As filed with the Securities and Exchange Commission on January 29, 1998

                                                     Registration No. 333-

                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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


                              CENDANT CORPORATION
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


            DELAWARE                                            06-0918165
(STATE OR OTHER JURISDICTION OF                              (I.R.S. EMPLOYER
 INCORPORATION OR ORGANIZATION)                             IDENTIFICATION NO.)


                                  6 SYLVAN WAY
                          PARSIPPANY, NEW JERSEY 07054
                                 (973) 428-9700
                              FAX: (973) 496-5331
    (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
                  OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)


                             JAMES E. BUCKMAN, ESQ.
                        SENIOR EXECUTIVE VICE PRESIDENT
                              AND GENERAL COUNSEL
                              CENDANT CORPORATION
                                  6 SYLVAN WAY
                          PARSIPPANY, NEW JERSEY 07054
                                 (973) 428-9700
                              FAX: (973) 496-5331
      (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
                        AREA CODE, OF AGENT FOR SERVICE)

                                   COPIES TO:

         VINCENT J. PISANO, ESQ.                       ERIC J. BOCK, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP              VICE PRESIDENT-LEGAL
            919 THIRD AVENUE                           CENDANT CORPORATION
           NEW YORK, NY 10022                             6 SYLVAN WAY
              (212) 735-3000                      PARSIPPANY, NEW JERSEY 07054
           FAX: (212) 735-2000                           (973) 428-9700
                                                       FAX: (973) 496-5331

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: FROM TIME TO
TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT AS DETERMINED BY
MARKET CONDITIONS.

IF THE ONLY SECURITIES BEING REGISTERED ON THIS FORM ARE BEING OFFERED PURSUANT
TO DIVIDEND OR INTEREST REINVESTMENT PLANS, PLEASE CHECK THE FOLLOWING BOX. [ ]

IF ANY OF THE SECURITIES BEING REGISTERED ON THIS FORM ARE TO BE OFFERED ON A
DELAYED OR CONTINUOUS BASIS PURSUANT TO RULE 415 UNDER THE SECURITIES ACT OF
1933, OTHER THAN SECURITIES OFFERED ONLY IN CONNECTION WITH DIVIDEND OR
INTEREST REINVESTMENT PLANS,



CHECK THE FOLLOWING BOX. [X]

IF THIS FORM IS FILED TO REGISTER ADDITIONAL SECURITIES FOR AN OFFERING
PURSUANT TO RULE 462(B) UNDER THE SECURITIES ACT, PLEASE CHECK THE FOLLOWING
BOX AND LIST THE SECURITIES ACT REGISTRATION STATEMENT NUMBER OF THE EARLIER
EFFECTIVE REGISTRATION STATEMENT FOR THE SAME OFFERING. [ ]

IF THIS FORM IS A POST-EFFECTIVE AMENDMENT FILED PURSUANT TO RULE 462(C) UNDER
THE SECURITIES ACT, CHECK THE FOLLOWING BOX AND LIST THE SECURITIES ACT
REGISTRATION STATEMENT NUMBER OF THE EARLIER EFFECTIVE REGISTRATION STATEMENT
FOR THE SAME OFFERING. [ ]

IF DELIVERY OF THE PROSPECTUS IS EXPECTED TO BE MADE PURSUANT TO RULE 434,
PLEASE CHECK THE FOLLOWING BOX. [ ]

CALCULATION OF REGISTRATION FEE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT TITLE OF SECURITIES AMOUNT TO BE OFFERING PRICE PER AGGREGATE OF TO BE REGISTERED REGISTERED SECURITY(1) OFFERING PRICE(1) REGISTRATION FEE - ---------------- ---------- ----------- ----------------- ---------------- Debt Securities(2).... Common Stock, $.01 par value............. Preferred Stock, par value $.01........ $3,000,000,000(3) 100% $3,000,000,000(3)(4) $885,000
(1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(i). (2) Also includes such indeterminate number of Debt Securities, shares of Common Stock and shares of Preferred Stock as may be issued upon conversion or exchange of any of the Debt Securities or Preferred Stock that provide for conversion or exchange into other securities. (3) Such amount represents the principal amount of any Debt Securities issued at their principal amount, the issue price rather than the principal amount of any Debt Securities issued at original issue discount, the liquidation preference of any Preferred Stock and the amount computed pursuant to Rule 457(i) for any Common Stock. (4) No separate consideration will be received for Debt Securities, Preferred Stock or Common Stock issuable upon conversion or exchange of the Debt Securities or Preferred Stock. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. 2 PROSPECTUS $3,000,000,000 CENDANT CORPORATION SECURITIES Cendant Corporation (the "Company"), directly or through such agents, dealers or underwriters as may be designated from time to time, may offer, issue and sell, together or separately, its (i) debt securities (the "Debt Securities"), which may be senior debt securities (the "Senior Debt Securities") or subordinated debt securities (the "Subordinated Debt Securities"), (ii) shares of its preferred stock, par value $0.01 per share (the "Preferred Stock") and (iii) shares of its common stock, par value $0.01 per share (the "Common Stock", together with the Debt Securities and the Preferred Stock, the "Securities"), with an aggregate public offering price of up to $3,000,000,000 (or its equivalent in foreign currencies or foreign currency units based on the applicable exchange rate at the time of offering) in amounts, at prices and on terms to be determined at the time of sale. The form in which the Securities are to be issued, their specific designation, aggregate principal amount or aggregate initial offering price, maturity, if any, rate and times of payment of interest or dividends, if any, redemption, conversion, and sinking fund terms, if any, voting or other rights, if any, exercise price and detachability, if any, and other specific terms will be set forth in a Prospectus Supplement (the "Prospectus Supplement"), together with the terms of offering of such Securities. Any such Prospectus Supplement will also contain information, as applicable, about certain material United States Federal income tax considerations relating to the particular Securities offered thereby. The Company's Common Stock is listed on the New York Stock Exchange under the symbol "CD". On January 28, 1998, the last reported sale price of the Common Stock on the New York Stock Exchange was $33.3125 per share. Any Prospectus Supplement will also contain information, where applicable, as to any other listing on a securities exchange of the Securities covered by such Prospectus Supplement. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The Securities may be sold directly by the Company, through agents designated from time to time or to or through underwriters or dealers. The Company reserves the sole right to accept, and together with its agents, from time to time, to reject in whole or in part any proposed purchase of Securities to be made directly or through agents. If any agents or underwriters are involved in the sale of any Securities, the names of such agents or underwriters and any applicable fees, commissions or discounts will be set forth in the applicable Prospectus Supplement. See "Plan of Distribution." This Prospectus may not be used to consummate any sale of Securities unless accompanied by a Prospectus Supplement. The date of this Prospectus is January 29, 1998 NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS OR INCORPORATED HEREIN BY REFERENCE IN CONNECTION WITH THE OFFERING DESCRIBED HEREIN, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER, DEALER OR AGENT INVOLVED IN THE OFFERING DESCRIBED HEREIN. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THOSE SPECIFICALLY OFFERED HEREBY OR OF ANY SECURITIES OFFERED HEREBY IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE. AVAILABLE INFORMATION The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports, proxy and information statements and other information with the Securities and Exchange Commission (the "Commission"). Such reports, proxy statements and other information can be inspected and copied at prescribed rates at the public reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the following Regional Offices of the Commission: Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago, IL 60661 and 7 World Trade Center, 13th Floor, New York, New York 10048. The Commission also maintains a website that contains reports, proxy and information statements and other information. The website address is http.//www.sec.gov. In addition, such material can be inspected at the offices of the New York Stock Exchange, 20 Broad Street, New York, New York 10005. The Company has filed a registration statement (the "Registration Statement") on Form S-3 with respect to the Securities offered hereby with the Commission under the Securities Act of 1933, as amended (the "Securities Act"). This Prospectus, which constitutes a part of the Registration Statement, does not contain all the information set forth in the Registration Statement, certain items of which are contained in schedules and exhibits to the Registration Statement as permitted by the rules and regulations of the Commission. Statements contained in this Prospectus as to the contents of any agreement, instrument or other document referred to herein are not necessarily complete. With respect to each such agreement, instrument or other document filed as an exhibit to the Registration Statement, reference is made to such exhibit for a more complete description of the matter involved, and each such statement is qualified in its entirety by reference to such agreement, instrument or document. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents previously filed by the Company with the Commission pursuant to the Exchange Act are incorporated herein by reference: (i) Annual Report on Form 10-K for the fiscal year ended January 31, 1997; (ii) Quarterly Reports on Form 10-Q for the fiscal quarters ended April 30, 1997, July 31, 1997 and October 31, 1997; (iii) Current Reports on Form 8-K dated January 22, 1997, February 4, 1997, February 13, 1997, February 26, 1997, March 17, 1997, May 29, 1997, August 15, 1997, October 31, 1997, November 4, 1997, December 18, 1997 and January 14, 1998, January 22, 1998, January 27, 1998 and January 29, 1998; (iv) Current Report on Form 8-K dated July 16, 1997 of HFS Incorporated (File No. 1-11402); and (v) description of the common stock, January 27, 1998 the Company which is contained in the Registration Statements on Form 8-A of the Company dated July 27, 1984 and August 15, 1989. All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to the termination of the offering of the Securities shall be deemed to be incorporated herein by reference and to be a part hereof from the date of filing of such documents. Any statement contained in this Prospectus or in a document incorporated or deemed to be incorporated herein by reference shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated herein by reference or in any Prospectus Supplement modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. The Company will provide without charge to each person to whom a copy of this Prospectus has been delivered, upon the written or oral request of such person, a copy of any or all of the documents referred to above which have been or may be incorporated herein by reference (other than exhibits to such documents unless such exhibits are specifically incorporated by reference in such documents). Requests for such copies should be directed to James E. Buckman, Esq., Senior Executive Vice President and General Counsel, Cendant Corporation, 6 Sylvan Way, Parsippany, New Jersey 07054, (973) 428-9700. 2 CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE SHARES OFFERED HEREBY, INCLUDING STABILIZING TRANSACTIONS, THE PURCHASE OF SHARES TO COVER SYNDICATE SHORT POSITIONS AND THE IMPOSITION OF PENALTY BIDS. 3 THE COMPANY The Company is one of the foremost consumer and business services companies in the world. The Company was created through the merger of CUC International Inc. ("CUC") and HFS Incorporated ("HFS") in December 1997 and provides all of the services formerly provided by each of CUC and HFS, including technology-driven, membership-based consumer services, travel services and real estate services. Membership Services. The Company's membership-based consumer services provide more than 70 million members with access to a variety of goods and services worldwide. These memberships include such components as shopping, travel, auto, dining, home improvement, lifestyle, vacation exchange, credit card and checking account enhancement packages, financial products and discount programs. The Company also administers insurance package programs which are generally combined with discount shopping and travel for credit union members, distributes welcoming packages which provide new homeowners with discounts for local merchants, and provides travelers with value-added tax refunds. The Company believes that it is the leading provider of membership-based consumer services of these types in the United States. The Company's membership activities are conducted principally through its Comp-U-Card division and certain of the Company's wholly-owned subsidiaries, FISI*Madison Financial Corporation, Benefit Consultants, Inc., Entertainment Publications, Inc. and SafeCard Services, Inc. Travel Services. The Company also provides services to consumers through intermediaries in the travel and real estate industries. In the travel industry, the Company, through certain of its subsidiaries, franchises hotels primarily in the mid-priced and economy markets. It is the world's largest hotel franchisor, operating the Days Inn(R), Ramada(R) (in the United States), Howard Johnson(R), Super 8(R), Travelodge(R) (in North America), Villager Lodge(R), Knights Inn(R) and Wingate Inn(R) franchise systems. Additionally, the Company owns the Avis worldwide vehicle rental system, which is operated through its franchisees and is the second-largest car rental system in the world (based on total revenues and volume of rental transactions). The Company currently owns approximately 27.5% of the capital stock of the world's largest Avis franchisee, Avis Rent A Car, Inc. The Company also owns Resort Condominiums International, Inc., a leading timeshare exchange organization. As a result of the April 1997 merger between HFS and PHH Corporation, the Company now operates the second largest provider in North America of comprehensive vehicle management services and is the market leader in the United Kingdom among the four nationwide providers of fuel card services and the six nationwide providers of vehicle management services. Real Estate Services. In the residential real estate industry, the Company, through certain of its subsidiaries, franchises real estate brokerage offices under the Century 21(R), Coldwell Banker(R) and Electronic Realty Associates(R) (ERA(R)) real estate brokerage franchise systems and is the world's largest real estate brokerage franchisor. Additionally, the Company, through Cendant Mobility Services Corporation, is the largest provider of corporate relocation services in the United States, offering relocation clients a variety of services in connection with the transfer of a client's employees. Through PHH Mortgage Services Corporation, the Company originates, sells and services residential mortgage loans in the United States, marketing such services to consumers through relationships with corporations, affinity groups, financial institutions, real estate brokerage firms and other mortgage banks. As a franchisor of hotels, residential real estate brokerage offices and car rental operations, the Company licenses the owners and operators of independent businesses to use the Company's brand names. The Company does not own or operate hotels or real estate brokerage offices. Instead, the Company provides its franchisee customers with services designed to increase their revenue and profitability. Other. The Company also offers consumer software in various multimedia forms. During 1996, the Company acquired Davidson & Associates, Inc., Sierra On-Line, Inc. and Knowledge Adventure, Inc. These companies develop, publish, manufacture and distribute educational, entertainment and personal productivity interactive multimedia products for home and school use. The Company from time to time explores and conducts discussions with regard to acquisitions and other strategic corporate transactions in its industries and in other businesses. Historically, the Company has been involved in numerous transactions of various magnitudes, for consideration which included cash or securities (including Common Stock) or combinations thereof. The Company will evaluate and pursue appropriate acquisition and combination opportunities as they arise. No assurance can be given with respect to the timing, likelihood or financial or business effect of any possible transaction. In the past, acquisitions by the Company have involved both relatively small acquisitions and acquisitions which have been significant. As part of its regular on-going evaluation of acquisition opportunities, the Company is currently engaged in a number of separate and unrelated preliminary discussions concerning possible acquisitions. The Company is in the early stages of such discussions and has not entered into any agreement in principle with respect to any of these possible acquisitions. The purchase price for 4 the possible acquisitions may be paid in cash, through the issuance of Common Stock (which would increase the number of shares of Common Stock outstanding) Preferred Stock, Debt Securities or other securities of the Company, borrowings, or a combination thereof. Prior to consummating any such possible acquisitions, the Company, among other things, will have to initiate and satisfactorily complete its due diligence investigation; negotiate the financial and other terms (including price) and conditions of such acquisitions; obtain appropriate Board of Directors, regulatory and other necessary consents and approvals; and secure financing. The Company cannot predict whether any such acquisitions will be consummated or, if consummated, will result in a financial or other benefit to the Company. The Company's principal executive offices are located at 6 Sylvan Way, Parsippany, New Jersey 07054 (telephone number: (973) 428-9700). RECENT DEVELOPMENTS Proposed Acquisition of American Bankers. On January 27, 1998, the Company made a proposal to acquire American Bankers Insurance Group Inc. ("American Bankers") for $58 per share in cash and stock, for an aggregate purchase price of approximately $2.7 billion on a fully diluted basis. On January 28, 1998, the Company commenced a tender offer to purchase approximately 23.5 million of American Bankers' common shares at a price of $58 per share in cash, which together with shares the Company owns will equal approximately 51% of the fully diluted shares of American Bankers. The Company proposes to exchange, on a tax free basis, shares of its common stock with a fixed value of $58 per share for the balance of American Bankers' common stock. The tender offer is subject to customary conditions and there can be no assurance that the Company will be successful in its proposal to acquire American Bankers. In connection with the Company's proposal to acquire American Bankers, the Company entered into a commitment letter, dated January 23, 1998, with The Chase Manhattan Bank and Chase Securities Inc. to provide a $1.5 billion 364-Day revolving credit facility (the "New Facility") which will mature 364 days after the execution of the definitive documentation relating thereto. The New Facility will bear interest, at the option of the Company, at rates based on competitive bids of lenders participating in such facilities at a prime rate or at LIBOR plus an applicable variable margin based on the Company's senior unsecured long-term debt rating. Harpur Acquisition. On January 20, 1998, the Company completed the acquisition of Harpur Group, Ltd., a leading fuel card and vehicle management company in the United Kingdom, from H-G Holdings, Inc. for approximately $186 million in cash plus future contingent payments of up to $20 million over the next two years. Jackson Hewitt Acquisition. On January 7, 1998, the Company completed the acquisition of Jackson Hewitt Inc. ("Jackson Hewitt"), for approximately $480 million in cash, or $68 per share of common stock of Jackson Hewitt. Jackson Hewitt is the second largest tax preparation service system in the United States with locations in 41 states. Jackson Hewitt franchises a system of approximately 2,050 offices that specialize in computerized preparation of federal and state individual income tax returns. Interval Divestiture. On December 17, 1997, in connection with the merger with HFS, the Company completed the divestiture of its timeshare exchange subsidiary, Interval International Inc., as contemplated by the consent decree with the Federal Trade Commission. Providian Acquisition. On December 10, 1997, the Company announced that it had entered into a definitive agreement to acquire Providian Auto and Home Insurance Company ("Providian") and its subsidiaries from an Aegon N.V. subsidiary for approximately $219 million in cash. Providian sells automobile insurance to consumers through direct response marketing in 45 states and the District of Columbia. The closing of this transaction is subject to customary conditions, including regulatory approval and is anticipated to occur in the spring of 1998. Hebdo Mag Acquisition. On October 3, 1997, the Company completed the acquisition of all of the outstanding capital stock of Hebdo Mag International Inc. in exchange for the issuance of shares of preferred stock of Getting to Know You of Canada Ltd., an indirect wholly-owned subsidiary of the Company, exchangeable for shares of Common Stock (the "Hebdo Acquisition Shares") and the assumption of certain options of Hebdo Mag exchanged for options to acquire shares of Common Stock, such Hebdo Acquisition Shares or options having an aggregate value of approximately $440 million. Based in Paris, France, Hebdo Mag is an international publisher of over 150 titles and distributor of classified advertising information with operations in twelve countries, including Canada, France, Sweden, Hungary, the United States, Italy, Russia and Holland. The Hebdo Mag Acquisition was accounted for in accordance with the pooling-of-interests method of accounting. USE OF PROCEEDS Unless otherwise set forth in a Prospectus Supplement, the net proceeds from the offering of the Securities will be used for general corporate purposes, which may include acquisitions, repayment of other debt, working capital and capital expenditures. When a particular series of Securities is offered, the Prospectus Supplement relating thereto will set forth the Company's intended use for the net proceeds received from the sale of such Securities. Pending application for specific purposes, the net proceeds may be invested in short-term marketable securities. 5 CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES The following table sets forth the unaudited consolidated ratio of earnings to fixed charges of the Company for the periods indicated.
HISTORICAL ---------- YEAR ENDED DECEMBER 31, ----------------------- Nine Months Ended September 30, 1997 1996 1995 1994 1993 1992 ------------------ ---- ---- ---- ---- ---- Ratio of Earnings to 3.48x 3.06x 2.70x 2.94x 2.68x 1.99x Fixed Charges (1)
(1) The ratio of earnings to fixed charges is computed by dividing income before income taxes and extraordinary items plus fixed charges, less capitalized interest by fixed charges. Fixed charges consist of interest expense on all indebtedness (including amortization of deferred financing costs) and the portion of operating lease rental expense that is representative of the interest factor (deemed to be one-third of operating lease rentals). GENERAL DESCRIPTION OF SECURITIES The Company directly or through agents, dealers, or underwriters designated from time to time, may offer, issue and sell, together or separately, its (a) secured or unsecured debt securities (the "Debt Securities") of the Company, in one or more series, which may be either senior debt securities (the "Senior Debt Securities") and/or subordinated debt securities (the "Subordinated Debt Securities"), (b) shares of preferred stock of the Company, par value $1.00 per share (the "Preferred Stock") and/or (c) shares of common stock of the Company, par value $.01 per share (the "Common Stock", together with the Debt Securities and the Preferred Stock, the "Securities"), or any combination of the foregoing, with an aggregate public offering price of up to $3,000,000,000 (or its equivalent in foreign currencies or foreign currency units based on the applicable exchange rate at the time of offering) in amounts, at prices and on terms to be determined at the time of sale. The Debt Securities may be issued as exchangeable and/or convertible Debt Securities exchangeable for or convertible into shares of Common Stock or Preferred Stock. The Preferred Stock may be issued as exchangeable and/or convertible Preferred Stock exchangeable or convertible into shares of Common Stock. When a particular series of Securities is offered, a supplement to this Prospectus (each a "Prospectus Supplement") will be delivered with this Prospectus. Each Prospectus Supplement will set forth the terms of the offering and sale of the offered Securities. DESCRIPTION OF THE DEBT SECURITIES The Debt Securities may be offered from time to time by the Company as Senior Debt Securities and/or as Subordinated Debt Securities. The Senior Debt Securities will be issued under an Indenture, as it may be supplemented from time to time (the "Senior Indenture"), between the Company and The Bank of Nova Scotia Trust Company of New York, as trustee (the "Senior Trustee"). The Subordinated Debt Securities will be issued under an Indenture, as it may be supplemented from time to time (the "Subordinated Indenture"), between the Company and The Bank of Nova Scotia Trust Company of New York, as trustee (the "Subordinated Trustee"). The term "Trustee", as used herein, refers to either the Senior Trustee or the Subordinated Trustee, as appropriate. The forms of the Senior Indenture and the Subordinated Indenture (being sometimes referred to herein collectively as the "Indentures" and individually as an "Indenture") have been filed as exhibits to the Registration Statement. The terms of the Indentures are also governed by certain provisions of the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). The following summary of certain material provisions of the Debt Securities does not purport to be complete and is qualified in its entirety by reference to the Indentures. All capitalized terms used herein and not otherwise defined shall have the meanings ascribed to such terms in the Indentures. For a summary of certain definitions used in this section, see "Certain Definitions" below. 6 GENERAL The Indentures will provide for the issuance of Debt Securities in series up to the aggregate amount from time to time authorized by the Company for each series. A Prospectus Supplement will set forth the following terms (to the extent such terms are applicable to such Debt Securities) of and information relating to the Debt Securities in respect of which this Prospectus is delivered: (1) the designation of such Debt Securities; (2) classification as Senior or Subordinated Debt Securities; (3) the aggregate principal amount of such Debt Securities; (4) the percentage of their principal amount at which such Debt Securities will be issued; (5) the date or dates on which such Debt Securities will mature; (6) the rate or rates, if any, per annum, at which such Debt Securities will bear interest, or the method of determination of such rate or rates; (7) the times and places at which such interest, if any, will be payable; (8) provisions for sinking, purchase or other analogous fund, if any; (9) the date or dates, if any, after which such Debt Securities may be redeemed at the option of the Company or of the holder and the redemption price or prices; (10) the date or the dates, if any, after which such Debt Securities may be converted or exchanged at the option of the holder into or for shares of Common Stock or Preferred Stock of the Company and the terms for any such conversion or exchange; and (11) any other specific terms of the Debt Securities. Principal, premium, if any, and interest, if any, will be payable and the Debt Securities offered hereby will be transferable, at the corporate trust office of the Trustee's agent in the borough of Manhattan, City of New York, provided that payment of interest, if any, may be made at the option of the Company by check mailed to the address of the person entitled thereto as it appears in the Security Register. (Section 301 of each Indenture). If a Prospectus Supplement specifies that a series of Debt Securities is denominated in a currency or currency unit other than United States dollars, such Prospectus Supplement shall also specify the denomination in which such Debt Securities will be issued and the coin or currency in which the principal, premium, if any, and interest, if any, on such Debt Securities will be payable, which may be United States dollars based upon the exchange rate for such other currency or currency unit existing on or about the time a payment is due. Special United States federal income tax considerations applicable to any Debt Securities so denominated are also described in the applicable Prospectus Supplement. The Debt Securities may be issued in registered or bearer form and, unless otherwise specified in a Prospectus Supplement, in denominations of $1,000 and integral multiples thereof. Debt Securities may be issued in book-entry form, without certificates. Any such issue will be described in the Prospectus Supplement relating to such Debt Securities. No service charge will be made for any transfer or exchange of the Debt Securities, but the Company or the Trustee may require payment of a sum sufficient to cover any tax or other government charge payable in connection therewith. Debt Securities may be issued under the Indentures as Original Issue Discount Securities to be sold at a substantial discount from their stated principal amount. United States Federal income tax consequences and other considerations applicable thereto will be described in the Prospectus Supplement relating to such Debt Securities. MERGER, CONSOLIDATION AND SALE OF ASSETS The Indentures will provide that the Company shall not consolidate with or merge into any other corporation or convey, transfer or lease its properties and assets substantially as an entirety to any Person, unless: (1) the corporation formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance or transfer, or which leases, the properties and assets of the Company substantially as an entirety (A) shall be a corporation, partnership, limited liability company or trust organized and validly existing under the laws of the United States of America, any state thereof or the District of Columbia and (B) shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, the Company's obligation for the due and punctual payment of the principal of (and premium, if any, on) and interest on all the Debt Securities and the performance and observance of every covenant of the Indentures on the part of the Company to be performed or observed; (2) immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing; and (3) the Company or such Person shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and such supplemental indenture comply with this "Merger, Consolidation and Sale of Assets" section and that all conditions precedent herein provided for relating to such transaction have been complied with. This paragraph shall apply only to a merger or consolidation in which the Company is not the surviving corporation and to conveyances, leases and transfers by the Company as transferor or lessor. (Section 801 of each Indenture) The Indentures will further provide that upon any consolidation by the Company with or merger by the Company into any other corporation or any conveyance, transfer or lease of the properties and assets of the Company substantially as an entirety to any Person in accordance with the preceding paragraph, the successor Person formed by such consolidation or into which the Company is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right 7 and power of, the Company under the Indentures with the same effect as if such successor Person had been named as the Company therein, and in the event of any such conveyance or transfer, the Company (which term shall for this purpose mean Cendant Corporation or any successor Person which shall theretofore become such in the manner described in the preceding paragraph), except in the case of a lease, shall be discharged of all obligations and covenants under the Indentures and the Debt Securities and the coupons and may be dissolved and liquidated. (Section 802 of each Indenture) EVENTS OF DEFAULT The following will be "Events of Default" under the Indentures with respect to Debt Securities of any series: (1) default in the payment of any interest on any Debt Securities of that series or any related coupon, when such interest or coupon becomes due and payable, and continuance of such default for a period of 30 days; or (2) default in the payment of the principal of (or premium, if any, on) any Debt Securities of that series at its Maturity; or (3) default in the deposit of any sinking fund payment when and as due pursuant to the terms of the Debt Securities of that series and Article Twelve of the Indentures; or (4) default in the performance, or breach, of any covenant or warranty of the Company in the Indentures (other than a default in the performance, or breach, of a covenant or warranty which is specifically dealt with elsewhere under this "Events of Default" section), and continuance of such default or breach for a period of 60 days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in principal amount of all Outstanding Debt Securities, a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" thereunder; or (5) the entry of a decree or order by a court having jurisdiction in the premises adjudging the Company bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company under the Federal Bankruptcy Code or any other applicable federal or state law, or appointing a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Company or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order unstayed and in effect for a period of 90 consecutive days; or (6) the institution by the Company of proceedings to be adjudicated bankrupt or insolvent, or the consent by it to the institution of bankruptcy or insolvency proceedings against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under the Federal Bankruptcy Code or any other applicable federal or state law, or the consent by it to the filing of any such petition or to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Company or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due; or (7) (A) there shall have occurred one or more defaults by the Company in the payment of the principal of (or premium, if any, on) Debt aggregating $50 million or more, when the same becomes due and payable at the stated maturity thereof, and such default or defaults shall have continued after any applicable grace period and shall not have been cured or waived, or (B) Debt of the Company aggregating $50 million or more shall have been accelerated or otherwise declared due and payable, or required to be prepaid or repurchased (other than by regularly scheduled required prepayment), prior to the stated maturity thereof; or (8) any other Event of Default provided with respect to Debt Securities of that series. If an Event of Default described in clause (1), (2), (3), (4), (7) or (8) above with respect to Debt Securities of any series at the time Outstanding occurs and is continuing, then in every such case the Trustee or the Holders of not less than 25% in principal amount of the Outstanding Debt Securities of that series may declare the principal amount (or, if the Debt Securities of that series are Original Issue Discount Securities or Indexed Securities, such portion of the principal amount as may be specified in the terms of that series) of all of the Debt Securities of that series to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by Holders), and upon any such declaration such principal amount (or specified portion thereof) shall become immediately due and payable. If an Event of Default described in clause (5) or (6) above occurs and is continuing, then the principal amount of all the Debt Securities shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder. 8 At any time after a declaration of acceleration with respect to Debt Securities of any series (or of all series, as the case may be) has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as provided in Article Five of the Indentures, the Holders of a majority in principal amount of the Outstanding Debt Securities of that series (or of all series, as the case may be), by written notice to the Company and the Trustee, may rescind and annul such declaration and its consequences if: (1) the Company has paid or deposited with the Trustee a sum sufficient to pay in the Currency in which the Debt Securities of such series are payable (except as otherwise specified pursuant to Section 301 of the Indentures for the Debt Securities of such series and except, if applicable, as provided in certain provisions of Section 312 of the Indentures): (A) all overdue interest on all Outstanding Debt Securities of that series (or of all series, as the case may be) and any related coupons; (B) all unpaid principal of (and premium, if any, on) any Outstanding Debt Securities of that series (or of all series, as the case may be) which has become due otherwise than by such declaration of acceleration, and interest on such unpaid principal at the rate or rates prescribed therefor in such Debt Securities; (C) to the extent that payment of such interest is lawful, interest on overdue interest at the rate or rates prescribed therefor in such Debt Securities; and (D) all sums paid or advanced by the Trustee thereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel; and (2) all Events of Default with respect to Debt Securities of that series (or of all series, as the case may be), other than the non-payment of amounts of principal of (or premium, if any, on) or interest on Debt Securities of that series (or of all series, as the case may be) which have become due solely by such declaration of acceleration, have been cured or waived as provided in Section 513 of the Indentures. No such rescission shall affect any subsequent default or impair any right consequent thereon. Notwithstanding the preceding paragraph, in the event of a declaration of acceleration in respect of the Debt Securities because of an Event of Default specified in clause (7) of the first paragraph of this section shall have occurred and be continuing, such declaration of acceleration shall be automatically annulled if the Debt that is the subject of such Event of Default has been discharged or the holders thereof have rescinded their declaration of acceleration in respect of such Debt, and written notice of such discharge or rescission, as the case may be, shall have been given to the Trustee by the Company and countersigned by the holders of such Debt or a trustee, fiduciary or agent for such holders, within 30 days after such declaration of acceleration in respect of the Debt Securities, and no other Event of Default has occurred during such 30-day period which has not been cured or waived during such period. (Section 502 of each Indenture) Subject to Section 502 of each Indenture, the Holders of not less than a majority in principal amount of the Outstanding Debt Securities of any series may on behalf of the Holders of all the Debt Securities of such series waive any past default described in clause (1), (2), (3), (4), (7), or (8) of the first paragraph of this section (or, in the case of a default described in clause (5) or (6) of the first paragraph of this section, the Holders of not less than a majority in principal amount of all Outstanding Debt Securities may waive any such past default), and its consequences, except a default (i) in respect of the payment of the principal of (or premium, if any, on) or interest on any Debt Security or any related coupon, or (ii) in respect of a covenant or provision which under the Indentures cannot be modified or amended without the consent of the Holder of each Outstanding Debt Security of such series affected. (Section 513 of each Indenture) Upon any such waiver, any such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of the Indentures; but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon. (Section 513 of each Indenture) No Holder of any Debt Security of any series or any related coupons shall have any right to institute any proceeding, judicial or otherwise, with respect to the Indentures, or for the appointment of a receiver or trustee, or for any other remedy thereunder, unless (i) such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Debt Securities of that series; (ii) the Holders of not less than 25% in principal amount of the Outstanding Debt Securities of that series 9 in the case of any Event of Default under clause (1), (2), (3), (4), (7) or (8) of the first paragraph of this section, or, in the case of any Event of Default described in clause (5) or (6) of the first paragraph of this section, the Holders of not less than 25% in principal amount of all Outstanding Debt Securities, shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee under each of the Indentures; (iii) such Holder or Holders have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; (iv) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and (v) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority or more in principal amount of the Outstanding Debt Securities of that series in the case of any Event of Default described in clause (1), (2), (3), (4), (7) or (8) of the first paragraph of this section, or, in the case of any Event of Default described in clause (5) or (6) of the first paragraph of this section, by the Holders of a majority or more in principal amount of all Outstanding Debt Securities. (Section 507 of each Indenture) During the existence of an Event of Default, the Trustee is required to exercise such rights and powers vested in it under either Indenture in good faith. Subject to the provisions of the Indentures relating to the duties of the Trustee, in case an Event of Default shall occur and be continuing, the Trustee under the Indentures is not under any obligation to exercise any of its rights or powers under the Indentures at the request or direction of any of the Holders unless such Holders shall have offered to the Trustee reasonable security or indemnity. Subject to certain provisions concerning the rights of the Trustee, with respect to the Debt Securities of any series, the Holders of not less than a majority in principal amount of the Outstanding Debt Securities of such series shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee under the Indentures. Within 90 days after the occurrence of any Default with respect to Debt Securities of any series, the Trustee shall transmit in the manner and to the extent provided in TIA Section 313(c), notice of such Default known to the Trustee, unless such Default shall have been cured or waived; provided, however, that, except in the case of a Default in the payment of the principal of (or premium, if any, on) or interest on any Debt Securities of such series, or in the payment of any sinking fund installment with respect to Debt Securities of such series, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or Responsible Officers of the Trustee in good faith determines that the withholding of such notice is in the interest of the Holders of Debt Securities of such series and any related coupons; and provided further that, in the case of any Default of the character specified in clause (7) of the first paragraph of this section with respect to Debt Securities of such series, no such notice to Holders shall be given until at least 30 days after the occurrence thereof. The Company is required to deliver to the Trustee, within 120 days after the end of each fiscal year, a brief certificate of the Company's compliance with all of the conditions and covenants under the Indentures. DEFEASANCE OR COVENANT DEFEASANCE OF THE INDENTURES The Indentures will provide that the Company may, at its option and at any time, terminate the obligations of the Company with respect to the Outstanding Debt Securities of any series ("defeasance"). Such defeasance means that the Company shall be deemed to have paid and discharged the entire indebtedness represented by the Outstanding Debt Securities and any related coupons, except for the following which shall survive until otherwise terminated or discharged under the Indentures: (A) the rights of Holders of such Outstanding Debt Securities and any related coupons (i) to receive, solely from the trust fund described in the Indentures, payments in respect of the principal of (and premium, if any, on) and interest on such Debt Securities and any related coupons when such payments are due, and (ii) to receive shares of common stock or other Securities from the Company upon conversion of any convertible Debt Securities issued thereunder, (B) the Company's obligations to issue temporary Debt Securities, register the transfer or exchange of any Debt Securities, replace mutilated, destroyed, lost or stolen Debt Securities, maintain an office or agency for payments in respect of the Debt Securities and, if the Company acts as its own Paying Agent, hold in trust, money to be paid to such Persons entitled to payment, and with respect to Additional Amounts, if any, on such Debt Securities as contemplated in the Indentures, (C) the rights, powers, trusts, duties and immunities of the Trustee under the Indentures and (D) the defeasance provisions of the Indentures. With respect to Subordinated Debt Securities, money and securities held in trust pursuant to the Defeasance and Covenant Defeasance provisions described herein, shall not be subject to the subordination provisions of the Subordinated Indenture. In addition, the Company may, at its option and at any time, elect to terminate the obligations of the Company with respect to certain covenants that are set forth in the Indentures, some of which are described in the "Certain Covenants" section above, and any omission to comply with such obligations shall not constitute a Default or an Event of Default with respect to the Debt Securities ("covenant defeasance"). (Section 1403 of each Indenture) In order to exercise either defeasance or covenant defeasance: 10 (1) the Company shall irrevocably have deposited or caused to be deposited with the Trustee, 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 Debt Securities and any related coupons, (A) money in an amount (in such Currency in which such Debt Securities and any related coupons are then specified as payable at Stated Maturity), or (B) Government Obligations applicable to such Debt Securities (determined on the basis of the Currency in which such Debt Securities are then specified as payable at Stated Maturity) which through the scheduled payment of principal and interest in respect thereof in accordance with their terms will provide, not later than one day before the due date of any payment of principal (including any premium) and interest, if any, under such Debt Securities and any related coupons, money in an amount or (C) a combination thereof, sufficient, in the opinion of a nationally recognized firm of independent public accountants to pay and discharge (i) the principal of (and premium, if any, on) and interest on the Outstanding Debt Securities and any related coupons on the Stated Maturity (or Redemption Date, if applicable) of such principal (and premium, if any) or installment or interest and (ii) any mandatory sinking fund payments or analogous payments applicable to the Outstanding Debt Securities and any related coupons on the day on which such payments are due and payable in accordance with the terms of the Indentures and of such Debt Securities and any related coupons; provided that the Trustee shall have been irrevocably instructed to apply such money or the proceeds of such Government Obligations to said payments with respect to such Debt Securities and any related coupons. Before such a deposit, the Company may give to the Trustee, in accordance with certain redemption provisions in the Indentures, a notice of its election to redeem all or any portion of such Outstanding Debt Securities at a future date in accordance with the terms of the Debt Securities of such series and the redemption provisions of the Indentures, which notice shall be irrevocable. Such irrevocable redemption notice, if given, shall be given effect in applying the foregoing; and (2) no Default or Event of Default with respect to the Debt Securities and any related coupons shall have occurred and be continuing on the date of such deposit or, insofar as the Event of Default described in clauses (5) and (6) of the Events of Default section above are concerned, at any time during 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); (3) such defeasance or covenant defeasance shall not result in a breach or violation of, or constitute a default under, the Indentures or any other material agreement or instrument to which the Company is a party or by which it is bound; (4) in the case of a defeasance, the Company shall have delivered to the Trustee an Opinion of Counsel stating that (x) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (y) since the Issue Date, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Outstanding Debt Securities and any related coupons will not recognize income, gain or loss for federal income tax purposes as a result of such defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such defeasance had not occurred; (5) in the case of a covenant defeasance, the Company shall have delivered to the Trustee an Opinion of Counsel to the effect that the Holders of the Outstanding Debt Securities and any related coupons will not recognize income, gain or loss for federal income tax purposes as a result of such covenant defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (6) notwithstanding any other provisions of the defeasance and covenant defeasance provisions of the Indentures, such defeasance or covenant defeasance shall be effected in compliance with any additional or substitute terms, conditions or limitations in connection therewith pursuant to Section 301 of the Indentures; and (7) the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent under the Indentures to either defeasance or covenant defeasance, as the case may be, have been complied with. (Section 1404 of each Indenture) 11 SATISFACTION AND DISCHARGE The Indentures shall upon Company Request cease to be of further effect with respect to any series of Debt Securities (except as to any surviving rights of registration of transfer or exchange of Debt Securities of such series herein expressly provided for and the obligation of the Company to pay any Additional Amounts as contemplated by Section 1005 of each Indenture) and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of such Indenture as to such series when (1) either (A) all Debt Securities of such series theretofore authenticated and delivered and all coupons, if any, appertaining thereto (other than (i) coupons appertaining to Bearer Securities surrendered for exchange for Registered Securities and maturing after such exchange, whose surrender is not required or has been waived as provided in Section 305 of the Indentures, (ii) Debt Securities and coupons of such series which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 306 of the Indentures, (iii) coupons appertaining to Debt Securities called for redemption and maturing after the relevant Redemption Date, whose surrender has been waived as provided in Section 1106 of the Indentures, and (iv) Debt Securities and coupons of such series for whose payment money has theretofore been deposited in trust with the Trustee or any Paying Agent or segregated and held in trust by the Company and thereafter repaid to the Company, as provided in Section 1003 of the Indentures) have been delivered to the Trustee for cancellation; or (B) all Debt Securities of such series and, in the case of (i) or (ii) below, any coupons appertaining thereto not theretofore delivered to the Trustee for cancellation (i) have become due and payable, or (ii) will become due and payable at their Stated Maturity within one year, or (iii) if redeemable at the option of the Company, are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company, and the Company, in the case of (i), (ii) or (iii) above, has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust for the purpose an amount, in the Currency in which the Debt Securities of such series are payable, sufficient to pay and discharge the entire indebtedness on such Debt Securities not theretofore delivered to the Trustee for cancellation, for principal (and premium, if any) and interest to the date of such deposit (in the case of Debt Securities which have become due and payable) or to the Stated Maturity or Redemption Date, as the case may be; (2) the Company has paid or caused to be paid all other sums payable hereunder by the Company; and (3) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of the Indentures as to such series have been complied with. (Section 401 of each Indenture) AMENDMENTS AND WAIVERS The Indentures will provide that at any time and from time to time, the Company and the Trustee may, without the consent of any holder of Debt Securities, enter into one or more indentures supplemental thereto for certain specified purposes, including, among other things, (i) to cure ambiguities, defects or inconsistencies, or to make any other provisions with respect to questions or matters arising under the Indentures (provided that such action shall not adversely affect the interests of the Holders in any material respect), (ii) to effect or maintain the qualification of the Indentures under the Trust Indenture Act, or (iii) to evidence the succession of another person to the Company and the assumption by any such successor of the obligations of the Company in accordance with the Indentures and the Debt Securities. (Section 901 of each Indenture). Other amendments and modifications of the Indentures or the Debt Securities may be made by the Company and the Trustee with the consent of the holders of not less than a majority of the aggregate principal amount of all of the then Outstanding Debt Securities of any Series; provided, however, that no such modification or amendment may, without the consent of the holder of each Outstanding Debt Security affected thereby, (1) change the Stated Maturity of the principal of, or any installment of interest on, any Debt Security or reduce the principal amount thereof or the rate of interest thereon or any premium payable upon the redemption thereof, or change any obligation of the Company to pay Additional Amounts contemplated by Section 1005 of each Indenture (except as contemplated and permitted by certain provisions of the Indentures), or reduce the amount of the principal of an Original Issue Discount Security that would be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 502 of the Indentures of the amount thereof provable in bankruptcy pursuant to Section 504 of the Indentures, or adversely affect any right of repayment at the option of any Holder of any Debt Security, or change any Place of Payment where, or the Currency in which, any Debt Security or any premium or the interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof (or, in the case of redemption or repayment at the option of the Holder, on or after the Redemption Date or Repayment Date, as the case may be), or adversely affect any right to convert or manage any Debt Securities as may be provided pursuant to Section 301 of the Indentures, or (2) reduce the percent in principal amount of the Outstanding Debt Securities of any series, the consent of whose Holders is required for any such supplemental indenture, for any waiver of compliance with certain provisions of the Indentures or certain defaults thereunder and their consequences provided for in the Indentures, or reduce the requirements for quorum or voting. 12 GOVERNING LAW The Indentures and the Debt Securities will be governed by and construed in accordance with the laws of the State of New York. The Indentures are subject to the provisions of the Trust Indenture Act that are required to be a part thereof and shall, to the extent applicable, be governed by such provisions. CERTAIN DEFINITIONS Set forth below is a summary of certain of the defined terms used in the Indentures. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Capital Stock" means any and all shares, interests, participations, rights or equivalents (however designated) of corporate stock of the Company or any Principal Subsidiary. "Company Request" or "Company Order" means a written request or order signed in the name of the Company by its Chairman, its President, any Vice President, its Treasurer or an Assistant Treasurer, and delivered to the Trustee. "Debt" means notes, bonds, debentures or other similar evidences of indebtedness for money borrowed. "Default" means any event which is, or after notice or passage of time or both would be, an Event of Default. "Fair Market Value" means the fair market value of the item in question as determined by the Board of Directors acting in good faith and in exercise of its fiduciary duties. "Holder" means a Person in whose name a Debt Security is registered in the Security Register. "Interest Payment Date" means the Stated Maturity of an installment of interest on the Debt Securities. "Issue Date" means the date of first issuance of the Debt Securities under either Indenture. "Maturity", when used with respect to any Debt Securities, means the date on which the principal of such Debt Security or an installment of principal becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, notice of redemption, notice of option to elect repayment or otherwise. "Officers' Certificate" means a certificate signed by the Chairman, the President or a Vice President, and by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of the Company, and delivered to the Trustee. "Opinion of Counsel" means a written opinion of counsel, who may be counsel for the Company, including an employee of the Company, and who shall be acceptable to the Trustee. "Original Issue Discount Security" means any Debt Security which provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 502 of the Indentures. "Outstanding", when used with respect to Debt Securities, means, as of the date of determination, all Debt Securities theretofore authenticated and delivered under the Indentures, except: (i) Debt Securities theretofore cancelled by the Trustee or delivered to the Trustee for cancellation; (ii) Debt Securities, or portions thereof, for whose payment, money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent (other than the Company) in trust or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent) for the Holders of such Debt Securities; 13 (iii) Debt Securities, except to the extent provided in the "Defeasance or Covenant Defeasance of the Indentures" section, with respect to which the Company has effected defeasance and/or covenant defeasance as provided in the Indenture; and (iv) Mutilated, destroyed, lost or stolen Debt Securities which have become or are about to become due and payable which have been paid pursuant to Section 306 of the Indentures or in exchange for or in lieu of which other Debt Securities have been authenticated and delivered pursuant to the Indenture, other than any such Debt Securities in respect of which there shall have been presented to the Trustee proof satisfactory to it that such Debt Securities are held by a bona fide purchaser in whose hands the Debt Securities are valid obligations of the Company; provided, however, that in determining whether the Holders of the requisite principal amount of Outstanding Debt Securities have given any request, demand, authorization, direction, notice, consent or waiver under the Indentures, and for the purpose of making the calculations required by TIA Section 313, Debt Securities owned by the Company or any other obligor upon the Debt Securities or any Affiliate of the Company or such other obligor shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in making such calculation or in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Debt Securities which the Trustee knows to be so owned shall be so disregarded. Debt Securities so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Debt Securities and that the pledgee is not the Company or any other obligor upon the Debt Securities or any Affiliate of the Company or such other obligor. "Paying Agent" means any Person (including the Company acting as Paying Agent) authorized by the Company to pay the principal of (and premium, if any, on) or interest on any Debt Securities on behalf of the Company. "Person" means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "Responsible Officer", when used with respect to the Trustee, means the chairman or any vice-chairman of the board of directors, the chairman or any vice-chairman of the executive committee of the board of directors, the chairman of the trust committee, the president, any vice president, the secretary, any assistant secretary, the treasurer, any assistant treasurer, the cashier, any assistant cashier, any trust officer or assistant trust officer, the controller or any assistant controller or any other officer of the Trustee customarily performing functions similar to those performed by any of the above-designated officers, and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "Rolling Period" shall mean with respect to any fiscal quarter, such fiscal quarter and the three immediately preceding fiscal quarters considered as a single accounting period. "Security Register" and "Security Registrar" have the respective meanings specified in Section 305 of the Indenture. "Stated Maturity", when used with respect to any Debt Security or any installment of principal thereof or interest thereon, means the date specified in such Debt Security as the fixed date on which the principal of such Debt Security or such installment of principal or interest is due and payable. "Subsidiary" means any corporation of which at the time of determination the Company, directly and/or indirectly through one or more Subsidiaries, owns more than 50% of the Voting Stock. "Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939 as in force at the date as of which the Indentures were executed, except that any supplemental indenture executed pursuant to the Indentures shall conform to the requirements of the Trust Indenture Act as in effect on the date of execution thereof. "Trustee" means The Bank of Nova Scotia Trust Company of New York until a successor Trustee shall have become such pursuant to the applicable provisions of the Indentures, and thereafter "Trustee" shall mean such successor Trustee. "Vice President", when used with respect to the Company or the Trustee, means any vice president, whether or not designated by a number or a word or words added before or after the title "vice president". "Voting Stock" means stock of the class or classes having general voting power under ordinary circumstances to elect at least a majority of the board of directors, managers or trustees of a corporation (irrespective of whether or not at the time stock of any other class or 14 classes shall have or might have voting power by reason of the happening of any contingency). GENERAL DESCRIPTION OF CAPITAL STOCK The following description of the Company's capital stock does not purport to be complete and is subject to, and qualified in its entirety by reference to, the more complete descriptions thereof set forth in the Company's Amended and Restated Certificate of Incorporation (the "Certificate"), and Amended and Restated By-laws (the "By-laws") which documents are exhibits to this Registration Statement. The Company is authorized to issue up to 2,000,000,000 shares of Common Stock, par value $.01 per share, and up to 10,000,000 shares of Preferred Stock, par value $1.00 per share. As of January 15, 1998, there were 839,992,974 shares of Common Stock and no shares of Preferred Stock outstanding. DESCRIPTION OF PREFERRED STOCK GENERAL The following summary contains a description of certain general terms of the Company's Preferred Stock. The particular terms of any series of Preferred Stock that may be offered will be described in the applicable Prospectus Supplement. If so indicated in a Prospectus Supplement, the terms of any such series may differ from the terms set forth below. The summary of terms of the Preferred Stock does not purport to be complete and is subject to and qualified in its entirety by reference to the provisions of the Certificate and the Certificate of Designation (the "Certificate of Designation") relating to a particular series of offered Preferred Stock which is or will be in the form filed or incorporated by reference as an exhibit to the Registration Statement of which this Prospectus is a part at or prior to the time of the issuance of such series of Preferred Stock. The Board of Directors of the Company has the power, without further action by the shareholders, to issue Preferred Stock in one or more series, with such designations of series, dividend rates, redemption provisions, special or relative rights in the event of liquidation, dissolution, distribution or winding up of the Company, sinking fund provisions, conversion or exchange provisions, voting rights thereof and other preferences, privileges, powers, rights, qualifications, limitations and restrictions, as shall be set forth as and when established by the Board of Directors of the Company. The shares of any series of Preferred Stock will be, when issued, fully paid and non-assessable and holders thereof will have no preemptive rights in connection therewith. RANK Unless otherwise specified in the Prospectus Supplement relating to a particular series of Preferred Stock, each series of Preferred Stock will rank on parity as to dividends and liquidation rights in all respects with each other series of Preferred Stock. DIVIDEND RIGHTS Holders of the Preferred Stock of each series will be entitled to receive, when, as and if declared by the Board of Directors of the Company, out of funds legally available therefor, cash dividends at such rates and on such dates as are set forth in the Prospectus Supplement relating to such series of Preferred Stock. Different series of the Preferred Stock may be entitled to dividends at different rates or based upon different methods of determination. Such rates may be fixed or variable or both. Each such dividend will be payable to the holders of record as they appear on the stock books of the Company on such record dates as will be fixed by the Board of Directors of the Company or a duly authorized committee thereof. Dividends on any series of the Preferred Stock may be cumulative or noncumulative, as provided in the Prospectus Supplement relating thereto. RIGHTS UPON LIQUIDATION In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, the holders of each series of Preferred Stock will be entitled to receive out of assets of the Company available for distribution to stockholders, before any distribution of assets is made to holders of Common Stock or any other class of stock ranking junior to such series of the Preferred Stock upon liquidation, liquidating distributions in the amount set forth in the Prospectus Supplement relating to such series of Preferred Stock plus an amount equal to accrued and unpaid dividends for the then current dividend period and, if such series of the Preferred Stock is cumulative, for all dividend periods prior thereto, all as set forth in the Prospectus Supplement with respect to such series of Preferred Stock. 15 REDEMPTION The terms, if any, on which shares of a series of Preferred Stock may be subject to optional or mandatory redemption, in whole or in part, will be set forth in the Prospectus Supplement relating to such series. CONVERSION AND EXCHANGE The terms, if any, on which shares of a series of Preferred Stock are convertible into another series of Preferred Stock or Common Stock or exchangeable for another series of Preferred Stock or Common Stock will be set forth in the Prospectus Supplement relating thereto. Such terms may include provisions for conversion, either mandatory, at the option of the holder, or at the option of the Company, in which case the number of shares of another series of Preferred Stock or Common Stock to be received by the holders of such series of Preferred Stock would be calculated as of a time and in the manner stated in such Prospectus Supplement. TRANSFER AGENT AND REGISTRAR The transfer agent, registrar and dividend disbursement agent for each series of Preferred Stock will be designate in the applicable Prospectus Supplement. The registrar for shares of each series of Preferred Stock will send notices to shareholders of any meetings at which holders of the Preferred Stock have the right to elect directors of the Company or to vote on any other matter. VOTING RIGHTS The holders of Preferred Stock of a series offered hereby will not be entitled to vote except as indicated in the Prospectus Supplement relating to such series of Preferred Stock or as required by applicable law. DESCRIPTION OF COMMON STOCK GENERAL Subject to the rights of the holders of any shares of the Company's Preferred Stock which may at the time be outstanding, holders of Common Stock are entitled to such dividends as the Board of Directors may declare out of funds legally available therefor. The holders of Common Stock will possess exclusive voting rights in the Company, except to the extent the Board of Directors specifies voting power with respect to any Preferred Stock issued. Except as hereinafter described, holders of Common Stock are entitled to one vote for each share of Common Stock, but will not have any right to cumulate votes in the election of directors. In the event of liquidation, dissolution or winding up of the Company, the holders of Common Stock are entitled to receive, after payment of all of the Company's debts and liabilities and of all sums to which holders of any Preferred Stock may be entitled, the distribution of any remaining assets of the Company. Holders of the Common Stock will not be entitled to preemptive rights with respect to any shares which may be issued. Any shares of Common Stock sold hereunder will be fully paid and non-assessable upon issuance against full payment of the purchase price therefor. The Common Stock is listed on the New York Stock Exchange under the symbol "CD." CERTAIN PROVISIONS The provisions of the Company's Certificate and By-Laws which are summarized below may be deemed to have an anti-takeover effect and may delay, defer or prevent a tender offer or takeover attempt that a stockholder might consider in such stockholder's best interest, including those attempts that might result in a premium over the market price for the shares held by stockholders. CLASSIFIED BOARD The Board of Directors is divided into three classes that are elected for staggered three-year terms. A director may be removed by the stockholders without cause only by the affirmative vote of the holders, voting as a single class, of 80% or more of the total number of votes entitled to be cast by all holders of the voting stock, which shall include all capital stock of the Company which by its terms may vote on all matters submitted to stockholders of the Company generally. The size of the Board of Directors was set by resolution at 30 and pursuant to the By-Laws (i) until the third anniversary of the consummation of the merger of HFS and CUC (the "Effective Time"), an affirmative vote of 80% of the entire Board of Directors will be required in order to change the number of directors, and (ii) a quorum, at any meeting of the Board of Directors, shall consist of a majority of the entire Board of Directors. 16 COMMITTEES OF THE BOARD OF DIRECTORS Pursuant to the Certificate, the Board of Director's authority to designate committees shall be subject to the provisions of the By-Laws. Pursuant to the By-Laws, the Board of Directors shall have the following committees: (i) an Executive Committee consisting of four CUC Directors (as defined below) and four HFS Directors (as defined below) and whose Chairman shall be the Chairman of the Board; (ii) a Compensation Committee consisting of two CUC Directors and two HFS Directors and whose Chairman shall be an HFS Director; and (iii) an Audit Committee consisting of two CUC Directors and two HFS Directors and whose Chairman shall be a CUC Director. The Board of Directors may designate one or more directors as alternate members of any committee to fill any vacancy on a committee and to fill a vacant chairmanship of a committee occurring as a result of a member or chairman leaving the committee, whether through death, resignation, removal or otherwise. Until the third anniversary of the Effective Time, the affirmative vote of 80% of the entire Board of Directors will be required in order to remove a director from a committee, change the chairmanship of a committee, designate an alternate member to any committee, designate any additional committee, or amend, modify or repeal or adopt any provision inconsistent with the provisions described herein. The term "HFS Director" means (A) any person serving as a Director of HFS on May 27, 1997 (or any person appointed by the Board of Directors of HFS after May 27, 1997 to fill a vacancy on the HFS Board of Directors created other than due to an increase in the size of the Board of Directors of HFS) who continues as a Director of the Company at the Effective Time and (B) any person who becomes a Director of the Company and who was designated as such by the remaining HFS Directors prior to his or her election; and the term "CUC Director" means (A) any person serving as a Director of the Company on May 27, 1997 (or any person appointed by the Board of Directors of the Company after May 27, 1997 but prior to the Effective Time to fill a vacancy on the Board of Directors created other than due to an increase in the size of the Board of Directors) who continues as a Director of the Company at the Effective Time, (B) any of the four persons designated by the CUC Directors to become a Director of the Company at the Effective Time and (C) any person who becomes Director of the Company and who was designated as such by the remaining CUC Directors prior to his or her election. NEWLY CREATED DIRECTORSHIPS AND VACANCIES Pursuant to the By-Laws, until the third anniversary of the Effective Time, the Board of Directors will delegate to the Executive Committee the full and exclusive power and authority to nominate directors for election to the Board of Directors at the next stockholders' meetings at which directors are to be elected, elect directors to fill vacancies on the Board of Directors between stockholders' meetings and fill vacancies on any committee of the Board of Directors to the extent an alternate member has not been previously designated. Such nominations and elections of directors and members of committees shall be undertaken by the Executive Committee such that (i) the number of HFS Directors and CUC Directors on the Board of Directors or any committee of the Board of Directors shall be equal and (ii) the remaining HFS Directors (if the number of HFS Directors is less than the number of CUC Directors) or the remaining CUC Directors (if the number of CUC Directors is less than the number of HFS Directors) shall designate the person to be nominated or elected. Any resolution regarding such election or nomination as described above in a manner that (a) is consistent with the two preceding sentences will require the approval by only three members of the Executive Committee (or only two members if there are then two vacancies on the Executive Committee) or (b) is inconsistent with the two preceding sentences will require approval by at least seven members of the Executive Committee. Until the third anniversary of the Effective Time, the affirmative vote of at least 80% of the entire Board of Directors shall be required in order for the Board of Directors to amend, modify or repeal, or adopt any provision inconsistent with, the provisions of the By-Laws described herein. OFFICERS Pursuant to the By-Laws, Walter A. Forbes shall be the Chairman of the Board from and after the Effective Time and until January 1, 2000, at which time Henry R. Silverman will be the Chairman of the Board. If, for any reason Mr. Forbes ceases to serve as Chairman of the Board prior to January 1, 2000 and at such time Mr. Silverman is President and Chief Executive Officer, Mr. Silverman shall become Chairman of the Board. Mr. Silverman will be President and Chief Executive Officer from and after the Effective Time and until January 1, 2000, at which time Mr. Forbes will be President and Chief Executive Officer. If, for any reason Mr. Silverman ceases to serve as President and Chief Executive Officer prior to January 1, 2000 and at such time Mr. Forbes is Chairman of the Board, Mr. Forbes shall become President and Chief Executive Officer. Until January 1, 2002, the affirmative vote of 80% of the entire Board of Directors shall be required in order for the Board to (i) amend, modify, repeal or adopt any provision inconsistent with the provisions described herein, (ii) remove Mr. Forbes or Mr. Silverman from the positions specifically provided for in their employment agreements with the Company and HFS, respectively, (iii) modify either of the respective roles, duties or authority of Messrs. Forbes and Silverman. 17 SPECIAL MEETINGS OF STOCKHOLDERS A special meeting of stockholders may be called only by the Chairman of the Board of Directors, the President or the Board of Directors pursuant to a resolution approved by a majority of the entire Board of Directors. QUORUM AT STOCKHOLDER MEETINGS The holders of one-third of the shares entitled to vote at any meeting of the stockholders, present in person or by proxy, shall constitute a quorum at all stockholder meetings. STOCKHOLDER ACTION BY WRITTEN CONSENT Stockholder action by written consent in lieu of a meeting is prohibited under the Certificate. As a result, stockholder action can be taken only at an annual or special meeting of stockholders. This prevents the holders of a majority of the outstanding voting stock of the Company from using the written consent procedure to take stockholder action without giving all the stockholders of the Company entitled to vote on a proposed action the opportunity to participate in determining the proposed action. ADVANCE NOTICE OF STOCKHOLDER--PROPOSED BUSINESS AT ANNUAL MEETINGS The By-Laws provide that for business to be properly brought before an annual meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the Secretary of the Company. To be timely, a stockholder's notice must be delivered to or mailed and received at the principal executive offices of the Company not less than 60 days nor more than 90 days prior to the meeting; provided, however, that in the event that less than 70 days' notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be so received not later than the close of business on the tenth day following the date on which such notice of the date of the annual meeting was mailed or such public disclosure was made. A stockholder's notice to the Secretary must set forth as to each matter the stockholder proposes to bring before the annual meeting; (i) a brief description of the business desired to be brought before the annual meeting, (ii) the name and address, as they appear on the Company's books, of the stockholder proposing such business, (iii) the class and number of shares of the Company which are beneficially owned by the stockholder, and (iv) any material interest of the stockholder in such business. In addition, the By-Laws provide that for a stockholder to properly nominate a director at a meeting of stockholders, the stockholder must have given timely notice thereof in writing to the Secretary of the Company. To be timely, a stockholder's notice must be delivered to or mailed and received at the principal executive offices of the Company (i) in the case of an annual meeting, at least 90 days prior to the date of the last annual meeting of the Company stockholders and (ii) with respect to a special meeting of stockholders, the close of business on the 10th day following the date on which notice of such meeting is first given to stockholders. Such stockholder's notice to the Secretary must set forth: (i) the name and address of the stockholder who intends to make the nomination and of the person or persons to be nominated, (ii) a representation that the stockholder is holder of record of Common Stock and intends to appear in person or by proxy at the meeting to nominate each such nominee, (iii) a description of all arrangements between such stockholder and each nominee, (iv) such other information with respect to each nominee as would be required to be included in a proxy statement filed pursuant to the proxy rules of the Commission, and (v) the consent of each nominee to serve as director of the Company if so elected. AMENDMENT OF GOVERNING DOCUMENTS In addition to the provisions of the Certificate which require a super-majority of stockholders to approve certain amendments to the Certificate and the By-Laws, the By-Laws require the affirmative vote of 80% of the entire Board of Directors in order for the Board of Directors to adopt certain amendments to the By-Laws as described under "--Board of Directors," "--Committees of the Board of Directors," "Newly Created Directorships and Vacancies" and "--Officers." FAIR PRICE PROVISIONS Under the Delaware General Corporation Law and the Certificate, an agreement of merger, sale, lease or exchange of all or substantially all of the Company's assets must be approved by the Board of Directors and adopted by the holders of a majority of the outstanding shares of stock entitled to vote thereon. However, the Certificate includes what generally is referred to as a "fair price provision," which requires the affirmative vote of the holders of at least 80% of the outstanding shares of capital stock entitled to vote generally in the election of the Company's directors, voting together as a single class, to approve certain business combination transactions (including certain mergers, recapitalization and the issuance or transfer of securities of the Company or a subsidiary having 18 an aggregate fair market value of $10 million or more) involving the Company or a subsidiary and an owner or any affiliate of an owner of 5% or more of the outstanding shares of capital stock entitled to vote, unless either (i) such business combination is approved by a majority of disinterested directors, or (ii) the shareholders receive a "fair price" for their securities and certain other procedural requirements are met. The Certificate provides that this provision may not be repealed or amended in any respect except by the affirmative vote of the holders of not less than 80% of the outstanding shares of capital stock entitled to vote generally in the election of directors. PLAN OF DISTRIBUTION The Company may sell the Securities being offered hereby in any of, or any combination of, the following ways: (i) directly to purchasers; (ii) through agents; (iii) through underwriters; and/or (iv) through dealers. Offers to purchase Securities may be solicited directly by the Company or by agents designated by the Company from time to time. Any such agent, who may be deemed to be an underwriter as that term is defined in the Securities Act, involved in the offer or sale of Securities, will be named, and any commissions payable by the Company to such agent will be set forth, in the Prospectus Supplement. Unless otherwise indicated in a Prospectus Supplement, any such agent will be acting on a best efforts basis for the period of its appointment (ordinarily five business days or less). If an underwriter or underwriters are utilized in the offer or sale of Securities, the Company will execute an underwriting agreement with such underwriters at the time of sale of such Securities to such underwriters and the names of such underwriters and the principal terms of the Company's agreement with such underwriters will be set forth in the appropriate Prospectus Supplement. If a dealer is utilized in the offer or sale of Securities, the Company will sell such Securities to such dealer, as principal. Such dealer may then resell such Securities to the public at varying prices to be determined by such dealer at the time of resale. The name of such dealer and the principal terms of the Company's agreement with such dealer will be set forth in the appropriate Prospectus Supplement. Agents, underwriters, and dealers may be entitled under agreements with the Company to indemnification by the Company against certain liabilities, including liabilities under the Securities Act. Agents, dealers and underwriters may also be customers of, engage in transactions with, or perform services for the Company in the ordinary course of their business. The place and time of delivery for Securities will be set forth in the accompanying Prospectus Supplement for such Securities. LEGAL OPINION The validity of the Securities offered hereby will be passed on for the Company by Eric J. Bock, Esq., Vice President - Legal of the Company. Mr. Bock holds shares of Common Stock and options to acquire shares of Common Stock. EXPERTS The supplemental consolidated financial statements of the Company and its consolidated subsidiaries, except PHH Corporation ("PHH"), as of December 31, 1996 and January 31, 1995 and for the years ended December 31, 1996, January 31, 1996 and 1995 and CUC International Inc. ("CUC") as of January 31, 1997 and 1996 and for each of the three years in the period ended January 31, 1997 incorporated in this Prospectus by reference from the Company Form 8-K dated January 29, 1998, have been audited by Deloitte & Touche LLP, as stated in their reports which are incorporated herein by reference. The financial statements of PHH (consolidated with those of the Company) have been audited by KPMG Peat Marwick LLP, as stated in their report incorporated herein by reference. Their report contains an explanatory paragraph that states that PHH adoptd the provisions of Statement of Financial Standards No. 122 "Accounting for Mortgage Service Rights" in the year ended January 31, 1996. The consolidated financial statements of CUC (consolidated with those of the Company) have been audited by Ernst & Young LLP, as stated in their report incorporated herein by reference, which, as to the years ended January 31, 1996 and 1995, is based in part on the reports of Deloitte & Touche LLP, independent auditors of Sierra On-Line, Inc., KPMG Peat Marwick LLP, independent auditors of Davidson & Associates, Inc., and Price Waterhouse LLP, independent accountants of Ideon Group, Inc. Such supplemental consolidated financial statements of the Company and its consolidated subsidiaries are incorporated by reference herein in reliance upon the respective reports of such firms given upon their authority as experts in accounting and auditing. All of the foregoing firms are independent auditors. The consolidated financial statements and schedule of CUC appearing in CUC's Annual Report on Form 10-K for the fiscal year ended January 31, 1997 incorporated by reference in this Prospectus have been audited by Ernst & Young LLP, independent auditors, as set forth in their report thereon included therein and incorporated herein by reference which, as to the years ended January 31, 1996 and 1995, is based in part on the reports of Deloitte & Touche LLP, independent auditors of Sierra On-Line, Inc., KPMG Peat Marwick LLP, independent auditors of Davidson & Associates, Inc., and Price Waterhouse LLP, independent accountants of Ideon Group, Inc. The financial statements and schedule referred to above are incorporated herein by reference in reliance upon such reports given upon the authority of such firms as experts in accounting and auditing. With respect to the unaudited condensed consolidated interim financial information of CUC for the three-month periods ended April 30, 1997 and 1996, incorporated by reference in this Prospectus, Ernst & Young LLP have reported that they have applied limited procedures in accordance with professional standards for a review of such information. However, their separate report, included in CUC's Form 10-Q for the period ended April 30, 1997, incorporated herein by reference, states that they did not audit and they do not express an opinion on that interim financial information. Accordingly, the degree of reliance on their report on such information should be restricted considering the limited nature of the review procedures applied. The independent auditors are not subject to the liability provisions of Section 11 of the Securities Act for their report on the unaudited interim financial information 19 because the report is not a "report" or a "part" of the Registration Statement prepared or certified by the auditors within the meaning of Sections 7 and 11 of the Securities Act. The consolidated financial statements of HFS and its consolidated subsidiaries, except PHH Corporation ("PHH"), as of December 31, 1996 and 1995 and for each of the three years in the period ended December 31, 1996, incorporated in this Prospectus by reference from the Current Report on Form 8-K filed by HFS on July 16, 1997 have been audited by Deloitte & Touche LLP, as stated in their reports which are incorporated herein by reference. The financial statements of PHH (consolidated with those of HFS) as of December 31, 1996 and January 31, 1996 and for the year ended December 31, 1996 and each of the years in the two-year period ended January 31, 1996 have been audited by KPMG Peat Marwick LLP, as stated in their report incorporated herein by reference. Their report contains an explanatory paragraph that states that PHH adopted the provisions of Statement of Financial Standards No. 122 "Accounting for Mortgage Service Rights" in the year ended January 31, 1996. Such financial statements of HFS and its consolidated subsidiaries are incorporated by reference herein in reliance upon the respective reports of such firms given upon their authority as experts in accounting and auditing. All of the foregoing firms are independent auditors. The consolidated financial statements incorporated in this prospectus by reference from the Avis Rent A Car, Inc. Registration Statement on Form S-1, as amended, dated September 23, 1997 have been audited by Deloitte & Touche LLP, independent auditors, as stated in their report, which is incorporated herein by reference, and have been so incorporated in reliance upon the report of such firm given upon their authority as experts in accounting and auditing. 20 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. Securities and Exchange Commission Registration Fee....................................... $885,000 Trustee's Expenses..................................... 5,000 *Accounting Fees and Expenses.......................... 35,000 *Legal Fees and Expenses............................... 10,000 *Miscellaneous......................................... 10,000 ------ Total Expenses......................................... $945,000 ------------ * Estimated for purposes of completing the information required pursuant to this Item 14. The Company will pay all fees and expenses associated with filing the Registration Statement. ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Section 145 of the Delaware General Corporation Law empowers a Delaware corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of such corporation) by reason of the fact that such person is or was a director, officer, employee or agent of such corporation or is or was serving at the request of such corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise. The indemnity may include expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding, provided that such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interest of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person's conduct was unlawful. A Delaware corporation may indemnify directors, officers, employees and other agents of such corporation in an action by or in the right of a corporation under the same conditions, except that no indemnification is permitted without judicial approval if the person to be indemnified has been adjudged to be liable to the corporation. Where a director, officer, employee or agent of the corporation is successful on the merits or otherwise in the defense of any action, suit or proceeding referred to above or in defense of any claim, issue or matter therein, the corporation must indemnify such person against the expenses (including attorneys' fees) which he or she actually and reasonably incurred in connection therewith. The Registrant's By-Laws contain provisions that provide for indemnification of officers and directors and their heirs and distributees to full extent permitted by, and in the manner permissible under, the General Corporation Law of the State of Delaware. As permitted by Section 102(b)(7) of the General Corporation Law of the State of Delaware, registrant's Amended and Restated Certificate of Incorporation contains a provision eliminating the personal liability of a director to the Registrant or its stockholders for monetary damages for breach of fiduciary duty as a director, subject to certain exceptions. The Company maintains, at its expense, a policy of insurance which insures its directors and officers, subject to certain exclusions and deductions as are usual in such insurance policies, against certain liabilities which may be incurred in those capacities. II-1 ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. (a) Exhibits Exhibit No. Description - ----------- ----------- 1.1 Form of Underwriting Agreement (Standard Provisions) for Debt Securities. 1.2 Form of Underwriting Agreement (Standard Provisions) for Common Stock. 1.3 Form of Underwriting Agreement (Standard Provisions) for Preferred Stock. 3.1 Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference to Appendix B to the Joint Proxy Statement/Prospectus included as part of the Registration Statement on Form S-4 of the Registrant, Registration No. 333-34517). 3.2 Amended and Restated By-Laws of the Registrant (incorporated by reference to Appendix C of the Registrant's Proxy Statement/Prospectus included as part of the Registration Statement on Form S-4 of the Registrant, Registration No. 333-34517). 4.1 Form of Certificate for the Company's Common Stock, par value $.01 per share. 4.2 Form of Senior Indenture to be entered into by the Company and The Bank of Nova Scotia Trust Company of New York, as Trustee. 4.3 Form of Subordinated Indenture to be entered into by the Company and The Bank of Nova Scotia Trust Company of New York, as Trustee. 5.1 Opinion of Eric J. Bock, Esq. regarding the legality of the Securities being registered hereby. 12.1 Statement re: Computation of Consolidated Ratio of Earnings to Fixed Charges. 15.1 Letter of Ernst & Young LLP re: unaudited interim financial information of CUC International Inc. 23.1 Consent of Deloitte & Touche LLP related to the financial statements of Cendant Corporation. 23.2 Consent of Deloitte & Touche LLP relating to the financial statements of HFS Incorporated. 23.3 Consent of Ernst & Young LLP relating to the financial statements of CUC International Inc. 23.4 Consent of KPMG Peat Marwick LLP relating to the financial statements of PHH Corporation. 23.5 Consent of Deloitte & Touche LLP relating to the financial statements of Sierra On-Line, Inc. 23.6 Consent of Deloitte & Touche LLP related to the financial statements of Avis Rent A Car, Inc. 23.7 Consent of KPMG Peat Marwick LLP relating to the financial statements of Davidson & Associates, Inc. II-2 23.8 Consent of Price Waterhouse LLP relating to the financial statements of Ideon Group, Inc. 23.9 Consent of Eric J. Bock (included in Exhibit 5.1). 24.1 Power of attorney (included in the signature page to the Registration Statement). 25.1 Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of The Bank of Nova Scotia Trust Company of New York, as Trustee for the Senior Debt Securities. 25.2 Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of The Bank of Nova Scotia Trust Company of New York, as Trustee for the Subordinated Debt Securities. II-3 ITEM 17. UNDERTAKINGS. (a) The undersigned Registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement, to include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement; (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; and (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. II-4 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement, to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Parsippany, State of New Jersey, on January , 1998. CENDANT CORPORATION By: /s/ James E. Buckman --------------------------------- James E. Buckman Senior Executive Vice President, General Counsel and Director POWER OF ATTORNEY Know all those by these presents, that each person whose signature appears below constitutes and appoints each of Stephen P. Holmes, James E. Buckman and Eric J. Bock, or any of them, each acting alone, his true and lawful attorney-in-fact and agent, with full Power of Substitution and Resubstitution, for such person and in his name, place and stead, in any and all capacities, in connection with the Registrant's Registration Statement on Form S-3 under the Securities Act of 1933, as amended, including, without limitation the generality of the foregoing, to sign the Registration Statement in the name and on behalf of the Registrant or on behalf of the undersigned as a director or officer of the Registrant, and any and all amendments or supplements to the Registration Statement, including any and all stickers and post-effective amendments to the Registration Statement, and to sign any and all additional Registration Statements relating to the same offering of Securities as the Registration Statement that are filed pursuant to Rule 462(B) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission and any applicable securities exchange or securities self-regulatory body, granting unto said attorneys-in-fact and agents, each acting alone, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitutes or substitute, may lawfully do or cause to be done by virtue hereof. PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED. Signature Title Date /s/ Walter A. Forbes Chairman of the Board January 29, 1998 - ------------------------ (Walter A. Forbes) /s/ Henry R. Silverman President, Chief Executive January 29, 1998 - ------------------------ Officer and Director (Henry R. Silverman) /s/ Michael P. Monaco Vice Chairman, Chief Financial January 29, 1998 - ------------------------ Officer and Director (Michael P. Monaco) /s/ Scott E. Forbes Senior Vice President-Finance January 29, 1998 - ------------------------ (Chief Accounting Officer) Scott E. Forbes /s/ Stephen P. Holmes Vice Chairman and Director January 29, 1998 - ------------------------ (Stephen P. Holmes) /s/ Robert D. Kunisch Vice Chairman and Director January 29, 1998 - ------------------------ (Robert D. Kunisch) II-5 /s/ Christopher K. McLeod Vice Chairman and Director January 29, 1998 - ---------------------------- (Christopher K. McLeod) /s/ E. Kirk Shelton Vice Chairman and Director January 29, 1998 - ---------------------------- (E. Kirk Shelton) /s/ Robert T. Tucker Vice Chairman, Director January 29, 1998 - ---------------------------- and Secretary (Robert T. Tucker) /s/ James E. Buckman Senior Executive Vice January 29, 1998 - ---------------------------- President, General Counsel (James E. Buckman) and Director /s/ John D. Snodgrass Director January 29, 1998 - ---------------------------- (John D. Snodgrass) /s/ Bartlett Burnap Director January 29, 1998 - ---------------------------- (Bartlett Burnap) /s/ Leonard S. Coleman Director January 29, 1998 - ---------------------------- (Leonard S. Coleman) /s/ T. Barnes Donnelley Director January 29, 1998 - ---------------------------- (T. Barnes Donnelley) /s/ Martin L. Edelman Director January 29, 1998 - ---------------------------- (Martin L. Edelman) /s/ Frederick D. Green Director January 29, 1998 - ---------------------------- (Frederick D. Green) /s/ Stephen A. Greyser Director January 29, 1998 - ------------------------ (Stephen A. Greyser) /s/ Dr. Carole G. Hankin Director January 29, 1998 - ------------------------ (Dr. Carole G. Hankin) /s/ The Rt. Hon. Brian Director January 29, 1998 Mulroney, P.C., LL.D. - ---------------------------- (The Rt. Hon. Brian II-6 Mulroney, P.C., LL.D.) /s/ Robert E. Nederlander Director January 29, 1998 - ---------------------------- (Robert E. Nederlander) /s/ Burton C. Perfit Director January 29, 1998 - ---------------------------- (Burton C. Perfit) /s/ Anthony G. Petrello Director January 29, 1998 - ---------------------------- (Anthony G. Petrello) /s/ Robert W. Pittman Director January 29, 1998 - ---------------------------- (Robert W. Pittman) /s/ E. John Rosenwald, Jr. Director January 29, 1998 - ---------------------------- (E. John Rosenwald, Jr.) /s/ Robert P. Rittereiser Director January 29, 1998 - ---------------------------- (Robert P. Rittereiser) /s/ Stanley M. Rumbough, Jr. Director January 29, 1998 - ---------------------------- (Stanley M. Rumbough, Jr.) /s/ Leonard Schutzman Director January 29, 1998 - ---------------------------- (Leonard Schutzman) /s/ Robert F. Smith Director January 29, 1998 - ---------------------------- (Robert F. Smith) /s/ Craig R. Stapleton Director January 29, 1998 - ---------------------------- (Craig R. Stapleton) II-7 EXHIBIT INDEX Exhibit No. Description Page No. - ----------- ----------- -------- 1.1 Form of Underwriting Agreement (Standard Provisions) for Debt Securities. 1.2 Form of Underwriting Agreement (Standard Provisions) for Common Stock. 1.3 Form of Underwriting Agreement (Standard Provisions) for Preferred Stock. 3.1 Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference to Appendix B to the Joint Proxy Statement/Prospectus included as part of the Registration Statement on Form S-4 of the Registrant, Registration No. 333-34517). 3.2 Amended and Restated By-Laws of the Registrant (incorporated by reference to Appendix C of the Registrant's Proxy Statement/Prospectus included as part of the Registration Statement on Form S-4 of the Registrant, Registration No. 333-34517). 4.1 Form of Certificate for the Company's Common Stock, par value $.01 per share. 4.2 Form of Senior Indenture to be entered into by the Company and The Bank of Nova Scotia Trust Company of New York, as Trustee. 4.3 Form of Subordinated Indenture to be entered into by the Company and The Bank of Nova Scotia Trust Company of New York, as Trustee. 5.1 Opinion of Eric J. Bock, Esq. regarding the legality of the Securities being registered hereby. 12.1 Statement re: Computation of Consolidated Ratio of Earnings to Fixed Charges. 15.1 Letter of Ernst & Young LLP re: unaudited interim financial information of CUC International Inc. 23.1 Consent of Deloitte & Touche LLP relating to the financial statements of Cendant Corporation. 23.2 Consent of Deloitte & Touche LLP relating to the financial statements of HFS Incorporated. 23.3 Consent of Ernst & Young LLP relating to the financial statements of CUC International Inc. 23.4 Consent of KPMG Peat Marwick LLP relating to the financial statements of PHH Corporation. 23.5 Consent of Deloitte & Touche LLP relating to the financial statements of Sierra On-Line, Inc. 23.6 Consent of Deloitte & Touche LLP relating to the financial statements of Avis Rent A Car, Inc. 23.7 Consent of KPMG Peat Marwick LLP relating to the financial statements of Davidson & Associates, Inc. 23.8 Consent of Price Waterhouse LLP relating to the financial statements of Ideon Group, Inc. 23.9 Consent of Eric J. Bock (included in Exhibit 5.1). 24.1 Power of attorney (included in the signature page to the Registration Statement). 25.1 Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of The Bank of Nova Scotia Trust Company of New York, as Trustee for the Senior Debt Securities. 25.2 Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of The Bank of Nova Scotia Trust Company of New York, as Trustee for the Subordinated Debt Securities. 99.1 Consolidated Financial Statements of Avis Rent A Car, Inc.


                              CENDANT CORPORATION
                            (a Delaware corporation)


                              $___________________
                                Debt Securities

                             UNDERWRITING AGREEMENT


Dated:













                                       1


                              CENDANT CORPORATION
                            (a Delaware corporation)


                              $___________________
                                Debt Securities


                             UNDERWRITING AGREEMENT


                                                                [Date]

To the Underwriters named in Schedule I

Ladies and Gentlemen:

         CENDANT CORPORATION, a Delaware corporation (the "Company"), proposes
to issue and sell to the underwriters named in Schedule I the principal amount
of certain of its debt securities specified in Schedule II (the "Initial Debt
Securities") on the terms and conditions stated herein and in Schedule II. The
Company also grants to the Underwriters, severally and not jointly, the option
described in Section 2 to purchase all or any part of the additional principal
amount of debt securities as set forth in Schedule II to cover over-allotments
(the "Option Debt Securities") on the terms and conditions stated herein and in
Schedule II. The Option Debt Securities together with the Initial Debt
Securities are herein called the "Debt Securities". The Debt Securities will be
issued pursuant to an indenture dated as of January   , 1998 (the "Indenture")
between the Company and The Bank of Nova Scotia Trust Company of New York,
trustee (the "Trustee"). As used herein, unless the context otherwise requires,
the term "Underwriters" shall mean the firm or firms named as Underwriter or
Underwriters in Schedule I and the term "you" shall mean the Underwriter or
Underwriters, if no underwriting syndicate is purchasing the Offered Securities
(as

                                       2


defined below), or the representative or representatives of the Underwriters,
if an underwriting syndicate is purchasing the Offered Securities, as indicated
in Schedule I.

         [The Initial Debt Securities and the Option Debt Securities are
convertible into shares of common stock, par value $0.01 per share, of the
Company (the "Common Stock"), as specified in Schedule II. The shares of Common
Stock issuable upon conversion of any Initial Debt Securities are referred to
herein as the "Firm Shares". The shares of Common Stock issuable upon
conversion of any Option Debt Securities are referred to herein as the
"Additional Shares", which, together with the Firm Shares, are collectively
herein called the "Shares".] The Debt Securities and the Shares, if any, are
collectively referred to as the "Offered Securities". The Offered Securities
may be sold pursuant to delayed delivery contracts, a form of which is attached
as Schedule IV (the "Delayed Delivery Contracts"), as specified in Schedule II.

         The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (Registration No. 333-     )
including a prospectus, relating to certain of its debt securities (including
the Offered Securities), Preferred Stock and Common Stock, and the offering
thereof from time to time in accordance with Rule 415 under the Securities Act
of 1933, as amended (the "1933 Act"). Such registration statement has been
declared effective by the Commission. As provided in Section 3(a), a prospectus
supplement reflecting the terms of the Offered Securities, the terms of the
offering thereof and the other matters set forth therein has been prepared and
will be filed pursuant to Rule 424 under the 1933 Act. Such prospectus
supplement, in the form first filed after the date hereof pursuant to Rule 424,
is herein referred to as the "Prospectus Supplement". Such registration
statement, as amended at the date hereof, together with the Rule 462(b)
Registration Statement under the 1933 Act, including the exhibits thereto and
the documents incorporated by

                                       3


reference therein, is herein called the "Registration Statement", and the basic
prospectus included therein relating to all offerings of Debt Securities,
Preferred Stock and Common Stock under the Registration Statement, as
supplemented by the Prospectus Supplement, is herein called the "Prospectus",
except that, if such basic prospectus is amended or supplemented on or prior to
the date on which the Prospectus Supplement is first filed pursuant to Rule
424, the term "Prospectus" shall refer to the basic prospectus, as so amended
or supplemented and as supplemented by the Prospectus Supplement, in either
case including the documents filed by the Company with the Commission pursuant
to the Securities Exchange Act of 1934, as amended (the "1934 Act"), that are
incorporated by reference therein.

         You have advised us that you and the other Underwriters, acting
severally and not jointly, desire to purchase the Initial Debt Securities and
that you have been authorized by the other Underwriters to execute this
Underwriting Agreement ("this Agreement") on their behalf.

         Section 1. Representations and Warranties. (a) The Company represents
and warrants to and agrees with each Underwriter that:

         (i) On the original effective date of the Registration Statement, on
    the effective date of the most recent post-effective amendment thereto, if
    any, on the date of the filing of any Rule 462(b) Registration Statement,
    and on the date of the filing by the Company of any annual report on Form
    10-K after the original filing of the Registration Statement, the
    Registration Statement complied in all material respects with the
    requirements of the 1933 Act and the rules and regulations of the
    Commission thereunder (the "1933 Act Regulations"), the Trust Indenture Act
    of 1939, as amended (the "1939 Act"), and the rules and regulations of the
    Commission under the 1939 Act (the "1939 Act Regulations") and did not
    contain an untrue

                                       4


    statement of a material fact or omit to state a material fact required to
    be stated therein or necessary to make the state ments therein not
    misleading; on the date hereof, at the Closing Time (as defined below) and
    at each Delivery Date (as defined below), if any, the Registration
    Statement, and any amendments thereof, and the Prospectus, and any
    amendments thereof and supplements thereto, comply and will comply in all
    material respects with the requirements of the 1933 Act, the 1933 Act
    Regulations, the 1939 Act and the 1939 Act Regulations and neither the
    Registration Statement nor any amendments thereof include or will include
    an untrue statement of a material fact or omit or will omit to state any
    material fact required to be stated therein or necessary to make the
    statements therein not misleading, and neither the Prospectus, nor any
    amendments thereof and supplements thereto, include or will include an
    untrue statement of a material fact or omit or will omit to state any
    material fact required to be stated therein or necessary to make the
    statements therein, in light of the circumstances under which they were
    made, not misleading; provided, however, that the Company makes no
    representations or warranties as to statements or omissions made in
    reliance upon and in conformity with information furnished in writing to
    the Company by or on behalf of any Underwriter, directly or through you,
    expressly for use in the Registration Statement or the Prospectus. At the
    Closing Time and at each Delivery Date, if any, the Designated Indenture
    (as defined below) will comply in all material respects with the
    requirements of the 1939 Act and the 1939 Act Regulations.

         (ii) The documents incorporated by reference in the Prospectus, at the
    time they were filed with the Commission, complied in all material respects
    with the requirements of the Securities Exchange Act of 1934, as amended
    (the "1934 Act"), and the rules and regulations of the Commission
    thereunder (the "1934 Act Regulations") and, when read together with the

                                       5


    other information in the Prospectus, do not and will not, on the date
    hereof, at the Closing Time and at each Delivery Date, if any, include an
    untrue statement of a material fact or omit to state a material fact
    required to be stated therein or necessary to make the statements therein,
    in light of the circumstances under which they were made, not misleading.

         (iii) Ernst & Young LLP, who has reported upon the audited
    financial statements and schedules included or incorporated by reference in
    the Registration Statement, is an independent public accountant as required
    by the 1933 Act and the 1933 Act Regulations with respect to the Company
    and each corporation whose financial statements have been included in the
    Registration Statement for each of the years reported on by such
    accountant.

         (iv) This Agreement has been duly authorized, executed and delivered
    by the Company.

         (v) The consolidated financial statements included or incorporated by
    reference in the Registration Statement present fairly the consolidated
    financial position and stockholders' equity and the consolidated results of
    operations and consolidated statements of cash flows of the entities
    purported to be shown thereby at the indicated dates and for the periods
    specified. Such financial statements have been prepared in conformity with
    generally accepted accounting principles applied on a consistent basis
    throughout the periods involved. The financial statement schedules, if any,
    included or incorporated by reference in the Registration Statement present
    fairly the information required to be stated therein. The selected
    financial data included or incorporated by reference in the Prospectus
    present fairly the information shown therein and have been compiled on a
    basis consistent with that of the audited consolidated financial statements
    incorporated by reference in the Registration

                                       6


    Statement. The pro forma financial statements and other pro forma financial
    information included or incorporated by reference in the Prospectus present
    fairly the information shown therein, have been prepared in accordance with
    the Commission's rules and guidelines with respect to pro forma financial
    statements, have been properly compiled on the pro forma bases described
    therein, and, in the opinion of the Company, the assumptions used in the
    preparation thereof are reasonable and the adjustments used therein are
    appropriate to give effect to the transactions or circumstances referred to
    therein.

         (vi) The Company is duly organized and is validly existing in good
    standing as a corporation under the laws of the State of Delaware with
    corporate power and corporate authority under such laws to own, lease and
    operate its properties and conduct its business as described in the
    Prospectus. The Company is duly qualified to transact business as a foreign
    corporation and is in good standing in each other jurisdiction in which it
    owns or leases property of a nature, or transacts business of a type, that
    would make such qualification necessary, except to the extent that the
    failure to so qualify or be in good standing would not have a material
    adverse effect on the Company and its subsidiaries, considered as one
    enterprise.

         (vii) The Company's only subsidiaries are listed in Schedule III
    hereto (each a "Company Subsidiary" and collectively hereinafter referred
    to as the "Company Subsidiaries"). Each Subsidiary is duly organized and is
    validly existing and in good standing under the laws of the jurisdiction of
    its incorporation with corporate power and corporate authority under such
    laws to own, lease and operate its properties and conduct its business.
    Each Subsidiary is duly qualified to transact business as a foreign
    corporation and is in good standing in each other jurisdic tion in which it
    owns or leases

                                       7


    property of a nature, or transacts business of a type, that would make such
    qualification necessary, except to the extent that the failure to so
    qualify or be in good standing would not have a material adverse effect on
    the Company and its Subsidiaries, considered as one enterprise. All of the
    outstanding shares of capital stock of each Company Subsidiary have been 
    duly authorized and validly issued and are fully paid and nonassessable and
    are owned by the Company, directly or through one or more Company 
    Subsidiaries, free and clear of any pledge, lien, security interest, charge,
    claim, equity or encumbrance of any kind (each, a "Lien") except for such 
    Liens as are not, individually or in the aggre gate, material to the Company
    and its Subsidiaries considered as one enterprise.

         (viii) The Designated Indenture, each supplement thereto, if any, to
    the date hereof and the supplement thereto or resolutions adopted by the
    Board of Directors of the Company (the "Board") or by a special committee
    designated by the Board setting forth the terms of the Offered Securities
    (the Indenture, as so supplemented by such supplement or supplements or
    resolutions adopted by the Board or by a special committee designated by
    the Board, being herein referred to as the "Designated Indenture"), have
    been duly authorized by the Company. The Designated Indenture as executed
    is or will be substantially in the form filed as an exhibit to the
    Registration Statement. The Designated Indenture, when duly executed and
    delivered (to the extent required by the Indenture) by the Company and the
    Trustee, will constitute a valid and binding obliga tion of the Company,
    enforceable against the Company in accordance with its terms, except as
    enforcement thereof may be limited by bankruptcy, insolvency (including,
    without limitation, all laws relating to fraudulent

                                       8


    transfers), reorganization, moratorium or similar laws affecting
    enforcement of creditors' rights generally and except as enforcement
    thereof is subject to general principles of equity (regardless of whether
    enforcement is considered in a proceeding in equity or at law).

         (ix) The sale and issuance of the Offered Securities have been duly
    authorized by requisite corporate action on the part of the Company. When
    executed, authenticated, issued and delivered in the manner provided for in
    the Designated Indenture and sold and paid for as provided herein and in
    any Delayed Delivery Contracts, the Debt Securities will constitute valid
    and binding obligations of the Company entitled to the benefits of the
    Designated Indenture and enforceable against the Company in accordance with
    their terms, except to the extent that enforcement thereof may be limited
    by bankruptcy, insolvency (including, without limitation, all laws relating
    to fraudulent transfers), reorganization, moratorium or similar laws
    affecting enforcement of creditors' rights generally and except as
    enforcement thereof is subject to general principles of equity (regardless
    of whether enforcement is considered in a proceeding in equity or at law);
    the Offered Securities conform to the description thereof in the Prospectus
    and such description conforms to the rights set forth in the instruments
    defining the same.

         [(x) The Debt Securities will be convertible into Shares in accordance
    with their terms as set forth in the Prospectus. The Shares issuable upon
    conversion of such Debt Securities have been duly authorized and, when
    issued in accordance with the terms of the Designated Indenture, such
    Shares will be validly issued, fully paid and non-assessable. All corporate
    action required to be taken for the authorization, issuance and delivery of
    such Shares has been validly taken. The issuance of the Debt Securities is
    not, and the issuance of such Shares

                                       9


    upon conversion thereof will not be, subject to any preemptive rights of
    any stockholder of the Company.]

         (xi) In the event that any of the Offered Securities are purchased
    pursuant to Delayed Delivery Contracts, each of such Delayed Delivery
    Contracts has been duly authorized by the Company and, when executed and
    delivered on behalf of the Company and duly authorized, executed and
    delivered on behalf of the purchaser thereunder, will constitute a valid
    and binding obligation of the Company enforceable against the Company in
    accordance with its terms, except as enforcement thereof may be limited by
    bankruptcy, insolvency (including, without limitation, all laws relating to
    fraudulent transfers), reorganization, moratorium or similar laws affecting
    enforcement of creditors' rights generally and except as enforcement
    thereof is subject to general principles of equity (regardless of whether
    enforcement is considered in a proceeding in equity or at law).

         [(xii) All of the outstanding shares of capital stock of the Company
    have been duly authorized and validly issued and are fully paid and
    non-assessable; no holder thereof is or will be subject to personal
    liability by reason of being such a holder; and none of the outstanding
    shares of capital stock of the Company was issued in violation of the
    preemptive rights of any stockholder of the Company.]

         (xiii) Since the respective dates as of which information is given in
    the Registration Statement and the Prospectus, except as otherwise stated
    therein or contemplated thereby, there has not been (A) any material
    adverse change in the condition (financial or otherwise), earnings or
    business affairs of the Company and its Subsidiaries, considered as one
    enterprise, whether or not arising in the ordinary course of business, (B)
    any

                                      10


    transaction entered into by the Company or any Subsidiary, other than in
    the ordinary course of business, that is material to the Company and its
    Subsidiaries, considered as one enterprise, or (C) any dividend or
    distribution of any kind declared, paid or made by the Company on its
    capital stock.

         (xiv) Neither the Company nor any Subsidiary is in default in the
    performance or observance of any obligation, agreement, covenant or
    condition contained in any contract, indenture, mortgage, loan agreement,
    note, lease or other agreement or instrument to which it is a party or by
    which it may be bound or to which any of its properties may be subject,
    except for such defaults that would not have a material adverse effect on
    the condition (financial or otherwise), earnings or business affairs of the
    Company and its Subsidiaries, considered as one enterprise. The execution
    and delivery by the Company of this Agreement, the Designated Indenture and
    any Delayed Delivery Contracts, the issuance and delivery of the Offered
    Securities, the consummation by the Company of the transactions concerning
    the Offered Securities contemplated herein and in the Registration
    Statement and compliance by the Company with the terms of this Agreement,
    the Designated Indenture and any Delayed Delivery Contracts, have, in each
    case, been duly authorized by all necessary corporate action on the part of
    the Company and do not and will not result in any violation of the
    certificate of incorporation or by-laws of the Company, and do not and will
    not conflict with, or result in a breach of any of the terms or provisions
    of, or constitute a default under, or result in the creation or imposition
    of any lien, charge or encumbrance upon any property or assets of the
    Company or any Subsidiary under (A) any contract, indenture, mortgage, loan
    agreement, note, lease or other agreement or instrument to which the
    Company or any Subsidiary is a party or by which it may be bound or to
    which any of its properties may be

                                      11


    subject (except for such conflicts, breaches or defaults or liens, charges
    or encumbrances that would not have a material adverse effect on the
    condition (financial or otherwise), earnings or business affairs of the
    Company and its Subsidiaries, considered as one enterprise) or (B) any
    existing applicable law, rule, regulation (other than state securities,
    foreign securities or Blue Sky laws, rules and regulations), judgment,
    order or decree of any government, governmental instrumentality or court,
    domestic or foreign, having jurisdiction over the Company or any Subsidiary
    or any of their respective properties (except for such conflicts, breaches
    or defaults or liens, charges or encumbrances that would not have a
    material adverse effect on the condition (financial or otherwise), earnings
    or business affairs of the Company and its Subsidiaries, considered as one
    enterprise).

         (xv) No authorization, approval, consent or license of any government,
    governmental instrumentality or court, domestic or foreign (other than
    under the 1933 Act, the 1934 Act, the 1939 Act and the securities or Blue
    Sky laws of the various states and foreign securities laws), is required
    for the valid authorization, issuance, sale and delivery of the Debt
    Securities, [the reservation and issuance of the Common Stock] or for the
    execution, delivery or performance of the Designated Indenture by the
    Company and for the compliance with the other transactions contemplated in
    this Agreement.

         (xvi) Except as disclosed in the Prospectus, there is no action, suit
    or proceeding before or by any government, governmental instrumentality or
    court, domestic or foreign, now pending or, to the knowledge of the
    Company, threatened against or affecting the Company or any Sub sidiary
    that is required to be disclosed in the Prospectus or that could reasonably
    be expected to result in any material adverse change in the condition
    (financial

                                      12


    or otherwise), earnings or business affairs of the Company and its
    Subsidiaries, considered as one enterprise, or that could reasonably be
    expected to materially and adversely affect the properties or assets of the
    Company and its Subsidiaries, considered as one enterprise, or that could
    reasonably be expected to adversely affect the consummation of the
    transactions contemplated in this Agreement. The aggregate of all pending
    legal or governmental proceedings to which the Company or its Subsidiaries
    is a party or to which any of its or their respective properties is subject
    that are not described in the Prospectus, including ordinary routine
    litigation incidental to its or their business, could not reasonably be
    expected to have a material adverse effect on the condition (financial or
    otherwise), earnings or business affairs of the Company and its
    Subsidiaries, considered as one enterprise.

         (xvii) There are no statutes, regulations, contracts or other
    documents of a character required to be described in the Registration
    Statement or the Prospectus or to be filed as exhibits to the Registration
    Statement that are not described and filed as required.

         (xviii) The Company and each Subsidiary have good and marketable title
    to all properties and assets, including, without limitation, intangible
    property rights described in the Prospectus as owned by it, free and clear
    of all liens, charges, encumbrances, restrictions (other than as described
    in paragraph 1(a)(xx) hereof) or defects, except such as (A) are described

                                      13


    (1) in the Indenture dated as of October 1, 1994, between the Company and
    Bank of America, Illinois, as trustee, (2) in the Indenture and the
    Supplemental Indenture No. 1 dated as of February 28, 1996, between the
    Company and First Trust of Illinois, National Association, as trustee, (3)
    in the 364 Day Credit Agreement, dated as of March 4, 1997, among PHH
    Corporation, PHH Vehicle Management Services Inc., the Lenders thereunder
    and The Chase Manhattan Bank, (4) in the Five Year Credit Agreement, dated
    as of March 4, 1997, among PHH Corporation, the Lenders and The Chase
    Manhattan Bank, (5) in the Five Year Revolving Credit and Competitive
    Advance Facility Agreement, dated as of October 2, 1996, among the Company,
    the lenders thereunder and The Chase Manhattan Bank, (6) in the 364 Day
    Revolving Credit and Competitive Advance Facility Agreement, dated as of
    October 2, 1996, among the Company, the lenders thereunder and The Chase
    Manhattan Bank, (7) in the Indenture dated as of June 5, 1997, between PHH
    Corporation and The First National Bank of Chicago and (8) in the Amended
    and Restated Pooling and Servicing Agreement dated as of October 5, 1994,
    as amended, among Cendant Mobility Funding Corporation, Cendant Mobility
    Services, Inc., Citicorp North America, Inc. and Bankers Trust Company, the
    Amended and Restated Purchase Agreement dated as of October 5, 1994, as
    amended, between Cendant Mobility Services, Inc. and Cendant Mobility
    Funding Corporation and the Amended and Restated Investor Funding Agreement
    dated as of October 5, 1994, as amended, among Cendant Mobility Funding
    Corporation, Bankers Trust Company, Citicorp North America, Inc., as agent,
    Bank of America Illinois, as co-agent, and the investors named therein, (B)
    are leases of real property in which the Company or its Subsidiaries have
    good title and that would be marketable but for the requirement that the
    landlord consent to an assignment of the lease or (C) are neither material
    in amount nor materially significant in relation to the business of the
    Company and its Subsidiaries, considered as one enterprise; all of the
    leases and subleases material to the business of the Company and the
    Subsidiaries, considered as one enterprise, and under which the Company or
    any Subsidiary holds properties described in the Prospectus, are in full
    force and effect, and neither the Company nor any Subsidiary has any notice
    of any material claim of any sort that has been asserted by anyone adverse
    to the rights of the Company or any Subsidiary under any of the leases or
    subleases mentioned above, or affecting or questioning the rights of such
    corporation to the continued possession or use of

                                      14


    the leased or subleased properties under any such lease or sublease.

         (xix) (a) The Company and each Subsidiary own, possess or have
    obtained all material governmental licenses, permits, certificates,
    consents, orders, approvals and other authorizations necessary to own or
    lease, as the case may be, and to operate its or their properties and to
    carry on its or their business as presently conducted; (b) neither the
    Company nor any of its Subsidiaries has received any notice of proceedings
    relating to revocation or modification of any such licenses, permits,
    certificates, consents, orders, approvals or authorizations which could
    result in a material adverse change of the condition (financial or
    otherwise), earnings or financial affairs of the Company and its
    Subsidiaries, considered as one enterprise; and (c) the Company and each
    Subsidiary are in all respects complying with each license, permit,
    certificate, consent, order, approval and other authorization, except where
    the failure to do so would not have a material adverse effect on the
    condition (financial or otherwise), earnings or business affairs of the
    Company and its Subsidiaries, considered as one enterprise.

         (xx) Subject to each of the franchise and license agreements entered
    into by the Company or any of its Subsidiaries, the Company and each of the
    Subsidiaries own or have the unrestricted right to use such patents, patent
    licenses, trademarks, trademark licenses, service marks, service mark
    licenses and trade names and registrations thereof as are necessary to
    carry on their respective businesses as described in the Prospectus and as
    currently conducted, except where the failure to own or possess any of the
    Marks or the Ramada Marks would not have a material adverse effect on the
    condition (financial or otherwise), earnings or business affairs of the
    Company and its Subsidiaries, considered as one enterprise. Neither

                                      15


    of the Company nor any of its Subsidiaries has received any notice of
    infringement of or conflict with asserted rights of others with respect to
    any of the Marks or the Ramada Marks, or any applications therefor or
    registrations thereof, that in the aggregate would materially and adversely
    affect the condition (financial or otherwise), earnings or business affairs
    of the Company and its Subsidiaries, considered as one enterprise. In
    addition to, and not in limitation of, anything else contained in this
    paragraph (xx), the Company or a Subsidiary (y) is the exclusive owner of
    all rights, title and interest (subject to all existing franchise and
    license agreements referred to above) in and to the Marks within the United
    States and outside the United States is the owner of the registrations and
    applications as are necessary to carry on its business as described in the
    Prospectus and as currently conducted, except where the failure to be such
    owner would not have a material adverse effect on the condition (financial
    or otherwise), earnings or business affairs of the Company and its
    Subsidiaries, considered as one enterprise and (z) is the exclusive
    licensee in the United States of the Ramada Marks. Such intellectual
    property with respect to the Company's Century 21, Coldwell Banker and ERA,
    Days Inns of America, Inc. ("Days Inn"), Super 8 Motels, Inc. ("Super 8"),
    the Villager Lodge Franchise Systems, Inc. ("Villager Lodge"), the Knights
    Franchise Systems, Inc. ("Knights Inn"), Howard Johnson and Travelodge
    Hotels, Inc. ("Travelodge") businesses (each as described in the Prospectus
    and as currently conducted) is referred to herein as the "Marks" and such
    intellectual property with respect to the Company's Ramada business (as
    described in the Prospectus and as currently conducted) is hereinafter
    referred to as the "Ramada Marks."

         (xxi) To the best knowledge of the Company, no labor problem exists
    with its employees, with employees of any Subsidiary or, to the best

                                      16


    knowledge of the Company without having made any inquiry or independent
    investigation, with the employees of any party which licenses a franchise,
    directly or indirectly, from a Subsidiary (a "Franchisee") or is imminent
    that could reasonably be expected to materially adversely affect the
    Company and its Subsidiaries, considered as one enterprise.

         (xxii) To the best knowledge of the Company, no dispute exists or is
    imminent with any Franchisee or with the Franchisees that could reasonably
    be expected to materially adversely affect the Company and the
    Subsidiaries, considered as one enterprise.

         (xxiii) Neither the Company nor any of its Subsidiaries has taken or
    will take, directly or indirectly, any action designed to, or that might be
    reasonably expected to, cause or result in stabilization or manipulation of
    the price of the Offered Securities.

         (xxiv) The Company and each Subsidiary are in material compliance with
    all applicable existing federal, state and local laws and regulations
    relating to protection of human health or the environment and have no
    liability or, to the best knowledge of the Company, alleged liability under
    any such law which is required to be disclosed in the Registration
    Statement that is not so disclosed.

         (xxv) All United States federal income tax returns of the Company and
    each Subsidiary required by law to be filed have been filed and all taxes
    shown on such returns or otherwise assessed which are due and payable have
    been paid, except tax assessments being contested in good faith and as to
    which adequate reserves have been provided. All other tax returns of the
    Company and each Subsidiary required to be filed pursuant to applicable
    foreign, state, local or other law have been filed, except insofar as the
    failure to file such returns would

                                      17


    not have a material adverse effect on the condition (financial or
    otherwise), earnings or business affairs of the Company and its
    Subsidiaries considered as one enterprise, and all taxes shown on such
    returns or otherwise assessed which are due and payable have been paid,
    except for such taxes, if any, as are being contested in good faith and as
    to which adequate reserves have been provided. The charges, accruals and
    reserves on the books of the Company and its Subsidiaries in respect of any
    income and corporate franchise tax liability for any years not finally
    determined are believed to be adequate to meet any assessments or
    reassessments for additional income or corporate franchise tax for any
    years not finally determined, except to the extent of any inadequacy that
    would not have a material adverse effect on the condition (financial or
    otherwise), earnings or business affairs of the Company and its
    Subsidiaries considered as one enterprise.

         (xxvi) Each Franchisee is such by virtue of being a party to a
    franchise contract with either the Company or a Subsidiary and assuming
    each such contract has been duly authorized, executed and delivered by the
    parties thereto, other than the Company or a Subsidiary, each such contract
    constitutes a valid, legal and binding obligation of each party thereto,
    enforceable against the Company or a Subsidiary in accordance with its
    terms, except (A) for any one or more of such franchise contracts as would
    not have a material adverse effect on the condition (financial or
    otherwise), earnings or business affairs of the Company and its
    Subsidiaries, considered as one enterprise, and (B) to the extent that
    enforcement thereof may be limited by (1) bankruptcy, insolvency,
    reorganization, moratorium or other similar laws now or hereafter in effect
    relating to creditors' rights generally and (2) general principles of
    equity (regardless of whether enforceability is considered in a proceeding
    in equity or at law).

                                      18


         (xxvii) The Company and each Subsidiary have complied and are
    currently complying in all material respects with the rules and regulations
    of the United States Federal Trade Commission and the comparable laws,
    rules and regulations of each state or state agency applicable to the
    franchising business of the Company and such Subsidiary in each state in
    which the Company or such Subsidiary is doing business. The Company and
    each Subsidiary have complied and are currently complying in all material
    respects with the Federal Real Estate Settlement Procedures Act and the
    real estate brokerage laws, rules and regulations of each state or state
    agency applicable to the real estate franchising business of the Company
    and such Subsidiary in each state in which the Company or such Subsidiary
    is doing business.

         (xxviii) The Company is not an "investment company" or an entity
    "controlled" by an "investment company" as such terms are defined in the
    Investment Company Act of 1940, as amended.

         (b) Any certificate signed by any officer of the Company or any
    Subsidiary and delivered to you or to counsel for the Underwriters shall be
    deemed a representation and warranty by the Company or by a Subsidiary, as
    applicable, to each Underwriter as to the matters covered thereby.

         Section 2. Purchase and Sale. (a) On the basis of the representations
and warranties herein contained (except as may be otherwise specified in
Schedule II) and subject to the terms and conditions herein set forth, the
Company agrees to sell to each Underwriter, and each Underwriter agrees,
severally and not jointly, to purchase from the Company, at the purchase price
to the Underwriters set forth in Schedule II, the principal amount of Initial
Debt Securities set forth opposite the name of such Underwriter in Schedule I.

                                      19


         (b) In addition, on the basis of the representations and warranties
    herein contained, and subject to the terms and conditions herein set forth,
    the Company hereby grants an option to the Underwriters, severally and not
    jointly, to purchase up to the additional principal amount of Option Debt
    Securities as set forth in Schedule II at the same purchase price as shall
    be applicable to the Initial Debt Securities. The option hereby granted
    will expire 30 days after the date hereof, and may be exercised, in whole
    or from time to time in part (but not more than twice), only for the
    purpose of covering over-allotments that may be made in connection with the
    offering and distribution of the Initial Debt Securities upon notice by you
    to the Company setting forth the principal amount of Option Debt Securities
    as to which the several Underwriters are exercising this option, and the
    time and date of payment and delivery thereof. Such time and date of
    delivery (each, a "Delivery Date") shall be determined by you but shall not
    be later than seven full business days after the exercise of such option,
    nor in any event prior to the Closing Time. If the option is exercised as
    to all or any portion of the Option Debt Securities, each of the
    Underwriters, acting severally and not jointly, will purchase from the
    Company that portion of the aggregate number of Option Debt Securities
    being purchased which the number of Initial Debt Securities set forth
    opposite the name of such Underwriter bears to the total number of Initial
    Debt Securities (such proportion is hereinafter referred to as such
    Underwriter's "underwriting obligation proportion").

         (c) Payment of the purchase price for, and delivery of, the Initial
    Debt Securities shall be made at the date, time and location specified in
    Schedule II, or at such other date, time or location as shall be agreed
    upon by the Company and you, or as shall otherwise be provided in Section
    11 (such date and time of payment and delivery being herein

                                      20


    called the "Closing Time"). Unless otherwise specified in Schedule II,
    payment shall be made to the Company by you by wire or bank transfer of
    same day funds payable to the account of the Company, against delivery to
    you for the respective accounts of the several Underwriters of the Initial
    Debt Securities. Such Initial Debt Securities shall be in such authorized
    denominations and registered in such names as you may request in writing at
    least two full business days before the Closing Time. Such Initial Debt
    Securities, which may be in temporary form, will be made available in New
    York City for examination and packaging by you not later than 10:00 A.M. on
    the business day prior to the Closing Time. In addition, in the event that
    any or all of the Option Debt Securities are purchased by the Underwriters,
    payment of the purchase price for, and delivery of, such Option Debt
    Securities shall be made at the same location as set forth above, or at
    such other place as the Company and you shall determine, on each Delivery
    Date as specified in the notice from you to the Company. Payment for the
    Option Debt Securities shall be made by wire or bank transfer of same day
    funds.

         (d) If specified in Schedule II, the Underwriters may solicit offers
    to purchase Offered Securities from the Company pursuant to Delayed
    Delivery Contracts substantially in the form of Schedule IV with such
    changes therein as the Company may approve. Any Delayed Delivery Contracts
    are to be with institutional investors of the types set forth in the
    Prospectus. If Delayed Delivery Contracts are specified in Schedule II, at
    the Closing Time, the Company will enter into Delayed Delivery Contracts
    (for the minimum principal amount of Offered Securities per De layed
    Delivery Contract specified in Schedule II) with all purchasers proposed by
    the Underwriters and previously approved by the Company as provided below,
    but not for an aggregate principal amount of Offered Securities less than
    or greater than the minimum and maximum

                                      21


    aggregate principal amounts specified in Schedule II. The Underwriters will
    not have any responsibility for the validity or performance of Delayed
    Delivery Contracts.

         (e) You are to submit to the Company, at least three business days
    prior to the Closing Time, the names of any institutional investors with
    which it is proposed that the Company enter into Delayed Delivery
    Contracts, the principal amount of Offered Securities to be purchased by
    each of them and the date of delivery thereof, and the Company will advise
    you, at least two business days prior to the Closing Time, of the names of
    the institutions with which the making of Delayed Delivery Contracts is
    approved by the Company and the principal amount of Convertible Debt
    Securities to be covered by each such Delayed Delivery Contract.

         (f) As compensation for arranging Delayed Delivery Contracts, the
    Company will pay (by wire or bank transfer of same day funds) to you at the
    Closing Time, for the accounts of the Underwriters, a fee equal to that
    percentage of the principal amount of Offered Securities for which Delayed
    Delivery Contracts are made at the Closing Time as is specified in Schedule
    II or the amount of such fee may be deducted from the payment delivered
    pursuant to Section 2(b).

         (g) The principal amount of Debt Securities agreed to be purchased by
    each Underwriter shall be reduced by the principal amount of Debt
    Securities covered by Delayed Delivery Contracts as to such Underwriter, as
    set forth in a notice delivered by you to the Company; provided, however,
    that the total principal amount of Debt Securities to be purchased by all
    Underwriters shall be the principal amount of Debt Securities covered by
    this Agreement, less the principal amount of Debt Securities covered by all
    Delayed Delivery Contracts.

                                      22


         (h) It is understood that each Underwriter has authorized you, for its
    account, to accept delivery of, receipt for, and make payment of the
    purchase price for, the Debt Securities that it has agreed to purchase.
    You, individually and not as Representatives, may (but shall not be
    obligated to) make payment of the purchase price for the Debt Securities to
    be purchased by any Underwriter whose payments shall not have been received
    by the Closing Time or each Delivery Date, if any, as the case may be.

         Section 3. Certain Covenants of the Company. The Company covenants
with each Underwriter as follows:

         (a) If reasonably requested by you in connection with the offering of
    the Offered Securities, the Company will prepare a preliminary prospectus
    supplement containing such information as you and the Company deem
    appropriate and, immediately following the execution of this Agreement, the
    Company will prepare a Prospectus Supplement that complies with the 1933
    Act and the 1933 Act Regulations and that sets forth the principal amount
    of the Offered Securities and their terms not otherwise specified in the
    Indenture, the name of each Underwriter participating in the offering and
    the principal amount of the Offered Securities that each severally has
    agreed to purchase, the name of each Underwriter, if any, acting as
    representative of the Underwriters in connection with the offering, the
    price at which the Offered Securities are to be purchased by the
    Underwriters from the Company, any initial public offering price, any
    selling concession and reallowance any delayed delivery arrangements and
    such other information as you and the Company deem appropriate in
    connection with the offering of the Offered Securities. The Company will
    promptly transmit copies of the Prospectus Supplement to the Commission for
    filing pursuant to Rule 424 under the 1933 Act and will furnish to the
    Underwriters as

                                      23


    many copies of any preliminary prospectus supplement and the Prospectus as
    you shall reasonably request.

         (b) If at any time when the Prospectus is required by the 1933 Act to
    be delivered in connection with sales of the Offered Securities any event
    shall occur or condition exist as a result of which it is necessary, in the
    opinion of counsel for the Underwriters or counsel for the Company, to
    amend the Registration Statement or amend or supplement the Prospectus in
    order that the Prospectus will not include an untrue statement of a
    material fact or omit to state a material fact necessary in order to make
    the statements therein not misleading in the light of the circumstances
    existing at the time it is delivered to a purchaser, or if it shall be
    necessary, in the opinion of either such counsel, at any such time to amend
    the Registration Statement or amend or supplement the Prospectus in order
    to comply with the requirements of the 1933 Act or the 1933 Act
    Regulations, the Company will promptly prepare and file with the
    Commission, subject to Section 3(f), such amendment or supplement as may be
    necessary to correct such untrue statement or omission or to make the
    Registration Statement or the Prospectus comply with such require ments.

         (c) During the period when the Prospectus is required by the 1933 Act
    to be delivered in connection with sales of the Offered Securities, the
    Company will, subject to Section 3(f), file promptly all documents required
    to be filed with the Commission pursuant to Section 13, Section 14 or
    Section 15(d) of the 1934 Act.

         (d) During the period when the Prospectus is required by the 1933 Act
    to be delivered in connection with sales of the Offered Securities, the
    Company will inform you of its intention to file any amendment to the
    Registration Statement, any supplement to the Prospectus or any document
    that

                                      24


    would as a result thereof be incorporated by reference in the Prospectus;
    and the Company will furnish you with copies of any such amendment,
    supplement or other document at a reasonable time in advance of filing,
    except any current report on Form 8-K filed with the Commission with
    respect to a press release issued by the Company that is not reasonably
    expected to have a material effect on the Company or the price of the
    Common Stock; provided, however, that the Company shall inform you of its
    intention to file documents pursuant to Section 14(d) of the 1934 Act and
    shall furnish you with copies of such documents immediately upon the filing
    thereof; and provided further that you or your counsel shall not be
    entitled to object thereto other than pursuant to Section 3(b).

         (e) During the period when the Prospectus is required by the 1933 Act
    to be delivered in connection with sales of the Offered Securities, the
    Company will notify you immediately, and confirm the notice in writing, (i)
    of the effectiveness of any amendment to the Registration State ment, (ii)
    of the mailing or the delivery to the Commission for filing of any
    supplement to the Prospectus or any document that would as a result thereof
    be incorporated by reference in the Prospectus, (iii) of the receipt of any
    comments from the Commission with respect to the Registration Statement,
    the Prospectus or the Prospectus Supplement, (iv) of any request by the
    Commission for any amendment to the Registration Statement or any
    supplement to the Prospectus or for additional information relating thereto
    or to any document incorporated by reference in the Prospectus and (v) of
    the issuance by the Commission of any stop order suspending the
    effectiveness of the Registration Statement, of the suspension of the
    qualification of the Offered Securities for offering or sale in any
    jurisdiction, or of the institution or threatening of any proceeding for
    any of such purposes. The Company will use every reasonable effort to
    prevent the issuance of any such stop

                                      25


    order or of any order suspending such qualification and, if any such order
    is issued, to obtain the lifting thereof at the earliest possible moment.

         (f) The Company has furnished or will furnish to you one signed copy
    of the Registration Statement (as originally filed), of any Rule 462(b)
    Registration Statement, and of all amendments thereto, whether filed before
    or after the Registration Statement became effective, copies of all
    exhibits and documents filed therewith or incorporated by reference therein
    (through the end of the period when the Prospectus is required by the 1933
    Act to be delivered in connection with sales of the Offered Securities) and
    signed copies of all consents and certificates of experts, as you may
    reasonably request, and has furnished or will furnish to you, for each of
    the Underwriters, ten conformed copies of the Registration Statement (as
    originally filed), of any Rule 462(b) Registration Statement and of each
    amendment thereto (including documents incorporated by reference into the
    Prospectus but without exhibits).

         (g) The Company will use its best efforts, in cooperation with the
    Underwriters, to qualify the Offered Securities for offering and sale under
    the applicable securities laws of such states and other jurisdictions as
    you may designate and to maintain such qualifications in effect for a
    period of not less than one year from the date hereof; provided, however,
    that the Company shall not be obligated to file any general consent to
    service of process or to qualify as a foreign corporation or as a dealer in
    securities in any jurisdiction in which it is not so qualified or to
    subject itself to taxation in respect of doing business in any jurisdiction
    in which it is not otherwise so subject. The Company will file such
    statements and reports as may be required by the laws of each jurisdiction
    in which the Offered Securities have been qualified as above pro vided. The
    Company will also supply you with such

                                      26


    information as is necessary for the determination of the legality of the
    Offered Securities for investment under the laws of such jurisdictions as
    you may request.

         (h) The Company will make generally available to its security holders
    as soon as practicable, but not later than 45 days after the close of the
    period covered thereby, an earnings statement of the Company (in form
    complying with the provisions of Rule 158 of the 1933 Act Regula tions),
    covering (i) a period of 12 months beginning after the effective date of
    the Registration Statement (or, if applicable, any Rule 462(b) Registration
    Statement) and covering a period of 12 months beginning after the effective
    date of any post-effective amendment to the Registration Statement but not
    later than the first day of the Company's fiscal quarter next following
    such respective effective dates and (ii) a period of 12 months beginning
    after the date of this Agreement but not later than the first day of the
    Company's fiscal quarter next following the date of this Agreement.

         (i) If and to the extent specified in Schedule II hereto, the Company
    will use its best efforts to cause the Offered Securities to be duly
    authorized for listing on the New York Stock Exchange and to be registered
    under the 1934 Act.

         (j) For a period of two years after the Closing Time, the Company will
    furnish to you and, upon request, to each Underwriter, copies of all annual
    reports, quarterly reports and current reports filed with the Commission on
    Forms 10-K, 10-Q and 8-K, or such other similar forms as may be designated
    by the Commission, and such other documents, reports and information as
    shall be furnished by the Company to its stockholders or security holders
    generally.

         (k) Between the date hereof and the Closing Time or such other date as
    may be specified in

                                      27


    Schedule II, the Company will not, without your prior consent, offer or
    sell, or enter into any agreement to sell, any debt securities issued or
    guaranteed by the Company with a maturity of more than one year in any
    public offering (other than the Offered Securities). This limitation is not
    applicable to the public offering of tax exempt securities guaranteed by
    the Company or to such other public offering of long-term debt as may be
    specified in Schedule II.

         (l) The Company has agreed not to sell or otherwise dispose of, any
    shares of Common Stock or any securities convertible into, or exercisable
    or exchangeable for, Common Stock [other than shares issuable upon
    conversion of the Debt Securities] without the prior written consent of
    [___________] on behalf of the Underwriters for a period of 90 days after
    the date of the Prospectus Supplement (except for Common Stock issued upon
    conversion of the 4 3/4% Convertible Senior Notes due 2003 or the Company's
    3% Convertible Subordinated Notes Due 2002 or issued pursuant to the
    Company's stock option or employee benefit plans or issued by the Company
    in connection with strategic acquisitions or issued or sold pursuant to
    employee benefit plans of the Company existing at the Closing Time or sold
    in connection with an employee's decision to direct that 401(k)
    contributions be invested in Common Stock, provided that any such shares in
    excess of 5% of the then outstanding shares of Common Stock shall remain
    subject to the foregoing restriction) or exercise any right to have
    securities of the Company registered by the Company under the 1933 Act.

         (m) The Company has complied and will comply with all the provisions
    of Florida H.B. 1771, codified as Section 517.075 of the Florida statutes,
    and all regulations promulgated thereunder relating to issuers doing
    business in Cuba.

         Section 4. Payment of Expenses. The Company

                                      28


will pay and bear all costs and expenses incident to the performance of its
obligations under this Agreement, including, without limitation, (a) the
preparation, printing and filing of the Registration Statement (including
financial statements and exhibits), as originally filed and as amended, any
preliminary prospectus supplements and the Prospectus and any amendments or
supplements thereto, and the cost of furnishing copies thereof to the
Underwriters, (b) the preparation, printing and distribution of this Agreement,
the Designated Indenture, the Offered Securities, any Delayed Delivery
Contracts, the Blue Sky Survey, (c) the delivery of the Debt Securities to the
Underwriters, (d) the fees and disbursements of the Company's counsel and
accountants and the fees and disbursements of the Company's counsel (including,
without limitation, local counsel upon whom such counsel may rely in rendering
their opinion required by Section 5 and 6 hereof), (e) the qualification of the
Offered Securities under the applicable securities laws, (f) any fees charged
by rating agencies for rating the Debt Securities, (g) the reasonable fees and
disbursements of counsel in connection with the Blue Sky Survey, (h) any
applicable fees for listing the Offered Securities on an exchange and (i) the
fees and expenses of the Trustee, including the fees and disbursements of
counsel for the Trustee, in connection with the Designated Indenture and the
Offered Securities.

         If this Agreement is terminated by you in accordance with the
provisions of Section 5 or Section 10(a)(i), the Company shall reimburse the
Underwriters for all of their reasonable out-of-pocket expenses, including the
reasonable fees and disbursements of counsel for the Underwriters, incurred by
them in connection with the public offering of the Offered Securities.

         Section 5. Conditions of the Underwriters' Obligations. Except as
otherwise provided in Schedule II hereto, the obligations of the several
Underwriters to purchase and pay for the Debt Securities that they have

                                      29


respectively agreed to purchase hereunder, including any Option Debt Securities
as to which the option granted in Section 2 has been exercised and the Delivery
Date determined by you is the same as the Closing Time, are subject to (i) the
accuracy of the representations and warranties of the Company contained herein
or in certificates of the Company's officers delivered pursuant to the
provisions hereof, (ii) the performance by the Company of its obligations
hereunder, (iii) the delivery to the Underwriters at the Closing Time by the
Company of all of the Initial Debt Securities, and (iv) the following further
conditions:

         (a) The Registration Statement shall have become effective prior to
    the date hereof or, with your consent, at a later time and date no later,
    however, than the first business day following the date hereof, or at such
    later date as you may agree to in writing with the approval of a majority
    in interest of the several underwriters; and at the Closing Time, no stop
    order suspending the effectiveness of the Registration Statement shall have
    been issued under the 1933 Act and no proceedings for that purpose shall
    have been instituted or shall be pending or, to your knowledge or the
    knowledge of the Company, shall be contemplated by the Commission, and any
    request on the part of the Commission for additional information shall have
    been complied with to the reasonable satisfaction of counsel for the
    Underwriters.

         (b) At the Closing Time, you shall have received a signed opinion of
    Skadden, Arps, Slate, Meagher & Flom LLP, in New York, in its capacity as
    special counsel for the Company, dated as of the Closing Time, together
    with signed or reproduced copies of such opinion for each of the other
    Underwriters, in form and substance reasonably satisfactory to Counsel for
    the Underwriters to the effect as attached hereto as Exhibit 1.

                                      30


         (c) At the Closing Time, you shall have received signed opinions of
    Counsel for the Company, and Siegal, Barnett & Schutz, special South Dakota
    counsel for the Company, dated as of the Closing Time, together with signed
    or reproduced copies of such opinions for each of the other Underwriters,
    in form and substance reasonably satisfactory to counsel for the
    Underwriters to the effect, with respect to the opinion of Counsel for the
    Company, as attached hereto as Exhibit 2.

         (d) At the Closing Time, you shall have received a signed opinion of
    Schaefer, Rosenwein & Fleming, special trademark counsel for the Company
    with respect to the Coldwell Banker franchise system, dated as of the
    Closing Time, together with signed or reproduced copies of such opinion for
    each of the other Underwriters, in form and substance reasonably
    satisfactory to counsel for the Underwriters.

         The opinions referred to above in clauses (b), (c) and (d) shall be to
such further effect with respect to other legal matters relating to this
Agreement and the sale of the Offered Securities pursuant to this Agreement as
counsel for the Underwriters may reasonably request. Such counsel may also
state that, insofar as such opinion involves factual matters, they have relied,
to the extent they deem proper, upon certificates of officers of the Company,
as the case may be, and certificates of public officials; provided that such
certificates have been delivered to the Un derwriters.

         In giving the opinions referred to above in clauses (b), (c) and (d),
such counsel may rely, as to all matters governed by the laws of jurisdictions
other than those in which they are expert, upon opinions of other counsel who
shall be counsel reasonably satisfactory to counsel for the Underwriters, in
which case the opinion shall state that they believe you and they are justified
and entitled to so rely.

                                      31


         (e) At the Closing Time, you shall have received the favorable opinion
    of [________], counsel for the Underwriters, dated as of the Closing Time,
    together with signed or reproduced copies of such opinion for each of the
    other Underwriters.

         (f) At the Closing Time, (i) the Registration Statement and the
    Prospectus, as they may then be amended or supplemented, shall contain all
    statements that are required to be stated therein under the 1933 Act and
    the 1933 Act Regulations and in all material respects shall conform to the
    requirements of the 1933 Act and the 1933 Act Regulations and the 1939 Act
    and the 1939 Act Regulations, the Company shall have complied in all
    material respects with Rule 430A (if it shall have elected to rely thereon)
    and (A) the Registration Statement, as it may then be amended or
    supplemented, shall not contain an untrue statement of a material fact or
    omit to state a material fact required to be stated therein or necessary to
    make the statements therein not misleading and (B) the Prospectus, as it
    may be amended or supplemented, will not include an untrue state ment of a
    material fact or omit to state a material fact necessary in order to make
    the statements therein, in the light of the circumstances under which they
    were made, not misleading, (ii) there shall not have been, since the
    respective dates as of which information is given in the Registration
    Statement, any material adverse change in the condition (financial or
    otherwise), earnings, business affairs or business prospects of the Company
    and its Subsidiaries, considered as one enterprise, whether or not arising
    in the ordinary course of business, (iii) no action, suit or proceeding
    shall be pending

                                      32


    or, to the knowledge of the Company, threatened against the Company or any
    Subsidiary that would be required to be set forth in the Prospectus other
    than as set forth therein and no proceedings shall be pending or, to the
    knowledge of the Company, threatened against the Company or any Subsidiary
    before or by any federal, state or other commission, board or
    administrative agency wherein an unfavorable decision, ruling or finding
    would materially adversely affect the condition (financial or otherwise),
    earnings, business affairs or business prospects of the Company and its
    Subsidiaries, considered as one enterprise, other than as set forth in the
    Prospectus, (iv) the Company shall have complied in all material respects
    with all agreements and satisfied in all material respects all conditions
    included herein on its part to be performed and satisfied at or prior to
    the Closing Time and (v) the other representations and warranties of the
    Company set forth in Section 1(a) shall be accurate as though expressly
    made at and as of the Closing Time. At the Closing Time, you shall have
    received a certificate of the Chairman of the Board or the President and
    the Chief Financial Officer of the Company, dated as of the Closing Time,
    to such effect, it being understood that such certificate shall not
    constitute personal representations and warranties of the signing
    individual.

         (g) You shall have received a letter or letters at the date hereof
    substantially in the form attached hereto as Schedule V hereto, and a
    letter or letters to be delivered at the Closing Time reaffirming the
    statements made in each such letter or letters, except that the inquiries
    and procedures specified therein shall have been carried out to a specified
    date not more than five days prior to the Closing Time.

         (h) Subsequent to the execution and delivery of this Agreement and
    prior to the Closing Time, there shall not have been any downgrading, nor
    any notice given of intended or potential downgrading or of a possible
    change that does not indicate the direction of the possible change, in the
    rating accorded any

                                      33


    of the Company's securities, including the Offered Securities, by any
    "nationally recognized statistical rating organization," as such term is
    defined for purposes of Rule 436(g)(2) under the 1933 Act.

         (i) The Company shall have complied with the provisions of Section
    3(a) hereof with respect to the furnishing of Prospectuses and Supplemental
    Prospectuses on the business day next succeeding the date of this
    Agreement, in such quantities as you reasonably request.

         (j) At the Closing Time, counsel for the Underwriters shall have been
    furnished with all such documents, certificates and opinions as they may
    reasonably request for the purpose of enabling them to pass upon the
    issuance and sale of the Offered Securities as herein contemplated and the
    matters referred to in Section 5(c) and in order to evidence the accuracy
    and completeness of any of the representations, warranties or statements of
    the Company, the performance of any of the covenants of the Company, or the
    fulfillment of any of the conditions herein contained; and all proceedings
    taken by the Company at or prior to the Closing Time in connection with the
    authorization, issuance and sale of the Offered Securities as herein
    contemplated shall be reasonably satisfactory in form and substance to you
    and to counsel for the Underwriters.

         (k) The Debt Securities shall have been duly authorized for listing by
    the New York Stock Exchange subject to official notice of issuance thereof
    and notice of a satisfactory distribution of the Debt Securities. If any of
    the conditions specified in this Section 5 shall not have been fulfilled
    when and as required by this Agreement to be fulfilled, this Agreement may
    be terminated by you on notice to the Company at any time at or prior to
    the Closing Time, and such termination shall be

                                      34


    without liability of any party to any other party, except as provided in
    Section 4 herein. Notwithstanding any such termination, the provisions of
    Sections 7, 8 and 9 shall remain in effect.

         Section 6. Conditions to Purchase of Option Debt Securities. In the
event that the Underwriters exercise their option granted in Section 2 to
purchase all or any of the Option Debt Securities, and each Delivery Date
determined by you pursuant to Section 2 is later than the Closing Time, the
obligations of the several Underwriters to purchase and pay for the Option Debt
Securities that they shall have respectively agreed to purchase pursuant to
this Agreement (collectively, the "purchased Option Debt Securities") are
subject to the accuracy of the representations and warranties of the Company
herein contained, to the performance by the Company of its obligations
hereunder, the delivery to the Underwriters at the Delivery Date by the Company
of such Option Debt Securities and to the following further conditions:

         (a) The Registration Statement shall remain effective at each Delivery
    Date, and, at each Delivery Date, no stop order suspending the
    effectiveness of the Registration Statement shall have been issued under
    the 1933 Act and no proceedings for that purpose shall have been institut
    ed or shall be pending, or, to your knowledge or the knowledge of the
    Company, shall be threatened by the Commission, and any request on the part
    of the Commission for additional information shall have been complied with
    to the reasonable satisfaction of counsel for the Underwriters.

         (b) At each Delivery Date, the provisions of Sections 5(e)(i) through
    5(e)(v) shall have been complied with at and as of each Delivery Date and,
    at each Delivery Date, you shall have received a certificate of the
    Chairman of the Board or the President and the Chief Financial Officer of
    the Company, dated as of each Delivery Date, to such

                                      35


    effect, it being understood that such certificate shall not constitute
    personal representations and warranties of the signing individual.

         (c) At each Delivery Date, you shall have received the favorable
    opinion of Skadden, Arps, Slate, Meagher & Flom, in its role as special
    counsel for the Company, James Buckman, Esq., General Counsel for the
    Company, together with signed or reproduced copies of such opinions for
    each of the other Underwriters, respectively, dated as of each Delivery
    Date, relating to the purchased Option Debt Securities and otherwise to the
    same effect required by Sections 5(b) and 5(c), as the case may be, and
    each such counsel shall have been furnished with all such documents,
    certificates and opinions as such counsel may reasonably request for the
    purpose of enabling such counsel to deliver such opinion or opinions.

         The opinions referred to above shall be to such further effect with
respect to other legal matters relating to this Agreement and the sale of the
Offered Securities pursuant to this Agreement as counsel for the Underwriters
may reasonably request. Such counsel may also state that, insofar as such
opinion involves factual matters, they have relied, to the extent they deem
proper, upon certificates of officers of the Company, and certificates of
public officials; provided that such certificates have been delivered to the
Underwriters.

         In giving the opinions referred to above, each such counsel may rely,
as to all matters governed by the laws of jurisdictions other than those in
which they are expert, upon opinions of other counsel who shall be counsel
reasonably satisfactory to counsel for the Underwriters, in which case the
opinion shall state that they believe you and they are justified and entitled
to so rely.

         (d) At each Delivery Date, you shall have received the favorable
    opinion of [ ], counsel for

                                      36


    the Underwriters, dated as of each Delivery Date, relating to the purchased
    Option Debt Securities and otherwise to the same effect as the opinion
    required by Section 5(d).

         (e) At each Delivery Date, you shall have received a separate letter
    from Deloitte & Touche LLP, in form and substance satisfactory to you and
    dated as of each Delivery Date, to the effect that they reaffirm the 
    statements made in their respective letter furnished pursuant to 
    Section 5(f), except that the specified date referred to shall be a date 
    not more than five days prior to each Delivery Date.

         (f) At each Delivery Date, counsel for the Underwriters shall have
    been furnished with all such documents, certificates and opinions as they
    may reasonably request for the purpose of enabling them to pass upon the
    issuance and sale of the purchased Option Debt Securities as contemplated
    in the Underwriting Agreement and the matters referred to in Section 6(d)
    and in order to evidence the accuracy and completeness of any of the
    representations, warranties or statements of the Company, the performance
    of any of the covenants of the Company, or the fulfillment of any of the
    conditions herein contained; and all proceedings taken by the Company at or
    prior to each Delivery Date in connection with the authorization, issuance
    and sale of the purchased Option Debt Securities as contemplated in the
    Underwriting Agreement shall be reasonably satisfactory in form and
    substance to you and to counsel for the Underwriters.

         Section 7. Indemnification. (a) The Company agrees to indemnify and
hold harmless each Underwriter and each person, if any, who controls any
Underwriter, as the case may be, within the meaning of Section 15 of the 1933
Act, as follows:

         (i) against any and all loss, liability, claim,

                                      37


    damage and expense whatsoever, as incurred, arising out of an untrue
    statement or alleged untrue statement of a material fact contained in the
    Registration Statement (or any amendment thereto), including all documents
    incorporated therein by reference, or the omission or alleged omission
    therefrom of a material fact required to be stated therein or necessary to
    make the statements therein not misleading or arising out of an untrue
    statement or alleged untrue statement of a material fact included in any
    preliminary prospectus supplement or the Prospectus (or any amendment or
    supplement thereto) or the omission or alleged omission therefrom of a
    material fact necessary in order to make the statements therein, in the
    light of the circumstances under which they were made, not misleading;

         (ii) against any and all loss, liability, claim, damage and expense
    whatsoever, as incurred, to the extent of the aggregate amount paid in
    settlement of any litigation or investigation or proceeding by any
    governmental agency or body, commenced or threatened, or of any claim
    whatsoever based upon any such untrue statement or omission, or any such
    alleged untrue statement or omission, if such settlement is effected with
    the written consent of the Company; and

         (iii) against any and all expense whatsoever, as incurred, including
    fees and disbursements of counsel chosen by you, reasonably incurred in
    investigating, preparing or defending against any litigation, or
    investigation or proceeding by any governmental agency or body, commenced
    or threatened, or any claim whatsoever based upon any such untrue statement
    or omission, or any such alleged untrue statement or omission, to the
    extent that any such expense is not paid under subparagraph (i) or (ii)
    above;

provided, however, that this indemnity agreement does not

                                      38


apply to any loss, liability, claim, damage or expense to the extent arising
out of an untrue statement or omission or alleged untrue statement or omission
made in reliance upon and in conformity with written information furnished to
the Company by any Underwriter through you expressly for use in the
Registration Statement (or any amendment thereto) or any preliminary prospectus
supplement or the Prospectus (or any amendment or supplement thereto); and
provided, further, however, that the foregoing indemnification with respect to
any preliminary prospectus supplement shall not inure to the benefit of any
Underwriter (or any person controlling such Underwriter) from whom the person
asserting any such losses, claims, damages or liabilities purchased any of the
Offered Securities if a copy of the Prospectus (as then amended or supplemented
if the Company shall have furnished any amendments or supplements thereto) was
not sent or given by or on behalf of such Underwriter to such person, if such
is required by law, at or prior to the written confirmation of the sale of such
Offered Securities to such person and if the Prospectus (as so amended or
supplemented) would have cured the defect giving rise to such loss, claim,
damage or liability.

         (b) Each Underwriter severally agrees to indemnify and hold harmless
    the Company, its directors, each of its officers who signed the
    Registration Statement, and each person, if any, who controls the Company
    within the meaning of Section 15 of the 1933 Act, and of Section 20 of the
    1934 Act, from and against any and all loss, liability, claim, damage and
    expense described in the indemnity agreement in Section 7(a), as incurred,
    but only with respect to untrue statements or omissions, or alleged untrue
    statements or omissions, made in the Registration Statement (or any
    amendment thereto) or any preliminary prospectus supplement or the
    Prospectus (or any amendment or supplement thereto) in reliance upon and in
    conformity with written information furnished to the Company by or on
    behalf of such Underwriter expressly for use in the Registration Statement
    (or any amendment thereto) or

                                      39


    such preliminary prospectus supplement or the Prospectus (or any amendment
    or supplement thereto).

         (c) In case any proceeding (including any governmental investigation)
    shall be instituted involving any person in respect of which indemnity may
    be sought pursuant to any of the two preceding paragraphs, such person (the
    "indemnified party") shall promptly notify the person against whom such
    indemnity may be sought (the "indemnifying party") in writing and the
    indemnifying party, upon request of the indemnified party, shall retain
    counsel reasonably satisfactory to the indemnified party to represent the
    indemnified party and any others the indemnifying party may designate in
    such proceeding and shall pay the fees and disbursements of such counsel
    related to such proceeding. In any such proceeding, any indemnified party
    shall have the right to retain its own counsel, but the fees and expenses
    of such counsel shall be at the expense of such indemnified party unless
    (i) the indemnifying party and the indemnified party shall have mutually
    agreed to the retention of such counsel or (ii) the named parties to any
    such proceeding (including any impleaded parties) include both the
    indemnifying party and the indemnified party and representation of both
    parties by the same counsel would be inappropriate due to actual or
    potential differing interests between them. It is understood that the
    indemnifying party shall not, in respect of the legal expenses of any
    indemnified party in connection with any proceeding or related proceedings
    in the same jurisdiction, be liable for the fees and expenses of more than
    one separate firm (in addition to any local counsel) for all such
    indemnified parties and that all such fees and expenses shall be reimbursed
    as they are incurred. In the case of any such separate firm for the
    Underwriters and such control persons of Underwriters, such firm shall be
    designated in writing by ______________. In the case of any such separate
    firm for the Company, and such directors,

                                      40


    officers and control persons of the Company, such firm shall be designated
    in writing by the Company. The indemnifying party shall not be liable for
    any settlement of any proceeding effected without its written consent, but
    if settled with such consent or if there be a final judgment for the
    plaintiff, the indemnifying party agrees to indemnify the indemnified party
    from and against any loss or liability by reason of such settlement or
    judgment. No indemnifying party shall, without the prior written consent of
    the indemnified party, effect any settlement of any pending or threatened
    proceeding in respect of which any indemnified party is or could have been
    a party and indemnity could have been sought hereunder by such indemnified
    party, unless such settlement includes an unconditional release of such
    indemnified party from all liability on claims that are the subject matter
    of such proceeding.

         Section 8. Contribution. If the indemnification provided for in
Sections 7(a) and 7(b) is for any reason held to be unenforceable by the
indemnified parties although applicable in accordance with its terms, then each
indemnifying party under such paragraph (it being understood that an
indemnifying party is one who would have had an obligation to provide
indemnification pursuant to Section 7 had such indemnification been
enforceable), in lieu of indemnifying such indemnified party thereunder, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses,

                                      41


claims, damages or liabilities (i) in such proportion as is appropriate to
reflect (A) the relative benefits received by the Underwriters, and (B) that
the Company is responsible for the balance or (ii) if the allocation provided
by clause (i) above is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the allocation referred to in clause (i)
above but also the relative fault of the indemnifying party or parties on the
one hand and of the indemnified party or parties on the other hand in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Underwriters on the other hand in connection with the offering of the
Offered Securities shall be deemed to be in the same respective proportions as
the net proceeds from the offering of the Offered Securities (before deducting
expenses) received by the Company and the total underwriting discounts and
commissions received by the Underwriters, in each case as set forth in the
table on the cover of the Prospectus Supplement, bear to the aggregate public
offering price of the Offered Securities. The relative fault of the Company on
the one hand and of the Underwriters on the other hand shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company or by the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The
Underwriters' respective obligations to contribute pursuant to this Section 8
are several in proportion to the respective number of Offered Securities they
have purchased hereunder, and not joint.

         The Company and the Underwriters agree that it would not be just or
equitable if contribution pursuant to this Section 8 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 8, no Underwriter shall be
required to contribute any amount in

                                      42


excess of the amount by which the total price at which the Offered Securities
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages that such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the 1933 Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this Section 8 are not
exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.

         Section 9. Representations, Warranties and Agreements to Survive
Delivery. The representations, warranties, indemnities, agreements and other
statements of the Company or its officers set forth in or made pursuant to this
Agreement will remain operative and in full force and effect regardless of any
investigation made by or on behalf of the Company, any Underwriter or any
person who controls the Company or any Underwriter within the meaning of
Section 15 of the 1933 Act and will survive delivery of and payment for the
Offered Securities.

         Section 10. Termination of Agreement. (a) You may terminate this
Agreement, by notice to the Company, at any time at or prior to the Closing
Time (i) if there has been, since the respective dates as of which information
is given in the Registration Statement, any material adverse change in the
condition (financial or otherwise), earnings, business affairs or business
prospects of the Company and its subsidiaries, considered as one enterprise,
whether or not arising in the ordinary course of business, or (ii) if there has
occurred any material adverse change in the financial markets in the United
States or any outbreak of hostilities or escalation thereof or other calamity
or crisis the effect of which on the financial markets of the United States is
such as to make it, in your judgment, impracticable to

                                      43


market the Offered Securities or enforce contracts for the sale of the Offered
Securities or (iii) if trading in any securities of the Company has been
suspended by the Commission, the New York Stock Exchange or any other exchange
or quotation system on which securities of the Company are listed, or if
trading generally on either the American Stock Exchange or the New York Stock
Exchange or in the over-the-counter market has been suspended, or minimum or
maximum prices for trading have been fixed, or maximum ranges for prices for
securities have been required, by such exchange or by order of the Commission
or any other governmental authority or (iv) if a banking moratorium has been
declared by either federal, New Jersey or New York authorities.

         (b) If this Agreement is terminated pursuant to this Section, such
    termination shall be without liability of any party to any other party,
    except to the extent provided in Section 4 herein. Notwithstanding any such
    termination, the provisions of Sections 7, 8 and 9 shall remain in effect.

         Section 11. Default by One or More of the Underwriters. If one or more
of the Underwriters shall fail at the Closing Time to purchase the Offered
Securities that it or they are obligated to purchase (the "Defaulted Offered
Securities"), you shall have the right, within 24 hours thereafter, to make
arrangements for one or more of the non-defaulting Underwriters, or any other
underwriters, to purchase all, but not less than all, of the Defaulted Offered
Securities in such amounts as may be agreed upon and upon the terms herein set
forth; if, however, you have not completed such arrangements within such
24-hour period, then:

         (a) if the aggregate principal amount of Defaulted Offered Securities
    does not exceed 10% of the aggregate principal amount of the Offered
    Securities to be purchased pursuant to this Agreement, the non-defaulting
    Underwriters shall be obligated to purchase the full amount thereof in the
    proportions that their respective underwriting

                                      44


    obligation proportions bear to the underwriting obligation proportions (as
    defined below) of all non-defaulting Underwriters, or

         (b) if the aggregate principal amount of Defaulted Offered Securities
    exceeds 10% of the aggregate principal amount of the Offered Securities to
    be purchased pursuant to this Agreement, this Agreement shall terminate
    without liability on the part of any non-defaulting Underwriter.

         No action taken pursuant to this Section 11 shall relieve any
defaulting Underwriter from liability in respect of its default.

         In the event of any such default that does not result in a termination
of this Agreement, either you or the Company shall have the right to postpone
the Closing Time or the Delivery Date, as applicable for a period not exceeding
seven days in order to effect any required changes in the Registration
Statement or Prospectus or in any other documents or arrangements. As used
herein, the term "Underwriter" includes any person substituted for an
Underwriter under this Section 11.

         Section 12. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if delivered,
mailed or transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed as set forth in Schedule I. Notices to the
Company shall be directed to it at 6 Sylvan Way, Parsippany, New Jersey
07054, attention of James Buckman, Esq., General Counsel.

         Section 13. Parties. This Agreement is made solely for the benefit of
the several Underwriters, the Company and, to the extent expressed, any person
who controls the Company or any of the Underwriters within the meaning of
Section 15 of the 1933 Act, and the directors of the Company, its officers who
have signed the Registration Statement, and their respective

                                      45


executors, administrators, successors and assigns and, subject to the
provisions of Section 11, no other person shall acquire or have any right under
or by virtue of this Agreement. The term "successors and assigns" shall not
include any purchaser, as such purchaser, from any Underwriter of the Offered
Securities. If there are two or more Underwriters, all of their obligations
hereunder are several and not joint.

         Section 14. Governing Law and Time. This Agreement shall be governed
by the laws of the State of New York. Specified times of the day refer to New
York City time.

         Section 15. Counterparts. This Agreement may be executed in one or
more counterparts and when a counterpart has been executed by each party, all
such counterparts taken together shall constitute one and the same agreement.

         Section 16. Headings. All headings of the sections and subparts
thereof of this Agreement are for convenience of reference only and shall not
be deemed a part of this Agreement.

                                      46


         If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
instrument will become a binding agreement between the Company and each
Underwriter in accordance with its terms.

                                            Very truly yours,

                                            CENDANT CORPORATION

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


Confirmed and Accepted, as of the date first above written:
[UNDERWRITERS]

By:

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

                                      47


                                                               SCHEDULE I
                                                               to Underwriting
                                                               Agreement dated
                                                               [_____________]



                              CENDANT CORPORATION

                                Debt Securities

                                                               Principal Amount
Underwriter                                                        Purchased
- -----------                                                        ---------
                                                               $

Total..........................................................$


                                      48


                                                               SCHEDULE II
                                                               to Underwriting
                                                               Agreement
                                                               dated [________]

                              CENDANT CORPORATION

                                Debt Securities

Principal amount to be issued:         $

Over-allotment option:                 $

Current ratings:                       [        ]

Interest rate:                         ____% per annum, payable semiannually

Interest accrues from:

Date of maturity:

Initial Conversion Price:              $______ per share (___________shares of
                                       Common Stock for every $1,000 principal
                                       amount of Convertible Debt Securities)

Redemption provisions:

Sinking fund requirements:

Initial public offering price:         ____% of the principal amount plus
                                       accrued interest from the date of
                                       issuance of the Initial Debt Securities.

Purchase price:                        ____% of the principal amount plus
                                       accrued interest from the date of
                                       issuance of the Initial Debt Securities
                                       to the date of delivery (payable in same
                                       day funds).

Closing date, time and location:

Delayed delivery contracts:

                                      49


Listing requirement:

Other terms and conditions:



                                      50


                                                      SCHEDULE III     
                                                      to Underwriting Agreement
                                                      dated [____________]

                          SUBSIDIARIES OF THE COMPANY










                                                     SCHEDULE IV
                                                     to Underwriting Agreement
                                                     dated [_______________]


                              CENDANT CORPORATION

                                Debt Securities

                           DELAYED DELIVERY CONTRACT

CENDANT CORPORATION
6 Sylvan Way
Parsippany, New Jersey  07054

Dear Sirs:

         The undersigned hereby agrees to purchase from Cendant Corporation, a
Delaware corporation (the "Company"), and the Company agrees to sell to the
undersigned on _______, 19__ (the "Delivery Date"), ________________________
principal amount of the Company's [Title of Offered Securities] (the "Offered
Securities"), offered by the Company's Prospectus dated _______, 1996, as
supplemented by its Prospectus Supplement dated _______, 19__ , receipt of
which is hereby acknowledged, at a purchase price of % of the principal amount
thereof, plus interest accrued on the amount thereof, principal amount at the
rate borne by the Offered Securities from _______, 19__ to the Delivery Date,
and on the further terms and conditions set forth in this contract.

         Payment for the Offered Securities shall be made to the Company or its
order by certified or official bank check in New York Clearing House funds, at
the offices of _______________, _____________, New York, New York, at A.M., New
York City time, on the Delivery Date (or in such other funds and/or at such
other place as the Company and the undersigned may agree upon in writing), upon
delivery of the Offered Securities to the undersigned, in such authorized
denominations and

                                      54


registered in such names as the undersigned may request in writing addressed to
the Company not less than five business days prior to the Delivery Date.

         The obligation of the undersigned to take delivery of and make payment
for the Offered Securities on the Delivery Date shall be subject only to the
conditions that (1) the purchase of the Offered Securities by the undersigned
shall not, on the Delivery Date, be prohibited under the laws of any
jurisdiction to which the undersigned is subject and that govern such
investment, and (2) the Company, on or before , 19 , shall have sold to the
Underwriters of the Offered Securities (the "Underwriters") such principal
amount of the Offered Securities as is to be sold to them pursuant to the
Underwriting Agreement dated the date hereof between the Company and the
Underwriters. The obligation of the undersigned to take delivery of and make
payment for the Offered Securities shall not be affected by the failure of any
Underwriter or other purchaser to take delivery of and make payment for the
Offered Securities pursuant to other contracts similar to this contract.

         Promptly after completion of the sale to the Underwriters, the Company
will mail or deliver to the undersigned, at its address set forth below, a
notice to such effect, accompanied by a copy of the opinion of counsel for the
Company delivered to the Underwriters in connection therewith.

         By the execution hereof, the undersigned represents and warrants to
the Company that (1) its investment in the Offered Securities is not, as of the
date hereof, prohibited under the laws of any jurisdiction to which the
undersigned is subject and that govern such investment, (2) all necessary
corporate action for the due execution and delivery of this contract and the
payment for and purchase of the Offered Securities has been taken by it and no
further authorization or approval of any governmental or other regulatory
authority is required for such execution, delivery, payment or purchase and (3)
upon the acceptance

                                      55


by the Company and the mailing or delivery of a copy as provided below, this
contract will constitute a valid and binding agreement of the undersigned in
accordance with its terms.

         This contract will inure to the benefit of and be binding upon the
parties hereto and their respective successors, but will not be assignable by
either party hereto without the written consent of the other.

         It is understood that the Company will not accept Delayed Delivery
Contracts for an aggregate principal amount of the Offered Securities in excess
of $ and that the acceptance of any Delayed Delivery Contract is in the
Company's sole discretion and, without limiting the foregoing, need not be on a
first-come, first-served basis. If this contract is acceptable to the Company,
it is requested that the Company sign the form of acceptance on a copy hereof
and mail or deliver a signed copy to the undersigned at its address set forth
below. This will become a binding contract between the Company and the
undersigned when such copy is so mailed or delivered.

                                      56


         This contract shall be governed by the laws of the State of New York.

                                            Yours very truly,


                                            ------------------------------------
                                            (Name of Purchaser)

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

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

                                            ------------------------------------
                                            (Address)


Accepted as of the date first above written:

CENDANT CORPORATION

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

                 PURCHASER - PLEASE COMPLETE AT TIME OF SIGNING

         The name and telephone number of the representative of the Purchaser
with whom details of delivery on the Delivery Date may be discussed is as
follows: (Please print.)

                                                         Telephone No.
Name                                                 (including Area Code)
- ----                                                 ---------------------






                                      57


                                                     SCHEDULE V
                                                     to Underwriting Agreement
                                                     dated [_______________]



                   MATTERS TO BE COVERED BY LETTER OR LETTERS
                       OF INDEPENDENT PUBLIC ACCOUNTANTS

         To the extent that a report or opinion of Deloitte & Touche, LLP, on
the Consolidated Financial Statements of Cendant Corporation is included or
incorporated by reference in the Registration Statement or any exhibit thereto,
the Prospectus or any Prospectus Supplement, such firm, to the extent
applicable, shall have furnished to you the following letter or letters (in
each case in form and substance satisfactory to you):

    (1) At the date hereof, a letter (the "Comfort Letter"), to the effect
    that:

         (a) They are independent accountants with respect to the Company and
    its subsidiaries within the meaning of the 1933 Act and the applicable
    published 1933 Act Regulations.

         (b) In their opinion, the audited consolidated financial statements
    and the related financial statement schedules of the Company reported on by
    them included or incorporated by reference in such annual report on Form
    10-K comply as to form in all material respects with the applicable
    accounting requirements of the 1933 Act and the published 1933 Act
    Regulations with respect to Registration Statements on Form S-3 and the
    1934 Act and the published 1934 Act Regulations with respect to annual
    reports on Form 10-K.

         (c) Such letter shall further state that they have performed such
    other procedures, specified by you, not constituting an audit, as they have
    agreed to perform and report on with respect to certain

                                      58


    amounts, percentages, numerical data and other financial information in the
    Form 10- K identified by you and have compared certain of such amounts,
    percentages, numerical data and financial information with, and have found
    such items to be in agreement with or derived from, the detailed accounting
    records of the Company and its subsidiaries.

         (d) On the basis of procedures (but not an examination in accordance
    with generally accepted auditing standards) consisting of:

              (i) a reading of minutes of all meetings of the Company's
         shareholders, Board of Directors (including the audit, executive and
         compensation committees) from the date of the latest audited con-
         solidated financial statements of the Company and its subsidiaries;

              (ii) a reading of the unaudited condensed consolidated financial
         statements of the Company and its subsidiaries included or
         incorporated by reference in the quarterly report on Form 10-Q for
         each Form 10-Q filed; and

              (iii) inquiries of certain officials of the Company who have
         responsibility for financial and accounting matters as to (A) whether
         the unaudited condensed consolidated financial statements referred to
         in (ii) above comply as to form in all material respects with the ap
         plicable accounting requirements of the 1934 Act and the published
         1934 Act Regulations with respect to Form 10-Q and (B) whether such
         unaudited condensed consolidated financial statements are in
         conformity with generally accepted accounting principles applied on a
         basis substan tially consistent with that of the audited consolidated
         financial statements referred to above;

                                      59


nothing came to their attention that caused them to believe that the unaudited
condensed consolidated financial statements included or incorporated by
reference in such quarterly report on Form 10-Q do not comply as to form in all
material respects with the applicable accounting requirements of the 1934 Act
and the published 1934 Act Regulations with respect to Form 10-Q, or that such
unaudited condensed consolidated financial statements are not in conformity
with generally accepted accounting principles applied on a basis substantially
consistent with that of audited consolidated financial statements referred to
above, except as disclosed in the notes to such unaudited condensed
consolidated financial statements.

         (e) Such letter shall further state that they have performed such
    other procedures, specified by you, not constituting an audit, as they have
    agreed to perform and report on with respect to certain amounts,
    percentages, numerical data and other financial information in the Form 10-
    Qs identified by you and have compared certain of such amounts,
    percentages, numerical data and financial information with, and have found
    such items to be in agreement with or derived from, the detailed accounting
    records of the Company and its subsidiaries.

         (f) On the basis of the inquiries and procedures referred to in
    Section 1(d) of Schedule III (but carried out to the specified date
    referred to in Section 2(a) of Schedule III), nothing came to their
    attention that caused them to believe that, from the date of the latest
    balance sheet of the Company and its subsidiaries included or incorporated
    by reference in the Prospectus to such specified date, there was:

              (i) any change in the capital stock of the Company, as compared
         with the amount shown in such latest balance sheet;

                                      60


              (ii) any decrease in stockholders' equity of the Company and its
         subsidiaries, as compared with the amounts shown in such latest
         balance sheet;

              (iii) any increase in long-term debt of the Company and its
         subsidiaries, as compared with the corresponding total amount of such
         debt outstanding at the date of such latest balance sheet; or

              (iv) any decrease from the date of such latest balance sheet to
         such specified date in consolidated net revenue of the Company and its
         subsidiaries or in the total amount or per share amount (on a primary
         and fully diluted basis) of consolidated net income of the Company and
         its subsidiaries, as compared with the corresponding period of the
         preceding year, except in all instances for changes or decreases that
         the Prospectus discloses have occurred or may occur or that are
         described in the Closing Letter.

         (g) Such letter shall further state that they have performed such
    other procedures, specified by you, not constituting an audit, as they have
    agreed to perform and report on with respect to certain amounts,
    percentages, numerical data and other financial information in the
    Registration Statement, the Prospectus and the exhibits to the Registration
    Statement or in the documents incorporated by reference in the Prospectus
    identified by you, and have compared certain of such amounts, percentages,
    numerical data and financial information with, and have found such items to
    be in agreement with or derived from, the detailed accounting records of
    the Company and its subsidiaries.

         (2) At the Closing Time, a letter dated the Closing Time (the "Closing
Letter"), to the effect that they

                                      61


reaffirm as of the date of the Closing Letter (and as though made on the date
of the Closing Letter) all statements made in the comfort letter, if any,
except that the inquiries and procedures specified therein shall have been
carried out to a specified date not more than five days prior to the date of
the Closing Letter.

                                      62


                                                                      EXHIBIT 1

                  SKADDEN, ARPS, SLATE, MEAGHER & FLOM OPINION

         Based upon and subject to the limitations, qualifications, exceptions
and assumptions set forth above, we are of the opinion that:

         (1) the Notes, the Indenture and the authorized capital stock of the
Company conform in all material respects as to legal matters to the description
thereof contained in the Prospectus;

         (2) the Underwriting Agreement has been duly authorized, executed and
delivered by the Company;

         (3) the execution and delivery by the Company of, and the performance
by the Company of its obligations under, the Underwriting Agreement will not
(i) contravene any provision of the Amended and Restated Certificate of
Incorporation of the Company as currently in effect or the Amended and Restated
By-Laws of the Company as currently in effect, (ii) contravene any agreement or
other instrument binding upon the Company or any of its subsidiaries that is
listed as an exhibit to (a) the Registration Statement or (b) the Company's
Annual Report on Form 10-K for the fiscal year ending December 31, ____, as
amended, or (iii) violate any present statute, rule or regulation
(collectively, "Requirements of Law") or any order, judgment or decree of any
court or governmental agency or body (collectively, "Orders") having
jurisdiction over the Company or any of its properties or assets. The opinion
expressed in clause (iii) of this paragraph (3) is based on our review of those
Requirements of Law which are ordinarily applicable to transactions of the type
provided for in the Underwriting Agreement, but without making any special
investigation concerning any other Requirements of Law, and those Orders
specifically identified to us by the Company as being Orders to which it is
subject (no such Orders have been so identified to such counsel). In

                                      63


addition, we express no opinion in this paragraph (3) with respect to (i) any
state securities or Blue Sky laws, rules or regulations or (ii) the information
contained in, or the accuracy, completeness or correctness of, the Prospectus
or the Registration Statements or the compliance thereof as to form with the
Securities Act of 1933 (the "Act") and the General Rules and Regulations
thereunder, which matters are dealt with in paragraphs (1) above and (5) below
and the second paragraph following paragraph (7) below;

         (4) based upon our review of those Requirements of Law which are
ordinarily applicable to transactions of the type provided for in the
Underwriting Agreement, but without having made any special investigation
concerning any other Requirements of Law, no consent, approval, authorization
or Order of, or filing or registration with, any court or governmental agency
or body having jurisdiction over the Company and its Subsidiaries or any of
their respective properties or assets is required for the execution, delivery
and performance of the Underwriting Agreement by the Company or the
consummation by the Company of the transactions contemplated thereby except for
(i) such as have been obtained under the Act and the Securities Exchange Act of
1934, as amended (the "Exchange Act"), or (ii) such as may be required under
state securities or Blue Sky laws in connection with the purchase and
distribution of the Offered Securities by you, as to which we express no
opinion;

         [(5) the statements made in the Prospectus under the caption
"Description of Capital Stock," to the extent such statements constitute
summaries of legal matters and documents or legal conclusions, have been
reviewed by us and fairly present the information disclosed therein in all
material respects;]

         (6) (i) each document filed pursuant to the Exchange Act, and
incorporated by reference in the Prospectus (other than the financial
statements, notes and schedules thereto and other financial information
included in or omitted from such document as to which we

                                      64


need express no opinion), when filed, appeared on its face to be responsive as
to form in all material respects with the requirements of the Exchange Act and
the applicable rules and regulations of the Commission thereunder and (ii) each
of the Registration Statements and the Prospectus (other than the financial
statements, notes and schedules thereto and other financial information
included in or omitted from the Registration Statement or Prospectus, and the
Form T-1, as to which we express no opinion), as of their respective effective
or issue dates, appeared on their face to be responsive as to form in all
material respects with the requirements of the Act and the applicable rules and
regulations thereunder; and such counsel does not have actual knowledge of any
contracts or other documents of a character required to be filed as an exhibit
to the Registration Statement which are not filed as required; and

         (7) the Company is not required to be registered or regulated as an
"investment company" as such term is defined under the Investment Company Act
of 1940, as amended.

         [We have been orally advised by the Commission that] [The Designated
Indenture has been qualified under the Trust Indenture Act and] the
Registration Statement was declared effective under the Act at __ a.m. on      
__, 199_ and, to the best of our knowledge, no stop order suspending the
effectiveness of the Registration Statement under the Act has been issued and
no proceedings for that purpose have been initiated or are threatened by the
Commission.

         In addition, we have participated in conferences with officers and
representatives of the Company, representatives of the independent accountants
of the Company, and you and your counsel at which the contents of the
Registration Statement and the Prospectus and related matters were discussed
and, although we are not passing upon and do not assume any responsibility for,
the accuracy, completeness or fairness of the 

                                      65


statements contained in the Registration Statement or the Prospectus and we
have made no independent check or verification thereof, except as set forth in
numbered paragraph 5 hereof, on the basis of the foregoing, no facts have come
to our attention that have led us to believe that the Registration Statement,
on the original effective date of the Registration Statement, on the effective
date of the most recent post-effective amendment thereto, if any, on the date
of the filing of any annual report on Form 10-K after the filing of the
Registration Statement, on the date of the Underwriting Agreement, or at the
Closing Time, contained an untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus, or any amendment or
supplement thereto, at the time the Prospectus Supplement was issued at the
time any such amended or supplemented Prospectus was issued or at the Closing
Time, contained or contains an untrue statement of a material fact or omitted
or omits to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, except that we express no opinion or belief with respect to the
financial statements, schedules and other financial data included therein or
excluded therefrom.

                                                 Very truly yours,

                                      66


                                                                      EXHIBIT 2

                            COMPANY COUNSEL OPINION

         Based upon and subject to the limitations, qualifications, exceptions
and assumptions set forth herein, I am of the opinion that:

         1. the Company has been duly organized and is subsisting in good
standing as a corporation under the laws of the State of Delaware with
corporate power and corporate authority under such laws to own, lease and
operate its properties and conduct its business as described in the Prospectus;

         2. the Company is qualified to do business and is in good standing as
a foreign corporation in each other jurisdiction in which it owns or leases
property of a nature, or transacts business of a type, that would make such
qualification necessary except to the extent that the failure to so qualify or
be in good standing would not have a material adverse effect on the Company and
its subsidiaries, considered as one enterprise;

         3. each of the subsidiaries that is incorporated in Delaware (a
"Delaware Subsidiary") has been duly organized and is subsisting and in good
standing as a corporation under the laws of Delaware with corporate power and
corporate authority under such laws to own, lease and operate its properties
and conduct its business;

         4. each subsidiary is qualified to do business and is in good standing
as a foreign corporation in each other jurisdiction in which it owns or leases
property of a nature, or transacts business of a type, that would make such
qualification necessary except to the extent that the failure to so qualify or
be in good standing would not have a material adverse effect on the Company and
its subsidiaries, considered as one enterprise;

                                      67


         5. each of the Indenture and the Supplemental Indenture has been duly
authorized, executed and delivered by the Company and, assuming due
authorization, execution and delivery by the Trustee, constitutes a valid and
binding obligation of the Company, enforceable against the Compa ny in
accordance with its terms, except to the extent that (a) enforcement thereof
may be limited by (1) bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or similar laws affecting enforcement of creditors'
rights generally and (2) general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law) and (b) the
waiver contained in Section 514 of the Designated Indenture may be limited by
applicable law;

         6. the Notes have been duly authorized by the Company and assuming
that the Notes have been duly authenticated by the Trustee in the manner
described in its certificate delivered today (which fact I have not
independently determined), the Notes have been duly executed, issued and
delivered by the Company and constitute valid and binding obligations of the
Company entitled to the benefits of the Indenture and enforceable against the
Company in accordance with their terms, except to the extent that (a)
enforcement thereof may be limited by (1) bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or similar laws affecting
enforcement of creditors' rights generally and (2) general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or
at law) and (b) the waiver contained in Section 514 of the Indenture may be
limited by applicable law;

         [7. all of the outstanding shares of capital stock of the Company have
been duly authorized by all requisite corporate action on the part of the
Company and have been validly issued and are fully paid and nonassessable; no
holder thereof is or will be subject to personal liability by reason of being
such a holder; and none of the outstanding shares of capital stock of the
Company were issued in violation of the preemptive rights of any stockholder of
the Company;]

                                      68


         [8. the Shares issuable upon conversion of the Notes have been duly
authorized and validly reserved for issuance by the Company upon such
conversion and, when issued in accordance with the terms of the Indenture, such
Shares will be validly issued, fully paid and nonassessable; all corporate
action required to be taken for the authorization, issuance and delivery of
such Shares has been validly taken; the issuance of the Notes is not, and the
issuance of such Shares upon conversion thereof will not be, subject to any
preemptive rights of any stockholder of the Company;]

         [9. the authorized, issued and outstanding capital stock of the
Company is as described in the Prospectus under the caption "Description of
Capital Stock";]

         10. all of the outstanding shares of capital stock of each Delaware
Subsidiary have been duly authorized by all requisite corporate action on the
part of the relevant Delaware Subsidiary and have been validly issued and are
fully paid and nonassessable; All of the shares of capital stock of each of 
the Company Subsidiaries are owned by the  Company free and clear of any 
pledge, lien, security interest, charge, claim, encumbrance or equity (each a
"Lien") except for such Liens as are not, individually or in the aggregate, 
material to the Company and its subsidiaries,  considered as one enterprise;

         11. there are no statutes or regulations, or any pending or, to my
knowledge, threatened legal or governmental proceedings against the Company or
any subsidiary, required to be described in the Prospectus that are not
described as required, nor are there any contracts or documents required to be
described in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement that are not described or filed as
required; furthermore, no default

                                      69


exists in the due performance or observance by the Company, or any subsidiary,
or, to my knowledge, any other party thereto, of any material obligation,
agreement, covenant or condition contained in any contract, indenture, loan
agreement, note, lease or other agreement or instrument that is described in
the Registration Statement or the Prospectus or filed as an exhibit to the
Registration Statement, except such defaults that do not have a material
adverse effect on the Company and its subsidiaries, considered as one
enterprise;

         12. the provisions of the contracts and agreements that are summarized
in the Prospectus or in the Company's Proxy Statement dated [_______] (the
"Proxy") under the heading "Certain Relationships and Related Transactions" and
"Executive Compensation" conform in all material respects to the description
thereof contained in the Prospectus or Proxy and such description fairly
presents the information disclosed;

         13. the Underwriting Agreement has been duly authorized, executed and
delivered by the Company;

         14. the execution and delivery of the Underwriting Agreement by the
Company, the execution and delivery of the Indenture, the Supplemental
Indenture and the Notes by the Company and compliance by the Company with the
terms of the Underwriting Agreement, the Indenture and the Supplemental
Indenture (a) do not and will not constitute or result in a breach of or a
default under any of the terms or provisions of, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of
the Company or any subsidiary under (i) any indenture, mortgage or loan
agreement, or any other agreement, including without limitation the Credit
Agreement (as defined in the Prospectus) or instrument to which the Company or
any subsidiary is a party or by which it may be bound or to which any of its
properties may be subject, (ii) any judgment, order or decree applicable to the
Company or any subsidiary of any government, governmental 

                                      70


instrumentality or court, domestic, or foreign, having jurisdiction over the
Company or any subsidiary or any of their properties, and (B) do not and will
not result in a violation of any applicable law, rule or regulation (except for
the federal securities laws, and the securities or blue sky laws of the various
states, as to which I express no opinion) except, in each case, for such
breaches, defaults or violations that would not have a material adverse effect
on the condition (financial or otherwise), earnings or business affairs of the
Company and its subsidiaries, considered as one enterprise;

         15. except as previously disclosed to you in writing, (i) the Company
or its subsidiaries are the beneficial owners of the U.S. trademarks and
service marks set forth in the Prospectus, with the exception of the Ramada
mark; (ii) there is no claim, suit, action or proceeding pending or, to the
best of my knowledge, threatened against the Company or any subsidiary that
involves a claim of infringement of any trademark or service marks which
infringement (if the subject of any unfavorable decision) would have a material
adverse effect on the Company and its subsidiaries, considered as one
enterprise; and (iii) the current use of the trademarks and service marks by
the Company or any of its subsidiaries does not, to the best of my knowledge,
infringe upon any right of any third party which infringement (if the subject
of any unfavorable decision) would reasonably be expected to have a material
adverse effect on the Company and its subsidiaries, considered as one
enterprise;

         16. all corporate action required to be taken for consummation of the
Merger has been validly taken.

         In addition, I have participated in conferences with other officers
and representatives of the Company, representatives of the independent
accountants of the Company, and you and your counsel at which the contents of
the Registration Statement and the Prospectus and related matters were
discussed and, although I am not passing upon, and do not assume any
responsibility for,

                                      71


the accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus and I have made no independent check
or verification thereof, except as otherwise specifically referred to in
paragraph 12 of this opinion, on the basis of the foregoing, no facts have come
to my attention that have led me to believe that the Registration Statement, on
the original effective date of the Registration Statement, on the effective
date of the most recent post-effective amendment thereto, if any, on the date
of the filing of any annual report on Form 10-K after the filing of the
Registration Statement, on the date of the Underwriting Agreement, or at the
Closing Time, contained an untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus, or any amendment or
supplement thereto, at the time the Prospectus Supplement was issued, at the
time any such amended or supplemented Prospectus was issued or at the Closing
Time, contained or contains an untrue statement of a material fact or omitted
or omits to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, except that I express no opinion or belief with respect to the
financial statements, schedules and other financial data included therein or
excluded therefrom or with respect to the Statement of Eligibility of the
Trustee under the Trust Indenture Act on Form T-1.

                                                 Very truly yours,



                                      72



                              CENDANT CORPORATION
                            (a Delaware corporation)


                                [______________]
                                  Common Stock


                             UNDERWRITING AGREEMENT


Dated:____________



                              CENDANT CORPORATION
                            (a Delaware corporation)

                         _______ Shares of Common Stock
                           Par Value $0.01 Per Share


                             UNDERWRITING AGREEMENT

                                                                     [Date]

To the Underwriters named in Schedule I

Ladies and Gentlemen:

         Cendant Corporation, a Delaware corporation (the "Company"), proposes
to issue and sell to the underwriters named in Schedule I the number of shares
of Common Stock specified in Schedule II (the "Firm Shares") on the terms and
conditions stated herein and in Schedule II. The Company also grants to the
Underwriters, severally and not jointly, the option described in Section 2 to
purchase all or any part of the additional shares of Common Stock as set forth
in Schedule II to cover over-allotments (the "Additional Shares") on the terms
and conditions stated herein and in Schedule II. The Additional Shares together
with the Firm Shares are herein called the "Shares". As used herein, unless the
context otherwise requires, the term "Underwriters" shall mean the firm or
firms named as Underwriter or Underwriters in Schedule I and the term "you"
shall mean the Underwriter or Underwriters, if no underwriting syndicate is
purchasing the Shares, or the representative or representatives of the
Underwriters, if an underwriting syndicate is purchasing the Shares, as
indicated in Schedule I. The Shares may be sold pursuant to delayed delivery
contracts, a form of which is attached as Schedule IV (the "Delayed Delivery
Contracts"), as specified in Schedule II.

         The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (Registration No. 333-    )
including

                                       2


a prospectus, relating to certain of its debt securities and Common Stock, and
the offering thereof from time to time in accordance with Rule 415 under the
Securities Act of 1933, as amended (the "1933 Act"). Such registration
statement has been declared effective by the Commission. As provided in Section
3(a), a prospectus supplement reflecting the terms of the Shares, the terms of
the offering thereof and the other matters set forth therein has been prepared
and will be filed pursuant to Rule 424 under the 1933 Act. Such prospectus
supplement, in the form first filed after the date hereof pursuant to Rule 424,
is herein referred to as the "Prospectus Supplement". Such registration
statement, as amended at the date hereof, together with the Rule 462(b)
Registration Statement under the 1933 Act, including the exhibits thereto and
the documents incorporated by reference therein, is herein called the
"Registration Statement", and the basic prospectus included therein relating to
all offerings of debt securities and Common Stock under the Registration
Statement, as supplemented by the Prospectus Supplement, is herein called the
"Prospectus", except that, if such basic prospectus is amended or supplemented
on or prior to the date on which the Prospectus Supplement is first filed
pursuant to Rule 424, the term "Prospectus" shall refer to the basic
prospectus, as so amended or supplemented and as supplemented by the Prospectus
Supplement, in either case including the documents filed by the Company with
the Commission pursuant to the Securities Exchange Act of 1934, as amended (the
"1934 Act"), that are incorporated by reference therein.

         You have advised us that you and the other Underwriters, acting
severally and not jointly, desire to purchase the Firm Shares and that you have
been authorized by the other Underwriters to execute this Underwriting
Agreement ("this Agreement") on their behalf.

         Section 1. Representations and Warranties. (a) The Company represents
and warrants to and agrees with each Underwriter that:

         (i) On the original effective date of the Registration Statement, on
    the effective date of the most recent post-effective amendment thereto, if
    any, on the date of the filing of any Rule 462(b) Registration Statement,
    and on the date of the filing

                                       3


    by the Company of any annual report on Form 10-K after the original filing
    of the Registration Statement, the Registration Statement complied in all
    material respects with the requirements of the 1933 Act and the rules and
    regulations of the Commission thereunder (the "1933 Act Regulations") and
    did not contain an untrue statement of a material fact or omit to state a
    material fact required to be stated therein or necessary to make the
    statements therein not misleading; on the date hereof, at the Closing Time
    (as defined below) and at each Delivery Date (as defined below), if any,
    the Registration Statement, and any amendments thereof, and the Prospectus,
    and any amendments thereof and supplements thereto, comply and will comply
    in all material respects with the requirements of the 1933 Act and the 1933
    Act Regulations, and neither the Registration Statement nor any amendments
    thereof include or will include an untrue statement of a material fact or
    omit or will omit to state any material fact required to be stated therein
    or necessary to make the statements therein not misleading, and neither the
    Prospectus, nor any amendments thereof and supplements thereto, include or
    will include an untrue statement of a material fact or omit or will omit to
    state any material fact required to be stated therein or necessary to make
    the statements therein, in light of the circumstances under which they were
    made, not misleading; provided, however, that the Company makes no
    representations or warranties as to statements or omissions made in
    reliance upon and in conformity with information furnished in writing to
    the Company by or on behalf of any Underwriter, directly or through you,
    expressly for use in the Registration Statement or the Pro spectus.

         (ii) The documents incorporated by reference in the Prospectus, at the
    time they were filed with the Commission, complied in all material respects
    with the requirements of the 1934 Act, and the rules and regulations of the
    Commission thereunder (the "1934 Act Regulations") and, when read together
    with the other information in the Prospectus, do not and will not, on the
    date hereof, at the Closing Time and at each Delivery Date, if any, include
    an untrue statement of a material fact or omit to state a

                                       4


    material fact required to be stated therein or necessary to make the
    statements therein, in light of the circumstances under which they were
    made, not misleading.

         (iii) Deloitte & Touche LLP, who has reported upon the audited
    financial statements and schedules included or incorporated by reference in
    the Registration Statement, is an independent public accountant as required
    by the 1933 Act and the 1933 Act Regulations with respect to the Company
    and each corporation whose financial statements have been included in the
    Registration Statement for each of the years reported on by such
    accountant.

         (iv) This Agreement has been duly authorized, executed and delivered
    by the Company.

         (v) The consolidated financial statements included or incorporated by
    reference in the Registration Statement present fairly the consolidated
    financial position and stockholders' equity and the consolidated results of
    operations and consolidated statements of cash flows of the entities
    purported to be shown thereby at the indicated dates and for the periods
    specified. Such financial statements have been prepared in conformity with
    generally accepted accounting principles applied on a consistent basis
    throughout the periods involved. The financial statement schedules, if any,
    included or incorporated by reference in the Registration Statement present
    fairly the information required to be stated therein. The selected
    financial data included or incorporated by reference in the Prospectus
    present fairly the information shown therein and have been compiled on a
    basis consistent with that of the audited consolidated financial statements
    incorporated by reference in the Registration Statement. The pro forma
    financial statements and other pro forma financial information included or
    incorporated by reference in the Prospectus present fairly the information
    shown therein, have been prepared in accordance with the Commission's rules
    and guidelines with respect to pro forma financial statements, have been
    properly compiled on the pro forma bases described therein,

                                       5


    and, in the opinion of the Company, the assumptions used in the preparation
    thereof are reasonable and the adjustments used therein are appropriate to
    give effect to the transactions or circumstances referred to therein.

         (vi) The Company is duly organized and is validly existing in good
    standing as a corporation under the laws of the State of Delaware with
    corporate power and corporate authority under such laws to own, lease and
    operate its properties and conduct its business as described in the
    Prospectus. The Company is duly qualified to transact business as a foreign
    corporation and is in good standing in each other jurisdiction in which it
    owns or leases property of a nature, or transacts business of a type, that
    would make such qualification necessary, except to the extent that the
    failure to so qualify or be in good standing would not have a material
    adverse effect on the Company and its subsidiaries, considered as one
    enterprise.

         (vii) The Company's only subsidiaries are listed in Schedule III
    hereto (each a "Company Subsidiary" and collectively hereinafter referred
    to as the "Company Subsidiaries"). Each Subsidiary is duly organized and is
    validly existing and in good standing under the laws of the jurisdiction of
    its incorporation with corporate power and corporate authority under such
    laws to own, lease and operate its properties and conduct its business.
    Each Subsidiary is duly qualified to transact business as a foreign
    corporation and is in good standing in each other jurisdic tion in which it
    owns or leases property of a nature, or transacts business of a type, that
    would make such qualification necessary, except to the extent that the
    failure to so qualify or be in good standing would not have a material
    adverse effect on the Company and its Subsidiaries, considered as one
    enterprise. All of the outstanding shares of capital stock of each Company
    Subsidiary have been duly authorized and validly issued and are fully paid
    and nonassessable and are owned by the Company, directly or through one

                                       6


    or more Company Subsidiaries, free and clear of any pledge, lien, security
    interest, charge, claim, equity or encumbrance of any kind (each, a "Lien")
    except for such Liens as are not, individually or in the aggregate,
    material to the Company and its Subsidiaries, considered as one enterprise.

         (viii) The authorized capital stock of the Company conforms to the
    description thereof under the caption "Description of Capital Stock"
    contained in the Prospectus and such description conforms to the rights set
    forth in the instruments defining the same.

         (ix) The Shares have been duly authorized and, when issued and paid
    for in accordance with this Agreement, will be validly issued, fully paid
    and non-assessable. All corporate action required to be taken for the
    authorization, issuance and delivery of such Shares has been validly taken.
    The issuance of the Shares is not subject to any preemptive rights of any
    stockholder of the Company.

         [(x) In the event that any of the Shares are purchased pursuant to
    Delayed Delivery Contracts, each of such Delayed Delivery Contracts has
    been duly authorized by the Company and, when executed and delivered on
    behalf of the Company and duly authorized, executed and delivered on behalf
    of the purchaser thereunder, will constitute a valid and binding obligation
    of the Company enforceable against the Company in accordance with its
    terms, except as enforcement thereof may be limited by bankruptcy,
    insolvency (including, without limitation, all laws relating to fraudulent
    transfers), reorganization, moratorium or similar laws affecting
    enforcement of creditors' rights generally and except as enforcement
    thereof is subject to general principles of equity (regardless of whether
    enforcement is considered in a proceeding in equity or at law).]

         (xi) All of the other outstanding shares of capital stock of the
    Company have been duly authorized and validly issued and are fully paid and
    non-assessable; no holder thereof is or will be subject to personal
    liability by reason of being such

                                       7


    a holder; and none of the outstanding shares of capital stock of the
    Company was issued in violation of the preemptive rights of any stockholder
    of the Company.

         (xii) Since the respective dates as of which information is given in
    the Registration Statement and the Prospectus, except as otherwise stated
    therein or contemplated thereby, there has not been (A) any material
    adverse change in the condition (financial or otherwise), earnings or
    business affairs of the Company and its Subsidiaries, considered as one
    enterprise, whether or not arising in the ordinary course of business, (B)
    any transaction entered into by the Company or any Subsidiary, other than
    in the ordinary course of business, that is material to the Company and its
    Subsidiaries, considered as one enterprise, or (C) any dividend or
    distribution of any kind declared, paid or made by the Company on its
    capital stock.

         (xiii) Neither the Company nor any Subsidiary is in default in the
    performance or observance of any obligation, agreement, covenant or
    condition contained in any contract, indenture, mortgage, loan agreement,
    note, lease or other agreement or instrument to which it is a party or by
    which it may be bound or to which any of its properties may be subject,
    except for such defaults that would not have a material adverse effect on
    the condition (financial or otherwise), earnings or business affairs of the
    Company and its Subsidiaries, considered as one enterprise. The execution
    and delivery by the Company of this Agreement [and any Delayed Delivery
    Contracts,] the issuance and delivery of the Shares, the consummation by
    the Company of the transactions concerning the Shares contemplated herein
    and in the Registration Statement and compliance by the Com pany with the
    terms of this Agreement [and any Delayed Delivery Contracts] have, in each
    case, been duly authorized by all necessary corporate action on the part of
    the Company and do not and will not result in any violation of the
    certificate of incorporation or by-laws of the Company, and do not and will
    not conflict with, or result in a breach of any of the terms or provisions
    of, or constitute a default

                                       8


    under, or result in the creation or imposition of any lien, charge or
    encumbrance upon any property or assets of the Company or any Subsidiary
    under (A) any contract, indenture, mortgage, loan agreement, note, lease or
    other agreement or instrument to which the Company or any Subsidiary is a
    party or by which it may be bound or to which any of its properties may be
    subject (except for such conflicts, breaches or defaults or liens, charges
    or encumbrances that would not have a material adverse effect on the
    condition (financial or otherwise), earnings or business affairs of the
    Company and its Subsidiaries, considered as one enterprise) or (B) any
    existing applicable law, rule, regulation (other than state securities,
    foreign securities or Blue Sky laws, rules and regulations), judgment,
    order or decree of any government, governmental instrumentality or court,
    domestic or foreign, having jurisdiction over the Company or any Subsidiary
    or any of their respective properties (except for such conflicts, breaches
    or defaults or liens, charges or encumbrances that would not have a
    material adverse effect on the condition (financial or otherwise), earnings
    or business affairs of the Company and its Subsidiaries, considered as one
    enterprise).

         (xiv) No authorization, approval, consent or license of any
    government, governmental instrumentality or court, domestic or foreign
    (other than under the 1933 Act and the 1934 Act and the securities or Blue
    Sky laws of the various states and foreign securities laws), is required
    for the valid authorization, issuance, sale and delivery of the Shares or
    for the compliance with the transactions contemplated in this Agreement.

         (xv) Except as disclosed in the Prospectus, there is no action, suit
    or proceeding before or by any government, governmental instrumentality or
    court, domestic or foreign, now pending or, to the knowledge of the
    Company, threatened against or affecting the Company or any Subsidiary that
    is required to be disclosed in the Prospectus or that could reasonably be
    expected to result in any material adverse change in the condition
    (financial or otherwise), earnings or business affairs of the

                                       9


    Company and its Subsidiaries, considered as one enterprise, or that could
    reasonably be expected to materially and adversely affect the properties or
    assets of the Company and its Subsidiaries, considered as one enterprise,
    or that could reasonably be expected to adversely affect the consummation
    of the transactions contemplated in this Agreement. The aggregate of all
    pending legal or governmental proceedings to which the Company or its
    Subsidiaries is a party or to which any of its or their respective
    properties is subject that are not described in the Prospectus, including
    ordinary routine litigation incidental to its or their business, could not
    reasonably be expected to have a material adverse effect on the condition
    (financial or otherwise), earnings or business affairs of the Company and
    its Subsidiaries, considered as one enterprise.

         (xvi) There are no statutes, regulations, contracts or other documents
    of a character required to be described in the Registration Statement or
    the Prospectus or to be filed as exhibits to the Registration Statement
    that are not described and filed as required.

         (xvii) The Company and each Subsidiary have good and marketable title
    to all properties and assets, including, without limitation, intangible
    property rights described in the Prospectus as owned by it, free and clear
    of all liens, charges, encumbrances, restrictions (other than as described
    in paragraph 1(a)(ix) hereof) or defects, except such as (A) are described
    (1) in the Indenture dated as of October 1, 1994, between the Company and
    Bank of America, Illinois, as trustee, (2) in the Indenture and the
    Supplemental Indenture No. 1 dated as of February 28, 1996, between the
    Company and First Trust of Illinois,

                                      10




    National Association, as trustee, (3) in the 364 Day Credit Agreement,
    dated as of March 4, 1997, among PHH Corporation, PHH Vehicle Management
    Services Inc., the Lenders thereunder and The Chase Manhattan Bank, (4) in
    the Five Year Credit Agreement, dated as of March 4, 1997, among PHH
    Corporation, the Lenders and The Chase Manhattan Bank, (5) in the Five Year
    Revolving Credit and Competitive Advance Facility Agreement, dated as of
    October 2, 1996, among the Company, the lenders thereunder and The Chase
    Manhattan Bank, (6) in the 364 Day Revolving Credit and Competitive Advance
    Facility Agreement, dated as of October 2, 1996, among the Company, the
    lenders thereunder and The Chase Manhattan Bank, (7) in the Indenture dated
    as of June 5, 1997, between PHH Corporation and The First National Bank of
    Chicago and (8) in the Amended and Restated Pooling and Servicing Agreement
    dated as of October 5, 1994, as amended, among Cendant Mobility Funding
    Corporation, Cendant Mobility Services, Inc., Citicorp North America, Inc.
    and Bankers Trust Company, the Amended and Restated Purchase Agreement
    dated as of October 5, 1994, as amended, between Cendant Mobility Services,
    Inc. and Cendant Mobility Funding Corporation and the Amended and Restated
    Investor Funding Agreement dated as of October 5, 1994, as amended, among
    Cendant Mobility Funding Corporation, Bankers Trust Company, Citicorp North
    America, Inc., as agent, Bank of America Illinois, as co-agent, and the
    investors named therein, (B) are leases of real property in which the
    Company or its Subsidiaries have good title and that would be marketable
    but for the requirement that the landlord consent to an assignment of the
    lease or (C) are neither material in amount nor materially significant in
    relation to the business of the Company and its Subsidiaries, considered as
    one enterprise; all of the leases and subleases material to the business of
    the Company and the Subsidiaries, considered as one enterprise, and under
    which the Company or any Subsidiary holds properties described in the
    Prospectus, are in full force and effect, and neither the Company nor any
    Subsidiary has any notice of any material claim of any sort that has been
    asserted by anyone adverse to the rights of the Company or any Subsidiary
    under any of the leases or subleases mentioned above, or affecting or
    questioning the rights of such corporation to the continued possession or
    use of the leased or subleased properties under any such lease or sublease.

         (xviii) (a) The Company and each Subsidiary own, possess or have
    obtained all material governmental licenses, permits, certificates,
    consents, orders, approvals and other authorizations necessary to own or
    lease, as the case may be, and to operate its or their properties and to
    carry on its or their

                                      11


    business as presently conducted; (b) neither the Company nor any of its
    Subsidiaries has received any notice of proceedings relating to revocation
    or modification of any such licenses, permits, certificates, consents,
    orders, approvals or authorizations which could result in a material
    adverse change of the condition (financial or otherwise), earnings or
    financial affairs of the Company and its Subsidiaries, considered as one
    enterprise; and (c) the Company and each Subsidiary are in all respects
    complying with each license, permit, certificate, consent, order, approval
    and other authorization, except where the failure to do so would not have a
    material adverse effect on the condition (financial or otherwise), earnings
    or business affairs of the Company and its Subsidiaries, considered as one
    enterprise.

         (xix) Subject to each of the franchise and license agreements entered
    into by the Company or any of its Subsidiaries, the Company and each of the
    Subsidiaries own or have the unrestricted right to use such patents, patent
    licenses, trademarks, trademark licenses, service marks, service mark
    licenses and trade names and registrations thereof as are necessary to
    carry on their respective businesses as described in the Prospectus and as
    currently conducted, except where the failure to own or possess any of the
    Marks or the Ramada Marks would not have a material adverse effect on the
    condition (financial or otherwise), earnings or business affairs of the
    Company and its Subsidiaries, considered as one enterprise. Neither of the
    Company nor any of its Subsidiaries has received any notice of infringement
    of or conflict with asserted rights of others with respect to any of the
    Marks or the Ramada Marks, or any applications therefor or registrations
    thereof, that in the aggregate would materially and adversely affect the
    condition (financial or otherwise), earnings or business affairs of the
    Company and its Subsidiaries, considered as one enterprise. In addition to,
    and not in limitation of, anything else contained in this paragraph
    (xviii), the Company or a Subsidiary (y) is the exclusive owner of all
    rights, title and interest (subject to all existing franchise and license
    agreements referred to above) in and to

                                      12


    the Marks within the United States and outside the United States is the
    owner of the registrations and applications as are necessary to carry on
    its business as described in the Prospectus and as currently conducted,
    except where the failure to be such owner would not have a material adverse
    effect on the condition (financial or otherwise), earnings or business
    affairs of the Company and its Subsidiaries, considered as one enterprise
    and (z) is the exclusive licensee in the United States of the Ramada Marks.
    Such intellectual property with respect to the Company's Century 21,
    Coldwell Banker and ERA, Days Inns of America, Inc. ("Days Inn"), Super 8
    Motels, Inc. ("Super 8"), the Villager Lodge Franchise Systems, Inc.
    ("Villager Lodge"), the Knights Franchise Systems, Inc. ("Knights Inn"),
    Howard Johnson and Travelodge Hotels, Inc. ("Travelodge") businesses (each
    as described in the Prospectus and as currently conducted) is referred to
    herein as the "Marks" and such intellectual property with respect to the
    Company's Ramada business (as described in the Prospectus and as currently
    conducted) is hereinafter referred to as the "Ramada Marks".

         (xx) To the best knowledge of the Company, no labor problem exists
    with its employees, with employees of any Subsidiary or, to the best
    knowledge of the Company without having made any inquiry or independent
    investigation, with the employees of any party which licenses a franchise,
    directly or indirectly, from a Subsidiary (a "Franchisee") or is imminent
    that could reasonably be expected to materially adversely affect the
    Company and its Subsidiaries, considered as one enterprise.

         (xxi) To the best knowledge of the Company, no dispute exists or is
    imminent with any Franchisee or with the Franchisees that could reasonably
    be expected to materially adversely affect the Company and the
    Subsidiaries, considered as one enterprise.

         (xxii) Neither the Company nor any of its Subsidiaries has taken or
    will take, directly or indirectly, any action designed to, or that might be
    reasonably expected to, cause or result in

                                      13


    stabilization or manipulation of the price of the Common Stock.

         (xxiii) The Company and each Subsidiary are in material compliance
    with all applicable existing federal, state and local laws and regulations
    relating to protection of human health or the environment and have no
    liability or alleged liability under any such law which is required to be
    disclosed in the Registration Statement that is not so disclosed.

         (xxiv) All United States federal income tax returns of the Company and
    each Subsidiary required by law to be filed have been filed and all taxes
    shown on such returns or otherwise assessed which are due and payable have
    been paid, except tax assessments being contested in good faith and as to
    which adequate reserves have been provided. All other tax returns of the
    Company and each Subsidiary required to be filed pursuant to applicable
    foreign, state, local or other law have been filed, except insofar as the
    failure to file such returns would not have a material adverse effect on
    the condition (financial or otherwise), earnings or business affairs of the
    Company and its Subsidiaries, considered as one enterprise, and all taxes
    shown on such returns or otherwise assessed which are due and payable have
    been paid, except for such taxes, if any, as are being contested in good
    faith and as to which adequate reserves have been provided. The charges,
    accruals and reserves on the books of the Company and its Subsidiaries in
    respect of any income and corporate franchise tax liability for any years
    not finally determined are believed to be adequate to meet any assessments
    or reassessments for additional income or corporate franchise tax for any
    years not finally determined, except to the extent of any inadequacy that
    would not have a material adverse effect on the condition (financial or
    otherwise), earnings or business affairs of the Company and its
    Subsidiaries considered as one enterprise.

         (xxv) Each Franchisee is such by virtue of being a party to a
    franchise contract with either the Company or a Subsidiary and assuming
    each such

                                      14


    contract has been duly authorized, executed and delivered by the parties
    thereto, other than the Company or a Subsidiary, each such contract
    constitutes a valid, legal and binding obligation of each party thereto,
    enforceable against the Company or a Subsidiary in accordance with its
    terms, except (A) for any one or more of such franchise contracts as would
    not have a material adverse effect on the condition (financial or
    otherwise), earnings or business affairs of the Company and its
    Subsidiaries, considered as one enterprise, and (B) to the extent that
    enforcement thereof may be limited by (1) bankruptcy, insolvency,
    reorganization, moratorium or other similar laws now or hereafter in effect
    relating to creditors' rights generally and (2) general principles of
    equity (regardless of whether enforceability is considered in a proceeding
    in equity or at law).

         (xxvi) The Company and each Subsidiary have complied and are currently
    complying in all material respects with the rules and regulations of the
    United States Federal Trade Commission and the comparable laws, rules and
    regulations of each state or state agency applicable to the franchising
    business of the Company and such Subsidiary in each state in which the
    Company or such Subsidiary is doing business. The Company and each
    Subsidiary have complied and are currently complying in all material
    respects with the Federal Real Estate Settlement Procedures Act and the
    real estate brokerage laws, rules and regulations of each state or state
    agency applicable to the real estate franchising business of the Company
    and such Subsidiary in each state in which the Company or such Subsidiary
    is doing business.

         (xxvii) The Shares will, upon notice of issuance, be listed on the New
    York Stock Exchange (the "NYSE").

         (xxviii) The Company is not an "investment company" or an entity
    "controlled" by an "investment company" as such terms are defined in the
    Investment Company Act of 1940, as amended.

         (b) Any certificate signed by any officer of the

                                      15


    Company or any Subsidiary and delivered to you or to counsel for the
    Underwriters shall be deemed a representation and warranty by the Company
    or by a Subsidiary, as applicable, to each Underwriter as to the matters
    covered thereby.

         Section 2. Purchase and Sale. (a) On the basis of the representations
and warranties herein contained (except as may be otherwise specified in
Schedule II hereto) and subject to the terms and conditions herein set forth,
the Company agrees to sell to each Underwriter, and each Underwriter agrees,
severally and not jointly, to purchase from the Company, at the purchase price
per share for the Firm Shares set forth in Schedule II hereto, the number of
Firm Shares set forth opposite the name of such Underwriter in Schedule I
hereto.

         (b) In addition, on the basis of the representations and warranties
    herein contained, and subject to the terms and conditions herein set forth,
    the Company hereby grants an option to the Underwriters, severally and not
    jointly, to purchase up to an additional [ ] of Additional Shares as set
    forth in Schedule II hereto at the same purchase price as shall be
    applicable to the Firm Shares. The option hereby granted will expire 30
    days after the date hereof, and may be exercised, in whole or from time to
    time in part (but not more than twice), only for the purpose of covering
    over-allotments that may be made in connection with the offering and
    distribution of the Firm Shares upon notice by you to the Company setting
    forth the number of Additional Shares as to which the several U.S.
    Underwriters are exercising this option, and the time and date of payment
    and delivery thereof. Such time and date of delivery (each, a "Delivery
    Date") shall be determined by you but shall not be later than seven full
    business days after the exercise of such option, nor in any event prior to
    the Closing Time. If the option is exercised as to all or any portion of
    the Additional Shares, each of the Underwriters, acting severally and not
    jointly, will purchase from the Company that portion of the aggregate
    number of Additional Shares being purchased which the number of Firm Shares
    set forth opposite the name of such Underwriter bears to the total number
    of Firm Shares

                                      16


    (such proportion is hereinafter referred to as such Underwriter's
    "underwriting obligation proportion").

         (c) Payment of the purchase price for, and delivery of, the Firm
    Shares shall be made at the date, time and location specified in Schedule
    II hereto, or at such other date, time or location as shall be agreed upon
    by the Company and you, or as shall otherwise be provided in Section 11
    (such date and time of payment and delivery being herein called the
    "Closing Time"). Unless otherwise specified in Schedule II, payment shall
    be made to the Company by you by wire or bank transfer of same day funds
    payable to the account of the Company, against delivery to you for the
    respective accounts of the several Underwriters of the Firm Shares.
    Certificates for the Firm Shares shall be in such authorized denominations
    and registered in such names as you may request in writing at least two
    full business days before the Closing Time. Certificates for the Firm
    Shares will be made available in New York City for examination and
    packaging by you not later than 10:00 A.M. on the business day prior to the
    Closing Time. In addition, in the event that any or all of the Additional
    Shares are purchased by the Underwriters, payment of the purchase price
    for, and delivery of, such Additional Shares shall be made at the same
    location as set forth above, or at such other place as the Company and you
    shall determine, on each Delivery Date as specified in the notice from you
    to the Company. Payment for the Additional Shares shall be made by wire or
    bank transfer of same day funds.

         (d) If specified in Schedule II, the Underwriters may solicit offers
    to purchase Shares from the Company pursuant to Delayed Delivery Contracts
    substantially in the form of Schedule IV with such changes therein as the
    Company may approve. Any Delayed Delivery Contracts are to be with
    institutional investors of the types set forth in the Prospectus. If
    Delayed Delivery Contracts are specified in Schedule II, at the Closing
    Time, the Company will enter into Delayed Delivery Contracts (for the
    minimum principal amount of Shares per Delayed Delivery Contract specified
    in Schedule II) with all purchasers proposed by the Underwriters and

                                      17


    previously approved by the Company as provided below, but not for an
    aggregate principal amount of Shares less than or greater than the minimum
    and maximum aggregate principal amounts specified in Schedule II. The
    Underwriters will not have any responsibility for the validity or
    performance of Delayed Delivery Contracts.

         (e) You are to submit to the Company, at least three business days
    prior to the Closing Time, the names of any institutional investors with
    which it is proposed that the Company enter into Delayed Delivery
    Contracts, the number of Shares to be purchased by each of them and the
    date of delivery thereof, and the Company will advise you, at least two
    business days prior to the Closing Time, of the names of the institutions
    with which the making of Delayed Delivery Contracts is approved by the
    Company and the number of Shares to be covered by each such Delayed
    Delivery Contract.

         (f) As compensation for arranging Delayed Delivery Contracts, the
    Company will pay (by wire or bank transfer of same day funds) to you at the
    Closing Time, for the accounts of the Underwriters, a fee equal to that
    percentage of the gross proceeds from the sale of the Shares for which
    Delayed Delivery Contracts are made at the Closing Time as is specified in
    Schedule II or the amount of such fee may be deducted from the payment
    delivered pursuant to Section 2(b).

         (g) The number of Shares agreed to be purchased by each Underwriter
    shall be reduced by the number of Shares covered by Delayed Delivery
    Contracts as to such Underwriter, as set forth in a notice delivered by you
    to the Company; provided, however, that the total number of Shares to be
    purchased by all Underwriters shall be the number of Shares covered by this
    Agreement, less the number of Shares covered by all Delayed Delivery
    Contracts.

         It is understood that each Underwriter has authorized you, for its
account, to accept delivery of, receipt for, and make payment of the purchase
price for, the Shares that it has agreed to purchase. You,

                                      18


individually and not as Representatives, may (but shall not be obligated to)
make payment of the purchase price for the Firm Shares to be purchased by any
Underwriter whose payments shall not have been received by the Closing Time or
each Delivery Date, if any, as the case may be.

         Section 3. Certain Covenants of the Company. The Company covenants
with each Underwriter as follows:

         (a) If reasonably requested by you in connection with the offering of
    the Shares, the Company will prepare a preliminary prospectus supplement
    containing such information as you and the Company deem appropriate and,
    immediately following the execution of this Agreement, the Company will
    prepare a Prospectus Supplement that complies with the 1933 Act and the
    1933 Act Regulations and that sets forth the number of Shares and their
    terms, the name of each Underwriter participating in the offering and the
    number of Shares that each severally has agreed to purchase, the name of
    each Underwriter, if any, acting as representative of the Underwriters in
    connection with the offering, the price at which the Shares are to be
    purchased by the Underwriters from the Company, any initial public offering
    price, any selling concession and reallowance and [any delayed delivery
    arrangements, and] such other information as you and the Company deem
    appropriate in connection with the offering of the Shares. The Company will
    promptly transmit copies of the Prospectus Supplement to the Commission for
    filing pursuant to Rule 424 under the 1933 Act and will furnish to the
    Underwriters as many copies of any preliminary prospectus supplement and
    the Prospectus as you shall reasonably request.

         (b) If at any time when the Prospectus is required by the 1933 Act to
    be delivered in connection with sales of the Shares, any event shall occur
    or condition exist as a result of which it is necessary, in the opinion of
    counsel for the Underwriters or counsel for the Company, to amend the
    Registration Statement or amend or supplement the Prospectus in order that
    the Prospectus will not include an untrue statement of a material fact or
    omit to state a material fact necessary in order to

                                      19


    make the statements therein not misleading in the light of the
    circumstances existing at the time it is delivered to a purchaser, or if it
    shall be necessary, in the opinion of either such counsel, at any such time
    to amend the Registration Statement or amend or supplement the Prospectus
    in order to comply with the requirements of the 1933 Act or the 1933 Act
    Regulations, the Company will promptly prepare and file with the
    Commission, subject to Section 3(f), such amendment or supplement as may be
    necessary to correct such untrue statement or omission or to make the
    Registration Statement or the Prospectus comply with such requirements.

         (c) During the period when the Prospectus is required by the 1933 Act
    to be delivered in connection with sales of the Shares, the Company will,
    subject to Section 3(f), file promptly all documents required to be filed
    with the Commission pursuant to Section 13, Section 14 or Section 15(d) of
    the 1934 Act.

         (d) During the period when the Prospectus is required by the 1933 Act
    to be delivered in connection with sales of the Shares, the Company will
    inform you of its intention to file any amendment to the Registration
    Statement, any supplement to the Prospectus or any document that would as a
    result thereof be incorporated by reference in the Prospectus; and the
    Company will furnish you with copies of any such amendment, supplement or
    other document at a reasonable time in advance of filing, except any
    current report on Form 8-K filed with the Commission with respect to a
    press release issued by the Company that is not reasonably expected to have
    a material effect on the Company or the price of the Common Stock;
    provided, however, that the Company shall inform you of its intention to
    file documents pursuant to Section 14(d) of the 1934 Act and shall furnish
    you with copies of such documents immediately upon the filing thereof; and
    provided further that you or your counsel shall not be entitled to object
    thereto other than pursuant to Section 3(b).

         (e) During the period when the Prospectus is required by the 1933 Act
    to be delivered in

                                      20


    connection with sales of the Shares, the Company will notify you
    immediately, and confirm the notice in writing, (i) of the effectiveness of
    any amendment to the Registration Statement, (ii) of the mailing or the
    delivery to the Commission for filing of any supplement to the Prospectus
    or any document that would as a result thereof be incorporated by reference
    in the Prospectus, (iii) of the receipt of any comments from the Commission
    with respect to the Registration Statement, the Prospectus or the
    Prospectus Supplement, (iv) of any request by the Commission for any
    amendment to the Registration Statement or any supplement to the Prospectus
    or for additional information relating thereto or to any document
    incorporated by reference in the Prospectus and (v) of the issuance by the
    Commission of any stop order suspending the effectiveness of the
    Registration Statement, of the suspension of the qualification of the
    Shares for offering or sale in any jurisdiction, or of the institution or
    threatening of any proceeding for any of such purposes. The Company will
    use every reasonable effort to prevent the issuance of any such stop order
    or of any order suspending such qualification and, if any such order is
    issued, to obtain the lifting thereof at the earliest possible moment.

         (f) The Company has furnished or will furnish to you one signed copy
    of the Registration Statement (as originally filed), of any Rule 462(b)
    Registration Statement, and of all amendments thereto, whether filed before
    or after the Registration Statement became effective, copies of all
    exhibits and documents filed therewith or incorporated by reference therein
    (through the end of the period when the Prospectus is required by the 1933
    Act to be delivered in connection with sales of the Shares) and signed
    copies of all consents and certificates of experts, as you may reasonably
    request, and has furnished or will furnish to you, for each of the
    Underwriters, ten conformed copies of the Registration Statement (as
    originally filed), of any Rule 462(b) Registration Statement and of each
    amendment thereto (including documents incorporated by reference into the
    Prospectus but without exhibits).

                                      21


         (g) The Company will use its best efforts, in cooperation with the
    Underwriters, to qualify the Shares for offering and sale under the
    applicable securities laws of such states and other jurisdictions as you
    may designate and to maintain such qualifications in effect for a period of
    not less than one year from the date hereof; provided, however, that the
    Company shall not be obligated to file any general consent to service of
    process or to qualify as a foreign corporation or as a dealer in securities
    in any jurisdiction in which it is not so qualified or to subject itself to
    taxation in respect of doing business in any jurisdiction in which it is
    not otherwise so subject. The Company will file such statements and reports
    as may be required by the laws of each jurisdiction in which the Shares
    have been qualified as above provided. The Company will also supply you
    with such information as is necessary for the determination of the legality
    of the Shares for investment under the laws of such jurisdictions as you
    may request.

         (h) The Company will make generally available to its security holders
    as soon as practicable, but not later than 45 days after the close of the
    period covered thereby, an earnings statement of the Company (in form
    complying with the provisions of Rule 158 of the 1933 Act Regulations),
    covering (i) a period of 12 months beginning after the effective date of
    the Registration Statement (or, if applicable, any Rule 462(b) Registration
    Statement) and covering a period of 12 months beginning after the effective
    date of any post-effective amendment to the Registration Statement but not
    later than the first day of the Company's fiscal quarter next following
    such respective effective dates and (ii) a period of 12 months beginning
    after the date of this Agreement but not later than the first day of the
    Company's fiscal quarter next following the date of this Agreement.

         (i) If and to the extent specified in Schedule II hereto, the Company
    will use its best efforts to cause the Shares to be duly authorized for
    listing on the New York Stock Exchange.

                                      22


         (j) For a period of two years after the Closing Time, the Company will
    furnish to you and, upon request, to each Underwriter, copies of all annual
    reports, quarterly reports and current reports filed with the Commission on
    Forms 10-K, 10-Q and 8-K, or such other similar forms as may be designated
    by the Commission, and such other documents, reports and information as
    shall be furnished by the Company to its stockholders or security holders
    generally.

         (k) The Company agrees, for a period of 90 days from the date of the
    Prospectus Supplement, they will not, without the prior written consent of
    [____________] in any transaction settled by delivery of Common Stock or
    other securities, in cash or otherwise, (i) register, offer, pledge, sell,
    contract to sell, purchase any option or contract to sell, grant any
    option, right or warrant to purchase, or otherwise transfer or dispose of,
    directly or indirectly, any shares of Common Stock of the Company or any
    securities convertible into, or exercisable or exchangeable for, Common
    Stock of the Company (provided, however, that the Company may file a shelf
    registration statement covering its equity securities during such 90 day
    period) or (ii) enter into any swap or similar agreement that transfers, in
    whole or in part, the economic risk of ownership of such Common Stock
    (except for (y) Common Stock (A) issued as part of the offering of the
    Shares, (B) issued upon conversion of the Company's 3% Convertible
    Subordinated Notes Due 2002 or the Company's 4 3/4% Convertible Senior
    Notes due 2003, (C) issued pursuant to the Company's stock option or
    employee benefit plans, (D) issued by the Company in connection with
    strategic acquisitions, (E) issued or sold pursuant to employee benefit
    plans of the Company existing at the Closing Time, and (F) sold in
    connection with an employee's decision to direct that 401(k) contributions
    be invested in Common Stock; provided that any shares issued pursuant to
    clause (D) above in excess of 5% of the then outstanding shares of Common
    Stock shall remain subject to the foregoing restriction) or exercise any
    right to have securities of the Company registered by the Company under the
    1933 Act.

         (l) The Company has complied and will comply

                                      23


    with all the provisions of Florida H.B. 1771, codified as Section 517.075
    of the Florida statutes, and all regulations promulgated thereunder
    relating to issuers doing business in Cuba.

         Section 4. Payment of Expenses. The Company will pay and bear all
costs and expenses incident to the performance of its obligations under this
Agreement, including, without limitation, (a) the preparation, printing and
filing of the Registration Statement (including financial statements and
exhibits), as originally filed and as amended, any preliminary prospectus
supplements and the Prospectus and any amendments or supplements thereto, and
the cost of furnishing copies thereof to the Underwriters, (b) the preparation,
printing and distribution of this Agreement, [any Delayed Delivery Contracts,]
the Shares, the Blue Sky Survey, (c) the delivery of the Shares to the
Underwriters, (d) the fees and disbursements of the Company's counsel and
accountants and the fees and disbursements of the Company's counsel (including,
without limitation, local counsel upon whom such counsel may rely in rendering
their opinion required by Section 5 and 6 hereof), (e) the qualification of the
Shares under the applicable securities laws, (f) the reasonable fees and
disbursements of counsel in connection with the Blue Sky Survey, and (g) any
applicable fees for listing the Shares on an exchange.

         If this Agreement is terminated by you in accordance with the
provisions of Section 5 or Section 10(a)(i), the Company shall reimburse the
Underwriters for all of their reasonable out-of-pocket expenses, including the
reasonable fees and disbursements of counsel for the Underwrit ers, incurred by
them in connection with the public offering of the Shares.

         Section 5. Conditions of the Underwriters' Obligations. Except as
otherwise provided in Schedule II hereto, the obligations of the several
Underwriters to purchase and pay for the Shares that they have respectively
agreed to purchase hereunder, including any Additional Shares as to which the
option granted in Section 2 has been exercised and the Delivery Date determined
by you is the same as the Closing Time, are subject to (i) the accuracy of the
representations and

                                      24


warranties of the Company contained herein or in certificates of the Company's
officers delivered pursuant to the provisions hereof, (ii) the performance by
the Company of its obligations hereunder, (iii) the delivery to the
Underwriters at the Closing Time by the Company of all of the Firm Shares, and
(iv) the following further conditions:

         (a) The Registration Statement shall have become effective prior to
    the date hereof or, with your consent, at a later time and date no later,
    however, than the first business day following the date hereof, or at such
    later date as you may agree to in writing with the approval of a majority
    in interest of the several underwriters; and at the Closing Time, no stop
    order suspending the effectiveness of the Registration Statement shall have
    been issued under the 1933 Act and no proceedings for that purpose shall
    have been instituted or shall be pending or, to your knowledge or the
    knowledge of the Company, shall be contemplated by the Commission, and any
    request on the part of the Commission for additional information shall have
    been complied with to the reasonable satisfaction of counsel for the
    Underwriters.

         (b) At the Closing Time, you shall have received a signed opinion of
    Skadden, Arps, Slate, Meagher & Flom LLP, in New York, in its capacity as
    special counsel for the Company, dated as of the Closing Time, together
    with signed or reproduced copies of such opinion for each of the other
    Underwriters, in form and substance reasonably satisfactory to Counsel for
    the Underwriters to the effect as attached hereto as Exhibit 1.

         (c) At the Closing Time, you shall have received signed opinions of
    Counsel for the Company, and Siegal, Barnett & Schutz, special South Dakota
    counsel for the Company, dated as of the Closing Time, together with signed
    or reproduced copies of such opinions for each of the other Underwriters,
    in form and substance reasonably satisfactory to counsel for the
    Underwriters to the effect, with respect to the opinion of Counsel for the
    Company, as attached hereto as Exhibit 2.

                                      25


         (d) At the Closing Time, you shall have received a signed opinion of
    Schaefer, Rosenwein & Fleming, special trademark counsel for the Company
    with respect to the Coldwell Banker franchise system, dated as of the
    Closing Time, together with signed or reproduced copies of such opinion for
    each of the other Underwriters, in form and substance reasonably
    satisfactory to counsel for the Underwriters.

         The opinions referred to above in clauses (b), (c) and (d) shall be to
such further effect with respect to other legal matters relating to this
Agreement and the sale of the Shares pursuant to this Agreement as counsel for
the Underwriters may reasonably request. Such counsel may also state that,
insofar as such opinion involves factual matters, they have relied, to the
extent they deem proper, upon certificates of officers of the Company, as the
case may be, and certificates of public officials; provided that such
certificates have been delivered to the Underwriters.

         In giving the opinions referred to above in clause (b), (c) and (d),
such counsel may rely, as to all matters governed by the laws of jurisdictions
other than those in which they are expert, upon opinions of other counsel who
shall be counsel reasonably satisfactory to counsel for the Underwriters, in
which case the opinion shall state that they believe you and they are justified
and entitled to so rely.

         (e) At the Closing Time, you shall have received the favorable opinion
    of [_________], counsel for the Underwriters, dated as of the Closing Time,
    together with signed or reproduced copies of such opinion for each of the
    other Underwriters.

         (f) At the Closing Time, (i) the Registration Statement and the
    Prospectus, as they may then be amended or supplemented, shall contain all
    statements that are required to be stated therein under the 1933 Act and
    the 1933 Act Regulations and in all material respects shall conform to the
    requirements of the 1933 Act and the 1933 Act Regulations, and the 1934 Act
    and the 1934 Act Regulations, the Company shall have complied in all
    material respects with Rule 430A (if it shall have

                                      26


    elected to rely thereon) and (A) the Registration Statement, as it may then
    be amended or supplemented, shall not contain an untrue statement of a
    material fact or omit to state a material fact required to be stated
    therein or necessary to make the statements therein not misleading and (B)
    the Prospectus, as it may be amended or supplemented, will not include an
    untrue statement of a material fact or omit to state a material fact
    necessary in order to make the statements therein, in the light of the
    circumstances under which they were made, not misleading, (ii) there shall
    not have been, since the respective dates as of which information is given
    in the Registration Statement, any material adverse change in the condition
    (financial or otherwise), earnings, business affairs or business prospects
    of the Company and its Subsidiaries, considered as one enterprise, whether
    or not arising in the ordinary course of business, (iii) no action, suit or
    proceeding shall be pending or, to the knowledge of the Company, threatened
    against the Company or any Subsidiary that would be required to be set
    forth in the Prospectus other than as set forth therein and no proceedings
    shall be pending or, to the knowledge of the Company, threatened against
    the Company or any Subsidiary before or by any federal, state or other
    commission, board or administrative agency wherein an unfavorable decision,
    ruling or finding would materially adversely affect the condition
    (financial or otherwise), earnings, business affairs or business prospects
    of the Company and its Subsidiaries, considered as one enterprise, other
    than as set forth in the Prospectus, (iv) the Company shall have complied
    in all material respects with all agreements and satisfied in all material
    respects all conditions included herein on its part to be performed and
    satisfied at or prior to the Closing Time and (v) the other representations
    and warranties of the Company set forth in Section 1(a) shall be accurate
    as though expressly made at and as of the Closing Time. At the Closing
    Time, you shall have received a certificate of the Chairman of the Board or
    the President and the Chief Financial Officer of the Company, dated as of
    the Closing Time, to such effect, it being understood that such certificate
    shall not constitute personal representations and warranties of the signing

                                      27


    individual.

         (g) You shall have received a letter or letters at the date hereof
    substantially in the form attached hereto as Schedule VI hereto, and a
    letter or letters to be delivered at the Closing Time reaffirming the
    statements made in each such letter or letters, except that the inquiries
    and procedures specified therein shall have been carried out to a specified
    date not more than five days prior to the Closing Time.

         (h) The Company shall have complied with the provisions of Section
    3(a) hereof with respect to the furnishing of Prospectuses and Supplemental
    Prospectuses on the business day next succeeding the date of this
    Agreement, in such quantities as you reasonably request.

         (i) At the Closing Time, counsel for the Underwriters shall have been
    furnished with all such documents, certificates and opinions as they may
    reasonably request for the purpose of enabling them to pass upon the
    issuance and sale of the Shares as herein contemplated and the matters
    referred to in Section 5(c) and in order to evidence the accuracy and
    completeness of any of the representations, warranties or statements of the
    Company, the performance of any of the covenants of the Company, or the
    fulfillment of any of the conditions herein contained; and all proceedings
    taken by the Company at or prior to the Closing Time in connection with the
    authorization, issuance and sale of the Shares as herein contemplated shall
    be reasonably satisfactory in form and substance to you and to counsel for
    the Underwriters.

         (j) The Shares have been duly authorized for listing by the New York
    Stock Exchange subject to notice of issuance thereof and notice of a
    satisfactory distribution of the Shares.

         If any of the conditions specified in this Section 5 shall not have
been fulfilled when and as required by this Agreement to be fulfilled, this
Agreement may be terminated by you on notice to the Company at any

                                      28


time at or prior to the Closing Time, and such termination shall be without
liability of any party to any other party, except as provided in Section 4
herein. Notwithstanding any such termination, the provisions of Sections 7, 8
and 9 shall remain in effect.

         Section 6. Conditions to Purchase of Additional Shares. In the event
that the Underwriters exercise their option granted in Section 2 to purchase
all or any of the Additional Shares, and each Delivery Date determined by you
pursuant to Section 2 is later than the Closing Time, the obligations of the
several Underwriters to purchase and pay for the Additional Shares that they
shall have respectively agreed to purchase pursuant to this Agreement
(collectively, the "purchased Additional Shares") are subject to the accuracy
of the representations and warranties of the Company herein contained, to the
performance by the Company of its obligations hereunder, the delivery to the
Underwriters at the Delivery Date by the Company of such Additional Shares and
to the following further conditions:

         (a) The Registration Statement shall remain effective at each Delivery
    Date, and, at each Delivery Date, no stop order suspending the
    effectiveness of the Registration Statement shall have been issued under
    the 1933 Act and no proceedings for that purpose shall have been instituted
    or shall be pending, or, to your knowledge or the knowledge of the Company,
    shall be threatened by the Commission, and any request on the part of the
    Commission for additional information shall have been complied with to the
    reasonable satisfaction of counsel for the Underwriters.

         (b) At each Delivery Date, the provisions of Sections 5(f)(i) through
    5(f)(v) shall have been complied with at and as of each Delivery Date and,
    at each Delivery Date, you shall have received a certificate of the
    Chairman of the Board or the President and the Chief Financial Offi cer of
    the Company, dated as of such Delivery Date, to such effect, it being
    understood that such certificate shall not constitute personal
    representations and warranties of the signing individual.

                                      29


         (c) At each Delivery Date, you shall have received the favorable
    opinion of Skadden, Arps, Slate, Meagher & Flom LLP in New York, in its
    role as special counsel for the Company, James Buckman, Esq., General
    Counsel for the Company, together with signed or reproduced copies of such
    opinions for each of the other Underwriters, respectively, dated as of each
    Delivery Date, relating to the purchased Additional Shares and otherwise to
    the same effect required by Sections 5(b) and 5(c), as the case may be, and
    each such counsel shall have been furnished with all such documents,
    certificates and opinions as such counsel may reasonably request for the
    purpose of enabling such counsel to deliver such opinion or opinions.

         The opinions referred to above shall be to such further effect with
respect to other legal matters relating to this Agreement and the sale of the
Shares pursuant to this Agreement as counsel for the Underwriters may
reasonably request. Such counsel may also state that, insofar as such opinion
involves factual matters, they have relied, to the extent they deem proper,
upon certificates of officers of the Company, and certificates of public
officials; provided that such certificates have been delivered to the
Underwriters.

         In giving the opinions referred to above, each such counsel may rely,
as to all matters governed by the laws of jurisdictions other than those in
which they are expert, upon opinions of other counsel who shall be counsel
reasonably satisfactory to counsel for the Underwriters, in which case the
opinion shall state that they believe you and they are justified and entitled
to so rely.

         (d) At each Delivery Date, you shall have received the favorable
    opinion of [__________ ], counsel for the Underwriters, dated as of such
    Delivery Date, relating to the purchased Additional Shares and otherwise to
    the same effect as the opinion required by Section 5(e).

         (e) At each Delivery Date, you shall have received a separate letter
    from Deloitte & Touche LLP, in form and substance satisfactory to you and
    dated as of such Delivery Date, to the effect that they

                                      30


    reaffirm the statements made in their respective letter furnished pursuant
    to Sec tion 5(f), except that the specified date referred to shall be a
    date not more than five days prior to such Delivery Date.

         (f) At each Delivery Date, counsel for the Underwriters shall have
    been furnished with all such documents, certificates and opinions as they
    may reasonably request for the purpose of enabling them to pass upon the
    issuance and sale of the purchased Additional Shares as contem plated in
    the Underwriting Agreement and the matters referred to in Section 6(d) and
    in order to evidence the accuracy and completeness of any of the
    representations, warranties or statements of the Company, the performance
    of any of the covenants of the Company, or the fulfillment of any of the
    conditions herein contained; and all proceedings taken by the Company at or
    prior to each Delivery Date in connection with the authorization, issuance
    and sale of the purchased Additional Shares as contemplated in the
    Underwriting Agreement shall be reasonably satisfactory in form and
    substance to you and to counsel for the Underwriters.

         Section 7. Indemnification. (a) The Company agrees to indemnify and
hold harmless each Underwriter and each person, if any, who controls any
Underwriter, as the case may be, within the meaning of Section 15 of the 1933
Act, as follows:

         (i) against any and all loss, liability, claim, damage and expense
    whatsoever, as incurred, arising out of an untrue statement or alleged
    untrue statement of a material fact contained in the Registration Statement
    (or any amendment thereto), including all documents incorporated therein by
    reference, or the omission or alleged omission therefrom of a material fact
    required to be stated therein or necessary to make the statements therein
    not misleading or arising out of an untrue statement or alleged untrue
    statement of a material fact included in any preliminary prospectus
    supplement or the Prospectus (or any amendment or supplement thereto) or
    the omission or alleged omission therefrom of a material fact necessary in
    order to

                                      31


    make the statements therein, in the light of the circumstances under which
    they were made, not misleading;

         (ii) against any and all loss, liability, claim, damage and expense
    whatsoever, as incurred, to the extent of the aggregate amount paid in
    settlement of any litigation or investigation or proceeding by any
    governmental agency or body, commenced or threatened, or of any claim
    whatsoever based upon any such untrue statement or omission, or any such
    alleged untrue statement or omission, if such settlement is effected with
    the written consent of the Company; and

         (iii) against any and all expense whatsoever, as incurred, including
    fees and disbursements of counsel chosen by you, reasonably incurred in
    investigating, preparing or defending against any litigation, or
    investigation or proceeding by any governmental agency or body, commenced
    or threatened, or any claim whatsoever based upon any such untrue statement
    or omission, or any such alleged untrue statement or omission, to the
    extent that any such expense is not paid under subparagraph (i) or (ii)
    above;

provided, however, that this indemnity agreement does not apply to any loss,
liability, claim, damage or expense to the extent arising out of an untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through you expressly for use in the Registration Statement (or any
amendment thereto) or any preliminary prospectus supplement or the Prospectus
(or any amendment or supplement thereto); and provided, further, however, that
the foregoing indemnification with respect to any preliminary prospectus
supplement shall not inure to the benefit of any Underwriter (or any person
controlling such Underwriter) from whom the person asserting any such losses,
claims, damages or liabilities purchased any of the Shares if a copy of the
Prospectus (as then amended or supplemented if the Company shall have furnished
any amendments or supplements thereto) was not sent or given by or on behalf of
such Underwriter to such person, if such is required by law, at or prior to the
written confirmation of the sale of such Shares to such person and if the
Prospectus (as so

                                      32


amended or supplemented) would have cured the defect giving rise to such loss,
claim, damage or liability.

         (b) Each Underwriter severally agrees to indemnify and hold harmless
    the Company, its directors, each of its officers who signed the
    Registration Statement, and each person, if any, who controls the Company
    within the meaning of Section 15 of the 1933 Act and of Section 20 of the
    1934 Act, from and against any and all loss, liability, claim, damage and
    expense described in the indemnity agreement in Section 7(a), as incurred,
    but only with respect to untrue statements or omissions, or alleged untrue
    statements or omissions, made in the Registration Statement (or any
    amendment thereto) or any preliminary prospectus supplement or the
    Prospectus (or any amendment or supplement thereto) in reliance upon and in
    conformity with written information furnished to the Company by or on
    behalf of such Underwriter expressly for use in the Registration Statement
    (or any amendment thereto) or such preliminary prospectus supplement or the
    Prospectus (or any amendment or supplement thereto).

         (c) In case any proceeding (including any governmental investigation)
    shall be instituted involving any person in respect of which indemnity may
    be sought pursuant to any of the two preceding paragraphs, such person (the
    "indemnified party") shall promptly notify the person against whom such
    indemnity may be sought (the "indemnifying party") in writing and the
    indemnifying party, upon request of the indemnified party, shall retain
    counsel reasonably satisfactory to the indemnified party to represent the
    indemnified party and any others the indemnifying party may designate in
    such proceeding and shall pay the fees and disbursements of such counsel
    related to such proceeding. In any such proceeding, any indemnified party
    shall have the right to retain its own counsel, but the fees and expenses
    of such counsel shall be at the expense of such indemnified party unless
    (i) the indemnifying party and the indemnified party shall have mutually
    agreed to the retention of such counsel or (ii) the named parties to any
    such proceeding (including any impleaded parties) include both the
    indemnifying

                                      33


    party and the indemnified party and representation of both parties by the
    same counsel would be inappropriate due to actual or potential differing
    interests between them. It is understood that the indemnifying party shall
    not, in respect of the legal expenses of any indemnified party in
    connection with any proceeding or related proceedings in the same
    jurisdiction, be liable for the fees and expenses of more than one separate
    firm (in addition to any local counsel) for all such indemnified parties
    and that all such fees and expenses shall be reimbursed as they are
    incurred. In the case of any such separate firm for the Underwriters and
    such control persons of Underwriters, such firm shall be designated in
    writing by. In the case of any such separate firm for the Company, and such
    directors, officers and control persons of the Company, such firm shall be
    designated in writing by the Company. The indemnifying party shall not be
    liable for any settlement of any proceeding effected without its written
    consent, but if settled with such consent or if there be a final judgment
    for the plaintiff, the indemnifying party agrees to indemnify the
    indemnified party from and against any loss or liability by reason of such
    settlement or judgment. No indemnifying party shall, without the prior
    written consent of the indemnified party, effect any settlement of any
    pending or threatened proceeding in respect of which any indemnified party
    is or could have been a party and indemnity could have been sought
    hereunder by such indemnified party, unless such settlement includes an
    unconditional release of such indemnified party from all liability on
    claims that are the subject matter of such proceeding.

         Section 8. Contribution. If the indemnification provided for in
Sections 7(a) and 7(b) is for any reason held to be unenforceable by the
indemnified parties although applicable in accordance with its terms, then each
indemnifying party under such paragraph (it being understood that an
indemnifying party is one who would have had an obligation to provide
indemnification pursuant to Section 7 had such indemnification been
enforceable), in lieu of indemnifying such indemnified party thereunder, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims,

                                      34


damages or liabilities (i) in such proportion as is appropriate to reflect (A)
the relative benefits received by the Underwriters, and (B) that the Company is
responsible for the balance or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the allocation referred to in clause (i) above but also the
relative fault of the indemnifying party or parties on the one hand and of the
indemnified party or parties on the other hand in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the Underwriters
on the other hand in connection with the offering of the Shares shall be deemed
to be in the same respective proportions as the net proceeds from the offering
of the Shares (before deducting expenses) received by the Company and the total
underwriting discounts and commissions received by the Underwriters, in each
case as set forth in the table on the cover of the Prospectus Supplement, bear
to the aggregate public offering price of the Shares. The relative fault of the
Company on the one hand and of the Underwriters on the other hand shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company or by the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The
Underwriters' respective obligations to contribute pursuant to this Section 8
are several in proportion to the respective number of Shares they have
purchased hereunder, and not joint.

         The Company and the Underwriters agree that it would not be just or
equitable if contribution pursuant to this Section 8 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to

                                      35


include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 8, no Underwriter shall be required to contribute
any amount in excess of the amount by which the total price at which the Shares
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages that such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the 1933 Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this Section 8 are not
exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.

         Section 9. Representations, Warranties and Agreements to Survive
Delivery. The representations, warranties, indemnities, agreements and other
statements of the Company or its officers set forth in or made pursuant to this
Agreement will remain operative and in full force and effect regardless of any
investigation made by or on behalf of the Company, any Underwriter or any
person who controls the Company or any Underwriter within the meaning of
Section 15 of the 1933 Act and will survive delivery of and payment for the
Shares.

         Section 10. Termination of Agreement. (a) You may terminate this
Agreement, by notice to the Company, at any time at or prior to the Closing
Time (i) if there has been, since the respective dates as of which information
is given in the Registration Statement, any material adverse change in the
condition (financial or otherwise), earnings, business affairs or business
prospects of the Company and its subsidiaries, considered as one enterprise,
whether or not arising in the ordinary course of business, or (ii) if there has
occurred any material adverse change in the financial markets in the United
States or any outbreak of hostilities or escalation thereof or other calamity
or crisis the effect of which on the financial markets of the United States is
such as to make it, in your judgment, impracticable to market the

                                      36


Shares or enforce contracts for the sale of the Shares or (iii) if trading in
any securities of the Company has been suspended by the Commission, the New
York Stock Exchange or any other exchange or quotation system on which
securities of the Company are listed, or if trading generally on either the
American Stock Exchange or the New York Stock Exchange or in the
overthe-counter market has been suspended, or minimum or maximum prices for
trading have been fixed, or maximum ranges for prices for securities have been
required, by such exchange or by order of the Commission or any other
governmental authority or (iv) if a banking moratorium has been declared by
either federal, New Jersey or New York authorities.

         (b) If this Agreement is terminated pursuant to this Section 10, such
    termination shall be without liability of any party to any other party,
    except to the extent provided in Section 4 herein. Notwithstanding any such
    termination, the provisions of Sections 7, 8 and 9 shall remain in effect.

         Section 11. Default by One or More of the Underwriters. If one or more
of the Underwriters shall fail at the Closing Time to purchase the Firm Shares
that it or they are obligated to purchase (the "Defaulted Shares"), you shall
have the right, within 24 hours thereafter, to make arrangements for one or
more of the non-defaulting Underwriters, or any other underwriters, to purchase
all, but not less than all, of the Defaulted Shares in such amounts as may be
agreed upon and upon the terms herein set forth; if, however, you have not
completed such arrangements within such 24-hour period, then:

         (a) if the number of Defaulted Shares does not exceed 10% of the total
    number of the Shares to be purchased pursuant to this Agreement, the
    non-defaulting Underwriters shall be obligated to purchase the full amount
    thereof in the proportions that their respective underwriting obligation
    proportions (as defined below) bear to the underwriting obligation
    proportions of all non-defaulting Underwriters, or

         (b) if the number of Defaulted Shares exceeds

                                      37


    10% of the total number of the Shares to be purchased pursuant to this
    Agreement, this Agreement shall terminate without liability on the part of
    any non-defaulting Underwriter.

         No action taken pursuant to this Section 11 shall relieve any
defaulting Underwriter from liability in respect of its default.

         In the event of any such default that does not result in a termination
of this Agreement, either you or the Company shall have the right to postpone
the Closing Time or the Delivery Date, as applicable for a period not exceeding
seven days in order to effect any required changes in the Registration
Statement or Prospectus or in any other documents or arrangements. As used
herein, the term "Underwriter" includes any person substituted for an
Underwriter under this Section 11. As used herein, the term "underwriting
obligation proportion" means the proportion that the number of Firm Shares set
forth opposite the name of each Underwriter in Schedule I hereto bears to the
total number of Firm Shares.

         Section 12. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if delivered,
mailed or transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed as set forth in Schedule I. Notices to the
Company shall be directed to it at 339 Jefferson Road, Parsippany, New Jersey
07054, attention of James Buckman, Esq., General Counsel.

         Section 13. Parties. This Agreement is made solely for the benefit of
the several Underwriters, the Company and, to the extent expressed, any person
who controls the Company or any of the Underwriters within the meaning of
Section 15 of the 1933 Act, and the directors of the Company, its officers who
have signed the Registration Statement, and their respective executors,
administrators, successors and assigns and, subject to the provisions of
Section 11, no other person shall acquire or have any right under or by virtue
of this Agreement. The term "successors and assigns" shall not include any
purchaser, as such purchaser, from any Underwriter of the Shares. If there are
two or more Underwriters, all of their obligations hereunder are several and
not joint.

                                      38


         Section 14. Governing Law and Time. This Agreement shall be governed
by the laws of the State of New York. Specified times of the day refer to New
York City time.

         Section 15. Counterparts. This Agreement may be executed in one or
more counterparts and when a counterpart has been executed by each party, all
such counterparts taken together shall constitute one and the same agreement.

         Section 16. Headings. All headings of the sections and subparts
thereof of this Agreement are for convenience of reference only and shall not
be deemed a part of this Agreement.

                                      39


         If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
instrument will become a binding agreement between the Company and each
Underwriter in accordance with its terms.

                                                 Very truly yours,


                                                 CENDANT CORPORATION


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

Confirmed and Accepted, as of the date first above written:

[UNDERWRITERS]

By:

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


                                      40


                                                              SCHEDULE I
                                                              to Underwriting
                                                              Agreement dated
                                                              [_____________]

                              CENDANT CORPORATION

                                  Common Stock

                                                              Number of Initial
                                                                   Shares
Underwriter                                                    to be Purchased
- -----------                                                    ---------------

Total.........................................................________________


                                      41


                                                              SCHEDULE II
                                                              to Underwriting
                                                              Agreement
                                                              dated [________]

                              CENDANT CORPORATION

                                  Common Stock

Number of Firm Shares to be issued:                                  [________]

Number of Additional Shares to be issued:                            [________]

Initial public offering price:                                       $_______

Purchase price:                                                      $_______

Closing date, time and location:

Delayed delivery contracts:

Listing requirement:

Other terms and conditions:

                                      42


                                                      SCHEDULE III
                                                      to Underwriting Agreement
                                                      dated [______________]


                          SUBSIDIARIES OF THE COMPANY






                                                     SCHEDULE IV
                                                     to Underwriting Agreement
                                                     dated [_______________]


                              CENDANT CORPORATION

                                  Common Stock

                           DELAYED DELIVERY CONTRACT

CENDANT CORPORATION
6 Sylvan Way
Parsippany, New Jersey  07054

Dear Sirs:

         The undersigned hereby agrees to purchase from Cendant Coporation, a
Delaware corporation (the "Company"), and the Company agrees to sell to the
undersigned on _______, 19__ (the "Delivery Date"),_______________________ 
[    ] Shares of the Company's Common Stock, par value $.01 per share (the
"Shares"), offered by the Company's Prospectus dated _______, 1996, as
supplemented by its Prospectus Supplement dated _______, 19__, receipt of which
is hereby acknowledged, at a purchase price of $____ per share, and on the
further terms and conditions set forth in this contract.

         Payment for the Shares shall be made to the Company or its order by
certified or official bank check in New York Clearing House funds, at the
offices of _____________, _____________, New York, New York, at A.M., New York
City time, on the Delivery Date (or in such other funds and/or at such other
place as the Company and the undersigned may agree upon in writing), upon
delivery of the Shares to the undersigned, in such authorized denominations and
registered in such names as the undersigned may request in writing addressed to
the Company not less than five business days prior to the Delivery Date.

         The obligation of the undersigned to take

                                      45


delivery of and make payment for the Shares on the Delivery Date shall be
subject only to the conditions that (1) the purchase of the Shares by the
undersigned shall not, on the Delivery Date, be prohibited under the laws of
any jurisdiction to which the undersigned is subject and that govern such
investment, and (2) the Company, on or before ________, 19__, shall have sold
to the Underwriters of the Shares (the "Underwriters") such number of Shares as
is to be sold to them pursuant to the Underwriting Agreement dated the date
hereof between the Company and the Underwriters. The obligation of the
undersigned to take delivery of and make payment for the Shares shall not be
affected by the failure of any Underwriter or other purchaser to take delivery
of and make payment for the Shares pursuant to other contracts simi lar to this
contract.

         Promptly after completion of the sale to the Underwriters, the Company
will mail or deliver to the undersigned, at its address set forth below, a
notice to such effect, accompanied by a copy of the opinion of counsel for the
Company delivered to the Underwriters in connection therewith.

         By the execution hereof, the undersigned represents and warrants to
the Company that (1) its investment in the Shares is not, as of the date
hereof, prohibited under the laws of any jurisdiction to which the undersigned
is subject and that govern such investment, (2) all necessary corporate action
for the due execution and delivery of this contract and the payment for and
purchase of the Shares has been taken by it and no further authorization or
approval of any governmental or other regulatory authority is required for such
execution, delivery, payment or purchase and (3) upon the acceptance by the
Company and the mailing or delivery of a copy as provided below, this contract
will constitute a valid and binding agreement of the undersigned in accordance
with its terms.

         This contract will inure to the benefit of and be binding upon the
parties hereto and their respective successors, but will not be assignable by
either party hereto without the written consent of the other.

         It is understood that the Company will not

                                      46


accept Delayed Delivery Contracts for a number of Shares, the aggregate
proceeds of which are in excess of $______ and that the acceptance of any
Delayed Delivery Contract is in the Company's sole discretion and, without
limiting the foregoing, need not be on a first-come, first-served basis. If
this contract is acceptable to the Company, it is requested that the Company
sign the form of acceptance on a copy hereof and mail or deliver a signed copy
to the undersigned at its address set forth below. This will become a binding
contract between the Company and the undersigned when such copy is so mailed or
delivered.

                                      47


This contract shall be governed by the laws of the State of New York.

                                                 Yours very truly,

                                                 (Name of Purchaser)


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


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

                                                 ------------------------------
                                                 (Address)


Accepted as of the date first above written:

CENDANT CORPORATION

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

                 PURCHASER - PLEASE COMPLETE AT TIME OF SIGNING

         The name and telephone number of the representative of the Purchaser
with whom details of delivery on the Delivery Date may be discussed is as
follows: (Please print.)

                                                             Telephone No.
Name                                                     (including Area Code)
- ----                                                     ---------------------




                                      48


                                                     SCHEDULE V
                                                     to Underwriting Agreement
                                                     dated [_______________]


                   MATTERS TO BE COVERED BY LETTER OR LETTERS
                       OF INDEPENDENT PUBLIC ACCOUNTANTS

         To the extent that a report or opinion of Deloitte & Touche, LLP, on
the Consolidated Financial Statements of Cendant Corporation is included or
incorporated by reference in the Registration Statement or any exhibit thereto,
the Prospectus or any Prospectus Supplement, such firm, to the extent
applicable, shall have furnished to you the following letter or letters (in
each case in form and substance satisfactory to you):

    (1) At the date hereof, a letter (the "Comfort Letter"), to the effect
    that:

         (a) They are independent accountants with respect to the Company and
    its subsidiaries within the meaning of the 1933 Act and the applicable
    published 1933 Act Regulations.

         (b) In their opinion, the audited consolidated financial statements
    and the related financial statement schedules of the Company reported on by
    them included or incorporated by reference in such annual report on Form
    10-K comply as to form in all material respects with the applicable
    accounting requirements of the 1933 Act and the published 1933 Act
    Regulations with respect to Registration Statements on Form S-3 and the
    1934 Act and the published 1934 Act Regulations with respect to annual
    reports on Form 10-K.

         (c) Such letter shall further state that they have performed such
    other procedures, specified by you, not constituting an audit, as they have
    agreed to perform and report on with respect to certain amounts,
    percentages, numerical data and other financial information in the Form
    10-K identified by you and have compared certain of such amounts,

                                      49


    percentages, numerical data and financial information with, and have found
    such items to be in agreement with or derived from, the detailed accounting
    records of the Company and its subsidiaries.

         (d) On the basis of procedures (but not an examination in accordance
    with generally accepted auditing standards) consisting of:

              (i) a reading of minutes of all meetings of the Company's
         shareholders, Board of Directors (including the audit, executive and
         compensation committees) from the date of the latest audited
         consolidated financial statements of the Company and its subsidiaries;

              (ii) a reading of the unaudited condensed consolidated financial
         statements of the Company and its subsidiaries included or
         incorporated by reference in the quarterly report on Form 10-Q for
         each Form 10-Q filed; and

              (iii) inquiries of certain officials of the Company who have
         responsibility for financial and accounting matters as to (A) whether
         the unaudited condensed consolidated financial statements referred to
         in (ii) above comply as to form in all material respects with the
         applicable accounting requirements of the 1934 Act and the published
         1934 Act Regulations with respect to Form 10-Q and (B) whether such
         unaudited condensed consolidated financial statements are in
         conformity with generally accepted accounting principles applied on a
         basis substan tially consistent with that of the audited consolidated
         financial statements referred to above;

nothing came to their attention that caused them to believe that the unaudited
condensed consolidated financial statements included or incorporated by
reference in such quarterly report on Form 10-Q do not comply as to form in all
material respects with the applicable accounting requirements of the 1934 Act
and the published 1934 Act Regulations with respect to Form 10-Q, or that such
unaudited condensed consolidated financial statements

                                      50


are not in conformity with generally accepted accounting principles applied on
a basis substantially consistent with that of audited consolidated financial
statements referred to above, except as disclosed in the notes to such
unaudited condensed consolidated financial statements.

         (e) Such letter shall further state that they have performed such
    other procedures, specified by you, not constituting an audit, as they have
    agreed to perform and report on with respect to certain amounts,
    percentages, numerical data and other financial information in the Form 10-
    Qs identified by you and have compared certain of such amounts,
    percentages, numerical data and financial information with, and have found
    such items to be in agreement with or derived from, the detailed accounting
    records of the Company and its subsidiaries.

         (f) On the basis of the inquiries and procedures referred to in
    Section 1(d) of Schedule III (but carried out to the specified date
    referred to in Section 2(a) of Schedule III), nothing came to their
    attention that caused them to believe that, from the date of the latest
    balance sheet of the Company and its subsidiaries included or incorporated
    by reference in theProspectus to such specified date, there was:

              (i) any change in the capital stock of the Company, as compared
         with the amount shown in such latest balance sheet;

              (ii) any decrease in stockholders' equity of the Company and its
         subsidiaries, as compared with the amounts shown in such latest
         balance sheet;

              (iii) any increase in long-term debt of the Company and its
         subsidiaries, as compared with the corresponding total amount of such
         debt outstanding at the date of such latest balance sheet; or

              (iv) any decrease from the date of such latest balance sheet to
         such specified date in

                                      51


         consolidated net revenue of the Company and its subsidiaries or in the
         total amount or per share amount (on a primary and fully diluted
         basis) of consolidated net income of the Company and its subsidiaries,
         as compared with the corresponding period of the preceding year,
         except in all instances for changes or decreases that the Prospectus
         discloses have occurred or may occur or that are described in the
         Closing Letter.

         (g) Such letter shall further state that they have performed such
    other procedures, specified by you, not constituting an audit, as they have
    agreed to perform and report on with respect to certain amounts,
    percentages, numerical data and other financial information in the
    Registration Statement, the Prospectus and the exhibits to the Registration
    Statement or in the documents incorporated by reference in the Prospectus
    identified by you, and have compared certain of such amounts, percentages,
    numerical data and financial information with, and have found such items to
    be in agreement with or derived from, the detailed accounting records of
    the Company and its subsidiaries.

         (2) At the Closing Time, a letter dated the Closing Time (the "Closing
Letter"), to the effect that they reaffirm as of the date of the Closing Letter
(and as though made on the date of the Closing Letter) all statements made in
the comfort letter, if any, except that the inquiries and procedures specified
therein shall have been carried out to a specified date not more than five days
prior to the date of the Closing Letter.

                                      52


                                                                      EXHIBIT 1

                  SKADDEN, ARPS, SLATE, MEAGHER & FLOM OPINION

         Based upon and subject to the limitations, qualifications, exceptions
and assumptions set forth above, we are of the opinion that:

         (1) the authorized capital stock of the Company conform in all
material respects as to legal matters to the description thereof contained in
the Prospectus;

         (2) the Underwriting Agreement has been duly authorized, executed and
delivered by the Company;

         (3) the execution and delivery by the Company of, and the performance
by the Company of its obligations under, the Underwriting Agreement will not
(i) contravene any provision of the Amended and Restated Certificate of
Incorporation of the Company as currently in effect or the Amended and Restated
By-Laws of the Company as currently in effect, (ii) contravene any agreement or
other instrument binding upon the Company or any of its subsidiaries that is
listed as an exhibit to (a) the Registration Statement or (b) the Company's
Annual Report on Form 10-K for the fiscal year ending December 31, ____, as
amended, or (iii) violate any present statute, rule or regulation
(collectively, "Requirements of Law") or any order, judgment or decree of any
court or governmental agency or body (collectively, "Orders") having
jurisdiction over the Company or any of its properties or assets. The opinion
expressed in clause (iii) of this paragraph (3) is based on our review of those
Requirements of Law which are ordinarily applicable to transactions of the type
provided for in the Underwriting Agreement, but without making any special
investigation concerning any other Requirements of Law, and those Orders
specifically identified to us by the Company as being Orders to which it is
subject (no such Orders have been so identified to such counsel). In addition,
we express no opinion in this paragraph (3) with respect to (i) any state
securities or Blue Sky laws, rules or regulations or (ii) the information
contained in, or the accuracy, completeness or correctness of, the Prospectus
or the Registration Statement or the compliance thereof as to form with the

                                      53


Securities Act of 1933 (the "Act") and the General Rules and Regulations
thereunder, which matters are dealt with in paragraphs (1) above and (5) below
and the second paragraph following paragraph (7) below;

         (4) based upon our review of those Requirements of Law which are
ordinarily applicable to transactions of the type provided for in the
Underwriting Agreement, but without having made any special investigation
concerning any other Requirements of Law, no consent, approval, authorization
or Order of, or filing or registration with, any court or governmental agency
or body having jurisdiction over the Company and its Subsidiaries or any of
their respective properties or assets is required for the execution, delivery
and performance of the Underwriting Agreement by the Company or the
consummation by the Company of the transactions contemplated thereby except for
(i) such as have been obtained under the Act and the Securities Exchange Act of
1934, as amended (the "Exchange Act"), or (ii) such as may be required under
state securities or Blue Sky laws in connection with the purchase and
distribution of the shares by you, as to which we express no opinion;

         (5) the statements made in the Prospectus under the caption
"Description of Capital stock," to the extent such statements constitute
summaries of legal matters and documents or legal conclusions, have been
reviewed by us and fairly present the information disclosed therein in all
material respects;

         (6) (i) each document filed pursuant to the Exchange Act, and
incorporated by reference in the Prospectus (other than the financial
statements, notes and schedules thereto and other financial information
included in or omitted from such document as to which we need express no
opinion), when filed, appeared on its face to be responsive as to form in all
material respects with the requirements of the Exchange Act and the applicable
rules and regulations of the Commission thereunder and (ii) each of the
Registration Statement and the Prospectus (other than the financial statements,
notes and schedules thereto and other financial information included in or
omitted from the Registration Statement or Prospectus, as to which we express
no opinion), as of their respective effective or issue dates, appeared on their
face to be responsive as

                                      54


to form in all material respects with the requirements of the Act and the
applicable rules and regulations thereunder; and such counsel does not have
actual knowledge of any contracts or other documents of a character required to
be filed as an exhibit to the Registration Statement which are not filed as
required; and

         (7) the Company is not required to be registered or regulated as an
"investment company" as such term is defined under the Investment Company Act
of 1940, as amended.

         We have been orally advised by the Commission that the Registration
statement was declared effective under the 1933 Act at ___ on __________ and,
we have been advised by the Commission that no stop order suspending the
effectiveness of the Registration Statement under the 1933 Act has been issued
and, to the best of our knowledge, no proceedings for that purpose have been
initiated or are pending or threatened by the Commission.

         In addition, we have participated in conferences with officers and
representatives of the Company, representatives of the independent accountants
of the Company, and you and your counsel at which the contents of the
Registration Statement and the Prospectus and related matters were discussed
and, although we are not passing upon and do not assume any responsibility for,
the accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus and we have made no independent check
or verification thereof, except as set forth in numbered paragraph 5 hereof, on
the basis of the foregoing, no facts have come to our attention that have led
us to believe that the Registration Statement, on the original effective date
of the Registration Statement, on the effective date of the most recent
post-effective amendment thereto, if any, on the date of the filing of any
annual report on Form 10-K after the filing of the Registration Statement, on
the date of the Underwriting Agreement, or at the Closing Time, contained an
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading, or that the Prospectus, or any amendment or supplement thereto, at
the time the Prospectus Supplement

                                      55


was issued at the time any such amended or supplemented Prospectus was issued
or at the Closing Time, contained or contains an untrue statement of a material
fact or omitted or omits to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, except that we express no opinion or belief with respect
to the financial statements, schedules and other financial data included
therein or excluded therefrom.

                                                 Very truly yours,




                                      56


                                                                      EXHIBIT 2

                            COMPANY COUNSEL OPINION

         Based upon and subject to the limitations, qualifications, exceptions
and assumptions set forth herein, I am of the opinion that:

         1. the Company has been duly organized and is subsisting in good
standing as a corporation under the laws of the State of Delaware with
corporate power and corporate authority under such laws to own, lease and
operate its properties and conduct its business as described in the Prospectus;

         2. the Company is qualified to do business and is in good standing as
a foreign corporation in each other jurisdiction in which it owns or leases
property of a nature, or transacts business of a type, that would make such
qualification necessary except to the extent that the failure to so qualify or
be in good standing would not have a material adverse effect on the Company and
its subsidiaries, considered as one enterprise;

         3. each of the subsidiaries that is incorporated in Delaware (a
"Delaware Subsidiary") has been duly organized and is subsisting and in good
standing as a corporation under the laws of Delaware with corporate power and
corporate authority under such laws to own, lease and operate its properties
and conduct its business;

         4. each subsidiary is qualified to do business and is in good standing
as a foreign corporation in each other jurisdiction in which it owns or leases
property of a nature, or transacts business of a type, that would make such
qualification necessary except to the extent that the failure to so qualify or
be in good standing would not have a material adverse effect on the Company and
its subsidiaries, considered as one enterprise;

         5. all of the outstanding shares of capital stock of the Company have
been duly authorized by all requisite corporate action on the part of the
Company and have been validly issued and are fully paid and non-assessable; no
holder thereof is or will be subject to

                                      57


personal liability by reason of being such a holder; and none of the
outstanding shares of capital stock of the Company were issued in violation of
the preemptive rights of any stockholder of the Company;

         6. the Shares have been duly authorized and validly reserved for
issuance by the Company and, when issued and paid for in accordance with the
terms of the Underwriting Agreement, will be validly issued, fully paid and
nonassessable; all corporate action required to be taken for the authorization,
issuance and delivery of such Shares has been validly taken; the issuance of
the Shares is not subject to any preemptive rights of any stockholder of the
Company;

         7. the authorized, issued and outstanding capital stock of the Company
is as described in the Prospectus under the caption "Description of Capital
Stock";

         8. all of the outstanding shares of capital stock of each Delaware
Subsidiary have been duly authorized by all requisite corporate action on the
part of the relevant Delaware Subsidiary and have been validly issued and are
fully paid and nonassessable;  All of the shares of capital stock of each of
the Company Subsidiaries are owned by the Company free and clear of any pledge,
lien, security interest, charge, claim, encumbrance or equity (each a "Lien") 
except for such Liens as are not, individually or in the aggregate, material
to the Company and its subsidiaries, considered as one enterprise;

         9. there are no statutes or regulations, or any pending or, to my
knowledge, threatened legal or governmental proceedings against the Company or
any subsidiary, required to be described in the Prospectus that are not
described as required, nor are there any contracts or documents required to be
described in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement that are not described or filed as
required; furthermore, no default exists in the due performance or observance
by the Company, or any subsidiary, or, to my knowledge, any other

                                      58


party thereto, of any material obligation, agreement, covenant or condition
contained in any contract, indenture, loan agreement, note, lease or other
agreement or instrument that is described in the Registration Statement or the
Prospectus or filed as an exhibit to the Registration State ment, except such
defaults that do not have a material adverse effect on the Company and its
subsidiaries, considered as one enterprise;

         10. the provisions of the contracts and agreements that are summarized
in the Prospectus or in the Company's Proxy Statement dated [ ] (the "Proxy")
under the heading "Certain Relationships and Related Transactions" and
"Executive Compensation" conform in all material respects to the description
thereof contained in the Prospectus or Proxy and such description fairly
presents the information disclosed;

         11. the Underwriting Agreement has been duly authorized, executed and
delivered by the Company;

         12. the execution and delivery of the Underwriting Agreement by the
Company and compliance by the Company with the terms of the Underwriting
Agreement (a) do not and will not constitute or result in a breach of or a
default under any of the terms or provisions of, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of
the Company or any subsidiary under (i) any indenture, mortgage or loan
agreement, or any other agreement, including without limitation the Credit
Agreement (as defined in the Prospectus) or instrument to which the Company or
any subsidiary is a party or by which it may be bound or to which any of its
properties may be subject, (ii) any judgment, order or decree applicable to the
Company or any subsidiary of any government, governmental instrumentality or
court, domestic, or foreign, having jurisdic tion over the Company or any
subsidiary or any of their properties, and (B) do not and will not result in a
violation of any applicable law, rule or regulation (except for the federal
securities laws, and the securities or blue sky laws of the various states, as
to which I express no opinion) except, in each case, for such breaches,
defaults or violations that would not have a material adverse effect on the
condition (financial or otherwise), earnings or business affairs of the Company

                                      59


and its subsidiaries, considered as one enterprise;

         13. except as previously disclosed to you in writing, (i) the Company
or its subsidiaries are the beneficial owners of the U.S. trademarks and
service marks set forth in the Prospectus, with the exception of the Ramada
mark; (ii) there is no claim, suit, action or proceeding pending or, to the
best of my knowledge, threatened against the Company or any subsidiary that
involves a claim of infringement of any trademark or service marks which
infringement (if the subject of any unfavorable decision) would have a material
adverse effect on the Company and its subsidiaries, considered as one
enterprise; and (iii) the current use of the trademarks and service marks by
the Company or any of its subsidiaries does not, to the best of my knowledge,
infringe upon any right of any third party which infringement (if the subject
of any unfavorable decision) would reasonably be expected to have a material
adverse effect on the Company and its subsidiaries, considered as one
enterprise;

         14. all corporate action required to be taken for consummation of the
Merger has been validly taken.

         In addition, I have participated in conferences with other officers
and representatives of the Company, representatives of the independent
accountants of the Company, and you and your counsel at which the contents of
the Registration Statement and the Prospectus and related matters were
discussed and, although I am not passing upon, and do not assume any
responsibility for, the accuracy, completeness or fairness of the statements
contained in the Registration Statement or the Prospectus and I have made no
independent check or verification thereof, except as otherwise specifically
referred to in paragraph 12 of this opinion, on the basis of the foregoing, no
facts have come to my attention that have led me to believe that the
Registration Statement, on the original effective date of the Registration
Statement, on the effective date of the most recent post-effective amendment
thereto, if any, on the date of the filing of any annual report on Form 10-K
after the filing of the Registration Statement, on the date of the Underwriting
Agreement, or at the Closing Time, contained an untrue statement of a material
fact or omitted to state any

                                      60


material fact required to be stated therein or necessary to make the statements
therein not misleading, or that the Prospectus, or any amendment or supplement
thereto, at the time the Prospectus Supplement was issued, at the time any such
amended or supplemented Prospectus was issued or at the Closing Time, contained
or contains an untrue statement of a material fact or omitted or omits to state
a material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading, except that I
express no opinion or belief with respect to the financial statements,
schedules and other financial data included therein or excluded therefrom.

                                                 Very truly yours,




                                      61



                              CENDANT CORPORATION
                            (a Delaware corporation)


                               [_______________]
                                Preferred Stock


                             UNDERWRITING AGREEMENT


Dated:____________



                              CENDANT CORPORATION
                            (a Delaware corporation)

                       _______ Shares of Preferred Stock
                           Par Value $0.01 Per Share


                             UNDERWRITING AGREEMENT

                                                                     [Date]

To the Underwriters named in Schedule I

Ladies and Gentlemen:

         Cendant Corporation, a Delaware corporation (the "Company"), proposes
to issue and sell to the underwriters named in Schedule I the number of shares
of Preferred Stock specified in Schedule II (the "Firm Shares") on the terms
and conditions stated herein and in Schedule II. The Company also grants to the
Underwriters, severally and not jointly, the option described in Section 2 to
purchase all or any part of the additional shares of Preferred Stock as set
forth in Schedule II to cover over-allotments (the "Additional Shares") on the
terms and conditions stated herein and in Schedule II. The Additional Shares
together with the Firm Shares are herein called the "Shares". As used herein,
unless the context otherwise requires, the term "Underwriters" shall mean the
firm or firms named as Underwriter or Underwriters in Schedule I and the term
"you" shall mean the Underwriter or Underwriters, if no underwriting syndicate
is purchasing the Shares, or the representative or representatives of the
Underwriters, if an underwriting syndicate is purchasing the Shares, as
indicated in Schedule I. The Shares may be sold pursuant to delayed delivery
contracts, a form of which is attached as Schedule IV (the "Delayed Delivery
Contracts"), as specified in Schedule II.

         The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration

                                       2


statement on Form S-3 (Registration No. 333-_____) including a prospectus,
relating to certain of its debt securities, Common Stock and Preferred Stock,
and the offering thereof from time to time in accordance with Rule 415 under
the Securities Act of 1933, as amended (the "1933 Act"). Such registration
statement has been declared effective by the Commission. As provided in Section
3(a), a prospectus supplement reflecting the terms of the Shares, the terms of
the offering thereof and the other matters set forth therein has been prepared
and will be filed pursuant to Rule 424 under the 1933 Act. Such prospectus
supplement, in the form first filed after the date hereof pursuant to Rule 424,
is herein referred to as the "Prospectus Supplement". Such registration
statement, as amended at the date hereof, together with the Rule 462(b)
Registration Statement under the 1933 Act, including the exhibits thereto and
the documents incorporated by reference therein, is herein called the
"Registration Statement", and the basic prospectus included therein relating to
all offerings of debt securities and Preferred Stock under the Registration
Statement, as supplemented by the Prospectus Supplement, is herein called the
"Prospectus", except that, if such basic prospectus is amended or supplemented
on or prior to the date on which the Prospectus Supplement is first filed
pursuant to Rule 424, the term "Prospectus" shall refer to the basic
prospectus, as so amended or supplemented and as supplemented by the Prospectus
Supplement, in either case including the documents filed by the Company with
the Commission pursuant to the Securities Exchange Act of 1934, as amended (the
"1934 Act"), that are incorporated by reference therein.

         You have advised us that you and the other Underwriters, acting
severally and not jointly, desire to purchase the Firm Shares and that you have
been authorized by the other Underwriters to execute this Underwriting
Agreement ("this Agreement") on their behalf.

         Section 1. Representations and Warranties. (a) The Company represents
and warrants to and agrees with each Underwriter that:

                                       3


         (i) On the original effective date of the Registration Statement, on
    the effective date of the most recent post-effective amendment thereto, if
    any, on the date of the filing of any Rule 462(b) Registration Statement,
    and on the date of the filing by the Company of any annual report on Form
    10-K after the original filing of the Registration Statement, the
    Registration Statement complied in all material respects with the
    requirements of the 1933 Act and the rules and regulations of the
    Commission thereunder (the "1933 Act Regulations") and did not contain an
    untrue statement of a material fact or omit to state a material fact
    required to be stated therein or necessary to make the statements therein
    not misleading; on the date hereof, at the Closing Time (as defined below)
    and at each Delivery Date (as defined below), if any, the Registration
    Statement, and any amendments thereof, and the Prospectus, and any
    amendments thereof and supplements thereto, comply and will comply in all
    material respects with the requirements of the 1933 Act and the 1933 Act
    Regulations, and neither the Registration Statement nor any amendments
    thereof include or will include an untrue statement of a material fact or
    omit or will omit to state any material fact required to be stated therein
    or necessary to make the statements therein not misleading, and neither the
    Prospectus, nor any amendments thereof and supplements thereto, include or
    will include an untrue statement of a material fact or omit or will omit to
    state any material fact required to be stated therein or necessary to make
    the statements therein, in light of the circumstances under which they were
    made, not misleading; provided, however, that the Company makes no
    representations or warranties as to statements or omissions made in
    reliance upon and in conformity with information furnished in writing to
    the Company by or on behalf of any Underwriter, directly or through you,
    expressly for use in the Registration Statement or the Pro spectus.

         (ii) The documents incorporated by reference in the Prospectus, at the
    time they were filed with the

                                       4


    Commission, complied in all material respects with the requirements of the
    1934 Act, and the rules and regulations of the Commission thereunder (the
    "1934 Act Regulations") and, when read together with the other information
    in the Prospectus, do not and will not, on the date hereof, at the Closing
    Time and at each Delivery Date, if any, include an untrue statement of a
    material fact or omit to state a material fact required to be stated
    therein or necessary to make the statements therein, in light of the
    circumstances under which they were made, not misleading.

         (iii) Deloitte & Touche LLP, who has reported upon the audited 
    financial statements and schedules included or incorporated by reference 
    in the Registration Statement, is an independent public accountant as 
    required by the 1933 Act and the 1933 Act Regulations with respect to the
    Company and each corporation whose financial statements have been included
    in the Registration Statement for each of the years reported on by such
    accountant.

         (iv) This Agreement has been duly authorized, executed and delivered
    by the Company.

         (v) The consolidated financial statements included or incorporated by
    reference in the Registration Statement present fairly the consolidated
    financial position and stockholders' equity and the consolidated results of
    operations and consolidated statements of cash flows of the entities
    purported to be shown thereby at the indicated dates and for the periods
    specified. Such financial statements have been prepared in conformity with
    generally accepted accounting principles applied on a consistent basis
    throughout the periods involved. The financial statement schedules, if any,
    included or incorporated by reference in the Registration Statement present
    fairly the information required to be stated therein. The selected
    financial data included or incorporated by reference in the Prospectus
    present fairly the information shown therein and have been

                                       5


    compiled on a basis consistent with that of the audited consolidated
    financial statements incorporated by reference in the Registration
    Statement. The pro forma financial statements and other pro forma financial
    information included or incorporated by reference in the Prospectus present
    fairly the information shown therein, have been prepared in accordance with
    the Commission's rules and guidelines with respect to pro forma financial
    statements, have been properly compiled on the pro forma bases described
    therein, and, in the opinion of the Company, the assumptions used in the
    preparation thereof are reasonable and the adjustments used therein are
    appropriate to give effect to the transactions or circumstances referred to
    therein.

         (vi) The Company is duly organized and is validly existing in good
    standing as a corporation under the laws of the State of Delaware with
    corporate power and corporate authority under such laws to own, lease and
    operate its properties and conduct its business as described in the
    Prospectus. The Company is duly qualified to transact business as a foreign
    corporation and is in good standing in each other jurisdiction in which it
    owns or leases property of a nature, or transacts business of a type, that
    would make such qualification necessary, except to the extent that the
    failure to so qualify or be in good standing would not have a material
    adverse effect on the Company and its subsidiaries, considered as one
    enterprise.

         (vii) The Company's only subsidiaries are listed in Schedule III
    hereto (each a "Company Subsidiary" and collectively hereinafter referred
    to as the "Company Subsidiaries"). Each Subsidiary is duly organized and is
    validly existing and in good standing under the laws of the jurisdiction of
    its incorporation with corporate power and corporate authority under such
    laws to own, lease and operate its properties and conduct its business.
    Each Subsidiary is duly qualified to transact business as a foreign
    corporation and is in good standing in

                                       6


    each other jurisdiction in which it owns or leases property of a nature, or
    transacts business of a type, that would make such qualification necessary,
    except to the extent that the failure to so qualify or be in good standing
    would not have a material adverse effect on the Company and its
    Subsidiaries, considered as one enterprise. All of the outstanding shares
    of capital stock of each Company Subsidiary have been duly authorized and
    validly issued and are fully paid and nonassessable and are owned by the
    Company, directly or through one or more Company Subsidiaries, free and
    clear of any pledge, lien, security interest, charge, claim, equity or
    encumbrance of any kind (each, a "Lien") except for such Liens as are not,
    individually or in the aggregate, material to the Company and its
    Subsidiaries, considered as one enterprise.

         (viii) The authorized capital stock of the Company conforms to the
    description thereof under the caption "Description of Capital Stock"
    contained in the Prospectus and such description conforms to the rights set
    forth in the instruments defining the same.

         (ix) The Shares have been duly authorized and, when issued and paid
    for in accordance with this Agreement, will be validly issued, fully paid
    and non-assessable. All corporate action required to be taken for the
    authorization, issuance and delivery of such Shares has been validly taken.
    The issuance of the Shares is not subject to any preemptive rights of any
    stockholder of the Company.

         [(x) In the event that any of the Shares are purchased pursuant to
    Delayed Delivery Contracts, each of such Delayed Delivery Contracts has
    been duly authorized by the Company and, when executed and delivered on
    behalf of the Company and duly authorized, executed and delivered on behalf
    of the purchaser thereunder, will constitute a valid and 

                                       7


    binding obligation of the Company enforceable against the Company in
    accordance with its terms, except as enforcement thereof may be limited by
    bankruptcy, insolvency (including, without limitation, all laws relating to
    fraudulent transfers), reorganization, moratorium or similar laws affecting
    enforcement of creditors' rights generally and except as enforcement
    thereof is subject to general principles of equity (regardless of whether
    enforcement is considered in a proceeding in equity or at law).]

         (xi) All of the other outstanding shares of capital stock of the
    Company have been duly authorized and validly issued and are fully paid and
    non-assessable; no holder thereof is or will be subject to personal
    liability by reason of being such a holder; and none of the outstanding
    shares of capital stock of the Company was issued in violation of the
    preemptive rights of any stockholder of the Company.

         (xii) Since the respective dates as of which information is given in
    the Registration Statement and the Prospectus, except as otherwise stated
    therein or contemplated thereby, there has not been (A) any material
    adverse change in the condition (financial or otherwise), earnings or
    business affairs of the Company and its Subsidiaries, considered as one
    enterprise, whether or not arising in the ordinary course of business, (B)
    any transaction entered into by the Company or any Subsidiary, other than
    in the ordinary course of business, that is material to the Company and its
    Subsidiaries, considered as one enterprise, or (C) any dividend or
    distribution of any kind declared, paid or made by the Company on its
    capital stock.

         (xiii) Neither the Company nor any Subsidiary is in default in the
    performance or observance of any obligation, agreement, covenant or
    condition contained in any contract, indenture, mortgage, loan agreement,
    note, lease or other agreement or instrument to which it is a party or by
    which it may

                                       8


    be bound or to which any of its properties may be subject, except for such
    defaults that would not have a material adverse effect on the condition
    (financial or otherwise), earnings or business affairs of the Company and
    its Subsidiaries, considered as one enterprise. The execution and delivery
    by the Company of this Agreement [and any Delayed Delivery Contracts,] the
    issuance and delivery of the Shares, the consummation by the Company of the
    transactions concerning the Shares contemplated herein and in the
    Registration Statement and compliance by the Company with the terms of this
    Agreement [and any Delayed Delivery Contracts] have, in each case, been
    duly authorized by all necessary corporate action on the part of the
    Company and do not and will not result in any violation of the certificate
    of incorporation or by-laws of the Company, and do not and will not
    conflict with, or result in a breach of any of the terms or provisions of,
    or constitute a default under, or result in the creation or imposition of
    any lien, charge or encumbrance upon any property or assets of the Company
    or any Subsidiary under (A) any contract, indenture, mortgage, loan
    agreement, note, lease or other agreement or instrument to which the
    Company or any Subsidiary is a party or by which it may be bound or to
    which any of its properties may be subject (except for such conflicts,
    breaches or defaults or liens, charges or encumbrances that would not have
    a material adverse effect on the condition (financial or otherwise),
    earnings or business affairs of the Company and its Subsidiaries,
    considered as one enterprise) or (B) any existing applicable law, rule,
    regulation (other than state securities, foreign securities or Blue Sky
    laws, rules and regulations), judgment, order or decree of any government,
    governmental instrumentality or court, domestic or foreign, having
    jurisdiction over the Company or any Subsidiary or any of their respective
    properties (except for such conflicts, breaches or defaults or liens,
    charges or encumbrances that would not have a material adverse effect on
    the condition (financial or otherwise), earnings or business affairs of the

                                       9


    Company and its Subsidiaries, considered as one enterprise).

         (xiv) No authorization, approval, consent or license of any
    government, governmental instrumentality or court, domestic or foreign
    (other than under the 1933 Act and the 1934 Act and the securities or Blue
    Sky laws of the various states and foreign securities laws), is required
    for the valid authorization, issuance, sale and delivery of the Shares or
    for the compliance with the transactions contemplated in this Agreement.

         (xv) Except as disclosed in the Prospectus, there is no action, suit
    or proceeding before or by any government, governmental instrumentality or
    court, domestic or foreign, now pending or, to the knowledge of the
    Company, threatened against or affecting the Company or any Subsidiary that
    is required to be disclosed in the Prospectus or that could reasonably be
    expected to result in any material adverse change in the condition
    (financial or otherwise), earnings or business affairs of the Company and
    its Subsidiaries, considered as one enterprise, or that could reasonably be
    expected to materially and adversely affect the properties or assets of the
    Company and its Subsidiaries, considered as one enterprise, or that could
    reasonably be expected to adversely affect the consummation of the
    transactions contemplated in this Agreement. The aggregate of all pending
    legal or governmental proceedings to which the Company or its Subsidiaries
    is a party or to which any of its or their respective properties is subject
    that are not described in the Prospectus, including ordinary routine
    litigation incidental to its or their business, could not reasonably be
    expected to have a material adverse effect on the condition (financial or
    otherwise), earnings or business affairs of the Company and its
    Subsidiaries, considered as one enterprise.

         (xvi) There are no statutes, regulations, contracts or other documents
    of a character required

                                      10


    to be described in the Registration Statement or the Prospectus or to be
    filed as exhibits to the Registration Statement that are not described and
    filed as required.

         (xvii) The Company and each Subsidiary have good and marketable title
    to all properties and assets, including, without limitation, intangible
    property rights described in the Prospectus as owned by it, free and clear
    of all liens, charges, encumbrances, restrictions (other than as described
    in paragraph 1(a)(ix) hereof) or defects, except such as (A) are described
    (1) in the Indenture dated as of October 1, 1994, between the
    Company and Bank of America, Illinois, as trustee, (2) in the Indenture and
    the Supplemental Indenture No. 1 dated as of February 28, 1996, between the
    Company and First Trust of Illinois, National Association, as trustee,
    (3) in the 364 Day Credit Agreement, dated as of March 4, 1997, among PHH
    Corporation, PHH Vehicle Management Services Inc., the Lenders thereunder
    and The Chase Manhattan Bank, (4) in the Five Year Credit Agreement, dated
    as of March 4, 1997, among PHH Corporation, the Lenders and The Chase
    Manhattan Bank, (5) in the Five Year Revolving Credit and Competitive
    Advance Facility Agreement, dated as of October 2, 1996, among the Company,
    the lenders thereunder and The Chase Manhattan Bank, (6) in the 364 Day
    Revolving Credit and Competitive Advance Facility Agreement, dated as of
    October 2, 1996, among the Company, the lenders thereunder and The Chase
    Manhattan Bank, (7) in the Indenture dated as of June 5, 1997, between PHH
    Corporation and The First National Bank of Chicago and (8) in the Amended
    and Restated Pooling and Servicing Agreement dated as of October 5, 1994,
    as amended, among Cendant Mobility Funding Corporation, Cendant Mobility
    Services, Inc., Citicorp North America, Inc. and Bankers Trust Company, the
    Amended and Restated Purchase Agreement dated as of October 5, 1994, as
    amended, between Cendant Mobility Services, Inc. and Cendant Mobility
    Funding Corporation and the Amended and Restated Investor Funding Agreement
    dated as of October 5, 1994, as amended, among Cendant Mobility Funding
    Corporation, Bankers Trust Company, Citicorp North America, Inc., as agent,
    Bank of America Illinois, as co-agent, and the investors named therein, (B)
    are leases of real

                                      11


    property in which the Company or its Subsidiaries have good title and that
    would be marketable but for the requirement that the landlord consent to an
    assignment of the lease or (C) are neither material in amount nor
    materially significant in relation to the business of the Company and its
    Subsidiaries, considered as one enterprise; all of the leases and subleases
    material to the business of the Company and the Subsidiaries, considered as
    one enterprise, and under which the Company or any Subsidiary holds
    properties described in the Prospectus, are in full force and effect, and
    neither the Company nor any Subsidiary has any notice of any material claim
    of any sort that has been asserted by anyone adverse to the rights of the
    Company or any Subsidiary under any of the leases or subleases mentioned
    above, or affecting or questioning the rights of such corporation to the
    continued possession or use of the leased or subleased properties under any
    such lease or sublease.

         (xviii) (a) The Company and each Subsidiary own, possess or have
    obtained all material governmental licenses, permits, certificates,
    consents, orders, approvals and other authorizations necessary to own or
    lease, as the case may be, and to operate its or their properties and to
    carry on its or their business as presently conducted; (b) neither the
    Company nor any of its Subsidiaries has received any notice of proceedings
    relating to revocation or modification of any such licenses, permits,
    certificates, consents, orders, approvals or authorizations which could
    result in a material adverse change of the condition (financial or
    otherwise), earnings or financial affairs of the Company and its
    Subsidiaries, considered as one enterprise; and (c) the Company and each
    Subsidiary are in all respects complying with each license, permit,
    certificate, consent, order, approval and other authorization, except where
    the failure to do so would not have a material adverse effect on the
    condition (financial or otherwise), earnings or business affairs of the
    Company and its Subsidiaries, considered as one enterprise.

                                      12


         (xix) Subject to each of the franchise and license agreements entered
    into by the Company or any of its Subsidiaries, the Company and each of the
    Subsidiaries own or have the unrestricted right to use such patents, patent
    licenses, trademarks, trademark licenses, service marks, service mark
    licenses and trade names and registrations thereof as are necessary to
    carry on their respective businesses as described in the Prospectus and as
    currently conducted, except where the failure to own or possess any of the
    Marks or the Ramada Marks would not have a material adverse effect on the
    condition (financial or otherwise), earnings or business affairs of the
    Company and its Subsidiaries, considered as one enterprise. Neither of the
    Company nor any of its Subsidiaries has received any notice of infringement
    of or conflict with asserted rights of others with respect to any of the
    Marks or the Ramada Marks, or any applications therefor or registrations
    thereof, that in the aggregate would materially and adversely affect the
    condition (financial or otherwise), earnings or business affairs of the
    Company and its Subsidiaries, considered as one enterprise. In addition to,
    and not in limitation of, anything else contained in this paragraph
    (xviii), the Company or a Subsidiary (y) is the exclusive owner of all
    rights, title and interest (subject to all existing franchise and license
    agreements referred to above) in and to the Marks within the United States
    and outside the United States is the owner of the registrations and
    applications as are necessary to carry on its business as described in the
    Prospectus and as currently conducted, except where the failure to be such
    owner would not have a material adverse effect on the condition (financial
    or otherwise), earnings or business affairs of the Company and its
    Subsidiaries, considered as one enterprise and (z) is the exclusive
    licensee in the United States of the Ramada Marks. Such intellectual
    property with respect to the Company's Century 21, Coldwell Banker and ERA,
    Days Inns of America, Inc. ("Days Inn"), Super 8 Motels, Inc. ("Super 8"),
    the Villager Lodge

                                      13


    Franchise Systems, Inc. ("Villager Lodge"), the Knights Franchise Systems,
    Inc. ("Knights Inn"), Howard Johnson and Travelodge Hotels, Inc.
    ("Travelodge") businesses (each as described in the Prospectus and as
    currently conducted) is referred to herein as the "Marks" and such
    intellectual property with respect to the Company's Ramada business (as
    described in the Prospectus and as currently conducted) is hereinafter
    referred to as the "Ramada Marks".

         (xx) To the best knowledge of the Company, no labor problem exists
    with its employees, with employees of any Subsidiary or, to the best
    knowledge of the Company without having made any inquiry or independent
    investigation, with the employees of any party which licenses a franchise,
    directly or indirectly, from a Subsidiary (a "Franchisee") or is imminent
    that could reasonably be expected to materially adversely affect the
    Company and its Subsidiaries, considered as one enterprise.

         (xxi) To the best knowledge of the Company, no dispute exists or is
    imminent with any Franchisee or with the Franchisees that could reasonably
    be expected to materially adversely affect the Company and the
    Subsidiaries, considered as one enterprise.

         (xxii) Neither the Company nor any of its Subsidiaries has taken or
    will take, directly or indirectly, any action designed to, or that might be
    reasonably expected to, cause or result in stabilization or manipulation of
    the price of the Preferred Stock.

         (xxiii) The Company and each Subsidiary are in material compliance
    with all applicable existing federal, state and local laws and regulations
    relating to protection of human health or the environment and have no
    liability or alleged liability under any such law which is required to be
    disclosed in the Registration Statement that is not so disclosed.

                                      14


         (xxiv) All United States federal income tax returns of the Company and
    each Subsidiary required by law to be filed have been filed and all taxes
    shown on such returns or otherwise assessed which are due and payable have
    been paid, except tax assessments being contested in good faith and as to
    which adequate reserves have been provided. All other tax returns of the
    Company and each Subsidiary required to be filed pursuant to applicable
    foreign, state, local or other law have been filed, except insofar as the
    failure to file such returns would not have a material adverse effect on
    the condition (financial or otherwise), earnings or business affairs of the
    Company and its Subsidiaries, considered as one enterprise, and all taxes
    shown on such returns or otherwise assessed which are due and payable have
    been paid, except for such taxes, if any, as are being contested in good
    faith and as to which adequate reserves have been provided. The charges,
    accruals and reserves on the books of the Company and its Subsidiaries in
    respect of any income and corporate franchise tax liability for any years
    not finally determined are believed to be adequate to meet any assessments
    or reassessments for additional income or corporate franchise tax for any
    years not finally determined, except to the extent of any inadequacy that
    would not have a material adverse effect on the condition (financial or
    otherwise), earnings or business affairs of the Company and its
    Subsidiaries considered as one enterprise.

         (xxv) Each Franchisee is such by virtue of being a party to a
    franchise contract with either the Company or a Subsidiary and assuming
    each such contract has been duly authorized, executed and delivered by the
    parties thereto, other than the Company or a Subsidiary, each such contract
    constitutes a valid, legal and binding obligation of each party thereto,
    enforceable against the Company or a Subsidiary in accordance with its
    terms, except (A) for any one or more of such franchise contracts as would
    not have a material adverse effect on the

                                      15


    condition (financial or other wise), earnings or business affairs of the
    Company and its Subsidiaries, considered as one enterprise, and (B) to the
    extent that enforcement thereof may be limited by (1) bankruptcy,
    insolvency, reorganization, moratorium or other similar laws now or
    hereafter in effect relating to creditors' rights generally and (2) general
    principles of equity (regardless of whether enforceability is considered in
    a proceeding in equity or at law).

         (xxvi) The Company and each Subsidiary have complied and are currently
    complying in all material respects with the rules and regulations of the
    United States Federal Trade Commission and the comparable laws, rules and
    regulations of each state or state agency applicable to the franchising
    business of the Company and such Subsidiary in each state in which the
    Company or such Subsidiary is doing business. The Company and each
    Subsidiary have complied and are currently complying in all material
    respects with the Federal Real Estate Settlement Procedures Act and the
    real estate brokerage laws, rules and regulations of each state or state
    agency applicable to the real estate franchising business of the Company
    and such Subsidiary in each state in which the Company or such Subsidiary
    is doing business.

         (xxvii) The Shares will, upon notice of issuance, be listed on the New
    York Stock Exchange (the "NYSE").

         (xxviii) The Company is not an "investment company" or an entity
    "controlled" by an "investment company" as such terms are defined in the
    Investment Company Act of 1940, as amended.

         (b) Any certificate signed by any officer of the Company or any
    Subsidiary and delivered to you or to counsel for the Underwriters shall be
    deemed a representation and warranty by the Company or by a Subsidiary, as
    applicable, to each Underwriter as to the matters covered thereby.

                                      16


         Section 2. Purchase and Sale. (a) On the basis of the representations
and warranties herein contained (except as may be otherwise specified in
Schedule II hereto) and subject to the terms and conditions herein set forth,
the Company agrees to sell to each Underwriter, and each Underwriter agrees,
severally and not jointly, to purchase from the Company, at the purchase price
per share for the Firm Shares set forth in Schedule II hereto, the number of
Firm Shares set forth opposite the name of such Underwriter in Schedule I
hereto.

         (b) In addition, on the basis of the representations and warranties
    herein contained, and subject to the terms and conditions herein set forth,
    the Company hereby grants an option to the Underwriters, severally and not
    jointly, to purchase up to an additional [ ] of Additional Shares as set
    forth in Schedule II hereto at the same purchase price as shall be
    applicable to the Firm Shares. The option hereby granted will expire 30
    days after the date hereof, and may be exercised, in whole or from time to
    time in part (but not more than twice), only for the purpose of covering
    over-allotments that may be made in connection with the offering and
    distribution of the Firm Shares upon notice by you to the Company setting
    forth the number of Additional Shares as to which the several U.S.
    Underwriters are exercising this option, and the time and date of payment
    and delivery thereof. Such time and date of delivery (each, a "Delivery
    Date") shall be determined by you but shall not be later than seven full
    business days after the exercise of such option, nor in any event prior to
    the Closing Time. If the option is exercised as to all or any portion of
    the Additional Shares, each of the Underwriters, acting severally and not
    jointly, will purchase from the Company that portion of the aggregate
    number of Additional Shares being purchased which the number of Firm Shares
    set forth opposite the name of such Underwriter bears to the total number
    of Firm Shares (such proportion is hereinafter referred to as such
    Underwriter's

                                      17


    "underwriting obligation proportion").

         (c) Payment of the purchase price for, and delivery of, the Firm
    Shares shall be made at the date, time and location specified in Schedule
    II hereto, or at such other date, time or location as shall be agreed upon
    by the Company and you, or as shall otherwise be provided in Section 11
    (such date and time of payment and delivery being herein called the
    "Closing Time"). Unless otherwise specified in Schedule II, payment shall
    be made to the Company by you by wire or bank transfer of same day funds
    payable to the account of the Company, against delivery to you for the
    respective accounts of the several Underwriters of the Firm Shares.
    Certificates for the Firm Shares shall be in such authorized denominations
    and registered in such names as you may request in writing at least two
    full business days before the Closing Time. Certificates for the Firm
    Shares will be made available in New York City for examination and
    packaging by you not later than 10:00 A.M. on the business day prior to the
    Closing Time. In addition, in the event that any or all of the Additional
    Shares are purchased by the Underwriters, payment of the purchase price
    for, and delivery of, such Additional Shares shall be made at the same
    location as set forth above, or at such other place as the Company and you
    shall determine, on each Delivery Date as specified in the notice from you
    to the Company. Payment for the Additional Shares shall be made by wire or
    bank transfer of same day funds.

         (d) If specified in Schedule II, the Underwriters may solicit offers
    to purchase Shares from the Company pursuant to Delayed Delivery Contracts
    substantially in the form of Schedule IV with such changes therein as the
    Company may approve. Any Delayed Delivery Contracts are to be with
    institutional investors of the types set forth in the Prospectus. If
    Delayed Delivery Contracts are specified in Schedule II, at the Closing
    Time, the Company will enter into Delayed Delivery Contracts (for the
    minimum principal amount of Shares per

                                      18


    Delayed Delivery Contract specified in Schedule II) with all purchasers
    proposed by the Underwriters and previously approved by the Company as
    provided below, but not for an aggregate principal amount of Shares less
    than or greater than the minimum and maximum aggregate principal amounts
    specified in Schedule II. The Underwriters will not have any responsibility
    for the validity or performance of Delayed Delivery Contracts.

         (e) You are to submit to the Company, at least three business days
    prior to the Closing Time, the names of any institutional investors with
    which it is proposed that the Company enter into Delayed Delivery
    Contracts, the number of Shares to be purchased by each of them and the
    date of delivery thereof, and the Company will advise you, at least two
    business days prior to the Closing Time, of the names of the institutions
    with which the making of Delayed Delivery Contracts is approved by the
    Company and the number of Shares to be covered by each such Delayed
    Delivery Contract.

         (f) As compensation for arranging Delayed Delivery Contracts, the
    Company will pay (by wire or bank transfer of same day funds) to you at the
    Closing Time, for the accounts of the Underwriters, a fee equal to that
    percentage of the gross proceeds from the sale of the Shares for which
    Delayed Delivery Contracts are made at the Closing Time as is specified in
    Schedule II or the amount of such fee may be deducted from the payment
    delivered pursuant to Section 2(b).

         (g) The number of Shares agreed to be purchased by each Underwriter
    shall be reduced by the number of Shares covered by Delayed Delivery
    Contracts as to such Underwriter, as set forth in a notice delivered by you
    to the Company; provided, however, that the total number of Shares to be
    purchased by all Underwriters shall be the number of Shares covered by this
    Agreement, less the number of Shares covered by all Delayed Delivery
    Contracts.

                                      19


         It is understood that each Underwriter has authorized you, for its
account, to accept delivery of, receipt for, and make payment of the purchase
price for, the Shares that it has agreed to purchase. You, individually and not
as Representatives, may (but shall not be obligated to) make payment of the
purchase price for the Firm Shares to be purchased by any Underwriter whose
payments shall not have been received by the Closing Time or each Delivery
Date, if any, as the case may be.

         Section 3. Certain Covenants of the Company. The Company covenants
with each Underwriter as follows:

         (a) If reasonably requested by you in connection with the offering of
    the Shares, the Company will prepare a preliminary prospectus supplement
    containing such information as you and the Company deem appropriate and,
    immediately following the execution of this Agreement, the Company will
    prepare a Prospectus Supplement that complies with the 1933 Act and the
    1933 Act Regulations and that sets forth the number of Shares and their
    terms, the name of each Underwriter participating in the offering and the
    number of Shares that each severally has agreed to purchase, the name of
    each Underwriter, if any, acting as representative of the Underwriters in
    connection with the offering, the price at which the Shares are to be
    purchased by the Underwriters from the Company, any initial public offering
    price, any selling concession and reallowance and [any delayed delivery
    arrangements, and] such other information as you and the Company deem
    appropriate in connection with the offering of the Shares. The Company will
    promptly transmit copies of the Prospectus Supplement to the Commission for
    filing pursuant to Rule 424 under the 1933 Act and will furnish to the
    Underwriters as many copies of any preliminary prospectus supplement and
    the Prospectus as you shall reasonably request.

         (b) If at any time when the Prospectus is required by the 1933 Act to
    be delivered in

                                      20


    connection with sales of the Shares, any event shall occur or condition
    exist as a result of which it is necessary, in the opinion of counsel for
    the Underwriters or counsel for the Company, to amend the Registration
    Statement or amend or supplement the Prospectus in order that the
    Prospectus will not include an untrue statement of a material fact or omit
    to state a material fact necessary in order to make the statements therein
    not misleading in the light of the circumstances existing at the time it is
    delivered to a purchaser, or if it shall be necessary, in the opinion of
    either such counsel, at any such time to amend the Registration Statement
    or amend or supplement the Prospectus in order to comply with the
    requirements of the 1933 Act or the 1933 Act Regulations, the Company will
    promptly prepare and file with the Commission, subject to Section 3(f),
    such amendment or supplement as may be necessary to correct such untrue
    statement or omission or to make the Registration Statement or the
    Prospectus comply with such requirements.

         (c) During the period when the Prospectus is required by the 1933 Act
    to be delivered in connection with sales of the Shares, the Company will,
    subject to Section 3(f), file promptly all documents required to be filed
    with the Commission pursuant to Section 13, Section 14 or Section 15(d) of
    the 1934 Act.

         (d) During the period when the Prospectus is required by the 1933 Act
    to be delivered in connection with sales of the Shares, the Company will
    inform you of its intention to file any amendment to the Registration
    Statement, any supplement to the Prospectus or any document that would as a
    result thereof be incorporated by reference in the Prospectus; and the
    Company will furnish you with copies of any such amendment, supplement or
    other document at a reasonable time in advance of filing, except any
    current report on Form 8-K filed with the Commission with respect to a
    press release issued by the Company that is not reasonably expected to have
    a material effect on the

                                      21


    Company or the price of the Preferred Stock; provided, however, that the
    Company shall inform you of its intention to file documents pursuant to
    Section 14(d) of the 1934 Act and shall furnish you with copies of such
    documents immediately upon the filing thereof; and provided further that
    you or your counsel shall not be entitled to object thereto other than
    pursuant to Section 3(b).

         (e) During the period when the Prospectus is required by the 1933 Act
    to be delivered in connection with sales of the Shares, the Company will
    notify you immediately, and confirm the notice in writing, (i) of the
    effectiveness of any amendment to the Registration Statement, (ii) of the
    mailing or the delivery to the Commission for filing of any supplement to
    the Prospectus or any document that would as a result thereof be
    incorporated by reference in the Prospectus, (iii) of the receipt of any
    comments from the Commission with respect to the Registration Statement,
    the Prospectus or the Prospectus Supplement, (iv) of any request by the
    Commission for any amendment to the Registration Statement or any
    supplement to the Prospectus or for additional information relating thereto
    or to any document incorporated by reference in the Prospectus and (v) of
    the issuance by the Commission of any stop order suspending the
    effectiveness of the Registration Statement, of the suspension of the
    qualification of the Shares for offering or sale in any jurisdiction, or of
    the institution or threatening of any proceeding for any of such purposes.
    The Company will use every reasonable effort to prevent the issuance of any
    such stop order or of any order suspending such qualification and, if any
    such order is issued, to obtain the lifting thereof at the earliest
    possible moment.

         (f) The Company has furnished or will furnish to you one signed copy
    of the Registration Statement (as originally filed), of any Rule 462(b)
    Registration Statement, and of all amendments thereto, whether filed before
    or after the Registration Statement became effective, copies of

                                      22


    all exhibits and documents filed therewith or incorporated by reference
    therein (through the end of the period when the Prospectus is required by
    the 1933 Act to be delivered in connection with sales of the Shares) and
    signed copies of all consents and certificates of experts, as you may
    reasonably request, and has furnished or will furnish to you, for each of
    the Underwriters, ten conformed copies of the Registration Statement (as
    originally filed), of any Rule 462(b) Registration Statement and of each
    amendment thereto (including documents incorporated by reference into the
    Prospectus but without exhibits).

         (g) The Company will use its best efforts, in cooperation with the
    Underwriters, to qualify the Shares for offering and sale under the
    applicable securities laws of such states and other jurisdictions as you
    may designate and to maintain such qualifications in effect for a period of
    not less than one year from the date hereof; provided, however, that the
    Company shall not be obligated to file any general consent to service of
    process or to qualify as a foreign corporation or as a dealer in securities
    in any jurisdiction in which it is not so qualified or to subject itself to
    taxation in respect of doing business in any jurisdiction in which it is
    not otherwise so subject. The Company will file such statements and reports
    as may be required by the laws of each jurisdiction in which the Shares
    have been qualified as above provided. The Company will also supply you
    with such information as is necessary for the determination of the legality
    of the Shares for investment under the laws of such jurisdictions as you
    may request.

         (h) The Company will make generally available to its security holders
    as soon as practicable, but not later than 45 days after the close of the
    period covered thereby, an earnings statement of the Company (in form
    complying with the provisions of Rule 158 of the 1933 Act Regulations),
    covering (i) a period of 12 months beginning after the effective date of
    the Registration Statement (or, if

                                      23


    applicable, any Rule 462(b) Registration Statement) and covering a period
    of 12 months beginning after the effective date of any post-effective
    amendment to the Registration Statement but not later than the first day of
    the Company's fiscal quarter next following such respective effective dates
    and (ii) a period of 12 months beginning after the date of this Agreement
    but not later than the first day of the Company's fiscal quarter next
    following the date of this Agreement.

         (i) If and to the extent specified in Schedule II hereto, the Company
    will use its best efforts to cause the Shares to be duly authorized for
    listing on the New York Stock Exchange.

         (j) For a period of two years after the Closing Time, the Company will
    furnish to you and, upon request, to each Underwriter, copies of all annual
    reports, quarterly reports and current reports filed with the Commission on
    Forms 10-K, 10-Q and 8-K, or such other similar forms as may be designated
    by the Commission, and such other documents, reports and information as
    shall be furnished by the Company to its stockholders or security holders
    generally.

         (k) The Company agrees, for a period of 90 days from the date of the
    Prospectus Supplement, they will not, without the prior written consent of
    [____________] in any transaction settled by delivery of Preferred Stock or
    other securities, in cash or otherwise, (i) register, offer, pledge, sell,
    contract to sell, purchase any option or contract to sell, grant any
    option, right or warrant to purchase, or otherwise transfer or dispose of,
    directly or indirectly, any shares of Preferred Stock of the Company or any
    securities convertible into, or exercisable or exchangeable for, Preferred
    Stock of the Company (provided, however, that the Company may file a shelf
    registration statement covering its equity securities during such 90 day
    period) or (ii) enter into any swap or similar agreement that transfers, in
    whole or in part, the economic risk of ownership of such Preferred Stock

                                      24


    (except for (y) Preferred Stock (A) issued as part of the offering of the
    Shares, (B) issued upon conversion of 3% Convertible Subordinated Notes Due
    2002 the Company's 4 3/4% Convertible Senior Notes due 2003, (C) issued
    pursuant to the Company's stock option or employee benefit plans, (D)
    issued by the Company in connection with strategic acquisitions, (E) issued
    or sold pursuant to employee benefit plans of the Company existing at the
    Closing Time, and (F) sold in connection with an employee's decision to
    direct that 401(k) contributions be invested in Preferred Stock; provided
    that any shares issued pursuant to clause (D) above in excess of 5% of the
    then outstanding shares of Preferred Stock shall remain subject to the
    foregoing restriction) or exercise any right to have securities of the
    Company registered by the Company under the 1933 Act.

         (l) The Company has complied and will comply with all the provisions
    of Florida H.B. 1771, codified as Section 517.075 of the Florida statutes,
    and all regulations promulgated thereunder relating to issuers doing
    business in Cuba.

         Section 4. Payment of Expenses. The Company will pay and bear all
costs and expenses incident to the performance of its obligations under this
Agreement, including, without limitation, (a) the preparation, printing and
filing of the Registration Statement (including financial statements and
exhibits), as originally filed and as amended, any preliminary prospectus
supplements and the Prospectus and any amendments or supplements thereto, and
the cost of furnishing copies thereof to the Underwriters, (b) the preparation,
printing and distribution of this Agreement, [any Delayed Delivery Contracts,]
the Shares, the Blue Sky Survey, (c) the delivery of the Shares to the
Underwriters, (d) the fees and disbursements of the Company's counsel and
accountants and the fees and disbursements of the Company's counsel (including,
without limitation, local counsel upon whom such counsel may rely in rendering
their opinion required by Section 5 and 6 hereof), (e) the qualification of the
Shares under

                                      25


the applicable securities laws, (f) the reasonable fees and disbursements of
counsel in connection with the Blue Sky Survey, and (g) any applicable fees for
listing the Shares on an exchange.

         If this Agreement is terminated by you in accordance with the
provisions of Section 5 or Section 10(a)(i), the Company shall reimburse the
Underwriters for all of their reasonable out-of-pocket expenses, including the
reasonable fees and disbursements of counsel for the Underwrit ers, incurred by
them in connection with the public offering of the Shares.

         Section 5. Conditions of the Underwriters' Obligations. Except as
otherwise provided in Schedule II hereto, the obligations of the several
Underwriters to purchase and pay for the Shares that they have respectively
agreed to purchase hereunder, including any Additional Shares as to which the
option granted in Section 2 has been exercised and the Delivery Date determined
by you is the same as the Closing Time, are subject to (i) the accuracy of the
representations and warranties of the Company contained herein or in
certificates of the Company's officers delivered pursuant to the provisions
hereof, (ii) the performance by the Company of its obligations hereunder, (iii)
the delivery to the Underwriters at the Closing Time by the Company of all of
the Firm Shares, and (iv) the following further conditions:

         (a) The Registration Statement shall have become effective prior to
    the date hereof or, with your consent, at a later time and date no later,
    however, than the first business day following the date hereof, or at such
    later date as you may agree to in writing with the approval of a majority
    in interest of the several underwriters; and at the Closing Time, no stop
    order suspending the effectiveness of the Registration Statement shall have
    been issued under the 1933 Act and no proceedings for that purpose shall
    have been instituted or shall be pending or, to your knowledge or the
    knowledge of the Company, shall be contemplated by the Commission, and any
    request on

                                      26


    the part of the Commission for additional information shall have been
    complied with to the reasonable satisfaction of counsel for the
    Underwriters.

         (b) At the Closing Time, you shall have received a signed opinion of
    Skadden, Arps, Slate, Meagher & Flom, in New York, in its capacity as
    special counsel for the Company, dated as of the Closing Time, together
    with signed or reproduced copies of such opinion for each of the other
    Underwriters, in form and substance reasonably satisfactory to Counsel for
    the Underwriters to the effect as attached hereto as Exhibit 1.

         (c) At the Closing Time, you shall have received signed opinions of
    Counsel for the Company, and Siegal, Barnett & Schutz, special South Dakota
    counsel for the Company, dated as of the Closing Time, together with signed
    or reproduced copies of such opinions for each of the other Underwriters,
    in form and substance reasonably satisfactory to counsel for the
    Underwriters to the effect, with respect to the opinion of Counsel for the
    Company, as attached hereto as Exhibit 2.

         (d) At the Closing Time, you shall have received a signed opinion of
    Schaefer, Rosenwein & Fleming, special trademark counsel for the Company
    with respect to the Coldwell Banker franchise system, dated as of the
    Closing Time, together with signed or reproduced copies of such opinion for
    each of the other Underwriters, in form and substance reasonably
    satisfactory to counsel for the Underwriters.

         The opinions referred to above in clauses (b), (c) and (d) shall be to
such further effect with respect to other legal matters relating to this
Agreement and the sale of the Shares pursuant to this Agreement as counsel for
the Underwriters may reasonably request. Such counsel may also state that,
insofar as such opinion involves factual matters, they have relied, to the
extent they

                                      27


deem proper, upon certificates of officers of the Company, as the case may be,
and certificates of public officials; provided that such certificates have been
delivered to the Underwriters.

         In giving the opinions referred to above in clause (b), (c) and (d),
such counsel may rely, as to all matters governed by the laws of jurisdictions
other than those in which they are expert, upon opinions of other counsel who
shall be counsel reasonably satisfactory to counsel for the Underwriters, in
which case the opinion shall state that they believe you and they are justified
and entitled to so rely.

         (e) At the Closing Time, you shall have received the favorable opinion
    of [_________], counsel for the Underwriters, dated as of the Closing Time,
    together with signed or reproduced copies of such opinion for each of the
    other Underwriters.

         (f) At the Closing Time, (i) the Registration Statement and the
    Prospectus, as they may then be amended or supplemented, shall contain all
    statements that are required to be stated therein under the 1933 Act and
    the 1933 Act Regulations and in all material respects shall conform to the
    requirements of the 1933 Act and the 1933 Act Regulations, and the 1934 Act
    and the 1934 Act Regulations, the Company shall have complied in all
    material respects with Rule 430A (if it shall have elected to rely thereon)
    and (A) the Registration Statement, as it may then be amended or
    supplemented, shall not contain an untrue statement of a material fact or
    omit to state a material fact required to be stated therein or necessary to
    make the statements therein not misleading and (B) the Prospectus, as it
    may be amended or supplemented, will not include an untrue statement of a
    material fact or omit to state a material fact necessary in order to make
    the statements therein, in the light of the circumstances under which they
    were made, not misleading, (ii) there shall not have been, since the
    respective dates as of which information is

                                      28


    given in the Registration Statement, any material adverse change in the
    condition (financial or otherwise), earnings, business affairs or business
    prospects of the Company and its Subsidiaries, considered as one
    enterprise, whether or not arising in the ordinary course of business,
    (iii) no action, suit or proceeding shall be pending or, to the knowledge
    of the Company, threatened against the Company or any Subsidiary that would
    be required to be set forth in the Prospectus other than as set forth
    therein and no proceedings shall be pending or, to the knowledge of the
    Company, threatened against the Company or any Subsidiary before or by any
    federal, state or other commission, board or administrative agency wherein
    an unfavorable decision, ruling or finding would materially adversely
    affect the condition (financial or otherwise), earnings, business affairs
    or business prospects of the Company and its Subsidiaries, considered as
    one enterprise, other than as set forth in the Prospectus, (iv) the Company
    shall have complied in all material respects with all agreements and
    satisfied in all material respects all conditions included herein on its
    part to be performed and satisfied at or prior to the Closing Time and (v)
    the other representations and warranties of the Company set forth in
    Section 1(a) shall be accurate as though expressly made at and as of the
    Closing Time. At the Closing Time, you shall have received a certificate of
    the Chairman of the Board or the President and the Chief Financial Officer
    of the Company, dated as of the Closing Time, to such effect, it being
    understood that such certificate shall not constitute personal
    representations and warranties of the signing individual.

         (g) You shall have received a letter or letters at the date hereof
    substantially in the form attached hereto as Schedule VI hereto, and a
    letter or letters to be delivered at the Closing Time reaffirming the
    statements made in each such letter or letters, except that the inquiries
    and procedures specified therein shall have been carried out to a

                                      29


    specified date not more than five days prior to the Closing Time.

         (h) The Company shall have complied with the provisions of Section
    3(a) hereof with respect to the furnishing of Prospectuses and Supplemental
    Prospectuses on the business day next succeeding the date of this
    Agreement, in such quantities as you reasonably request.

         (i) At the Closing Time, counsel for the Underwriters shall have been
    furnished with all such documents, certificates and opinions as they may
    reasonably request for the purpose of enabling them to pass upon the
    issuance and sale of the Shares as herein contemplated and the matters
    referred to in Section 5(c) and in order to evidence the accuracy and
    completeness of any of the representations, warranties or statements of the
    Company, the performance of any of the covenants of the Company, or the
    fulfillment of any of the conditions herein contained; and all proceedings
    taken by the Company at or prior to the Closing Time in connection with the
    authorization, issuance and sale of the Shares as herein contemplated shall
    be reasonably satisfactory in form and substance to you and to counsel for
    the Underwriters.

         (j) The Shares have been duly authorized for listing by the New York
    Stock Exchange subject to notice of issuance thereof and notice of a
    satisfactory distribution of the Shares.

         If any of the conditions specified in this Section 5 shall not have
been fulfilled when and as required by this Agreement to be fulfilled, this
Agreement may be terminated by you on notice to the Company at any time at or
prior to the Closing Time, and such termination shall be without liability of
any party to any other party, except as provided in Section 4 herein.
Notwithstanding any such termination, the provisions of Sections 7, 8 and 9
shall remain in effect.

         Section 6. Conditions to Purchase of Additional

                                      30


Shares. In the event that the Underwriters exercise their option granted in
Section 2 to purchase all or any of the Additional Shares, and each Delivery
Date determined by you pursuant to Section 2 is later than the Closing Time,
the obligations of the several Underwriters to purchase and pay for the
Additional Shares that they shall have respectively agreed to purchase pursuant
to this Agreement (collectively, the "purchased Additional Shares") are subject
to the accuracy of the representations and warranties of the Company herein
contained, to the performance by the Company of its obligations hereunder, the
delivery to the Underwriters at the Delivery Date by the Company of such
Additional Shares and to the following further conditions:

         (a) The Registration Statement shall remain effective at each Delivery
    Date, and, at each Delivery Date, no stop order suspending the
    effectiveness of the Registration Statement shall have been issued under
    the 1933 Act and no proceedings for that purpose shall have been instituted
    or shall be pending, or, to your knowledge or the knowledge of the Company,
    shall be threatened by the Commission, and any request on the part of the
    Commission for additional information shall have been complied with to the
    reasonable satisfaction of counsel for the Underwriters.

         (b) At each Delivery Date, the provisions of Sections 5(f)(i) through
    5(f)(v) shall have been complied with at and as of each Delivery Date and,
    at each Delivery Date, you shall have received a certificate of the
    Chairman of the Board or the President and the Chief Financial Officer of
    the Company, dated as of such Delivery Date, to such effect, it being
    understood that such certificate shall not constitute personal
    representations and warranties of the signing individual.

         (c) At each Delivery Date, you shall have received the favorable
    opinion of Skadden, Arps, Slate, Meagher & Flom LLP in New York, in its
    role as special counsel for the Company, James Buckman, Esq., General
    Counsel for the Company, together with

                                      31


    signed or reproduced copies of such opinions for each of the other
    Underwriters, respectively, dated as of each Delivery Date, relating to the
    purchased Additional Shares and otherwise to the same effect required by
    Sections 5(b) and 5(c), as the case may be, and each such counsel shall
    have been furnished with all such documents, certificates and opinions as
    such counsel may reasonably request for the purpose of enabling such
    counsel to deliver such opinion or opinions.

         The opinions referred to above shall be to such further effect with
respect to other legal matters relating to this Agreement and the sale of the
Shares pursuant to this Agreement as counsel for the Underwriters may
reasonably request. Such counsel may also state that, insofar as such opinion
involves factual matters, they have relied, to the extent they deem proper,
upon certificates of officers of the Company, and certificates of public
officials; provided that such certificates have been delivered to the
Underwriters.

         In giving the opinions referred to above, each such counsel may rely,
as to all matters governed by the laws of jurisdictions other than those in
which they are expert, upon opinions of other counsel who shall be counsel
reasonably satisfactory to counsel for the Underwriters, in which case the
opinion shall state that they believe you and they are justified and entitled
to so rely.

         (d) At each Delivery Date, you shall have received the favorable
    opinion of [__________ ], counsel for the Underwriters, dated as of such
    Delivery Date, relating to the purchased Additional Shares and otherwise to
    the same effect as the opinion required by Section 5(e).

         (e) At each Delivery Date, you shall have received a separate letter
    from Deloitte & Touche LLP, in form and substance satisfactory to you and
    dated as of such Delivery Date, to the effect that they reaffirm the
    statements made in their respective letter furnished pursuant to Section
    5(f), except

                                      32


    that the specified date referred to shall be a date not more than five days
    prior to such Delivery Date.

         (f) At each Delivery Date, counsel for the Underwriters shall have
    been furnished with all such documents, certificates and opinions as they
    may reasonably request for the purpose of enabling them to pass upon the
    issuance and sale of the purchased Additional Shares as contemplated in the
    Underwriting Agreement and the matters referred to in Section 6(d) and in
    order to evidence the accuracy and completeness of any of the
    representations, warranties or statements of the Company, the performance
    of any of the covenants of the Company, or the fulfillment of any of the
    conditions herein contained; and all proceedings taken by the Company at or
    prior to each Delivery Date in connection with the authorization, issuance
    and sale of the purchased Additional Shares as contemplated in the
    Underwriting Agreement shall be reasonably satisfactory in form and
    substance to you and to counsel for the Underwriters.

         Section 7. Indemnification. (a) The Company agrees to indemnify and
hold harmless each Underwriter and each person, if any, who controls any
Underwriter, as the case may be, within the meaning of Section 15 of the 1933
Act, as follows:

         (i) against any and all loss, liability, claim, damage and expense
    whatsoever, as incurred, arising out of an untrue statement or alleged
    untrue statement of a material fact contained in the Registration Statement
    (or any amendment thereto), including all documents incorporated therein by
    reference, or the omission or alleged omission therefrom of a material fact
    required to be stated therein or necessary to make the statements therein
    not misleading or arising out of an untrue statement or alleged untrue
    statement of a material fact included in any preliminary prospectus
    supplement or the Prospectus (or any amendment or supplement thereto) or
    the omission or alleged omission therefrom of a material fact necessary in
    order to

                                      33


    make the statements therein, in the light of the circumstances under which
    they were made, not misleading;

         (ii) against any and all loss, liability, claim, damage and expense
    whatsoever, as incurred, to the extent of the aggregate amount paid in
    settlement of any litigation or investigation or proceeding by any
    governmental agency or body, commenced or threatened, or of any claim
    whatsoever based upon any such untrue statement or omission, or any such
    alleged untrue statement or omission, if such settlement is effected with
    the written consent of the Company; and

         (iii) against any and all expense whatsoever, as incurred, including
    fees and disbursements of counsel chosen by you, reasonably incurred in
    investigating, preparing or defending against any litigation, or
    investigation or proceeding by any governmental agency or body, commenced
    or threatened, or any claim whatsoever based upon any such untrue statement
    or omission, or any such alleged untrue statement or omission, to the
    extent that any such expense is not paid under subparagraph (i) or (ii)
    above;

provided, however, that this indemnity agreement does not apply to any loss,
liability, claim, damage or expense to the extent arising out of an untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through you expressly for use in the Registration Statement (or any
amendment thereto) or any preliminary prospectus supplement or the Prospectus
(or any amendment or supplement thereto); and provided, further, however, that
the foregoing indemnification with respect to any preliminary prospectus
supplement shall not inure to the benefit of any Underwriter (or any person
controlling such Underwriter) from whom the person asserting any such losses,
claims, damages or liabilities purchased any of the Shares if a copy of the
Prospectus (as then amended or supplemented if the Company shall have furnished
any

                                      34


amendments or supplements thereto) was not sent or given by or on behalf of
such Underwriter to such person, if such is required by law, at or prior to the
written confirmation of the sale of such Shares to such person and if the
Prospectus (as so amended or supplemented) would have cured the defect giving
rise to such loss, claim, damage or liability.

         (b) Each Underwriter severally agrees to indemnify and hold harmless
    the Company, its directors, each of its officers who signed the
    Registration Statement, and each person, if any, who controls the Company
    within the meaning of Section 15 of the 1933 Act and of Section 20 of the
    1934 Act, from and against any and all loss, liability, claim, damage and
    expense described in the indemnity agreement in Section 7(a), as incurred,
    but only with respect to untrue statements or omissions, or alleged untrue
    statements or omissions, made in the Registration Statement (or any
    amendment thereto) or any preliminary prospectus supplement or the
    Prospectus (or any amendment or supplement thereto) in reliance upon and in
    conformity with written information furnished to the Company by or on
    behalf of such Underwriter expressly for use in the Registration Statement
    (or any amendment thereto) or such preliminary prospectus supplement or the
    Prospectus (or any amendment or supplement thereto).

         (c) In case any proceeding (including any governmental investigation)
    shall be instituted involving any person in respect of which indemnity may
    be sought pursuant to any of the two preceding paragraphs, such person (the
    "indemnified party") shall promptly notify the person against whom such
    indemnity may be sought (the "indemnifying party") in writing and the
    indemnifying party, upon request of the indemnified party, shall retain
    counsel reasonably satisfactory to the indemnified party to represent the
    indemnified party and any others the indemnifying party may designate in
    such proceeding and shall pay the fees and disbursements of such counsel
    related to such proceeding. In any such proceeding, any indemnified party
    shall have the

                                      35


    right to retain its own counsel, but the fees and expenses of such counsel
    shall be at the expense of such indemnified party unless (i) the
    indemnifying party and the indemnified party shall have mutually agreed to
    the retention of such counsel or (ii) the named parties to any such
    proceeding (including any impleaded parties) include both the indemnifying
    party and the indemnified party and representation of both parties by the
    same counsel would be inappropriate due to actual or potential differing
    interests between them. It is understood that the indemnifying party shall
    not, in respect of the legal expenses of any indemnified party in
    connection with any proceeding or related proceedings in the same
    jurisdiction, be liable for the fees and expenses of more than one separate
    firm (in addition to any local counsel) for all such indemnified parties
    and that all such fees and expenses shall be reimbursed as they are
    incurred. In the case of any such separate firm for the Underwriters and
    such control persons of Underwriters, such firm shall be designated in
    writing by. In the case of any such separate firm for the Company, and such
    directors, officers and control persons of the Company, such firm shall be
    designated in writing by the Company. The indemnifying party shall not be
    liable for any settlement of any proceeding effected without its written
    consent, but if settled with such consent or if there be a final judgment
    for the plaintiff, the indemnifying party agrees to indemnify the
    indemnified party from and against any loss or liability by reason of such
    settlement or judgment. No indemnifying party shall, without the prior
    written consent of the indemnified party, effect any settlement of any
    pending or threatened proceeding in respect of which any indemnified party
    is or could have been a party and indemnity could have been sought
    hereunder by such indemnified party, unless such settlement includes an
    unconditional release of such indemnified party from all liability on
    claims that are the subject matter of such proceeding.

                                      36


         Section 8. Contribution. If the indemnification provided for in
Sections 7(a) and 7(b) is for any reason held to be unenforceable by the
indemnified parties although applicable in accordance with its terms, then each
indemnifying party under such paragraph (it being understood that an
indemnifying party is one who would have had an obligation to provide
indemnification pursuant to Section 7 had such indemnification been
enforceable), in lieu of indemnifying such indemnified party thereunder, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (i) in such proportion as is
appropriate to reflect (A) the relative benefits received by the Underwriters,
and (B) that the Company is responsible for the balance or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the allocation referred
to in clause (i) above but also the relative fault of the indemnifying party or
parties on the one hand and of the indemnified party or parties on the other
hand in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Underwriters on the other hand in connection with the offering of the
Shares shall be deemed to be in the same respective proportions as the net
proceeds from the offering of the Shares (before deducting expenses) received
by the Company and the total underwriting discounts and commissions received by
the Underwriters, in each case as set forth in the table on the cover of the
Prospectus Supplement, bear to the aggregate public offering price of the
Shares. The relative fault of the Company on the one hand and of the
Underwriters on the other hand shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to
information supplied by the Company or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Underwriters' respective obligations to
contribute pursuant to this Section 8 are

                                      37


several in proportion to the respective number of Shares they have purchased
hereunder, and not joint.

         The Company and the Underwriters agree that it would not be just or
equitable if contribution pursuant to this Section 8 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 8, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Shares underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages that such Underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall
be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The remedies provided for in this Section 8 are
not exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.

         Section 9. Representations, Warranties and Agreements to Survive
Delivery. The representations, warranties, indemnities, agreements and other
statements of the Company or its officers set forth in or made pursuant to this
Agreement will remain operative and in full force and effect regardless of any
investigation made by or on behalf of the Company, any Underwriter or any
person who controls the Company or any Underwriter within the meaning of
Section 15 of the 1933 Act and will survive delivery of and payment for the
Shares.

                                      38


         Section 10. Termination of Agreement. (a) You may terminate this
Agreement, by notice to the Company, at any time at or prior to the Closing
Time (i) if there has been, since the respective dates as of which information
is given in the Registration Statement, any material adverse change in the
condition (financial or otherwise), earnings, business affairs or business
prospects of the Company and its subsidiaries, considered as one enterprise,
whether or not arising in the ordinary course of business, or (ii) if there has
occurred any material adverse change in the financial markets in the United
States or any outbreak of hostilities or escalation thereof or other calamity
or crisis the effect of which on the financial markets of the United States is
such as to make it, in your judgment, impracticable to market the Shares or
enforce contracts for the sale of the Shares or (iii) if trading in any
securities of the Company has been suspended by the Commission, the New York
Stock Exchange or any other exchange or quotation system on which securities of
the Company are listed, or if trading generally on either the American Stock
Exchange or the New York Stock Exchange or in the overthe-counter market has
been suspended, or minimum or maximum prices for trading have been fixed, or
maximum ranges for prices for securities have been required, by such exchange
or by order of the Commission or any other governmental authority or (iv) if a
banking moratorium has been declared by either federal, New Jersey or New York
authorities.

         (b) If this Agreement is terminated pursuant to this Section 10, such
    termination shall be without liability of any party to any other party,
    except to the extent provided in Section 4 herein. Notwithstanding any such
    termination, the provisions of Sections 7, 8 and 9 shall remain in effect.

         Section 11. Default by One or More of the Underwriters. If one or more
of the Underwriters shall fail at the Closing Time to purchase the Firm Shares
that it or they are obligated to purchase (the "Defaulted Shares"), you shall
have the right, within 24 hours thereafter, to make arrangements for one or
more of the 

                                      39


non-defaulting Underwriters, or any other underwriters, to purchase
all, but not less than all, of the Defaulted Shares in such amounts as may be
agreed upon and upon the terms herein set forth; if, however, you have not
completed such arrangements within such 24-hour period, then:

         (a) if the number of Defaulted Shares does not exceed 10% of the total
    number of the Shares to be purchased pursuant to this Agreement, the
    non-defaulting Underwriters shall be obligated to purchase the full amount
    thereof in the proportions that their respective underwriting obligation
    proportions (as defined below) bear to the underwriting obligation
    proportions of all non-defaulting Underwriters, or

         (b) if the number of Defaulted Shares exceeds 10% of the total number
    of the Shares to be purchased pursuant to this Agreement, this Agreement
    shall terminate without liability on the part of any non-defaulting
    Underwriter.

         No action taken pursuant to this Section 11 shall relieve any
defaulting Underwriter from liability in respect of its default.

         In the event of any such default that does not result in a termination
of this Agreement, either you or the Company shall have the right to postpone
the Closing Time or the Delivery Date, as applicable for a period not exceeding
seven days in order to effect any required changes in the Registration
Statement or Prospectus or in any other documents or arrangements. As used
herein, the term "Underwriter" includes any person substituted for an
Underwriter under this Section 11. As used herein, the term "underwriting
obligation proportion" means the proportion that the number of Firm Shares set
forth opposite the name of each Underwriter in Schedule I hereto bears to the
total number of Firm Shares.

         Section 12. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if delivered,
mailed or

                                      40


transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed as set forth in Schedule I. Notices to the
Company shall be directed to it at 6 Sylvan Way, Parsippany, New Jersey
07054, attention of James Buckman, Esq., General Counsel.

         Section 13. Parties. This Agreement is made solely for the benefit of
the several Underwriters, the Company and, to the extent expressed, any person
who controls the Company or any of the Underwriters within the meaning of
Section 15 of the 1933 Act, and the directors of the Company, its officers who
have signed the Registration Statement, and their respective executors,
administrators, successors and assigns and, subject to the provisions of
Section 11, no other person shall acquire or have any right under or by virtue
of this Agreement. The term "successors and assigns" shall not include any
purchaser, as such purchaser, from any Underwriter of the Shares. If there are
two or more Underwriters, all of their obligations hereunder are several and
not joint.

         Section 14. Governing Law and Time. This Agreement shall be governed
by the laws of the State of New York. Specified times of the day refer to New
York City time.

         Section 15. Counterparts. This Agreement may be executed in one or
more counterparts and when a counterpart has been executed by each party, all
such counterparts taken together shall constitute one and the same agreement.

         Section 16. Headings. All headings of the sections and subparts
thereof of this Agreement are for convenience of reference only and shall not
be deemed a part of this Agreement.

                                      41


         If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
instrument will become a binding agreement between the Company and each
Underwriter in accordance with its terms.

                                            Very truly yours,


                                            CENDANT CORPORATION


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

Confirmed and Accepted, as of the date first above written:

[UNDERWRITERS]

By:

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


                                      42


                                                              SCHEDULE I
                                                              to Underwriting
                                                              Agreement dated
                                                              [_____________]


                              CENDANT CORPORATION

                                Preferred Stock

                                                              Number of Initial
                                                                   Shares
Underwriter                                                    to be Purchased
- -----------                                                    ---------------

Total.........................................................________________




                                      43

 
                                                              SCHEDULE II
                                                              to Underwriting
                                                              Agreement
                                                              dated [________]


                              CENDANT CORPORATION

                                Preferred Stock

Number of Firm Shares to be issued:                                 [________]

Number of Additional Shares to be issued:                           [________]

Initial public offering price:                                      $_______

Purchase price:                                                     $_______

Closing date, time and location:

Delayed delivery contracts:

Listing requirement:

Other terms and conditions:


                                      44


                                                     SCHEDULE III
                                                     to Underwriting Agreement
                                                     dated [______________]

                          SUBSIDIARIES OF THE COMPANY





                                                     SCHEDULE IV
                                                     to Underwriting Agreement
                                                     dated [_______________]


                              CENDANT CORPORATION

                                Preferred Stock

                           DELAYED DELIVERY CONTRACT

CENDANT CORPORATION
6 Sylvan Way
Parsippany, New Jersey  07054

Dear Sirs:

         The undersigned hereby agrees to purchase from Cendant Corporation, a
Delaware corporation (the "Company"), and the Company agrees to sell to the
undersigned on _______, 19__ (the "Delivery Date"), __________________________
[____] Shares of the Company's Preferred Stock, par value $.01 per share (the
"Shares"), offered by the Company's Prospectus dated ________, 1996, as
supplemented by its Prospectus Supplement dated _______, 19__, receipt of which
is hereby acknowledged, at a purchase price of $____ per share, a on the
further terms and conditions set forth in this contract.

         Payment for the Shares shall be made to the Company or its order by
certified or official bank check in New York Clearing House funds, at the
offices of _____________, _____________, New York, New York, at A.M., New York
City time, on the Delivery Date (or in such other funds and/or at such other
place as the Company and the undersigned may agree upon in writing), upon
delivery of the Shares to the undersigned, in such authorized denominations and
registered in such names as the undersigned may request in writing addressed to
the Company not less than five business days prior to the Delivery Date.

                                      48


         The obligation of the undersigned to take delivery of and make payment
for the Shares on the Delivery Date shall be subject only to the conditions
that (1) the purchase of the Shares by the undersigned shall not, on the
Delivery Date, be prohibited under the laws of any jurisdiction to which the
undersigned is subject and that govern such investment, and (2) the Company, on
or before _______, 19__, shall have sold to the Underwriters of the Shares (the
"Underwriters") such number of Shares as is to be sold to them pursuant to the
Underwriting Agreement dated the date hereof between the Company and the
Underwriters. The obligation of the undersigned to take delivery of and make
payment for the Shares shall not be affected by the failure of any Underwriter
or other purchaser to take delivery of and make payment for the Shares pursuant
to other contracts simi lar to this contract.

         Promptly after completion of the sale to the Underwriters, the Company
will mail or deliver to the undersigned, at its address set forth below, a
notice to such effect, accompanied by a copy of the opinion of counsel for the
Company delivered to the Underwriters in connection therewith.

         By the execution hereof, the undersigned represents and warrants to
the Company that (1) its investment in the Shares is not, as of the date
hereof, prohibited under the laws of any jurisdiction to which the undersigned
is subject and that govern such investment, (2) all necessary corporate action
for the due execution and delivery of this contract and the payment for and
purchase of the Shares has been taken by it and no further authorization or
approval of any governmental or other regulatory authority is required for such
execution, delivery, payment or purchase and (3) upon the acceptance by the
Company and the mailing or delivery of a copy as provided below, this contract
will constitute a valid and binding agreement of the undersigned in accordance
with its terms.

         This contract will inure to the benefit of and be binding upon the
parties hereto and their respective

                                      49


successors, but will not be assignable by either party hereto without the
written consent of the other.

         It is understood that the Company will not accept Delayed Delivery
Contracts for a number of Shares, the aggregate proceeds of which are in excess
of $______ and that the acceptance of any Delayed Delivery Contract is in the
Company's sole discretion and, without limiting the foregoing, need not be on a
first-come, first-served basis. If this contract is acceptable to the Company,
it is requested that the Company sign the form of acceptance on a copy hereof
and mail or deliver a signed copy to the undersigned at its address set forth
below. This will become a binding contract between the Company and the
undersigned when such copy is so mailed or delivered.

                                      50


This contract shall be governed by the laws of the State of New York.

                                                 Yours very truly,

                                                 (Name of Purchaser)


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


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

                                                 ------------------------------
                                                 (Address)


Accepted as of the date first above written:

CENDANT CORPORATION

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

                 PURCHASER - PLEASE COMPLETE AT TIME OF SIGNING

         The name and telephone number of the representative of the Purchaser
with whom details of delivery on the Delivery Date may be discussed is as
follows: (Please print.)

                                                               Telephone No.
Name                                                      (including Area Code)
- ----                                                      ---------------------





                                      51


                                                     SCHEDULE V
                                                     to Underwriting Agreement
                                                     dated [_______________]


                   MATTERS TO BE COVERED BY LETTER OR LETTERS
                       OF INDEPENDENT PUBLIC ACCOUNTANTS

         To the extent that a report or opinion of Deloitte & Touche, LLP, on
the Consolidated Financial Statements of Cendant Corporation is included or
incorporated by reference in the Registration Statement or any exhibit thereto,
the Prospectus or any Prospectus Supplement, such firm, to the extent
applicable, shall have furnished to you the following letter or letters (in
each case in form and substance satisfactory to you):

    (1) At the date hereof, a letter (the "Comfort Letter"), to the effect
    that:

         (a) They are independent accountants with respect to the Company and
    its subsidiaries within the meaning of the 1933 Act and the applicable
    published 1933 Act Regulations.

         (b) In their opinion, the audited consolidated financial statements
    and the related financial statement schedules of the Company reported on by
    them included or incorporated by reference in such annual report on Form
    10-K comply as to form in all material respects with the applicable
    accounting requirements of the 1933 Act and the published 1933 Act
    Regulations with respect to Registration Statements on Form S-3 and the
    1934 Act and the published 1934 Act Regulations with respect to annual
    reports on Form 10-K.

         (c) Such letter shall further state that they have performed such
    other procedures, specified by you, not constituting an audit, as they have
    agreed to perform and report on with respect to certain amounts,
    percentages, numerical data and other

                                      52


    financial information in the Form 10-K identified by you and have compared
    certain of such amounts, percentages, numerical data and financial
    information with, and have found such items to be in agreement with or
    derived from, the detailed accounting records of the Company and its
    subsidiaries.

         (d) On the basis of procedures (but not an examination in accordance
    with generally accepted auditing standards) consisting of:

              (i) a reading of minutes of all meetings of the Company's
         shareholders, Board of Directors (including the audit, executive and
         compensation committees) from the date of the latest audited
         consolidated financial statements of the Company and its subsidiaries;

              (ii) a reading of the unaudited condensed consolidated financial
         statements of the Company and its subsidiaries included or
         incorporated by reference in the quarterly report on Form 10-Q for
         each Form 10-Q filed; and

              (iii) inquiries of certain officials of the Company who have
         responsibility for financial and accounting matters as to (A) whether
         the unaudited condensed consolidated financial statements referred to
         in (ii) above comply as to form in all material respects with the
         applicable ac counting requirements of the 1934 Act and the published
         1934 Act Regulations with respect to Form 10-Q and (B) whether such
         unaudited condensed consolidated financial statements are in
         conformity with generally accepted accounting principles applied on a
         basis substantially consistent with that of the audited consolidated
         financial statements referred to above;

nothing came to their attention that caused them to believe that the unaudited
condensed consolidated

                                      53


financial statements included or incorporated by reference in such quarterly
report on Form 10-Q do not comply as to form in all material respects with the
applicable accounting requirements of the 1934 Act and the published 1934 Act
Regulations with respect to Form 10-Q, or that such unaudited condensed
consolidated financial statements are not in conformity with generally accepted
accounting principles applied on a basis substantially consistent with that of
audited consolidated financial statements referred to above, except as
disclosed in the notes to such unaudited condensed consolidated financial
statements.

         (e) Such letter shall further state that they have performed such
    other procedures, specified by you, not constituting an audit, as they have
    agreed to perform and report on with respect to certain amounts,
    percentages, numerical data and other financial information in the Form
    10-Qs identified by you and have compared certain of such amounts,
    percentages, numerical data and financial information with, and have found
    such items to be in agreement with or derived from, the detailed accounting
    records of the Company and its subsidiaries.

         (f) On the basis of the inquiries and procedures referred to in
    Section 1(d) of Schedule III (but carried out to the specified date
    referred to in Section 2(a) of Schedule III), nothing came to their
    attention that caused them to believe that, from the date of the latest
    balance sheet of the Company and its subsidiaries included or incorporated
    by reference in theProspectus to such specified date, there was:

              (i) any change in the capital stock of the Company, as compared
         with the amount shown in such latest balance sheet;

              (ii) any decrease in stockholders' equity of the Company and its
         subsidiaries, as compared with the amounts shown in such latest
         balance sheet;

                                      54


              (iii) any increase in long-term debt of the Company and its
         subsidiaries, as compared with the corresponding total amount of such
         debt outstanding at the date of such latest balance sheet; or

              (iv) any decrease from the date of such latest balance sheet to
         such specified date in consolidated net revenue of the Company and its
         subsidiaries or in the total amount or per share amount (on a primary
         and fully diluted basis) of consolidated net income of the Company and
         its subsidiaries, as compared with the corresponding period of the
         preceding year, except in all instances for changes or decreases that
         the Prospectus discloses have occurred or may occur or that are
         described in the Closing Letter.

         (g) Such letter shall further state that they have performed such
    other procedures, specified by you, not constituting an audit, as they have
    agreed to perform and report on with respect to certain amounts,
    percentages, numerical data and other financial information in the
    Registration Statement, the Prospectus and the exhibits to the Registration
    Statement or in the documents incorporated by reference in the Prospectus
    identified by you, and have compared certain of such amounts, percentages,
    numerical data and financial information with, and have found such items to
    be in agreement with or derived from, the detailed accounting records of
    the Company and its subsidiaries.

         (2) At the Closing Time, a letter dated the Closing Time (the "Closing
Letter"), to the effect that they reaffirm as of the date of the Closing Letter
(and as though made on the date of the Closing Letter) all statements made in
the comfort letter, if any, except that the inquiries and procedures specified
therein shall have been carried out to a specified date not more than five days
prior to the date of the Closing Letter.

                                      55


                                                                      EXHIBIT 1

                  SKADDEN, ARPS, SLATE, MEAGHER & FLOM OPINION

         Based upon and subject to the limitations, qualifications, exceptions
and assumptions set forth above, we are of the opinion that:

         (1) the authorized capital stock of the Company conform in all
material respects as to legal matters to the description thereof contained in
the Prospectus;

         (2) the Underwriting Agreement has been duly authorized, executed and
delivered by the Company;

         (3) the execution and delivery by the Company of, and the performance
by the Company of its obligations under, the Underwriting Agreement will not
(i) contravene any provision of the Amended and Restated Certificate of
Incorporation of the Company as currently in effect or the Amended and Restated
By-Laws of the Company as currently in effect, (ii) contravene any agreement or
other instrument binding upon the Company or any of its subsidiaries that is
listed as an exhibit to (a) the Registration Statement or (b) the Company's
Annual Report on Form 10-K for the fiscal year ending December 31, ____, as
amended, or (iii) violate any present statute, rule or regulation
(collectively, "Requirements of Law") or any order, judgment or decree of any
court or governmental agency or body (collectively, "Orders") having
jurisdiction over the Company or any of its properties or assets. The opinion
expressed in clause (iii) of this paragraph (3) is based on our review of those
Requirements of Law which are ordinarily applicable to transactions of the type
provided for in the Underwriting Agreement, but without making any special
investigation concerning any other Requirements of Law, and those Orders
specifically identified to us by the Company as being Orders to which it is
subject (no such Orders have been so identified to such counsel). In addition,
we express no opinion in this paragraph (3) with respect to (i) any state
securities or Blue Sky

                                      56


laws, rules or regulations or (ii) the information contained in, or the
accuracy, completeness or correctness of, the Prospectus or the Registration
Statement or the compliance thereof as to form with the Securities Act of 1933
(the "Act") and the General Rules and Regulations thereunder, which matters are
dealt with in paragraphs (1) above and (5) below and the second paragraph
following paragraph (7) below;

         (4) based upon our review of those Requirements of Law which are
ordinarily applicable to transactions of the type provided for in the
Underwriting Agreement, but without having made any special investigation
concerning any other Requirements of Law, no consent, approval, authorization
or Order of, or filing or registration with, any court or governmental agency
or body having jurisdiction over the Company and its Subsidiaries or any of
their respective properties or assets is required for the execution, delivery
and performance of the Underwriting Agreement by the Company or the
consummation by the Company of the transactions contemplated thereby except for
(i) such as have been obtained under the Act and the Securities Exchange Act of
1934, as amended (the "Exchange Act"), or (ii) such as may be required under
state securities or Blue Sky laws in connection with the purchase and
distribution of the shares by you, as to which we express no opinion;

         (5) the statements made in the Prospectus under the caption
"Description of Capital stock," to the extent such statements constitute
summaries of legal matters and documents or legal conclusions, have been
reviewed by us and fairly present the information disclosed therein in all
material respects;

         (6) (i) each document filed pursuant to the Exchange Act, and
incorporated by reference in the Prospectus (other than the financial
statements, notes and schedules thereto and other financial information
included in or omitted from such document as to which we need express no
opinion), when filed, appeared on its face to be responsive as to form in all
material respects with the requirements of the Exchange Act and the applicable
rules and regulations of the Commission

                                      57


thereunder and (ii) each of the Registration Statement and the Prospectus
(other than the financial statements, notes and schedules thereto and other
financial information included in or omitted from the Registration Statement or
Prospectus, as to which we express no opinion), as of their respective
effective or issue dates, appeared on their face to be responsive as to form in
all material respects with the requirements of the Act and the applicable rules
and regulations thereunder; and such counsel does not have actual knowledge of
any contracts or other documents of a character required to be filed as an
exhibit to the Registration Statement which are not filed as required; and

         (7) the Company is not required to be registered or regulated as an
"investment company" as such term is defined under the Investment Company Act
of 1940, as amended.

         We have been orally advised by the Commission that the Registration
statement was declared effective under the 1933 Act at ___ on __________ and,
we have been advised by the Commission that no stop order suspending the
effectiveness of the Registration Statement under the 1933 Act has been issued
and, to the best of our knowledge, no proceedings for that purpose have been
initiated or are pending or threatened by the Commission.

         In addition, we have participated in conferences with officers and
representatives of the Company, representatives of the independent accountants
of the Company, and you and your counsel at which the contents of the
Registration Statement and the Prospectus and related matters were discussed
and, although we are not passing upon and do not assume any responsibility for,
the accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus and we have made no independent check
or verification thereof, except as set forth in numbered paragraph 5 hereof, on
the basis of the foregoing, no facts have come to our attention that have led
us to believe that the Registration Statement, on the original effective date
of the Registration Statement, on the effective date of the most recent
post-effective

                                      58


amendment thereto, if any, on the date of the filing of any annual report on
Form 10-K after the filing of the Registration Statement, on the date of the
Underwriting Agreement, or at the Closing Time, contained an untrue statement
of a material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, or that the
Prospectus, or any amendment or supplement thereto, at the time the Prospectus
Supplement was issued at the time any such amended or supplemented Prospectus
was issued or at the Closing Time, contained or contains an untrue statement of
a material fact or omitted or omits to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, except that we express no opinion or belief
with respect to the financial statements, schedules and other financial data
included therein or excluded therefrom.

                                                 Very truly yours,


                                      59


                                                                      EXHIBIT 2

                            COMPANY COUNSEL OPINION

         Based upon and subject to the limitations, qualifications, exceptions
and assumptions set forth herein, I am of the opinion that:

         1. the Company has been duly organized and is subsisting in good
standing as a corporation under the laws of the State of Delaware with
corporate power and corporate authority under such laws to own, lease and
operate its properties and conduct its business as described in the Prospectus;

         2. the Company is qualified to do business and is in good standing as
a foreign corporation in each other jurisdiction in which it owns or leases
property of a nature, or transacts business of a type, that would make such
qualification necessary except to the extent that the failure to so qualify or
be in good standing would not have a material adverse effect on the Company and
its subsidiaries, considered as one enterprise;

         3. each of the subsidiaries that is incorporated in Delaware (a
"Delaware Subsidiary") has been duly organized and is subsisting and in good
standing as a corporation under the laws of Delaware with corporate power and
corporate authority under such laws to own, lease and operate its properties
and conduct its business;

         4. each subsidiary is qualified to do business and is in good standing
as a foreign corporation in each other jurisdiction in which it owns or leases
property of a nature, or transacts business of a type, that would make such
qualification necessary except to the extent that the failure to so qualify or
be in good standing would not have a material adverse effect on the Company and
its subsidiaries, considered as one enterprise;

         5. all of the outstanding shares of capital stock of the Company have
been duly authorized by all

                                      60


requisite corporate action on the part of the Company and have been validly
issued and are fully paid and nonassessable; no holder thereof is or will be
subject to personal liability by reason of being such a holder; and none of the
outstanding shares of capital stock of the Company were issued in violation of
the preemptive rights of any stockholder of the Company;

         6. the Shares have been duly authorized and validly reserved for
issuance by the Company and, when issued and paid for in accordance with the
terms of the Underwriting Agreement, will be validly issued, fully paid and
nonassessable; all corporate action required to be taken for the authorization,
issuance and delivery of such Shares has been validly taken; the issuance of
the Shares is not subject to any preemptive rights of any stockholder of the
Company;

         7. the authorized, issued and outstanding capital stock of the Company
is as described in the Prospectus under the caption "Description of Capital
Stock";

         8. all of the outstanding shares of capital stock of each Delaware
Subsidiary have been duly authorized by all requisite corporate action on the
part of the relevant Delaware Subsidiary and have been validly issued and are
fully paid and nonassessable. All of the shares of capital stock of each of the
Company Subsidiaries are owned by the Company free and clear of any pledge,
lien, security interest, charge, claim, encumbrance or equity (each a "Lien")
except for such Liens as are not, individually or in the aggregate, material to
the Company and its subsidiaries, considered as one enterprise;

         9. there are no statutes or regulations, or any pending or, to my
knowledge, threatened legal or governmental proceedings against the Company or
any subsidiary, required to be described in the Prospectus that are not
described as required, nor are there any contracts or documents required to be
described in the

                                      61


Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement that are not described or filed as required;
furthermore, no default exists in the due performance or observance by the
Company, or any subsidiary, or, to my knowledge, any other party thereto, of
any material obligation, agreement, covenant or condition contained in any
contract, indenture, loan agreement, note, lease or other agreement or
instrument that is described in the Registration Statement or the Prospectus or
filed as an exhibit to the Registration State ment, except such defaults that
do not have a material adverse effect on the Company and its subsidiaries,
considered as one enterprise;

         10. the provisions of the contracts and agreements that are summarized
in the Prospectus or in the Company's Proxy Statement dated [ ] (the "Proxy")
under the heading "Certain Relationships and Related Transactions" and
"Executive Compensation" conform in all material respects to the description
thereof contained in the Prospectus or Proxy and such description fairly
presents the information disclosed;

         11. the Underwriting Agreement has been duly authorized, executed and
delivered by the Company;

         12. the execution and delivery of the Underwriting Agreement by the
Company and compliance by the Company with the terms of the Underwriting
Agreement (a) do not and will not constitute or result in a breach of or a
default under any of the terms or provisions of, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of
the Company or any subsidiary under (i) any indenture, mortgage or loan
agreement, or any other agreement, including without limitation the Credit
Agreement (as defined in the Prospectus) or instrument to which the Company or
any subsidiary is a party or by which it may be bound or to which any of its
properties may be subject, (ii) any judgment, order or decree applicable to the
Company or any subsidiary of any government, governmental instrumentality or
court, domestic, or foreign, having jurisdic tion over the Company or any

                                      62


subsidiary or any of their properties, and (B) do not and will not result in a
violation of any applicable law, rule or regulation (except for the federal
securities laws, and the securities or blue sky laws of the various states, as
to which I express no opinion) except, in each case, for such breaches,
defaults or violations that would not have a material adverse effect on the
condition (financial or otherwise), earnings or business affairs of the Company
and its subsidiaries, considered as one enterprise;

         13. except as previously disclosed to you in writing, (i) the Company
or its subsidiaries are the beneficial owners of the U.S. trademarks and
service marks set forth in the Prospectus, with the exception of the Ramada
mark; (ii) there is no claim, suit, action or proceeding pending or, to the
best of my knowledge, threatened against the Company or any subsidiary that
involves a claim of infringement of any trademark or service marks which
infringement (if the subject of any unfavorable decision) would have a material
adverse effect on the Company and its subsidiaries, considered as one
enterprise; and (iii) the current use of the trademarks and service marks by
the Company or any of its subsidiaries does not, to the best of my knowledge,
infringe upon any right of any third party which infringement (if the subject
of any unfavorable decision) would reasonably be expected to have a material
adverse effect on the Company and its subsidiaries, considered as one
enterprise;

         14. all corporate action required to be taken for consummation of the
Merger has been validly taken.

         In addition, I have participated in conferences with other officers
and representatives of the Company, representatives of the independent
accountants of the Company, and you and your counsel at which the contents of
the Registration Statement and the Prospectus and related matters were
discussed and, although I am not passing upon, and do not assume any
responsibility for, the accuracy, completeness or fairness of the statements
contained in the Registration Statement or the Prospectus and I have made no
independent check or verification

                                      63


thereof, except as otherwise specifically referred to in paragraph 12 of this
opinion, on the basis of the foregoing, no facts have come to my attention that
have led me to believe that the Registration Statement, on the original
effective date of the Registration Statement, on the effective date of the most
recent post-effective amendment thereto, if any, on the date of the filing of
any annual report on Form 10-K after the filing of the Registration Statement,
on the date of the Underwriting Agreement, or at the Closing Time, contained an
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading, or that the Prospectus, or any amendment or supplement thereto, at
the time the Prospectus Supplement was issued, at the time any such amended or
supplemented Prospectus was issued or at the Closing Time, contained or
contains an untrue statement of a material fact or omitted or omits to state a
material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading, except that I
express no opinion or belief with respect to the financial statements,
schedules and other financial data included therein or excluded therefrom.

                                                 Very truly yours,




                                      64




                                    NUMBER

                              CENDANT CORPORATION

                                CORPORATE SEAL
                                     1974
                                   DELAWARE

                          AMERICAN BANK NOTE COMPANY

                                 COMMON STOCK
                                Par Value $.01

                                 COMMON STOCK
                                Par Value $.01

                             INCORPORATED UNDER THE
                         LAWS OF THE STATE OF DELAWARE

                       THIS CERTIFICATE IS TRANSFERABLE
                            IN NEW YORK, NEW YORK
                       AND RIDGEFIELD PARK, NEW JERSEY

                                    SHARES

                               CUSIP 151313 10 3

                     SEE REVERSE FOR CERTAIN DEFINITIONS

                          [LOGO] CENDANT CORPORATION

THIS CERTIFIES THAT
                                   SPECIMEN
IS THE OWNER OF

         FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK OF

Cendant Corporation transferable on the books of the Corporation by the
holder hereof in person or by duly authorized attorney upon surrender of this
Certificate properly endorsed. This Certificate and the shares represented
hereby are issued an shall be held subject to  all of the provisions of the
Certificate of Incorporation and By-laws of the Corporation and all amendments
thereto.  This Certificate is not valid unless countersigned and registered by
the Transfer Agent and Registrar.

     Witness the facsimile seal of the Corporation and the facsimile signatures
of its duly authorized officers.

Dated:

COUNTERSIGNED AND REGISTERED
    ChaseMellon Shareholder Services, L.L.C.
        TRANSFER AGENT AND REGISTRAR

BY

AUTHORIZED SIGNATURE

Secretary

Chairman of the Board


     The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in
full according to applicable laws or regulations:

TEN COM -as tenants in common        UNIF GIFT MIN ACT -- .... Custodian......
                                                         (Cust)         (Minor)
TEN ENT -as tenants by the entireties           under Uniform Gifts to Minors

JT TEN  -as joint tenants with right
         of survivorship and not as              Act....................
         tenants in common                               (State)
      Additional abbreviations may also be used though not in the above list

   For value received,..............hereby sell, assign and transfer unto.

PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFICATION NUMBER OF ASSIGNEE

 ..............................................................................

 ..............................................................................
     Please print or typewrite name and address including postal zip code
                                of assignee

 ..............................................................................

 ..............................................................................

 ........................................................................Shares
of the Common Stock  represented by the within Certificate, and do hereby
irrevocably constitute and appoint............................................

 ..............................................................................
Attorney to transfer the said stock on the books of the within-named
Corporation with full power of substitution in the premises.

Dated, ........................

                               ...............................................

   NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the Certificate, in every particular, without
alteration or enlargement, or any change whatever.

        ......................................................................
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
        WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR,
        WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.

        ......................................................................
SIGNATURE(S) GUARANTEED: THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE
                         GUARANTOR INSTITUTION (BANKS, STOCKHOLDERS, SAVINGS
                         AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH
                         MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE
                         MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.





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










                              CENDANT CORPORATION


                                       TO


               THE BANK OF NOVA SCOTIA TRUST COMPANY OF NEW YORK,

                                    Trustee


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

                                   Indenture

                           Dated as January __, 1998

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


                        CONVERTIBLE AND NON-CONVERTIBLE

                             SENIOR DEBT SECURITIES










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


                              CENDANT CORPORATION

               Reconciliation and tie between Trust Indenture Act
               of 1939 and Indenture, dated as of January , 1998


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

ss. 310(a)(1)    .......................................   607(a)
       (a)(2)    .......................................   607(a)
       (b)       .......................................   608
ss. 312(c)       .......................................   701
ss. 314(a)       .......................................   703
       (a)(4)    .......................................   1004
       (c)(1)    .......................................   102
       (c)(2)    .......................................   102
       (e)       .......................................   102
ss. 315(b)       .......................................   601
ss. 316(a)(last
       sentence) .......................................   101 ("Outstanding")
       (a)(1)(A) .......................................   502, 512
       (a)(1)(B) .......................................   513
       (b)       .......................................   508
       (c)       .......................................   104(e)
ss. 317(a)(1)    .......................................   503
       (a)(2)    .......................................   504
       (b)       .......................................   1003
ss. 318(a)       .......................................   111


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



                               Table of Contents(1)
                               --------------------
                                                                           Page
                                                                           ----
PARTIES......................................................................1
RECITALS OF THE COMPANY......................................................1


                                  ARTICLE ONE

                        DEFINITIONS AND OTHER PROVISIONS
                             OF GENERAL APPLICATION

SECTION 101.   Definitions.................................................  1
               Act.........................................................  2
               Additional Amounts..........................................  2
               Affiliate...................................................  2
               Authenticating Agent........................................  2
               Authorized Newspaper........................................  2
               Bearer Security.............................................  2
               Beneficial Owner............................................  2
               Board of Directors..........................................  3
               Board Resolution............................................  3
               Business Day................................................  3
               Capital Stock...............................................  3
               CEDEL S.A...................................................  4
               Commission..................................................  4
               Common Depositary...........................................  4
               Company.....................................................  4
               Company Request or Company Order............................  4
               Corporate Trust Office......................................  4
               corporation.................................................  4
               coupon......................................................  4
               Currency....................................................  4
               Currency Conversion Date....................................  4
               Currency Conversion Event...................................  4
               Debt........................................................  4
               Default.....................................................  5
               Defaulted Interest..........................................  5
               Dollar or $.................................................  5
               Dollar Equivalent of the Currency Unit......................  5
               Dollar Equivalent of the Foreign Currency...................  5
               ECU.........................................................  5
               Election Date...............................................  5
               Euroclear...................................................  5
               European Communities........................................  5
               European Monetary System....................................  5
               Event of Default............................................  5
               Exchange Date...............................................  5

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



               Exchange Rate Agent.........................................  5
               Exchange Rate Officer's Certificate.........................  5
               Federal Bankruptcy Code.....................................  6
               Foreign Currency............................................  6
               Government Obligations......................................  6
               Holder......................................................  6
               Indenture...................................................  6
               Indexed Security............................................  6
               interest....................................................  7
               Interest Payment Date.......................................  7
               Issue Date..................................................  7
               Lien........................................................  7
               Market Exchange Rate........................................  7
               Maturity....................................................  7
               Officers' Certificate.......................................  8
               Opinion of Counsel..........................................  8
               Optional Reset Date.........................................  8
               Original Issue Discount Security............................  8
               Outstanding.................................................  8
               Paying Agent................................................  9
               Person......................................................  9
               Place of Payment............................................  9
               Predecessor Security........................................  9
               Principal Property..........................................  9
               Redemption Date............................................. 10
               Redemption Price............................................ 10
               Registered Security......................................... 10
               Regular Record Date......................................... 10
               Repayment Date.............................................. 10
               Repayment Price..............................................10
               Responsible Officer......................................... 10
               Securities.................................................. 10
               Security Register........................................... 11
               Special Record Date......................................... 11
               Stated Maturity............................................. 11
               Subordinated Indenture...................................... 11
               Subsidiary.................................................. 11
               Total Assets................................................ 11
               Trust Indenture Act......................................... 11
               Trustee..................................................... 11
               United States............................................... 11
               United States person........................................ 11
               Valuation Date.............................................. 12

                                      ii


               Vice President.............................................. 12
               Voting Stock................................................ 12
               Yield to Maturity........................................... 12
SECTION 102.   Compliance Certificates and Opinions........................ 12
SECTION 103.   Form of Documents Delivered to Trustee...................... 13
SECTION 104.   Acts of Holders............................................. 13
SECTION 105.   Notices, etc. to Trustee and Company........................ 15
SECTION 106.   Notice to Holders; Waiver................................... 15
SECTION 107.   Effect of Headings and Table of Contents.................... 17
SECTION 108.   Successors and Assigns...................................... 17
SECTION 109.   Separability Clause......................................... 17
SECTION 110.   Benefits of Indenture....................................... 17
SECTION 111.   Governing Law............................................... 17
SECTION 112.   Legal Holidays...............................................17
SECTION 113.   Trust Indenture Act......................................... 18


                                  ARTICLE TWO

                                 SECURITY FORMS

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


                                 ARTICLE THREE

                                 THE SECURITIES

SECTION 301.   Amount Unlimited; Issuable in Series........................ 20
SECTION 302.   Denominations............................................... 24
SECTION 303.   Execution, Authentication, Delivery and Dating.............. 24
SECTION 304.   Temporary Securities........................................ 26
SECTION 305.   Registration, Registration of Transfer and Exchange......... 39
SECTION 306.   Mutilated, Destroyed, Lost and Stolen Securities............ 31
SECTION 307.   Payment of Interest; Interest Rights Preserved; Optional
               Interest Reset.............................................. 32
SECTION 308.   Optional Extension of Stated Maturity....................... 35
SECTION 309.   Persons Deemed Owners....................................... 36
SECTION 310.   Cancellation................................................ 37
SECTION 311.   Computation of Interest..................................... 37
SECTION 312.   Currency and Manner of Payments in Respect of Securities.... 38
SECTION 313.   Appointment and Resignation of Successor Exchange Rate
               Agent....................................................... 41

                                      iii


SECTION 314.   Designation as Senior Indebtedness.......................... 42


                                  ARTICLE FOUR

                           SATISFACTION AND DISCHARGE

SECTION 401.   Satisfaction and Discharge of Indenture..................... 42
SECTION 402.   Application of Trust Money.................................. 43


                                  ARTICLE FIVE

                                    REMEDIES

SECTION 501.   Events of Default........................................... 43
SECTION 502.   Acceleration of Maturity; Rescission and Annulment.......... 45
SECTION 503.   Collection of Indebtedness and Suits for Enforcement by
               Trustee..................................................... 46
SECTION 504.   Trustee May File Proofs of Claim............................ 47
SECTION 505.   Trustee May Enforce Claims Without Possession of
               Securities.................................................. 48
SECTION 506.   Application of Money Collected.............................. 48
SECTION 507.   Limitation on Suits......................................... 48
SECTION 508.   Unconditional Right of Holders to Receive Principal, 
               Premium and Interest........................................ 49
SECTION 509.   Restoration of Rights and Remedies.......................... 50
SECTION 510.   Rights and Remedies Cumulative.............................. 50
SECTION 511.   Delay or Omission Not Waiver................................ 50
SECTION 512.   Control by Holders.......................................... 50
SECTION 513.   Waiver of Past Defaults..................................... 51
SECTION 514.   Waiver of Stay or Extension Laws............................ 51


                                  ARTICLE SIX

                                  THE TRUSTEE

SECTION 601.   Notice of Defaults.......................................... 52
SECTION 602.   Certain Rights of Trustee................................... 52
SECTION 603.   Trustee Not Responsible for Recitals or Issuance of
               Securities.................................................. 53
SECTION 604.   May Hold Securities......................................... 53
SECTION 605.   Money Held in Trust......................................... 54
SECTION 606.   Compensation and Reimbursement.............................. 54
SECTION 607.   Corporate Trustee Required; Eligibility..................... 54
SECTION 608.   Resignation and Removal; Appointment of Successor........... 55

                                      iv


SECTION 609.   Acceptance of Appointment by Successor...................... 56
SECTION 610.   Merger, Conversion, Consolidation or Succession to
               Business.................................................... 57
SECTION 611.   Appointment of Authenticating Agent......................... 58


                                 ARTICLE SEVEN

               HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY

SECTION 701.   Disclosure of Names and Addresses of Holders................ 59
SECTION 702.   Reports by Trustee.......................................... 60
SECTION 703.   Reports by Company.......................................... 60


                                 ARTICLE EIGHT

                    MERGER, CONSOLIDATION AND SALE OF ASSETS

SECTION 801.   Company May Consolidate, Etc., Only on Certain Terms........ 61
SECTION 802.   Successor Person Substituted................................ 61
SECTION 803.   Securities to Be Secured in Certain Events.................. 62


                                  ARTICLE NINE

                            SUPPLEMENTAL INDENTURES

SECTION 901.   Supplemental Indentures Without Consent of Holders.......... 62
SECTION 902.   Supplemental Indentures with Consent of Holders............. 64
SECTION 903.   Execution of Supplemental Indentures........................ 65
SECTION 904.   Effect of Supplemental Indentures........................... 65
SECTION 905.   Conformity with Trust Indenture Act......................... 65
SECTION 906.   Reference in Securities to Supplemental Indentures.......... 65
SECTION 907.   Notice of Supplemental Indentures........................... 65


                                  ARTICLE TEN

                                   COVENANTS

SECTION 1001.  Payment of Principal, Premium, if any, and Interest......... 66
SECTION 1002.  Maintenance of Office or Agency............................. 66
SECTION 1003.  Money for Securities Payments to Be Held in Trust........... 67

                                       v


SECTION 1004.  Statement as to Compliance.................................. 69
SECTION 1005.  Additional Amounts.......................................... 69
SECTION 1006.  Payment of Taxes and Other Claims........................... 70
SECTION 1007.  Corporate Existence......................................... 70
SECTION 1008.  Waiver of Certain Covenants................................. 70


                                 ARTICLE ELEVEN

                            REDEMPTION OF SECURITIES

SECTION 1101.  Applicability of Article.................................... 71
SECTION 1102.  Election to Redeem; Notice to Trustee....................... 71
SECTION 1103.  Selection by Trustee of Securities to Be Redeemed........... 71
SECTION 1104.  Notice of Redemption........................................ 72
SECTION 1105.  Deposit of Redemption Price................................. 73
SECTION 1106.  Securities Payable on Redemption Date....................... 73
SECTION 1107.  Securities Redeemed in Part................................. 74


                                 ARTICLE TWELVE

                                 SINKING FUNDS

SECTION 1201.  Applicability of Article.................................... 74
SECTION 1202.  Satisfaction of Sinking Fund Payments with Securities....... 74
SECTION 1203.  Redemption of Securities for Sinking Fund................... 75

                                ARTICLE THIRTEEN

                         REPAYMENT AT OPTION OF HOLDERS

SECTION 1301.  Applicability of Article.................................... 76
SECTION 1302.  Repayment of Securities..................................... 76
SECTION 1303.  Exercise of Option.......................................... 76
SECTION 1304.  When Securities Presented for Repayment Become Due and
               Payable..................................................... 77
SECTION 1305.  Securities Repaid in Part................................... 78

                                      vi


                                ARTICLE FOURTEEN

                       DEFEASANCE AND COVENANT DEFEASANCE

SECTION 1401.  Company's Option to Effect Defeasance or Covenant
               Defeasance.................................................. 78
SECTION 1402.  Defeasance and Discharge.................................... 79
SECTION 1403.  Covenant Defeasance......................................... 79
SECTION 1404.  Conditions to Defeasance or Covenant Defeasance............. 80
SECTION 1405.  Deposited Money and Government Obligations to Be Held in
               Trust; Other Miscellaneous Provision........................ 81
SECTION 1406.  Reinstatement............................................... 82


                                ARTICLE FIFTEEN

                       MEETINGS OF HOLDERS OF SECURITIES

SECTION 1501.  Purposes for Which Meetings May Be Called................... 83
SECTION 1502.  Call, Notice and Place of Meetings.......................... 83
SECTION 1503.  Persons Entitled to Vote at Meetings........................ 83
SECTION 1504.  Quorum; Action.............................................. 84
SECTION 1505.  Determination of Voting Rights; Conduct and Adjournment
               of Meetings................................................. 85
SECTION 1506.  Counting Votes and Recording Action of Meetings............. 86

TESTIMONIUM

SIGNATURES AND SEALS

EXHIBIT A      FORMS OF CERTIFICATION

EXHIBIT A-1    FORM OF CERTIFICATE TO BE GIVEN BY PERSON ENTITLED TO RECEIVE
               BEARER SECURITY OR TO OBTAIN INTEREST PAYABLE PRIOR TO THE
               EXCHANGE DATE

EXHIBIT A-2    FORM OF CERTIFICATE TO BE GIVEN BY EUROCLEAR AND CEDEL S.A. IN
               CONNECTION WITH THE EXCHANGE OF A PORTION OF A TEMPORARY GLOBAL
               SECURITY OR TO OBTAIN INTEREST PAYABLE PRIOR TO THE EXCHANGE DATE

                                      vii


                                    PARTIES

         INDENTURE, dated as of January , 1998, between CENDANT CORPORATION, a
corporation duly organized and existing under the laws of the State of Delaware
(herein called the "Company"), having its principal office at 6 Sylvan Way,
Parsippany, New Jersey 07054, and THE BANK OF NOVA SCOTIA TRUST COMPANY OF NEW
YORK, a New York banking corporation duly organized and existing under the laws
of the State of New York, as Trustee (herein called the "Trustee") having its
principal office at One Liberty Plaza, 23rd Floor, New York, New York 10006.

                            RECITALS OF THE COMPANY

         The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured
debentures, notes or other evidences of indebtedness (herein called the
"Securities"), which may or may not be convertible into or exchangeable for any
securities of any Person (including the Company), to be issued in one or more
series as provided in this Indenture.

         This Indenture is subject to the provisions of the Trust Indenture Act
of 1939, as amended, that are required to be part of this Indenture and shall,
to the extent applicable, be governed by such provisions.

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

         NOW, THEREFORE, THIS INDENTURE WITNESSETH:

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

                                  ARTICLE ONE

                        DEFINITIONS AND OTHER PROVISIONS
                             OF GENERAL APPLICATION

         SECTION 101. Definitions.

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

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

         (2) all other terms used herein which are defined in the Trust
    Indenture Act, either directly or by reference therein, have the meanings
    assigned to them therein, and the terms "cash transaction" and
    "self-liquidating paper", as used in TIA Section 311, shall have the
    meanings assigned to them in the rules of the Commission adopted under the
    Trust Indenture Act;

         (3) all accounting terms not otherwise defined herein have the
    meanings assigned to



    them in accordance with generally accepted accounting principles, and,
    except as otherwise herein expressly provided, the term "generally accepted
    accounting principles" with respect to any computation required or
    permitted hereunder shall mean such accounting principles as are generally
    accepted at the date of such computation; and

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

         Certain terms, used principally in Article Three, are defined in that
Article.

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

         "Additional Amounts" has the meaning specified in Section 1005.

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

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

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

         "Bearer Security" means any Security except a Registered Security.

         "Beneficial Owner" of shares of Capital Stock means, with respect to
any Person, any such shares:

         (a) which such Person or any of such Person's Affiliates or
    Associates, directly or indirectly, has the sole or shared right to vote or
    dispose of or has "beneficial ownership" of (as determined pursuant to Rule
    13d-3 promulgated under the Exchange Act or pursuant to any successor
    provision), including, but not limited to, pursuant to any agreement,
    arrangement or understanding, whether or not in writing; provided, that a
    Person shall not be deemed the

                                       2


    "Beneficial Owner" of, or to "Beneficially Own", any security under this
    subparagraph as a result of an agreement, arrangement or understanding to
    vote such security that both (y) arises solely from a revocable proxy given
    in response to a public proxy or consent solicitation made pursuant to, and
    in accordance with, the applicable provisions of the rules and regulations
    promulgated under the Exchange Act and (z) is not reportable by such person
    on Schedule 13D promulgated under the Exchange Act (or any comparable or
    successor report) without giving effect to any applicable waiting period,
    or Exchange Act (or any comparable or successor report) without giving
    effect to any applicable waiting period; or

         (b) which are Beneficially Owned, directly or indirectly, by any other
    person (or any Affiliate or Associate thereof) with which such person (or
    any of such person's Affiliates or Associates) has any agreement,
    arrangement or understanding, whether or not in writing, for the purpose of
    acquiring, holding, voting (except pursuant to a revocable proxy as
    described in the proviso to subparagraph (a) above) or disposing of any
    Capital Stock;

    provided, that (i) no director or officer of the Corporation (nor any
    Affiliate or Associate of any such director or officer) shall, solely by
    reason of any or all of such directors or officers acting in their
    capacities as such, be deemed the "Beneficial Owner" of or to "Beneficially
    Own" any shares of Capital Stock that are Beneficially Owned by any other
    such director or officer, and (ii) no person shall be deemed the
    "Beneficial Owner" of or to "Beneficially Own" any shares of Capital Stock
    held in any voting trust, any employee stock ownership plan or any similar
    plan or trust if such person does not possess the right to vote, to direct
    the voting of or to be consulted with respect to the voting of such shares.

         For the purposes of this definition, the terms "Affiliate" and
    "Associate" shall have the respective meanings ascribed to such terms in
    Rule 12b-2 promulgated under the Securities Exchange Act of 1934, as
    amended as in effect on June 14, 1996 (the term "registrant" in said Rule
    12b-2 meaning in this case the Company).

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

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

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

         "Capital Stock" means any and all shares, interests, participations,
rights or other

                                       3


equivalents (however designated) of corporate stock of the Company or any
Subsidiary.

         "CEDEL S.A." means Cedel, S.A., or its successor.

         "Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Securities Exchange Act of 1934,
or, if at any time after the execution of this Indenture such Commission is not
existing and performing the duties now assigned to it under the Trust Indenture
Act, then the body performing such duties at such time.

         "Common Depositary" has the meaning specified in Section 304.

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

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

         "Corporate Trust Office" means the principal corporate trust office of
the Trustee, at which at any particular time its corporate trust business shall
be administered, which office on the date of execution of this Indenture is
located at One Liberty Plaza, N.Y., N.Y., except that with respect to
presentation of Securities for payment or for registration of transfer or
exchange, such term shall mean the office or agency of the Trustee at which, at
any particular time, its corporate agency business shall be conducted.

         "corporation" includes corporations, associations, companies and
business trusts.

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

         "Currency" means any currency or currencies, composite currency or
currency unit or currency units, including, without limitation, the ECU, issued
by the government of one or more countries or by any recognized confederation
or association of such governments.

         "Currency Conversion Date" has the meaning specified in Section
312(d).

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

                                       4


         "Debt" means notes, bonds, debentures or other similar evidences of
indebtedness for money borrowed.

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

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

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

         "Dollar Equivalent of the Currency Unit" has the meaning specified in
Section 312(g).

         "Dollar Equivalent of the Foreign Currency" has the meaning specified
in Section 312(f).

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

         "Election Date" has the meaning specified in Section 312(h).

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

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

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

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

         "Exchange Date" has the meaning specified in Section 304.

         "Exchange Rate Agent" means, with respect to Securities of or within
any series, unless otherwise specified with respect to any Securities pursuant
to Section 301, a New York Clearing House bank, designated pursuant to Section
301 or Section 313.

         "Exchange Rate Officer's Certificate" means a tested telex or a
certificate setting forth (i) the applicable Market Exchange Rate and (ii) the
Dollar or Foreign Currency amounts of principal (and premium, if any) and
interest, if any (on an aggregate basis and on the basis of a Security having
the

                                       5


lowest denomination principal amount determined in accordance with Section 302
in the relevant Currency), payable with respect to a Security of any series on
the basis of such Market Exchange Rate, sent (in the case of a telex) or signed
(in the case of a certificate) by the Treasurer, any Vice President or any
Assistant Treasurer of the Company.

         "Federal Bankruptcy Code" means the Bankruptcy Act of Title 11 of the
United States Code, as amended from time to time.

         "Foreign Currency" means any Currency other than Currency of the
United States.

         "Government Obligations" means, unless otherwise specified with
respect to any series of Securities pursuant to Section 301, securities which
are (i) direct obligations of the government which issued the Currency in which
the Securities of a particular series are payable or (ii) obligations of a
Person controlled or supervised by and acting as an agency or instrumentality
of the government which issued the Currency in which the Securities of such
series are payable, the payment of which is unconditionally guaranteed by such
government, which, in either case, are full faith and credit obligations of
such government payable in such Currency and are not callable or redeemable at
the option of the issuer thereof and shall also include a depository receipt
issued by a bank or trust company as custodian with respect to any such
Government Obligation or a specific payment of interest on or principal of any
such Government Obligation held by such custodian for the account of the holder
of a depository receipt; provided that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable to
the holder of such depository receipt from any amount received by the custodian
in respect of the Government Obligation or the specific payment of interest or
principal of the Government Obligation evidenced by such depository receipt.

         "Holder" means, in the case of a Registered Security, the Person in
whose name a Security is registered in the Security Register and, in the case
of a Bearer Security, the bearer thereof and, when used with respect to any
coupon, shall mean the bearer thereof.

         "Indenture" means this instrument as originally executed and as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
and shall include the terms of any particular series of Securities established
as contemplated by Section 301; provided, however, that, if at any time more
than one Person is acting as Trustee under this instrument, "Indenture" shall
mean, with respect to any one or more series of Securities for which such
Person is Trustee, this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into pursuant to the applicable provisions hereof and shall
include the terms of particular series of Securities for which such Person is
Trustee established as contemplated by Section 301, exclusive, however, of any
provisions or terms which relate solely to other series of Securities for which
such Person is not Trustee, regardless of when such terms or provisions were
adopted, and exclusive of any provisions or terms adopted by means of one or
more indentures supplemental hereto executed and delivered after such Person
had become such Trustee but to which such Person, as such Trustee, was

                                       6


not a party.

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

         "interest", when used with respect to an Original Issue Discount
Security which by its terms bears interest only after Maturity, means interest
payable after Maturity at the rate prescribed in such Original Issue Discount
Security.

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

         "Issue Date" with respect to a Security means the date of first
issuance of such Security under this Indenture.

         "Lien" means any pledge, mortgage, lien, charge, encumbrance or
security interest except that a Lien shall not mean any license or right to use
intellectual property of the Company or a Subsidiary granted by the Company or
a Subsidiary.

         "Market Exchange Rate" means, unless otherwise specified with respect
to any Securities pursuant to Section 301, (i) for any conversion involving a
currency unit on the one hand and Dollars or any Foreign Currency on the other,
the exchange rate between the relevant currency unit and Dollars or such
Foreign Currency calculated by the method specified pursuant to Section 301 for
the Securities of the relevant series, (ii) for any conversion of Dollars into
any Foreign Currency, the noon (New York City time) buying rate for such
Foreign Currency for cable transfers quoted in New York City as certified for
customs purposes by the Federal Reserve Bank of New York and (iii) for any
conversion of one Foreign Currency into Dollars or another Foreign Currency,
the spot rate at noon local time in the relevant market at which, in accordance
with normal banking procedures, the Dollars or Foreign Currency into which
conversion is being made could be purchased with the Foreign Currency from
which conversion is being made from major banks located in either New York
City, London or any other principal market for Dollars or such purchased
Foreign Currency, in each case determined by the Exchange Rate Agent. Unless
otherwise specified with respect to any Securities pursuant to Section 301, in
the event of the unavailability of any of the exchange rates provided for in
the foregoing clauses (i), (ii) and (iii), the Exchange Rate Agent shall use,
in its sole discretion and without liability on its part, such quotation of the
Federal Reserve Bank of New York as of the most recent available date, or
quotations from one or more major banks in New York City, London or another
principal market for the Currency in question, or such other quotations as the
Exchange Rate Agent shall deem appropriate. Unless otherwise specified by the
Exchange Rate Agent, if there is more than one market for dealing in any
Currency by reason of foreign exchange regulations or otherwise, the market to
be used in respect of such Currency shall be that upon which a non-resident
issuer of securities designated in such Currency would purchase such Currency
in order to make payments in respect of such securities.

                                       7


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

         "Officers' Certificate" means a certificate signed by the Chairman,
the President or a Vice President, and by the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary of the Company, and
delivered to the Trustee.

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

         "Optional Reset Date" has the meaning specified in Section 307(b).

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

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

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

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

         (iii) Securities, except to the extent provided in Sections 1402 and
    1403, with respect to which the Company has effected defeasance and/or
    covenant defeasance as provided in Article Fourteen; and

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

                                       8


provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder or are present at
a meeting of Holders for quorum purposes, and for the purpose of making the
calculations required by TIA Section 313, (i) the principal amount of an
Original Issue Discount Security that may be counted in making such
determination or calculation and that shall be deemed to be Outstanding for
such purpose shall be equal to the amount of principal thereof that would be
(or shall have been declared to be) due and payable, at the time of such
determination, upon a declaration of acceleration of the maturity thereof
pursuant to Section 502, (ii) the principal amount of any Security denominated
in a Foreign Currency that may be counted in making such determination or
calculation and that shall be deemed Outstanding for such purpose shall be
equal to the Dollar equivalent, determined as of the date such Security is
originally issued by the Company as set forth in an Exchange Rate Officer's
Certificate delivered to the Trustee, of the principal amount (or, in the case
of an Original Issue Discount Security, the Dollar equivalent as of such date
of original issuance of the amount determined as provided in clause (i) above),
of such Security, (iii) the principal amount of any Indexed Security that may
be counted in making such determination or calculation and that shall be deemed
outstanding for such purpose shall be equal to the principal face amount of
such Indexed Security at original issuance, unless otherwise provided with
respect to such Security pursuant to Section 301, and (iv) Securities owned by
the Company or any other obligor upon the Securities or any Affiliate of the
Company or of such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in making such calculation or in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Securities which the
Trustee knows to be so owned shall be so disregarded. Securities so owned which
have been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Securities and that the pledgee is not the Company or any
other obligor upon the Securities or any Affiliate of the Company or such other
obligor.

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

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

         "Place of Payment" means, when used with respect to the Securities of
or within any series, the place or places where the principal of (and premium,
if any, on) and interest on such Securities are payable as specified as
contemplated by Sections 301 and 1002.

         "Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the

                                       9


purposes of this definition, any Security authenticated and delivered under
Section 306 in exchange for or in lieu of a mutilated, destroyed, lost or
stolen Security or a Security to which a mutilated, destroyed, lost or stolen
coupon appertains shall be deemed to evidence the same debt as the mutilated,
destroyed, lost or stolen Security or the Security to which the mutilated,
destroyed, lost or stolen coupons appertains, as the case may be.

         "Principal Property" means any reservation centers, leaseholds,
telecommunications contracts, computerized systems contracts, intellectual
property rights, or Franchise Contracts, owned by the Company or any Subsidiary
and located in the United States, the gross book value (without deduction of
any reserve for depreciation) of which on the date as of which the
determination is being made is an amount which exceeds 5% of Total Assets,
other than any such property which, in the opinion of the Board of Directors,
is not of material importance to the total business conducted by the Company
and its Subsidiaries, taken as a whole.

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

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

         "Registered Security" means any Security registered in the Security
Register.

         "Regular Record Date" for the interest payable on any Interest Payment
Date on the Registered Securities of or within any series means the date
specified for that purpose as contemplated by Section 301.

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

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

         "Responsible Officer", when used with respect to the Trustee, means
the chairman or any vice-chairman of the board of directors, the chairman or
any vice-chairman of the executive committee of the board of directors, the
chairman of the trust committee, the president, any vice president, the
secretary, any assistant secretary, the treasurer, any assistant treasurer, the
cashier, any assistant cashier, any trust officer or assistant trust officer,
the controller or any assistant controller or any other officer of the Trustee
customarily performing functions similar to those performed by any of the
above-designated officers, and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of his knowledge of and familiarity with the particular subject.

                                      10


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

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

         "Special Record Date" for the payment of any Defaulted Interest on the
Registered Securities of or within any series means a date fixed by the Trustee
pursuant to Section 307.

         "Stated Maturity", when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date specified
in such Security or a coupon representing such installment of interest as the
fixed date on which the principal of such Security or such installment of
principal or interest is due and payable, as such date may be extended pursuant
to the provisions of Section 308.

         "Subordinated Indenture" means the indenture to be entered into
between the Company and The Bank of Nova Scotia Trust Company of New York in
connection with the January 1998 shelf registration of the Company.

         "Subsidiary" means any corporation of which at the time of
determination the Company, directly and/or indirectly through one or more
Subsidiaries, owns more than 50% of the shares of Voting Stock.

         "Total Assets" means the total amount of assets (less applicable
reserves and other properly deductible items), as set forth on the most recent
balance sheet of the Company and its consolidated Subsidiaries and computed in
accordance with generally accepted accounting principles.

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

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

                                      11


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

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

         "Valuation Date" has the meaning specified in Section 312(c).

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

         "Voting Stock" means stock of the class or classes having general
voting power under ordinary circumstances to elect at least a majority of the
board of directors, managers or trustees of a corporation (irrespective of
whether or not at the time stock of any other class or classes shall have or
might have voting power by reason of the happening of any contingency).

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

         SECTION 102. Compliance Certificates and Opinions.

         Upon any application or request by the Company to the Trustee to take
any action under any provision of this Indenture, the Company shall furnish to
the Trustee an Officers' Certificate stating that all conditions precedent, if
any, provided for in this Indenture (including any covenant compliance with
which constitutes a condition precedent) relating to the proposed action have
been complied with and an Opinion of Counsel stating that in the opinion of
such counsel all such conditions precedent, if any, have been complied with,
except that in the case of any such application or request as to which the
furnishing of such documents is specifically required by any provision of this
Indenture relating to such particular application or request, including,
without limitation, the certificate of authentication provided pursuant to
Section 303, no additional certificate or opinion need be furnished.

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

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

                                      12


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

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

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

         SECTION 103. Form of Documents Delivered to Trustee.

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

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

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

         SECTION 104. Acts of Holders.

         (a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders of the Outstanding Securities of all series or one or more series, as
the case may be, may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agents duly
appointed in writing. If Securities of a series are issuable as Bearer
Securities, any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given 

                                      13


or taken by Holders of such series may, alternatively, be embodied in and
evidenced by the record of Holders of Securities of such series voting in favor
thereof, either in person or by proxies duly appointed in writing, at any
meeting of Holders of Securities of such series duly called and held in
accordance with the provisions of Article Fifteen, or a combination of such
instruments and any such record. Except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments or
record or both are delivered to the Trustee and, where it is hereby expressly
required, to the Company. Such instrument or instruments and any such record
(and the action embodied therein and evidenced thereby) are herein sometimes
referred to as the "Act" of the Holders signing such instrument or instruments
or so voting at any such meeting. Proof of execution of any such instrument or
of a writing appointing any such agent, or of the holding by any Person of a
Security, shall be sufficient for any purpose of this Indenture and conclusive
in favor of the Trustee and the Company, if made in the manner provided in this
Section. The record of any meeting of Holders of Securities shall be proved in
the manner provided in Section 1506.

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

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

         (d) The principal amount and serial numbers of Bearer Securities held
by any Person, and the date of holding the same, may be proved by the
production of such Bearer Securities or by a certificate executed, as
depositary, by any trust company, bank, banker or other depositary, wherever
situated, if such certificate shall be deemed by the Trustee to be
satisfactory, showing that at the date therein mentioned such Person had on
deposit with such depositary, or exhibited to it, the Bearer Securities therein
described; or such facts may be proved by the certificate or affidavit of the
Person holding such Bearer Securities, if such certificate or affidavit is
deemed by the Trustee to be satisfactory. The Trustee and the Company may
assume that such ownership of any Bearer Security continues until (1) another
certificate or affidavit bearing a later date issued in respect of the same
Bearer Security is produced, or (2) such Bearer Security is produced to the
Trustee by some other Person, or (3) such Bearer Security is surrendered in
exchange for a Registered Security, or (4) such Bearer Security is no longer
Outstanding. The principal amount and serial numbers of Bearer Securities held
by any Person, and the date of holding the same, may also be proved in any
other manner which the Trustee deems sufficient.

         (e) If the Company shall solicit from the Holders of Registered
Securities any

                                      14


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

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

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

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

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

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

         SECTION 106. Notice to Holders; Waiver.

         Where this Indenture provides for notice of any event to Holders of
Registered Securities by the Company or the Trustee, such notice shall be
sufficiently given (unless otherwise herein

                                      15


expressly provided) if in writing and mailed, first-class postage prepaid, to
each such Holder affected by such event, at his address as it appears in the
Security Register within the time prescribed for the giving of such notice. In
any case where notice to Holders of Registered Securities is given by mail,
neither the failure to mail such notice, nor any defect in any notice so
mailed, to any particular Holder shall affect the sufficiency of such notice
with respect to other Holders of Registered Securities or the sufficiency of
any notice to Holders of Bearer Securities given as provided. Any notice mailed
to a Holder in the manner herein prescribed shall be conclusively deemed to
have been received by such Holder, whether or not such Holder actually receives
such notice.

         In case, by reason of the suspension of or irregularities in regular
mail service or by reason of any other cause, it shall be impractical to mail
notice of any event to Holders of Registered Securities when such notice is
required to be given pursuant to any provision of this Indenture, then any
manner of giving such notice as shall be satisfactory to the Trustee shall be
deemed to be sufficient giving of such notice for every purpose hereunder.

         Except as otherwise expressly provided herein or otherwise specified
with respect to any Securities pursuant to Section 301, where this Indenture
provides for notice to Holders of Bearer Securities of any event, such notice
shall be sufficiently given to Holders of Bearer Securities if published in an
Authorized Newspaper in The City of New York and in such other city or cities
as may be specified in such Securities on a Business Day at least twice, the
first such publication to be not earlier than the earliest date, and not later
than the latest date, prescribed for the giving of such notice. Any such notice
shall be deemed to have been given on the date of the first such publication.

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

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

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

                                      16


         SECTION 107. Effect of Headings and Table of Contents.

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

         SECTION 108. Successors and Assigns.

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

         SECTION 109. Separability Clause.

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

         SECTION 110. Benefits of Indenture.

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

         SECTION 111. Governing Law.

         THIS INDENTURE AND THE SECURITIES AND COUPONS SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. THIS INDENTURE
IS SUBJECT TO THE PROVISIONS OF THE TRUST INDENTURE ACT OF 1939, AS AMENDED,
THAT ARE REQUIRED TO BE PART OF THIS INDENTURE AND SHALL, TO THE EXTENT
APPLICABLE, BE GOVERNED BY SUCH PROVISIONS.

         SECTION 112. Legal Holidays.

         In any case where any Interest Payment Date, Redemption Date, sinking
fund payment date or Stated Maturity or Maturity of any Security shall not be a
Business Day at any Place of Payment, then (notwithstanding any other provision
of this Indenture or of any Security or coupon other than a provision in the
Securities of any series which specifically states that such provision shall
apply in lieu of this Section) payment of interest or principal (and premium,
if any) need not be made at such Place of Payment on such date, but may be made
on the next succeeding Business Day at such Place of Payment with the same
force and effect as if made on the Interest Payment Date or Redemption Date or

                                      17


sinking fund payment date, or at the Stated Maturity or Maturity; provided that
no interest shall accrue for the period from and after such Interest Payment
Date, Redemption Date, sinking fund payment date, Stated Maturity or Maturity,
as the case may be.

         SECTION 113. Trust Indenture Act.

         This Indenture is subject to the provisions of the Trust Indenture Act
that are required to be part of this Indenture and shall, to the extent
applicable, be governed by such provisions.

                                  ARTICLE TWO

                                 SECURITY FORMS

         SECTION 201. Forms Generally.

         The Registered Securities, if any, of each series and the Bearer
Securities, if any, of each series and related coupons shall be in
substantially the forms as shall be established by or pursuant to a Board
Resolution or in one or more indentures supplemental hereto, in each case with
such appropriate insertions, omissions, substitutions and other variations as
are required or permitted by this Indenture, and may have such letters, numbers
or other marks of identification and such legends or endorsements placed
thereon as may be required to comply with the rules of any securities exchange
or as may, consistently herewith, be determined by the officers executing such
Securities or coupons, as evidenced by their execution of the Securities or
coupons. If the forms of Securities or coupons of any series are established by
action taken pursuant to a Board Resolution, a copy of an appropriate record of
such action shall be certified by the Secretary or an Assistant Secretary of
the Company and delivered to the Trustee at or prior to the delivery of the
Company Order contemplated by Section 303 for the authentication and delivery
of such Securities or coupons. Any portion of the text of any Security may be
set forth on the reverse thereof, with an appropriate reference thereto on the
face of the Security.

         Unless otherwise specified as contemplated by Section 301, Securities
in bearer form shall have interest coupons attached.

         The Trustee's certificate of authentication on all Securities shall be
in substantially the form set forth in this Article.

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

                                      18


         SECTION 202. Form of Trustee's Certificate of Authentication.

         Subject to Section 611, the Trustee's certificate of authentication
shall be in substantially the following form:

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

                                       THE BANK OF NOVA SCOTIA TRUST
                                         COMPANY OF NEW YORK,
                                       as Trustee


                                       By
                                         ---------------------------------
                                         Authorized Officer


         SECTION 203. Securities Issuable in Global Form.

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

                                      19


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

         Notwithstanding the provisions of Section 307, unless otherwise
specified as contemplated by Section 301, payment of principal of and any
premium and interest on any Security in permanent global form shall be made to
the Person or Persons specified therein.

         Notwithstanding the provisions of Section 309 and except as provided
in the preceding paragraph, the Company, the Trustee and any agent of the
Company and the Trustee shall treat as the Holder of such principal amount of
Outstanding Securities represented by a permanent global Security (i) in the
case of a permanent global Security in registered form, the Holder of such
permanent global Security in registered form, or (ii) in the case of a
permanent global Security in bearer form, Euroclear or CEDEL as specified by
the common depositary for such global securities.

                                 ARTICLE THREE

                                 THE SECURITIES

         SECTION 301. Amount Unlimited; Issuable in Series.

         The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture and the Subordinated
Indenture is unlimited.

         The Securities may be issued in one or more series. There shall be
established in one or more Board Resolutions or pursuant to authority granted
by one or more Board Resolutions and, subject to Section 303, set forth in, or
determined in the manner provided in, an Officers' Certificate, or established
in one or more indentures supplemental hereto, prior to the issuance of
Securities of any series, any or all of the following, as applicable (each of
which (except for the matters set forth in clauses (1), (2) and (17) below), if
so provided, may be determined from time to time by the Company with respect to
unissued Securities of the series and set forth in such Securities of the
series when issued from time to time):

                                      20


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

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

         (3) the date or dates, or the method by which such date or dates will
    be determined or extended, on which the principal of the Securities of the
    series is payable;

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

         (5) the place or places, if any, other than or in addition to the
    Borough of Manhattan, The City of New York, where the principal of (and
    premium, if any, on) and any interest on Securities of the series shall be
    payable, any Registered Securities of the series may be surrendered for
    registration of transfer, Securities of the series may be surrendered for
    exchange and, if different than the location specified in Section 106, the
    place or places where notices or demands to or upon the Company in respect
    of the Securities of the series and this Indenture may be served;

         (6) the period or periods within which, the price or prices at which,
    the Currency in which, and other terms and conditions upon which Securities
    of the series may be redeemed, in whole or in part, at the option of the
    Company, if the Company is to have that option;

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

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

                                      21


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

         (10) if other than the principal amount thereof, the portion of the
    principal amount of Securities of the series that shall be payable upon
    declaration of acceleration of the Maturity thereof pursuant to Section 502
    or the method by which such portion shall be determined;

         (11) if other than Dollars, the Currency in which payment of the
    principal of (and premium, if any, on) or interest, if any, on the
    Securities of the series shall be payable or in which the Securities of the
    series shall be denominated and the particular provisions applicable
    thereto in accordance with, in addition to or in lieu of any of the
    provisions of Section 312;

         (12) whether the amount of payments of principal of (and premium, if
    any, on) or interest on the Securities of the series may be determined with
    reference to an index, formula or other method (which index, formula or
    method may be based, without limitation, on one or more Currencies,
    commodities, equity indices or other indices), and the manner in which such
    amounts shall be determined;

         (13) whether the principal of (and premium, if any, on) and interest,
    if any, on the Securities of the series are to be payable, at the election
    of the Company or a Holder thereof, in a Currency other than that in which
    such Securities are denominated or stated to be payable, the period or
    periods within which (including the Election Date), and the terms and
    conditions upon which, such election may be made, and the time and manner
    of determining the exchange rate between the Currency in which such
    Securities are denominated or stated to be payable and the Currency in
    which such Securities are to be so payable, in each case in accordance
    with, in addition to or in lieu of any of the provisions of Section 312;

         (14) the designation of the initial Exchange Rate Agent, if any;

         (15) any provisions in modification of, in addition to or in lieu of
    the provisions of Article Fourteen that shall be applicable to the
    Securities of the series;

         (16) provisions, if any, granting special rights to the Holders of
    Securities of the series upon the occurrence of such events as may be
    specified;

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

         (18) whether Securities of the series are to be issuable as Registered
    Securities, Bearer Securities (with or without coupons) or both, any
    restrictions applicable to the offer, sale or delivery of Bearer
    Securities, whether any Securities of the series are to be issuable
    initially in

                                      22


    temporary global form and whether any Securities of the series are to be
    issuable in permanent global form with or without coupons and, if so,
    whether beneficial owners of interests in any such permanent global
    Security may exchange such interests for Securities of such series and of
    like tenor of any authorized form and denomination and the circumstances
    under which any such exchanges may occur, if other than in the manner
    provided in Section 305, whether Registered Securities of the series may be
    exchanged for Bearer Securities of the series (if permitted by applicable
    laws and regulations), whether Bearer Securities of the series may be
    exchanged for Registered Securities of the series, and the circumstances
    under which and the place or places where such exchanges may be made and if
    Securities of the series are to be issuable in global form, the identity of
    any initial depository therefor;

         (19) the date as of which any Bearer Securities of the series and any
    temporary global Security representing Outstanding Securities of the series
    shall be dated if other than the date of original issuance of the first
    Security of the series to be issued;

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

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

         (22) if the Securities of the series are to be issued upon the
    exercise of warrants or upon the conversion or exchange of other
    securities, the time, manner and place for such Securities to be
    authenticated and delivered;

         (23) whether and under what circumstances the Company will pay
    Additional Amounts as contemplated by Section 1005 on the Securities of the
    series to any Holder who is not a United States person (including any
    modification to the definition of such term) in respect of any tax,
    assessment or governmental charge and, if so, whether the Company will have
    the option to redeem such Securities rather than pay such Additional
    Amounts (and the terms of any such option);

         (24) if the Securities of the series are to be convertible into or
    exchangeable for any securities of any Person (including the Company), the
    terms and conditions upon which such

                                      23


    Securities will be so convertible or exchangeable;

         (25) any other terms, conditions, rights and preferences (or
    limitations on such rights and preferences) relating to the series (which
    terms shall not be inconsistent with the requirements of the Trust
    Indenture Act or the provisions of this Indenture).

         All Securities of any one series and the coupons appertaining to any
Bearer Securities of such series shall be substantially identical except, in
the case of Registered Securities, as to denomination and except as may
otherwise be provided in or pursuant to such Board Resolution (subject to
Section 303) and set forth in such Officers' Certificate or in any such
indenture supplemental hereto. Not all Securities of any one series need be
issued at the same time, and, unless otherwise provided, a series may be
reopened for issuances of additional Securities of such series.

         If any of the terms of the series are established by action taken
pursuant to one or more Board Resolutions, such Board Resolutions shall be
delivered to the Trustee at or prior to the delivery of the Officers'
Certificate setting forth the terms of the series.

         SECTION 302. Denominations.

         All Securities shall be issuable in such denominations as shall be
specified as contemplated by Section 301. With respect to Securities of any
series denominated in Dollars, in the absence of any such provisions, the
Registered Securities of such series, other than Registered Securities issued
in global form (which may be of any denomination), shall be issuable in
denominations of $1,000 and any integral multiple thereof and the Bearer
Securities of such Series, other than the Bearer Securities issued in global
form (which may be of any denomination), shall be issuable in a denomination of
$5,000.

         SECTION 303. Execution, Authentication, Delivery and Dating.

         The Securities and any coupons appertaining thereto shall be executed
on behalf of the Company by its Chairman, its President or a Vice President,
under its corporate seal reproduced thereon attested by its Secretary or an
Assistant Secretary. The signature of any of these officers on the Securities
or coupons may be the manual or facsimile signatures of the present or any
future such authorized officer and may be imprinted or otherwise reproduced on
the Securities.

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

         At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Securities of any series together with
any coupon appertaining thereto, executed

                                      24


by the Company to the Trustee for authentication, together with a Company Order
for the authentication and delivery of such Securities, and the Trustee in
accordance with such Company Order shall authenticate and deliver such
Securities; provided, however, that, in connection with its original issuance,
no Bearer Security shall be mailed or otherwise delivered to any location in
the United States; and provided further that, unless otherwise specified with
respect to any series of Securities pursuant to Section 301, a Bearer Security
may be delivered in connection with its original issuance only if the Person
entitled to receive such Bearer Security shall have furnished a certificate in
the form set forth in Exhibit A-1 to this Indenture, dated no earlier than 15
days prior to the earlier of the date on which such Bearer Security is
delivered and the date on which any temporary Security first becomes
exchangeable for such Bearer Security in accordance with the terms of such
temporary Security and this Indenture. If any Security shall be represented by
a permanent global Bearer Security, then, for purposes of this Section and
Section 304, the notation of a beneficial owner's interest therein upon
original issuance of such Security or upon exchange of a portion of a temporary
global Security shall be deemed to be delivered in connection with its original
issuance of such beneficial owner's interest in such permanent global Security.
Except as permitted by Section 306, the Trustee shall not authenticate and
deliver any Bearer Security unless all appurtenant coupons for interest then
matured have been detached and cancelled. If not all the Securities of any
series are to be issued at one time and if the Board Resolution or supplemental
indenture establishing such series shall so permit, such Company Order may set
forth procedures acceptable to the Trustee for the issuance of such Securities
and determining terms of particular Securities of such series such as interest
rate, maturity date, date of issuance and date from which interest shall
accrue.

         In authenticating such Securities, and accepting the additional
responsibilities under this Indenture in relation to such Securities, the
Trustee shall be entitled to receive, and (subject to TIA Sections 315(a)
through 315(d)) shall be fully protected in relying upon, an Opinion of Counsel
stating:

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

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

         (c) that such Securities, together with any coupons appertaining
    thereto, when completed by appropriate insertions and executed and
    delivered by the Company to the Trustee for authentication in accordance
    with this Indenture, authenticated and delivered by the Trustee in
    accordance with this Indenture and issued by the Company in the manner and
    subject to any conditions specified in such Opinion of Counsel, will
    constitute the legal, valid and binding obligations of the Company,
    enforceable in accordance with their terms, subject to applicable
    bankruptcy, insolvency, reorganization and other similar laws of general
    applicability relating to or affecting the enforcement of creditors'
    rights, to general equitable principles and to such other qualifications as
    such counsel shall conclude do not materially affect the rights of Holders
    of such Securities and any coupons;

                                      25


         (d) that all laws and requirements in respect of the execution and
    delivery by the Company of such Securities, any coupons and of the
    supplemental indentures, if any, have been complied with (except for the
    federal securities laws, the Trust Indenture Act of 1939, as amended, and
    the securities or blue sky laws of the various states, as to which no
    opinion need be expressed) and that authentication and delivery of such
    Securities and any coupons and the execution and delivery of the
    supplemental indenture, if any, by the Trustee will not violate the terms
    of the Indenture;

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

         (f) that the issuance of such Securities and any coupons will not
    contravene the articles of incorporation or by-laws of the Company or
    result in any violation of any of the terms or provisions of any law or
    regulation or of any indenture, mortgage or other agreement known to such
    Counsel by which the Company is bound.

         Notwithstanding the provisions of Section 301 and of the preceding two
paragraphs, if less than all the Securities of any series are to be issued at
one time, it shall not be necessary to deliver the Officers' Certificate
otherwise required pursuant to Section 301 or the Company Order and Opinion of
Counsel otherwise required pursuant to the preceding two paragraphs prior to or
at the time of issuance of each Security, but such documents shall be delivered
prior to or at the time of issuance of the first Security of such series.

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

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

         No Security or coupon shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose unless there appears on
such Security a certificate of authentication substantially in the form
provided for herein duly executed by the Trustee by manual signature of an
authorized officer, and such certificate upon any Security shall be conclusive
evidence, and the only evidence, that such Security has been duly authenticated
and delivered hereunder and is entitled to the benefits of this Indenture.
Notwithstanding the foregoing, if any Security shall have been authenticated
and delivered hereunder but never issued and sold by the Company, and the
Company shall deliver such Security to the Trustee for cancellation as provided
in Section 310 together with a written statement (which need not comply with
Section 102 and need not be accompanied by an Opinion of Counsel) stating that
such Security has never been issued and sold by the Company, for all purposes
of this

                                      26


Indenture such Security shall be deemed never to have been authenticated and
delivered hereunder and shall never be entitled to the benefits of this
Indenture.

         SECTION 304. Temporary Securities.

         Pending the preparation of definitive Securities of any series, the
Company may execute, and upon Company Order the Trustee shall authenticate and
deliver, temporary Securities which are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities in lieu of which they
are issued, in registered form or, if authorized, in bearer form with one or
more coupon or without coupons, and with such appropriate insertions,
omissions, substitutions and other variations as the officers executing such
Securities may determine, as conclusively evidenced by their execution of such
Securities. In the case of Securities of any series, such temporary Securities
may be in global form.

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

         If temporary Securities of any series are issued in global form, any
such temporary global Security shall, unless otherwise provided therein, be
delivered to the London office of a depositary or common depositary (the
"Common Depositary"), for the benefit of Euroclear and CEDEL S.A., for credit
to the respective accounts of the beneficial owners of such Securities (or to
such other accounts as they may direct).

         Without unnecessary delay, but in any event not later than the date
specified in, or determined pursuant to the terms of, any such temporary global
Security (the "Exchange Date"), the Company shall deliver to the Trustee
definitive Securities, in aggregate principal amount equal to the principal
amount of such temporary global Security, executed by the Company. On or after
the Exchange Date such temporary global Security shall be surrendered by the
Common Depositary to the Trustee, as the Company's agent for such purpose, to
be exchanged, in whole or from time to time in 

                                      27


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

         Unless otherwise specified in such temporary global Security, the
interest of a beneficial owner of Securities of a series in a temporary global
Security shall be exchanged for definitive Securities of the same series and of
like tenor following the Exchange Date when the account holder instructs
Euroclear or CEDEL S.A., as the case may be, to request such exchange on his
behalf and delivers to Euroclear or CEDEL S.A., as the case may be, a
certificate in the form set forth in Exhibit A-1 to this Indenture (or in such
other form as may be established pursuant to Section 301), dated no earlier
than 15 days prior to the Exchange Date, copies of which certificate shall be
available from the offices of Euroclear and CEDEL S.A., the Trustee, any
Authenticating Agent appointed for such series of Securities and each Paying
Agent. Unless otherwise specified in such temporary global Security, any such
exchange shall be made free of charge to the beneficial owners of such
temporary global Security, except that a Person receiving definitive Securities
must bear the cost of insurance, postage, transportation and the like in the
event that such Person does not take delivery of such definitive Securities in
person at the offices of Euroclear or CEDEL S.A. Definitive Securities in
bearer form to be delivered in exchange for any portion of a temporary global
Security shall be delivered only outside the United States.

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

                                      28


the beneficial owners of such temporary global Security on such Interest
Payment Date and who have each delivered to Euroclear or CEDEL S.A., as the
case may be, a certificate dated no earlier than 15 days prior to the Interest
Payment Date occurring prior to such Exchange Date in the form set forth in
Exhibit A-1 to this Indenture (or in such other form as may be established
pursuant to Section 301). Notwithstanding anything to the contrary herein
contained, the certifications made pursuant to this paragraph shall satisfy the
certification requirements of the preceding two paragraphs of this Section and
of the third paragraph of Section 303 of this Indenture and the interests of
the Persons who are the beneficial owners of the temporary global Security with
respect to which such certification was made will be exchanged for definitive
Securities of the same series and of like tenor on the Exchange Date or the
date of certification if such date occurs after the Exchange Date, without
further act or deed by such beneficial owners. Except as otherwise provided in
this paragraph, no payments of principal or interest owing with respect to a
beneficial interest in a temporary global Security will be made unless and
until such interest in such temporary global Security shall have been exchanged
for an interest in a definitive Security. Any interest so received by Euroclear
and CEDEL S.A. and not paid as herein provided shall be returned to the Trustee
immediately prior to the expiration of two years after such Interest Payment
Date in order to be repaid to the Company in accordance with Section 1003.

         SECTION 305. Registration, Registration of Transfer and Exchange.

         The Company shall cause to be kept at the Corporate Trust Office of
the Trustee a register for each series of Securities (the registers maintained
in the Corporate Trust Office of the Trustee and in any other office or agency
of the Company in a Place of Payment being herein sometimes collectively
referred to as the "Security Register") in which, subject to such reasonable
regulations as it may prescribe, the Company shall provide for the registration
of Registered Securities and of transfers of Registered Securities. The
Security Register shall be in written form or any other form capable of being
converted into written form within a reasonable time. At all reasonable times,
the Security Register shall be open to inspection by the Trustee. The Trustee
is hereby initially appointed as security registrar (the "Security Registrar")
for the purpose of registering Registered Securities and transfers of
Registered Securities as herein provided.

         Upon surrender for registration of transfer of any Registered Security
of any series at the office or agency in a Place of Payment for that series,
the Company shall execute, and the Trustee shall authenticate and deliver, in
the name of the designated transferee, one or more new Registered Securities of
the same series, of any authorized denominations and of a like aggregate
principal amount and tenor.

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

                                      29


contemplated by Section 301, Bearer Securities may not be issued in exchange
for Registered Securities.

         If (but only if) expressly permitted in or pursuant to the applicable
Board Resolution and (subject to Section 303) set forth in the applicable
Officers' Certificate, or in any indenture supplemental hereto, delivered as
contemplated by Section 301, at the option of the Holder, Bearer Securities of
any series may be exchanged for Registered Securities of the same series of any
authorized denomination and of a like aggregate principal amount and tenor,
upon surrender of the Bearer Securities to be exchanged at any such office or
agency, with all unmatured coupons and all matured coupons in default thereto
appertaining. If the Holder of a Bearer Security is unable to produce any such
unmatured coupon or coupons or matured coupon or coupons in default, any such
permitted exchange may be effected if the Bearer Securities are accompanied by
payment in funds acceptable to the Company in an amount equal to the face
amount of such missing coupon or coupons, or the surrender of such missing
coupon or coupons may be waived by the Company and the Trustee if there is
furnished to them such security or indemnity as they may require to save each
of them and any Paying Agent harmless. If thereafter the Holder of such
Security shall surrender to any Paying Agent any such missing coupon in respect
of which such a payment shall have been made, such Holder shall be entitled to
receive the amount of such payment; provided, however, that, except as
otherwise provided in Section 1002, interest represented by coupons shall be
payable only upon presentation and surrender of those coupons at an office or
agency located outside the United States. Notwithstanding the foregoing, in
case a Bearer Security of any series is surrendered at any such office or
agency in a permitted exchange for a Registered Security of the same series and
like tenor after the close of business at such office or agency on (i) any
Regular Record Date and before the opening of business at such office or agency
on the relevant Interest Payment Date, or (ii) any Special Record Date and
before the opening of business at such office or agency on the related proposed
date for payment of Defaulted Interest, such Bearer Security shall be
surrendered without the coupon relating to such Interest Payment Date or
proposed date for payment, as the case may be, and interest or Defaulted
Interest, as the case may be, will not be payable on such Interest Payment Date
or proposed date for payment, as the case may be, in respect of the Registered
Security issued in exchange for such Bearer Security, but will be payable only
to the Holder of such coupon when due in accordance with the provisions of this
Indenture.

         Whenever any Securities are so surrendered for exchange, the Company
shall execute, and the Trustee shall authenticate and deliver, the Securities
which the Holder making the exchange is entitled to receive.

         Notwithstanding the foregoing, except as otherwise specified as
contemplated by Section 301, any permanent global Security shall be
exchangeable only as provided in this paragraph. If any beneficial owner of an
interest in a permanent global Security is entitled to exchange such interest
for Securities of such series and of like tenor and principal amount of another
authorized form and denomination, as specified as contemplated by Section 301
and provided that any applicable notice provided in the permanent global
Security shall have been given, then without unnecessary delay but in

                                      30


any event not later than the earliest date on which such interest may be so
exchanged, the Company shall deliver to the Trustee definitive Securities in
aggregate principal amount equal to the principal amount of such beneficial
owner's interest in such permanent global Security, executed by the Company. On
or after the earliest date on which such interests may be so exchanged, such
permanent global Security shall be surrendered by the Common Depositary or such
other depositary as shall be specified in the Company Order with respect
thereto to the Trustee, as the Company's agent for such purpose, to be
exchanged, in whole or from time to time in part, for definitive Securities
without charge, and the Trustee shall authenticate and deliver, in exchange for
each portion of such permanent global Security, an equal aggregate principal
amount of definitive Securities of the same series of authorized denominations
and of like tenor as the portion of such permanent global Security to be
exchanged which, unless the Securities of the series are not issuable both as
Bearer Securities and as Registered Securities, as specified as contemplated by
Section 301, shall be in the form of Bearer Securities or Registered
Securities, or any combination thereof, as shall be specified by the beneficial
owner thereof; provided, however, that no such exchanges may occur during a
period beginning at the opening of business 15 days before any selection of
Securities to be redeemed and ending on the relevant Redemption Date if the
Security for which exchange is requested may be among those selected for
redemption; and provided further that no Bearer Security delivered in exchange
for a portion of a permanent global Security shall be mailed or otherwise
delivered to any location in the United States. If a Registered Security is
issued in exchange for any portion of a permanent global Security after the
close of business at the office or agency where such exchange occurs on (i) any
Regular Record Date and before the opening of business at such office or agency
on the relevant Interest Payment Date, or (ii) any Special Record Date and the
opening of business at such office or agency on the related proposed date for
payment of interest or Defaulted Interest, as the case may be, will not be
payable on such Interest Payment Date or proposed date for payment, as the case
may be, in respect of such Registered Security, but will be payable on such
Interest Payment Date or proposed date for payment, as the case may be, only to
the Person to whom interest in respect of such portion of such permanent global
Security is payable in accordance with the provisions of this Indenture.

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

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

         No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 304, 906, 1107 or 1305 not involving any
transfer.

                                      31


         The Company shall not be required (i) to issue, to register the
transfer of or to exchange Securities of any series during a period beginning
at the opening of business 15 days before the day of the selection for
redemption of Securities of that series under Section 1103 or 1203 and ending
at the close of business on (A) if Securities of the series are issuable only
as Registered Securities, the day of the mailing of the relevant notice of
redemption and (B) if Securities of the series are issuable as Bearer
Securities, the day of the first publication of the relevant notice of
redemption or, if Securities of the series are also issuable as Registered
Securities and there is no publication, the mailing of the relevant notice of
redemption, or (ii) to register the transfer of or exchange any Registered
Security so selected for redemption in whole or in part, except the unredeemed
portion of any Security being redeemed in part, or (iii) to exchange any Bearer
Security so selected for redemption except that such a Bearer Security may be
exchanged for a Registered Security of that series and like tenor; provided
that such Registered Security shall be simultaneously surrendered for
redemption, or (iv) to issue, to register the transfer of or to exchange any
Security which has been surrendered for repayment at the option of the Holder,
except the portion, if any, of such Security not to be so repaid.

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

         If any mutilated Security or a Security with a mutilated coupon
appertaining to it is surrendered to the Trustee, the Company shall execute and
the Trustee shall authenticate and deliver in exchange therefor a new Security
of the same series and of like tenor and principal amount and bearing a number
not contemporaneously outstanding, with coupons corresponding to the coupons,
if any, appertaining to the surrendered Security, or, in case any such
mutilated Security or coupon has become or is about to become due and payable,
the Company in its discretion may, instead of issuing a new Security, with
coupons corresponding to the coupons, if any, appertaining to the surrendered
Security, pay such Security or coupon.

         If there shall be delivered to the Company and to the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any
Security or coupon and (ii) such security or indemnity as may be required by
them to save each of them and any agent of either of them harmless, then, in
the absence of notice to the Company or the Trustee that such Security or
coupon has been acquired by a bona fide purchaser, the Company shall execute
and upon Company Order the Trustee shall authenticate and deliver, in lieu of
any such destroyed, lost or stolen Security or in exchange for the Security for
which a destroyed, lost or stolen coupon appertains (with all appurtenant
coupons not destroyed, lost or stolen), a new Security of the same series and
of like tenor and principal amount and bearing a number not contemporaneously
outstanding, with coupons corresponding to the coupons, if any, appertaining to
such destroyed, lost or stolen Security or to the Security to which such
destroyed, lost or stolen coupon appertains, or, in case any such destroyed,
lost or stolen Security or coupon has become or is about to become due and
payable, the Company in its discretion may, instead of issuing a new Security,
with coupons corresponding to the coupons, if any, appertaining to such
destroyed, lost or stolen Security or to the Security to which such destroyed,
lost or stolen coupon appertains, pay such Security or coupon.

                                      32


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

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

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

         SECTION 307. Payment of Interest; Interest Rights Preserved; Optional
Interest Reset.

         (a) Unless otherwise provided as contemplated by Section 301 with
respect to any series of Securities, interest on any Registered Security which
is payable, and is punctually paid or duly provided for, on any Interest
Payment Date shall be paid to the Person in whose name such Security (or one or
more Predecessor Securities) is registered at the close of business on the
Regular Record Date for such interest at the office or agency of the Company
maintained for such purpose pursuant to Section 1002; provided, however, that
each installment of interest on any Registered Security may at the Company's
option be paid by (i) mailing a check for such interest, payable to or upon the
written order of the Person entitled thereto pursuant to Section 309, to the
address of such Person as it appears on the Security Register or (ii) transfer
to an account maintained by the payee located in the United States.

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

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

         Any interest on any Registered Security of any series which is
payable, but is not

                                      33


punctually paid or duly provided for, on any Interest Payment Date shall
forthwith cease to be payable to the Holder on the relevant Regular Record Date
by virtue of having been such Holder, and such defaulted interest and, if
applicable, interest on such defaulted interest (to the extent lawful) at the
rate specified in the Securities of such series (such defaulted interest and,
if applicable, interest thereon herein collectively called "Defaulted
Interest") may be paid by the Company, at its election in each case, as
provided in clause (1) or (2) below:

         (1) The Company may elect to make payment of any Defaulted Interest to
    the Persons in whose names the Registered Securities of such series (or
    their respective Predecessor Securities) are registered at the close of
    business on a Special Record Date for the payment of such Defaulted
    Interest, which shall be fixed in the following manner. The Company shall
    notify the Trustee in writing of the amount of Defaulted Interest proposed
    to be paid on each Registered Security of such series and the date of the
    proposed payment, and at the same time the Company shall deposit with the
    Trustee an amount of money in the Currency in which the Securities of such
    series are payable (except as otherwise specified pursuant to Section 301
    for the Securities of such series and except, if applicable, as provided in
    Sections 312(b), 312(d) and 312(e)) equal to the aggregate amount proposed
    to be paid in respect of such Defaulted Interest or shall make arrangements
    satisfactory to the Trustee for such deposit on or prior to the date of the
    proposed payment, such money when deposited to be held in trust for the
    benefit of the Persons entitled to such Defaulted Interest as in this
    clause provided. Thereupon the Trustee shall fix a Special Record Date for
    the payment of such Defaulted Interest which shall be not more than 15 days
    and not less than 10 days prior to the date of the proposed payment and not
    less than 10 days after the receipt by the Trustee of the notice of the
    proposed payment. The Trustee shall promptly notify the Company of such
    Special Record Date and, in the name and at the expense of the Company,
    shall cause notice of the proposed payment of such Defaulted Interest and
    the Special Record Date therefor to be given in the manner provided in
    Section 106, not less than 10 days prior to such Special Record Date.
    Notice of the proposed payment of such Defaulted Interest and the Special
    Record Date therefor having been so given, such Defaulted Interest shall be
    paid to the Persons in whose name the Registered Securities of such series
    (or their respective Predecessor Securities) are registered at the close of
    business on such Special Record Date and shall no longer be payable
    pursuant to the following clause (2).

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

         (b) The provisions of this Section 307(b) may be made applicable to
any series of Securities pursuant to Section 301 (with such modifications,
additions or substitutions as may be specified pursuant to such Section 301).
The interest rate (or the spread or spread multiplier used to

                                      34


calculate such interest rate, if applicable) on any Security of such series may
be reset by the Company on the date or dates specified on the face of such
Security (each an "Optional Reset Date"). The Company may exercise such option
with respect to such Security by notifying the Trustee of such exercise at
least 50 but not more than 60 days prior to an Optional Reset Date for such
Note. Not later than 40 days prior to each Optional Reset Date, the Trustee
shall transmit, in the manner provided for in Section 106, to the Holder of any
such Security a notice (the "Reset Notice") indicating whether the Company has
elected to reset the interest rate (or the spread or spread multiplier used to
calculate such interest rate, if applicable), and if so (i) such new interest
rate (or such new spread or spread multiplier, if applicable) and (ii) the
provisions, if any, for redemption during the period from such Optional Reset
Date to the next Optional Reset Date or if there is no such next Optional Reset
Date, to the Stated Maturity Date of such Security (each such period a
"Subsequent Interest Period"), including the date or dates on which or the
period or periods during which and the price or prices at which such redemption
may occur during the Subsequent Interest Period.

         Notwithstanding the foregoing, not later than 20 days prior to the
Optional Reset Date, the Company may, at its option, revoke the interest rate
(or the spread or spread multiplier used to calculate such interest rate, if
applicable) provided for in the Reset Notice and establish an interest rate (or
a spread or spread multiplier used to calculate such interest rate, if
applicable) that is higher than the interest rate (or the spread or spread
multiplier, if applicable) provided for in the Reset Notice, for the Subsequent
Interest Period by causing the Trustee to transmit, in the manner provided for
in Section 106, notice of such higher interest rate (or such higher spread or
spread multiplier, if applicable) to the Holder of such Security. Such notice
shall be irrevocable. All Securities with respect to which the interest rate
(or the spread or spread multiplier used to calculate such interest rate, if
applicable) is reset on an Optional Reset Date, and with respect to which the
Holders of such Securities have not tendered such Securities for repayment (or
have validly revoked any such tender) pursuant to the next succeeding
paragraph, will bear such higher interest rate (or such higher spread or spread
multiplier, if applicable).

         The Holder of any such Security will have the option to elect
repayment by the Company of the principal of such Security on each Optional
Reset Date at a price equal to the principal amount thereof plus interest
accrued to such Optional Reset Date. In order to obtain repayment on an
Optional Reset Date, the Holder must follow the procedures set forth in Article
Thirteen for repayment at the option of Holders except that the period for
delivery or notification to the Trustee shall be at least 25 but not more than
35 days prior to such Optional Reset Date and except that, if the Holder has
tendered any Security for repayment pursuant to the Reset Notice, the Holder
may, by written notice to the Trustee, revoke such tender or repayment until
the close of business on the tenth day before such Optional Reset Date.

         Subject to the foregoing provisions of this Section and Section 305,
each Security delivered under this Indenture upon registration of transfer of
or in exchange for or in lieu of any other Security shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such other
Security.

                                      35


         SECTION 308. Optional Extension of Stated Maturity.

         The provisions of this Section 308 may be made applicable to any
series of Securities pursuant to Section 301 (with such modifications,
additions or substitutions as may be specified pursuant to such Section 301).
The Stated Maturity of any Security of such series may be extended at the
option of the Company for the period or periods specified on the face of such
Security (each an "Extension Period") up to but not beyond the date (the "Final
Maturity") set forth on the face of such Security. The Company may exercise
such option with respect to any Security by notifying the Trustee of such
exercise at least 50 but not more than 60 days prior to the Stated Maturity of
such Security in effect prior to the exercise of such option (the "Original
Stated Maturity"). If the Company exercises such option, the Trustee shall
transmit, in the manner provided for in Section 106, to the Holder of such
Security not later than 40 days prior to the Original Stated Maturity a notice
(the "Extension Notice") indicating (i) the election of the Company to extend
the Stated Maturity, (ii) the new Stated Maturity, (iii) the interest rate
applicable to the Extension Period and (iv) the provisions, if any, for
redemption during such Extension Period. Upon the Trustee's transmittal of the
Extension Notice, the Stated Maturity of such Security shall be extended
automatically and, except as modified by the Extension Notice and as described
in the next paragraph, such Security will have the same terms as prior to the
transmittal of such Extension Notice.

         Notwithstanding the foregoing, not later than 20 days before the
Original Stated Maturity of such Security, the Company may, at its option,
revoke the interest rate provided for in the Extension Notice and establish a
higher interest rate for the Extension Period by causing the Trustee to
transmit, in the manner provided for in Section 106, notice of such higher
interest rate to the Holder of such Security. Such notice shall be irrevocable.
All Securities with respect to which the Stated Maturity is extended will bear
such higher interest rate.

         If the Company extends the Maturity of any Security, the Holder will
have the option to elect repayment of such Security by the Company on the
Original Stated Maturity at a price equal to the principal amount thereof, plus
interest accrued to such date. In order to obtain repayment on the Original
Stated Maturity once the Company has extended the Maturity thereof, the Holder
must follow the procedures set forth in Article Thirteen for repayment at the
option of Holders, except that the period for delivery or notification to the
Trustee shall be at least 25 but not more than 35 days prior to the Original
Stated Maturity and except that, if the Holder has tendered any Security for
repayment pursuant to an Extension Notice, the Holder may by written notice to
the Trustee revoke such tender for repayment until the close of business on the
tenth day before the Original Stated Maturity.

         SECTION 309. Persons Deemed Owners.

         Prior to due presentment of a Registered Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name such Registered Security is registered as
the owner of such Registered Security for the purpose of receiving payment of
principal of (and premium, if any, on) and (subject to Sections 305 and 307)

                                      36


interest on such Security and for all other purposes whatsoever, whether or not
such Security be overdue, and none of the Company, the Trustee or any agent of
the Company or the Trustee shall be affected by notice to the contrary.

         Title to any Bearer Security and any coupons appertaining thereto
shall pass by delivery. The Company, the Trustee and any agent of the Company
or the Trustee may treat the bearer of any Bearer Security and the bearer of
any coupon as the absolute owner of such Security or coupon for the purpose of
receiving payment thereof or on account thereof and for all other purposes
whatsoever, whether or not such Security or coupons be overdue, and none of the
Company, the Trustee or any agent of the Company or the Trustee shall be
affected by notice to the contrary.

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

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

         SECTION 310. Cancellation.

         All Securities and coupons surrendered for payment, redemption,
repayment at the option of the Holder, registration of transfer or exchange or
for credit against any current or future sinking fund payment shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee.
All Securities and coupons so delivered to the Trustee shall be promptly
cancelled by it. The Company may at any time deliver to the Trustee for
cancellation any Securities previously authenticated and delivered hereunder
which the Company may have acquired in any manner whatsoever, and may deliver
to the Trustee (or to any other Person for delivery to the Trustee) for
cancellation any Securities previously authenticated hereunder which the
Company has not issued and sold, and all Securities so delivered shall be
promptly cancelled by the Trustee. If the Company shall so acquire any of the
Securities, however, such acquisition shall not operate as a redemption or
satisfaction of the indebtedness represented by such Securities unless and
until the same are surrendered to the Trustee for cancellation. No Securities
shall be authenticated in lieu of or in exchange for any Securities cancelled
as provided in this Section, except as expressly permitted by this Indenture.
All cancelled Securities held by the Trustee shall be disposed of by the
Trustee in accordance with its customary procedures and certification of their
disposal delivered to the Company unless by Company Order the Company shall
direct that cancelled Securities be returned to it.

                                      37


         SECTION 311. Computation of Interest.

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

         SECTION 312. Currency and Manner of Payments in Respect of Securities.

         (a) Unless otherwise specified with respect to any Securities pursuant
to Section 301, with respect to Registered Securities of any series not
permitting the election provided for in paragraph (b) below or the Holders of
which have not made the election provided for in paragraph (b) below, and with
respect to Bearer Securities of any series, except as provided in paragraph (d)
below, payment of the principal of (and premium, if any, on) and interest, if
any, on any Registered or Bearer Security of such series will be made in the
Currency in which such Registered Security or Bearer Security, as the case may
be, is payable. The provisions of this Section 312 may be modified or
superseded with respect to any Securities pursuant to Section 301.

         (b) It may be provided pursuant to Section 301 with respect to
Registered Securities of any series that Holders shall have the option, subject
to paragraphs (d) and (e) below, to receive payments of principal of (and
premium, if any, on) or interest, if any, on such Registered Securities in any
of the Currencies which may be designated for such election by delivering to
the Trustee a written election with signature guarantees and in the applicable
form established pursuant to Section 301, not later than the close of business
on the Election Date immediately preceding the applicable payment date. If a
Holder so elects to receive such payments in any such Currency, such election
will remain in effect for such Holder or any transferee of such Holder until
changed by such Holder or such transferee by written notice to the Trustee (but
any such change must be made not later than the close of business on the
Election Date immediately preceding the next payment date to be effective for
the payment to be made on such payment date and no such change of election may
be made with respect to payments to be made on any Registered Security of such
series with respect to which an Event of Default has occurred or with respect
to which the Company has deposited funds pursuant to Article Four or with
respect to which a notice of redemption has been given by the Company or a
notice of option to elect repayment has been sent by such Holder or such
transferee). Any Holder of any such Registered Security who shall not have
delivered any such election to the Trustee not later than the close of business
on the applicable Election Date will be paid the amount due on the applicable
payment date in the relevant Currency as provided in Section 312(a). The
Trustee shall notify the Exchange Rate Agent as soon as practicable after the
Election Date of the aggregate principal amount of Registered Securities for
which Holders have made such written election.

         (c) Unless otherwise specified pursuant to Section 301, if the
election referred to in paragraph (b) above has been provided for pursuant to
Section 301, then, unless otherwise specified pursuant to Section 301, not
later than the fourth Business Day after the Election Date for each payment
date for Registered Securities of any series, the Exchange Rate Agent will
deliver to the Company a

                                      38


written notice specifying, in the Currency in which Registered Securities of
such series are payable, the respective aggregate amounts of principal of (and
premium, if any, on) and interest, if any, on the Registered Securities to be
paid on such payment date, specifying the amounts in such Currency so payable
in respect of the Registered Securities as to which the Holders of Registered
Securities of such series shall have elected to be paid in another Currency as
provided in paragraph (b) above. If the election referred to in paragraph (b)
above has been provided for pursuant to Section 301 and if at least one Holder
has made such election, then, unless otherwise specified pursuant to Section
301, on the second Business Day preceding such payment date the Company will
deliver to the Trustee for such series of Registered Securities an Exchange
Rate Officer's Certificate in respect of the Dollar or Foreign Currency
payments to be made on such payment date. Unless otherwise specified pursuant
to Section 301, the Dollar or Foreign Currency amount receivable by Holders of
Registered Securities who have elected payment in a Currency as provided in
paragraph (b) above shall be determined by the Company on the basis of the
applicable Market Exchange Rate in effect on the third Business Day (the
"Valuation Date") immediately preceding each payment date, and such
determination shall be conclusive and binding for all purposes, absent manifest
error.

         (d) If a Currency Conversion Event occurs with respect to a Foreign
Currency in which any of the Securities are denominated or payable other than
pursuant to an election provided for pursuant to paragraph (b) above, then with
respect to each date for the payment of principal of (and premium, if any, on)
and interest, if any, on the applicable Securities denominated or payable in
such Foreign Currency occurring after the last date on which such Foreign
Currency was used (the "Currency Conversion Date"), the Dollar shall be the
Currency of payment for use on each such payment date. Unless otherwise
specified pursuant to Section 301, the Dollar amount to be paid by the Company
to the Trustee and by the Trustee or any Paying Agent to the Holders of such
Securities with respect to such payment date shall be, in the case of a Foreign
Currency other than a currency unit, the Dollar Equivalent of the Foreign
Currency or, in the case of a currency unit, the Dollar Equivalent of the
Currency Unit, in each case as determined by the Exchange Rate Agent in the
manner provided in paragraph (f) or (g) below.

         (e) Unless otherwise specified pursuant to Section 301, if the Holder
of a Registered Security denominated in any Currency shall have elected to be
paid in another Currency as provided in paragraph (b) above, and a Currency
Conversion Event occurs with respect to such elected Currency, such Holder
shall receive payment in the Currency in which payment would have been made in
the absence of such election; and if a Currency Conversion Event occurs with
respect to the Currency in which payment would have been made in the absence of
such election, such Holder shall receive payment in Dollars as provided in
paragraph (d) above.

         (f) The "Dollar Equivalent of the Foreign Currency" shall be
determined by the Exchange Rate Agent and shall be obtained for each subsequent
payment date by converting the specified Foreign Currency into Dollars at the
Market Exchange Rate on the Currency Conversion Date.

                                      39


         (g) The "Dollar Equivalent of the Currency Unit" shall be determined
by the Exchange Rate Agent and subject to the provisions of paragraph (h) below
shall be the sum of each amount obtained by converting the Specified Amount of
each Component Currency into Dollars at the Market Exchange Rate for such
Component Currency on the Valuation Date with respect to each payment.

         (h) For purposes of this Section 312 the following terms shall have
the following meanings:

         A "Component Currency" shall mean any Currency which, on the Currency
    Conversion Date, was a component currency of the relevant currency unit,
    including, but not limited to, the ECU.

         A "Specified Amount" of a Component Currency shall mean the number of
    units of such Component Currency or fractions thereof which were
    represented in the relevant currency unit, including, but not limited to,
    the ECU, on the Currency Conversion Date. If after the Currency Conversion
    Date the official unit of any Component Currency is altered by way of
    combination or subdivision, the Specified Amount of such Component Currency
    shall be divided or multiplied in the same proportion. If after the
    Currency Conversion Date two or more Component Currencies are consolidated
    into a single currency, the respective Specified Amounts of such Component
    Currencies shall be replaced by an amount in such single Currency equal to
    the sum of the respective Specified Amounts of such consolidated Component
    Currencies expressed in such single Currency, and such amount shall
    thereafter be a Specified Amount and such single Currency shall thereafter
    be a Component Currency. If after the Currency Conversion Date any
    Component Currency shall be divided into two or more currencies, the
    Specified Amount of such Component Currency shall be replaced by amounts of
    such two or more currencies, having an aggregate Dollar Equivalent value at
    the Market Exchange Rate on the date of such replacement equal to the
    Dollar Equivalent value of the Specified Amount of such former Component
    Currency at the Market Exchange Rate immediately before such division and
    such amounts shall thereafter be Specified Amounts and such currencies
    shall thereafter be Component Currencies. If, after the Currency Conversion
    Date of the relevant currency unit, including, but not limited to, the ECU,
    a Currency Conversion Event (other than any event referred to above in this
    definition of "Specified Amount") occurs with respect to any Component
    Currency of such currency unit and is continuing on the applicable
    Valuation Date, the Specified Amount of such Component Currency shall, for
    purposes of calculating the Dollar Equivalent of the Currency Unit, be
    converted into Dollars at the Market Exchange Rate in effect on the
    Currency Conversion Date of such Component Currency.

         "Election Date" shall mean the date for any series of Registered
    Securities as specified pursuant to clause (13) of Section 301 by which the
    written election referred to in paragraph (b) above may be made.

                                      40


         All decisions and determinations of the Exchange Rate Agent regarding
the Dollar Equivalent of the Foreign Currency, the Dollar Equivalent of the
Currency Unit, the Market Exchange Rate and changes in the Specified Amounts as
specified above shall be in its sole discretion and shall, in the absence of
manifest error, be conclusive for all purposes and irrevocably binding upon the
Company, the Trustee and all Holders of such Securities denominated or payable
in the relevant Currency. The Exchange Rate Agent shall promptly give written
notice to the Company and the Trustee of any such decision or determination.

         In the event that the Company determines in good faith that a Currency
Conversion Event has occurred with respect to a Foreign Currency, the Company
will immediately give written notice thereof to the Trustee and to the Exchange
Rate Agent (and the Trustee will promptly thereafter give notice in the manner
provided for in Section 106 to the affected Holders) specifying the Currency
Conversion Date. In the event the Company so determines that a Currency
Conversion Event has occurred with respect to the ECU or any other currency
unit in which Securities are denominated or payable, the Company will
immediately give written notice thereof to the Trustee and to the Exchange Rate
Agent (and the Trustee will promptly thereafter give notice in the manner
provided for in Section 106 to the affected Holders) specifying the Currency
Conversion Date and the Specified Amount of each Component Currency on the
Currency Conversion Date. In the event the Company determines in good faith
that any subsequent change in any Component Currency as set forth in the
definition of Specified Amount above has occurred, the Company will similarly
give written notice to the Trustee and the Exchange Rate Agent.

         The Trustee shall be fully justified and protected in relying and
acting upon information received by it from the Company and the Exchange Rate
Agent and shall not otherwise have any duty or obligation to determine the
accuracy or validity of such information independent of the Company or the
Exchange Rate Agent.

         SECTION 313. Appointment and Resignation of Successor Exchange Rate
Agent.

         (a) Unless otherwise specified pursuant to Section 301, if and so long
as the Securities of any series (i) are denominated in a Currency other than
Dollars or (ii) may be payable in a Currency other than Dollars, or so long as
it is required under any other provision of this Indenture, then the Company
will maintain with respect to each such series of Securities, or as so
required, at least one Exchange Rate Agent. The Company will cause the Exchange
Rate Agent to make the necessary foreign exchange determinations at the time
and in the manner specified pursuant to Section 301 for the purpose of
determining the applicable rate of exchange and, if applicable, for the purpose
of converting the issued Currency into the applicable payment Currency for the
payment of principal (and premium, if any) and interest, if any, pursuant to
Section 312.

         (b) No resignation of the Exchange Rate Agent and no appointment of a
successor Exchange Rate Agent pursuant to this Section shall become effective
until the acceptance of appointment by the successor Exchange Rate Agent as
evidenced by a written instrument delivered to

                                      41


the Company and the Trustee.

         (c) If the Exchange Rate Agent shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of the Exchange
Rate Agent for any cause with respect to the Securities of one or more series,
the Company, by or pursuant to a Board Resolution, shall promptly appoint a
successor Exchange Rate Agent or Exchange Rate Agents with respect to the
Securities of that or those series (it being understood that any such successor
Exchange Rate Agent may be appointed with respect to the Securities of one or
more or all of such series and that, unless otherwise specified pursuant to
Section 301, at any time there shall only be one Exchange Rate Agent with
respect to the Securities of any particular series that are originally issued
by the Company on the same date and that are initially denominated and/or
payable in the same Currency).

         SECTION 314. Designation as Senior Indebtedness.

         The Company hereby confirms the designation of the Securities as
"Senior Indebtedness" for the purposes of any securities of the Company that
may be issued pursuant to the Subordinated Indenture.

                                  ARTICLE FOUR

                           SATISFACTION AND DISCHARGE

         SECTION 401. Satisfaction and Discharge of Indenture.

         This Indenture shall upon Company Request cease to be of further
effect with respect to any series of Securities (except as to any surviving
rights of registration of transfer or exchange of Securities of such series
herein expressly provided for and the obligation of the Company to pay any
Additional Amounts as contemplated by Section 1005) and the Trustee, at the
expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture as to such series when

         (1) either

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

                                      42


         deposited in trust with the Trustee or any Paying Agent or segregated
         and held in trust by the Company and thereafter repaid to the Company,
         as provided in Section 1003) have been delivered to the Trustee for
         cancellation; or

              (B) all Securities of such series and, in the case of (i) or (ii)
         below, any coupons appertaining thereto not theretofore delivered to
         the Trustee for cancellation

                   (i) have become due and payable, or

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

                   (iii) if redeemable at the option of the Company, are to be
              called for redemption within one year under arrangements
              satisfactory to the Trustee for the giving of notice of
              redemption by the Trustee in the name, and at the expense, of the
              Company, and the Company, in the case of (i), (ii) or (iii)
              above, has irrevocably deposited or caused to be deposited with
              the Trustee as trust funds in trust for the purpose an amount, in
              the Currency in which the Securities of such series are payable,
              sufficient to pay and discharge the entire indebtedness on such
              Securities not theretofore delivered to the Trustee for
              cancellation, for principal (and premium, if any) and interest to
              the date of such deposit (in the case of Securities which have
              become due and payable) or to the Stated Maturity or Redemption
              Date, as the case may be;

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

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

         Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 606, the obligations of
the Trustee to any Authenticating Agent under Section 611 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of clause (1) of
this Section, the obligations of the Trustee under Section 402 and the last
paragraph of Section 1003 shall survive.

                                      43


         SECTION 402. Application of Trust Money.

         Subject to the provisions of the last paragraph of Section 1003, all
money deposited with the Trustee pursuant to Section 401 shall be held in trust
and applied by it, in accordance with the provisions of the Securities, the
coupons and this Indenture, to the payment, either directly or through any
Paying Agent (including the Company acting as its own Paying Agent) as the
Trustee may determine, to the Persons entitled thereto, of the principal (and
premium, if any) and interest for whose payment such money has been deposited
with the Trustee, but such money need not be segregated from other funds except
to the extent required by law.

                                  ARTICLE FIVE

                                    REMEDIES

         SECTION 501. Events of Default.

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

         (1) default in the payment of any interest on any Security of that
    series, or any related coupon, when such interest or coupon becomes due and
    payable, and continuance of such default for a period of 30 days; or

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

         (3) default in the deposit of any sinking fund payment, when and as
    due by the terms of the Securities of that series and Article Twelve; or

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

         (5) the entry of a decree or order by a court having jurisdiction in
    the premises

                                      44


    adjudging the Company a bankrupt or insolvent, or approving as properly
    filed a petition seeking reorganization, arrangement, adjustment or
    composition of or in respect of the Company under the Federal Bankruptcy
    Code or any other applicable federal or state law, or appointing a
    receiver, liquidator, assignee, trustee, sequestrator (or other similar
    official) of the Company or of any substantial part of its property, or
    ordering the winding up or liquidation of its affairs, and the continuance
    of any such decree or order unstayed and in effect for a period of 90
    consecutive days; or

         (6) the institution by the Company of proceedings to be adjudicated a
    bankrupt or insolvent, or the consent by it to the institution of
    bankruptcy or insolvency proceedings against it, or the filing by it of a
    petition or answer or consent seeking reorganization or relief under the
    Federal Bankruptcy Code or any other applicable federal or state law, or
    the consent by it to the filing of any such petition or to the appointment
    of a receiver, liquidator, assignee, trustee, sequestrator (or other
    similar official) of the Company or of any substantial part of its
    property, or the making by it of an assignment for the benefit of
    creditors, or the admission by it in writing of its inability to pay its
    debts generally as they become due; or

         (7) (A) there shall have occurred one or more defaults by the Company
    or any Subsidiary in the payment of the principal of or premium, if any, on
    Debt aggregating $50 million or more, when the same becomes due and payable
    at the stated maturity thereof, and such default or defaults shall have
    continued after any applicable grace period and shall not have been cured
    or waived or (B) Debt of the Company or any Subsidiary aggregating $50
    million or more shall have been accelerated or otherwise declared due and
    payable, or required to be prepaid or repurchased (other than by regularly
    scheduled required prepayment), prior to the stated maturity thereof; or

         (8) any other Event of Default provided with respect to Securities of
    that series.

         SECTION 502. Acceleration of Maturity; Rescission and Annulment.

         If an Event of Default described in clause (1), (2), (3), (4), (7) or
(8) of Section 501 with respect to Securities of any series at the time
Outstanding occurs and is continuing, then in every such case the Trustee or
the Holders of not less than 25% in principal amount of the Outstanding
Securities of that series may declare the principal amount (or, if the
Securities of that series are Original Issue Discount Securities or Indexed
Securities, such portion of the principal amount as may be specified in the
terms of that series) of all of the Securities of that series to be due and
payable immediately, by a notice in writing to the Company (and to the Trustee
if given by Holders), and upon any such declaration such principal amount (or
specified portion thereof) shall become immediately due and payable. If an
Event of Default described in clause (5) or (6) of Section 501 occurs and is
continuing, then the principal amount of all the Debt Securities shall ipso
facto become and be immediately due and payable without declaration or other
act on the part of the Trustee or any Holder.

                                      45


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

         (1) the Company has paid or deposited with the Trustee a sum
    sufficient to pay in the Currency in which the Securities of such series
    are payable (except as otherwise specified pursuant to Section 301 for the
    Securities of such series and except, if applicable, as provided in
    Sections 312(b), 312(d) and 312(e)),

              (A) all overdue interest on all Outstanding Securities of that
         series (or of all series, as the case may be) and any related coupons,

              (B) all unpaid principal of (and premium, if any, on) any
         Outstanding Securities of that series (or of all series, as the case
         may be) which has become due otherwise than by such declaration of
         acceleration, and interest on such unpaid principal at the rate or
         rates prescribed therefor in such Securities,

              (C) to the extent that payment of such interest is lawful,
         interest on overdue interest at the rate or rates prescribed therefor
         in such Securities, and

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

         (2) all Events of Default with respect to Securities of that series
    (or of all series, as the case may be), other than the non-payment of
    amounts of principal of (or premium, if any, on) or interest on Securities
    of that series (or of all series, as the case may be) which have become due
    solely by such declaration of acceleration, have been cured or waived as
    provided in Section 513.

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

         Notwithstanding the preceding paragraph, in the event of a declaration
of acceleration in respect of the Securities because of an Event of Default
specified in Section 501(7) shall have occurred and be continuing, such
declaration of acceleration shall be automatically annulled if the Debt that is
the subject of such Event of Default has been discharged or the holders thereof
have rescinded their declaration of acceleration in respect of such Debt, and
written notice of such discharge or rescission, as the case may be, shall have
been given to the Trustee by the Company and countersigned by the holders of
such Debt or a trustee, fiduciary or agent for such holders, within 30 days
after such

                                      46


declaration of acceleration in respect of the Securities, and no other Event of
Default has occurred during such 30-day period which has not been cured or
waived during such period.

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

         The Company covenants that if

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

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

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

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

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

                                      47


         SECTION 504. Trustee May File Proofs of Claim.

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

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

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

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders,
to pay to the Trustee any amount due it for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel,
and any other amounts due the Trustee under Section 606.

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

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

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

                                      48


         SECTION 506. Application of Money Collected.

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

         First: To the payment of all amounts due the Trustee under Section
    606;

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

         Third: The balance, if any, to the Person or Persons entitled thereto
    including, without limitation, the Company.

         SECTION 507. Limitation on Suits.

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

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

         (2) the Holders of not less than 25% in principal amount of the
    Outstanding Securities of that series in the case of any Event of Default
    described in clause (1), (2), (3), (4), (7) or (8) of Section 501, or, in
    the case of any Event of Default described in clause (5) or (6) of Section
    501, the Holders of not less than 25% in principal amount of all
    Outstanding Securities, shall have made written request to the Trustee to
    institute proceedings in respect of such Event of Default in its own name
    as Trustee hereunder;

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

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

                                      49


         (5) no direction inconsistent with such written request has been given
    to the Trustee during such 60-day period by the Holders of at least a
    majority or more in principal amount of the Outstanding Securities of that
    series in the case of any Event of Default described in clause (1), (2),
    (3), (4), (7) or (8) of Section 501, or, in the case of any Event of
    Default described in clause (5) or (6) of Section 501, by the Holders of a
    majority or more in principal amount of all Outstanding Securities;

it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other
Holders of Securities of the same series, in the case of any Event of Default
described in clause (1), (2), (3), (4), (7) or (8) of Section 501, or of
Holders of all Securities in the case of any Event of Default described in
clause (5) or (6) of Section 501, or to obtain or to seek to obtain priority or
preference over any other of such Holders or to enforce any right under this
Indenture, except in the manner herein provided and for the equal and ratable
benefit of all Holders of Securities of the same series, in the case of any
Event of Default described in clause (1), (2), (3), (4), (7) or (8) of Section
501, or of Holders of all Securities in the case of any Event of Default
described in clause (5) or (6) of Section 501.

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

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

         SECTION 509. Restoration of Rights and Remedies.

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

         SECTION 510. Rights and Remedies Cumulative.

         Except as otherwise provided with respect to the replacement or
payment of mutilated,

                                      50


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

         SECTION 511. Delay or Omission Not Waiver.

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

         SECTION 512. Control by Holders.

         With respect to the Securities of any series, the Holders of not less
than a majority in principal amount of the Outstanding Securities of such
series shall have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee, or exercising any trust
or power conferred on the Trustee, relating to or arising under clause (1),
(2), (3), (4), (7) or (8) of Section 501, and, with respect to all Securities,
the Holders of not less than a majority in principal amount of all Outstanding
Securities shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee, not relating to or
arising under clause (1), (2), (3), (4), (7) or (8) of Section 501, provided
that in each case

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

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

         (3) the Trustee need not take any action which might involve it in
    personal liability or be unjustly prejudicial to the Holders of Securities
    of such series not consenting.

         SECTION 513. Waiver of Past Defaults.

         Subject to Section 502, the Holders of not less than a majority in
principal amount of the Outstanding Securities of any series may on behalf of
the Holders of all the Securities of such series waive any past default
described in clause (1), (2), (3), (4), (7) or (8) of Section 501 (or, in the
case of a default described in clause (5) or (6) of Section 501, the Holders of
not less than a majority in

                                      51


principal amount of all Outstanding Securities may waive any such past
default), and its consequences, except a default

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

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

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

         SECTION 514. Waiver of Stay or Extension Laws.

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

                                      52


                                  ARTICLE SIX

                                  THE TRUSTEE

         SECTION 601. Notice of Defaults.

         Within 90 days after the occurrence of any Default hereunder with
respect to the Securities of any series, the Trustee shall transmit in the
manner and to the extent provided in TIA Section 313(c), notice of such default
hereunder known to the Trustee, unless such Default shall have been cured or
waived; provided, however, that, except in the case of a Default in the payment
of the principal of (or premium, if any, on) or interest on any Security of
such series or in the payment of any sinking fund installment with respect to
Securities of such series, the Trustee shall be protected in withholding such
notice if and so long as the board of directors, the executive committee or a
trust committee of directors and/or Responsible Officers of the Trustee in good
faith determine that the withholding of such notice is in the interest of the
Holders of Securities of such series and any related coupons; and provided
further that in the case of any Default of the character specified in Section
501(4) with respect to Securities of such series, no such notice to Holders
shall be given until at least 30 days after the occurrence thereof.

         SECTION 602. Certain Rights of Trustee.

         Subject to the provisions of TIA Sections 315(a) through 315(d):

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

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

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

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

                                      53


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

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

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

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

         The Trustee shall not be required to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers if it shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.

         SECTION 603. Trustee Not Responsible for Recitals or Issuance of
Securities.

         The recitals contained herein and in the Securities, except for the
Trustee's certificates of authentication, and in any coupons shall be taken as
the statements of the Company, and neither the Trustee nor any Authenticating
Agent assumes any responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Securities or coupons, except that the Trustee represents that it is duly
authorized to execute and deliver this Indenture, authenticate the Securities
and perform its obligations hereunder and that the statements made by it in a
Statement of Eligibility and Qualification on Form T-1 supplied to the Company
are true and accurate, subject to the qualifications set forth therein. Neither
the Trustee nor any Authenticating Agent shall be accountable for the use or
application by the Company of Securities or the proceeds thereof.

         SECTION 604. May Hold Securities.

                                      54


         The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other agent of the Company or of the Trustee, in its
individual or any other capacity, may become the owner or pledgee of Securities
and coupons and, subject to TIA Sections 310(b) and 311, may otherwise deal
with the Company with the same rights it would have if it were not Trustee,
Authenticating Agent, Paying Agent, Security Registrar or such other agent.

         SECTION 605. Money Held in Trust.

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

         SECTION 606. Compensation and Reimbursement.

         The Company agrees:

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

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

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

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

         SECTION 607. Corporate Trustee Required; Eligibility; 
                      Conflicting Interest.

                                      55


         (a) There shall at all times be a Trustee hereunder which shall be
eligible to act as Trustee under TIA Section 310(a)(1). Each successor trustee
shall have a combined capital and surplus of at least $50,000,000. If such 
corporation publishes reports of condition at least annually, pursuant to law 
or to the requirements of federal, state, territorial or District of Columbia 
supervising or examining authority, then for the purposes of this Section, the 
combined capital and surplus of such corporation shall be deemed to be its 
combined capital and surplus as set forth in its most recent report of 
condition so published. If at any time the Trustee shall cease to be eligible 
in accordance with the provisions of this Section, it shall resign immediately 
in the manner and with the effect hereinafter specified in this Article.

         (b) The Indenture dated as of ___________, 1998 between the Company
and The Bank of Nova Scotia Trust Company of New York providing for the 
issuance of convertible and non-convertible subordinated debt securities shall
be deemed to be specifically described herein for purposes of clause (i) of
the first proviso contained in TIA Section 310(b).

         SECTION 608. Resignation and Removal; Appointment of Successor.

         (a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 609.

         (b) The Trustee may resign at any time with respect to the Securities
of one or more series by giving written notice thereof to the Company. If the
instrument of acceptance by a successor Trustee required by Section 609 shall
not have been delivered to the Trustee within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee with respect
to the Securities of such series.

         (c) The Trustee may be removed at any time with respect to the
Securities of any series by Act of the Holders of not less than a majority in
principal amount of the Outstanding Securities of such series, delivered to the
Trustee and to the Company.

         (d) If at any time:

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

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

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

then, in any such case, (i) the Company, by a Board Resolution, may remove the
Trustee with respect

                                      56


to all Securities, or (ii) subject to TIA Section 315(e), any Holder who has
been a bona fide Holder of a Security for at least six months may, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee with respect to all Securities and
the appointment of a successor Trustee or Trustees.

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

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

         SECTION 609. Acceptance of Appointment by Successor.

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

                                      57


         (b) In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the Company, the
retiring Trustee and each successor Trustee with respect to the Securities of
one or more series shall execute and deliver an indenture supplemental hereto
wherein each successor Trustee shall accept such appointment and which (1)
shall contain such provisions as shall be necessary or desirable to transfer
and confirm to, and to vest in, each successor Trustee all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities of
that or those series to which the appointment of such successor Trustee
relates, (2) if the retiring Trustee is not retiring with respect to all
Securities, shall contain such provisions as shall be deemed necessary or
desirable to confirm that all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Securities of that or those series as to
which the retiring Trustee is not retiring shall continue to be vested in the
retiring Trustee, and (3) shall add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the administration
of the trusts hereunder by more than one Trustee, it being understood that
nothing herein or in such supplemental indenture shall constitute such Trustees
co-trustees of the same trust and that each such Trustee shall be trustee of a
trust or trusts hereunder separate and apart from any trust or trusts hereunder
administered by any other such Trustee; and upon the execution and delivery of
such supplemental indenture to resignation or removal of the retiring Trustee
shall become effective to the extent provided therein and each such successor
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Trustee with respect
to the Securities of that or those series to which the appointment of such
successor Trustee relates; but, on request of the Company or any successor
Trustee, such retiring Trustee shall duly assign, transfer and deliver to such
successor Trustee all property and money held by such retiring Trustee
hereunder with respect to the Securities of that or those series to which the
appointment of such successor Trustee relates. Whenever there is a successor
Trustee with respect to one or more (but less than all) series of securities
issued pursuant to this Indenture, the terms "Indenture" and "Securities" shall
have the meanings specified in the provisos to the respective definitions of
those terms in Section 101 which contemplate such situation.

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

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

         SECTION 610. Merger, Conversion, Consolidation or Succession to
Business.

         Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to all or substantially all the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper

                                      58


or any further act on the part of any of the parties hereto. In case any
Securities shall have been authenticated, but not delivered, by the Trustee
then in office, any successor by merger, conversion or consolidation to such
authenticating Trustee may adopt such authentication and deliver the Securities
so authenticated with the same effect as if such successor Trustee had itself
authenticated such Securities; and in case at that time any of the Securities
shall not have been authenticated, any successor Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the name of
the successor Trustee; and in all such cases such certificates shall have the
full force which it is anywhere in the Securities or in this Indenture provided
that the certificate of the Trustee shall have; provided, however, that the
right to adopt the certificate of authentication of any predecessor Trustee or
to authenticate Securities in the name of any predecessor Trustee shall apply
only to its successor or successors by merger, conversion or consolidation.

         SECTION 611. Appointment of Authenticating Agent.

         At any time when any of the Securities remain Outstanding, the Trustee
may appoint an Authenticating Agent or Agents with respect to one or more
series of Securities which shall be authorized to act on behalf of the Trustee
to authenticate Securities of such series and the Trustee shall give written
notice of such appointment to all Holders of Securities of the series with
respect to which such Authenticating Agent will serve, in the manner provided
for in Section 106. Securities so authenticated shall be entitled to the
benefits of this Indenture and shall be valid and obligatory for all purposes
as if authenticated by the Trustee hereunder. Any such appointment shall be
evidenced by an instrument in writing signed by a Responsible Officer of the
Trustee, and a copy of such instrument shall be promptly furnished to the
Company. Wherever reference is made in this Indenture to the authentication and
delivery of Securities by the Trustee or the Trustee's certificate of
authentication, such reference shall be deemed to include authentication and
delivery on behalf of the Trustee by an Authenticating Agent and a certificate
of authentication executed on behalf of the Trustee by an Authenticating Agent.
Each Authenticating Agent shall be acceptable to the Company and shall at all
times be a corporation organized and doing business under the laws of the
United States of America, any state thereof or the District of Columbia,
authorized under such laws to act as Authenticating Agent, having a combined
capital and surplus of not less than $50,000,000 and subject to supervision or
examination by federal or state authority. If such corporation publishes
reports of condition at least annually, pursuant to law or to the requirements
of said supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such corporation shall be deemed
to be its combined capital and surplus as set forth in its most recent report
of condition so published. If at any time an Authenticating Agent shall cease
to be eligible in accordance with the provisions of this Section, it shall
resign immediately in the manner and with the effect specified in this Section.

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

                                      59


the execution or filing of any paper or any further act on the part of the
Trustee or the Authenticating Agent.

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

         The Trustee agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section, and the
Trustee shall be entitled to be reimbursed for such payments, subject to the
provisions of Section 606.

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

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


                                            THE BANK OF NOVA SCOTIA TRUST
                                              COMPANY OF NEW YORK,
                                            as Trustee


                                            By
                                              ----------------------------
                                              as Authenticating Agent


                                            By
                                              ----------------------------
                                              Authorized Officer

                                      60


                                 ARTICLE SEVEN

               HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY

           SECTION 701.  Disclosure of Names and Addresses of Holders.

         Every Holder of Securities or coupons, by receiving and holding the
same, agrees with the Company and the Trustee that none of the Company or the
Trustee or any agent of either of them shall be held accountable by reason of
the disclosure of any such information as to the names and addresses of the
Holders in accordance with TIA Section 312, regardless of the source from which
such information was derived, and that the Trustee shall not be held
accountable by reason of mailing any material pursuant to a request made under
TIA Section 312(b).

         SECTION 702. Reports by Trustee.

         Within 60 days after May 15 of each year commencing with the first May
15 after the first issuance of Securities pursuant to this Indenture, the
Trustee shall transmit to the Holders of Securities, in the manner and to the
extent provided in TIA Section 313(c), a brief report dated as of such May 15
if required by TIA Section 313(a).

         SECTION 703. Reports by Company.

         The Company shall:

         (1) file with the Trustee, within 15 days after the Company is
    required to file the same with the Commission, copies of the annual reports
    and of the information, documents and other reports (or copies of such
    portions of any of the foregoing as the Commission may from time to time by
    rules and regulations prescribe) which the Company may be required to file
    with the Commission pursuant to Section 13 or Section 15(d) of the
    Securities Exchange Act of 1934; or, if the Company is not required to file
    information, documents or reports pursuant to either of such Sections, then
    it shall file with the Trustee and the Commission, in accordance with rules
    and regulations prescribed from time to time by the Commission, such of the
    supplementary and periodic information, documents and reports which may be
    required pursuant to Section 13 of the Securities Exchange Act of 1934 in
    respect of a security listed and registered on a national securities
    exchange as may be prescribed from time to time in such rules and
    regulations;

         (2) file with the Trustee and the Commission, in accordance with rules
    and regulations prescribed from time to time by the Commission, such
    additional information, documents and reports with respect to compliance by
    the Company with the conditions and covenants of this Indenture as may be
    required from time to time by such rules and regulations; and

         (3) transmit to all Holders, in the manner and to the extent provided
    in TIA Section

                                      61


    313(c), within 30 days after the filing thereof with the Trustee, such
    summaries of any information, documents and reports required to be filed by
    the Company pursuant to paragraphs (1) and (2) of this Section as may be
    required by rules and regulations prescribed from time to time by the
    Commission.

                                      62


                                 ARTICLE EIGHT

                    MERGER, CONSOLIDATION AND SALE OF ASSETS

         SECTION 801.  Company May Consolidate, Etc., Only on Certain Terms.

         The Company shall not consolidate with or merge into any other
corporation or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, unless:

         (1) the corporation formed by such consolidation or into which the
    Company is merged or the Person which acquires by conveyance or transfer,
    or which leases, the properties and assets of the Company substantially as
    an entirety (A) shall be a corporation, partnership or trust organized and
    validly existing under the laws of the United States of America, any state
    thereof or the District of Columbia and (B) shall expressly assume, by an
    indenture supplemental hereto, executed and delivered to the Trustee, in
    form satisfactory to the Trustee, the Company's obligation for the due and
    punctual payment of the principal of (and premium, if any, on) and interest
    on all the Securities and the performance and observance of every covenant
    of this Indenture on the part of the Company to be performed or observed;

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

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

         This Section shall only apply to a merger or consolidation in which
the Company is not the surviving corporation and to conveyances, leases and
transfers by the Company as transferor or lessor.

         SECTION 802. Successor Person Substituted.

         Upon any consolidation by the Company with or merger by the Company
into any other corporation or any conveyance, transfer or lease of the
properties and assets of the Company substantially as an entirety to any Person
in accordance with Section 801, the successor Person formed by such
consolidation or into which the Company is merged or to which such conveyance,
transfer or lease is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Indenture with the
same effect as if such successor Person had been named as the Company herein,
and in the event of any such conveyance or transfer, the Company (which term
shall for this purpose mean the Person named as the "Company" in the first
paragraph of this Indenture or any successor Person which shall theretofore
become such in the manner described in Section 801), except in the case of a
lease, shall be discharged of all obligations and covenants under this
Indenture

                                      63


and the Securities and the coupons and may be dissolved and liquidated.

         SECTION 803. Securities to Be Secured in Certain Events.

         If, upon any such consolidation of the Company with or merger of the
Company into any other corporation, or upon any conveyance, lease or transfer
of the property of the Company as an entirety or substantially as an entirety
to any other Person, any Principal Property of the Company or of any
Subsidiary, would thereupon become subject to any Lien, then unless such Lien
could be created under the Indenture without equally and ratably securing the
Securities, the Company, prior to or simultaneously with such consolidation,
merger, conveyance, lease or transfer, will, as to such Principal Property,
secure the Securities Outstanding hereunder (together with, if the Company
shall so determine, any other Debt of the Company now existing or hereafter
created which is not subordinate to the Securities) equally and ratably with
(or prior to) the Debt which upon such consolidation, merger, conveyance, lease
or transfer is to become secured as to such Principal Property by such Lien, or
will cause such Securities to be so secured; provided that, for the purpose of
providing such equal and ratable security, the principal amount of Original
Issue Discount Securities and Indexed Securities shall mean that amount which
would at the time of making such effective provision be due and payable
pursuant to Section 502 and the terms of such Original Issue Discount
Securities and Indexed Securities upon a declaration of acceleration of the
Maturity thereof, and the extent of such equal and ratable security shall be
adjusted, to the extent permitted by law, as and when said amount changes over
time pursuant to the terms of such Original Issue Discount Securities and
Indexed Securities.

                                  ARTICLE NINE

                            SUPPLEMENTAL INDENTURES

         SECTION 901. Supplemental Indentures Without Consent of Holders.

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

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

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

         (3) to add any additional Events of Default (and if such Events of
    Default are to be for the benefit of less than all series of Securities,
    stating that such Events of Default are being

                                      64


    included solely for the benefit of such series); or

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

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

         (6) to secure the Securities pursuant to the requirements of Section
    803 or otherwise; or

         (7) to establish the form or terms of Securities of any series as
    permitted by Sections 201 and 301; or

         (8) to evidence and provide for the acceptance of appointment
    hereunder by a successor Trustee with respect to the Securities of one or
    more series and to add to or change any of the provisions of this Indenture
    as shall be necessary to provide for or facilitate the administration of
    the trusts hereunder by more than one Trustee, pursuant to the requirements
    of Section 609(b); or

         (9) to close this Indenture with respect to the authentication and
    delivery of additional series of Securities, to cure any ambiguity, to
    correct or supplement any provision herein which may be inconsistent with
    any other provision herein, or to make any other provisions with respect to
    matters or questions arising under this Indenture; provided that such
    action shall not adversely affect the interests of the Holders of
    Securities of any series and any related coupons in any material respect;

         (10) to supplement any of the provisions of this Indenture to such
    extent as shall be necessary to permit or facilitate the defeasance and
    discharge of any series of Securities pursuant to Sections 401, 1402 and
    1403; provided that any such action shall not adversely affect the
    interests of the Holders of Securities of such series and any related
    coupons or any other series of Securities in any material respect; or

         (11) to effect or maintain the qualification of the Indenture under
    the Trust Indenture Act.

                                      65


         SECTION 902. Supplemental Indentures with Consent of Holders.

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

         (1) change the Stated Maturity of the principal of, or any installment
of interest on, any Security or reduce the principal amount thereof or the rate
of interest thereon or any premium payable upon the redemption thereof, or
change any obligation of the Company to pay Additional Amounts contemplated by
Section 1005 (except as contemplated by Section 801(1) and permitted by Section
901(1)), or reduce the amount of the principal of an Original Issue Discount
Security that would be due and payable upon a declaration of acceleration of
the Maturity thereof pursuant to Section 502 or the amount thereof provable in
bankruptcy pursuant to Section 504, or adversely affect any right of repayment
at the option of any Holder of any Security, or change any Place of Payment
where, or the Currency in which, any Security or any premium or the interest
thereon is payable, or impair the right to institute suit for the enforcement
of any such payment on or after the Stated Maturity thereof (or, in the case of
redemption or repayment at the option of the Holder, on or after the Redemption
Date or Repayment Date, as the case may be), or adversely affect any right to
convert or manage any Security as may be provided pursuant to Section 301
herein, or

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

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

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

                                       66


approve the substance thereof.

         SECTION 903. Execution of Supplemental Indentures.

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

         SECTION 904. Effect of Supplemental Indentures.

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

         SECTION 905. Conformity with Trust Indenture Act.

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

         SECTION 906. Reference in Securities to Supplemental Indentures.

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

         SECTION 907. Notice of Supplemental Indentures.

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

                                      67


                                  ARTICLE TEN

                                   COVENANTS

         SECTION 1001. Payment of Principal, Premium, if any, and Interest.

         The Company covenants and agrees for the benefit of the Holders of
each series of Securities and any related coupons that it will duly and
punctually pay the principal of (and premium, if any, on) and interest on the
Securities of that series in accordance with the terms of the Securities, any
coupons appertaining thereto and this Indenture. Unless otherwise specified as
contemplated by Section 301 with respect to any series of Securities, any
interest installments due on Bearer Securities on or before Maturity shall be
payable only upon presentation and surrender of the several coupons for such
interest installments as are evidenced thereby as they severally mature.

         SECTION 1002. Maintenance of Office or Agency.

         If the Securities of a series are issuable only as Registered
Securities, the Company will maintain in each Place of Payment for any series
of Securities an office or agency where Securities of that series may be
presented or surrendered for payment, where Securities of that series may be
surrendered for registration of transfer or exchange, where Securities of that
series that are convertible may be surrendered for conversion, if applicable,
and where notices and demands to or upon the Company in respect of the
Securities of that series and this Indenture may be served.

         If Securities of a series are issuable as Bearer Securities, the
Company will maintain (A) in The City of New York, an office or agency where
any Registered Securities of that series may be presented or surrendered for
payment, where any Registered Securities of that series may be surrendered for
registration of transfer, where Securities of that series may be surrendered
for exchange, where notices and demands to or upon the Company in respect of
the Securities of that series and this Indenture may be served and where Bearer
Securities of that series and related coupons may be presented or surrendered
for payment in the circumstances described in the following paragraph (and not
otherwise); (B) subject to any laws or regulations applicable thereto, in a
Place of Payment for that series which is located outside the United States, an
office or agency where Securities of that series and related coupons may be
presented and surrendered for payment; provided, however, that, if the
Securities of that series are listed on any stock exchange located outside the
United States and such stock exchange shall so require, the Company will
maintain a Paying Agent for the Securities of that series in any required city
located outside the United States so long as the Securities of that series are
listed on such exchange, and (C) subject to any laws or regulations applicable
thereto, in a Place of Payment for that series located outside the United
States an office or agency where any Registered Securities of that series may
be surrendered for registration of transfer, where Securities of that series
may be surrendered for exchange and where notices and demands to or upon the
Company in respect of the Securities of that series and this Indenture may be
served.

                                      68


         The Company will give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee, except that Bearer Securities of any series and the
related coupons may be presented and surrendered for payment at the offices
specified in the Security, in London, and the Company hereby appoints the same
as its agents to receive such respective presentations, surrenders, notices and
demands.

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

         The Company may also from time to time designate one or more other
offices or agencies where the Securities of one or more series may be presented
or surrendered for any or all such purposes and may from time to time rescind
any such designation; provided, however, that no such designation or rescission
shall in any manner relieve the Company of its obligation to maintain an office
or agency in accordance with the requirements set forth above for Securities of
any series for such purposes. The Company will give prompt written notice to
the Trustee of any such designation or rescission and of any change in the
location of any such other office or agency. Unless otherwise specified with
respect to any Securities as contemplated by Section 301 with respect to a
series of Securities, the Company hereby designates as a Place of Payment for
each series of Securities the office or agency of the Trustee in the Borough of
Manhattan, The City of New York, and initially appoints the Trustee, as Paying
Agent in such city as its agent to receive all such presentations, surrenders,
notices and demands.

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

         SECTION 1003. Money for Securities Payments to Be Held in Trust.

         If the Company shall at any time act as its own Paying Agent with
respect to any series of Securities and any related coupons, it will, on or
before each due date of the principal of (and premium,

                                      69


if any, on) or interest on any of the Securities of that series, segregate and
hold in trust for the benefit of the Persons entitled thereto a sum in the
Currency in which the Securities of such series are payable (except as
otherwise specified pursuant to Section 301 for the Securities of such series
and except, if applicable, as provided in Sections 312(b), 312(d) and 312(e))
sufficient to pay the principal (and premium, if any) or interest so becoming
due until such sums shall be paid to such Persons or otherwise disposed of as
herein provided and will promptly notify the Trustee of its action or failure
so to act.

         Whenever the Company shall have one or more Paying Agents for any
series of Securities and any related coupons, it will, prior to or on each due
date of the principal of (and premium, if any, on) or interest on any
Securities of that series, deposit with a Paying Agent a sum (in the Currency
described in the preceding paragraph) sufficient to pay the principal (and
premium, if any) or interest so becoming due, such sum to be held in trust for
the benefit of the Persons entitled to such principal, premium or interest, and
(unless such Paying Agent is the Trustee) the Company will promptly notify the
Trustee of its action or failure so to act.

         The Company will cause each Paying Agent (other than the Trustee) for
any series of Securities to execute and deliver to the Trustee an instrument in
which such Paying Agent shall agree with the Trustee, subject to the provisions
of this Section, that such Paying Agent will:

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

         (2) give the Trustee notice of any default by the Company (or any
    other obligor upon the Securities of such series) in the making of any
    payment of principal of (or premium, if any, on) or interest on the
    Securities of such series; and

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

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

         Except as provided in the Securities of any series, any money
deposited with the Trustee or any Paying Agent, or then held by the Company, in
trust for the payment of the principal of (and premium, if any, on) or interest
on any Security of any series, or any coupon appertaining thereto, and
remaining unclaimed for two years after such principal (and premium, if any) or
interest has become due and payable shall be paid to the Company on Company
Request, or (if then held by the Company)

                                      70


shall be discharged from such trust; and the Holder of such Security or coupon
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 an Authorized Newspaper,
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
publication, any unclaimed balance of such money then remaining will be repaid
to the Company.

         SECTION 1004. Statement as to Compliance.

         The Company will deliver to the Trustee, within 120 days after the end
of each fiscal year, a brief certificate from the principal executive officer,
principal financial officer or principal accounting officer as to his or her
knowledge of the Company's compliance with all conditions and covenants under
this Indenture. For purposes of this Section 1004, such compliance shall be
determined without regard to any period of grace or requirement of notice under
this Indenture.

         SECTION 1005. Additional Amounts.

         If any Securities of a series provide for the payment of additional
amounts to any Holder who is not a United States person in respect of any tax,
assessment or governmental charge ("Additional Amounts"), the Company will pay
to the Holder of any Security of such series or any coupon appertaining thereto
such Additional Amounts as may be specified as contemplated by Section 301.
Whenever in this Indenture there is mentioned, in any context, the payment of
the principal (or premium, if any, on) or interest on, or in respect of, any
Security of a series or payment of any related coupon or the net proceeds
received on the sale or exchange of any Security of a series, such mention
shall be deemed to include mention of the payment of Additional Amounts
provided for by the terms of such series established pursuant to Section 301 to
the extent that, in such context, Additional Amounts are, were or would be
payable in respect thereof pursuant to such terms and express mention of the
payment of Additional Amounts (if applicable) in any provisions hereof shall
not be construed as excluding Additional Amounts in those provisions hereof
where such express mention is not made.

         Except as otherwise specified as contemplated by Section 301, if the
Securities of a series provide for the payment of Additional Amounts, at least
10 days prior to the first Interest Payment Date with respect to that series of
Securities (or if the Securities of that series will not bear interest prior to
Maturity, the first day on which a payment of principal (and premium, if any)
is made), and at least 10 days prior to each date of payment of principal (and
premium, if any) or interest if there has been any change with respect to the
matters set forth in the below-mentioned Officers' Certificate, the Company
will furnish the Trustee and the Company's principal Paying Agent or Paying
Agents, if other than the Trustee, with an Officers' Certificate instructing
the Trustee and such Paying Agent or Paying Agents whether such payment of
principal of (and premium, if any, on) or interest on the Securities of that
series shall be made to Holders of Securities of that series or any related
coupons who are not United

                                      71


States persons without withholding for or on account of any tax, assessment or
other governmental charge described in the Securities of the series. If any
such withholding shall be required, then such Officers' Certificate shall
specify by country the amount, if any, required to be withheld on such payments
to such Holders of Securities of that series or related coupons and the Company
will pay to the Trustee or such Paying Agent the Additional Amounts required by
the terms of such Securities. In the event that the Trustee or any Paying
Agent, as the case may be, shall not so receive the above-mentioned
certificate, then the Trustee or such Paying Agent shall be entitled to (i)
assume that no such withholding or deduction is required with respect to any
payment of principal (and premium, if any) or interest with respect to any
Securities of a series or related coupons until it shall have received a
certificate advising otherwise and (ii) to make all payments of principal (and
premium, if any) and interest with respect to the Securities of a series or
related coupons without withholding or deductions until otherwise advised. The
Company covenants to indemnify the Trustee and any Paying Agent for, and to
hold them harmless against, any loss, liability or expense reasonably incurred
without negligence or bad faith on their part arising out of or in connection
with actions taken or omitted by any of them in reliance on any Officers'
Certificate furnished pursuant to this Section.

         SECTION 1006. Payment of Taxes and Other Claims.

         The Company will pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (1) all material taxes, assessments
and governmental charges levied or imposed upon the Company or any Subsidiary
or upon the income, profits or property of the Company or any Subsidiary, and
(2) all material lawful claims for labor, materials and supplies which, if
unpaid, might by law become a Lien upon any Principal Property of the Company
or any Subsidiary; provided, however, that the Company shall not be required to
pay or discharge or cause to be paid or discharged any such tax, assessment,
charge or claim whose amount, applicability or validity is being contested in
good faith by appropriate proceedings.

         SECTION 1007. Corporate Existence.

         Subject to Article Eight, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence and the rights (charter and statutory) and franchises of the Company
and any Subsidiary; provided, however, that the Company shall not be required
to preserve any such right or franchise if the Company shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company and its Subsidiaries as a whole and provided further that the
foregoing does not prohibit any mergers or consolidations between Subsidiaries
or between the Company and one or more Subsidiaries so long as any such merger
or consolidation complies with Article Eight.

         SECTION 1008. Waiver of Certain Covenants.

         The Company may, with respect to any series of Securities, omit in any
particular instance to comply with any term, provision or condition which
affects such series set forth in Section 803 or

                                      72


Sections 1006 to 1007, inclusive, if before the time for such compliance the
Holders of at least a majority in principal amount of all Outstanding
Securities of any series, by Act of such Holders, waive such compliance in such
instance with such term, provision or condition, but no such waiver shall
extend to or affect such term, provision or condition except to the extent so
expressly waived, and, until such waiver shall become effective, the
obligations of the Company and the duties of the Trustee in respect of any such
term, provision or condition shall remain in full force and effect.

                                 ARTICLE ELEVEN

                            REDEMPTION OF SECURITIES

         SECTION 1101. Applicability of Article.

         Securities of any series which are redeemable before their Stated
Maturity shall be redeemable in accordance with the terms of such Securities
and (except as otherwise specified as contemplated by Section 301 for
Securities of any series) in accordance with this Article.

         SECTION 1102. Election to Redeem; Notice to Trustee.

         The election of the Company to redeem any Securities shall be
evidenced by or pursuant to a Board Resolution. In case of any redemption at
the election of the Company, the Company shall, at least 60 days prior to the
Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee of such Redemption Date and of
the principal amount of Securities of such series to be redeemed and shall
deliver to the Trustee such documentation and records as shall enable the
Trustee to select the Securities to be redeemed pursuant to Section 1103. In
the case of any redemption of Securities prior to the expiration of any
restriction on such redemption provided in the terms of such Securities or
elsewhere in this Indenture, the Company shall furnish the Trustee with an
Officers' Certificate evidencing compliance with such restriction.

         SECTION 1103. Selection by Trustee of Securities to Be Redeemed.

         If less than all the Securities of any series are to be redeemed, the
particular Securities to be redeemed shall be selected not more than 60 days
prior to the Redemption Date by the Trustee, from the Outstanding Securities of
such series not previously called for redemption, by such method as the Trustee
shall deem fair and appropriate and which may provide for the selection for
redemption of portions of the principal of Securities of such series; provided,
however, that no such partial redemption shall reduce the portion of the
principal amount of a Security not redeemed to less than the minimum authorized
denomination for Securities of such series established pursuant to Section 301.

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

                                      73


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

         SECTION 1104. Notice of Redemption.

         Except as otherwise specified as contemplated by Section 301, notice
of redemption shall be given in the manner provided for in Section 106 not less
than 30 nor more than 60 days prior to the Redemption Date, to each Holder of
Securities to be redeemed.

         All notices of redemption shall state:

              (1) the Redemption Date,

              (2) the Redemption Price,

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

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

              (5) the place or places where such Securities, together in the
         case of Bearer Securities with all coupons appertaining thereto, if
         any, maturing after the Redemption Date, are to be surrendered for
         payment of the Redemption Price,

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

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

              (8) if Bearer Securities of any series are to be redeemed and any
         Registered Securities of such series are not to be redeemed, and if
         such Bearer Securities may be exchanged for Registered Securities not
         subject to redemption on such Redemption Date

                                      74


         pursuant to Section 305 or otherwise, the last date, as determined by
         the Company, on which such exchanges may be made.

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

         SECTION 1105. Deposit of Redemption Price.

         Prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) an amount of
money in the Currency in which the Securities of such series are payable
(except as otherwise specified pursuant to Section 301 for the Securities of
such series and except, if applicable, as provided in Sections 312(b), 312(d)
and 312(e)) sufficient to pay the Redemption Price of, and accrued interest on,
all the Securities which are to be redeemed on that date.

         SECTION 1106. Securities Payable on Redemption Date.

         Notice of redemption having been given as aforesaid, the Securities so
to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified in the Currency in which the Securities of
such series are payable (except as otherwise specified pursuant to Section 301
for the Securities of such series and except, if applicable, as provided in
Sections 312(b), 312(d) and 312(e)) (together with accrued interest, if any, to
the Redemption Date), and from and after such date (unless the Company shall
default in the payment of the Redemption Price and accrued interest) such
Securities shall, if the same were interest-bearing, cease to bear interest and
the coupons for such interest appertaining to any Bearer Securities so to be
redeemed, except to the extent provided below, shall be void. Upon surrender of
any such Security for redemption in accordance with said notice, together with
all coupons, if any, appertaining thereto maturing after the Redemption Date,
such Security shall be paid by the Company at the Redemption Price, together
with accrued interest, if any, to the Redemption Date; provided, however, that
installments of interest on Bearer Securities whose Stated Maturity is on or
prior to the Redemption Date shall be payable only at an office or agency
located outside the United States (except as otherwise provided in Section
1002) and, unless otherwise specified as contemplated by Section 301, only upon
presentation and surrender of coupons for such interest, and provided further
that installments of interest on Registered Securities whose Stated Maturity is
on or prior to the Redemption Date shall be payable to the Holders of such
Securities, or one or more Predecessor Securities, registered as such at the
close of business on the relevant Record Dates according to their terms and the
provisions of Section 307.

         If any Bearer Security surrendered for redemption shall not be
accompanied by all appurtenant coupons maturing after the Redemption Date, such
Security may be paid after deducting from the Redemption Price an amount equal
to the face amount of all such missing coupons, or the surrender of such
missing coupon or coupons may be waived by the Company and the Trustee if there

                                      75


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

         If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal (and premium, if any) shall,
until paid, bear interest from the Redemption Date at the rate of interest or
Yield to Maturity (in the case of Original Issue Discount Securities) set forth
in the Security.

         SECTION 1107. Securities Redeemed in Part.

         Any Security which is to be redeemed only in part (pursuant to the
provisions of this Article or of Article Twelve) shall be surrendered at a
Place of Payment therefor (with, if the Company or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the Holder thereof or such Holder's
attorney duly authorized in writing), and the Company shall execute, and the
Trustee shall authenticate and deliver to the Holder of such Security without
service charge, a new Security or Securities of the same series, of any
authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Security so surrendered.

                                 ARTICLE TWELVE

                                 SINKING FUNDS

         SECTION 1201. Applicability of Article.

         Retirements of Securities of any series pursuant to any sinking fund
shall be made in accordance with the terms of such Securities and (except as
otherwise specified as contemplated by Section 301 for Securities of any
series) in accordance with this Article.

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

                                      76


         SECTION 1202. Satisfaction of Sinking Fund Payments with Securities.

         Subject to Section 1203, in lieu of making all or any part of any
mandatory sinking fund payment with respect to any Securities of a series in
cash, the Company may at its option (1) deliver to the Trustee Outstanding
Securities of a series (other than any previously called for redemption)
theretofore purchased or otherwise acquired by the Company together in the case
of any Bearer Securities of such series with all unmatured coupons appertaining
thereto, and/or (2) receive credit for the principal amount of Securities of
such series which have been previously delivered to the Trustee by the Company
or for Securities of such series which have been redeemed either at the
election of the Company pursuant to the terms of such Securities or through the
application of permitted optional sinking fund payments pursuant to the terms
of such Securities, in each case in satisfaction of all or any part of any
mandatory sinking fund payment with respect to the Securities of the same
series required to be made pursuant to the terms of such Securities as provided
for by the terms of such series; provided, however, that such Securities have
not been previously so credited. Such Securities shall be received and credited
for such purpose by the Trustee at the Redemption Price specified in such
Securities for redemption through operation of the sinking fund and the amount
of such mandatory sinking fund payment shall be reduced accordingly.

         SECTION 1203. Redemption of Securities for Sinking Fund.

         Not less than 60 days prior to each sinking fund payment date for any
series of Securities, the Company will deliver to the Trustee an Officers'
Certificate specifying the amount of the next ensuing sinking fund payment for
that series pursuant to the terms of that series, the portion thereof, if any,
which is to be satisfied by payment of cash in the Currency in which the
Securities of such series are payable (except as otherwise specified pursuant
to Section 301 for the Securities of such series and except, if applicable, as
provided in Sections 312(b), 312(d) and 312(e)) and the portion thereof, if
any, which is to be satisfied by delivering or crediting Securities of that
series pursuant to Section 1202 (which Securities will, if not previously
delivered, accompany such certificate) and whether the Company intends to
exercise its right to make a permitted optional sinking fund payment with
respect to such series. Such certificate shall be irrevocable and upon its
delivery the Company shall be obligated to make the cash payment or payments
therein referred to, if any, on or before the next succeeding sinking fund
payment date. In the case of the failure of the Company to deliver such
certificate, the sinking fund payment due on the next succeeding sinking fund
payment date for that series shall be paid entirely in cash and shall be
sufficient to redeem the principal amount of such Securities subject to a
mandatory sinking fund payment without the option to deliver or credit
Securities as provided in Section 1202 and without the right to make any
optional sinking fund payment, if any, with respect to such series.

         Not more than 60 days before each such sinking fund payment date the
Trustee shall select the Securities to be redeemed upon such sinking fund
payment date in the manner specified in Section 1103 and cause notice of the
redemption thereof to be given in the name of and at the expense of the Company
in the manner provided in Section 1104. Such notice having been duly given, the
redemption

                                      77


of such Securities shall be made upon the terms and in the manner stated in
Sections 1106 and 1107.

         Prior to any sinking fund payment date, the Company shall pay to the
Trustee or a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) in cash a sum
equal to any interest that will accrue to the date fixed for redemption of
Securities or portions thereof to be redeemed on such sinking fund payment date
pursuant to this Section 1203.

         Notwithstanding the foregoing, with respect to a sinking fund for any
series of Securities, if at any time the amount of cash to be paid into such
sinking fund on the next succeeding sinking fund payment date, together with
any unused balance of any preceding sinking fund payment or payments for such
series, does not exceed in the aggregate $100,000, the Trustee, unless
requested by the Company, shall not give the next succeeding notice of the
redemption of Securities of such series through the operation of the sinking
fund. Any such unused balance of moneys deposited in such sinking fund shall be
added to the sinking fund payment for such series to be made in cash on the
next succeeding sinking fund payment date or, at the request of the Company,
shall be applied at any time or from time to time to the purchase of Securities
of such series, by public or private purchase, in the open market or otherwise,
at a purchase price for such Securities (excluding accrued interest and
brokerage commissions, for which the Trustee or any Paying Agent will be
reimbursed by the Company) not in excess of the principal amount thereof.

                                ARTICLE THIRTEEN

                         REPAYMENT AT OPTION OF HOLDERS

         SECTION 1301. Applicability of Article.

         Repayment of Securities of any series before their Stated Maturity at
the option of Holders thereof shall be made in accordance with the terms of
such Securities and (except as otherwise specified as contemplated by Section
301 for Securities of any series) in accordance with this Article.

         SECTION 1302. Repayment of Securities.

         Securities of any series subject to repayment in whole or in part at
the option of the Holders thereof will, unless otherwise provided in the terms
of such Securities, be repaid at a price equal to the principal amount thereof,
together with interest, if any, thereon accrued to the Repayment Date specified
in or pursuant to the terms of such Securities. The Company covenants that on
or before the Repayment Date it will deposit with the Trustee or with a Paying
Agent (or, if the Company is acting as its own Paying Agent, segregate and hold
in trust as provided in Section 1003) an amount of money in the Currency in
which the Securities of such series are payable (except as otherwise specified
pursuant to Section 301 for the Securities of such series and except, if
applicable, as provided in Sections 312(b), 312(d) and 312(e)) sufficient to
pay the principal (or, if so provided by the terms of the

                                      78


Securities of any series, a percentage of the principal) of, and (except if the
Repayment Date shall be an Interest Payment Date) accrued interest on, all the
Securities or portions thereof, as the case may be, to be repaid on such date.

         SECTION 1303. Exercise of Option.

         Securities of any series subject to repayment at the option of the
Holders thereof will contain an "Option to Elect Repayment" form on the reverse
of such Securities. To be repaid at the option of the Holder, any Security so
providing for such repayment, with the "Option to Elect Repayment" form on the
reverse of such Security duly completed by the Holder (or by the Holder's
attorney duly authorized in writing), must be received by the Company at the
Place of Payment therefor specified in the terms of such Security (or at such
other place or places of which the Company shall from time to time notify the
Holders of such Securities) not earlier than 45 days nor later than 30 days
prior to the Repayment Date. If less than the entire principal amount of such
Security is to be repaid in accordance with the terms of such Security, the
principal amount of such Security to be repaid, in increments of the minimum
denomination for Securities of such series, and the denomination or
denominations of the Security or Securities to be issued to the Holder for the
portion of the principal amount of such Security surrendered that is not to be
repaid, must be specified. The principal amount of any Security providing for
repayment at the option of the Holder thereof may not be repaid in part if,
following such repayment, the unpaid principal amount of such Security would be
less than the minimum authorized denomination of Securities of the series of
which such Security to be repaid is a part. Except as otherwise may be provided
by the terms of any Security providing for repayment at the option of the
Holder thereof, exercise of the repayment option by the Holder shall be
irrevocable unless waived by the Company.

         SECTION 1304. When Securities Presented for Repayment Become Due and
Payable.

         If Securities of any series providing for repayment at the option of
the Holders thereof shall have been surrendered as provided in this Article and
as provided by or pursuant to the terms of such Securities, such Securities or
the portions thereof, as the case may be, to be repaid shall become due and
payable and shall be paid by the Company on the Repayment Date therein
specified, and on and after such Repayment Date (unless the Company shall
default in the payment of such Securities on such Repayment Date) such
Securities shall, if the same were interest-bearing, cease to bear interest and
the coupons for such interest appertaining to any Bearer Securities so to be
repaid, except to the extent provided below, shall be void. Upon surrender of
any such Security for repayment in accordance with such provisions, together
with all coupons, if any, appertaining thereto maturing after the Repayment
Date, the principal amount of such Security so to be repaid shall be paid by
the Company, together with accrued interest, if any, to the Repayment Date;
provided, however, that coupons whose Stated Maturity is on or 

                                      79


prior to the Repayment Date shall be payable only at an office or agency
located outside the United States (except as otherwise provided in Section
1002) and, unless otherwise specified pursuant to Section 301, only upon
presentation and surrender of such coupons, and provided further that, in the
case of Registered Securities, installments of interest, if any, whose Stated
Maturity is on or prior to the Repayment Date shall be payable to the Holders
of such Securities, or one or more Predecessor Securities, registered as such
at the close of business on the relevant Record Dates according to their terms
and the provisions of Section 307.

         If any Bearer Security surrendered for repayment shall not be
accompanied by all appurtenant coupons maturing after the Repayment Date, such
Security may be paid after deducting from the amount payable therefor as
provided in Section 1302 an amount equal to the face amount of all such missing
coupons, or the surrender of such missing coupon or coupons may be waived by
the Company and the Trustee if there be furnished to them such security or
indemnity as they may require to save each of them and any Paying Agent
harmless. If thereafter the Holder of such Security shall surrender to the
Trustee or any Paying Agent any such missing coupon in respect of which a
deduction shall have been made as provided in the preceding sentence, such
Holder shall be entitled to receive the amount so deducted; provided, however,
that interest represented by coupons shall be payable only at an office or
agency located outside the United States (except as otherwise provided in
Section 1002) and, unless otherwise specified as contemplated by Section 301,
only upon presentation and surrender of those coupons.

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

         SECTION 1305. Securities Repaid in Part.

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

                                ARTICLE FOURTEEN

                       DEFEASANCE AND COVENANT DEFEASANCE

         SECTION 1401. Company's Option to Effect Defeasance or Covenant
Defeasance.

         Except as otherwise specified as contemplated by Section 301 for
Securities of any series, the provisions of this Article Fourteen shall apply
to each series of Securities, and the Company may, at its option, effect
defeasance of the Securities of or within a series under Section 1402, or
covenant defeasance of or within a series under Section 1403 in accordance with
the terms of such Securities and in accordance with this Article.

                                      80


         SECTION 1402. Defeasance and Discharge.

         Upon the Company's exercise of the above option applicable to this
Section with respect to any Securities of or within a series, the Company shall
be deemed to have been discharged from its obligations with respect to such
Outstanding Securities and any related coupons on the date the conditions set
forth in Section 1404 are satisfied (hereinafter, "defeasance"). For this
purpose, such defeasance means that the Company shall be deemed to have paid
and discharged the entire indebtedness represented by such Outstanding
Securities and any related coupons, which shall thereafter be deemed to be
"Outstanding" only for the purposes of Section 1405 and the other Sections of
this Indenture referred to in (A) and (B) below, and to have satisfied all its
other obligations under such Securities and any related coupons and this
Indenture insofar as such Securities and any related coupons are concerned (and
the Trustee, at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following which shall survive until
otherwise terminated or discharged hereunder: (A) the rights of Holders of such
Outstanding Securities and any related coupons (i) to receive, solely from the
trust fund described in Section 1404 and as more fully set forth in such
Section, payments in respect of the principal of (and premium, if any, on) and
interest on such Securities and any related coupons when such payments are due,
and (ii) to receive shares of common stock or other Securities from the Company
upon the conversion of any convertible securities issued hereunder, (B) the
Company's obligations with respect to such Securities under Sections 304, 305,
306, 1002 and 1003 and with respect to the payment of Additional Amounts, if
any, on such Securities as contemplated by Section 1005, (C) the rights,
powers, trusts, duties and immunities of the Trustee hereunder and (D) this
Article Fourteen. Subject to compliance with this Article Fourteen, the Company
may exercise its option under this Section 1402 notwithstanding the prior
exercise of its option under Section 1403 with respect to such Securities and
any related coupons.

         SECTION 1403. Covenant Defeasance.

         Upon the Company's exercise of the above option applicable to this
Section with respect to any Securities of or within a series, the Company shall
be released from its obligations under Section 803 and Sections 1006 through
1008, and, if specified pursuant to Section 301, its obligations under any
other covenant, with respect to such Outstanding Securities and any related
coupons on and after the date the conditions set forth in Section 1404 are
satisfied (hereinafter, "covenant defeasance"), and such Securities and any
related coupons shall thereafter be deemed not to be "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. For
this purpose, such covenant defeasance means that, with respect to such
Outstanding Securities and any related coupons, the Company may omit to comply
with and shall have no liability in respect of any term, condition or
limitation set forth in any such covenant, whether directly or indirectly, by
reason of any reference elsewhere herein to any such covenant or by reason of
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 Section 501(4) or Section

                                      81


501(8) or otherwise, as the case may be, but, except as specified above, the
remainder of this Indenture and such Securities and any related coupons shall
be unaffected thereby.

         SECTION 1404. Conditions to Defeasance or Covenant Defeasance.

         The following shall be the conditions to application of either Section
1402 or Section 1403 to any Outstanding Securities of or within a series and
any related coupons:

         (1) The Company shall irrevocably have deposited or caused to be
    deposited with the Trustee (or another trustee satisfying the requirements
    of Section 607 who shall agree to comply with the provisions of this
    Article Fourteen applicable to it) in trust for the purpose of making the
    following payments, specifically pledged as security for, and dedicated
    solely to, the benefit of the Holders of such Securities and any related
    coupons, (A) money in an amount (in such Currency in which such Securities
    and any related coupons are then specified as payable at Stated Maturity),
    or (B) Government Obligations applicable to such Securities (determined on
    the basis of the Currency in which such Securities are then specified as
    payable at Stated Maturity) which through the scheduled payment of
    principal and interest in respect thereof in accordance with their terms
    will provide, not later than one day before the due date of any payment of
    principal (including any premium) and interest, if any, under such
    Securities and any related coupons, money in an amount, or (C) a
    combination thereof, 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 Trustee (or other qualifying trustee) to pay and discharge,
    (i) the principal of (and premium, if any, on) and interest on such
    Outstanding Securities and any related coupons on the Stated Maturity (or
    Redemption Date, if applicable) of such principal (and premium, if any) or
    installment or interest and (ii) any mandatory sinking fund payments or
    analogous payments applicable to such Outstanding Securities and any
    related coupons on the day on which such payments are due and payable in
    accordance with the terms of this Indenture and of such Securities and any
    related coupons; provided that the Trustee shall have been irrevocably
    instructed to apply such money or the proceeds of such Government
    Obligations to said payments with respect to such Securities and any
    related coupons. Before such a deposit, the Company may give to the
    Trustee, in accordance with Section 1102 hereof, a notice of its election
    to redeem all or any portion of such Outstanding Securities at a future
    date in accordance with the terms of the Securities of such series and
    Article Eleven hereof, which notice shall be irrevocable. Such irrevocable
    redemption notice, if given, shall be given effect in applying the
    foregoing.

         (2) No Default or Event of Default with respect to such Securities or
    any related coupons shall have occurred and be continuing on the date of
    such deposit or, insofar as paragraphs (5) and (6) of Section 501 are
    concerned, at any time during 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).

                                      82


         (3) Such defeasance or covenant defeasance shall not result in a
    breach or violation of, or constitute a default under, this Indenture or
    any other material agreement or instrument to which the Company is a party
    or by which it is bound.

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

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

         (6) Notwithstanding any other provisions of this Section, such
    defeasance or covenant defeasance shall be effected in compliance with any
    additional or substitute terms, conditions or limitations in connection
    therewith pursuant to Section 301.

         (7) The Company shall have delivered to the Trustee an Officers'
    Certificate and an Opinion of Counsel, each stating that all conditions
    precedent provided for relating to either the defeasance under Section 1402
    or the covenant defeasance under Section 1403 (as the case may be) have
    been complied with.

                                      83


         SECTION 1405. Deposited Money and Government Obligations to Be Held in
Trust; Other Miscellaneous Provisions.

         Subject to the provisions of the last paragraph of Section 1003, all
money and Government Obligations (or other property as may be provided pursuant
to Section 301) (including the proceeds thereof) deposited with the Trustee (or
other qualifying trustee--collectively for purposes of this Section 1405, the
"Trustee") pursuant to Section 1404 in respect of such Outstanding Securities
and any related coupons shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Securities and any related coupons and
this Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Holders of such Securities and any related coupons of all
sums due and to become due thereon in respect of principal (and premium, if
any) and interest, but such money need not be segregated from other funds
except to the extent required by law.

         Unless otherwise specified with respect to any Security pursuant to
Section 301, if, after a deposit referred to in Section 1404(1) has been made,
(a) the Holder of a Security in respect of which such deposit was made is
entitled to, and does, elect pursuant to Section 312(b) or the terms of such
Security to receive payment in a Currency other than that in which the deposit
pursuant to Section 1404(1) has been made in respect of such Security, or (b) a
Conversion Event occurs as contemplated in Section 312(d) or 312(e) or by the
terms of any Security in respect of which the deposit pursuant to Section
1404(1) has been made, the indebtedness represented by such Security and any
related coupons shall be deemed to have been, and will be, fully discharged and
satisfied through the payment of the principal of (premium, if any, on), and
interest, if any, on such Security as they become due out of the proceeds
yielded by converting (from time to time as specified below in the case of any
such election) the amount or other property deposited in respect of such
Security into the Currency in which such Security becomes payable as a result
of such election or Conversion Event based on the applicable Market Exchange
Rate for such Currency in effect on the third Business Day prior to each
payment date, except, with respect to a Conversion Event, for such Currency in
effect (as nearly as feasible) at the time of the Conversion Event.

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

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

                                      84


applicable, in accordance with this Article.

         SECTION 1406. Reinstatement.

         If the Trustee or any Paying Agent is unable to apply any money in
accordance with Section 1405 by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and such
Securities and any related coupons shall be revived and reinstated as though no
deposit had occurred pursuant to Section 1402 or 1403, as the case may be,
until such time as the Trustee or Paying Agent is permitted to apply all such
money in accordance with Section 1405; provided, however, that if the Company
makes any payment of principal of (or premium, if any, on) or interest on any
such Security or any related coupon following the reinstatement of its
obligations, the Company shall be subrogated to the rights of the Holders of
such Securities and any related coupons to receive such payment from the money
held by the Trustee or Paying Agent.

                                      85


                                ARTICLE FIFTEEN

                       MEETINGS OF HOLDERS OF SECURITIES

         SECTION 1501. Purposes for Which Meetings May Be Called.

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

         SECTION 1502. Call, Notice and Place of Meetings.

         (a) The Trustee may at any time call a meeting of Holders of
Securities of any series for any purpose specified in Section 1501, to be held
at such time and at such place in The City of New York or in London as the
Trustee shall determine. Notice of every meeting of Holders of Securities of
any series, setting forth the time and the place of such meeting and in general
terms the action proposed to be taken at such meeting, shall be given, in the
manner provided for in Section 106, not less than 21 nor more than 180 days
prior to the date fixed for the meeting.

         (b) In case at any time the Company, pursuant to a Board Resolution,
or the Holders of at least 10% in principal amount of the Outstanding
Securities of any series shall have requested the Trustee to call a meeting of
the Holders of Securities of such series for any purpose specified in Section
1501, by written request setting forth in reasonable detail the action proposed
to be taken at the meeting, and the Trustee shall not have made the first
publication of the notice of such meeting within 21 days after receipt of such
request or shall not thereafter proceed to cause the meeting to be held as
provided herein, then the Company or the Holders of Securities of such series
in the amount above specified, as the case may be, may determine the time and
the place in The City of New York or in London for such meeting and may call
such meeting for such purposes by giving notice thereof as provided in
paragraph (a) of this Section.

         SECTION 1503. Persons Entitled to Vote at Meetings.

         To be entitled to vote at any meeting of Holders of Securities of any
series, a Person shall be (1) a Holder of one or more Outstanding Securities of
such series, or (2) a Person appointed by an instrument in writing as proxy for
a Holder or Holders of one or more Outstanding Securities of such series by
such Holder or Holders. The only Persons who shall be entitled to be present or
to speak at any meeting of Holders of Securities of any series shall be the
Person entitled to vote at such meeting and their counsel, any representatives
of the Trustee and its counsel and any representatives of the Company and its
counsel.

                                      86


         SECTION 1504. Quorum; Action.

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

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

         Except as limited by the proviso to Section 902, any resolution
presented to a meeting or adjourned meeting duly reconvened at which a quorum
is present as aforesaid may be adopted by the affirmative vote of the Holders
of not less than a majority in principal amount of the Outstanding Securities
of that series; provided, however, that, except as limited by the proviso to
Section 902, any resolution with respect to any request, demand, authorization,
direction, notice, consent, waiver or other action which this Indenture
expressly provides may be made, given or taken by the Holders of a specified
percentage, which is less than a majority, in principal amount of the
Outstanding Securities of a series may be adopted at a meeting or an adjourned
meeting duly reconvened and at which a quorum is present as aforesaid by the
affirmative vote of the Holders of not less than such specified percentage in
principal amount of the Outstanding Securities of that series.

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

         Notwithstanding the foregoing provisions of this Section 1504, if any
action is to be taken at a meeting of Holders of Securities of any series with
respect to any request, demand, authorization, direction, notice, consent,
waiver or other action that this Indenture expressly provides may be made,

                                      87


given or taken by the Holders of a specified percentage in principal amount of
all Outstanding Securities affected thereby, or of the Holders of such series
and one or more additional series:

         (i) there shall be no minimum quorum requirement for such meeting; and

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

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

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

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

         (c) At any meeting each Holder of a Security of such series or proxy
shall be entitled to one vote for each $1,000 principal amount of Outstanding
Securities of such series held or represented by him (determined as specified
in the definition of "Outstanding" in Section 101); provided, however, that no
vote shall be cast or counted at any meeting in respect of any Security
challenged as not Outstanding and ruled by the chairman of the meeting to be
not Outstanding. The chairman of the meeting shall have no right to vote,
except as a Holder of a Security of such series or proxy.

                                      88


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

         SECTION 1506. Counting Votes and Recording Action of Meetings.

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

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

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

                                            CENDANT CORPORATION


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

[Seal]

Attest:


                                      89


                                       THE BANK OF NOVA SCOTIA TRUST
                                       COMPANY OF NEW YORK
                                         Trustee


                                       By:
                                          --------------------------------
                                          Name:
                                          Title:
[Seal]

Attest:


                                      90


                                  EXHIBIT A-1

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

                                  CERTIFICATE

                    [Insert title or sufficient description
                         of Securities to be delivered]


         This is to certify that as of the date hereof, and except as set forth
below, the above-captioned Securities held by you for our account (i) are owned
by person(s) that are not citizens or residents of the United States, domestic
partnerships, domestic corporations or any estate or trust the income of which
is subject to United States federal income taxation regardless of its source
("United States persons(s)"), (ii) are owned by United States person(s) that
are (a) foreign branches of United States financial institutions (financial
institutions, as defined in United States Treasury Regulations Section
2.165-12(c)(1)(v) are herein referred to as "financial institutions")
purchasing for their own account or for resale, or (b) United States person(s)
who acquired the Securities through foreign branches of United States financial
institutions and who hold the Securities through such United States financial
institutions on the date hereof (and in either case (a) or (b), each such
United States financial institution hereby agrees, on its own behalf or through
its agent, that you may advise [Name of Issuer] or its agent that such
financial institution will comply with the requirements of Section
165(j)(3)(A), (B) or (C) of the United States Internal Revenue Code of 1986, as
amended, and the regulations thereunder), or (iii) are owned by United States
or foreign financial institution(s) for purposes of resale during the
restricted period (as defined in United States Treasury Regulations Section
1.163-5(c)(2)(i)(D)(7)), and, in addition, if the owner is a United States or
foreign financial institution described in clause (iii) above (whether or not
also described in clause (i) or (ii)), this is to further certify that such
financial institution has not acquired the Securities for purposes of resale
directly or indirectly to a United States person or to a person within the
United States or its possessions.

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

         We undertake to advise you promptly by tested telex on or prior to the
date on which you intend to submit your certification relating to the
above-captioned Securities held by you for our account in accordance with your
Operating Procedures if any applicable statement herein is not correct on such
date, and in the absence of any such notification it may be assumed that this
certification applies as of such date.

                                      91


         This certificate excepts and does not relate to [U.S.$]     of such
interest in the above-captioned Securities in respect of which we are not able
to certify and as to which we understand an exchange for an interest in a
Permanent Global Security or an exchange for and delivery of definitive
Securities (or, if relevant, collection of any interest) cannot be made until
we do so certify.

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

Dated:

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

                                            [Name of Person Making
                                            Certification]


                                            -----------------------------------
                                            (Authorized Signatory)
                                            Name:
                                            Title:

                                      92


                                  EXHIBIT A-2

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

                                  CERTIFICATE

                    [Insert title or sufficient description
                         of Securities to be delivered]


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

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

         We further certify that (i) we are not making available herewith for
exchange (or, if relevant, collection of any interest) any portion of the
temporary global Security representing the above-

                                      93


captioned Securities excepted in the above-referenced certificates of Member
Organizations and (ii) as of the date hereof we have not received any
notification from any of our Member Organizations to the effect that the
statements made by such Member Organizations with respect to any portion of the
part submitted herewith for exchange (or, if relevant, collection of any
interest) are no longer true and cannot be relied upon as of the date hereof.

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

Dated:

[To be dated no earlier than the Exchange Date or the relevant Interest Payment
Date occurring prior to the Exchange Date, as applicable]

                          [MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
                          BRUSSELS OFFICE, as Operator of the Euroclear System]
                          [CEDEL S.A.]


                          By
                            -------------------------------




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










                              CENDANT CORPORATION


                                       TO


               THE BANK OF NOVA SCOTIA TRUST COMPANY OF NEW YORK,

                                    Trustee


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

                                   Indenture

                          Dated as of January __, 1998

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



                        CONVERTIBLE AND NON-CONVERTIBLE

                          SUBORDINATED DEBT SECURITIES










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


                              CENDANT CORPORATION

               Reconciliation and tie between Trust Indenture Act
              of 1939 and Indenture, dated as of January __, 1998


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

ss. 310(a)(1).....................................         607(a)
       (a)(2).....................................         607(a)
       (b)........................................         607(b), 608
ss. 312(c)........................................         701
ss. 314(a)........................................         703
       (a)(4).....................................         1004
       (c)(1).....................................         102
       (c)(2).....................................         102
       (e)........................................         102
ss. 315(b)........................................         601
ss. 316(a)(last sentence).........................         101 ("Outstanding")
       (a)(1)(A)..................................         502, 512
       (a)(1)(B)..................................         513
       (b)........................................         508
       (c)........................................         104(e)
ss. 317(a)(1).....................................         503
       (a)(2).....................................         504
       (b)........................................         1003
ss. 318(a)........................................         111

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



                               TABLE OF CONTENTS
                               -----------------
                                                                           Page
                                                                           ----

RECITALS OF THE COMPANY....................................................  1


                                  ARTICLE ONE

                        DEFINITIONS AND OTHER PROVISIONS
                             OF GENERAL APPLICATION

SECTION 101.   Definitions.................................................  1
               Act.........................................................  2
               Additional Amounts..........................................  2
               Affiliate...................................................  2
               Authenticating Agent........................................  2
               Authorized Newspaper........................................  2
               Bearer Security.............................................  2
               Beneficial Owner............................................  2
               Board of Directors..........................................  3
               Board Resolution............................................  3
               Business Day................................................  3
               Capital Stock...............................................  3
               CEDEL S.A...................................................  3
               Commission..................................................  4
               Common Depositary...........................................  4
               Company.....................................................  4
               Company Request or Company Order............................  4
               Corporate Trust Office......................................  4
               corporation.................................................  4
               coupon......................................................  4
               Currency....................................................  4
               Currency Conversion Date....................................  4
               Currency Conversion Event...................................  4
               Debt........................................................  4
               Default.....................................................  4
               Defaulted Interest..........................................  4
               Dollar or $.................................................  4
               Dollar Equivalent of the Currency Unit......................  5
               Dollar Equivalent of the Foreign Currency...................  5
               ECU.........................................................  5
               Election Date...............................................  5
               Euroclear...................................................  5
               European Communities........................................  5
               European Monetary System....................................  5
               Event of Default............................................  5

                                       i


               Exchange Date...............................................  5
               Exchange Rate Agent.........................................  5
               Exchange Rate Officer's Certificate.........................  5
               Federal Bankruptcy Code.....................................  5
               Foreign Currency............................................  5
               Government Obligations......................................  5
               Holder......................................................  6
               Indenture...................................................  6
               Indexed Security............................................  6
               interest....................................................  6
               Interest Payment Date.......................................  6
               Issue Date..................................................  6
               Lien........................................................  6
               Market Exchange Rate........................................  7
               Maturity....................................................  7
               Officers' Certificate.......................................  7
               Opinion of Counsel..........................................  7
               Optional Reset Date.........................................  7
               Original Issue Discount Security............................  7
               Outstanding.................................................  7
               Paying Agent................................................  9
               Person......................................................  9
               Place of Payment............................................  9
               Predecessor Security........................................  9
               Principal Property..........................................  9
               Redemption Date.............................................  9
               Redemption Price............................................  9
               Registered Security.........................................  9
               Regular Record Date.........................................  9
               Repayment Date..............................................  9
               Repayment Price.............................................  9
               Responsible Officer.........................................  9
               Securities.................................................. 10
               Security Register; Security Registrar....................... 10
               Senior Indebtedness......................................... 10
               Senior Indenture............................................ 10
               Special Record Date......................................... 10
               Stated Maturity............................................. 10
               Subsidiary.................................................. 10
               Total Assets................................................ 10
               Trust Indenture Act; TIA.................................... 11
               Trustee..................................................... 11
               United States............................................... 11
               United States person........................................ 11
               Valuation Date.............................................. 11
               Vice President.............................................. 11
 
                                      ii


               Voting Stock................................................ 11
               Yield to Maturity........................................... 11
SECTION 102.   Compliance Certificates and Opinions........................ 12
SECTION 103.   Form of Documents Delivered to Trustee...................... 12
SECTION 104.   Acts of Holders............................................. 13
SECTION 105.   Notices, etc. to Trustee and Company........................ 14
SECTION 106.   Notice to Holders; Waiver................................... 15
SECTION 107.   Effect of Headings and Table of Contents.................... 16
SECTION 108.   Successors and Assigns...................................... 16
SECTION 109.   Separability Clause......................................... 16
SECTION 110.   Benefits of Indenture....................................... 16
SECTION 111.   Governing Law............................................... 16
SECTION 112.   Legal Holidays.............................................. 16
SECTION 113.   Trust Indenture Act......................................... 17


                                  ARTICLE TWO

                                 SECURITY FORMS

SECTION 201.   Forms Generally............................................. 17
SECTION 202.   Form of Trustee's Certificate of Authentication............. 17
SECTION 203.   Securities Issuable in Global Form.......................... 18


                                 ARTICLE THREE

                                 THE SECURITIES

SECTION 301.   Amount Unlimited; Issuable in Series........................ 19
SECTION 302.   Denominations............................................... 22
SECTION 303.   Execution, Authentication, Delivery and Dating.............. 23
SECTION 304.   Temporary Securities........................................ 25
SECTION 305.   Registration, Registration of Transfer and Exchange......... 27
SECTION 306.   Mutilated, Destroyed, Lost and Stolen Securities............ 30
SECTION 307.   Payment of Interest; Interest Rights Preserved; Optional
               Interest Reset.............................................. 31
SECTION 308.   Optional Extension of Stated Maturity....................... 33
SECTION 309.   Persons Deemed Owners....................................... 34
SECTION 310.   Cancellation................................................ 35
SECTION 311.   Computation of Interest..................................... 35
SECTION 312.   Currency and Manner of Payments in Respect of Securities.... 35
SECTION 313.   Appointment and Resignation of Successor Exchange Rate
               Agent....................................................... 38

                                      iii


                                 ARTICLE FOUR

                          SATISFACTION AND DISCHARGE

SECTION 401.   Satisfaction and Discharge of Indenture..................... 39
SECTION 402.   Application of Trust Money.................................. 40


                                  ARTICLE FIVE

                                    REMEDIES

SECTION 501.   Events of Default........................................... 41
SECTION 502.   Acceleration of Maturity; Rescission and Annulment.......... 42
SECTION 503.   Collection of Indebtedness and Suits for Enforcement by
               Trustee..................................................... 43
SECTION 504.   Trustee May File Proofs of Claim............................ 44
SECTION 505.   Trustee May Enforce Claims Without Possession of
               Securities.................................................. 45
SECTION 506.   Application of Money Collected.............................. 45
SECTION 507.   Limitation on Suits......................................... 45
SECTION 508.   Unconditional Right of Holders to Receive Principal,
               Premium and Interest........................................ 46
SECTION 509.   Restoration of Rights and Remedies.......................... 46
SECTION 510.   Rights and Remedies Cumulative.............................. 47
SECTION 511.   Delay or Omission Not Waiver................................ 47
SECTION 512.   Control by Holders.......................................... 47
SECTION 513.   Waiver of Past Defaults..................................... 48
SECTION 514.   Waiver of Stay or Extension Laws............................ 48


                                  ARTICLE SIX

                                  THE TRUSTEE

SECTION 601.   Notice of Defaults.......................................... 49
SECTION 602.   Certain Rights of Trustee................................... 49
SECTION 603.   Trustee Not Responsible for Recitals or Issuance of
               Securities.................................................. 50
SECTION 604.   May Hold Securities......................................... 50
SECTION 605.   Money Held in Trust......................................... 51
SECTION 606.   Compensation and Reimbursement.............................. 51
SECTION 607.   Corporate Trustee Required; Eligibility..................... 51
SECTION 608.   Resignation and Removal; Appointment of Successor........... 52
SECTION 609.   Acceptance of Appointment by Successor...................... 53
SECTION 610.   Merger, Conversion, Consolidation or Succession to
               Business.................................................... 54
SECTION 611.   Appointment of Authenticating Agent......................... 55

                                      iv


                                 ARTICLE SEVEN

                  HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY

SECTION 701.   Disclosure of Names and Addresses of Holders................ 56
SECTION 702.   Reports by Trustee.......................................... 56
SECTION 703.   Reports by Company.......................................... 57


                                 ARTICLE EIGHT

                    MERGER, CONSOLIDATION AND SALE OF ASSETS

SECTION 801.   Company May Consolidate, etc., Only on Certain Terms........ 57
SECTION 802.   Successor Person Substituted................................ 58
SECTION 803.   Securities to Be Secured in Certain Events.................. 59


                                  ARTICLE NINE

                            SUPPLEMENTAL INDENTURES

SECTION 901.   Supplemental Indentures without Consent of Holders...........59
SECTION 902.   Supplemental Indentures with Consent of Holders............. 61
SECTION 903.   Execution of Supplemental Indentures........................ 62
SECTION 904.   Effect of Supplemental Indentures........................... 62
SECTION 905.   Conformity with Trust Indenture Act......................... 62
SECTION 906.   Reference in Securities to Supplemental Indentures.......... 62
SECTION 907.   Notice of Supplemental Indentures........................... 62


                                  ARTICLE TEN

                                   COVENANTS

SECTION 1001.  Payment of Principal, Premium, if any, and Interest......... 63
SECTION 1002.  Maintenance of Office or Agency............................. 63
SECTION 1003.  Money for Securities Payments to Be Held in Trust........... 64
SECTION 1004.  Statement as to Compliance.................................. 66
SECTION 1005.  Additional Amounts.......................................... 66
SECTION 1006.  Payment of Taxes and Other Claims........................... 67
SECTION 1007.  Corporate Existence......................................... 67
SECTION 1008.  Waiver of Certain Covenants................................. 67

                                       v


                                 ARTICLE ELEVEN

                            REDEMPTION OF SECURITIES

SECTION 1101.  Applicability of Article.................................... 68
SECTION 1102.  Election to Redeem; Notice to Trustee....................... 68
SECTION 1103.  Selection by Trustee of Securities to Be Redeemed........... 68
SECTION 1104.  Notice of Redemption........................................ 69
SECTION 1105.  Deposit of Redemption Price................................. 70
SECTION 1106.  Securities Payable on Redemption Date....................... 70
SECTION 1107.  Securities Redeemed in Part................................. 71


                                 ARTICLE TWELVE

                                 SINKING FUNDS

SECTION 1201.  Applicability of Article.................................... 71
SECTION 1202.  Satisfaction of Sinking Fund Payments with Securities....... 72
SECTION 1203.  Redemption of Securities for Sinking Fund................... 72


                                ARTICLE THIRTEEN

                         REPAYMENT AT OPTION OF HOLDERS

SECTION 1301.  Applicability of Article.................................... 73
SECTION 1302.  Repayment of Securities..................................... 73
SECTION 1303.  Exercise of Option.......................................... 74
SECTION 1304.  When Securities Presented for Repayment Become Due and
               Payable..................................................... 74
SECTION 1305.  Securities Repaid in Part................................... 75


                          ARTICLE FOURTEEN

                 DEFEASANCE AND COVENANT DEFEASANCE

SECTION 1401.  Company's Option to Effect Defeasance or Covenant
               Defeasance.................................................. 75
SECTION 1402.  Defeasance and Discharge.................................... 76
SECTION 1403.  Covenant Defeasance......................................... 76
SECTION 1404.  Conditions to Defeasance or Covenant Defeasance............. 77
SECTION 1405.  Deposited Money and Government Obligations to Be Held in
               Trust; Other Miscellaneous Provisions....................... 78
SECTION 1406.  Reinstatement............................................... 79

                                      vi


                                ARTICLE FIFTEEN

                       MEETINGS OF HOLDERS OF SECURITIES

SECTION 1501.  Purposes for Which Meetings May Be Called................... 79
SECTION 1502.  Call, Notice and Place of Meetings.......................... 80
SECTION 1503.  Persons Entitled to Vote at Meetings........................ 80
SECTION 1504.  Quorum; Action.............................................. 81
SECTION 1505.  Determination of Voting Rights; Conduct and Adjournment
               of Meetings................................................. 22
SECTION 1506.  Counting Votes and Recording Action of Meetings............. 83


                                ARTICLE SIXTEEN

                          SUBORDINATION OF SECURITIES

SECTION 1601.  Securities Subordinate to Senior Indebtedness............... 83
SECTION 1602.  Payment over of Proceeds upon Dissolution, etc.............. 83
SECTION 1603.  No Payment When Senior Indebtedness in Default.............. 84
SECTION 1604.  Payment Permitted if No Default............................. 85
SECTION 1605.  Subrogation to Rights of Holders of Senior Indebtedness..... 85
SECTION 1606.  Provisions Solely to Define Relative Rights..................85
SECTION 1607.  Trustee to Effectuate Subordination......................... 85
SECTION 1608.  No Waiver of Subordination Provisions....................... 85
SECTION 1609.  Notice to Trustee........................................... 86
SECTION 1610.  Reliance on Judicial Order or Certificate of Liquidation
               Agent....................................................... 86
SECTION 1611.  Rights of Trustee As a Holder of Senior Indebtedness;
               Preservation
               of Trustee's Rights......................................... 87
SECTION 1612.  Article Applicable to Paying Agents......................... 87
SECTION 1613.  No Suspension of Remedies................................... 87
SECTION 1614.  Trust Moneys Not Subordinated............................... 87

EXHIBIT A      FORMS OF CERTIFICATION

EXHIBIT A-1    FORM OF CERTIFICATE TO BE GIVEN BY PERSON ENTITLED TO RECEIVE
               BEARER SECURITY OR TO OBTAIN INTEREST PAYABLE PRIOR TO THE
               EXCHANGE DATE

EXHIBIT A-2    FORM OF CERTIFICATE TO BE GIVEN BY EUROCLEAR AND CEDEL S.A. IN
               CONNECTION WITH THE EXCHANGE OF A PORTION OF A TEMPORARY GLOBAL
               SECURITY OR TO OBTAIN INTEREST PAYABLE PRIOR TO THE EXCHANGE
               DATE

                                      vii


         INDENTURE, dated as of January __, 1998 between CENDANT CORPORATION, a
corporation duly organized and existing under the laws of the State of Delaware
(herein called the "Company"), having its principal office at 6 Sylvan Way,
Parsippany, New Jersey 07054, and THE BANK OF NOVA SCOTIA TRUST COMPANY OF NEW
YORK, a New York Banking Corporation, duly organized and existing under the
laws of the State of New York, Trustee (herein called the "Trustee"), having
its principal office at One Liberty Plaza, 23rd Floor, New York, New York
10006.

                            RECITALS OF THE COMPANY

         The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured and
subordinated debentures, notes or other evidences of indebtedness (herein
called the "Securities"), which may or may not be convertible into or
exchangeable for any securities of any Person (including the Company) and which
will be subordinated to the Senior Indebtedness of the Company to the extent
and in the manner set forth in Article Sixteen (as such article may be revised
pursuant to Section 301(25)), to be issued in one or more series as provided in
this Indenture.

         This Indenture is subject to the provisions of the Trust Indenture Act
of 1939, as amended, that are required to be part of this Indenture and shall,
to the extent applicable, be governed by such provisions.

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

         NOW, THEREFORE, THIS INDENTURE WITNESSETH:

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

                                  ARTICLE ONE

                        DEFINITIONS AND OTHER PROVISIONS
                             OF GENERAL APPLICATION

         SECTION 101. Definitions.

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

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

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



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

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

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

         Certain terms, used principally in Article Three, are defined in that
Article.

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

         "Additional Amounts" has the meaning specified in Section 1005.

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

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

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

         "Bearer Security" means any Security except a Registered Security.

         "Beneficial Owner" of shares of Capital Stock means, with respect to
any Person, any such shares:

         (a) which such Person or any of such Person's Affiliates or
    Associates, directly or indirectly, has the sole or shared right to vote or
    dispose of or has "beneficial ownership" of (as determined pursuant to Rule
    13d-3 promulgated under the Exchange Act or pursuant to

                                       2


    any successor provision), including, but not limited to, pursuant to any
    agreement, arrangement or understanding, whether or not in writing;
    provided, that a Person shall not be deemed the "Beneficial Owner" of, or
    to "Beneficially Own", any security under this subparagraph as a result of
    an agreement, arrangement or understanding to vote such security that both
    (y) arises solely from a revocable proxy given in response to a public
    proxy or consent solicitation made pursuant to, and in accordance with, the
    applicable provisions of the rules and regulations promulgated under the
    Exchange Act and (z) is not reportable by such person on Schedule 13D
    promulgated under the Exchange Act (or any comparable or successor report)
    without giving effect to any applicable waiting period, or Exchange Act (or
    any comparable or successor report) without giving effect to any applicable
    waiting period; or

         (b) which are Beneficially Owned, directly or indirectly, by any other
    person (or any Affiliate or Associate thereof) with which such person (or
    any of such person's Affiliates or Associates) has any agreement,
    arrangement or understanding, whether or not in writing, for the purpose of
    acquiring, holding, voting (except pursuant to a revocable proxy as
    described in the proviso to subparagraph (a) above) or disposing of any
    Capital Stock;

provided, that (i) no director or officer of the corporation (nor any Affiliate
or Associate of any such director or officer) shall, solely by reason of any or
all of such directors or officers acting in their capacities as such, be deemed
the "Beneficial Owner" of or to "Beneficially Own" any shares of Capital Stock
that are Beneficially Owned by any other such director or officer, and (ii) no
person shall be deemed the "Beneficial Owner" of or to "Beneficially Own" any
shares of Capital Stock held in any voting trust, any employee stock ownership
plan or any similar plan or trust if such person does not posses the right to
vote, to direct the voting of or to be consulted with respect to the voting of
such shares.

         For the purposes of this definition, the terms "Affiliate" and
"Associate" shall have the respective meanings ascribed to such terms in Rule
12b-2 promulgated under the Securities Exchange Act of 1934, as amended as in
effect on June 14, 1994 (the term "registrant" in said Rule 12b-2 meaning in
this case the Company).

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

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

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

         "Capital Stock" means any and all shares, interests, participations,
rights or other equivalents (however designated) of corporate stock of the
Company or any Restricted Subsidiary.

         "CEDEL S.A." means Cedel, S.A., or its successor.

                                       3


         "Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Securities Exchange Act of 1934,
or, if at any time after the execution of this Indenture such Commission is not
existing and performing the duties now assigned to it under the Trust Indenture
Act, then the body performing such duties at such time.

         "Common Depositary" has the meaning specified in Section 304.

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

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

         "Corporate Trust Office" means the principal corporate trust office of
the Trustee, at which at any particular time its corporate trust business shall
be administered, which office on the date of execution of this Indenture is
located at One Liberty Plaza, N.Y., N.Y.

         "corporation" includes corporations, associations, companies and
business trusts.

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

         "Currency" means any currency or currencies, composite currency or
currency unit or currency units, including, without limitation, the ECU, issued
by the government of one or more countries or by any recognized confederation
or association of such governments.

         "Currency Conversion Date" has the meaning specified in Section
312(d).

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

         "Debt" means notes, bonds, debentures or other similar evidences of
indebtedness for money borrowed.

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

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

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

                                       4


debts.

         "Dollar Equivalent of the Currency Unit" has the meaning specified in
Section 312(g).

         "Dollar Equivalent of the Foreign Currency" has the meaning specified
in Section 312(f).

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

         "Election Date" has the meaning specified in Section 312(h).

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

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

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

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

         "Exchange Date" has the meaning specified in Section 304.

         "Exchange Rate Agent" means, with respect to Securities of or within
any series, unless otherwise specified with respect to any Securities pursuant
to Section 301, a New York Clearing House bank, designated pursuant to Section
301 or Section 313.

         "Exchange Rate Officer's Certificate" means a tested telex or a
certificate setting forth (i) the applicable Market Exchange Rate and (ii) the
Dollar or Foreign Currency amounts of principal (and premium, if any) and
interest, if any (on an aggregate basis and on the basis of a Security having
the lowest denomination principal amount determined in accordance with Section
302 in the relevant Currency), payable with respect to a Security of any series
on the basis of such Market Exchange Rate, sent (in the case of a telex) or
signed (in the case of a certificate) by the Treasurer, any Vice President or
any Assistant Treasurer of the Company.

         "Federal Bankruptcy Code" means the Bankruptcy Act of Title 11 of the
United States Code, as amended from time to time.

         "Foreign Currency" means any Currency other than Currency of the
United States.

         "Government Obligations" means, unless otherwise specified with
respect to any series of Securities pursuant to Section 301, securities which
are (i) direct obligations of the government which issued the Currency in which
the Securities of a particular series are payable or (ii) obligations of a
Person controlled or supervised by and acting as an agency or instrumentality
of the government which issued the Currency in which the Securities of such
series are payable, the

                                       5


payment of which is unconditionally guaranteed by such government, which, in
either case, are full faith and credit obligations of such government payable
in such Currency and are not callable or redeemable at the option of the issuer
thereof and shall also include a depository receipt issued by a bank or trust
company as custodian with respect to any such Government Obligation or a
specific payment of interest on or principal of any such Government Obligation
held by such custodian for the account of the holder of a depository receipt;
provided that (except as required by law) such custodian is not authorized to
make any deduction from the amount payable to the holder of such depository
receipt from any amount received by the custodian in respect of the Government
Obligation or the specific payment of interest or principal of the Government
Obligation evidenced by such depository receipt.

         "Holder" means, in the case of a Registered Security, the Person in
whose name a Security is registered in the Security Register and, in the case
of a Bearer Security, the bearer thereof and, when used with respect to any
coupon, shall mean the bearer thereof.

         "Indenture" means this instrument as originally executed and as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
and shall include the terms of any particular series of Securities established
as contemplated by Section 301; provided, however, that, if at any time more
than one Person is acting as Trustee under this instrument, "Indenture" shall
mean, with respect to any one or more series of Securities for which such
Person is Trustee, this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into pursuant to the applicable provisions hereof and shall
include the terms of particular series of Securities for which such Person is
Trustee established as contemplated by Section 301, exclusive, however, of any
provisions or terms which relate solely to other series of Securities for which
such Person is not Trustee, regardless of when such terms or provisions were
adopted, and exclusive of any provisions or terms adopted by means of one or
more indentures supplemental hereto executed and delivered after such Person
had become such Trustee but to which such Person, as such Trustee, was not a
party.

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

         "interest", when used with respect to an Original Issue Discount
Security which by its terms bears interest only after Maturity, means interest
payable after Maturity at the rate prescribed in such Original Issue Discount
Security.

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

         "Issue Date" with respect to a Security means the date of first
issuance of such Security under this Indenture.

         "Lien" means any pledge, mortgage, lien, charge, encumbrance or
security interest except that a Lien shall not mean any license or right to use
intellectual property of the Company or a Subsidiary granted by the Company or
a Subsidiary.

                                       6


         "Market Exchange Rate" means, unless otherwise specified with respect
to any Securities pursuant to Section 301, (i) for any conversion involving a
currency unit on the one hand and Dollars or any Foreign Currency on the other,
the exchange rate between the relevant currency unit and Dollars or such
Foreign Currency calculated by the method specified pursuant to Section 301 for
the Securities of the relevant series, (ii) for any conversion of Dollars into
any Foreign Currency, the noon (New York City time) buying rate for such
Foreign Currency for cable transfers quoted in New York City as certified for
customs purposes by the Federal Reserve Bank of New York and (iii) for any
conversion of one Foreign Currency into Dollars or another Foreign Currency,
the spot rate at noon local time in the relevant market at which, in accordance
with normal banking procedures, the Dollars or Foreign Currency into which
conversion is being made could be purchased with the Foreign Currency from
which conversion is being made from major banks located in either New York
City, London or any other principal market for Dollars or such purchased
Foreign Currency, in each case determined by the Exchange Rate Agent. Unless
otherwise specified with respect to any Securities pursuant to Section 301, in
the event of the unavailability of any of the exchange rates provided for in
the foregoing clauses (i), (ii) and (iii), the Exchange Rate Agent shall use,
in its sole discretion and without liability on its part, such quotation of the
Federal Reserve Bank of New York as of the most recent available date, or
quotations from one or more major banks in New York City, London or another
principal market for the Currency in question, or such other quotations as the
Exchange Rate Agent shall deem appropriate. Unless otherwise specified by the
Exchange Rate Agent, if there is more than one market for dealing in any
Currency by reason of foreign exchange regulations or otherwise, the market to
be used in respect of such Currency shall be that upon which a non-resident
issuer of securities designated in such Currency would purchase such Currency
in order to make payments in respect of such securities.

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

         "Officers' Certificate" means a certificate signed by the Chairman,
the President or a Vice President, and by the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary of the Company, and
delivered to the Trustee.

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

         "Optional Reset Date" has the meaning specified in Section 307(b).

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

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

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

                                       7


cancellation;

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

         (iii) Securities, except to the extent provided in Sections 1402 and
    1403, with respect to which the Company has effected defeasance and/or
    covenant defeasance as provided in Article Fourteen; and

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

provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder or are present at
a meeting of Holders for quorum purposes, and for the purpose of making the
calculations required by TIA Section 313, (i) the principal amount of an
Original Issue Discount Security that may be counted in making such
determination or calculation and that shall be deemed to be Outstanding for
such purpose shall be equal to the amount of principal thereof that would be
(or shall have been declared to be) due and payable, at the time of such
determination, upon a declaration of acceleration of the maturity thereof
pursuant to Section 502, (ii) the principal amount of any Security denominated
in a Foreign Currency that may be counted in making such determination or
calculation and that shall be deemed Outstanding for such purpose shall be
equal to the Dollar equivalent, determined as of the date such Security is
originally issued by the Company as set forth in an Exchange Rate Officer's
Certificate delivered to the Trustee, of the principal amount (or, in the case
of an Original Issue Discount Security, the Dollar equivalent as of such date
of original issuance of the amount determined as provided in clause (i) above),
of such Security, (iii) the principal amount of any Indexed Security that may
be counted in making such determination or calculation and that shall be deemed
outstanding for such purpose shall be equal to the principal face amount of
such Indexed Security at original issuance, unless otherwise provided with
respect to such Security pursuant to Section 301, and (iv) Securities owned by
the Company or any other obligor upon the Securities or any Affiliate of the
Company or of such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in making such calculation or in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Securities which the
Trustee knows to be so owned shall be so disregarded. Securities so owned which
have been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Securities and that the pledgee is not the Company or any
other obligor upon the Securities or any Affiliate of the Company or such other
obligor.

                                       8


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

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

         "Place of Payment" means, when used with respect to the Securities of
or within any series, the place or places where the principal of (and premium,
if any, on) and interest on such Securities are payable as specified as
contemplated by Sections 301 and 1002.

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

         "Principal Property" means any reservation centers, leaseholds,
telecommunications contracts, computerized systems contracts, intellectual
property rights, or Franchise Contracts, owned by the Company or any Subsidiary
and located in the United States, the gross book value (without deduction of
any reserve for depreciation) of which on the date as of which the
determination is being made is an amount which exceeds 5% of Total Assets,
other than any such property which, in the opinion of the Board of Directors,
is not of material importance to the total business conducted by the Company
and its Subsidiaries, taken as a whole.

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

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

         "Registered Security" means any Security registered in the Security
Register.

         "Regular Record Date" for the interest payable on any Interest Payment
Date on the Registered Securities of or within any series means the date
specified for that purpose as contemplated by Section 301.

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

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

         "Responsible Officer", when used with respect to the Trustee, means
the chairman or

                                       9


any vice-chairman of the board of directors, the chairman or any vice-chairman
of the executive committee of the board of directors, the chairman of the trust
committee, the president, any vice president, the secretary, any assistant
secretary, the treasurer, any assistant treasurer, the cashier, any assistant
cashier, any trust officer or assistant trust officer, the controller or any
assistant controller or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above-designated officers,
and also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of his knowledge of and
familiarity with the particular subject.

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

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

         "Senior Indebtedness" of the Company means (a) the principal (and
premium, if any) and interest with respect to all indebtedness for money
borrowed of the Company whether outstanding on the date hereof or thereafter
created, incurred, assumed or guaranteed, unless in the instrument creating or
evidencing the same or pursuant to which the same is outstanding, it is
expressly provided that such indebtedness is not senior or prior in right of
payment to the Securities and (b) amendments, supplements, deferrals, renewals,
extensions, modifications and refundings of any liability of the types referred
to in clause (a) above.

         "Senior Indenture" means the indenture entered into between the
Company and The Bank of Nova Scotia Trust Company of New York in connection
with the January 1998 shelf registration of the Company.

         "Special Record Date" for the payment of any Defaulted Interest on the
Registered Securities of or within any series means a date fixed by the Trustee
pursuant to Section 307.

         "Stated Maturity", when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date specified
in such Security or a coupon representing such installment of interest as the
fixed date on which the principal of such Security or such installment of
principal or interest is due and payable, as such date may be extended pursuant
to the provisions of Section 308.

         "Subsidiary" means any corporation of which at the time of
determination the Company, directly and/or indirectly through one or more
Subsidiaries, owns more than 50% of the shares of Voting Stock.

         "Total Assets" means the total amount of assets (less applicable
reserves and other properly deductible items), as set forth on the most recent
balance sheet of the Company and its

                                      10


consolidated Subsidiaries and computed in accordance with generally accepted
accounting principles.

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

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

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

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

         "Valuation Date" has the meaning specified in Section 312(c).

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

         "Voting Stock" means stock of the class or classes having general
voting power under ordinary circumstances to elect at least a majority of the
board of directors, managers or trustees of a corporation (irrespective of
whether or not at the time stock of any other class or classes shall have or
might have voting power by reason of the happening of any contingency).

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

                                      11


         SECTION 102. Compliance Certificates and Opinions.

         Upon any application or request by the Company to the Trustee to take
any action under any provision of this Indenture, the Company shall furnish to
the Trustee an Officers' Certificate stating that all conditions precedent, if
any, provided for in this Indenture (including any covenant compliance with
which constitutes a condition precedent) relating to the proposed action have
been complied with and an Opinion of Counsel stating that in the opinion of
such counsel all such conditions precedent, if any, have been complied with,
except that in the case of any such application or request as to which the
furnishing of such documents is specifically required by any provision of this
Indenture relating to such particular application or request, including,
without limitation, the certificate of authentication provided pursuant to
Section 303, no additional certificate or opinion need be furnished.

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

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

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

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

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

         SECTION 103. Form of Documents Delivered to Trustee.

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

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

                                      12


opinion or representations with respect to such matters are erroneous.

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

         SECTION 104. Acts of Holders.

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

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

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

         (d) The principal amount and serial numbers of Bearer Securities held
by any Person, and the date of holding the same, may be proved by the
production of such Bearer Securities or by a certificate executed, as
depositary, by any trust company, bank, banker or other depositary, wherever
situated, if such certificate shall be deemed by the Trustee to be
satisfactory, showing that at the date therein mentioned such Person had on
deposit with such depositary, or exhibited to it, the Bearer Securities therein
described; or such facts may be proved by the certificate or affidavit of the
Person holding such Bearer Securities, if such certificate or affidavit is
deemed by the Trustee to be

                                      13


satisfactory. The Trustee and the Company may assume that such ownership of any
Bearer Security continues until (1) another certificate or affidavit bearing a
later date issued in respect of the same Bearer Security is produced, or (2)
such Bearer Security is produced to the Trustee by some other Person, or (3)
such Bearer Security is surrendered in exchange for a Registered Security, or
(4) such Bearer Security is no longer Outstanding. The principal amount and
serial numbers of Bearer Securities held by any Person, and the date of holding
the same, may also be proved in any other manner which the Trustee deems
sufficient.

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

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

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

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

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

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

                                      14


         SECTION 106. Notice to Holders; Waiver.

         Where this Indenture provides for notice of any event to Holders of
Registered Securities by the Company or the Trustee, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class postage prepaid, to each such Holder affected by such
event, at his address as it appears in the Security Register within the time
prescribed for the giving of such notice. In any case where notice to Holders
of Registered Securities is given by mail, neither the failure to mail such
notice, nor any defect in any notice so mailed, to any particular Holder shall
affect the sufficiency of such notice with respect to other Holders of
Registered Securities or the sufficiency of any notice to Holders of Bearer
Securities given as provided. Any notice mailed to a Holder in the manner
herein prescribed shall be conclusively deemed to have been received by such
Holder, whether or not such Holder actually receives such notice.

         In case, by reason of the suspension of or irregularities in regular
mail service or by reason of any other cause, it shall be impractical to mail
notice of any event to Holders of Registered Securities when such notice is
required to be given pursuant to any provision of this Indenture, then any
manner of giving such notice as shall be satisfactory to the Trustee shall be
deemed to be sufficient giving of such notice for every purpose hereunder.

         Except as otherwise expressly provided herein or otherwise specified
with respect to any Securities pursuant to Section 301, where this Indenture
provides for notice to Holders of Bearer Securities of any event, such notice
shall be sufficiently given to Holders of Bearer Securities if published in an
Authorized Newspaper in The City of New York and in such other city or cities
as may be specified in such Securities on a Business Day at least twice, the
first such publication to be not earlier than the earliest date, and not later
than the latest date, prescribed for the giving of such notice. Any such notice
shall be deemed to have been given on the date of the first such publication.

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

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

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

                                      15


         SECTION 107. Effect of Headings and Table of Contents.

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

         SECTION 108. Successors and Assigns.

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

         SECTION 109. Separability Clause.

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

         SECTION 110. Benefits of Indenture.

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

         SECTION 111. Governing Law.

         THIS INDENTURE AND THE SECURITIES AND COUPONS SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. THIS INDENTURE
IS SUBJECT TO THE PROVISIONS OF THE TRUST INDENTURE ACT OF 1939, AS AMENDED,
THAT ARE REQUIRED TO BE PART OF THIS INDENTURE AND SHALL, TO THE EXTENT
APPLICABLE, BE GOVERNED BY SUCH PROVISIONS.

         SECTION 112. Legal Holidays.

         In any case where any Interest Payment Date, Redemption Date, sinking
fund payment date or Stated Maturity or Maturity of any Security shall not be a
Business Day at any Place of Payment, then (notwithstanding any other provision
of this Indenture or of any Security or coupon other than a provision in the
Securities of any series which specifically states that such provision shall
apply in lieu of this Section) payment of interest or principal (and premium,
if any) need not be made at such Place of Payment on such date, but may be made
on the next succeeding Business Day at such Place of Payment with the same
force and effect as if made on the Interest Payment Date or Redemption Date or
sinking fund payment date, or at the Stated Maturity or Maturity; provided that
no interest shall accrue for the period from and after such Interest Payment
Date, Redemption Date, sinking fund payment date, Stated Maturity or Maturity,
as the case may be.

                                      16


         SECTION 113. Trust Indenture Act.

         This Indenture is subject to the provisions of the Trust Indenture Act
that are required to be part of this Indenture and shall, to the extent
applicable, be governed by such provisions.

                                  ARTICLE TWO

                                 SECURITY FORMS

         SECTION 201. Forms Generally.

         The Registered Securities, if any, of each series and the Bearer
Securities, if any, of each series and related coupons shall be in
substantially the forms as shall be established by or pursuant to a Board
Resolution or in one or more indentures supplemental hereto, in each case with
such appropriate insertions, omissions, substitutions and other variations as
are required or permitted by this Indenture, and may have such letters, numbers
or other marks of identification and such legends or endorsements placed
thereon as may be required to comply with the rules of any securities exchange
or as may, consistently herewith, be determined by the officers executing such
Securities or coupons, as evidenced by their execution of the Securities or
coupons. If the forms of Securities or coupons of any series are established by
action taken pursuant to a Board Resolution, a copy of an appropriate record of
such action shall be certified by the Secretary or an Assistant Secretary of
the Company and delivered to the Trustee at or prior to the delivery of the
Company Order contemplated by Section 303 for the authentication and delivery
of such Securities or coupons. Any portion of the text of any Security may be
set forth on the reverse thereof, with an appropriate reference thereto on the
face of the Security.

         Unless otherwise specified as contemplated by Section 301, Securities
in bearer form shall have interest coupons attached.

         The Trustee's certificate of authentication on all Securities shall be
in substantially the form set forth in this Article.

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

         SECTION 202. Form of Trustee's Certificate of Authentication.

         Subject to Section 611, the Trustee's certificate of authentication
shall be in substantially the following form:

                                      17


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

                                       THE BANK OF NOVA SCOTIA TRUST COMPANY
                                       OF NEW YORK,
                                         as Trustee


                                       By
                                         ---------------------------------
                                         Authorized Officer


         SECTION 203. Securities Issuable in Global Form.

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

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

         Notwithstanding the provisions of Section 307, unless otherwise
specified as contemplated by Section 301, payment of principal of and any
premium and interest on any Security in permanent global form shall be made to
the Person or Persons specified therein.

         Notwithstanding the provisions of Section 309 and except as provided
in the preceding paragraph, the Company, the Trustee and any agent of the
Company and the Trustee shall treat as the Holder of such principal amount of
Outstanding Securities represented by a permanent global Security (i) in the
case of a permanent global Security in registered form, the Holder of such

                                      18


permanent global Security in registered form, or (ii) in the case of a
permanent global Security in bearer form, Euroclear or CEDEL as specified by
the common depositary for such global security.

                                 ARTICLE THREE

                                 THE SECURITIES

         SECTION 301. Amount Unlimited; Issuable in Series.

         The aggregate principal amount of securities which may be authorized
and delivered under this Indenture and the Senior Indenture is unlimited. The
Securities shall be subordinated in right of payment to the Senior Indebtedness
of the Company to the extent and in the manner set forth in Article Sixteen (as
such Article may be revised pursuant to Section 301(25)).

         The Securities may be issued in one or more series. There shall be
established in one or more Board Resolutions or pursuant to authority granted
by one or more Board Resolutions and, subject to Section 303, set forth in, or
determined in the manner provided in, an Officers' Certificate, or established
in one or more indentures supplemental hereto, prior to the issuance of
Securities of any series, any or all of the following, as applicable (each of
which (except for the matters set forth in clauses (1), (2) and (17) below), if
so provided, may be determined from time to time by the Company with respect to
unissued Securities of the series and set forth in such Securities of the
series when issued from time to time):

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

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

         (3) the date or dates, or the method by which such date or dates will
    be determined or extended, on which the principal of the Securities of the
    series is payable;

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

         (5) the place or places, if any, other than or in addition to the
    Borough of Manhattan, The City of New York, where the principal of (and
    premium, if any, on) and any interest on Securities of the series shall be
    payable, any Registered Securities of the series

                                      19


    may be surrendered for registration of transfer, Securities of the series
    may be surrendered for exchange and, if different than the location
    specified in Section 106, the place or places where notices or demands to
    or upon the Company in respect of the Securities of the series and this
    Indenture may be served;

         (6) the period or periods within which, the price or prices at which,
    the Currency in which, and other terms and conditions upon which Securities
    of the series may be redeemed, in whole or in part, at the option of the
    Company, if the Company is to have that option;

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

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

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

         (10) if other than the principal amount thereof, the portion of the
    principal amount of Securities of the series that shall be payable upon
    declaration of acceleration of the Maturity thereof pursuant to Section 502
    or the method by which such portion shall be determined;

         (11) if other than Dollars, the Currency in which payment of the
    principal of (and premium, if any, on) or interest, if any, on the
    Securities of the series shall be payable or in which the Securities of the
    series shall be denominated and the particular provisions applicable
    thereto in accordance with, in addition to or in lieu of any of the
    provisions of Section 312;

         (12) whether the amount of payments of principal of (and premium, if
    any, on) or interest on the Securities of the series may be determined with
    reference to an index, formula or other method (which index, formula or
    method may be based, without limitation, on one or more Currencies,
    commodities, equity indices or other indices), and the manner in which such
    amounts shall be determined;

         (13) whether the principal of (and premium, if any, on) and interest,
    if any, on the Securities of the series are to be payable, at the election
    of the Company or a Holder thereof, in a Currency other than that in which
    such Securities are denominated or stated to be payable, the period or
    periods within which (including the Election Date), and the terms and
    conditions upon which, such election may be made, and the time and manner
    of determining the exchange rate between the Currency in which such
    Securities are denominated or stated to be payable and the Currency in
    which such Securities are to

                                      20


    be so payable, in each case in accordance with, in addition to or in lieu
    of any of the provisions of Section 312;

         (14) the designation of the initial Exchange Rate Agent, if any;

         (15) any provisions in modification of, in addition to or in lieu of
    the provisions of Article Fourteen that shall be applicable to the
    Securities of the series;

         (16) provisions, if any, granting special rights to the Holders of
    Securities of the series upon the occurrence of such events as may be
    specified;

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

         (18) whether Securities of the series are to be issuable as Registered
    Securities, Bearer Securities (with or without coupons) or both, any
    restrictions applicable to the offer, sale or delivery of Bearer
    Securities, whether any Securities of the series are to be issuable
    initially in temporary global form and whether any Securities of the series
    are to be issuable in permanent global form with or without coupons and, if
    so, whether beneficial owners of interests in any such permanent global
    Security may exchange such interests for Securities of such series and of
    like tenor of any authorized form and denomination and the circumstances
    under which any such exchanges may occur, if other than in the manner
    provided in Section 305, whether Registered Securities of the series may be
    exchanged for Bearer Securities of the series (if permitted by applicable
    laws and regulations), whether Bearer Securities of the series may be
    exchanged for Registered Securities of the series, and the circumstances
    under which and the place or places where such exchanges may be made and if
    Securities of the series are to be issuable in global form, the identity of
    any initial depository therefor;

         (19) the date as of which any Bearer Securities of the series and any
    temporary global Security representing Outstanding Securities of the series
    shall be dated if other than the date of original issuance of the first
    Security of the series to be issued;

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

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

                                      21


         (22) if the Securities of the series are to be issued upon the
    exercise of warrants or upon the conversion or exchange of other
    securities, the time, manner and place for such Securities to be
    authenticated and delivered;

         (23) whether and under what circumstances the Company will pay
    Additional Amounts as contemplated by Section 1005 on the Securities of the
    series to any Holder who is not a United States person (including any
    modification to the definition of such term) in respect of any tax,
    assessment or governmental charge and, if so, whether the Company will have
    the option to redeem such Securities rather than pay such Additional
    Amounts (and the terms of any such option); and

         (24) if the Securities of the series are to be convertible into or
    exchangeable for any securities of any Person (including the Company), the
    terms and conditions upon which such Securities will be so convertible or
    exchangeable.

         (25) any provisions in modification of, in addition to or in lieu of
    the provisions of Article Sixteen or Section 908 (or the definition of the
    term"Senior Indebtedness" contained in Section 101 or any other term used
    in such definition or in Article Sixteen or Section 908) that shall be
    applicable to the Securities of the series.

         (26) any other terms, conditions, rights and preferences (or
    limitations on such rights and preferences) relating to the series (which
    terms shall not be inconsistent with the requirements of the Trust
    Indenture Act or the provisions of this Indenture).

         All Securities of any one series and the coupons appertaining to any
Bearer Securities of such series shall be substantially identical except, in
the case of Registered Securities, as to denomination and except as may
otherwise be provided in or pursuant to such Board Resolution (subject to
Section 303) and set forth in such Officers' Certificate or in any such
indenture supplemental hereto. Not all Securities of any one series need be
issued at the same time, and, unless otherwise provided, a series may be
reopened for issuances of additional Securities of such series.

         If any of the terms of the series are established by action taken
pursuant to one or more Board Resolutions, such Board Resolutions shall be
delivered to the Trustee at or prior to the delivery of the Officers'
Certificate setting forth the terms of the series.

         SECTION 302. Denominations.

         All Securities shall be issuable in such denominations as shall be
specified as contemplated by Section 301. With respect to Securities of any
series denominated in Dollars, in the absence of any such provisions, the
Registered Securities of such series, other than Registered Securities issued
in global form (which may be of any denomination), shall be issuable in
denominations of $1,000 and any integral multiple thereof and the Bearer
Securities of such Series, other than the Bearer Securities issued in global
form (which may be of any denomination), shall be issuable in a denomination of
$5,000.

                                      22


         SECTION 303. Execution, Authentication, Delivery and Dating.

         The Securities and any coupons appertaining thereto shall be executed
on behalf of the Company by its Chairman, its President or a Vice President,
under its corporate seal reproduced thereon attested by its Secretary or an
Assistant Secretary. The signature of any of these officers on the Securities
or coupons may be the manual or facsimile signatures of the present or any
future such authorized officer and may be imprinted or otherwise reproduced on
the Securities.

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

         At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Securities of any series together with
any coupon appertaining thereto, executed by the Company to the Trustee for
authentication, together with a Company Order for the authentication and
delivery of such Securities, and the Trustee in accordance with such Company
Order shall authenticate and deliver such Securities; provided, however, that,
in connection with its original issuance, no Bearer Security shall be mailed or
otherwise delivered to any location in the United States; and provided,
further, that, unless otherwise specified with respect to any series of
Securities pursuant to Section 301, a Bearer Security may be delivered in
connection with its original issuance only if the Person entitled to receive
such Bearer Security shall have furnished a certificate in the form set forth
in Exhibit A-1 to this Indenture, dated no earlier than 15 days prior to the
earlier of the date on which such Bearer Security is delivered and the date on
which any temporary Security first becomes exchangeable for such Bearer
Security in accordance with the terms of such temporary Security and this
Indenture. If any Security shall be represented by a permanent global Bearer
Security, then, for purposes of this Section and Section 304, the notation of a
beneficial owner's interest therein upon original issuance of such Security or
upon exchange of a portion of a temporary global Security shall be deemed to be
delivery in connection with its original issuance of such beneficial owner's
interest in such permanent global Security. Except as permitted by Section 306,
the Trustee shall not authenticate and deliver any Bearer Security unless all
appurtenant coupons for interest then matured have been detached and cancelled.
If not all the Securities of any series are to be issued at one time and if the
Board Resolution or supplemental indenture establishing such series shall so
permit, such Company Order may set forth procedures acceptable to the Trustee
for the issuance of such Securities and determining terms of particular
Securities of such series such as interest rate, maturity date, date of
issuance and date from which interest shall accrue.

         In authenticating such Securities, and accepting the additional
responsibilities under this Indenture in relation to such Securities, the
Trustee shall be entitled to receive, and (subject to TIA Sections 315(a)
through 315(d)) shall be fully protected in relying upon, an Opinion of Counsel
stating:

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

         (b) that the terms of such Securities and any coupons have been
    established in 

                                      23


    conformity with the provisions of this Indenture;

         (c) that such Securities, together with any coupons appertaining
    thereto, when completed by appropriate insertions and executed and
    delivered by the Company to the Trustee for authentication in accordance
    with this Indenture, authenticated and delivered by the Trustee in
    accordance with this Indenture and issued by the Company in the manner and
    subject to any conditions specified in such Opinion of Counsel, will
    constitute the legal, valid and binding obligations of the Company,
    enforceable in accordance with their terms, subject to applicable
    bankruptcy, insolvency, reorganization and other similar laws of general
    applicability relating to or affecting the enforcement of creditors'
    rights, to general equitable principles and to such other qualifications as
    such counsel shall conclude do not materially affect the rights of Holders
    of such Securities and any coupons;

         (d) that all laws and requirements in respect of the execution and
    delivery by the Company of such Securities, any coupons and of the
    supplemental indentures, if any, have been complied with (except for
    federal securities laws, the Trust Indenture Act of 1939, as amended, and
    the securities or blue sky laws of the various states, as to which no
    opinion need be expressed) and that authentication and delivery of such
    Securities and any coupons and the execution and delivery of the
    supplemental indenture, if any, by the Trustee will not violate the terms
    of the Indenture;

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

         (f) that the issuance of such Securities and any coupons will not
    contravene the articles of incorporation or by-laws of the Company or
    result in any violation of any of the terms or provisions of any law or
    regulation or of any indenture, mortgage or other agreement known to such
    Counsel by which the Company is bound.

         Notwithstanding the provisions of Section 301 and of the preceding two
paragraphs, if less than all the Securities of any series are to be issued at
one time, it shall not be necessary to deliver the Officers' Certificate
otherwise required pursuant to Section 301 or the Company Order and Opinion of
Counsel otherwise required pursuant to the preceding two paragraphs prior to or
at the time of issuance of each Security, but such documents shall be delivered
prior to or at the time of issuance of the first Security of such series.

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

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

         No Security or coupon shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose unless there appears on
such Security a certificate of authentication substantially in the form
provided for herein duly executed by the Trustee by manual signature of an

                                      24


authorized officer, and such certificate upon any Security shall be conclusive
evidence, and the only evidence, that such Security has been duly authenticated
and delivered hereunder and is entitled to the benefits of this Indenture.
Notwithstanding the foregoing, if any Security shall have been authenticated
and delivered hereunder but never issued and sold by the Company, and the
Company shall deliver such Security to the Trustee for cancellation as provided
in Section 310 together with a written statement (which need not comply with
Section 102 and need not be accompanied by an Opinion of Counsel) stating that
such Security has never been issued and sold by the Company, for all purposes
of this Indenture such Security shall be deemed never to have been
authenticated and delivered hereunder and shall never be entitled to the
benefits of this Indenture.

         SECTION 304. Temporary Securities.

         Pending the preparation of definitive Securities of any series, the
Company may execute, and upon Company Order the Trustee shall authenticate and
deliver, temporary Securities which are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities in lieu of which they
are issued, in registered form or, if authorized, in bearer form with one or
more coupon or without coupons, and with such appropriate insertions,
omissions, substitutions and other variations as the officers executing such
Securities may determine, as conclusively evidenced by their execution of such
Securities. In the case of Securities of any series, such temporary Securities
may be in global form.

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

         If temporary Securities of any series are issued in global form, any
such temporary global Security shall, unless otherwise provided therein, be
delivered to the London office of a depositary or common depositary (the
"Common Depositary"), for the benefit of Euroclear and CEDEL S.A., for credit
to the respective accounts of the beneficial owners of such Securities (or to
such other accounts as they may direct).

         Without unnecessary delay but in any event not later than the date
specified in, or determined pursuant to the terms of, any such temporary global
Security (the "Exchange Date"), the Company shall deliver to the Trustee
definitive Securities, in aggregate principal amount equal to the 

                                      25


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

         Unless otherwise specified in such temporary global Security, the
interest of a beneficial owner of Securities of a series in a temporary global
Security shall be exchanged for definitive Securities of the same series and of
like tenor following the Exchange Date when the account holder instructs
Euroclear or CEDEL S.A., as the case may be, to request such exchange on his
behalf and delivers to Euroclear or CEDEL S.A., as the case may be, a
certificate in the form set forth in Exhibit A-1 to this Indenture (or in such
other form as may be established pursuant to Section 301), dated no earlier
than 15 days prior to the Exchange Date, copies of which certificate shall be
available from the offices of Euroclear and CEDEL S.A., the Trustee, any
Authenticating Agent appointed for such series of Securities and each Paying
Agent. Unless otherwise specified in such temporary global Security, any such
exchange shall be made free of charge to the beneficial owners of such
temporary global Security, except that a Person receiving definitive Securities
must bear the cost of insurance, postage, transportation and the like in the
event that such Person does not take delivery of such definitive Securities in
person at the offices of Euroclear or CEDEL S.A. Definitive Securities in
bearer form to be delivered in exchange for any portion of a temporary global
Security shall be delivered only outside the United States.

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

                                      26


Payment Date to the respective accounts of the Persons who are the beneficial
owners of such temporary global Security on such Interest Payment Date and who
have each delivered to Euroclear or CEDEL S.A., as the case may be, a
certificate dated no earlier than 15 days prior to the Interest Payment Date
occurring prior to such Exchange Date in the form set forth in Exhibit A-1 to
this Indenture (or in such other form as may be established pursuant to Section
301). Notwithstanding anything to the contrary herein contained, the
certifications made pursuant to this paragraph shall satisfy the certification
requirements of the preceding two paragraphs of this Section and of the third
paragraph of Section 303 of this Indenture and the interests of the Persons who
are the beneficial owners of the temporary global Security with respect to
which such certification was made will be exchanged for definitive Securities
of the same series and of like tenor on the Exchange Date or the date of
certification if such date occurs after the Exchange Date, without further act
or deed by such beneficial owners. Except as otherwise provided in this
paragraph, no payments of principal or interest owing with respect to a
beneficial interest in a temporary global Security will be made unless and
until such interest in such temporary global Security shall have been exchanged
for an interest in a definitive Security. Any interest so received by Euroclear
and CEDEL S.A. and not paid as herein provided shall be returned to the Trustee
immediately prior to the expiration of two years after such Interest Payment
Date in order to be repaid to the Company in accordance with Section 1003.

         SECTION 305. Registration, Registration of Transfer and Exchange.

         The Company shall cause to be kept at the Corporate Trust Office of
the Trustee a register for each series of Securities (the registers maintained
in the Corporate Trust Office of the Trustee and in any other office or agency
of the Company in a Place of Payment being herein sometimes collectively
referred to as the "Security Register") in which, subject to such reasonable
regulations as it may prescribe, the Company shall provide for the registration
of Registered Securities and of transfers of Registered Securities. The
Security Register shall be in written form or any other form capable of being
converted into written form within a reasonable time. At all reasonable times,
the Security Register shall be open to inspection by the Trustee. The Trustee
is hereby initially appointed as security registrar (the "Security Registrar")
for the purpose of registering Registered Securities and transfers of
Registered Securities as herein provided.

         Upon surrender for registration of transfer of any Registered Security
of any series at the office or agency in a Place of Payment for that series,
the Company shall execute, and the Trustee shall authenticate and deliver, in
the name of the designated transferee, one or more new Registered Securities of
the same series, of any authorized denominations and of a like aggregate
principal amount and tenor.

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

         If (but only if) expressly permitted in or pursuant to the applicable
Board Resolution and (subject to Section 303) set forth in the applicable
Officers' Certificate, or in any indenture

                                      27


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

         Whenever any Securities are so surrendered for exchange, the Company
shall execute, and the Trustee shall authenticate and deliver, the Securities
which the Holder making the exchange is entitled to receive.

         Notwithstanding the foregoing, except as otherwise specified as
contemplated by Section 301, any permanent global Security shall be
exchangeable only as provided in this paragraph. If any beneficial owner of an
interest in a permanent global Security is entitled to exchange such interest
for Securities of such series and of like tenor and principal amount of another
authorized form and denomination, as specified as contemplated by Section 301
and provided that any applicable notice provided in the permanent global
Security shall have been given, then without unnecessary delay but in any event
not later than the earliest date on which such interest may be so exchanged,
the Company shall deliver to the Trustee definitive Securities in aggregate
principal amount equal to the principal amount of such beneficial owner's
interest in such permanent global Security, executed by the Company. On or
after the earliest date on which such interests may be so exchanged, such
permanent global Security shall be surrendered by the Common Depositary or such
other depositary as shall be specified in the Company Order with respect
thereto to the Trustee, as the Company's agent for such purpose, to be
exchanged, in whole or from time to time in part, for definitive Securities
without charge, and the Trustee shall authenticate and deliver, in exchange for
each portion of such permanent global Security, an equal aggregate principal
amount of definitive Securities of the same series of authorized denominations
and of like tenor as the portion of such

                                      28


permanent global Security to be exchanged which, unless the Securities of the
series are not issuable both as Bearer Securities and as Registered Securities,
as specified as contemplated by Section 301, shall be in the form of Bearer
Securities or Registered Securities, or any combination thereof, as shall be
specified by the beneficial owner thereof; provided, however, that no such
exchanges may occur during a period beginning at the opening of business 15
days before any selection of Securities to be redeemed and ending on the
relevant Redemption Date if the Security for which exchange is requested may be
among those selected for redemption; and provided, further, that no Bearer
Security delivered in exchange for a portion of a permanent global Security
shall be mailed or otherwise delivered to any location in the United States. If
a Registered Security is issued in exchange for any portion of a permanent
global Security after the close of business at the office or agency where such
exchange occurs on (i) any Regular Record Date and before the opening of
business at such office or agency on the relevant Interest Payment Date, or
(ii) any Special Record Date and the opening of business at such office or
agency on the related proposed date for payment of Defaulted Interest, interest
or Defaulted Interest, as the case may be, will not be payable on such Interest
Payment Date or proposed date for payment, as the case may be, in respect of
such Registered Security, but will be payable on such Interest Payment Date or
proposed date for payment, as the case may be, only to the Person to whom
interest in respect of such portion of such permanent global Security is
payable in accordance with the provisions of this Indenture.

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

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

         No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 304, 906, 1107 or 1305 not involving any
transfer.

         The Company shall not be required (i) to issue, to register the
transfer of or to exchange Securities of any series during a period beginning
at the opening of business 15 days before the day of the selection for
redemption of Securities of that series under Section 1103 or 1203 and ending
at the close of business on (A) if Securities of the series are issuable only
as Registered Securities, the day of the mailing of the relevant notice of
redemption and (B) if Securities of the series are issuable as Bearer
Securities, the day of the first publication of the relevant notice of
redemption or, if Securities of the series are also issuable as Registered
Securities and there is no publication, the mailing of the relevant notice of
redemption, or (ii) to register the transfer of or exchange any Registered
Security so selected for redemption in whole or in part, except the unredeemed
portion of any Security being redeemed in part, or (iii) to exchange any Bearer
Security so selected for redemption except that such a Bearer Security may be
exchanged for a Registered Security of that series and like tenor; provided
that such Registered Security shall be simultaneously surrendered for
redemption, or (iv) to issue, to register the transfer of or to exchange any
Security

                                      29


which has been surrendered for repayment at the option of the Holder, except
the portion, if any, of such Security not to be so repaid.

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

         If any mutilated Security or a Security with a mutilated coupon
appertaining to it is surrendered to the Trustee, the Company shall execute and
the Trustee shall authenticate and deliver in exchange therefor a new Security
of the same series and of like tenor and principal amount and bearing a number
not contemporaneously outstanding, with coupons corresponding to the coupons,
if any, appertaining to the surrendered Security, or, in case any such
mutilated Security or coupon has become or is about to become due and payable,
the Company in its discretion may, instead of issuing a new Security, with
coupons corresponding to the coupons, if any, appertaining to the surrendered
Security, pay such Security or coupon.

         If there shall be delivered to the Company and to the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any
Security or coupon and (ii) such security or indemnity as may be required by
them to save each of them and any agent of either of them harmless, then, in
the absence of notice to the Company or the Trustee that such Security or
coupon has been acquired by a bona fide purchaser, the Company shall execute
and upon Company Order the Trustee shall authenticate and deliver, in lieu of
any such destroyed, lost or stolen Security or in exchange for the Security for
which a destroyed, lost or stolen coupon appertains (with all appurtenant
coupons not destroyed, lost or stolen), a new Security of the same series and
of like tenor and principal amount and bearing a number not contemporaneously
outstanding, with coupons corresponding to the coupons, if any, appertaining to
such destroyed, lost or stolen Security or to the Security to which such
destroyed, lost or stolen coupon appertains, or, in case any such destroyed,
lost or stolen Security or coupon has become or is about to become due and
payable, the Company in its discretion may, instead of issuing a new Security,
with coupons corresponding to the coupons, if any, appertaining to such
destroyed, lost or stolen Security or to the Security to which such destroyed,
lost or stolen coupon appertains, pay such Security or coupon.

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

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

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

                                      30


         SECTION 307. Payment of Interest; Interest Rights Preserved; Optional
Interest Reset.

         (a) Unless otherwise provided as contemplated by Section 301 with
respect to any series of Securities, interest on any Registered Security which
is payable, and is punctually paid or duly provided for, on any Interest
Payment Date shall be paid to the Person in whose name such Security (or one or
more Predecessor Securities) is registered at the close of business on the
Regular Record Date for such interest at the office or agency of the Company
maintained for such purpose pursuant to Section 1002; provided, however, that
each installment of interest on any Registered Security may at the Company's
option be paid by (i) mailing a check for such interest, payable to or upon the
written order of the Person entitled thereto pursuant to Section 309, to the
address of such Person as it appears on the Security Register or (ii) transfer
to an account maintained by the payee located in the United States.

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

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

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

         (1) The Company may elect to make payment of any Defaulted Interest to
    the Persons in whose names the Registered Securities of such series (or
    their respective Predecessor Securities) are registered at the close of
    business on a Special Record Date for the payment of such Defaulted
    Interest, which shall be fixed in the following manner. The Company shall
    notify the Trustee in writing of the amount of Defaulted Interest proposed
    to be paid on each Registered Security of such series and the date of the
    proposed payment, and at the same time the Company shall deposit with the
    Trustee an amount of money in the Currency in which the Securities of such
    series are payable (except as otherwise specified pursuant to Section 301
    for the Securities of such series and except, if applicable, as provided in
    Sections 312(b), 312(d) and 312(e)) equal to the aggregate amount proposed
    to be paid in respect of such Defaulted Interest or shall make arrangements
    satisfactory to the Trustee for such deposit on or prior to the date of the
    proposed payment, such money when deposited to be held in trust for the
    benefit of the Persons entitled to such Defaulted Interest as in this

                                      31


    clause provided. Thereupon the Trustee shall fix a Special Record Date for
    the payment of such Defaulted Interest which shall be not more than 15 days
    and not less than 10 days prior to the date of the proposed payment and not
    less than 10 days after the receipt by the Trustee of the notice of the
    proposed payment. The Trustee shall promptly notify the Company of such
    Special Record Date and, in the name and at the expense of the Company,
    shall cause notice of the proposed payment of such Defaulted Interest and
    the Special Record Date therefor to be given in the manner provided in
    Section 106, not less than 10 days prior to such Special Record Date.
    Notice of the proposed payment of such Defaulted Interest and the Special
    Record Date therefor having been so given, such Defaulted Interest shall be
    paid to the Persons in whose name the Registered Securities of such series
    (or their respective Predecessor Securities) are registered at the close of
    business on such Special Record Date and shall no longer be payable
    pursuant to the following clause (2).

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

         (b) The provisions of this Section 307(b) may be made applicable to
any series of Securities pursuant to Section 301 (with such modifications,
additions or substitutions as may be specified pursuant to such Section 301).
The interest rate (or the spread or spread multiplier used to calculate such
interest rate, if applicable) on any Security of such series may be reset by
the Company on the date or dates specified on the face of such Security (each
an "Optional Reset Date"). The Company may exercise such option with respect to
such Security by notifying the Trustee of such exercise at least 50 but not
more than 60 days prior to an Optional Reset Date for such Note. Not later than
40 days prior to each Optional Reset Date, the Trustee shall transmit, in the
manner provided for in Section 106, to the Holder of any such Security a notice
(the "Reset Notice") indicating whether the Company has elected to reset the
interest rate (or the spread or spread multiplier used to calculate such
interest rate, if applicable), and if so (i) such new interest rate (or such
new spread or spread multiplier, if applicable) and (ii) the provisions, if
any, for redemption during the period from such Optional Reset Date to the next
Optional Reset Date or if there is no such next Optional Reset Date, to the
Stated Maturity Date of such Security (each such period a "Subsequent Interest
Period"), including the date or dates on which or the period or periods during
which and the price or prices at which such redemption may occur during the
Subsequent Interest Period.

         Notwithstanding the foregoing, not later than 20 days prior to the
Optional Reset Date, the Company may, at its option, revoke the interest rate
(or the spread or spread multiplier used to calculate such interest rate, if
applicable) provided for in the Reset Notice and establish an interest rate (or
a spread or spread multiplier used to calculate such interest rate, if
applicable) that is higher than the interest rate (or the spread or spread
multiplier, if applicable) provided for in the Reset Notice, for the Subsequent
Interest Period by causing the Trustee to transmit, in the manner provided for
in Section 106, notice of such higher interest rate (or such higher spread or
spread multiplier, if applicable) to the Holder of such Security. Such notice
shall be irrevocable. All Securities with respect to which the interest rate
(or the spread or spread multiplier used to calculate

                                      32


such interest rate, if applicable) is reset on an Optional Reset Date, and with
respect to which the Holders of such Securities have not tendered such
Securities for repayment (or have validly revoked any such tender) pursuant to
the next succeeding paragraph, will bear such higher interest rate (or such
higher spread or spread multiplier, if applicable).

         The Holder of any such Security will have the option to elect
repayment by the Company of the principal of such Security on each Optional
Reset Date at a price equal to the principal amount thereof plus interest
accrued to such Optional Reset Date. In order to obtain repayment on an
Optional Reset Date, the Holder must follow the procedures set forth in Article
Thirteen for repayment at the option of Holders except that the period for
delivery or notification to the Trustee shall be at least 25 but not more than
35 days prior to such Optional Reset Date and except that, if the Holder has
tendered any Security for repayment pursuant to the Reset Notice, the Holder
may, by written notice to the Trustee, revoke such tender or repayment until
the close of business on the tenth day before such Optional Reset Date.

         Subject to the foregoing provisions of this Section and Section 305,
each Security delivered under this Indenture upon registration of transfer of
or in exchange for or in lieu of any other Security shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such other
Security.

         SECTION 308. Optional Extension of Stated Maturity.

         The provisions of this Section 308 may be made applicable to any
series of Securities pursuant to Section 301 (with such modifications,
additions or substitutions as may be specified pursuant to such Section 301).
The Stated Maturity of any Security of such series may be extended at the
option of the Company for the period or periods specified on the face of such
Security (each an "Extension Period") up to but not beyond the date (the "Final
Maturity") set forth on the face of such Security. The Company may exercise
such option with respect to any Security by notifying the Trustee of such
exercise at least 50 but not more than 60 days prior to the Stated Maturity of
such Security in effect prior to the exercise of such option (the "Original
Stated Maturity"). If the Company exercises such option, the Trustee shall
transmit, in the manner provided for in Section 106, to the Holder of such
Security not later than 40 days prior to the Original Stated Maturity a notice
(the "Extension Notice") indicating (i) the election of the Company to extend
the Stated Maturity, (ii) the new Stated Maturity, (iii) the interest rate
applicable to the Extension Period and (iv) the provisions, if any, for
redemption during such Extension Period. Upon the Trustee's transmittal of the
Extension Notice, the Stated Maturity of such Security shall be extended
automatically and, except as modified by the Extension Notice and as described
in the next paragraph, such Security will have the same terms as prior to the
transmittal of such Extension Notice.

         Notwithstanding the foregoing, not later than 20 days before the
Original Stated Maturity of such Security, the Company may, at its option,
revoke the interest rate provided for in the Extension Notice and establish a
higher interest rate for the Extension Period by causing the Trustee to
transmit, in the manner provided for in Section 106, notice of such higher
interest rate to the Holder of such Security. Such notice shall be irrevocable.
All Securities with respect to which the Stated Maturity is extended will bear
such higher interest rate.

                                      33


         If the Company extends the Maturity of any Security, the Holder will
have the option to elect repayment of such Security by the Company on the
Original Stated Maturity at a price equal to the principal amount thereof, plus
interest accrued to such date. In order to obtain repayment on the Original
Stated Maturity once the Company has extended the Maturity thereof, the Holder
must follow the procedures set forth in Article Thirteen for repayment at the
option of Holders, except that the period for delivery or notification to the
Trustee shall be at least 25 but not more than 35 days prior to the Original
Stated Maturity and except that, if the Holder has tendered any Security for
repayment pursuant to an Extension Notice, the Holder may by written notice to
the Trustee revoke such tender for repayment until the close of business on the
tenth day before the Original Stated Maturity.

         SECTION 309. Persons Deemed Owners.

         Prior to due presentment of a Registered Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name such Registered Security is registered as
the owner of such Registered Security for the purpose of receiving payment of
principal of (and premium, if any, on) and (subject to Sections 305 and 307)
interest on such Security and for all other purposes whatsoever, whether or not
such Security be overdue, and none of the Company, the Trustee or any agent of
the Company or the Trustee shall be affected by notice to the contrary.

         Title to any Bearer Security and any coupons appertaining thereto
shall pass by delivery. The Company, the Trustee and any agent of the Company
or the Trustee may treat the bearer of any Bearer Security and the bearer of
any coupon as the absolute owner of such Security or coupon for the purpose of
receiving payment thereof or on account thereof and for all other purposes
whatsoever, whether or not such Security or coupons be overdue, and none of the
Company, the Trustee or any agent of the Company or the Trustee shall be
affected by notice to the contrary.

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

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

                                      34


         SECTION 310. Cancellation.

         All Securities and coupons surrendered for payment, redemption,
repayment at the option of the Holder, registration of transfer or exchange or
for credit against any current or future sinking fund payment shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee.
All Securities and coupons so delivered to the Trustee shall be promptly
cancelled by it. The Company may at any time deliver to the Trustee for
cancellation any Securities previously authenticated and delivered hereunder
which the Company may have acquired in any manner whatsoever, and may deliver
to the Trustee (or to any other Person for delivery to the Trustee) for
cancellation any Securities previously authenticated hereunder which the
Company has not issued and sold, and all Securities so delivered shall be
promptly cancelled by the Trustee. If the Company shall so acquire any of the
Securities, however, such acquisition shall not operate as a redemption or
satisfaction of the indebtedness represented by such Securities unless and
until the same are surrendered to the Trustee for cancellation. No Securities
shall be authenticated in lieu of or in exchange for any Securities cancelled
as provided in this Section, except as expressly permitted by this Indenture.
All cancelled Securities held by the Trustee shall be disposed of by the
Trustee in accordance with its customary procedures and certification of their
disposal delivered to the Company unless by Company Order the Company shall
direct that cancelled Securities be returned to it.

         SECTION 311. Computation of Interest.

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

         SECTION 312. Currency and Manner of Payments in Respect of Securities.

         (a) Unless otherwise specified with respect to any Securities pursuant
to Section 301, with respect to Registered Securities of any series not
permitting the election provided for in paragraph (b) below or the Holders of
which have not made the election provided for in paragraph (b) below, and with
respect to Bearer Securities of any series, except as provided in paragraph (d)
below, payment of the principal of (and premium, if any, on) and interest, if
any, on any Registered or Bearer Security of such series will be made in the
Currency in which such Registered Security or Bearer Security, as the case may
be, is payable. The provisions of this Section 312 may be modified or
superseded with respect to any Securities pursuant to Section 301.

         (b) It may be provided pursuant to Section 301 with respect to
Registered Securities of any series that Holders shall have the option, subject
to paragraphs (d) and (e) below, to receive payments of principal of (and
premium, if any, on) or interest, if any, on such Registered Securities in any
of the Currencies which may be designated for such election by delivering to
the Trustee a written election with signature guarantees and in the applicable
form established pursuant to Section 301, not later than the close of business
on the Election Date immediately preceding the applicable payment date. If a
Holder so elects to receive such payments in any such Currency, such election
will remain in effect for such Holder or any transferee of such Holder until
changed by such Holder or such transferee by written notice to the Trustee (but
any such change must be made not

                                      35


later than the close of business on the Election Date immediately preceding the
next payment date to be effective for the payment to be made on such payment
date and no such change of election may be made with respect to payments to be
made on any Registered Security of such series with respect to which an Event
of Default has occurred or with respect to which the Company has deposited
funds pursuant to Articles Four or with respect to which a notice of redemption
has been given by the Company or a notice of option to elect repayment has been
sent by such Holder or such transferee). Any Holder of any such Registered
Security who shall not have delivered any such election to the Trustee not
later than the close of business on the applicable Election Date will be paid
the amount due on the applicable payment date in the relevant Currency as
provided in Section 312(a). The Trustee shall notify the Exchange Rate Agent as
soon as practicable after the Election Date of the aggregate principal amount
of Registered Securities for which Holders have made such written election.

         (c) Unless otherwise specified pursuant to Section 301, if the
election referred to in paragraph (b) above has been provided for pursuant to
Section 301, then, unless otherwise specified pursuant to Section 301, not
later than the fourth Business Day after the Election Date for each payment
date for Registered Securities of any series, the Exchange Rate Agent will
deliver to the Company a written notice specifying, in the Currency in which
Registered Securities of such series are payable, the respective aggregate
amounts of principal of (and premium, if any, on) and interest, if any, on the
Registered Securities to be paid on such payment date, specifying the amounts
in such Currency so payable in respect of the Registered Securities as to which
the Holders of Registered Securities of such series shall have elected to be
paid in another Currency as provided in paragraph (b) above. If the election
referred to in paragraph (b) above has been provided for pursuant to Section
301 and if at least one Holder has made such election, then, unless otherwise
specified pursuant to Section 301, on the second Business Day preceding such
payment date the Company will deliver to the Trustee for such series of
Registered Securities an Exchange Rate Officer's Certificate in respect of the
Dollar or Foreign Currency payments to be made on such payment date. Unless
otherwise specified pursuant to Section 301, the Dollar or Foreign Currency
amount receivable by Holders of Registered Securities who have elected payment
in a Currency as provided in paragraph (b) above shall be determined by the
Company on the basis of the applicable Market Exchange Rate in effect on the
third Business Day (the "Valuation Date") immediately preceding each payment
date, and such determination shall be conclusive and binding for all purposes,
absent manifest error.

         (d) If a Currency Conversion Event occurs with respect to a Foreign
Currency in which any of the Securities are denominated or payable other than
pursuant to an election provided for pursuant to paragraph (b) above, then with
respect to each date for the payment of principal of (and premium, if any, on)
and interest, if any, on the applicable Securities denominated or payable in
such Foreign Currency occurring after the last date on which such Foreign
Currency was used (the "Currency Conversion Date"), the Dollar shall be the
Currency of payment for use on each such payment date. Unless otherwise
specified pursuant to Section 301, the Dollar amount to be paid by the Company
to the Trustee and by the Trustee or any Paying Agent to the Holders of such
Securities with respect to such payment date shall be, in the case of a Foreign
Currency other than a currency unit, the Dollar Equivalent of the Foreign
Currency or, in the case of a currency unit, the Dollar Equivalent of the
Currency Unit, in each case as determined by the Exchange Rate Agent in the
manner provided in paragraph (f) or (g) below.

                                      36


         (e) Unless otherwise specified pursuant to Section 301, if the Holder
of a Registered Security denominated in any Currency shall have elected to be
paid in another Currency as provided in paragraph (b) above, and a Currency
Conversion Event occurs with respect to such elected Currency, such Holder
shall receive payment in the Currency in which payment would have been made in
the absence of such election; and if a Currency Conversion Event occurs with
respect to the Currency in which payment would have been made in the absence of
such election, such Holder shall receive payment in Dollars as provided in
paragraph (d) above.

         (f) The "Dollar Equivalent of the Foreign Currency" shall be
determined by the Exchange Rate Agent and shall be obtained for each subsequent
payment date by converting the specified Foreign Currency into Dollars at the
Market Exchange Rate on the Currency Conversion Date.

         (g) The "Dollar Equivalent of the Currency Unit" shall be determined
by the Exchange Rate Agent and subject to the provisions of paragraph (h) below
shall be the sum of each amount obtained by converting the Specified Amount of
each Component Currency into Dollars at the Market Exchange Rate for such
Component Currency on the Valuation Date with respect to each payment.

         (h) For purposes of this Section 312 the following terms shall have
the following meanings:

         A "Component Currency" shall mean any Currency which, on the Currency
    Conversion Date, was a component currency of the relevant currency unit,
    including, but not limited to, the ECU.

         A "Specified Amount" of a Component Currency shall mean the number of
    units of such Component Currency or fractions thereof which were
    represented in the relevant currency unit, including, but not limited to,
    the ECU, on the Currency Conversion Date. If after the Currency Conversion
    Date the official unit of any Component Currency is altered by way of
    combination or subdivision, the Specified Amount of such Component Currency
    shall be divided or multiplied in the same proportion. If after the
    Currency Conversion Date two or more Component Currencies are consolidated
    into a single currency, the respective Specified Amounts of such Component
    Currencies shall be replaced by an amount in such single Currency equal to
    the sum of the respective Specified Amounts of such consolidated Component
    Currencies expressed in such single Currency, and such amount shall
    thereafter be a Specified Amount and such single Currency shall thereafter
    be a Component Currency. If after the Currency Conversion Date any
    Component Currency shall be divided into two or more currencies, the
    Specified Amount of such Component Currency shall be replaced by amounts of
    such two or more currencies, having an aggregate Dollar Equivalent value at
    the Market Exchange Rate on the date of such replacement equal to the
    Dollar Equivalent value of the Specified Amount of such former Component
    Currency at the Market Exchange Rate immediately before such division and
    such amounts shall thereafter be Specified Amounts and such currencies
    shall thereafter be Component Currencies. If, after the Currency Conversion
    Date of the relevant currency unit, including, but not limited to, the ECU,
    a Currency Conversion Event (other than any event referred to above in this
    definition of "Specified Amount") occurs with respect to any Component
    Currency of such currency unit and is

                                      37


    continuing on the applicable Valuation Date, the Specified Amount of such
    Component Currency shall, for purposes of calculating the Dollar Equivalent
    of the Currency Unit, be converted into Dollars at the Market Exchange Rate
    in effect on the Currency Conversion Date of such Component Currency.

         "Election Date" shall mean the date for any series of Registered
    Securities as specified pursuant to clause (13) of Section 301 by which the
    written election referred to in paragraph (b) above may be made.

         All decisions and determinations of the Exchange Rate Agent regarding
the Dollar Equivalent of the Foreign Currency, the Dollar Equivalent of the
Currency Unit, the Market Exchange Rate and changes in the Specified Amounts as
specified above shall be in its sole discretion and shall, in the absence of
manifest error, be conclusive for all purposes and irrevocably binding upon the
Company, the Trustee and all Holders of such Securities denominated or payable
in the relevant Currency. The Exchange Rate Agent shall promptly give written
notice to the Company and the Trustee of any such decision or determination.

         In the event that the Company determines in good faith that a Currency
Conversion Event has occurred with respect to a Foreign Currency, the Company
will immediately give written notice thereof to the Trustee and to the Exchange
Rate Agent (and the Trustee will promptly thereafter give notice in the manner
provided for in Section 106 to the affected Holders) specifying the Currency
Conversion Date. In the event the Company so determines that a Currency
Conversion Event has occurred with respect to the ECU or any other currency
unit in which Securities are denominated or payable, the Company will
immediately give written notice thereof to the Trustee and to the Exchange Rate
Agent (and the Trustee will promptly thereafter give notice in the manner
provided for in Section 106 to the affected Holders) specifying the Currency
Conversion Date and the Specified Amount of each Component Currency on the
Currency Conversion Date. In the event the Company determines in good faith
that any subsequent change in any Component Currency as set forth in the
definition of Specified Amount above has occurred, the Company will similarly
give written notice to the Trustee and the Exchange Rate Agent.

         The Trustee shall be fully justified and protected in relying and
acting upon information received by it from the Company and the Exchange Rate
Agent and shall not otherwise have any duty or obligation to determine the
accuracy or validity of such information independent of the Company or the
Exchange Rate Agent.

         SECTION 313. Appointment and Resignation of Successor Exchange Rate
Agent.

         (a) Unless otherwise specified pursuant to Section 301, if and so long
as the Securities of any series (i) are denominated in a Currency other than
Dollars or (ii) may be payable in a Currency other than Dollars, or so long as
it is required under any other provision of this Indenture, then the Company
will maintain with respect to each such series of Securities, or as so
required, at least one Exchange Rate Agent. The Company will cause the Exchange
Rate Agent to make the necessary foreign exchange determinations at the time
and in the manner specified pursuant to Section 301 for the purpose of
determining the applicable rate of exchange and, if applicable, for the purpose
of converting the issued Currency into the applicable payment Currency for the
payment of principal (and premium, if any) and interest, if any, pursuant to
Section 312.

                                      38


         (b) No resignation of the Exchange Rate Agent and no appointment of a
successor Exchange Rate Agent pursuant to this Section shall become effective
until the acceptance of appointment by the successor Exchange Rate Agent as
evidenced by a written instrument delivered to the Company and the Trustee.

         (c) If the Exchange Rate Agent shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of the Exchange
Rate Agent for any cause with respect to the Securities of one or more series,
the Company, by or pursuant to a Board Resolution, shall promptly appoint a
successor Exchange Rate Agent or Exchange Rate Agents with respect to the
Securities of that or those series (it being understood that any such successor
Exchange Rate Agent may be appointed with respect to the Securities of one or
more or all of such series and that, unless otherwise specified pursuant to
Section 301, at any time there shall only be one Exchange Rate Agent with
respect to the Securities of any particular series that are originally issued
by the Company on the same date and that are initially denominated and/or
payable in the same Currency).

                                 ARTICLE FOUR

                           SATISFACTION AND DISCHARGE

         SECTION 401. Satisfaction and Discharge of Indenture.

         This Indenture shall upon Company Request cease to be of further
effect with respect to any series of Securities (except as to any surviving
rights of registration of transfer or exchange of Securities of such series
herein expressly provided for and the obligation of the Company to pay any
Additional Amounts as contemplated by Section 1005) and the Trustee, at the
expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture as to such series when

         (1) either

              (a) all Securities of such series theretofore authenticated and
         delivered and all coupons, if any, appertaining thereto (other than
         (i) coupons appertaining to Bearer Securities surrendered for exchange
         for Registered Securities and maturing after such exchange, whose
         surrender is not required or has been waived as provided in Section
         305, (ii) Securities and coupons of such series which have been
         destroyed, lost or stolen and which have been replaced or paid as
         provided in Section 306, (iii) coupons appertaining to Securities
         called for redemption and maturing after the relevant Redemption Date,
         whose surrender has been waived as provided in Section 1106, and (iv)
         Securities and coupons of such series for whose payment money has
         theretofore been deposited in trust with the Trustee or any Paying
         Agent or segregated and held in trust by the Company and thereafter
         repaid to the Company, as provided in Section 1003) have been
         delivered to the Trustee for cancellation; or

              (b) all Securities of such series and, in the case of (i) or (ii)
         below, any coupons appertaining thereto not theretofore delivered to
         the Trustee for cancellation

                                      39


                   (i) have become due and payable, or

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

                   (iii) if redeemable at the option of the Company, are to be
              called for redemption within one year under arrangements
              satisfactory to the Trustee for the giving of notice of
              redemption by the Trustee in the name, and at the expense, of the
              Company, and the Company, in the case of (i), (ii) or (iii)
              above, has irrevocably deposited or caused to be deposited with
              the Trustee as trust funds in trust for the purpose an amount, in
              the Currency in which the Securities of such series are payable,
              sufficient to pay and discharge the entire indebtedness on such
              Securities not theretofore delivered to the Trustee for
              cancellation, for principal (and premium, if any) and interest to
              the date of such deposit (in the case of Securities which have
              become due and payable) or to the Stated Maturity or Redemption
              Date, as the case may be;

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

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

         Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 606, the obligations of
the Trustee to any Authenticating Agent under Section 611 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of clause (1) of
this Section, the obligations of the Trustee under Section 402 and the last
paragraph of Section 1003 shall survive.

         SECTION 402. Application of Trust Money.

         Subject to the provisions of the last paragraph of Section 1003, all
money deposited with the Trustee pursuant to Section 401 shall be held in trust
and applied by it, in accordance with the provisions of the Securities, the
coupons and this Indenture, to the payment, either directly or through any
Paying Agent (including the Company acting as its own Paying Agent) as the
Trustee may determine, to the Persons entitled thereto, of the principal (and
premium, if any) and interest for whose payment such money has been deposited
with the Trustee, but such money need not be segregated from other funds except
to the extent required by law.

                                      40


                                 ARTICLE FIVE

                                    REMEDIES

         SECTION 501. Events of Default.

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

         (1) default in the payment of any interest on any Security of that
    series, or any related coupon, when such interest or coupon becomes due and
    payable, and continuance of such default for a period of 30 days; or

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

         (3) default in the deposit of any sinking fund payment, when and as
    due by the terms of the Securities of that series and Article Twelve; or

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

         (5) the entry of a decree or order by a court having jurisdiction in
    the premises adjudging the Company a bankrupt or insolvent, or approving as
    properly filed a petition seeking reorganization, arrangement, adjustment
    or composition of or in respect of the Company under the Federal Bankruptcy
    Code or any other applicable federal or state law, or appointing a
    receiver, liquidator, assignee, trustee, sequestrator (or other similar
    official) of the Company or of any substantial part of its property, or
    ordering the winding up or liquidation of its affairs, and the continuance
    of any such decree or order unstayed and in effect for a period of 90
    consecutive days; or

         (6) the institution by the Company of proceedings to be adjudicated a
    bankrupt or insolvent, or the consent by it to the institution of
    bankruptcy or insolvency proceedings against it, or the filing by it of a
    petition or answer or consent seeking reorganization or relief under the
    Federal Bankruptcy Code or any other applicable federal or state law, or
    the consent by it to the filing of any such petition or to the appointment
    of a receiver, liquidator, assignee, trustee, sequestrator (or other
    similar official) of the Company or of any substantial

                                      41


    part of its property, or the making by it of an assignment for the benefit
    of creditors, or the admission by it in writing of its inability to pay its
    debts generally as they become due; or

         (7) there shall have occurred one or more defaults by the Company or
    any Subsidiary in the payment of the principal of or premium, if any, on
    Debt aggregating $50 million or more, when the same becomes due and payable
    at the stated maturity thereof, and such default or defaults shall have
    continued after any applicable grace period and shall not have been cured
    or waived or (B) Debt of the Company or any Subsidiary aggregating $50
    million or more shall have been accelerated or otherwise declared due and
    payable, or required to be prepaid or repurchased (other than by regularly
    scheduled required prepayment), prior to the stated maturity thereof; or

         (8) any other Event of Default provided with respect to Securities of
    that series.

         SECTION 502. Acceleration of Maturity; Rescission and Annulment.

         If an Event of Default described in clause (1), (2), (3), (4), (7) or
(8) of Section 501 with respect to Securities of any series at the time
Outstanding occurs and is continuing, then in every such case the Trustee or
the Holders of not less than 25% in principal amount of the Outstanding
Securities of that series may declare the principal amount (or, if the
Securities of that series are Original Issue Discount Securities or Indexed
Securities, such portion of the principal amount as may be specified in the
terms of that series) of all of the Securities of that series to be due and
payable immediately, by a notice in writing to the Company (and to the Trustee
if given by Holders), and upon any such declaration such principal amount (or
specified portion thereof) shall become immediately due and payable. If an
Event of Default described in clause (5) or (6) of Section 501 occurs and is
continuing, then the principal amount of all the Debt Securities shall ipso
facto become and be immediately due and payable without any declaration or
other act on the part of the Trustee or any Holder.

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

         (1) the Company has paid or deposited with the Trustee a sum
    sufficient to pay in the Currency in which the Securities of such series
    are payable (except as otherwise specified pursuant to Section 301 for the
    Securities of such series and except, if applicable, as provided in
    Sections 312(b), 312(d) and 312(e)),

              (a) all overdue interest on all Outstanding Securities of that
         series (or of all series, as the case may be) and any related coupons,

              (b) all unpaid principal of (and premium, if any, on) any
         Outstanding Securities of that series (or of all series, as the case
         may be) which has become due otherwise than by such declaration of
         acceleration, and interest on such unpaid

                                      42


         principal at the rate or rates prescribed therefor in such Securities,

              (c) to the extent that payment of such interest is lawful,
         interest on overdue interest at the rate or rates prescribed therefor
         in such Securities, and

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

         (2) all Events of Default with respect to Securities of that series
    (or of all series, as the case may be), other than the non-payment of
    amounts of principal of (or premium, if any, on) or interest on Securities
    of that series (or of all series, as the case may be) which have become due
    solely by such declaration of acceleration, have been cured or waived as
    provided in Section 513.

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

         Notwithstanding the preceding paragraph, in the event of a declaration
of acceleration in respect of the Securities because of an Event of Default
specified in Section 501(7) shall have occurred and be continuing, such
declaration of acceleration shall be automatically annulled if the Debt that is
the subject of such Event of Default has been discharged or the holders thereof
have rescinded their declaration of acceleration in respect of such Debt, and
written notice of such discharge or rescission, as the case may be, shall have
been given to the Trustee by the Company and countersigned by the holders of
such Debt or a trustee, fiduciary or agent for such holders, within 30 days
after such declaration of acceleration in respect of the Securities, and no
other Event of Default has occurred during such 30-day period which has not
been cured or waived during such period.

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

         The Company covenants that if

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

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

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

                                      43


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

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

         SECTION 504. Trustee May File Proofs of Claim.

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

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

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

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders,
to pay to the Trustee any amount due it for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel,
and any other amounts due the Trustee under Section 606.

         Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement,

                                      44


adjustment or composition affecting the Securities or the rights of any Holder
thereof or to authorize the Trustee to vote in respect of the claim of any
Holder in any such proceeding.

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

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

         SECTION 506. Application of Money Collected.

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

         First: To the payment of all amounts due the Trustee under Section
    606;

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

         Third: The balance, if any, to the Person or Persons entitled thereto
    including, without limitation, the Company.

         SECTION 507. Limitation on Suits.

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

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

         (2) the Holders of not less than 25% in principal amount of the
    Outstanding Securities of that series in the case of any Event of Default
    described in clause (1), (2), (3), (4), (7) or (8) of Section 501, or, in
    the case of any Event of Default described in clause (5) or (6) of Section
    501, the Holders of not less than 25% in principal amount of all
    Outstanding Securities, shall have made written request to the Trustee to
    institute proceedings in respect of such Event of Default in its own name
    as Trustee hereunder;

                                      45


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

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

         (5) no direction inconsistent with such written request has been given
    to the Trustee during such 60-day period by the Holders of at least a
    majority or more in principal amount of the Outstanding Securities of that
    series in the case of any Event of Default described in clause (1), (2),
    (3), (4), (7) or (8) of Section 501, or, in the case of any Event of
    Default described in clause (5) or (6) of Section 501, by the Holders of a
    majority or more in principal amount of all Outstanding Securities;

it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other
Holders of Securities of the same series, in the case of any Event of Default
described in clause (1), (2), (3), (4), (7) or (8) of Section 501, or of
Holders of all Securities in the case of any Event of Default described in
clause (5) or (6) of Section 501, or to obtain or to seek to obtain priority or
preference over any other of such Holders or to enforce any right under this
Indenture, except in the manner herein provided and for the equal and ratable
benefit of all Holders of Securities of the same series, in the case of any
Event of Default described in clause (1), (2), (3), (4), (7) or (8) of Section
501, or of Holders of all Securities in the case of any Event of Default
described in clause (5) or (6) of Section 501.

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

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

         SECTION 509. Restoration of Rights and Remedies.

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

                                      46


         SECTION 510. Rights and Remedies Cumulative.

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

         SECTION 511. Delay or Omission Not Waiver.

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

         SECTION 512. Control by Holders.

         With respect to the Securities of any series, the Holders of not less
than a majority in principal amount of the Outstanding Securities of such
series shall have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee, or exercising any trust
or power conferred on the Trustee, relating to or arising under clause (1),
(2), (3), (4), (7) or (8) of Section 501, and, with respect to all Securities,
the Holders of not less than a majority in principal amount of all Outstanding
Securities shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee, not relating to or
arising under clause (1), (2), (3), (4), (7) or (8) of Section 501, provided
that in each case

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

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

         (3) the Trustee need not take any action which might involve it in
    personal liability or be unjustly prejudicial to the Holders of Securities
    of such series not consenting.

                                      47


         SECTION 513. Waiver of Past Defaults.

         Subject to Section 502, the Holders of not less than a majority in
principal amount of the Outstanding Securities of any series may on behalf of
the Holders of all the Securities of such series waive any past default
described in clause (1), (2), (3), (4), (7) or (8) of Section 501 (or, in the
case of a default described in clause (5) or (6) of Section 501, the Holders of
not less than a majority in principal amount of all Outstanding Securities may
waive any such past default), and its consequences, except a default

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

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

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

         SECTION 514. Waiver of Stay or Extension Laws.

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

                                      48


                                  ARTICLE SIX


                                  THE TRUSTEE

         SECTION 601. Notice of Defaults.

         Within 90 days after the occurrence of any Default hereunder with
respect to the Securities of any series, the Trustee shall transmit in the
manner and to the extent provided in TIA Section 313(c), notice of such default
hereunder known to the Trustee, unless such Default shall have been cured or
waived; provided, however, that, except in the case of a Default in the payment
of the principal of (or premium, if any, on) or interest on any Security of
such series or in the payment of any sinking fund installment with respect to
Securities of such series, the Trustee shall be protected in withholding such
notice if and so long as the board of directors, the executive committee or a
trust committee of directors and/or Responsible Officers of the Trustee in good
faith determine that the withholding of such notice is in the interest of the
Holders of Securities of such series and any related coupons; and provided,
further, that in the case of any Default of the character specified in Section
501(4) with respect to Securities of such series, no such notice to Holders
shall be given until at least 30 days after the occurrence thereof.

         SECTION 602. Certain Rights of Trustee.

         Subject to the provisions of TIA Sections 315(a) through 315(d):

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

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

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

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

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

                                      49


    or direction.

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

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

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

         The Trustee shall not be required to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers if it shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.

         SECTION 603. Trustee Not Responsible for Recitals or Issuance of
Securities.

         The recitals contained herein and in the Securities, except for the
Trustee's certificates of authentication, and in any coupons shall be taken as
the statements of the Company, and neither the Trustee nor any Authenticating
Agent assumes any responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Securities or coupons, except that the Trustee represents that it is duly
authorized to execute and deliver this Indenture, authenticate the Securities
and perform its obligations hereunder and that the statements made by it in a
Statement of Eligibility and Qualification on Form T-1 supplied to the Company
are true and accurate, subject to the qualifications set forth therein. Neither
the Trustee nor any Authenticating Agent shall be accountable for the use or
application by the Company of Securities or the proceeds thereof.

         SECTION 604. May Hold Securities.

         The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other agent of the Company or of the Trustee, in its
individual or any other capacity, may become the owner or pledgee of Securities
and coupons and, subject to TIA Sections 310(b) and 311, may otherwise deal
with the Company with the same rights it would have if it were not Trustee,
Authenticating Agent, Paying Agent, Security Registrar or such other agent.

                                      50


         SECTION 605. Money Held in Trust.

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

         SECTION 606. Compensation and Reimbursement.

         The Company agrees:

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

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

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

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

         SECTION 607. Corporate Trustee Required; Eligibility; 
                      Conflicting Interest.

         (a) There shall at all times be a Trustee hereunder which shall be
eligible to act as Trustee under TIA Section 310(a)(1). Each successor trustee 
shall have a combined capital and surplus of at least $50,000,000. If such 
corporation publishes reports of condition at least annually, pursuant to law 
or to the requirements of federal, state, territorial or District of Columbia 
supervising or examining authority, then for the purposes of this Section, the 
combined capital and surplus of such corporation shall be deemed to be its 
combined capital and surplus as set forth in its most recent report of 
condition so published. If at any time the Trustee shall cease to be eligible 
in accordance with the provisions of this Section, it shall resign immediately 
in the manner and with the effect hereinafter specified in this Article.


         (b) The Indenture dated as of ___________, 1998 between the Company
and The Bank of Nova Scotia Trust Company of New York providing for the 
issuance of convertible and non-convertible senior debt securities shall
be deemed to be specifically described herein for purposes of clause (i) of
the first proviso contained in TIA Section 310(b).

                                      51


         SECTION 608. Resignation and Removal; Appointment of Successor.

         (a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 609.

         (b) The Trustee may resign at any time with respect to the Securities
of one or more series by giving written notice thereof to the Company. If the
instrument of acceptance by a successor Trustee required by Section 609 shall
not have been delivered to the Trustee within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee with respect
to the Securities of such series.

         (c) The Trustee may be removed at any time with respect to the
Securities of any series by Act of the Holders of not less than a majority in
principal amount of the Outstanding Securities of such series, delivered to the
Trustee and to the Company.

         (d) If at any time:

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

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

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

then, in any such case, (i) the Company, by a Board Resolution, may remove the
Trustee with respect to all Securities, or (ii) subject to TIA Section 315(e),
any Holder who has been a bona fide Holder of a Security for at least six
months may, on behalf of himself and all others similarly situated, petition
any court of competent jurisdiction for the removal of the Trustee with respect
to all Securities and the appointment of a successor Trustee or Trustees.

         (e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause,
with respect to the Securities of one or more series, the Company, by a Board
Resolution, shall promptly appoint a successor Trustee or Trustees with respect
to the Securities of that or those series (it being understood that any such
successor Trustee may be appointed with respect to the Securities of one or
more or all of such series and that at any time there shall be only one Trustee
with respect to the Securities of any particular series). If, within one year
after such resignation, removal or incapability, or the occurrence of such
vacancy, a successor Trustee with respect to the Securities of any series shall
be appointed by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series delivered

                                      52


to the Company and the retiring Trustee, the successor Trustee so appointed
shall, forthwith upon its acceptance of such appointment, become the successor
Trustee with respect to the Securities of such series and to that extent
supersede the successor Trustee appointed by the Company. If no successor
Trustee with respect to the Securities of any series shall have been so
appointed by the Company or the Holders and accepted appointment in the manner
hereinafter provided, any Holder who has been a bona fide Holder of a Security
of such series for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the Securities of such
series.

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

         SECTION 609. Acceptance of Appointment by Successor.

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

         (b) In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the Company, the
retiring Trustee and each successor Trustee with respect to the Securities of
one or more series shall execute and deliver an indenture supplemental hereto
wherein each successor Trustee shall accept such appointment and which (1)
shall contain such provisions as shall be necessary or desirable to transfer
and confirm to, and to vest in, each successor Trustee all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities of
that or those series to which the appointment of such successor Trustee
relates, (2) if the retiring Trustee is not retiring with respect to all
Securities, shall contain such provisions as shall be deemed necessary or
desirable to confirm that all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Securities of that or those series as to
which the retiring Trustee is not retiring shall continue to be vested in the
retiring Trustee, and (3) shall add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the administration
of the trusts hereunder by more than one Trustee, it being understood that
nothing herein or in such supplemental indenture shall constitute such Trustees
co-trustees of the same trust and that each such Trustee shall be trustee of a
trust or trusts hereunder separate and apart from any trust or trusts hereunder
administered by any other such Trustee; and upon the execution and delivery of
such supplemental indenture to resignation or removal of the retiring Trustee
shall become effective to the extent provided therein and each such successor
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Trustee

                                      53


with respect to the Securities of that or those series to which the appointment
of such successor Trustee relates; but, on request of the Company or any
successor Trustee, such retiring Trustee shall duly assign, transfer and
deliver to such successor Trustee all property and money held by such retiring
Trustee hereunder with respect to the Securities of that or those series to
which the appointment of such successor Trustee relates. Whenever there is a
successor Trustee with respect to one or more (but less than all) series of
securities issued pursuant to this Indenture, the terms "Indenture" and
"Securities" shall have the meanings specified in the provisos to the
respective definitions of those terms in Section 101 which contemplate such
situation.

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

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

         SECTION 610. Merger, Conversion, Consolidation or Succession to
Business.

         Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to all or substantially all the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities so authenticated with the same
effect as if such successor Trustee had itself authenticated such Securities;
and in case at that time any of the Securities shall not have been
authenticated, any successor Trustee may authenticate such Securities either in
the name of any predecessor hereunder or in the name of the successor Trustee;
and in all such cases such certificates shall have the full force which it is
anywhere in the Securities or in this Indenture provided that the certificate
of the Trustee shall have; provided, however, that the right to adopt the
certificate of authentication of any predecessor Trustee or to authenticate
Securities in the name of any predecessor Trustee shall apply only to its
successor or successors by merger, conversion or consolidation.

                                      54


         SECTION 611. Appointment of Authenticating Agent.

         At any time when any of the Securities remain Outstanding, the Trustee
may appoint an Authenticating Agent or Agents with respect to one or more
series of Securities which shall be authorized to act on behalf of the Trustee
to authenticate Securities of such series and the Trustee shall give written
notice of such appointment to all Holders of Securities of the series with
respect to which such Authenticating Agent will serve, in the manner provided
for in Section 106. Securities so authenticated shall be entitled to the
benefits of this Indenture and shall be valid and obligatory for all purposes
as if authenticated by the Trustee hereunder. Any such appointment shall be
evidenced by an instrument in writing signed by a Responsible Officer of the
Trustee, and a copy of such instrument shall be promptly furnished to the
Company. Wherever reference is made in this Indenture to the authentication and
delivery of Securities by the Trustee or the Trustee's certificate of
authentication, such reference shall be deemed to include authentication and
delivery on behalf of the Trustee by an Authenticating Agent and a certificate
of authentication executed on behalf of the Trustee by an Authenticating Agent.
Each Authenticating Agent shall be acceptable to the Company and shall at all
times be a corporation organized and doing business under the laws of the
United States of America, any state thereof or the District of Columbia,
authorized under such laws to act as Authenticating Agent, having a combined
capital and surplus of not less than $50,000,000 and subject to supervision or
examination by federal or state authority. If such corporation publishes
reports of condition at least annually, pursuant to law or to the requirements
of said supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such corporation shall be deemed
to be its combined capital and surplus as set forth in its most recent report
of condition so published. If at any time an Authenticating Agent shall cease
to be eligible in accordance with the provisions of this Section, it shall
resign immediately in the manner and with the effect specified in this Section.

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

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

                                      55


         The Trustee agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section, and the
Trustee shall be entitled to be reimbursed for such payments, subject to the
provisions of Section 606.

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

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

                                       THE BANK OF NOVA SCOTIA TRUST
                                       COMPANY OF NEW YORK,
                                         as Trustee


                                       By
                                         ---------------------------------
                                         as Authenticating Agent



                                       By
                                         ---------------------------------
                                         Authorized Officer


                                 ARTICLE SEVEN

               HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY

         SECTION 701. Disclosure of Names and Addresses of Holders.

         Every Holder of Securities or coupons, by receiving and holding the
same, agrees with the Company and the Trustee that none of the Company or the
Trustee or any agent of either of them shall be held accountable by reason of
the disclosure of any such information as to the names and addresses of the
Holders in accordance with TIA Section 312, regardless of the source from which
such information was derived, and that the Trustee shall not be held
accountable by reason of mailing any material pursuant to a request made under
TIA Section 312(b).

         SECTION 702. Reports by Trustee.

         Within 60 days after May 15 of each year commencing with the first May
15 after the first issuance of Securities pursuant to this Indenture, the
Trustee shall transmit to the Holders of Securities, in the manner and to the
extent provided in TIA Section 313(c), a brief report dated as of such May 15
if required by TIA Section 313(a).

                                      56

         SECTION 703. Reports by Company.

         The Company shall:

         (1) file with the Trustee, within 15 days after the Company is
    required to file the same with the Commission, copies of the annual reports
    and of the information, documents and other reports (or copies of such
    portions of any of the foregoing as the Commission may from time to time by
    rules and regulations prescribe) which the Company may be required to file
    with the Commission pursuant to Section 13 or Section 15(d) of the
    Securities Exchange Act of 1934; or, if the Company is not required to file
    information, documents or reports pursuant to either of such Sections, then
    it shall file with the Trustee and the Commission, in accordance with rules
    and regulations prescribed from time to time by the Commission, such of the
    supplementary and periodic information, documents and reports which may be
    required pursuant to Section 13 of the Securities Exchange Act of 1934 in
    respect of a security listed and registered on a national securities
    exchange as may be prescribed from time to time in such rules and
    regulations;

         (2) file with the Trustee and the Commission, in accordance with rules
    and regulations prescribed from time to time by the Commission, such
    additional information, documents and reports with respect to compliance by
    the Company with the conditions and covenants of this Indenture as may be
    required from time to time by such rules and regulations; and

         (3) transmit to all Holders, in the manner and to the extent provided
    in TIA Section 313(c), within 30 days after the filing thereof with the
    Trustee, such summaries of any information, documents and reports required
    to be filed by the Company pursuant to paragraphs (1) and (2) of this
    Section as may be required by rules and regulations prescribed from time to
    time by the Commission.

                                 ARTICLE EIGHT

                    MERGER, CONSOLIDATION AND SALE OF ASSETS

         SECTION 801. Company May Consolidate, etc., Only on Certain Terms.

         The Company shall not consolidate with or merge into any other
corporation or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, unless:

         (1) the corporation formed by such consolidation or into which the
    Company is merged or the Person which acquires by conveyance or transfer,
    or which leases, the properties and assets of the Company substantially as
    an entirety (A) shall be a corporation, partnership or trust organized and
    validly existing under the laws of the United States of America, any state
    thereof or the District of Columbia and (B) shall expressly assume, by an
    indenture supplemental hereto, executed and delivered to the Trustee, in
    form satisfactory to the Trustee, the Company's obligation for the due and
    punctual payment of the principal of (and premium, if any, on) and interest
    on all the Securities and the performance and observance of every covenant
    of this Indenture on the part of the Company to be performed

                                      57


    or observed;

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

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

         This Section shall only apply to a merger or consolidation in which
the Company is not the surviving corporation and to conveyances, leases and
transfers by the Company as transferor or lessor.

         SECTION 802. Successor Person Substituted.

         Upon any consolidation by the Company with or merger by the Company
into any other corporation or any conveyance, transfer or lease of the
properties and assets of the Company substantially as an entirety to any Person
in accordance with Section 801, the successor Person formed by such
consolidation or into which the Company is merged or to which such conveyance,
transfer or lease is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Indenture with the
same effect as if such successor Person had been named as the Company herein,
and in the event of any such conveyance or transfer, the Company (which term
shall for this purpose mean the Person named as the "Company" in the first
paragraph of this Indenture or any successor Person which shall theretofore
become such in the manner described in Section 801), except in the case of a
lease, shall be discharged of all obligations and covenants under this
Indenture and the Securities and the coupons and may be dissolved and
liquidated.

                                      58


         SECTION 803. Securities to Be Secured in Certain Events.

         If, upon any such consolidation of the Company with or merger of the
Company into any other corporation, or upon any conveyance, lease or transfer
of the property of the Company as an entirety or substantially as an entirety
to any other Person, any Principal Property of the Company or of any
Subsidiary, would thereupon become subject to any Lien, then unless such Lien
could be created under the Indenture without equally and ratably securing the
Securities, the Company, prior to or simultaneously with such consolidation,
merger, conveyance, lease or transfer, will, as to such Principal Property,
secure the Securities Outstanding hereunder (together with, if the Company
shall so determine, any other Debt of the Company now existing or hereafter
created which is not subordinate to the Securities) equally and ratably with
(or prior to) the Debt which upon such consolidation, merger, conveyance, lease
or transfer is to become secured as to such Principal Property by such Lien, or
will cause such Securities to be so secured; provided that, for the purpose of
providing such equal and ratable security, the principal amount of Original
Issue Discount Securities and Indexed Securities shall mean that amount which
would at the time of making such effective provision be due and payable
pursuant to Section 502 and the terms of such Original Issue Discount
Securities and Indexed Securities upon a declaration of acceleration of the
Maturity thereof, and the extent of such equal and ratable security shall be
adjusted, to the extent permitted by law, as and when said amount changes over
time pursuant to the terms of such Original Issue Discount Securities and
Indexed Securities.

                                 ARTICLE NINE

                            SUPPLEMENTAL INDENTURES

         Section 901. Supplemental Indentures Without Consent of Holders.

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

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

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

         (3) to add any additional Events of Default (and if such Events of
    Default are to be for the benefit of less than all series of Securities,
    stating that such Events of Default are being included solely for the
    benefit of such series); or

                                      59


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

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

         (6) to secure the Securities pursuant to the requirements of Section
    803 or otherwise; or

         (7) to establish the form or terms of Securities of any series as
    permitted by Sections 201 and 301; or

         (8) to evidence and provide for the acceptance of appointment
    hereunder by a successor Trustee with respect to the Securities of one or
    more series and to add to or change any of the provisions of this Indenture
    as shall be necessary to provide for or facilitate the administration of
    the trusts hereunder by more than one Trustee, pursuant to the requirements
    of Section 609(b); or

         (9) to close this Indenture with respect to the authentication and
    delivery of additional series of Securities, to cure any ambiguity, to
    correct or supplement any provision herein which may be inconsistent with
    any other provision herein, or to make any other provisions with respect to
    matters or questions arising under this Indenture; provided that such
    action shall not adversely affect the interests of the Holders of
    Securities of any series and any related coupons in any material respect;

         (10) to supplement any of the provisions of this Indenture to such
    extent as shall be necessary to permit or facilitate the defeasance and
    discharge of any series of Securities pursuant to Sections 401, 1402 and
    1403; provided that any such action shall not adversely affect the
    interests of the Holders of Securities of such series and any related
    coupons or any other series of Securities in any material respect; or

         (11) to effect or maintain the qualification of the Indenture under
    the Trust Indenture Act.

                                      60


         SECTION 902. Supplemental Indentures with Consent of Holders.

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

         (1) change the Stated Maturity of the principal of, or any installment
    of interest on, any Security or reduce the principal amount thereof or the
    rate of interest thereon or any premium payable upon the redemption
    thereof, or change any obligation of the Company to pay Additional Amounts
    contemplated by Section 1005 (except as contemplated by Section 801(1) and
    permitted by Section 901(1)), or reduce the amount of the principal of an
    Original Issue Discount Security that would be due and payable upon a
    declaration of acceleration of the Maturity thereof pursuant to Section 502
    or the amount thereof provable in bankruptcy pursuant to Section 504, or
    adversely affect any right of repayment at the option of any Holder of any
    Security, or change any Place of Payment where, or the Currency in which,
    any Security or any premium or the interest thereon is payable, or impair
    the right to institute suit for the enforcement of any such payment on or
    after the Stated Maturity thereof (or, in the case of redemption or
    repayment at the option of the Holder, on or after the Redemption Date or
    Repayment Date, as the case may be), or adversely affect any right to
    convert or manage any Security as may be provided pursuant to Section 301
    herein, or

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

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

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

                                      61


         SECTION 903. Execution of Supplemental Indentures.

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

         SECTION 904. Effect of Supplemental Indentures.

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

         SECTION 905. Conformity with Trust Indenture Act.

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

         SECTION 906. Reference in Securities to Supplemental Indentures.

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

         SECTION 907. Notice of Supplemental Indentures.

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

                                      62


                                  ARTICLE TEN

                                   COVENANTS

         SECTION 1001. Payment of Principal, Premium, if any, and Interest.

         The Company covenants and agrees for the benefit of the Holders of
each series of Securities and any related coupons that it will duly and
punctually pay the principal of (and premium, if any, on) and interest on the
Securities of that series in accordance with the terms of the Securities, any
coupons appertaining thereto and this Indenture. Unless otherwise specified as
contemplated by Section 301 with respect to any series of Securities, any
interest installments due on Bearer Securities on or before Maturity shall be
payable only upon presentation and surrender of the several coupons for such
interest installments as are evidenced thereby as they severally mature.

         SECTION 1002. Maintenance of Office or Agency.

         If the Securities of a series are issuable only as Registered
Securities, the Company will maintain in each Place of Payment for any series
of Securities an office or agency where Securities of that series may be
presented or surrendered for payment, where Securities of that series may be
surrendered for registration of transfer or exchange, where Securities of that
series that are convertible may be surrendered for conversion, if applicable,
and where notices and demands to or upon the Company in respect of the
Securities of that series and this Indenture may be served.

         If Securities of a series are issuable as Bearer Securities, the
Company will maintain (A) in The City of New York, an office or agency where
any Registered Securities of that series may be presented or surrendered for
payment, where any Registered Securities of that series may be surrendered for
registration of transfer, where Securities of that series may be surrendered
for exchange, where notices and demands to or upon the Company in respect of
the Securities of that series and this Indenture may be served and where Bearer
Securities of that series and related coupons may be presented or surrendered
for payment in the circumstances described in the following paragraph (and not
otherwise); (B) subject to any laws or regulations applicable thereto, in a
Place of Payment for that series which is located outside the United States, an
office or agency where Securities of that series and related coupons may be
presented and surrendered for payment; provided, however, that, if the
Securities of that series are listed on any stock exchange located outside the
United States and such stock exchange shall so require, the Company will
maintain a Paying Agent for the Securities of that series in any required city
located outside the United States so long as the Securities of that series are
listed on such exchange, and (C) subject to any laws or regulations applicable
thereto, in a Place of Payment for that series located outside the United
States an office or agency where any Registered Securities of that series may
be surrendered for registration of transfer, where Securities of that series
may be surrendered for exchange and where notices and demands to or upon the
Company in respect of the Securities of that series and this Indenture may be
served.

         The Company will give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office

                                      63


of the Trustee, except that Bearer Securities of any series and the related
coupons may be presented and surrendered for payment at the offices specified
in the Security, in London, and the Company hereby appoints the same as its
agents to receive such respective presentations, surrenders, notices and
demands.

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

         The Company may also from time to time designate one or more other
offices or agencies where the Securities of one or more series may be presented
or surrendered for any or all such purposes and may from time to time rescind
any such designation; provided, however, that no such designation or rescission
shall in any manner relieve the Company of its obligation to maintain an office
or agency in accordance with the requirements set forth above for Securities of
any series for such purposes. The Company will give prompt written notice to
the Trustee of any such designation or rescission and of any change in the
location of any such other office or agency. Unless otherwise specified with
respect to any Securities as contemplated by Section 301 with respect to a
series of Securities, the Company hereby designates as a Place of Payment for
each series of Securities the office or agency of the Company in the Borough of
Manhattan, The City of New York, and initially appoints the Trustee as Paying
Agent in such city and as its agent to receive all such presentations,
surrenders, notices and demands.

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

         SECTION 1003. Money for Securities Payments to Be Held in Trust.

         If the Company shall at any time act as its own Paying Agent with
respect to any series of Securities and any related coupons, it will, on or
before each due date of the principal of (and premium, if any, on) or interest
on any of the Securities of that series, segregate and hold in trust for the
benefit of the Persons entitled thereto a sum in the Currency in which the
Securities of such series are payable (except as otherwise specified pursuant
to Section 301 for the Securities of such series and except, if applicable, as
provided in Sections 312(b), 312(d) and 312(e)) sufficient to pay the principal
(and premium, if any) or interest so becoming due until such sums shall be paid
to such Persons or otherwise disposed of as herein provided and will promptly
notify the Trustee of its action or failure so to act.

                                      64


         Whenever the Company shall have one or more Paying Agents for any
series of Securities and any related coupons, it will, prior to or on each due
date of the principal of (and premium, if any, on) or interest on any
Securities of that series, deposit with a Paying Agent a sum (in the Currency
described in the preceding paragraph) sufficient to pay the principal (and
premium, if any) or interest so becoming due, such sum to be held in trust for
the benefit of the Persons entitled to such principal, premium or interest, and
(unless such Paying Agent is the Trustee) the Company will promptly notify the
Trustee of its action or failure so to act.

         The Company will cause each Paying Agent (other than the Trustee) for
any series of Securities to execute and deliver to the Trustee an instrument in
which such Paying Agent shall agree with the Trustee, subject to the provisions
of this Section, that such Paying Agent will:

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

         (2) give the Trustee notice of any default by the Company (or any
    other obligor upon the Securities of such series) in the making of any
    payment of principal of (or premium, if any, on) or interest on the
    Securities of such series; and

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

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

         Except as provided in the Securities of any series, any money
deposited with the Trustee or any Paying Agent, or then held by the Company, in
trust for the payment of the principal of (and premium, if any, on) or interest
on any Security of any series, or any coupon appertaining thereto, and
remaining unclaimed for two years after such principal (and premium, if any) or
interest has become due and payable shall be paid to the Company on Company
Request, or (if then held by the Company) shall be discharged from such trust;
and the Holder of such Security or coupon 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 an Authorized Newspaper, 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 publication, any unclaimed balance of such
money then remaining will be repaid to the Company.

                                      65


         SECTION 1004. Statement as to Compliance.

         The Company will deliver to the Trustee, within 120 days after the end
of each fiscal year, a brief certificate from the principal executive officer,
principal financial officer or principal accounting officer as to his or her
knowledge of the Company's compliance with all conditions and covenants under
this Indenture. For purposes of this Section 1004, such compliance shall be
determined without regard to any period of grace or requirement of notice under
this Indenture.

         SECTION 1005. Additional Amounts.

         If any Securities of a series provide for the payment of additional
amounts to any Holder who is not a United States person in respect of any tax,
assessment or governmental charge ("Additional Amounts"), the Company will pay
to the Holder of any Security of such series or any coupon appertaining thereto
such Additional Amounts as may be specified as contemplated by Section 301.
Whenever in this Indenture there is mentioned, in any context, the payment of
the principal (or premium, if any, on) or interest on, or in respect of, any
Security of a series or payment of any related coupon or the net proceeds
received on the sale or exchange of any Security of a series, such mention
shall be deemed to include mention of the payment of Additional Amounts
provided for by the terms of such series established pursuant to Section 301 to
the extent that, in such context, Additional Amounts are, were or would be
payable in respect thereof pursuant to such terms and express mention of the
payment of Additional Amounts (if applicable) in any provisions hereof shall
not be construed as excluding Additional Amounts in those provisions hereof
where such express mention is not made.

         Except as otherwise specified as contemplated by Section 301, if the
Securities of a series provide for the payment of Additional Amounts, at least
10 days prior to the first Interest Payment Date with respect to that series of
Securities (or if the Securities of that series will not bear interest prior to
Maturity, the first day on which a payment of principal (and premium, if any)
is made), and at least 10 days prior to each date of payment of principal (and
premium, if any) or interest if there has been any change with respect to the
matters set forth in the below-mentioned Officers' Certificate, the Company
will furnish the Trustee and the Company's principal Paying Agent or Paying
Agents, if other than the Trustee, with an Officers' Certificate instructing
the Trustee and such Paying Agent or Paying Agents whether such payment of
principal of (and premium, if any, on) or interest on the Securities of that
series shall be made to Holders of Securities of that series or any related
coupons who are not United States persons without withholding for or on account
of any tax, assessment or other governmental charge described in the Securities
of the series. If any such withholding shall be required, then such Officers'
Certificate shall specify by country the amount, if any, required to be
withheld on such payments to such Holders of Securities of that series or
related coupons and the Company will pay to the Trustee or such Paying Agent
the Additional Amounts required by the terms of such Securities. In the event
that the Trustee or any Paying Agent, as the case may be, shall not so receive
the above-mentioned certificate, then the Trustee or such Paying Agent shall be
entitled to (i) assume that no such withholding or deduction is required with
respect to any payment of principal (and premium, if any) or interest with
respect to any Securities of a series or related coupons until it shall have
received a certificate advising otherwise and (ii) to make all payments of
principal (and premium, if any) and interest with respect to the Securities of
a series or related coupons without withholding or deductions until otherwise

                                      66


advised. The Company covenants to indemnify the Trustee and any Paying Agent
for, and to hold them harmless against, any loss, liability or expense
reasonably incurred without negligence or bad faith on their part arising out
of or in connection with actions taken or omitted by any of them in reliance on
any Officers' Certificate furnished pursuant to this Section.

         SECTION 1006. Payment of Taxes and Other Claims.

         The Company will pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (1) all material taxes, assessments
and governmental charges levied or imposed upon the Company or any Subsidiary
or upon the income, profits or property of the Company or any Subsidiary, and
(2) all material lawful claims for labor, materials and supplies which, if
unpaid, might by law become a Lien upon any Principal Property of the Company
or any Subsidiary; provided, however, that the Company shall not be required to
pay or discharge or cause to be paid or discharged any such tax, assessment,
charge or claim whose amount, applicability or validity is being contested in
good faith by appropriate proceedings.

         SECTION 1007. Corporate Existence.

         Subject to Article Eight, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence and the rights (charter and statutory) and franchises of the Company
and any Subsidiary; provided, however, that the Company shall not be required
to preserve any such right or franchise if the Company shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company and its Subsidiaries as a whole and provided further that the
foregoing does not prohibit any mergers or consolidations between Subsidiaries
or between the Company and one or more Subsidiaries so long as any such merger
or consolidation complies with Article Eight.

         SECTION 1008. Waiver of Certain Covenants.

         The Company may, with respect to any series of Securities, omit in any
particular instance to comply with any term, provision or condition which
affects such series set forth in Section 803 or Sections 1006 to 1007,
inclusive, if before the time for such compliance the Holders of at least a
majority in principal amount of all Outstanding Securities of any series, by
Act of such Holders, waive such compliance in such instance with such term,
provision or condition, but no such waiver shall extend to or affect such term,
provision or condition except to the extent so expressly waived, and, until
such waiver shall become effective, the obligations of the Company and the
duties of the Trustee in respect of any such term, provision or condition shall
remain in full force and effect.

                                      67


                                ARTICLE ELEVEN

                            REDEMPTION OF SECURITIES

         SECTION 1101. Applicability of Article.

         Securities of any series which are redeemable before their Stated
Maturity shall be redeemable in accordance with the terms of such Securities
and (except as otherwise specified as contemplated by Section 301 for
Securities of any series) in accordance with this Article.

         SECTION 1102. Election to Redeem; Notice to Trustee.

         The election of the Company to redeem any Securities shall be
evidenced by or pursuant to a Board Resolution. In case of any redemption at
the election of the Company, the Company shall, at least 60 days prior to the
Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee of such Redemption Date and of
the principal amount of Securities of such series to be redeemed and shall
deliver to the Trustee such documentation and records as shall enable the
Trustee to select the Securities to be redeemed pursuant to Section 1103. In
the case of any redemption of Securities prior to the expiration of any
restriction on such redemption provided in the terms of such Securities or
elsewhere in this Indenture, the Company shall furnish the Trustee with an
Officers' Certificate evidencing compliance with such restriction.

         SECTION 1103. Selection by Trustee of Securities to Be Redeemed.

         If less than all the Securities of any series are to be redeemed, the
particular Securities to be redeemed shall be selected not more than 60 days
prior to the Redemption Date by the Trustee, from the Outstanding Securities of
such series not previously called for redemption, by such method as the Trustee
shall deem fair and appropriate and which may provide for the selection for
redemption of portions of the principal of Securities of such series; provided,
however, that no such partial redemption shall reduce the portion of the
principal amount of a Security not redeemed to less than the minimum authorized
denomination for Securities of such series established pursuant to Section 301.

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

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

                                      68


         SECTION 1104. Notice of Redemption.

         Except as otherwise specified as contemplated by Section 301, notice
of redemption shall be given in the manner provided for in Section 106 not less
than 30 nor more than 60 days prior to the Redemption Date, to each Holder of
Securities to be redeemed.

         All notices of redemption shall state:

              (1) the Redemption Date,

              (2) the Redemption Price,

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

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

              (5) the place or places where such Securities, together in the
         case of Bearer Securities with all coupons appertaining thereto, if
         any, maturing after the Redemption Date, are to be surrendered for
         payment of the Redemption Price,

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

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

              (8) if Bearer Securities of any series are to be redeemed and any
         Registered Securities of such series are not to be redeemed, and if
         such Bearer Securities may be exchanged for Registered Securities not
         subject to redemption on such Redemption Date pursuant to Section 305
         or otherwise, the last date, as determined by the Company, on which
         such exchanges may be made.

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

                                      69


         SECTION 1105. Deposit of Redemption Price.

         Prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) an amount of
money in the Currency in which the Securities of such series are payable
(except as otherwise specified pursuant to Section 301 for the Securities of
such series and except, if applicable, as provided in Sections 312(b), 312(d)
and 312(e)) sufficient to pay the Redemption Price of, and accrued interest on,
all the Securities which are to be redeemed on that date.

         SECTION 1106. Securities Payable on Redemption Date.

         Notice of redemption having been given as aforesaid, the Securities so
to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified in the Currency in which the Securities of
such series are payable (except as otherwise specified pursuant to Section 301
for the Securities of such series and except, if applicable, as provided in
Sections 312(b), 312(d) and 312(e)) (together with accrued interest, if any, to
the Redemption Date), and from and after such date (unless the Company shall
default in the payment of the Redemption Price and accrued interest) such
Securities shall, if the same were interest-bearing, cease to bear interest and
the coupons for such interest appertaining to any Bearer Securities so to be
redeemed, except to the extent provided below, shall be void. Upon surrender of
any such Security for redemption in accordance with said notice, together with
all coupons, if any, appertaining thereto maturing after the Redemption Date,
such Security shall be paid by the Company at the Redemption Price, together
with accrued interest, if any, to the Redemption Date; provided, however, that
installments of interest on Bearer Securities whose Stated Maturity is on or
prior to the Redemption Date shall be payable only at an office or agency
located outside the United States (except as otherwise provided in Section
1002) and, unless otherwise specified as contemplated by Section 301, only upon
presentation and surrender of coupons for such interest, and provided further
that installments of interest on Registered Securities whose Stated Maturity is
on or prior to the Redemption Date shall be payable to the Holders of such
Securities, or one or more Predecessor Securities, registered as such at the
close of business on the relevant Record Dates according to their terms and the
provisions of Section 307.

         If any Bearer Security surrendered for redemption shall not be
accompanied by all appurtenant coupons maturing after the Redemption Date, such
Security may be paid after deducting from the Redemption Price an amount equal
to the face amount of all such missing coupons, or the surrender of such
missing coupon or coupons may be waived by the Company and the Trustee if there
be furnished to them such security or indemnity as they may require to save
each of them and any Paying Agent harmless. If thereafter the Holder of such
Security shall surrender to the Trustee or any Paying Agent any such missing
coupon in respect of which a deduction shall have been made from the Redemption
Price, such Holder shall be entitled to receive the amount so deducted;
provided, however, that interest represented by coupons shall be payable only
at an office or agency located outside the United States (except as otherwise
provided in Section 1002) and, unless otherwise specified as contemplated by
Section 301, only upon presentation and surrender of those coupons.

                                      70


         If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal (and premium, if any) shall,
until paid, bear interest from the Redemption Date at the rate of interest or
Yield to Maturity (in the case of Original Issue Discount Securities) set forth
in the Security.

         SECTION 1107. Securities Redeemed in Part.

         Any Security which is to be redeemed only in part (pursuant to the
provisions of this Article or of Article Twelve) shall be surrendered at a
Place of Payment therefor (with, if the Company or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the Holder thereof or such Holder's
attorney duly authorized in writing), and the Company shall execute, and the
Trustee shall authenticate and deliver to the Holder of such Security without
service charge, a new Security or Securities of the same series, of any
authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Security so surrendered.

                                ARTICLE TWELVE

                                 SINKING FUNDS

         SECTION 1201. Applicability of Article.

         Retirements of Securities of any series pursuant to any sinking fund
shall be made in accordance with the terms of such Securities and (except as
otherwise specified as contemplated by Section 301 for Securities of any
series) in accordance with this Article.

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

                                      71


         SECTION 1202. Satisfaction of Sinking Fund Payments with Securities.

         Subject to Section 1203, in lieu of making all or any part of any
mandatory sinking fund payment with respect to any Securities of a series in
cash, the Company may at its option (1) deliver to the Trustee Outstanding
Securities of a series (other than any previously called for redemption)
theretofore purchased or otherwise acquired by the Company together in the case
of any Bearer Securities of such series with all unmatured coupons appertaining
thereto, and/or (2) receive credit for the principal amount of Securities of
such series which have been previously delivered to the Trustee by the Company
or for Securities of such series which have been redeemed either at the
election of the Company pursuant to the terms of such Securities or through the
application of permitted optional sinking fund payments pursuant to the terms
of such Securities, in each case in satisfaction of all or any part of any
mandatory sinking fund payment with respect to the Securities of the same
series required to be made pursuant to the terms of such Securities as provided
for by the terms of such series; provided, however, that such Securities have
not been previously so credited. Such Securities shall be received and credited
for such purpose by the Trustee at the Redemption Price specified in such
Securities for redemption through operation of the sinking fund and the amount
of such mandatory sinking fund payment shall be reduced accordingly.

         SECTION 1203. Redemption of Securities for Sinking Fund .

         Not less than 60 days prior to each sinking fund payment date for any
series of Securities, the Company will deliver to the Trustee an Officers'
Certificate specifying the amount of the next ensuing sinking fund payment for
that series pursuant to the terms of that series, the portion thereof, if any,
which is to be satisfied by payment of cash in the Currency in which the
Securities of such series are payable (except as otherwise specified pursuant
to Section 301 for the Securities of such series and except, if applicable, as
provided in Sections 312(b), 312(d) and 312(e)) and the portion thereof, if
any, which is to be satisfied by delivering or crediting Securities of that
series pursuant to Section 1202 (which Securities will, if not previously
delivered, accompany such certificate) and whether the Company intends to
exercise its right to make a permitted optional sinking fund payment with
respect to such series. Such certificate shall be irrevocable and upon its
delivery the Company shall be obligated to make the cash payment or payments
therein referred to, if any, on or before the next succeeding sinking fund
payment date. In the case of the failure of the Company to deliver such
certificate, the sinking fund payment due on the next succeeding sinking fund
payment date for that series shall be paid entirely in cash and shall be
sufficient to redeem the principal amount of such Securities subject to a
mandatory sinking fund payment without the option to deliver or credit
Securities as provided in Section 1202 and without the right to make any
optional sinking fund payment, if any, with respect to such series.

         Not more than 60 days before each such sinking fund payment date the
Trustee shall select the Securities to be redeemed upon such sinking fund
payment date in the manner specified in Section 1103 and cause notice of the
redemption thereof to be given in the name of and at the expense of the Company
in the manner provided in Section 1104. Such notice having been duly given, the
redemption of such Securities shall be made upon the terms and in the manner
stated in Sections 1106 and 1107.

         Prior to any sinking fund payment date, the Company shall pay to the
Trustee or a

                                      72


Paying Agent (or, if the Company is acting as its own Paying Agent, segregate
and hold in trust as provided in Section 1003) in cash a sum equal to any
interest that will accrue to the date fixed for redemption of Securities or
portions thereof to be redeemed on such sinking fund payment date pursuant to
this Section 1203.

         Notwithstanding the foregoing, with respect to a sinking fund for any
series of Securities, if at any time the amount of cash to be paid into such
sinking fund on the next succeeding sinking fund payment date, together with
any unused balance of any preceding sinking fund payment or payments for such
series, does not exceed in the aggregate $100,000, the Trustee, unless
requested by the Company, shall not give the next succeeding notice of the
redemption of Securities of such series through the operation of the sinking
fund. Any such unused balance of moneys deposited in such sinking fund shall be
added to the sinking fund payment for such series to be made in cash on the
next succeeding sinking fund payment date or, at the request of the Company,
shall be applied at any time or from time to time to the purchase of Securities
of such series, by public or private purchase, in the open market or otherwise,
at a purchase price for such Securities (excluding accrued interest and
brokerage commissions, for which the Trustee or any Paying Agent will be
reimbursed by the Company) not in excess of the principal amount thereof.

                                ARTICLE THIRTEEN

                         REPAYMENT AT OPTION OF HOLDERS

         SECTION 1301. Applicability of Article.

         Repayment of Securities of any series before their Stated Maturity at
the option of Holders thereof shall be made in accordance with the terms of
such Securities and (except as otherwise specified as contemplated by Section
301 for Securities of any series) in accordance with this Article.

         SECTION 1302. Repayment of Securities.

         Securities of any series subject to repayment in whole or in part at
the option of the Holders thereof will, unless otherwise provided in the terms
of such Securities, be repaid at a price equal to the principal amount thereof,
together with interest, if any, thereon accrued to the Repayment Date specified
in or pursuant to the terms of such Securities. The Company covenants that on
or before the Repayment Date it will deposit with the Trustee or with a Paying
Agent (or, if the Company is acting as its own Paying Agent, segregate and hold
in trust as provided in Section 1003) an amount of money in the Currency in
which the Securities of such series are payable (except as otherwise specified
pursuant to Section 301 for the Securities of such series and except, if
applicable, as provided in Sections 312(b), 312(d) and 312(e)) sufficient to
pay the principal (or, if so provided by the terms of the Securities of any
series, a percentage of the principal) of, and (except if the Repayment Date
shall be an Interest Payment Date) accrued interest on, all the Securities or
portions thereof, as the case may be, to be repaid on such date.

                                      73


         SECTION 1303. Exercise of Option.

         Securities of any series subject to repayment at the option of the
Holders thereof will contain an "Option to Elect Repayment" form on the reverse
of such Securities. To be repaid at the option of the Holder, any Security so
providing for such repayment, with the "Option to Elect Repayment" form on the
reverse of such Security duly completed by the Holder (or by the Holder's
attorney duly authorized in writing), must be received by the Company at the
Place of Payment therefor specified in the terms of such Security (or at such
other place or places or which the Company shall from time notify the Holders
of such Securities) not earlier than 45 days nor later than 30 days prior to
the Repayment Date. If less than the entire principal amount of such Security
is to be repaid in accordance with the terms of such Security, the principal
amount of such Security to be repaid, in increments of the minimum denomination
for Securities of such series, and the denomination or denominations of the
Security or Securities to be issued to the Holder for the portion of the
principal amount of such Security surrendered that is not to be repaid, must be
specified. The principal amount of any Security providing for repayment at the
option of the Holder thereof may not be repaid in part if, following such
repayment, the unpaid principal amount of such Security would be less than the
minimum authorized denomination of Securities of the series of which such
Security to be repaid is a part. Except as otherwise may be provided by the
terms of any Security providing for repayment at the option of the Holder
thereof, exercise of the repayment option by the Holder shall be irrevocable
unless waived by the Company.

         SECTION 1304. When Securities Presented for Repayment Become Due and
Payable.

         If Securities of any series providing for repayment at the option of
the Holders thereof shall have been surrendered as provided in this Article and
as provided by or pursuant to the terms of such Securities, such Securities or
the portions thereof, as the case may be, to be repaid shall become due and
payable and shall be paid by the Company on the Repayment Date therein
specified, and on and after such Repayment Date (unless the Company shall
default in the payment of such Securities on such Repayment Date) such
Securities shall, if the same were interest-bearing, cease to bear interest and
the coupons for such interest appertaining to any Bearer Securities so to be
repaid, except to the extent provided below, shall be void. Upon surrender of
any such Security for repayment in accordance with such provisions, together
with all coupons, if any, appertaining thereto maturing after the Repayment
Date, the principal amount of such Security so to be repaid shall be paid by
the Company, together with accrued interest, if any, to the Repayment Date;
provided, however, that coupons whose Stated Maturity is on or prior to the
Repayment Date shall be payable only at an office or agency located outside the
United States (except as otherwise provided in Section 1002) and, unless
otherwise specified pursuant to Section 301, only upon presentation and
surrender of such coupons, and provided further that, in the case of Registered
Securities, installments of interest, if any, whose Stated Maturity is on or
prior to the Repayment Date shall be payable to the Holders of such Securities,
or one or more Predecessor Securities, registered as such at the close of
business on the relevant Record Dates according to their terms and the
provisions of Section 307.

         If any Bearer Security surrendered for repayment shall not be
accompanied by all appurtenant coupons maturing after the Repayment Date, such
Security may be paid after deducting from the amount payable therefor as
provided in Section 1302 an amount equal to the face amount of

                                      74


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

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

         SECTION 1305. Securities Repaid in Part.

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

                                ARTICLE FOURTEEN

                       DEFEASANCE AND COVENANT DEFEASANCE

         SECTION 1401. Company's Option to Effect Defeasance or Covenant
Defeasance.

         Except as otherwise specified as contemplated by Section 301 for
Securities of any series, the provisions of this Article Fourteen shall apply
to each series of Securities, and the Company may, at its option, effect
defeasance of the Securities of or within a series under Section 1402, or
covenant defeasance of or within a series under Section 1403 in accordance with
the terms of such Securities and in accordance with this Article.

                                      75


         SECTION 1402. Defeasance and Discharge.

         Upon the Company's exercise of the above option applicable to this
Section with respect to any Securities of or within a series, the Company shall
be deemed to have been discharged from its obligations with respect to such
Outstanding Securities and any related coupons on the date the conditions set
forth in Section 1404 are satisfied (hereinafter, "defeasance"). For this
purpose, such defeasance means that the Company shall be deemed to have paid
and discharged the entire indebtedness represented by such Outstanding
Securities and any related coupons, which shall thereafter be deemed to be
"Outstanding" only for the purposes of Section 1405 and the other Sections of
this Indenture referred to in (A) and (B) below, and to have satisfied all its
other obligations under such Securities and any related coupons and this
Indenture insofar as such Securities and any related coupons are concerned (and
the Trustee, at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following which shall survive until
otherwise terminated or discharged hereunder: (A) the rights of Holders of such
Outstanding Securities and any related coupons (i) to receive, solely from the
trust fund described in Section 1404 and as more fully set forth in such
Section, payments in respect of the principal of (and premium, if any, on) and
interest on such Securities and any related coupons when such payments are due,
and (ii) to receive shares of common stock or other Securities from the Company
upon the conversion of any convertible securities issued hereunder, (B) the
Company's obligations with respect to such Securities under Sections 304, 305,
306, 1002 and 1003 and with respect to the payment of Additional Amounts, if
any, on such Securities as contemplated by Section 1005, (C) the rights,
powers, trusts, duties and immunities of the Trustee hereunder and (D) this
Article Fourteen. Subject to compliance with this Article Fourteen, the Company
may exercise its option under this Section 1402 notwithstanding the prior
exercise of its option under Section 1403 with respect to such Securities and
any related coupons. As provided in Section 1614, money and securities held in
trust pursuant to this Section 1402 shall not be subject to Article Sixteen.

         SECTION 1403. Covenant Defeasance.

         Upon the Company's exercise of the above option applicable to this
Section with respect to any Securities of or within a series, the Company shall
be released from its obligations under Section 803 and Sections 1006 through
1008, and, if specified pursuant to Section 301, its obligations under any
other covenant, with respect to such Outstanding Securities and any related
coupons on and after the date the conditions set forth in Section 1404 are
satisfied (hereinafter, "covenant defeasance"), and such Securities and any
related coupons shall thereafter be deemed not to be "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. For
this purpose, such covenant defeasance means that, with respect to such
Outstanding Securities and any related coupons, the Company may omit to comply
with and shall have no liability in respect of any term, condition or
limitation set forth in any such covenant, whether directly or indirectly, by
reason of any reference elsewhere herein to any such covenant or by reason of
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 Section 501(4) or Section 501(8) or otherwise, as the case may
be, but, except as specified above, the remainder of this Indenture and such
Securities and any related coupons shall be unaffected thereby.

                                      76


         SECTION 1404. Conditions to Defeasance or Covenant Defeasance.

         The following shall be the conditions to application of either Section
1402 or Section 1403 to any Outstanding Securities of or within a series and
any related coupons:

         (1) The Company shall irrevocably have deposited or caused to be
    deposited with the Trustee (or another trustee satisfying the requirements
    of Section 607 who shall agree to comply with the provisions of this
    Article Fourteen applicable to it) in trust for the purpose of making the
    following payments, specifically pledged as security for, and dedicated
    solely to, the benefit of the Holders of such Securities and any related
    coupons, (A) money in an amount (in such Currency in which such Securities
    and any related coupons are then specified as payable at Stated Maturity),
    or (B) Government Obligations applicable to such Securities (determined on
    the basis of the Currency in which such Securities are then specified as
    payable at Stated Maturity) which through the scheduled payment of
    principal and interest in respect thereof in accordance with their terms
    will provide, not later than one day before the due date of any payment of
    principal (including any premium) and interest, if any, under such
    Securities and any related coupons, money in an amount, or (C) a
    combination thereof, 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 Trustee (or other qualifying trustee) to pay and discharge,
    (i) the principal of (and premium, if any, on) and interest on such
    Outstanding Securities and any related coupons on the Stated Maturity (or
    Redemption Date, if applicable) of such principal (and premium, if any) or
    installment or interest and (ii) any mandatory sinking fund payments or
    analogous payments applicable to such Outstanding Securities and any
    related coupons on the day on which such payments are due and payable in
    accordance with the terms of this Indenture and of such Securities and any
    related coupons; provided that the Trustee shall have been irrevocably
    instructed to apply such money or the proceeds of such Government
    Obligations to said payments with respect to such Securities and any
    related coupons. Before such a deposit, the Company may give to the
    Trustee, in accordance with Section 1102 hereof, a notice of its election
    to redeem all or any portion of such Outstanding Securities at a future
    date in accordance with the terms of the Securities of such series and
    Article Eleven hereof, which notice shall be irrevocable. Such irrevocable
    redemption notice, if given, shall be given effect in applying the
    foregoing.

         (2) No Default or Event of Default with respect to such Securities or
    any related coupons shall have occurred and be continuing on the date of
    such deposit or, insofar as paragraphs (5) and (6) of Section 501 are
    concerned, at any time during 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).

         (3) Such defeasance or covenant defeasance shall not result in a
    breach or violation of, or constitute a default under, this Indenture or
    any other material agreement or instrument to which the Company is a party
    or by which it is bound.

         (4) In the case of an election under Section 1402, the Company shall
    have delivered to the Trustee an Opinion of Counsel stating that (x) the
    Company has received from, or there

                                      77


    has been published by, the Internal Revenue Service a ruling, or (y) since
    the date of execution of this Indenture, there has been a change in the
    applicable federal income tax law, in either case to the effect that, and
    based thereon such opinion shall confirm that, the Holders of such
    Outstanding Securities and any related coupons will not recognize income,
    gain or loss for federal income tax purposes as a result of such defeasance
    and will be subject to federal income tax on the same amounts, in the same
    manner and at the same times as would have been the case if such defeasance
    had not occurred.

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

         (6) Notwithstanding any other provisions of this Section, such
    defeasance or covenant defeasance shall be effected in compliance with any
    additional or substitute terms, conditions or limitations in connection
    therewith pursuant to Section 301.

         (7) The Company shall have delivered to the Trustee an Officers'
    Certificate and an Opinion of Counsel, each stating that all conditions
    precedent provided for relating to either the defeasance under Section 1402
    or the covenant defeasance under Section 1403 (as the case may be) have
    been complied with.

         SECTION 1405. Deposited Money and Government Obligations to Be Held in
Trust; Other Miscellaneous Provisions.

         Subject to the provisions of the last paragraph of Section 1003, all
money and Government Obligations (or other property as may be provided pursuant
to Section 301) (including the proceeds thereof) deposited with the Trustee (or
other qualifying trustee--collectively for purposes of this Section 1405, the
"Trustee") pursuant to Section 1404 in respect of such Outstanding Securities
and any related coupons shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Securities and any related coupons and
this Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Holders of such Securities and any related coupons of all
sums due and to become due thereon in respect of principal (and premium, if
any) and interest, but such money need not be segregated from other funds
except to the extent required by law.

         Unless otherwise specified with respect to any Security pursuant to
Section 301, if, after a deposit referred to in Section 1404(1) has been made,
(a) the Holder of a Security in respect of which such deposit was made is
entitled to, and does, elect pursuant to Section 312(b) or the terms of such
Security to receive payment in a Currency other than that in which the deposit
pursuant to Section 1404(1) has been made in respect of such Security, or (b) a
Conversion Event occurs as contemplated in Section 312(d) or 312(e) or by the
terms of any Security in respect of which the deposit pursuant to Section
1404(1) has been made, the indebtedness represented by such Security and any
related coupons shall be deemed to have been, and will be, fully discharged and
satisfied

                                      78


through the payment of the principal of (premium, if any, on), and interest, if
any, on such Security as they become due out of the proceeds yielded by
converting (from time to time as specified below in the case of any such
election) the amount or other property deposited in respect of such Security
into the Currency in which such Security becomes payable as a result of such
election or Conversion Event based on the applicable Market Exchange Rate for
such Currency in effect on the third Business Day prior to each payment date,
except, with respect to a Conversion Event, for such Currency in effect (as
nearly as feasible) at the time of the Conversion Event.

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

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

         SECTION 1406. Reinstatement.

         If the Trustee or any Paying Agent is unable to apply any money in
accordance with Section 1405 by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and such
Securities and any related coupons shall be revived and reinstated as though no
deposit had occurred pursuant to Section 1402 or 1403, as the case may be,
until such time as the Trustee or Paying Agent is permitted to apply all such
money in accordance with Section 1405; provided, however, that if the Company
makes any payment of principal of (or premium, if any, on) or interest on any
such Security or any related coupon following the reinstatement of its
obligations, the Company shall be subrogated to the rights of the Holders of
such Securities and any related coupons to receive such payment from the money
held by the Trustee or Paying Agent.

                                ARTICLE FIFTEEN

                       MEETINGS OF HOLDERS OF SECURITIES

         SECTION 1501. Purposes for Which Meetings May Be Called .

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

                                      79


         SECTION 1502. Call, Notice and Place of Meetings.

         (a) The Trustee may at any time call a meeting of Holders of
Securities of any series for any purpose specified in Section 1501, to be held
at such time and at such place in The City of New York or in London as the
Trustee shall determine. Notice of every meeting of Holders of Securities of
any series, setting forth the time and the place of such meeting and in general
terms the action proposed to be taken at such meeting, shall be given, in the
manner provided for in Section 106, not less than 21 nor more than 180 days
prior to the date fixed for the meeting.

         (b) In case at any time the Company, pursuant to a Board Resolution,
or the Holders of at least 10% in principal amount of the Outstanding
Securities of any series shall have requested the Trustee to call a meeting of
the Holders of Securities of such series for any purpose specified in Section
1501, by written request setting forth in reasonable detail the action proposed
to be taken at the meeting, and the Trustee shall not have made the first
publication of the notice of such meeting within 21 days after receipt of such
request or shall not thereafter proceed to cause the meeting to be held as
provided herein, then the Company or the Holders of Securities of such series
in the amount above specified, as the case may be, may determine the time and
the place in The City of New York or in London for such meeting and may call
such meeting for such purposes by giving notice thereof as provided in
paragraph (a) of this Section.

         SECTION 1503. Persons Entitled to Vote at Meetings.

         To be entitled to vote at any meeting of Holders of Securities of any
series, a Person shall be (1) a Holder of one or more Outstanding Securities of
such series, or (2) a Person appointed by an instrument in writing as proxy for
a Holder or Holders of one or more Outstanding Securities of such series by
such Holder or Holders. The only Persons who shall be entitled to be present or
to speak at any meeting of Holders of Securities of any series shall be the
Person entitled to vote at such meeting and their counsel, any representatives
of the Trustee and its counsel and any representatives of the Company and its
counsel.

                                      80


         SECTION 1504. Quorum; Action.

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

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

         Except as limited by the proviso to Section 902, any resolution
presented to a meeting or adjourned meeting duly reconvened at which a quorum
is present as aforesaid may be adopted by the affirmative vote of the Holders
of not less than a majority in principal amount of the Outstanding Securities
of that series; provided, however, that, except as limited by the proviso to
Section 902, any resolution with respect to any request, demand, authorization,
direction, notice, consent, waiver or other action which this Indenture
expressly provides may be made, given or taken by the Holders of a specified
percentage, which is less than a majority, in principal amount of the
Outstanding Securities of a series may be adopted at a meeting or an adjourned
meeting duly reconvened and at which a quorum is present as aforesaid by the
affirmative vote of the Holders of not less than such specified percentage in
principal amount of the Outstanding Securities of that series.

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

         Notwithstanding the foregoing provisions of this Section 1504, if any
action is to be taken at a meeting of Holders of Securities of any series with
respect to any request, demand, authorization, direction, notice, consent,
waiver or other action that this Indenture expressly provides may be made,
given or taken by the Holders of a specified percentage in principal amount of
all Outstanding Securities affected thereby, or of the Holders of such series
and one or more additional series:

                                      81


         (i) there shall be no minimum quorum requirement for such meeting; and

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

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

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

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

         (c) At any meeting each Holder of a Security of such series or proxy
shall be entitled to one vote for each $1,000 principal amount of Outstanding
Securities of such series held or represented by him (determined as specified
in the definition of "Outstanding" in Section 101); provided, however, that no
vote shall be cast or counted at any meeting in respect of any Security
challenged as not Outstanding and ruled by the chairman of the meeting to be
not Outstanding. The chairman of the meeting shall have no right to vote,
except as a Holder of a Security of such series or proxy.

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

                                      82


         SECTION 1506. Counting Votes and Recording Action of Meetings.

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

                                ARTICLE SIXTEEN

                          SUBORDINATION OF SECURITIES

         SECTION 1601. Securities Subordinate to Senior Indebtedness. Except as
otherwise specified pursuant to Section 301 for Securities of any series, the
Company covenants and agrees, and each Holder of a Security, by such Holder's
acceptance thereof, likewise covenants and agrees, for the benefit of the
holders, from time to time, of Senior Indebtedness of the Company,
respectively, that, to the extent and in the manner hereinafter set forth in
this Article, the indebtedness represented by the Securities and the payment of
the principal of (and premium, if any, on) and interest, if any, on each and
all of the Securities are hereby expressly made subordinate and subject in
right of payment as provided in this Article to the prior payment in full of
all Senior Indebtedness of the Company.

         SECTION 1602. Payment over of Proceeds upon Dissolution, etc. In the
event of (a) any insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, reorganization or other similar case or proceeding
in connection therewith, relative to the Company or to its creditors, as such,
or to its assets, or (b) any liquidation, dissolution or other winding up of
the Company as the case may be, whether voluntary or involuntary and whether or
not involving insolvency or bankruptcy, or (c) any assignment for the benefit
of creditors or any other marshalling of assets and liabilities of the Company
then and in any such event

         (1) the holders of all Senior Indebtedness shall first be entitled to
    receive payment in full (or provision is made for payment in money or
    money's worth) of the principal thereof (and premium, if any, thereon) and
    interest thereon (including, without limitation, all interest accruing
    after the commencement of any bankruptcy, insolvency, receivership or
    similar proceeding), before the Holders of the indebtedness evidenced by
    the Securities are entitled to

                                      83


    receive any payment or distribution of any kind or character on account of
    principal (or premium, if any, on) or interest, if any, on such
    indebtedness; and

         (2) any payment or distribution of assets of the Company of any kind
    or character, whether in cash, property or securities to which the Holders
    or the Trustee would be entitled but for the provisions of this Article
    shall be paid by the Company by the liquidating trustee or agent or other
    person making such payment or distribution, whether a trustee in
    bankruptcy, a receiver or liquidating trustee or otherwise, directly to the
    representative or representatives of the holders of Senior Indebtedness, or
    to the trustee or trustees under any indenture under which any instrument
    evidencing any of such Senior Indebtedness may have been issued, ratably
    according to the aggregate amounts remaining unpaid on account of the
    Senior Indebtedness held or represented by each, to the extent necessary to
    make payment in full of all Senior Indebtedness remaining unpaid, after
    giving effect to any concurrent payment or distribution to the holders of
    such Senior Indebtedness; and

         (3) in the event that, notwithstanding the foregoing provisions of
    this Section, the Trustee or the Holder of any Security shall have received
    any payment or distribution of assets of the Company of any kind or
    character, whether in cash, property or securities, before all Senior
    Indebtedness of the Company as the case may be, is paid in full (or
    provision therefor is made in money or money's worth), and such fact shall 
    at or prior to the time of such payment or distribution have been made 
    known to the Trustee or such Holder, as the case may be then such payment or
    distribution shall be paid over to the representative or representatives of
    the holders of such Senior Indebtedness, or to the trustee or trustees
    under any indenture under which any instrument evidencing any of such
    Senior Indebtedness may have been issued, ratably as aforesaid, for
    application to the payment of all Senior Indebtedness remaining unpaid, to
    the extent necessary to pay all Senior Indebtedness in full (or to provide
    for payment thereof in money or money's worth), after giving effect to any
    concurrent payment or distribution to or for the holders of such Senior
    Indebtedness.

         The consolidation of the Company with, or the merger of the Company
into, another Person or the liquidation or dissolution of the Company following
the conveyance or transfer of its properties and assets substantially as an
entirety to another Person upon the terms and conditions set forth in Article
Eight shall not be deemed a dissolution, winding up, liquidation,
reorganization, assignment for the benefit of creditors or marshalling of
assets and liabilities of the Company for the purposes of this Section if the
Person formed by such consolidation or into which the Company as the case may
be, is merged or the Person which acquires by conveyance or transfer such
properties and assets substantially as an entirety, as the case may be, shall,
as a part of such consolidation, merger, conveyance or transfer, comply with
the conditions set forth in Article Eight.

         SECTION 1603. No Payment When Senior Indebtedness in Default. (a) No
payments on account of the principal of (or premium, if any, on) or interest,
if any, on the Securities shall be made by the Company if, at the time of such
payment or immediately after giving effect thereto, there shall exist with
respect to any Senior Indebtedness of the Company or any agreement pursuant to
which any Senior Indebtedness is issued, any default in the payment of
principal, premium (if any) or interest in respect of such Senior Indebtedness
beyond any applicable grace period with respect thereto.

         (b) In the event that, notwithstanding the foregoing, the Company
shall make any payment to the Trustee or the Holder of any Security prohibited
by the foregoing provision of this

                                      84


Section, and such fact shall at or prior to the time of such payment or 
distribution have been made known to the Trustee or such Holder, as the case
may be then and in such event such payment shall be paid over and delivered
forthwith to the Company.

         SECTION 1604. Payment Permitted if No Default. Nothing contained in
this Article or elsewhere in this Indenture or in any of the Securities shall
prevent the Company at any time except during the pendency of any case,
proceeding, liquidation, dissolution or other winding up, assignment for the
benefit of creditors or other marshalling of assets and liabilities of the
Company referred to in Section 1602 or under the conditions described in
Section 1603, from making payments at any time of principal of (or premium, if
any, on) or interest, if any, on the Securities.

         SECTION 1605. Subrogation to Rights of Holders of Senior Indebtedness.
Subject to the payment in full of all Senior Indebtedness (or the making of
provision therefor in money or money's worth), the Holders of the Securities
shall be subrogated to the rights of the holders of such Senior Indebtedness to
receive payments and distributions of cash, property and securities applicable
to the Senior Indebtedness until the principal of (and premium, if any, on) and
interest, if any, on the Securities shall be paid in full. For purposes of such
subrogation, no payments or distributions to the holders of Senior Indebtedness
of any cash, property or securities to which the Holders of the Securities or
the Trustee would be entitled except for the provisions of this Article, and no
payments over pursuant to the provisions of this Article to the holders of
Senior Indebtedness by Holders of the Securities or the Trustee, shall, as
among the Company, its creditors other than holders of Senior Indebtedness, and
the Holders of the Securities, be deemed to be a payment or distribution by the
Company to or on account of the Senior Indebtedness.

         SECTION 1606. Provisions Solely to Define Relative Rights. The
provisions of this Article are and are intended solely for the purpose of
defining the relative rights of the Holders of the Securities on the one hand
and the holders of Senior Indebtedness on the other hand. Nothing contained in
this Article or elsewhere in this Indenture or in the Securities is intended to
or shall (a) impair, as among the Company, its creditors other than holders of
Senior Indebtedness and the Holders of the Securities, the obligation of the
Company which is absolute and unconditional, to pay to the Holders of the
Securities the principal of (and premium, if any, on) and interest, if any, on
the Securities as and when the same shall become due and payable in accordance
with their terms; or (b) affect the relative rights against the Company of the
Holders of the Securities and creditors of the Company other than the holders
of Senior Indebtedness; or (c) prevent the Trustee or the Holder of any
Security from exercising all remedies otherwise permitted by applicable law
upon default under this Indenture, subject to the rights, if any, under this
Article of the holders of Senior Indebtedness.

         SECTION 1607. Trustee to Effectuate Subordination. Each Holder of a
Security by such Holder's acceptance thereof authorizes and directs the Trustee
on such Holder's behalf to take such action as may be necessary or appropriate
to effectuate the subordination provided in this Article and appoints the
Trustee such Holder's attorney-in-fact for any and all such purposes.

         SECTION 1608. No Waiver of Subordination Provisions. (a) No right of
any present or future holder of any Senior Indebtedness to enforce
subordination as herein provided (as the subordination provisions of this
Article Sixteen may be amended or supplemented from time to time in accordance
with the provisions of this Indenture) shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
non-compliance by the Company with the terms,

                                      85


provisions and covenants of this Indenture, regardless of any knowledge thereof
any such holder may have or be otherwise charged with.

         (b) Without in any way limiting the generality of paragraph (a) of
this Section, the holders of Senior Indebtedness may, at any time and from time
to time, without the consent of or notice to the Trustee or the Holders of the
Securities, without incurring responsibility to the Holders of the Securities
and without impairing or releasing the subordination provided in this Article
or the obligations hereunder of the Holders of the Securities to the holders of
Senior Indebtedness, do any one or more of the following: (1) change the
manner, place or terms of payment or extend the time of payment of, or renew or
alter, Senior Indebtedness or any instrument evidencing the same or any
agreement under which Senior Indebtedness is outstanding; (2) sell, exchange,
release or otherwise deal with any property pledged, mortgaged or otherwise
securing Senior Indebtedness; (3) release any Person liable in any manner for
the collection of Senior Indebtedness; and (4) exercise or refrain from
exercising any rights against the Company and any other Person.

         SECTION 1609. Notice to Trustee. (a) The Company shall give prompt
written notice to the Trustee of any fact known to it which would prohibit the
making of any payment to or by the Trustee in respect of the Securities.
Notwithstanding the provisions of this Article or any other provision of this
Indenture, the Trustee shall not be charged with knowledge of the existence of
any fact that would prohibit the making of any payment to or by the Trustee in
respect of the Securities, unless and until the Trustee shall have received
written notice thereof from the Company or a holder of Senior Indebtedness or
from any trustee, fiduciary or agent therefor; and, prior to the receipt of any
such written notice, the Trustee, subject to TIA Sections 315(a) through
315(d), shall be entitled in all respects to assume that no such facts exist;
provided, however, that, if the Trustee shall not have received the notice
provided for in this Section at least five Business Days prior to the date upon
which by the terms hereof any money may become payable for any purpose
(including, without limitation, the payment of the principal of (or premium, if
any, on) or interest, if any, on any Security), then, anything herein contained
to the contrary notwithstanding, the Trustee shall have full power and
authority to receive such money and to apply the same to the purpose for which
such money was received and shall not be affected by any notice to the contrary
which may be received by it within five Business Days prior to such date.

         (b) Subject to TIA Sections 315(a) through 315(d), the Trustee shall
be entitled to rely on the delivery to it of a written notice by a Person
representing himself to be a holder of Senior Indebtedness (or such holder's
representative or a trustee therefor) to establish that such notice has been
given by a holder of Senior Indebtedness (or such holder's representative or a
trustee therefor). In the event that the Trustee determines in good faith that
further evidence is required with respect to the right of any Person as a
holder of Senior Indebtedness to participate in any payment or distribution
pursuant to this Article, the Trustee may request such Person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of
Senior Indebtedness held by such Person, the extent to which such Person is
entitled to participate in such payment or distribution and any other facts
pertinent to the rights of such Person under this Article and, if such evidence
is not furnished, the Trustee may defer any payment to such Person pending
judicial determination as to the right of such Person to receive such payment.

         SECTION 1610. Reliance on Judicial Order or Certificate of Liquidating
Agent. Upon any payment or distribution of assets of the Company referred to in
this Article, the Trustee,

                                      86


subject to TIA Sections 315(a) through 315(d), and the Holders of the
Securities shall be entitled to rely upon any order or decree entered by any
court of competent jurisdiction in which such insolvency, bankruptcy,
receivership, liquidation, reorganization, dissolution, winding up or similar
case or proceeding is pending, or a certificate of the trustee in bankruptcy,
receiver, liquidating trustee, custodian, assignee for the benefit of
creditors, agent or other Person making such payment or distribution, delivered
to the Trustee or to the Holders of Securities, for the purpose of ascertaining
the Persons entitled to participate in such payment or distribution, the
holders of Senior Indebtedness and other indebtedness of the Company, the
amount thereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this Article.

         SECTION 1611. Rights of Trustee As a Holder of Senior Indebtedness;
Preservation of Trustee's Rights. The Trustee in its individual capacity shall
be entitled to all the rights set forth in this Article with respect to any
senior Indebtedness which may at any time be held by it, to the same extent as
any other holder of Senior Indebtedness, and nothing in this Indenture shall
deprive the Trustee of any of its rights as such holder. Notwithstanding
anything to the contrary in this Indenture, nothing in this Article shall apply
to claims of, or payments to, the Trustee under or pursuant to Section 606.

         SECTION 1612. Article Applicable to Paying Agents. In case at any time
any Paying Agent other than the Trustee shall have been appointed by the
Company and be then acting hereunder, the term "Trustee" as used in this
Article shall in such case (unless the context otherwise requires) be construed
as extending to and including such Paying Agent within its meaning as fully for
all intents and purposes as if such Paying Agent were named in this Article in
addition to or in place of the Trustee; provided, however, that Section 1611
shall not apply to the Company, the Guarantor or any of their respective
Affiliates if it or such Affiliate acts as Paying Agent.

         SECTION 1613. No Suspension of Remedies. Nothing contained in this
Article shall limit the right of the Trustee or the Holders of Securities to
take any action to accelerate the maturity of the Securities pursuant to
Article Five or to pursue any rights or remedies hereunder or under applicable
law.

         SECTION 1614. Trust Moneys Not Subordinated. Notwithstanding anything
contained herein to the contrary, payments from cash or the proceeds of U.S.
Government Obligations held in trust under Article Fourteen hereof by the
Trustee (or other qualifying trustee) and which were deposited in accordance
with the terms of this Article and not in violation of Section 1603 hereof for
the payment of principal of (and premium, if any, on) and interest, if any, on
the Securities shall not be subordinated to the prior payment of any Senior
Indebtedness or subject to the restrictions set forth in this Article Thirteen,
and none of the Holders shall be obligated to pay over any such amount to the
Company or any holder of Senior Indebtedness or any other creditor of the
Company.

         SECTION 1615. Trustee Not Fiduciary for Holders of Senior 
Indebtedness. The Trustee shall not be deemed to owe any fiduciary duty to 
the holders of Senior Indebtedness.

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

IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly
executed, and

                                      87


their respective corporate seals to be hereunto affixed and attested, all as of
the day and year first above written.

                                       CENDANT CORPORATION

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

[Seal]

Attest:
                                       THE BANK OF NOVA SCOTIA TRUST COMPANY
                                       OF NEW YORK,
                                         Trustee

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

[Seal]

Attest:


                                      88


                                   EXHIBIT A

                             FORMS OF CERTIFICATION

                                  EXHIBIT A-1

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

                                  CERTIFICATE

                    [Insert title or sufficient description
                         of Securities to be delivered]


         This is to certify that as of the date hereof, and except as set forth
below, the above-captioned Securities held by you for our account (i) are owned
by person(s) that are not citizens or residents of the United States, domestic
partnerships, domestic corporations or any estate or trust the income of which
is subject to United States federal income taxation regardless of its source
("United States persons(s)"), (ii) are owned by United States person(s) that
are (a) foreign branches of United States financial institutions (financial
institutions, as defined in United States Treasury Regulations Section
2.165-12(c)(1)(v) are herein referred to as "financial institutions")
purchasing for their own account or for resale, or (b) United States person(s)
who acquired the Securities through foreign branches of United States financial
institutions and who hold the Securities through such United States financial
institutions on the date hereof (and in either case (a) or (b), each such
United States financial institution hereby agrees, on its own behalf or through
its agent, that you may advise [Name of Issuer] or its agent that such
financial institution will comply with the requirements of Section
165(j)(3)(A), (B) or (C) of the United States Internal Revenue Code of 1986, as
amended, and the regulations thereunder), or (iii) are owned by United States
or foreign financial institution(s) for purposes of resale during the
restricted period (as defined in United States Treasury Regulations Section
1.163-5(c)(2)(i)(D)(7)), and, in addition, if the owner is a United States or
foreign financial institution described in clause (iii) above (whether or not
also described in clause (i) or (ii)), this is to further certify that such
financial institution has not acquired the Securities for purposes of resale
directly or indirectly to a United States person or to a person within the
United States or its possessions.

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

         We undertake to advise you promptly by tested telex on or prior to the
date on which you intend to submit your certification relating to the
above-captioned Securities held by you for our account in accordance with your
Operating Procedures if any applicable statement herein is not correct on such
date, and in the absence of any such notification it may be assumed that this
certification applies as of such date.

                                      89


         This certificate excepts and does not relate to [U.S.$] ____________
of such interest in the above-captioned Securities in respect of which we are
not able to certify and as to which we understand an exchange for an interest
in a Permanent Global Security or an exchange for and delivery of definitive
Securities (or, if relevant, collection of any interest) cannot be made until
we do so certify.

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

Dated:

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



                                         [Name of Person Making Certification]


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

                                         (Authorized Signatory)
                                         ----------------------
                                         Name:
                                         Title:

                                      90


                                  EXHIBIT A-2

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

                                  CERTIFICATE

                    [Insert title or sufficient description
                         of Securities to be delivered]


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

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

         We further certify that (i) we are not making available herewith for
exchange (or, if relevant, collection of any interest) any portion of the
temporary global Security representing the above-captioned Securities excepted
in the above-referenced certificates of Member Organizations and (ii) as of the
date hereof we have not received any notification from any of our Member
Organizations to the effect that the statements made by such Member
Organizations with respect to any portion of the part submitted herewith for
exchange (or, if relevant, collection of any interest)

                                      91


are no longer true and cannot be relied upon as of the date hereof.

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

Dated:

[To be dated no earlier than
the Exchange Date or the
relevant Interest Payment Date
occurring prior to the Exchange
Date, as applicable]

                                       [MORGAN GUARANTY TRUST COMPANY OF NEW
                                       YORK, BRUSSELS OFFICE, as Operator of the
                                       Euroclear System] [CEDEL S.A.]


                                       By
                                         ----------------------------

                                      92



                                                           January 29, 1998


The Board of Directors
Cendant Corporation
6 Sylvan Way
Parsippany, New Jersey 07054
          
     Re:  Registration Statement on Form S-3

Ladies and Gentlemen:

     I am Vice President - Legal of Cendant Corporation, a Delaware corporation
(the "Company"), and have acted in such capacity in connection with the
registration under the Securities Act of 1933, as amended (the "Securities
Act"), on Form S-3 of (i) debt securities (the "Debt Securities") of the
Company; (ii) shares of preferred stock (the "Preferred Stock") of the Company
and (iii) shares (the "Common Shares", together with the Debt Securities and
the Preferred Stock, the "Securities") of the Company's Common Stock, par value
$0.01 per share (the "Common Stock"), to be offered and sold by the Company
from time to time, pursuant to Rule 415 of the General Rules and Regulations
promulgated under the Securities Act (the "Rules and Regulations"), with
aggregate gross proceeds of up to $3,000,000,000 or the equivalent thereof in
one or more foreign currencies or composite currencies.

     This opinion is being furnished in accordance with the requirements of
Item 601(b)(5) of Regulation S-K of the Rules and Regulations.

     In connection with this opinion, we have examined and are familiar with
originals or copies, certified or otherwise identified to our satisfaction, of
(i) the Registration Statement on Form S-3 relating to the Securities as filed
with the Securities and Exchange Commission (the "Commission") on the date
hereof (together with all exhibits thereto, the "Registration Statement"); (ii)
the forms of Senior Indenture and Subordinated Indenture relating to the Debt
Securities to be entered into by and between the Company and The Bank of Nova
Scotia Trust Company of New York (the "Trustee"), as Trustee (each, an
"Indenture"); (iii) the Amended and Restated Certificate of Incorporation of
the Company, as currently in effect (the "Certificate of Incorporation"); (iv)
the By-Laws of the Company, as currently in effect (the "By-Laws"); (v) the
form of underwriting agreement relating to the Debt Securities to be entered
into by and between the Company and the underwriters to be named therein (the
"Debt Underwriting Agreement"); (vi) the form of underwriting agreement
relating to the Common Stock to be entered into by and between the Company and
the underwriters to be named therein (the "Common Stock Underwriting
Agreement"); (vii) the form of underwriting agreement relating to the Preferred
Stock to be entered into by and between the Company and the Underwriters
named therein (the "Preferred Stock Underwriting Agreement"); (viii) a specimen
of the share certificate used to evidence the Common Stock; and (ix)
resolutions of the Company's Board of Directors relating to (A) the



The Board of Directors
Cendant Corporation
January 29, 1998
Page 2


preparation of the Registration Statement and the registration of the
Securities under the Securities Act and (B) the issuance, offering and sale
from time to time of the Securities. We have also examined originals or copies,
certified or otherwise identified to our satisfaction, of such records of the
Company and such agreements, certificates of public officials, certificates of
officers or other representatives of the Company and others and such other
documents, certificates and records as we have deemed necessary or appropriate
as a basis for the opinions set forth herein.

     In our examination, we have assumed the genuineness of all signatures, the
legal capacity of all natural persons, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified, photostatic, conformed or reproduced
copies and the authenticity of the originals of such latter documents. In
making our examination of documents executed or to be executed by parties other
than the Company, we have assumed that such parties had the power, corporate or
other to enter into and perform all obligations thereunder and have also
assumed the due authorization by all requisite action, corporate or other, and
execution and delivery by such parties of such documents and the validity and
binding effect thereof. As to any facts material to the opinions expressed
herein which were not independently established or verified, we have relied
upon oral or written statements and representations of officers and other
representatives of the Company and others.

     In rendering this opinion, we have also assumed that (i) each Indenture
will be duly authorized, executed and delivered by the Trustee and that any
Debt Security that may be issued will be manually signed by duly authorized
officers of the Trustee; (ii) prior to any offering and sale of Securities, the
Company's Board of Directors (or a special committee thereof authorized to act
on its behalf) will duly authorize the terms of and the prices at which the (A)
Shares are to be issued and sold and (B) the Debt Securities are to be issued
and sold in accordance with the terms of an Indenture (and, if Debt Securities
are convertible into or exchangeable for Common Stock, the issuance of such
Common Stock upon such conversion or exchange and the terms thereof); and (iii)
the denomination of any Debt Security in a currency other than United States
dollars will no contravene the currency exchange control laws of any
jurisdiction.

     I am admitted to the Bar in the States of New York and New Jersey, and do
not express any opinion as to the laws of any other jurisdiction other than (i)
the General Corporation Law of the State of Delaware and (ii) the laws of the
United States of America to the extent referred to specifically herein. The
Securities may be issued from time to time on a delayed or continuous basis,
and this opinion is limited to the laws specified above, including the Rules
and Regulations, as in effect on the date hereof.

     Based upon and subject to the foregoing, we are of the opinion that:



The Board of Directors
Cendant Corporation
January 29, 1998
Page 3


     1. With respect to any offering of any series of Debt Securities (the
"Offered Debt Securities"),when (i) the Registration Statement, as finally
amended (including all necessary post effective amendments), has become
effective; (ii) an appropriate Prospectus Supplement with respect to the
Offered Debt Securities has been prepared, delivered and filed in compliance
with the Securities Act and the applicable Rules and Regulations thereunder;
(iii) if the Offered Debt Securities are to be sold pursuant to (A) a firm
commitment underwritten offering, the Debt Underwriting Agreement with respect
to the Offered Debt Securities has been duly authorized, executed and delivered
by the Company and the other parties thereto or (B) any other purchase
agreement, such agreement with respect to the Offered Debt Securities has been
duly authorized, executed and delivered by the Company and the other parties
thereto; (iv) the terms of the Offered Debt Securities and of their issuance
and sale have been duly established in conformity with the applicable
Indenture, if any, so as not to violate any applicable law, the Certificate of
Incorporation or By-Laws of the Company or result in a default under or breach
of any agreement or instrument binding upon the Company and so as to comply
with any requirement or restriction imposed by any court or governmental body
having jurisdiction over the Company; (v) the applicable Indenture has been
qualified under the Trust Indenture Act of 1939, as amended; and (vi) the
Offered Debt Securities have been duly executed and authenticated in accordance
with the provisions of the applicable Indenture and duly delivered to the
purchasers thereof upon payment of the agreed upon consideration therefor; (1)
the Offered Debt Securities, when issued and sold in accordance with the
applicable Indenture, if any, and the Debt Underwriting Agreement or any other
duly authorized, executed and delivered applicable valid and binding purchase
agreement will be valid and binding obligations of the Company, enforceable
against the Company in accordance with their respective terms, except to the
extent that enforcement thereof may be limited by (A) bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally, (B) general
principles of equity (regardless of whether enforceability is considered in a
proceeding at law or in equity), (C) public policy considerations which may
limit the rights of parties to obtain further remedies, (D) requirements that a
claim with respect to any Offered Debt Securities denominated other than in
United States dollars (or a judgment denominated other than in United States
dollars in respect of such claim) be converted into United States dollars at a
rate of exchange prevailing on a date determined pursuant to applicable law,
and (E) governmental authority to limit, delay or prohibit the making of
payments outside the United States or in foreign currencies, currency units or
composite currencies; and (2) if Common Stock is issuable upon conversion or
exchange of any convertible Offered Debt Securities, the Common Stock issuable
upon conversion or exchange will be validly issued, fully paid and
nonassessable, assuming the execution, authentication, issuance and delivery of
the Offered Debt Securities and conversion or exchange of the Offered Debt
Securities in accordance with the terms of the applicable Indenture, if any,
relating thereto and that the consideration therefor is not less than the par
value thereof.



The Board of Directors
Cendant Corporation
January 29, 1998
Page 4


     We note that, as of the date of this opinion, a judgment for money in an
action based on an Offered Debt Security denominated in a foreign currency,
currency unit or composite currency in a federal or state court in the United
States ordinarily would be enforced in the United States only in United States
dollars. The date used to determine the rate of conversion of the foreign
currency, currency unit or composite currency in which a particular Offered
Debt Security is denominated into United States dollars will depend upon
various factors, including which court renders the judgment.

     2. With respect to any offering of any Common Shares, when (i) the
Registration Statement, as finally amended (including all necessary
post-effective amendments), has become effective; (ii) an appropriate
Prospectus Supplement with respect to the Common Shares has been prepared,
delivered and filed in compliance with the Securities Act and the applicable
Rules and Regulations thereunder; (iii) if the Common Shares are to be sold
pursuant to (A) a firm commitment underwritten offering, the Common Stock
Underwriting Agreement with respect to the Common Shares has been duly
authorized, executed and delivered by the Company and the other parties thereto
or (B) any other purchase agreement, such agreement with respect to the Common
Shares has been duly authorized, executed and delivered by the Company and the
other parties thereto; (iv) the Board of Directors, including any appropriate
committee appointed thereby, and appropriate officers of the Company have taken
all necessary corporate action to approve the issuance and terms of the Common
Shares and related matters; (v) the terms of the Common Shares and of their
issuance and sale have been duly established in conformity with the Certificate
of Incorporation and By-Laws so as not to violate any applicable law, the
Certificate of Incorporation or By-Laws of the Company or result in a default
under or breach of any agreement or instrument binding upon the Company and so
as to comply with any requirement or restriction imposed by any court or
governmental body having jurisdiction over the Company; and (vi) certificates
representing the Common Shares in the form of the specimen certificates
examined by us are duly executed, countersigned, registered and delivered upon
payment of the agreed upon consideration therefor, the Common Shares, when
issued and sold in accordance with the Common Stock Underwriting Agreement or
any other duly authorized, executed and delivered applicable purchase agreement
will be duly authorized, validly issued, fully paid and nonassessable, provided
that the consideration therefor is not less than the par value thereof.



The Board of Directors
Cendant Corporation
January 29, 1998
Page 5


     3. With respect to the shares of any series of Preferred Stock (the
"Offered Preferred Stock"), when (i) the Registration Statement, as finally
amended (including all necessary post-effective amendments), has become
effective under the Securities Act; (ii) an appropriate prospectus supplement
with respect to the shares of the Offered Preferred Stock has been prepared,
delivered and filed in compliance with the Securities Act and the applicable
rules and regulations thereunder; (iii) the Board of Directors, including any
appropriate committee appointed thereby, and appropriate officers of the
Company have taken all necessary corporate action to approve the issuance and
terms of the shares of the Offered Preferred Stock and related matters,
including the adoption of a Certificate of Designation for the Offered
Preferred Stock; (iv) the filing of the Certificate of Designation with the
Secretary of State of the State of Delaware has duly occurred; (v) the terms of
the Offered Preferred Stock and of their issuance and sale have been duly
established by all necessary corporate action in conformity with the Company's
Certificate of Incorporation including the Certificate of Designation relating
to the Offered Preferred Stock and the By-laws of the Company so as not to
violate any applicable law, the Certificate of Incorporation or By-laws of the
Company or result in a default under or breach of any agreement or instrument
binding upon the Company and so as to comply with any requirement or
restriction imposed by any court or governmental body having jurisdicton over
the Company; (vi) if the Offered Preferred Stock is to be sold pursuant to a
firm commitment underwritten offering, the Preferred Stock Underwriting
Agreement with respect to the shares of the Offered Preferred Stock has been



The Board of Directors
Cendant Corporation
January 29, 1998
Page 6


duly authorized, executed and delivered by the Company and the other parties
thereto; and (vii) certificates representing the shares of the Offered
Preferred Stock are duly executed, countersigned, registered and delivered by
the proper officers of the Company to the purchasers thereof against payment of
the agreed-upon consideration therefor in the manner contemplated in the
Registration Statement or any prospectus supplement or term sheet relating
thereto, (1) the shares of the Offered Preferred Stock, when issued and sold in
accordance with the related Preferred Stock Underwriting Agreement or any other
duly authorized, executed and delivered applicable purchase agreement, will be
duly authorized, valid issued, fully paid and nonassessable, provided that the
consideration therefor is not less than the par value thereof; and (2) if the
Offered Preferred Stock is convertible into Common Stock, the indeterminate
number of shares of Common Stock initially issuable upon conversion of the
Offered Preferred Stock when so issued will be duly authorized, validly issued,
fully paid and nonassessable, assuming the execution, authentication, issuance
and delivery of the Offered Preferred Stock and the conversion of the Offered
Preferred Stock in accordance with the terms of the Certificates of Designation
and assuming certificates representing such shares of Common Stock are duly
executed, countersigned, registered and delivered upon such conversion.



The Board of Directors
Cendant Corporation
January 29, 1998
Page 7


     I hereby consent to the use of my name in the Registration Statement under
the caption "Legal Matters" and to the filing of this opinion as an Exhibit to
the Registration Statement. In giving such consent, I do not thereby admit that
I come within the category of persons whose consent is required under Section 7
of the Securities Act or the rules and regulations of the Commission
promulgated thereunder.

                                            Very truly yours,


                                            Eric J. Bock
                                            Vice President - Legal

EJB:mb









CENDANT CORPORATION 
Computation of Ratio of Earnings to Fixed Charges 

FOR THE NINE MONTHS ENDED FOR THE YEAR ENDED SEPTEMBER 30, ---------------------------------------------------------- 1997 1996 1995 1994 1993 1992 --------------- ------------ ---------- ---------- ---------- ---------- Income before income taxes, minority interest, and extraordinary loss............. $ 747,230 $ 713,670 $503,332 $464,332 $365,930 $236,949 Plus: Fixed charges............. 300,697 345,421 295,214 238,610 217,431 239,343 Less: Capitalized interest...... -- (560) -- (246) (440) -- --------------- ------------ ---------- ---------- ---------- ---------- Eearnings available to cover fixed charges.................. $1,047,927 $1,058,531 $798,546 $702,696 $582,921 $ 476,292 =============== ============ ========== ========== ========== ========== Fixed charges (1): Interest including amortization of deferred loan costs......... $ 277,184 $ 317,127 $273,174 $219,815 $198,847 $225,590 Capitalized interest............ -- 560 -- 246 440 -- Interest portion of rental payment........................ 23,513 27,734 22,040 18,549 18,144 13,753 --------------- ------------ ---------- ---------- ---------- ---------- Total fixed charges........ $ 300,697 $ 345,421 $295,214 $238,610 $217,431 $239,343 =============== ============ ========== ========== ========== ========== Ratio of earnings to fixed charges (1).................... 3.48x 3.06x 2.70x 2.94x 2.68x 1.99x =============== ============ ========== ========== ========== ==========
(1) Earnings before fixed charges consist of income before income taxes and extraordinary loss plus fixed charges, less capitalized interest. Fixed charges consist of interest expense on all indebtedness (including amortization of deferred financing costs) and the portion of operating lease rental expense that is representative of the interest factor (deemed to be one-third of operating lease rentals).





CENDANT CORPORATION

EXHIBIT 15.1--LETTER RE: UNAUDITED INTERIM FINANCIAL INFORMATION

January 28, 1998

Shareholders and Board of Directors
Cendant Corporaiton (formerly "CUC International Inc.")

We are aware of the incorporation by reference in the Registration Statement
(Form S-3) and related Prospectus of Cendant Corporation (formerly "CUC
International Inc.") for the registration of up to $3,000,000,000 of debt
securities, preferred stock and/or common stock of our report dated June 13,
1997 relating to the unaudited condensed consolidated interim financial
statements of CUC International Inc. that was included in its Quarterly Report
on Form 10-Q for the quarter ended April 30, 1997.

Pursuant to Rule 436(c) of the Securities Act of 1933 our report is not a 
part of the registration statement prepared or certified by accountants 
within the meaning of Section 7 or 11 of the Securities Act of 1933.




                                                  /s/ ERNST & YOUNG LLP

Stamford, Connecticut







INDEPENDENT AUDITORS' CONSENT


We consent to the incorporation by reference in this Registration Statement of
Cendant Corporation on Form S-3 of our report dated December 17, 1997,
appearing in the Current Report of Form 8-K of Cendant Corporation expected
to be filed on January 29, 1998, and to the reference to us under the 
heading "Experts" in the Prospectus, which is a part of this Registration 
Statement.


/s/ DELOITTE & TOUCHE LLP

Parsippany, New Jersey
January 28, 1998













INDEPENDENT AUDITORS' CONSENT


We consent to the incorporation by reference in this Registration Statement of
Cendant Corporation on Form S-3 of our report dated March 31, 1997 (May 27,
1997 as to Note 2a, and April 30, 1997 as to Note 2b), appearing in the Current
Report of Form 8-K of HFS Incorporated dated July 15, 1997, and to the
reference to us under the heading "Experts" in the Prospectus, which is a part
of this Registration Statement.


/s/ DELOITTE & TOUCHE LLP

Parsippany, New Jersey
January 28, 1998














                                                                Exhibit 23.3


                          Consent of Independent Auditors

We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated March 10, 1997, with respect to the 
consolidated financial statements and schedule of CUC International Inc.
incorporated by reference in the Registration Statement (Form S-3) and
related Prospectus of Cendant Corporation (formerly "CUC International Inc.")
for the registratin of up to $3,000,000,000 of its debt securities, preferred
stock and/or common stock.



                                               /s/ ERNST & YOUNG LLP



Stamford, Connecticut
January 28, 1998


  












The Board of Directors
PHH Corporation:


We consent to the incorporation by reference in the Registration Statement of
Cendant Corporation on Form S-3, of our report dated April 30, 1997, with 
respect to the consolidated balance sheets of PHH Corporation and subsidiaries
(the "Company") at December 31, 1996 and January 31, 1996 and the related
consolidated statements of income, stockholders' equity, and cash flows for the
year ended December 31, 1996 and each of the years in the two year period ended
January 31, 1996, which report appears in the Form 8-K of Cendant Corporation
dated January 29, 1998, incorporated by reference in the Registration 
Statement. We also consent to the reference to our firm under the heading
"Experts" in the Registration Statement.

Our report contains an explanatory paragraph that states that the Company 
adopted the provisions of Statement of Financial Accounting Standards No. 122,
"Accounting for Mortgage Servicing Rights," in the year ended January 31, 1996.


                                          /s/ KPMG Peat Marwick LLP
                                          -------------------------
                                              KPMG Peat Marwick LLP


Baltimore, Maryland
January 29, 1998






INDEPENDENT AUDITORS' CONSENT


We consent to the incorporation by reference in this Registration Statement of
Cendant Corporation on Form S-3 of our report dated June 24, 1996, appearing in
the Current Report of Form 8-K of Cendant Corporation expected to be filed on
January 29, 1998, and to the reference to us under the heading "Experts" in 
the Prospectus, which is a part of this Registration Statement.


/s/ DELOITTE & TOUCHE LLP

Seattle, Washington
January 28, 1998



INDEPENDENT AUDITORS' CONSENT


We consent to the incorporation by reference in this Registration Statement of
Cendant Corporation on Form S-3 of our report dated May 12, 1997 (August 20,
1997 as to Note 15), appearing in the Registration Statement on Form S-1, as
amended, of Avis Rent A Car, Inc. dated September 23, 1997, and to the
reference to us under the heading "Experts" in the Prospectus, which is a part
of this Registration Statement.


/s/ DELOITTE & TOUCHE LLP

New York, New York
January 28, 1998





                     CONSENT OF INDEPENDENT AUDITORS

The Board of Directors
Cendant Corporation

We consent to the use of our report incorporated herein by reference with
respect to the consolidated balance sheet of Davidson & Associates, Inc. and
subsidiaries as of December 31, 1995 and the related consolidated statements
of earnings, shareholders' equity, and cash flows and related schedule for
each of the years in the two-year period ended December 31, 1995, and  to
the reference to our firm under the heading "Experts" in the prospectus.
Our report appears in the annual report on Form 10-K of CUC International
Inc. for the year ended January 31, 1997.



                                             /s/ KPMG Peat Marwick LLP


Long Beach, California
January 27, 1998
























                                                         Exhibit 23.8

             CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-3 of Cendant
Corporation (formerly known as CUC International Inc.) of our report dated 
February 2, 1996, relating to the consolidated financial statements of
Ideon Group, Inc., which appears in the Annual Report on Form 10-K of
CUC International Inc. for the year ended January 31, 1997. We also
consent to the reference to us under the heading "Experts" in such
Prospectus.



/s/ PRICE WATERHOUSE LLP
Tampa, Florida
January 28, 1998























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

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

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

                                    FORM T-1

                            STATEMENT OF ELIGIBILITY
                   UNDER THE TRUST INDENTURE ACT OF 1939 OF A
                    CORPORATION DESIGNATED TO ACT AS TRUSTEE

                      CHECK IF AN APPLICATION TO DETERMINE
                      ELIGIBILITY OF A TRUSTEE PURSUANT TO
                        SECTION 305 (B)(2) _____________

               THE BANK OF NOVA SCOTIA TRUST COMPANY OF NEW YORK
              (Exact name of trustee as specified in its charter)

              New York                                   13-5691211
      (State of Incorporation                        ( I.R.S. employer
    If not a U.S. national bank)                   Identification number)

           One Liberty Plaza
             New York, N.Y.                                 10006
         (Address of principal                            (Zip code)
           Executive office)

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

                              CENDANT CORPORATION
              (Exact name of obligor as specified in its charter)
                                    DELAWARE
         (State or other jurisdiction of incorporation or organization)
                                   06-0918165
                      (I.R.S. employer identification no.)
                                  6 Sylvan Way
                             Parsippany, N.J. 07054

             (Address of principal executive offices) (Postal Code)

                        -------------------------------
                        CONVERTIBLE AND NON-CONVERTIBLE
                             SENIOR DEBT SECURITIES
                      (Title of the indenture securities)



                                      -2-

Item 1.  General Information

         Furnish the following information as to the trustee:

         (a) Name and address of each examining or supervising authority to
             which it is subject.
                  Federal Reserve Bank of New York
                  33 Liberty Street
                  New York, N. Y. 10045

                  State of New York Banking Department
                  State House, Albany, N.Y.

         (b) Whether it is authorized to exercise corporate trust powers.
             The Trustee is authorized to exercise corporate trust powers.

Item 2.  Affiliation with the Obligor.

         If the obligor is an affiliate of the trustee, describe each such
         affiliation. The obligor is not an affiliate of the Trustee.

Item 16. List of Exhibits.

         List below all exhibits filed as part of this statement of
         eligibility.

         Exhibit 1 - Copy of the Organization Certificate of the Trustee as now
                     in effect. (Exhibit 1 to T-1 to Registration Statement No.
                     333-6688).

         Exhibit 2 - Copy of the Certificate of Authority of the Trustee to
                     commerce business. (Exhibit 2 to T-1 to Registration
                     Statement No. 333-6688).

         Exhibit 3 - None; authorization to exercise corporate trust powers is
                     contained in the documents identified above as Exhibit 1
                     and 2.

         Exhibit 4 - Copy of the existing By-Laws of the Trustee.(Exhibit 4 to
                     T-1 to Registration Statement No. 333-6688).

         Exhibit 5 - No Indenture referred to in Item 4.

         Exhibit 6 - The consent of the Trustee required by Section 321 (b) of
                     the Trust Indenture Act of 1939.(Exhibit 6 to T-1 to
                     Registration Statement No. 333-27685).

         Exhibit 7 - Copy of the latest Report of Condition of the Trustee as
                     of September 30, 1997




                                   SIGNATURE


         Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, The Bank of Nova Scotia Trust Company of New York, a corporation
organized and existing under the laws of the State of New York, has duly caused
this statement of eligibility to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of New York, and State of New York,
on the day of January 29, 1998.


                                            THE BANK OF NOVA SCOTIA TRUST
                                              COMPANY OF NEW YORK


                                            By: /s/ George E. Timmes
                                               ------------------------------
                                                George E. Timmes
                                                Vice President





Affix the address label in this space.

The Bank of Nova Scotia Trust Company of New York
- --------------------------------------------------
Legal Title of Bank

New York
- --------------------------------------------------
City

NY                                       10006
- --------------------------------------------------
State                                  Zip Code

FDIC Certificate Number

Consolidated Report of Condition for Insured Commercial and State-Chartered
Savings Banks for September 30, 1997

All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of
the quarter.

Schedule RC--Balance Sheet

                                      Dollar Amounts in Thousands      C100
                                                                     Mil Thou
- -----------------------------------------------------------------------------
ASSETS
 1. Cash and balances due from depository institutions:
    a. Noninterest-bearing balances and currency and coin(1)(3)...........408
    b. Interest-bearing balances(2)......................................NONE
 2. Securities:
    a. Held-to-maturity securities (from Schedule RC-B, column A)........1880
    b. Available-for-sale securities (from Schedule RC-B, column D)......NONE
 3. Federal funds sold(4) and securities purchased under agreements
       to resell.........................................................2400
 4. Loans and lease financing receivables:
    a. Loans and leases, net of unearned income (from Schedule RC-C)........
    b. LESS: Allowance for loan and lease losses............................
    c. LESS: Allocated transfer risk reserve................................
    d. Loans and leases, net of unearned income, allowance, and reserve
       (item 4.a minus 4.b and 4.c).....................................NONE
 5. Trading assets......................................................NONE
 6. Premises and fixed assets (including capitalized leases)..............16
 7. Other real estate owned (from Schedule RC-M)........................NONE
 8. Investments in unconsolidated subsidiaries and associated companies
    (from Schedule RC-M)................................................NONE
 9. Customers' liability to this bank on acceptances outstanding........NONE
10. Intangible assets (from Schedule RC-M)..............................NONE
11. Other assets (from Schedule RC-F)....................................110
12. a. Total assets (sum of items 1 through 11).........................4814
    b. Losses deferred pursuant to 12 U.S.C. 1823(j)....................NONE
    c. Total assets and losses deferred pursuant to 12 U.S.C. 1823(j)
       (sum of items 12.a and 12.b).....................................4814

- -----------
(1) Includes cash items in process of collection and unposted debits.
(2) The amount reported in this item must be greater than or equal to the sum
    of Schedule RC-M, items 3.a  and 3.b.
(3) Includes time certificates of deposit not held for trading.
(4) Report "term federal funds sold" in Schedule RC, item 4.a. "Loans and
    leases, net of unearned income," and in Schedule RC-C, part 1.





Schedule RC--Continued

                                    Dollar Amounts in Thousands  Mil  Thou
LIABILITIES
13. Deposits:
    a. In domestic offices (sum of totals of columns A and C from Schedule
       RC-1)...................................................2404    13.a
       (1) Noninterest-bearing(1).........................1500         13.a
       (2) Interest-bearing................................904         13.a
    b. In foreign offices, Edge and Agreement subsidiaries, and IBFs
       (1) Noninterest-bearing......................................
       (2) Interest-bearing.........................................
14. Federal funds purchased(2) and securities sold under agreements to
       repurchase..............................................NONE    14.
15. a. Demand notes issued to the U.S. Treasury................NONE    15.a
    b. Trading liabilities.....................................NONE    15.b
16. Other borrowed money (includes mortgage indebtedness and obligations
    under capitalized leases):
    a. With a remaining maturity of one year or less...........NONE    16.a
    b. With a remaining maturity of more than one year through
       three years.............................................NONE    16.b
    c. With a remaining maturity of more than three years......NONE    16.c
17. Not applicable
18. Bank's liability on acceptances executed and outstanding...NONE    18.
19. Subordinated notes and debentures(3).......................NONE    19.
20. Other liabilities (from Schedule RC-G).......................46    20.
21. Total liabilities (sum of items 13 through 20).............2450    21.
22. Not applicable
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus..............NONE    23.
24. Common stock...............................................1000    24.
25. Surplus (exclude all surplus related to preferred stock)...1000    25.
26. a. Undivided profits and capital reserves...................364    26.a
    b. Net unrealized holding gains (losses) on available-for-
       sale securities.........................................NONE    26.b
27. Cumulative foreign currency translation adjustments............
28. a. Total equity capital (sum of items 23 through 27).......2364    28.a
    b. Losses deferred pursuant to 12 U.S.C. 1823(j)...........NONE    28.b
    c. Total equity capital and losses deferred pursuant to
       12 U.S.C. 1823(j) (sum of items 28.a and 28.b)..........2364    28.c
29. Total liabilities, equity capital, and losses deferred
    pursuant to 12 U.S.C. 1823(j) (sum of items 21 and 28.c)...4816    29.

Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that
   best describes the most comprehensive level of auditing work performed
   for the bank by independent external auditors as of any date during
   1998.......................................................   1    M.1.

1 - Independent audit of the bank conducted in accordance with generally
    accepted auditing standards by a certified public accounting firm
    which submits a report on the bank

2 - Independent audit of the bank's parent holding company conducted in
    accordance with generally accepted auditing standards by a certified
    public accounting firm which submits a report on the consolidated
    holding company (but not on the bank separately)

3 - Directors' examination of the bank conducted in accordance with
    generally accepted auditing standards by a certified public accounting
    firm (may be required by state chartering authority)

4 - Directors' examination of the bank performed by other external auditors
    (may be required by state chartering authority)

5 - Review of the bank's financial statements by external auditors

6 - Compilation of the bank's financial statements by external auditors

7 - Other audit procedures (excluding tax preparation work)

8 - No external audit work

- ------------
(1) Includes total demand deposits  and noninterest-bearing time and savings
    deposits.

(2) Report "term federal funds purchased" in Schedule RC, item 16. "Other
    borrowed money."

(3) Includes limited-life preferred stock and related surplus.




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

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

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                                    FORM T-1

                            STATEMENT OF ELIGIBILITY
                   UNDER THE TRUST INDENTURE ACT OF 1939 OF A
                    CORPORATION DESIGNATED TO ACT AS TRUSTEE

                      CHECK IF AN APPLICATION TO DETERMINE
                      ELIGIBILITY OF A TRUSTEE PURSUANT TO
                         SECTION 305 (B)(2) ___________

               THE BANK OF NOVA SCOTIA TRUST COMPANY OF NEW YORK
              (Exact name of trustee as specified in its charter)

                  New York                             13-5691211
          (State of Incorporation                  (I.R.S. employer
        If not a U.S. national bank)             Identification number)

              One Liberty Plaza
                 New York, N.Y.                           10006
            (Address of principal                      (Zip code)
               Executive office)

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

                              CENDANT CORPORATION
              (Exact name of obligor as specified in its charter)
                                    DELAWARE
         (State or other jurisdiction of incorporation or organization)
                                   06-0918165
                      (I.R.S. employer identification no.)
                                  6 Sylvan Way
                             Parsippany, N.J. 07054

             (Address of principal executive offices) (Postal Code)

           ---------------------------------------------------------
                        CONVERTIBLE AND NON-CONVERTIBLE
                          SUBORDINATED DEBT SECURITIES
                      (Title of the indenture securities)



                                      -2-

Item 1.  General Information

         Furnish the following information as to the trustee:

         (a) Name and address of each examining or supervising authority to
             which it is subject.

                  Federal Reserve Bank of New York
                  33 Liberty Street
                  New York, N. Y. 10045

                  State of New York Banking Department
                  State House, Albany, N.Y.

         (b) Whether it is authorized to exercise corporate trust powers.
             The Trustee is authorized to exercise corporate trust powers.

Item 2.  Affiliation with the Obligor.

         If the obligor is an affiliate of the trustee, describe each such
         affiliation. The obligor is not an affiliate of the Trustee.

Item 16. List of Exhibits.

         List below all exhibits filed as part of this statement of
         eligibility.

         Exhibit 1 - Copy of the Organization Certificate of the Trustee as now
                     in effect. (Exhibit 1 to T-1 to Registration Statement No.
                     333-6688).

         Exhibit 2 - Copy of the Certificate of Authority of the Trustee to
                     commerce business. (Exhibit 2 to T-1 to Registration
                     Statement No. 333-6688).

         Exhibit 3 - None; authorization to exercise corporate trust powers is
                     contained in the documents identified above as Exhibit 1
                     and 2.

         Exhibit 4 - Copy of the existing By-Laws of the Trustee.(Exhibit 4 to
                     T-1 to Registration Statement No. 333-6688).

         Exhibit 5 - No Indenture referred to in Item 4.

         Exhibit 6 - The consent of the Trustee required by Section 321 (b) of
                     the Trust Indenture Act of 1939.(Exhibit 6 to T-1 to
                     Registration Statement No. 333-27685).

         Exhibit 7 - Copy of the latest Report of Condition of the Trustee as
                     of September 30, 1997



                                   SIGNATURE


         Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, The Bank of Nova Scotia Trust Company of New York, a corporation
organized and existing under the laws of the State of New York, has duly caused
this statement of eligibility to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of New York, and State of New York,
on the 29th day of January, 1998.


                                            THE BANK OF NOVA SCOTIA TRUST
                                              COMPANY OF NEW YORK


                                            By: /s/ George E. Timmes
                                               ---------------------------
                                                George E. Timmes
                                                Vice President





Affix the address label in this space.

The Bank of Nova Scotia Trust Company of New York
- --------------------------------------------------
Legal Title of Bank

New York
- --------------------------------------------------
City

NY                                       10006
- --------------------------------------------------
State                                  Zip Code

FDIC Certificate Number

Consolidated Report of Condition for Insured Commercial and State-Chartered
Savings Banks for September 30, 1997

All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of
the quarter.

Schedule RC--Balance Sheet

                                      Dollar Amounts in Thousands      C100
                                                                     Mil Thou
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ASSETS
 1. Cash and balances due from depository institutions:
    a. Noninterest-bearing balances and currency and coin(1)(3)...........408
    b. Interest-bearing balances(2)......................................NONE
 2. Securities:
    a. Held-to-maturity securities (from Schedule RC-B, column A)........1880
    b. Available-for-sale securities (from Schedule RC-B, column D)......NONE
 3. Federal funds sold(4) and securities purchased under agreements
       to resell.........................................................2400
 4. Loans and lease financing receivables:
    a. Loans and leases, net of unearned income (from Schedule RC-C)........
    b. LESS: Allowance for loan and lease losses............................
    c. LESS: Allocated transfer risk reserve................................
    d. Loans and leases, net of unearned income, allowance, and reserve
       (item 4.a minus 4.b and 4.c).....................................NONE
 5. Trading assets......................................................NONE
 6. Premises and fixed assets (including capitalized leases)..............16
 7. Other real estate owned (from Schedule RC-M)........................NONE
 8. Investments in unconsolidated subsidiaries and associated companies
    (from Schedule RC-M)................................................NONE
 9. Customers' liability to this bank on acceptances outstanding........NONE
10. Intangible assets (from Schedule RC-M)..............................NONE
11. Other assets (from Schedule RC-F)....................................110
12. a. Total assets (sum of items 1 through 11).........................4814
    b. Losses deferred pursuant to 12 U.S.C. 1823(j)....................NONE
    c. Total assets and losses deferred pursuant to 12 U.S.C. 1823(j)
       (sum of items 12.a and 12.b).....................................4814

- -----------
(1) Includes cash items in process of collection and unposted debits.
(2) The amount reported in this item must be greater than or equal to the sum
    of Schedule RC-M, items 3.a  and 3.b.
(3) Includes time certificates of deposit not held for trading.
(4) Report "term federal funds sold" in Schedule RC, item 4.a. "Loans and
    leases, net of unearned income," and in Schedule RC-C, part 1.





Schedule RC--Continued

                                    Dollar Amounts in Thousands  Mil  Thou
LIABILITIES
13. Deposits:
    a. In domestic offices (sum of totals of columns A and C from Schedule
       RC-1)...................................................2404    13.a
       (1) Noninterest-bearing(1).........................1500         13.a
       (2) Interest-bearing................................904         13.a
    b. In foreign offices, Edge and Agreement subsidiaries, and IBFs
       (1) Noninterest-bearing......................................
       (2) Interest-bearing.........................................
14. Federal funds purchased(2) and securities sold under agreements to
       repurchase..............................................NONE    14.
15. a. Demand notes issued to the U.S. Treasury................NONE    15.a
    b. Trading liabilities.....................................NONE    15.b
16. Other borrowed money (includes mortgage indebtedness and obligations
    under capitalized leases):
    a. With a remaining maturity of one year or less...........NONE    16.a
    b. With a remaining maturity of more than one year through
       three years.............................................NONE    16.b
    c. With a remaining maturity of more than three years......NONE    16.c
17. Not applicable
18. Bank's liability on acceptances executed and outstanding...NONE    18.
19. Subordinated notes and debentures(3).......................NONE    19.
20. Other liabilities (from Schedule RC-G).......................46    20.
21. Total liabilities (sum of items 13 through 20).............2450    21.
22. Not applicable
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus..............NONE    23.
24. Common stock...............................................1000    24.
25. Surplus (exclude all surplus related to preferred stock)...1000    25.
26. a. Undivided profits and capital reserves...................364    26.a
    b. Net unrealized holding gains (losses) on available-for-
       sale securities.........................................NONE    26.b
27. Cumulative foreign currency translation adjustments............
28. a. Total equity capital (sum of items 23 through 27).......2364    28.a
    b. Losses deferred pursuant to 12 U.S.C. 1823(j)...........NONE    28.b
    c. Total equity capital and losses deferred pursuant to
       12 U.S.C. 1823(j) (sum of items 28.a and 28.b)..........2364    28.c
29. Total liabilities, equity capital, and losses deferred
    pursuant to 12 U.S.C. 1823(j) (sum of items 21 and 28.c)...4816    29.

Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that
   best describes the most comprehensive level of auditing work performed
   for the bank by independent external auditors as of any date during
   1998.......................................................   1    M.1.

1 - Independent audit of the bank conducted in accordance with generally
    accepted auditing standards by a certified public accounting firm
    which submits a report on the bank

2 - Independent audit of the bank's parent holding company conducted in
    accordance with generally accepted auditing standards by a certified
    public accounting firm which submits a report on the consolidated
    holding company (but not on the bank separately)

3 - Directors' examination of the bank conducted in accordance with
    generally accepted auditing standards by a certified public accounting
    firm (may be required by state chartering authority)

4 - Directors' examination of the bank performed by other external auditors
    (may be required by state chartering authority)

5 - Review of the bank's financial statements by external auditors

6 - Compilation of the bank's financial statements by external auditors

7 - Other audit procedures (excluding tax preparation work)

8 - No external audit work

- ------------
(1) Includes total demand deposits  and noninterest-bearing time and savings
    deposits.

(2) Report "term federal funds purchased" in Schedule RC, item 16. "Other
    borrowed money."

(3) Includes limited-life preferred stock and related surplus.



                         INDEPENDENT AUDITORS' REPORT 

The Board of Directors and Stockholder of 
Avis Rent A Car, Inc. 
Garden City, New York 

We have audited the accompanying consolidated statements of financial 
position of Avis Rent A Car, Inc. and subsidiaries (successor to Avis Rent A 
Car Systems Holdings, Inc. and subsidiaries, Avis International, Ltd. and 
subsidiaries, Avis Enterprises, Inc. and subsidiaries, Pathfinder Insurance 
Company and Global Excess & Reinsurance, Ltd., all previously wholly-owned by 
Avis, Inc., collectively the "Predecessor Companies"), (collectively referred 
to as "Avis Rent A Car, Inc." or the "Company") as of December 31, 1996 and 
as to the Predecessor Companies as of December 31, 1995, and the related 
consolidated statements of operations, stockholder's equity and cash flows 
for the period October 17, 1996 (Date of Acquisition) to December 31, 1996 
and as to the Predecessor Companies the related consolidated statements of 
operations, stockholder's equity and cash flows for each of the two years in 
the period ended December 31, 1995 and the period January 1, 1996 to October 
16, 1996. These consolidated financial statements are the responsibility of 
the Company's management. Our responsibility is to express an opinion on 
these consolidated financial statements based on our audits. 

We conducted our audits in accordance with generally accepted auditing 
standards. Those standards require that we plan and perform the audit to 
obtain reasonable assurance about whether the financial statements are free 
of material misstatement. An audit includes examining, on a test basis, 
evidence supporting the amounts and disclosures in the financial statements. 
An audit also includes assessing the accounting principles used and 
significant estimates made by management, as well as evaluating the overall 
financial statement presentation. We believe that our audits provide a 
reasonable basis for our opinion. 

In our opinion, such consolidated financial statements present fairly, in all 
material respects, the consolidated financial position of the Company at 
December 31, 1996, and the results of its operations and its cash flows for 
the period October 17, 1996 to December 31, 1996 (period after the change in 
control referred to in Note 1 to the consolidated financial statements), and 
with respect to the Predecessor Companies as of December 31, 1995, and for 
each of the two years in the period ended December 31, 1995 and the period 
January 1, 1996 to October 16, 1996 (period up to the change in control 
referred to in Note 1 to the consolidated financial statements) in conformity 
with generally accepted accounting principles. 

As more fully discussed in Note 1 to the consolidated financial statements, 
the Predecessor Companies were acquired in a business combination accounted 
for as a purchase. As a result of the acquisition, the consolidated financial 
statements for the period subsequent to the acquisition are presented on a 
different basis of accounting than those for the periods prior to the 
acquisition and, therefore, are not directly comparable. 

Deloitte & Touche LLP 

New York, New York 
May 12, 1997 
(August 20, 1997 as to Note 15) 



                                       1

                             AVIS RENT A CAR, INC. 
                CONSOLIDATED STATEMENTS OF FINANCIAL POSITION 
                                (IN THOUSANDS) 

PREDECESSOR COMPANIES DECEMBER 31, DECEMBER 31, 1995 1996 -------------- -------------- ASSETS Cash and cash equivalents........................................ $ 39,081 $ 50,886 Accounts receivable, net......................................... 194,971 311,179 Due from affiliates, net......................................... 61,807 Prepaid expenses................................................. 35,053 40,155 Vehicles, net.................................................... 2,167,167 2,243,492 Property and equipment, net...................................... 140,992 98,887 Other assets..................................................... 20,882 14,526 Deferred income tax assets....................................... 81,974 113,660 Cost in excess of net assets acquired, net....................... 144,778 196,765 -------------- -------------- Total assets................................................. $2,824,898 $3,131,357 ============== ============== LIABILITIES AND STOCKHOLDER'S EQUITY Accounts payable................................................. $ 228,146 $ 175,535 Accrued liabilities.............................................. 183,595 329,245 Due to affiliates, net........................................... 385,687 Current income tax liabilities................................... 6,696 4,790 Deferred income tax liabilities.................................. 27,990 35,988 Public liability, property damage and other insurance liabilities..................................................... 194,677 213,785 Debt............................................................. 1,109,747 2,295,474 -------------- -------------- Total liabilities............................................ 2,136,538 3,054,817 -------------- -------------- Commitments and contingencies Stockholder's equity: Common stock ($.01 par value, 1,000 shares authorized; 100 shares outstanding at December 31, 1996)................... 2,977 -- Additional paid-in capital...................................... 344,531 75,000 Retained earnings............................................... 340,596 1,184 Foreign currency translation adjustment......................... 256 356 -------------- -------------- Total stockholder's equity................................... 688,360 76,540 -------------- -------------- Total liabilities and stockholder's equity................... $2,824,898 $3,131,357 ============== ==============
See accompanying notes to the consolidated financial statements. 2 AVIS RENT A CAR, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS)
PREDECESSOR COMPANIES OCTOBER 17, 1996 -------------------------------------------- (DATE OF YEAR ENDED DECEMBER 31, JANUARY 1, 1996 ACQUISITION) -------------------------- TO TO 1994 1995 OCTOBER 16, 1996 DECEMBER 31, 1996 ------------ ------------ ---------------- ------------------- Revenue........................ $1,412,400 $1,615,951 $1,504,673 $362,844 ------------ ------------ ---------------- ------------------- Cost and expenses: Direct operating.............. 664,993 724,759 650,750 167,682 Vehicle depreciation, net .... 266,637 324,186 275,867 66,790 Vehicle lease charges......... 42,778 86,916 100,318 22,658 Selling, general and administrative............... 252,024 269,434 283,180 68,215 Interest, net................. 128,898 145,199 120,977 34,212 Amortization of cost in excess of net assets acquired .................... 4,754 4,757 3,782 1,026 ------------ ------------ ---------------- ------------------- 1,360,084 1,555,251 1,434,874 360,583 ------------ ------------ ---------------- ------------------- Income before provision for income taxes.................. 52,316 60,700 69,799 2,261 Provision for income taxes .... 30,213 34,635 31,198 1,040 ------------ ------------ ---------------- ------------------- Net income..................... $ 22,103 $ 26,065 $ 38,601 $ 1,221 ============ ============ ================ ===================
See accompanying notes to the consolidated financial statements. 3 AVIS RENT A CAR, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY (IN THOUSANDS, EXCEPT SHARE AMOUNTS)
FOREIGN ADDITIONAL CURRENCY COMMON PAID-IN RETAINED TRANSLATION STOCK CAPITAL EARNINGS ADJUSTMENT TOTAL -------- ------------ ---------- ------------- ---------- Balance, January 1, 1994..................... $2,827 $318,125 $309,902 $(2,598) $628,256 Net income for the year ended December 31, 1994.................................... 22,103 22,103 Tax benefit of ESOP income tax deductions ... 13,104 13,104 Foreign currency translation adjustment ..... 3,466 3,466 Cash dividends............................... (8,578) (8,578) Stock dividends.............................. 150 (150) -------- ------------ ---------- ------------- ---------- Balance, December 31, 1994................... 2,977 331,229 323,277 868 658,351 Net income for the year ended December 31, 1995.................................... 26,065 26,065 Tax benefit of ESOP income tax deductions ... 13,302 13,302 Foreign currency translation adjustment ..... (612) (612) Cash dividends............................... (8,746) (8,746) -------- ------------ ---------- ------------- ---------- Balance, December 31, 1995................... 2,977 344,531 340,596 256 688,360 Net income for the period ended October 16, 1996.................................... 38,601 38,601 Tax benefit of ESOP income tax deductions ... 12,939 12,939 Foreign currency translation adjustment ..... 2,805 2,805 Cash dividends............................... (1,398) (1,398) -------- ------------ ---------- ------------- ---------- Balance, October 16, 1996.................... $2,977 $357,470 $377,799 $ 3,061 $741,307 ======== ============ ========== ============= ========== Avis Rent A Car, Inc. ($.01 par value, 1,000 shares authorized; 100 shares outstanding at October 17, 1996 (Date of Acquisition)) . $-- $ 75,000 $ 75,000 Net income for the period from October 17, 1996 to December 31, 1996 ...... $ 1,221 1,221 Foreign currency translation adjustment for the period October 17, 1996 to December 31, 1996........................................ $ 356 356 Additional minimum pension liability for the period October 17, 1996 to December 31, 1996.................................... (37) (37) -------- ------------ ---------- ------------- ---------- Balance, December 31, 1996................... $-- $ 75,000 $ 1,184 $ 356 $ 76,540 ======== ============ ========== ============= ==========
See accompanying notes to the consolidated financial statements. 4 AVIS RENT A CAR, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
PREDECESSOR COMPANIES OCTOBER 17, 1996 ---------------------------------------------- (DATE OF YEARS ENDED DECEMBER 31, JANUARY 1, 1996 ACQUISITION) ---------------------------- TO TO 1994 1995 OCTOBER 16, 1996 DECEMBER 31, 1996 ------------- ------------- ---------------- ------------------- Cash flows from operating activities: Net income....................................... $ 22,103 $ 26,065 $ 38,601 $ 1,221 Adjustments to reconcile net income to net cash provided by operating activities: Vehicle depreciation............................ 291,360 342,048 306,159 71,343 Depreciation and amortization of property and equipment...................................... 12,782 13,387 12,333 2,212 Amortization of cost in excess of net assets acquired....................................... 4,754 4,757 3,782 1,026 Amortization of debt issuance costs ............ 3,454 2,660 2,423 Deferred income tax provision................... 19,384 25,852 22,342 33 Undistributed earnings of associated companies . (65) (376) (232) Provision for (benefit from) losses on accounts receivable..................................... 305 (48) 1,238 227 Provision for public liability, property damage and other insurance liabilities................ 73,900 81,800 74,109 17,355 Change in operating assets and liabilities: Decrease (increase) in accounts receivable .... 53 (22,644) (204,137) 10,327 Decrease (increase) in prepaid expenses ....... 4,640 (863) (2,125) (2,664) (Increase) decrease in other assets............ (595) 1,988 3,266 (3,459) (Decrease) increase in accounts payable ....... (44,087) (5,733) 82,354 (18,712) Increase (decrease) in accrued liabilities .... 26,399 42,176 101,069 (24,718) Decrease in public liability, property damage and other insurance liabilities............... (72,363) (71,159) (56,364) (16,015) ------------- ------------- ---------------- ------------------- Net cash provided by operating activities .... 342,024 439,910 384,818 38,176 ------------- ------------- ---------------- ------------------- Cash flows from investing activities: Payments for vehicle additions.................. (3,218,613) (2,553,324) (2,325,460) (561,117) Vehicle deletions............................... 2,680,535 2,028,474 1,795,562 565,896 Payments for additions to property and equipment...................................... (24,487) (36,939) (25,953) (3,484) Sales of property and equipment................. 2,898 3,715 1,849 361 Investment in associated companies.............. (100) Investment in Canadian Licensees................ (3,134) ------------- ------------- ---------------- ------------------- Net cash (used in) provided by investing activities.................................... (559,767) (558,074) (557,136) 1,656 ------------- ------------- ---------------- ------------------- Cash flows from financing activities: Changes in debt: Proceeds....................................... 423,502 320,940 519,167 63,903 Repayments..................................... (161,523) (287,271) (267,317) (133,457) ------------- ------------- ---------------- ------------------- Net increase (decrease) in debt................ 261,979 33,669 251,850 (69,554) Deferred debt issuance costs.................... (4,637) (5,515) (2,604) (Payments on) proceeds from intercompany loans . (29,090) 104,209 (27,696) (6,661) Cash dividends.................................. (8,578) (8,746) (1,398) ------------- ------------- ---------------- ------------------- Net cash provided by (used in) financing activities.................................... 219,674 123,617 220,152 (76,215) ------------- ------------- ---------------- ------------------- Effect of exchange rate changes on cash ......... 119 (197) 260 94 ------------- ------------- ---------------- ------------------- Net increase (decrease) in cash and cash equivalents..................................... 2,050 5,256 48,094 (36,289) Cash and cash equivalents at beginning of period.......................................... 31,775 33,825 39,081 87,175 ------------- ------------- ---------------- ------------------- Cash and cash equivalents at end of period ...... $ 33,825 $ 39,081 $ 87,175 $ 50,886 ============= ============= ================ =================== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest....................................... $ 131,877 $ 149,885 $ 135,733 $ 28,170 ============= ============= ================ =================== Income taxes................................... $ 7,576 $ 8,688 $ 6,220 $ 827 ============= ============= ================ =================== SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTION -- Recapitalization at Date of Acquisition ..... $ -- $ -- $ -- $ 666,307 ============= ============= ================ ===================
See accompanying notes to the consolidated financial statements. 5 AVIS RENT A CAR, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION The accompanying consolidated financial statements include Avis Rent A Car, Inc. (name changed from and formerly known as Rental Car System Holdings, Inc. which was incorporated on October 17, 1996) and subsidiaries (including the carved out corporate operations of HFS Car Rental, Inc. (name changed from and formerly known as, and hereinafter referred to as, Avis, Inc.), which is the holding company of Rental Car System Holdings, Inc., and Prime Vehicles Trust (the "Vehicle Trust")), Avis International, Ltd. and subsidiaries, Avis Enterprises, Inc. and subsidiaries, Pathfinder Insurance Company and Global Excess & Reinsurance, Ltd. (collectively referred to as "Avis Rent A Car, Inc."). All of the foregoing companies are ultimately wholly-owned subsidiaries of Avis, Inc., which was acquired by HFS Incorporated ("HFS") on October 17, 1996 (the "Date of Acquisition") for approximately $806.5 million. The purchase price was comprised of approximately $367.2 million in cash, $100.9 million of indebtedness and $338.4 million of HFS common stock. Prior to October 16, 1996, the above-named entities were wholly-owned by Avis, Inc. and are referred to collectively as the "Predecessor Companies". Avis Rent A Car, Inc. and the Predecessor Companies are referred to throughout the notes as the "Company". The major shareholder of Avis, Inc. was an Employee Stock Ownership Plan ("ESOP") and the minority shareholder was General Motors Corporation ("General Motors"). The Company purchases a significant portion of its vehicles, obtains financing, and receives certain financial incentives and allowances from General Motors (see Notes 2, 4, 7 and 14). As a result of the acquisition, the consolidated financial statements for the period subsequent to the acquisition are presented on a different basis of accounting than those for the periods prior to the acquisition and, therefore, are not directly comparable. On January 1, 1997, Avis, Inc. contributed the net assets of its corporate operations and all of its common stock ownership in Avis International, Ltd., Avis Enterprises, Inc., Pathfinder Insurance Company and Global Excess & Reinsurance, Ltd. to the Company. After the transfer, the remaining operations of Avis, Inc. consist of an investment in a wholly-owned subsidiary which owns the Avis trade names and trademarks. Pursuant to a plan developed by HFS prior to the Date of Acquisition, HFS will cause the Company to undertake an initial public offering ("IPO") within one year of the Date of Acquisition, which will reduce HFS' equity interest in the Company to 25%. HFS owns and operates the reservation system as well as the telecommunications and computer processing systems which service the rental car operations for reservations, rental agreement processing, accounting and vehicle control. HFS will charge a fee for such services (see Note 3). In addition, HFS will retain the Avis trade name and charge the Company a royalty fee for the use of the Avis name. The acquisition was accounted for under the purchase method and includes the operations of the Company subsequent to the Date of Acquisition. A portion of this purchase price has been allocated to the estimated fair value of the Company. This estimate is calculated assuming that the Company is an independent franchisee of Avis, Inc. and is required to pay certain fees for use of the Avis trade name, reservation services and other franchise related services. HFS and its advisors have estimated that the value of the Company at the Date of Acquisition was $75 million. The value of the Company is expected to increase to approximately $300 million upon completion of the IPO (with the IPO proceeds retained by the Company) with HFS's equity interest to be reduced to 25% equal to $75 million. If the results of the IPO do not confirm the preliminary value as of the Date of Acquisition, then the allocated purchase price will be adjusted with a corresponding adjustment to cost in excess of net assets acquired. The estimated fair value of the Company has been allocated to individual assets and liabilities based on their estimated fair value at the Date of Acquisition. The final asset and liability fair values may differ from those set forth in the accompanying consolidated statement of financial position on December 31, 1996; however, the changes are not expected to have a material effect on the consolidated financial position of the Company. 6 AVIS RENT A CAR, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) The preliminary purchase cost allocation at the Date of Acquisition has been allocated to the Company as follows (in thousands):
Allocated purchase cost ........................... $ 75,000 ----------- Fair Value of: Liabilities assumed .............................. 3,145,395 Assets acquired .................................. 3,022,712 ----------- Net Liabilities ................................... 122,683 ----------- Excess of purchase price over net assets acquired $ 197,683 ===========
PRINCIPLES OF CONSOLIDATION All material intercompany accounts and transactions have been eliminated. ACCOUNTING ESTIMATES Generally accepted accounting principles require the use of estimates, which are subject to change, in the preparation of financial statements. Significant accounting estimates used include estimates for determining public liability, property damage and other insurance liabilities, and the realization of deferred income tax assets. Management has exercised reasonableness at deriving these estimates. However, actual results may differ. REVENUE RECOGNITION Revenue is recognized over the period the vehicle is rented. CASH AND CASH EQUIVALENTS The Company considers deposits and short-term investments with an original maturity of three months or less to be cash equivalents. VEHICLES Vehicles are stated at cost net of accumulated depreciation. In accordance with industry practice, when vehicles are sold, gains or losses are reflected as an adjustment to depreciation. Vehicles are generally depreciated at rates ranging from 10% to 25% per annum. Manufacturers provide the Company with incentives and allowances (such as rebates and volume discounts) which are amortized to income over the holding period of the vehicles. PROPERTY AND EQUIPMENT Property and equipment is stated at cost net of accumulated depreciation and amortization. Depreciation is calculated using the straight-line method over the estimated useful life of the assets. Estimated useful lives range from five to ten years for furniture and office equipment, to thirty years for buildings. Leasehold improvements are amortized over the shorter of twenty years or the remaining life of the lease. Maintenance and repairs are expensed; renewals and improvements are capitalized. When depreciable assets are retired or sold, the cost and related accumulated depreciation are removed from the accounts with any resulting gain or loss reflected in the consolidated statement of operations. COST IN EXCESS OF NET ASSETS ACQUIRED Cost in excess of net assets acquired is amortized over a 40 year period and is shown net of accumulated amortization of $37.5 million and $1.0 million at December 31, 1995 and 1996, respectively. 7 AVIS RENT A CAR, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) IMPAIRMENT ACCOUNTING In 1996, the Company adopted Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of". The Company reviews the recoverability of its long-lived assets, including cost in excess of net assets acquired, when events or changes in circumstances occur that indicate that the carrying value of the assets may not be recoverable. The measurement of possible impairment is based on the Company's ability to recover the carrying value of the asset from the expected future pre-tax undiscounted future cash flows generated. The measurement of impairment requires management to use estimates of expected future cash flows. If an impairment loss existed, the amount of the loss would be recorded under the caption Costs and Expenses in the consolidated statement of operations. It is at least reasonably possible that future events or circumstances could cause these estimates to change. The adoption of this statement had no material effect on the consolidated financial statements of the Company. PUBLIC LIABILITY, PROPERTY DAMAGE AND OTHER INSURANCE LIABILITIES Insurance liabilities on the accompanying consolidated statements of financial position include additional liability insurance, personal effects protection insurance, public liability and property damage ("PLPD") and personal accident insurance claims for which the Company is self-insured. The Company is self-insured up to $1 million per claim under its automobile liability insurance program for PLPD and additional liability insurance. Costs in excess of $1 million per claim are insured under various contracts with commercial insurance carriers. The liability for claims up to $1 million is estimated based on the Company's historical loss and loss adjustment expense experience and adjusted for current trends. The insurance liabilities include a provision for both claims reported to the Company as well as claims incurred but not yet reported to the Company. This method is an actuarially accepted loss reserve method. Adjustments to this estimate and differences between estimates and the amounts subsequently paid are reflected in operations as they occur. FOREIGN CURRENCY TRANSLATION The assets and liabilities of foreign companies are translated at the year-end exchange rates. The resultant translation adjustment is included as a component of consolidated stockholder's equity. Results of operations are translated at the average rates of exchange in effect during the year. INCOME TAXES The Company is included in the consolidated federal income tax return of HFS. Pursuant to the regulations under the Internal Revenue Code, the Company's pro rata share of the consolidated federal income tax liability of HFS is allocated to the Company on a separate return basis. The Predecessor Companies were included in the consolidated federal income tax return of Avis, Inc. The Company files separate income tax returns in states where a consolidated return is not permitted. In accordance with Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS 109"), deferred income tax assets and liabilities are measured based upon the difference between the financial accounting and tax bases of assets and liabilities. PENSIONS Costs of the defined benefit plans are actuarially determined under the projected unit credit cost method and include amounts for current service and interest on projected benefit obligations and plan assets. The Company's policy is to fund at least the minimum contribution amount required by the Employee Retirement Income Security Act of 1974. ADVERTISING Advertising costs are expensed as incurred. Advertising costs were $60.4 million, $48.4 million, $66.1 million and $10.3 million for the periods ended December 31, 1994, December 31, 1995, October 16, 1996 and December 31, 1996, respectively. 8 AVIS RENT A CAR, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) ENVIRONMENTAL COSTS The Company's operations include the storage and dispensing of gasoline. The Company accrues losses associated with the remediation of accidental fuel discharges when such losses are probable and reasonably estimable. Accruals for estimated losses from environmental remediation obligations generally are recognized no later than completion of the remedial feasibility study. Such accruals are adjusted as further information develops or circumstances change. Costs of future expenditures for environmental remediation obligations are not discounted to their present value. Recoveries from insurance companies and other reimbursements are generally not significant. In October 1996, the Accounting Standards Executive Committee of the American Institute of Certified Public Accountants issued Statement of Position 96-1 Environmental Remediation Liabilities ("SOP 96-1"). SOP 96-1 provides guidance on the timing and measurement of liabilities associated with environmental remediation. The statement is effective for fiscal years beginning after December 15, 1996. The adoption of this statement is not expected to have a material effect on the results of operations or financial position of the Company. NOTE 2 -- ACCOUNTS RECEIVABLE Accounts receivable at December 31, 1995 and 1996 consist of the following (in thousands):
1995 1996 ---------- --------- Vehicle rentals....................... $ 90,290 $ 94,480 Due from vehicle manufacturers ...... 11,308 14,758 Due from General Motors .............. 69,504 168,546 Damage claims ........................ 5,969 10,697 Due from licensees ................... 3,297 3,903 Other ................................ 17,349 19,022 ---------- --------- 197,717 311,406 Less allowance for doubtful accounts (2,746) (227) ---------- --------- $194,971 $311,179 ========== =========
Amounts due from vehicle manufacturers include receivables for vehicles sold under guaranteed repurchase contracts and amounts due for incentives and allowances. Incentives and allowances are based on the volume of vehicles to be purchased for a model year, or from the manufacturers' willingness to encourage the Company to retain vehicles rather than return the vehicles back to the manufacturer or arise from the purchase of particular models not subject to repurchase under "buyback" arrangements. Incentives and allowances are amortized to income over the holding period of the vehicles (see Notes 4 and 14). NOTE 3 -- DUE (TO) FROM AFFILIATES, NET Due (to) from affiliates, net at December 31, 1995 and 1996 consist of the following balances due to or from HFS or its consolidated subsidiaries which will be settled on or before the previously mentioned IPO (in thousands): 9 AVIS RENT A CAR, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1995 1996 ------------- ----------- Note receivable from Wizard Co., Inc. (a) .. $ 196,965 Subordinated vehicle financing notes (b) .... $ (180,000) (247,500) Due to Avis, Inc. for tax advantaged vehicle financing (c) .............................. (1,000,000) Non-interest bearing advances (d) ........... 794,313 112,342 ------------- ----------- $ (385,687) $ 61,807 ============= ===========
NOTES: (a) Consists of a $194.1 million note receivable from Wizard Co., Inc., an indirect wholly-owned subsidiary of HFS, plus accrued interest. The note bears interest at 7.13% and is due on October 1, 2006 and is guaranteed by HFS. (b) Represents loans from Avis, Inc. to the Vehicle Trust, as described in Note 7, to provide additional subordinated financing. The amounts provided reduce, within certain limits, the amount of subordinated financing required from other lenders. The loans are made under terms of a credit agreement which terminates on October 29, 2003. At December 31, 1995 and 1996, the weighted average interest rate under these loans was 11.16% and 10.75%, respectively. (c) Represents a $1 billion ESOP related tax advantaged vehicle trust financing consisting of loans under various agreements with banks, insurance companies and vehicle manufacturer finance companies. The tax advantaged notes were issued in September 1987 with a final maturity of 25 years and annual principal reductions commencing in 1998. At December 31, 1995, the weighted average interest rate under these loans was 6.0%. Included within the $1 billion ESOP related vehicle trust financing is $118 million that is ultimately due to General Motors. This loan was retired as of the Date of Acquisition. (d) Primarily represents the transfer of assets from the Company to HFS and subsidiaries, recorded in connection with the October 17, 1996 acquisition of Avis, Inc. by HFS, as well as intercompany transactions relating to management, service and administrative fees since the Date of Acquisition. The amounts due to or from HFS and subsidiaries are interest free and are guaranteed by HFS. Expense and (income) items of the Company include the following charges from (to) Avis, Inc. and subsidiaries prior to the Date of Acquisition for the period ended December 31, 1994, December 31, 1995 and October 16, 1996 (in thousands).
FOR THE YEARS ENDED DECEMBER 31, JANUARY 1, 1996 --------------------- TO 1994 1995 OCTOBER 16, 1996 --------- ---------- ---------------- Vehicle related costs ........ $(3,954) $(25,134) Data processing .............. $28,671 29,833 30,209 Employee benefits allocation (2,975) (3,385) (2,776) Rent ......................... (1,730) (2,188) (2,459)
These charges seek to reimburse the affiliated company for the actual costs incurred. These amounts reflect the effect of various intercompany agreements, which are subject to renegotiation from time to time, and certain allocations which are based upon such factors as square footage, employee salaries, computer usage time, etc. 10 AVIS RENT A CAR, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Expense items of the Company include the following charges from HFS and affiliates of HFS for the period October 17, 1996 (Date of Acquisition) to December 31, 1996 (in thousands):
Reservations ................................ $10,900 Data processing ............................. 8,772 Management, service and administrative fees 8,568 Interest on intercompany debt, net .......... 2,561 Rent ........................................ 950 ---------- $31,751 ==========
Reservations and data processing services are charged to the Company based on actual cost. Effective January 1, 1997, HFS will charge the Company a royalty fee of 4.0% of revenue for the use of the Avis trade name. On an unaudited pro forma basis, had the royalty fee been charged to the Company beginning on October 17, 1996, net income for the period October 17, 1996 to December 31, 1996 would have been reduced by $4.3 million resulting in a pro forma net loss of $3.1 million. NOTE 4 -- VEHICLES Vehicles at December 31, 1995 and 1996 consist of the following (in thousands):
1995 1996 ------------ ------------ Vehicles ................................................ $2,283,003 $2,250,309 Vehicles acquired under long-term capital lease (Note 7) 95,084 19,324 Buses and support vehicles .............................. 42,075 45,868 Vehicles held for sale .................................. 42,332 36,378 ------------ ------------ 2,462,494 2,351,879 Less accumulated depreciation ........................... (295,327) (108,387) ------------ ------------ $2,167,167 $2,243,492 ============ ============
Depreciation expense recorded for vehicles was $266.6 million, $324.2 million, $275.9 million and $66.8 million, for the periods ended December 31, 1994, December 31, 1995, October 16, 1996 and December 31, 1996, respectively. Depreciation expense reflects a net gain on the disposal of vehicles of $24.8 million, $17.8 million, $30.3 million and $4.5 million for the periods ended December 31, 1994, December 31, 1995, October 16, 1996 and December 31, 1996, respectively. It also reflects the amortization of certain incentives and allowances from various vehicle manufacturers (the most significant of which was received from General Motors) of approximately $74 million, $77 million, $61 million and $14 million for the periods ended December 31, 1994, December 31, 1995, October 16, 1996 and December 31, 1996, respectively. During the periods ended December 31, 1994, December 31, 1995, October 16, 1996 and December 31, 1996, the Company purchased from General Motors $2.7 billion, $2.0 billion, $1.8 billion and $0.4 billion of vehicles, net of incentives and allowances, respectively (see Notes 1 and 14). In November 1988 and April 1990, the Company entered into seven year operating leases under which an original amount of $324.3 million of vehicles were leased, with the ability to exchange such leased vehicles for newly manufactured vehicles with the same value to the lessor. The leases are cancelable at the Company's option, however, additional costs may be incurred upon termination based upon the fair value of the vehicles at the time the option is exercised. At the termination of the leases, the Company may purchase the vehicles at the agreed upon fair market value or return them to the lessor. 11 AVIS RENT A CAR, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) In December 1994, the Company entered into a financing arrangement whereby it may lease up to $503 million of vehicles. This arrangement was amended on October 17, 1996 to increase the amount to $650 million. Under this arrangement, at December 31, 1995 and 1996, there were $219 million and $322 million of vehicles under operating leases. The vehicles leased under this arrangement may be leased for periods of up to 18 months. The lease cost charged to the Company varies with the number of vehicles leased and the repurchase agreement offered by the vehicle manufacturer to the lessor and includes all expenses including the interest costs of the financing company. The rental payments due in each of the years ending December 31 for the operating leases as described above are as follows (in thousands):
1997 ... $69,444 1998 ... 15,388
Rental expense for those vehicles under operating leases as described above was $59.2 million, $106.1 million, $93.0 million and $16.1 million for the periods ended December 31, 1994, December 31, 1995, October 16, 1996 and December 31, 1996, respectively. NOTE 5 -- PROPERTY AND EQUIPMENT Property and equipment at December 31, 1995 and 1996 consist of the following (in thousands):
1995 1996 ---------- --------- Land .......................................... $ 19,702 $ 19,523 Buildings ..................................... 13,321 11,862 Leasehold improvements ........................ 139,938 48,898 Furniture, fixtures and equipment ............. 30,779 10,997 Construction-in-progress ...................... 15,813 9,946 ---------- --------- 219,553 101,226 Less accumulated depreciation and amortization.................................. (78,561) (2,339) ---------- --------- $140,992 $ 98,887 ========== =========
NOTE 6 -- ACCRUED LIABILITIES Accrued liabilities at December 31, 1995 and 1996 consist of the following (in thousands):
1995 1996 ---------- --------- Payroll and related costs ..... $ 54,706 $ 73,142 Taxes, other than income taxes 10,740 29,522 Rents and property related .... 10,594 30,889 Interest ....................... 12,081 18,531 Sales and marketing ............ 20,567 20,395 Vehicle related ................ 24,492 18,784 Other various .................. 50,415 137,982 ---------- --------- $183,595 $329,245 ========== =========
12 AVIS RENT A CAR, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 7 -- FINANCING AND DEBT Debt outstanding at December 31, 1996 is not guaranteed by HFS and debt outstanding at December 31, 1995 and 1996 is comprised of the following (in thousands):
1995 1996 ------------ ------------ VEHICLE TRUST FINANCING Commercial paper........................................... $ 3,000 Short-term vehicle trust financing--revolving credit facilities ............................................... $1,970,000 Current portion of long-term debt ......................... 56,000 ------------ ------------ Total current portion of vehicle trust financing ......... 59,000 1,970,000 ------------ ------------ Long-term vehicle trust revolving credit facilities ...... 476,000 Vehicle manufacturer's floating rate notes due September 1998 ($50,719 senior at 8.50% and $16,281 subordinated at 10.00%) .................................................. 67,000 Vehicle manufacturer's floating rate notes due October 2001 ($63,731 senior at 7.16% and $54,269 subordinated at 8.91%) ................................................... 118,000 Floating rate notes due September 1998 .................... 115,000 Insurance company notes due from December 1997 to December 1999 at 7.53% to 8.23% ................................... 112,000 Insurance company notes due from June 1998 to June 2003 at 6.75% to 7.92% ........................................... 150,500 ------------ ------------ Total long-term portion of vehicle trust financing ..... 853,500 185,000 ------------ ------------ OTHER FINANCING Short-term notes--foreign at 6.63% to 18.00% in 1995 and 3.89% to 13.00% in 1996 .................................. 37,264 65,516 Short-term floating rate capital lease terminating in 1996 12,801 Current portion of 7.50% capital lease terminating November 1997 ............................................ 19,153 40,169 Current portion of long-term debt--other .................. 13,605 1,060 ------------ ------------ Total current portion of other financing ................ 82,823 106,745 ------------ ------------ 7.50% capital lease terminating November 1997 ............. 40,169 Other domestic............................................. 3,974 2,916 Debt of foreign subsidiaries: Floating rate notes due April 1997 at 8.26% to 8.44% .... 51,891 Floating rate notes due July 1997 at 9.42% to 9.63% ..... 10,378 Floating rate notes due February 1998 at 7.65% in 1995 and 4.75% in 1996 ....................................... 8,012 2,935 Floating rate notes due August 1998 at 6.94% to 8.65% ... 27,878 ------------ ------------ Total long-term portion of other financing .............. 114,424 33,729 ------------ ------------ $1,109,747 $2,295,474 ============ ============
13 AVIS RENT A CAR, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Currently, the primary source of funding for domestic vehicles is provided by the Vehicle Trust (a grantor trust). The Vehicle Trust consists of loans from banks, vehicle manufacturer finance companies and Avis, Inc. The Predecessor Companies' financing structure of the Vehicle Trust consisted of loans from banks, insurance companies, vehicle manufacturer finance companies and Avis, Inc. Amounts drawn against this facility may be used to purchase vehicles and pay certain expenses of the Vehicle Trust. The security for the Vehicle Trust financing facility consists of a lien on the vehicles acquired under the facility, which at December 31, 1995 and 1996, totaled approximately $1.9 billion and $2.1 billion, respectively, exclusive of related valuation reserves. The security for the Vehicle Trust financing facility also consists of security interests in certain other assets of the Vehicle Trust. In addition, the Vehicle Trust and its security agreement require that there be outstanding, at all times, subordinated debt in a specified percentage range (10% -25%) of the net book value of the vehicles owned by the Vehicle Trust. Pursuant to the agreement, the subordinated debt is to be provided by vehicle manufacturer finance companies and Avis, Inc. At December 31, 1995 and 1996, subordinated debt of $292.1 million and $318.0 million, respectively, was required under the Vehicle Trust financing of which $180.0 million and $247.5 million, respectively, was due to Avis, Inc. (Note 3). At December 31, 1995, the weighted average interest rate on commercial paper was 6.4%. For the periods ended December 31, 1994, December 31, 1995 and October 16, 1996, the average outstanding borrowings of commercial paper were $19.9 million, $33.5 million and $30.4 million, respectively, with a weighted average interest rate of 5.3%, 6.5% and 6.0%, respectively. The short-term notes are issued pursuant to a $2.5 billion revolving credit facility dated as of October 17, 1996 which matures on October 16, 1997. At December 31, 1996, the weighted average interest rate on borrowings under this facility was 6.00%. For the period from October 17, 1996 to December 31, 1996, the average outstanding borrowings under this facility were $2.0 billion with a weighted average interest rate of 5.98%. This facility requires a fee of 1/8 of 1% on the committed amount. The long-term vehicle trust revolving credit facility consisted of $850 million revolving credit facility expiring on September 30, 1997. The interest rate on these loans is based on the London interbank rate ("LIBOR") plus a spread negotiated at the time of borrowing. At December 31, 1995, the weighted average interest rate on outstanding borrowings under this facility was 6.3%. For the periods ended December 31, 1994, December 31, 1995 and October 16, 1996, the average outstanding borrowings under this facility were $366.5 million, $288.0 million and $516.9 million, respectively, with a weighted average interest rate of 5.2%, 6.5% and 5.7%, respectively. This facility was retired on the Date of Acquisition. The Company also had Vehicle Trust financing outstanding from vehicle manufacturer finance companies under terms of loan agreements dated October 17, 1996. Under these agreements, the maximum amount of borrowings allowed is $267 million, of which up to $260 million may be used as subordinated debt. On December 31, 1996, $185 million was outstanding of which $70.5 million of the outstanding debt was deemed subordinated. At December 31, 1996, the weighted average interest rate of borrowings under this facility was 8.5%. For the period October 17, 1996 to December 31, 1996, the average outstanding borrowings under this facility was $185 million with a weighted average interest rate of 8.41%. The Predecessor Companies, through its parent, Avis, Inc., had substantially similar financing arrangements under a portion of a $1 billion ESOP related tax advantaged vehicle trust financing facility (Note 3). At December 31, 1995, the outstanding borrowings under this arrangement was $185 million, of which $112.1 million was subordinated. The average borrowings under this facility for the periods ended December 31, 1994, December 31, 1995 and October 16, 1996 were $317.0 million, $268.2 million and $185.0 million, respectively. The weighted average interest rate on these average borrowings were 6.2%, 7.7% and 7.3%. The floating rate notes were issued pursuant to a loan agreement, dated September 1, 1995, for a period of three years. The interest rate on these notes is based on the LIBOR, plus a spread of 0.45%. The 14 AVIS RENT A CAR, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) interest rate on these notes at December 31, 1995 was 6.2%. For the periods ended December 31, 1995 and October 16, 1996, the average outstanding borrowings under this facility were $35.1 million and $115.0 million, respectively, with a weighted average interest rate of 6.2% and 6.0%, respectively. The notes were retired on the Date of Acquisition. In December 1992 and May 1993, the Company borrowed a total of $318.5 million from a group of insurance companies. The maturities on these notes ranged from 3 to 10 years, with an average life, when issued, of 6.1 years. The effective interest rate on these notes was 7.3% at December 31, 1995. The average amounts outstanding for the periods ended December 31, 1994, December 31, 1995 and October 16, 1996 were $318.5 million, $318.5 million and $287.1 million, respectively, with a weighted average interest rate of 7.3%, 7.3% and 7.4%, respectively. These notes were retired as of the Date of Acquisition. In November 1992, the Predecessor Companies entered into a five year capital lease under which $96.7 million of vehicles were leased. The lease is cancelable at the Company's option, however, additional costs may be incurred upon termination based upon the fair value of the vehicles at the time the option is exercised. At the termination of the lease, the Company may purchase the vehicles at an agreed upon fair market value or return them to the lessor. The future minimum lease payments due under the Company's capital lease obligation, which terminates on November 30, 1997, are $41.5 million (including interest of $1.3 million). Included in total debt at December 31, 1995 and 1996 is indebtedness to General Motors of $10.1 million and $118.3 million, respectively (see Note 14). Under the terms of the Company's loan agreements, the Company must maintain a minimum net worth, minimum earnings and cash flow ratios. Mandatory maturities of long-term obligations for each of the next five years ending December 31, and thereafter, are as follows (in thousands):
1997 ......... $ 41,229 1998 ......... 98,950 1999 ......... 1,086 2000 ......... 209 2001 ......... 118,228 Thereafter .. 256
OTHER CREDIT FACILITIES At December 31, 1995 and 1996, the Company has letters of credit/working capital agreements totaling $102.6 million and $102.6 million, respectively, which may be renewed biannually at the Company's option and the banks' discretion. The collateral for certain of these agreements consists of a lien on property and equipment and certain receivables with a carrying value of $140.9 million and $136.9 million, respectively. At December 31, 1995 and 1996, the Company has outstanding letters of credit amounting to $47.6 million and $55.1 million, respectively. In addition, for certain of its international operations, the Company has available at December 31, 1995 and 1996, unused lines of credit of $176.9 million and $224.3 million, respectively. The unused lines of credit agreements require an annual fee of 0.2% to 0.5% of the unused line. INTEREST RATE SWAP AGREEMENTS The Company has entered into interest rate swap agreements to reduce the impact of changes in interest rates on certain outstanding debt obligations. These agreements effectively change the Company's interest rate exposure on $29.1 million and $44.0 million of its outstanding debt from a weighted average 15 AVIS RENT A CAR, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) variable interest rate to a fixed rate of 7.7% and 7.1% at December 31, 1995 and 1996, respectively. The variable interest element with respect to these interest rate swap agreements is reset quarterly. The interest rate swap agreements will terminate in March 1997, July 1998 and November 1998. The differential to be paid or received is recognized ratably as interest rates change over the life of the agreements as an adjustment to interest expense. The net interest differential charged to interest expense for the periods ended December 31, 1994, December 31, 1995, October 16, 1996 and December 31, 1996 was $179,000, $146,000, $582,000 and $285,000, respectively. The Company is exposed to credit risk in the event of nonperformance by counterparties to its interest rate swap agreements. Credit risk is limited by entering into such agreements with primary dealers only; therefore, the Company does not anticipate that nonperformance by counterparties will occur. Notwithstanding this, the Company's treasury department monitors counterparty credit ratings at least quarterly through reviewing independent credit agency reports. Both current and potential exposure are evaluated as necessary, by obtaining replacement cost information from alternative dealers. Potential loss to the Company from credit risk on these agreements is limited to amounts receivable, if any. NOTE 8 -- FAIR VALUE OF FINANCIAL INSTRUMENTS The carrying amount and the estimated fair value of the Company's interest rate swap agreements represent liabilities of approximately $123,600 and $843,100 at December 31, 1995, and $578,000 and $1.4 million at December 31, 1996, respectively. For instruments including cash and cash equivalents, accounts receivable and accounts payable, the carrying amount approximates fair value because of the short maturity of these instruments. The fair value of floating-rate debt approximates carrying value because these instruments re-price frequently at current market prices. The fair value of fixed-rate debt approximates carrying value. The Company believes that it is not practicable to estimate the current fair value of the amounts due from (to) affiliates because of the related party nature of the instruments. NOTE 9 -- INCOME TAXES The provision for income taxes for the periods ended December 31, 1994, December 31, 1995, October 16, 1996 and December 31, 1996 consists of the following (in thousands):
OCTOBER 17, 1996 YEARS ENDED DECEMBER (DATE OF 31, JANUARY 1, 1996 ACQUISITION) -------------------- TO TO 1994 1995 OCTOBER 16, 1996 DECEMBER 31, 1996 --------- --------- ---------------- ------------------- Current: State..................... $ 735 $ 1,422 $ 2,176 $ 719 Foreign .................. 10,094 7,361 6,680 288 --------- --------- ---------------- ------------------- 10,829 8,783 8,856 1,007 --------- --------- ---------------- ------------------- Deferred: Federal .................. 16,020 19,057 19,614 (85) Foreign .................. 3,364 6,795 2,728 118 --------- --------- ---------------- ------------------- 19,384 25,852 22,342 33 --------- --------- ---------------- ------------------- Provision for income taxes..................... $30,213 $34,635 $31,198 $1,040 ========= ========= ================ ===================
16 AVIS RENT A CAR, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) The effective income tax rate for the periods ended December 31, 1994, December 31, 1995, October 16, 1996 and December 31, 1996 varies from the statutory U.S. federal income tax rate due to the following (dollars amounts in thousands):
YEARS ENDED DECEMBER 31, ------------------------------------- 1994 1995 ------------------ ------------------ Statutory U.S. federal income tax rate........... $18,311 35.0% $21,245 35.0% Tax effect of foreign operations and dividends 9,447 18.1 8,984 14.8 Amortization of cost in excess of net assets acquired and other intangibles .............. 1,633 3.1 1,633 2.7 State income taxes, net of federal tax benefit ...... 478 .9 924 1.5 Other non-deductible business expenses ........ 550 .9 Other ..................... 344 .7 1,299 2.2 --------- ------- --------- ------- Effective income tax rate . $30,213 57.8% $34,635 57.1% ========= ======= ========= =======
(RESTUBBED TABLE CONTINUED FROM ABOVE)
OCTOBER 17, 1996 (DATE OF JANUARY 1, 1996 ACQUISITION) TO TO OCTOBER 16, 1996 DECEMBER 31, 1996 ----------------- ----------------- Statutory U.S. federal income tax rate........... $24,429 35.0% $ 791 35.0% Tax effect of foreign operations and dividends 5,134 7.4 (1,073) (47.5) Amortization of cost in excess of net assets acquired and other intangibles .............. 1,045 1.5 359 15.9 State income taxes, net of federal tax benefit ...... 1,413 2.0 469 20.8 Other non-deductible business expenses ........ 462 .6 494 21.8 Other ..................... (1,285) (1.8) --------- ------- --------- -------- Effective income tax rate . $31,198 44.7% $ 1,040 46.0% ========= ======= ========= ========
In accordance with SFAS 109, the net deferred income tax assets at December 31, 1995 and 1996 include the following (in thousands):
1995 1996 ----------- ----------- GROSS DEFERRED INCOME TAX ASSETS: Accrued liabilities ........................................ $ 108,914 $ 171,050 Net operating loss carryforwards ........................... 68,474 78,172 Alternative minimum income tax credit carryforwards ....... 3,025 3,025 ----------- ----------- 180,413 252,247 ----------- ----------- GROSS DEFERRED INCOME TAX LIABILITIES: Tax depreciation in excess of book depreciation ........... (116,304) (152,346) Tax amortization in excess of book amortization of cost in excess of net assets acquired and difference in book and tax basis of intangibles .................................. (13,547) Prepaids and other ......................................... (10,125) (8,682) ----------- ----------- (126,429) (174,575) ----------- ----------- Net deferred income tax assets.............................. $ 53,984 $ 77,672 =========== ===========
The Company, under its tax disaffiliation agreement with HFS, has allocated alternative minimum tax net operating loss carryforwards of $139.8 million. The net operating loss carryforward is $223.3 million. The net operating loss carryforwards expire as follows: 2001, $4.3 million; 2002, $2.5 million; 2005, $32.6 million; 2008, $23.7 million; 2009, $15.1 million. The Company also has available unused investment tax credits of approximately $5.8 million which expire on February 28, 2002. 17 AVIS RENT A CAR, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 10 -- RETIREMENT BENEFITS The Company, through its subsidiary, Avis Rent A Car System, Inc. ("ARACS"), sponsors non-contributory defined benefit plans covering employees who are members of certain collective bargaining units and non-union full-time employees hired prior to December 31, 1983 who were age 25 or above on January 1, 1985. ARACS also contributes to union sponsored pension plans. Through ARACS, the Company sponsors a Voluntary Investment Savings Plan under a "qualified cash or deferred arrangement" under Section 401(k) of the Internal Revenue Code. For the periods ended December 31, 1994, December 31, 1995, October 16, 1996, and December 31, 1996, the cost of the plan was $1.6 million, $1.7 million, $1.4 million and $352,000, respectively. Included in the Investment Savings Plan, ARACS sponsors a defined contribution plan for substantially all non-union full-time employees not otherwise covered. Costs for this plan are determined at 2% of each covered employee's compensation. Employer contributions and costs of the plan for the periods ended December 31, 1994, December 31, 1995, October 16, 1996 and December 31, 1996 amounted to $1.7 million, $1.8 million, $1.5 million and $394,000, respectively. The defined benefit plans provide benefits based upon years of credited service, highest average compensation and social security benefits. Annual retirement benefits, at age 65, are equal to 1 1/2% of the participating employee's final average compensation (average compensation during the highest five consecutive years of employment in the ten years prior to retirement) less 1 3/7% of the Social Security benefits for each year of service up to a maximum of 35 years. In addition, the plan provides for reduced benefits before age 65 and for a joint and survivor annuity option. The Company also sponsors several foreign pension plans. The most significant of these is the Canadian pension plan. The status of the defined benefit plans at December 31, 1995 and 1996 is as follows (in thousands):
1995 ---------------------------- U.S. PLANS ---------------------------- SALARIED AND HOURLY EMPLOYEES AS OF JUNE BARGAINING CANADIAN 30, 1985 PLAN PLAN -------------- ------------ ---------- Actuarial present value of accumulated benefit obligations: Vested................................................ $(37,040) $(5,327) $(2,349) Nonvested ............................................ (4,186) (201) -------------- ------------ ---------- Total ............................................... $(41,226) $(5,528) $(2,349) ============== ============ ========== Actuarial present value of projected benefit obligation............................................ $ 57,780 $ 5,528 $ 2,566 Plan assets at fair value ............................. 51,633 4,426 7,072 -------------- ------------ ---------- Projected benefit obligation (in excess of) less than plan assets .......................................... (6,147) (1,102) 4,506 Unrecognized net actuarial loss (gain) ................ 4,713 455 (557) Prior service cost (gain) not yet recognized in net periodic pension cost ................................ (2,798) 996 Remaining unrecognized obligation ..................... (1,451) Unrecognized net transition asset ..................... (2,944) -------------- ------------ ---------- Pension (liability) asset included in the statement of financial position.................................... $ (4,232) $(1,102) $ 1,005 ============== ============ ==========
18 AVIS RENT A CAR, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1996 ---------------------------- U.S. PLANS ---------------------------- SALARIED AND HOURLY EMPLOYEES AS OF JUNE BARGAINING CANADIAN 30, 1985 PLAN PLAN -------------- ------------ ---------- Actuarial present value of accumulated benefit obligations: Vested ............................................... $(43,406) $(7,147) $(3,389) Nonvested ............................................ (4,671) (284) -------------- ------------ ---------- Total ............................................... $(48,077) $(7,431) $(3,389) ============== ============ ========== Actuarial present value of projected benefit obligation ........................................... $ 66,083 $ 7,431 $ 3,703 Plan assets at fair value ............................. 60,697 6,623 8,323 -------------- ------------ ---------- Projected benefit obligation (in excess of) less than plan assets .......................................... (5,386) (808) 4,620 Unrecognized net actuarial loss (gain) ................ 1,440 37 (336) Prior service cost not yet recognized in net periodic pension cost ......................................... 878 Remaining unrecognized obligation ..................... (915) Unrecognized net transition asset ..................... (2,833) -------------- ------------ ---------- Pension (liability) asset included in the statement of financial position.................................... $ (3,946) $ (808) $ 1,451 ============== ============ ==========
Net pension costs of the defined benefit plans for the periods ended December 31, 1994, December 31, 1995, October 16, 1996 and December 31, 1996, include the following components (in thousands):
YEAR ENDED YEAR ENDED DECEMBER 31, 1994 DECEMBER 31, 1995 --------------------- ---------------------- U.S. CANADIAN U.S. CANADIAN PLANS PLAN PLANS PLAN --------- ---------- ---------- ---------- Service cost--benefits earned during the period .................................. $ 2,820 $ 102 $ 2,566 $ 76 Interest cost on projected benefit obligation .............................. 3,708 271 4,069 304 Return on assets--Actual loss (gain) on plan assets ............................. 1,626 (586) (10,768) (578) Net amortization of actuarial (gain) loss and prior service cost .................. (5,702) 6,184 Contributions to union plans and other .. 2,057 2,211 Amortization of unrecognized net asset at transition .............................. (134) (130) --------- ---------- ---------- ---------- Net pension cost (benefit) ............... $ 4,509 $ (347) $ 4,262 $ (328) ========= ========== ========== ==========
19 AVIS RENT A CAR, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 17, 1996 (DATE OF JANUARY 1, 1996 ACQUISITION) TO TO OCTOBER 16, 1996 DECEMBER 31, 1996 --------------------- -------------------- U.S. CANADIAN U.S. CANADIAN PLANS PLAN PLANS PLAN --------- ---------- -------- ---------- Service cost--benefits earned during the period .................................. $ 2,401 $ 59 $ 302 $ 28 Interest cost on projected benefit obligation .............................. 3,679 206 357 54 Return on assets--Actual (gain) on plan assets .................................. (3,194) (538) (551) (115) Net amortization of actuarial (gain) loss and prior service cost .................. (794) 390 Contributions to union plans and other .. 2,029 733 Amortization of unrecognized net asset at transition .............................. (106) (28) --------- ---------- -------- ---------- Net pension cost (benefit) ............... $ 4,121 $ (379) $1,231 $ (61) ========= ========== ======== ==========
At December 31, 1995 and 1996, the measurement of the projected benefit obligation was based upon the following:
1995 1996 ------------------ ------------------ U.S. CANADIAN U.S. CANADIAN PLANS PLAN PLANS PLAN ------- ---------- ------- ---------- Discount rate ................... 7.50% 9.50% 7.75% 7.00% Compensation increase ........... 5.00 5.50 5.00 4.00 Long-term return on plan assets 8.75 9.50 8.75 7.00
The U.S. plans' assets are invested in corporate bonds, U.S. government securities and common stock mutual funds. The Canadian plan's assets are invested in Canadian stocks, bonds, mutual funds, real estate and money market funds. The Company also sponsors a non-qualified defined benefit pension plan. The liability for this unfunded plan was $4.6 million and $8.8 million at December 31, 1995 and 1996, respectively, and is included in accrued liabilities on the accompanying statement of financial position. The projected benefit obligation of the plan was $6.0 million and $10.0 million at December 31, 1995 and 1996, respectively. NOTE 11 -- LEASES, AIRPORT CONCESSION FEES AND COMMITMENTS The Company is committed to make rental payments under noncancelable operating leases relating principally to vehicle rental facilities and equipment. Under certain leases, the Company is obligated to pay certain additional costs, such as property taxes, insurance and maintenance. Airport concession agreements usually require a guaranteed minimum amount plus contingent fees which are generally based on a percentage of revenues. 20 AVIS RENT A CAR, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Operating lease payments and airport concession fees charged to expense for the periods ended December 31, 1994, December 31, 1995, October 16, 1996 and December 31, 1996 are as follows (in thousands):
OCTOBER 17, 1996 YEARS ENDED DECEMBER (DATE OF 31, JANUARY 1, 1996 ACQUISITION) ---------------------- TO TO 1994 1995 OCTOBER 16, 1996 DECEMBER 31, 1996 ---------- ---------- ---------------- ------------------- Minimum fees........... $102,104 $108,965 $ 88,787 $23,576 Contingent fees ....... 45,633 56,624 61,290 13,220 ---------- ---------- ---------------- ------------------- 147,737 165,589 150,077 36,796 Less sublease rentals (4,082) (4,427) (3,843) (1,000) ---------- ---------- ---------------- ------------------- $143,655 $161,162 $146,234 $35,796 ========== ========== ================ ===================
Future minimum rental commitments under noncancelable operating leases amounted to approximately $338.0 million at December 31, 1996. The minimum rental payments due in each of the next five years ending December 31, and thereafter, are as follows (in thousands):
1997 ......... $86,264 1998 ......... 62,400 1999 ......... 43,179 2000 ......... 32,669 2001 ......... 20,805 Thereafter .. 92,709
In addition to the Company's lease commitments, the Company has outstanding purchase commitments of approximately $1.5 billion at December 31, 1996, which relate principally to vehicle purchases. 21 AVIS RENT A CAR, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 12 -- SEGMENT INFORMATION The Company operates in the United States and in foreign countries. The operations within major geographic areas for the periods ended December 31, 1994, December 31, 1995, October 16, 1996 and December 31, 1996 are summarized as follows (in thousands):
OCTOBER 17, 1996 (DATE OF YEARS ENDED DECEMBER 31, JANUARY 1, 1996 ACQUISITION) -------------------------- TO TO 1994 1995 OCTOBER 16, 1996 DECEMBER 31, 1996 ------------ ------------ ---------------- ------------------ Revenue: United States................. $1,241,465 $1,414,380 $1,313,619 $ 312,194 Australia/New Zealand ........ 92,929 113,744 105,401 31,107 Canada ....................... 59,571 67,809 69,814 13,467 Other foreign operations .... 18,435 20,018 15,839 6,076 ------------ ------------ ---------------- ------------------- $1,412,400 $1,615,951 $1,504,673 $ 362,844 ============ ============ ================ =================== Income (loss) before provision for income taxes: United States................. $ 21,759 $ 32,122 $ 48,098 $ (2,346) Australia/New Zealand ........ 14,736 17,198 15,884 4,706 Canada ....................... 7,434 6,838 8,433 (1,752) Other foreign operations .... 8,387 4,542 (2,616) 1,653 ------------ ------------ ---------------- ------------------- $ 52,316 $ 60,700 $ 69,799 $ 2,261 ============ ============ ================ =================== Total assets at end of period: United States................. $2,344,723 $2,535,621 $2,859,202 $2,750,119 Australia/New Zealand ........ 109,649 133,629 115,082 120,216 Canada ....................... 96,660 97,426 147,617 122,657 Other foreign operations .... 52,081 58,222 65,796 138,365 ------------ ------------ ---------------- ------------------- $2,603,113 $2,824,898 $3,187,697 $3,131,357 ============ ============ ================ ===================
NOTE 13 -- LITIGATION Certain litigation has been initiated against the Company which has arisen during the normal course of operations. Since litigation is subject to many uncertainties, the outcome of any individual matter is not predictable with any degree of certainty, and it is reasonably possible that one or more of these matters could be decided unfavorably against the Company. The Company maintains insurance policies that cover most of the actions brought against the Company. Two legal actions have been filed against ARACS alleging discrimination in the rental of vehicles. HFS has agreed to indemnify the Company from any unfavorable outcome with respect to these matters upon the consummation of an IPO. The Company is currently not involved in any legal proceeding which it believes would have a material adverse effect upon its consolidated financial condition or results of operations. NOTE 14 -- RELATED PARTY TRANSACTIONS The Company and Avis Europe, plc cooperate jointly in marketing and promotional activities, the exchange of reservations, the honoring of charge cards and vouchers, and the transfer of the related billings. A member of the board of directors and an executive officer of HFS serve on the board of Avis Europe Limited (formerly Cilva), the parent company of Avis Europe, plc. 22 AVIS RENT A CAR, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Vehicle manufacturers offer vehicle repurchase programs on an ongoing basis to assist in the acquisition and disposition of vehicles. These programs generally allow the Company, at its option, subject to certain provisions, to sell the vehicles back to the manufacturers at pre-determined prices. Amounts included under these programs are reflected in "Accounts receivable" (see Note 2). Under the terms of certain financing agreements with General Motors, the Company is required to purchase a significant percentage of its fleet from local dealers of General Motors subject to market conditions. In addition, the Company participates in an arrangement whereby General Motors provides payments for purchasing and promoting a specified number and mix of vehicles (see Note 4). At December 31, 1995 and 1996, the Company has a $450.0 million and a $250.0 million line of credit, respectively, from General Motors which may be used for either ESOP or vehicle trust financing (see Note 7). Of this facility, $300.0 million and $200.0 million is available for subordinated debt at December 31, 1995 and 1996, respectively. As of December 31, 1995 and 1996, the Company utilized $118.0 million of this facility, of which $93.4 million and $54.3 million was subordinated, respectively. This facility requires a fee of 1/4 of 1% on the unused portion. NOTE 15 -- SUBSEQUENT EVENTS On August 20, 1997, the Company purchased The First Gray Line Corporation and its subsidiaries for approximately $210 million, including expenses. The fair value of unaudited assets and liabilities, exclusive of cost in excess of the fair value of net assets acquired, at June 30, 1997 are $332.3 million and $296.3 million, respectively. The transaction is subject to customary closing conditions and regulatory approval. On July 31, 1997, the Company refinanced all of its domestic debt. This debt was refinanced by utilizing a $3.65 billion asset-backed structure, which consisted of (i) a $2.0 billion Commercial Paper Program and (ii) a $1.65 billion Medium Term Note Issuance with maturities of 3 and 5 years. ARACS is party to a $470.0 million secured credit agreement that provides for (i) a revolving credit facility in the amount of up to $125.0 million which is available on a revolving basis until December 31, 2000 (the "Final Maturity Date") in order to finance the general corporate needs of ARACS in the ordinary course of business (with up to $75.0 million of such amount available for the issuance of standby letters of credit to support worker's compensation and other insurance and bonding requirements of ARACS, the Company and their subsidiaries in the ordinary course of business), (ii) a term loan facility in the amount of $120.0 million to finance general corporate needs in the ordinary course of business, which will be repayable in four installments, the first three of which shall be in the amount of $1.0 million payable on June 30, 1998, June 30, 1999 and June 30, 2000 and the remainder of which will be due on the Final Maturity Date, and (iii) a standby letter of credit facility of up to $225.0 million available on a revolving basis to fund (a) any shortfall in certain payments owing pursuant to fleet lease agreements and (b) maturing Commercial Paper Notes if such Commercial Paper Notes cannot be repaid through the issuance of additional Commercial Paper Notes or draws under the Liquidity Facility. Under terms of this facility, the Company will be required to meet the following covenants (i) certain maximum leverage ratios, (ii) certain minimum interest coverage ratios, and (iii) certain minimum fixed charge coverage. In addition, the Credit Facility prohibits the payment of cash dividends until the fiscal year ending December 31, 1998 and, thereafter, permits the payment of dividends only if the Company meets a minimum leverage ratio, the amount of such dividend does not exceed a designated percentage of the Company's cash flow and no default exists. Interest rates under these new facilities ranged from 5.6% to 7.8% at July 31, 1997. 23