 (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date.

"Regulation S" means Regulation S under the Securities Act (or any
successor provision), as it may be amended from time to time.

"Regulation S Global Security" has the meaning specified in Section 3.4.

"Representative" means the (a) indenture trustee or other trustee, agent
or representative for any Senior Indebtedness or (b) with respect to any Senior
Indebtedness that does not have any such trustee, agent or other representative,
(i) in the case of such Senior Indebtedness issued pursuant to an agreement
providing for voting arrangements as among the holders or owners of such Senior
Indebtedness, any holder or owner of such Senior Indebtedness acting with the
consent of the required Persons necessary to bind such holders or owners of such
Senior Indebtedness and (ii) in the case of all other such Senior Indebtedness,
the holder or owner of such Senior Indebtedness.

"Repurchase Date" has the meaning specified in Section 14.1.

"Repurchase Price" has the meaning specified in Section 14.1.

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

"Rule 144A" means Rule 144A under the Securities Act (or any successor
provision), as it may be amended from time to time.

"Rule 144A Global Security" has the meaning specified in Section 3.4.

"Rule 144A Information" has the meaning specified in Section 10.7.

"Securities" has the meaning ascribed to it in the first paragraph under
the caption "Recitals".

"Securities Act" means the United States Securities Act of 1933, as
amended from time to time.

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<PAGE> 21
"Senior Indebtedness" means the principal of, premium, if any, interest
(including all interest accruing subsequent to the commencement of any
bankruptcy or similar proceeding, whether or not a claim for post-petition
interest is allowable as a claim in such proceeding) and rent payable on or in
connection with, and all fees, costs, expenses and other amounts accrued or due
on or in connection with, Indebtedness of the Company, whether outstanding on
the date of this Indenture or thereafter created, incurred, assumed, guaranteed
or in effect guaranteed by the Company (including all deferrals, renewals,
extensions or refundings of, or amendments, modifications or supplements to, the
foregoing), unless in the case of any particular Indebtedness the instrument
creating or evidencing the same or the assumption or guarantee thereof expressly
provides that such Indebtedness shall not be senior in right of payment to the
Securities or expressly provides that such Indebtedness is "pari passu" or
"junior" to the Securities. Notwithstanding the foregoing, Senior Indebtedness
shall not include any Indebtedness of the Company to any Subsidiary of the
Company a majority of the voting stock of which is owned, directly or
indirectly, by the Company; provided, however, that the term Senior Indebtedness
shall include Indebtedness of the Company to any Subsidiary of the Company.

"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 3.7.

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

"Subsidiary" means, with respect to any Person, a corporation more than
50% of the outstanding voting stock of which is owned, directly or indirectly,
by such Person or by one or more other Subsidiaries, or by such Person and one
or more other Subsidiaries. For the purposes of this definition, "voting stock"
means stock or other similar interests in the corporation which ordinarily has
or have voting power for the election of directors, or persons performing
similar functions, whether at all times or only so long as no senior class of
stock or other interests has or have such voting power by reason of any
contingency.

"Successor Security" of any particular Security means every Security
issued after, and evidencing all or a portion of the same debt as that evidenced
by, such particular Security; and, for the purposes of this definition, any
Security authenticated and delivered under Section 3.6 in exchange for or in
lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to
evidence the same debt as the mutilated, destroyed, lost or stolen Security.

"Tax Affected Security" means any Security that, as a result of any Tax
Law Change, the Company has or will become obligated to pay Additional Amounts
in respect of such Security.

"Taxing Jurisdiction" has the meaning specified in Section 2.2.

"Tax Law Change" means any change in, or amendment to, the laws,
regulations, treaties or rulings prevailing in the United States or any
political subdivision or taxing authority thereof or therein,

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<PAGE> 22
which change or amendment becomes effective on or after the date hereof or any
application or judicial, legislative or administrative interpretation of such
laws, regulations, treaties or rulings.

"Trading Day" has the meaning specified in Section 12.4(8)(e).

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

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

"United States" means the United States of America (including the States
and the District of Columbia), its territories, its possessions and other areas
subject to its jurisdiction (its "possessions" including Puerto Rico, the U.S.
Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana
Islands).

"U.S. Holder" means the beneficial holder of a Security or Common Stock
that for United States federal income tax purposes is (i) a citizen or resident
(as defined in Section 7701(b) of the Code) of the United States, (ii) a
corporation, partnership or other entity formed under the laws of the United
States or any political subdivision thereof, (iii) an estate the income of which
is subject to U.S. federal income taxation regardless of its source, (iv) in
general, a trust subject to the primary supervision of a court within the United
States and the control of a United States fiduciary as described in Section
7701(a)(30) of the Code or (v) any other person whose income or gain with
respect to a Security or Common Stock is effectively connected with the conduct
of a United States trade or business.

"Western Europe" means Austria, Belgium, Denmark, Finland, France,
Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal,
Spain, Sweden, Switzerland and the United Kingdom.

The definitions of certain other terms are specified in Article Twelve.

SECTION 1.2. Compliance Certificates and Opinions.

Upon any application or request by the Company to the Trustee or any
Paying Agent to take any action under any provision of this Indenture, the
Company shall furnish to the Trustee or the Paying Agent, as the case may be, an
Officers' Certificate stating that all conditions precedent, if any, provided
for in this Indenture relating to the proposed action have been complied with
and an Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with, except that in the case
of any such application or request as to which the furnishing of such documents

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<PAGE> 23
is specifically required by any provision of this Indenture relating to such
particular application or request, no additional certificate or opinion need be
furnished.

Every certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture (excluding certificates provided for
in Section 10.6) shall include:

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

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

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

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

SECTION 1.3. Form of Documents Delivered to the Trustee.

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

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

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

SECTION 1.4. Acts of Holders of Securities.

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<PAGE> 24
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided or permitted by this Indenture to be given or
taken by Holders of Securities may be embodied in and evidenced by (1) one or
more instruments of substantially similar tenor signed by such Holders in person
or by agents or proxies duly appointed in writing by such Holders, (2) the
record of Holders of Securities voting in favor thereof, either in person or by
proxies duly appointed in writing, at any meeting of Holders of Securities duly
called and held in accordance with the provisions of Article Nine or (3) a
combination of such instruments and any such record. Such action shall become
effective when such instrument or instruments or record or both are delivered to
the Trustee and, where it is hereby expressly required, to the Company. The
Trustee shall promptly deliver to the Company copies of all such instruments and
records delivered to the Trustee with a courtesy copy to Company's counsel at
the address listed in Section 1.5 and if pertaining to any conversion notice,
with a courtesy copy to Company's common stock transfer agent at the address
listed in Section 1.5. Such instrument or instruments and record (and the action
embodied therein and evidenced thereby) are herein sometimes referred to as the
"Act" of the Holders of Securities signing such instrument or instruments and so
voting at such meeting. Proof of execution of any such instrument or of a
writing appointing any such agent or proxy, or of the holding by any Person of a
Security, shall be sufficient for any purpose of this Indenture and (subject to
Section 6.1) conclusive in favor of the Trustee and the Company if made in the
manner provided in this Section. The record of any meeting of Holders of
Securities shall be proved in the manner provided in Section 9.6.

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

(c) The principal amount and serial number of any Security held by any
Person, and the date of his holding the same, shall be proved by the Note
Register.

(d) The fact and date of execution of any such instrument or writing and
the authority of the Person executing the same may also be proved in any other
manner which the Trustee or the Paying Agent deems sufficient; and the Trustee
or any Paying Agent may in any instance require further proof with respect to
any of the matters referred to in this Section 1.4.

(e) The Company may set any day as the record date for the purpose of
determining the Holders entitled to give or take any request, demand,
authorization, direction, notice, consent, waiver or other action, or to vote on
any action, authorized or permitted by this Indenture to be given or taken by
Holders. Promptly and in any case not later than ten days after setting a record
date, the Company shall notify the Trustee, each Paying Agent and the Holders of
such record date. If not set by the Company prior to the first solicitation of a
Holder made by any Person in respect of any such action, or, in the case of any
such vote, prior to such vote, the record date for any such action or vote shall
be the 30th day (or, if later, the date of the most recent list of Holders
required to be provided pursuant to

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<PAGE> 25
Section 15.1) prior to such first solicitation or vote, as the case may be. With
regard to any record date, the Holders on such date (or their duly appointed
agents or proxies), and only such Persons, shall be entitled to give or take, or
vote on, the relevant action, whether or not such Holders remain Holders after
such record date. Notwithstanding the foregoing, the Company shall not set a
record date for, and the provisions of this paragraph shall not apply with
respect to, any notice, declaration or direction referred to in the next
paragraph.

Upon receipt by the Trustee from any Holder of (i) any notice of default
or breach referred to in Section 5.1(3), if such default or breach has occurred
and is continuing and the Trustee shall not have given such a notice to the
Company, (ii) any declaration of acceleration referred to in Section 5.2, if an
Event of Default has occurred and is continuing and the Trustee shall not have
given such a declaration to the Company, or (iii) any direction referred to in
Section 5.12, if the Trustee shall not have taken the action specified in such
direction, then a record date shall automatically and without any action by the
Company or the Trustee be set for determining the Holders entitled to join in
such notice, declaration or direction, which record date shall be the close of
business on the tenth day (or, if such day is not a Business Day, the first
Business Day thereafter) following the day on which the Trustee receives such
notice, declaration or direction. Promptly after such receipt by the Trustee,
and as soon as practicable thereafter, the Trustee shall notify the Company and
the Holders of any such record date so fixed. The Holders on such record date
(or their duly appointed agents or proxies), and only such Persons, shall be
entitled to join in such notice, declaration or direction, whether or not such
Holders remain Holders after such record date; provided that, unless such
notice, declaration or direction shall have become effective by virtue of
Holders of the requisite principal amount of Securities on such record date (or
their duly appointed agents or proxies) having joined therein on or prior to the
90th day after such record date, such notice, declaration or direction shall
automatically and without any action by any Person be canceled and of no further
effect. Nothing in this paragraph shall be construed to prevent a Holder (or a
duly appointed agent or proxy thereof) from giving, before or after the
expiration of such 90-day period, a notice, declaration or direction contrary to
or different from, or, after the expiration of such period, identical to, the
notice, declaration or direction to which such record date relates, in which
event a new record date in respect thereof shall be set pursuant to this
paragraph. In addition, nothing in this paragraph shall be construed to render
ineffective any notice, declaration or direction of the type referred to in this
paragraph given at any time to the Trustee and the Company by Holders (or their
duly appointed agents or proxies) of the requisite principal amount of
Securities on the date such notice, declaration or direction is so given.

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

(g) The provisions of this Section 1.4 are subject to the provisions of
Section 9.5.

SECTION 1.5. Notices, Etc., to Trustee and Company.

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<PAGE> 26
Any request, demand, authorization, direction, notice, consent, election,
waiver or Act of Holders of Securities or other document provided or permitted
by this Indenture to be made upon, given or furnished to, or filed with,

(1) the Trustee or the Paying Agent in New York, New York or the
Paying Agent in Luxembourg by any Holder of Securities or by the Company
shall be sufficient for every purpose hereunder if made, given, furnished
or filed in writing to or with the Trustee and received at its Corporate
Trust Office, 31 West 52nd Street 9th Floor, New York, New York 10019,
Attention: Corporate Trust Department -The Vantive Corporation (facsimile
number (212) 469-8979), or to or with the Paying Agent in Luxembourg and
received at 14 Boulevard Royal, L-2449 Luxembourg, Attention:
International Department (facsimile number: (352) 46 26 68). In addition,
a courtesy copy shall be sent to Trustee's counsel (which shall not
constitute notice to the Trustee): Ziegler, Ziegler & Altman, 750
Lexington Avenue, New York, New York 10022 (facsimile number (212)
319-7605), Attention: Scott A Ziegler, Esq., or

(2) the Company by the Trustee or any Paying Agent or by any
Holder of Securities shall be sufficient for every purpose hereunder
(unless otherwise herein expressly provided) if in writing, mailed,
first-class postage prepaid, or telecopied and confirmed by mail,
first-class postage prepaid, or delivered by hand or overnight courier,
addressed to the Company at, The Vantive Corporation, 2455 Augustine
Drive, Santa Clara, California 95054 (facsimile number: (408) 982-5710),
Attention: Chief Financial Officer, or at any other address previously
furnished in writing to the Trustee by the Company. In addition, a
courtesy copy shall be sent to Company's counsel (which shall not
constitute notice to the Company): Gray Care Ware & Freidenrich, 400
Hamilton Avenue, Palo Alto, California 94301 (facsimile number (650)
327-3699), Attention: Gregory M. Gallo, Esq. and if relating to a
conversion notice as described in Section 2.2, with a copy to Company's
common stock transfer agent, Harris Trust and Savings Bank, 311 West
Monroe St., 11th Floor, P.O. Box 755, Chicago, Illinois 60690.

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

SECTION 1.6. Notice to Holders of Securities; Waiver.

Except as otherwise expressly provided herein, where this Indenture
provides for notice to Holders of Securities of any event, such notice shall be
sufficiently given to Holders of Securities if in writing and mailed,
first-class postage prepaid, to each Holder of a Security affected by such
event, at the address of such Holder as it appears in the Note Register, not
earlier than the earliest date and not later than the latest date prescribed for
the giving of such notice. Such notice shall be conclusively deemed to have been
given and received by Holders when such notice is mailed, whether or not such
Holder receives such notice.

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<PAGE> 27
In any case where notice to Holders of Securities is given by mail,
neither the failure to mail such notice, nor any defect in any notice so mailed,
to any particular Holder of a Security shall affect the sufficiency of such
notice with respect to other Holders of Securities given as provided above. In
case by reason of the suspension of or irregularities in regular mail service or
by reason of any other cause it shall be impracticable to give such notice by
mail, then such notification to Holders of Securities as shall be made with the
approval of the Trustee, which approval shall not be unreasonably withheld,
shall constitute a sufficient notification to such Holders for every purpose
hereunder.

Where this Indenture provides for notice in any manner, such notice may be
waived in writing by the Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Holders of Securities shall be filed with the Trustee, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.

SECTION 1.7. Effect of Headings and Table of Contents.

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

SECTION 1.8. Successors and Assigns.

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

SECTION 1.9. Separability Clause.

In case any provision in this Indenture or 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 1.10. Benefits of Indenture.

Except as provided in the next sentence, nothing in this Indenture or in
the Securities, express or implied, shall give to any Person, other than the
parties hereto and their successors and assigns hereunder and the Holders of
Securities, any benefit or legal or equitable right, remedy or claim under this
Indenture. The provisions of Article Thirteen are intended to be for the benefit
of, and shall be enforceable directly by, the holders of Senior Indebtedness of
the Company.

SECTION 1.11. Governing Law.

THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, THE

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<PAGE> 28
UNITED STATES OF AMERICA, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS.

SECTION 1.12. Legal Holidays.

In any case where any Interest Payment Date, Redemption Date, Repurchase
Date or Stated Maturity of any Security or the last day on which a Holder of a
Security has a right to convert his Security shall not be a Business Day at any
Place of Payment or Place of Conversion, as the case may be, then
(notwithstanding any other provision of this Indenture or of the Securities)
payment of interest or principal and premium, if any, or delivery for conversion
of such Security need not be made at such Place of Payment or Place of
Conversion, as the case may be, on or by such day, but may be made on or by the
next succeeding Business Day at such Place of Payment or Place of Conversion, as
the case may be, with the same force and effect as if made on the Interest
Payment Date, Redemption Date or Repurchase Date, or at the Stated Maturity or
by such last day for conversion; provided, however, that in the case that
payment is made on such succeeding Business Day, no interest shall accrue on the
amount so payable for the period from and after such Interest Payment Date,
Redemption Date, Repurchase Date, Stated Maturity or last day for conversion, as
the case may be.

SECTION 1.13. Conflict with Trust Indenture Act.

If any provision hereof limits, qualifies or conflicts with a provision of
the Trust Indenture Act that is required under the Trust Indenture Act to be a
part of and to govern this Indenture, the latter provision shall control. If any
provision of this Indenture modifies or excludes any provision of the Trust
Indenture Act that may be so modified or excluded, the latter provision shall be
deemed to apply to this Indenture as so modified or to be excluded, as the case
may be. Until such time as this Indenture shall be qualified under the Trust
Indenture Act, this Indenture, the Company and the Trustee shall be deemed for
all purposes hereof to be subject to and governed by the Trust Indenture Act to
the same extent as would be the case if this Indenture were so qualified on the
date hereof.

SECTION 1.14. Jurisdiction.

(a) The Company hereby irrevocably and unconditionally submits to the
non-exclusive jurisdiction of any New York State or United States Federal court
sitting in New York City over any suit, action or proceeding arising out of or
relating to this Indenture or any Security. The Company irrevocably and
unconditionally waives, to the fullest extent permitted by law, any objection
which it may now or hereafter have to the laying of the venue of any such suit,
action or proceeding brought in such a court and any claim that any such suit,
action or proceeding brought in such a court has been brought in an inconvenient
forum. To the extent that the Company has or hereafter may acquire any immunity
from jurisdiction of any court or from any legal process with respect to itself
or its property, the Company irrevocably waives such immunity in respect of its
obligations under the Indenture or any Security. The Company agrees that final
judgment in any such suit, action or proceeding brought in such a court shall be
conclusive and binding upon the Company, and, to the extent permitted by
applicable law, may be enforced in any court to the jurisdiction of which the
Company is subject by a suit upon such judgment

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<PAGE> 29
or in any manner provided by law; provided that service of process is effected
upon the Company in the manner specified in the following subsection or as
otherwise permitted by law.

(b) As long as any of the Securities remain outstanding, the Company
will at all times have an authorized agent in New York City, upon whom process
may be served in any legal action or proceeding arising out of or relating to
this Indenture or any Security. Service of process upon such agent and written
notice of such service mailed or delivered to the Company shall to the fullest
extent permitted by law be deemed in every respect effective service of process
upon the Company in any such legal action or proceeding. The Company hereby
irrevocably appoints the CT Corporation System, 1633 Broadway, New York, New
York 10019 as its agent for such purpose, and covenants and agrees that service
of process in any suit, action or proceeding may be made upon it at such office
of such agent. Notwithstanding the foregoing, the Company may, with prior
written notice to the Trustee, terminate the appointment of such agent and
appoint another agent for the above purposes so that the Company shall at all
times have an agent for the above purposes in New York City.

SECTION 1.15. Indenture and Securities Solely Corporate Obligations.

No recourse for the payment of the principal of or premium, if any, or
interest on any Security and no recourse under or upon any obligation, covenant
or agreement of the Company in this Indenture or in any supplemental indenture
or in any Security, or because of the creation of any indebtedness represented
thereby, shall be had against any incorporator, stockholder, employee, agent,
officer, or director or subsidiary, as such, past, present or future, of the
Company or of any successor corporation, whether by virtue of any constitution,
statute or rule of law, or by the enforcement of any assessment or penalty or
otherwise; it being expressly understood that all such liability is hereby
waived and released as a condition of, and as a consideration for, the execution
of this Indenture and the issue of the Securities.

SECTION 1.16. Luxembourg Obligations.

Any obligation of the Company under this Indenture (i) to maintain a
Conversion Agent, Paying Agent or Note Registrar in Luxembourg, (ii) to maintain
an office for payment and conversion of the Securities in Luxembourg pursuant to
Section 10.2, (iii) to publish notice of the occurrence of certain events under
this Indenture in Luxembourg or (iv) to take any other action under this
Indenture that is specifically required to be taken in Luxembourg (the
"Luxembourg Obligations") shall cease to exist, and any of the provisions in
this Indenture regarding such Luxembourg Obligations shall no longer have any
force or effect, if at any time the Securities are either no longer listed on
the Luxembourg Stock Exchange or such obligation is no longer required by the
Luxembourg Stock Exchange.

ARTICLE TWO

SECURITY FORMS

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<PAGE> 30
SECTION 2.1. Forms Generally.

The Securities shall be in substantially the forms set forth in this
Article, with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the Securities Act
and the Exchange Act, applicable state securities law or the rules of any
securities exchange, the Code, and the treasury regulations under the Code, or
as may, consistently herewith, be determined by the Officers executing such
Securities, as evidenced by their execution thereof.

The Assignment Form and Certificate of Transfer shall be in substantially
the form set forth in Section 2.3.

The Election of Holder to Require Repurchase Form shall be substantially
in the form set forth in Section 2.4. The Conversion Notice shall be in
substantially the form set forth in Section 2.5. The Trustee's certificate of
authentication shall be in substantially the form set forth in Section 2.6.

The Securities may be printed, lithographed, typewritten, mimeographed or
otherwise produced, as determined by the Officers executing such Security, as
evidenced by their execution thereof.

SECTION 2.2. Form of Security.

[For Global Security only:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (THE
"DEPOSITARY," WHICH TERM INCLUDES ANY SUCCESSOR DEPOSITARY FOR THE CERTIFICATES)
TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DEPOSITARY AND ANY
PAYMENT HEREON IS MADE TO CEDE & CO. (OR TO SUCH OTHER ENTITY AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), ANY TRANSFER, PLEDGE, OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]

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<PAGE> 31
OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) ("INSTITUTIONAL ACCREDITED
INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THE SECURITY
EVIDENCED HEREBY IN AN OFFSHORE TRANSACTION; (2) AGREES THAT IT WILL NOT, PRIOR
TO EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY
EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR
PROVISION), RESELL OR OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY OR THE
COMMON STOCK ISSUABLE UPON CONVERSION OF SUCH SECURITY EXCEPT (A) TO THE VANTIVE
CORPORATION OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES
ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT,
PRIOR TO SUCH TRANSFER, FURNISHES TO DEUTSCHE BANK AG, NEW YORK BRANCH, AS
TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE), A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER
OF THE SECURITY EVIDENCED HEREBY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM
SUCH TRUSTEE OR A SUCCESSOR TRUSTEE, AS APPLICABLE), (D) OUTSIDE THE UNITED
STATES IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT TO THE
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE) OR (F) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT (AND WHICH CONTINUES TO BE EFFECTIVE AT THE
TIME OF SUCH TRANSFER); (3) PRIOR TO SUCH TRANSFER (OTHER THAN A TRANSFER
PURSUANT TO CLAUSE 2(F) ABOVE), IT WILL FURNISH TO DEUTSCHE BANK AG, NEW YORK
BRANCH, AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE), SUCH CERTIFICATIONS,
LEGAL OPINIONS OR OTHER INFORMATION AS IT MAY REASONABLY REQUIRE TO CONFIRM THAT
SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (4)
AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE SECURITY EVIDENCED HEREBY
IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN
CONNECTION WITH ANY TRANSFER OF THE SECURITY EVIDENCED HEREBY PRIOR TO THE
EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED
HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION),
THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF
RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO DEUTSCHE
BANK AG, NEW YORK BRANCH, AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE). IF
THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR OR A PURCHASER
WHO IS NOT A U.S. PERSON, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO
DEUTSCHE BANK AG, NEW YORK BRANCH, AS TRUSTEE (OR A

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<PAGE> 32
SUCCESSOR TRUSTEE, AS APPLICABLE), SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER
INFORMATION AS IT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING
MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE REMOVED
UPON THE EARLIER OF THE TRANSFER OF THE SECURITY EVIDENCED HEREBY PURSUANT TO
CLAUSE 2(F) ABOVE OR UPON ANY TRANSFER OF THE SECURITIES EVIDENCED HEREBY UNDER
RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION). AS USED
HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE
THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.

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<PAGE> 33
THE VANTIVE CORPORATION

4.75% CONVERTIBLE SUBORDINATED NOTE DUE 2002

No. _____________ U.S.$_____
CUSIP NO. __________

The Vantive Corporation, a Delaware corporation (herein called the
"Company", which term includes any successor Person under the Indenture referred
to on the reverse hereof), for value received, hereby promises to pay to
_______________, or registered assigns (the "Holder"), the principal sum of
_____________ United States Dollars (U.S.$_____) [(which amount may from time to
time be increased or decreased to such other principal amounts (which, taken
together with the principal amounts of all other Outstanding Securities, shall
not exceed $69,000,000 in the aggregate at any time) by adjustments made on the
records of the Trustee, as Custodian of the Depositary, in accordance with the
rules and procedures of the Depositary)](1) on September 1, 2002 and to pay
interest thereon, from August 21, 1997, or from the most recent Interest Payment
Date (as defined below) to which interest has been paid or duly provided for,
semi-annually in arrears on March 1 and September 1 in each year (each, an
"Interest Payment Date"), commencing March 1, 1998, at the rate of 4.75% per
annum (together with any Additional Amounts and Liquidated Damages that the
Company may be required to pay) until the principal hereof is due, and at a rate
of 4.75% per annum on any overdue principal and premium, if any, and, to the
extent permitted by law, on any overdue interest.

The interest so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in the Indenture, be paid to the Person
in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, which shall be the February 15 or August 15 (whether or not a Business
Day), as the case may be, next preceding such Interest Payment Date. Except as
otherwise provided in the Indenture, any such interest not so punctually paid or
duly provided for ("Defaulted Interest") will forthwith cease to be payable to
the Holder on such Regular Record Date and may either be paid to the Person in
whose name this Security (or one or more Predecessor Securities) is registered
at the close of business on a Special Record Date for the payment of such
Defaulted Interest to be fixed by the Company, notice whereof shall be given to
Holders of Securities not less than 10 days prior to such Special Record Date,
or be paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Securities may be listed,
and upon such notice as may be required by such exchange, all as more fully
provided in the Indenture. Payments of principal shall be made upon the
surrender of this Security at the office of the Trustee in the Borough of
Manhattan, The City of New York or, subject to the right of the Company to
terminate such appointment, the Paying Agent in Luxembourg, or at such other
office or agency of the Company as may be designated by it for such purpose in
the Borough of Manhattan, The City of New York or Luxembourg in such coin or
currency of the United States of

- --------
(1) This language shall appear on each Global Security.

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<PAGE> 34
America as at the time of payment shall be legal tender for the payment of
public and private debts, or at such other offices or agencies as the Company
may designate, by United States Dollar check drawn on a bank in the United
States, or transfer to a United States Dollar account (such a transfer to be
made only to a Holder of an aggregate principal amount of Securities in excess
of U.S. $2,000,000, and only if such Holder shall have furnished wire
instructions in writing to the Trustee no later than 15 days prior to the
relevant payment date) maintained by the Holder with a bank in the United
States. Payment of interest on this Security may be made by United States Dollar
check mailed to the address of the Person entitled thereto as such address shall
appear in the Note Register, or, upon written application by the Holder to the
Note Registrar setting forth wire instructions not later than the relevant
Record Date, by transfer to a United States Dollar account (such a transfer to
be made only to a Holder of an aggregate principal amount of Securities in
excess of U.S.$2,000,000 and only if such Holder shall have furnished wire
instructions in writing to the Trustee no later than 15 days prior to the
relevant payment date) maintained by the Holder with a bank in the United
States.

The Company and the Holder intend that all interest on this Security shall
qualify as portfolio interest within the meaning of Sections 871(h) and 881(c)
of the Code, including the provisions relating to registered obligations.

The Company will pay to the Holder of this Security who is a Non-U.S.
Holder such additional amounts ("Additional Amounts") as may be necessary in
order that every net payment of the principal of, premium, if any, and interest
on this Security (including payment on redemption or repurchase), after
deduction or withholding for or on account of any present or future tax,
assessment or governmental charge imposed upon or as a result of such payment to
the United States of America or any political subdivision or taxing authority
thereof or therein (each, a "Taxing Jurisdiction"), will not be less than the
amount provided for in this Security to be then due and payable; provided,
however, that the Company shall not be obligated to pay any Additional Amounts
in respect of payments becoming due on the Securities more than 15 days after
the Redemption Date with respect to any redemption of the Tax Affected
Securities pursuant to the fourth paragraph of the reverse of this Security to
the extent that the Company's obligation to pay such Additional Amounts arises
from the Tax Law Change that resulted in such redemption; and provided, further,
that the foregoing obligation to pay Additional Amounts will not apply to:

(a) any tax, assessment or other governmental charge which would
not have been so imposed but for (i) the existence of any present or
former connection between such Non-U.S. Holder (or between a fiduciary,
settlor, beneficiary, member, shareholder of or possessor of a power over
such Non-U.S. Holder, if such Non-U.S. Holder is an estate, a trust, a
partnership or a corporation) and the Taxing Jurisdiction, including,
without limitation, such Non-U.S. Holder (or such fiduciary, settlor,
beneficiary, member, shareholder or possessor) being or having been a
citizen, domiciliary or resident of the United States of America or
treated as a resident thereof, or being or having been engaged in trade or
business or present therein, or having or having had a permanent
establishment therein or (ii) such Non-U.S. Holder's present or former
status as a personal holding company, a foreign personal holding company
with respect to the United States, a controlled foreign corporation, a
passive foreign investment company, or a

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<PAGE> 35
foreign private foundation or foreign tax exempt entity for United States
federal tax purposes, or a corporation which accumulates earnings to avoid
United States federal income tax;

(b) any tax, assessment or other governmental charge which would
not have been so imposed but for the presentation by the Non-U.S. Holder
of this Security for payment on a date more than 15 days after the date on
which such payment became due and payable or the date on which payment
thereof is duly provided for, whichever occurs later;

(d) any tax, assessment or other governmental charge which would
not have been imposed but for the failure to comply with any
certification, identification or other reporting requirement concerning
the nationality, residence, identity or connection with the United States
of such Non-U.S. Holder (or beneficial owner of such Security), if
compliance is required or imposed by a statute, treaty, regulation or
administrative practice of the United States as a precondition to
exemption from all or part of such tax, assessment or other governmental
charge;

(e) any tax, assessment or other governmental charge which is
payable otherwise than by deduction or withholding from payments of
principal of, premium, if any, or interest on such Security:

(f) any tax, assessment or other governmental charge imposed on
interest received by a Non-U.S. Holder actually or constructively holding
10% or more of the total combined voting power of all classes of stock of
the Company entitled to vote;

(g) any tax, assessment or other governmental charge imposed on a
Non-U.S. Holder that is a partnership or a fiduciary or other than the
sole beneficial owner of such payment, but only to the extent that any
beneficial owner or member of the partnership or beneficiary or settlor
with respect to the fiduciary would not have been entitled to the payment
of Additional Amounts had the beneficial owner, member, beneficiary or
settlor directly been the Holder of this Security; or

(h) any combination of items (a), (b), (c), (d), (e), (f) and (g).

Except as specifically provided herein and in the Indenture, the Company
shall not be required to make any payment with respect to any tax, assessment or
other governmental charge imposed by any government or any political subdivision
or taxing authority thereof or therein. Whenever in this Security there is a
reference, in any context, to the payment of the principal of, premium, if any,
or interest on, or in respect of, any Security, such mention shall be deemed to
include mention of the payment of Additional Amounts payable as described in the
preceding paragraph to the extent that, in such context, Additional Amounts are,
were or would be payable in respect of such Security and express mention of the
payment of Additional Amounts (if applicable) in any provisions of this Security
shall not be construed as

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<PAGE> 36
excluding Additional Amounts in those provisions of this Security where such
express mention is not made.

Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place. Capitalized terms used
herein, including on the reverse hereof, and not defined herein or on the
reverse hereof shall have the respective meanings given to such terms in the
Indenture.

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

IN WITNESS WHEREOF, the Company has caused this Security to be signed
manually or by facsimile by its duly authorized officers and by its corporate
seal to be affixed or imported thereon.

Dated:

The Vantive Corporation

[seal]

By: _____________________________________
Name:
Title:

Attest

By:_______________________

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<PAGE> 37
[FORM OF REVERSE]

This Security is one of a duly authorized issue of securities of the
Company designated as its "4.75% Convertible Subordinated Notes due 2002"
(herein called the "Securities"), limited in aggregate principal amount to U.S.
$69,000,000, issued and to be issued under and pursuant to an Indenture, dated
as of August 15, 1997 (herein called the "Indenture"), between the Company and
Deutsche Bank AG, New York Branch, Trustee (herein called the "Trustee", which
term includes any successor trustee under the Indenture), to which Indenture and
all indentures supplemental thereto reference is hereby made for a statement of
the respective rights, limitations of rights, duties and immunities thereunder
of the Company, the Trustee, the holders of Senior Indebtedness of the Company
and the Holders of the Securities and of the terms upon which the Securities
are, and are to be, authenticated and delivered. The Securities are issuable in
the denomination of U.S.$1,000 and integral multiples thereof. As provided in
the Indenture and subject to the limitations therein set forth, the Securities
are exchangeable (a) at the office of the Trustee, or at such other office or
agency of the Company as may be designated by it for such purpose in The City of
New York or (b) so long as the Securities are listed on the Luxembourg Stock
Exchange and the rules of the Luxembourg Stock Exchange shall so require (and to
the right of the Company to terminate the appointment of any Note Registrar (as
defined below)), the office of Banque de Luxembourg, International Department,
14 Boulevard Royal, L-2449 Luxembourg, or at such other offices or agencies
outside the United States as the Company may designate (each a "Note
Registrar").

No sinking fund is provided for the Securities. The Securities will not be
redeemable at the option of the Company prior to September 6, 2000. At any time
on or after September 6, 2000, and prior to maturity, the Securities are subject
to redemption at the option of the Company at any time, in whole or in part, at
the following Redemption Prices (expressed as percentages of the principal
amount) upon not less than 20 nor more than 60 days' notice to the Holders prior
to the Redemption Date.

If redeemed during the 12-month period beginning September 1 (beginning
September 6, 2000 and ending August 31, 2001, in the case of the first such
period);

Year Redemption Price
---- ----------------
2000 101.90%
2001 100.95

and 100% at September 1, 2002, together, in each case, with accrued interest to,
but excluding, the Redemption Date; provided that Securities that are Tax
Affected Securities are also redeemable, in whole but not in part, under the
circumstances described in the next succeeding paragraph, at a Redemption Price
equal to 100% of the principal amount thereof plus interest accrued to, but
excluding, the Redemption Date; provided, however, that interest installments on
Securities whose Stated Maturity is on or prior to such Redemption Date will be
payable to the Holders of such Securities, or one or more Predecessor
Securities, of record at the close of business on the relevant Record Dates
referred to on the face hereof, all as provided in the Indenture.

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<PAGE> 38
If the Company determines that, principally as a result of a Tax Law
Change, the Company is or would become obligated to pay Additional Amounts to
the Holder of any Security, as described in the third paragraph of the face of
this Security, and such obligation cannot be avoided by the Company taking
reasonable measures available to it, then the Company may, at its option, redeem
the Tax Affected Securities in whole, but not in part, at any time, on giving
not less than 20 days' notice to the Holders prior to the Redemption Date, at a
Redemption Price equal to 100% of the principal amount plus interest accrued to,
but excluding, the Redemption Date, and any Additional Amounts then payable;
provided, that no such notice of redemption shall be given earlier than 90 days
prior to the earliest date on which the Company would be obligated to pay any
such Additional Amounts were a payment in respect of the Tax Affected Securities
then made. Prior to the giving of any notice of redemption pursuant to this
paragraph, the Company shall deliver to the Trustee (a) an Officers' Certificate
stating that the Company is entitled to effect such redemption and setting forth
a statement of facts showing that the conditions precedent to the right of the
Company so to redeem have occurred and (b) an Opinion of Counsel of recognized
standing selected by the Company to the effect that the circumstances referred
to above in this paragraph exist. The Trustee shall accept such opinion as
sufficient evidence of the satisfaction of the conditions precedent described
above, in which event it shall be conclusive and binding on the Holders. The
Company's right to redeem the Tax Affected Securities shall continue as long as
the Company is obligated to pay such Additional Amounts, notwithstanding that
the Company shall have made payments of Additional Amounts specified in such
third paragraph.

In the event of a redemption of less than all of the Securities, the
Company will not be required (a) to register the transfer or exchange of
Securities for a period of 15 days immediately preceding the date notice is
given identifying the serial numbers of the Securities called for such
redemption or (b) to register the transfer or exchange of any Security, or
portion thereof, called for redemption.

In any case where the due date for the payment of the principal or
premium, if any, or interest, including Additional Amounts and Liquidated
Damages on, any Security or the last day on which a Holder of a Security has a
right to convert his Security shall be, at any Place of Payment or Place of
Conversion, as the case may be, a day on which banking institutions at such
Place of Payment or Place of Conversion are authorized or obligated by law or
executive order to close, then payment of principal, premium, if any, or
interest, including Additional Amounts and Liquidated Damages, or delivery for
conversion of such Security need not be made on or by such date at such place
but may be made on or by the next succeeding day at such place which is not a
day on which banking institutions are authorized or obligated by law or
executive order to close, with the same force and effect as if made on the date
for such payment or the date fixed for redemption or repurchase, or by such last
day for conversion, and no interest shall accrue on the amount so payable for
the period after such date.

Subject to and upon compliance with the provisions of the Indenture, the
Holder of this Security is entitled, at his option, at any time prior to the
close of business on September 1, 2002, or in case this Security or a portion
hereof is called for redemption or the Holder hereof has exercised his right to
require the Company to repurchase this Security, or such portion hereof, then in
respect of this Security until and including, but (unless the Company defaults
in making the payment due upon redemption or repurchase, as the case may be) not
after, the close of business on the Business Day next preceding the

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<PAGE> 39
Redemption Date or the Repurchase Date, as the case may be, to convert this
Security (or any portion of the principal amount hereof that is an integral
multiple of U.S.$1,000, provided that the unconverted portion of such principal
amount is U.S.$1,000 or any integral multiple thereof) into fully paid and
nonassessable Common Stock of the Company at an initial Conversion Price of U.S.
$41.93 for each share of Common Stock (or at the then current adjusted
Conversion Price if an adjustment has been made as provided in the Indenture).

In order to convert such Security, a Holder must surrender this Security,
duly endorsed or assigned to the Company or in blank and, in case such surrender
shall be made during the period from the close of business of any Regular Record
Date next preceding any Interest Payment Date to the opening of business on such
Interest Payment Date ("Interest Period") (except Securities called for
redemption on a Redemption Date or to be repurchased on a Repurchase Date
during, in each case, such Interest Period), also accompanied by payment in New
York Clearing House or other funds acceptable to the Company of an amount equal
to the interest payable on such Interest Payment Date on the principal amount of
this Security then being converted, and also the conversion notice hereon duly
executed, to the Company at the office of the Trustee in the Borough of
Manhattan, The City of New York or the Conversion Agent in Luxembourg, or at
such other office or agency of the Company, subject to any laws or regulations
applicable thereto and subject to the right of the Company to terminate the
appointment of any Conversion Agent (as defined below) as may be designated by
it for such purpose in the Borough of Manhattan, The City of New York, New York
or Luxembourg, or at such other offices or agencies as the Company may designate
(each a "Conversion Agent"), provided further, that if this Security or portion
hereof has been called for redemption on a Redemption Date or is repurchasable
on a Repurchase Date occurring, in either case, during the Interest Period and
is surrendered for conversion during such Interest Period, then the Holder of
this Security who converts this Security or a portion hereof during such
Interest Period will be entitled to receive the interest accruing hereon from
the Interest Payment Date next preceding the date of such conversion to such
succeeding Interest Payment Date and shall not be required to pay such interest
upon surrender of this Security for conversion. Subject to the aforesaid
requirement for payment and, in the case of a conversion after the Regular
Record Date next preceding any Interest Payment Date and on or before such
Interest Payment Date, to the right of the Holder of this Security (or any
Predecessor Security) of record at such Regular Record Date to receive an
installment of interest, no cash payment or adjustment is to be made on
conversion, if the date of conversion is not an Interest Payment Date, for
interest accrued hereon from the Interest Payment Date next preceding the date
of conversion, or for dividends on the Common Stock issued on conversion hereof.
The Company shall thereafter deliver to the Holder the fixed number of shares of
Common Stock (together with any cash adjustment, as provided in the Indenture)
into which this Security is convertible and such delivery will be deemed to
satisfy the Company's obligation to pay the principal amount of this Security.
No fractions of shares or scrip representing fractions of shares will be issued
on conversion, but instead of any fractional interest (calculated to the nearest
1/100th of a share) the Company shall pay a cash adjustment as provided in the
Indenture. The Conversion Price is subject to adjustment as provided in the
Indenture. In addition, the Indenture provides that in case of certain
consolidations or mergers to which the Company is a party (other than a
consolidation or merger which does not result in any reclassification,
conversion, exchange or cancellation of the Common Stock) or the transfer of all
or substantially all of the property and assets of the Company, the Indenture
shall be amended, without the

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<PAGE> 40
consent of any Holders of Securities, so that this Security, if then
Outstanding, will be convertible thereafter, during the period this Security
shall be convertible as specified above, only into the kind and amount of
securities, cash and other property receivable upon such consolidation, merger
or transfer by a holder of the number of shares of Common Stock of the Company
into which this Security could have been converted immediately prior to such
consolidation, merger or transfer (assuming such holder of Common Stock is not a
Constituent Person and failed to exercise any rights of election and received
per share the kind and amount received per share by a plurality of Non-electing
Shares). No adjustment in the Conversion Price will be made until such
adjustment would require an increase or decrease of at least one percent of such
price, provided that any adjustment that would otherwise be made will be carried
forward and taken into account in the computation of any subsequent adjustment.

Subject to certain limitations in the Indenture, at any time when the
Company is not subject to Section 13 or 15(d) of the United States Securities
Exchange Act of 1934, as amended, upon the request of a Holder of a Restricted
Security or the holder of Common Stock issued upon conversion thereof, the
Company will promptly furnish or cause to be furnished Rule 144A Information to
such Holder of Restricted Securities or such holder of Common Stock issued upon
conversion of Restricted Securities, or to a prospective purchaser of any such
security designated by any such Holder or holder, as the case may be, to the
extent required to permit compliance by such Holder or holder with Rule 144A
under the Securities Act in connection with the resale of any such security.

The Holder of this Security and the Common Stock issuable upon conversion
thereof is entitled to the benefits of a Registration Rights Agreement (subject
to the provisions thereof), dated as of August 14, 1997, between the Company and
the Initial Purchasers.

If a Fundamental Change (as defined in the Indenture) occurs at any time
on or prior to September 1, 2002, each Holder shall have the right, at such
Holder's option, to require the Company to repurchase all of such Holder's
Securities (or any portion of such Securities that is $1,000 or an integral
multiple of $1,000 in excess thereof) on the 45th day after notice thereof. Such
payment shall be made at the following Repurchase Prices (expressed as
percentages of the principal amount thereof) in the event of a Fundamental
Change occurring during the 12-month period beginning September 1:

Year Percentage
---- ----------
1997 104.75%
1998 103.80
1999 102.85
2000 101.90
2001 100.95

and 100% at September 1, 2002; provided in each case that if the Applicable
Price (as defined in the Indenture) is less than the Reference Market Price (as
defined in the Indenture), the Company shall repurchase such Securities at a
price equal to the foregoing Repurchase Price multiplied by the fraction
obtained by dividing the Applicable Price by the Reference Market Price. In each
case, the Company shall also pay accrued interest, if any, on such Securities
to, but excluding the Repurchase Date; provided that if such Repurchase Date is
March 1 or September 1, then the interest payable on such date shall be

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<PAGE> 41
paid to the Holder of record of the Securities on the Regular Record Date.
Whenever in this Security there is a reference, in any context, to the principal
of any Security as of any time, such reference shall be deemed to include
reference to the Repurchase Price payable in respect of such Security to the
extent that such Repurchase Price is, was or would be so payable at such time,
and express mention of the Repurchase Price in any provision of this Security
shall not be construed as excluding the Repurchase Price in those provisions of
this Security when such express mention is not made.

[The following paragraph shall appear in each Security that is not a
Global Security:

In the event of redemption, repurchase or conversion of this Security in
part only, a new Security or Securities for the unredeemed, unrepurchased or
unconverted portion hereof will be issued in the name of the Holder hereof.]

[The following paragraph shall appear in the Global Security:

In the event of a deposit or withdrawal of an interest in this Security,
including an exchange, transfer, redemption, repurchase or conversion of this
Security in part only, the Trustee, as Custodian of the Depositary, shall make
an adjustment on its records to reflect such deposit or withdrawal in accordance
with the rules and procedures of the Depositary.]

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

If an Event of Default (as defined in the Indenture) shall occur and be
continuing, the principal of all the Securities, together with accrued interest
to the date of declaration, may be declared due and payable in the manner and
with the effect provided in the Indenture. Upon payment (i) of the amount of
principal so declared due and payable, together with accrued interest premium,
if any, Additional Amounts, if any, and Liquidated Damages, if any, to the date
of declaration, and (ii) of interest on any overdue principal and overdue
interest, to the extent permitted by law, all of the Company's obligations in
respect of the payment of the principal of and interest on the Securities shall
terminate.

The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities under the Indenture at
any time by the Company and the Trustee with either (a) the written consent of
the Holders of not less than a majority in aggregate principal amount of the
Securities at the time Outstanding (as defined in the Indenture), or (b) by the
adoption of a resolution, at a meeting of Holders of the Outstanding Securities
at which a quorum is present, by the Holders of at least the lesser

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<PAGE> 42
of (i) a majority in aggregate principal amount of the Securities at the time
Outstanding and (ii) 66-2/3% in aggregate principal amount of the Outstanding
Securities represented and entitled to vote at such meeting. The Indenture also
contains provisions permitting the Holders of specified percentages in aggregate
principal amount of the Securities at the time Outstanding, on behalf of the
Holders of all the Securities, to waive compliance by the Company with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Security
shall be conclusive and binding upon such Holder and upon all future Holders of
this Security and of any Successor Security to this Security, whether or not
notation of such consent or waiver is made upon this Security or such Successor
Security.

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

No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of, premium, if any, and
interest on (including Additional Amounts and Liquidated Damages, as described
herein) this Security at the times, places and rate, and in the coin or
currency, herein prescribed or to convert this Security as provided in the
Indenture.

As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of Securities is registrable on the Note Register (as
defined in the Indenture) upon surrender of a Security for registration of
transfer (a) at the Corporate Trust Office of the Trustee or at such other
office or agency of the Company as may be designated by it for such purpose in
the Borough of Manhattan, The City of New York, (b) so long as the Securities
are listed on the Luxembourg Stock Exchange and the rules of the Luxembourg
Stock Exchange shall so require, the office of Banque de Luxembourg in
Luxembourg or (c) subject to any laws or regulations applicable thereto and to
the right of the Company to terminate the appointment of any Note Registrar, at
the offices of the Note Registrars described herein or at such other offices or
agencies as the Company may designate, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Company and the Note
Registrar duly executed by, the Holder thereof or his attorney duly authorized
in writing, and thereupon one or more new Securities, of authorized
denominations and for the same aggregate principal amount, will be issued to the
designated transferee or transferees by the Note Registrar. No service charge
shall be made for

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<PAGE> 43
any such registration of transfer or exchange, but the Company may require
payment of a sum sufficient to recover any tax or other governmental charge
payable in connection therewith.

No recourse for the payment of the principal (and premium, if any) or
interest on this Security and no recourse under or upon any obligation, covenant
or agreement of the Company in the Indenture or any indenture supplemental
thereto or in any Security, or because of the creation of any indebtedness
represented thereby, shall be had against any incorporator, stockholder,
employee, agent, officer or director or subsidiary, as such, past, present or
future, of the Company or of any successor corporation, either directly or
through the Company or any successor corporation, whether by virtue of any
constitution, statute or rule of law or by the enforcement of any assessment or
penalty or otherwise, all such liability being, by the acceptance hereof and as
part of consideration for the issue hereof, expressly waived and released.

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

THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, UNITED STATES OF AMERICA,
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS.

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

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<PAGE> 44
SECTION 2.3. Assignment Form and Certificate of Transfer.

ASSIGNMENT FORM AND
CERTIFICATE OF TRANSFER

To assign this Security fill in the form below:

(I) or (we) assign and transfer this Security to

- --------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number, if any)

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)

and irrevocably appoint ______________ agent to transfer this Security on the
books of the Company. The agent may substitute another to act for him.

In connection with any transfer of any of the Securities within the period
prior to the expiration of the holding period applicable to the sales thereof
under Rule 144(k) (other than any transfer pursuant to a registration statement
that has been declared effective under the Securities Act of 1933, as amended
(the "Securities Act") (or any successor provision)), the undersigned confirms
that such Securities are being transferred:

CHECK ONE BOX BELOW

- to the Company or a subsidiary thereof; or

- pursuant to and in compliance with Rule 144A under the Securities
Act; or

- pursuant to and in compliance with Regulation S under the Securities
Act; or

- to an Institutional Accredited Investor pursuant to and in
compliance with the Securities Act; or

- pursuant to Rule 144 of the Securities Act;

and unless the box below is checked, the undersigned confirms that such
Securities are not being transferred to an "affiliate" of the Company as defined
in Rule 144 under the Securities Act (an "Affiliate").

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<PAGE> 45
- The transferee is an Affiliate of the Company.

Dated:____________________

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

---------------------------------
Signature(s)

Signature(s) must be guaranteed by a
commercial bank or trust company or a member
firm of a major stock exchange if shares of
Common Stock are to be issued, or Securities
to be delivered, other than to or in the
name of the registered Holder.

------------------------------
Signature Guarantee

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<PAGE> 46
SECTION 2.4. Form of Election of Holder to Require Repurchase.

ELECTION OF HOLDER TO REQUIRE REPURCHASE

1. Pursuant to Section 14.1 of the Indenture, the undersigned hereby
elects to have this Security repurchased by the Company.

2. The undersigned hereby directs the Company to pay it or
_______________ the Repurchase Price plus interest accrued to, but excluding,
the Repurchase Date, as provided in the Indenture.

Dated:___________________________ _________________________________________

_________________________________________
Signature(s) must be guaranteed by a
commercial bank or trust company or a
member firm of a major stock exchange if
shares of Common Stock are to be issued,
or Securities to be delivered, other than
to or in the name of the registered
Holder.

_________________________________________
Signature Guaranteed

Principal amount to be repurchased: ____________________

Remaining principal amount following such repurchase: ______________

NOTICE: The signature to the foregoing Election must correspond to the name as
written upon the face of this Security in every particular, without alteration
or any change whatsoever.

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<PAGE> 47
SECTION 2.5. Form of Conversion Notice.

CONVERSION NOTICE

The undersigned Holder of this Security hereby irrevocably exercises the
option to convert this Security, or any portion of the principal amount hereof
(which is an integral multiple of U.S.$1,000) below designated, into shares of
Common Stock of the Company in accordance with the terms of the Indenture
referred to in this Security, and directs that such shares, together with a
check in payment for any fractional shares and any Securities representing any
unconverted principal amount hereof, be delivered to and be registered in the
name of the undersigned unless a different name has been indicated below. If
shares of Common Stock or Securities are to be registered in the name of a
Person other than the undersigned, the undersigned will pay all transfer taxes
payable with respect thereto. Any amount required to be paid by the undersigned
on account of interest accompanies this Security.

Dated:_____________________________ _________________________________________

_________________________________________
Signature(s)

If shares or Securities are to be Signature(s) must be guaranteed by a
registered in the name of a commercial bank or trust company or a
Person other than the Holder, member firm of a major stock exchange if
please print such Person's name shares of Common Stock are to be issued,
and address: or Securities to be delivered, other
than to or in the name of the registered
Holder.

__________________________________
Name

_________________________________________
Signature Guaranteed

__________________________________
Address If only a portion of the Security is to
be converted, please indicate:

Principal amount to be converted:
__________________________________
Social Security or other Taxpayer
Identification Number, if any
U.S.$_____________________

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<PAGE> 48
SECTION 2.6. Form of Certificate of Authentication.

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

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

Dated: _______________

DEUTSCHE BANK AG, NEW YORK BRANCH
as Trustee

By: _____________________________________
Authorized Signatory

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<PAGE> 49
ARTICLE THREE

THE SECURITIES

SECTION 3.1. Title and Terms.

The aggregate principal amount of Securities which may be authenticated
and delivered under this Indenture is limited to U.S.$69,000,000, excluding for
the purposes of determining compliance with this limit the Securities
authenticated and delivered in exchange for, or in lieu of, other Securities
pursuant to Section 3.4, 3.5, 3.6, 8.5, 11.8, 12.2 or 14.2(e).

The Securities shall be known and designated as the "4.75% Convertible
Subordinated Notes due 2002" of the Company. Their Stated Maturity shall be
September 1, 2002 and they shall bear interest on their principal amount from
August 21, 1997, payable semi-annually in arrears on March 1 and September 1 in
each year, commencing March 1, 1998, at the rate of 4.75% (together with any
Additional Amounts and Liquidated Damages the Company may be required to pay)
until the principal thereof is due, and at the rate of 4.75% per annum on any
overdue principal and, to the extent permitted by law, on any overdue interest;
provided, however, that payments shall only be made on Business Days as provided
in Section 1.12.

The Securities are entitled to the benefits of registration rights as
provided by the Registration Rights Agreement.

The principal of, premium, if any, and interest on the Securities shall be
payable as provided in the form of Security set forth in Section 2.2 and the
Repurchase Price shall be payable at such places as are identified in the
Company Notice given pursuant to Section 14.2 (any city in which any Paying
Agent is located being herein called a "Place of Payment").

The Securities shall be redeemable at the option of the Company, in whole
or in part, and at the option of the Company or otherwise in the event of
certain developments, including, developments with respect to U.S. withholding
taxes or certification requirements, as provided in Article Eleven and in the
form of Security set forth in Section 2.2.

The Securities shall be convertible as provided in Article Twelve (any
city in which any Conversion Agent is located being herein called a "Place of
Conversion").

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

The Securities shall be subject to repurchase by the Company at the option
of the Holders as provided in Article Fourteen.

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<PAGE> 50
SECTION 3.2. Denominations.

The Securities shall be issuable without coupons in denominations of
U.S.$1,000 and integral multiples thereof.

SECTION 3.3. Execution, Authentication, Delivery and Dating.

The Securities shall be executed on behalf of the Company by its Chairman
of the Board, its Vice Chairman of the Board, its Chief Executive Officer, its
President or one of its Senior Vice Presidents or one of its Vice Presidents,
under a facsimile of its corporate seal reproduced thereon attested by its
Secretary or one of its Assistant Secretaries. Any such signature may be manual
or facsimile.

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

At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Securities executed by the Company to the
Trustee or to its order for authentication (or to the Paying Agent), together
with a Company Order for the authentication and delivery of such Securities, and
the Trustee or an Authenticating Agent in accordance with such Company Order
shall authenticate and make available for delivery such Securities as in this
Indenture provided and not otherwise. In connection with any Company Order for
authentication, an Officers' Certificate and Opinion of Counsel pursuant to
Section 1.2 shall be required.

Each Security shall be dated the date of its authentication.

In authenticating the Securities and in accepting the additional
responsibilities under the Indenture in relation to such Securities, the Trustee
shall be entitled to receive and shall be fully protected in relying upon, an
Opinion of Counsel stating that:

(a) the form or forms of such Securities have been established in
conformity with the provisions of this Indenture;

(b) the terms of such Securities have been established in
conformity with the provisions of this Indenture;

(c) such Securities, when completed by appropriate insertions and
executed and delivered by the Company to the Trustee for authentication in
accordance with this Indenture, authenticated and delivered by the Trustee in
accordance with this Indenture and issued by the Company in the manner and
subject to any conditions specified in such Opinion of Counsel, will constitute
the legal, valid and binding obligations of the Company, enforceable in
accordance with their terms, subject to applicable bankruptcy, insolvency,
reorganization and other similar laws of general applicability relating

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<PAGE> 51
to or affecting the enforcement of creditors' rights, to general equitable
principles and to such other qualifications as such counsel shall conclude do
not materially affect the rights of Holders of such Securities;

(d) all laws and requirements in respect of the execution and
delivery by the Company of such Securities and of the supplemental indenture, if
any, have been complied with and that authentication and delivery of such
Securities and the execution and delivery of the supplemental indenture, if any,
by the Trustee will not violate the terms of this Indenture;

(e) the Company has the corporate power to issue such Securities,
and has duly taken all necessary corporate action with respect to such issuance;
and

(f) the issuance of such Securities will not contravene the
certificate of incorporation or by-laws of the Company or result in any
violation of any of the terms or provisions of any law or regulation or of any
indenture, mortgage or other agreement by which Company is bound known to such
counsel which violation would have a material adverse effect on the Company.

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

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

Any Global Security shall represent such of the outstanding Securities as
shall be specified therein and shall provide that it shall represent the
aggregate amount of outstanding Securities from time to time endorsed thereon
and that the aggregate amount of outstanding Securities represented thereby may
from time to time be increased or reduced to reflect transfers or exchanges
permitted hereby. Any endorsement of a Global Security to reflect the amount of
any increase or decrease in the amount of outstanding Securities represented
thereby shall be made by the Trustee or the Custodian, at the direction of the
Trustee, in such manner and upon instructions given by the holder of such
Securities in accordance with this Indenture. Payment of principal of and
interest and premium, if any, on any Global Security shall be made to the Holder
of such Global Security.

SECTION 3.4. Registration, Registration of Transfer and Exchange; Restrictions
on Transfer.

(a) The Company shall cause to be kept at the Corporate Trust
Office of the Trustee a register (the register maintained in such office and in
any other office or agency of the Company

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<PAGE> 52
designated pursuant to Section 10.2 (including the office of Deutsche Bank AG,
New York Branch, in the Borough of Manhattan, The City of New York and the
office of Banque de Luxembourg, in Luxembourg) being herein sometimes
collectively referred to as the "Note Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Securities and of transfers of Securities.

Upon surrender for registration of transfer of any Security at an office
or agency of the Company designated pursuant to Section 10.2 for such purpose,
the Company shall execute, and the Trustee shall authenticate and deliver, in
the name of the designated transferee or transferees, one or more new Securities
of any authorized denominations and of a like aggregate principal amount and
tenor and bearing such restrictive legends as may be required by this Indenture.

At the option of the Holder, and subject to the further provisions of this
Section 3.4, Securities may be exchanged for other Securities of any authorized
denomination and of a like aggregate principal amount, upon surrender of the
Securities to be exchanged at any such office or agency maintained by the
Company pursuant to Section 10.2. Whenever any Securities are so surrendered for
exchange, and subject to the further provisions of this Section 3.4, the Company
shall execute, and the Trustee shall authenticate and deliver, the Securities
which the Holder making the exchange is entitled to receive. Every Security
presented or surrendered for registration of transfer or for exchange shall (if
so required by the Company or the Note Registrar) be duly endorsed, or be
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Note Registrar duly executed, by the Holder thereof or his
attorney duly authorized in writing.

All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and, subject to the other provisions of this Section 3.4, entitled to the
same benefits, under and subject to the same restrictions imposed by this
Indenture, as the Securities surrendered upon such registration of transfer or
exchange.

Except as provided in Section 3.6, no service charge shall be made for any
registration of transfer or exchange of Securities, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any registration of transfer or exchange of
Securities, other than exchanges pursuant to Section 8.5, 11.8, 12.2 or 14.2(e)
(other than, in the case of Securities, where the Common Stock is to be issued
or delivered in a name other than that of the Holder of the Security) not
involving any transfer and other than any stamp and other duties, if any, which
may be imposed in connection with any such transfer or exchange by the United
States or any political subdivision thereof or therein, which shall be paid by
the Company.

In the event of a redemption of the Securities in part, neither the
Company nor the Note Registrar will be required (a) to register the transfer of
or exchange of Securities for a period of 15 days immediately preceding the date
notice is given identifying the serial numbers of the Securities called for such
redemption or (b) to register the transfer of or exchange any Security, or
portion thereof, called for redemption.

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(b) So long as the Securities are eligible for book-entry
settlement with the Depositary, or unless otherwise required by law, all
Securities that are so eligible may be represented by one or more Global
Securities registered in the name of the Depositary or the nominee of the
Depositary, except as otherwise specified below. The transfer and exchange of
beneficial interests in any such Global Security shall be effected through the
Depositary in accordance with this Indenture and the procedures of the
Depositary therefor.

Securities that upon initial issuance are beneficially owned by QIBs will
be represented by a Global Security (the "Rule 144A Global Security"), and
Securities that upon initial issuance are beneficially owned by Non-U.S. Persons
will be represented by another Global Security (the "Regulation S Global
Security"). Transfers of interests in the Securities between the Rule 144A
Global Security and the Regulation S Global Security will be made in accordance
with the standing instructions and procedures of the Depositary and its
participants. The Trustee shall make appropriate endorsements to reflect
increases or decreases in the principal amounts of such Global Securities as set
forth on the face of the Security ("Principal Amount") to reflect any such
transfers.

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

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

Upon any sale or transfer of a Security to an Institutional Accredited
Investor (other than pursuant to a registration statement that has been declared
effective under the Securities Act), such Institutional Accredited Investor
shall, prior to such sale or transfer, furnish to the Company and/or the Trustee
a signed letter containing representations and agreements relating to
restrictions on transfer substantially in the form set forth in Exhibit A to
this Indenture.

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

(d) Every Security that bears or is required under this Section
3.4(d) to bear the legend set forth in this Section 3.4(d) (together with any
Common Stock issued upon conversion of the Securities and required to bear the
legend set forth in Section 3.4(e), collectively, the "Restricted Securities")
shall be subject to the restrictions on transfer set forth in this Section 3.4
(d) (including those set forth in the legend set forth below) unless such
restrictions on transfer shall be waived by written consent of the Company, and
the holder of each such Restricted Security by such Holder's acceptance thereof,
agrees to be bound by all such restrictions on transfer. As used in Sections
3.4(d) and 3.4(e), the term "transfer" encompasses any sale, pledge, transfer or
other disposition whatsoever of any Restricted Security.

Until the expiration of the holding period applicable to sales thereof
under Rule 144(k) under the Securities Act (or any successor provision), any
certificate evidencing such Security (and all securities issued in exchange
therefor or substitution thereof, other than Common Stock, if any, issued upon
conversion thereof, which shall bear the legend set forth in Section 3.4(e), if
applicable) shall bear a legend in substantially the following form, unless such
Security has been sold pursuant to a registration statement that has been
declared effective under the Securities Act (and which continues to be effective
at the time of such transfer), or unless otherwise agreed by the Company in
writing, with written notice thereof to the Trustee:

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PROVISION), RESELL OR OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY OR
THE COMMON STOCK ISSUABLE UPON CONVERSION OF SUCH SECURITY EXCEPT (A) TO
THE VANTIVE CORPORATION OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED
STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A
UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL
ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO DEUTSCHE
BANK AG, NEW YORK BRANCH, AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS
APPLICABLE), A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THE SECURITY
EVIDENCED HEREBY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM SUCH
TRUSTEE OR A SUCCESSOR TRUSTEE, AS APPLICABLE), (D) OUTSIDE THE UNITED
STATES IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT
TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO A REGISTRATION STATEMENT
WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT (AND WHICH
CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH TRANSFER); (3) PRIOR TO SUCH
TRANSFER (OTHER THAN A TRANSFER PURSUANT TO CLAUSE 2(F) ABOVE), IT WILL
FURNISH TO DEUTSCHE BANK AG, NEW YORK BRANCH, AS TRUSTEE (OR A SUCCESSOR
TRUSTEE, AS APPLICABLE), SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER
INFORMATION AS IT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS
BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT
TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (4) AGREES
THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE SECURITY EVIDENCED HEREBY
IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN
CONNECTION WITH ANY TRANSFER OF THE SECURITY EVIDENCED HEREBY PRIOR TO THE
EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY
EVIDENCED HEREBY UNDER RULE 144(k) UNDER THE SECURITIES ACT (OR ANY
SUCCESSOR PROVISION), THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH
ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT
THIS CERTIFICATE TO DEUTSCHE BANK AG, NEW YORK BRANCH, AS TRUSTEE (OR A
SUCCESSOR TRUSTEE, AS APPLICABLE). IF THE PROPOSED TRANSFEREE IS AN
INSTITUTIONAL ACCREDITED INVESTOR OR A PURCHASER WHO IS NOT A U.S. PERSON,
THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO DEUTSCHE BANK AG, NEW
YORK BRANCH, AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE), SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS IT MAY REASONABLY
REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE REMOVED UPON THE
EARLIER OF

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THE TRANSFER OF THE SECURITY EVIDENCED HEREBY PURSUANT TO CLAUSE 2(F)
ABOVE OR UPON ANY TRANSFER OF THE SECURITY EVIDENCED HEREBY UNDER RULE
144(k) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION), AS USED
HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S.
PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE
SECURITIES ACT.

Any Security (or Successor Security issued in exchange or substitution
therefor) as to which such restrictions on transfer shall have expired in
accordance with their terms or as to the conditions for removal of the foregoing
legend set forth therein have been satisfied may, upon surrender of such
Security for exchange to the Note Registrar in accordance with the provisions of
this Section 3.4, be exchanged for a new Security or Securities of like tenor
and aggregate principal amount, which shall not bear the restrictive legend
required by this Section 3.4(d).

Notwithstanding any other provisions of this Indenture (other than the
provisions set forth in the second paragraph of Section 3.4(b) and in this
Section 3.4(d)), a Global Security may not be transferred as a whole or in part
except by the Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary or by the
Depositary or any such nominee to a successor Depositary or a nominee of such
successor Depositary.

The Depositary shall be a clearing agency registered under the Exchange
Act. The Company initially appoints DTC to act as Depositary with respect to the
Global Securities. Initially, the Rule 144A Global Security and the Regulation S
Global Security shall be issued to the Depositary, registered in the name of
Cede & Co., as the nominee of the Depositary, and deposited with the Custodian
for Cede & Co.

If at any time the Depositary for a Global Security notifies the Company
that it is unwilling or unable to continue as Depositary for such Global
Security, the Company may appoint a successor Depositary with respect to such
Global Security. If a successor Depositary is not appointed by the Company
within ninety (90) days after the Company receives such notice, the Company will
execute, and the Trustee, upon receipt of an Officers' Certificate for the
authentication and delivery of Securities, will authenticate and deliver,
Securities in certificated form, in aggregate principal amount equal to the
Principal Amount of such Global Security, in exchange for such Global Security.

If a Security in certificated form is issued in exchange for any portion
of a Global Security after the close of business at the office or agency where
such exchange occurs on any Record Date and before the opening of business at
such office or agency on the next succeeding Interest Payment Date, interest
will not be payable on such Interest Payment Date in respect of such Security,
but will be payable on such Interest Payment Date, subject to the provisions of
Section 3.7, only to the Person to whom interest in respect of such portion of
such Global Security is payable in accordance with the provisions of this
Indenture.

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Securities in certificated form issued in exchange for all or a part of a
Global Security pursuant to this Section 3.4 shall be registered in such names
and in such authorized denominations as the Depositary, pursuant to instructions
from its direct or indirect participants or otherwise, shall instruct the
Trustee. Upon execution and authentication, the Trustee shall deliver such
Securities in certificated form to the Persons in whose names such Securities in
certificated form are so registered.

At such time as all interests in a Global Security have been redeemed,
repurchased, converted, canceled, exchanged for Securities in certificated form,
or transferred to a transferee who receives Securities in certificated form
thereof, such Global Security shall, upon receipt thereof, be canceled by the
Trustee in accordance with standing procedures and instructions existing between
the Depositary and the Custodian. At any time prior to such cancellation, if any
interest in a Global Security is exchanged for Securities in certificated form,
redeemed, converted, repurchased or canceled, exchanged for Securities in
certificated form or transferred to a transferee who receives Securities in
certificated form therefor or any Security in certificated form is exchanged or
transferred for part of a Global Security, the principal amount of such Security
shall, in accordance with the standing procedures and instructions existing
between the Depositary and the Custodian, be appropriately reduced or increased,
as the case may be, and an endorsement shall be made on such Global Security, by
the Trustee or the Custodian, at the direction of the Trustee, to reflect such
reduction or increase.

(e) Until the expiration of the holding period applicable to sales
thereof under Rule 144(k) under the Securities Act (or any successor provision),
any stock certificate representing Common Stock issued upon conversion of such
Security shall bear a legend in substantially the following form, unless such
Common Stock has been sold pursuant to a registration statement that has been
declared effective under the Securities Act (and which continues to be effective
at the time of such transfer) or such Common Stock has been issued upon
conversion of Securities that have been transferred pursuant to a registration
statement that has been declared effective under the Securities Act, or unless
otherwise agreed by the Company in writing with written notice thereof to the
Common Stock transfer agent:

THE COMMON STOCK EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE
UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT
AS SET FORTH IN THE FOLLOWING SENTENCE. THE HOLDER HEREOF AGREES THAT
UNTIL THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE
SECURITY EVIDENCED HEREBY UNDER RULE 144(k) UNDER THE SECURITIES ACT (OR
ANY SUCCESSOR PROVISION), (1) IT WILL NOT RESELL OR OTHERWISE TRANSFER THE
COMMON STOCK EVIDENCED HEREBY EXCEPT (A) TO THE VANTIVE CORPORATION OR ANY
SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN
COMPLIANCE WITH RULE 144A, (C) INSIDE THE UNITED STATES TO AN

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INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2),
(3) OR (7) UNDER THE SECURITIES ACT) THAT PRIOR TO SUCH TRANSFER FURNISHES
TO HARRIS TRUST AND SAVINGS BANK, AS TRANSFER AGENT (OR A SUCCESSOR
TRANSFER AGENT, AS APPLICABLE), A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF
THE COMMON STOCK EVIDENCED HEREBY (THE FORM OF WHICH LETTER CAN BE
OBTAINED FROM SUCH TRANSFER AGENT OR A SUCCESSOR TRANSFER AGENT, AS
APPLICABLE), (D) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904
UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION
PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), OR (F)
PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE
UNDER THE SECURITIES ACT (AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME
OF SUCH TRANSFER); (2) PRIOR TO SUCH TRANSFER (OTHER THAN A TRANSFER
PURSUANT TO CLAUSE 1(F) ABOVE), IT WILL FURNISH TO HARRIS TRUST AND
SAVINGS BANK AS TRANSFER AGENT (OR A SUCCESSOR TRANSFER AGENT, AS
APPLICABLE), SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS
IT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE
PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (3) IT WILL DELIVER TO
EACH PERSON TO WHOM THE COMMON STOCK EVIDENCED HEREBY IS TRANSFERRED
(OTHER THAN A TRANSFER PURSUANT TO CLAUSE 1(F) ABOVE) A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. THIS LEGEND WILL BE REMOVED
UPON THE EARLIER OF THE TRANSFER OF THE COMMON STOCK EVIDENCED HEREBY
PURSUANT TO CLAUSE 1(F) ABOVE OR UPON ANY TRANSFER OF THE COMMON STOCK
EVIDENCED HEREBY AFTER THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO
SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(k) UNDER THE
SECURITIES ACT (OR ANY SUCCESSOR PROVISION). AS USED HEREIN, THE TERMS
"UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY
REGULATION S UNDER THE SECURITIES ACT.

Any such Common Stock as to which such restrictions on transfer shall have
expired in accordance with their terms or as to which the conditions for removal
of the foregoing legend set forth therein have been satisfied may, upon
surrender of the certificates representing such shares of Common Stock for
exchange in accordance with the procedures of the transfer agent for the Common
Stock, be exchanged for a new certificate or certificates for a like number of
shares of Common Stock, which shall not bear the restrictive legend required by
this Section 3.4(e).

(f) Any Security or Common Stock issued upon the conversion or
exchange of a Security that, prior to the expiration of the holding period
applicable to sales thereof under Rule 144(k) under the Securities Act (or any
successor provision), is purchased or owned by the Company

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or any Affiliate thereof may not be resold by the Company or such Affiliate
unless registered under the Securities Act or resold pursuant to an exemption
from the registration requirements of the Securities Act in a transaction which
results in such Securities or Common Stock, as the case may be, no longer being
"restricted securities" (as defined under Rule 144).

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SECTION 3.5. Temporary Securities

Pending the preparation of Securities in certificated form, the Company
may execute and the Trustee or an Authenticating Agent shall, upon the written
request of the Company, authenticate and deliver temporary Securities (printed
or lithographed). Temporary Securities shall be issuable in any authorized
denomination, and substantially in the form of the Securities in certificated
form, but with such omissions, insertions and variations as may be appropriate
for temporary Securities, all as may be determined by the Company. Every such
temporary Security shall be executed by the Company and authenticated by the
Trustee or such Authenticating Agent upon the same conditions and in
substantially the same manner, and with the same effect, as the Securities in
certificated form. Without unreasonable delay the Company will execute and
deliver to the Trustee or such Authenticating Agent Securities in certificated
form (other than in the case of Global Securities) and thereupon any or all
temporary Securities (other than any such Global Security) may be surrendered in
exchange therefor, at each office or agency maintained by the Company and the
Trustee or such Authenticating Agent shall authenticate and make available for
delivery in exchange for such temporary Securities an equal aggregate principal
amount of Securities in certificated form. Such exchange shall be made by the
Company at its own expense and without any charge therefor. Until so exchanged,
the temporary Securities shall in all respects be entitled to the same benefits
and subject to the same limitations under this Indenture as Securities in
certificated form authenticated and delivered hereunder.

SECTION 3.6. Mutilated, Destroyed, Lost or Stolen Securities

If any mutilated Security is surrendered to the Trustee or to a Note
Registrar outside the United States, the Company shall execute, the Trustee or
an Authenticating Agent shall authenticate and the Trustee or Note Registrar
shall deliver in exchange therefor a new Security of like tenor and principal
amount and bearing a number not contemporaneously outstanding.

If there be delivered to the Company and either to the Trustee or to a
Note Registrar outside the United States:

(1) evidence to their satisfaction of the destruction, loss
or theft of any Security, and

(2) such security or indemnity as may be satisfactory to the
Company and the Trustee and such Note Registrar to save each of them and any
agent of either of them harmless, then, in the absence of actual notice to the
Company, the Trustee or the Note Registrar that such Security has been acquired
by a bona fide purchaser, the Company shall execute, and upon its request, the
Trustee or an Authenticating Agent shall authenticate and the Trustee or Note
Registrar shall deliver in lieu of any such destroyed, lost or stolen Security
or in exchange for the Security, a new Security of like tenor and principal
amount and bearing a number not contemporaneously outstanding.

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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, but
subject to any conversion rights, may, instead of issuing a new Security, pay
such Security.

Upon the issuance of any new Security under this Section 3.6, 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 (other than any
stamp and other duties, if any, which may be imposed in connection therewith by
the United States of America or any political subdivision thereof or therein,
which shall be paid by the Company) and any other expenses (including the fees
and expenses of the Trustee, any Paying Agent and any Note Registrar) connected
therewith.

Every new Security issued pursuant to this Section 3.6 in lieu of any
mutilated, destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the mutilated,
destroyed, lost or stolen Security shall be at any time enforceable by anyone,
and such new Security shall be entitled to all the benefits of this Indenture
equally and proportionately with any and all other Securities duly issued
hereunder.

The provisions of this Section 3.6 are exclusive and shall preclude (to
the extent lawful) all other rights and remedies of any Holder with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Securities.

SECTION 3.7. Payment of Interest; Interest Rights Preserved.

Interest on any Security which is payable, and is punctually paid or duly
provided for, on any Interest Payment Date shall be paid to the Person in whose
name that Security (or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest.

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

(1) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Securities (or their respective
Predecessor Securities) are registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest, which
shall be fixed in the following manner. The Company shall notify the
Trustee in writing of the amount of Defaulted Interest proposed to be paid
on each Security, and the date of the proposed payment, and at the same
time the Company shall deposit with the Trustee an amount of money equal
to the aggregate amount proposed to be paid in respect of such Defaulted
Interest or shall make arrangements satisfactory to the Trustee for such
deposit prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the Persons entitled to
such Defaulted Interest as in this Clause provided. Thereupon, the Trustee
shall fix the Special Record Date for the payment of such Defaulted
Interest, which shall be not more than 15 days

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and not less than 10 days prior to the date of the proposed payment and
not less than 10 days after the receipt by the Trustee of the notice of
the proposed payment. The Trustee shall promptly notify the Company of
such Special Record Date and, in the name and at the expense of the
Company, shall cause notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor to be mailed, first-class
postage prepaid, to each Holder of Securities at such Holder's address as
it appears in the Note Register, not less than 10 days prior to such
Special Record Date. Notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor having been so mailed, such
Defaulted Interest shall be paid to the Persons in whose names the
Securities (or their respective Predecessor Securities) are registered at
the close of business on such Special Record Date and shall no longer be
payable pursuant to the following Clause (2).

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

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

In the case of any Security which is converted after any Regular Record
Date and on or prior to the next succeeding Interest Payment Date (other than
any Security whose Maturity is prior to such Interest Payment Date), interest
whose Stated Maturity is on such Interest Payment Date shall be payable on such
Interest Payment Date notwithstanding such conversion, and such interest
(whether or not punctually paid or duly provided for) shall be paid to the
Person in whose name such Security (or one or more Predecessor Securities) is
registered at the close of business on such Regular Record Date. Except as
otherwise expressly provided in the immediately preceding sentence, in the case
of any Security which is converted, interest whose Stated Maturity is after the
date of conversion of such Security shall not be payable.

SECTION 3.8. Persons Deemed Owners.

Prior to due presentment of a Security for registration of transfer, the
Company or the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name such Security is registered as the owner of such Security
for the purpose of receiving payment of principal of, premium, if any, and
(subject to Section 3.7) interest on such Security and for all other purposes
whatsoever, whether or not such Security be overdue, and neither the Company,
the Trustee nor any agent of the Company or the Trustee shall be affected by
notice to the contrary.

None of the Company, the Trustee, any Paying Agent or the Note Registrar
will have any responsibility or liability for any aspect of the records relating
to or payments made on account of

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beneficial ownership interests of a Security in global form or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.

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

SECTION 3.9. Cancellation.

All Securities surrendered for payment, redemption, repurchase,
registration of transfer or exchange or conversion shall, if surrendered to any
Person other than the Trustee, be delivered to the Trustee. All Securities so
delivered to the Trustee shall be canceled promptly by the Trustee. No
Securities shall be authenticated in lieu of or in exchange for any Securities
canceled as provided in this Section 3.9. The Trustee shall destroy all canceled
Securities in accordance with applicable law and its customary practices in
effect from time to time.

SECTION 3.10. Computation of Interest.

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

SECTION 3.11. CUSIP Numbers.

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

ARTICLE FOUR

SATISFACTION AND DISCHARGE

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SECTION 4.1. Satisfaction and Discharge of Indenture.

This Indenture shall, upon Company Request, cease to be of further effect
(except as to any surviving rights of conversion, or registration of transfer or
exchange, or replacement of Securities herein expressly provided for and any
right to receive Additional Amounts and Liquidated Damages, if any, as provided
in the form of Security set forth in Section 2.2 and the Company's obligations
to the Trustee pursuant to Section 6.7), and the Trustee, at the expense of the
Company, shall execute proper instruments in form and substance satisfactory to
the Trustee acknowledging satisfaction and discharge of this Indenture, when

(1) either

(A) all Securities theretofore authenticated and delivered (other
than (i) Securities which have been destroyed, lost or stolen and which have
been replaced or paid as provided in Section 3.6 and (ii) Securities for whose
payment money has theretofore been deposited with the Trustee or the Paying
Agent in trust or segregated and held in trust by the Company and thereafter
repaid to the Company or discharged from such trust, as provided in Section
10.3) have been delivered to the Trustee for cancellation; or

(B) all such Securities not theretofore delivered to the Trustee
or the Paying Agent or its agent for cancellation (other than Securities
referred to in clauses (i) and (ii) of clause (1)(A) above)

(i) have become due and payable, or

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

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

and the Company, in the case of clause (i), (ii) or (iii) above, has
deposited or caused to be deposited with the Trustee as trust funds
(immediately available to the Holders in the case of clause (i)) in trust
for the purpose an amount sufficient to pay and discharge the entire
indebtedness on such Securities not theretofore delivered to the Trustee
for cancellation, for principal, premium, if any, and interest (including
any applicable Additional Amounts and Liquidated Damages) to the date of
such deposit (in the case of Securities which have become due and payable)
or to the Stated Maturity or Redemption Date, as the case may be;

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

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

Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 6.7, the obligations of
the Company to any Authenticating Agent under Section 6.12, the obligation of
the Company to pay Additional Amounts and, if money shall have been deposited
with the Trustee pursuant to clause (1)(B) of this Section 4.1, the obligations
of the Trustee under Section 4.2 and the last paragraph of Section 10.3 shall
survive. Funds held in trust pursuant to this Section are not subject to the
provisions of Article Thirteen.

SECTION 4.2. Application of Trust Money.

Subject to the provisions of the last paragraph of Section 10.3, all money
deposited with the Trustee pursuant to Section 4.1 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, premium, if any,
and interest for whose payment such money has been deposited with the Trustee;
but such money need not be segregated from other funds except to the extent
required by law.

All moneys deposited with the Trustee pursuant to Section 4.1 (and held by
it or any Paying Agent) for the payment of Securities subsequently converted
shall be returned to the Company upon a Company Request.

ARTICLE FIVE

REMEDIES

SECTION 5.1. Events of Default.

"Event of Default", wherever used herein, means any one of the following
events (whatever the reason for such Event of Default and whether it shall be
occasioned by the provisions of Article Thirteen or be voluntary or involuntary
or be effected by operation of law or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any administrative or
governmental body):

(1) default in the payment of the principal of or premium, if any,
on any Security at its Maturity, whether or not such payment is prohibited
by the subordination provisions of Article Thirteen; or

(2) default in the payment of any interest (including any
Additional Amounts or Liquidated Damages, if any) upon any Security when
it becomes due and payable, and

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continuance of such default for a period of 30 days, whether or not such
payment is prohibited by the subordination provisions of Article Thirteen;
or

(3) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture (other than a covenant or
warranty a default in the performance or breach of which is specifically
dealt with elsewhere in this Section), 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 aggregate principal amount of
the Outstanding Securities a written notice specifying such default or
breach and requiring it to be remedied and stating that such notice is a
"Notice of Default" hereunder; or

(4) the entry by a court having jurisdiction in the premises of
(A) a decree or order for relief in respect of the Company in an
involuntary case or proceeding under any applicable bankruptcy, moratorium
of payments, insolvency, reorganization or other similar law or (B) a
decree or order adjudging the Company a bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of the Company
under any applicable federal or state law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other similar
official of the Company or of substantially all of its property, or
ordering the winding up or liquidation of its affairs, and the continuance
of any such decree or order unstayed and in effect for a period of 60
consecutive days; or

(5) the commencement by the Company of a voluntary case or
proceeding under any applicable bankruptcy, moratorium of payments,
insolvency, reorganization or other similar law or of any other case or
proceeding to be adjudicated a bankrupt or insolvent or to be granted
moratorium of payment, or the consent by it to the entry of a decree or
order for relief in respect of the Company in an involuntary case or
proceeding under any applicable bankruptcy, moratorium of payment,
insolvency, reorganization or other similar law or to the commencement of
any bankruptcy, moratorium of payment or insolvency proceedings against
it, or the filing by it of a petition or consent seeking reorganization or
similar relief under any applicable law, or the consent by it to the
filing of such petition or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or of substantially all of its property,
or the making by it of an assignment for the benefit of creditors, or the
admission by it in writing of its inability to pay its debts generally as
they become due, or the taking of corporate action by the Company in
furtherance of any such action.

SECTION 5.2. Acceleration of Maturity; Rescission and Annulment.

If an Event of Default (other than an Event of Default specified in
Section 5.1(4) or (5)) occurs and is continuing, then in every such case the
Trustee or the Holders of not less than 25% in aggregate principal amount of the
Outstanding Securities may declare the principal of all the Securities to be due
and payable immediately, by a notice in writing to the Company (and to the
Trustee if given by the

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Holders), and upon any such declaration such principal and all accrued interest
thereon shall become immediately due and payable. If an Event of Default
specified in Section 5.1(4) or (5) occurs, the principal of, and accrued
interest on, all the Securities shall ipso facto become immediately due and
payable without any declaration or other Act of the Holders or any act on the
part of the Trustee.

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

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

(A) all overdue interest (including any Additional Amounts
and Liquidated Damages) on all Securities,

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

(C) to the extent that payment of such interest is lawful,
interest upon overdue interest at a rate of 4.75% per annum, and

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

(2) all Events of Default, other than the nonpayment of the principal
of, and any interest on, Securities which have become due solely by such
declaration of acceleration, have been cured or waived as provided in Section
5.13.

No rescission or annulment referred to above shall affect any subsequent
default or impair any right consequent thereon.

SECTION 5.3. Collection of Indebtedness and Suits for Enforcement by Trustee.

The Company covenants that if

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

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

the Company will, upon demand of the Trustee, pay to the Trustee, for the
benefit of the Holders of such Securities, the whole amount then due and payable
on such Securities for principal and interest (including any Additional Amounts
and Liquidated Damages) and interest on any overdue principal and premium, if
any, and on any overdue interest (including any Additional Amounts and
Liquidated Damages), to the extent permitted by law, at a rate of 4.75% per
annum, and in addition thereto, such further amount as shall be sufficient to
cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel.

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

If an Event of Default occurs and is continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the rights of the
Holders of Securities 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 5.4. Trustee May File Proofs of Claim.

In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, moratorium of payments, 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 the creditors of either, the Trustee (irrespective of whether the
principal of, and any interest on, 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,

(1) to file and prove a claim for the whole amount of principal,
premium, if any, and interest owing and unpaid in respect of the
Securities and take such other actions, including participating as a
member, voting or otherwise, of any official committee of creditors
appointed in such matter, and to file such other papers or documents, in
each of the foregoing cases, 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 of Securities allowed in such
judicial proceeding, and

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(2) to collect and receive any moneys or other property payable or
deliverable on any such claim and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder of Securities 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 of Securities to pay to the Trustee any amount due to 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 6.7.

Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder of a Security
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 of a Security in any such proceeding;
provided, however, that the Trustee may, on behalf of such Holders, vote for the
election of a trustee in bankruptcy or similar official.

SECTION 5.5. 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 judgment has been recovered.

SECTION 5.6. Application of Money Collected.

Any money collected by the Trustee pursuant to this Article Five 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, premium, if
any, or interest, upon presentation of the Securities and the notation thereon
of the payment if only partially paid and upon surrender thereof if fully paid:

FIRST: To the payment of all amounts due the Trustee under Section
6.7;

SECOND: To the payment of the amounts then due and unpaid for
principal, premium, if any, or interest (including any Additional Amounts
and Liquidated Damages) 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, premium, if any, and interest
(including any Additional Amounts and Liquidated Damages), respectively;
and

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THIRD: Any remaining amounts shall be repaid to the Company.

SECTION 5.7. Limitation on Suits.

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

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

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

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

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

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

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 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 5.8. Unconditional Right of Holders to Receive Principal, Premium and
Interest and to Convert.

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, premium, if any, and interest on such Security on
the respective Stated Maturities expressed in such Security (or, in the case of
redemption or repurchase, on the Redemption Date or Repurchase Date, as the case
may be), and to convert such Security in accordance with Article Twelve, and to
institute suit for the enforcement of any such payment and right to convert, and
such rights shall not be impaired without the consent of such Holder.

SECTION 5.9. Restoration of Rights and Remedies.

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If the Trustee or any Holder of a Security 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 of
Securities shall be restored severally and respectively to their former
positions hereunder and thereafter all rights and remedies of the Trustee and
such Holders shall continue as though no such proceeding had been instituted.

SECTION 5.10. Rights and Remedies Cumulative.

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

SECTION 5.11. Delay or Omission Not Waiver.

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

SECTION 5.12. Control by Holders of Securities.

Subject to Section 6.3(6), the Holders of a majority in aggregate
principal amount of the Outstanding Securities shall have the right to direct
the time, method and place of conducting any proceeding for any remedy available
to the Trustee or exercising any trust or power conferred on the Trustee,
provided that

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

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

(3) the Trustee need not take any action which might result in
personal liability or be unjustly prejudicial to the Holders of Securities
not consenting; and

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(4) such direction shall be presented by such Holders to the
Trustee in a timely manner.

SECTION 5.13. Waiver of Past Defaults.

The Holders, either (a) through the written consent of not less than a
majority in aggregate principal amount of the Outstanding Securities, or (b) by
the adoption of a resolution, at a meeting of Holders of the Outstanding
Securities at which a quorum is present, by the Holders of the lessor of (x) not
less than a majority in aggregate principal amount of Outstanding Securities and
(y) at least 66-2/3% in aggregate principal amount of the Outstanding Securities
represented at such meeting, may on behalf of the Holders of all the Securities
waive any past default hereunder and its consequences, except a default (1) in
the payment of the principal of, premium, if any, or interest on any Security,
or (2) in respect of a covenant or provision hereof which under Article Eight
cannot be modified or amended without the consent of the Holder of each
Outstanding Security affected.

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

SECTION 5.14. Undertaking for Costs.

All parties to this Indenture agree, and each Holder of any Security by
his or her 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.

SECTION 5.15. Waiver of Stay, Extension and Usury Laws.

The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay, extension law or usury law or other
law that would prohibit or forgive the Company from paying all or any portion of
its obligations on the Securities as provided herein, 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 hinder, delay or impede the execution of any power
herein granted to the Trustee, but will suffer and permit the execution of every
such power as though no such law had been enacted.

ARTICLE SIX

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THE TRUSTEE

SECTION 6.1. Certain Duties and Responsibilities.

(a) Except during the continuance of an Event of Default,

(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and

(2) 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 certificates or opinions furnished
to the Trustee and conforming to the requirements of this Indenture; but
in the case of any such certificates or opinions which by any provision
hereof are specifically required to be furnished to the Trustee, the
Trustee shall be under a duty to examine the same to determine whether or
not they conform to the requirements of this Indenture, but not to verify
the contents thereof.

(b) In case an Event of Default has occurred and is continuing of which
a Responsible Officer of the Trustee has actual knowledge, the Trustee shall
exercise such of 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.

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

(1) this paragraph (c) shall not be construed to limit the effect
of paragraph (a) of this Section;

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

(3) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of a majority in aggregate principal amount of
the Outstanding Securities or such lesser percentage as provided in this
Indenture 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.

(d) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.

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

SECTION 6.2. Notice of Defaults.

Within 90 days after the occurrence of any default hereunder as to which
the Trustee has received written notice, the Trustee shall give to all Holders
of Securities, in the manner provided in Section 1.6, notice of such default,
unless such default shall have been cured or waived; provided, however, that,
except in the case of a default in the payment of the principal of, premium, if
any, or interest on any Security, the Trustee shall be protected in withholding
such notice if and so long as the board of directors, the executive committee or
a trust committee of directors or Responsible Officers of the Trustee in good
faith determine that the withholding of such notice is in the interest of the
Holders; and provided, further, that in the case of any default of the character
specified in Section 5.1(4), no such notice to Holders of Securities shall be
given until at least 30 days after the occurrence thereof. For the purpose of
this Section, the term "default" means any event which is, or after notice or
lapse of time or both would become, an Event of Default.

SECTION 6.3. Certain Rights of Trustee.

Subject to the provisions of Section 6.1:

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

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

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

(4) the Trustee may consult with counsel of its selection 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;

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

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

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

(8) the permissive right of the Trustee to take or refrain from
taking any actions enumerated in this Indenture shall not be construed as
a duty and the Trustee shall not be answerable in such actions other than
for its own negligence, bad faith or willful misconduct in exercising any
such right; and

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

SECTION 6.4. Not Responsible for Recitals or Issuance of Securities.

The recitals contained herein and in the Securities (except the Trustee's
certificates of authentication) shall be taken as the statements of the Company,
and the Trustee or any Authenticating Agent assumes no responsibility for their
correctness. The Trustee makes no representations as to the validity or
sufficiency of this Indenture, of the Securities or of the Common Stock issuable
upon the conversion of the Securities. The Trustee or any Authenticating Agent
shall not be accountable for the use or application by the Company of Securities
or the proceeds thereof.

SECTION 6.5. May Hold Securities, Act as Trustee Under Other Indentures.

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

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The Trustee may become and act as trustee under other indentures under
which other securities, or certificates of interest or participation in other
securities, of the Company are outstanding in the same manner as if it were not
Trustee hereunder.

SECTION 6.6. Money Held in Trust.

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

SECTION 6.7. Compensation and Reimbursement.

The Company agrees

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

(2) except as otherwise expressly provided herein, to reimburse
the Trustee upon its request for all reasonable expenses, disbursements
and advances incurred or made by the Trustee in accordance with any
provision of this Indenture (including the reasonable compensation and the
expenses and disbursements of its agents and counsel), except for any such
expense, disbursement or advance as may be attributable to its negligence,
bad faith or willful misconduct; and

(3) to indemnify the Trustee (and its directors, officers,
employees and agents) for, and to hold it harmless against, any loss,
liability or expense incurred without negligence, bad faith or willful
misconduct on its part, arising out of or in connection with the
acceptance or administration of this trust, including the costs, expenses
and reasonable attorneys' fees of defending itself against any claim or
liability in connection with the exercise or performance of any of its
powers or duties hereunder.

When the Trustee incurs expenses or renders services in connection with an
Event of Default specified in Section 5.1(4) or Section 5.1(5), the expenses
(including the reasonable charges of its counsel) and the compensation for the
services are intended to constitute expenses of the administration under any
applicable Federal or state bankruptcy, insolvency or other similar law.

Any Paying Agent or Authenticating Agent appointed hereunder shall be
entitled to the benefits of Section 6.7(3) as if the indemnity set forth
therefor were specifically afforded to such Paying Agent or Authenticating
Agent.

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The provisions of this Section shall survive the termination of this
Indenture or the earlier resignation or removal of the Trustee, any Paying Agent
or any Authenticating Agent, as the case may be.

The obligations of the Company under this Section to compensate the
Trustee, to pay or reimburse the Trustee for expenses, disbursements and
advances and to indemnify and hold harmless the Trustee shall constitute
additional indebtedness hereunder and shall survive the satisfaction and
discharge of this Indenture. As security for the performance of such obligations
of the Company, the Trustee shall have a claim prior to the Securities upon all
property and funds held or collected by the Trustee as such, except funds held
in trust for the payment of principal of (and premium, if any) or interest on
particular Securities.

SECTION 6.8. Corporate Trustee Required; Eligibility.

There shall at all times be a Trustee hereunder which shall be a Person
that is eligible pursuant to the Trust Indenture Act to act as such, having (or
if the Trustee is a member of a bank holding company, its bank holding company
has) a combined capital and surplus of at least U.S.$50,000,000, subject to
supervision or examination by Federal or state authority, in good standing. If
such corporation publishes reports of condition at least annually, pursuant to
law or to the requirements of said supervising or examining authority, then for
the purposes of this Section, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. If at any time the Trustee
shall cease to be eligible in accordance with the provisions of this Section, it
shall resign immediately in the manner and with the effect hereinafter specified
in this Article and a successor shall be appointed pursuant to Section 6.9.

SECTION 6.9. Resignation and Removal; Appointment of Successor.

(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 6.10.

(b) The Trustee may resign at any time by giving written notice thereof
to the Company. If the instrument of acceptance by a successor Trustee required
by Section 6.10 shall not have been delivered to the Trustee within 30 days
after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.

(c) The Trustee may be removed at any time by Act of the Holders of a
majority in aggregate principal amount of the Outstanding Securities, delivered
to the Trustee and the Company. If the instrument of acceptance by a successor
Trustee required by Section 6.10 shall not have been delivered to the Trustee
within 30 days after the giving of such notice of removal, the removed Trustee
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.

(d) If at any time:

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(1) the Trustee shall cease to be eligible under Section 6.8 and
shall fail to resign after written request therefor by the Company or by
any Holder of a Security who has been a bona fide Holder of a Security for
at least six months, or

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

then, in any such case (i) the Company by a Board Resolution may remove the
Trustee, or (ii) subject to Section 5.14, any Holder of a Security who has been
a bona fide Holder of a Security for at least six months may, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.

(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, the
Company, by a Board Resolution, shall promptly appoint a successor Trustee and
shall comply with the applicable requirements of this Section and Section 6.10.
If, within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee shall be appointed by Act of the
Holders of a majority in aggregate principal amount of the Outstanding
Securities delivered to the Company and the retiring Trustee, the successor
Trustee so appointed shall, forthwith upon its acceptance of such appointment in
accordance with the applicable requirements of Section 6.10, become the
successor Trustee and supersede the successor Trustee appointed by the Company.
If no successor Trustee shall have been so appointed by the Company or the
Holders of Securities and accepted appointment in the manner required by this
Section and Section 6.10, any Holder of a Security who has been a bona fide
Holder of a Security for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee.

(f) The Company shall give notice of each resignation and each removal
of the Trustee and each appointment of a successor Trustee to all Holders of
Securities in the manner provided in Section 1.6. Each notice shall include the
name of the successor Trustee and the address of its Corporate Trust Office.

SECTION 6.10. Acceptance of Appointment by Successor.

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

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of any such successor Trustee, the Company shall execute any and all instruments
for more fully and certainly vesting in and confirming to such successor Trustee
all such rights, powers and trusts.

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

SECTION 6.11. Merger, Conversion, Consolidation or Succession to Business.

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

SECTION 6.12. Authenticating Agents.

The Trustee may appoint an additional Authenticating Agent or Agents with
respect to the Securities which shall be authorized to act on behalf of the
Trustee to authenticate Securities issued upon exchange or substitution pursuant
to this Indenture.

Securities authenticated by an Authenticating Agent shall be entitled to
the benefits of this Indenture and shall be valid and obligatory for all
purposes as if authenticated by the Trustee hereunder, and every reference in
this Indenture to the authentication and delivery of Securities by the Trustee
or the Trustee's certificate of authentication shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating Agent
and a certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be acceptable to the
Company and shall at all times be a corporation organized and doing business
under the laws of the United States of America, any State thereof, the District
of Columbia or Luxembourg authorized under such laws to act as Authenticating
Agent and subject to supervision or examination by government or other fiscal
authority. If at any time an Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section 6.12, such Authenticating Agent
shall resign immediately in the manner and with the effect specified in this
Section 6.12.

Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section 6.12, without the execution or filing of any paper or any
further act on the part of the Trustee or the Authenticating Agent.

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An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time terminate
the agency of an Authenticating Agent by giving written notice thereof to such
Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section 6.12, the Trustee may appoint a successor
Authenticating Agent which shall be subject to acceptance by the Company. Any
successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section 6.12.

The Company agrees to pay to each Authenticating Agent from time to time
reasonable compensation for its services under this Section 6.12 and the Trustee
shall be entitled to be reimbursed for such payments, subject to the provisions
of Section 6.7.

If an Authenticating Agent is appointed with respect to the Securities
pursuant to this Section 6.12, the Securities may have endorsed thereon, in
addition to or in lieu of the Trustee's certification of authentication, an
alternative certificate of authentication in the following form:

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

Dated: DEUTSCHE BANK AG, NEW YORK BRANCH,

as Trustee
By [Authenticating Agent],
as Authenticating Agent

By:_________________________________________
Authorized Signatory

SECTION 6.13. Disqualification; Conflicting Interests.

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

SECTION 6.14. Preferential Collection of Claims Against Company.

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If and when the Trustee shall be or become a creditor of the Company (or
any other obligor upon the Securities), the Trustee shall be subject to the
provisions of Section 311 of the Trust Indenture Act regarding the collection of
claims against the Company (or any such other obligor).

ARTICLE SEVEN

CONSOLIDATION, MERGER, TRANSFER OR LEASE

SECTION 7.1. Company May Consolidate, Etc., Only on Certain Terms.

The Company shall not consolidate or merge into any other corporation or
convey or transfer its properties and assets substantially as an entirety to any
Person, and shall not transfer and assign all its obligations of, and position
as, the Company hereunder, except for a consolidation or merger in which the
Company is the surviving party, unless:

(a) the Person formed by such consolidation or into which the
Company is merged or which acquires by conveyance or transfer the
properties and assets of the Company substantially as an entirety, or to
which obligations of, and position as, the Company hereunder are
transferred and assigned (the "Successor") (i) shall be a corporation,
limited liability company, partnership or trust organized and existing
under the laws of, and resident for tax purposes in, the United States of
America or any political subdivision thereof, and (ii) shall expressly
assume, by an indenture supplemental hereto, executed and delivered to the
Trustee, in form satisfactory to the Trustee, due and punctual payment of
the principal of and interest (including Additional Amounts, if any, and
Liquidated Damages, if any) on all of the Securities and the performance
of every covenant of this Indenture and in the Securities on the part of
the Company to be performed or observed;

(b) immediately after giving effect to any such consolidation,
merger, conveyance or transfer, or such transfer and assignment, no
default and no Event of Default shall have occurred and be continuing; and

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

SECTION 7.2. Successor Substituted.

Upon any consolidation, merger or any conveyance or transfer of the
properties and assets of the Company substantially as an entirety, or upon
transfer and assignment of all obligations of, and position as, the Company
hereunder, in accordance with Section 7.1, the Successor shall succeed to and be
substituted for, and may exercise every right and power of, the Company under
this Indenture with the

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same effect as if such Successor had been named as the Company herein, and
thereafter, the predecessor Person shall be relieved of all obligations and
covenants under the Indenture and the Securities.

ARTICLE EIGHT

SUPPLEMENTAL INDENTURES

SECTION 8.1. Supplemental Indentures Without Consent of Holders of Securities.

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

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

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

(3) to add any additional Events of Default;

(4) to secure the Securities; or

(5) to make provision with respect to the conversion rights of
Holders of Securities pursuant to Section 12.11 or the repurchase rights
of Holders of Securities pursuant to Section 14.3; or

(6) to comply with the requirements of the Trust Indenture Act or
the rules and regulations of the Commission thereunder in order to effect
or maintain the qualification of this Indenture under the Trust Indenture
Act, as contemplated by this Indenture or otherwise; or

(7) to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein or which
is otherwise defective, or to make any other provisions with respect to
matters or questions arising under this Indenture as the Company and the
Trustee may deem necessary or desirable, provided, such action pursuant to
this clause (7) shall not adversely affect the interests of the Holders of
Securities in any material respect.

Upon Company Request, accompanied by a Board Resolution authorizing the
execution of any such supplemental indenture, and subject to and upon receipt by
the Trustee of the documents described in Section 8.3 hereof, the Trustee shall
join with the Company in the execution of any supplemental

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indenture authorized or permitted by the terms of this Indenture and to make any
further appropriate agreements and stipulations which may be therein contained.

SECTION 8.2. Supplemental Indentures with Consent of Holders of Securities.

With either (a) the written consent of the Holders of not less than a
majority in aggregate principal amount of the Outstanding Securities, by the Act
of said Holders delivered to the Company and the Trustee, or (b) by the adoption
of a resolution, at a meeting of Holders of the Outstanding Securities at which
a quorum is present, by the Holders of the lesser of (x) not less than a
majority in aggregate principal amount of the Outstanding Securities and (y)
66-2/3% in aggregate principal amount of the Outstanding Securities represented
at such meeting, the Company, when authorized by a Board Resolution, and the
Trustee may enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Indenture or of modifying in any manner the rights of
the Holders of Securities under this Indenture; provided, however, that no such
supplemental indenture shall, without the consent or affirmative vote of the
Holder of each Outstanding Security,

(1) change the Stated Maturity of the principal of, or any
installment of interest on, any Security, or reduce the principal amount
or the rate of interest payable thereon or any premium payable upon
redemption or mandatory repurchase thereof, or change the obligation of
the Company to pay Additional Amounts pursuant to Section 10.4 in a manner
adverse to the Holders, or change the Place of Payment or coin or currency
in which any Security or the interest or any premium thereon or any other
amount in respect thereof is payable, or impair the right to institute
suit for the enforcement of any payment in respect of any Security on or
after the Stated Maturity thereof (or, in the case of redemption or any
repurchase, on or after the Redemption Date or Repurchase Date, as the
case may be) or, except as permitted by Section 12.11, adversely affect
the right to convert any Security as provided in Article Twelve, or modify
the provisions of this Indenture with respect to the subordination of the
Securities in a manner adverse to the Holders of Securities, or

(2) reduce the requirements of Section 9.4 for quorum or voting,
or reduce the percentage in aggregate principal amount of the Outstanding
Securities the consent of whose Holders is required for any such
supplemental indenture or the consent of whose Holders is required for any
waiver (of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences) provided for in this Indenture,
or

(3) modify any of the provisions of this Section or Section 5.13,
except to increase any percentage contained herein or therein or to
provide that certain other provisions of this Indenture cannot be modified
or waived without the consent of the Holder of each Outstanding Security
affected thereby; or

(4) modify the provisions of Article Fourteen in a manner adverse
to the Holders; or

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(5) modify any of the provisions of Section 10.7 in a manner
adverse to the Holders.

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

SECTION 8.3. Execution of Supplemental Indentures.

In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Sections 6.1 and 6.3) 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, and that such supplemental
indenture has been duly authorized, executed and delivered by the Company and
constitutes a valid and legally binding obligation of the Company enforceable
against the Company in accordance with its terms. The Trustee may, but shall not
be obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.

SECTION 8.4. Effect of Supplemental Indentures.

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

SECTION 8.5. Reference in Securities to Supplemental Indentures.

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

SECTION 8.6. Notice of Supplemental Indentures.

Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of Section 8.2, the Company
shall give notice to all Holders of Securities of such fact, setting forth in
general terms the substance of such supplemental indenture, in the manner
provided in Section 1.6. Any failure of the Company to give such notice, or any
defect therein, shall not in any way impair or affect the validity of any such
supplemental indenture.

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So long as the Securities are listed on the Luxembourg Stock Exchange and
the rules of the Luxembourg Stock Exchange shall require, notice of any
supplemental indenture pursuant to this Article Eight will be given by
publication in a Authorized Newspaper in Luxembourg, or, if not practicable in
Luxembourg, elsewhere in a Western European city. Any failure of the Company to
give such notice, or any defect therein, shall not in any way impair or affect
the validity of any such supplemental indenture.

ARTICLE NINE

MEETINGS OF HOLDERS OF SECURITIES

SECTION 9.1. Purposes for Which Meetings May Be Called.

A meeting of Holders of Securities may be called at any time and from time
to time pursuant to this Article to make, give or take any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be made, given or taken by Holders of Securities.

SECTION 9.2. Call, Notice and Place of Meetings.

(a) The Trustee may at any time call a meeting of Holders of Securities
for any purpose specified in Section 9.1, to be held at such time and at such
place in the Borough of Manhattan, The City of New York or, so long as the
Securities are listed on the Luxembourg Stock Exchange and the Luxembourg Stock
Exchange shall require, in Luxembourg, as the Trustee shall determine. Notice of
every meeting of Holders of Securities, setting forth the time and the place of
such meeting and in general terms the action proposed to be taken at such
meeting, shall be given, in the manner provided in Section 1.6, not less than 21
nor more than 180 days prior to the date fixed for the meeting.

(b) In case at any time the Company, pursuant to a Board Resolution, or
the Holders of at least 25% in aggregate principal amount of the Outstanding
Securities shall have requested the Trustee to call a meeting of the Holders of
Securities for any purpose specified in Section 9.1, by written request setting
forth in reasonable detail the action proposed to be taken at the meeting, and
the Trustee shall not have made the first publication of the notice of such
meeting within 21 days after receipt of such request or shall not thereafter
proceed to cause the meeting to be held as provided herein, then the Company or
the Holders of Securities in the amount specified, as the case may be, may
determine the time and the place in the Borough of Manhattan, The City of New
York, or, so long as the Securities are listed on the Luxembourg Stock Exchange
and the Luxembourg Stock Exchange shall require, in Luxembourg, for such meeting
and may call such meeting for such purposes by giving notice thereof as provided
in paragraph (a) of this Section.

SECTION 9.3. Persons Entitled to Vote at Meetings.

To be entitled to vote at any meeting of Holders of Securities, a Person
shall be (a) a Holder of one or more Outstanding Securities on the applicable
record date, or (b) a Person appointed by an

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instrument in writing as proxy for a Holder or Holders of one or more
Outstanding Securities by such Holder or Holders. The only Persons who shall be
entitled to be present or to speak at any meeting of Holders shall be the
Persons entitled to vote at such meeting and their counsel, any representatives
of the Trustee and its counsel and any representatives of the Company and its
counsel.

SECTION 9.4. Quorum; Action.

The Persons entitled to vote a majority in aggregate principal amount of
the Outstanding Securities shall constitute a quorum. In the absence of a quorum
within 30 minutes of the time appointed for any such meeting, the meeting shall,
if convened at the request of Holders of Securities, be dissolved. In any other
case, the meeting may be adjourned for a period of not less than 10 days as
determined by the chairman of the meeting prior to the adjournment of such
meeting. In the absence of a quorum at any such reconvened meeting, such
reconvened meeting may be further adjourned for a period not less than 10 days
as determined by the chairman of the meeting prior to the adjournment of such
reconvened meeting (subject to repeated applications of this sentence). Notice
of the reconvening of any adjourned meeting shall be given as provided in
Section 9.2(a), except that such notice need be given only once not less than
five days prior to the date on which the meeting is scheduled to be reconvened.
Notice of the reconvening of an adjourned meeting shall state expressly the
percentage of the principal amount of the Outstanding Securities which shall
constitute a quorum.

Subject to the foregoing, at the reconvening of any meeting adjourned for
a lack of a quorum, the Persons entitled to vote 25% in aggregate principal
amount of the Outstanding Securities at the time shall constitute a quorum for
the taking of any action set forth in the notice of the original meeting.

At a meeting or an adjourned meeting duly reconvened and at which a quorum
is present as aforesaid, any resolution and all matters (except as limited by
the proviso to Section 8.2) shall be effectively passed and decided if passed or
decided by the lesser of (i) not less than a majority in aggregate principal
amount of the Outstanding Securities and (ii) Persons entitled to vote not less
than 66-2/3% in aggregate principal amount of Outstanding Securities represented
and entitled to vote at such meeting.

Any resolution passed or decisions taken at any meeting of Holders of
Securities duly held in accordance with this Section shall be binding on all the
Holders of Securities, whether or not present or represented at the meeting. The
Trustee shall, in the name and at the expense of the Company, notify all the
Holders of Securities of any such resolutions or decisions pursuant to Section
1.6.

SECTION 9.5. Determination of Voting Rights; Conduct and Adjournment of
Meetings.

(a) Notwithstanding any other provisions of this Indenture, the Trustee
may make such reasonable regulations as it may deem advisable for any meeting of
Holders of Securities in regard to proof of the holding of Securities and of the
appointment of proxies and in regard to the appointment and duties of inspectors
of votes, the submission and examination of proxies, certificates and other
evidence of the right to vote, and such other matters concerning the conduct of
the meeting as it shall deem

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appropriate. Except as otherwise permitted or required by any such regulations,
the holding of Securities shall be proved in the manner specified in Section 1.4
and the appointment of any proxy shall be proved in the manner specified in
Section 1.4.

(b) The Trustee shall, by an instrument in writing, appoint a temporary
chairman (which may be the Trustee) of the meeting, unless the meeting shall
have been called by the Company or by Holders of Securities as provided in
Section 9.2(b), in which case the Company or the Holders of Securities calling
the meeting, as the case may be, shall in like manner appoint a temporary
chairman. A permanent chairman and a permanent secretary of the meeting shall be
elected by vote of the Persons entitled to vote a majority in aggregate
principal amount of the Outstanding Securities represented at the meeting.

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

(d) Any meeting of Holders of Securities duly called pursuant to Section
9.2 at which a quorum is present may be adjourned from time to time by Persons
entitled to vote a majority in aggregate principal amount of the Outstanding
Securities represented at the meeting, and the meeting may be held as so
adjourned without further notice.

SECTION 9.6. Counting Votes and Recording Action of Meetings.

The vote upon any resolution submitted to any meeting of Holders of
Securities shall be by written ballots on which shall be subscribed the
signatures of the Holders of Securities or of their representatives by proxy and
the principal amounts at Stated Maturity and serial numbers of the Outstanding
Securities held or represented by them. The permanent chairman of the meeting
shall appoint two inspectors of votes who shall count all votes cast at the
meeting for or against any resolution and who shall make and file with the
secretary of the meeting their verified written reports in duplicate of all
votes cast at the meeting. A record, at least in duplicate, of the proceedings
of each meeting of Holders of Securities shall be prepared by the secretary of
the meeting and there shall be attached to said record the original reports of
the inspectors of votes on any vote by ballot taken thereat and affidavits by
one or more Persons having knowledge of the facts setting forth a copy of the
notice of the meeting and showing that said notice was given as provided in
Section 9.2 and, if applicable, Section 9.4. Each copy shall be signed and
verified by the affidavits of the permanent chairman and secretary of the
meeting and one such copy shall be delivered to the Company and another to the
Trustee to be preserved by the Trustee, the latter to have attached thereto the
ballots voted at the meeting. Any record so signed and verified shall be
conclusive evidence of the matters therein stated.

ARTICLE TEN

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COVENANTS

SECTION 10.1. Payment of Principal, Premium and Interest.

The Company covenants and agrees that it will duly and punctually pay the
principal of and premium, if any, and interest (including Additional Amounts, if
any, or Liquidated Damages, if any) on the Securities in accordance with the
terms of the Securities and this Indenture. The Company will deposit or cause to
be deposited with the Trustee on or prior to the due date for any installment of
interest thereon or on the Stated Maturity of any Security all payments so due,
which payments shall be in immediately available funds on the date of such due
date or Stated Maturity, as the case may be.

SECTION 10.2. Maintenance of Offices or Agencies.

The Company hereby appoints (a) an office or agency of the Trustee in the
Borough of Manhattan, The City of New York, where Securities may be presented or
surrendered for payment, where Securities may be surrendered for registration of
transfer or exchange, where Securities may be surrendered for conversion, and
where notices and demands to or upon the Company in respect of the Securities
and this Indenture may be served, and (b) so long as the Securities are listed
on Luxembourg Stock Exchange and the Luxembourg Stock Exchange shall require,
the office of Banque de Luxembourg, 14 Boulevard Royal, L-2449 Luxembourg, as
its agent outside of the United States where, subject to any applicable laws or
regulations, Securities may be surrendered for payment, where Securities may be
surrendered for registration of transfer or exchange and where Securities may be
surrendered for conversion.

The Company may at any time and from time to time vary or terminate the
appointment of any such agent or appoint any additional agents for any or all of
such purposes; provided, however, that until all of the Securities have been
delivered to the Trustee for cancellation, or moneys sufficient to pay the
principal of, premium, if any, and interest on the Securities have been made
available for payment and either paid or returned to the Company pursuant to the
provisions of Section 10.3, the Company will maintain (1) in the Borough of
Manhattan, The City of New York, an office or agency where Securities may be
presented or surrendered for payment and conversion, where Securities may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Company in respect of the Securities and this Indenture
may be served, and (2) so long as the Securities are listed on the Luxembourg
Stock Exchange and the Luxembourg Stock Exchange shall require, subject to any
laws or regulations applicable thereto, in Luxembourg an office or agency where
Securities may be presented and surrendered for payment, where Securities may be
presented for registration of transfer or exchange or conversion. The Company
will give prompt written notice to the Trustee, and notice to the Holders in
accordance with Section 1.6, of the appointment or termination of any such
agents and of the location and any change in the location of any such office or
agency.

If at any time the Company shall fail to maintain any such required office
or agency, or shall fail to furnish the Trustee with the address thereof,
presentations and surrenders may be made and notices and demands may be served
on the office or agency of the Trustee in the Borough of Manhattan, the City

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of New York, or other Paying Agent or Conversion Agent outside the United
States, and the Company hereby appoints the Paying Agent in Luxembourg as its
agent to receive such respective presentations, surrenders, notices and demands
outside the United States.

SECTION 10.3. Money for Security Payments To Be Held in Trust.

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

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

The Company will cause each Paying Agent other than the Trustee to execute
and deliver to the Trustee an instrument in which such Paying Agent shall agree
with the Trustee, subject to the provisions of this Section, that such Paying
Agent will:

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

(2) give the Trustee notice of any default by the Company (or any
other obligor upon the Securities) in the making of any payment of
principal, premium, if any, or interest; and

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

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

Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of, premium, if any, or
interest on any Security and remaining unclaimed for the earlier of ten days
prior to the time such money would escheat to the state or two years after such

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

SECTION 10.4. Additional Amounts.

The Company will pay to the Holder of any Security Additional Amounts as
provided in the form of Security, as set forth in Section 2.2. Whenever in this
Indenture there is mentioned, in any context, the payment of the principal of,
premium, if any, or interest on, or in respect of, any Security, such mention
shall be deemed to include mention of the payment of Additional Amounts provided
for in this Section to the extent that, in such context, Additional Amounts are,
were or would be payable in respect thereof pursuant to the provisions of this
Section and express mention of the payment of Additional Amounts (if applicable)
in any provisions hereof shall not be construed as excluding Additional Amounts
in those provisions hereof where such express mention is not made.

At least 10 days prior to March 1, 1998, or an earlier Redemption Date or
Repurchase Date (and at least 10 days prior to each date of payment of
principal, premium, if any, or interest after March 1, 1998, or such earlier
Redemption Date or Repurchase Date), the Company shall furnish the Trustee and
the Paying Agent in Luxembourg and the Paying Agent in the Borough of Manhattan,
The City of New York, if other than the Trustee, with an Officers' Certificate
instructing the Trustee and such Paying Agents whether or not such payment of
principal of, premium, if any, or interest on the Securities shall be made to
the Holders of Securities subject to withholding or deduction. If any
withholding or deduction shall be required, such Officers' Certificate shall
specify the amount required to be withheld or deducted with respect to such
payments to such Holders of Securities and the Company will pay to the Trustee
or the applicable Paying Agent the Additional Amounts, if any, required to be
paid as set forth in the first sentence of this Section 10.4. The Company
covenants to indemnify the Trustee and any Paying Agent for, and to hold them
harmless against, any loss, liability or expense reasonably incurred without
negligence, bad faith or willful misconduct arising out of or in connection with
actions taken or omitted by any of them in reliance on any Officers' Certificate
furnished pursuant to this Section. In the absence of any such Officers'
Certificates with respect to withholding, the Trustee can conclusively rely on
the fact that there is no such withholding.

SECTION 10.5. Corporate Existence.

Subject to Article Seven, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its existence.

SECTION 10.6. Statement by Officers as to Default.

The Company will deliver to the Trustee within 120 days after the end of
each fiscal year of the Company an Officers' Certificate stating that in the
course of performance by the signers of their duties

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as such officers of the Company they would normally obtain knowledge of whether
any default exists in the performance and observance of any of the terms,
provisions and conditions of this Indenture and whether the Company has kept,
observed, performed and fulfilled its obligations under this Indenture. Such
Officers' Certificate shall further state, as to each such officer signing such
Certificate, to the best of the knowledge of such officer, as of the date of
such Officers' Certificate, (a) whether any such default exists, (b) whether the
Company (as applicable) during the preceding fiscal year kept, observed,
performed and fulfilled each and every covenant and obligation of the Company
under this Indenture and (c) whether there was any default in the performance
and observance of any of the terms, provisions or conditions of this Indenture
during such preceding fiscal year. If the officer or officers signing the
Officers' Certificate know of such a default, whether then existing or occurring
during such preceding fiscal year, the Officers' Certificate shall describe such
default and its status with particularity. The Company shall also promptly
notify the Trustee if the Company's fiscal year is changed so that the end
thereof is on any date other than the then current fiscal year end date.

The Company will deliver to the Trustee, forthwith upon becoming aware of
any default in the performance or observance of any covenant, agreement or
condition contained in this Indenture, or any Event of Default, an Officers'
Certificate specifying with particularity such default or Event of Default and
further stating what action the Company has taken, is taking or proposes to take
with respect thereto.

Any notice required to be given under this Section 10.6 shall be delivered
to the Trustee at its Corporate Trust Office.

SECTION 10.7. Delivery of Certain Information.

At any time when the Company is not subject to Section 13 or 15(d) of the
Exchange Act, upon the request of a holder of a Restricted Security, the Company
will promptly furnish or cause to be furnished Rule 144A Information (as defined
below) to such holder of Restricted Securities, or to a prospective purchaser of
any such security designated by any such holder, as the case may be, to the
extent required to permit compliance by such holder with Rule 144A under the
Securities Act (or any successor provision thereto) in connection with the
resale of any such security; provided, however, that the Company shall not be
required to furnish such information in connection with any request made on or
after the date which is two years from the later of (i) the date such a security
(or any such predecessor security) was last acquired from the Company or (ii)
the date such a security (or any such predecessor security) was last acquired
from an "affiliate" of the Company within the meaning of Rule 144 under the
Securities Act (or any successor provision thereto). "Rule 144A Information"
shall be such information as is specified pursuant to Rule 144A(d)(4) under the
Securities Act (or any successor provision thereto).

ARTICLE ELEVEN

REDEMPTION OF SECURITIES

SECTION 11.1. Right of Redemption.

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The Securities may be redeemed in accordance with the provisions of the
form of Security set forth in Section 2.2.

SECTION 11.2. Applicability of Article.

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

SECTION 11.3. Election to Redeem; Notice to Trustee.

The election of the Company to redeem any Securities shall be evidenced by
a Board Resolution. In case of any redemption at the election of the Company of
any of the Securities, the Company shall, at least 45 days prior to the
Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee in writing of such Redemption
Date. If the Securities are to be redeemed pursuant to an election of the
Company which is subject to a condition specified in the form of Security set
forth in Section 2.2, the Company shall furnish the Trustee with an Officers'
Certificate stating that the Company is entitled to effect such redemption and
setting forth a statement of facts showing that the conditions precedent to the
right of the Company so to redeem have occurred.

SECTION 11.4. Selection by Trustee of Securities to Be Redeemed.

If less than all the Securities are to be redeemed (other than pursuant to
the fourth paragraph on the reverse of the form of Security in Section 2.2), the
particular Securities to be redeemed shall be selected by the Trustee within
seven Business Days after it receives the notice described in 11.3, from the
Outstanding Securities not previously called for redemption, by such method as
the Trustee may deem fair and appropriate.

If any Security selected for partial redemption is converted in part
before termination of the conversion right with respect to the portion of the
Security so selected, the converted portion of such Security shall be deemed (so
far as may be) to be the portion selected for redemption. Securities which have
been converted during a selection of Securities to be redeemed may be treated by
the Trustee as Outstanding for the purpose of such selection.

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

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

SECTION 11.5. Notice of Redemption.

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Notice of redemption shall be given in the manner provided in Section 1.6
to the Holders of Securities to be redeemed not less than 20 nor more than 60
days prior to the Redemption Date, and such notice shall be irrevocable.

All notices of redemption shall state:

(1) the Redemption Date,

(2) the Redemption Price,

(3) if less than all Outstanding Securities are to be redeemed,
the aggregate principal amount of Securities to be redeemed and the
aggregate principal amount of Securities which will be outstanding after
such partial redemption,

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

(5) the Conversion Price then in effect, the date on which the
right to convert the Securities to be redeemed will terminate and the
places where such Securities may be surrendered for conversion,

(6) the place or places where such Securities are to be
surrendered for payment of the Redemption Price and accrued interest, if
any, and

(7) in the case of a notice of redemption pursuant to the fourth
paragraph on the reverse of the form of Security in Section 2.2, a form of
written certification of each beneficial owner of a Security as to such
beneficial owner's entitlement to Additional Amounts.

In case of a partial redemption, the notice shall specify the serial and
CUSIP numbers (if any) and the portions thereof called for redemption and that
transfers and exchanges may occur on or prior to the Redemption Date.

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

So long as the Securities are listed on the Luxembourg Stock Exchange and
the rules of the Luxembourg Stock Exchange shall require, notice of redemption
will be given by publication in a Authorized Newspaper in Luxembourg, or, if not
practicable in Luxembourg, elsewhere in a Western European city.

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SECTION 11.6. Deposit of Redemption Price.

By 10:00 a.m. (New York time) on any Redemption Date of the Securities,
the Company shall deposit with the Trustee or with the Paying Agent so directed
by the Trustee (or, if the Company is acting as its own Paying Agent, segregate
and hold in trust as provided in Section 10.3) an amount of money (which shall
be in immediately available funds on such Redemption Date) sufficient to pay the
Redemption Price of, and accrued interest on, all the Securities which are to be
redeemed on that date other than any Securities called for redemption on that
date which have been converted prior to the date of such deposit.

If any Security called for redemption is converted, any money deposited
with the Trustee or with a Paying Agent or so segregated and held in trust for
the redemption of such Security shall (subject to any right of the Holder of
such Security, if a Security, or any Predecessor Security to receive interest as
provided in the last paragraph of Section 3.7) be paid to the Company on Company
Request as soon as administratively practicable after the Trustee receives such
Company Request or, if then held by the Company, shall be discharged from such
trust.

SECTION 11.7. Securities Payable on Redemption Date.

Notice of redemption having been given as aforesaid, the Securities so to
be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified and from and after such date (unless the
Company shall default in the payment of the Redemption Price, including accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
Security for redemption in accordance with said notice, such Security shall be
paid by the Company at the Redemption Price together with accrued and unpaid
interest to the Redemption Date; provided, however, that installments of
interest on Securities whose Stated Maturity is on or prior to the Redemption
Date shall be payable to the Holders of such Securities, or one or more
Predecessor Securities, registered as such on the relevant Record Date according
to their terms and the provisions of Section 3.7.

If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal amount of, premium, if any, and, to the
extent permitted by applicable law, accrued interest on such Security shall,
until paid, bear interest from the Redemption Date at a rate of 4.75% per annum
and such Security shall remain convertible into Common Stock until the principal
of such Security (or portion thereof, as the case may be) shall have been paid
or duly provided for.

SECTION 11.8. Securities Redeemed in Part.

Any Security which is to be redeemed only in part shall be surrendered at
an office or agency of the Company designated for that purpose pursuant to
Section 10.2 (with, if the Company or the Trustee so requires, due endorsement
by, or a written instrument of transfer in form satisfactory to the Company and
the Trustee duly executed by, the Holder thereof or his attorney duly authorized
in writing), and the Company shall execute, and the Trustee shall authenticate
and make available for delivery to the Holder of such Security without service
charge, a new Security or Securities, of any authorized denomination

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as requested by such Holder, in aggregate principal amount equal to and in
exchange for the unredeemed portion of the principal of the Security so
surrendered.

SECTION 11.9. Conversion Arrangement on Call for Redemption.

In connection with any redemption of Securities, the Company may arrange
for the purchase and conversion of any Securities by an agreement with one or
more investment bankers or other purchasers (the "Purchasers") to purchase such
securities by paying to the Trustee in trust for the Holders, on or before the
Redemption Date, an amount not less than the applicable Redemption Price,
together with interest accrued to the Redemption Date, of such Securities.
Notwithstanding anything to the contrary contained in this Article Eleven, the
obligation of the Company to pay the Redemption Price, together with interest
accrued to, but excluding, the Redemption Date, shall be deemed to be satisfied
and discharged to the extent such amount is so paid by such Purchasers. If such
an agreement is entered into (a copy of which shall be filed with the Trustee
prior to the close of business on the Business Day immediately prior to the
Redemption Date), any Securities called for redemption that are not duly
surrendered for conversion by the Holders thereof may, at the option of the
Company, be deemed, to the fullest extent permitted by law, and consistent with
any agreement or agreements with such Purchasers, to be acquired by such
Purchasers from such Holders and (notwithstanding anything to the contrary
contained in Article Twelve) surrendered by such Purchasers for conversion, all
as of immediately prior to the close of business on the Redemption Date (and the
right to convert any such Securities shall be extended though such time),
subject to payment of the above amount as aforesaid. At the direction of the
Company, the Trustee shall hold and dispose of any such amount paid to it to the
Holders in the same manner as it would monies deposited with it by the Company
for the redemption of Securities. Without the Trustee's prior written consent,
no arrangement between the Company and such Purchasers for the purchase and
conversion of any Securities shall increase or otherwise affect any of the
powers, duties, responsibilities or obligations of the Trustee as set forth in
this Indenture, and the Company agrees to indemnify the Trustee from, and hold
it harmless against, any loss, liability or expense arising out of or in
connection with any such arrangement for the purchase and conversion of any
Securities between the Company and such Purchasers, including the costs and
expenses, including reasonable legal fees, incurred by the Trustee in the
defense of any claim or liability arising out of or in connection with the
exercise or performance of any of its powers, duties, responsibilities or
obligations under this Indenture.

ARTICLE TWELVE

CONVERSION OF SECURITIES

SECTION 12.1. Conversion Privilege and Conversion Price.

Subject to and upon compliance with the provisions of this Article Twelve,
at the option of the Holder thereof, the Holder of any Security is entitled at
his option, at any time prior to the close of business on September 1, 2002, to
convert such Security into fully paid and nonassessable shares (calculated as to
each conversion to the nearest 1/100th of a share) of Common Stock of the
Company

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at the Conversion Price, determined as hereinafter provided, in effect at the
time of conversion. Such conversion right shall be subject, in the case of the
conversion of any Global Security, to any applicable book-entry procedures of
the Depositary therefor and the following sentence. In case a Security or
portion thereof is called for redemption or is delivered for repurchase, such
conversion right in respect of the Security or portion so called shall expire at
the close of business on the Business Day prior to the Redemption Date or the
Repurchase Date (as defined in Article Fourteen), as the case may be, unless the
Company defaults in making the payment due upon redemption or repurchase, as the
case may be.

The price at which shares of Common Stock shall be delivered upon
conversion (herein called the "Conversion Price") shall be initially U.S.$41.93
per share of Common Stock. The Conversion Price shall be adjusted in certain
instances as provided in this Article Twelve.

SECTION 12.2. Exercise of Conversion Privilege.

Beneficial owners of interests in a Global Security may exercise their
right of conversion by delivering to the Depositary the appropriate instruction
form for conversion pursuant to the Depositary's conversion program and, in the
case of conversions through Euroclear or Cedel, in accordance with Euroclear's
or Cedel's normal operating procedures. To convert a definitive Security into
shares of Common Stock, a Holder must (i) complete and manually sign the
conversion notice in the form set forth in Section 2.4 on the back of the
definitive Security (or complete and manually sign a facsimile thereof) and
deliver such notice to the Trustee at the office of Deutsche Bank AG, New York
Branch, in New York, New York or the Conversion Agent in Luxembourg, (ii)
surrender the definitive Security to the Trustee at the office of Deutsche Bank
AG, New York Branch, in New York, New York or to the Conversion Agent in
Luxembourg, (iii) if required, furnish appropriate endorsements and transfer
documents, (iv) if required, pay all transfer or similar taxes, and (v) if
required, pay funds equal to interest payable on the next Interest Payment Date.
The date on which all of the foregoing requirements have been satisfied is the
date of surrender for conversion. The Trustee shall promptly deliver to the
Company and the Company's Common Stock transfer agent notification of such
notice of conversion at the address described in Section 1.5. Such notice of
conversion can be obtained from the Trustee at the Corporate Trust Office or the
office of any Conversion Agent. Each Security surrendered for conversion will be
converted into Common Stock in registered form. Each Security surrendered for
conversion (in whole or in part) during the period from the close of business on
any Regular Record Date to the opening of business on the next succeeding
Interest Payment Date (except Securities called for redemption on a Redemption
Date or to be repurchased on a Repurchase Date during, in each case, such
period) shall be accompanied by payment in New York Clearing House funds or
other funds acceptable to the Company of an amount equal to the interest payable
on such Interest Payment Date on the principal amount of such Security (or part
thereof, as the case may be) being surrendered for conversion. The interest so
payable on such Interest Payment Date with respect to any Security (or portion
thereof, if applicable) which has been called for redemption on a Redemption
Date, or is repurchasable on a Repurchase Date, occurring, in either case,
during the period from the close of business on any Record Date next preceding
any Interest Payment Date to the opening of business on such Interest Payment
Date, which Security (or portion thereof, if applicable) is surrendered for
conversion during such period, shall be paid to the Holder of such Security
being converted in an amount equal to the interest that would have been payable

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on such Security if such Security had been converted as of the close of business
on such Interest Payment Date. The interest so payable on such Interest Payment
Date in respect of any Security (or portion thereof, as the case may be) which
has not been called for redemption on a Redemption Date, or is not eligible for
repurchase on a Repurchase Date, occurring, in either case, during the period
from the close of business on any Record Date next preceding any Interest
Payment Date, which Security (or portion thereof, as the case may be) is
surrendered for conversion during such period, shall be paid to the Holder of
such Security as of such Regular Record Date. Except as provided in this
paragraph and subject to the last paragraph of Section 3.7, no cash payment or
adjustment shall be made upon any conversion on account of, if the date of
conversion is not an Interest Payment Date, any interest accrued from the
Interest Payment Date next preceding the conversion date, in respect of any
Security (or part thereof, as the case may be) surrendered for conversion, or on
account of any dividends on the shares of Common Stock issued upon conversion.
The Company's delivery to the Holder of the number of shares of Common Stock
(and cash in lieu of fractions thereof, as provided in this Indenture) into
which a Security is convertible will be deemed to satisfy the Company's
obligation to pay the principal amount of the Security.

Securities shall be deemed to have been converted immediately prior to the
close of business on the day of surrender of such Securities for conversion, in
accordance with the foregoing provisions, and at such time the rights of the
Holders of such Securities as Holders shall cease, and the Person or Persons
entitled to receive the shares of Common Stock issuable upon conversion shall be
treated for all purposes as the record holder or holders of such Common Stock at
such time. As promptly as practicable on or after the conversion date, the
Company shall issue and deliver to the Trustee, for delivery to the Holder, a
certificate or certificates for the number of full shares of Common Stock
issuable upon conversion, together with payment in lieu of any fraction of a
share, as provided in Section 12.3.

All shares of Common Stock delivered upon such conversion of Securities
that are Restricted Securities shall, if required, bear restrictive legends set
forth in Section 3.4(d) and shall be subject to the restrictions on transfer
provided in such legends. Neither the Trustee nor any agent maintained for the
purpose of such conversion shall have any responsibility for the inclusion or
content of any such restrictive legends on such shares of Common Stock;
provided, however, that the Trustee or Conversion Agent shall have provided, to
the Company or to the Note Registrar for such shares of Common Stock, prior to
or concurrently with a request to the Company to deliver such shares of Common
Stock, written notice that the Securities delivered for conversion are
Restricted Securities.

In the case of any Security which is converted in part only, upon such
conversion the Company shall execute and the Trustee shall authenticate and
deliver to the Holder thereof, at the expense of the Company, a new Security or
Securities of authorized denominations in an aggregate principal amount equal to
the unconverted portion of the principal amount of such Security. A Security may
be converted in part, but only if the principal amount of such Security to be
converted is any integral multiple of U.S.$1,000 and the principal amount of
such security to remain Outstanding after such conversion is equal to U.S.$1,000
or any integral multiple thereof.

SECTION 12.3. Fractions of Shares.

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No fractional shares of Common Stock shall be issued upon conversion of
any Securities. If more than one Security shall be surrendered for conversion at
one time by the same Holder, the number of full shares which shall be issuable
upon conversion thereof shall be computed on the basis of the aggregate
principal amount of the Securities (or specified portions thereof) so
surrendered. Instead of any fractional share of Common Stock which would
otherwise be issuable upon conversion of any Securities (or specified portions
thereof), the Company shall calculate and pay a cash adjustment in respect of
such fraction (calculated to the nearest 1/100th of a share) in an amount equal
to the same fraction of the Current Market Price per share of Common Stock
(calculated in accordance with Section 12.4(8)(b) below) at the close of
business on the day of conversion.

SECTION 12.4. Adjustment of Conversion Price.

The Conversion Price shall be subject to adjustments from time to time as
follows:

(1) In case the Company shall hereafter pay a dividend or make a
distribution to all holders of the outstanding Common Stock in shares of Common
Stock, the Conversion Price in effect at the opening of business on the date
following the date fixed for the determination of stockholders entitled to
receive such dividend or other distribution shall be reduced by multiplying such
Conversion Price by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding at the close of business on the date fixed
for such determination and the denominator of which shall be the sum of such
number of shares and the total number of shares constituting such dividend or
other distribution, such reduction to become effective immediately after the
opening of business on the day following the date fixed for such determination.
If any dividend or distribution of the type described in this Section 12.4(1) is
declared but not so paid or made, the Conversion Price shall again be adjusted
to the Conversion Price which would then be in effect if such dividend or
distribution had not been declared.

(2) In case the Company shall issue rights or warrants to all holders of
its outstanding Common Stock entitling them (for a period expiring within 45
days after the date fixed for determination of stockholders entitled to receive
such rights or warrants) to subscribe for or purchase Common Stock at a price
per share less than the Current Market Price (as defined in Section 12.4(8)(b))
on the date fixed for determination of stockholders entitled to receive such
rights or warrants, the Conversion Price shall be adjusted so that the same
shall equal the price determined by multiplying the Conversion Price in effect
immediately prior to the date fixed for determination of shareholders entitled
to receive such rights or warrants by a fraction, the numerator of which shall
be the number of shares of Common Stock outstanding at the close of business on
the date fixed for determination of stockholders entitled to receive such rights
and warrants plus the number of shares which the aggregate offering price of the
total number of shares so offered would purchase at such Current Market Price,
and the denominator of which shall be the number of shares of Common Stock
outstanding on the date fixed for determination of stockholders entitled to
receive such rights and warrants plus the total number of additional shares of
Common Stock offered for subscription or purchase. Such adjustment shall be
successively made whenever any such rights and warrants are issued, and shall
become effective immediately after the opening of business on the day following
the date fixed for determination of stockholders entitled to receive such rights
or warrants. To the extent that shares of Common Stock are not delivered after
the

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expiration of such rights or warrants, the Conversion Price shall be readjusted
to the Conversion Price which would then be in effect had the adjustments made
upon the issuance of such rights or warrants been made on the basis of delivery
of only the number of shares of Common Stock actually delivered. In the event
that such rights or warrants are not so issued, the Conversion Price shall again
be adjusted to be the Conversion Price which would then be in effect if such
date fixed for the determination of stockholders entitled to receive such rights
or warrants had not been fixed. In determining whether any rights or warrants
entitle the holders to subscribe for or purchase Common Stock at less than such
Current Market Price, and in determining the aggregate offering price of such
Common Stock, there shall be taken into account any consideration received by
the Company for such rights or warrants, the value of such consideration, if
other than cash, to be determined by the Board of Directors.

(3) In case outstanding Common Stock shall be subdivided into a greater
number of shares of Common Stock, the Conversion Price in effect at the opening
of business on the day following the day upon which such subdivision becomes
effective shall be proportionately reduced, and conversely, in case outstanding
shares of Common Stock shall be combined into a smaller number of shares of
Common Stock, the Conversion Price in effect at the opening of business on the
day following the day upon which such combination becomes effective shall be
proportionately increased.

(4) In case the Company shall, by dividend or otherwise, distribute to
all holders of its Common Stock shares of any class of capital stock of the
Company (other than any dividends or distributions to which Section 12.4(1)
applies) or evidences of its indebtedness or assets (including securities, but
excluding any rights or warrants referred to in Section 12.4(2), and excluding
any dividend or distribution (x) paid exclusively in cash or (y) referred to in
Section 12.4(1) (any of the foregoing hereinafter in this Section 12.4(4) called
the "Distribution Securities")), then, in each such case, the Conversion Price
shall be reduced so that the same shall be equal to the price determined by
multiplying the Conversion Price in effect on the Distribution Record Date with
respect to such distribution by a fraction the numerator of which shall be the
Current Market Price per share of Common Stock on such Distribution Record Date
less the fair market value (as determined by the Board of Directors whose
determination shall be conclusive and described in a resolution of the Board of
Directors) on the Distribution Record Date of the portion of the Distribution
Securities so distributed applicable to one share of Common Stock and the
denominator of which shall be the Current Market Price per share of Common
Stock, such reduction to become effective immediately prior to the opening of
business on the day following such Distribution Record Date; provided, however,
that in the event the then fair market value (as so determined) of the portion
of the Distribution Securities so distributed applicable to one share of Common
Stock is equal to or greater than the Current Market Price per share of the
Common Stock on the Distribution Record Date, in lieu of the foregoing
adjustment, adequate provision shall be made so that each Holder shall have the
right to receive upon conversion the amount of Distribution Securities such
Holder would have received had such Holder converted each Security on the
Distribution Record Date. In the event that such dividend or distribution is not
so paid or made, the Conversion Price shall again be adjusted to be the
Conversion Price which would then be in effect if such dividend or distribution
had not been declared. If the Company's Board of Directors determines the fair
market value of any distribution for purposes of this Section 12.4(4) by
reference to the actual or when issued trading

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market for any securities, it must in doing so consider the prices in such
market over the same period used in computing the Current Market Price of the
Common Stock.

In the event that the Company implements a stockholder rights plan, such
rights plan shall provide that upon conversion of the Securities the Holders
will receive, in addition to the Common Stock issuable upon such conversion, the
rights issued under such rights plan (notwithstanding the occurrence of an event
causing such rights to separate from the Common Stock at or prior to the time of
conversion). Any distribution of rights or warrants pursuant to a stockholder
rights plan complying with the requirements set forth in the immediately
preceding sentence of this paragraph shall not constitute a distribution of
rights or warrants for the purposes of this Section 12.4.

Rights or warrants distributed by the Company to all holders of Common
Stock entitling the holders thereof to subscribe for or purchase shares of the
Company's capital stock (either initially or under certain circumstances), which
rights or warrants, until the occurrence of a specified event or events
("Trigger Event"): (i) are deemed to be transferred with such shares of Common
Stock; (ii) are not exercisable; and (iii) are also issued in respect of future
issuances of shares of Common Stock, shall be deemed not to have been
distributed for purposes of this Section 12.4 (and no adjustment to the
Conversion Price under this Section 12.4 will be required) until the occurrence
of the earliest Trigger Event, whereupon such rights and warrants shall be
deemed to have been distributed and an appropriate adjustment (if any is
required) to the Conversion Price shall be made under this Section 12.4(4). If
any such right or warrant, including any such existing rights or warrants
distributed prior to the date of this Indenture, are subject to events, upon the
occurrence of which such rights or warrants become exercisable to purchase
different securities, evidences of indebtedness or other assets, then the date
of the occurrence of any and each such event shall be deemed to be the date of
distribution and record date with respect to new rights or warrants with such
rights (and a termination or expiration of the existing rights or warrants
without exercise by any of the holders thereof). In addition, in the event of
any distribution (or deemed distribution) of rights or warrants, or any Trigger
Event or other event (of the type described in the preceding sentence) with
respect thereto that was counted for purposes of calculating a distribution
amount for which an adjustment to the Conversion Price under this Section 12.4
was made, (1) in the case of any such rights or warrants which shall all have
been redeemed or repurchased without exercise by any holders thereof, the
Conversion Price shall be readjusted upon such final redemption or repurchase to
give effect to such distribution or Trigger Event, as the case may be, as though
it were a cash distribution, equal to the per share redemption or repurchase
price received by a holder or holders of shares of Common Stock with respect to
such rights or warrants (assuming such holder had retained such rights or
warrants), made to all holders of shares of Common Stock as of the date of such
redemption or repurchase, and (2) in the case of such rights or warrants which
shall have expired or been terminated without exercise by any holders thereof,
the Conversion Price shall be readjusted as if such rights and warrants had not
been issued.

Notwithstanding the foregoing, in the event that the Company shall
distribute rights or warrants to subscribe for additional shares of the Common
Stock (other than rights or warrants described in Section 12.4(2)), pro rata to
holders of Common Stock, the Company may, in lieu of making any adjustment
pursuant to this Section 12.4(4), make proper provision so that each holder of a
Security who

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converts such Security (or any portion thereof) after the Distribution Record
Date for such distribution and prior to the expiration or redemption of such
rights or warrants shall be entitled to receive upon such conversion, in
addition to the shares of Common Stock issuable upon such conversion (the
"Conversion Shares"), a number of rights or warrants to be determined as
follows: (i) if such conversion occurs on or prior to the date for the
distribution to the holders of such rights or warrants of separate certificates
evidencing such rights or warrants (the "Distribution Date"), the same number of
rights or warrants to which a holder of a number of shares of Common Stock equal
to the number of Conversion Shares is entitled at the time of such conversion in
accordance with the terms and provisions of and applicable to such rights or
warrants; and (ii) if such conversion occurs after the Distribution Date, the
same number of rights or warrants to which a holder of the number of shares of
Common Stock into which the principal amount of the Security so converted was
convertible immediately prior to the Distribution Date would have been entitled
on the Distribution Date in accordance with the terms and provisions of, and
applicable to such rights or warrants.

For purposes of this Section 12.4(4) and Sections 12.4(1) and (2), any
dividend or distribution to which this Section 12.4(4) is applicable that also
includes shares of Common Stock, or rights or warrants to subscribe for or
purchase shares of Common Stock (or both), shall be deemed instead to be (1) a
dividend or distribution of the evidences of indebtedness, assets or shares of
capital stock other than such shares of Common Stock or rights or warrants (and
any Conversion Price reduction required by this Section 12.4(4) with respect to
such dividend or distribution shall then be made) immediately followed by (2) a
dividend or distribution of such shares of Common Stock or such rights or
warrants (and any further Conversion Price reduction required by Sections
12.4(1) and (2) with respect to such dividend or distribution shall then be
made), except (A) the Distribution Record Date of such dividend or distribution
shall be substituted as "the date fixed for the determination of shareholders
entitled to receive such dividend or other distribution" and "the date fixed for
such determination" within the meaning of Sections 12.4(1) and (2) and (B) any
shares of Common Stock included in such dividend or distribution shall not be
deemed "outstanding at the close of business on the date fixed for such
determination" within the meaning of Section 12.4(1).

(5) In case the Company shall, by dividend or otherwise, distribute to
all holders of its Common Stock cash (excluding (x) any quarterly cash dividend
on the Common Stock to the extent the aggregate cash dividend per share of
Common Stock in any quarterly period does not exceed the greater of (A) the
amount per share of Common Stock of the next preceding quarterly cash dividend
on the Common Stock to the extent that such preceding quarterly dividend did not
require any adjustment of the Conversion Price pursuant to this Section 12.4(5)
(as adjusted to reflect subdivisions or combinations of the Common Stock), and
(B) 3.75% of the arithmetic average of the Closing Prices (determined as set
forth in Section 12.4(8)(a)) during the ten Trading Days immediately prior to
the date of declaration of such dividend, (y) any dividend or distribution in
connection with the liquidation, dissolution or winding up of the Company,
whether voluntary or involuntary and (z) any cash that is distributed as part of
a distribution requiring a Conversion Price adjustment pursuant to Section
12.4(4)), then, in such case, the Conversion Price shall be reduced so that the
same shall equal the price determined by multiplying the Conversion Price in
effect immediately prior to the close of business on such Distribution Record
Date by a fraction of which the numerator shall be the Current Market Price of
the Common Stock on

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the Distribution Record Date less the amount of cash so distributed (and not
excluded as provided above) applicable to one share of Common Stock and the
denominator shall be such Current Market Price of the Common Stock, such
reduction to be effective immediately prior to the opening of business on the
day following the Distribution Record Date; provided, however, that in the event
the portion of the cash so distributed applicable to one share of Common Stock
is equal to or greater than the Current Market Price of the Common Stock on the
Distribution Record Date, in lieu of the foregoing adjustment, adequate
provision shall be made so that each Holder shall have the right to receive upon
conversion the amount of cash such Holder would have received had such Holder
converted each Security on the Distribution Record Date. In the event that such
dividend or distribution is not so paid or made, the Conversion Price shall
again be adjusted to be the Conversion Price which would then be in effect if
such dividend or distribution had not been declared. If any adjustment is
required to be made as set forth in this Section 12.4(5) as a result of a
distribution that is a quarterly dividend, such adjustment shall be based upon
the amount by which such distribution exceeds the amount of the quarterly cash
dividend permitted to be excluded pursuant hereto. If an adjustment is required
to be made as set forth in this Section 12.4(5) above as a result of a
distribution that is not a quarterly dividend, such adjustment shall be based
upon the full amount of the distribution.

(6) In case a tender or exchange offer made by the Company or any
Subsidiary of the Company for all or any portion of the Common Stock shall
expire and such tender or exchange offer (as amended upon the expiration
thereof) shall require the payment to stockholders of consideration per share of
Common Stock having a fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and described in a Board
Resolution) that as of the last time (the "Expiration Time") tenders or
exchanges may be made pursuant to such tender or exchange offer (as it may be
amended) that exceeds the Current Market Price per share of the Common Stock on
the Trading Day next succeeding the Expiration Time, the Conversion Price shall
be reduced so that the same shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to the Expiration Time by a
fraction of which the numerator shall be the number of shares of Common Stock
outstanding (including any tendered or exchanged shares) on the Expiration Time
multiplied by the Current Market Price of the Common Stock on the Trading Day
next succeeding the Expiration Time and the denominator shall be the sum of (x)
the fair market value (determined as aforesaid) of the aggregate consideration
payable to stockholders based on the acceptance (up to any maximum specified in
the terms of the tender or exchange offer) of all shares validly tendered or
exchanged and not withdrawn as of the Expiration Time (the shares deemed so
accepted, up to any such maximum, being referred to as the "Purchased Shares")
and (y) the product of the number of shares of Common Stock outstanding (less
any Purchased Shares) on the Expiration Time and the Current Market Price of the
Common Stock on the Trading Day next succeeding the Expiration Time, such
reduction to become effective immediately prior to the opening of business on
the day following the Expiration Time. In the event that the Company is
obligated to purchase shares pursuant to any such tender or exchange offer, but
the Company is permanently prevented by applicable law from effecting any such
purchases or all such purchases are rescinded, the Conversion Price shall again
be adjusted to be the Conversion Price which would then be in effect if such
tender or exchange offer had not been made.

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(7) In case of a tender or exchange offer made by a Person other than
the Company or any Subsidiary of the Company for an amount which increases the
offeror's ownership of Common Stock to more than 25% of the Common Stock
outstanding and shall involve the payment by such Person of consideration per
share of Common Stock having a fair market value (as determined by the Board of
Directors, whose determination shall be conclusive, and described in a
resolution of the Board) at the last time (the "Tender Expiration Time") tenders
or exchanges may be made pursuant to such tender or exchange offer (as it shall
have been amended) that exceeds the Current Market Price of the Common Stock on
the Trading Day next succeeding the Tender Expiration Time, and in which, as of
the Tender Expiration Time the Board of Directors is not recommending rejection
of the offer, the Conversion Price shall be reduced so that the same shall equal
the price determined by multiplying the Conversion Price in effect immediately
prior to the Tender Expiration Time by a fraction of which the numerator shall
be the number of shares of Common Stock outstanding (including any tendered or
exchanged shares) on the Tender Expiration Time multiplied by the Current Market
Price of the Common Stock on the Trading Day next succeeding the Tender
Expiration Time and the denominator shall be the sum of (x) the fair market
value (determined as aforesaid) of the aggregate consideration payable to
stockholders based on the acceptance (up to any maximum specified in the terms
of the tender or exchange offer) of all shares validly tendered or exchanged and
not withdrawn as of the Tender Expiration Time (the shares deemed so accepted,
up to any such maximum, being referred to as the "Accepted Purchased Shares")
and (y) the product of the number of shares of Common Stock outstanding (less
any Accepted Purchased Shares) on the Tender Expiration Time and the Current
Market Price of the Common Stock on the Trading Day next succeeding the Tender
Expiration Time, such reduction to become effective immediately prior to the
opening of business on the day following the Tender Expiration Time. In the
event that such Person is obligated to purchase shares pursuant to any such
tender or exchange offer, but such Person is permanently prevented by applicable
law from effecting any such purchases or all such purchases are rescinded, the
Conversion Price shall again be adjusted to be the Conversion Price which would
then be in effect if such tender or exchange offer had not been made.
Notwithstanding the foregoing, the adjustment described in this Section 12.4(7)
shall not be made if, as of the Tender Expiration Time, the offering documents
with respect to such offer disclose a plan or intention to cause the Company to
engage in any transaction described in Article Seven.

(8) For purposes of this Section 12.4, the following terms shall have
the meaning indicated:

(a) "Closing Price" with respect to any securities on any day
shall mean the closing sale price regular way on such day or, in case no
such sale takes place on such day, the average of the reported closing bid
and asked prices, regular way, in each case on the New York Stock
Exchange, or, if such security is not listed or admitted to trading on
such Exchange, on the principal security exchange or quotation system in
the United States on which such security is quoted or listed or admitted
to trading, or, the average of the closing bid and asked prices of such
security on the over-the-counter market on the day in question as reported
by the Nasdaq National Market or a similar generally accepted reporting
service, or if not so available, in such manner as furnished by any New
York Stock Exchange member firm selected from time to time by the Board of
Directors for that purpose, or a price determined in good faith by the
Board of

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Directors or, to the extent permitted by applicable law, a duly authorized
committee thereof, whose determination shall be conclusive.

(b) "Current Market Price" shall mean the average of the daily
Closing Prices per share of Common Stock for the ten consecutive Trading
Days immediately prior to the date in question; provided, however, that
(1) if the "ex" date (as hereinafter defined) for any event (other than
the issuance or distribution or Fundamental Change requiring such
computation) that requires an adjustment to the Conversion Price pursuant
to Section 12.4(1), (2), (3), (4), (5), (6) or (7) occurs during such ten
consecutive Trading Days, the Closing Price for each Trading Day prior to
the "ex" date for such other event shall be adjusted by multiplying such
Closing Price by the same fraction by which the Conversion Price is so
required to be adjusted as a result of such other event, (2) if the "ex"
date for any event (other than the issuance, distribution or Fundamental
Change requiring such computation) that requires an adjustment to the
Conversion Price pursuant to Section 12.4(1), (2), (3), (4), (5), (6) or
(7) occurs on or after the "ex" date for the issuance or distribution
requiring such computation and prior to the day in question, the Closing
Price for each Trading Day on and after the "ex" date for such other event
shall be adjusted by multiplying such Closing Price by the reciprocal of
the fraction by which the Conversion Price is so required to be adjusted
as a result of such other event, and (3) if the "ex" date for the
issuance, distribution or Fundamental Change requiring such computation is
prior to the day in question, after taking into account any adjustment
required pursuant to clause (1) or (2) of this proviso, the Closing Price
for each Trading Day on or after such "ex" date shall be adjusted by
adding thereto the amount of any cash and the fair market value (as
determined by the Board of Directors in a manner consistent with any
determination of such value for purposes of Section 12.4(4), (6) or (7),
whose determination shall be conclusive and described in a resolution of
the Board of Directors) of the evidences of indebtedness, shares of
capital stock or assets being distributed applicable to one share of
Common Stock as of the close of business on the day before such "ex" date.
For purposes of any computation under Section 12.4(6) or (7), the Current
Market Price of the Common Stock on any date shall be deemed to be the
average of the daily Closing Prices per share of Common Stock for such day
and the next two succeeding Trading Days; provided, however, that if the
"ex" date for any event (other than the tender or exchange offer requiring
such computation) that requires an adjustment to the Conversion Price
pursuant to Section 12.4(1), (2), (3), (4), (5), (6) or (7) occurs on or
after the Expiration Time or Tender Expiration Time, as the case may be,
for the tender or exchange offer requiring such computation and prior to
the day in question, the Closing Price for each Trading Day on and after
the "ex" date for such other event shall be adjusted by multiplying such
Closing Price by the reciprocal of the fraction by which the Conversion
Price is so required to be adjusted as a result of such other event. For
purposes of this paragraph, the term "ex" date, (1) when used with respect
to any issuance or distribution, means the first date on which the Common
Stock trades regular way on the relevant exchange or in the relevant
market from which the Closing Price was obtained without the right to
receive such issuance or distribution, (2) when used with respect to any
subdivision or combination of shares of Common Stock, means the first date
on which the Common Stock trades regular way on such exchange or in such
market after the time at which such subdivision or combination becomes
effective, and (3) when used with respect to any tender

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or exchange offer means the first date on which the Common Stock trades
regular way on such exchange or in such market after the Expiration Time
or Tender Expiration Time, as the case may be, of such offer.

(c) "fair market value" shall mean the amount which a willing
buyer would pay a willing seller in an arm's length transaction.

(d) "Distribution Record Date" shall mean, with respect to any
dividend, distribution or other transaction or event in which the holders
of Common Stock have the right to receive any cash, securities or other
property or in which the Common Stock (or other applicable security) is
exchanged for or converted into any combination of cash, securities or
other property, the date fixed for determination of stockholders entitled
to receive such cash, securities or other property (whether such date is
fixed by the Board of Directors or by statute, contract or otherwise).

(e) "Trading Day" shall mean (x) if the applicable security is
listed or admitted for trading on the New York Stock Exchange or another
national security exchange, a day on which the New York Stock Exchange or
another national security exchange is open for business or (y) if the
applicable security is quoted on the Nasdaq National Market, a day on
which trades may be made on thereon or (z) if the applicable security is
not so listed, admitted for trading or quoted, any day other than a
Saturday or Sunday or a day on which banking institutions in the State of
New York are authorized or obligated by law or executive order to close.

(9) No adjustment in the Conversion Price shall be required unless such
adjustment (plus any adjustments not previously made by reason of this paragraph
(9)) would require an increase or decrease of at least one percent in such
price; provided, however, that any adjustments which by reason of this paragraph
(9) are not required to be 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 one-hundredth of a share, as the case may
be.

(10) The Company may, at its option, make such reductions in the
Conversion Price as the Board deems advisable, in addition to those required by
paragraphs (1), (2), (3), (4), (5), (6) or (7) of this Section 12.4 in order to
avoid or diminish any income tax to any holders of Common Stock or rights to
purchase Common Stock resulting from any dividend or distribution on Common
Stock (or rights to acquire such shares) or from any event treated as such for
income tax purposes, resulting from any dividend or distribution of shares or
issuance of rights or warrants to purchase or subscribe for shares or from any
event treated as such for income tax purposes.

To the extent permitted by applicable law, the Company from time to time
may reduce the Conversion Price by any amount for any period of time if the
period is (i) at least twenty (20) days, (ii) the reduction is irrevocable
during the period and (iii) the Board shall have made a determination that such
reduction would be in the best interests of the Company, which determination
shall be conclusive. Whenever the Conversion Price is reduced pursuant to the
preceding sentence, the Company shall give notice of the reduction to the
Holders of Securities in the manner provided in Section 1.6 at least fifteen

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(15) days prior to the date the reduced Conversion Price takes effect, and such
notice shall state the reduced Conversion Price and the period during which it
will be in effect.

(11) No adjustment of the Conversion Price will result in zero or a
negative number.

SECTION 12.5. Notice of Adjustments of Conversion Price.

Whenever the Conversion Price is adjusted as herein provided:

(1) the Company shall compute the adjusted Conversion Price in
accordance with Section 12.4 and shall prepare a certificate signed by the
President, Treasurer, Chief Financial Officer or Vice President of Finance
of the Company setting forth the adjusted Conversion Price and showing in
reasonable detail the facts upon which such adjustment is based, and such
certificate shall promptly be filed with the Trustee and with each
Conversion Agent; and

(2) a notice stating that the Conversion Price has been adjusted
and setting forth the adjusted Conversion Price shall promptly be prepared
and as soon as practicable thereafter, such notice shall be provided by
the Company to all Holders in accordance with Section 1.6.

Neither the Trustee nor any Conversion Agent shall be under any duty or
responsibility with respect to any such certificate or the information and
calculations contained therein, except to exhibit the same to any Holder of
Securities desiring inspection thereof at its office during normal business
hours.

So long as the Securities are listed on the Luxembourg Stock Exchange and
the rules of the Luxembourg Stock Exchange shall require, notice of any
adjustment of the Conversion Price pursuant to this Article Twelve will be given
by publication in an Authorized Newspaper in Luxembourg, or, if not practicable
in Luxembourg, elsewhere in a Western European city. Any failure of the Company
to give such notice, or any defect therein, shall not in any way impair or
affect the validity of any such Conversion Price adjustment.

SECTION 12.6. Notice of Certain Corporate Action.

In case:

(a) the Company shall declare a dividend (or any other
distribution) on all or substantially all of its Common Stock payable (i)
otherwise than exclusively in cash or (ii) exclusively in cash in an
amount that would require any adjustment pursuant to Section 12.4; or

(b) the Company shall authorize the granting to the holders of its
Common Stock of rights, options or warrants to subscribe for or purchase
any shares of capital stock of any class or of any other rights that would
require any adjustment pursuant to Section 12.4; or

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(c) of any reclassification of the Common Stock of the Company
(other than a subdivision or combination of its outstanding Common Stock),
or of any consolidation or merger to which the Company is a party and for
which approval of any stockholders of the Company is required, or of the
sale or transfer of all or substantially all of the assets of the Company;
or

(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company; or

(e) the Company or any Subsidiary of the Company shall commence a
tender offer for all or a portion of the Company's outstanding Common
Stock (or shall amend any such tender offer);

then the Company shall cause to be filed at each office or agency maintained for
the purpose of conversion of Securities pursuant to Section 10.2, and shall
cause to be provided to all Holders in accordance with Section 1.6, at least 20
days (or 10 days in any case specified in clause (a) or (b) above) prior to the
applicable record, expiration or effective date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the purpose of such
dividend, distribution, rights, options or warrants, or, if a record is not to
be taken, the date as of which the holders of Common Stock of record to be
entitled to such dividend, distribution, rights, options or warrants are to be
determined, (y) the date on which the right to make tenders under such tender
offer expires or (z) the date on which such reclassification, consolidation,
merger, share exchange, conveyance, transfer, sale, dissolution, liquidation or
winding up is expected to become effective, and the date as of which it is
expected that holders of shares of Common Stock of record shall be entitled to
exchange their shares of Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, share exchange,
conveyance, transfer, sale, lease, dissolution, liquidation or winding up. If at
the time the Trustee shall not be the Conversion Agent, a copy of such notice
and any notice referred to in the following paragraph shall also forthwith be
filed by the Company with the Trustee.

The preceding paragraph to the contrary notwithstanding, the Company shall
cause to be filed at each office or agency maintained for the purpose of
conversion of Securities pursuant to Section 10.2, and shall cause to be
provided to all Holders in accordance with Section 1.6, notice of any tender
offer by the Company or any Subsidiary of the Company for all or any portion of
the Common Stock at or about the time that such notice of tender offer is
provided to the public generally (such notice to be sent to all Holders within
five days after receipt of such notice by the Trustee or Conversion Agent from
the Company).

SECTION 12.7. Company to Provide Common Stock.

The Company shall ensure that the Company has, free from preemptive
rights, out of its authorized but unissued Common Stock, the full number of
shares of Common Stock for the purpose of effecting the conversion of
Securities.

SECTION 12.8. Taxes on Conversions.

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The Company will pay any and all taxes and duties that may be payable in
respect of the issue or delivery of Common Stock on conversion of Securities
pursuant hereto. The Company shall not, however, be required to pay any tax or
duty which may be payable in respect of any transfer involved in the issue and
delivery of Common Stock in a name other than that of the Holder of the Security
or Securities to be converted, and no such issue or delivery shall be made
unless and until the Person requesting such issue has paid to the Company the
amount of any such tax or duty, or has established to the satisfaction of the
Company that such tax or duty has been paid.

SECTION 12.9. Company Covenant as to Common Stock.

The Company covenants that all Common Stock which may be delivered upon
conversion of Securities, upon such delivery, will have been duly authorized and
validly issued and will be fully paid and nonassessable and, except as provided
in Section 12.8, the Company will pay all taxes, liens and charges with respect
to the issue thereof.

SECTION 12.10. Cancellation of Converted Securities.

All Securities delivered for conversion shall be delivered to the Trustee
or the Paying Agent in Luxembourg or its agent to be canceled by or at the
direction of the Trustee, which shall dispose of the same as provided in Section
3.9.

SECTION 12.11. Provision in Case of Consolidation, Merger, or Sale of Assets of
the Company.

In case of any consolidation of the Company with, or merger of the Company
into, any other Person, or any merger of another Person into the Company (other
than a merger which does not result in any reclassification, conversion,
exchange or cancellation of outstanding Common Stock of the Company) or any sale
or transfer of all or substantially all of the assets of the Company, the
Company and the Person formed by such consolidation or resulting from such
merger or which acquires such assets shall execute and deliver to the Trustee a
supplemental indenture providing that the Holder of each Security then
Outstanding shall have the right thereafter, during the period such Security
shall be convertible as specified in Section 12.1, to convert such Security only
into the kind and amount of securities, cash and other property receivable upon
such consolidation, merger, sale or transfer by a holder of the number of shares
of Common Stock of the Company into which such Security might have been
converted immediately prior to such consolidation, merger, sale or transfer,
assuming such holder of Common Stock of the Company (i) is not a Person with
which the Company consolidated or into which the Company merged or which merged
into the Company or to which such sale or transfer was made, as the case may be
(a "Constituent Person"), or an Affiliate of a Constituent Person, and (ii)
failed to exercise his rights of election, if any, as to the kind or amount of
securities, cash and other property receivable upon such consolidation, merger,
sale or transfer (provided that if the kind or amount of securities, cash and
other property receivable upon such consolidation, merger, sale or transfer is
not the same for each share of Common Stock of the Company held immediately
prior to such consolidation, merger, sale or transfer by others than a
Constituent Person or an Affiliate thereof and in respect of which such rights
of election shall not have been exercised ("Non-electing Share"), then for the
purposes of this

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Section 12.11 the kind and amount of securities, cash and other property
receivable upon such consolidation, merger, sale or transfer by the holders of
each Non-electing Share shall be deemed to be the kind and amount so receivable
per share by a plurality of the Non-electing Shares). Such supplemental
indenture shall provide for adjustments which, for events subsequent to the
effective date of such supplemental indenture, shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Article. The above
provisions of this Section 12.11 shall similarly apply to successive
consolidations, mergers, sales or transfers. Notice of the execution of such a
supplemental indenture shall be given by the Company to the Holder of each
Security as provided in Section 1.6 promptly upon such execution.

Neither the Trustee, any Paying Agent nor any Conversion Agent shall be
under any responsibility to determine the correctness of any provisions
contained in any such supplemental indenture relating either to the kind or
amount of shares of stock or other securities or property or cash receivable by
Holders of Securities upon the conversion of their Securities after any such
consolidation, merger, conveyance, transfer, sale or lease or to any such
adjustment, but may accept as conclusive evidence of the correctness of any such
provisions, and shall be protected in relying upon, an Opinion of Counsel with
respect thereto, which the Company shall cause to be furnished to the Trustee
upon request.

SECTION 12.12. Responsibility of Trustee for Conversion Provisions.

The Trustee, subject to the provisions of Section 6.1, and any Conversion
Agent shall not at any time be under any duty or responsibility to any Holder of
Securities to determine whether any facts exist which may require any adjustment
of the Conversion Price, or with respect to the nature or extent of any such
adjustment when made, or with respect to the method employed, or herein or in
any supplemental indenture provided to be employed, in making the same, or
whether a supplemental indenture need be entered into. Neither the Trustee,
subject to the provisions of Section 6.1, nor any Conversion Agent shall be
accountable with respect to the validity or value (or the kind or amount) of any
Common Stock, or of any other securities or property or cash, which may at any
time be issued or delivered upon the conversion of any Security; and it or they
do not make any representation with respect thereto. Neither the Trustee,
subject to the provisions of Section 6.1, nor any Conversion Agent shall be
responsible for any failure of the Company to make or calculate any cash payment
or to issue, transfer or deliver any Common Stock or share certificates or other
securities or property or cash upon the surrender of any Security for the
purpose of conversion; and the Trustee, subject to the provisions of Section
6.1, and any Conversion Agent shall not be responsible for any failure of the
Company to comply with any of the covenants of the Company contained in this
Article.

ARTICLE THIRTEEN

SUBORDINATION OF SECURITIES

SECTION 13.1. Agreement of Subordination.

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The Company covenants and agrees, and each Holder of Securities issued
hereunder by his acceptance thereof likewise covenants and agrees, that all
Securities shall be issued subject to the provisions of this Article Thirteen;
and each Person holding any Security, whether upon original issue or upon
transfer, assignment or exchange thereof, accepts and agrees to be bound by such
provisions.

The payment of the principal of, premium, if any, and interest on all
Securities (including, but not limited to, the Redemption Price with respect to
the Securities called for redemption in accordance with Article Eleven, or the
Repurchase Price with respect to Securities submitted for repurchase in
accordance with Article Fourteen, as the case may be, as provided in this
Indenture and Additional Amounts, if any, and Liquidated Damages, if any) issued
hereunder shall, to the extent and in the manner hereinafter set forth, be
subordinated and subject in right of payment to the prior payment in full in
cash of all Senior Indebtedness of the Company, whether outstanding at the date
of this Indenture or thereafter incurred.

No provision of this Article Thirteen shall prevent the occurrence of any
default or Event of Default hereunder.

SECTION 13.2. Payments to Holders.

No payment shall be made with respect to the principal of, or premium, if
any, or interest on the Securities by the Company (including, but not limited
to, the Redemption Price with respect to the Securities to be called for
redemption in accordance with Article Eleven or the Repurchase Price with
respect to Securities submitted for repurchase in accordance with Article
Fourteen, as the case may be, as provided in this Indenture and Additional
Amounts, if any, Liquidated Damages, if any), except payments and distributions
made by the Trustee as permitted by the first or second paragraph of Section
13.5, if:

(i) a default in the payment of principal, premium, interest, rent
or other obligations due on any Senior Indebtedness of the Company has
occurred and is continuing (or, in the case of Senior Indebtedness of the
Company for which there is a period of grace, in the event of such a
default that continues beyond the period of grace, if any, specified in
the instrument or lease evidencing such Senior Indebtedness of the
Company), unless and until such default shall have been cured or waived or
shall have ceased to exist; or

(ii) a default (other than a payment default but including any
default in the payment of principal, premium, interest, rent or other
obligations on Designated Senior Indebtedness that would be a payment
default but for the period of grace specified in such instrument or lease)
on Designated Senior Indebtedness occurs and is continuing that then
permits holders of such Designated Senior Indebtedness to accelerate its
maturity and the Trustee receives a notice of the default (a "Payment
Blockage Notice") from a Representative of Designated Senior Indebtedness
or a holder of Designated Senior Indebtedness or the Company.

If the Trustee receives any Payment Blockage Notice pursuant to clause
(ii) above, no subsequent Payment Blockage Notice shall be effective for
purposes of this Section unless and until at least 365 days

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shall have elapsed since the initial effectiveness of the immediately prior
Payment Blockage Notice. No nonpayment default that existed or was continuing on
the date of delivery of any Payment Blockage Notice to the Trustee (unless such
default was waived, cured or otherwise ceased to exist and thereafter
subsequently reoccurred) shall be, or be made, the basis for a subsequent
Payment Blockage Notice.

The Company may and shall resume payments on and distributions in respect
of the Securities upon the earlier of:

(1) in the case of a payment default, the date upon which
the default is cured or waived or ceases to exist, or

(2) in the case of a default referred to in clause (ii)
above, the earlier of the date on which such default is cured or waived or
ceases to exist or 179 days after the date on which the applicable Payment
Blockage Notice is received if the maturity of such Designated Senior
Indebtedness has not been accelerated,

unless this Article Thirteen otherwise prohibits the payment or distribution at
the time of such payment or distribution (including without limitation, in the
case of default referred to in clause (ii) above, as a result of a payment
default with respect to the applicable Senior Indebtedness as a consequence of
the acceleration of the maturity thereof or otherwise).

Upon any payment by the Company, or distribution of assets of the Company
of any kind or character, whether in cash, property or securities, to creditors
upon any dissolution or winding-up or liquidation or reorganization of the
Company, whether voluntary or involuntary or in bankruptcy, moratorium of
payments, insolvency, receivership or other proceedings, all amounts due or to
become due upon all Senior Indebtedness of the Company shall first be paid in
full in cash or other payment satisfactory to the holders of such Senior
Indebtedness of the Company, or payment thereof in accordance with its terms
provided for in cash or other payment satisfactory to the holders of such Senior
Indebtedness of the Company before any payment is made on account of the
principal of, premium, if any, or interest (including Additional Amounts, if
any, or Liquidated Damages, if any) on the Securities by the Company (except
payments by the Company made pursuant to Article Four from monies deposited with
the Trustee pursuant thereto prior to commencement of proceedings for such
dissolution, winding-up, liquidation or reorganization); and upon any such
dissolution or winding-up or liquidation or reorganization of the Company or
bankruptcy, insolvency, receivership or other proceeding, any payment by the
Company, or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, to which the Holders or the Trustee
would be entitled, except for the provision of this Article Thirteen, shall
(except as aforesaid) be paid by the Company or by any receiver, trustee in
bankruptcy, moratorium of payments, liquidating trustee, agent or other Person
making such payment or distribution, or by the Holders or by the Trustee under
this Indenture if received by them or it, directly to the holders of Senior
Indebtedness of the Company (pro rata to such holders on the basis of the
respective amounts of Senior Indebtedness of the Company held by such holders,
or as otherwise required by law or a court order) or their Representative or
Representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing any Senior Indebtedness of the Company

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may have been issued, as their respective interests may appear, to the extent
necessary to pay all Senior Indebtedness of the Company in full, in cash or
other payment satisfactory to the holders of such Senior Indebtedness of the
Company, after giving effect to any concurrent payment or distribution to or for
the holders of Senior Indebtedness of the Company, before any payment or
distribution is made to the Holders or to the Trustee.

For purposes of this Article Thirteen, the words, "cash, property or
securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment, the payment of which
is subordinated at least to the extent provided in this Article Thirteen with
respect to the Securities to the payment of all Senior Indebtedness of the
Company which may at the time be outstanding; provided that (i) the Senior
Indebtedness of the Company is assumed by the new corporation, if any, resulting
from any reorganization or readjustment, and (ii) the rights of the holders of
Senior Indebtedness of the Company (other than leases which are not assumed by
the Company or the new corporation, as the case may be) are not, without the
consent of such holders, altered by such reorganization or readjustment. The
merger of the Company into another corporation or the liquidation or dissolution
of the Company following the conveyance or transfer of its property as an
entirety, or substantially as an entirety, to another corporation upon the terms
and conditions provided for in Article Seven shall not be deemed a dissolution,
winding-up, liquidation or reorganization for the purposes of this Section 13.2
if such other corporation shall, as a part of such merger, conveyance or
transfer, comply with the conditions stated in Article Seven.

In the event of the acceleration of the Securities because of an Event of
Default, no payment or distribution shall be made to the Trustee or any Holder
of Securities in respect of the principal of, premium, if any, or interest on
the Securities by the Company (including, but not limited to, the Redemption
Price with respect to the Securities called for redemption in accordance with
Article Eleven or the Repurchase Price with respect to Securities submitted for
repurchase in accordance with Article Fourteen, as the case may be, as provided
in this Indenture and Additional Amounts, if any, and Liquidated Damages, if
any), except payments and distributions made by the Trustee as permitted by the
first or second paragraph of Section 13.5, until all Senior Indebtedness of the
Company has been paid in full in cash or other payment satisfactory to the
holders of Senior Indebtedness of the Company or such acceleration is rescinded
in accordance with the terms of this Indenture. If payment of the Securities is
accelerated because of an Event of Default, the Company shall promptly notify
holders of Senior Indebtedness of the Company of the acceleration.

In the event that, notwithstanding the foregoing provisions, any payment
or distribution of assets of the Company of any kind or character, whether in
cash, property or securities (including, without limitation, by way of setoff or
otherwise), prohibited by the foregoing, shall be received by the Trustee or the
Holders of the Securities before all Senior Indebtedness of the Company is paid
in full in cash or other payment satisfactory to the holders of such Senior
Indebtedness of the Company, or provision is made for such payment thereof in
accordance with its terms in cash or other payment satisfactory to the holders
of such Senior Indebtedness of the Company, such payment or distribution shall
be held in trust for the benefit of and shall be paid over or delivered to the
holders of Senior Indebtedness of the

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Company or their Representative or Representatives, or to the trustee or
trustees under any indenture pursuant to which any instruments evidencing any
Senior Indebtedness of the Company may have been issued, as their respective
interests may appear, as calculated by the Company, for application to the
payment of all Senior Indebtedness of the Company remaining unpaid to the extent
necessary to pay all Senior Indebtedness of the Company in full in cash or other
payment satisfactory to the holders of such Senior Indebtedness of the Company,
after giving effect to any concurrent payment or distribution, or provision
therefor, to or for the holders of such Senior Indebtedness of the Company.

Nothing in this Article Thirteen shall apply to claims of, or payments to,
the Trustee under or pursuant to Section 6.7. This Section 13.2 shall be subject
to the further provisions of Section 13.5.

SECTION 13.3. Subrogation of Securities.

Subject to the payment in full in cash of all Senior Indebtedness of the
Company, the Holders of the Securities shall be subrogated to the extent of the
payments or distributions made to the holders of such Senior Indebtedness of the
Company pursuant to the provisions of this Article Thirteen (equally and ratably
with the holders of all indebtedness of the Company which by its express terms
is subordinated to other indebtedness of the Company to substantially the same
extent as the Securities are subordinated and is entitled to like rights of
subrogation) to the rights of the holders of Senior Indebtedness of the Company
to receive payments or distributions of cash, property or securities of the
Company applicable to the Senior Indebtedness of the Company until the
principal, premium, if any, and interest on the Securities shall be paid in
full; and, for the purposes of such subrogation, no payments or distributions to
the holders of the Senior Indebtedness of the Company of any cash, property or
securities to which the Holders of the Securities or the Trustee would be
entitled except for the provisions of this Article Thirteen, and no payment over
pursuant to the provisions of this Article Thirteen, to or for the benefit of
the holders of Senior Indebtedness of the Company by Holders of the Securities
or the Trustee, shall, as between the Company, its creditors other than holders
of Senior Indebtedness of the Company, and the Holders of the Securities, be
deemed to be a payment by the Company to or on account of the Senior
Indebtedness of the Company. It is understood that the provisions of this
Article Thirteen are and are intended solely for the purposes of defining the
relative rights of the Holders of the Securities, on the one hand, and the
holders of the Senior Indebtedness of the Company, on the other hand.

Nothing contained in this Article Thirteen or elsewhere in this Indenture
or in the Securities is intended to or shall impair, as among the Company, its
creditors other than the holders of Senior Indebtedness of the Company, and the
Holders of the Securities, the obligation of the Company, which is absolute and
unconditional, to pay to the Holders of the Securities the principal of (and
premium, if any) and interest on the Securities as and when the same shall
become due and payable in accordance with their terms, or is intended to or
shall affect the relative rights of the Holders of the Securities and creditors
of the Company other than the holders of the Senior Indebtedness of the Company,
nor shall anything herein or therein prevent the Trustee or the Holder of any
Security from exercising all remedies otherwise permitted by applicable law upon
default under this Indenture, subject to the rights, if any, under this Article
Thirteen of the holders of Senior Indebtedness of the Company in respect of
cash, property or securities of the Company received upon the exercise of any
such remedy.

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Upon any payment or distribution of assets of the Company referred to in
this Article Thirteen, the Trustee, subject to the provisions of Section 6.1,
and the Holders of the Securities shall be entitled to rely upon any order or
decree made by any court of competent jurisdiction in which such bankruptcy,
dissolution, winding-up, liquidation or reorganization proceedings are pending,
or a certificate of the receiver, trustee in bankruptcy, liquidating trustee,
agent or other Person making such payment or distribution, delivered to the
Trustee or to the Holders of the Securities, for the purpose of ascertaining the
Persons entitled to participate in such distribution, the holders of the Senior
Indebtedness of the Company and other Indebtedness of the Company, the amount
thereof or payable thereon and all other facts pertinent thereto or to this
Article Thirteen.

SECTION 13.4. Authorization to Effect Subordination.

Each Holder of a Security by the Holder's acceptance thereof authorizes
and directs the Trustee on the Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article Thirteen and appoints the Trustee to act as the Holder's
attorney-in-fact for any and all such purposes. If the Trustee does not file a
proper proof of claim or proof of debt in the form required in any proceeding
referred to in Section 5.4 hereof at least 30 days before the expiration of the
time to file such claim, the holders of any Senior Indebtedness of the Company
or their Representatives are hereby authorized to file an appropriate claim for
and on behalf of the Holders of the Securities.

SECTION 13.5. Notice to Trustee.

The Company shall give prompt written notice in the form of an Officers'
Certificate to a Responsible Officer of the Trustee and to any Paying Agent of
any fact known to the Company which would prohibit the making of any payment of
monies deposited by the Company to or by the Trustee or any Paying Agent in
respect of the Securities pursuant to the provisions of this Article Thirteen.
Notwithstanding the provisions of this Article Thirteen or any other provision
of this Indenture, the Trustee shall not be charged with knowledge of the
existence of any facts which would prohibit the making of any payment of monies
deposited by the Company to or by the Trustee in respect of the Securities
pursuant to the provisions of this Article Thirteen, unless and until a
Responsible Officer of the Trustee shall have received written notice thereof at
the Corporate Trust Office from the Company (in the form of an Officers'
Certificate) or a Representative of Senior Indebtedness or of a holder or
holders of Senior Indebtedness of the Company or from any trustee thereof; and
before the receipt of any such written notice, the Trustee, subject to the
provisions of Section 6.1, shall be entitled in all respects to assume that no
such facts exist; provided that if on a date not fewer than two Business Days
prior to the date upon which by the terms hereof any such monies may become
payable for any purpose (including, without limitation, the payment of the
principal of, or premium, if any, or interest on any Security) the Trustee shall
not have received, with respect to such monies, the notice provided for in this
Section 13.5, then, anything herein contained to the contrary notwithstanding,
the Trustee shall have full power and authority to receive such monies deposited
by the Company and to apply the same to the purpose for which they were
received, and shall not be affected by any notice to the contrary which may be
received by it on or after such prior date.

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Notwithstanding anything in this Article Thirteen to the contrary, nothing
shall prevent any payment by the Trustee to the Holders of monies deposited with
it pursuant to Section 4.1, and any such payment shall not be subject to the
provisions of Section 13.1 or 13.2.

The Trustee, subject to the provisions of Section 6.1, shall be entitled
to rely on the delivery to it of a written notice by a Representative or a
Person representing himself to be a holder of Senior Indebtedness of the Company
(or a trustee on behalf of such holder) to establish that such notice has been
given by a Representative or a holder of Senior Indebtedness of the Company or a
trustee on behalf of any such holder or holders. In the event that the Trustee
determines in good faith that further evidence is required with respect to the
right of any Person as a holder of Senior Indebtedness of the Company to
participate in any payment or distribution pursuant to this Article Thirteen,
the Trustee may request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of Senior Indebtedness of the
Company held by such Person, the extent to which such Person is entitled to
participate in such payment or distribution and any other facts pertinent to the
rights of such Person under this Article Thirteen, and if such evidence is not
furnished the Trustee may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment.

SECTION 13.6. Trustee's Relation to Senior Indebtedness of the Company.

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

With respect to the holders of Senior Indebtedness of the Company, the
Trustee undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article Thirteen, and no
implied covenants or obligations with respect to the holders of Senior
Indebtedness of the Company shall be read into this Indenture against the
Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness of the Company and, subject to the provisions of
Section 6.1, the Trustee shall not be liable to any holder of Senior
Indebtedness of the Company if it shall pay over or deliver to Holders of
Securities, the Company or any other Person money or assets to which any holder
of Senior Indebtedness of the Company shall be entitled by virtue of this
Article Thirteen or otherwise.

SECTION 13.7. No Impairment of Subordination.

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

SECTION 13.8. Article Applicable to Paying Agents.

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If at any time any Paying Agent other than the Trustee shall have been
appointed by the Company and be then acting hereunder, the term "Trustee" as
used in this Article shall (unless the context otherwise requires) be construed
as extending to and including such Paying Agent within its meaning as fully for
all intents and purposes as if such Paying Agent were named in this Article in
addition to or in place of the Trustee; provided, however, that the first
paragraph of Section 13.5 shall not apply to the Company or any Affiliate of the
Company if it or such Affiliate acts as Paying Agent.

SECTION 13.9. Senior Indebtedness of the Company Entitled to Rely.

The holders of Senior Indebtedness of the Company (including, without
limitation, Designated Senior Indebtedness) shall have the right to rely upon
this Article Thirteen, and no amendment or modification of the provisions
contained herein shall diminish the rights of such holders unless such holders
shall have agreed in writing thereto.

SECTION 13.10. Certain Conversions Deemed Payment.

For the purposes of this Article Thirteen only, (1) the issuance and
delivery of junior securities upon conversion of Securities in accordance with
Article Twelve shall not be deemed to constitute a payment or distribution on
account of the principal of (or premium, if any) or interest on Securities or on
account of the purchase or other acquisition of Securities, and (2) the payment,
issuance or delivery of cash (except in satisfaction of fractional shares
pursuant to Section 12.2), property or securities (other than junior securities)
upon conversion of a Security shall be deemed to constitute payment on account
of the principal of such Security. For the purposes of this Section 13.10, the
term "junior securities" means (a) shares of any stock of any class of the
Company (including, without limitation, the Common Stock of the Company), or (b)
securities of the Company which are subordinated in right of payment to all
Senior Indebtedness of the Company which may be outstanding at the time of
issuance or delivery of such securities to substantially the same extent as, or
to a greater extent than, the Securities are so subor dinated as provided in
this Article. Nothing contained in this Article Thirteen or elsewhere in this
Indenture or in the Securities is intended to or shall impair, as among the
Company, its creditors other than holders of Senior Indebtedness of the Company
and the Holders, the right, which is absolute and unconditional, of the Holder
of any Security to convert such Security in accordance with Article Twelve.

ARTICLE FOURTEEN

REPURCHASE OF SECURITIES AT THE OPTION
OF THE HOLDER UPON A FUNDAMENTAL CHANGE

SECTION 14.1. Right to Require Repurchase.

In the event that a Fundamental Change (as hereinafter defined) shall
occur, then each Holder shall have the right, at the Holder's option, to require
the Company to repurchase, and upon the exercise of such right the Company shall
repurchase, all of such Holder's Securities, or any portion of the principal

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amount thereof that is equal to U.S.$1,000 or any integral multiple thereof
(provided that no single Security may be repurchased in part unless the portion
of the principal amount of such Security to be Outstanding after such repurchase
is equal to U.S.$1,000 or integral multiples of U.S.$1,000 in excess thereof),
on the date (the "Repurchase Date") that is 45 days after the date of the
Company Notice (as defined in Section 14.2) at the following prices (expressed
as percentages of the principal amount thereof) (the "Repurchase Price") in the
event of a Fundamental Change occurring during the 12-month period beginning
September 1 (plus interest accrued to, but excluding, the Repurchase Date):

Year Repurchase Price
- ---- ----------------
1997 104.75%
1998 103.80
1999 102.85
2000 101.90
2001 100.95

and 100% at September 1, 2002; provided that if the Applicable Price with
respect to the Fundamental Change is less than the Reference Market Price, the
Company shall repurchase such Securities at a price equal to the foregoing
Repurchase Price multiplied by the fraction obtained by dividing the Applicable
Price by the Reference Market Price; and provided, further, that installments of
interest on Securities whose Stated Maturity is on or prior to the Repurchase
Date shall be payable to the Holders of such Securities, or one or more
Predecessor Securities, registered as such on the Regular Record Date according
to their terms and the provisions of Section 3.7. Such right to require the
repurchase of the Securities shall not continue after a discharge of the Company
from its obligations with respect to the Securities in accordance with Article
Four, unless a Fundamental Change shall have occurred prior to such discharge.
Whenever in this Indenture (including Sections 2.2, 3.1, 5.1(1) and 5.8) there
is a reference, in any context, to the principal of any Security as of any time,
such reference shall be deemed to include reference to the Repurchase Price
payable in respect of such Security to the extent that such Repurchase Price is,
was or would be so payable at such time, and express mention of the Repurchase
Price in any provision of this Indenture shall not be construed as excluding the
Repurchase Price in those provisions of this Indenture when such express mention
is not made.

SECTION 14.2. Notices; Method of Exercising Repurchase Right, Etc.

(a) Unless the Company shall have theretofore called for
redemption all of the Outstanding Securities, on or before the 30th day after
the occurrence of a Fundamental Change, the Company or, at the request and
expense of the Company, the Trustee, shall give to all Holders of Securities, in
the manner provided in Section 1.6, notice (the "Company Notice") of the
occurrence of the Fundamental Change and of the repurchase right set forth
herein arising as a result thereof. The Company shall also deliver a copy of
such notice of a repurchase right to the Trustee.

Each notice of a repurchase right shall state:

(1) the Repurchase Date,

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

(3) the Repurchase Price,

(4) a description of the procedure which a Holder must
follow to exercise a repurchase right, and the place or places where such
Securities are to be surrendered for payment of the Repurchase Price and accrued
interest, if any,

(5) that on the Repurchase Date the Repurchase Price, and
accrued interest, if any, will become due and payable upon each such Security
designated by the Holder to be repurchased, and that interest thereon shall
cease to accrue on and after said date, and

(6) the Conversion Price then in effect, the date on which
the right to convert the principal amount of the Securities to be repurchased
will terminate and the place or places where such Securities may be surrendered
for conversion.

So long as the Securities are listed on the Luxembourg Stock Exchange and
the Luxembourg Stock Exchange shall so require, on or before the 30th day after
the occurrence of a Fundamental Change, the Company or, at the request of the
Company, the Paying Agent in Luxembourg, will provide notice of such Fundamental
Change by publishing such notice in an Authorized Newspaper in Luxembourg, or,
if not practicable in Luxembourg, elsewhere in a Western European city. No
failure of the Company to give the foregoing notices or defect therein shall
limit any Holder's right to exercise a repurchase right or affect the validity
of the proceedings for the repurchase of Securities.

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

(b) To exercise a repurchase right, a Holder shall deliver to the
Trustee or any Paying Agent on or before the 30th day after the date of the
Company Notice (i) written notice of the Holder's exercise of such right, which
notice shall set forth the name of the Holder, the principal amount of the
Securities to be repurchased (and, if any Security is to be repurchased in part,
the serial number thereof, the portion of the principal amount thereof to be
repurchased and the name of the Person in which the portion thereof to remain
Outstanding after such repurchase is to be registered) and a statement that an
election to exercise the repurchase right is being made thereby, and (ii) the
Securities with respect to which the repurchase right is being exercised. Such
written notice shall be irrevocable, except that the right of the Holder to
convert the Securities with respect to which the repurchase right is being
exercised shall continue until the close of business on the Business Day prior
to the Repurchase Date.

(c) In the event a repurchase right shall be exercised in
accordance with the terms hereof, the Company shall pay or cause to be paid to
the Trustee or the Paying Agent the Repurchase Price in cash, as provided above,
for payment to the Holder on the Repurchase Date together with accrued and
unpaid interest to the Repurchase Date payable with respect to the Securities as
to which their purchase right has been exercised; provided, however, that
installments of interest that mature on

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or prior to the Repurchase Date shall be payable in cash, in the case of
Securities, to the Holders of such Securities, or one or more Predecessor
Securities, registered as such at the close of business on the relevant Regular
Record Date.

(d) If any Security (or portion thereof) surrendered for
repurchase shall not be so paid on the Repurchase Date, the principal amount of
such Security (or portion thereof, as the case may be) shall, until paid, bear
interest to the extent permitted by applicable law from the Repurchase Date at
the rate of 4.75% per annum, and each Security shall remain convertible into
Common Stock until the principal of such Security (or portion thereof, as the
case may be) shall have been paid or duly provided for.

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

(f) All securities delivered for repurchase shall be delivered to
the Trustee, the Paying Agent or any other agents (as shall be set forth in the
Company Notice) to be canceled by or at the direction of the Trustee, which
shall dispose of the same as provided in Section 3.9.

SECTION 14.3. Merger, Consolidation, etc.

In the case of any merger, consolidation, sale or transfer of all or
substantially all of the assets of the Company to which Section 12.11 applies,
in which the Common Stock of the Company is changed or exchanged as a result
into the right to receive shares of stock and other securities or property or
assets (including cash) which includes Common Stock of the Company or common
stock of another Person that are, or upon issuance will be, traded on a United
States national securities exchange or approved for trading on an established
automated over-the-counter trading market in the United States and such shares
constitute at the time such change or exchange becomes effective in excess of
50% of the aggregate fair market value of such shares of stock and other
securities, property and assets (including cash) (as determined by the Company,
which determination shall be conclusive and binding), then the Company and the
Person resulting from such merger or consolidation or which acquires the
properties or assets (including cash) of the Company, as the case may be, shall
execute and deliver to the Trustee a supplemental indenture (which shall comply
with the Trust Indenture Act as in force at the date of execution of such
supplemental indenture) modifying the provisions of this Indenture relating to
the right of Holders to cause the Company to repurchase the Securities following
a Fundamental Change, including, without limitation, the applicable provisions
of this Article Fourteen and the definitions of the Common Stock and Fundamental
Change, as appropriate, and such other related definitions set forth herein, as
determined in good faith by the Company (which determination shall be conclusive
and

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binding), to make such provisions apply in the event of a subsequent Fundamental
Change to the common stock and the issuer thereof if different from the Company
and the Common Stock of the Company (in lieu of the Company and Common Stock of
the Company).

ARTICLE FIFTEEN

HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY

SECTION 15.1. Company to Furnish Trustee Names and Addresses of Holders.

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

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

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

provided, however, that no such list need be furnished so long as the Trustee is
acting as Note Registrar.

SECTION 15.2. Trustee to Furnish Company Names and Addresses of Holders.

The Trustee will furnish or cause to be furnished to the Company, or to
Company's counsel:

(a) within 10 days from the date of this Indenture, an updated
Note Register,

(b) semi-annually, not more than 15 days after the Regular Record
Date, an updated Note Register, in such form as the Company may reasonably
require, of the names and addresses of the Holders of Securities as of such
Regular Record Date,

(c) During the preparation, pendency and effectiveness of the
Shelf Registration Statement (described in the Registration Rights Agreement)
beginning thirty days after the date of this Indenture and until such time as
the Company is no longer required to maintain the effectiveness of such Shelf
Registration Statement, the Trustee shall provide the Company on the first and
fifteenth date of every month (unless such date is a weekend or holiday, and
then on the preceding Business Day) during such period with an updated copy of
the Note Register detailing the holders of the Securities for the preceding
week, and

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

provided, however, that no such list need be furnished so long as the Trustee is
not acting as Note Registrar.

SECTION 15.3. Preservation of Information.

(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders contained in the most
recent list furnished to the Trustee as provided in Section 15.1, if any, and
the names and addresses of Holders received by the Trustee in its capacity as
Note Registrar. The Trustee may destroy any list furnished to it pursuant to
Section 15.1 upon receipt of a new list so furnished.

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

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

SECTION 15.4. Reports by Trustee.

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

(b) If and when this Indenture becomes qualified under the Trust
Indenture Act, a copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock exchange upon
which the Securities are listed, with the Commission and with the Company. The
Company will notify the Trustee when the Securities are listed on any stock
exchange.

SECTION 15.5. Reports by Company.

If and when this Indenture becomes qualified under the Trust Indenture
Act, the Company shall file with the Trustee and the Commission, and transmit to
Holders, such information, documents and other reports, and such summaries
thereof, as may be required pursuant to the Trust Indenture Act at the times and
in the manner provided pursuant to such Act; provided that any such information,
documents

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or reports required to be filed with the Commission pursuant to Section 13 or
15(d) of the Exchange Act shall be filed with the Trustee within 15 days after
the same is so required to be filed with the Commission.

SECTION 15.6. Reports with Respect to Registration of Securities.

The Company shall provide to the Trustee a form of Selling Securityholder
Questionnaire, within forty-five (45) days of the date of this Indenture. Within
ten (10) Business Days following the receipt of such Selling Securityholder
Questionnaire, the Trustee shall deliver to each Holder of Securities at such
time a copy of the Selling Securityholder Questionnaire in the form provided to
the Trustee by the Company. Thereafter, and until such time as the Company is no
longer required to maintain the effectiveness of the Shelf Registration
Statement (as defined in the Registration Rights Agreement), the Trustee shall
deliver, upon request of any Holder of Securities, a Selling Securityholder
Questionnaire in the form provided to the Trustee by the Company.

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

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

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<PAGE> 123
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed all as of the day and year first above written.

THE VANTIVE CORPORATION

By:______________________________________
Name:
Title:

DEUTSCHE BANK AG, NEW YORK BRANCH
Trustee

By:______________________________________
Name:
Title:

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EXHIBIT A

The Vantive Corporation
2455 Augustine Drive
Santa Clara, California 95054

Deutsche Bank AG, New York Branch
31 West 52nd Street
9th Floor
New York, New York 10019

Gentlemen:

We are delivering this letter in connection with an offering of 4.75%
Convertible Subordinated Notes due 2002 (the "Notes) which are convertible into
shares of Common Stock, $.001 par value (the "Common Stock"), of The Vantive
Corporation (the "Company").

We hereby confirm that:

1. we are an "accredited investor" within the meaning of Rule
501(a)(1), (2) or (3) under the Securities Act of 1933 (the "Securities
Act") or an entity in which all of the equity owners are accredited
investors within the meaning of Rule 501(a)(1), (2) or (3) under the
Securities Act;

2. (A) any purchase of Notes by us will be for our own account or
for the account of one or more other institutional accredited investors or
as fiduciary for the account of one or more trusts, each of which is an
"accredited investor" within the meaning of Rule 501(a)(7) under the
Securities Act (such trusts, together with accredited investors within the
meaning of Rule 501(a)(1), (2) or (3) under the Securities Act, an
"Institutional Accredited Investor") and for each of which we exercise
sole investment discretion or (B) we are a "bank," within the meaning of
Section 3(a)(2) of the Securities Act, or a "savings and loan association"
or other institution described in Section 3(l)(5)(a) of the Securities Act
that is acquiring Notes as fiduciary for the account of one or more
institutions for which we exercise sole investment discretion;

3. in the event that we purchase any Notes, we will acquire Notes
having a minimum principal amount of not less than $100,000 for our own
account or for any separate account for which we are acting;

4. we have such knowledge and experience in financial and
business matters that we are capable of evaluating the merits and risks of
purchasing the Notes; and

5. we are not acquiring Notes with a view to distribution thereof
or with any present intention of offering or selling Notes or the Common
Stock issuable upon conversion thereof,

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<PAGE> 125
except as permitted below; provided that the disposition of our property
and property of any accounts for which we are acting as fiduciary shall
remain at all times within our control.

We understand that the Notes are being offered in a transaction not
involving any public offering within the United States within the meaning of the
Securities Act and that the Notes and the shares of Common Stock issuable upon
conversion thereof have not been registered under the Securities Act, and we
agree, on our own behalf and on behalf of each account for which we acquire any
Notes, that if in the future we decide to resell or otherwise transfer such
Notes or the Common Stock issuable upon conversion thereof, such Notes or Common
Stock may be resold or otherwise transferred only (i) to the Company or any
subsidiary thereof, or (ii) inside the United States to a person who is a
"qualified institutional buyer" (as defined in Rule 144A under the Securities
Act) in a transaction meeting the requirements of Rule 144A, or (iii) inside the
United States to an Institutional Accredited Investor that, prior to such
transfer, furnishes to the Trustee or transfer agent for such securities a
signed letter containing certain representations and agreements relating to the
restrictions on transfer of such securities (the form of which letter can be
obtained from such Trustee or transfer agent), or (iv) outside the United States
in a transaction meeting the requirements of Rule 904 under the Securities Act,
or (v) pursuant to the exemption from registration provided by Rule 144 under
the Securities Art (if applicable), or (vi) pursuant to a registration statement
which has been declared effective under the Securities Act (and which continues
to be effective at the time of such transfer), and in each case, in accordance
with any applicable securities laws of any State of the United States or any
other applicable jurisdiction and in accordance with the legends set forth on
the Notes or the Common Stock issuable upon conversion thereof, as the case may
be. We further agree to provide any person purchasing any of the Notes or the
Common Stock issuable upon conversion thereof other than pursuant to clause (vi)
above from us a notice advising such purchaser that resales of such securities
are restricted as stated herein. We understand that the Trustee for the Notes
and the transfer agent for the Common Stock will not be required to accept for
registration of transfer any Notes or any shares of Common Stock issued upon
conversion of the Notes except upon presentation of evidence satisfactory to the
Company that the foregoing restrictions on transfer have been complied with. We
further understand that any Notes and any certificates representing Common Stock
will be in the form of definitive physical certificates and that such
certificates will bear a legend reflecting the substance of this paragraph other
than certificates representing Common Stock transferred pursuant to clause (vi)
above.

We acknowledge that the Company, others and you will rely upon our
confirmations, acknowledgments and agreements set forth herein, and we agree to
notify you promptly in writing if any of our representations or warranties
herein ceases to be accurate and complete.

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<PAGE> 126
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK

-----------------------------------------
(Name of Purchaser)

By:______________________________________
Name:
Title:
Address:

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<PAGE> 127
[For Global Security only:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (THE
"DEPOSITARY," WHICH TERM INCLUDES ANY SUCCESSOR DEPOSITARY FOR THE CERTIFICATES)
TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DEPOSITARY AND ANY
PAYMENT HEREON IS MADE TO CEDE & CO. (OR TO SUCH OTHER ENTITY AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), ANY TRANSFER, PLEDGE, OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]

THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS,
AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR
FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING
SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) ("INSTITUTIONAL ACCREDITED
INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THE SECURITY
EVIDENCED HEREBY IN AN OFFSHORE TRANSACTION; (2) AGREES THAT IT WILL NOT, PRIOR
TO EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY
EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR
PROVISION), RESELL OR OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY OR THE
COMMON STOCK ISSUABLE UPON CONVERSION OF SUCH SECURITY EXCEPT (A) TO THE VANTIVE
CORPORATION OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES
ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT,
PRIOR TO SUCH TRANSFER, FURNISHES TO DEUTSCHE BANK AG, NEW YORK BRANCH, AS
TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE), A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER
OF THE SECURITY EVIDENCED HEREBY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM
SUCH TRUSTEE OR A SUCCESSOR TRUSTEE, AS APPLICABLE), (D) OUTSIDE THE UNITED
STATES IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT TO THE
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE) OR (F) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN

<PAGE> 128
DECLARED EFFECTIVE UNDER THE SECURITIES ACT (AND WHICH CONTINUES TO BE EFFECTIVE
AT THE TIME OF SUCH TRANSFER); (3) PRIOR TO SUCH TRANSFER (OTHER THAN A TRANSFER
PURSUANT TO CLAUSE 2(F) ABOVE), IT WILL FURNISH TO DEUTSCHE BANK AG, NEW YORK
BRANCH, AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE), SUCH CERTIFICATIONS,
LEGAL OPINIONS OR OTHER INFORMATION AS IT MAY REASONABLY REQUIRE TO CONFIRM THAT
SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (4)
AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE SECURITY EVIDENCED HEREBY
IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN
CONNECTION WITH ANY TRANSFER OF THE SECURITY EVIDENCED HEREBY PRIOR TO THE
EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED
HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION),
THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF
RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO DEUTSCHE
BANK AG, NEW YORK BRANCH, AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE). IF
THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR OR A PURCHASER
WHO IS NOT A U.S. PERSON, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO
DEUTSCHE BANK AG, NEW YORK BRANCH, AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS
APPLICABLE), SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS IT MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE REMOVED UPON THE EARLIER
OF THE TRANSFER OF THE SECURITY EVIDENCED HEREBY PURSUANT TO CLAUSE 2(F) ABOVE
OR UPON ANY TRANSFER OF THE SECURITIES EVIDENCED HEREBY UNDER RULE 144(K) UNDER
THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION). AS USED HEREIN, THE TERMS
"OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS
GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.

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<PAGE> 129
THE VANTIVE CORPORATION

4.75% CONVERTIBLE SUBORDINATED NOTE DUE 2002

No. _____________ U.S.$_____
CUSIP NO. __________

- ----------
(1) This language shall appear on each Global Security.

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<PAGE> 130
America as at the time of payment shall be legal tender for the payment of
public and private debts, or at such other offices or agencies as the Company
may designate, by United States Dollar check drawn on a bank in the United
States, or transfer to a United States Dollar account (such a transfer to be
made only to a Holder of an aggregate principal amount of Securities in excess
of U.S. $2,000,000, and only if such Holder shall have furnished wire
instructions in writing to the Trustee no later than 15 days prior to the
relevant payment date) maintained by the Holder with a bank in the United
States. Payment of interest on this Security may be made by United States Dollar
check mailed to the address of the Person entitled thereto as such address shall
appear in the Note Register, or, upon written application by the Holder to the
Note Registrar setting forth wire instructions not later than the relevant
Record Date, by transfer to a United States Dollar account (such a transfer to
be made only to a Holder of an aggregate principal amount of Securities in
excess of U.S.$2,000,000 and only if such Holder shall have furnished wire
instructions in writing to the Trustee no later than 15 days prior to the
relevant payment date) maintained by the Holder with a bank in the United
States.

(a) any tax, assessment or other governmental charge which would
not have been so imposed but for (i) the existence of any present or
former connection between such Non-U.S. Holder (or between a fiduciary,
settlor, beneficiary, member, shareholder of or possessor of a power over
such Non-U.S. Holder, if such Non-U.S. Holder is an estate, a trust, a
partnership or a corporation) and the Taxing Jurisdiction, including,
without limitation, such Non-U.S. Holder (or such fiduciary, settlor,
beneficiary, member, shareholder or possessor) being or having been a
citizen, domiciliary or resident of the United States of America or
treated as a resident thereof, or being or having been engaged in trade or
business or present therein, or having or having had a permanent
establishment therein or (ii) such Non-U.S. Holder's present or former
status as a personal holding company, a foreign personal holding company
with respect to the United States, a controlled foreign corporation, a
passive foreign investment company, or a

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<PAGE> 131
foreign private foundation or foreign tax exempt entity for United States
federal tax purposes, or a corporation which accumulates earnings to avoid
United States federal income tax;

(d) any tax, assessment or other governmental charge which would
not have been imposed but for the failure to comply with any
certification, identification or other reporting requirement concerning
the nationality, residence, identity or connection with the United States
of such Non-U.S. Holder (or beneficial owner of such Security), if
compliance is required or imposed by a statute, treaty, regulation or
administrative practice of the United States as a precondition to
exemption from all or part of such tax, assessment or other governmental
charge;

(e) any tax, assessment or other governmental charge which is
payable otherwise than by deduction or withholding from payments of
principal of, premium, if any, or interest on such Security:

(f) any tax, assessment or other governmental charge imposed on
interest received by a Non-U.S. Holder actually or constructively holding
10% or more of the total combined voting power of all classes of stock of
the Company entitled to vote;

(g) any tax, assessment or other governmental charge imposed on a
Non-U.S. Holder that is a partnership or a fiduciary or other than the
sole beneficial owner of such payment, but only to the extent that any
beneficial owner or member of the partnership or beneficiary or settlor
with respect to the fiduciary would not have been entitled to the payment
of Additional Amounts had the beneficial owner, member, beneficiary or
settlor directly been the Holder of this Security; or

(h) any combination of items (a), (b), (c), (d), (e), (f) and (g).

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<PAGE> 132
excluding Additional Amounts in those provisions of this Security where such
express mention is not made.

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<PAGE> 133
IN WITNESS WHEREOF, the Company has caused this Security to be signed
manually or by facsimile by its duly authorized officers and by its corporate
seal to be affixed or imported thereon.

Dated: August 21, 1997

THE VANTIVE CORPORATION

[seal]

By:______________________________________
Name:
Title:

Attest

By:__________________________________

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

Dated: August 21, 1997

DEUTSCHE BANK AG, NEW YORK BRANCH
as Trustee

By: ____________________________________
Authorized Signatory

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<PAGE> 134
REVERSE

If redeemed during the 12-month period beginning September 1 (beginning
September 6, 2000 and ending August 31, 2001, in the case of the first such
period);

Year Redemption Price
---- ----------------
2000 101.90%
2001 100.95

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<PAGE> 135
If the Company determines that, principally as a result of a Tax Law
Change, the Company is or would become obligated to pay Additional Amounts to
the Holder of any Security, as described in the third paragraph of the face of
this Security, and such obligation cannot be avoided by the Company taking
reasonable measures available to it, then the Company may, at its option, redeem
the Tax Affected Securities in whole, but not in part, at any time, on giving
not less than 20 days' notice to the Holders prior to the Redemption Date, at a
Redemption Price equal to 100% of the principal amount plus interest accrued to,
but excluding, the Redemption Date, and any Additional Amounts then payable;
provided, that no such notice of redemption shall be given earlier than 90 days
prior to the earliest date on which the Company would be obligated to pay any
such Additional Amounts were a payment in respect of the Tax Affected Securities
then made. Prior to the giving of any notice of redemption pursuant to this
paragraph, the Company shall deliver to the Trustee (a) an Officers' Certificate
stating that the Company is entitled to effect such redemption and setting forth
a statement of facts showing that the conditions precedent to the right of the
Company so to redeem have occurred and (b) an Opinion of Counsel of recognized
standing selected by the Company to the effect that the circumstances referred
to above in this paragraph exist. The Trustee shall accept such opinion as
sufficient evidence of the satisfaction of the conditions precedent described
above, in which event it shall be conclusive and binding on the Holders. The
Company's right to redeem the Tax Affected Securities shall continue as long as
the Company is obligated to pay such Additional Amounts, notwithstanding that
the Company shall have made payments of Additional Amounts specified in such
third paragraph.

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<PAGE> 136
Redemption Date or the Repurchase Date, as the case may be, to convert this
Security (or any portion of the principal amount hereof that is an integral
multiple of U.S.$1,000, provided that the unconverted portion of such principal
amount is U.S.$1,000 or any integral multiple thereof) into fully paid and
nonassessable Common Stock of the Company at an initial Conversion Price of U.S.
$41.93 for each share of Common Stock (or at the then current adjusted
Conversion Price if an adjustment has been made as provided in the Indenture).

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<PAGE> 137
consent of any Holders of Securities, so that this Security, if then
Outstanding, will be convertible thereafter, during the period this Security
shall be convertible as specified above, only into the kind and amount of
securities, cash and other property receivable upon such consolidation, merger
or transfer by a holder of the number of shares of Common Stock of the Company
into which this Security could have been converted immediately prior to such
consolidation, merger or transfer (assuming such holder of Common Stock is not a
Constituent Person and failed to exercise any rights of election and received
per share the kind and amount received per share by a plurality of Non-electing
Shares). No adjustment in the Conversion Price will be made until such
adjustment would require an increase or decrease of at least one percent of such
price, provided that any adjustment that would otherwise be made will be carried
forward and taken into account in the computation of any subsequent adjustment.

Year Percentage
---- ----------
1997 104.75%
1998 103.80
1999 102.85
2000 101.90
2001 100.95

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<PAGE> 138
paid to the Holder of record of the Securities on the Regular Record Date.
Whenever in this Security there is a reference, in any context, to the principal
of any Security as of any time, such reference shall be deemed to include
reference to the Repurchase Price payable in respect of such Security to the
extent that such Repurchase Price is, was or would be so payable at such time,
and express mention of the Repurchase Price in any provision of this Security
shall not be construed as excluding the Repurchase Price in those provisions of
this Security when such express mention is not made.

[The following paragraph shall appear in each Security that is not a
Global Security:

[The following paragraph shall appear in the Global Security:

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<PAGE> 139
of (i) a majority in aggregate principal amount of the Securities at the time
Outstanding and (ii) 66-2/3% in aggregate principal amount of the Outstanding
Securities represented and entitled to vote at such meeting. The Indenture also
contains provisions permitting the Holders of specified percentages in aggregate
principal amount of the Securities at the time Outstanding, on behalf of the
Holders of all the Securities, to waive compliance by the Company with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Security
shall be conclusive and binding upon such Holder and upon all future Holders of
this Security and of any Successor Security to this Security, whether or not
notation of such consent or waiver is made upon this Security or such Successor
Security.

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<PAGE> 140
any such registration of transfer or exchange, but the Company may require
payment of a sum sufficient to recover any tax or other governmental charge
payable in connection therewith.

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

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<PAGE> 141
ASSIGNMENT FORM AND
CERTIFICATE OF TRANSFER

To assign this Security fill in the form below:

(I) or (we) assign and transfer this Security to

- --------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number, if any)

and irrevocably appoint ______________ agent to transfer this Security on the
books of the Company. The agent may substitute another to act for him.

CHECK ONE BOX BELOW

- to the Company or a subsidiary thereof; or

- pursuant to and in compliance with Rule 144A under the Securities
Act; or

- pursuant to and in compliance with Regulation S under the Securities
Act; or

- to an Institutional Accredited Investor pursuant to and in
compliance with the Securities Act; or

- pursuant to Rule 144 of the Securities Act;

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<PAGE> 142
- The transferee is an Affiliate of the Company.

Dated:____________________

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

---------------------------------
Signature(s)

------------------------------
Signature Guarantee

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<PAGE> 143
ELECTION OF HOLDER TO REQUIRE REPURCHASE

1. Pursuant to Section 14.1 of the Indenture, the undersigned hereby
elects to have this Security repurchased by the Company.

2. The undersigned hereby directs the Company to pay it or
_______________ the Repurchase Price plus interest accrued to, but excluding,
the Repurchase Date, as provided in the Indenture.

Dated:____________________

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

---------------------------------
Signature(s) must be guaranteed by a
commercial bank or trust company or a
member firm of a major stock exchange if
shares of Common Stock are to be issued,
or Securities to be delivered, other
than to or in the name of the registered
Holder.

---------------------------------
Signature Guaranteed

Principal amount to be repurchased: ____________________

Remaining principal amount following such repurchase: ______________

NOTICE: The signature to the foregoing Election must correspond to the name as
written upon the face of this Security in every particular, without alteration
or any change whatsoever.

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<PAGE> 144
CONVERSION NOTICE

Dated:_____________________________ _________________________________________

_________________________________________
Signature(s)

__________________________________
Name

_________________________________________
Signature Guaranteed

__________________________________
Address If only a portion of the Security is to
be converted, please indicate:

Principal amount to be converted:
__________________________________
Social Security or other Taxpayer
Identification Number, if any
U.S.$_____________________

-18-

<PAGE> 1
EXHIBIT 4.3

FINAL

THE VANTIVE CORPORATION

REGISTRATION RIGHTS AGREEMENT

Dated as of
August 14, 1997

Deutsche Morgan Grenfell Inc.
Hambrecht & Quist LLC
Robertson Stephens & Co. LLC
c/o Deutsche Morgan Grenfell Inc.
51 West 52nd Street
New York, NY 10019

Ladies and Gentlemen:

The Vantive Corporation, a Delaware corporation (the "Company"), proposes
to issue and sell to Deutsche Morgan Grenfell Inc., Hambrecht & Quist LLC and
Robertson Stephens & Company LLC (the "Initial Purchasers") upon the terms set
forth in a purchase agreement dated August 14, 1997 (the "Purchase Agreement")
between the Initial Purchasers and the Company, its 4 3/4% Convertible
Subordinated Notes due 2002. As an inducement to the Initial Purchasers to enter
into the Purchase Agreement and in satisfaction of a condition to the
obligations of the Initial Purchasers thereunder, the Company agrees with the
Initial Purchasers, (i) for the benefit of the Initial Purchasers and (ii) for
the benefit of the Holders (as defined below) from time to time of the
Registrable Securities (as defined below), including the Initial Purchasers, as
follows:

1. DEFINITIONS. Capitalized terms used herein without definition shall
have their respective meanings set forth in or pursuant to the Purchase
Agreement or the Offering Memorandum, dated August 14, 1997, in respect of the
Securities. As used in this Agreement, the following capitalized defined terms
shall have the following meanings:

"Affiliate" of any specified Person means any other Person which, directly
or indirectly, is in control of, is controlled by, or is under common control
with, such specified Person. For purposes of this definition, control of a
Person means the power, direct or indirect, to direct or

<PAGE> 2
FINAL

cause the direction of the management and policies of such Person whether by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.

"Agreement" shall mean this Registration Rights Agreement as the same may
be amended, supplemented or modified from time to time in accordance with the
terms hereof.

"Commission" means the United States Securities and Exchange Commission.

"Common Stock" means the common stock, $0.001 par value, of the Company
and any other shares of common stock as may constitute "Common Stock" for
purposes of the Indenture.

"DTC" means The Depository Trust Company.

"Effectiveness Period" has the meaning set forth in Section 2(b) hereof.

"Exchange Act" means the United States Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.

"Holder" shall mean any person that is the record owner of Registrable
Securities (and includes any person that has a beneficial interest in any
Registrable Security in book-entry form).

"Indenture" shall mean the Indenture, dated as of August 15, 1997, between
the Company and the Trustee thereunder, pursuant to which the Securities are
being issued, as amended, modified or supplemented from time to time in
accordance with the terms thereof.

"Issue Date" means August 21, 1997

"Liquidated Damages" has the meaning set forth in Section 2(c).

"Managing Underwriters" means the investment banker or investment bankers
and manager or managers that shall administer an underwritten offering, if any,
as set forth in Section 6 hereof.

"Person" shall mean an individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political subdivision
thereof.

"Prospectus" means the prospectus included in any Shelf Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A under

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<PAGE> 3
FINAL

the Securities Act), as amended or supplemented by any prospectus supplement,
with respect to the terms of the offering of any portion of the Registrable
Securities.

"Registration Default" has the meaning set forth in Section 2(c) hereof.

"Restricted Securities" shall mean all Securities required pursuant to the
Indenture to bear any Restricted Securities Legend (as defined in the
Indenture).

"Registrable Security" shall mean any Restricted Security and any share of
Common Stock issuable upon conversion thereof except any such Restricted
Security or share of Common Stock which (i) has been effectively registered
under the Securities Act and sold in a manner contemplated by the applicable
Registration Statement, (ii) has been transferred in compliance with Rule 144
under the Securities Act (or any successor provision thereto), or is
transferable pursuant to paragraph (k) of such Rule 144 (or any successor
provision thereto), or (iii) has otherwise been transferred and a new security
or share of Common Stock not subject to transfer restrictions under the
Securities Act has been delivered by or on behalf of the Company in accordance
with the Indenture.

"Rule 144" shall mean Rule 144 promulgated by the Commission pursuant to
the Securities Act, as such Rule may be amended from time to time, or any
successor rule or regulation.

"Rule 144A" shall mean Rule 144A promulgated by the Commission pursuant to
the Securities Act, as such Rule may be amended from time to time, or any
successor rule or regulation.

"Rule 415" shall mean Rule 415 promulgated by the Commission pursuant to
the Securities Act, as such Rule may be amended from time to time, or any
successor rule or regulation.

"Rule 430A" shall mean Rule 430A promulgated by the Commission pursuant to
the Securities Act, as such Rule may be amended from time to time, or any
successor rule or regulation.

"Securities" shall mean the $60,000,000 aggregate principal amount of
4 3/4% Convertible Subordinated Notes due 2002 of the Company being issued
pursuant to the Indenture (together with up to $9,000,000 aggregate principal
amount of such convertible subordinated notes if, and to the extent, the Initial
Purchasers' over-allotment option is exercised).

"Securities Act" means the United States Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.

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<PAGE> 4
FINAL

"Shelf Registration" means a registration effected pursuant to Section 2
hereof.

"Shelf Registration Statement" means a shelf registration statement of the
Company pursuant to the provisions of Section 2 hereof filed with the Commission
which covers some or all of the Registrable Securities, as applicable, on an
appropriate form under Rule 415 under the Securities Act, or any similar rule
that may be adopted by the Commission, amendments and supplements to such
registration statement, including post-effective amendments, in each case
including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.

"Special Counsel" means any special counsel to the Holders, determined as
provided in Section 4 hereof.

"Trust Indenture Act" has the meaning set forth in Section 1.1 of the
Indenture.

"Trustee" means the Trustee under the Indenture.

"underwriter" means any underwriter of Registrable Securities in
connection with an offering thereof under a Shelf Registration Statement.

2. SHELF REGISTRATION.

(a) The Company shall, within 90 calendar days following the Issue
Date of the Securities, file with the Commission a Shelf Registration Statement
relating to the offer and sale of the Registrable Securities by the Holders from
time to time in accordance with the methods of distribution elected by such
Holders and set forth in such Shelf Registration Statement and, thereafter,
shall use its reasonable efforts to cause such Shelf Registration Statement to
be declared effective under the Securities Act as soon as practicable, and in
any event within 180 calendar days after the Issue Date.

(b) The Company shall use its reasonable efforts:

(i) To keep the Shelf Registration Statement continuously
effective in order to permit the Prospectus forming part thereof to
be usable by Holders for a period of two years from the later of a)
the Issue Date or b) the last date of original issuance of the
Securities or such shorter period that will terminate upon the
earliest of the following: (A) when all the Securities covered by
the Shelf Registration Statement have been sold pursuant to the
Shelf Registration Statement, (B) when all shares of Common Stock
issued upon conversion of any such Securities that had not been sold
pursuant to the Shelf Registration Statement have been sold pursuant
to the Shelf Registration Statement and (C) when there

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<PAGE> 5
FINAL

shall cease to be outstanding Registrable Securities (in any such
case, such period being called the "Effectiveness Period"); and

(ii) After the effectiveness of the Shelf Registration
Statement, promptly upon the request of any Holder, to take any
action reasonably necessary to register the sale of any Registrable
Securities of such Holder and to identify such Holder as a selling
securityholder.

The Company shall be deemed not to have used its reasonable efforts to keep the
Shelf Registration Statement effective during the requisite period if the
Company voluntarily takes any action that would result in Holders of Registrable
Securities covered thereby not being able to offer and sell any such Registrable
Securities during that period, unless (i) such action is required by applicable
law, (ii) the continued effectiveness of the Shelf Registration Statement would
require the Company to disclose a material financing, acquisition or other
corporate transaction, and the Board of Directors shall have determined in good
faith that such disclosure is not in the best interests of the Company and the
holders of its outstanding Common Stock, or (iii) the Board of Directors shall
have determined in good faith that there is a valid business purpose or reason
for such suspension, and (x), in the case of clause (i) above, the Company
thereafter promptly complies with the requirements of paragraph 3(i) below and
(y) the Company complies with its obligations, if any, to pay Liquidated
Damages.

(c) (1) If (i) on or prior to 90 days following the Issue Date a
Shelf Registration Statement has not been filed with the Commission or (ii) on
or prior to the 180th day following the Issue Date, such Shelf Registration
Statement is not declared effective (each, a "Registration Default"), additional
interest ("Liquidated Damages") will accrue on the Restricted Securities from
and including the date following such Registration Default until such time as
such Shelf Registration Statement is filed or such Shelf Registration Statement
is declared effective, as the case may be. Liquidated Damages will be paid
semi-annually in arrears, with the first semi-annual payment due on the first
Interest Payment Date under the Indenture following the date on which such
Liquidated Damages begin to accrue, and will accrue at a rate per annum equal to
an additional one-quarter of one percent (0.25%) of the principal amount to and
including the 90th day following such Registration Default and one-half of one
percent (0.50%) thereof from and after the 91st day following such Registration
Default. In the event that Shelf Registration Statement ceases to be effective
for more than 90 days or the Company suspends the use of the prospectus which is
a part thereof for more than 90 days, whether or not consecutive, during any
12-month period, then the interest rate borne by Restricted Securities will
increase by an additional one-half of one percent (0.50%) per annum from the
91st day of the applicable 12-month period such Shelf Registration Statement
ceases to be effective or the Company suspends the use of the prospectus which
is a part thereof, as the case may be, until the earlier of such time as (i) the
Shelf Registration Statement again becomes effective, (ii) the use of the
related prospectus ceases to be suspended or (iii) the Effectiveness Period
expires. Following the

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<PAGE> 6
FINAL

cure of all Registration Defaults relating to any Restricted Securities, the
accrual of Liquidated Damages with respect to such Restricted Securities will
cease (without in any way limiting the effect of any subsequent Registration
Default). In no event shall the Company be required to pay Liquidated Damages in
excess of the applicable maximum amount of one-half of one percent (0.50%) set
forth above, regardless of whether one or multiple Registration Defaults exist.

(2) Liquidated Damages on the Restricted Securities shall be
paid by the Company to the holders of record of such Restricted Securities on
each Interest Payment Date (as defined in the Indenture) in the same manner as
for interest on such Restricted Securities as provided in the form of Securities
set forth in Section 2.2 of the Indenture.

(3) All of the Company's obligations set forth in this
Section 2(c) which are unsatisfied to any extent with respect to any Restricted
Security at the time such security ceases to be a Restricted Security shall
survive until such time as all such obligations with respect to such security
have been satisfied in full (notwithstanding the earlier termination of this
Agreement).

(4) Any payments due and payable pursuant to this Section
2(c) shall be subordinated to Senior Indebtedness (as defined in the Indenture)
to the extent and in the manner set forth in the Indenture.

(5) The rights of the recordholders of Restricted Securities
to Liquidated Damages as set forth in this Section 2(c) is not intended to be
exclusive of any other right or remedy, and shall be in addition to every other
right and remedy given hereunder or under the Indenture or now or hereafter
existing at law or in equity or otherwise.

3. REGISTRATION PROCEDURES. In connection with any Shelf Registration
Statement, the following provisions shall apply:

(a) The Company shall furnish to the Special Counsel and Holders
(if requested), prior to the filing thereof with the Commission, a copy of
any Shelf Registration Statement, and each amendment thereof and each
amendment or supplement, if any, to the Prospectus included therein and
shall use its reasonable efforts to reflect in each such document, when so
filed with the Commission, such comments as the Special Counsel and
Holders reasonably may propose.

(b) The Company shall take such action as may be necessary so that
(i) any Shelf Registration Statement and any amendment thereto and any
Prospectus forming part thereof and any amendment or supplement thereto
(and each report or other document incorporated therein by reference in
each case) complies in all material respects with the Securities Act and
the Exchange Act, (ii) any Shelf Registration Statement and any

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<PAGE> 7
FINAL

amendment thereto does not, when it becomes effective, contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading and (iii) any Prospectus forming part of any Shelf Registration
Statement, and any amendment or supplement to such Prospectus, does not
include an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements, in the light of the
circumstances under which they were made, not misleading.

(c) (1) The Company shall advise the Initial Purchasers and, in
the case of clause (i), the Holders and, if requested by the Initial
Purchasers or any such Holder, confirm such advice in writing:

(i) when a Shelf Registration Statement and any
amendment thereto has been filed with the Commission and when
the Shelf Registration Statement or any post effective
amendment thereto has become effective; and

(ii) of any request by the Commission for amendments or
supplements to the Shelf Registration Statement or the
Prospectus included therein or for additional information.

(2) The Company shall advise the Holders and, if requested
by any such Holder, confirm such advice in writing of:

(i) the issuance by the Commission of any stop order
suspending effectiveness of the Shelf Registration Statement
or the initiation of any proceedings for that purpose;

(ii) the receipt by the Company of any notification
with respect to the suspension of the qualification of the
securities included therein for sale in any jurisdiction or
the initiation of any proceeding for such purpose; and

(iii) the happening of any event that requires the
making of any changes in the Shelf Registration Statement or
the Prospectus so that, as of such date, the Shelf
Registration Statement and the Prospectus do not contain an
untrue statement of a material fact and do not omit to state a
material fact required to be stated therein or necessary to
make the statements therein (in the case of the Prospectus, in
light of the circumstances under which they were made) not
misleading (which advice

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<PAGE> 8
FINAL

shall be accompanied by an instruction to suspend the use of
the Prospectus until the requisite changes have been made).

(d) The Company shall use its reasonable efforts to prevent the
issuance, and if issued to obtain the withdrawal, of any order suspending
the effectiveness of any Shelf Registration Statement at the earliest
possible time.

(e) The Company shall furnish to the Special Counsel and each
Holder (if requested) with respect to a Shelf Registration Statement,
without charge, at least one copy of such Shelf Registration Statement and
any post-effective amendment thereto, including financial statements and
schedules, and, if the Holder so requests in writing, all reports, other
documents and exhibits (including those incorporated by reference).

(f) The Company shall, during the Effectiveness Period, deliver to
each Holder with respect to a Shelf Registration Statement, without
charge, as many copies of the Prospectus (including each preliminary
Prospectus) included in such Shelf Registration Statement and any
amendment or supplement thereto as such Holder may reasonably request, and
the Company consents (except during the continuance of any event described
in Section 3(c)(2)(iii)) to the use of the Prospectus or any amendment or
supplement thereto by each of the Holders in connection with the offering
and sale of the Registrable Securities covered by the Prospectus or any
amendment or supplement thereto during the Effectiveness Period.

(g) Prior to any offering of Registrable Securities pursuant to
any Shelf Registration Statement, the Company shall register or qualify or
cooperate with the Special Counsel and Holders in connection with the
registration or qualification of such Registrable Securities for offer and
sale under the securities or blue sky laws of such jurisdictions as any
such Holders reasonably request in writing and do any and all other acts
or things necessary or advisable to enable the offer and sale in such
jurisdictions of the Registrable Securities covered by such Shelf
Registration Statement; provided, however, that in no event shall the
Company be obligated to (i) qualify as a foreign corporation or as a
dealer in securities in any jurisdiction where it would not otherwise be
required to so qualify but for this Section 3(g), (ii) file any general
consent to service of process in any jurisdiction where it is not as of
the date hereof then so subject or (iii) subject itself to taxation in any
jurisdiction if it is not so subject.

(h) Unless any Registrable Securities shall be in book-entry only
form, the Company shall cooperate with the Holders to facilitate the
timely preparation and delivery of certificates representing Registrable
Securities to be sold pursuant to any Shelf Registration Statement free of
any restrictive legends and in such permitted denominations

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<PAGE> 9
FINAL

and registered in such names as Holders may request in connection with the
sale of Registrable Securities pursuant to such Shelf Registration
Statement.

(i) Upon the occurrence of any event contemplated by paragraph
3(c)(2)(iii) above, the Company shall promptly prepare a post-effective
amendment to any Shelf Registration Statement or an amendment or
supplement to the related Prospectus or file any other required document
so that, as thereafter delivered to purchasers of the Registrable
Securities included therein, the Prospectus will not include an untrue
statement of a material fact or omit to state any material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading. If the Company notifies the Holders
of the occurrence of any event contemplated by paragraph 3(c)(2)(iii)
above, the Holders shall suspend the use of the Prospectus until the
requisite changes to the Prospectus have been made.

(j) Not later than the effective date of any Shelf Registration
Statement hereunder, the Company shall provide a CUSIP number for the
Securities registered under such Shelf Registration Statement.

(k) The Company shall use its reasonable efforts to comply with
all applicable rules and regulations of the Commission and shall make
generally available to their securityholders or otherwise provide in
accordance with Section 11(a) of the Securities Act as soon as practicable
after the effective date of the applicable Shelf Registration Statement an
earnings statement satisfying the provisions of Section 11(a) of the
Securities Act.

(l) The Company shall cause the Indenture and the Securities to be
qualified under the Trust Indenture Act in a timely manner; and in
connection with such qualification, the Company shall cooperate with the
Trustee under the Indenture and the Holders (as defined in the Indenture)
to effect such changes to the Indenture as may be required for such
Indenture to be so qualified in accordance with the terms of the Trust
Indenture Act; and the Company shall execute and use all reasonable
efforts to cause the Trustee to execute, all documents that may be
required to effect such changes and all other forms and documents required
to be filed with the Commission to enable such Indenture to be so
qualified in a timely manner.

(m) The Company may require each Holder with respect to a Shelf
Registration Statement to furnish to the Company such information
regarding the Holder and the distribution of Registrable Securities held
by such Holder as may be required by applicable law or regulation for
inclusion in such Shelf Registration Statement (including, without
limitation, the information required by Item 507 of Regulation S-K of the
Securities Act), and the Company may exclude from such registration the
Registrable Securities of any

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<PAGE> 10
FINAL

Holder that fails to furnish such information within a reasonable time
after receiving such request unless, and until such time as, such
information is furnished by such Holder.

(n) The Company shall enter into such customary agreements
(including underwriting agreements in customary form) to take all other
appropriate actions in order to expedite or facilitate the registration or
the disposition of the Registrable Securities, and in connection
therewith, if an underwriting agreement is entered into pursuant to an
underwritten offering in accordance with the provisions of Section 6,
cause the same to contain indemnification provisions and procedures
substantially identical to those set forth in Section 5 (or such other
provisions and procedures acceptable to the Managing Underwriters, if any)
with respect to all parties to be indemnified pursuant to Section 5.

(o) The Company shall make reasonably available for inspection by
one representative of the Holders designated in writing by the Holders of
a majority of the Registrable Securities to be registered thereunder, any
underwriter participating in any disposition pursuant to such Shelf
Registration Statement, and any attorney, accountant or other agent
retained by such representative or any such underwriter all relevant
financial and other records, pertinent corporate documents and properties
of the Company and its subsidiaries;

(p) The Company shall cause the Company's officers, directors and
employees to make reasonably available for inspection all relevant
information reasonably requested by such representative or any such
underwriter, attorney, accountant or agent in connection with any such
Shelf Registration Statement, in each case, as is customary for similar
due diligence examinations; provided, however, that any information that
is designated in writing by the Company, in good faith, as confidential at
the time of delivery of such information shall be kept confidential by
such representative, any Holders or any such underwriter, attorney,
accountant or agent, unless such disclosure is made in connection with a
court proceeding or required by law, or such information becomes available
to the public generally or through a third party without an accompanying
obligation of confidentiality;

(q) The Company will use its reasonable efforts to cause the
Common Stock issuable upon conversion of the Securities to be admitted for
quotation on the Nasdaq National Market or other stock exchange or trading
system on which the Common Stock primarily trades on or prior to the
effective date of any Shelf Registration Statement hereunder.

(r) In the event that any broker-dealer registered under the
Exchange Act shall underwrite any Registrable Securities or participate as
a member of an underwriting syndicate or selling group or "assist in the
distribution" (within the meaning of the Rules of

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<PAGE> 11
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Fair Practice and the By-Laws of the National Association of Securities
Dealers, Inc. ("NASD")) thereof, whether as a Holder of such Registrable
Securities or as an underwriter, a placement or sales agent or a broker or
dealer in respect thereof, or otherwise, assist such broker-dealer in
complying with the requirements of such Rules and By-Laws, including,
without limitation, by (A) such Rules or By-Laws, including Schedule E
thereto, shall so require, engaging a "qualified independent underwriter"
(as defined in Schedule E) to participate in the preparation of the Shelf
Registration Statement relating to such Registrable Securities and to
exercise usual standards of due diligence in respect thereto, (B)
indemnifying any such qualified independent underwriter to the extent of
the indemnification of underwriters provided in Section 5 hereof and (C)
providing such information to such broker-dealer as may be required in
order for such broker-dealer to comply with the requirements of the Rules
of Fair Practice of the NASD.

(s) The Company shall use its reasonable efforts to take all other
steps necessary to effect the registration, offering and sale of the
Registrable Securities covered by the Shelf Registration Statement
contemplated hereby.

(t) Notwithstanding any provision of this Section 3 to the
contrary, the Company shall not be required to amend or supplement the
Shelf Registration Statement pursuant to the requirements of Sections
3(b), 3(c), 3(i) or 3(s) hereof if (i) such amendment or supplement would
require the Company to disclose a material financing, acquisition or
corporate transaction and the Board of Directors shall have determined
that such disclosure is not in the best interests of the Company and the
holders of its outstanding Common Stock or (ii) the Board of Directors
shall have determined in good faith that there is a valid business purpose
or reason for suspending the use of the Prospectus included in such Shelf
Registration Statement in accordance with Section 3(i) hereof instead of
making such amendment or supplement, provided that in each such case the
Company complies with its obligations, if any, to pay Liquidated Damages.

4. REGISTRATION EXPENSES. Except as otherwise provided in Section 6,
the Company shall bear all fees and expenses incurred in connection with the
performance of its obligations under Sections 2 and 3 hereof and shall bear or
reimburse the Holders for the reasonable fees and disbursements of a Special
Counsel designated by the Company. For purposes of this Agreement, the Company
initially appoints Wilson Sonsini Goodrich & Rosati, Professional Corporation,
as Special Counsel; provided that the Holders of a majority of the Registrable
Securities covered by the Shelf Registration Statement have the right pursuant
to this Agreement to substitute another firm of counsel as Special Counsel under
this Agreement.

5. INDEMNIFICATION AND CONTRIBUTION. (a) In connection with any Shelf
Registration Statement, the Company shall indemnify and hold harmless each
Initial Purchaser, each Holder, each underwriter who participates in an offering
of Registrable Securities, each

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<PAGE> 12
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person, if any, who controls any of such parties within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act and each of their
respective directors, officers, employees, trustees and agents, as follows:

(i) against any and all loss, liability, claim, damage and expense
whatsoever, including any amounts paid in settlement of any investigation,
litigation, proceeding or claim, joint or several, as incurred, arising
out of any untrue statement or alleged untrue statement of a material fact
contained in any Shelf Registration Statement (or any amendment thereto)
covering Registrable Securities, including all documents incorporated
therein by reference, or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the
statements therein not misleading or arising out of any untrue statement
or alleged untrue statement of a material fact contained in any Prospectus
(or any amendment or supplement thereto) or the omission or alleged
omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading; provided, that the Company shall not be liable
under this clause (i) for any settlement of any action effected without
its written consent, which consent shall not be unreasonably withheld; and

(ii) against any and all expenses whatsoever, as incurred
(including reasonable fees and disbursements of counsel chosen by the
Holders, such Holder or any underwriter (except to the extent otherwise
expressly provided in Section 5(c) hereof)), reasonably incurred in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any court or governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under
subparagraph (i) of this Section 5(a);

provided that this indemnity shall not apply to any loss, liability, claim,
damage or expense to the extent arising out of an untrue statement or omission
or alleged untrue statement or omission made in reliance upon and in conformity
with written information furnished to the Company by such Holder or any
underwriter in writing expressly for use in the Shelf Registration Statement (or
any amendment thereto) or any Prospectus (or any amendment or supplement
thereto). Any amounts advanced by the Company to an indemnified party pursuant
to this Section 5 as a result of such losses shall be returned to the Company if
it shall be finally determined by such a court in a judgment not subject to
appeal or final review that such indemnified party was not entitled to
indemnification by the Company.

(b) Each Holder shall agree, severally and not jointly, to indemnify and
hold harmless the Company, each underwriter who participates in an offering of
Registrable Securities and the other Holders and each of their respective
directors, officers (including each officer of the

-12-
<PAGE> 13
FINAL

Company who signed the Shelf Registration Statement), employees, trustees and
agents and each Person, if any, who controls the Company, any underwriter or any
other Holder within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act, from and against any and all loss, liability, claim,
damage and expense whatsoever described in the indemnity contained in Section
5(a)(i) and (ii) hereof, as incurred, but only with respect to untrue statements
or omissions, or alleged untrue statements or omissions, made in the Shelf
Registration Statement (or any amendment thereto) or any Prospectus (or any
amendment or supplement thereto) in reliance upon and in conformity with written
information furnished to the Company by such Holder expressly for use in the
Shelf Registration Statement (or any amendment thereto) or any Prospectus (or
any amendment or supplement thereto); provided, however, that, no such Holder
shall be liable for any claims hereunder in excess of the amount of net proceeds
received by such Holder from the sale of Registrable Securities pursuant to the
Shelf Registration Statement.

(c) Each indemnified party shall give prompt notice to each indemnifying
party of any action commenced against it in respect of which indemnity may be
sought hereunder, enclosing a copy of all papers served on such indemnified
party, but failure to so notify an indemnifying party shall not relieve it of
any liability which it may have to the indemnified party otherwise than on
account of this indemnity agreement. An indemnifying party may participate at
its own expense in the defense of any such action. If an indemnifying party so
elects within a reasonable time after receipt of such notice, such indemnifying
party, jointly with any other indemnifying party, may assume the defense of such
action with counsel chosen by it and approved by the indemnified party or
parties defendant in such action, provided that if any such indemnified party
reasonably determines that there may be legal defenses available to such
indemnified party which are different from or in addition to those available to
such indemnifying party or that representation of such indemnifying party and
any indemnified party by the same counsel would present a conflict of interest,
then such indemnifying party or parties shall not be entitled to assume such
defense. If an indemnifying party is not entitled to assume the defense of such
action as a result of the proviso to the preceding sentence, counsel for such
indemnifying party shall be entitled to conduct the defense of such indemnifying
party and counsel for each indemnified party or parties shall be entitled to
conduct the defense of such indemnified party or parties. If an indemnifying
party assumes the defense of an action in accordance with and as permitted by
the provisions of this paragraph, such indemnifying party shall not be liable
for any fees and expenses of counsel for the indemnified parties incurred
thereafter in connection with such action. In no event shall the indemnifying
party or parties be liable for the fees and expenses of more than one counsel
(in addition to any local counsel) separate from its own counsel for all
indemnified parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances.

(d) In order to provide for just and equitable contribution in
circumstances in which the indemnity provision agreement provided for in this
Section 5 is for any reason held to be unavailable to the indemnified parties
although applicable in accordance with its terms, the

-13-
<PAGE> 14
FINAL

Company, and the Holders shall contribute to the aggregate losses, liabilities,
claims, damages and expenses of the nature contemplated by said indemnity
agreement incurred by the Company and the Holders, as incurred; provided that no
Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
that was not guilty of such fraudulent misrepresentation. As between the
Company, on the one hand, and the Holders, on the other hand, such parties shall
contribute to such aggregate losses, liabilities, claims, damages and expenses
of the nature contemplated by such indemnity agreement in such proportion as
shall be appropriate to reflect the relative fault of the Company, on the one
hand, and the Holders, on the other hand, with respect to the statements or
omissions which resulted in such loss, liability, claim, damage or expense, or
action in respect thereof, as well as any other relevant equitable
considerations. The relative fault of the Company, on the one hand, and of the
Holders, on the other hand, shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company, on the one hand, or by or on behalf of the Holders, on
the other hand, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Initial Purchasers agree, and the Holders shall agree, that
it would not be just and equitable if contribution pursuant to this Section 5
were to be determined by pro rata allocation or by any other method of
allocation that does not take into account the relevant equitable
considerations. For purposes of this Section 5(d), each director, officer,
employee, trustee, agent and Person, if any, who controls a Holder within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
shall have the same rights to contribution as such Holder, and each director,
officer, employee, trustee and agent of the Company, and each Person, if any,
who controls the Company within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act shall have the same rights to contribution as
the Company. No party shall be liable for contribution with respect to any
action, suit, proceeding or claim settled without its written consent.

(e) The Company may require, as a condition to including any Registrable
Securities in any Registration Statement filed and to entering into any
underwriting agreement with respect thereto, that the Company shall have
received an undertaking reasonably satisfactory to it from the holder of such
Registrable Securities and from each underwriter named in any such underwriting
agreement, severally and not jointly, to comply with the provisions of
paragraphs (a) through (d) of this Section 5.

6. UNDERWRITTEN OFFERING. The Holders who desire to do so may sell
Registrable Securities in an underwritten offering. In any such underwritten
offering, the investment banker or bankers and manager or managers that will
administer the offering will be selected by, and the underwriting arrangements
with respect thereto will be approved by the Holders of a majority of the
Registrable Securities to be included in such offering; provided, however, that
(i) such investment bankers and managers and underwriting arrangements must be
reasonably satisfactory

-14-
<PAGE> 15
FINAL

to the Company and (ii) the Company shall not be obligated to arrange for more
than one underwritten offering during the Effectiveness Period. No Holder may
participate in any underwritten offering contemplated hereby unless such Holder
(a) agrees to sell such Holder's Registrable Securities in accordance with any
approved underwriting arrangements, (b) completes and executes all reasonable
questionnaires, powers of attorney, indemnities, underwriting agreements,
lock-up letters and other documents required under the terms of such approved
underwriting arrangements and (c) at least 20% of the outstanding Registrable
Securities are included in such underwritten offering. The Holders participating
in any underwritten offering shall be responsible for any expenses customarily
borne by selling securityholders, including underwriting discounts and
commissions and fees and expenses of counsel to the selling securityholders and
shall reimburse the Company for the fees and disbursements of their counsel,
their independent public accountants and any printing expenses incurred in
connection with such underwritten offerings. Notwithstanding the foregoing or
the provisions of Section 6(a) hereof, upon receipt of a request from the
Managing Underwriter or a representative of Holders of a majority of the
Registrable Securities outstanding to prepare and file an amendment or
supplement to the Shelf Registration Statement and Prospectus in connection with
an underwritten offering, the Company may delay the filing of any such amendment
or supplement for up to 90 days if the Company in good faith has a valid
business reason for such delay.

The Company shall in connection with an underwritten offering in
accordance with the provisions of this Section:

(a) The Company shall, if requested, promptly include or
incorporate in a Prospectus supplement or post-effective amendment to a
Shelf Registration Statement, such information as the Managing
Underwriters administering an underwritten offering of Registrable
Securities registered thereunder reasonably request to be included therein
and to which the Company does not reasonably object and shall make all
required filings of such Prospectus supplement or post-effective amendment
as soon as practicable after they are notified of the matters to be
included or incorporated in such Prospectus supplement or post-effective
amendment;

(b) make such representations and warranties to the Holders and
the underwriters in form, substance and scope as are customarily made by
the Company to underwriters in primary underwritten offerings and covering
matters, including, but not limited to, those set forth in the Purchase
Agreement;

(c) obtain opinions of counsel to the Company and updates thereof
(which counsel and opinions (in form, scope and substance) shall be
reasonably satisfactory to the Managing Underwriters) addressed to each
Holder and the underwriters covering such matters as are customarily
covered in opinions requested in underwritten offerings and such other
matters as may be reasonably requested by such Holders and underwriters
(it

-15-
<PAGE> 16
FINAL

being agreed that the matters to be covered by such opinion or written
statement by such counsel delivered in connection with such opinions shall
include in customary form, without limitation, as of the date of the
opinion and as of the effective date of the Shelf Registration Statement
or most recent post-effective amendment thereto, as the case may be, the
absence from such Shelf Registration Statement and the prospectus included
therein, as then amended or supplemented, including the documents
incorporated by reference therein, of an untrue statement of a material
fact or the omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading);

(d) obtain "cold comfort" letters and updates thereof from the
independent public accountants of the Company (and, if necessary, any
other independent public accountants of any subsidiary of the Company or
of any business acquired by the Company for which financial statements and
financial data are, or are required to be, included in the Shelf
Registration Statement), addressed to each Holder and the underwriters in
customary form and covering matters of the type customarily covered in
"cold comfort" letters in connection with primary underwritten offerings;
and

(e) deliver such documents and certificates as may be reasonably
requested by any such Holders and the Managing Underwriters, including
those to evidence compliance with Section 3(i) and with any customary
conditions contained in the underwriting agreement or other agreement
entered into by the Company.

7. MISCELLANEOUS.

(a) Other Registration Rights. The Company may grant registration
rights that would permit any Person that is a third party the right to
piggy-back on any Shelf Registration Statement, provided that if the Managing
Underwriter, if any, of such offering delivers an opinion to the Holders that
the total amount of securities which they and the holders of such piggy-back
rights intend to include in any Shelf Registration Statement is so large as to
materially adversely affect the success of such offering (including the price at
which such securities can be sold), then only the amount, the number or kind of
securities to be offered for the account of holders of such piggy-back rights
will be reduced to the extent necessary to reduce the total amount of securities
to be included in such offering to the amount, number or kind recommended by the
Managing Underwriter prior to any reduction in the amount of Registrable
Securities to be included.

(b) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, qualified,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless the Company has obtained the written
consent of Deutsche Morgan Grenfell Inc.

-16-
<PAGE> 17
FINAL

(c) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail,
telecopier, or air courier guaranteeing overnight delivery:

(1) if to a Holder, at the most current address given by
such Holder to the Company in accordance with the provisions of this
Section 7(c);

(2) if to the Initial Purchasers, initially at the address
set forth in the Purchase Agreement;

(3) if to the Company, initially at its address set forth in
the Purchase Agreement; and

(4) if to the Special Counsel, the address given by such
Special Counsel to the Company in accordance with the provisions of
this Section 7(c).

All such notices and communications shall be deemed to have been duly given when
received.

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

(d) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the parties
and the Holders, including, without the need for an express assignment or any
consent by the Company thereto, subsequent Holders of Registrable Securities.
The Company hereby agrees to extend the benefits of this Agreement to any Holder
of Registrable Securities and any such Holder may specifically enforce the
provisions of this Agreement as if an original party hereto.

(e) Counterparts. This agreement 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.

(f) Headings. The headings in this agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.

(g) Governing Law. This agreement shall be governed by and
construed in accordance with the laws of the State of New York, United States of
America, without giving effect to any provisions relating to conflicts of laws.

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<PAGE> 18
FINAL

(h) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in any way impaired
or affected thereby, it being intended that all of the rights and privileges of
the parties shall be enforceable to the fullest extent permitted by law.

[Remainder of page intentionally left blank]

-18-
<PAGE> 19
FINAL

Please confirm that the foregoing correctly sets forth the agreement
between the Company and you.

Very truly yours,

THE VANTIVE CORPORATION

By:______________________________________
Name:____________________________________
Title:___________________________________

The foregoing Registration Rights Agreement is hereby confirmed and
accepted as of the date first above written.

DEUTSCHE MORGAN GRENFELL INC.

Acting severally on behalf of itself
and the several Initial Purchasers named herein.

By: DEUTSCHE MORGAN GRENFELL INC.

By:__________________________________
Name:_____________________________
Title:____________________________

-19-

<PAGE> 1
EXHIBIT 5.1

[GCW&F Letterhead]

November 18, 1997

The Vantive Corporation
2455 Augustine Drive
Santa Clara, CA 95054

THE VANTIVE CORPORATION
REGISTRATION STATEMENT ON FORM S-3

Ladies and Gentlemen:

As counsel to The Vantive Corporation, a Delaware corporation (the
"Company"), we are rendering this opinion in connection with the registration by
the Company pursuant to the above-referenced Registration Statement on Form S-3
(the "Registration Statement") under the Securities Act of 1933, as amended, of
$69,000,000 aggregate principal amount of the Company's 4.75% Convertible
Subordinated Notes due September 1, 2002 (the "Notes") and the common stock, no
par value (the "Stock"), of the Company issuable upon conversion thereof. The
Notes were issued pursuant to the Indenture (the "Indenture"), dated as of
August 15, 1997, between the Company and Deutsche Bank AG, New York Branch, as
Trustee thereunder (the "Trustee").

As such counsel and in connection with the opinions expressed below, we
have examined a copy of (a) the Registration Statement, (b) the Indenture, (c) a
specimen of the Stock and (d) the originals, or copies identified to our
satisfaction, of such corporate records of the Company, certificates of public
officials, officers of the Company and other persons, and such other documents,
agreements and instruments as we have deemed necessary as a basis for the
opinions hereinafter expressed. In our examinations, we have assumed the
genuineness of all signatures, the authenticity of all documents submitted to us
as originals and the conformity with the originals of all documents submitted to
us as copies. In expressing the opinions set forth below, we have also relied on
certain certificates of officers of the Company and certificates of public
officials.

Our opinions expressed below are limited to the laws of the State of
California and the federal law of the United States, and we do not express any
opinion herein concerning any other law.

Based on such examination and review and subject to the foregoing, we
are of the opinion that:

(i) The shares of Stock initially issuable upon conversion of the
Notes have been duly and validly authorized and reserved for issuance and, when
issued and delivered in accordance with the provisions of the Securities and the
Indenture, will be duly and validly issued and fully paid and non-assessable.

We hereby consent to the use of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the caption "Legal
Matters" therein.

Very truly yours,
/s/ Gray Cary Ware & Freidenrich

<PAGE> 1

EXHIBIT 5.2

[Dewey Ballantine Letterhead]

November 17, 1997

The Vantive Corporation
2455 Augustine Drive
Santa Clara, CA 95054

Re: THE VANTIVE CORPORATION
REGISTRATION STATEMENT ON FORM S-3

Ladies and Gentlemen:

We have acted as special New York counsel for The Vantive Corporation, a
Delaware corporation (the "Company"), in connection with the registration by the
Company of 4.75% Convertible Subordinated Notes due September 1, 2002 (the
"Notes") pursuant to the above-referenced Registration Statement on Form S-3
(the "Registration Statement") under the Securities Act of 1933, as amended (the
"Act"), and the rules and regulations promulgated thereunder (the "Rules").

In connection with the opinion expressed herein, we have examined the (i)
the Registration Statement, (ii) form of the Notes, and (iii) final execution
copy of the Indenture dated as of August 15, 1997 (the "Indenture") between the
Company and Deutsche Bank AG, New York Branch. In addition, we have assumed the
due authorization, execution, authentication, issuance and delivery of the
Notes. We have made no independent investigation of fact. We have made such
investigations of law as we have deemed necessary. In providing the opinion
hereafter set forth, we have also assumed the due authorization, execution and
delivery of the Indenture by each party named therein (including the Company)
and that the Indenture so executed and delivered is identical to the final
execution copy delivered to us. In addition, we have assumed that the Indenture
is enforceable against each of the parties thereto other than the Company.

Based upon the foregoing and subject to the matters hereinafter set forth,
we are of the opinion that:

(i) The Notes, insofar as they are governed by the laws of the State of New
York, when authorized, executed, authenticated, issued and delivered in
accordance with the provisions of the Indenture will be valid and legally
binding obligations of the Company entitled to the benefits provided in the
Indenture.

The foregoing opinion is limited to the laws of the State of New York. This
opinion is furnished for your benefit, and no other person or entity is entitled
to rely on this opinion without our express written consent. This opinion may
not be published or reproduced in any manner or distributed or circulated to any
person or entity without our express written consent; provided, however, that we
consent to the filing of this opinion as an exhibit to the Registration
Statement and to the reference to our firm under the caption "Legal Matters"
therein. In giving this consent, we do not thereby agree that we come within the
category of persons whose consent is required by the Act or the Rules. This
opinion is limited to the matters stated herein, and no opinion is implied or
may be inferred beyond the matters expressly stated herein. This opinion speaks
as of the date hereof, and we undertake no obligation to update this opinion
after the date hereof.

Very truly yours,

/s/ Dewey Ballantine
--------------------

<PAGE> 1

EXHIBIT 12.1

STATEMENT REGARDING COMPUTATION OF RATIOS

THE VANTIVE CORPORATION
RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
Fiscal Years Ended December 31,
-------------------------------
1995 1996
-------------------------------
<S> <C> <C>

Ratio of Earnings to Fixed Charges:
Earnings Before Fixed Charges and Income Tax.............. 2,615 16,220
Fixed Charges............................................. 340 641

Ratio of Earnings to Fixed Charges........................... 7.7 25.3
------- -------
Earnings Before Fixed Charges and Income Tax:
Net Income................................................ 2,043 10,905
Fixed Charges............................................. 340 641
Income Taxes.............................................. 232 4,674
------- -------
Earnings Before Fixed Charges and Taxes...................... 2,615 16,220
======= =======

Fixed Charges:
Consolidated Interest Expense............................. 93 159
Estimated Interest Element in Rent Expenses............... 247 482
------- -------
Total Fixed Charges.................................... 340 641
======= =======
</TABLE>

The consolidated ratios of earnings to fixed charges were computed by dividing
earnings by the fixed charges. For computation of such ratios of earnings to
fixed charges, earnings consist of net income, to which has been added fixed
charges and income taxes of the Company and its subsidiaries. Fixed charges
consist of consolidated interest expense and the estimated portion of rent
expense deemed by the Company to be a reasonable approximation of the interest
factor of rental payments under operating leases. For the years ended December
31, 1992, 1993 and 1994 and the nine months ended September 30, 1997, earnings
were insufficient to cover fixed charges by approximately $2,254,000,
$3,697,000, $770,000 and $6,256,000, respectively.

<PAGE> 1

EXHIBIT 23.1

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the incorporation
by reference in this Registration Statement of our report dated January 20,
1997 included in The Vantive Corporation's Form 10-K for the year ended
December 31, 1996 and to all references to our Firm included in this
Registration Statement.

/s/ Arthur Andersen LLP
-----------------------
Arthur Andersen LLP

San Jose, California
November 14, 1997

<PAGE> 1
EXHIBIT 25.1

COORDINATION WITH DELAYED OFFERING REGISTRATION STATEMENT

When the Form T-1 is used for applications to determine the eligibility of a
trustee pursuant to Section 305(b)(2), the following provisions shall apply:

1. The file number under the Securities Act of 1933 for the delayed offering
registration statements to which the application applies shall be placed in the
upper right hand corner of the cover page of the Form T-1.

2. The description of the indenture securities included under "Title of
Securities" should specify whether the application relates to a single tranche
or to all of the securities registered pursuant to the delayed offering
registration statement.

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM T-1

STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939,
AS AMENDED, OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE

CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2)

Deutsche Bank, AG, New York Branch
(Exact name of trustee as specified in its charter)

Federal Republic of Germany 13-2944988
- --------------------------------------------------------------------------------
(Jurisdiction of Incorporation or (I.R.S. Employer
organization if not a U.S. national bank) Identification Number)

31 West 52nd Street, New York, New York 10004
(Address of principal executive offices) (Zip code)

Alfred Steffan, Deutsche Bank AG, New York Branch,
31 West 52nd Street, New York, New York 10004 (212) 469-8166
- --------------------------------------------------------------------------------
(Name, address and telephone number of agent for Service)

The Vantive Corporation
- --------------------------------------------------------------------------------
(Exact name of obligor as specified in its charter)

Delaware 77-0266662
- -------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
incorporation or organization)

2455 Augustine Drive, Santa Clara, California 95054
(Address of principal executive offices) (Zip code)

$69,000,000 aggregate principal amount of 4.75% Convertible Subordinated
Notes due 2002
- --------------------------------------------------------------------------------
(Title of the indenture securities)

ITEM 1. GENERAL INFORMATION.

Furnish the following information as to the trustee:

(a) Name and address of each examining or supervising authority to which it is
subject.

New York State Banking Department
Two Rector Street
New York, New York

Federal Reserve Bank of New York
33 Liberty Street
New York, New York

<PAGE> 2

(b) Whether it is authorized to exercise corporate trust powers.

Yes.

ITEM 2. AFFILIATIONS WITH THE OBLIGOR.

If the obligor is an affiliate of the trustee, describe each such affiliation.

The obligor is not an affiliate of the trustee.

Instructions.

1. The term "affiliate" is defined in Rule 0-2 of the General Rules and
Regulations under the Act. Attention is also directed to Rule 7a-26.

2. Include the name of each such affiliate and the names of all intermediary
affiliates, if any. Indicate the respective percentage of voting securities or
other bases of control giving rise to the affiliation.

ITEM 3. VOTING SECURITIES OF THE TRUSTEE.

Furnish the following information as to each class of voting securities of the
trustee: As of October 31, 1997 (Insert date within 31 days).

<TABLE>
<S> <C>
Col. A. Col. B.
Title of Class Amount Outstanding
</TABLE>

NOT APPLICABLE

Instructions. The term "voting security" is defined in Section 303(16) of the
Act.

ITEM 4. TRUSTEESHIPS UNDER OTHER INDENTURES.

If the trustee is a trustee under another indenture under which any other
securities, or certificates of interest or participation in any other
securities, of the obligor are outstanding, furnish the following information:

(a) Title of the securities outstanding under each such other indenture.

NONE.

(b) A brief statement of the facts relied upon as a basis for the claim that
no conflicting interest within the meaning of Section 310(b)(1) of the
Act arises as a result of the trusteeship under any such other
indenture, including a statement as to how the indenture securities will
rank as compared with the securities issued under such other indenture.

Not Applicable.

ITEM 5. INTERLOCKING DIRECTORATES AND SIMILAR RELATIONSHIPS WITH THE OBLIGOR OR
UNDERWRITERS.

If the trustee or any of the directors or executive officers of the trustee is
a director, officer, partner, employee, appointee, or representative of the
obligor or of any underwriter for the obligor, identify each such person having
any such connection and state the nature of each such connection.

Deutsche Morgan Grenfell Inc. was an underwriter for the obligor
in connection with the Notes to which this T-1 relates. Deutsche Bank AG
owns Deutsche Morgan Grenfell Inc. and the trustee is a licensed branch
of Deutsche Bank AG. The following individuals are officers and/or
employees of both Deutsche Bank AG, New York Branch and Deutsche Morgan
Grenfell Inc.:

Christopher Beaudet, David Bondy, John Cuttig, Kathy DeRuggiero,
Christine Fade, John Hamilton, Julie Harris, Howard Henick, Donald
Jones, Philip Kearns, Sean Kelleher, Doreen Kennedy, Charles W. Kerner,
Francisco R. Kraft, Robert M. Lupoli, Victor T. Mahoney, Lisa Masone,
Karen Meyer, Daniel Park, Dawn Patterson, Gergory Petretti, Hilger
Pothmann, Edward Rubin, Richard Uhlig, Joan Wang and Bernadette Whitaker

Instructions.

1. Notwithstanding General Instruction F, the term "underwriter" as used in
this item does not refer to any person who is not currently engaged in the
business of underwriting.

<PAGE> 3

2. The terms "employee," "appointee," and "representative," as used in this
item, do not include connections in the capacity of transfer agent,
registrar, custodian, paying agent, fiscal agent, escrow agent, or
depositary, or in any other similar capacity or connections in the capacity
of trustee, whether under an indenture or otherwise.

ITEM 6. VOTING SECURITIES OF THE TRUSTEE OWNED BY THE OBLIGOR OR ITS OFFICIALS.

Furnish the following information as to the voting securities of the trustee
owned beneficially by the obligor and each director, partner, and executive
officer of the obligor:

As of October 31, 1997 (Insert date within 31 days).

Instructions:

1. Names of persons who do not own beneficially any of the securities specified
may be omitted.

2. No information need be given in any case where the amount of voting
securities of the trustee, owned beneficially by the obligor and Its
directors, partners, and executive officers, taken as a group, does not
exceed 1 percent of the outstanding voting securities of the trustee.

<TABLE>
<CAPTION>
Col. A Col. B Col. C Col. D
------ ------ ------ ------
<S> <C> <C> <C>
Percentage of Voting
Amount Owned Securities Represented by
Name of Owner Title of Class Beneficially Amount Given in Col. C
</TABLE>

NONE

ITEM 7. VOTING SECURITIES OF THE TRUSTEE OWNED BY UNDERWRITERS OR THEIR
OFFICIALS.

Furnish the following information as to the voting securities of the trustee
owned beneficially by each underwriter for the obligor and each director,
partner, and executive officer of each such underwriter:

As of October 31, 1997 (Insert date within 31 days).

Instructions.

1. Instruction 1 to Item 6 shall be applicable to this item.

2. The name of each director, partner, or executive officer required to be
given in Column A shall be set forth under the name of the underwriter of
which he is a director, partner, or executive officer.

3. No information need be given in any case where the amount of voting
securities of the trustee owned beneficially by an underwriter and its
directors, partners, and executive officers, taken as a group, does not
exceed 1 percent of the outstanding voting securities of the trustee.

</TABLE>

NONE

ITEM 8. SECURITIES OF THE OBLIGOR OWNED OR HELD BY THE TRUSTEE.

Furnish the following information as to securities of the obligor beneficially
or held as collateral security for obligations in default by the trustee:

As of October 31, 1997 (Insert date within 31 days).

Instructions.

1. As used in this item, the term "securities" includes only such securities as
are generally known as corporate securities, but shall not include any note
or other evidence of indebtedness issued to evidence an obligation to repay
monies lent to a person by one or more banks, trust companies, or banking
firms, or any certificate of interest or participation in any such note or
evidence of indebtedness.

2. For the purposes of this item the trustee shall not be deemed the owner or
holder of (a) any security which it holds as collateral security (as trustee
or otherwise) for an obligation which is not in default, or (b) any security
which it holds as collateral security under

<PAGE> 4

the indenture to be qualified, irrespective of any default thereunder, or
(c) any security which it holds as agent for collection, or as custodian,
escrow agent or depositary, or in any similar representative capacity.

3. No information need be furnished under this item as to holdings by the
trustee of securities already issued under the indenture to be qualified or
securities issued under any other indenture under which the trustee is also
trustee.

4. No information need be given with respect to any class of securities where
the amount of securities of the class which the trustee owns beneficially or
holds as collateral security for obligations in default does not exceed 1
percent of the outstanding securities of the class.

<TABLE>
<CAPTION>
Col. A Col. B Col. C Col. D
------ ------ ------ ------
<S> <C> <C> <C>
Amount Owned Percentage of Class
Whether the Securities Beneficially or Held as Represented by
are Voting or Collateral Security for Amount Given
Title of Class Nonvoting Securities Obligations in Default in Col. C

</TABLE>

NONE

ITEM 9. SECURITIES OF UNDERWRITERS OWNED OR HELD BY THE TRUSTEE.

If the trustee owns beneficially or holds as collateral security for
obligations in default any securities of an underwriter for the obligor, furnish
the following information as to each class of securities of such underwriter any
of which are so owned or held by the trustee:

As of October 31, 1997 (Insert date within 31 days).

<TABLE>
<CAPTION>
Col. A Col. B Col. C Col. D
------ ------ ------ ------
<S> <C> <C> <C>
Amount Owned
Beneficially or Held as
Collateral Security for Percentage of Class
Title of Issuer Obligations in Default Represented by Amount
and Title of Class Amount Outstanding by Trustee Given in Col. C

</TABLE>

Instruction. Instructions 1, 2, and 4 to Item 8 shall be applicable to this
item.

ITEM 10. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF VOTING SECURITIES OF CERTAIN
AFFILIATES OR SECURITY HOLDERS OF THE OBLIGOR.

If the trustee owns beneficially or holds as collateral security for
obligations in default voting securities of a person who, to the knowledge of
the trustee (1) owns 10 percent or more of the voting securities of the obligor
or (2) is an affiliate, other than a subsidiary, of the obligor, furnish the
following information as to the voting securities of such person:

As of October 31, 1997 (Insert date within 31 days).

Instruction. Instructions 1, 2, and 4 to Item 8 shall be applicable to this
item.

NONE

<PAGE> 5

ITEM 11. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF ANY SECURITIES OF A PERSON
OWNING 50 PERCENT OR MORE OF THE VOTING SECURITIES OF THE OBLIGOR.

If the trustee owns beneficially or holds as collateral security for
obligations in default any securities of a person who, to the knowledge of the
trustee, owns 50 percent or more of the voting securities of the obligor,
furnish the following information as to each class of securities of such person
any of which are so owned or held by the trustee:

As of October 31, 1997 (Insert date within 31 days).

Instruction. Instructions 1, 2 and 4 to Item 8 shall be applicable to this item.

NONE.

ITEM 12. INDEBTEDNESS OF THE OBLIGOR TO THE TRUSTEE.

Except as noted in the instructions, if the obligor is indebted to the
trustee, furnish the following information: As of October 31, 1997 (Insert
date within 31 days).

<TABLE>
<CAPTION>
Col. A Col. B Col. C
------ ------ ------
<S> <C> <C> <C>
Nature of Indebtedness Amount Outstanding Date Due
</TABLE>

NONE

Instructions.

1. No information need be provided as to: (a) the ownership of securities issued
under any indenture, or any security or securities having a maturity of more
than one year at the time of acquisition by the indenture trustee; (b)
disbursements made in the ordinary course of business in the capacity of trustee
of an indenture, transfer agent, registrar, custodian, paying agent, fiscal
agent or depositary, or other similar capacity; (c) indebtedness created as a
result of services rendered or premises rented; or indebtedness created as a
result of goods or securities sold in a cash transaction; (d) the ownership of
stock or of other securities of a corporation organized under Section 25(a) of
the Federal Reserve Act, as amended, which is directly or indirectly a creditor
of an obligor upon the indenture securities; or (e) the ownership of any drafts,
bills of exchange, acceptances, or obligations which fall within the
classification of self-liquidating paper.

2. Information should be given as to the general type of indebtedness, such as
lines of credit, commercial paper, long-term notes, mortgages, etc.

ITEM 13. DEFAULTS BY THE OBLIGOR.

(a) State whether there is or has been a default with respect to the
securities under this indenture. Explain the nature of any such default.

NONE.

(b) If the trustee is a trustee under another indenture under which any other
securities, or certificates of interest or participation in any other
securities, of the obligor are outstanding, or is trustee for more than one
outstanding series of securities under the indenture, state whether there has
been a default under any such indenture or series, identify the indenture or
series affected, and explain the nature of any such default.

Not Applicable.

<PAGE> 6

ITEM 14. AFFILIATIONS WITH THE UNDERWRITERS.

If any underwriter is an affiliate of the trustee, describe each such
affiliation.

Instructions.

1. The term "affiliate" as defined in Rule 0-2 of the General Rules and
Regulations under the Act. Attention is directed to Rule 7a-26.

2. Include the name of each such affiliate and the names of all intermediate
affiliates, if any. Indicate the respective percentage of voting securities
or other bases of control giving rise to the affiliation

ITEM 15. FOREIGN TRUSTEE.

Identify the order or rule pursuant to which the foreign trustee is authorized
to act as sole trustee under indentures qualified or to be qualified under the
Act.

Section 304(d) of the Trust Indenture Act of 1939

ITEM 16. LIST OF EXHIBITS.

List below all exhibits filed as a part of this statement of eligibility.

Instructions. Subject to Rule 7a-29 permitting incorporation of exhibits by
reference, the following exhibits are to be filed as a part of the statement of
eligibility of the trustee. Such exhibits shall be appropriately lettered or
numbered for convenient reference. Exhibits incorporated by reference may be
referred to by the designation given in the previous filing. Where exhibits are
incorporated by reference, the reference shall be made in the list of exhibits
called for under Item 16. If the certificate of authority to commence business
(Exhibit 2) and/or the certificate to exercise corporate trust powers (Exhibit
3) is contained in another exhibit, a statement to that effect shall be made,
identifying the exhibit in which such certificates are included. If an
applicable exhibit is not in English, a translation in English shall also be
filed. In response to Exhibit 7, foreign trustees shall provide financial
information sufficient to provide the information required by Section 310(a)(2)
of the Act.

1. A copy of the articles of association of Deutsche Bank AG.

2. A copy of the Certificate of Authority of the Trustee to Commence Business.

3. A copy of the Authorization of the Trustee to exercise corporate trust
powers.

4. A copy of the existing By-laws of the Trustee or instruments corresponding
thereto, as amended to date. Not Applicable.

5. A copy of each Indenture referred to in Item 4, if the obligor is in default.
Not Applicable.

6. The consent of United States institutional trustees required by Section
321(b) of the Act.

7. A copy of the latest report of condition of the trustee published pursuant to
law or the requirements of its supervising or examining authority.

8. A copy of any order pursuant to which the foreign trustee is authorized to
act as sole trustee under indentures qualified or to be qualified under the
Act.*

9. Foreign trustees are required to furnish a consent to service of process (see
Rule 10a-4 under the Act). None

*to be filed by amendment

<PAGE> 7

SIGNATURE

(Pursuant to the requirements of the Trust Indenture Act of 1939, as amended,
the trustee, Deutsche Bank AG, New York Branch, a branch licensed to do business
as such under the Banking Law of the State of New York, being a branch of
Deutsche Bank AG, a corporation organized under the laws of the Federal Republic
of Germany, has duly caused this statement of eligibility and qualification to
be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York, and State of New York, on the 7th day of November, 1997.

DEUTSCHE BANK, AG, NEW YORK BRANCH

By:/s/George H. Gregor
--------------------------------
Name: George H. Gregor
Title: Vice President

By:/s/Peter C. Olsen
--------------------------------
Name: Peter C. Olsen
Title: Vice President

Instruction. The name of each person signing the statement of eligibility shall
be typed or printed beneath the signature.

<PAGE> 8
ARTICLES OF ASSOCIATION OF DEUTSCHE BANK AG

In conformity with the resolutions of the General Meeting on May 20, 1997

Deutsche Bank

<PAGE> 9
-1-

I. GENERAL PROVISIONS

Section 1

The stock corporation bears the name

Deutsche Bank
Aktiengesellschaft

It is domiciled in Frankfurt (Main).

Section 2

(1) The object of the enterprise is the transaction of banking business of
every kind, the provision of financial and other services, and the
promotion of international economic relations. The Company may realize
this object itself or through subsidiaries and affiliated companies.

(2) To the extent permitted by law, the Company is entitled to transact all
business and take all steps which appear likely to promote the object of
the Company, in particular to acquire and dispose of real estate, to
establish branches at home and abroad, to acquire, administer and
dispose of participations in other enterprises, and to conclude
enterprise agreements.

Section 3

The Company's notices shall be published in the Federal Gazette
(Bundesanzeiger).

II. SHARE CAPITAL AND SHARES

Section 4

(1) The share capital is DM 2,509,233,675.
It is divided into
501,846,735 shares in the nominal amount of DM 5 each.

(2) The Company shall not obtain any lien pursuant to its General Business
Conditions in respect of the shares it has issued except by special
pledging agreements.

(3) Insofar as the Company is authorized under the following subparagraphs
to issue shares in the nominal amount of DM 50 each, it may also,
instead of each share in the nominal amount of DM 50, issue ten shares
in the nominal amount of DM 5 each.

<PAGE> 10
-2-

(4) The share capital is increased conditionally by a further DM
225,000,000, divided into 4,500,000 bearer shares in the nominal amount
of DM 50 each. The conditional capital increase shall be effected only
to the extent that holders of warrants from participatory certificates
with warrants issued on or before April 30, 1996 by Deutsche Bank
Aktiengesellschaft exercise their option rights. The new shares should
be entitled to participate in profits from the beginning of the
financial year in which they are issued by virtue of the exercise of
option rights.

(5) The Board of Managing Directors is authorized to increase the share
capital with the consent of the Supervisory Board once or more than once
by up to a total of DM 31,852,760 on or before April 30, 2001 through
the issue of new shares against cash payment. Shareholders' pre-emptive
rights are excluded.

(6) The Board of Managing Directors is authorized to increase the share
capital with the consent of the Supervisory Board once or more than once
by up to a total of DM 500,000,000 on or before April 30, 1998 through
the issue of new shares against cash payment. At such time(s),
pre-emptive rights shall be granted to the shareholders, the Board of
Managing Directors is, however, authorized to except fractions from the
shareholders' pre-emptive rights and also to exclude the pre-emptive
rights insofar as is necessary to provide the holders of the warrants
and convertible bonds issued by Deutsche Bank Aktiengesellschaft and its
subsidiaries with such pre-emptive rights to new shares as they would be
entitled to upon exercising the option or conversion rights.

(7) The share capital is increased conditionally by a further DM 200,000,000
divided into 4,000,000 bearer shares of DM 50 par value each. The
conditional capital increase shall be effected only to the extent that
holders of warrants from the participatory certificates with warrants
and the bonds with warrants to be issued on or before April 30, 1998 by
Deutsche Bank Aktiengesellschaft exercise their option rights. The new
shares shall be entitled to participate in profits from the beginning of
the financial year in which they are issued by virtue of the exercise of
option rights.

(8) The Board of Managing Directors is authorized to increase the share
capital with the consent of the Supervisory Board once or more than once
by up to a total of DM 100 million on or before April 30, 2000 through
the issue of new shares against cash payment. At such time(s),
pre-emptive rights shall be granted to the shareholders subject to the
following restrictions. The Board of Managing Directors is, however,
authorized to except fractions from the shareholders' pre-emptive rights
and also in

<PAGE> 11
-3-

exclude the pre-emptive rights insofar as is necessary to provide the
holders of the warrants and convertible bonds issued by Deutsche Bank
Aktiengesellschaft and its subsidiaries with such pre-emptive rights to
new shares as they would be entitled to upon exercising the option of
conversion rights. Furthermore, the Board of Managing Directors is
authorized with the consent of the Supervisory Board to exclude
shareholders' pre-emptive rights when utilizing the authorization if the
issue price of the new shares is not substantially lower than the market
price of the already listed shares with the same terms and conditions at
the time the issue price is fixed.

(9) The Board of Managing Directors is authorized to increase the share
capital with the consent of the Supervisory Board, once or more than
once, by up to a total of DM 500,000,000 on or before April 30, 2002
through the issue of new shares against cash payment. For this purpose,
shareholders are to be granted pre-emptive rights; however, the Board of
Managing Directors is authorized to except broken amounts from
shareholders' pre-emptive rights and to exclude pre-emptive rights,
insofar as it is necessary to grant to the holders of warrants,
convertible bonds and convertible participatory rights issued by
Deutsche Bank Aktiengesellschaft or its subsidiaries pre-emptive rights
to new shares to the extent to which they would be entitled to such
rights were they to exercise their option or conversion rights.

(10) The share capital is increased conditionally by up to DM 300,000,000
through the issue of up to 60,000,000 new shares in the nominal amount
of DM 5 each. This conditional capital increase will only be affected
insofar as

a) the holders or creditors of conversion rights or warrants linked
to the participatory certificates or convertible bonds or bonds
with warrants to be issued on or before April 20, 2002 by
Deutsche Bank Aktiengesellschaft or its directly or indirectly
majority-held affiliated companies utilize their conversion or
option rights, or

b) the holders or creditors with conversion duties relating to
convertible participatory certificates or convertible bonds to
be issued on or before April 30, 2002 by Deutsche Bank
Aktiengesellschaft or its directly or indirectly majority-held
affiliated companies fulfill their conversion duty.

The new shares shall be entitled to participate in profits from the
beginning of the financial year in which they are issued by virtue of
the exercise of conversion or option rights or by virtue of the
fulfillment of conversion duties.

<PAGE> 12
-4-

Section 5

(1) The shares are bearer shares.

(2) If in the event of the capital being increased the resolution on the
increase does not provide that the new shares are to be made out to
bearer or registered in a name, they shall likewise be made out to
bearer.

(3) The form of the shares and the dividend coupons and talons shall be
determined by the Board of Managing Directors in agreement with the
Supervisory Board. The same shall apply to bonds and interest coupons.
Global certificates may be issued. The claim of shareholders to have
their shares issued in individual certificate form is excluded.

III. THE BOARD OF MANAGING DIRECTORS

Section 6

(1) The Board of Managing Directors shall consist of not less than three
members.

(2) The Supervisory Board shall appoint the members of the Board of Managing
Directors and determine their number. The Supervisory Board may appoint
deputy members of the Board of Managing Directors.

Section 7

(1) The Company shall be legally represented by two members of the Board of
Managing Directors or by one member jointly with a holder of procuration
(Prokurist).

(2) The deputy members of the Board of Managing Directors shall rank equally
with full members in respect of powers of representation.

<PAGE> 13
-5-

Section 8

For the purpose of closer contact and business consultation with trade and
industry the Board of Managing Directors may form an Advisory Board and Regional
Advisory Councils, lay down rules of procedure for their business and fix the
remuneration of their members. The Supervisory Board shall be informed of any
changes in the membership of the Advisory Board and the Regional Advisory
Councils at the Supervisory Board meeting immediately following such changes.

IV. THE SUPERVISORY BOARD

Section 9

(1) The Supervisory Board shall consist of 20 members. They are elected for
the period until conclusion of the Shareholders' Meeting which adopts
the resolutions concerning the ratification of acts of management for
the fourth financial year following the beginning of the term of office.
Here, the financial year in which the term of office begins is not taken
into account.

(2) In the election of shareholders' representatives to the Supervisory
Board and any substitute members, the Chairman of the Shareholders
Meeting shall be entitled to take a vote on a list of election proposals
submitted by management or shareholders. If substitute members are
elected on a list, they shall replace shareholders' representatives
prematurely leaving the Supervisory Board in the order in which they
were named, unless resolved otherwise at the vote.

(3) If a Supervisory Board member is elected to replace a member leaving the
Supervisory Board, the new member's term of office shall run for the
remainder of the replaced member's term. In the event that a substitute
member replaces the outgoing member, the substitute member's term of
office shall expire if a new vote to replace the outgoing member is
taken at the next Shareholders' Meeting or the next Shareholders'
Meeting but one, at the end of the said Shareholders' Meeting, otherwise
at the end of the outgoing member's residual term of office.

(4) Any member of the Supervisory Board may resign from office without being
required to show cause subject to his giving one month's notice by
written declaration addressed to the Board of Managing Directors.

Section 10

(1) Following a Shareholders' Meeting in which all members of the
Supervisory Board to be elected by a Shareholders' Meeting have been
newly elected a meeting of the

<PAGE> 14
-6-

Supervisory Board shall take place, for which no special invitation is
required. At this meeting, the Supervisory Board under the chairmanship
of its oldest member elected by the shareholders shall elect from among
its members and for the duration of its term of office the Chairman of
the Supervisory Board and his Deputy in accordance with Section 27 of
the Co-determination Act. In the event of the Chairman of the
Supervisory Board or his Deputy leaving before completion of his term of
office, the Supervisory Board shall forthwith elect a substitute.

(2) The Deputy Chairman of the Supervisory Board shall have the legal and
statutory rights and duties of the Chairman only if the latter is
indisposed. Sections 29 (2) 3 and 31 (4) 3 of the Co-determination Act
remain unaffected.

Section 11

(1) Meetings of the Supervisory Board shall be called by the Chairman or, if
the latter is indisposed, by his Deputy whenever so required by law or
business.

(2) The Supervisory Board shall be deemed to constitute a quorum if the
members have been invited in writing or by cable under their last given
address and not less than half the total members which it is required to
comprise take part in the voting in person or by written vote. The chair
shall be taken by the Chairman or his Deputy. The Chairman of the
meeting shall decide the manner of voting.

(3) Resolutions may also be taken without a meeting being called, by way of
written or cabled or telephoned votes, if so ruled by the Chairman of
the Supervisory Board or his Deputy and provided no member of the
Supervisory Board objects to such procedure. This also applies to second
polls pursuant to Sections 29 (2) 1 and 31 (4) 1 of the Co-determination
Act.

(4) Resolutions of the Supervisory Board are taken with the simple majority
of the votes unless otherwise provided by law. If there is equality of
votes the Chairman shall have the casting vote pursuant to Sections 29
(2) and 31 (4) of the Co-determination Act; a second poll within the
meaning of these provisions can be demanded by any member of the
Supervisory Board.

(5) If not all the members of the Supervisory Board are present at the
voting and if absent members have not submitted written votes, the
voting shall be postponed at the request of at least two members of the
Supervisory Board who are present. In the event of such postponement,
the new vote shall be taken at the next regular

<PAGE> 15
-7-

Supervisory Board meeting if no extraordinary meeting is called. At the
new vote a further minority call for postponement is not permitted.

(8) If the Chairman of the Supervisory Board is present at the meeting or if
a member of the Supervisory Board is in possession of his written vote,
subpara. 5 shall not apply if the same number of shareholders'
representatives and employees' representatives are personally present or
participate in the voting by written vote, or if any inequality is
balanced out by individual members of the Supervisory Board not
participating in the voting.

Section 12

(1) The Supervisory Board is authorized to appoint a Presiding Committee and
one or several other Committees from among its members; Section 27(3) of
the Co-determination Act remains unaffected. The functions and powers of
the Committees and the relevant procedures to be adopted shall be
determined by the Supervisory Board. To the extent permitted by law, the
Supervisory Board's powers of decision may also be delegated to the
Committees. Section 11 subparas. 3 and 4 apply to voting in the
Committees unless mandatory provisions of law provide otherwise.
Subparas. 5 and 6 are not applicable.

(2) Declarations of intention on the part of the Supervisory Board and its
Committees shall be made in the name of the Supervisory Board by the
Chairman or his Deputy.

Section 13

(1) The approval of the Supervisory Board is required

a) for the granting of general powers of attorney;

b) for the acquisition and disposal of real estate insofar as the
object involves more than 0.5% of the Company's liable capital
and reserves;

c) for the establishment and closure of branches with more than 20
employees;

d) for the granting of credits, including the acquisition of
participations in other companies, for which approval of a
credit institution's Supervisory Board is required under the
German Banking Act:

e) for the acquisition, not only temporarily, of other
participations in other companies where the object exceeds 1% of
the Company's liable capital and reserves.

(2) The Supervisory Board may specify further transactions which are to be
subject to its approval.

<PAGE> 16
-8-

Section 14

(1) The members of the Supervisory Board shall receive, in addition to
reimbursement of their cash expenses and of turnover tax to be borne by
them in connection with their Supervisory Board activity, a fixed
remuneration payable upon expiration of the financial year. Such
remuneration shall be DM 12,000 for each member, DM 24,000 for the
Chairman and DM 18,000 for the Deputy Chairman.

(2) The Supervisory Board shall in addition be entitled to a remuneration of
DM 50,000 for each percent by which the dividend distribution to the
shareholders exceeds 4% of the share capital. The Supervisory Board
shall resolve on the apportionment of this amount among the members.

V. SHAREHOLDERS' MEETING

Section 15

The Shareholders' Meeting called to adopt the resolutions concerning the
ratification of acts of management of the Board of Managing Directors and the
Supervisory Board, the appropriation of profits, the appointment of the annual
auditor and, as the case may be, the establishment of the annual statement of
accounts (Ordinary Shareholders' Meeting) shall be held within the first eight
months of each financial year.

Section 16

(1) The Shareholders' Meeting shall be called by the Board of Managing
Directors or the Supervisory Board to take place in Frankfurt (Main),
Dusseldorf, or any other German city with over 500,000 inhabitants.

(2) Notice of the meeting must be given in the Federal Gazette
(Bundesanzeiger) not later than one month before the last day of deposit
(Section 17 subpara. 1), not counting the day of publication and the
last day of deposit.

Section 17

(1) All shareholders who have not later than the fifth working day before
the meeting deposited their shares with the Company or the other
agencies announced in the invitation until conclusion of the
Shareholders' Meeting shall be entitled to take part therein and to
exercise their voting rights; for the purpose of this provision Saturday
is not considered a working day. Deposit shall also be deemed to have
been properly effected when shares, with the approval of a depositary,
are held blocked for it with other credit institutions until conclusion
of the Shareholders' Meeting.

<PAGE> 17
-9-

(2) Details regarding the depositing of shares and the issue of admission
cards must be given in the invitation.

Section 18

(1) The voting right of each share corresponds to its nominal amount.

(2) In the event of shares not having been fully paid up, the voting right
shall commence, in accordance with Section 134(2) 3 and 5 of the German
Stock Corporation Act (Aktiengesez), when the minimum contribution
required by law has been paid.

Section 19

(1) The Chairman of the Supervisory Board or another member of the
Supervisory Board belonging to the Supervisory Board as a representative
of the shareholders shall preside over the Shareholders' Meeting. In the
event that none of these persons takes the chair, the Chairman shall be
elected by the Shareholders' Meeting under the direction of the oldest
shareholder present.

(2) The Chairman shall direct proceedings and determine the sequence in
which the items on the agenda shall be dealt with.

Section 20

(1) The resolutions of the Shareholders' Meeting may be taken by a simple
majority of votes and, insofar as a majority of capital stock is
required, by a simple majority of capital stock, except where law or the
Articles of Association determine otherwise with mandatory effect.

(2) The Chairman shall determine the form and further particulars of the
voting. The voting result shall be obtained by ascertaining the "yes"
and the "no" votes. The Chairman shall also determine the manner in
which the votes are to be ascertained, e.g. by deducting the "yes" or
"no" votes and the abstentions from the overall number of votes to which
the voters are entitled.

(3) The Supervisory Board shall be authorized to amend the Articles of
Association insofar as such amendments merely relate to the wording.

<PAGE> 18
-10-

VI. ANNUAL STATEMENT OF ACCOUNTS AND APPROPRIATION OF PROFITS

Section 21

The financial year of the Company is the calendar year.

Section 22

(1) The Board of Managing Directors shall within the first three months of
each financial year, prepare the annual statement of accounts (balance
sheet, profit and loss account, notes to the annual statement of
accounts) and the management report for the preceding financial year,
and submit them to the auditor.

(2) The Supervisory Board shall submit its report to the Board of Managing
Directors within one month from the date of receipt of the statements
which must be presented to it. If the report is not submitted to the
Board of Managing Directors within this period, the Board of Managing
Directors shall promptly specify an additional period of not more than
one month within which the Supervisory Board must submit its report. If
the report is not submitted to the Board of Managing Directors prior to
the expiration of such additional period of time either, the annual
statement of accounts shall be deemed not to have been approved by the
Supervisory Board.

Section 23

(1) The distributable profit shall be distributed among the shareholders
unless the Shareholders' Meeting determines otherwise.

(2) Insofar as the Company has issued participatory certificates and the
respective conditions of participatory certificates accord the holders
of the participatory certificates a claim to distribution from the
distributable profit, the claim of the shareholders to this portion of
the distributable profit is excluded (Section 58 (4) of the Joint Stock
Corporation Act).

(3) The dividends due to the shareholders shall always be distributed in
proportion to the contribution made on the nominal amount of the shares
and in proportion to the time which has elapsed since the date fixed for
contribution.

(4) In the event of new shares being issued, a different dividend
entitlement may be established for such shares.

<PAGE> 19
-11-

VII. FORMATION OF DEUTSCHE BANK AG

Section 24

The Company was formed by the re-amalgamation of Norddeutsche Bank AG. Deutsche
Bank AG West and Suddeutsche Bank AG, which had been founded in 1952 as
successor institutions to the former Deutsche Bank, according to the Law on the
Regional Scope of Credit Institutions (Gesetz uber den Niedartassungabereich von
Kreddinstituten).

VIII. CONTRIBUTION AND ACQUISITION PROVISIONS CONTAINED IN THE
DISINCORPORATION AGREEMENT OF SEPTEMBER 27, 1952

Section 25

(1) Pursuant to Section 3 of the Big Bank Law, Deutsche Bank contributes to
the successor institution, Suddeutsche Bank Aktiengesellachaft, the
entire portion of its business which was previously transacted by
Bayerische Creditbank. Sudwestbank in Stuttgart and Mannheim,
Oberrheinische Bank, Wuvtembergische Vereinsbank, Hessische Bank and
Rheinische Kreditbank in the Federal States (Lander) of Bayem,
BadensWurtemberg (now Sudweststaat), Rheinland-Pfalz and Hessen. The
contribution includes all assets, including liabilities, acquired or
created in the course of this business.

(2) The assets include in particular:

a) all real estate and similar rights located in the Federal States
of Bayem, Baden/Wurtiemberg (now Sudweststaat), Hessen and
Rheinland-Pfalz,

b) all mortgage rights (including pre-registrations) held for own
account on real estate in the Federal States of Bayem,
BadensWurtemberg (now Sudweststaat), Hessen and Rheinland-Pfalz,

c) all claims and the related securities as well as all other
rights and assets recorded in the previous institutions' books
as at 31.12.51, in the Federal States of Bayem. Baden/Wurtemberg
(now Sudweststaat), Hessen or Rheinland-Pfalz,

d) Deutsche Bank's equalization claims, allocated in accordance
with Section 8 of the 2nd Conversion Law Implementing Order,
arising out of the contribution balance sheet per 31.12.51.
Should these equalization claims be subsequently increased or
reduced pursuant to a correction of the conversion account, this
amendment will be credited or debited to the successor
institution insofar as this institution has acquired the
respective asset or liability in the conversion account.

<PAGE> 20
-12-

(3) The liabilities include in particular:

a) all commitments recorded in the previous institutions' books per
31.12.51,

b) all commitments resulting from the trusteeships mentioned under
2 (d).

c) all foreign commitments resulting from Section 6(2) of the 35th
Conversion Law Implementing Order, subject to the provision of
Section 7(2) of the Big Bank Law,

d) all pension liabilities towards entitled persons resident per
31.12.51 in the Federal States of Bayem, Baden/Wurtemberg (now
Sudweststaat), Hessen or Rheinland-Pfalz, subject to the
provision that all expenses under this heading are to be shared
between Suddeutsche Bank Aktiengesellschaft and its sister
institutions. Norddeutsche Bank Aktiengesellschaft and
Rheinische-Westfalische Bank Aktiengesellschaft, according to
the formula used so far, i.e. on the basis of staff expenditure
in the respective year. This does not include retirements from
the previous institutions after 31.12.51, which must be borne by
the institution concerned. Should the aforementioned pension
liabilities be otherwise regulated following a change in the law
in the Federal territory or in West Berlin or in the rest of
Germany, the above regulation will cease to apply, with
retroactive effect.

(4) The contribution of assets and the acquisition of liabilities takes
place as at and with effect from 1.152, subject to the provision that
the contributed business of the previous institutions shall be deemed to
have been transacted from the said date for the account of the new
successor institution. The basis for the contributed assets and acquired
liabilities is the

balance sheet per 31.12.51

appended to this document. The assets and liabilities shown in this
balance sheet have been valued provisionally. The definitive
contribution will be effected at the values established with legal
validity in the balance sheet for tax purposes drawn up for Deutsche
Bank's business in the Federal territory per 31.12.51, if, as a result
of the values established--whether by an increase in assets or a
decrease in liabilities--the value of the assets should rise, then the
incremental value--less a reasonable deduction on the assets side for
depreciation in the interim period--must be added to the successor
institution's legal reserve.

(5) According to the balance sheet over 31.12.51, the value of contributed
assets loss acquired liabilities amounts to a total of

<PAGE> 21
-13-

DM 56,195,000.

Deutsche Bank guarantees that this value exists. As a set-off against
this contribution, Suddeutsche Bank Akdiengesellschaft gives to Deutsche
Bank shares in the nominal amount of DM 39,996,000. Pursuant to Section
8 and Section 9 of the Big Bank Law, these shares will be transferred to
the Bank deutscher Lander as trustee for the shareholders of Deutsche
Bank.

<PAGE> 22

EXHIBIT 2

A copy of the Certificate of Authority of the Trustee to Commence Business.

<PAGE> 23
BANKING DEPARTMENT

[LOGO] FB NO 4066

STATE OF NEW YORK

WHEREAS, DEUTSCHE BANK AG A BANKING CORPORATION DULY INCORPORATED UNDER
THE LAWS OF THE Federal Republic OF Germany AND HAVING ITS PRINCIPAL OFFICE IN
THE CITY OF Frankfurt am Main, Federal Republic of Germany HAS MADE APPLICATION,
UNDER THE TERMS AND CONDITIONS SET FORTH IN SECTION 201 OF THE BANKING LAW, TO
MAINTAIN A BRANCH AT 9 West 57th Street IN THE BOROUGH OF Manhattan CITY OF NEW
YORK, FOR THE PURPOSE OF TRANSACTING THE BUSINESS OF BUYING, SELLING, PAYING OR
COLLECTING BILLS OF EXCHANGE, OR OF ISSUING LETTERS OF CREDIT OR OF RECEIVING
MONEY FOR TRANSMISSION OR TRANSMITTING THE SAME BY DRAFT, CHECK, NOTE OR
OTHERWISE, OR OF MAKING LOANS, OR OF RECEIVING DEPOSITS, OR ANY PART OF SUCH
BUSINESS, AND

WHEREAS, THE SAID CORPORATION HAS COMPLIED WITH THE CONDITIONS IMPOSED
BY THE BANKING LAW AND APPEARS TO BE DULY QUALIFIED TO MAINTAIN SUCH BRANCH
UNDER THE PROVISIONS THEREOF:

NOW, THEREFORE, BE IT KNOWN THAT THE SAID APPLICANT IS HEREBY AUTHORIZED
TO CARRY ON THE BUSINESS HEREINBEFORE SPECIFIED AT THE ABOVE LOCATION.

THIS LICENSE IS TO BE EFFECTIVE ON OR AFTER January 27, 1983 AND SHALL
REMAIN IN FULL FORCE AND EFFECT UNTIL SURRENDERED OR REVOKED.

WITNESS MY HAND AND OFFICIAL SEAL OF THE BANKING DEPARTMENT AT THE CITY
OF NEW YORK, 26th DAY OF January IN THE YEAR OF OUR LORD One thousand NINE
HUNDRED AND eighty-three.

[SEAL]

/s/
------------------------------------------
ACTING SUPERINTENDENT OF BANKS

<PAGE> 24
Exhibit 3

A copy of the Authorization of the Trustee to exercise corporate trust powers.

<PAGE> 25
STATE OF NEW YORK

BANKING DEPARTMENT

WHEREAS, DEUTSCHE BANK AKTIENGESELLSCHAFT, a banking corporation duly
incorporated under the laws of The Federal Republic of Germany, having its
principal office in the City of Frankfurt Am Main Federal Republic of Germany,
and having been duly authorized and licensed pursuant to Article II of the
Banking Law to maintain a branch at 9 West 57 Street, in the borough of
Manhattan, City of New York, has made application to the Superintendent of Banks
for a certificate of authorization to exercise the fiduciary powers specified in
Section 201-b of the Banking Law; and

WHEREAS, the Superintendent of Banks is satisfied that said DEUTSCHE
BANK AKTIENGESELLSCHAFT will exercise such fiduciary powers in accordance with
the requirements of Article V of the Banking Law;

NOW, THEREFORE, I Muriel Siebert, Superintendent of Banks of the State
of New York, hereby issue this certificate authorizing DEUTSCHE BANK
AKTIENGESELLSCHAFT ("The Banking Corporation") to exercise at its authorized
branch at 9 West 57 Street, in the borough of Manhattan, City of New York, the
fiduciary powers specified in Section 201-b of the Banking Law.

WITNESS, MY HAND AND OFFICIAL SEAL OF THE BANKING DEPARTMENT AT THE CITY
OF NEW YORK, THIS 12TH DAY OF JANUARY IN THE YEAR OF OUR
LORD ONE THOUSAND NINE HUNDRED AND EIGHTY-TWO

/S/ MURIEL SIEBERT
-----------------------------------------
Superintendent of Banks.

<PAGE> 26
[DEUTSCHE BANK LETTERHEAD]

August 15, 1994

Superintendent of Banks of
the State of New York
New York State Banking Department
Two Rector Street
New York, New York 10006

Attention: Mr. Robert H. McCormick
Deputy Superintendent of Banks
Foreign Banks Division

Gentlemen:

Deutsche Bank AG is a banking corporation organized under the laws of
the Federal Republic of Germany and has been licensed pursuant to Article II of
the New York Banking Law (the "Banking Law") to maintain a branch in the State
of New York, which branch (the "Branch") is currently located at 31 West 52nd
Street, New York, New York 10019. Deutsche Bank hereby notifies the
Superintendent of Banks of the State of New York (the "Superintendent") of its
intention to expand the Branch's fiduciary activities permissible under Section
201-b of the Banking Law to the fullest extent authorized by Sections 100,
100-a, 100-b and 100-c of the Banking Law (the "Fiduciary Sections")

I. BACKGROUND

On January 12, 1982, Deutsche Bank received from the Superintendent an
authorization certificate to exercise, through and at the Branch, certain
limited fiduciary powers that were then exercisable by foreign banking
corporations under prior Section 201-b of the Banking Law.

Thereafter, in anticipation of the repeal of the old Section 201-b and
the adoption of the current Section 201-b that became effective on October 8,
1984, Mr. Edward P. Eustace of the New York State Banking Department notified
New York State-licensed branches of foreign banks with fiduciary powers
(including the Branch), in a letter dated July 31, 1984 (the "July 31, 1984
Letter"), that such branches were not required to submit a new application in
the event that they decided to expand their

<PAGE> 27
fiduciary activities into those areas newly authorized by the Fiduciary Sections
of the Banking Law. The July 31, 1984 Letter did require, however, that any New
York State-licensed branch of a foreign bank with fiduciary powers notify the
Superintendent and provide certain information described therein if such branch
intends to expand the scope of its fiduciary activities beyond those previously
authorized and into areas newly permitted by Section 201-b of the Banking Law.

In reliance on the notification-in-lieu-of-application procedure
provided for in the July 31, 1984 Letter, the Branch, in a letter dated November
5, 1984 to the Superintendent, requested authority under the new Section 201-b
of the Banking Law to engage in the fiduciary activities permitted under Section
100(2) of the Banking Law, including the power to act as a corporate trustee. In
that letter, the Branch undertook to notify the Superintendent if the Branch
were to exercise fiduciary powers beyond those permitted under the
above-mentioned authorization certificate granted on January 12, 1982 or under
Section 100(2) of the Banking Law.

The Branch now wishes to expand its authority to engage in fiduciary
activities to the fullest extent permitted under the Fiduciary Sections of the
Banking Law. Set forth below in Part II of this notification is the information
relating to the proposed expanded fiduciary activates of the Branch required
under the July 31, 1984 Letter.

II. INFORMATION REQUIRED PURSUANT TO THE JULY 31, 1984 LETTER

A. TYPES OF FIDUCIARY ACTIVITIES TO BE UNDERTAKEN

In addition to continuing to exercise its existing fiduciary powers
pursuant to the authorization certificate granted by the Superintendent on
January 12, 1982 and under Section 100(2) of the Banking Law, the Branch intends
to perform all other fiduciary functions, and conduct all related activities,
that may be performed and conducted by a New York State-chartered trust company
pursuant to the Fiduciary Sections. Such functions and activities will include
activities of a fiduciary, agency or custodial nature and related activities.

The Branch intends, without limiting the generality of the preceding
paragraph, that its services to be provided to individuals, pension funds,
registered investment companies, and other clients will include the following:

-2-
<PAGE> 28

- acting as attorney-in-fact or agent of any person or
corporation, foreign or domestic, for any lawful purpose,
including engaging in asset management activities;

- acting in the personal fiduciary capacities authorized by
Sections 100(3), (4) and (5) of the Banking Law, including
acting as trustee for INTER VIVOS and testamentary trusts and
estates; and

- securities lending in connection with the Branch's custodial and
safekeeping services.

B. Qualifications Of Ohe Officers
Of The Trust Department

The fiduciary activities of the Branch will be conducted or
supervised principally be Ms. Patricia B. Kelly, who will become a Vice
President and Chief Fiduciary Officer of the Branch. Attached hereto as Exhibit
A is a resume of Ms. Kelly, which describes her experience prior to joining the
Branch and her qualifications relating to fiduciary activities. Confidential
treatment of Exhibit A is hereby requested.

C. Organization Of Trust Department
And Plans To Utilize Outside Services

1. ORGANIZATION OF THE TRUST DEPARTMENT

Attached hereto as Exhibit B is an organizational chart
depicting the management of the proposed trust department of the Branch.

Deutsche Bank recognizes the importance of establishing and
enforcing an internal audit and control system for conducting the Branch's
fiduciary activities. In this regard, Deutsche Bank will develop, with the
advice and assistance of its accountants, KPMG Peat Marwick, adequate internal
control and auditing systems and procedures. It is the intention of Deutsche
Bank to establish for the Branch's fiduciary activities internal control systems
that effectively monitor daily transactions to ensure that they are conducted in
accordance with the applicable federal and state laws and regulations and with
appropriate managerial authorization. The internal control systems will comprise
such elements as (i) proper separation of official responsibilities and duties;
(ii) well-defined procedures for performance of tasks; and (iii) proper
information channels between management and staff. The legal and internal audit
staff of Deutsche Bank North America Holding Corp. will provide legal and
internal audit functions for the Branch's fiduciary activities.

-3-
<PAGE> 29
2. PLANS TO UTILIZE OUTSIDE SERVICES

The Branch plans to utilize outside services to perform
ministerial, administrative, accounting and recordkeeping tasks to conduct its
fiduciary activities. It will also utilize the services of KPMG Peat Marwick,
White & Case, and Deutsche Asset Management GmbH in an advisory capacity.

The Branch wishes to commence immediately the fiduciary
activities described above. It is the Branch's understanding that the submission
of this notification to the Superintendent is sufficient to enable the Branch to
commence exercising its expanded authority to engage in fiduciary activities to
the fullest extent permitted under the Fiduciary Sections of the Banking Law.
Notwithstanding the foregoing, however, the Branch, for its internal
recordkeeping purposes, would appreciate receiving from you an acknowledgment of
receipt of this notification.

Please contact either of the undersigned or Kevin F. Barnard,
Esq. of White & Case, counsel to Deutsche Bank in this matter, at (212) 819-8483
if you have any questions or need further information.

Very truly yours,

DEUTSCHE BANK A.G.
New York Branch

/s/ Detlev Staecker /s/ Nathan S. Muller
------------------------ ----------------------------
Detlev Staecker Nathan S. Muller
General Manager and Assistant Vice President and
Executive Vice PResident Counsel

ATTACHMENTS

-4-
<PAGE> 30

The Superintendent of Banks
of the State of New York
New York State Banking Department
Two World Trade Center
New York, New York 10047

ATT.: Foreign Banks Division
Mr. Edward P. Eustace
Deputy Superintendent of Banks

LEX-CF-AR/mr 8024 November 5, 1984

Gentlemen:

We refer to your letter of July 31, 1984 in which you informed us that we
are not required to submit a new application in case we decide to expand our
trust activities. We have been asked to be the trustee for an industrial revenue
bond issue for one of our customers. Therefore, it is necessary to expand our
trust activities beyond our previously limited fiduciary powers into the area
authorized by Section 100(2) of the New York Banking Law. This section would
enable us to act as a corporate trustee in general. Should we exercise fiduciary
powers beyond those permitted under our license granted January 12, 1982 and
such Section 100(2), we will notify you thereof.

The trust activities of Deutsche Bank AG New York Branch will henceforth be
managed by our Legal Department. The head of the Legal Department is Mr. Charles
R. Fewell, Jr., Vice President and Counsel of Deutsche Bank AG New York Branch.
Mr. Fewell has had extensive experience representing, as counsel, corporate
trustees such as Citibank, Chemical Bank and National Westminster Bank USA. He
is fully familiar with the legal and administrative requirements of a corporate
trustee. Please find enclosed a detailed resume of Mr. Fewell. We have no plans
to utilize outside services in connection with our trust activities.

.....Cont'd.

<PAGE> 31

.....Cont'd. -2-

From your letter of July 31, 1984, we assume that we may begin
exercising our expanded fiduciary powers described above unless you promptly
notify us to the contrary. Because of the necessity of moving forward on this
industrial revenue bond transaction described above, we would kindly ask you to
give us this notice on or before November 9, 1984.

Please do not hesitate to contact either of the undersigned if you have
any questions or need further information.

Very truly yours,

Deutsche Bank AG
New York Branch

/s/ /s/
------------------------ ------------------------
H. von Natzmer D. Staecker
Executive Vice President Executive Vice President
and General Manager and General Manager

Enclosure

<PAGE> 32

DEUTSCHE BANK AG

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS that DEUTSCHE BANK AG, a
corporation duly incorporated under the laws of the Federal Republic of Germany,
having its principal office and place of business at 10-14 Grosse Gallusstrasse,
Frankfurt am Main, Federal Republic of Germany (hereinafter referred to as the
"Corporation"):

A. Pursuant to a resolution of its Board of Managing Directors
duly adopted on February 6th, 1978, has nominated, constituted and
appointed and by these presents does nominate, constitute and appoint
ANY TWO OF THE FOLLOWING, ACTING JOINTLY except as hereinafter provided:

1. The Executive Vice President and Manager of the office of the
Corporation's New York Branch at 9 West 57th Street, New
York; New York;

2. The Senior Vice President and Manager of the office of said
New York Branch;

3. The other officers of the office of said New York Branch;

B. Confirms that any two Members of its Board of Managing
Directors are authorized under the law of the Federal Republic of
Germany acting jointly; and

C. Confirms that any two Assistant General Managers of the
Corporation (Generalvollmachtigte) are authorized under general power of
attorney granted by the Corporation (Generalvollmacht);

whose specific identities and names shall be established and evidenced by
certificates of an appropriate official of the Corporation, from time to time as
such positions may be held by different persons, its true and lawful agents and
attorneys-in-fact (hereinafter sometimes referred to as the "Managers"),
generally to represent the New York Branch, located at 9 West 57th Street, New
York, New York (herein sometimes called the "New York Branch" or the "Branch"),
with broad authority to manage and conduct the business, property and affairs of
the office of the New York Branch, and without limiting the generality of such
powers, and by way of enumerating some of the powers which it is intended to
repose in such Managers, so acting jointly, but not severally, to do and perform
the following:

1. To manage and control the funds and assets of the Branch and without
limiting this general power, to invest and re-invest the same, to purchase,
arrange for the purchase of or otherwise acquire, sell, arrange for the sale of,
or otherwise

<PAGE> 33

dispose of, own, hold, exchange, transfer, deliver, pledge, or otherwise deal in
and with bonds, stocks, bills of exchange, acceptances, notes and other
securities or property including, but not limited to, all such securities and
property at any time held or controlled by the Branch, either as collateral, in
custody, or otherwise; to receive the delivery of any securities, or other
property, and if conditionally released by any bank, or person, to execute trust
receipts or security agreements therefore.

2. To purchase, or otherwise acquire, sell or otherwise dispose of, own,
hold, exchange, transfer, deliver, pledge, issue, accept or otherwise deal in
and with the currency of or exchange on any country and spot and forward
contracts therefor; to purchase, or otherwise acquire, sell or otherwise dispose
of, own, hold, exchange, transfer, deliver, pledge, export, import, transship,
store, or otherwise deal in and with, gold and silver coin or bullion and spot
and forward contracts therefor; to receive money for transmission, or to
transmit the same draft, check, letter payment, telegraph, radio, cable, telex
or otherwise, in United States dollars or any other currency.

3. To pay, or accept for payment at a future date or certify, checks,
drafts, bills of exchange and any other instruments for the payment of money,
whether expressed in United States dollars or in any other currency, negotiable
or non-negotiable, drawn upon the Branch by its head office, branches,
correspondents, customers, or others; and to issue letters of credit, including
commercial or other letters of credit and travellers letters of credit,
authorizing the holder thereof to draw drafts upon the Branch, its head office,
branches or its correspondents at sight, on time or otherwise in United States
dollars or in any other currency.

4. To purchase, or otherwise acquire, own, hold, sell, endorse,
negotiate, assign, transfer, exchange, deliver or otherwise dispose of, make,
draw, sign, issue, open, accept, pay, renew, guarantee, discount, collect,
transmit, protest, create a security interest, mortgage, pledge, hypothecate,
and otherwise deal in and with, notes, drafts, bills of exchange or other
evidences of debt, acceptances, letters of credit, including commercial or other
letters of credit and travellers letters of credit, checks, orders for the
payment of money, stocks, bonds, securities, bills of lading or other shipping
documents, insurance policies, warehouse receipts, trust receipts, and other
instruments, negotiable or non-negotiable, of every kind and description; to
waive presentment, notice of non-payment and protest of any and all negotiable
instruments.

5. To open, maintain, adjust, settle and close any deposit account,
foreign currency account, or other account, in the United States of America or
any other country, for the deposit or collection of funds belonging to the
Branch or to others, with any bank, and to make any agreements or ar-

<PAGE> 34

rangements and to issue any instruction relative to such accounts; to designate
one or more depositaries for said accounts; to deposit such funds in said
deposit accounts. All said funds shall be subject to withdrawal or charge at any
time and from time to time, upon checks, notes, drafts, bills of exchange,
acceptances, undertakings or other instruments or orders for the payment of
money, when made, signed, drawn, accepted or endorsed by the Managers, or one of
the Managers and a substitute designated by the management of the New York
Branch in the manner specified in Paragraph 37. Each depository be and it hereby
is authorized to pay, cash, certify, give credit for, accept, or purchase, the
same, or make any such charge, without limit as to amount. Any and all
endorsements for or on account of the Branch upon such checks, notes, drafts,
bills of exchange, acceptances, undertakings and other instruments or orders for
the payment of money, tendered for deposit or collection to any said bank, may
be written or stamped endorsements of the Branch.

6. To open, maintain, adjust, settle and close, custody, safekeeping,
collection, or other accounts with any bank, trust company, or corporation in
the United States of America or any other country; to deliver to, transfer to,
and deposit with any such bank, trust company, or corporation for custody and
safekeeping, and to withdraw, any securities or other property belonging to the
Branch, its customers or others and to execute, any agreements or other
instruments and instructions relative thereto or relative to any custody or
safekeeping account or the securities and property therein; to have securities
of the Corporation, its customers or others, placed or registered in the name of
the depositary's nominee. The Managers may authorize each such bank, trust
company, or corporation to receive and hold in any such custody or safekeeping
account, as depositary, and to sell or arrange for the sale of, or otherwise
dispose of, checks, notes, drafts, bills of exchange, acceptances, or other
instruments for the payment of money, negotiable or non-negotiable, stocks,
bonds, coupons and other securities and funds not subject to check, to collect
all interest, dividends and other income which may become due and to credit the
same to any account of the Corporation, to receive the proceeds from the sale of
securities, redemption of bonds or other principal cash items for credit to the
account of the Corporation; to exchange securities in temporary form for
definitive securities; to surrender securities matured or called for redemption
upon receiving proper payment therefor for the account of the Corporation; to
execute on behalf of the Corporation all necessary ownership certificates or
other instruments that may be required under any income tax or other laws or
regulations of any Government now or hereafter in effect; to sign, or cause to
be signed from time to time, any proxies received with notices of meetings or
otherwise, covering shares of stock held from time to time for the account of
the Corporation in the name of a nominee, with respect to all stockholders
meetings, regular or special.

7. To hire deposit boxes, safes or other space in any vault of any safe
deposit company, bank or corporation, or in any warehouse or other premises,
subject to the terms, conditions, rules and regulations of any such safe deposit
company, bank or corporation, warehouse or owner of any other

<PAGE> 35

premises, and to execute any and all agreements and instruments required
therefor.

8. To borrow money, obtain advances, to obtain credit by means of
letters of credit or otherwise, and to borrow securities, upon such terms and
conditions as may be agreed upon between the Managers and the lender, and to
execute any and all notes, collateral notes, undertakings, contracts, or other
instruments binding the Branch to the repayment thereof; and as security for any
obligations of the Branch to create a security interest in, mortgage, pledge,
hypothecate, entrust or deposit any and all bonds, stocks, securities, bills of
exchange, bills of receivable, accounts, notes, drafts, checks, bills of lading
and other shipping documents, insurance policies, warehouse receipts, other
instruments, and other property and assets owned or held by the Corporation or
in which the Corporation may have an interest; and to execute deeds,
conveyances, mortgages, bills of sale, conditional bills of sale, security
agreements, assignments, transfers, or other instruments of assignment or
transfer.

9. To make, or participate in, loans in dollars or in any other
currency, or establish, create, and issue mercantile or other credits in favor
of, or to lend the credit of the Corporation by guaranty, endorsement or in any
other manner, to, or for the accommodation or benefit of, any bank, person or
Government, upon open account or upon real or personal security or otherwise,
and as evidence of such debts to accept notes, collateral notes, acceptances,
bills of exchange, bonds, undertakings, instruments of guaranty, agreements or
other documents and as collateral security therefor to accept securities,
mortgages, pledges, security agreements, trust receipts, warehouse receipts,
bill of lading, insurance policies, chattel mortgages or other instruments
conveying and transferring title to, or granting a lien upon or security
interest in, or pertaining to, any and all goods, wares and merchandise and
securities or other property, real or personal, tangible or intangible,
including but not limited to any such property, imported, exported, purchased,
or dealt with under, or in connection with, such loans or credit, and also to
accept any such property in kind; to enter into agreements with other lenders as
to relative priorities in any such security; and to subordinate any such loan to
any loan made or to be made by another lender to the same borrower.

10. To the extent permitted by law, to accept, receive, maintain and
manage deposits and safekeeping of custody accounts, or other accounts, from any
person or Government.

11. To receive personal property, both tangible and intangible, of every
kind and description for safekeeping, according to such regulations as the
Managers may prescribe.

<PAGE> 36

12. To receive goods, wares and merchandise, which may be shipped to or
consigned to the Corporation by or for the account of customers or others or for
its own account, or in which the Corporation may be interested, and to sell,
assign, transfer or otherwise dispose of, or deal with the same, or any part
thereof; to transport, store or warehouse the same or any part thereof in the
name of the Corporation or otherwise. To do and perform any act or thing
necessary or proper, in order to obtain clearance through customs of goods,
wares and merchandise, or other property for the account of the Corporation or
its customers or others including but not limited to the following: to make
customs entries; to pay customs duties; to challenge and contest any duty or
tax; to make delivery or other disposition of such property; to obtain proper
dutiable valuation and proper tariff classification for any such property; to
settle and determine all claims, disputes and matters; and to execute bonds,
reports and other instruments in connection with the foregoing matters.

13. To act as fiscal agent, financial representative or depositary for
any Government, corporation or person, or under or with respect to any issue of
stock, bonds, or other securities, and in such capacity, or otherwise, to
receive and disburse money, currency and gold and silver, either coin or
bullion; to collect, transmit, pay, distribute and otherwise deal with interest,
coupons, dividends, other income, moneys, stocks, bonds and other securities and
property; to transfer, register, and countersign certificates of stock, bonds
and other securities; to underwrite, or participate in any underwriting with
respect to, any issue of bonds, stocks or other securities, for the account of
the Corporation or its customers or others; to act as attorney-in-fact or agent
for any person for any lawful purpose.

14. To the extent permitted by law, (a) to act as the fiscal or transfer
agent of the Federal Republic of Germany or of any subdivision, department,
municipality, agency or instrumentality thereof, or of any corporation organized
under the laws of the Federal Republic of Germany or which is doing business in
the Federal Republic of Germany or whose principal business activity consists of
investments in the Federal Republic of Germany, provided such corporation shall
have filed with the New York Branch evidence satisfactory to the Branch that it
is so organized, is doing such business, or has such principal business
activity, as the case may be; and in such capapcity to receive and disburse
money, to transfer, register and countersign certificates of stock, bonds, or
other evidences of indebtedness or other securities, and to act as
attorney-in-fact or agent of any of the foregoing entities, for any lawful
purpose; (b) to act as trustee under any notes,

<PAGE> 37

bonds, debentures or other evidences of indebtedness issued or guaranteed by the
Federal Republic of Germany or by any subdivision, department, municipality,
agency, or instrumentality thereof, or issued by any corporation organized under
the laws of the Federal Republic of Germany or which is doing business in the
Federal Republic of Germany or whose principal business activity consists of
investments in the Federal Republic of Germany; provided such corporation shall
have filed with the New York Branch evidence satisfactory to the Branch that it
is so organized, is doing such business, or has such principal business
activity, as the case may be; (c) to take, accept and execute any and all such
trusts, duties and powers of whatever nature or description as may be conferred
upon or entrusted or committed to the New York Branch (by grant, assignment,
transfer or otherwise), by the Federal Republic of Germany or by any
subdivision, department, municipality, agency or instrumentality thereof, or by
any corporation organized under the laws of the Federal Republic of Germany or
which is doing business in the Federal Republic of Germany or whose principal
business activity consists of investments in the Federal Republic of Germany, or
by any charitable or religious organization organized under the laws of the
Federal Republic of Germany, or which is engaged in a substantial activity in
the Federal Republic of Germany, provided such corporation or charitable or
religious organization shall have filed with the New York Branch evidence
satisfactory to the Branch that is is so organized, is doing such business, has
such principal business activity, or is so engaged, as the case may be, and to
receive, take, manage, hold and dispose of according to the terms of such trust,
duty or power, any property or estate, real or personal, which may be the
subject of any such trust, duty or power; provided, however, that the New York
Branch shall not have or exercise any right or power to make any contract, or to
accept or execute any trust whatever, which it would not be lawful for any
individual to make, accept or execute; and (d) without limiting the generality
of the foregoing, to exercise any and all fiduciary powers which the New York
Branch may now or hereafter be entitled to exercise under Section 201-b of the
Banking Law of the State of New York as the same may be amended from time to
time.

15. To place or effect insurance of any kind upon any property or
assets of the Corporation or of its customers or others including but not
limited to fire, compensation, fidelity, theft, credit, liability, and public
liability; to obtain binders for, contract for, renew, cancel or make other
disposition of, such insurance; in connection therewith and in case of loss, to
execute proofs of loss, statements, affidavits, agreements or other documents,
and to collect, receive and

<PAGE> 38

acquit for any such insurance, or any sums which may be due the Corporation, its
customers or others in connection therewith.

16. To purchase or otherwise acquire, own, hold, manage, alter, remodel,
repair, lease, rent, and make loans upon, real estate, both improved and
unimproved, and wheresoever located, or any interest therein, and to construct,
erect, build, alter, improve, demolish buildings, and structures of every kind,
in the transaction of the business of the Branch.

17. To act as agents or attorneys-in-fact to any customers of the Branch
or others, either in the name of the Corporation or in the name of a nominee, in
any transaction in which such customers or others may be interested, and for any
purpose for which the Managers might act under this Power of Attorney in any
transaction on behalf of the Corporation.

18. To retain attorneys; to appoint, engage, employ, make contracts
with, manage, and control such sub-managers, agents and sub-agents, assistants,
cashiers, accountants, tellers, clerks, representatives, and other employees in
any agency, branch or other office of the New York Branch, as the said Managers
may deem necessary or advisable. Without limiting the foregoing general powers,
to fix their terms, conditions and agreements of retainer or employment and
salaries or other compensation; to prescribe their duties, to terminate their
employment, and to dismiss or to suspend any of them, upon such grounds as the
said Managers may deem sufficient in the best interests of the Corporation; to
fill vacancies and to increase or decrease the number of all such employees; to
assemble and maintain an adequate and proper staff; to establish, alter or amend
rules and regulations for the control of such staff, agents and employees; and
to make contracts with the New York Branch's nominee or nominees.

19. To execute such leases, extensions and renewals of leases, options,
service contracts and such other instruments as may be necessary or proper in
the establishment and maintenance of offices for the Corporation in the City of
New York and elsewhere; to purchase, acquire, sell, exchange or otherwise
dispose of such furniture, fixtures, supplies and other personal property as may
be necessary or convenient in connection with the business of the New York
Branch, or any other office maintained by the Corporation.

<PAGE> 39

20. To execute any and all instruments which may be required by the
Federal Reserve Bank of New York or any other Federal Reserve Bank, in
connection with the sale to or purchase by any such Federal Reserve Bank, of any
acceptances, bills of exchange, other commercial paper or other instruments,
negotiable or non-negotiable, made, executed, issued, accepted, endorsed,
negotiated, assigned or delivered by the Corporation or any agency or branch
thereof.

21. To ask, demand, sue for, recover, receive and give acquittances for
any and all moneys, debts and demands, bonds, stocks, securities and other
property due or payable to, or deliverable to the Corporation or which may
hereafter become due, or payable or deliverable to the Corporation, or to which
the Corporation may have the right of immediate possession, either as principal,
interest, dividends or otherwise, and from any person or Government; to
compromise, adjust, settle, compound or otherwise dispose of all claims,
demands, disputes and controversies; to execute any composition agreement or
other debtor or creditor agreement or to make any arrangement with debtors; to
refer any dispute, controversy or matter to arbitration and to appoint or
consent to the appointment of arbitrators or an umpire, either before or
subsequent to the commencement of legal proceedings; without limiting to any
extent the various rights and remedies which are or might be available to the
Corporation, to accept, take possession of, hold or store any goods, wares or
merchandise, or other personal property whether belonging to the Corporation or
held by the Corporation as security or in trust, or held by any bank or person
as security or in trust or for the account of the Corporation, or otherwise, and
to hold, manage, sell, assign, transfer, lease, create a security interest in,
mortgage, pledge or otherwise deal with the same, or any part thereof.

22. To commence, prosecute, enforce, appear in, intervene in, accept
service of process in, defend, settle, adjust, compromise or discontinue any
action, suit, proceeding or litigation at law or in equity, in any court, or
before any Government; to apply for or consent to the appointment, removal or
substitution of any Receiver, Trustee, Referee, Master or Arbitrator.

23. To appear in and participate in any bankruptcy, insolvency,
arrangement, reorganization, equity or receivership or other similar proceeding
or suit, or in any matter relating to the assets, estate or effects, or the
winding up of the affairs of, any person, indebted to the Corporation or its
customers; to execute proofs of claim and powers of attorney; to attend and
participate in any and all meetings of creditors, either prior to the
commencement of or in connection with any such proceeding or suit; to vote in
respect of any claim or other matter at any such meeting; to appoint

<PAGE> 40

proxies; to withdraw, compromise, settle, satisfy and deal with any claim; to
execute petitions in bankruptcy or applications for the appointment of receivers
in any court and under insolvency, bankruptcy, reorganization or other laws; and
to execute any and all other petitions, answers, proofs of claim, pleadings or
other papers which may be necessary or proper.

24. To attend and vote at, or to appoint proxies or other
representatives to attend or vote at, any and all meetings of stockholders,
bondholders, creditors, noteholders, holders of any other securities or
obligations, or of committees representing any class or kind of securities or
property.

25. To execute applications, affidavits, petitions and other
instruments, in order to obtain licenses, permits, franchises and rights from
the Government of the United States of America, the several States, territories
and dependencies thereof, the District of Columbia, or any other Government,
with reference to importing, exporting, selling, exchanging, storing,
transshipping, trucking, moving and otherwise dealing in and with gold and
silver, either coin or bullion, and with reference to the performance of any act
or thing or the exercise of any power granted by this Power of Attorney.

26. To execute all such tax returns, information returns, schedules,
affidavits, waivers, petitions, applications for refunds, and other instruments
and documents as may be required by or permitted under any tax law, income tax
law or other law, rule, regulation or requirement of any Government.

27. To execute, and file with the Superintendent of Banks of the State
of New York, any Federal Reserve Bank, or any Government all applications,
certificates, designations, financial statements, powers of attorney and other
instruments, or renewals or substitutions thereof which may be necessary or
proper in order to enable the Corporation to establish an agency, branch or
other office in any other city in the United States, or elsewhere, or which may
be necessary or proper in order to enable the Corporation to transact its
business and manage and control its assets, business and affairs in connection
with the New York Branch or any other agency, branch or office which is or may
be established as aforesaid; to execute, deliver, file and amend any deposit
agreements and other agreements and instruments which may be necessary or proper
in order to enable the Corporation to comply with any legal requirements for the
maintenance of assets or reserves in connection with the New York Branch and any
other agency, branch or office which is or may be

<PAGE> 41

established as aforesaid; and to execute, and file with the Superintendent of
Banks of the State of New York, a certificate of designation, specifying the
name and address of the officer, agent or other person to whom the
Superintendent of Banks shall forward any process served upon the Superintendent
of Banks in any action or proceeding against the Corporation on a cause of
action arising out of a transaction with the New York Branch; and to execute,
acknowledge and file with the Superintendent of Banks of the State of New York
an application or applications (and renewals or substitutions thereof) for a
certificate or certificates of authorization to exercise the fiduciary powers
specified in Section 201-b of the New York Banking Law at any or all of the
Corporation's authorized branches in the State of New York and in connection
therewith from time to time to take any and all proceedings and to make,
execute, acknowledge, deliver and file any and all agreements, certificates,
financial statements, affidavits, powers of attorney, and other documents,
instruments or papers, and to take or cause to be taken any and all further
action, which may be necessary or proper in order to enable any or all of the
Corporation's said branches to exercise, or to obtain a certificate of
authorization to exercise, said fiduciary powers.

28. Specifically, to sell and assign any and all bonds or obligations of
any description of the United States (or other obligor of any sort) now or
hereafter registered in the name of the Corporation on the books of the Treasury
Department (or on the books of any obligor of any sort, or any registrar or
agent) or which may now or hereafter be assigned to the Corporation; to exchange
registered bonds, or obligations of any description of the United States (or
other obligor of any sort) for coupon bonds or obligations, and to exchange any
such coupon bonds or obligations for registered bonds or obligations.

29. To designate on any endorsement or separate power in which the
Corporation or any branch, agency or office thereof is appointed attorney to
transfer shares of stock or other registered securities on the books of any such
association, company, or corporation, a substitute or substitutes (with like
power of substitution) to make such transfer.

30. To guarantee the signature or signatures of any person, firm or
corporation, including, without in any way limiting the generality of the
foregoing, the signature of any officers of this Corporation, being known as
Deutsche Bank AG located outside the State of New York, on any shares

<PAGE> 42

of stock or other registered securities or on any power of attorney executed to
secure the transfer of same, and, further, to guarantee the correctness or
authenticity of any instruments or other documents or copies thereof required in
connection with the transfer of any stock or registered securities; and such
guarantee by the New York Branch shall constitute a guarantee not only of the
genuineness of the signatures of the persons signing for the Corporation's
officers, but also the guarantee of their authority to endorse or assign shares
of stock in question; and such guarantee by the New York Branch is, under all
circumstances, to be considered as an unqualified guarantee of the validity and
propriety of each transfer even though the person or persons so assigning the
stock on behalf of the Corporation may no longer be with the Corporation, or
their signatures do not appear in the most recent specimen signature book or in
any other specimen signature book on file with the respective transfer agents.
This authority, given to the New York Branch, shall continue in full force and
effect and be binding on the Corporation until such time as notice has been
given in writing of its revocation.

31. To endorse or guarantee any or all assignments or powers of attorney
for the transfer of any shares of stock or other registered securities executed
by any person, firm or corporation whatsoever.

32. To do and perform any and all of the foregoing acts and things and
to exercise the broad general powers herein granted as well as the specific
powers mentioned in this instrument within and throughout the State of New York,
the District of Columbia and the several states, territories, and dependencies
of the United States of America and within any other country except as herein
otherwise stated, provided only that the same be not inconsistent with the laws,
statutes, ordinances, rules and regulations of any Government having valid
jurisdiction in the premises.

33. To transact, generally, any and all business on behalf of the
Branch, with full power and authority to do and perform all acts and things
incidental to the exercise of, or requisite, necessary or proper to be done
under and by virtue of the general powers hereby granted as well as the specific
powers herein enumerated, and in and about the premises; to organize and cause
to be organized subsidiary corporations or other corporations; to act as
directors on the Board of Directors of any corporation.

<PAGE> 43

34. To do and perform any and all of the acts and things, and to
exercise all of the powers herein granted, to the extent that the same shall be
in accordance with the laws; rules or regulations of the Government under whose
jurisdiction the same are performed or exercised; should the performance of any
act or thing or the exercise of any power herein granted, be determined to be
illegal or contrary to the laws, rules and regulations of any such Government,
as aforesaid, by any Court of competent jurisdiction, or pursuant to the opinion
of counsel, or otherwise, it is the intention of the Corporation that this Power
of Attorney and all the powers herein granted, nevertheless, shall be and
continue at all times in full force and effect as to all acts, things and powers
the performance and exercise of which shall not have been held or determined,
specifically, as aforesaid to be illegal or violative of such laws, rules and
regulations.

35. In the interpretation and construction of this Power of Attorney,
the several terms hereinafter mentioned shall be defined to include the meanings
indicated, but these definitions shall not be deemed to limit in any way the
broader definitions or meanings that would otherwise be given to them in law.
The term "bank" shall be defined to include any government bank, central bank,
correspondent bank, agency bank, branch bank, private bankers, banking
partnership or firm, or any other banking or financial organization or
institution, public or private. The term "person" shall be defined to include
any individual, firm, partnership, corporation, public or private, or
association, and also any Government bank as herein defined. The term "execute"
or "make" shall be defined to include, make, draw, sign, swear to, verify,
acknowledge, certify, deliver, deposit, send, file and record. The term
"Government" shall be defined to include any nation, country, principality,
state, province, county, dependency, territory, mandate, city, municipality, as
well as the Government thereof, de jure or de facto, and also any foreign
ministry, ministry of finance, department, bureau, board, administrative
authority, court, tribunal, any judicial or semi-judicial body or authority,
commission, sub-division, agency, representative, corporate subsidiary or
affiliate, or officer thereof.

36. The Corporation for itself, its successors and assigns does hereby
ratify, confirm and approve all acts and transactions which the Members of the
Board of Managing Directors,

<PAGE> 44

Assistant General Managers of the Corporation, General Manager and Managers
shall do or cause to be done by virtue of this Power of Attorney. All acts and
transactions of the Members of the Board of Managing Directors, Assistant
General Managers of the Corporation, General Manager and Managers shall,
notwithstanding any prior revocation of this Power of Attorney or the revocation
of the appointment of any Members of the Board of Managing Directors, Assistant
General Managers of the Corporation, General Manager or Managers thereunder, be
valid, effectual and binding upon the Corporation, unless notice in writing of
such revocation of this Power of Attorney as to any Members of the Board of
Managing Directors, Assistant General Managers of the Corporation, General
Manager or Managers shall have been previously delivered to the bank,
corporation or person to whom a copy of this Power of Attorney shall have been
delivered.

37. Instead of two of the Managers acting jointly, any one officer or
employee of the New York Branch who shall be specifically designated so to do by
the management of the New York Branch, which management is hereby authorized to
so designate from time to time, may act singly in instances where the office of
DEUTSCHE BANK AG, New York Branch, has occasion to

(a) guarantee the endorsement of any person in whose name a share
certificate or other corporate security stands;

(b) sign a power of substitution in connection with the transfer of
any share certificate or other corporate security;

(d) certify that a transfer of a corporate security (e.g., a stock
certificate or a bond) from any name into any other name, does not
effectuate a change of ownership.

38. Instead of two of the Managers acting jointly, any one officer or
employee who shall be specifically designated to do so by the management of the
New York Branch acting singly may sign:

<PAGE> 45

(a) Debit and credit advices involving amounts not in excess of $5,000
in connection with the routine operation of deposit accounts of any depositor
(including without limitation correspondent banks and branches, agencies,
offices and affiliates of the Corporation);

(b) Advices accompanying clean drafts or checks sent for collection to
domestic or foreign banks; advices accompanying checks bearing two
signatures, mailed in settlement of collection items;

(c) Debit and credit advices addressed to any branch, agency or office
of the Corporation, confirming the purchase or redemption of finance company
commercial paper or bankers' acceptances; and

(d) Form letters in connection with the routine operations of the New
York Branch (but which in no event involve any liability or engagement on the
part of the Corporation or authorize payments or transfers of funds or
purchase or delivery of securities or other property).

The New York Branch may be operated, and any paper or document may be
executed pursuant hereto, in the name of the Corporation with the addition of
the words "New York Branch".

IN WITNESS WHEREOF, DEUTSCHE BANK AG has caused this Power of Attorney
to be executed by Dr. Wilfried Guth and Dr. Alfred Herrhausen, Members of its
Board of Managing Directors, they being thereunto duly authorized in accordance
with a resolution of the Board of Managing Directors, this 6th day of February,
1978.

DEUTSCHE BANK AG

By /s/ DR. WILFRIED GUTH
-------------------------------
Dr. Wilfried Guth
Member of Board of Managing
Directors

Dated: 6th of February 1978 By /s/ DR. ALFRED HERRHAUSEN
-------------------------------
Dr. Alfred Herrhausen
Member of Board of Managing
Directors

<PAGE> 46

ACKNOWLEDGEMENT

FEDERAL REPUBLIC OF GERMANY )
LAND HESSE )
CITY OF FRANKFURT AM MAIN ) ss.:
CONSULATE GENERAL OF THE )
UNITED STATES OF AMERICA )

On this 9th day of February, 1978, before me personally came Dr. Alfred
Herrhausen, who, being by me duly sworn, deposes and says that he resides at
Solingen/Germany; that he is a Member of the Board of Managing Directors of
Deutsche Bank AG, the corporation described in and which executed the foregoing
Power of Attorney; that said corporation has no corporate seal; and that he
signed his name to said Power of Attorney in accordance with a resolution of the
Board of Managing Directors of said corporation.

/s/ J. Peter Becker
---------------------------------------
J. Peter Becker
Counsul of the United States of America
duly commissioned and qualified

(SEAL)

<PAGE> 47

ACKNOWLEDGEMENT

FEDERAL REPUBLIC OF GERMANY )
LAND HESSE )
CITY OF FRANKFURT AM MAIN ) ss.:
CONSULATE GENERAL OF THE )
UNITED STATES OF AMERICA )

On this 6th day of February, 1978, before me personally came Dr. Wilfried
Guth, who, being by me duly sworn, deposes and says that he resides at
Konigstein/Germany; that he is a Member of the Board of Managing Directors of
Deutsche Bank AG, the corporation described in and which executed the foregoing
Power of Attorney; that said corporation has no corporate seal; and that he
signed his name to said Power of Attorney in accordance with a resolution of the
Board of Managing Directors of said corporation.

/s/ J. Peter Becker
---------------------------------------
J. Peter Becker
Counsul of the United States of America
duly commissioned and qualified

(SEAL)

<PAGE> 48

Exhibit 6

The consent of United States institutional trustees required by Section 321(b)
of the Act.

<PAGE> 49

THE CONSENT OF THE TRUSTEE REQUIRED
BY SECTION 321(b) OF THE ACT

October 27, 1997

Securities and Exchange Commission
Washington, D.C. 20549

Gentlemen:

In connection with the qualification of an indenture between Wind River Systems,
Inc. and Deutsche Bank AG, New York Branch, the undersigned, in accordance with
Section 321(b) of the Trust Indenture Act of 1939, as amended, hereby consents
that the reports of examinations of the undersigned, made by Federal or State
authorities authorized to make such examinations, may be furnished by such
authorities to the Securities and Exchange Commission upon its request therefor.

Very truly yours,

Deutsche Bank AG, New York Branch

By: /s/ George H. Gregor
-------------------------------
Name: George H. Gregor

By: /s/ Peter C. Olsen
-------------------------------
Name: Peter C. Olsen

<PAGE> 50

Exhibit 7

A copy of the latest report of condition of the trustee published pursuant to
law or the requirements of its supervising or examining authority.

<PAGE> 51

<TABLE>
<S> <C>
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM FFIEC 002/002S
FEDERAL DEPOSIT INSURANCE CORPORATION OMB No. 7100-0032/7100-0273
OFFICE OF THE COMPTROLLER OF THE CURRENCY Approval of the FFIEC 002 expires June 30, 1997
Approval of the FFIEC 002S expires December 31, 1999.

REPORT OF ASSETS AND LIABILITIES OF U.S. BRANCHES This report is required by law (12 U.S.C. 3105(b)(2);
AND AGENCIES OF FOREIGN BANKS. 12 U.S.C. 1617(a)(1) and (3); and 12 U.S.C. 3102(b)1.

at close of business on June 30, 1997 Instruction ID: B365057000
-------------- ----------
</TABLE>

Please read carefully "Instructions for Preparation of the Report of Assets and
Liabilities of U.S. Branches and Agencies of Foreign Banks" and instructions for
preparation of the supplement "Report of Assets and Liabilities of a Non-U.S.
Branch that is Managed or Controlled by a U.S. Branch or Agency of a Foreign
(Non--U.S.) Bank."

Please indicate legal status: Branch
----------------

Indicate FDIC insurance Status (Y/N): N
--------

If this report consolidates the statements for multiple branches or agencies of
a foreign bank, indicate the number of branches or agencies included in this
report:

DEUTSCHE BANK AG - NEW YORK BRANCH
- ------------------------------------------------------------
Legal Title

31 WEST 52ND STREET
- ------------------------------------------------------------
Street Address

NEW YORK NEW YORK
- ------------------------------------------------------------
City County

NY 10019
- ------------------------------------------------------------
State Zip Code

- ------------------------------------------------------------
Legal Title

- ------------------------------------------------------------
Street Address

- ------------------------------------------------------------
City County

- ------------------------------------------------------------
State Zip Code

- ------------------------------------------------------------
Legal Title

- ------------------------------------------------------------
Street Address

- ------------------------------------------------------------
City County

- ------------------------------------------------------------
State Zip Code

DEUTSCHE BANK, AG
- ------------------------------------------------------------
Legal Title of Foreign Bank Parent

FRANKFURT GERMANY
- ------------------------------------------------------------
City Country

BOBBY CHATTERJEE - ASSOCIATE
- ------------------------------------------------------------
Person to be contacted concerning this report

(212) 469-8422
- ------------------------------------------------------------
Telephone Number (including area code and extension)

NOTE:
- -----

This report must be signed by an authorized officer and attested by the senior
executive officer.

I, DANIEL C. SELENDORIO
---------------------------------------------------------
Name of Officer Authorized to Sign Report

VICE PRESIDENT
- ------------------------------------------------------------
Title of Officer Authorized to Sign Report

of the branch or agency specified do hereby declare that this Report of Assets
and Liabilities including the supporting schedules and supplement have been
prepared in conformance with the instructions issued by the Federal Financial
Institutions Examination Council [ILLEGIBLE] to the best of my knowledge
and belief.

/s/ DANIEL SELENDORIO
- ----------------------------------------------------
Signature of Officer Authorized to Sign Report

I, GARY T. HANDEL
----------------------------------------------------------
Name of Senior Executive Officer

MANAGING DIRECTOR
- -------------------------------------------------------------
Title of Senior Executive Officer

attest the correctness of this Report of Assets and Liabilities (including the
supporting schedules and supplement) and declare that it has been examined by
us, and to the best of our knowledge and belief, has been prepared in
conformance with the instructions issued by the Federal Financial Institutions
Examination Council and Deutsche Bank.

Aktiengeseltschaft
New York Branch

/s/ GARY T. HANDEL
- ----------------------------------------------------
Signature of Senior Executive Officer

Public reporting burden associated with the FFIEC 002 and FFIEC 002S is
estimated to average 22.75 hours per response and 6.0 hours per response
respectively, including time to gather and maintain date in the required form
and to review instructions and complete the information collection. A federal
agency may not conduct or sponsor, and an organization (or a person) is not
required to respond to a collection of information, unless it displays a
currently valid OMB control number. Comments regarding this burden estimate or
any other aspect of this information collection, including suggestions for
reducing the burden, may be sent to Secretary, Board of Governors of the Federal
Reserve System, Washington, D.C. 20551 and to Office of Information and
Regulatory Affairs, Office of Management and Budget, Washington, D.C. 20503.

Return original and 2 copies to the Federal Reserve Bank in whose district the
branch or agency is located. FDIC-insured branches should file one copy with the
appropriate FDIC Regional Office (Supervision).

<PAGE> 52

REPORT OF ASSETS AND LIABILITIES OF

DEUTSCHE BANK AG - NEW YORK BRANCH
- ----------------------------------
Legal Title of Branch or Agency

at the close of business on JUNE 30, 1997
-------------

SCHEDULE RAL - ASSETS AND LIABILITIES

All schedules are to be reported in thousands of U.S. dollars. Unless otherwise
indicated, report the amount outstanding as of the last calendar day of the
quarter.

<TABLE>
<CAPTION>
(COLUMN A) (COLUMN B)
TOTAL REPORTING
BRANCH OR AGENCY
ASSETS DOLLAR AMOUNTS IN THOUSANDS INCLUDING ITS IBF IBF ONLY
- --------------------------------------------------------------- ----------------- --------------
<S> <C> <C> <C> <C> <C>
1. Claims on Nonrelated Parties:
(Excludes all claims on related depository institutions
but includes claims on related nondepository institutions.
See instructions for coverage and treatment of "nonrelated"
and "related" institutions.)
RDFC RCFN
a. Cash and balances due from depository institutions ---- ----
(from Schedule A, Item 6) . . . . . . . . . . . . . . . . . . 0010. . 315,582 0010. . 0 1.a.
---------- -------
b. U.S. Government Securities:
(1) U.S. Treasury securities. . . . . . . . . . . . . . . . . 0260. . 711,869 1.b.(1)
----------
(2) U.S. Government agency and corporation obligations. . . . 0371. . 2,083,972 1.b.(2)
----------
c. Other bonds, notes, debentures, and corporate stock
(including state and local securities):
(1) Securities of foreign governments and official
institutions. . . . . . . . . . . . . . . . . . . . . . . A003. . 566,364 A003. . 0 1.c.(1)
---------- -------
(2) All Other . . . . . . . . . . . . . . . . . . . . . . . . A004. . 11,531 A004. . 0 1.c.(2)
---------- -------
d. Federal Funds sold and securities purchased under agreements
to resell:
(1) With U.S. branches and agencies of other foreign banks. . 1631. . 215,000 1631. . 0 1.d.(1)
---------- -------
(2) With other commercial banks in the U.S. . . . . . . . . . 1632. . 0 1632. . 0 1.d.(2)
---------- -------
(3) With others . . . . . . . . . . . . . . . . . . . . . . . 1390. . 2,056,061 1390. . 0 1.d.(3)
---------- -------
e. Loans and leases, net of unearned income (from Schedule C,
item 11). . . . . . . . . . . . . . . . . . . . . . . . . . . 2122. . 6,105,628 2122. .463,357 1.e.
---------- -------
f. Trading Assets. . . . . . . . . . . . . . . . . . . . . . . . 3545. . 2,612,328 3545. . 0 1.f.
---------- -------
g. Customers' liablility to this branch or agency on acceptances outstanding:
(1) U.S. addressees (domicile). . . . . . . . . . . . . . . . 2156. . 163,000 1.g.(1)
----------
(2) Non-U.S. addressees (domicile). . . . . . . . . . . . . . 2157. . 115,258 1.g.(2)
----------
h. Other assets including other claims on nonrelated parties . . 2151. . 2,148,786 2151. . 10,944 1.h.
---------- -------
i. Total claims on nonrelated parties
(sum of items 1.a through 1.h) . . . . . . . . . . . . . . . 2171. .17,105,379 2171. .474,301 1.i.
---------- -------
2. Net Due from Related Depository institutions:
a. For the reporting branch or agency including its IBF: Net
due from head office and other related depository
institutions (item 4.g minus item 1.i. of Column A if
item 4.g is greater than 1.i; otherwise enter -0-). . . . . . 2154. . 9,793,751 2.a.
----------
b. For the IBF of the reporting branch or agency: Net due from
establishing entity, head office and other related
depository institutions (item 4.g minus item 1.i of
Column 8 if item 4.g is greater than item 1.i; otherwise
enter -0-). . . . . . . . . . . . . . . . . . . . . . . . . . 2154. .411,733 2.b.
-------
3. Total Assets (for Column A, sum of items 1.i and 2.a;
for Column 8, sum of items 1.i and 2.b). . . . . . . . . . . . . 2170. .26,899,130 2170. .886,034 3.
---------- -------
</TABLE>

<PAGE> 53

Schedule RAL - continued

<TABLE>
<CAPTION>
(COLUMN A) (COLUMN B)
TOTAL REPORTING
BRANCH OR AGENCY
LIABILITIES DOLLAR AMOUNTS IN THOUSANDS INCLUDING ITS IBF IBF ONLY
- --------------------------------------------------------------- ----------------- --------------
<S> <C> <C> <C> <C> <C>
4. Liabilities to nonrelated parties:
(Excludes all liabilities to related depository institutions
but includes all liabilities to related nondepository
institutions. See instructions for coverage and treatment
of "nonrelated" and "related" institutions.)
RCFD RCFN
a. Total deposits and credit balances (from Schedule C, ---- ----
item 7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2205. . 17,186,155 2205. . 329,971 4.a.
---------- -------
b. Federal funds purchased and securities sold under
agreements to repurchase:
(1) With U.S. branches and agencies of other foreign banks. . . 2317. . 556,000 2317. . 200,000 4.b.(1)
---------- -------
(2) With other commercial banks in the U.S. . . . . . . . . . . 2318. . 328,094 2318. . 0 4.b.(2)
---------- -------
(3) With others . . . . . . . . . . . . . . . . . . . . . . . . 2820. . 1,939,644 2820. . 339,000 4.b.(3)
---------- -------
c. Other borrowed money (from Schedule P, item 4). . . . . . . . . 3190. . 171,302 3190. . 15,000 4.c.
---------- -------
d. Branch or agency liability on acceptances executed and
outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . 2920. . 288,430 4.d.
----------
e. Trading liabilities . . . . . . . . . . . . . . . . . . . . . . 3548. . 4,359,929 3548. . 0 4.e.
---------- -------
f. Other liabilities to nonrelated parties . . . . . . . . . . . . 2916. . 1,769,576 2916. . 2,063 4.f.
---------- -------
g. Total liabilities to nonrelated (sum of items 4.a through 4.f). 2927. . 26,899,130 2927. . 886,034 4.g.
---------- -------
5. Net due to related depository institutions;
a. For the reporting branch or agency including its IBF: Net due
to head office and other related depository institutions
(item 1.i minus 4.g of Column A if item 1.i. is greater than
4.g.; otherwise enter -0-). . . . . . . . . . . . . . . . . . . 2944. . 0 5.a.
----------
b. For the IBF of the reporting branch or agency:
Net due to establishing entity, head office and other
related depository institutions (item 1.i. minus item 4.g
of Column B if item 1.i. is greater than item 4.g.;
otherwise enter -0-). . . . . . . . . . . . . . . . . . . . . . 2944. . 0 5.b.
-------
6. Total liabilities (for Column A, sum of item 4.g. and 5.a;
for Column B, sum of item 4.g. and 5.b.) . . . . . . . . . . . . . 2950. . 26,899,130 2950. . 866,034 6.
---------- -------

MEMORANDA
- ------------------------------------------------------------------- ----------------- ---------------
1. Fair value of held-to-maturity securities . . . . . . . . . . . 1771. . 273,057 1771. . 0 M.1.
---------- -------
2. Amortized cost of held-to-maturity securities . . . . . . . . . 1754. . 272,954 1754. . 0 M.2.
---------- -------
3. Fair value of available-for-sale securities . . . . . . . . . . 1773. . 3,100,782 1773. . 0 M.3.
---------- -------
4. Amortized cost of available-for-sale securities . . . . . . . . 1772. . 3,109,276 1772. . 0 M.4.
---------- -------
5. Fair value of high-risk mortgage securities . . . . . . . . . . 8781. . 0 8781. . 0 M.5.
---------- -------
6. Amortized cost of high-risk mortgage securities . . . . . . . . 8780. . 0 8780. . 0 M.6.
---------- -------
7. Fair value of structured notes. . . . . . . . . . . . . . . . . 8783. . 0 8783. . 0 M.7.
---------- -------
8. Amortized cost of structured notes. . . . . . . . . . . . . . . 8782. . 0 8782. . 0 M.8.
---------- -------
9. Mutual funds and annuity sales during the quarter . . . . . . . A005. . 0 A005. . 0 M.9.
---------- -------
10. Revaluation gains on interest rate, foreign exchange rate, and
other commodity and equity contracts . . . . . . . . . . . . . 3543. . 2,562,136 3543. . 0 M.10.
---------- -------
11. Revaluation losses on interest rate, foreign exchange rate, and
other commodity and equity contracts. . . . . . . . . . . . . . 3547. . 3,094,826 3547. . 0 M.11.
---------- -------
12. Amount of assets nested against nondeposit liabilities on the
balance sheet in accordance with generally accepted
accounting principles. . . .. . . . . . . . . . . . . . . . . . A526. . 2,538,598 A526. . 0 M.12.
---------- -------
13. If other assets including other claims on nonrelated parties (item 1.h.)
exceeds 5 percent of total assets (item 3.), itemize and describe amounts
that exceed 25 percent of item 1.h.

TEXT RCFD
a. A539: ACCRUED INTEREST RECEIVABLE A539. .1,067,220 M.13.a.
-------------------------------------------------------- ---------
b. A540: A540. . 0 M.13.b.
-------------------------------------------------------- ---------
c. A541: A541. . 0 M.13.c.
-------------------------------------------------------- ---------
</TABLE>

<PAGE> 54

SCHEDULE RAL - CONTINUED

14. If other liabilities to nonrelated parties (item 4.f) exceeds 5 percent of
total liabilities (item 6), itemize and describe amounts that exceed 25
percent of item 4.f.

<TABLE>
<CAPTION>
TEXT RCFD
<S> <C> <C> <C> <C>
a. A542: ACCRUED INTEREST PAYABLE A542.. 923,641 M.14.a
---------------------------- --------
b. A543: A543.. 0 M.14.b.
---------------------------- --------
c. A544: A544.. 0 M.14.c.
---------------------------- --------

15. Number of full-time equivalent employees
of the branch or agency at end of current
period (round to the nearest
whole number)........................... 4150.. 959 M.15
------

To be reported only with the March Report
16. Indicate in the box at the right the number of the
statement below that best describes the most
comprehensive level of audited work performed for the RCFD Number
branch or agency by, or on behalf of, the parent ---- ------
organization during the preceding year..................6726.. N/A M.16.
---------
</TABLE>

1 = Independent annual audit of the branch or agency conducted in accordance
with U.S. generally accepted auditing standards by a certified public
accounting firm.

2 = Independent annual audit of the branch or agency conducted in accordance
with home country auditing standards by an independent accounting firm.

3 = Review of the financial statements of the branch or agency by external
auditors, as part of the audit of the parent organization.

4 = Review of the financial statements of the branch or agency by internal
auditors.

5 = Compilation of the financial statements of the branch or agency by
external auditors.

6 = Other audit procedures.

7 = No audit or independent review.

SCHEDULE RAL - MEMORANDA

<TABLE>
<CAPTION>
Total Reporting
Branch or Agency
STATUTORY OR REGULATORY REQUIREMENT Dollar Amounts in Thousands Including its IBF
- ---------------------------------------------------------------- -----------------
<S> <C> <C> <C>
as appropriate for the reporting institution (see instructions) RCFD
----
1. Asset maintenance requirement................................. 3345 0 s.1.
---------
2. Asset pledge requirement/Capital equivalency deposit.......... 3349 2,029,428 s.2.
---------
3. FDIC asset maintenance requirement (for FDIC insured branches
only):
a. Average liabilities........................................ 2334 N/A s.3.a.
---------
b. Eligible assets............................................ 2387 N/A s.3.b.
---------
</TABLE>

<PAGE> 55

SCHEDULE A - CASH AND BALANCES DUE FROM DEPOSITORY INSTITUTIONS

NOTE: Exclude all transactions with related depository institutions

<TABLE>
<CAPTION>
---(Column A)---- ---(Column B)----
Total Reporting
Branch or Agency
Dollar Amounts in Thousands Including its IBF IBF Only
- -------------------------------------------------- ------------------ -----------------
<S> <C> <C> <C> <C> <C>
RCFD RCFW
1. Cash item in process of collection ---- ----
and unposted debits............................ 0020.. 46 0020.. 0 1.
----------- ----------
2. Currency and coin (U.S. and foreign)........... 0060.. 59 2.
----------- ----------
3. Balances due from depository institutions in
the U.S.:
a. U.S. branches and agencies of other foreign
banks (including their IBFs) ............... 0083.. 169,000 0083.. 0 3.a.
----------- ----------
b. other depository institutions in the U.S.
(including their IBFs) ..................... 0085.. 17,514 0085.. 0 3.b.
----------- ----------
4. Balances due from banks in foreign countries
and foreign central banks:
a. Foreign branches of U.S. banks.............. 0073.. 0 0073.. 0 4.a.
----------- ----------
b. Other banks in foreign countries and foreign
central banks............................... 1884.. 63,605 1884.. 0 4.b.
----------- ----------
5. Balance due from Federal Reserve Banks......... 0090.. 45,358 5.
----------- ----------
RCXY RCXY
6. Total (sum of items 1 through 5) (must equal ---- ----
Schedule RAL, item 1.a.)....................... 0010.. 315,582 0010.. 0 6.
----------- ----------

MEMORANDUM
- ------------
1. Noninterest-bearing balances due from commercial RCFD RCFN
banks in the U.S. (including their IBFs) ---- ----
(included in item 3 above)...................... 0050.. 17,514 0050.. 0 M.1.
----------- ----------
</TABLE>

<PAGE> 56

SCHEDULE C -- LOANS

Part I. Loans and Leases

Net of unearned income.

NOTE: Exclude all transactions with related depositary institutions.

<TABLE>
<CAPTION>
-----(Column A)----- -----(Column B)-----
Total Reporting
Branch or Agency
Dollar Amounts in Thousands Including its IBF IBF Only
- --------------------------------------------------------------- -------------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
RCFD RCFW
1. Loans secured by ---- ----
real estate.................................................. 1410.. 251,772 1410.. 0 1.
-------------- --------------
2. Loans to depository institutions:
a. To commercial banks in the U.S. (including their IBFs):
(1) To U.S. branches and agencies of other foreign banks.. 1506.. 553,254 1506.. 175,254 2.a.(1)
-------------- --------------
(2) To other commercial banks in the U.S.................. 1507.. 26,000 1507.. 0 2.a.(2)
-------------- --------------
b. To other depository institutions in the U.S. (including
their IBFs)............................................... 1517.. 0 1517.. 0 2.b.
-------------- --------------
c. To banks in foreign counties:
(1) To foreign branches of U.S. banks..................... 1513.. 0 1513.. 0 2.c.(1)
-------------- --------------
(2) To other banks in foreign countries................... 1516.. 343,227 1516.. 253,569 2.c.(2)
-------------- --------------
3. Loans to other financial institutions........................ 1520.. 2,799,397 1520.. 0 3.
-------------- --------------
4. Commercial and industrial loans:
a. To U.S. addressees (domicile)............................. 1763.. 1,373,431 1763.. 0 4.a.
-------------- --------------
b. To non-U.S. addressees (domicile)......................... 1764.. 276,403 1764.. 34,514 4.b.
-------------- --------------
5. Acceptances of other banks:
a. Of U.S. banks............................................. 1756.. 64 1756.. 0 5.a.
-------------- --------------
b. Of foreign banks.......................................... 1757.. 199 1757.. 0 5.b.
-------------- --------------
6. Loans to foreign governments and official institutions
(including foreign central banks)............................ 2081.. 0 2081.. 0 6.
-------------- --------------
7. Loans for purchasing or carrying securities (secured and
unsecured)................................................... 1545.. 170,619 1545.. 0 7.
-------------- --------------
8. All other loans (include state and local obligations other
than securities and loans to individuals).................... 1685.. 173,348 1685.. 0 8.
-------------- --------------
9. Lease financing receivables (net of unearned income):
a. Of U.S. addressees (domicile)............................. 2182.. 137,914 2182.. 0 9.a.
-------------- --------------
b. Of non-U.S. addressees (domicile)......................... 2183.. 0 2183.. 0 9.b.
-------------- -------------
10. Less: Any unearned income on loans reflect in items 1-8
above........................................................ 2123.. 0 2123.. 0 10.
-------------- --------------
11. Total loans and leases, net of unearned income (sum of items RCXX RCXY
1 through 9 minus item 10) (must equal Schedule RAL, ---- ----
item 1.a).................................................... 2122.. 6,105,628 2122.. 463,357 11.
-------------- --------------

MEMORANDA RCFD
- --------- ----
1. Not applicable...............................................

2. Holdings of own acceptances included in Schedule C, pt 1,
item 4....................................................... 3341.. 168,143 M.2.
--------------
3. Commercial and industrial loans with remaining maturity of
one year or less:
a. With predetermined interest rates......................... 6119.. 837,381 M.3.a.
--------------
b. With floating interest rates.............................. 6120.. 130,502 M.3.b.
--------------
4. Commercial and industrial loans with remaining maturity of
more than one year:
a. With predetermined interest rates......................... 6122.. 654,614 M.4.a.
--------------
b. With floating interest rates.............................. 6123.. 11,500 M.4.b.
--------------
</TABLE>

<PAGE> 57

SCHEDULE E -- DEPOSIT LIABILITIES AND CREDIT BALANCES

NOTE: EXCLUDE all transactions with related depositary institutions.

<TABLE>
<CAPTION>
-Total Deposit Liabilities and Credit Balances, Excluding IBF-
---------Transaction Accounts--------- Nontransaction Accts.
(Column A) (Column B) (Column C) (Column D)
Total
Total transaction nontransaction
accounts and Memo: Total demand accounts
credit balances deposits (included (including MMDAs) IBF deposit
Dollar Amounts in Thousands (excluding IBF) in Column A) (excluding IBF) liabilities*
- ------------------------------ ------------------ ------------------ -------------------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Individuals, partnerships,
and corporations: RCON RCON RCON RDFN
a. U.S. addressees (domicile).... 1641.. 65,856 2223.. 65,856 2242.. 12,545,444 1666.. 0 1.a
------------ ------------ ------------ -----------
b. Non-U.S. addressees(domicile). 1642.. 251,815 2226.. 251,815 2251.. 181,352 1667.. 88,079 1.b
------------ ------------ ------------ -----------
2. Commercial banks in the U.S.
(including their IBFs):
a. U.S. Branches and agencies of
other foreign banks.......... 1643.. 0 2313.. 0 2347.. 1,418,100 1668.. 10,000 2.a
------------ ------------ ------------ ------------
b. Other commercial banks in the
U.S.......................... 1645.. 0 2316.. 0 2348.. 114,500 1669.. 0 2.b
------------ ------------ ------------ ------------
3. Banks in foreign countries:

a. Foreign branches of U.S.
Banks........................ 1646.. 6 2323.. 6 2367.. 163,750 1671.. 0 3.a
------------ ------------ ------------ ------------
b. Other banks in foreign
countries.................... 1647.. 93,829 2326.. 93,829 2373.. 983,816 1672.. 8,000 3.b
------------ ------------ ------------ ------------
4. Foreign governments and official
institutions (including foreign
central banks).................. 1649.. 1,037 2300.. 1,037 2377.. 690,418 2650.. 223,892 4.
------------ ------------ ------------ ------------
5. All other deposits and credit
balances........................ 1650.. 14,037 1654.. 0 2259.. 300,926 2261.. 0 5.
------------ ------------ ------------ ------------
RCXZ
----
6. Certified and official checks... 2330.. 31,298 2330.. 31,298 6.
------------ ------------
7. Total deposits and credit balances
(sum of Columns A, C, and D must
equal Schedule RAL, item 4.a,
Column A. Column D must equal RCOM RCOM RCOM RCKY
Schedule RAL, item 4.a, ---- ---- ---- ----
Column B)....................... 1653.. 457,876 2210.. 443,841 2385.. 16,395,306 2205.. 329,971 7.
------------ ------------ ------------ ------------
</TABLE>
- -------
* Amounts in this column should EXCLUDE those IBF liabilities to be reported as
"Federal Funds purchased and securities sold under agreements to repurchase"
or as "Other borrowed money."

MEMORANDA
<TABLE>
<CAPTION>
Total Reporting
Branch or Agency
Dollar Amounts in Thousands Excluding its IBF
- ------------------------------------------------------------------- ------------------
<S> <C> <C> <C>
1. Components of total nontransaction accounts (included in item RCON
7, Column C): ----
a. Time deposits of $100,000 or more............................ 2604.. 16,397,824 M.1.a
------------
b. Not applicable.
c. Time certificates of deposit of $100,000 or more with
remaining maturity of more than 12 months.................... 6643.. 390,000 M.1.c
------------
</TABLE>

<PAGE> 58

SCHEDULE K - QUARTERLY AVERAGES (1)

NOTE: EXCLUDE all transactions with related depository institutions.

<TABLE>
<CAPTION>
Total Reporting
Branch or Agency
Dollar Amounts in Thousands including its IBF
- -------------------------------------------------------- -----------------
<S> <C> <C> <C>
ASSETS RCFD
- ------ ----
1. Interest-bearing balances due from depository
institutions (corresponds to part of Schedule RAL,
item 1.a, Column A)...................................3381.. 415,769 1.
-----------
2. Federal funds sold and securities purchased under
agreements to recall (corresponds to Schedule RAL,
item 1.d, Column A)...................................3365.. 783,311 2.
-----------
3. Total loans, net of unearned income (corresponds to
Schedule RAL, item 1.e, Column A).....................3360.. 5,208,261 3.
-----------
4. Loans to banks in foreign countries (corresponds to
Schedule C, item 2.c, Column A).......................3105.. 355,182 4.
-----------
5. Total claims on nonrelated parties (corresponds to
Schedule RAL, item 1.l, Column A).....................3106.. 19,655,449 5.
-----------
LIABILITIES
- -----------
6. Time certificates of deposit of $100,000 or more
(corresponds to Schedule E, Memorandum item 1.a)......3545.. 15,262,727 6.
-----------
7. Interest-bearing deposits and credit balances
(corresponds to part of Schedule RAL, item 4.a,
Column A).............................................3107.. 14,694,156 7.
-----------
8. Federal funds purchased and securities sold under
agreements to repurchase (corresponds to Schedule
RAL, item 4.b, Column A)..............................3353.. 2,724,561 8.
-----------
9. Other borrowed money (corresponds to Schedule RAL,
item 4.c, Column A)...................................3355.. 244,126 9.
-----------
</TABLE>
- -------------------
(1) For all items, branches and agencies have the option of reporting either (1)
an average of daily figures for the quarter or (2) an average of weekly
figures (i.e., the Wednesday of each week of the quarter).

<PAGE> 59

SCHEDULE L - OFF-BALANCE-SHEET ITEMS

NOTE: Exclude all transactions with related depository institutions.

<TABLE>
<CAPTION>
Total Reporting
Branch or Agency
Dollar Amounts in Thousands including its IBF
- -------------------------------------------------------- -----------------
<S> <C> <C> <C>
RCFD
----

1. Commitments to make or purchase loans.................3423..23,411,649 1.
----------
2. Spot foreign exchange contracts.......................8765..35,887,055 2.
----------
3. Standby letters of credit:
a. Total..............................................3375.. 3,443,518 3.a.
----------
(1) To U.S. addressees (domicile)..................3376.. 2,737,995 3.a.(1)
----------
(2) To non-U.S. addressees (domicile)..............3377.. 705,523 3.a.(2)
----------
b. Amount of total standby letters of credit in
item 3.a conveyed to others through participation..3378.. 991,868 3.b.
----------
4. Commercial and similar letters of credit..............3411.. 116,911 4.
----------
5. Participations in acceptances conveyed to others by
the reporting branch or agency (as described in the
instructions).........................................3428.. 0 5.
----------
6. Participations in acceptances acquired by the
reporting (non-accepting) branch or agency (as
described in the instructions)........................3429.. 0 6.
-----------
7. All other off-balance-sheet contingent liabilities
greater than or equal to 1/2 percent of total claims
on nonrelated parties as reported on Schedule RAL,
from item 1.i.........................................5602.. 4,760,540 7.
-----------
List below each component of this item greater than
or equal to 1 percent of total claims on nonrelated
parties as reported on Schedule RAL, item 1.i:
TEXT RCFD
---- ----
a. 5598: BOOK VALUE OF WRAP CONTRACTS 5598..6,507,107 7.a.
--------------------------------- ---------
b. 5600: OUTSTANDING INDENTURES 5600.. 253,433 7.b.
--------------------------------- ---------
c. 5601: 5601.. 0 7.c.
--------------------------------- ---------

8. All other off-balance-sheet contingent claims
(assets) greater than or equal to 1/2 percent
of total claims on nonrelated parties as
reported on Schedule RAL, item 1.i....................5603.. 0 8.
-----------
List below each component of this item greater than or equal to
1 percent of total claims on nonrelated parties as reported on
Schedule RAL, item 1.i:

TEXT RCFD
---- ----
a. 5604: 5604.. 0 8.a.
--------------------------------- ---------
b. 5605: 5605.. 0 8.b.
--------------------------------- ---------
c. 5606: 5606.. 0 8.c.
--------------------------------- ---------
</TABLE>

<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------
(Column A) (Column B) (Column C) (Column D)
Equity Commodity
Off-Balance-Sheet Derivatives Position Interest Rate Foreign Exchange Derivative and Other
Indicators(1) Contracts Contracts(2) Contracts Contracts
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
9. Gross amounts (e.g., notional
amounts): RCFD RCFD RCFD RCFD
---- ---- ---- ----
a. Futures contracts..................8693.. 61,020,633 8694.. 1,159,229 8695.. 0 8696.. 179,425 9.a.
----------- ----------- --------- ---------
b. Forward contracts..................8697.. 65,766,433 8698..252,636,013 8699.. 0 8700..1,655,850 9.b.
----------- ----------- --------- ---------
c. Exchange-traded option contracts:
(1) Written options................8701.. 5,950,468 8702.. 0 8703.. 0 8704.. 38,900 9.c1
----------- ----------- --------- ---------
(2) Purchased options..............8705.. 1,493,301 8706.. 0 8707.. 0 8708.. 33,370 9.c2
----------- ----------- --------- ---------
d. Over-the-counter option contracts:
(1) Written options................8709..232,514,572 8710.. 9,571,359 8711.. 0 8712.. 237,987 9.d1
----------- ----------- --------- ---------
(2) Purchased options..............8713..235,590,532 8714.. 7,734,864 8715.. 0 8716.. 236,283 9.d2
----------- ----------- --------- ---------
e. Swaps..............................3450..477,169,817 3826.. 12,321,416 8719.. 0 8720.. 16,697 9.e
----------- ----------- --------- ---------
</TABLE>

- --------------------
(1) For each column, sum of items 9.a through 9.e must equal sum of items 10,
11.a, and 11.b.

(2) Spot foreign exchange is reported in Schedule L, item 2.

<PAGE> 60

SCHEDULE L - CONTINUED

NOTE: Exclude all transactions with related depository institutions.

The following items should be completed by those branches or agencies with total
assets of $100 million or more.

<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- ----------------------------------------------------------------------------------------------------------------------------------
(Column A) (Column B) (Column C) (Column D)
------------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12. Gross fair values of
derivative contracts:
a. Contracts held for
trading: RCFD RCFD RCFD RCFD
(1) Gross positive fair ---- ---- ---- ----
value .............. 8733 4,134,570 8734 6,083,748 8735 0 8736 37,854 12.a1
------------- ------------ ------------ -------------
(2) Gross negative fair
value .............. 8737 4,163,767 8738 6,787,833 8739 0 8740 61,349 12.a2
------------- ------------ ------------ -------------
b. Contracts held for
purposes other than
trading that are marked
to market:
(1) Gross positive fair
value .............. 8741 0 8742 0 8743 0 8744 0 12.b1
------------- ------------ ------------ -------------
(2) Gross negative fair
value .............. 8745 0 8746 0 8747 0 8748 0 12.b2
------------- ------------ ------------ -------------
c. Contracts held for
purposes other than
trading that are not
marked to market:
(1) Gross positive
fair value ......... 8749 100,489 8750 0 8751 0 8752 0 12.c1
------------- ------------ ------------ -------------
(2) Gross negative
fair value ......... 8753 35,977 8754 2,944 8755 0 8756 0 12.c2
------------- ------------ ------------ -------------

MEMORANDA
- ---------
1. National amount of all credit derivatives on which the reporting branch or agency
is the guarantor ................................................................................. A534 0 N.1.

2. National amount of all credit derivatives on which the reporting branch or agency
is the beneficiary ............................................................................... A535 0 N.2.
</TABLE>
- ------------
(1) Spent foreign exchange is reported in Schedule L, item 2.

<PAGE> 61

SCHEDULE M - DUE FROM/DUE TO RELATED INSTITUTIONS
IN THE U.S. AND IN FOREIGN COUNTRIES (CONFIDENTIAL)

The Federal Financial Institutions Examination Council regards the individual
respondent information provided by each reporting Institution on this schedule
as confidential. If it should be determined subsequently that any information
collected on this schedule must be released respondents will be notified.

<TABLE>
<CAPTION>
Total Reporting Branch or Agency
--------including its IBF-------

(Column A) (Column B)
Dollar Amounts in Thousands Gross due from Gross due to
- ------------------------------------------------------------------------ -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
PART I: Transactions of reporting institution including its IBF with
related depository institutions, reflected in net due from/due
to items (items 2.a and 5.a; Column A) in Schedule RAL

Amounts outstanding as of report date:
1. U.S. domiciled offices of related depository institutions
(including their IBFs): RCFD RCFD
a. Related branches and agencies in the U.S.: ---- ----
(1) In same state as the reporting office ........................ 3008 0 3007 0 1.a.(1)
-------------- ------------
(2) In other states .............................................. 3010 0 3009 0 1.a.(2)
-------------- ------------
b. Offices in the U.S. of other related depository Institutions
(including Edge and Agreement corporations and New York
investment companies) ............................................ 3171 0 3172 0 1.b
-------------- ------------
2. Non-U.S. domiciled offices of related depository institutions:
a. Head offices of parent bank ...................................... 3173 2,858,729 3174 3,381,280 2.a.
-------------- ------------
b. Non-U.S. branches and agencies of the parent bank:
(1) Offices in the Caribbean ..................................... 3175 2,404,276 3176 8,018,896 2.b.(1)
-------------- ------------
(2) Other offices ................................................ 3177 13,546,172 3178 423,956 2.b.(2)
-------------- ------------
c. Other non-U.S. offices of related depository institutions ......... 3179 2,639,629 3180 30,925 2.c.
-------------- ------------
3. Total (sum of items 1.a, 1.b, and 2.a through 2.c) .................. 3002 21,648,806 3001 11,855,055 3.
-------------- ------------
4. Net due from head office and other related depository institutions
(item 3, Column A minus Column B - enter the amount with a minus
sign (-) if Column B is greater than Column A. The absolute value
of item 4 must equal Schedule RAL, item e.a if in item 3 above
Column A is greater than Column B, or Schedule RAL, RCFD
item 5.a if in item 3 above Column B is greater than ----
RCFD Column A).......................................... 3035.. 9,793,751 4.
-----------

MEMORANDA
- ---------
1. Average daily (or weekly) amounts for the quarter ending with the
report date:
a. Related depository offices domiciled in the U.S. (corresponds
to items 1.a and 1.b of Part 1 above) ............................ 3026 0 3025 0 M.1.a.
-------------- ------------
b. Related depository offices domiciled outside of the U.S.
(corresponds to item 2.a theough 2.c of Part 1 above) ............ 3028 16,921,089 3027 12,575,569 M.1.b.
-------------- ------------
2. Sum of those parts of items 1.b and 2.c of Part 1 above that are
with wholly-owned depository subsidiaries of the parent bank ........ 3181 2,839,629 3182 30,925 M.2.
-------------- ------------
3. Trading assets and liabilities, related parties (amount is included in item 3
above, and in Schedule RAL, items 2.a and 5.a, respectively) ........ A006 549,408 A007 566,241 M.3.
-------------- ------------

</TABLE>

<PAGE> 62

SCHEDULE M (CONFIDENTIAL) - CONTINUED

<TABLE>
<CAPTION>
------------IBF Only-------------
(Column A) (Column B)
Dollar Amounts in Thousands Gross due from Gross due to
- ---------------------------------------------------- ---------------- --------------
<S> <C> <C> <C> <C> <C>
PART II: Transactions of reporting institution's IBF
with related depository institutions.

Amounts outstanding as of report date:

1. IBF Transactions with related depository
institutions other than transactions with
establishing entity: RCFM BCFN
---- ----
a. IBF transactions with IBFs of related
depository institutions domiciled in the
U.S. (included in Part I, item 1) . . . . . . . . 3004 . . . 0 3003 . . . 0 1.a.
--------- ---------
b. IBF transactions with related depository
institutions domiciled outside
the U.S. (included in Part I, item 2):
(1) Head office of parent bank . . . . . . . . . .3173 . . . 0 3174 . . . 13,936 1.b.(1)
--------- ---------
(2) Non-U.S. branches and agencies of the
parent bank:
(a) Offices in the Caribbean . . . . . . . . 3175 . . . 439,856 3176 . . . 0 1.b.(2)(a)
--------- ---------
(b) Other offices . . . . . . . . . . . . . . 3177 . . . 0 3178 . . . 7,454 1.b.(2)(b)
--------- ---------
(3) Other related depository institutions
domiciled outside the U.S. . . . . . . . . . 3179 . . . 0 3180 . . . 0 1.b.(3)
--------- ---------
c. Total (sum of items 1.a and 1.b(1) through 1.b(3)
above) . . . . . . . . . . . . . . . . . . . . . .3002 . . . 439,856 3001 . . . 21,390 1.c.
--------- ---------
d. IBF net due from related depository institutions
other than establishing entity (item 1.c.,
Column A minus Column B enter RCFM
the amount with a minus sign (-) ----
if Column B is greater than Column A) . . . 3193 . . . 416,466 1.d.
-------
2. IBF net due from establishing
entity (if net due to, enter RCFM
the amount with a minus ----
sign (-) . . . . . . . . . . . . . . . . . . . 1888 . . . ( 6,733) 2.
-------
3. IBF net due from all related
depository institutions (sum of
items 1.d and 2. above; if
negative, enter the amount with
a minus sign (-)). (If this item
is positive, it must equal
Schedule RAL, item 2.b; if this
item is negative, its absolute RCFM
value must equal Schedule RAL, ----
item 5.b.) . . . . . . . . . . . . . . . . . . 3194 . . . 411,733 3.
-------
</TABLE>

<TABLE>
<CAPTION>
Total Importing Branch or Agency
---------Including its IBF----------
(Column A) (Column B)
Dollar Amounts in Thousands Gross due from Gross due to
- ---------------------------------------------------- -------------- --------------
<S> <C> <C> <C> <C>
PART III: Transactions of reporting institution
including its IBF with related
nondepository subsidiaries. These are not
reflected in the net due from/due to items
(items 2.a and 5.a) in Schedule RAL.
Amounts outstanding as of report date with: RCFD RCFD
---- ----
1. Related nondepository majority-owned
subsidiaries in the U.S. . . . . . . . . . . . . . . . 3030 . . . 2,967,094 3029 . . . 293,972
--------- --------- 1.
2. Related nondepository majority-owned subsidiaries
in foreign countries . . . . . . . . . . . . . . . . 3032 . . . 17,407 3031 . . . 102,252 2.
--------- ---------
MEMORANDUM
1. Amount of items 1 and 2 above for wholly-owned
related nondepository subsidiaries. . . . . . . . . . 3034 . . . 2,984,501 3033 . . . 396,224 M.1.
--------- ---------

Total Reporting
Branch or Agency
Dollar Amounts in Thousands Including its IBF
- ------------------------------------------------------------------------------ -------------------
PART IV: Confidential Loan information.
1. Amount of allowance for loan losses, if any, RCFD
carried on the books of the reporting branch ----
or agency including its IBF . . . . . . . . . . . . . . . . . . . . . . . . 3195 . . . 55,833 1.
-------
2. Other real estate owned . . . . . . . . . . . . . . . . . . . . . . . . . . 2150 . . . 0 2.
-------
</TABLE>

<PAGE> 63

SCHEDULE M (CONFIDENTIAL) - CONTINUED

<TABLE>
<CAPTION>
Total Reporting
Branch or Agency
Dollar Amounts in Thousands Including its IBF
- ------------------------------------------------------------------------------------- -------------------
<S> <C> <C> <C>
RCFD
----
PART V: Off-balance-sheet items: with related depository institutions.
1. Commitments to make or purchase loans . . . . . . . . . . . . . . . . . . . . . . 5766 . . 0 1.
-----------
2. Spot foreign exchange contracts . . . . . . . . . . . . . . . . . . . . . . . . . A125 . . 14,259,799 2.
-----------
3. Total standby letters of credit . . . . . . . . . . . . . . . . . . . . . . . . . .5770 . . 26,440 3.
-----------
4. Commercial and similar letters of credit . . . . . . . . . . . . . . . . . . . . . 5771 . . 17,961 4.
-----------
5. Participations in acceptances conveyed to related depository institutions by
the reporting branch or agency (as described in the instructions) . . . . . . . . .5772 . . 0 5.
-----------
6. Participations in acceptances acquired from related depository institutions
by the reporting (non-accepting) branch or agency (as described
in the instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5773 . . 0 6.
-----------
7. All other off-balance-sheet contingent liabilities greater than or equal to
1/2 percent of total claims on related depository institutions as reported
in Schedule M, Part 1, Item 3, Columns . . . . . . . . . . . . . . . . . . . . . . 8569 . . 0 7.
-----------
List below each component of this item greater than or equal to 1 percent of
total claims on related depository institutions as reported on Schedule M,
Part 1, Item 3, Column A:

TEXT RCFD
---- ----
a. 8570: 8570. . 0 7.a.
------------------------------------------------- -------------
b. 8571: 8571. . 0 7.b.
------------------------------------------------- -------------
c. 8572: 8572. . 0 7.c.
------------------------------------------------- -------------

8. All other off-balance-sheet contingent claims (assets) greater than or equal
to 1/2 percent of total claims on related depository institutions as
reported in Schedule M, Part 1, Item 3, Column A . . . . . . . . . . . . . . . . . 8573 . . 0 8.
-----------
List below each component of this item greater than or equal to 1 percent of
total claims on related depository institutions as reported on Schedule M,
Part 1, Item 3, Column A:
TEXT RCFD
---- ----
a. 8574: 8574.. 0 8.a.
------------------------------------------------- -- -----------
b. 8575: 8575.. 0 8.b.
------------------------------------------------- --------------
c. 8576: 8576.. 0 8.c.
------------------------------------------------- --------------
</TABLE>

<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------------------------
(Column A) (Column B) (Column C) (Column D)
Equity Commodity
Off-Balance-Sheet Derivatives Position Interest Rate Foreign Exchange Derivative and Other
Indicators(1) Contracts Contracts(2) Contracts Contracts
- ------------------------------------------ -------------------- ------------------- ------------------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
9. Gross amounts (e.g., notional)
amounts: RCFD RCFD RCFD RCFD
---- ---- ---- ----
a. Futures contracts. . . . . . . . . . A008 . . 0 A009 . . 0 A010 . . 0 A037 . . 0 9.a.
---------- ----------- --------- ---------
b. Forward contracts. . . . . . . . . . A038 . . 1,427,514 A039 . . 26,330,666 A040 . . 0 A041 . . 667,428 9.b.
---------- ----------- --------- ---------
c. Exchange-traded option contracts:
(1) Written options . . . . . . . . A042 . . 0 A043 . . 0 A044 . . 0 A045 . . 0 9.c1
---------- ----------- --------- ---------
(2) Purchased options . . . . . . . A046 . . 0 A047 . . 0 A048 . . 0 A049 . . 0 9.c2
---------- ----------- --------- ---------
d. Over-the-counter option contracts:
(1) Written options . . . . . . . . A050 . . 0 A051 . . 8,875,394 A052 . . 0 A053 . . 128,310 9.d1
---------- ----------- --------- ---------
(2) Purchased options . . . . . . . A054 . . 0 A055 . . 10,978,929 A056 . . 0 A057 . . 112,995 9.d2
---------- ----------- --------- ---------
e. Swaps . . . . . . . . . . . . . . . A058 . . 0 A059 . . 0 A060 . . 0 A061 . . 10,018 9.e.
---------- ----------- --------- ---------
10. Total gross notional amount of
derivative contracts held for trading . A042 . . 1,427,514 A063 . . 46,184,989 A064 . . 0 A065 . . 918,751 10.
---------- ----------- --------- ---------
</TABLE>
- --------------------------
(1) For each column, sum of items 9.a through 9.e must equal sum of items 10,
11.a, and 11.b

(2) Spot foreign exchange is reported in Schedule M, Part V, item 2.

<PAGE> 64

SCHEDULE M (CONFIDENTIAL) - CONTINUED

The following items should be completed by those branches or agencies with total
assets of $100 million or more.

12. Gross fair values of derivative contracts:
a. Contracts held for trading: RCFD RCFD RCFD RCFD
---- ---- ---- ----
(1) Gross positive fair value........A074.. 77 A075.. 913,894 A076.. 0 A077.. 6,358 12.a1
----------- ----------- ----------- -----------
(2) Gross negative fair value........A078.. 1,373 A079.. 736,108 A080.. 0 A081.. 10,556 12.a2
----------- ----------- ----------- -----------
b. Contracts held for purposes other
than trading that are marked to
market:
(1) Gross positive fair value........A082.. 0 A083.. 0 A084.. 0 A085.. 0 12.b1
----------- ----------- ----------- -----------
(2) Gross negative fair value........A086.. 0 A087.. 0 A088.. 0 A089.. 0 12.b2
----------- ----------- ----------- -----------
c. Contracts held for purposes other
than trading that are not marked
to market:
(1) Gross positive fair value........A090.. 0 A091.. 0 A092.. 0 A093.. 0 12.c1
----------- ----------- ----------- -----------
(2) Gross negative fair value........A094.. 0 A095.. 0 A096.. 0 A097.. 0 12.c2
----------- ----------- ----------- -----------

MEMORANDA Dollar Amounts in Thousands
- ----------------------------------------------------------------------------------------------------------------------------
1. Notional amount of all credit derivatives on which the reporting branch or agency
is the guarantor..................................................................................A536.. 0 M.1.
-----------
2. Notional amount of all credit derivatives on which the reporting branch or
agency is the beneficiary.........................................................................A537.. 0 M.2.
-----------
</TABLE>
- -------------
(1) Spot foreign exchange is reported in Schedule M, part V, item 2.

<PAGE> 65

SCHEDULE N - PAST DUE, NONACCRUAL, AND RESTRUCTURED LOANS (CONFIDENTIAL)

The FFIEC regards the individual respondent information provided by each
reporting institution on this schedule as confidential. If it should be
determined subsequently that any information collected on this schedule must be
released, respondents will be notified.

NOTE: EXCLUDE all transactions with related depository institutions.

<TABLE>
<CAPTION>
---------------Total Reporting Branch or Agency Including its IBF----------------
(Column A) (Column B) (Column C) (Column D)
Past due 30 Past due 90 days Restructured and
through 89 days or more and in compliance with
Dollar Amounts in Thousands and still accruing still accruing Nonaccrual modified terms
- ---------------------------------------- ------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Total loans to U.S. addressees
(domicile): RCFD RCFD RCFD RCFD
---- ---- ---- ----
a. Commercial and industrial Loans......1606.. 0 1607.. 0 1608.. 4,231 1609.. 0 1.a.
------------- ------------- ------------- ------------
b. Loans secured by real estate.........1421.. 0 1422.. 0 1423.. 0 1424.. 0 1.b.
------------- ------------- ------------- ------------
c. All other loans (including all
lease financing receivables..........3183.. 0 3184.. 0 3185.. 0 3186.. 0 1.c.
------------- ------------- ------------- ------------
2. Total loans to non-U.S. addressees
(domicile)..............................1623.. 0 1624.. 0 1625.. 0 1627.. 0 2.
------------- ------------- ------------- ------------
3. Total (sum of items 1.a through 1.c
and 2)..................................1406.. 0 1407.. 0 1403.. 4,231 1404.. 0 3.
------------- ------------- ------------- -----------

MEMORANDUM
1. Book value of loans sold or otherwise
transferred to head office or to related
institutions and still serviced by
the reporting branch or agency..........1628.. 0 1629.. 0 1562.. 0 1637.. 0 M.1.
------------- ------------- ------------- ------------
2. Interest rate, foreign exchange rate,
and other commodity and equity contracts:
a. Book value of amounts carried as
assets...............................3522.. 0 3528.. 0 M.2.a
------------- -------------
b. Replacement cost of contracts with
a positive replacement cost..........3529.. 0 3530.. 0 M.2.b
------------- -------------
</TABLE>

<PAGE> 66

SCHEDULE O - OTHER DATA FOR DEPOSIT INSURANCE ASSESSMENTS

This schedule is to be completed only by branches whose deposits are insured by
the FDIC.

<TABLE>
<CAPTION>
REPORTING BRANCH
DOLLAR AMOUNTS IN THOUSANDS EXCLUDING ITS IRF
- ------------------------------------------------------------------------------------------- -------------------
<S> <C> <C> <C>
RCXZ
1. Total deposits of the branch (excluding IBF): ----
a. Total demand deposits (excluding IBF)..................................................2210.. N/A 1.a.
------------
RCON
b. Total time and savings ----
deposits (excluding IBF)...............................................................3511.. N/A 1.b.
------------
c. Interest accrued and unpaid on deposits (excluding IBF)................................5763.. N/A 1.c.
------------
2. Unposted debits:
a. Actual amount of all unposted debits...................................................0030.. N/A 2.a.
------------
OR
b. Separate amount of unposted debits:
(1) Actual amount of unposted debits to demand deposits................................0031.. N/A 2.b.(1)
------------
(2) Actual amount of unposted debits to time and savings deposits......................0032.. N/A 2.b.(2)
------------
3. Unposted credits (see instructions):
a. Actual amount of all unposted credits..................................................3510.. N/A 3.a.
------------
OR
b. Separate amount of unposted credits:
(1) Actual amount of unposted credits to demand deposits...............................3512.. N/A 3.b.(1)
------------
(2) Actual amount of unposted credits to time and savings deposits.....................3514.. N/A 3.b.(2)
------------

4. Deposits of majority-owned depository subsidiaries of the parent foreign bank (not
included in total deposits):
a. Demand deposits of majority-owned depository subsidiaries..............................3141.. N/A 4.a.
------------
b. Time and savings deposits of majority-owned depository subsidiaries....................3142.. N/A 4.b.
------------
c. Interest accrued and unpaid in deposits of majority owned depository subsidiaries......5764.. N/A 4.c.
------------
5. Deposits of wholly-owned nondepository subsidiaries of the parent foreign bank (included
in total deposits):
a. Demand deposits of wholly-owned nondepository subsidiaries.............................3143.. N/A 5.a.
------------
b. Time and savings deposits of wholly-owned nondepository subsidiaries...................3144.. N/A 5.b.
------------
c. Interest accrued and unpaid on deposits of wholly-owned nondepository subsidiaries.....5765.. N/A 5.c.
------------
6. Reserve balances actually passed through to the Federal Reserve by the reporting branch on
behalf of its respondent depository institutions that are also reflected on deposit
liabilities of the reporting branch:
a. Amount reflected in demand deposits (included in item 1.a above).......................2314.. N/A 6.a.
------------
b. Amount reflected in time and savings deposits (included in item 1.b above).............2315.. N/A 6.b.
------------
7. Deposits in lifeline accounts.............................................................5596..//////////// 7.

MEMORANDA
- ---------
1. Total deposits of the branch (excluding IBF)
(sum of Memorandum items 1.a(1) and 1.b(1) must equal sum of items 1.a and 1.b above):
a. Deposit accounts of $100,000 or less: RCON
(1) Amount of deposit accounts of $100,000 or less.....................................2702.. N/A M.1.a.(1)
------------
RCON NUMBER
(2) Number of deposit accounts of ---- ------
$100,000 or less (June report only).................................3779.. N/A M.1.a.(2)
-----------
b. Deposit accounts of more than $100,000:
(1) Amount of deposit accounts of more than $100,000...................................2710.. N/A M.1.b.(1)
RCON NUMBER ------------
(2) Number of deposit accounts of ---- ------
more than $100,000..................................................2772.. N/A M.1.b.(2)
-----------
</TABLE>

<PAGE> 67

SCHEDULE O - CONTINUED
<TABLE>
<CAPTION>
DOLLAR AMOUNTS IN THOUSANDS
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MEMORANDA - Continued
- ---------------------
2. Estimated amount of uninsured deposits in the branch (excluding IBF):

a. An estimate of your branch's uninsured deposits can be determined by
multiplying the number of deposits of more than $100,000 reported in
Memorandum Item 1.b.(2) above by $100,000 and subtracting the result from
the amount of deposit accounts of more than $100,000 reported in
Memorandum item 1.b.(1) above.

Indicate in the appropriate box at the right whether your branch has a method or YES NO
procedure for determining a better estimate of uninsured deposits than the estimate --- --
described above........................................................................6961 X M.2.a.
b. If the box marked YES has been checked, report the estimate of uninsured deposits
determined by using your branch's method or procedure..................................5597.. N/A M.2.b.
------------
3. Preferred deposits........................................................................5590.. N/A M.3.
------------

4. Adjustments to demand deposits (excluding IBF) reported in Schedule E for
certain reciprocal demand balances:
a. Amount by which demand deposits would be reduced if reciprocal demand balances
between the reporting branch and savings associations were reported on a net basis
rather than a gross basis in Schedule E................................................8785.. N/A M.4.a.
------------
b. Amount by which demand deposits would be increased if reciprocal demand balances
between the reporting branch and U.S. banks were reported on a gross basis rather
than a net basis in Schedule E.........................................................A181 N/A M.4.b.
------------
c. Amount by which demand deposits would be reduced if cash items in process
of collection were included in the calculation of net reciprocal demand
balances between the reporting branch and U.S. banks and savings
associations in Schedule E............................................................A162 N/A M.4.c.
------------
5. Amount of assets netted against deposit liabilities on the balance sheet in
accordance with generally accepted accounting principles..................................A538.. N/A M.5.
------------
</TABLE>

SCHEDULE P - OTHER BORROWED MONEY

Note: EXCLUDE all transactions with related depository institutions.

<TABLE>
<CAPTION>
-----(COLUMN A)---- -----(COLUMN B)----
TOTAL REPORTING
BRANCH OR AGENCY
DOLLAR AMOUNTS IN THOUSANDS INCLUDING ITS IBF IBF ONLY
- ------------------------------------------------------------------- ------------------- -------------------
<S> <C> <C> <C> <C> <C>
1. Owed to nonrelated commercial banks in the U.S. (including
their IBFs): RFCD RCFM
---- ----
a. Owed to U.S. offices of nonrelated U.S. banks..................3312.. 620 3312.. 0 1.a.
------------ ------------
b. Owed to U.S. branches and agencies of nonrelated foreign banks.3313.. 15,000 3313.. 15,000 1.b.
------------ ------------
2. Owed to nonrelated banks in foreign countries:
a. Owed to foreign branches of nonrelated U.S. banks..............3314.. 3,349 3314.. 0 2.a.
------------ ------------
b. Owed to foreign offices of nonrelated foreign banks............3315.. 75,150 3315.. 0 2.b.
------------ ------------
3. Owed to others....................................................2869.. 77,183 2869.. 0 3.
------------ ------------
RCXX RCXY
4. Total (sum of items 1 through 3)(must equal Schedule RAL, ---- ----
item 4.c).........................................................3190.. 171,302 3190.. 15,000 4.
------------ ------------

MEMORANDUM RCFD
- ---------- ----
1. Immediately available funds with a maturity greater than one day
included in other borrowed money..................................2805.. 27,500 M.1.
------------
</TABLE>

<PAGE> 68

The FFIEC regards the information reported in this supplement as confidential

SUPPLEMENT
REPORT OF ASSETS AND LIABILITIES

Non - U.S. Branch Licensed in CAYMAN ISLANDS (TEXT 9031)
-------------------------------------
(country)

that is managed or controlled by DEUTSCHE BANK AG (TEXT 9010)
----------------------------------
(legal title of U.S. branch or agency)

at close of business on June 30, 1997
-------------

<TABLE>
<CAPTION>
Total Reporting
Please read instructions carefully, Dollar Amounts in Thousands Non - U.S. Branch
- ---------------------------------------------------------------------------------------------- ----------------------
<S> <C> <C> <C>
ASSETS CRCB
----
1. Claims on U.S.-domiciled offices of related depository institutions denominated in U.S.
dollars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5527 . . . 7,393,877 1.
----------
2. Claims on all other U.S. addressees (including related nondepository
institutions) denominated in U.S. dollars:

a. Balances due from nonrelated depository institutions:
(1) With remaining maturities of one day or under continuing contract
("overnight") . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5528 . . . 0 2.a.(1)
----------
(2) All other maturities ("term") . . . . . . . . . . . . . . . . . . . . . . . . . . 5529 . . . 0 2.a.(2)
----------
b. Securities:
(1) U.S. Treasury securities and U.S. Government agency and corporation
obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1918 . . . 0 2.b.(1)
----------
(2) All other securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0373 . . . 0 2.b.(2)
----------
c. Loans:
(1) Loans secured by real estate . . . . . . . . . . . . . . . . . . . . . . . . . 1410 . . . 16,609 2.c.(1)
----------
(2) Loans to nonrelated depository institutions in the United States . . . . . . . 5530 . . . 711,460 2.c.(2)
----------
(3) Commercial and industrial loans . . . . . . . . . . . . . . . . . . . . . . . . 1763 . . . 3,059,743 2.c.(3)
----------
(4) All other loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5531 . . . 5,515,373 2.c.(4)
----------
(5) Less: Any unearned income on loans reflected in Items 2.c.(1) through 2.c.(4)
above . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2123 . . . 0 2.c.(5)
----------
(6) Total loans, net of unearned income (sum of items 2.c.(1) through 2.c.(4)
above minus item 2.c.(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . 2122 . . . 9,303,185 2.c.(6)
----------
d. All other claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5532 . . . 6,091,824 2.d
----------
e. Total claims on U.S. addressees other than related depository institutions,
denominated in U.S. dollars (sum of Items 2.a, 2.b, 2.c.(6), and 2.d) . . . . . . . 5533 . . . 15,395,009 2.e
----------
3. Claims on all U.S. addressees denominated in currencies other than U.S. dollars . . . . . 5534 . . . 1,312,452 3.
----------
4. Claims on home-country addressees denominated in any currency:
a. Related depository institutions . . . . . . . . . . . . . . . . . . . . . . . . . . 3173 . . . 218,663 4.a
----------
b. Nonrelated depository institutions . . . . . . . . . . . . . . . . . . . . . . . . . 5536 . . . 9,356 4.b
----------
c. Home-country government and official institutions (including home-country central
bank) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5537 . . . 0 4.c
----------
d. All other home-country addressees . . . . . . . . . . . . . . . . . . . . . . . . . 5538 . . . 58,712 4.d
----------
5. Claims on all other non-U.S. addressees denominated in any currency . . . . . . . . . . . 5539 . . . 4,042,198 5.
----------
6. All other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2151 . . . 35,647 6.
----------
7. Total assets (sum of Items 1, 2.a, 3, 4, 5, and 6) . . . . . . . . . . . . . . . . . . . 2170 . . . 28,465,914 7.
----------

LIABILITIES
8. Liabilities to U.S.-domiciled offices of related depository institutions denominated in
U.S. dollars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5540 . . . 912,289 8.
----------
9. Liabilities to all other U.S. addressees (including related nondepository
institutions) denominated in U.S. dollars:

a. Liabilities to nonrelated depository institutions in the U.S.:
(1) With remaining maturities of one day or under continuing contract
("overnight") . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5541 . . . 17,909 9.a.(1)
----------
(2) All other maturities ("term") . . . . . . . . . . . . . . . . . . . . . . . . . 5542 . . . 231,620 9.a.(2)
----------
b. Liabilities to all other U.S. addressees denominated in U.S. dollars:
(1) With remaining maturities of one day or under continuing contract
("overnight") . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5544 . . . 6,426,930 9.b.(1)
----------
(2) All other maturities ("term") . . . . . . . . . . . . . . . . . . . . . . . . . 5545 . . . 9,658,937 9.b.(2)
----------
10. Liabilities to all U.S. addressees denominated in currencies other than U.S. dollars . . . 5546 . . . 1,611,429 10.
----------
11. Liabilities to home-country addressees denominated in any currency:
a. Related depository institutions . . . . . . . . . . . . . . . . . . . . . . . . . . 3174 . . . 1,235,408 11.a
----------
b. Nonrelated depository institutions . . . . . . . . . . . . . . . . . . . . . . . . . 5548 . . . 3,094 11.b
----------
c. Home-country government and official institutions (including home-country central
bank) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5549 . . . 0 11.c
----------
d. All other home-country addressees . . . . . . . . . . . . . . . . . . . . . . . . . 5550 . . . 122,718 11.d
----------
12. Liabilities to all other non-U.S. addressees denominated in any currency . . . . . . . . 5551 . . . 7,988,568 12.
----------
13. All other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2916 . . . 257,012 13.
----------
14. Total liabilities (sum of items 8 through 13) . . . . . . . . . . . . . . . . . . . . . . 2950 . . . 28,465,914 14.
----------
</TABLE>

<PAGE> 69

Non - U.S. Branch Licensed in CAYMAN ISLANDS
----------------------------------
(country)

MEMORANDA - TRANSACTIONS WITH U.S. ADDRESSEES DENOMINATED IN U.S. DOLLARS

<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- ---------------------------------------------------------------------------------------------- -----------------
<S> <C> <C> <C>
CRCB
----
1. Amount included in items 1 and 2.d above for U.S. Government securities purchased under
agreements to resell:
a. With original maturities of one day or under continuing contract ("overnight") . . . 5552 . . . . . . 0 M1.a
-----
b. All other maturities ("term") . . . . . . . . . . . . . . . . . . . . . . . . . . . 5553 . . . . . . 0 M1.b
-----
2. Amount included in items 8 and 9 above for U.S. Government securities sold
under agreements to repurchase:
a. With depository institutions in the U.S. (related and nonrelated) (included in items
8 and 9.a. above):
(1) With original maturities of one day or under continuing contract
("overnight") . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5554 . . . . . . 0 M.2.a(1)
-----
(2) All other maturities ("term") . . . . . . . . . . . . . . . . . . . . . . . . . 5555 . . . . . . 0 M.2.a(2)
-----
b. With all other U.S. addressees (included in item 9.b above):
(1) With original maturities of one day or under continuing contract
("overnight") . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5556 . . . . . . 0 M.2.b(1)
-----
(2) All other maturities ("term") . . . . . . . . . . . . . . . . . . . . . . . . . 5557 . . . . . . 0 M.2.b(2)
-----
3. Amount included in item 9.b above for negotiable certificates of deposit
issued by the reporting foreign branch:

a. Held in custody by the reporting
foreign branch or by the managing U.S. branch or agency. . . . . . . . . . . . . . . 5558 . . . . . . 0 M.3.a.
-----
b. All other negotiable certificates of deposit . . . . . . . . . . . . . . . . . . . . 5559 . . . . . . 0 M.3.b.
-----
4. Amount included in item 9.b above for deposits that are guaranteed payable
in the U.S. or for which the depositor is guaranteed payment by a U.S.
office:
a. With original maturities of one day or under continuing contract
("overnight") . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5560 . . . . . . 0 M.4.a.
-----
b. All other maturities ("term") . . . . . . . . . . . . . . . . . . . . . . . . . . . 5561 . . . . . . 0 M.4.b.
-----

YES NO
--- --
Does this supplement include data
covering other related U.S. agencies or branches? . . . . . . . . . . . . . . . . . . . . . . . . 6862 X
</TABLE>

If yes, list the city and state of each other related U.S. agency and branch
included in the report:

- ----------------------------, --------------------------- (TEX1 9130, TEX1 9200)
City, State

- ----------------------------, --------------------------- (TEX2 9130, TEX2 9200)
City, State

- ----------------------------, --------------------------- (TEX3 9130, TEX3 9200)
City, State

- ----------------------------, --------------------------- (TEX4 9130, TEX4 9200)
City, State

<ARTICLE> 5
<MULTIPLIER> 1

<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 93,856
<SECURITIES> 9,795
<RECEIVABLES> 22,286
<ALLOWANCES> 649
<INVENTORY> 0
<CURRENT-ASSETS> 131,696
<PP&E> 11,110
<DEPRECIATION> 0
<TOTAL-ASSETS> 146,570
<CURRENT-LIABILITIES> 28,427
<BONDS> 0
0
0
<COMMON> 25
<OTHER-SE> 48,639
<TOTAL-LIABILITY-AND-EQUITY> 146,570
<SALES> 51,808
<TOTAL-REVENUES> 79,621
<CGS> 512
<TOTAL-COSTS> 15,975
<OTHER-EXPENSES> 49,914
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (6,256)
<INCOME-TAX> 5,492
<INCOME-CONTINUING> (11,748)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (11,748)
<EPS-PRIMARY> (0.48)
<EPS-DILUTED> (0.48)

</TABLE>