DRAFT ========================================================================= ======= BEVERLY ENTERPRISES, INC. ___% SENIOR NOTES DUE 2006

1
EXHIBIT 4.1

DRAFT
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▇▇▇▇▇▇▇ ENTERPRISES, INC.

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$150,000,000

___% SENIOR NOTES DUE 2006

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INDENTURE

DATED AS OF FEBRUARY ___, 1996

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CHEMICAL BANK

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AS TRUSTEE

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2
TABLE OF CONTENTS

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ARTICLE 1 DEFINITIONS AND INCORPORATION
BY REFERENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

SECTION 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2. Other Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 1.3. Incorporation By Reference of
TIA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 1.4. Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

ARTICLE 2 THE SECURITIES; OFFER TO PURCHASE
PROCEDURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

SECTION 2.1. Form and Dating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 2.2. Execution and Authentication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 2.3. Registrar and Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 2.4. Paying Agent to Hold Money in
Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 2.5. Holder Lists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 2.6. Transfer and Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 2.7. Replacement Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 2.8. Outstanding Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 2.9. Treasury Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 2.10. Temporary Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 2.11. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 2.12. Defaulted Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 2.13. Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 2.14. CUSIP Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 2.15. Offer to Purchase by Application
of Excess Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

ARTICLE 3 REDEMPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

SECTION 3.1. Right of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 3.2. Notices to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 3.3. Selection of Securities to be
Redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 3.4. Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 3.5. Effect of Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 3.6. Deposit of Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 3.7. Securities Redeemed in Part . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

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ARTICLE 4 COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

SECTION 4.1. Payment of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 4.2. Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 4.3. Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 4.4. Compliance Certificate; Notice of
Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 4.5. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 4.6. Stay, Extension and Usury Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 4.7. Limitations on Restricted
Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 4.8. Limitations on Dividend and
Other Payment Restrictions
Affecting Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 4.9. Limitations on Incurrence of In-
debtedness and Issuance of Pre-
ferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 4.10. Asset Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 4.11. Limitations on Transactions With
Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 4.12. Limitations on Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 4.13. Change of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 4.14. Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 4.15. Line of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

ARTICLE 5 SUCCESSORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

SECTION 5.1. Limitations on Mergers, ▇▇▇▇▇▇▇-
dations or Sales of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 5.2. Successor Corporation or Person
Substituted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

ARTICLE 6 DEFAULTS AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

SECTION 6.1. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 6.2. Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 6.3. Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 6.4. Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 6.5. Control by Majority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 6.6. Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 6.7. Rights of Holders to Receive
Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 6.8. Collection Suit by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 6.9. Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65

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SECTION 6.10. Priorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 6.11. Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66

ARTICLE 7 TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67

SECTION 7.1. Duties of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 7.2. Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 7.3. Individual Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 7.4. Trustee's Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 7.5. Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 7.6. Reports by Trustee to Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 7.7. Compensation and Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 7.8. Replacement of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 7.9. Successor Trustee or Agent by
Merger, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 7.10. Eligibility; Disqualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 7.11. Preferential Collection of
Claims Against Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75

ARTICLE 8 DISCHARGE OF INDENTURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75

SECTION 8.1. Defeasance and Discharge of This
Indenture and the Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 8.2. Legal Defeasance and Discharge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 8.3. Covenant Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 8.4. Conditions to Legal or Covenant
Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
SECTION 8.5. Deposited Cash and U.S. Government
Obligations to be Held in Trust;
Other Miscellaneous Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 8.6. Repayment to Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
SECTION 8.7. Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81

ARTICLE 9 AMENDMENT, SUPPLEMENT AND WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82

SECTION 9.1. Without Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
SECTION 9.2. With Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
SECTION 9.3. Compliance With TIA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
SECTION 9.4. Revocation and Effect of
Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
SECTION 9.5. Notation on or Exchange of
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
SECTION 9.6. Trustee to Sign Amendments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86

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ARTICLE 10 GUARANTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87

SECTION 10.1. Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
SECTION 10.2. Execution and Delivery of
Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
SECTION 10.3. Future Subsidiary Guarantors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
SECTION 10.4. Guarantor May Consolidate, Etc.
on Certain Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
SECTION 10.5. Release of Guarantors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
SECTION 10.6. Certain Bankruptcy Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93

ARTICLE 11 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94

SECTION 11.1. TIA Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
SECTION 11.2. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
SECTION 11.3. Communication by Holders With
Other Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
SECTION 11.4. Certificate and Opinion as to
Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
SECTION 11.5. Statements Required in Certificate
or Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
SECTION 11.6. Rules by Trustee and Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
SECTION 11.7. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
SECTION 11.8. No Personal Liability of Direc-
tors, Officers, Employees and
Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
SECTION 11.9. Duplicate Originals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
SECTION 11.10. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
SECTION 11.11. No Adverse Interpretation of Other
Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
SECTION 11.12. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
SECTION 11.13. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
SECTION 11.14. Counterpart Originals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
SECTION 11.15. Table of Contents, Headings,
Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98

EXHIBIT A Form of Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1

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6
CROSS-REFERENCE TABLE*

TRUST INDENTURE INDENTURE
ACT SECTION SECTION
--------------- ---------

310 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.8; 7.10
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
311 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
312 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.3
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.3
313 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6
(b)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6; 11.2
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6
314 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3; 11.2
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.4
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.4
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.5
(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
315 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1(ii)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.5; 11.2
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1(i)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1(iii)
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11
316 (a) (last sentence) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.9
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5
(a)(1)B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.7
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.13; 9.4
317 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.8
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.9
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4
318 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.1
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.1

N.A. means not applicable.

* THIS CROSS-REFERENCE TABLE IS NOT PART OF THE INDENTURE.

INDENTURE dated as of February __, 1996, among ▇▇▇▇▇▇▇
Enterprises, Inc., a Delaware corporation (the "Company"), the corporations
listed on the signature page hereto (the "Guarantors") and Chemical Bank, a New
York corporation, as trustee (the "Trustee").

Each party hereto agrees as follows for the benefit of each
other party and for the equal and ratable benefit of the Holders of the __%
Senior Notes due 2006 (the "Securities"):

ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE

SECTION 1.1. Definitions.

"Acquired Debt" means, with respect to any specified Person,
(i) Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.

"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 purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person,
whether through the ownership of voting securities, by agreement or otherwise;
provided that beneficial ownership of 10% or more of the voting securities of a
Person shall be deemed to be control.

"Agent" means any Registrar or Paying Agent.

"Asset Sale" means (i) the sale, lease, conveyance or other
disposition of any assets (including, without limitation, by way of a sale and
leaseback or by merger or consolidation) other than in the ordinary course of
business (provided that the sale, lease, conveyance or other disposition of all
or substantially all of the assets of the Company and its Subsidiaries taken as
a whole will be governed by Section 4.13 and/or Section 5.1 hereof and not by
Section 4.10 hereof), and (ii) the issuance or sale by the Company or any of
its Subsidiaries of Equity Interests of any of the Company's Subsidiaries, in
the case of either clause (i) or (ii), whether in a single transaction or a
series of related transactions (a) that have a fair market value in excess of
$10 million or (b) for net proceeds in excess of $10 million. Notwithstanding
the foregoing: (a) a transfer of assets by the Company to a Subsidiary or by a
Subsidiary to the Company or to another Subsidiary, (b) an issuance of Equity
Interests by a Subsidiary to the Company or to another Subsidiary, (c) a
Restricted Payment that is permitted by Section 4.7 hereof and (d) a Nursing
Facility Swap shall not be deemed to be an Asset Sale.

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

"▇▇▇▇▇▇▇ Funding" means ▇▇▇▇▇▇▇ Funding Corporation, a
Delaware corporation, and any successor thereto.

"▇▇▇▇▇▇▇ Indemnity" means ▇▇▇▇▇▇▇ Indemnity, Ltd., a Vermont
corporation, and any successor thereto.

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

"Business Day" means any day other than a Legal Holiday.

"Capital Lease" means, at the time any determination thereof
is to be made, any lease of property, real or personal, in respect of which the
present value of the minimum rental commitment would be capitalized on a
balance sheet of the lessee in accordance with GAAP.

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"Capital Lease Obligation" means, at the time any
determination thereof is to be made, the amount of the liability in respect of
a Capital Lease that would at such time be required to be capitalized on a
balance sheet in accordance with GAAP.

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

"cash" means such coin or currency of the United States of
America as at the time of payment shall be legal tender for the payment of
public and private debts.

"Cash Equivalents" means (i) United States dollars, (ii)
securities issued or directly and fully guaranteed or insured by the United
States government or any agency or instrumentality thereof having maturities of
not more than one year from the date of acquisition, (iii) certificates of
deposit with maturities of one year or less from the date of acquisition,
bankers' acceptances (or, with respect to foreign banks, similar instruments)
with maturities not exceeding one year and overnight bank deposits, in each
case with any domestic commercial bank organized under the laws of the United
States of America or any state thereof or the District of Columbia, or any
United States branch of a foreign bank having at the date of acquisition
thereof combined capital and surplus of not less than $100 million, (iv)
repurchase obligations with a term of not more than seven days for underlying
securities of the types described in clauses (ii) and (iii) above entered into
with any financial institution meeting the qualifications specified in clause
(iii) above, (v) commercial paper having the highest rating obtainable from
▇▇▇▇▇'▇ or S&P and in each case maturing within one year after the date of
acquisition, and (vi) investments in money market funds which invest
substantially all their assets in securities of

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the types described in the foregoing clauses (i) through (v).

"Change of Control" means the occurrence of any of the
following: (i) the sale, lease, transfer, conveyance or other disposition, in
one or a series of related transactions, of all or substantially all of the
assets of the Company and its Subsidiaries taken as a whole to any Person or
group (as such term is used in Sections 13(d)(3) and 14(d)(2) of the Exchange
Act), other than to a Person or group who, prior to such transaction, held a
majority of the voting power of the voting stock of the Company, (ii) the
acquisition by any Person or group, as defined above, of a direct or indirect
interest in more than 50% of the voting power of the voting stock of the
Company, by way of merger, consolidation or otherwise, or (iii) the first day
on which a majority of the members of the Board of Directors of the Company are
not Continuing Directors.

"Commission" means the Securities and Exchange Commission.

"Company" means ▇▇▇▇▇▇▇ Enterprises, Inc., as obligor under
the Securities, unless and until a successor replaces ▇▇▇▇▇▇▇ Enterprises,
Inc., in accordance with Article 5 hereof and thereafter includes such
successor.

"Consolidated Cash Flow" means, with respect to any Person for
any period, the Consolidated Net Income of such Person for such period, plus
(i) provision for taxes based on income or profits of such Person and its
Subsidiaries for such period, to the extent such provision for taxes was
included in computing such Consolidated Net Income, plus (ii) the Fixed Charges
of such Person and its Subsidiaries for such period, to the extent that such
Fixed Charges were deducted in computing such Consolidated Net Income, plus
(iii) depreciation and amortization (including amortization of goodwill and
other intangibles) of such Person and its Subsidiaries for such period to the
extent that such depreciation and amortization were deducted in computing such
Consolidated Net Income, plus (iv) other non-cash items of such Person and its
Subsidiaries for such period to the extent such non-cash items were deducted in
computing such Consolidated Net Income, in each case, on a consolidated basis
and determined

in accordance with GAAP. Notwithstanding the foregoing, the provision for
taxes on the income or profits of, the depreciation and amortization of, and
the other non-cash items of, a Subsidiary of the referent Person shall be added
to Consolidated Net Income to compute Consolidated Cash Flow only to the extent
(and in the same proportion) that the Net Income of such Subsidiary was
included in calculating the Consolidated Net Income of such Person and only if
a corresponding amount would be permitted at the date of determination to be
dividended to the Company by such Subsidiary without prior approval (that has
not been obtained), pursuant to the terms of its charter and all agreements,
instruments, judgments, decrees, orders, statutes, rules and governmental
regulations applicable to that Subsidiary or its stockholders.

"Consolidated Net Income" means, with respect to any Person
for any period, the aggregate of the Net Income of such Person and its
Subsidiaries for such period, on a consolidated basis; provided that, (i) the
Net Income, if positive, of any Person that is not a Subsidiary or that is
accounted for by the equity method of accounting shall be included only to the
extent of the amount of dividends or distributions paid in cash to the referent
Person or a Subsidiary thereof, (ii) the Net Income, if positive, of any
Subsidiary shall be excluded to the extent that the declaration or payment of
dividends or similar distributions by that Subsidiary of that Net Income is not
at the date of determination permitted without any prior governmental approval
(that has not been obtained) or, directly or indirectly, by operation of the
terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that Subsidiary or its
stockholders, (iii) the Net Income of any Person acquired in a pooling of
interests transaction for any period prior to the date of such acquisition
shall be excluded and (iv) the cumulative effect of a change in accounting
principles shall be excluded.

"Consolidated Net Worth" means, with respect to any Person as
of any date, the sum of (i) the consolidated equity of the common stockholders
of such Person and its consolidated Subsidiaries as of such date plus (ii) the
respective amounts reported on such Person's balance sheet as of such date with
respect to any series of preferred

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stock (other than Redeemable Stock), less all write-ups (other than write-ups
resulting from foreign currency translations and write-ups of tangible assets
of a going concern business made in accordance with GAAP as a result of the
acquisition of such business) subsequent to the date hereof in the book value
of any asset owned by such Person or a consolidated Subsidiary of such Person,
and excluding the cumulative effect of a change in accounting principles, all
as determined in accordance with GAAP.

"Continuing Directors" means, as of any date of determination,
any member of the Board of Directors of the Company who (i) was a member of
such Board of Directors on the date hereof or (ii) was nominated for election
or elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination or election.

"Corporate Trust Office of the Trustee" shall be at the
address of the Trustee specified in Section 11.2 hereof or such other address
as to which the Trustee may give notice to the Company.

"Credit Agreement" means that certain Credit Agreement, dated
as of November 1, 1994, by and among ▇▇▇▇▇▇▇ California Corporation, a
California corporation, the Company and ▇▇▇▇▇▇ Guaranty Trust Company of New
York and the other banks that are party thereto, providing for $225,000,000 in
aggregate principal amount of senior term debt and up to $150,000,000 in
aggregate principal amount of Senior Revolving Debt, including any related
notes, collateral documents, instruments and agreements executed in connection
therewith, and in each case as amended, modified, extended, renewed, refunded,
replaced or refinanced, in whole or in part, from time to time.

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

"Debt to Consolidated Cash Flow Ratio" means with respect to
any Person as of any date of determination (the "Debt Ratio Calculation Date"),
the ratio of (i) the aggregate amount of Indebtedness of such Person and its
Subsidiaries, on a consolidated basis, outstanding

as of the Debt Ratio Calculation Date to (ii) the Consolidated Cash Flow of
such Person for the Reference Period immediately preceding such Debt Ratio
Calculation Date. In the event that such Person or any of its Subsidiaries
incurs, assumes, guarantees, redeems or repays any Indebtedness (other than
revolving credit borrowings) or issues or redeems preferred stock subsequent to
the commencement of the Reference Period but prior to the Debt Ratio
Calculation Date, then the Debt to Consolidated Cash Flow Ratio shall be
calculated giving pro forma effect to such incurrence, assumption, guarantee,
redemption or repayment of Indebtedness, or such issuance or redemption of
preferred stock, as if the same had occurred at the beginning of the applicable
Reference Period. For purposes of making the computation referred to above,
(i) acquisitions that have been made by such Person or any of its Subsidiaries,
including through mergers or consolidations and including any related financing
transactions, during the Reference Period or subsequent to such Reference
Period and on or prior to the Debt Ratio Calculation Date shall be deemed to
have occurred on the first day of the Reference Period, (ii) the Consolidated
Cash Flow attributable to operations or businesses disposed of prior to the
Debt Ratio Calculation Date shall be excluded and (iii) in any Reference Period
commencing on or prior to November 1, 1995, the Exchange shall be deemed to
have occurred on the first day of such Reference Period.

"Default" means any event that is or with the passage of time
or the giving of notice or both would be an Event of Default.

"Equity Interests" means Capital Stock and all warrants,
options or other rights to acquire Capital Stock (but excluding any debt
security that is convertible into, or exchangeable for, Capital Stock).

"Exchange" means the exchange of the Company's $2.75
Cumulative Convertible Exchangeable Preferred Stock, $1 par value, for the
Company's 5 1/2% Convertible Subordinated Debentures due August 1, 2018,
consummated on November 1, 1995.

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

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"Excluded Guarantee Subsidiary" shall have the meaning
specified in Section 10.3.

"Existing Collateral" means property or assets of ▇▇▇▇▇▇▇ or
its Subsidiaries (other than ▇▇▇▇▇▇▇ Funding) that are, or since the Closing
Date have been, subject to one or more Permitted Liens.

"Existing Indebtedness" means Indebtedness of the Company and
its Subsidiaries in existence on the date hereof, until such amounts are
repaid.

"Fixed Charge Coverage Ratio" means, with respect to any
Person for any period, the ratio of the Consolidated Cash Flow of such Person
for such period to the Fixed Charges of such Person for such period. In the
event that such Person or any of its Subsidiaries incurs, assumes, guarantees,
redeems or repays any Indebtedness (other than revolving credit borrowings) or
issues or redeems preferred stock subsequent to the commencement of the period
for which the Fixed Charge Coverage Ratio is being calculated but prior to the
date on which the event for which the calculation of the Fixed Charge Coverage
Ratio is made (the "Calculation Date"), then the Fixed Charge Coverage Ratio
shall be calculated giving pro forma effect to such incurrence, assumption,
guarantee, redemption or repayment of Indebtedness, or such issuance or
redemption of preferred stock, as if the same had occurred at the beginning of
the applicable Reference Period. In addition, for purposes of making the
computation referred to above, (i) acquisitions that have been made by the
Company or any of its Subsidiaries, including through mergers or consolidations
and including any related financing transactions, during the Reference Period
or subsequent to such Reference Period and on or prior to the Calculation Date
shall be deemed to have occurred on the first day of the Reference Period, (ii)
the Consolidated Cash Flow and Fixed Charges attributable to operations or
businesses disposed of prior to the Calculation Date shall be excluded and
(iii) in any Reference Period commencing on or prior to November 1, 1995, the
Exchange shall be deemed to have occurred on the first day of such Reference
Period.

"Fixed Charges" means, with respect to any Person for any
period, the sum of (i) the consolidated interest expense of such Person and its
Subsidiaries for

such period, whether paid or accrued (including, without limitation,
amortization of original issue discount, non-cash interest payments, the
interest component of any deferred payment obligations, the interest component
of all payments associated with Capital Lease Obligations, commissions,
discounts and other fees and charges incurred in respect of letters of credit
or bankers' acceptance financings, and net payments (if any) pursuant to
Hedging Obligations) and (ii) the consolidated interest expense of such Person
and its Subsidiaries that was capitalized during such period, and (iii)
interest actually paid by such Person or any of its Subsidiaries under any
guarantee of Indebtedness or other obligation of any other Person and (iv) the
product of (a) all cash dividend payments (and non-cash dividend payments in
the case of a Person that is a Subsidiary) on any series of preferred stock of
such Person, times (b) a fraction, the numerator of which is one and the
denominator of which is one minus the then current combined federal, state and
local statutory tax rate of such Person, expressed as a decimal, in each case,
on a consolidated basis and in accordance with GAAP; provided, however, in the
event that any cash dividend payment is deductible for federal, state and/or
local tax purposes, the amount of the tax deduction relating to such cash
dividend payment for such period shall be subtracted from the Fixed Charges for
such Person for such period.

"Future Subsidiary Guarantor" shall have the meaning specified
in Section 10.3.

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

"guarantee" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, letters of
credit and reimbursement agreements in respect thereof), of all or any part of
any Indebtedness.

"Guarantors" means (i) the Subsidiaries designated as such on
the signature pages hereof, and their successors and assigns and (ii) Future
Subsidiary Guarantors that became Guarantors pursuant to the terms of this
Indenture, but excluding ▇▇▇▇▇▇▇ Funding and ▇▇▇▇▇▇▇ Indemnity, any Persons
whose guarantees have been released pursuant to the terms of this Indenture,
and any Excluded Guarantee Subsidiary.

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

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

"Indebtedness" means, with respect to any Person, (i) any
Redeemable Stock of such Person, (ii) any indebtedness of such Person, whether
or not contingent, in respect of borrowed money or evidenced by bonds, notes,
debentures or similar instruments or letters of credit (or reimbursement
agreements in respect thereof) or banker's acceptances or representing Capital
Lease Obligations or the balance deferred and unpaid of the purchase price of
any property or representing any Hedging Obligations, except any such balance
that constitutes an accrued expense or trade payable, if and to the extent any
of the foregoing indebtedness (other than letters of credit and Hedging
Obligations) would appear as a liability upon a balance sheet of such Person
prepared in accordance with GAAP, (iii) all indebtedness of any other Person
secured by a Lien on any asset of such Person (whether or not such indebtedness
is assumed by such Person), and (iv) to the extent not otherwise included, the
guarantee by such Person of any indebtedness of any other Person.

"Indenture" means this Indenture, as amended or supplemented
from time to time.

"Interest Payment Date" means the stated due date of an
installment of interest on the Securities.

"Investment" by any Person in any other Person means (without
duplication) (a) the acquisition (whether by purchase, merger, consolidation or
otherwise) by such Person (whether for cash, property, services, securities or
otherwise) of capital stock, bonds, notes, debentures, partnership or other
ownership interests or other securities, including any options or warrants, of
such other Person or any agreement to make any such acquisition; (b) the making
by such Person of any deposit with, or advance, loan or other extension of
credit to, such other Person (including the purchase of property from another
Person subject to an understanding or agreement, contingent or otherwise, to
resell such property to such other Person) or any commitment to make any such
advance, loan or extension (but excluding accounts receivable or deposits
arising in the ordinary course of business); (c) other than guarantees of
Indebtedness of the Company or any Subsidiary to the extent permitted by
Section 4.9 hereof, the entering into by such Person of any guarantee of, or
other credit support or contingent obligation with respect to, Indebtedness or
other liability of such other Person; provided, however, Investments shall not
be deemed to include extensions of trade credit by such Person or any of its
Subsidiaries on commercially reasonable terms in accordance with normal trade
practices of such Person or such Subsidiary, as the case may be.

"Legal Holiday" means a Saturday, a Sunday or a day on which
banking institutions in The City of New York or at a place of payment are
authorized or obligated by law, regulation or executive order to remain closed.

"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset given to secure Indebtedness, whether or not filed, recorded or otherwise
perfected under applicable law (including any conditional sale or other title
retention agreement, any lease in the nature thereof, any option or other
agreement to sell or give a security interest in and any filing of or agreement
to give any financing statement under the Uniform Commercial Code (or
equivalent statutes) of any jurisdiction with respect to any such lien, pledge,
charge or security interest).

"Maturity Date" means, when used with respect to any Security,
the date specified on such Security as

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the fixed date on which the final installment of principal of such Security is
due and payable (in the absence of any acceleration thereof pursuant to the
provisions of the Indenture regarding acceleration of Indebtedness or any
Change of Control Offer or Senior Asset Sale Offer).

"Moody's" means ▇▇▇▇▇'▇ Investors Services, Inc. and its
successors.

"Net Income" means, with respect to any Person, the net income
(loss) of such Person, determined in accordance with GAAP, and before any
reduction in respect of preferred stock dividends, excluding, however, the
effect of any extraordinary or other material non-recurring gain or loss
outside the ordinary course of business, together with any related provision
for taxes on such extraordinary or other material non-recurring gain or loss.

"Net Proceeds" means the aggregate cash or Cash Equivalent
proceeds received by the Company or any of its Subsidiaries in respect of any
Asset Sale, net of the direct costs relating to such Asset Sale (including,
without limitation, legal, accounting and investment banking fees and sales
commissions) and any other expenses incurred or to be incurred by the Company
or a Subsidiary as a direct result of the sale of such assets (including,
without limitation, severance, relocation, lease termination and other similar
expenses), taxes actually paid or payable as a result thereof, amounts required
to be applied to the repayment of Indebtedness (other than Subordinated
Indebtedness or Senior Revolving Debt) secured by a Lien on the asset or assets
that were the subject of such Asset Sale and any reserve for adjustment in
respect of the sale price of such asset or assets established in accordance
with GAAP.

"Non-Cash Consideration" means any non-cash or non-Cash
Equivalent consideration received by the Company or a Subsidiary of the Company
in connection with an Asset Sale and any non-cash or non-Cash Equivalent
consideration received by the Company or any of its Subsidiaries upon
disposition thereof.

"Non-Qualified Asset Sale" means an Asset Sale in which the
Non-Cash Consideration received by the Company or its Subsidiaries exceeds 25%
of the total consideration

received in connection with such Asset Sale calculated in accordance with
clause (x), but not clause (y), of the proviso to the first sentence in Section
4.10 hereof. The Spinoff Transaction shall be deemed not to constitute a
Non-Qualified Asset Sale.

"Nursing Facility" means a nursing facility, hospital,
outpatient clinic, assisted living center, hospice, long-term care facility or
other facility that is used or useful in the provision of healthcare services.

"Nursing Facility Swap" means an exchange of assets by the
Company or one or more Subsidiaries of the Company for one or more Nursing
Facilities and/or one or more Related Businesses or for the Capital Stock of
any Person owning one or more Nursing Facilities and/or one or more Related
Businesses.

"Obligations" means any principal, premium, interest,
penalties, fees, indemnifications, reimbursements, damages and other
liabilities payable under the documentation governing any Indebtedness.

"Officers" means the Chairman of the Board, the Chief
Executive Officer, the President, the Chief Operating Officer, the Chief
Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the
Secretary and any Vice President of the Company or any Subsidiary, as the case
may be.

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

"Opinion of Counsel" means an opinion from legal counsel who
is reasonably acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company, any Subsidiary or the Trustee.

"Payment Default" means any failure to pay any scheduled
installment of principal on any Indebtedness within the grace period provided
for such payment in the documentation governing such Indebtedness.

"PCA" means Pharmacy Corporation of America, a California
corporation, and its successors.

"Permitted Liens" means (i) Liens in favor of the Company;
(ii) Liens on property of a Person existing at the time such Person is merged
into or consolidated with the Company or any Subsidiary of the Company or
becomes a Subsidiary of the Company; provided that such Liens were in existence
prior to the contemplation of such merger, consolidation or acquisition and do
not extend to any assets other than those of the Person merged into or
consolidated with the Company or that becomes a Subsidiary of the Company;
(iii) Liens on property existing at the time of acquisition thereof by the
Company or any Subsidiary of the Company, provided that such Liens were in
existence prior to the contemplation of such acquisition; (iv) Liens to secure
the performance of statutory obligations, surety or appeal bonds, performance
bonds or other obligations of a like nature incurred in the ordinary course of
business; (v) Liens existing on the date hereof; (vi) Liens for taxes,
assessments or governmental charges or claims that are not yet delinquent or
that are being contested in good faith by appropriate proceedings promptly
instituted and diligently concluded; provided that any reserve or other
appropriate provision as shall be required in conformity with GAAP shall have
been made therefor; (vii) Liens to secure Permitted Refinancing Indebtedness
incurred to refinance Indebtedness that was secured by a Lien permitted
hereunder and that was incurred in accordance with the provisions hereof;
provided that such Liens do not extend to or cover any property or assets of
the Company or any of its Subsidiaries other than assets or property securing
the Indebtedness so refinanced or Substitute Mortgage Collateral therefor;
(viii) Liens on Substitute Mortgage Collateral; (ix) Purchase Money Liens; (x)
Liens on Medicare, Medicaid or other patient accounts receivable of the Company
or its Subsidiaries and any other Liens granted by a Receivables Subsidiary, in
each case in connection with a Receivables Financing; provided that the
aggregate principal or redemption amount of Receivables Financing outstanding
shall not exceed 50% of the net amount of the uncollected Medicare, Medicaid or
other patient accounts receivable then owing to the Company or its
Subsidiaries; (xi) Liens on real estate and related personal property with a
fair market value not in excess of 50% of the fair market value of any Existing
Collateral

which has become free and clear of all Liens securing Indebtedness since the
Closing Date; (xii) Liens of carriers, warehousemen, mechanics, suppliers,
materialmen, repairmen and other Liens imposed by law incurred in the ordinary
course of business; (xiii) easements, rights-of-way, zoning restrictions,
reservations, encroachments and other similar encumbrances in respect of real
property; (xiv) any interest or title of a lessor under any Capitalized Lease
Obligation; (xv) Liens upon specific items of inventory or equipment and
proceeds of the Company or any Subsidiary securing its obligations in respect
of bankers' acceptances issued or created for its account (whether or not under
the Credit Agreement) to facilitate the purchase, shipment, or storage of such
inventory and equipment; (xvi) Liens securing reimbursement obligations with
respect to letters of credit (whether or not issued under the Credit Agreement)
otherwise permitted hereunder and issued in connection with the purchase of
inventory or equipment by the Company or any Subsidiary in the ordinary course
of business; (xvii) Liens to secure (or encumbering deposits securing)
obligations arising from warranty or contractual service obligations of the
Company or any Subsidiary, including rights of offset and setoff; (xviii) Liens
securing Acquired Debt or acquisition Indebtedness otherwise permitted
hereunder; provided that (A) the Indebtedness secured shall not exceed the fair
market value of the assets so acquired (such fair market value to be determined
in good faith by the Board of Directors of the Company at the time of such
acquisition) and (B) such Indebtedness shall be incurred, and the Lien securing
such Indebtedness shall be created, within 12 months after such acquisition;
(xix) Liens securing Hedging Obligations agreements relating to Indebtedness
otherwise permitted under the Indenture; (xx) Liens securing stay and appeal
bonds or judgment Liens in connection with any judgment not giving rise to a
Default hereunder; (xxi) Liens on property or assets ("Substitute Liens") in
substitution for Liens released on the stock of PCA and its Subsidiaries;
provided that (A) the fair market value of such property or assets subject to
such Substitute Liens (as conclusively evidenced by a resolution of the Board
of Directors set forth in an Officers' Certificate delivered to the Trustee) is
substantially equivalent to or less than the fair market value of the stock of
PCA and its Subsidiaries, and (B) the Indebtedness secured by such Substitute
Liens is permitted by the terms hereof;

and (xxii) other Liens on assets of the Company or any of its Subsidiaries
securing Indebtedness that is permitted hereunder to be outstanding having an
aggregate principal amount at any one time outstanding not to exceed $5
million.

"Permitted Refinancing Indebtedness" means any Indebtedness of
the Company or any of its Subsidiaries issued in exchange for, or the net
proceeds of which are used solely to extend, refinance, renew, replace, defease
or refund, other Indebtedness of the Company or any of its Subsidiaries;
provided that: (i) the principal amount of such Permitted Refinancing
Indebtedness does not exceed the principal amount of the Indebtedness so
extended, refinanced, renewed, replaced, defeased or refunded (plus the amount
of any premiums paid and reasonable expenses incurred in connection therewith);
(ii) such Permitted Refinancing Indebtedness has a final maturity date later
than the final maturity date of, and has a Weighted Average Life to Maturity
equal to or greater than the Weighted Average Life to Maturity of, the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; (iii) if the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded is Subordinated Indebtedness, such Permitted
Refinancing Indebtedness has a final maturity date of, and is subordinated in
right of payment to, the Securities on terms at least as favorable to the
Holders of Securities as those contained in the documentation governing the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; and (iv) if the obligor on the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded is a Subsidiary that is not
a Guarantor, such Permitted Refinancing Indebtedness shall only be incurred by
such Subsidiary.

"Person" means an individual, corporation, partnership,
limited liability company, joint venture, association, joint-stock company,
trust or unincorporated organization (including any subdivision or ongoing
business of any such entity or substantially all of the assets of any such
entity, subdivision or business).

"Purchase Money Indebtedness" means any Indebtedness of a
Person to any seller or other Person incurred to finance the acquisition or
construction (including in the case of a Capital Lease Obligation, the lease)
of any

asset or property which is incurred within 180 days of such acquisition or
completion of construction and is secured only by the assets so financed.

"Purchase Money Lien" means a Lien granted on an asset or
property to secure Purchase Money Indebtedness permitted to be incurred under
the Indenture and incurred solely to finance the acquisition or construction of
such asset or property; provided, however, that such Lien encumbers only such
asset or property and is granted within 180 days of such acquisition or
completion of construction.

"Qualified Equity Interests" shall mean all Equity Interests
of the Company other than Redeemable Stock of the Company.

"Receivables Financing" means the sale or other disposition of
Medicare, Medicaid or other patient accounts receivable of the Company or any
of its Subsidiaries to a Receivables Subsidiary followed by a financing
transaction in connection with such sale or disposition of such accounts
receivable.

"Receivables Subsidiary" means a Subsidiary of the Company
exclusively engaged in Receivables Financing and activities reasonably related
thereto.

"Record Date" means a Record Date specified in the Securities
whether or not such Record Date is a Business Day.

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

"Redemption Date," when used with respect to any Security to
be redeemed, means the date fixed for such redemption pursuant to Article 3 of
this Indenture and Paragraph 5 in the form of Security.

24
"Redemption Price," when used with respect to any Security to
be redeemed, means the redemption price for such redemption pursuant to
Paragraph 5 in the form of Security, which shall include, without duplication,
in each case, accrued and unpaid interest to the Redemption Date (subject to
the provisions of Section 3.5).

"Reference Period," with regard to any Person means the four
full fiscal quarters (or such lesser period during which such Person has been
in existence) for which internal financial statements are available ended
immediately preceding any date upon which any determination is to be made
pursuant to the terms of the Securities or this Indenture.

"Related Business" means the business conducted by the Company
and its Subsidiaries as of the date of the Indenture and any and all healthcare
service businesses that in the good faith judgment of the Board of Directors of
the Company are materially related businesses. Without limiting the generality
of the foregoing, Related Business shall include the operation of long-term and
specialty healthcare services, skilled nursing care, subacute care,
rehabilitation programs, pharmaceutical services, geriatric care and home
healthcare.

"Responsible Officer," when used with respect to the Trustee,
means any officer within the corporate trust department of the Trustee (or any
successor group of the Trustee) with direct responsibility for the
administration of this Indenture and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of his knowledge of and familiarity with the particular subject.

"Restricted Investment" means, in one or a series of related
transactions, any Investment, other than (i) Investments in Cash Equivalents,
(ii) Investments in a Subsidiary, (iii) Investments in any Person that as a
consequence of such Investment becomes a Subsidiary, (iv) Investments existing
on the date of the Indenture, (v) accounts receivable, advances, loans,
extensions of credit created or acquired in the ordinary course of business,
(vi) Investments made as a result of the receipt of Non-Cash Consideration from
an Asset Sale that was made pursuant to and in compliance with Section 4.10
hereof including, without limitation, as a result of

the Spinoff Transaction, (vii) Investments made as the result of the guarantee
by the Company or any of its Subsidiaries of Indebtedness of a Person or
Persons other than the Company or any Subsidiary of the Company that is secured
by Liens on assets sold or otherwise disposed of by the Company or such
Subsidiary to such Person or Persons; provided that such Indebtedness was in
existence prior to the contemplation of such sale or other disposition and that
the terms of such guarantee permit the Company or such Subsidiary to foreclose
on the pledged or mortgaged assets if the Company or such Subsidiary are
required to perform under such guarantee, and (viii) Investments in any Related
Business; provided, however, that a merger of another Person with or into the
Company or a Guarantor shall not be deemed to be a Restricted Investment so
long as the surviving entity is the Company or a direct wholly owned Guarantor.

"S&P" means Standard & Poor's, a division of The McGraw Hill
Companies, and its successors.

"Securities" means the securities described above, issued
under this Indenture.

"Securities Act" means the Securities Act of 1933, as amended.

"Senior Revolving Debt" means revolving credit loans and
letters of credit outstanding from time to time under the Credit Agreement.

"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date hereof.

"Spinoff Transaction" means a pro rata distribution by the
Company to its stockholders of all or a portion of the shares of PCA or a sale
or other disposition to a Person or Persons other than the Company or a
Subsidiary of the Company of all or a portion of the shares of PCA or all or
substantially all of the assets of PCA.

"Stockholders' Equity" means, with respect to any Person as of
any date, the stockholders' equity of

26
such Person determined in accordance with GAAP as of the date of the most
recent available internal financial statements of such Person, and calculated
on a pro forma basis to give effect to any acquisition or disposition by such
Person consummated or to be consummated since the date of such financial
statements and on or prior to the date of such calculation.

"Subordinated Indebtedness" means Indebtedness of the Company
or a Guarantor that is subordinated in right of payment to the Securities or
such Subsidiary's Guarantee of the Securities, as applicable.

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

"Substitute Mortgage Collateral" means real estate and related
personal property on which Liens are created in substitution for the release of
Liens on other real estate and related personal property ("Initial Liens");
provided, that (i) such Initial Liens were permitted hereunder, (ii) the fair
market value of the Substitute Mortgage Collateral (as conclusively evidenced
by an Officers' Certificate delivered to the Trustee within 60 days prior to
the date of such substitution of collateral) is substantially equivalent to or
less than the fair market value of the property subject to the released Initial
Liens and (iii) the Indebtedness secured by the Liens on Substitute Mortgage
Collateral is permitted hereunder.

"TIA" means the Trust Indenture Act of 1939, as amended (15
U.S.C. Section 77aaa-77bbbb) as in effect on the date on which this Indenture
is qualified under the TIA, except as provided in Section 9.3 hereof;
provided,

however, that, in the event the Trust Indenture Act of 1939 is amended after
such date, "TIA" means, to the extent required by any such amendment, the Trust
Indenture Act of 1939, as so amended.

"Transfer Restriction" means, with respect to the Company's
Subsidiaries, any encumbrance or restriction on the ability of any Subsidiary
to (i)(a) pay dividends or make any other distributions to the Company or any
of its Subsidiaries (1) on its Capital Stock or (2) with respect to any other
interest or participation in, or measured by, its profits, or (b) pay any
Indebtedness owed to the Company or any of its Subsidiaries, (ii) make loans or
advances to the Company or any of its Subsidiaries, or (iii) transfer any of
its properties or assets to the Company or any of its Subsidiaries.

"Trustee" means the party named as such above until a
successor replaces it in accordance with the applicable provisions of this
Indenture and thereafter means the successor serving hereunder.

"U.S. Government Obligations" means direct noncallable
obligations of, or noncallable obligations guaranteed by, the United States of
America for the payment of which obligation or guarantee the full faith and
credit of the United States of America is pledged.

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

"Wholly Owned Subsidiary" of any Person means a Subsidiary of
such Person all of the outstanding Capital Stock or other ownership interests
of which (other than directors' qualifying shares) shall at the time be owned
by such Person or by one or more Wholly Owned Subsidiaries of such Person or by
such Person and one or more Wholly Owned Subsidiaries of such Person.

28
SECTION 1.2. Other Definitions.

DEFINED IN
TERM SECTION
---- -----------

"Affiliate Transaction" . . . . . . . . . . . . . . . . . . 4.11
"Change of Control Offer" . . . . . . . . . . . . . . . . . 4.13
"Change of Control Payment" . . . . . . . . . . . . . . . . 4.13
"Change of Control Payment Date" . . . . . . . . . . . . . . 4.13
"Commencement Date" . . . . . . . . . . . . . . . . . . . . 2.15
"Covenant Defeasance" . . . . . . . . . . . . . . . . . . . 8.3
"Event of Default" . . . . . . . . . . . . . . . . . . . . . 6.1
"Excess Proceeds" . . . . . . . . . . . . . . . . . . . . . 4.10
"Guarantee" . . . . . . . . . . . . . . . . . . . . . . . . 10.1
"incur" . . . . . . . . . . . . . . . . . . . . . . . . . . 4.9
"Legal Defeasance" . . . . . . . . . . . . . . . . . . . . . 8.2
"Notice of Default" . . . . . . . . . . . . . . . . . . . . 6.1
"Offer Amount" . . . . . . . . . . . . . . . . . . . . . . . 2.15
"Offer Period" . . . . . . . . . . . . . . . . . . . . . . . 2.15
"Paying Agent" . . . . . . . . . . . . . . . . . . . . . . . 2.3
"Purchase Date" . . . . . . . . . . . . . . . . . . . . . . 2.15
"Purchase Price" . . . . . . . . . . . . . . . . . . . . . . 4.10
"Registrar" . . . . . . . . . . . . . . . . . . . . . . . . 2.3
"Restricted Payments" . . . . . . . . . . . . . . . . . . . 4.7
"Senior Asset Sale Offer" . . . . . . . . . . . . . . . . . 4.10

SECTION 1.3. Incorporation By Reference of TIA.

Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.

The following TIA terms used in this Indenture have the
following meanings:

"Indenture Securities" means the Securities;

"Indenture Security Holder" means a Holder;

"Indenture to be Qualified" means this Indenture;

"Indenture Trustee" or "Institutional Trustee" means the
Trustee;

"Obligor" on the Securities means the Company, any Guarantor
and any successor obligor upon the Securities.

All other terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by the Commission
rule under the TIA have the meanings so assigned to them.

SECTION 1.4. Rules of Construction.

Unless the context otherwise requires:

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

(2) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;

(3) "or" is not exclusive;

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

(5) provisions apply to successive events and
transactions;

(6) "herein," "hereof," "hereunder" and other words of
similar import refer to this Indenture as a whole (as
amended or supplemented from time to time) and not to
any particular Article, Section or other subdivision;
and

(7) references to sections of or rules under the
Securities Act or the Exchange Act shall be deemed to
include substitute, replacement and successor
sections or rules adopted by the Commission from time
to time.

ARTICLE 2
THE SECURITIES; OFFER TO PURCHASE PROCEDURES

SECTION 2.1. Form and Dating.

The Securities and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A hereto, the terms of which are
incorporated in and made a part of this Indenture. The Securities may have
notations, legends or endorsements approved as to form by the Company and
required by law, stock exchange rule, agreements to which the Company is
subject or usage. The terms and provisions contained in the Securities shall
constitute, and are hereby expressly made, a part of this Indenture and to the
extent applicable, the Company, the Guarantors and the Trustee, by their
execution and delivery of this Indenture, expressly agree to such terms and
provisions and to be bound thereby. Each Security shall be dated the date of
its authentication. The Securities shall be issuable only in registered form,
without coupons, in denominations of $1,000 and integral multiples thereof.

SECTION 2.2. Execution and Authentication.

Two Officers of the Company shall sign the Securities for the
Company by manual or facsimile signature. The Company's seal shall be
reproduced on the Securities and may be in facsimile form.

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

A Security shall not be valid until authenticated by the
manual signature of the Trustee. The signature of the Trustee shall be
conclusive evidence that the Security has been authenticated under this
Indenture. The form of Trustee's certificate of authentication to be borne by
the Securities shall be substantially as set forth in Exhibit A hereto.

The Trustee shall, upon a written order of the Company signed
by two Officers of the Company, from time to time, authenticate Securities for
original issue up to the aggregate principal amount stated in paragraph 4 of
the Securities. The aggregate principal amount of Securities outstanding at
any time shall not exceed the amount set forth herein except as provided in
Section 2.8 hereof.

31
The Trustee may appoint an authenticating agent acceptable to
the Company to authenticate Securities. Unless limited by the terms of such
appointment, an authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with the Company or an Affiliate of the
Company.

SECTION 2.3. Registrar and Paying Agent.

The Company shall maintain (i) an office or agency where
Securities may be presented for registration of transfer or for exchange
(including any co-registrar, the "Registrar") and (ii) an office or agency
where Securities may be presented for payment (the "Paying Agent"). The
Registrar shall keep a register of the Securities and of their transfer and
exchange. The Company may, from time to time, appoint one or more
co-registrars and one or more additional paying agents. The term "Paying
Agent" includes any additional paying agent. The Company may change any Paying
Agent or Registrar without prior notice to any Holder. The Company shall
notify the Trustee and the Trustee shall notify the Holders of the name and
address of any Agent not a party to this Indenture. If the Company fails to
appoint or maintain another entity as Registrar or Paying Agent, the Trustee
shall act as such. The Company or any of its Subsidiaries may act as Paying
Agent or Registrar. The Company shall enter into an appropriate agency
agreement with any Agent not a party to this Indenture, which shall incorporate
the provisions of the TIA. The agreement shall implement the provisions of
this Indenture that relate to such Agent. The Company shall notify the Trustee
of the name and address of any such Agent. If the Company fails to maintain a
Registrar or Paying Agent, or fails to give the foregoing notice, the Trustee
shall act as such, and shall be entitled to appropriate compensation in
accordance with Section 7.7 hereof.

The Company initially appoints the Trustee as Registrar,
Paying Agent and agent for service of notices and demands in connection with
the Securities.

SECTION 2.4. Paying Agent to Hold Money in Trust.

32
On or prior to the due date of principal of, premium, if any,
and interest on any Securities, the Company shall deposit with the Trustee or
the Paying Agent money sufficient to pay such principal, premium, if any, and
interest becoming due. The Company shall require each Paying Agent other than
the Trustee to agree in writing that the Paying Agent shall hold in trust for
the benefit of the Holders or the Trustee all money held by the Paying Agent
for the payment of principal of, premium, if any, and interest on the
Securities, and shall notify the Trustee of any Default by the Company in
making any such payment. While any such Default continues, the Trustee may
require a Paying Agent to pay all money held by it to the Trustee. The Company
at any time may require a Paying Agent to pay all money held by it to the
Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the
Company) shall have no further liability for the money delivered to the
Trustee. If the Company acts as Paying Agent, it shall segregate and hold in a
separate trust fund for the benefit of the Holders all money held by it as
Paying Agent.

SECTION 2.5. Holder Lists.

The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of all Holders and shall otherwise comply with TIA Section 312(a).
If the Trustee is not the Registrar, the Company shall furnish to the Trustee
at least seven Business Days before each Interest Payment Date and at such
other times as the Trustee may request in writing a list in such form and as of
such date as the Trustee may reasonably require of the names and addresses of
Holders, including the aggregate principal amount of the Securities held by
each thereof, and the Company shall otherwise comply with TIA Section 312(a).

SECTION 2.6. Transfer and Exchange.

When Securities are presented to the Registrar with a request
to register the transfer or to exchange them for an equal principal amount of
Securities of other denominations, the Registrar shall register the transfer or
make the exchange if its requirements for such transactions are met; provided,
however, that any Security presented or surrendered for registration of
transfer or

exchange shall be duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar and the Trustee duly executed by
the Holder thereof or by his attorney duly authorized in writing. To permit
registrations of transfer and exchanges, the Company shall issue and the
Trustee shall authenticate Securities at the Registrar's request.

Neither the Company nor the Registrar shall be required to (i)
issue, register the transfer of, or exchange Securities during a period
beginning at the opening of business 15 days before the day of any selection of
Securities for redemption under Section 3.2 hereof and ending at the close of
business on the day of selection, (ii) register the transfer of, or exchange
any Security so selected for redemption in whole or in part, except the
unredeemed portion of any Security being redeemed in part, or (iii) register
the transfer or exchange of a Security between the record date and the next
succeeding Interest Payment Date.

No service charge shall be made to any Holder for any
registration of transfer or exchange (except as otherwise expressly permitted
herein), but the Company may require payment of a sum sufficient to cover any
transfer tax or similar governmental charge payable in connection therewith
(other than such transfer tax or similar governmental charge payable upon
exchanges pursuant to Sections 2.10 or 9.5 hereof, which shall be paid by the
Company).

Prior to due presentment for registration of a transfer of
any Security, the Trustee, any Agent, the Company and any agent of the
foregoing may deem and treat the Person in whose name any Security is
registered as the absolute owner of such Security for the purpose of receiving
payment of principal of, premium, if any, and interest on such Security and for
all other purposes whatsoever, whether or not such Security is overdue
(provided, that defaulted interest shall be paid as set forth in Section 2.12
hereof), and neither the Trustee, any Agent nor the Company shall be affected
by notice to the contrary.

SECTION 2.7. Replacement Securities.

If any mutilated Security is surrendered to the Trustee or the
Company, or the Trustee receives evidence to its satisfaction of the
destruction, loss or theft of any Security, the Company shall, upon written
request of the Holder thereof, issue and the Trustee, upon the written order of
the Company signed by two Officers of the Company, shall authenticate a
replacement Security if the Trustee's requirements for replacements of
Securities are met. If required by the Trustee or the Company, an indemnity
bond must be supplied by the Holder that is sufficient in the judgment of the
Trustee and the Company to protect the Company, the Trustee, any Agent and any
authenticating agent from any loss which any of them may suffer if a Security
is replaced. Each of the Company and the Trustee may charge for its expenses
in replacing a Security.

Every replacement Security is an additional obligation of the
Company and shall be entitled to all of the benefits of this Indenture equally
and proportionally with all other Securities duly issued hereunder.

SECTION 2.8. Outstanding Securities.

The Securities outstanding at any time are all the Securities
authenticated by the Trustee except for those cancelled by it (or its agent),
those delivered to it for cancellation and those described in this Section as
not outstanding.

If a Security is replaced pursuant to Section 2.7 hereof, it
ceases to be outstanding unless the Trustee receives proof satisfactory to it
that the replaced Security is held by a bona fide purchaser (as such term is
defined in Section 8-302 of the Uniform Commercial Code as in effect in the
State of New York).

If the principal amount of any Security is considered paid
under Section 4.1 hereof, it ceases to be outstanding and interest on it ceases
to accrue.

Subject to Section 2.9 hereof, a Security does not cease to be
outstanding because the Company or an Affiliate of the Company holds the
Security.

SECTION 2.9. Treasury Securities.

35
In determining whether the Holders of the required principal
amount of Securities then outstanding have concurred in any demand, direction,
waiver or consent, Securities owned by the Company or any Affiliate of the
Company shall be considered as though not outstanding, except that for purposes
of determining whether the Trustee shall be protected in relying on any such
demand, direction, waiver or consent, only Securities that a Responsible
Officer actually knows to be so owned shall be so considered. Notwithstanding
the foregoing, Securities that are to be acquired by the Company or an
Affiliate of the Company pursuant to an exchange offer, tender offer or other
agreement shall not be deemed to be owned by the Company or an Affiliate of the
Company until legal title to such Securities passes to the Company or such
Affiliate, as the case may be.

SECTION 2.10. Temporary Securities.

Until definitive Securities are ready for delivery, the
Company may prepare and the Trustee, upon receipt of the written order of the
Company signed by two Officers of the Company, shall authenticate temporary
Securities. Temporary Securities shall be substantially in the form of
definitive Securities but may have variations that the Company and the Trustee
consider appropriate for temporary Securities. Without unreasonable delay, the
Company shall prepare and the Trustee, upon receipt of the written order of the
Company signed by two Officers of the Company, shall authenticate definitive
securities in exchange for temporary Securities. Until such exchange, Holders
of temporary Securities shall be entitled to all of the rights, benefits and
privileges of this Indenture.

SECTION 2.11. Cancellation.

The Company at any time may deliver Securities to the Trustee
(or its agent) for cancellation. The Registrar and Paying Agent shall forward
to the Trustee any Securities surrendered to them for registration of transfer,
exchange or payment. The Trustee (or its agent) shall cancel all Securities
surrendered for registration of transfer, exchange, payment, replacement or
cancellation and shall destroy such cancelled Securities unless the Company
otherwise directs. The Company may not issue new Securities to replace
Securities that it

has paid or that have been delivered to the Trustee (or its agent) for
cancellation.

SECTION 2.12. Defaulted Interest.

If the Company defaults in a payment of interest on the
Securities, it shall pay the defaulted interest in any lawful manner plus, to
the extent lawful, interest payable on the defaulted interest, to the Persons
who are Holders on a subsequent special record date, which date shall be at the
earliest practicable date but in all events at least five Business Days prior
to the related payment date, in each case at the rate provided in the
Securities and in Section 4.1 hereof. The Company shall, with the consent of
the Trustee, fix or cause to be fixed each such special record date and payment
date. At least 15 days before the special record date, the Company (or, upon
written request of the Company, the Trustee, in the name of and at the expense
of the Company) shall mail to Holders a notice that states the special record
date, the related payment date and the amount of such interest to be paid.

SECTION 2.13. Record Date.

The record date for purposes of determining the identity of
Holders entitled to vote or consent to any action by vote or consent authorized
or permitted under this Indenture shall be determined as provided for in TIA
Section 316(c).

SECTION 2.14. CUSIP Number.

The Company in issuing the Securities may use a "CUSIP"
number, and if it does so, the Trustee shall use the CUSIP number in notices to
Holders; provided that any such notice may state that no representation is made
as to the correctness or accuracy of the CUSIP number printed in the notice or
on the Securities and that reliance may be placed only on the other
identification numbers printed on the Securities. The Company shall promptly
notify the Trustee of any change in the CUSIP number.

SECTION 2.15. Offer to Purchase by Application of Excess
Proceeds.

37
In the event that the Company shall commence a Senior Asset
Sale Offer pursuant to Section 4.10 hereof, it shall follow the procedures
specified below.

No later than 10 days following the date on which the
aggregate amount of Excess Proceeds exceeds $25 million, the Company shall
notify the Trustee of such Senior Asset Sale Offer and provide the Trustee with
an Officers' Certificate setting forth, in addition to the information to be
included therein pursuant to Section 4.10 hereof, the calculations used in
determining the amount of Net Proceeds to be applied to the purchase of
Securities. The Company shall commence or cause to be commenced such Senior
Asset Sale Offer on a date no later than 20 days after such notice (the
"Commencement Date").

The Senior Asset Sale Offer shall remain open for at least 20
Business Days after the Commencement Date relating to such Senior Asset Sale
Offer and shall remain open for no more than such 20 Business Days, except to
the extent required by applicable law (as so extended, the "Offer Period"). No
later than three Business Days after the termination of the Offer Period (the
"Purchase Date"), the Company shall purchase the principal amount (the "Offer
Amount") of Securities required to be purchased in such Senior Asset Sale Offer
pursuant to Section 4.10 hereof or, if less than the Offer Amount has been
tendered, all Securities tendered in response to the Senior Asset Sale Offer,
in each case for an amount in cash equal to the Purchase Price.

If the Purchase Date is on or after an interest payment record
date and on or before the related interest payment date, any accrued interest
shall be paid to the Person in whose name a Security is registered at the close
of business on such record date, and no additional interest shall be payable to
Holders who tender Securities pursuant to the Senior Asset Sale Offer.

On the Commencement Date of any Senior Asset Sale Offer, the
Company shall send or shall cause to be sent by first class mail, a notice to
each of the Holders at their last registered address, with a copy to the
Trustee and the Paying Agent, offering to repurchase the Securities held by
such Holder pursuant to the procedure specified in such notice. Such notice,
which shall govern the terms of the Senior Asset Sale Offer, shall

38
contain all instructions and materials necessary to enable the Holders to
tender Securities pursuant to the Senior Asset Sale Offer and shall state:

(1) that the Senior Asset Sale Offer is being made
pursuant to this Section 2.15 and Section 4.10 hereof
and the length of time the Senior Asset Sale Offer
shall remain open;

(2) the Offer Amount, the Purchase Price and the Purchase
Date;

(3) that any Security not tendered or accepted for
payment shall continue to accrue interest;

(4) that, unless the Company defaults in the payment of
the Purchase Price, any Security accepted for payment
pursuant to the Senior Asset Sale Offer shall cease
to accrue interest after the Purchase Date;

(5) that Holders electing to have a Security purchased
pursuant to any Senior Asset Sale Offer shall be
required to surrender the Security, with the form
entitled "Option of Holder to Elect Purchase" on the
reverse of the Security completed, to the Company, a
depositary, if appointed by the Company, or a Paying
Agent at the address specified in the notice prior to
the close of business on the Business Day next
preceding the Purchase Date;

(6) that Holders shall be entitled to withdraw their
election if the Company, depositary or Paying Agent,
as the case may be, receives, not later than the
close of business on the Business Day next preceding
the termination of the Offer Period, a facsimile
transmission or letter setting forth the name of the
Holder, the principal amount of the Security the
Holder delivered for purchase and a statement that
such Holder is withdrawing his election to have such
Security purchased;

39
(7) that, if the aggregate principal amount of Securities
surrendered by Holders exceeds the Offer Amount, the
Trustee shall select the Securities to be purchased
on a pro rata basis (with such adjustments as may be
deemed appropriate by the Trustee so that only
Securities in denominations of $1,000, or integral
multiples thereof, shall be purchased);

(8) that Holders whose Securities were purchased only in
part shall be issued new Securities equal in
principal amount to the unpurchased portion of the
Securities surrendered; and

(9) the circumstances and relevant facts regarding such
Asset Sale and any other information that would be
material to a decision as to whether to tender a
Security pursuant to the Senior Asset Sale Offer.

On the Purchase Date, the Company shall, to the extent lawful,
(i) accept for payment, on a pro rata basis to the extent necessary, an
aggregate principal amount equal to the Offer Amount of Securities and other
Indebtedness ranking on a parity with the Securities whose provisions require
the Company to make an offer to purchase or redeem such Indebtedness with
proceeds from any asset sales tendered pursuant to the Senior Asset Sale Offer,
or if less than the Offer Amount has been tendered, all Securities and other
Indebtedness or portions thereof so tendered, (ii) deposit with the Paying
Agent an amount equal to the Purchase Price in respect of all Securities and
other Indebtedness or portions thereof so tendered and (iii) deliver or cause
to be delivered to the Trustee the Securities and other Indebtedness so
accepted together with an Officers' Certificate stating the aggregate principal
amount of Securities and other Indebtedness or portions thereof being purchased
by the Company. The Paying Agent shall promptly mail to each Holder of
Securities so tendered payment in an amount equal to the Purchase Price for
such Securities and the Trustee shall promptly authenticate and mail (or cause
to be transferred by book entry) a new Security to such Holder equal in
principal amount to any unpurchased portion of the Securities surrendered, if
any;

40
provided that each such new Security shall be in a principal amount of $1,000
or an integral multiple thereof. The Company shall publicly announce the
results of the Senior Asset Sale Offer on or as soon as practicable after the
Purchase Date.

The Company shall comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent such laws and regulations are applicable in connection with the
purchase of Securities and other Indebtedness as a result of the Senior Asset
Sale Offer.

ARTICLE 3
REDEMPTION

SECTION 3.1. Right of Redemption.

Redemption of Securities, as permitted by any provision of
this Indenture, shall be made in accordance with such provision and this
Article 3. The Company will not have the right to redeem any Securities prior
to _______ __, 2001. On or after ______ __, 2001, the Company will have the
right to redeem all or any part of the Securities at the Redemption Prices
specified in the form of Security attached as Exhibit A set forth therein under
the caption "Optional Redemption," in each case (subject to the right of
Holders of record on a Record Date to receive interest due on an Interest
Payment Date that is on or prior to such Redemption Date, and subject to the
provisions set forth in Section 3.5 hereof) including accrued and unpaid
interest to the Redemption Date.

SECTION 3.2. Notices to Trustee.

If the Company elects to redeem Securities pursuant to Paragraph 5 of
the Securities, it shall notify the Trustee in writing of the Redemption Date
and the principal amount of Securities to be redeemed and whether it wants the
Trustee to give notice of redemption to the Holders.

If the Company elects to reduce the principal amount of
Securities to be redeemed pursuant to Paragraph 5 of the Securities by
crediting against any such redemption

41
Securities it has not previously delivered to the Trustee for cancellation, it
shall so notify the Trustee of the amount of the reduction and deliver such
Securities with such notice.

The Company shall give each notice to the Trustee provided for
in this Section 3.2 at least 45 days before the Redemption Date (unless a
shorter notice period shall be satisfactory to the Trustee). Any such notice
may be cancelled at any time prior to notice of such redemption being mailed to
any Holder and shall thereby be void and of no effect.

SECTION 3.3. Selection of Securities to be Redeemed.

If less than all of the Securities are to be redeemed pursuant
to Paragraph 5 thereof, the Trustee shall select the Securities to be redeemed
on a pro rata basis, by lot, by a method that complies with the requirements of
any exchange on which the Securities are listed or by such other method as the
Trustee shall determine to be fair and appropriate.

The Trustee shall make the selection from the Securities
outstanding and not previously called for redemption and shall promptly notify
the Company in writing of the Securities selected for redemption and, in the
case of any Security selected for partial redemption, the principal amount
thereof to be redeemed. Securities in denominations of $1,000 may be redeemed
only in whole. The Trustee may select for redemption portions (equal to $1,000
or any integral multiple thereof) of the principal of Securities that have
denominations larger than $1,000. Provisions of this Indenture that apply to
Securities called for redemption also apply to portions of Securities called
for redemption.

SECTION 3.4. Notice of Redemption.

At least 30 days but not more than 60 days before a
Redemption Date, the Company shall mail or cause to be mailed a notice of
redemption by first class mail, postage prepaid, to the Trustee and each Holder
whose Securities are to be redeemed to such Holder's last address as then shown
on the registry books of the Registrar. At the Company's request, the Trustee
shall give

42
the notice of redemption in the Company's name and at the Company's expense.
Each notice for redemption shall identify the Securities to be redeemed and
shall state:

(1) the Redemption Date;

(2) the Redemption Price, including the
amount of accrued and unpaid interest to be paid upon such redemption;

(3) the name, address and telephone number
of the Paying Agent;

(4) that Securities called for redemption
must be surrendered to the Paying Agent at the address specified in
such notice to collect the Redemption Price;

(5) that, unless the Company defaults in its
obligation to deposit cash or U.S. Government Obligations which
through the scheduled payment of principal and interest in respect
thereof in accordance with their terms will provide, not later than
one day before the due date of any payment, cash in an amount to fund
the Redemption Price with the Paying Agent in accordance with Section
3.6 hereof or such redemption payment is otherwise prohibited,
interest on Securities called for redemption ceases to accrue on and
after the Redemption Date and the only remaining right of the Holders
of such Securities is to receive payment of the Redemption Price,
including accrued and unpaid interest to the Redemption Date, upon
surrender to the Paying Agent of the Securities called for redemption
and to be redeemed;

(6) if any Security is being redeemed in
part, the portion of the principal amount equal to the unredeemed
portion thereof, of such Security to be redeemed and that, on or after
the Redemption Date, and upon surrender of such Security, a new
Security or Securities in aggregate principal amount equal to the
unredeemed portion thereof will be issued upon cancellation of the
original Security;

43
(7) if less than all the Securities are to
be redeemed, the identification of the particular Securities (or
portion thereof) to be redeemed, as well as the aggregate principal
amount of such Securities to be redeemed and the aggregate principal
amount of Securities to be outstanding after such partial redemption;

(8) the CUSIP number of the Securities to be
redeemed; and

(9) that the notice is being sent pursuant
to this Section 3.4 and pursuant to the optional redemption provisions
of Paragraph 5 of the Securities.

SECTION 3.5. Effect of Notice of Redemption.

Once notice of redemption is mailed in accordance with Section
3.4, Securities called for redemption become due and payable on the Redemption
Date and at the Redemption Price, including accrued and unpaid interest to the
Redemption Date. Upon surrender to the Trustee or Paying Agent, such
Securities called for redemption shall be paid at the Redemption Price,
including interest, if any, accrued and unpaid to the Redemption Date;
provided that if the Redemption Date is after a regular Record Date and on or
prior to the Interest Payment Date to which such Record Date relates, the
accrued interest shall be payable to the Holder of the redeemed Securities
registered on the relevant Record Date; and provided, further that if a
Redemption Date is a non-Business Day, payment shall be made on the next
succeeding Business Day and no interest shall accrue for the period from such
Redemption Date to such succeeding Business Day.

SECTION 3.6. Deposit of Redemption Price.

On or prior to the Redemption Date, the Company shall deposit
with the Trustee or the Paying Agent (other than the Company or an Affiliate of
the Company) cash or U.S. Government Obligations sufficient to pay the
Redemption Price of, including accrued and unpaid interest on, all Securities
to be redeemed on such Redemption Date (other than Securities or portions
thereof called for redemption on that date that have been delivered by the
Company to the Trustee for cancellation). The Trustee or

the Paying Agent shall promptly return to the Company any cash or U.S.
Government Obligations so deposited which is not required for that purpose upon
the written request of the Company.

If the Company complies with the preceding paragraph and the
other provisions of this Article 3 and payment of the Securities called for
redemption is not otherwise prohibited, interest on the Securities to be
redeemed will cease to accrue on the applicable Redemption Date, whether or not
such Securities are presented for payment. Notwithstanding anything herein to
the contrary, if any Security surrendered for redemption in the manner provided
in the Securities shall not be so paid upon surrender for redemption because of
the failure of the Company to comply with the preceding paragraph, interest
shall continue to accrue and be paid from the Redemption Date until such
payment is made on the unpaid principal, and, to the extent lawful, on any
interest not paid on such unpaid principal, in each case at the rate and in the
manner provided in Section 4.1 hereof and the Security.

SECTION 3.7. Securities Redeemed in Part.

Upon surrender of a Security that is to be redeemed in part,
the Company shall issue and the Trustee shall authenticate and deliver to the
Holder, at the expense of the Company, a new Security or Securities equal in
principal amount to the unredeemed portion of the Security surrendered.

ARTICLE 4
COVENANTS

SECTION 4.1. Payment of Securities.

The Company shall pay or cause to be paid the principal of,
premium, if any, and interest on the Securities on the dates and in the manner
provided in this Indenture and the Securities. Principal, premium, if any, and
interest shall be considered paid on the date due if the Trustee or the Paying
Agent, if other than the Company or a Subsidiary of the Company, holds as of
10:00 a.m. New York City Time on the due date money deposited by the Company in
immediately available funds and designated

for and sufficient to pay all principal, premium, if any, and interest then
due. The Trustee or such Paying Agent shall return to the Company, no later
than three days following the date of payment, any money that exceeds such
amount of principal, premium, if any, and interest to be paid on the
Securities.

The Company shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue principal at
the rate equal to 1% per annum in excess of the interest rate then applicable
to the Securities to the extent lawful. In addition, it shall pay interest
(including post-petition interest in any proceeding under any Bankruptcy Law)
on overdue installments of interest (without regard to any applicable grace
period) at the same rate to the extent lawful.

SECTION 4.2. Maintenance of Office or Agency.

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

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

46
The Company hereby designates Chemical Bank, Corporate Trust
Department, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ as one such office
or agency of the Company in accordance with Section 2.3 hereof.

SECTION 4.3. Reports.

(a) Whether or not the Company is subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, the Company shall
deliver to the Trustee, within 15 days after it files or would have been
required to file such with the Commission, annual and quarterly financial
statements substantially equivalent to financial statements that would have
been included in a report filed with the Commission on Forms 10-Q and 10-K, if
the Company were subject to the requirements of Section 13 or 15(d) of the
Exchange Act, including, with respect to annual information only, a report
thereon by the Company's certified independent public accountants as such would
be required in such reports to the Commission, and, in each case, together with
a "Management's Discussion and Analysis of Financial Condition and Results of
Operations" which would be so required. In addition, whether or not required
by the rules and regulations of the Commission, the Company will file a copy of
all such information and reports with the Commission for public availability
(unless the Commission will not accept such a filing) and will make such
information available to securities analysts and prospective investors upon
request. All obligors on the Securities shall comply with the provisions of
TIA Section 314(a).

(b) The Trustee, at the Company's expense, shall promptly
mail copies of all such annual reports, information, documents and other
reports provided to the Trustee pursuant to Section 4.3(a) hereof to the
Holders at their addresses appearing in the register of Securities maintained
by the Registrar. The Company shall provide the Trustee with a sufficient
number of copies of all reports and other documents and information that the
Trustee may be required to deliver to the Holders under this Section 4.3.

SECTION 4.4. Compliance Certificate; Notice of Default.

(a) The Company shall deliver to the Trustee, within 120 days
after the end of each fiscal year, an Officers' Certificate complying with
Section 314(a)(4) of the TIA and stating that a review of the activities of the
Company and its Subsidiaries during the preceding fiscal year has been made
under the supervision of the signing Officers with a view to determining
whether each has kept, observed, performed and fulfilled its obligations under
this Indenture, and further stating, as to each such Officer signing such
certificate, that to the best of his or her knowledge each entity has kept,
observed, performed and fulfilled each and every covenant contained in this
Indenture and is not in default in the performance or observance of any of the
terms, provisions and conditions of this Indenture or, if a Default or Event of
Default shall have occurred, describing all such Defaults or Events of Default
of which he or she may have knowledge and what action each is taking or
proposes to take with respect thereto, all without regard to periods of grace
or notice requirements, and that to the best of his or her knowledge no event
has occurred and remains in existence by reason of which payments on account of
the principal of or interest, if any, on the Securities is prohibited or if
such event has occurred, a description of the event and what action each is
taking or proposes to take with respect thereto. The Officers' Certificate
shall also notify the Trustee should the relevant fiscal year end on any date
other than the current fiscal year end date.

(b) So long as not contrary to the then current
recommendations of the American Institute of Certified Public Accountants, the
year-end financial statements delivered pursuant to Section 4.3 above shall be
accompanied by a written statement of the Company's certified independent
public accountants (who shall be a firm of established national reputation)
that in making the examination necessary for certification of such financial
statements nothing has come to their attention which would lead them to believe
that the Company or any Subsidiary of the Company has violated any provisions
of Article 4 or of Article 5 of this Indenture or, if any such violation has
occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.

(c) The Company shall, so long as any of the Securities are
outstanding, deliver to the Trustee, forthwith upon any Officer becoming
actually aware of any Default or Event of Default, an Officers' Certificate
specifying such Default or Event of Default and what action the Company is
taking or proposes to take with respect thereto. The Trustee shall not be
deemed to have knowledge of any Default or any Event of Default unless one of
its Trust Officers receives written notice thereof from the Company or any of
the Holders.

SECTION 4.5. Taxes.

The Company shall pay, and shall cause each of its
Subsidiaries to pay, prior to delinquency, all material taxes, assessments, and
governmental levies except (i) as contested in good faith by appropriate
proceedings and with respect to which appropriate reserves have been taken in
accordance with GAAP or (ii) where the failure to effect such payment is not
adverse in any material respect to the Holders.

SECTION 4.6. Stay, Extension and Usury Laws.

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

SECTION 4.7. Limitations on Restricted Payments.

The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or
make any distribution on account of the Equity Interests of the Company or any
of its Subsidiaries (other than (x) dividends or distributions payable in
Qualified Equity Interests of the Company,

(y) dividends or distributions payable to the Company or any Subsidiary of the
Company, and (z) dividends or distributions by any Subsidiary of the Company
payable to all holders of a class of Equity Interests of such Subsidiary on a
pro rata basis); (ii) purchase, redeem or otherwise acquire or retire for value
any Equity Interests of the Company or any of its Subsidiaries; (iii) make any
principal payment on, or purchase, redeem, defease or otherwise acquire or
retire for value any Subordinated Indebtedness, except at the original final
maturity date thereof; or (iv) make any Restricted Investment (all such
payments and other actions set forth in clauses (i) through (iv) above being
collectively referred to as "Restricted Payments"), unless, at the time of and
after giving effect to such Restricted Payment (the amount of any such
Restricted Payment, if other than cash or Cash Equivalents, shall be the fair
market value (as conclusively evidenced by a resolution of the Board of
Directors set forth in an Officers' Certificate delivered to the Trustee within
60 days prior to the date of such Restricted Payment) of the asset(s) proposed
to be transferred by the Company or such Subsidiary, as the case may be,
pursuant to such Restricted Payment):

(a) no Default or Event of Default shall have occurred
and be continuing or would occur as a consequence
thereof; and

(b) the Company would, at the time of such Restricted
Payment and after giving pro forma effect thereto as
if such Restricted Payment had been made at the
beginning of the Reference Period immediately
preceding the date of such Restricted Payment, have
been permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage
Ratio test set forth in the first paragraph of
Section 4.9 hereof; and

(c) such Restricted Payment, together with the aggregate
of all other Restricted Payments made by the Company
and its Subsidiaries after December 31, 1995
(excluding Restricted Payments permitted by clauses
(ii), (iii), (iv) and (v) of the next succeeding
paragraph), is less than the sum

(without duplication) of (1) 50% of the Consolidated
Net Income of the Company for the period (taken as
one accounting period) from the beginning of the
first fiscal quarter commencing after December 31,
1995 to the end of the Company's most recently ended
fiscal quarter for which internal financial
statements are available at the time of such
Restricted Payment (or, if such Consolidated Net
Income for such period is a deficit, less 100% of
such deficit), plus (2) 100% of the aggregate net
cash proceeds received by the Company from the issue
or sale (other than to a Subsidiary of the Company)
since December 31, 1995 of Qualified Equity Interests
of the Company or of debt securities of the Company
or any of its Subsidiaries that have been converted
into or exchanged for such Qualified Equity Interests
of the Company, plus (3) to the extent that any
Restricted Investment that was made after the date
hereof is sold for cash or otherwise liquidated or
repaid for cash, the lesser of (A) the cash return of
capital with respect to such Restricted Investment
(net of taxes and the cost of disposition, if any) or
(B) the initial amount of such Restricted Investment,
plus (4) $20 million.

The foregoing provisions shall not prohibit the following
Restricted Payments:

(i) the payment of any dividend within 60 days after
the date of declaration thereof, if at said date of
declaration such payment would have otherwise
complied with the provisions hereof;

(ii) the redemption, repurchase, retirement or other
acquisition of any Equity Interests of the Company
or any Subsidiary in exchange for, or out of the
net cash proceeds of, the substantially concurrent
sale (other than to a Subsidiary of the Company) of
Qualified Equity Interests

51
of the Company; provided that the amount of any
such net cash proceeds that are utilized for any
such redemption, repurchase, retirement or other
acquisition shall be excluded from clause (c)(2) of
the preceding paragraph;

(iii) the defeasance, redemption or repurchase of
Subordinated Indebtedness with the net cash
proceeds from an incurrence of Permitted
Refinancing Indebtedness or in exchange for or out
of the net cash proceeds from the substantially
concurrent sale (other than to a Subsidiary of the
Company) of Qualified Equity Interests of the
Company; provided that the amount of any such net
cash proceeds that are utilized for any such
redemption, repurchase, retirement or other
acquisition shall be excluded from clause (c)(2) of
the preceding paragraph;

(iv) any purchase or defeasance of Subordinated
Indebtedness to the extent required upon a change
of control or asset sale (as defined therein) by
the indenture or other agreement or instrument
pursuant to which such Subordinated Indebtedness
was issued, but only if the Company (1) in the case
of a Change of Control, has complied with its
obligations under the provisions described under
Section 4.13 of this Indenture or (2) in the case
of an Asset Sale, has applied the Net Proceeds from
such Asset Sale in accordance with the provisions
under Sections 2.15 and 4.10 of this Indenture; and

(v) any Restricted Payment permitted in accordance with
the provisions of the second paragraph of Section
4.10 of this Indenture;

provided, however, in the case of each of clauses (ii), (iii), (iv) and (v) of
this paragraph, no Default or

52
Event of Default shall have occurred or be continuing at the time of such
Restricted Payment or would occur as a consequence thereof.

Not later than the date of making any Restricted Payment, the
Company shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by this covenant were computed.

SECTION 4.8. Limitations on Dividend and Other Payment
Restrictions Affecting Subsidiaries.

The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any consensual Transfer Restriction (other than a
consensual Transfer Restriction with respect to ▇▇▇▇▇▇▇ Funding), except for
such Transfer Restrictions existing under or by reason of:

(a) Existing Indebtedness as in effect on the date
hereof,

(b) this Indenture,

(d) any instrument governing Indebtedness or Capital
Stock of a Person acquired by the Company or any of
its Subsidiaries as in effect at the time of such
acquisition (except to the extent such Indebtedness
was incurred in connection with or in contemplation
of such acquisition or in violation of Section 4.9
hereof), which encumbrance or restriction is not
applicable to any Person, or the properties or assets
of any Person, other than the Person, or the property
or assets of the Person, so acquired, provided that
the Consolidated Cash Flow of such Person shall not
be taken into account in determining whether such
acquisition was permitted by the terms hereof except
to the extent that such Consolidated Cash Flow would
be permitted to be dividended to the Company

53
without the prior consent or approval of any third
party,

(e) customary non-assignment provisions in leases entered
into in the ordinary course of business,

(f) purchase money obligations for property acquired in
the ordinary course of business that impose
restrictions on the ability of any of the Company's
Subsidiaries to transfer the property so acquired to
the Company or any of its Subsidiaries,

(g) Permitted Refinancing Indebtedness, provided that the
restrictions contained in the agreements governing
such Permitted Refinancing Indebtedness are no more
restrictive than those contained in the agreements
governing the Indebtedness being refinanced, or

(h) the Credit Agreement and related documentation as the
same is in effect on the date hereof and as amended
or replaced from time to time, provided that no such
amendment or replacement is more restrictive as to
Transfer Restrictions than the Credit Agreement and
related documentation as in effect on the date
hereof.

Nothing contained in this Section 4.8 shall prevent the
Company or any Subsidiary of the Company from creating, incurring, assuming or
suffering to exist any Permitted Liens or entering into agreements in
connection therewith that impose restrictions on the transfer or disposition of
the property or assets subject to such Permitted Liens.

SECTION 4.9. Limitations on Incurrence of Indebtedness and
Issuance of Preferred Stock.

The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create, incur, issue, assume,
guarantee or otherwise become directly or indirectly liable, contingently or
otherwise, with respect to (collectively, "incur") after the date

hereof any Indebtedness (including Acquired Debt) and the Company will not
permit any of its Subsidiaries (other than ▇▇▇▇▇▇▇ Funding) to issue any shares
of preferred stock; provided, however, that the Company and its Subsidiaries
may incur Indebtedness (including Acquired Debt) if the Fixed Charge Coverage
Ratio for the Reference Period immediately preceding the date on which such
additional Indebtedness is incurred would have been at least 2.5 to 1, in each
case determined on a pro forma basis (including a pro forma application of the
net proceeds therefrom), as if the additional Indebtedness had been incurred at
the beginning of such Reference Period. Indebtedness consisting of
reimbursement obligations in respect of a letter of credit shall be deemed to
be incurred when the letter of credit is first issued.

The foregoing provision shall not apply to:

(a) the incurrence by the Company or any of its
Subsidiaries of Senior Revolving Debt pursuant to the
Credit Agreement in an aggregate principal amount at
any time outstanding (with letters of credit being
deemed to have a principal amount equal to the
maximum potential reimbursement obligation of the
Company or any Subsidiary with respect thereto) not
to exceed an amount equal to $150 million less the
aggregate amount of all Net Proceeds of Asset Sales
applied to permanently reduce the commitments with
respect to such Indebtedness pursuant to Sections
2.15 and 4.10 hereof after the date of this
Indenture;

(b) the incurrence by the Company and the Guarantors of
Indebtedness represented by the Securities;

(c) the incurrence by the Company or any of its
Subsidiaries of Permitted Refinancing Indebtedness in
exchange for, or the net proceeds of which are used
to extend, refinance, renew, replace, defease or
refund, Indebtedness that was permitted by this
Indenture to be incurred (including,

55
without limitation, Existing Indebtedness);

(d) the incurrence by the Company or any of its
Subsidiaries of intercompany Indebtedness between or
among the Company and any of its Subsidiaries;
provided that in the case of such Indebtedness of the
Company, such obligations shall be unsecured;

(e) the incurrence by the Company or any of its
Subsidiaries of Hedging Obligations that are incurred
for the purpose of fixing or hedging interest rate or
currency risk with respect to any fixed or floating
rate Indebtedness that is permitted by the terms
hereof to be outstanding or any receivable or
liability the payment of which is determined by
reference to a foreign currency; provided that the
notional principal amount of any such Hedging
Obligation does not exceed the principal amount of
the Indebtedness or the amount of such receivable or
liability to which such Hedging Obligation relates;

(f) the incurrence by the Company or any of its
Subsidiaries of Indebtedness represented by perfor-
▇▇▇▇▇ ▇▇▇▇▇, warranty or contractual service
obligations, standby letters of credit or appeal
bonds, in each case to the extent incurred in the
ordinary course of business of the Company or such
Subsidiary; and

(g) the incurrence by the Company or any of its
Subsidiaries of Indebtedness (in addition to
Indebtedness permitted by any other clause of this
paragraph) in an aggregate principal amount at any
time outstanding not to exceed $100 million.

For purposes of determining any particular amount of
Indebtedness under this covenant, guarantees, Liens or obligations with respect
to letters of credit supporting Indebtedness otherwise included in the
determination of such particular amount shall not be included. For purposes of
determining compliance with this covenant,

(i) in the event that an item of Indebtedness meets the criteria of more than
one of the types of Indebtedness permitted by the second paragraph of this
covenant, the Company shall classify such item of Indebtedness and only be
required to include the amount and type of such Indebtedness in one of the
categories of permitted Indebtedness described above and (ii) the outstanding
principal amount on any date of any Indebtedness issued with original issue
discount is the face amount of such Indebtedness less the remaining unamortized
portion of the original issue discount of such Indebtedness on such date.

SECTION 4.10. Asset Sales.

The Company shall not, and shall not permit any of its
Subsidiaries to, consummate an Asset Sale, unless (i) the Company (or the
Subsidiary, as the case may be) receives consideration at the time of such
Asset Sale at least equal to the fair market value (as conclusively determined
by a resolution of the Board of Directors set forth in an Officers' Certificate
delivered to the Trustee) of the assets or Equity Interests issued or sold or
otherwise disposed of and (ii) at least 75% of the consideration therefor
received by the Company or such Subsidiary is in the form of cash or Cash
Equivalents; provided that for purposes of this provision, (x) the amount of
(A) any liabilities (as shown on the most recent balance sheet of the Company
or such Subsidiary or in the notes thereto) of the Company or such Subsidiary
(other than liabilities that are by their terms subordinated to the Securities
or the Guarantees) that are assumed by the transferee of any such assets and
(B) any securities or other obligations received by the Company or any such
Subsidiary from such transferee that are immediately converted by the Company
or such Subsidiary into cash or Cash Equivalents (or as to which the Company or
such Subsidiary has received at or prior to the consummation of the Asset Sale
a commitment (which may be subject to customary conditions) from a nationally
recognized investment, merchant or commercial bank to convert into cash or Cash
Equivalents within 90 days of the consummation of such Asset Sale and which are
thereafter actually converted into cash or Cash Equivalents within such 90-day
period) shall be deemed to be cash or Cash Equivalents (but shall not be deemed
to be Net Proceeds for purposes of the following provisions until reduced to

cash or Cash Equivalents) and (y) the fair market value of any Non-Cash
Consideration received by the Company or a Subsidiary in any Non-Qualified
Asset Sale shall be deemed to be cash to the extent that the aggregate fair
market value (as conclusively determined by resolution of the Board of
Directors set forth in any Officers' Certificate delivered to the Trustee) of
all Non-Cash Consideration (measured at the time received and without giving
effect to any subsequent changes in value) received by the Company or any of
its Subsidiaries since the date hereof in all Non-Qualified Asset Sales does
not exceed 6% of the Company's Stockholders' Equity as of the date of such
consummation. Notwithstanding the foregoing, to the extent the Company or any
of its Subsidiaries receives Non-Cash Consideration as proceeds of an Asset
Sale, such Non-Cash Consideration shall be deemed to be Net Proceeds for
purposes of (and shall be applied in accordance with) the following provisions
when the Company or such Subsidiary receives cash or Cash Equivalents from a
sale, repayment, exchange, redemption or retirement of or extraordinary
dividend or return of capital on such Non-Cash Consideration.

The provisions of clauses (i) and (ii) of the immediately
preceding paragraph shall not apply to the Spinoff Transaction if, after giving
pro forma effect to such transaction, including the application by the Company
of the net proceeds, if any, of any such transaction, as if it had occurred at
the beginning of the Reference Period immediately preceding the date on which
such transaction occurs, (i) the Company would have been permitted to incur at
least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage
Ratio test set forth in the first paragraph of Section 4.9 of this Indenture,
(ii) the Company's Fixed Charge Coverage Ratio would not be reduced by 15% or
more from the Company's actual Fixed Charge Coverage Ratio for such Reference
Period, (iii) the Company's Debt to Consolidated Cash Flow Ratio as of the date
such transaction occurs would not be increased by 15% or more from the
Company's actual Debt to Consolidated Cash Flow Ratio as of such date, (iv) PCA
shall have satisfied in full all indebtedness of PCA and its Subsidiaries to
▇▇▇▇▇▇▇ and its Subsidiaries and (v) no Default or Event of Default would
exist. If the Spinoff Transaction (including the Company's proposed
application of the net proceeds thereof, if any) satisfies the requirements of
the immediately preceding sentence,

the Company shall be entitled to (A) consummate the Spinoff Transaction and (B)
use up to $100 million of the Net Proceeds of such transaction to make
Restricted Payments or for any other purpose not prohibited by this Indenture;
provided that (x) any Net Proceeds in excess of $100 million shall be applied
in accordance with the following provisions and (y) all Non-Cash Consideration
received by the Company or any Subsidiary of the Company as a result of or in
connection with the Spinoff Transaction will be deemed to be Net Proceeds for
purposes of (and shall be applied in accordance with) the foregoing clause (B)
and the following provisions when the Company or such Subsidiary receives cash
or Cash Equivalents from a sale, repayment, exchange, redemption or retirement
of or extraordinary dividend or return of capital on such Non-Cash
Consideration.

Within 365 days after the receipt of any Net Proceeds from an
Asset Sale, the Company or such Subsidiary may apply such Net Proceeds (i) to
purchase one or more Nursing Facilities or Related Businesses and/or a
controlling interest in the Capital Stock of a Person owning one or more
Nursing Facilities and/or one or more Related Businesses, (ii) to make a
capital expenditure or to acquire other tangible assets, in each case, that are
used or useful in any business in which the Company is permitted to be engaged
pursuant to Section 4.15 hereof, (iii) to permanently reduce Indebtedness
(other than Subordinated Indebtedness) of the Company or its Subsidiaries, (iv)
to permanently reduce Senior Revolving Debt (and to correspondingly reduce
commitments with respect thereto, except that up to an aggregate of $20 million
of Net Proceeds from Asset Sales may be applied after the date hereof to reduce
Senior Revolving Debt without a corresponding reduction in commitments with
respect thereto) or (v) if such Net Proceeds are derived from the Spinoff
Transaction, use up to $100 million of the Net Proceeds of such transaction to
make Restricted Payments or for any other purpose not prohibited by this
Indenture, in accordance with the second sentence of the preceding paragraph.
Pending the final application of any such Net Proceeds, the Company or such
Subsidiary may temporarily reduce Senior Revolving Debt or otherwise invest
such Net Proceeds in any manner that is not prohibited by the terms hereof.
Any Net Proceeds from Asset Sales that are not so invested or applied shall be
deemed to constitute "Excess Proceeds." When the aggregate

amount of Excess Proceeds exceeds $25 million, the Company shall make an offer
to all Holders of Securities and holders of any other Indebtedness of the
Company ranking on a parity with the Securities from time to time outstanding
with similar provisions requiring the Company to make an offer to purchase or
to redeem such Indebtedness with proceeds from any asset sales, pro rata in
proportion to the respective principal amounts of the Securities and such other
Indebtedness then outstanding (a "Senior Asset Sale Offer") to purchase the
maximum principal amount of Securities and such other Indebtedness that may be
purchased out of the Excess Proceeds, at an offer price in cash equal to 100%
of the principal amount thereof plus accrued and unpaid interest thereon, if
any, to the date of purchase (the "Purchase Price"), in accordance with the
procedures set forth in Section 2.15 hereof. To the extent that the aggregate
amount of Securities and such other Indebtedness tendered pursuant to a Senior
Asset Sale Offer is less than the Excess Proceeds, the Company may use any
remaining Excess Proceeds for general corporate purposes not prohibited at the
time by the provisions of this Indenture. If the aggregate principal amount of
Securities and such other Indebtedness surrendered by holders thereof exceeds
the amount of Excess Proceeds, the Securities and such other Indebtedness shall
be purchased on a pro rata basis. Upon completion of a Senior Asset Sale
Offer, the amount of Excess Proceeds shall be reset at zero.

SECTION 4.11. Limitations on Transactions With Affiliates.

The Company shall not, and shall not permit any of its
Subsidiaries to, sell, lease, transfer or otherwise dispose of any of their
properties or assets to, or purchase any property or assets from, or enter into
or make any contract, agreement, understanding, loan, advance or guarantee
with, or for the benefit of, any Affiliate (each of the foregoing, an
"Affiliate Transaction") unless (i) such Affiliate Transaction is on terms that
are no less favorable to the Company or the relevant Subsidiary than those that
could have been obtained in a comparable transaction by the Company or such
Subsidiary with an unrelated Person and (ii) the Company delivers to the
Trustee (a) with respect to any Affiliate Transaction involving aggregate
consideration in excess of $5 million, a resolution of the Board of Directors
set forth in

an Officers' Certificate certifying that such Affiliate Transaction complies
with clause (i) above and that such Affiliate Transaction was approved by a
majority of the disinterested members of the Board of Directors and (b) with
respect to any Affiliate Transaction involving aggregate consideration in
excess of $10 million, an opinion as to the fairness of such Affiliate
Transaction to the Company or such Subsidiary from a financial point of view
issued by an investment banking firm of national standing; provided that (x)
transactions or payments pursuant to any employment arrangements, director or
officer indemnification agreements or employee or director benefit plans
entered into by the Company or any of its Subsidiaries in the ordinary course
of business of the Company or such Subsidiary, (y) transactions between or
among the Company and/or its Subsidiaries and (z) Restricted Payments permitted
under Section 4.7 hereof, in each case, shall not be deemed to be Affiliate
Transactions.

SECTION 4.12. Limitations on Liens.

The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien (except Permitted Liens) on any asset now owned or hereafter
acquired, or any income or profits therefrom or assign or convey any right to
receive income therefrom unless all payments due hereunder and under the
Securities are secured on an equal and ratable basis with the Obligations so
secured until such time as such Obligations are no longer secured by a Lien.

SECTION 4.13. Change of Control.

Upon the occurrence of a Change of Control, each Holder of
Securities shall have the right to require the Company to repurchase all or any
part (equal to $1,000 or an integral multiple thereof) of such Holder's
Securities pursuant to the offer described below (the "Change of Control
Offer") at an offer price in cash equal to 101% of the aggregate principal
amount thereof plus accrued and unpaid interest, if any, thereon to the date of
purchase (the "Change of Control Payment") on a date that is not more than 90
days after the occurrence of such Change of Control (the "Change of Control
Payment Date").

Within 45 days following any Change of Control, the Company
shall mail or cause to be mailed a notice of a Change of Control to each Holder
(at its last registered address with a copy to the Trustee and the Paying
Agent) offering to repurchase the Securities held by such Holder pursuant to
the procedures specified in such notice. The Change of Control Offer shall
remain open from the time of mailing until at least the close of business on
the third Business Day preceding the Change of Control Payment Date. The
notice, which shall govern the terms of the Change of Control Offer, shall
contain all instructions and materials necessary to enable the Holders to
tender Securities pursuant to the Change of Control Offer and shall state:

(1) that the Change of Control Offer is being made
pursuant to this Section 4.13 and that all Securities
tendered will be accepted for payment;

(2) the Change of Control Payment and the Change of
Control Payment Date, which date shall be no earlier
than 30 days from the date such notice is mailed;

(3) that any Security not tendered will continue to
accrue interest in accordance with the terms of this
Indenture;

(4) that, unless the Company defaults in the payment of
the Change of Control Payment, all Securities
accepted for payment pursuant to the Change of
Control Offer will cease to accrue interest after the
Change of Control Payment Date;

(5) that Holders electing to have a Security purchased
pursuant to any Change of Control Offer will be
required to surrender the Security, with the form
entitled "Option of Holder to Elect Purchase" on the
reverse of the Security completed, to the Company, a
depositary, if appointed by the Company, or a Paying
Agent at the address specified in the notice prior to
the close of business on the Business Day next
preceding the Change of Control Payment Date;

(6) that Holders will be entitled to withdraw their
election if the Company, depositary or Paying Agent,
as the case may be, receives, not later than the
close of business on the third Business Day next
preceding the Change of Control Payment Date, a
facsimile transmission or letter setting forth the
name of the Holder, the principal amount of the
Security the Holder delivered for purchase, and a
statement that such Holder is withdrawing his
election to have such Security purchased;

(7) that Holders whose Securities are being purchased
only in part will be issued new Securities equal in
principal amount to the unpurchased portion of the
Securities surrendered, which unpurchased portion
must be equal to $1,000 in principal amount or an
integral multiple thereof; and

(8) the circumstances and relevant facts regarding such
Change of Control and any other information that
would be material to a decision as to whether to
tender a Security pursuant to the Change of Control
Offer.

On the Change of Control Payment Date, the Company shall, to
the extent lawful, (i) accept for payment all Securities or portions thereof
properly tendered and not withdrawn pursuant to the Change of Control Offer,
(ii) deposit with the Paying Agent an amount equal to the Change of Control
Payment in respect of all Securities or portions thereof so tendered and (iii)
deliver or cause to be delivered to the Trustee the Securities so accepted
together with an Officers' Certificate stating the aggregate principal amount
of Securities or portions thereof being purchased by the Company. The Paying
Agent shall promptly mail to each Holder of Securities so tendered the Change
of Control Payment for such Securities, and the Trustee shall promptly
authenticate and mail (or cause to be transferred by book entry) to each Holder
a new Security equal in principal amount to any unpurchased portion of the
Securities surrendered, if any; provided that each such new Security shall be
in a principal

63
amount of $1,000 or an integral multiple thereof. The Company shall publicly
announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.

The Company shall comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent such laws and regulations are applicable in connection with the
repurchase of Securities as a result of a Change of Control.

SECTION 4.14. Corporate Existence.

Subject to Section 4.13 and Article 5 hereof, the Company
shall do or cause to be done all things necessary to preserve and keep in full
force and effect (i) its corporate existence, and the corporate, partnership or
other existence of each of its Subsidiaries, in accordance with the respective
organizational documents (as the same may be amended from time to time) of each
Subsidiary and (ii) the rights (charter and statutory), licenses and franchises
of the Company and its Subsidiaries; provided, however, that the Company shall
not be required to preserve any such right, license or franchise, or the
corporate, partnership or other existence of any of its Subsidiaries, if the
Board of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and its Subsidiaries,
taken as a whole, and that the loss thereof is not adverse in any material
respect to the Holders.

SECTION 4.15. Line of Business.

The Company shall not, and shall not permit any of its
Subsidiaries to, engage to any material extent in any business other than the
ownership, operation and management of Nursing Facilities and Related
Businesses.

64
ARTICLE 5
SUCCESSORS

SECTION 5.1. Limitations on Mergers, Consolidations or Sales
of Assets.

The Company may not consolidate or merge with or into (whether
or not the Company is the surviving corporation), or sell, assign, transfer,
lease, convey or otherwise dispose of all or substantially all of its
properties or assets in one or more related transactions, to another Person
unless:

(i) the Company is the surviving corporation or the
Person formed by or surviving any such
consolidation or merger (if other than the Company)
or to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been
made is a corporation organized or existing under
the laws of the United States, any state thereof or
the District of Columbia;

(ii) the Person formed by or surviving any such
consolidation or merger (if other than the Company)
or the Person to which such sale, assignment,
transfer, lease, conveyance or other disposition
shall have been made assumes all the Obligations of
the Company under this Indenture and the Securities
pursuant to a supplemental indenture in a form
reasonably satisfactory to the Trustee;

(iii) immediately after such transaction no Default or
Event of Default exists; and

(iv) the Company or the Person formed by or surviving
any such consolidation or merger (if other than the
Company), or to which such sale, assignment,
transfer, lease, conveyance or other disposition
shall have been made (A) shall have Consolidated
Net Worth immediately after the transaction equal
to or greater than the Consolidated Net Worth of
the Company

immediately preceding the transaction and (B)
shall, at the time of such transaction and after
giving pro forma effect thereto as if such
transaction had occurred at the beginning of the
Reference Period, be permitted to incur at least
$1.00 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test set forth in the
first paragraph of Section 4.9 hereof.

The Company shall deliver to the Trustee prior to the
consummation of the proposed transaction an Officers' Certificate covering
clauses (i) through (iv) above and an Opinion of Counsel covering clauses (i)
and (ii) above, and each stating that the proposed transaction and such
supplemental indenture comply with this Indenture. The Trustee shall be
entitled to conclusively rely upon such Officers' Certificate and Opinion of
Counsel.

SECTION 5.2. Successor Corporation or Person Substituted.

Upon any consolidation or merger or any sale, assignment,
transfer, lease, conveyance or other disposition of all or substantially all of
the assets of the Company in accordance with Section 5.1 hereof, the successor
corporation or Person formed by such consolidation or into or with which the
Company is merged or to which such sale, assignment, transfer, lease,
conveyance or other disposition is made shall succeed to, and be substituted
for (so that from and after the date of such consolidation, merger, sale,
assignment, transfer, lease, conveyance or other disposition, the provisions of
this Indenture referring to the "Company" shall refer instead to the successor
corporation or Person and not to the Company), and may exercise every right and
power of, the Company under this Indenture with the same effect as if such
successor corporation or Person had been named as the Company, herein.

66
ARTICLE 6
DEFAULTS AND REMEDIES

SECTION 6.1. Events of Default.

Each of the following constitutes an "Event of Default":

(i) default for 30 days in the payment when due of
interest on the Securities;

(ii) default in payment when due of the principal of,
or premium, if any, on the Securities, at
maturity or otherwise;

(iii) failure by the Company or any Guarantor to comply
with the provisions of Section 4.10 or 4.13
hereof;

(iv) failure by the Company or any Guarantor for 30
days after notice to comply with the provisions
of Section 4.7 or 4.9 hereof;

(v) failure by the Company or any Guarantor for 60
days after notice to comply with any of its
agreements in this Indenture or the Securities;

(vi) any default that occurs under any mortgage,
indenture or instrument under which there may be
issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by
the Company or any of its Significant
Subsidiaries (or the payment of which is
guaranteed by the Company or any of its
Significant Subsidiaries), whether such
Indebtedness or guarantee exists on the date
hereof or is created after the date hereof, which
default (a) constitutes a Payment Default or (b)
results in the acceleration of such Indebtedness
prior to its express maturity and, in each case,
the principal amount of any such Indebtedness,
together with

the principal amount of any other such
Indebtedness under which there has been a Payment
Default or that has been so accelerated,
aggregates in excess of $20 million;

(vii) failure by the Company or any of its Significant
Subsidiaries to pay a final judgment or judgments
aggregating in excess of $20 million entered by a
court or courts of competent jurisdiction against
the Company or such Significant Subsidiaries,
which judgment or judgments are not paid,
discharged or stayed for a period of 60 days;

(viii) any Guarantee shall cease, for any reason not
permitted by this Indenture, to be in full force
and effect or any Guarantor, or any Person acting
on behalf of any Guarantor, shall deny or
disaffirm its obligations under its Guarantee;

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

(a) commences a voluntary case,

(b) consents to the entry of an order for relief
against it in an involuntary case in which it
is the debtor,

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

(e) admits in writing its inability generally to
pay its debts as the same become due; and

68
(x) a court of competent jurisdiction enters an order
or decree under any Bankruptcy Law that:

(a) is for relief against the Company or any
Significant Subsidiary thereof in an in-
voluntary case in which it is the debtor,

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

(c) orders the liquidation of the Company or any
Significant Subsidiary thereof, and the order
or decree remains unstayed and in effect for
60 consecutive days.

A Default under clause (iv) or (v) is not an Event of Default
until the Trustee notifies the Company in writing, or the Holders of at least
25% in aggregate principal amount of the then outstanding Securities notify the
Company and the Trustee in writing, of the Default and the Company does not
cure the Default within 30 days, with respect to a Default under clause (iv),
or 60 days, with respect to a Default under clause (v), after receipt of such
notice. The written notice must specify the Default, demand that it be
remedied and state that the notice is a "Notice of Default."

SECTION 6.2. Acceleration.

If any Event of Default occurs (other than an Event of Default
with respect to the Company specified in clause (ix) or (x) of Section 6.1
hereof) and is continuing, the Trustee by notice to the Company, or the Holders
of at least 25% in aggregate principal amount of the then outstanding
Securities by written notice to the Company and the Trustee, may declare the
unpaid principal of, premium, if any, and accrued and unpaid interest on all
the Securities to be due and payable immediately. Upon such declaration the
principal, premium, if any, and interest shall be due and payable immediately.
If an

69
Event of Default specified in clause (ix) or (x) of Section 6.1 hereof occurs
with respect to the Company such an amount shall ipso facto become and be
immediately due and payable without further action or notice on the part of the
Trustee or any Holder.

SECTION 6.3. Other Remedies.

If an Event of Default occurs and is continuing, the Trustee
may pursue any available remedy to collect the payment of principal or interest
on the Securities or to enforce the performance of any provision of the
Securities or this Indenture.

The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the
proceeding. A delay or omission by the Trustee or any Holder in exercising any
right or remedy accruing upon an Event of Default shall not impair the right or
remedy or constitute a waiver of or acquiescence in the Event of Default. All
remedies are cumulative to the extent permitted by law.

SECTION 6.4. Waiver of Past Defaults.

The Holders of not less than a majority in aggregate principal
amount of the Securities then outstanding by written notice to the Trustee may,
on behalf of the Holders of all of the Securities, waive any existing Default
or Event of Default and its consequences under this Indenture except a
continuing Default or Event of Default in the payment of the principal of,
premium, if any, or interest on any Security. Upon any such waiver, such
Default shall cease to exist, and any Event of Default arising therefrom shall
be deemed to have been cured for every purpose of this Indenture; but no such
waiver shall extend to any subsequent or other Default or impair any right
consequent thereon.

SECTION 6.5. Control by Majority.

Holders of the Securities may not enforce this Indenture or
the Securities except as provided in this Indenture. Subject to certain
limitations, Holders of a majority in principal amount of the then outstanding
Securities may direct the time, method and place of conducting any proceeding
for exercising any remedy

70
available to the Trustee or exercising any trust or power conferred on it.
However, the Trustee may refuse to follow any direction that conflicts with law
or this Indenture that the Trustee determines may be unduly prejudicial to the
rights of other Holders or that may involve the Trustee in personal liability.
The Trustee may take any other action which it deems proper which is not
inconsistent with any such direction.

SECTION 6.6. Limitation on Suits.

A Holder may pursue a remedy with respect to this Indenture or
the Securities only if:

(i) the Holder gives to the Trustee written notice
of a continuing Event of Default;

(ii) the Holders of at least 25% in principal amount
of the then outstanding Securities make a
written request to the Trustee to pursue the
remedy;

(iii) such Holder or Holders offer and, if requested,
provide to the Trustee indemnity satisfactory
to the Trustee against any loss, liability or
expense;

(iv) the Trustee does not comply with the request
within 60 days after receipt of the request and
the offer and, if requested, the provision of
indemnity; and

(v) during such 60-day period the Holders of a
majority in principal amount of the then
outstanding Securities do not give the Trustee
a direction inconsistent with the request.

A Holder may not use this Indenture to prejudice the rights of another Holder
or to obtain a preference or priority over another Holder.

SECTION 6.7. Rights of Holders to Receive Payment.

Notwithstanding any other provision of this Indenture, the
right of any Holder to receive payment of

71
principal, premium, if any, and interest on the Security, on or after the
respective due dates expressed in the Security, or to bring suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of the Holder.

SECTION 6.8. Collection Suit by Trustee.

If an Event of Default specified in Section 6.1(i) or (ii)
hereof occurs and is continuing, the Trustee is authorized to recover judgment
in its own name and as trustee of an express trust against the Company or any
other obligor for the whole amount of principal, premium, if any, and interest
remaining unpaid on the Securities and interest on overdue principal and, to
the extent lawful, interest and such further amount as shall be sufficient to
cover amounts due the Trustee under Section 7.7 hereof, including the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.

SECTION 6.9. Trustee May File Proofs of Claim.

The Trustee is authorized to file such proofs of claim and
other papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel)
and the Holders allowed in any judicial proceedings relative to the Company (or
any other obligor upon the Securities), its creditors or its property and shall
be entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any Custodian in any
such judicial proceeding is hereby authorized by each Holder to make such
payments to the Trustee, and in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay to the Trustee any
amount due 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 7.7 hereof. To the extent that the payment of any such
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.7

hereof out of the estate in any such proceeding, shall be denied for any
reason, payment of the same shall be secured by a Lien on, and shall be paid
out of any and all distributions, dividends, money, securities and other
properties which the Holders may be entitled to receive in such proceeding
whether in liquidation or under any plan of reorganization or arrangement or
otherwise. Nothing herein contained shall be deemed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of any Holder any plan
of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof, or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding.

SECTION 6.10. Priorities.

If the Trustee collects any money pursuant to this Article, it
shall pay out the money in the following order:

First: to the Trustee, its agents and attorneys for amounts
due under Section 7.7, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;

Second: to Holders for amounts due and unpaid on the
Securities for principal, premium, if any, and interest, ratably, without
preference or priority of any kind, according to the amounts due and payable on
the Securities for principal, premium, if any, and interest, respectively; and

Third: to the Company or to such party as a court of
competent jurisdiction shall direct.

The Trustee may fix a record date and payment date for any
payment to Holders pursuant to this Section 6.10 upon five Business Days prior
notice to the Company.

SECTION 6.11. Undertaking for Costs.

In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action taken or
omitted by it as a Trustee, a court in its discretion may require the filing by

73
any party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorneys' fees and expenses, against any party litigant in the
suit, having due regard to the merits and good faith of the claims or defenses
made by the party litigant. This Section does not apply to a suit by the
Trustee, a suit by a Holder pursuant to Section 6.7 hereof, or a suit by
Holders of more than 10% in principal amount of the then outstanding
Securities.

ARTICLE 7
TRUSTEE

SECTION 7.1. Duties of Trustee.

(i) If an Event of Default has occurred and is
continuing, 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.

(ii) Except during the continuance of an Event of
Default known to the Trustee:

(a) the duties of the Trustee shall be
determined solely by the express
provisions of this Indenture or the TIA
and the Trustee need perform only those
duties that are specifically set forth in
this Indenture or the TIA and no others,
and no implied covenants or obligations
shall be read into this Indenture against
the Trustee, and

(b) 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. However,
in the case of any such certificates or
opinions which by any provisions hereof
are required to be furnished to the
Trustee, the Trustee shall examine the
certificates and opinions to determine
whether or not they conform to the
requirements of this Indenture.

(iii) The Trustee may not be relieved from liabilities
for its own negligent action, its own negligent
failure to act, or its own willful misconduct,
except that:

(a) this paragraph does not limit the effect
of paragraph (ii) of this Section;

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

(c) the Trustee shall not be liable with
respect to any action it takes or omits
to take in good faith in accordance with
a direction received by it pursuant to
Section 6.5 hereof.

(iv) Whether or not therein expressly so provided,
every provision of this Indenture that in any way
relates to the Trustee is subject to paragraphs
(i), (ii), and (iii) of this Section.

(v) No provision of this Indenture shall require the
Trustee to expend or risk its own funds or incur
any liability. The Trustee may refuse to perform
any duty or exercise any right or power unless

75
it receives security and indemnity satisfactory
to it against any loss, liability or expense.

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

(vii) The Trustee shall not be charged with knowledge
of any Default or Event of Default with respect
to the Securities unless either (1) a Responsible
Officer shall have actual knowledge of such
Default or Event of Default or (2) written notice
of such Default or Event of Default shall have
been given to the Trustee by the Company, any
Guarantor or any other obligor on the Securities
or by any Holder of the Securities.

SECTION 7.2. Rights of Trustee.

(i) The Trustee may conclusively rely upon any
document believed by it to be genuine and to have
been signed or presented by the proper Person.
The Trustee need not investigate any fact or
matter stated in the document.

(ii) Before the Trustee acts or refrains from acting,
it may require an Officers' Certificate or an
Opinion of Counsel or both. The Trustee shall
not be liable for any action it takes or omits to
take in good faith in reliance on such Officers'
Certificate or Opinion of Counsel. The Trustee
may consult with counsel and the written advice
of such counsel or any Opinion of Counsel shall
be full and complete authorization

76
and protection from liability in respect of any
action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon.

(iii) The Trustee may act through its attorneys and
agents and shall not be responsible for the
misconduct or negligence of any agent appointed
with due care.

(iv) The Trustee shall not be liable for any action it
takes or omits to take in good faith which it
believes to be authorized or within its rights or
powers conferred upon it by this Indenture. A
permissive right granted to the Trustee hereunder
shall not be deemed an obligation to act.

(v) Unless otherwise specifically provided in this
Indenture, any demand, request, direction or
notice from the Company shall be sufficient if
signed by an Officer of the Company.

(vi) The Trustee shall not be charged with knowledge
of any Default or Event of Default with respect
to the Securities unless either (1) a Responsible
Officer shall have actual knowledge of such
Default or Event of Default or (2) written notice
of such Default or Event of Default shall have
been given to the Trustee by the Company, any
Guarantor or any other obligor on the Securities
or by any Holder of the Securities.

SECTION 7.3. Individual Rights of Trustee.

The Trustee in its individual or any other capacity may become
the owner or pledgee of Securities and may otherwise deal with the Company or
any Affiliate of the Company with the same rights it would have if it were not
Trustee. Any Agent may do the same with like rights. However, the Trustee is
subject to Sections 7.10 and 7.11 hereof.

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SECTION 7.4. Trustee's Disclaimer.

The Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Indenture or the
Securities, nor shall it be accountable for the Company's use of the proceeds
from the Securities or any money paid to the Company or upon the Company's
direction under any provision of this Indenture, nor shall it be responsible
for the use or application of any money received by any Paying Agent other than
the Trustee, nor shall it be responsible for any statement or recital herein or
any statement in the Securities or any other document in connection with the
sale of the Securities or pursuant to this Indenture other than its certificate
of authentication.

SECTION 7.5. Notice of Defaults.

The Company is required, upon becoming aware of any Default or
Event of Default, to deliver to the Trustee a statement specifying such Default
or Event of Default.

If a Default or Event of Default occurs and is continuing and
if it is known to the Trustee, the Trustee shall mail to Holders a notice of
the Default or Event of Default within 90 days after such Default or Event of
Default occurs. Except in the case of a Default or Event of Default in payment
on any Security, the Trustee may withhold the notice if and so long as a
committee of its Responsible Officers in good faith determines that withholding
the notice is in the interests of the Holders.

SECTION 7.6. Reports by Trustee to Holders.

Within 60 days after each December 31 beginning with the
December 31 following the date hereof, the Trustee shall mail to the Holders a
brief report dated as of such reporting date that complies with TIA Section
313(a) (but if no event described in TIA Section 313(a) has occurred within the
twelve months preceding the reporting date, no report need be transmitted).
The Trustee also shall comply with TIA Section 313(b). The Trustee shall also
transmit by mail all reports as required by TIA Section 313(c).

A copy of each report at the time of its mailing to the
Holders shall be mailed to the Company and filed with the Commission and each
stock exchange on which the Securities are listed in accordance with TIA
Section 313(d). The Company shall promptly notify the Trustee when the
Securities are listed on any stock exchange.

SECTION 7.7. Compensation and Indemnity.

The Company shall pay to the Trustee from time to time
reasonable compensation for its acceptance of this Indenture and services
rendered by it hereunder. The Trustee's compensation shall not be limited by
any law on compensation of a trustee of an express trust. The Company shall
reimburse the Trustee promptly upon request for all reasonable disbursements,
advances and expenses incurred or made by it in addition to the compensation
for its services. Such expenses shall include the reasonable compensation,
disbursements and expenses of the Trustee's agents and counsel.

The Company shall indemnify the Trustee against any and all
losses, liabilities, damages, claims or expenses incurred by it arising out of
or in connection with the acceptance of its duties and the administration of
the trusts under this Indenture, except as set forth below. The Trustee shall
notify the Company promptly of any claim for which it may seek indemnity.
Failure by the Trustee to so notify the Company shall not relieve the Company
of its obligations hereunder. The Company shall defend the claim and the
Trustee shall cooperate in the defense. The Trustee may have separate counsel
and the Company shall pay the reasonable fees and expenses of such counsel.
The Company need not pay for any settlement made without its consent, which
consent shall not be unreasonably withheld.

In addition, the Trustee will not be under any obligation to
exercise any of its rights or powers under this Indenture at the request of any
Holder of Securities, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.

The obligations of the Company under this Section 7.7 shall
survive the satisfaction and discharge of this Indenture.

79
The Company need not reimburse any expense or indemnify
against any loss or liability incurred by the Trustee through its own
negligence or bad faith.

To secure the Company's payment obligations in this Section,
the Trustee shall have a Lien prior to the Securities on all money or property
held or collected by the Trustee, except that held in trust to pay principal
and interest on particular Securities. Such Lien shall survive the resignation
or removal of the Trustee and the satisfaction and discharge of this Indenture.

When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.1(ix) or (x) hereof occurs, the
expenses and the compensation for the services (including the fees and expenses
of its agents and counsel) are intended to constitute expenses of
administration under any Bankruptcy Law.

SECTION 7.8. Replacement of Trustee.

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

The Trustee may resign in writing at any time and be
discharged from the trust hereby created by so notifying the Company. The
Holders of a majority in principal amount of the then outstanding Securities
may remove the Trustee by so notifying the Trustee and the Company in writing.
The Company may remove the Trustee if:

(1) the Trustee fails to comply with Section 7.10
hereof;

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

(3) a Custodian or public officer takes charge of the
Trustee or its property; or

(4) the Trustee becomes incapable of acting.

If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason,

80
the Company shall promptly appoint a successor Trustee. Within one year after
the successor Trustee takes office, the Holders of a majority in principal
amount of the then outstanding Securities may appoint a successor Trustee to
replace the successor Trustee appointed by the Company.

If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company, or the Holders of at least 10% in principal amount of the then
outstanding Securities may petition any court of competent jurisdiction for the
appointment of a successor Trustee.

If the Trustee after written request by any Holder who has
been a Holder for at least six months fails to comply with Section 7.10 hereof,
such Holder may petition any court of competent jurisdiction for the removal of
the Trustee and the appointment of a successor Trustee.

A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, provided all sums
owing to the Trustee hereunder have been paid and subject to the Lien provided
for in Section 7.7 hereof. Notwithstanding replacement of the Trustee pursuant
to this Section 7.8, the Company's obligations under Section 7.7 hereof shall
continue for the benefit of the retiring Trustee.

SECTION 7.9. Successor Trustee or Agent by Merger, Etc.

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

SECTION 7.10. Eligibility; Disqualification.

There shall at all times be a Trustee hereunder which shall be
a corporation organized and doing business

81
under the laws of the United States of America or of any state thereof
authorized under such laws to exercise corporate trustee power, shall be
subject to supervision or examination by federal or state authority and shall
have a combined capital and surplus of at least $100 million as set forth in
its most recent published annual report of condition.

This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1), (2) and (5). The Trustee is subject to
TIA Section 310(b).

SECTION 7.11. Preferential Collection of Claims Against
Company.

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

ARTICLE 8
DISCHARGE OF INDENTURE

SECTION 8.1. Defeasance and Discharge of This Indenture and
the Securities.

The Company may, at the option of its Board of Directors
evidenced by a resolution set forth in an Officers' Certificate, at any time,
with respect to the Securities, elect to have either Section 8.2 or 8.3 hereof
be applied to all outstanding Securities upon compliance with the conditions
set forth below in this Article 8.

SECTION 8.2. Legal Defeasance and Discharge.

Upon the Company's exercise under Section 8.1 hereof of the
option applicable to this Section 8.2, the Company and the Guarantors shall be
deemed to have been discharged from their respective obligations with respect
to all outstanding Securities on the date the conditions set forth below are
satisfied (hereinafter, "Legal Defeasance"). For this purpose, such Legal
Defeasance means that the Company shall be deemed to have paid and discharged
the entire Indebtedness represented by the outstanding Securities, which shall
thereafter be deemed to be "outstanding" only for the purposes of Section 8.5

82
hereof and the other Sections of this Indenture referred to in clauses (i) and
(ii) of this Section 8.2, and to have satisfied all its other obligations under
such Securities and this Indenture (and the Trustee, on demand of and at the
expense of the Company, shall execute proper instruments acknowledging the
same), except for the following provisions which shall survive until otherwise
terminated or discharged hereunder: (i) the rights of Holders of outstanding
Securities to receive solely from the trust fund described in Section 8.4
hereof, and as more fully set forth in such Section, payments in respect of the
principal of, premium, if any, and interest on such Securities when such
payments are due, (ii) the Company's obligations with respect to such
Securities under Sections 2.4, 2.6, 2.7, 2.10 and 4.2 hereof, (iii) the rights,
powers, trusts, duties and immunities of the Trustee hereunder, including,
without limitation, the Trustee's rights under Section 7.7 hereof, and the
Company's obligations in connection therewith and (iv) this Article 8. Upon
Legal Defeasance as provided herein, the Guarantee of each Guarantor shall be
fully released and discharged and the Trustee shall promptly execute and
deliver to the Company any documents reasonably requested by the Company to
evidence or effect the foregoing. Subject to compliance with this Article 8,
the Company may exercise its option under this Section 8.2 notwithstanding the
prior exercise of its option under Section 8.3 hereof with respect to the
Securities.

SECTION 8.3. Covenant Defeasance.

Upon the Company's exercise under Section 8.1 hereof of the
option applicable to this Section 8.3, the Company and the Guarantors shall be
released from their respective obligations under the covenants contained in
Sections 2.15, 4.3, 4.7, 4.8, 4.9, 4.10, 4.11, 4.12, 4.13, 4.14 and 4.15 and
Article 5 hereof with respect to the outstanding Securities on and after the
date the conditions set forth below are satisfied (hereinafter, "Covenant
Defeasance"), and the Securities shall thereafter be deemed not "outstanding"
for the purposes of any direction, waiver, consent or declaration or act of
Holders (and the consequences of any thereof) in connection with such
covenants, but shall continue to be deemed "outstanding" for all other purposes
hereunder (it being understood that such Securities shall not be deemed
outstanding for accounting purposes). For this purpose, such Covenant
Defeasance means that, with respect to the outstanding Securities, the Company
may omit to comply

83
with and shall have no liability in respect of any term, condition or
limitation set forth in any such covenant, whether directly or indirectly, by
reason of any reference elsewhere herein to any such covenant or by reason of a
reference in any such covenant to any other provision herein or in any other
document and such omission to comply shall not constitute a Default or an Event
of Default under Sections 6.1(iii) and 6.1(iv) hereof, but, except as specified
above, the remainder of this Indenture and such Securities shall be unaffected
thereby. In addition upon the Company's exercise under Section 8.1 hereof of
the option applicable to this Section 8.3, Sections 6.1(v) through 6.1(viii)
hereof shall not constitute Events of Default.

SECTION 8.4. Conditions to Legal or Covenant Defeasance.

The following shall be the conditions to the application of
either Section 8.2 or Section 8.3 hereof to the outstanding Securities:

(i) The Company shall irrevocably have deposited or
caused to be deposited with the Trustee (or
another trustee satisfying the requirements of
Section 7.10 who shall agree to comply with the
provisions of this Article 8 applicable to it) as
trust funds in trust for the purpose of making
the following payments, specifically pledged as
security for, and dedicated solely to, the
benefit of the Holders of such Securities, (a)
cash in an amount, or (b) U.S. Government
Obligations which through the scheduled payment
of principal and interest in respect thereof in
accordance with their terms will provide, not
later than one day before the due date of any
payment, cash in an amount, or (c) a combination
thereof, in such amounts as will be sufficient,
in the opinion of a nationally recognized firm of
independent public accountants expressed in a
written certification thereof delivered to the
Trustee, to pay and discharge and which shall be
applied by the Paying Agent (or other qualifying
trustee) to pay and discharge the principal

of, premium, if any, and interest on such
outstanding Securities on the Maturity Date or on
the applicable Redemption Date, as the case may
be, of such principal or installment of
principal, premium, if any, or interest on the
Securities, and the Holders of the Securities
must have a valid, perfected, exclusive security
interest in such trust; provided that the Paying
Agent shall have been irrevocably instructed to
apply such cash and the proceeds of such U.S.
Government Obligations to said payments with
respect to the Securities. The Paying Agent
shall promptly advise the Trustee in writing of
any cash or Securities deposited pursuant to this
Section 8.4.

(ii) In the case of an election under Section 8.2
hereof, the Company shall have delivered to the
Trustee an Opinion of Counsel in the United
States confirming that (a) the Company has
received from, or there has been published by,
the Internal Revenue Service a ruling or (b)
since the date hereof, there has been a change in
the applicable federal income tax law, in either
case to the effect that, and based thereon such
Opinion of Counsel shall confirm that, the
Holders of the outstanding Securities will not
recognize income, gain or loss for federal income
tax purposes as a result of such Legal Defeasance
and will be subject to federal income tax on the
same amounts, in the same manner and at the same
times as would have been the case if such Legal
Defeasance had not occurred.

(iii) In the case of an election under Section 8.3
hereof, the Company shall have delivered to the
Trustee an Opinion of Counsel in the United
States confirming that the Holders of the
outstanding Securities will not recognize income,
gain or loss for federal income tax purposes as a
result of such Covenant

85
Defeasance and will be subject to federal income
tax on the same amounts, in the same manner and
at the same times as would have been the case if
such Covenant Defeasance had not occurred.

(iv) No Default or Event of Default with respect to
the Securities shall have occurred and be
continuing on the date of such deposit (other
than a Default or Event of Default resulting from
the borrowing of funds to be applied to such
deposit) or, insofar as Section 6.1(ix) or 6.1(x)
hereof is concerned, at any time in the period
ending on the 91st day after the date of such
deposit (it being understood that this condition
shall not be deemed satisfied until the
expiration of such period, but in the case of
Covenant Defeasance, the covenants which are
defeased under Section 8.3 hereof will cease to
be in effect unless an Event of Default under
Section 6.1(ix) or Section 6.1(x) hereof occurs
during such period).

(v) Such Legal Defeasance or Covenant Defeasance
shall not result in a breach or violation of, or
constitute a default under any material agreement
or instrument (other than this Indenture) to
which the Company or any of its Subsidiaries is a
party or by which the Company or any of its
Subsidiaries is bound (other than a breach,
violation or default resulting from the borrowing
of funds to be applied to such deposit).

(vi) The Company shall have delivered to the Trustee
an Opinion of Counsel to the effect that after
the 91st day following the deposit, the trust
funds will not be subject to the effect of any
applicable bankruptcy, insolvency, reorganization
or similar laws affecting creditors' rights
generally.

(vii) The Company shall have delivered to the Trustee
an Officers' Certificate stating that the deposit
made by the Company pursuant to its election
under Section 8.2 or 8.3 hereof was not made by
the Company with the intent of preferring the
Holders of the Securities over the other
creditors of the Company or with the intent of
defeating, hindering, delaying or defrauding
creditors of the Company or others.

(viii) The Company shall have delivered to the Trustee
an Officers' Certificate and an Opinion of
Counsel in the United States, each stating that
all conditions precedent relating to either the
Legal Defeasance under Section 8.2 hereof or the
Covenant Defeasance under Section 8.3 hereof (as
the case may be) have been complied with as
contemplated by this Section 8.4.

SECTION 8.5. Deposited Cash and U.S. Government Obligations
to be Held in Trust; Other Miscellaneous Provisions.

Subject to Section 8.6 hereof, all cash and U.S. Government
Obligations (including the proceeds thereof) deposited with the Paying Agent
(or other qualifying trustee, collectively for purposes of this Section 8.5,
the "Paying Agent") pursuant to Section 8.4 hereof in respect of the
outstanding Securities shall be held in trust and applied by the Paying Agent,
in accordance with the provisions of such Securities and this Indenture, to the
payment, either directly or through any Paying Agent (including the Company
acting as Paying Agent) as the Trustee may determine, to the Holders of such
Securities of all sums due and to become due thereon in respect of principal,
premium, if any, and interest, but such money need not be segregated from other
funds except to the extent required by law.

The Company shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the cash or U.S.
Government Obligations deposited pursuant to Section 8.4 hereof or the
principal and interest received in respect thereof other than any

87
such tax, fee or other charge which by law is for the account of the Holders of
the outstanding Securities.

Anything in this Article 8 to the contrary notwithstanding,
the Trustee or the Paying Agent, as applicable, shall deliver or pay to the
Company from time to time upon the Company's request any cash or U.S.
Government Obligations held by it as provided in Section 8.4 hereof which, in
the opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee (which
may be the opinion delivered under Section 8.4(i) hereof), are in excess of the
amount thereof which would then be required to be deposited to effect an
equivalent Legal Defeasance or Covenant Defeasance.

SECTION 8.6. Repayment to Company.

Any cash and U.S. Government Obligations (including the
proceeds thereof) 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 two years after such
principal, and premium, if any, or interest has become due and payable shall be
paid to the Company on its written request or (if then held by the Company)
shall be discharged from such trust; and the Holder of such Security shall
thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in The New York Times and
The Wall Street Journal (national edition), notice that such money remains
unclaimed and that, after a date specified therein, which shall not be less
than 30 days from the date of such notification or publication, any unclaimed
balance of such money then remaining will be repaid to the Company.

SECTION 8.7. Reinstatement.

If the Trustee or Paying Agent is unable to apply any cash or
U.S. Government Obligations in accordance with Section 8.2 or 8.3 hereof, as
the case may be, by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise

88
prohibiting such application, then the Company's and the Guarantors'
obligations under this Indenture and the Securities shall be revived and
reinstated as though no deposit had occurred pursuant to Section 8.2 or 8.3
hereof until such time as the Trustee or Paying Agent is permitted to apply all
such money in accordance with Section 8.2 or 8.3 hereof, as the case may be;
provided, however, that, if the Company makes any payment of principal of,
premium, if any, or interest on any Security following the reinstatement of its
obligations, the Company shall be subrogated to the rights of the Holders of
such Security to receive such payment from the cash and U.S. Government
Obligations held by the Trustee or Paying Agent.

ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER

SECTION 9.1. Without Consent of Holders.

Notwithstanding Section 9.2 hereof, the Company, the
Guarantors and the Trustee may amend or supplement this Indenture or the
Securities without the consent of any Holder:

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

(ii) to provide for uncertificated Securities in
addition to or in place of certificated
Securities;

(iii) to provide for the assumption of the Company's
obligations to the Holders of the Securities in
the case of a merger, consolidation or sale of
assets pursuant to Article 5 hereof;

(iv) to provide for the assumption of any Guarantor's
obligations to the Holders of the Securities in
the case of a merger, consolidation or sale of
assets pursuant to Section 10.4 hereof;

(v) to provide for additional Guarantors of the
Securities;

89
(vi) to evidence the release of any Guarantor in
accordance with Article 10 hereof;

(vii) to make any change that would provide any
additional rights or benefits to the Holders of
the Securities or that does not adversely affect
the legal rights hereunder of any such Holder;

(viii) to comply with requirements of the Commission in
order to effect or maintain the qualification of
this Indenture under the TIA;

(ix) in any other case where a supplemental indenture
is required or permitted to be entered into
pursuant to the provisions of Article 10 hereof
without the consent of any Holder; or

(x) to evidence and provide for the acceptance of
appointment hereunder by a successor Trustee with
respect to the Securities.

Upon the request of the Company accompanied by a resolution of
its Board of Directors authorizing the execution of any such amended or
supplemental indenture, and upon receipt by the Trustee of the documents
described in Section 9.6 hereof, the Trustee shall join with the Company in the
execution of any amended or supplemental indenture authorized or permitted by
the terms of this Indenture and to make any further appropriate agreements and
stipulations which may be therein contained, but the Trustee shall not be
obligated to enter into such amended or supplemental indenture which affects
its own rights, duties or immunities under this Indenture or otherwise.

SECTION 9.2. With Consent of Holders.

Except as otherwise provided herein, this Indenture or the
Securities may be amended or supplemented with the consent of the Holders of at
least a majority in principal amount of the Securities then outstanding
(including consents obtained in connection with a tender offer or exchange
offer for such Securities), and any existing default or compliance with any
provision of this

90
Indenture or the Securities may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Securities (including
consents obtained in connection with a tender offer or exchange offer for such
Securities).

Upon the request of the Company, accompanied by a resolution
of its Board of Directors authorizing the execution of any such amended or
supplemental indenture, and upon the filing with the Trustee of evidence
satisfactory to the Trustee of the consent of the Holders as aforesaid, and
upon receipt by the Trustee of the documents described in Section 9.6 hereof,
the Trustee shall join with the Company and the Guarantors in the execution of
such amended or supplemental indenture unless such amended or supplemental
indenture affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise, in which case the Trustee may in its discretion, but
shall not be obligated to, enter into such amended or supplemental indenture.

It shall not be necessary for the consent of the Holders under
this Section 9.2 to approve the particular form of any proposed amendment or
waiver, but it shall be sufficient if such consent approves the substance
thereof.

After an amendment, supplement or waiver under this Section
becomes effective, the Company shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such supplemental indenture or
waiver. Subject to Sections 6.4 and 6.7 hereof, the Holders of a majority in
aggregate principal amount of the Securities then outstanding may waive
compliance in a particular instance by the Company or any Guarantor with any
provision of this Indenture or the Securities. Without the consent of each
Holder affected, however, an amendment or waiver may not (with respect to any
Security held by a non-consenting Holder):

(i) reduce the principal amount of Securities whose
Holders must consent to an amendment, supplement
or waiver;

(ii) reduce the principal of or change the fixed
maturity of any Security;

91
(iii) reduce the rate of or change the time for payment
of interest on any Security;

(iv) waive a Default or Event of Default in the
payment of principal of, or premium, if any, or
interest, on the Securities (except a rescission
of acceleration of the Securities by the Holders
of at least a majority in aggregate principal
amount thereof and a waiver of the Payment
Default that resulted from such acceleration);

(v) make any Security payable in money other than
that stated in the Securities;

(vi) make any change in Section 6.4 or 6.7 hereof; or

(vii) make any change in this sentence of this Section
9.2.

SECTION 9.3. Compliance with TIA.

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

SECTION 9.4. Revocation and Effect of Consents.

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

The Company may, but shall not be obligated to, fix a record
date for determining which Holders must consent to such amendment, supplement
or waiver. If the Company fixes a record date, the record date shall be

92
fixed at (i) the later of 30 days prior to the first solicitation of such
consent or the date of the most recent list of Holders furnished to the Trustee
prior to such solicitation pursuant to Section 2.5 hereof or (ii) such other
date as the Company shall designate.

If a record date is fixed, then notwithstanding the last
sentence of the immediately preceding paragraph, those Persons who were Holders
at such record date (or their duly designated proxies), and only those Persons,
shall be entitled to consent to such amendment or waiver or revoke any consent
previously given, whether or not such persons continue to be Holders after such
record date.

After an amendment, supplement or waiver becomes effective, it
shall bind every Holder, unless such amendment, supplement or waiver makes a
change described in any of clauses (i) through (vii) of Section 9.2, in which
case, the amendment, supplement or waiver shall bind only each Holder of a
Security who has consented to it and every subsequent Holder of a Security or
portion of a Security that evidences the same indebtedness as the consenting
Holder's Security.

SECTION 9.5. Notation on or Exchange of Securities.

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

Failure to make the appropriate notation or issue a new
Security shall not affect the validity and effect of such amendment, supplement
or waiver.

SECTION 9.6. Trustee to Sign Amendments, Etc.

The Trustee shall sign any amendment or supplemental indenture
authorized pursuant to this Article 9 if the amendment or supplemental
indenture does not adversely affect the rights, duties, liabilities or
immunities of the Trustee. If it does, the Trustee may, but need not, sign it.
In signing or refusing to sign such amendment or supplemental indenture, the
Trustee shall be

entitled to receive and, subject to Section 7.1, shall be fully protected in
relying upon, in addition to the documents required by Section 11.4, an
Officers' Certificate and an Opinion of Counsel as conclusive evidence that
such amendment or supplemental indenture is authorized or permitted by this
Indenture, that it is not inconsistent herewith, and that it shall be valid and
binding upon the Company in accordance with its terms. Neither the Company nor
any Guarantor may sign such amendment or supplemental indenture until its Board
of Directors approves it.

ARTICLE 10
GUARANTEE

SECTION 10.1. Guarantee.

In consideration of good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, each of the Guarantors
hereby irrevocably and unconditionally guarantees (the "Guarantee"), jointly
and severally, on a senior basis, to each Holder of a Security authenticated
and delivered by the Trustee and to the Trustee and its successors and assigns,
irrespective of the validity and enforceability of this Indenture, the
Securities or the obligations of the Company under this Indenture or the
Securities, that, in accordance with the terms of this Indenture and the
Securities: (i) the principal and premium (if any) of and interest on the
Securities will be paid in full when due, whether at the Maturity Date or
Interest Payment Date, by acceleration, call for redemption or otherwise; (ii)
the purchase price for all Securities properly and timely tendered for
acceptance in response to a Change of Control Offer or a Senior Asset Sale
Offer will be timely, or otherwise in accordance with the provisions of this
Indenture, paid in full; (iii) all other payment obligations of the Company to
the Holders or the Trustee under this Indenture or the Securities will be
promptly paid in full; and (iv) in case of any extension of time of payment or
renewal of any Securities or any of such other obligations, they will be paid
in full when due or performed in accordance with the terms of the extension or
renewal, whether at the Maturity Date, as so extended, by acceleration, call
for redemption, upon a Change of Control Offer, upon a Senior Asset Sale Offer
or otherwise. Failing payment when due of any amount so Guaranteed for
whatever reason, each Guarantor shall be jointly and severally obligated

94
to pay the same before failure so to pay becomes an Event of Default. If the
Company or a Guarantor defaults in the payment of the principal of, premium, if
any, or interest on, the Securities when and as the same shall become due,
whether upon maturity, acceleration, call for redemption, upon a Change of
Control Offer, Asset Sale Offer or otherwise, without the necessity of action
by the Trustee or any Holder, each Guarantor shall be required, jointly and
severally, to promptly make such payment in full.

Each Guarantor hereby agrees that its obligations with regard
to this Guarantee shall be unconditional, irrespective of the validity,
regularity or enforceability of the Securities or this Indenture, the absence
of any action to enforce the same, any delays in obtaining or realizing upon or
failures to obtain or realize upon collateral, the recovery of any judgment
against the Company, any action to enforce the same or any other circumstances
that might otherwise constitute a legal or equitable discharge or defense of a
Guarantor (except as provided in Sections 10.4 and 10.5 hereof). Each
Guarantor hereby waives diligence, presentment, demand of payment, filing of
claims with a court in the event of insolvency or bankruptcy of the Company,
any right to require a proceeding first against the Company or right to require
the prior disposition of the assets of the Company to meet its obligations,
protest, notice and all demands whatsoever and covenants that this Guarantee
will not be discharged (except to the extent released pursuant to Sections 10.4
or 10.5 hereof) except by complete performance of the obligations contained in
the Securities and this Indenture.

If any Holder or the Trustee is required by any court or
otherwise to return to either the Company or any Guarantor, or any Custodian,
trustee, or similar official acting in relation to either the Company or such
Guarantor, any amount paid by either the Company or such Guarantor to the
Trustee or such Holder, this Guarantee, to the extent theretofore discharged,
shall be reinstated in full force and effect (except to the extent released
pursuant to Sections 10.4 or 10.5 hereof). Each Guarantor agrees that it will
not be entitled to any right of subrogation in relation to the Holders in
respect of any obligations guaranteed hereby until payment in full of all
obligations guaranteed hereby. Each Guarantor further agrees that, as between
such Guarantor, on the one hand, and the Holders and the Trustee, on the other
hand,

(i) the maturity of the obligations guaranteed hereby may be accelerated as
provided in Article 6 hereof for the purposes of this Guarantee,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration as to the Company of the obligations guaranteed hereby, and (ii)
in the event of any declaration of acceleration of those obligations as
provided in Article 6, those obligations (whether or not due and payable) will
forthwith become due and payable by each of the Guarantors for the purpose of
this Guarantee.

Each Guarantor and by its acceptance of a Security issued
hereunder each Holder hereby confirms that it is the intention of all such
parties that the guarantee by such Guarantor set forth in the first paragraph
of this Section 10.1 not constitute a fraudulent transfer or conveyance for
purpose of any Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the
Uniform Fraudulent Transfer Act or any similar Federal or state law. To
effectuate the foregoing intention, the Holders and such Guarantor hereby
irrevocably agree that the obligations of such Guarantor under its Guarantee
set forth in the first paragraph of this Section 10.1 shall be limited to the
maximum amount as will, after giving effect to all other contingent and fixed
liabilities of such Guarantor and after giving effect to any collections from
or payments made by or on behalf of any other Guarantor in respect of the
obligations of such other Guarantor under its Guarantee or pursuant to the
following paragraph of this Section 10.1, result in the obligations of such
Guarantor under such Guarantee not constituting such a fraudulent transfer or
conveyance.

Each Guarantor that makes any payment or distribution under
the first paragraph of this Section 10.1 shall be entitled to a contribution
from each other Guarantor equal to its Pro Rata Portion of such payment or
distribution. For purposes of the foregoing, the "Pro Rata Portion" of any
Guarantor means the percentage of the net assets of all Guarantors held by such
Guarantor, determined in accordance with GAAP.

It is the intention of each Guarantor and the Company that the
obligations of each Guarantor hereunder shall be joint and several and in, but
not in excess of, the maximum amount permitted by applicable law. Accordingly,
if the obligations in respect of the Guarantee would be annulled, avoided or
subordinated to the creditors of any Guarantor by a court of competent
jurisdiction

96
in a proceeding actually pending before such court as a result of a
determination both that such Guarantee was made without fair consideration and,
immediately after giving effect thereto, such Guarantor was insolvent or unable
to pay its debts as they mature or left with an unreasonably small capital,
then the obligations of such Guarantor under such Guarantee shall be reduced by
such court if and to the extent such reduction would result in the avoidance of
such annulment, avoidance or subordination; provided, however, that any
reduction pursuant to this paragraph shall be made in the smallest amount as is
strictly necessary to reach such result. For purposes of this paragraph, "fair
consideration," "insolvency," "unable to pay its debts as they mature,"
"unreasonably small capital," and the effective times of reductions, if any,
required by this paragraph shall be determined in accordance with applicable
law.

SECTION 10.2. Execution and Delivery of Guarantee.

Each Guarantor shall, by virtue of such Guarantor's execution
and delivery of this Indenture or such Guarantor's execution and delivery of an
indenture supplement pursuant to Section 10.3 hereof, be deemed to have signed
on each Security issued hereunder the notation of guarantee set forth on the
form of the Securities attached hereto as Exhibit A to the same extent as if
the signature of such Guarantor appeared on such Security.

The delivery of any Security by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the
guarantee set forth in Section 10.1 on behalf of each Guarantor. The notation
of a guaranty set forth on any Security shall be null and void and of no
further effect with respect to the guaranty of any Guarantor which, pursuant to
Section 10.4 or Section 10.5, is released from such Guarantee.

SECTION 10.3. Future Subsidiary Guarantors.

Upon (i) the acquisition by the Company or Guarantor of the
Capital Stock of any Person, if, as a result of such acquisition, such Person
becomes a Subsidiary of the Company or any Guarantor or (ii) the last day of
any fiscal quarter during which any Subsidiary of the Company that is not a
Guarantor as of such date and has not previously been released as a Guarantor
pursuant to Section 10.4 or Section 10.5 of this Indenture becomes a

Subsidiary, such Subsidiary (hereinafter any such Subsidiary, except any
Excluded Guarantee Subsidiary (as defined below), being called a "Future
Subsidiary Guarantor") shall unconditionally guarantee the obligations of the
Company with respect to payment and performance of the Securities and the other
obligations of the Company under this Indenture to the same extent that such
obligations are guaranteed by the other Guarantors pursuant to Section 10.1
hereof; and, within 60 days of the date of such occurrence, such Future
Subsidiary Guarantor shall execute and deliver to the Trustee a supplemental
indenture, which shall be in a form satisfactory to the Trustee, making such
Future Subsidiary Guarantor a party to this Indenture; provided, however, that
the foregoing provisions shall not apply to (A) any Subsidiary referenced in
clause (i) or clause (ii) above that is prohibited by law or by the terms of
any agreement from making the guarantee set forth in Section 10.1 hereof (an
"Excluded Guarantee Subsidiary") (provided that such Subsidiary will become a
Future Subsidiary Guarantor as of the date such prohibition is removed or
lapses), or (B) a Subsidiary which would have been released from its guarantee,
by virtue of events set forth in Section 10.5 hereof, had such Subsidiary been
a Guarantor at the time such events occurred, or (C) a Subsidiary of any Person
which has been released as a Guarantor pursuant to Section 10.5 hereof, or (D)
▇▇▇▇▇▇▇ Funding, ▇▇▇▇▇▇▇ Indemnity or any of their respective successors.

SECTION 10.4. Guarantor May Consolidate, Etc. on Certain
Terms.

Nothing contained in this Indenture or in any of the
Securities shall prevent any consolidation or merger of a Guarantor with or
into the Company or any other Guarantor. Upon any such consolidation or
merger, the Guarantees (as set forth in Section 10.1 hereof) of the Guarantor
which is not the survivor of the merger or consolidation, and of any Subsidiary
of such Guarantor that is also a Guarantor, shall be released and shall no
longer have any force or effect.

Nothing contained in this Indenture shall prevent any sale or
conveyance of assets of any Guarantor (whether or not constituting all or
substantially all of the assets of such Guarantor) to any Person, provided that
the Company shall comply with the provisions of Sections 2.15 and 4.10 hereof,
and provided further that, in the event that all or substantially all of the
assets

of a Guarantor are sold or conveyed, the Guarantees of such Guarantor (as set
forth in Section 10.1 hereof) shall be released and shall no longer have any
force or effect.

Except as provided in the first paragraph of Section 10.4 or
Section 10.5 hereof, each Guarantor shall not, directly or indirectly,
consolidate with or merge with or into another Person, unless (i) either (a)
the Guarantor is the continuing entity or (b) the resulting or surviving entity
is a corporation organized under the laws of the United States, any state
thereof or the District of Columbia and expressly assumes by supplemental
indenture all of the obligations of the Guarantor in connection with the
Securities and this Indenture; (ii) no Default or Event of Default would occur
as a consequence of (after giving effect, on a pro forma basis, to) such
transaction; and (iii) the Guarantor has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation or merger and if a supplemental indenture is required, such
supplemental indenture comply with this Indenture and that all conditions
precedent herein relating to such transaction have been satisfied.

Upon any consolidation or merger of the Guarantor in
accordance with Section 10.4 hereof, the successor corporation formed by such
consolidation or into which the Guarantor is merged shall succeed to, and be
substituted for, and may exercise every right and power of, the Guarantor under
this Indenture with the same effect as if such successor corporation had been
named herein as the Guarantor, and when a successor corporation duly assumes
all of the obligations of the Guarantor pursuant hereto and pursuant to the
Securities, the Guarantor shall be released from such obligations.

SECTION 10.5. Release of Guarantors.

Without any further notice or action being required by any
Person, any Guarantor, and each Subsidiary of such Guarantor that is also a
Guarantor, shall be fully and conditionally released and discharged from all
obligations under its Guarantee and this Indenture upon the sale or disposition
(whether by merger, stock purchase, asset sale or otherwise) of a Guarantor (or
all of its assets) to an entity which is not a Subsidiary of the Company, or
upon the dissolution of any Guarantor, which sale, disposition or dissolution
is otherwise in compliance

with this Indenture, such Guarantor shall be deemed released from its
obligations under its Guarantee of the Securities; provided, however, that any
such termination shall occur only to the extent that all obligations of such
Guarantor under all of its guarantees of, and under all of its pledges of
assets or other security interests which secure any Indebtedness of the Company
shall also terminate upon such sale, disposition or dissolution.
Notwithstanding the foregoing, if upon consummation of the Spinoff Transaction,
PCA ceases to satisfy the conditions necessary to be a subsidiary of the
Company under the definition of "Subsidiary," PCA shall be deemed released from
its Guarantee of the Securities.

The releases and discharges set forth in the first paragraph
of this Section 10.5 shall be effective on the date of consummation thereof.
At the written request of the Company, the Trustee shall promptly execute and
deliver appropriate instruments in forms reasonably acceptable to the Company
evidencing and further implementing any releases and discharges pursuant to the
foregoing provisions. If the Company desires the instruments evidencing or
implementing any releases or discharges to be executed prior to the
effectiveness of such releases and discharges as set forth above, such
instruments may be made conditional upon the occurrence of the events necessary
to cause the effectiveness of such releases and discharges, as specified in the
first sentence of this Section 10.5.

Notwithstanding the foregoing provisions of this Article 10,
(i) any Guarantor whose Guarantee would otherwise be released pursuant to the
provisions of this Section 10.5 may elect, by written notice to the Trustee, to
maintain such Guarantee in effect notwithstanding the event or events that
otherwise would cause the release of such Guarantee (which election to maintain
such Guarantee in effect may be conditional or for a limited period of time),
and (ii) any Subsidiary of the Company which is not a Guarantor may elect, by
written notice to the Trustee, to become a Guarantor (which election may be
conditional or for a limited period of time).

SECTION 10.6. Certain Bankruptcy Events.

Each Guarantor hereby covenants and agrees, to the fullest
extent that it may do so under applicable law, that in the event of the
insolvency, bankruptcy, dissolution, liquidation or reorganization of the
Company,

100
such Guarantor shall not file (or join in any filing of), or otherwise seek to
participate in the filing of, any motion or request seeking to stay or to
prohibit (even temporarily) execution on the Guarantee and hereby waives and
agrees not to take the benefit of any such stay of execution, whether under the
Bankruptcy Law or otherwise.

ARTICLE 11
MISCELLANEOUS

SECTION 11.1. TIA Controls.

If any provision of this Indenture limits, qualifies or
conflicts with the duties imposed by TIA Section 318(c), the imposed duties
shall control.

SECTION 11.2. Notices.

Any notice or communication to the Company or any Guarantor or
the Trustee is duly given if in writing and delivered in person or mailed by
first class mail (registered or certified, return receipt requested),
telecopier or overnight air courier guaranteeing next day delivery, addressed
as follows:

If to the Company or to any Guarantor:

▇▇▇▇▇▇▇ Enterprises, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇-▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Secretary

With, in the case of notices delivered in connection with
Section 6.1 hereof, a copy to:

▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇

101
If to the Trustee:

Chemical Bank
Corporate Trust Department - 15th Floor
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Vice President-Corporate Trustee
Administration

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

All notices and communications (other than those sent to
Holders) shall be deemed to have been duly given: at the time delivered by
hand, if personally delivered; five Business Days after being deposited in the
mail, postage prepaid, if mailed; when receipt acknowledged, if telecopied; and
the next Business Day after timely delivery to the courier, if sent by
overnight air courier guaranteeing next day delivery.

Unless otherwise set forth above, any notice or communication
to a Holder shall be mailed by first class mail, certified or registered,
return receipt requested, or by overnight air courier guaranteeing next day
delivery to its address shown on the register kept by the Registrar. Any
notice or communication shall also be so mailed to any Person described in TIA
Section 313(c), to the extent required by the TIA. Failure to mail a notice or
communication to a Holder or any defect in it shall not affect its sufficiency
with respect to other Holders.

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

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

SECTION 11.3. Communication by Holders With Other Holders.

Holders may communicate pursuant to TIA Section 312(b) with
other Holders with respect to their rights under this Indenture or the
Securities. The Company, the

102
Trustee, the Registrar and anyone else shall have the protection of TIA Section
312(c).

SECTION 11.4. Certificate and Opinion as to Conditions
Precedent.

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

(1) an Officers' Certificate (which shall include the
statements set forth in Section 11.5 hereof) stating
that, in the opinion of the signers, all conditions
precedent and covenants, if any, provided for in this
Indenture relating to the proposed action have been
satisfied; and

(2) an Opinion of Counsel (which shall include the
statements set forth in Section 11.5 hereof) stating
that, in the opinion of such counsel, all such
conditions precedent and covenants have been
satisfied.

SECTION 11.5. Statements Required in Certificate or Opinion.

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

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

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

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

103
(4) a statement as to whether or not, in the opinion of
such person, such condition or covenant has been
satisfied; provided, however, that with respect to
matters of fact, an Opinion of Counsel may rely on an
Officers' Certificate or certificates of public
officials.

SECTION 11.6. Rules by Trustee and Agents.

The Trustee may make reasonable rules for action by or at a
meeting of Holders. The Registrar or Paying Agent may make reasonable rules
and set reasonable requirements for its functions.

SECTION 11.7. Legal Holidays.

If a payment date is a Legal Holiday at a place of payment,
payment may be made at that place on the next succeeding day that is not a
Legal Holiday, and no interest shall accrue for the intervening period.

SECTION 11.8. No Personal Liability of Directors, Officers,
Employees and Stockholders.

No director, officer, employee, incorporator or stockholder of
the Company or of any Guarantor, as such, shall have any liability for any
obligations of the Company or of any Guarantor under the Securities, the
Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder of the Securities by accepting a
Security waives and releases all such liability. The waiver and release are
part of the consideration for issuance of the Securities.

SECTION 11.9. Duplicate Originals.

The parties may sign any number of copies of this Indenture.
One signed copy is enough to prove this Indenture.

SECTION 11.10. Governing Law.

The internal law of the State of New York, shall govern and be
used to construe this Indenture and the Securities, without regard to the
conflict of laws provisions thereof.

104
SECTION 11.11. No Adverse Interpretation of Other Agreements.

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

SECTION 11.12. Successors.

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

SECTION 11.13. Severability.

In case any provision in this Indenture or in the Securities
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby, it being intended that all of the provisions hereof shall be
enforceable to the full extent permitted by law.

SECTION 11.14. Counterpart Originals.

The parties may sign any number of copies of this Indenture.
Each signed copy shall be an original, but all of them together represent the
same agreement.

SECTION 11.15. Table of Contents, Headings, Etc.

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

105
SIGNATURES

Executed this ___ day of February, 1996.

▇▇▇▇▇▇▇ ENTERPRISES, INC.

By:_____________________________
Name:
Title:

CHEMICAL BANK, as Trustee

By:_____________________________
Name:
Title:

GUARANTORS LISTED ON SCHEDULE I
HERETO

By:_____________________________
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: __________ of each
Guarantor

106

SCHEDULE I

Guarantors

A.B.C. Health Equipment Corp.
AdviNet, Inc.
AGI-Camelot, Inc.
AGI-▇▇▇▇▇▇▇▇ County Health Care, Inc.
Alliance Health Services, Inc.
Alliance Home Health Care, Inc.
Amco Medical Service, Inc.
American Transitional Care Centers of Texas, Inc.
American Transitional Care Dallas -- Ft. Worth, Inc.
American Transitional Health Care, Inc.
American Transitional Hospitals, Inc.
American Transitional Hospitals of Indiana, Inc.
American Transitional Hospitals of Oklahoma, Inc.
American Transitional Hospitals of Tennessee, Inc.
American Transitional Hospitals -- Texas Medical
Center, Inc.
ATH -- Clear Lake, Inc.
ATH Columbus, Inc.
ATH Del Oro, Inc.
ATH Heights, Inc.
ATH Oklahoma City, Inc.
ATH Tucson, Inc.
▇▇▇▇▇▇▇ Acquisition Corporation
▇▇▇▇▇▇▇ Assisted Living, Inc.
▇▇▇▇▇▇▇ Health and Rehabilitation Services, Inc.
▇▇▇▇▇▇▇ Enterprises -- Alabama, Inc.
▇▇▇▇▇▇▇ Enterprises -- Arizona, Inc.
▇▇▇▇▇▇▇ Enterprises -- Arkansas, Inc.
▇▇▇▇▇▇▇ Enterprises -- California, Inc.
▇▇▇▇▇▇▇ Enterprises -- Colorado, Inc.
▇▇▇▇▇▇▇ Enterprises -- Connecticut, Inc.
▇▇▇▇▇▇▇ Enterprises -- Delaware, Inc.
▇▇▇▇▇▇▇ Enterprises -- Distribution Services, Inc.
▇▇▇▇▇▇▇ Enterprises -- District of Columbia, Inc.
▇▇▇▇▇▇▇ Enterprises -- Florida, Inc.
▇▇▇▇▇▇▇ Enterprises -- Garden Terrace, Inc.
▇▇▇▇▇▇▇ Enterprises -- Georgia, Inc.
▇▇▇▇▇▇▇ Enterprises -- Hawaii, Inc.
▇▇▇▇▇▇▇ Enterprises -- Idaho, Inc.
▇▇▇▇▇▇▇ Enterprises -- Illinois, Inc.
▇▇▇▇▇▇▇ Enterprises -- Indiana, Inc.
▇▇▇▇▇▇▇ Enterprises -- Iowa, Inc.
▇▇▇▇▇▇▇ Enterprises -- Kansas, Inc.
▇▇▇▇▇▇▇ Enterprises -- Kentucky, Inc.
▇▇▇▇▇▇▇ Enterprises -- Louisiana, Inc.

100

107

▇▇▇▇▇▇▇ Enterprises -- Maine, Inc.
▇▇▇▇▇▇▇ Enterprises -- Maryland, Inc.
▇▇▇▇▇▇▇ Enterprises -- Massachusetts, Inc.
▇▇▇▇▇▇▇ Enterprises -- Michigan, Inc.
▇▇▇▇▇▇▇ Enterprises -- Minnesota, Inc.
▇▇▇▇▇▇▇ Enterprises -- Mississippi, Inc.
▇▇▇▇▇▇▇ Enterprises -- Missouri, Inc.
▇▇▇▇▇▇▇ Enterprises -- Montana, Inc.
▇▇▇▇▇▇▇ Enterprises -- Nebraska, Inc.
▇▇▇▇▇▇▇ Enterprises -- Nevada, Inc.
▇▇▇▇▇▇▇ Enterprises -- New Hampshire, Inc.
▇▇▇▇▇▇▇ Enterprises -- New Jersey, Inc.
▇▇▇▇▇▇▇ Enterprises -- New Mexico, Inc.
▇▇▇▇▇▇▇ Enterprises -- North Carolina, Inc.
▇▇▇▇▇▇▇ Enterprises -- North Dakota, Inc.
▇▇▇▇▇▇▇ Enterprises -- Ohio, Inc.
▇▇▇▇▇▇▇ Enterprises -- Oklahoma, Inc.
▇▇▇▇▇▇▇ Enterprises -- Oregon, Inc.
▇▇▇▇▇▇▇ Enterprises -- Pennsylvania, Inc.
▇▇▇▇▇▇▇ Enterprises -- Rhode Island, Inc.
▇▇▇▇▇▇▇ Enterprises -- South Carolina, Inc.
▇▇▇▇▇▇▇ Enterprises -- Tennessee, Inc.
▇▇▇▇▇▇▇ Enterprises -- Texas, Inc.
▇▇▇▇▇▇▇ Enterprises -- Utah, Inc.
▇▇▇▇▇▇▇ Enterprises -- Vermont, Inc.
▇▇▇▇▇▇▇ Enterprises -- Virginia, Inc.
▇▇▇▇▇▇▇ Enterprises -- Washington, Inc.
▇▇▇▇▇▇▇ Enterprises -- West Virginia, Inc.
▇▇▇▇▇▇▇ Enterprises -- Wisconsin, Inc.
▇▇▇▇▇▇▇ Enterprises -- Wyoming, Inc.
▇▇▇▇▇▇▇ Enterprises Japan Limited
▇▇▇▇▇▇▇ Enterprises Medical Equipment Corporation
▇▇▇▇▇▇▇ Enterprises Rehabilitation Corporation
▇▇▇▇▇▇▇ Holdings I, Inc.
▇▇▇▇▇▇▇ Manor Inc. of Hawaii
▇▇▇▇▇▇▇ Real Estate Holdings, Inc.
▇▇▇▇▇▇▇ ▇▇▇▇▇ Depositor, Inc.
▇▇▇▇▇▇▇ Savana Cay Manor, Inc.
Brownstone Pharmacy, Inc.
Columbia-Valley Nursing Home, Inc.
Commercial Management, Inc.
Computran Systems, Inc.
Continental Care Centers of Council Bluffs, Inc.
DD Wholesale, Inc.
▇▇▇▇▇▇▇▇▇▇ Drug, Inc.
▇▇▇▇▇▇▇▇▇▇ Rx Services of Rhode Island, Inc.
▇▇▇▇▇▇▇▇▇▇ Rx Services of Massachusetts, Inc.
Forest City Building Ltd.
Hallmark Convalescent Homes, Inc.

101

108

Healthcare Prescription Services, Inc.
Home Medical Systems, Inc.
Hospice Preferred Choice, Inc.
Hospital Facilities Corporation
Insta-Care Holdings, Inc.
Insta-Care Pharmacy Services Corporation
Insurance Software Packages, Inc.
Kenwood View Nursing Home, Inc.
Liberty Nursing Homes, Incorporated
Medical Arts Health Facility of Lawrenceville, Inc.
Medical Health Industries, Inc.
MedView Services, Incorporated
Moderncare of Lumberton, Inc.
Nebraska City S-C-H, Inc.
Nursing Home Operators, Inc.
Omni Med B, Inc.
▇▇▇▇▇▇▇▇ Health Care, Inc.
Pharmacy Corporation of America
Pharmacy Corporation of America -- Massachusetts, Inc.
Pharmacy Dynamics Group, Inc.
Phymedsco, Inc.
Resource Opportunities, Inc.
Salem No. 1, Inc.
South Alabama Nursing Home, Inc.
South Dakota -- ▇▇▇▇▇▇▇ Enterprises, Inc.
Spectra Rehab Alliance, Inc.
Synergos, Inc.
Synergos -- North Hollywood, Inc.
Synergos -- Pleasant Hill, Inc.
Synergos -- Scottsdale, Inc.
▇▇▇▇▇▇ County Health Facility, Inc.
TMD Disposition Company
Vantage Healthcare Corporation

102

109
EXHIBIT A

(Face of Security)

___% Senior Note due 2006

CUSIP:
No. $___________

▇▇▇▇▇▇▇ ENTERPRISES, INC. promises to pay to
______________________ or its registered assigns, the principal sum
of________________ Dollars on _________ __, 2006.

Interest Payment Dates: ________ __ and _________
__, commencing ___________
__, 1996

Record Dates: ______________ __ and __________ __
(whether or not a Business Day).

▇▇▇▇▇▇▇ ENTERPRISES, INC.

By:__________________________
Name:
Title:

Dated: ___________, __

(SEAL)

Trustee's Certificate of Authentication:

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

CHEMICAL BANK, as Trustee

By:___________________________
Authorized Officer

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110
(Back of Security)

___% Senior Note Due 2006

Capitalized terms used herein have the meanings assigned to
them in the Indenture (as defined below) unless otherwise indicated.

1. Interest. ▇▇▇▇▇▇▇ Enterprises, Inc., a Delaware
corporation (the "Company"), promises to pay interest on the principal amount
of this Security at the rate and in the manner specified below.

The Company shall pay interest in cash on the principal amount
of this Security at the rate per annum of ______% until maturity. The Company
shall pay interest semi-annually in arrears on ____________ __ and ____________
__ of each year, commencing _____________, 1996, to Holders of record on the
immediately preceding __________, ___ and ___________ ___, respectively, or if
any such date of payment is not a Business Day on the next succeeding Business
Day (each an "Interest Payment Date").

Interest shall be computed on the basis of a 360-day year
comprised of twelve 30-day months. Interest shall accrue from the most recent
date to which interest has been paid or, if no interest has been paid, from the
date of the original issuance of the Securities. To the extent lawful, the
Company shall pay interest on overdue principal at the rate of 1% per annum in
excess of the interest rate then applicable to the Securities; it shall pay
interest on overdue installments of interest (without regard to any applicable
grace periods) at the same rate to the extent lawful.

2. Method of Payment. The Company shall pay interest on the
Securities (except defaulted interest) to the Persons who are registered
Holders of Securities at the close of business on the record date next
preceding the Interest Payment Date, even if such Securities are cancelled
after such record date and on or before such Interest Payment Date, except as
provided in Section 2.12 of the Indenture with respect to defaulted interest.
The Holder hereof must surrender this Security to a Paying Agent to collect
principal payments. The Company shall pay principal and interest in money of
the United States that at the time of payment is legal tender for payment of
public and private debts. Principal, premium, if any,

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111
and interest shall be payable at the office or agency of the Company maintained
for such purpose within the City and State of New York or, at the option of the
Company, payment of interest may be made by check mailed to the Holder's
registered address. Notwithstanding the foregoing, all payments with respect
to Securities, the Holders of which have given wire transfer instructions to
the Paying Agent on or before the relevant record date, shall be made by wire
transfer of immediately available funds to the accounts specified by such
Holders.

3. Paying Agent and Registrar. Initially, the Trustee shall
act as Paying Agent and Registrar. The Company may change any Paying Agent or
Registrar without prior notice to any Holder. The Company and any of its
Subsidiaries may act in any such capacity.

4. Indenture. The Company issued the Securities under an
Indenture, dated as of February __, 1996 (the "Indenture"), by and among the
Company, the Guarantors named therein and the Trustee. The terms of the
Securities include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S.
Code Sections 77aaa-77bbbb) (the "TIA"). The Securities are subject to all
such terms, and Holders are referred to the Indenture and the TIA for a
statement of such terms. The terms of the Indenture shall govern any
inconsistencies between the Indenture and the Securities. The Securities are
unsecured senior obligations of the Company. The Securities are limited to
$150,000,000 in aggregate principal amount.

5. Optional Redemption. The Securities may be
redeemed, in whole or in part, at any time on or after ___________ __, 2001, at
the option of the Company, at the Redemption Price (expressed as a percentage
of principal amount) set forth below with respect to the indicated Redemption
Date, in each case (subject to the right of Holders of record on a Record Date
that is on or prior to such Redemption Date to receive interest due on the
Interest Payment Date to which such Record Date relates), plus any accrued but
unpaid interest to the Redemption Date. The Securities may not be so redeemed
prior to ___________ __, 2001.

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112

If redeemed during
the 12-month period
commencing Redemption Price
-------------------- ----------------

2001 %
2002 %
2003 %
2004 and thereafter 100%

Any such redemption will comply with Article 3 of the
Indenture.

6. Mandatory Redemption. Subject to the Company's obligation
to make an offer to repurchase Securities under certain circumstances pursuant
to Sections 2.15, 4.10 and 4.13 of the Indenture (as described in paragraph 7
below), the Company shall have no mandatory redemption or sinking fund
obligations with respect to the Securities.

7. Repurchase at Option of Holder. (i) If there is a Change
of Control, the Company shall offer to repurchase on the Change of Control
Payment Date all outstanding Securities at 101% of the aggregate principal
amount thereof plus accrued and unpaid interest thereon to the Change of
Control Payment Date. Holders that are subject to an offer to purchase shall
receive a Change of Control Offer from the Company prior to any related Change
of Control Payment Date and may elect to have such Securities purchased by
completing the form entitled "Option of Holder to Elect Purchase" appearing
below.

(ii) If the Company or a Subsidiary consummates an Asset
Sale, within 365 days after the receipt of any Net Proceeds from such Asset
Sale, the Company or such Subsidiary may apply such Net Proceeds (a) to
purchase one or more Nursing Facilities or Related Businesses and/or a
controlling interest in the Capital Stock of a Person owning one or more
Nursing Facilities and/or one or more Related Businesses, (b) to make a capital
expenditure or to acquire other tangible assets, in each case, that are used or
useful in any business in which the Company is permitted to be engaged pursuant
to Section 4.15 of the Indenture, (c) to permanently reduce Indebtedness (other
than Subordinated Indebtedness) of the Company or its Subsidiaries, (d) to
permanently reduce Senior Revolving Debt (and to correspondingly reduce
commitments with respect thereto, except that up to an aggregate of $20 million
of Net Proceeds from Asset Sales may be applied after the date of the Indenture
to reduce Senior Revolving Debt without a corresponding reduction in
commitments with respect thereto) or (e) if such Net Proceeds are derived from
the Spinoff Transaction, use up to $100

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113

million of the Net Proceeds of such transaction to make Restricted Payments or
for any other purpose not prohibited by the Indenture, in accordance with the
second sentence of the the second paragraph of Section 4.10 of the Indenture.
Pending the final application of any such Net Proceeds, the Company or such
Subsidiary may temporarily reduce Senior Revolving Debt or otherwise invest
such Net Proceeds in any manner that is not prohibited by the Indenture. Any
Net Proceeds from any Asset Sale that are not so invested or applied shall be
deemed to constitute "Excess Proceeds." When the aggregate amount of Excess
Proceeds exceeds $25 million, the Company shall make an offer to all Holders of
Securities and holders of any other Indebtedness of the Company ranking on a
parity with the Securities from time to time outstanding with similar
provisions requiring the Company to make an offer to purchase or to redeem such
Indebtedness with the proceeds from any Asset Sales, pro rata in proportion to
the respective principal amounts of the Securities and such other Indebtedness
then outstanding (a "Senior Asset Sale Offer") to purchase the maximum
principal amount of Securities and such other Indebtedness that may be
purchased out of the Excess Proceeds, at an offer price in cash in an amount
equal to 100% of the principal amount thereof plus accrued and unpaid interest
thereon, if any, to the date of purchase, in accordance with the terms of the
Indenture. To the extent that the aggregate amount of Securities and such
other Indebtedness tendered pursuant to a Senior Asset Sale Offer is less than
the Excess Proceeds, the Company may use any remaining Excess Proceeds for
general corporate purposes not prohibited at the time under the Indenture. If
the aggregate principal amount of Securities and such other Indebtedness
surrendered by holders pursuant to a Senior Asset Sale Offer exceeds the amount
of Excess Proceeds, the Securities and such other Indebtedness shall be
purchased on a pro rata basis. Holders that are the subject of an offer to
purchase shall receive a Senior Asset Sale Offer from the Company prior to any
related purchase date and may elect to have such Securities purchased by
completing the form entitled "Option of Holder to Elect Purchase" appearing
below.

8. Denominations, Transfer, Exchange. The Securities are in
registered form without coupons, and in denominations of $1,000 and integral
multiples of $1,000. The transfer of Securities may be registered and
Securities may be exchanged as provided in the Indenture. The Registrar and
the Trustee may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. Neither the Company nor the Registrar shall
be required to register the transfer of or exchange Securities for a period of

▇-▇

▇▇▇

▇▇ days before a selection of Securities to be redeemed (except the unredeemed
portion of any Security being redeemed in part) or during the period between a
record date and the next succeeding Interest Payment Date.

9. Persons Deemed Owners. Prior to due presentment to the
Trustee for registration of the transfer of this Security, the Trustee, any
Agent and the Company may deem and treat the Person in whose name this Security
is registered as its absolute owner for the purpose of receiving payment of
principal of, premium, if any, and interest on this Security and for all other
purposes whatsoever, whether or not this Security is overdue (provided that
defaulted interest shall be paid as set forth in Section 2.12 of the
Indenture), and neither the Trustee, any Agent nor the Company shall be
affected by notice to the contrary. The registered Holder of a Security shall
be treated as its owner for all purposes.

10. Amendment, Supplement and Waivers. Except as provided in
the next two succeeding paragraphs, the Indenture or the Securities may be
amended or supplemented with the consent of the Holders of at least a majority
in principal amount of the Securities then outstanding (including consents
obtained in connection with a tender offer or exchange offer for Securities)
and any existing default or compliance with any provision of the Indenture or
the Securities may be waived with the consent of the Holders of a majority in
principal amount of the then outstanding Securities (including consents
obtained in connection with a tender offer or exchange offer for Securities).

Without the consent of each Holder affected, an amendment or
waiver may not (with respect to any Security held by a non-consenting Holder of
Securities): (i) reduce the principal amount of Securities whose Holders must
consent to an amendment, supplement or waiver, (ii) reduce the principal of or
change the fixed maturity of any Security, (iii) reduce the rate of or change
the time for payment of interest on any Security, (iv) waive a Default or Event
of Default in the payment of principal of, or premium, if any, or interest on
the Securities (except a rescission of acceleration of the Securities by the
Holders of at least a majority in aggregate principal amount thereof and a
waiver of the Payment Default that resulted from such acceleration), (v) make
any Security payable in money other than that stated in the Securities, (vi)
make any change in the provisions of the Indenture relating to waivers of past
Defaults or the rights of Holders of Securities to receive payments of
principal of, or premium, if any, or

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115

interest on the Securities, or (vii) make any change in the foregoing amendment
and waiver provisions.

Notwithstanding the foregoing, without the consent of any
Holder of Securities, the Company, the Guarantors and the Trustee may amend or
supplement the Indenture or the Securities to cure any ambiguity, defect or
inconsistency, to provide for uncertificated Securities in addition to or in
place of certificated Securities, to provide for additional Guarantors of the
Securities or the release, in accordance with the Indenture, of any Guarantor,
to provide for the assumption of the Company's or any Guarantor's obligations
to Holders of the Securities in the case of a merger, consolidation or sale of
assets, to make any change that would provide any additional rights or benefits
to the Holders of the Securities or that does not adversely affect the legal
rights under the Indenture of any such Holder, or to comply with requirements
of the Securities and Exchange Commission (the "Commission") in order to effect
or maintain the qualification of the Indenture under the TIA, to evidence and
provide for the acceptance of the appointment of a successor Trustee with
respect to the Securities, or in any other case, pursuant to the provisions of
the Indenture, where a supplemental indenture is required or permitted to be
entered into without the consent of any Holder of Securities.

11. Defaults and Remedies. Events of Default under the
Indenture include: (i) a default for 30 days in the payment when due of
interest on the Securities; (ii) a default in payment when due of the principal
of, or premium, if any, on the Securities, at maturity or otherwise; (iii) a
failure by the Company or any Guarantor to comply with the provisions described
under Section 4.10 or 4.13 of the Indenture; (iv) a failure by the Company or
any Guarantor for 30 days after notice to comply with the provisions of Section
4.7 or 4.9 of the Indenture; (v) a failure by the Company or any Guarantor for
60 days after notice to comply with any of its agreements in the Indenture or
the Securities; (vi) any default that occurs under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by the Company or any of its
Significant Subsidiaries (or the payment of which is guaranteed by the Company
or any of its Significant Subsidiaries) whether such Indebtedness or guarantee
exists on the date of the Indenture, or is created after the date of the
Indenture, which default (a) constitutes a Payment Default or (b) results in
the acceleration of such Indebtedness prior to its express maturity and, in
each case, the principal amount of any such Indebtedness, together with the
principal amount of any other such Indebtedness under which there has been a
Payment

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116

Default or that has been so accelerated, aggregates in excess of $20 million;
(vii) failure by the Company or any of its Significant Subsidiaries to pay a
final judgment or judgments aggregating in excess of $20 million entered by a
court or courts of competent jurisdiction against the Company or any of its
Significant Subsidiaries which such final judgment or judgments are not paid,
discharged or stayed for a period of 60 days; (viii) any Guarantee shall cease,
for any reason not permitted by the Indenture, to be in full force and effect
or any Guarantor, or any Person acting on behalf of any Guarantor, shall deny
or disaffirm its obligations under its Guarantee; and (ix) certain events of
bankruptcy or insolvency with respect to the Company or any of its Significant
Subsidiaries. If any Event of Default occurs and is continuing, the Trustee or
the Holders of at least 25% in aggregate principal amount of the then
outstanding Securities by written notice to the Company and the Trustee, may
declare all the Securities to be due and payable immediately (plus, in the case
of an Event of Default that is the result of willful actions (or inactions) by
or on behalf of the Company intended to avoid prohibitions on redemptions of
the Securities contained in the Indenture or the Securities, an amount of
premium applicable pursuant to the Indenture). Notwithstanding the foregoing,
in the case of an Event of Default arising from certain events of bankruptcy or
insolvency with respect to the Company, all outstanding Securities shall become
due and payable without further action or notice. Holders of the Securities
may not enforce the Indenture or the Securities except as provided in the
Indenture. Subject to certain limitations, Holders of a majority in aggregate
principal amount of the then outstanding Securities may direct the Trustee in
its exercise of any trust or power. The Trustee may withhold from Holders of
the Securities notice of any continuing Default or Event of Default (except a
Default or Event of Default relating to the payment of principal or interest)
if it determines that withholding notice is in such Holders' interest.

The Company is required to deliver to the Trustee annually a
statement regarding compliance with the Indenture, and the Company is required
upon becoming aware of any Default

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117
or Event of Default, to deliver to the Trustee a statement specifying such
Default or Event of Default.

The above description of Events of Default and remedies is
qualified by reference, and subject in its entirety, to the more complete
description thereof contained in the Indenture.

12. Restrictive Covenants. The Indenture imposes certain
limitations on the ability of the Company and its Subsidiaries to incur
additional Indebtedness and issue preferred stock, pay dividends or make other
distributions, repurchase Equity Interests or Subordinated Indebtedness, create
certain Liens, enter into certain transactions with Affiliates, sell assets of
the Company or its Subsidiaries, issue or sell Equity Interests of the
Company's Subsidiaries and enter into certain mergers and consolidations.

13. Notation of Guarantee. As set forth more fully in the
Indenture, the Persons constituting Guarantors from time to time, in accordance
with the provisions of the Indenture, unconditionally and jointly and severally
Guarantee, on a senior basis, in accordance with Section 10.1 of the Indenture,
to each Holder of Securities and to the Trustee and its successors and assigns,
that, in accordance with the terms of the Indenture and the Securities (i) the
principal of, premium, if any, and interest on the Security will be paid in
full when due, whether at the Maturity Date or Interest Payment Date, by
acceleration, call for redemption or otherwise; (ii) the purchase price for all
Securities properly and timely tendered for acceptance in response to a Change
of Control Offer or a Senior Asset Sale Offer will be timely, or otherwise in
accordance with the provisions of the Indenture, paid in full; (iii) all other
payment obligations of the Company to the Holders or the Trustee under the
Indenture or this Security will be promptly paid in full, all in accordance
with the terms of the Indenture and this Security; and (iv) in the case of any
extension of time of payment or renewal of this Security or any of such other
obligations, they will be paid in full when due or performed in accordance with
the terms of such extension or renewal, whether at the Maturity Date, as so
extended, by acceleration, call for redemption, upon a Change of Control Offer,
upon a Senior Asset Sale Offer or otherwise. Such Guarantees shall cease to
apply, and shall be null and void, with respect to any Guarantor who, pursuant
to Article 10 of the Indenture, is released from its Guarantees, or whose
Guarantees otherwise cease to be applicable pursuant to the terms of the
Indenture.

▇-▇

▇▇▇
▇▇. Trustee Dealings with Company. The Trustee under the
Indenture, in its individual or any other capacity, may make loans to, accept
deposits from, and perform services for the Company or its Affiliates, and may
otherwise deal with the Company or its Affiliates, as if it were not Trustee.

15. No Personal Liability of Directors, Officers, Employees
and Stockholders. No director, officer, employee, incorporator, stockholder or
other Affiliate of the Company or any Guarantor, as such, shall have any
liability for any obligations of the Company or other Affiliate under the
Securities, the Indenture or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder by accepting a
Security waives and releases all such liability. The waiver and release are
part of the consideration for the issuance of the Securities.

16. Authentication. This Security shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating
agent.

17. Abbreviations. Customary abbreviations may be used in
the name of a Holder or an assignee, such as: TEN COM (= tenants in common),
TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (=
Uniform Gifts to Minors Act).

18. CUSIP Numbers. Pursuant to a recommendation promulgated
by the Committee on Uniform Security Identification Procedures, the Company has
caused CUSIP numbers to be printed on the Securities and has directed the
Trustee to use CUSIP numbers as a convenience to Holders. No representation is
made as to the accuracy of such numbers either as printed on the Securities or
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.

The Company will furnish to any Holder upon written request
and without charge a copy of the Indenture. Request may be made to:

▇▇▇▇▇▇▇ Enterprises, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇-▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Secretary

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119
ASSIGNMENT FORM

To assign this Security, fill in the form below: For value
received (I) or (we) hereby sell, assign and transfer this Security to

________________________________________________________________________________
(Insert assignee's Soc. Sec. or Tax I.D. No.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)

and do hereby irrevocably constitute and appoint ____________
_______________________ Attorney to transfer this Security on the books of the
Company with full power of substitution in the premises.

________________________________________________________________________________
________________________________________________________________________________

Date:_______________________

Your Signature:_______________________________
(Sign exactly as your name
appears on the face of this
Security)

Signature Guarantee*

___________________

* Participant in a recognized Signature Guarantee Medallion Program (or
other signature guarantor acceptable to the Trustee).

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120
OPTION OF HOLDER TO ELECT PURCHASE

If you want to elect to have all or any part of this Security
purchased by the Company pursuant to Section 4.10 or Section 4.13 of the
Indenture, check the appropriate box:

[ ] Section 4.10 [ ] Section 4.13
(Asset Sale) (Change of Control)

If you want to have only part of the Security purchased by the
Company pursuant to Section 4.10 or Section 4.13 of the Indenture, state the
amount you elect to have purchased:

$_______________________

Date:___________________

Your Signature:_______________________________
(Sign exactly as your name
appears on the face of this
Security)

Signature Guarantee*

___________________

* Participant in a recognized Signature Guarantee Medallion Program (or
other signature guarantor acceptable to the Trustee).

A-12

DRAFT ========================================================================= ======= BEVERLY ENTERPRISES, INC. ___% SENIOR NOTES DUE 2006

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