8-K

 
                      SECURITIES AND EXCHANGE COMMISSION

                            WASHINGTON, D.C.  20549

                                  ___________

                                   FORM 8-K

                                CURRENT REPORT
                    PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934


Date of Report (Date of earliest event reported):  May 8, 1998


                         ADVANCED MICRO DEVICES, INC.
                   _________________________________________
              (Exact Name of Registrant as Specified in Charter)


                                                                 
             Delaware                        001-07882                        94-1692300
- -------------------------------       -----------------------            ----------------------
(State or Other Jurisdiction of       (Commission File Number)              (I.R.S. Employer
         Incorporation)                                                    Identification No.)


                         One AMD Place, Sunnyvale, California  94086
              ----------------------------------------------------------------
                     (Address of Principal Executive Offices) (Zip Code)

                                       (408) 732-2400
                    ---------------------------------------------------
                    (Registrant's telephone number, including area code)
 
                                             N/A
                            ------------------------------------
                (Former Name or Former Address, if Changed Since Last Report)
 



 
ITEM 5.   OTHER EVENTS.

          On May 8, 1998, Advanced Micro Devices, Inc. (the "Company") completed
an underwritten offering of $517,500,000 aggregate principal amount of its 6%
Convertible Subordinated Notes due 2005 (the "Securities") under its
Registration Statement on Form S-3, filed with the Securities and Exchange
Commission (the "Commission") on March 3, 1998 (File No. 333-47243), as
amended by Amendment No. 1 filed with the Commission on April 17, 1998, a
Prospectus, dated April 20, 1998, and the related Prospectus Supplement, dated
May 5, 1998, relating to the offer and sale by the Company of the Securities.
The terms and conditions of the Securities and related matters are set forth
in the Underwriting Agreement, dated as of May 5, 1998, by and among the
Company, Donaldson, Lufkin & Jenrette Securities Corporation and Smith Barney
Inc. filed as Exhibit 1.1 hereto; the Indenture, dated as of May 8, 1998, by
and between the Company and The Bank of New York, as trustee (the
"Indenture"), filed as Exhibit 4.1 hereto; and, pursuant to Sections 2.01 and
10.04 of the Indenture, the Officers' Certificate filed as Exhibit 4.2 hereto.
A form of the Company's 6% Convertible Subordinated Note is filed as Exhibit
4.3 hereto.

                                       2

 
ITEM 7.   FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.

(c)       Exhibits
 
          The following exhibits are filed as part of this Report:
 
          No.      Exhibit
          ---      -------
 
          1.1      Underwriting Agreement dated as of May 5, 1998, by and among
                   the Company, Donaldson, Lufkin & Jenrette Securities
                   Corporation and Smith Barney Inc.

          4.1      Indenture dated as of May 8, 1998, by and between the Company
                   and The Bank of New York.

          4.2      Officers' Certificate dated as of May 8, 1998.

          4.3      Form of 6% Convertible Subordinated Note due 2005.

          5.1      Opinion of Latham & Watkins.
 

                                       3

 
                                   SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.

                         ADVANCED MICRO DEVICES, INC.
                              (Registrant)
 

                         By:  /s/ Thomas M. McCoy
                              ----------------------------
                              Thomas M. McCoy
                              Vice President, General Counsel and Secretary
 
 
Dated:  May 8, 1998

                                       4

 
                                 EXHIBIT INDEX

1.1  Underwriting Agreement dated as of May 5, 1998, by and among the Company,
     Donaldson, Lufkin & Jenrette Securities Corporation and Smith Barney Inc.

4.1  Indenture dated as of May 8, 1998, by and between the Company and The Bank
     of New York.

4.2  Officers' Certificate dated as of May 8, 1998.

4.3  Form of 6% Convertible Subordinated Note due 2005.

5.1  Opinion of Latham & Watkins.

                                       5

EX-1.1

                                                                     EXHIBIT 1.1
                                                                  EXECUTION COPY












 
                                 $450,000,000



                         ADVANCED MICRO DEVICES, INC.



                  6% Convertible Subordinated Notes due 2005



                            UNDERWRITING AGREEMENT
                            ----------------------



                                                                     May 5, 1998



DONALDSON, LUFKIN & JENRETTE
 SECURITIES CORPORATION
SMITH BARNEY INC.
c/o Donaldson, Lufkin & Jenrette Securities Corporation
    277 Park Avenue
    New York, New York 10172

Ladies and Gentlemen:

     Advanced Micro Devices, Inc., a Delaware corporation (the "COMPANY"),
proposes to issue and sell $450,000,000 principal amount of its 6% Convertible
Subordinated Notes due 2005 (the "FIRM SECURITIES"), convertible into shares of
the Company's common stock, par value $.01 per share (the "COMMON STOCK"), to
the several underwriters named in Schedule I hereto (the "UNDERWRITERS").  The
Company also proposes to issue and sell to the several Underwriters not more
than $67,500,000 in aggregate principal amount of 6% Convertible Subordinated
Notes due 2005 (the "ADDITIONAL SECURITIES"), if requested by the Underwriters
as provided in Section 2 hereof. The Firm Securities and the Additional
Securities are herein collectively called the Securities. The Securities are to
be issued pursuant to the provisions of an Indenture to be dated as of May 8,
1998 (the 

                                       1

 
"INDENTURE") between the Company and The Bank of New York, as Trustee (the
"TRUSTEE"). The terms of the Securities will be set forth in the Indenture as
supplemented by an Officers' Certificate, dated May 8, 1998 (the "OFFICERS'
CERTIFICATE").

     Section 1. Registration Statement and Prospectus. Commission (the
"COMMISSION") in accordance with the provisions of the Securities Act of 1933,
as amended, and the rules and regulations of the Commission thereunder
(collectively, the "ACT"), a registration statement on Form S-3 (File No. 333-
47243), including a prospectus relating to the Securities, which may be amended
or supplemented, relating to the registration of debt and other securities under
the Act and the offering thereof from time to time in accordance with Rule 415
under the Act. The registration statement, as amended at the time it became
effective, including the information (if any) deemed to be part of the
registration statement at the time of effectiveness pursuant to Rule 430A under
the Act, is hereinafter referred to as the "REGISTRATION STATEMENT"; and the
prospectus and the prospectus supplement in the form first used to confirm sales
of Securities (including (a) the information contained in any prospectus
supplement relating to the Securities or deemed to be part of the Registration
Statement at effectiveness pursuant to Rule 430A or Rule 434 of the Act, and (b)
any documents or information incorporated or deemed to be incorporated by
reference into such prospectus) is hereinafter referred to as the "PROSPECTUS."
The terms "supplement" and "amendment" or "amend" as used in this Agreement with
respect to the Registration Statement or the Prospectus shall include all
documents subsequently filed by the Company with the Commission pursuant to the
Securities Exchange Act of 1934, as amended, and the rules and regulations of
the Commission thereunder (collectively, the "EXCHANGE ACT") that are deemed to
be incorporated by reference in the Prospectus.

     Section 2. Agreements to Sell and Purchase. On the basis of the
representations and warranties contained in this Agreement, and subject to its
terms and conditions, the Company agrees to issue and sell, and each Underwriter
agrees, severally and not jointly, to purchase from the Company the principal
amount of Firm Securities set forth opposite the name of such Underwriter in
Schedule I hereto at 97.50% of the principal amount thereof (the "PURCHASE
PRICE"), plus accrued interest thereon, if any, from May 8, 1998 to the date of
payment and delivery.

     On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, (i) the Company agrees to

                                       2

 
issue and sell up to all of the Additional Securities and (ii) the Underwriters
shall have the right to purchase, severally and not jointly, up to all of the
Additional Securities from the Company at the Purchase Price.  Additional
Securities may be purchased (in integral multiples of $1,000), as provided for
in Section 4 hereof, solely for the purpose of covering over-allotments made in
connection with the offering of the Firm Securities.  The Underwriters may
exercise their right to purchase Additional Securities in whole or in part from
time to time by giving written notice thereof to the Company within 30 days
after the date of this Agreement; provided that the Underwriters may exercise
such right no more than twice within such 30-day period.  Such notice shall
specify the aggregate amount of Additional Securities to be purchased pursuant
to such exercise and the date for payment and delivery thereof. The date
specified in any such notice shall be a business day (i) no earlier than the
Closing Date (as hereinafter defined), (ii) no later than ten business days
after such notice has been given and (iii) no earlier than two business days
after such notice has been given. If any Additional Securities are to be
purchased, each Underwriter, severally and not jointly, agrees to purchase the
number of Additional Securities which bears the same proportion to the total
amount of Additional Securities to be purchased as the amount of Firm Securities
set forth opposite the name of such Underwriter in Schedule I bears to the total
amount of Firm Securities.

     The Company hereby agrees not to (i) offer, pledge, sell, contract to sell,
sell any option or contract to purchase, 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 or any securities
convertible into or exercisable or exchangeable for Common Stock or (ii) enter
into any swap or other arrangement that transfers all or a portion of the
economic consequences associated with the ownership of any Common Stock
(regardless of whether any of the transactions described in clause (i) or (ii)
is to be settled by the delivery of Common Stock, or such other securities, in
cash or otherwise), except to the Underwriters pursuant to this Agreement, for a
period of 60 days after the date of the Prospectus without the prior written
consent of Donaldson, Lufkin & Jenrette Securities Corporation.  Notwithstanding
the foregoing, during such period (i) the Company may grant stock options
pursuant to the Company's existing stock option plans, (ii) the Company may
issue shares of Common Stock upon the exercise of an option or warrant or the
conversion of a security outstanding on the date hereof or issued pursuant to
clause (i) above and (iii) the Company may issue shares of Common Stock pursuant
to its Employee Stock Purchase Plan.  The Company also agrees not to file any
registration statement with respect to any shares of Common Stock or any
securities convertible into or exercisable or

                                       3

 
exchangeable for Common Stock for a period of 60 days after the date of the
Prospectus without the prior written consent of Donaldson, Lufkin & Jenrette
Securities Corporation (other than a Registration Statement on Form S-8 with
respect to shares of Common Stock issuable under the Company's 1996 Stock
Incentive Plan). The Company shall, prior to or concurrently with the execution
of this Agreement, deliver an agreement executed by each of the directors and
executive officers of the Company to the effect that such person will not,
during the period commencing on the date such person signs such agreement and
ending 60 days after the date of the Prospectus (but in no event later than July
10, 1998), without the prior written consent of Donaldson, Lufkin & Jenrette
Securities Corporation, engage in any of the transactions described in the first
sentence of this paragraph.

     Section 3. Terms of Public Offering. The Company is advised by you that the
Underwriters propose (i) to make a public offering of their respective portions
of the Securities as soon after the execution and delivery of this Agreement as
in your judgment is advisable and (ii) initially to offer the Securities upon
the terms set forth in the Prospectus.

     Section 4. Delivery and Payment. A global certificate for the Securities
(the "GLOBAL CERTIFICATE") shall be registered in the name of Cede & Co.,
nominee of The Depository Trust Company ("DTC"). The Global Certificate shall be
made available to you for inspection not later than 9:30 A.M., New York City
time, on the business day prior to the Closing Date or, if applicable, each
Option Closing Date. The Global Certificate, or other form agreed to in the
alternative, evidencing the Securities, shall be delivered to the Trustee on
your behalf on the Closing Date or, if applicable, each Option Closing Date,
with any transfer taxes thereon duly paid by the Company, for the respective
accounts of the several Underwriters, against payment to the Company of the
Purchase Price therefore by wire transfer of Federal or other funds immediately
available in New York City. The time and date of delivery and payment for the
Securities shall be 9:00 A.M., New York City time, on May 8, 1998 or such other
time on the same or such other date as Donaldson, Lufkin & Jenrette Securities
Corporation and the Company shall agree in writing. The time and date of such
delivery and payment are hereinafter referred to as the "CLOSING DATE". The time
and date of delivery and payment for the Additional Securities shall be 9:00
A.M., New York City time, on such date or dates (each, an "OPTION CLOSING
DATE"), which may be the same as the Closing Date, but shall in no event be
earlier than the Closing Date, as shall be specified in the applicable exercise
notice given by you pursuant to Section 2. Any such Option Closing Date and the
location of delivery of and the form of payment for such Additional Securities
may be varied by agreement

                                       4

 
between you and the Company.

     The documents to be delivered on the Closing Date on behalf of the parties
hereto pursuant to Section 8 of this Agreement shall be delivered at the offices
of Latham & Watkins, 75 Willow Road, Menlo Park, California  94025.

     Section 5.  Agreements of the Company.  The Company agrees with you:

     (a) To advise you promptly and, if requested by you, to confirm such advice
in writing, (i) of any request by the Commission for amendments to the
Registration Statement or amendments or supplements to the Prospectus or for
additional information, (ii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of the suspension
of qualification of the Securities for offering or sale in any jurisdiction, or
the initiation of any proceeding for such purposes, (iii) when any post-
effective amendment to the Registration Statement becomes effective, and (iv) of
the happening of any event during the period referred to in Section 5(d) below
which makes any statement of a material fact made in the Registration Statement
or the Prospectus untrue or which requires any additions to or changes in the
Registration Statement or the Prospectus in order to make the statements therein
not misleading. If at any time the Commission shall issue any stop order
suspending the effectiveness of the Registration Statement, the Company will use
its commercially reasonable efforts to obtain the withdrawal or lifting of such
order at the earliest possible time.

     (b) To furnish to you three copies of the executed Registration Statement
as first filed with the Commission and of each amendment to it, including all
exhibits and documents incorporated therein by reference, and to furnish to you
and each Underwriter designated by you such number of conformed copies of the
Registration Statement as so filed and of each amendment to it, without exhibits
but including documents incorporated therein by reference, as you may reasonably
request.

     (c) To prepare the Prospectus, the form and substance of which shall be
satisfactory to you, and to file the Prospectus in such form with the Commission
within the applicable period specified in Rule 424(b) under the Act; during the
period specified in Section 5(d) below, not to file any further amendment to the
Registration Statement and not to make any amendment or supplement to the
Prospectus of which you shall not previously have been advised or to which you
shall reasonably object after being so advised; and, during such period, to
prepare and file with the Commission, promptly upon your reasonable request, any

                                       5

 
amendment to the Registration Statement or amendment or supplement to the
Prospectus which may be necessary or advisable in connection with the
distribution of the Securities by you, and to use its commercially reasonable
efforts to cause any such amendment to the Registration Statement to become
promptly effective.

     (d) To furnish to each of you and each dealer as many copies of the
Prospectus (and of any amendment or supplement to the Prospectus) as you or any
such dealer may reasonably request for such period as in the opinion of counsel
for the Underwriters a prospectus is required by law to be delivered in
connection with sales by you or a dealer.

     (e) If during the period specified in Section 5(d), any event shall occur
or condition shall exist as a result of which, in the opinion of counsel for the
Underwriters, it becomes necessary to amend or supplement the Prospectus in
order to make the statements therein, in the light of the circumstances when the
Prospectus is delivered to a purchaser, not misleading, or if, in the opinion of
counsel for the Underwriters, it is necessary to amend or supplement the
Prospectus to comply with applicable law, forthwith to prepare and file with the
Commission an appropriate amendment or supplement to the Prospectus so that the
statements in the Prospectus, as so amended or supplemented, will not in the
light of the circumstances when it is so delivered, be misleading, or so that
the Prospectus will comply with applicable law, and to furnish to each
Underwriter and to any dealer as many copies thereof as such Underwriter or
dealer may reasonably request.

     (f)  Prior to any public offering of the Securities, to cooperate with
you and counsel for the Underwriters in connection with the registration or
qualification of the Securities for offer and sale by the several Underwriters
and by dealers under the state securities or Blue Sky laws of such jurisdictions
as you may request, to continue such registration or qualification in effect so
long as required for distribution of the Securities and to file such consents to
service of process or other documents as may be necessary in order to effect
such registration or qualification; provided, however, that the Company shall
not be required in connection therewith to qualify as a foreign corporation in
any jurisdiction in which it is not now so qualified or to take any action that
would subject it to general consent to service of process or taxation other than
as to matters and transactions relating to the Prospectus, the Registration
Statement, any preliminary prospectus or the offering or sale of the Securities,
in any jurisdiction in which it is not now so subject.

                                       6

 
     (g)  To mail and make generally available to its security holders as soon
as reasonably practicable an earnings statement covering a period of at least
twelve months after the date of the Prospectus (but in no event commencing later
than 90 days after such date) that shall satisfy the provisions of Section 11(a)
of the Act, and to advise you in writing when such statement has been so made
available.

     (h) So long as the Securities are outstanding, (i) to mail and make
generally available as soon as reasonably practicable after the end of each
fiscal year to the record holders of the Securities a financial report of the
Company and its subsidiaries on a consolidated basis (and a similar financial
report of all unconsolidated subsidiaries, if any), all such financial reports
to include a consolidated balance sheet, a consolidated statement of operations,
a consolidated statement of cash flows and a consolidated statement of
shareholders' equity as of the end of and for such fiscal year, together with
comparable information as of the end of and for the preceding year, certified by
independent public accountants and (ii) to mail and make generally available as
soon as practicable after the end of each quarterly period (except for the last
quarterly period of each fiscal year) to such holders, a consolidated balance
sheet, a consolidated statement of operations and a consolidated statement of
cash flows (and similar financial reports of all unconsolidated subsidiaries, if
any) as of the end of and for such period, and for the period from the beginning
of such year to the close of such quarterly period, together with comparable
information for the corresponding periods of the preceding year.

     (i) So long as the Securities are outstanding, to furnish to you as soon as
available copies of all reports or other communications furnished to its
security holders or furnished to or filed with the Commission or any national
securities exchange on which any class of securities of the Company is listed
and such other publicly available information concerning the Company and its
subsidiaries as you may reasonably request.

     (j) To pay or cause to be paid all expenses incident to the performance of
its obligations under this Agreement, including: (i) the fees, disbursements and
expenses of the Company's counsel and the Company's accountants in connection
with the registration and delivery of the Securities under the Act and all other
fees and expenses in connection with the preparation, printing, filing and
distribution of the Registration Statement (including financial statements and
exhibits), any preliminary prospectus, the Prospectus and all amendments and
supplements to

                                       7

 
any of the foregoing, including the mailing and delivering of copies thereof to
the Underwriters and dealers in the quantities specified herein, (ii) all costs
and expenses related to the transfer and delivery of the Securities to the
Underwriters, including any transfer or other taxes payable thereon, (iii) all
costs of printing or producing this Agreement and any other agreements or
documents in connection with the offering, purchase, sale or delivery of the
Securities, (iv) all expenses in connection with the registration or
qualification of the Securities for offer and sale under the securities or Blue
Sky laws of the several states and all costs of printing or producing any
Preliminary and Supplemental Blue Sky Memoranda in connection therewith
(including the filing fees and fees and disbursements of counsel for the
Underwriters in connection with such registration or qualification and memoranda
relating thereto), (v) all costs and expenses incident to the listing of the
shares of Common Stock issuable upon conversion of the Securities on the New
York Stock Exchange (the "NYSE"), (vi) the cost of printing certificates
representing the Securities, (vii) the costs and charges of any transfer agent,
registrar and/or depositary (including DTC), (viii) any fees charged by rating
agencies for the rating of the Securities, (ix) the fees and expenses of the
Trustee and the Trustee's counsel in connection with the Indenture and the
Securities and (x) all other costs and expenses incident to the performance of
the obligations of the Company hereunder for which provision is not otherwise
made in this Section.

     (k) To use its best efforts to list, subject to notice of issuance, the
shares of Common Stock issuable upon conversion of the Securities on the NYSE
and to maintain the listing of such shares of Common Stock on the NYSE for so
long as the Securities are outstanding.

     (l) During the period beginning on the date hereof and continuing to and
including the Closing Date, not to offer, sell, contract to sell or otherwise
transfer or dispose of any debt securities of the Company or any warrants,
rights or options to purchase or otherwise acquire debt securities of the
Company substantially similar to the Securities (other than (i) the Securities
and (ii) commercial paper issued in the ordinary course of business), without
the prior written consent of Donaldson, Lufkin & Jenrette Securities
Corporation.

     (m) Not to voluntarily claim, and to actively resist any attempts to claim,
the benefit of any usury laws against the holders of the Securities.

     (n) To use its commercially reasonable efforts to do and perform all things
required or necessary to be done and performed under this Agreement by the
Company prior to the Closing Date and to satisfy all conditions precedent to

                                       8

 
the delivery of the Securities.


     Section 6.  Representations and Warranties of the Company.  The Company
represents and warrants to each Underwriter that:

     (a) The Registration Statement has become effective; and no stop order
suspending the effectiveness of the Registration Statement is in effect, and no
proceedings for such purpose are pending before or threatened by the Commission.


 (b) (i) Each document, if any, filed or to be filed pursuant to the
Exchange Act and incorporated by reference in the Prospectus complied or will
comply when so filed in all material respects with the Exchange Act, (ii) the
Registration Statement, when it became effective, did not contain and, as
amended, if applicable, will not contain any 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, (ii) the Registration Statement and
the Prospectus comply and, as amended or supplemented, if applicable, will
comply in all material respects with the Act, and (iv) the Prospectus does not
contain and, as amended or supplemented, if applicable, will not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, except that the representations and warranties
set forth in this paragraph do not apply to statements or omissions in the
Registration Statement or the Prospectus based upon information relating to any
Underwriter furnished to the Company in writing by such Underwriter through you
expressly for use therein.



     (c) Each preliminary prospectus or preliminary prospectus supplement filed
as part of the registration statement as originally filed or as part of any
amendment thereto, or filed pursuant to Rule 424 under the Act, complied when so
filed in all material respects with the Act, 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, in the light of the
circumstances under which they were made, not misleading, except that the
representations and warranties set forth in this paragraph do not apply to
statements or omissions in any preliminary prospectus or preliminary prospectus
supplement based upon information relating to any Underwriter furnished to the
Company in writing by such Underwriter through you expressly for use therein.

                                       9

 
     (d) The Company meets the requirements for the use of Form S-3 under the
Act.

     (e) The Company and each of its subsidiaries has been duly incorporated, is
validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation and has the corporate power and authority to carry
on its business as described in the Prospectus and to own, lease and operate its
properties, and each is duly qualified and is in good standing as a foreign
corporation authorized to do business in each jurisdiction in which the nature
of its business or its ownership or leasing of property requires such
qualification, except where the failure to be so qualified would not have a
material adverse effect on the Company and its subsidiaries, taken as a whole.

     (f) The Company has all necessary corporate power and authority to execute
and deliver this Agreement, the Securities and the Indenture and to perform its
obligations under this Agreement, the Securities and the Indenture, and to
authorize, issue, sell and deliver the Securities as contemplated by this
Agreement.

     (g) The Company has an authorized capitalization as set forth in the
Prospectus, and all the outstanding shares of capital stock of the Company have
been duly authorized and validly issued and are fully paid, non-assessable and
not subject to any preemptive or similar rights; and the shares of Common Stock
issuable upon conversion of the Securities have been duly authorized and, when
issued and delivered upon conversion of the Securities in accordance with their
terms, will be validly issued, fully paid and non-assessable, and the issuance
of such shares of Common Stock will not be subject to any preemptive or similar
rights. Upon payment of the Purchase Price and delivery of the Global
Certificate representing the Securities, each of the Underwriters will receive
the Securities free and clear of all liens, security interests or encumbrances.

     (h) All of the outstanding shares of capital stock of each of the Company's
subsidiaries have been duly authorized and validly issued and are fully paid and
non-assessable, and are owned by the Company, directly or indirectly through one
or more subsidiaries, free and clear of any security interest, claim, lien,
encumbrance or adverse interest of any nature (each, a "LIEN").

     (i) The Indenture has been duly qualified under the Trust Indenture Act of
1939, as amended (the "TRUST INDENTURE ACT"), and has been duly authorized,
executed and delivered by the Company and is a valid and binding

                                       10

 
agreement of the Company, enforceable in accordance with its terms except as (A)
the enforceability thereof may be limited by bankruptcy, insolvency or similar
laws affecting creditors' rights generally and (B) rights of acceleration and
the availability of equitable remedies may be limited by equitable principles of
general applicability.

     (j) The Securities have been duly authorized and, on the Closing Date, will
have been validly executed and delivered by the Company. When the Securities
have been executed and authenticated in accordance with the provisions of the
Indenture and delivered to and paid for by the Underwriters in accordance with
the terms of this Agreement, the Securities will be entitled to the benefits of
the Indenture and will be valid and binding obligations of the Company,
enforceable in accordance with their terms except as (A) the enforceability
thereof may be limited by bankruptcy, insolvency or similar laws affecting
creditors' rights generally and (B) rights of acceleration and the availability
of equitable remedies may be limited by equitable principles of general
applicability.

     (k) This Agreement has been duly authorized, executed and delivered by the
Company and is a valid and binding agreement of the Company enforceable in
accordance with its terms (except as rights to indemnity and contribution
hereunder may be limited by applicable law).

     (l) The Securities conform as to legal matters to the description thereof
contained in the Prospectus.

     (m) Neither the Company nor any of its subsidiaries is in violation of its
respective charter or by-laws or in default in the performance of any
obligation, agreement, covenant or condition contained in any indenture, loan
agreement, mortgage, lease or other agreement or instrument that is material to
the Company and its subsidiaries, taken as a whole, to which the Company or any
of its subsidiaries is a party or by which the Company or any of its
subsidiaries or their respective property is bound.

     (n) The execution, delivery and performance of this Agreement, the
Indenture and the Securities by the Company, the compliance by the Company with
all the provisions hereof and thereof and the consummation of the transactions
contemplated hereby and thereby will not (i) require any consent, approval,
authorization or other order of, or qualification with, any court or
governmental body or agency (except such as may be required under the securities
or Blue Sky laws of the various states), (ii) conflict with or constitute a
breach of any of the terms or provisions of, or a default under, the charter or
by-laws of the

                                       11

 
Company or any of its subsidiaries or any indenture, loan agreement, mortgage,
lease or other agreement or instrument that is material to the Company and its
subsidiaries, taken as a whole, to which the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries or their
respective property is bound, (iii) violate or conflict with any applicable law
or any rule, regulation, judgment, order or decree of any court or any
governmental body or agency having jurisdiction over the Company, any of its
subsidiaries or their respective property, (iv) result in the imposition or
creation of (or the obligation to create or impose) a Lien under any agreement
or instrument to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries or their respective property is
bound or (v) result in the suspension, termination or revocation of any
Authorization (as defined below) of the Company or any of its subsidiaries or
any other impairment of the rights of the holder of any such Authorization.

     (o) There are no legal or governmental proceedings pending or, to the best
of the Company's knowledge, threatened to which the Company or any of its
subsidiaries is or could be a party or to which any of their respective property
is or could be subject that are required to be described in the Registration
Statement or the Prospectus and are not so described; nor are there any
statutes, regulations, contracts or other documents that are required to be
described in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement that are not so described or filed as
required.

     (p) Except as set forth in the Prospectus, neither the Company nor any of
its subsidiaries has violated any foreign, federal, state or local law or
regulation relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("ENVIRONMENTAL LAWS"), any provisions of the Employee Retirement
Income Security Act of 1974, as amended, or any provisions of the Foreign
Corrupt Practices Act or the rules and regulations promulgated thereunder,
except for such violations which, singly or in the aggregate, would not have a
material adverse effect on the business, prospects, financial condition or
results of operation of the Company and its subsidiaries, taken as a whole.

     (q) Each of the Company and its subsidiaries has such permits, licenses,
consents, exemptions, franchises, authorizations and other approvals (each, an
"AUTHORIZATION") of, and has made all filings with and notices to, all
governmental or regulatory authorities and self-regulatory organizations and all
courts and other tribunals, including, without limitation, under any applicable

                                       12

 
Environmental Laws, as are necessary to own, lease, license and operate its
respective properties and to conduct its business, except where the failure to
have any such Authorization or to make any such filing or notice would not,
singly or in the aggregate, have a material adverse effect on the Company and
its subsidiaries, taken as a whole. Each such Authorization is valid and in full
force and effect and each of the Company and its subsidiaries is in compliance
with all the terms and conditions thereof and with the rules and regulations of
the authorities and governing bodies having jurisdiction with respect thereto;
and no event has occurred (including, without limitation, the receipt of any
notice from any authority or governing body) which allows or, after notice or
lapse of time or both, would allow, revocation, suspension or termination of any
such Authorization or results or, after notice or lapse of time or both, would
result in any other impairment of the rights of the holder of any such
Authorization; and such Authorizations contain no restrictions that are
burdensome to the Company or any of its subsidiaries; except where such failure
to be valid and in full force and effect or to be in compliance, the occurrence
of any such event or the presence of any such restriction would not, singly or
in the aggregate, have a material adverse effect on the Company and its
subsidiaries, taken as a whole.

     (r) In the ordinary course of its business, the Company conducts a periodic
review of the effect of Environmental Laws on the business, operations and
properties of the Company and its subsidiaries, in the course of which it
identifies and evaluates associated costs and liabilities (including, without
limitation, any capital or operating expenditures required for clean-up, closure
of properties or compliance with Environmental Laws or any permit, license or
approval, any related constraints on operating activities and any potential
liabilities to third parties). On the basis of such review, the Company has
reasonably concluded that such associated costs and liabilities would not,
singly or in the aggregate, have a material adverse effect on the Company and
its subsidiaries, taken as a whole.

     (s) The Company and each of its subsidiaries maintains insurance covering
its properties, operations, personnel and businesses. Such insurance insures
against such losses and risks as are adequate in accordance with customary
industry practice to protect the Company and each of its subsidiaries and its
businesses. Neither the Company nor any of its subsidiaries has received notice
from any insurer or agent of such insurer that substantial capital improvements
or other expenditures will have to be made in order to continue such insurance.
All such insurance is outstanding and duly in force on the date hereof and will
be outstanding and duly in force on the Closing Date.

                                       13

 
     (t) Ernst & Young LLP are independent public accountants with respect to
the Company and its subsidiaries as required by the Act.

     (u) The consolidated financial statements included or incorporated by
reference in the Registration Statement and the Prospectus (and any amendment or
supplement thereto), together with related schedules and notes, present fairly
the consolidated financial position, results of operations and changes in
financial position of the Company and its subsidiaries on the basis stated
therein at the respective dates or for the respective periods to which they
apply; such statements and related schedules and notes have been prepared in
accordance with generally accepted accounting principles consistently applied
throughout the periods involved, except as disclosed therein; the supporting
schedules, if any, included or incorporated by reference in the Registration
Statement present fairly in accordance with generally accepted accounting
principles the information required to be stated therein; and the other
financial and statistical information and data set forth or incorporated by
reference in the Registration Statement and the Prospectus (and any amendment or
supplement thereto) are, in all material respects, accurately presented and
prepared on a basis consistent with such financial statements and the books and
records of the Company.

     (v) The Company is not and, after giving effect to the offering and sale of
the Securities and the application of the proceeds thereof as described in the
Prospectus, will not be, an "investment company" as such term is defined in the
Investment Company Act of 1940, as amended.

     (w) There are no contracts, agreements or understandings between the
Company and any person granting such person the right to require the Company to
file a registration statement under the Act with respect to any securities of
the Company or to require the Company to include such securities with the
Securities registered pursuant to the Registration Statement.

     (x) Since the date of the Prospectus, no "nationally recognized statistical
rating organization" as such term is defined for purposes of Rule 436(g)(2)
under the Act has indicated to the Company that it is considering (i) the
downgrading, suspension or withdrawal of, or any review for a possible change
that does not indicate the direction of the possible change in, any rating
assigned to the Company or any securities of the Company or (ii) any change in
the outlook for any rating of the Company or any securities of the Company.

                                       14

 
     (y) The Company and its subsidiaries own or possess, or can acquire on
reasonable terms, all patents, patent rights, licenses, inventions, copyrights,
know-how (including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures), trademarks,
service marks and trade names ("INTELLECTUAL PROPERTY") currently employed by
them in connection with the business now operated by them except where the
failure to own or possess or otherwise be able to acquire such intellectual
property would not, singly or in the aggregate, have a material adverse effect
on the Company and its subsidiaries, taken as a whole; and except as set forth
in the Prospectus, neither 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 such intellectual property which, singly or in the aggregate,
if the subject of an unfavorable decision, ruling or finding, would have a
material adverse effect on the Company and its subsidiaries, taken as a whole.

     (z) Since the respective dates as of which information is given in the
Prospectus other than as set forth in the Prospectus (exclusive of any
amendments or supplements thereto subsequent to the date of this Agreement), (i)
there has not occurred any material adverse change or any development involving
a prospective material adverse change in the condition, financial or otherwise,
or the earnings, business, management or operations of the Company and its
subsidiaries, taken as a whole, (ii) there has not been any material adverse
change or any development involving a prospective material adverse change in the
capital stock or in the long-term debt of the Company and its subsidiaries,
taken as a whole and (iii) neither the Company nor any of its subsidiaries has
incurred any liability or obligation, direct or contingent, which is material to
the Company and its subsidiaries, taken as a whole, other than as reflected in
the Registration Statement and the Prospectus.

     (aa) There are no outstanding subscriptions, rights, warrants, options,
calls, convertible securities, commitments of sale or liens related to or
entitling any person to purchase or otherwise to acquire any shares of the
capital stock of, or other ownership interest in, the Company or any subsidiary
thereof except as otherwise disclosed in the Registration Statement.

     (ab) Except as disclosed in the Prospectus, there are no business
relationships or related party transactions required to be disclosed therein by
Item 404 of Regulation S-K of the Commission.

                                       15

 
     (ac) There is (i) no significant unfair labor practice complaint pending
against the Company or any of its subsidiaries or, to the best knowledge of the
Company, threatened against any of them, before the National Labor Relations
Board or any state or local labor relations board, and no significant grievance
or more significant arbitration proceeding arising out of or under any
collective bargaining agreement is so pending against the Company or any of its
subsidiaries or, to the best knowledge of the Company, threatened against any of
them, and (ii) no significant strike, labor dispute, slowdown or stoppage
pending against the Company or any of its subsidiaries or, to the best knowledge
of the Company, threatened against it or any of its subsidiaries except for such
actions specified in clause (i) or (ii) above, which, singly or in the aggregate
could not reasonably be expected to have a material adverse effect on the
Company and its subsidiaries, taken as a whole.

     (ad) The Company and each of its subsidiaries maintains a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management's general or specific
authorization, and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.

     (ae) All material tax returns required to be filed by the Company and each
of its subsidiaries in any jurisdiction have been filed, other than those
filings being contested in good faith, and all material taxes, including
withholding taxes, penalties and interest, assessments, fees and other charges
due pursuant to such returns or pursuant to any assessment received by the
Company or any of its subsidiaries have been paid, other than those being
contested in good faith and for which adequate reserves have been provided.

     (af) With the exception of this Agreement, there are no contracts,
agreements or understandings between the Company or any of its subsidiaries and
any person that would give rise to a valid claim against the Company, any of its
subsidiaries or any Underwriter for a brokerage commission, finder's fee or like
payment in connection with the issuance, purchase and sale of the Securities.

     (ag) Neither the Company nor any of its subsidiaries has (i) taken,

                                       16

 
directly or indirectly, any action designed to cause or to result in, or that
has constituted or that might reasonably be expected to constitute, the
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Securities or (ii) since the initial filing
of the Registration Statement (A) sold, bid for, purchased, or paid anyone any
compensation for soliciting purchases of, the Securities or (B) paid or agreed
to pay to any person any compensation for soliciting another to purchase any
other securities of the Company.

     Section 7. Indemnification. (a) The Company agrees to indemnify and hold
harmless each Underwriter, its directors, its officers and each person, if any,
who controls any Underwriter within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, from and against any and all losses, claims,
damages, liabilities and judgments (including, without limitation, any legal or
other expenses incurred in connection with investigating or defending any
matter, including any action, that could give rise to any such losses, claims,
damages, liabilities or judgments) caused by any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement (or
any amendment thereto), the Prospectus (or any amendment or supplement thereto)
or any preliminary prospectus, or caused by any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, except insofar as such losses, claims,
damages, liabilities or judgments are caused by any such untrue statement or
omission or alleged untrue statement or omission based upon information relating
to any Underwriter furnished in writing to the Company by such Underwriter
through you expressly for use therein; provided, however, that the foregoing
indemnity agreement with respect to any preliminary prospectus shall not inure
to the benefit of any Underwriter who failed to deliver a Prospectus, as then
amended or supplemented, (so long as the Prospectus and any amendment or
supplemented thereto was provided by the Company to the several Underwriters in
the requisite quantity and on a timely basis to permit proper delivery on or
prior to the Closing Date) to the person asserting any losses, claims, damages,
liabilities or judgements caused by any untrue statement or alleged untrue
statement of a material fact contained in the preliminary prospectus, or caused
by any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading, if
such material misstatement or omission or alleged material misstatement or
omission was cured in the Prospectus, as so amended or supplemented, and such
Prospectus was required by law to be delivered at or prior to the written
confirmation of sale to

                                       17

 
such person.

     (b) Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Company, its directors, its officers who sign the Registration
Statement and each person, if any, who controls the Company within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act, to the same extent
as the foregoing indemnity from the Company to such Underwriter but only with
reference to information relating to such Underwriter furnished in writing to
the Company by such Underwriter through you expressly for use in the
Registration Statement (or any amendment thereto), the Prospectus (or any
amendment or supplement thereto) or any preliminary prospectus.

     (c) In case any action shall be commenced against any person in respect of
which indemnity may be sought pursuant to Section 7(a) or 7(b) (the "indemnified
party"), the indemnified party shall promptly notify the person against whom
such indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party shall assume the defense of such action, including the
employment of counsel reasonably satisfactory to the indemnified party and the
payment of all fees and expenses of such counsel, as incurred (except that in
the case of any action in respect of which indemnity may be sought pursuant to
both Sections 7(a) and 7(b), the Underwriter shall not be required to assume the
defense of such action pursuant to this Section 7(c), but may employ separate
counsel and participate in the defense thereof, but the fees and expenses of
such counsel, except as provided below, shall be at the expense of such
Underwriter). Any indemnified party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of the indemnified party
unless (i) the employment of such counsel shall have been specifically
authorized in writing by the indemnifying party, (ii) the indemnifying party
shall have failed to assume the defense of such action or employ counsel
reasonably satisfactory to the indemnified party or (iii) the named parties to
any such action (including any impleaded parties) include both the indemnified
party and the indemnifying party, and the indemnified party shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the
indemnifying party (in which case the indemnifying party shall not have the
right to assume the defense of such action on behalf of the indemnified party).
In any such case, the indemnifying party shall not, in connection with any one
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the fees and expenses of more than one separate firm

                                       18

 
of attorneys (in addition to any local counsel) for all indemnified parties and
all such fees and expenses shall be reimbursed as they are incurred. Such firm
shall be designated in writing by Donaldson, Lufkin & Jenrette Securities
Corporation, in the case of parties indemnified pursuant to Section 7(a), and by
the Company, in the case of parties indemnified pursuant to Section 7(b). The
indemnifying party shall indemnify and hold harmless the indemnified party from
and against any and all losses, claims, damages, liabilities and judgments by
reason of any settlement of any action (i) effected with its written consent or
(ii) effected without its written consent if the settlement is entered into more
than twenty business days after the indemnifying party shall have received a
request from the indemnified party for reimbursement for the fees and expenses
of counsel (in any case where such fees and expenses are at the expense of the
indemnifying party) and, prior to the date of such settlement, the indemnifying
party shall have failed to comply with such reimbursement request. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement or compromise of, or consent to the entry of
judgment with respect to, any pending or threatened action in respect of which
the indemnified party is or could have been a party and indemnity or
contribution may be or could have been sought hereunder by the indemnified
party, unless such settlement, compromise or judgment (i) includes an
unconditional release of the indemnified party from all liability on claims that
are or could have been the subject matter of such action and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act, by or on behalf of the indemnified party.

     (d) To the extent the indemnification provided for in this Section 7 is
unavailable to an indemnified party or insufficient in respect of any losses,
claims, damages, liabilities or judgments referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities and judgments (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Underwriters on the other hand from the offering
of the Securities or (ii) if the allocation provided by clause 7(d)(i) above is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause 7(d)(i) above but also the
relative fault of the Company on the one hand and the Underwriters on the other
hand in connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities or judgments, 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 shall be deemed to be in the
same proportion as the total net proceeds from the

                                       19

 
offering (after deducting underwriting discounts and commissions but before
deducting expenses) received by the Company, and the total underwriting
discounts and commissions received by the Underwriters, bear to the total price
to the public of the Securities, in each case as set forth in the table on the
cover page of the Prospectus. The relative fault of the Company on the one hand
and 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 the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.

     The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7(d) 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 which 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, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses incurred by such indemnified party in
connection with investigating or defending any matter, including any action,
that could have given rise to such losses, claims, damages, liabilities or
judgments. Notwithstanding the provisions of this Section 7, no Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the Securities underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages which 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 Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute
pursuant to this Section 7(d) are several in proportion to the respective
principal amount of Securities purchased by each of the Underwriters hereunder
and not joint.

     (e) The remedies provided for in this Section 7 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 8.  Conditions of Underwriters' Obligations.  The several 

                                       20

 
obligations of the Underwriters to purchase the Securities under this Agreement
are subject to the satisfaction of each of the following conditions:

     (a) All the representations and warranties of the Company contained in this
Agreement shall be true and correct on the Closing Date and the Option Closing
Date, as applicable, with the same force and effect as if made on and as of the
Closing Date or the Option Closing Date, as the case may be.

     (b) At the Closing Date, no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been commenced or shall be pending before or contemplated by
the Commission.

     (c) On or after the date hereof, (i) there shall not have occurred any
downgrading, suspension or withdrawal of, nor shall any notice have been given
of any potential or intended downgrading, suspension or withdrawal of, or of any
review (or of any potential or intended review) for a possible change that does
not indicate the direction of the possible change in, any rating of the Company
or any securities of the Company (including, without limitation, the placing of
any of the foregoing ratings on credit watch with negative or developing
implications or under review with an uncertain direction) by any "nationally
recognized statistical rating organization" as such term is defined for purposes
of Rule 436(g)(2) under the Act, and (ii) there shall not have occurred any
change, nor shall any notice have been given of any potential or intended
change, in the outlook for any rating of the Company or any securities of the
Company by any such rating organization.

     (d) You shall have received on the Closing Date and the Option Closing Date
a certificate dated the Closing Date or the Option Closing Date, as the case may
be, signed by W.J. Sanders III and Richard Previte, in their capacities as the
Chief Executive Officer and Chief Financial Officer, respectively, of the
Company, confirming the matters set forth in Sections 8(a), 8(b), 8(c) and 8(e)
and that the Company has complied with all of the agreements and satisfied all
of the conditions herein contained and required to be complied with or satisfied
by the Company on or prior to the Closing Date or the Option Closing Date, as
the case may be.

     (e) Since the respective dates as of which information is given in the
Prospectus other than as set forth in the Prospectus (exclusive of any
amendments or supplements thereto subsequent to the date of this Agreement), (i)
there shall

                                       21

 
not have occurred any material adverse change or any development involving a
prospective material adverse change in the condition, financial or otherwise, or
the earnings, business, management or operations of the Company and its
subsidiaries, taken as a whole, (ii) there shall not have been any change or any
development involving a prospective material adverse change in the capital stock
or in the long-term debt of the Company and its subsidiaries, taken as a whole,
and (iii) the Company and its subsidiaries shall not have incurred any liability
or obligation, direct or contingent, which is material to the Company and its
subsidiaries, taken as a whole, other than as reflected in the Registration
Statement and the Prospectus.

     (f) You shall have received on the Closing Date and the Option Closing
Date, as applicable, an opinion (satisfactory to you and counsel for the
Underwriters), dated the Closing Date or the Option Closing Date, as applicable,
of Latham & Watkins, counsel for the Company, to the effect that:

          (i) the Company has been duly incorporated, is validly existing as a
     corporation in good standing under the laws of its jurisdiction of
     incorporation and has the corporate power and authority to carry on its
     business as described in the Prospectus and to own, lease and operate its
     properties;

          (ii) the Securities have been duly authorized by the Company and, when
     executed and authenticated in accordance with the provisions of the
     Indenture and delivered to and paid for by the Underwriters in accordance
     with the terms of this Agreement, will be legally valid and binding
     obligations of the Company, enforceable against the Company in accordance
     with their terms; the shares of Common Stock into which the Securities are
     convertible have been duly authorized, and when issued upon conversion of
     the Securities will be validly issued, fully paid and non-assessable and
     not subject to any statutory preemptive rights or, to the knowledge of such
     counsel, any other similar rights;

          (iii) the Indenture has been duly qualified under the Trust Indenture
     Act and has been duly authorized, executed and delivered by the Company and
     is a valid and binding agreement of the Company, enforceable in accordance
     with its terms;

          (iv) this Agreement has been duly authorized, executed and delivered
     by the Company;

                                       22

 
          (v) the Registration Statement has become effective under the Act,
     and, to such counsel's knowledge, no stop order suspending its
     effectiveness has been issued under the Act and no proceedings therefor
     have been initiated by the Commission;

          (vi) the statements under the captions "Description of Notes",
     "Certain Federal Income Tax Considerations", "Description of Debt
     Securities" and "Description of Common Stock" in the Prospectus, insofar as
     such statements constitute a summary of the legal matters or documents
     referred to therein, are accurate in all material respects;

          (vii) no consent, approval, authorization or order of, or filing with,
     any state or federal court or governmental agency or body is required for
     the issuance and sale of the Securities or for the execution, delivery and
     performance by the Company of its obligations under this Agreement, the
     Indenture or the Securities, except such as have been obtained under the
     Act and the Trust Indenture Act and the applicable rules and regulations of
     the Commission under the Act and the Trust Indenture Act and such as may be
     required under state securities laws in connection with the purchase and
     distribution of the Securities by the Underwriters as to which such counsel
     need not express an opinion;

          (viii) the Company is not in violation of its Certificate of
     Incorporation or Bylaws, and the issuance and sale of the Securities being
     delivered on the date hereof by the Company and the compliance by the
     Company with the provisions of this Agreement will not result in the
     violation by the Company of its Certificate of Incorporation or Bylaws or
     any state or federal statute, rule or regulation known to such counsel to
     be applicable to the Company (other than federal securities laws, which are
     specifically addressed in paragraph (vii) above, or state securities laws,
     as to which such counsel need not express an opinion);

          (ix) the Company is not an "investment company" as such term is
     defined in the Investment Company Act of 1940, as amended;

          (x) the Registration Statement and the Prospectus, in each case
     excluding the documents referred to in paragraph (xi) below, comply as to
     form in all material respects with the requirements for Registration
     Statements on Form S-3 under the Act and the applicable rules and

                                       23

 
     regulations of the Commission thereunder, except that such counsel need not
     express an opinion with respect to the financial statements, schedules and
     other financial data included or incorporated in the Registration Statement
     or Prospectus or with respect to the Statement of Eligibility of the
     Trustee on Form T-1 (the "Form T-1"); and

          (xi) each of the documents incorporated by reference in the Prospectus
     (the "Incorporated Documents") (other than the financial statements,
     schedules and other financial data included or incorporated by reference
     therein, as to which such counsel need not express an opinion), when it was
     filed with the Commission, appeared on its face to comply as to form in all
     material respects with the requirements of the Exchange Act and the
     applicable rules and regulations of the Commission thereunder.


     In addition, Latham & Watkins shall state that it has participated in
conferences with officers and other representatives of the Company,
representatives of the independent public accountants for the Company, and
representatives of the Underwriters, at which the contents of the Registration
Statement and the Prospectus and related matters were discussed and, although
such counsel is not passing upon, and does not assume any responsibility for,
the accuracy, completeness or fairness of the statements contained in the
Registration Statement and the Prospectus and has not made any independent check
or verification thereof (except as set forth in paragraph (vi) above), during
the course of such participation, no facts came to such counsel's attention that
caused such counsel to believe that the Registration Statement, at the time it
became effective, contained an untrue statement of a material fact or omitted to
state a material fact necessary to make the statements therein, not misleading,
or that the Prospectus, as of the date of the Prospectus Supplement or as of the
date of such opinion, contained or contains an untrue statement of a material
fact or omitted or omits to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading (except that such counsel need not express such belief with
respect to the financial statements, schedules or other financial data included
or incorporated by reference in the Registration Statement or the Prospectus or
with respect to the Form T-1).

     (g) You shall have received on the Closing Date and the Option Closing
Date, as applicable, an opinion (satisfactory to you and counsel for the
Underwriters), dated the Closing Date or the Option Closing Date, as applicable,
of Thomas M. McCoy, Vice President and General Counsel of the Company, to 

                                       24

 
the effect that:

          (i) each of the subsidiaries of the Company listed on Schedule II
     hereto or which constitutes a "significant subsidiary" within the meaning
     of Rule 1-02 of Regulation S-X (in each case, individually a "Material
     Subsidiary" and collectively, the "Material Subsidiaries") has been duly
     incorporated, is validly existing as a corporation in good standing under
     the laws of its jurisdiction of incorporation and has the corporate power
     and authority to carry on its business as described in the Prospectus and
     to own, lease and operate its properties;

          (ii) each of the Company and each of the Material Subsidiaries is duly
     qualified and is in good standing as a foreign corporation authorized to do
     business in each jurisdiction in which the nature of its business or its
     ownership or leasing of property requires such qualification, except where
     the failure to be so qualified would not have a material adverse effect on
     the Company and its subsidiaries, taken as a whole;

          (iii) all the outstanding shares of capital stock of the Company have
     been duly authorized and validly issued and are fully paid, non-assessable
     and not subject to any preemptive or similar rights;

          (iv) all of the outstanding shares of capital stock of each of the
     Company's Material Subsidiaries have been duly authorized and validly
     issued and are fully paid and non-assessable, and are owned by the Company,
     directly or indirectly through one or more subsidiaries, free and clear of
     any Lien;

          (v) neither the Company nor any of its Material Subsidiaries is in
     violation of its respective charter or by-laws and, to such counsel's
     knowledge after due inquiry, neither the Company nor any of its
     subsidiaries is in default in the performance of any obligation, agreement,
     covenant or condition contained in any indenture, loan agreement, mortgage,
     lease or other agreement or instrument that is material to the Company and
     its subsidiaries, taken as a whole, to which the Company or any of its
     subsidiaries is a party or by which the Company or any of its subsidiaries
     or their respective property is bound;

          (vi) the execution, delivery and performance of this Agreement, the
     Indenture and the Securities by the Company, the compliance by the

                                       25

 
     Company with all the provisions hereof and thereof and the consummation of
     the transactions contemplated hereby and thereby will not (A) require any
     consent, approval, authorization or other order of, or qualification with,
     any court or governmental body or agency (except such as may be required
     under the securities or Blue Sky laws of the various states), (B) conflict
     with or constitute a breach of any of the terms or provisions of, or a
     default under, the charter or by-laws of the Company or any of its
     subsidiaries or any indenture, loan agreement, mortgage, lease or other
     agreement or instrument that is material to the Company and its
     subsidiaries, taken as a whole, to which the Company or any of its
     subsidiaries is a party or by which the Company or any of its subsidiaries
     or their respective property is bound, (C) violate or conflict with any
     applicable law or any rule, regulation, judgment, order or decree of any
     court or any governmental body or agency having jurisdiction over the
     Company, any of its subsidiaries or their respective property, (D) result
     in the imposition or creation of (or the obligation to create or impose) a
     Lien under any agreement or instrument to which the Company or any of its
     subsidiaries is a party or by which the Company or any of its subsidiaries
     or their respective property is bound or (E) result in the suspension,
     termination or revocation of any Authorization of the Company or any of its
     subsidiaries or any other impairment of the rights of the holder of any
     such Authorization;

          (vii) after due inquiry, such counsel does not know of any legal or
     governmental proceedings pending or threatened to which the Company or any
     of its subsidiaries is or could be a party or to which any of their
     respective property is or could be subject that are required to be
     described in the Registration Statement or the Prospectus and are not so
     described, or of any statutes, regulations, contracts or other documents
     that are required to be described in the Registration Statement or the
     Prospectus or to be filed as exhibits to the Registration Statement that
     are not so described or filed as required;

          (viii) neither the Company nor any of its Material Subsidiaries is in
     violation of its respective charter or by-laws and, to such counsel's
     knowledge after due inquiry, neither the Company nor any of its
     subsidiaries is in default in the performance of any obligation, agreement,
     covenant or condition contained in any indenture, loan agreement, mortgage,
     lease or other agreement or instrument that is material to the Company and
     its subsidiaries, taken as a whole, to which the Company or any of its
     subsidiaries is a party or by which the Company or

                                       26

 
     any of its subsidiaries or their respective property is bound;

          (ix) except for such rights that have been waived or are inapplicable
     to the issuance and sale of the Securities pursuant to the Registration
     Statement, to such counsel's knowledge after due inquiry, there are no
     contracts, agreements or understandings between the Company and any person
     granting such person the right to require the Company to file a
     registration statement under the Act with respect to any securities of the
     Company or to require the Company to include such securities with the
     Securities registered pursuant to the Registration Statement; and

          (x) to such counsel's knowledge, no action has been taken and no
     statute, rule or regulation or order has been enacted, adopted or issued by
     any governmental agency or body that prevents the issuance of the
     Securities, suspends the effectiveness of the Registration Statement,
     presents or suspends the use of any preliminary prospectus or suspends the
     sale of the Securities in any jurisdiction referred to in Section 5(f)
     hereof; to such counsel's knowledge, no injunction, restraining order or
     order of any nature by a federal or state court of competent jurisdiction
     has been issued with respect to the Company which would prevent or suspend
     the issuance or sale of the Securities, the effectiveness of the
     Registration Statement, or the use of any preliminary prospectus in any
     jurisdiction referred to in Section 5(f) hereof; to such counsel's
     knowledge, no action, suit or proceeding is pending against or threatened
     against or affecting the Company before any court or arbitrator or any
     governmental body, agency or official, domestic or foreign, which, if
     adversely determined, would materially interfere with or adversely affect
     the issuance of the Securities or in any manner draw into question the
     validity of this Agreement, the Indenture or the Securities; and every
     request of the Commission or, to such counsel's knowledge, any securities
     authority or agency of any jurisdiction for additional information (to be
     included in the Registration Statement or the Prospectus or otherwise) has
     been complied with or waived by the Commission or such securities authority
     or agency, as applicable.

     (h) You shall have received on the Closing Date and the Option Closing Date
an opinion, dated the Closing Date or the Option Closing Date, as applicable, of
Pillsbury Madison & Sutro LLP, counsel for the Underwriters, as to the matters
referred to in Sections 8(f)(ii), 8(f)(iii), 8(f)(iv), 8(f)(x) and the matters

                                       27

 
set forth in the last paragraph of Section 8(f).

     In giving such opinions with respect to the matters covered by Sections
8(f)(x) and 8(f)(xi), Latham & Watkins may state that their opinion and belief
are based upon their participation in the preparation of the Registration
Statement and Prospectus and any amendments or supplements thereto and documents
incorporated therein by reference and review and discussion of the contents
thereof, but is without independent check or verification except as specified.
In giving such opinions with respect to the matters covered by Section 8(f)(x),
Pillsbury Madison & Sutro LLP may state that their opinion and belief are based
upon their participation in the preparation of the Registration Statement and
Prospectus and any amendments or supplements thereto (other than the documents
incorporated therein by reference) and review and discussion of the contents
thereof (including the documents incorporated therein by reference), but are
without independent check or verification except as specified.

     (i) You shall have received, on each of the date hereof and the Closing
Date and the Option Closing Date, a letter dated the date hereof or the Closing
Date or the Option Closing Date, as the case may be, in form and substance
satisfactory to you, from Ernst & Young LLP, independent public accountants,
containing the information and statements of the type ordinarily included in
accountants' "comfort letters" to Underwriters with respect to the financial
statements and certain financial information contained in or incorporated by
reference into the Registration Statement and the Prospectus.

     (j) The Underwriters shall have received a counterpart, conformed as
executed, of the Indenture which shall have been entered into by the Company and
the Trustee.

     (k) The Company shall not have failed on or prior to the Closing Date or,
if applicable, the Option Closing Date to perform or comply with any of the
material agreements herein contained and required to be performed or complied
with by the Company on or prior to the Closing Date or the Option Closing Date.

     Section 9. Effectiveness of Agreement and Termination . This Agreement
shall become effective upon the execution and delivery of this Agreement by the
parties hereto.

     This Agreement may be terminated at any time on or prior to the Closing
Date by you by written notice to the Company if any of the following has
occurred:  (i) any outbreak or escalation of hostilities or other national or

                                       28

 
international calamity or crisis or change in economic conditions or in the
financial markets of the United States or elsewhere that, in your judgment, is
material and adverse and, in your judgment, makes it impracticable to market the
Securities on the terms and in the manner contemplated in the Prospectus, (ii)
the suspension or material limitation of trading in securities or other
instruments on the New York Stock Exchange, the American Stock Exchange or The
Nasdaq Stock Market or limitation on prices for securities or other instruments
on any such exchange or The Nasdaq Stock Market, (iii) the suspension of trading
of any securities of the Company on any exchange or in the over-the-counter
market, (iv) the enactment, publication, decree or other promulgation of any
federal or state statute, regulation, rule or order of any court or other
governmental authority which in your opinion materially and adversely affects,
or will materially and adversely affect, the Company and its subsidiaries, taken
as a whole, (v) the declaration of a banking moratorium by either federal or New
York State authorities or (vi) the taking of any action by any federal, state or
local government or agency in respect of its monetary or fiscal affairs which in
your opinion has a material adverse effect on the financial markets in the
United States.

     If on the Closing Date or any Option Closing Date, if applicable, any one
or more of the Underwriters shall fail or refuse to purchase the Securities
which it or they have agreed to purchase hereunder on such date and the
aggregate principal amount of Securities which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase is not more than one-tenth
of the aggregate principal amount of Securities to be purchased on such date by
all Underwriters, each non-defaulting Underwriter shall be obligated severally,
in the proportion which the principal amount of Securities set forth opposite
its name in Schedule I bears to the aggregate principal amount of Securities
which all the non-defaulting Underwriters have agreed to purchase, or in such
other proportion as you may specify, to purchase the Securities which such
defaulting Underwriter or Underwriters agreed but failed or refused to purchase
on such date; provided that in no event shall the aggregate principal amount of
Securities which any Underwriter has agreed to purchase pursuant to Section 2
hereof be increased pursuant to this Section 9 by an amount in excess of one-
ninth of such principal amount of Securities without the written consent of such
Underwriter.  If on the Closing Date or an Option Closing Date, as the case may
be, any Underwriter or Underwriters shall fail or refuse to purchase Securities
and the aggregate principal amount of Securities with respect to which such
default occurs is more than one-tenth of the aggregate principal amount of
Securities to be purchased by all Underwriters and arrangements satisfactory to
you and the Company for purchase of such Securities are not made within 48 hours
after such default, this Agreement 

                                       29

 
will terminate without liability on the part of any non-defaulting Underwriter
and the Company. In any such case which does not result in termination of this
Agreement, either you or the Company shall have the right to postpone the
Closing Date or an Option Closing Date, if applicable, but in no event for
longer than seven days, in order that the required changes, if any, in the
Registration Statement and the Prospectus or any other documents or arrangements
may be effected. Any action taken under this paragraph shall not relieve any
defaulting Underwriter from liability in respect of any default of any such
Underwriter under this Agreement.

     Section 10. Miscellaneous . Notices given pursuant to any provision of this
Agreement shall be addressed as follows: (i) if to the Company, to Advanced
Micro Devices, Inc., One AMD Place, Sunnyvale, California 94086, Attention:
General Counsel and (ii) if to any Underwriter or to you, to you c/o Donaldson,
Lufkin & Jenrette Securities Corporation, 277 Park Avenue, New York, New York
10172, Attention: Syndicate Department, or in any case to such other address as
the person to be notified may have requested in writing.

     The respective indemnities, contribution agreements, representations,
warranties and other statements of the Company and the several Underwriters set
forth in or made pursuant to this Agreement shall remain operative and in full
force and effect, and will survive delivery of and payment for the Securities,
regardless of (i) any investigation, or statement as to the results thereof,
made by or on behalf of any Underwriter, the officers or directors of any
Underwriter, any person controlling any Underwriter, the Company, the officers
or directors of the Company or any person controlling the Company, (ii)
acceptance of the Securities and payment for them hereunder and (iii)
termination of this Agreement.

     If for any reason the Securities are not delivered by or on behalf of the
Company as provided herein (other than as a result of any termination of this
Agreement pursuant to Section 9), the Company agrees to reimburse the several
Underwriters for all out-of-pocket expenses (including the fees and
disbursements of counsel) incurred by them.  Notwithstanding any termination of
this Agreement, the Company shall be liable for all expenses which it has agreed
to pay pursuant to Section 5(j) hereof.  The Company also agrees to reimburse
the several Underwriters, their directors and officers and any persons
controlling any of the Underwriters for any and all fees and expenses
(including, without limitation, the fees disbursements of counsel) incurred by
them in connection with enforcing their rights hereunder (including, without
limitation, pursuant to Section 7 hereof).

                                       30

 
     Except as otherwise provided, this Agreement has been and is made solely
for the benefit of and shall be binding upon the Company, the Underwriters, the
Underwriters' directors and officers, any controlling persons referred to
herein, the Company's directors and the Company's officers who sign the
Registration Statement and their respective successors and assigns, all as and
to the extent provided in this Agreement, and no other person shall acquire or
have any right under or by virtue of this Agreement.  The term "successors and
assigns" shall not include a purchaser of any of the Securities from any of the
several Underwriters merely because of such purchase.

     This Agreement shall be governed and construed in accordance with the laws
of the State of New York.

     This Agreement may be signed in various counterparts which together shall
constitute one and the same instrument.

                                       31

 
     Please confirm that the foregoing correctly sets forth the agreement
between the Company and the several Underwriters.



                                        Very truly yours,

                                        ADVANCED MICRO DEVICES, INC.

                                        By: /s/ W.J. Sanders III
                                           ___________________________

                                        Title: Chairman & CEO
                                              ________________________


DONALDSON, LUFKIN & JENRETTE
 SECURITIES CORPORATION
SMITH BARNEY INC.

Acting severally on behalf of
 themselves and the several
 Underwriters named in
 Schedule I hereto

     By: /s/ Ian Zwicker
        ___________________________

     Title: Managing Director
           ________________________

                                       32

 
                                  SCHEDULE I
                                  ----------


Underwriters                                               Principal Amount of
                                                               Securities
                                                             to be Purchased
 
 
Donaldson, Lufkin & Jenrette Securities                            $225,000,000
  Corporation
 
Smith Barney Inc.                                                   225,000,000

 
                                                                   ____________
                                              Total                $450,000,000
                                                                   ============


 
                                  SCHEDULE II
                                  -----------

                             MATERIAL SUBSIDIARIES

AMD Saxony Manufacturing GmbH

Fujitsu AMD Semiconductor Limited

EX-4.1

 
                                                                     EXHIBIT 4.1


                         ADVANCED MICRO DEVICES, INC.,
                                   as Issuer

                                      and

                              THE BANK OF NEW YORK

                                   as Trustee

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



                                   INDENTURE

                            dated as of May 8, 1998



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

 
CROSS-REFERENCE TABLE*



TRUST INDENTURE
  ACT SECTION                                               INDENTURE SECTION
- -------------                                               -----------------
                                                         
310(a)(1)..............................................................7.10
  (a)(2)...............................................................7.10
  (a)(3)...............................................................N.A.
  (a)(4)...............................................................N.A.
  (a)(5)...............................................................7.10
  (b)............................................................7.08;.7.10
  (c)..................................................................N.A.
311(a).................................................................7.11
  (b)..................................................................7.11
  (c)..................................................................N.A.
312(a).................................................................2.05
  (b).................................................................10.03
  (c).................................................................10.03
313(a).................................................................7.06
  (b)..................................................................7.06
  (c)...........................................................7.06;.10.02
  (d)..................................................................7.06
314(a)..........................................................4.03;.10.02
  (b)..................................................................N.A.
  (c)(1)..............................................................10.04
  (c)(2)..............................................................10.04
  (c)(3)...............................................................N.A.
  (d)..................................................................N.A.
  (e).................................................................10.05
  (f)..................................................................N.A.
315(a)..........................................................7.01(b)(ii)
  (b)...........................................................7.05;.10.02
  (c)...............................................................7.01(a)
  (d)...............................................................7.01(d)
  (e)..................................................................6.11
316(a)(last sentence)..................................................2.09
  (a)(1)(A)............................................................6.05
  (a)(1)(B)............................................................6.04
  (a)(2)...............................................................N.A.
  (b)..................................................................6.07
  (c)............................................................2.14;.9.03
317(a)(1)..............................................................6.08
  (a)(2)...............................................................6.09
  (b)..................................................................2.04
318(a)................................................................10.01
  (b)..................................................................N.A.
* (c).................................................................10.01


- ---------------------------
N.A. means not applicable

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

 
                               TABLE OF CONTENTS


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

Section 1.01. Certain Definitions.........................................    1
Section 1.02. Other Definitions...........................................    4
Section 1.03. Incorporation by Reference of Trust Indenture Act...........    4
Section 1.04. Rules of Construction.......................................    4

ARTICLE 2.  THE SECURITIES................................................    5

Section 2.01. Unlimited In Amount, Issuable In Series, Form and Dating....    5
Section 2.02. Execution and Authentication................................    7
Section 2.03. Registrar and Paying Agent..................................    8
Section 2.04. Paying Agent to Hold Money in Trust.........................    8
Section 2.05. Securityholder Lists........................................    9
Section 2.06. Transfer and Exchange.......................................    9
Section 2.07. Replacement Securities......................................   10
Section 2.08. Outstanding Securities......................................   10
Section 2.09. Treasury Securities.........................................   10
Section 2.10. Temporary Securities........................................   11
Section 2.11. Cancellation................................................   11
Section 2.12. Defaulted Interest..........................................   11
Section 2.13. Special Record Dates........................................   11
Section 2.14. CUSIP Numbers...............................................   12

ARTICLE 3.  REDEMPTION....................................................   12

Section 3.01. Notices to Trustee..........................................   12
Section 3.02. Selection of Securities to Be Redeemed......................   12
Section 3.03. Notice of Redemption........................................   13
Section 3.04. Effect of Notice of Redemption..............................   14
Section 3.05. Deposit of Redemption Price.................................   14
Section 3.06. Securities Redeemed in Part.................................   14

ARTICLE 4.  COVENANTS.....................................................   14

Section 4.01. Payment of Securities.......................................   14
Section 4.02. Maintenance of Office or Agency.............................   14
Section 4.03. Commission Reports..........................................   15
Section 4.04. Compliance Certificate......................................   15
Section 4.05. Taxes.......................................................   16
Section 4.06. Stay, Extension and Usury Laws..............................   16
Section 4.07. Corporate Existence.........................................   16
 

                                       i

 
                                                                         
Section 4.08. Calculation of Original Issue Discount......................   16

ARTICLE 5.  SUCCESSORS....................................................   17
Section 5.01. When Company May Merge, etc.................................   17
Section 5.02. Successor Corporation Substituted...........................   17

ARTICLE 6.  DEFAULTS AND REMEDIES.........................................   18

Section 6.01. Events of Default...........................................   18
Section 6.02. Acceleration................................................   19
Section 6.03. Other Remedies..............................................   19
Section 6.04. Waiver of Past Defaults.....................................   20
Section 6.05. Control by Majority.........................................   20
Section 6.06. Limitation on Suits.........................................   20
Section 6.07. Rights of Holders to Receive Payment........................   21
Section 6.08. Collection Suit by Trustee..................................   21
Section 6.09. Trustee May File Proofs of Claim............................   21
Section 6.10. Priorities..................................................   22
Section 6.11. Undertaking for Costs.......................................   22

ARTICLE 7.  TRUSTEE.......................................................   22

Section 7.01. Duties of Trustee...........................................   22
Section 7.02. Rights of Trustee...........................................   24
Section 7.03. Individual Rights of Trustee................................   25
Section 7.04. Trustee's Disclaimer........................................   25
Section 7.05. Notice of Defaults..........................................   25
Section 7.06. Reports by Trustee to Holders...............................   25
Section 7.07. Compensation and Indemnity..................................   26
Section 7.08. Replacement of Trustee......................................   26
Section 7.09. Successor Trustee by Merger, etc............................   28
Section 7.10. Eligibility; Disqualification...............................   28
Section 7.11. Preferential Collection of Claims Against Company...........   28

ARTICLE 8.  SATISFACTION AND DISCHARGE DEFEASANCE.........................   28

Section 8.01. Satisfaction and Discharge of Indenture.....................   28
Section 8.02. Application of Trust Funds; Indemnification.................   29
Section 8.03. Legal Defeasance of Securities of any Series................   30
Section 8.04. Covenant Defeasance.........................................   31
Section 8.05. Repayment to Company........................................   33

ARTICLE 9.  SUPPLEMENTS, AMENDMENTS AND WAIVERS...........................   33

Section 9.01. Without Consent of Holders..................................   33
 
 

                                      ii

 
                                                                         
Section 9.02. With Consent of Holders.....................................   34
Section 9.03. Revocation and Effect of Consents...........................   35
Section 9.04. Notation on or Exchange of Securities.......................   35
Section 9.05. Trustee to Sign Amendments, etc.............................   35

ARTICLE 10.  MISCELLANEOUS................................................   36

Section 10.01. Indenture Subject to Trust Indenture Act...................   36
Section 10.02. Notices....................................................   36
Section 10.03. Communication By Holders With Other Holders................   37
Section 10.04. Certificate and Opinion as to Conditions Precedent.........   37
Section 10.05. Statements Required in Certificate or Opinion..............   37
Section 10.06. Rules by Trustee and Agents................................   37
Section 10.07. Legal Holidays.............................................   38
Section 10.08. No Recourse Against Others.................................   38
Section 10.09. Counterparts...............................................   38
Section 10.10. Governing Law..............................................   38
Section 10.11. Severability...............................................   38
Section 10.12. Effect of Headings, Table of Contents, etc.................   38
Section 10.13. Successors and Assigns.....................................   39
Section 10.14. No Interpretation of Other Agreements......................   39
 


                                      iii

 
          INDENTURE dated as of May 8, 1998 between Advanced Micro Devices,
Inc., a Delaware corporation (the "Company"), and The Bank of New York, a New
York banking corporation, as Trustee (the "Trustee").

          The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its debentures, notes
or other evidences of indebtedness to be issued in one or more series (the
"Securities"), as herein provided, up to such principal amount as may from time
to time be authorized in or pursuant to one or more resolutions of the Board of
Directors or by supplemental indenture or Officers' Certificate.

          Each party agrees as follows for the benefit of the other party and
for the equal and ratable benefit of the Holders of each series of the
Securities:

                                   ARTICLE 1.

                         DEFINITIONS AND INCORPORATION
                                  BY REFERENCE

Section 1.01.  Certain Definitions.

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

          "Agent" means any Registrar, Paying Agent, authenticating agent or co-
Registrar.

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

          "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 pursuant to authorization by the Board of Directors
and to be in full force and effect on the date of such certification (and
delivered to the Trustee, if appropriate).

          "Commission" means the Securities and Exchange Commission.

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

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

                                       1

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

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

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

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

          "Global Security" shall mean a Security issued to evidence all or a
part of any series of Securities that is executed by the Company and
authenticated and delivered by the Trustee to a depositary or pursuant to such
depositary's instructions, all in accordance with this Indenture and pursuant to
Section 2.01, which shall be registered as to principal and interest in the name
of such depositary or its nominee.

          "Holder" or "Securityholder" means a Person in whose name a Security
is registered in the register of Securities kept by the Registrar.

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

          "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.

          "Officer" means the Chairman of the Board, the Chief Executive
Officer, the President, the Chief Operating Officer, the Chief Financial
Officer, any Vice-President, the Treasurer, the Controller, the Secretary, any
Assistant Treasurer or any Assistant Secretary of the Company.

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

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

          "Original Issue Discount Security" means any Security which provides
that an amount less than its principal amount is due and payable upon
acceleration after an Event of Default.

                                       2

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

          "Principal" of a Security means the principal amount due on the stated
maturity of the Security plus the premium, if any, on the Security.

          "Securities" means the Securities authenticated and delivered under
this Indenture.

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

          "Subsidiary" means any corporation, partnership or limited liability
company of which the Company, or the Company and one or more Subsidiaries, or
any one or more Subsidiaries, directly or indirectly own (i) in the case of a
corporation, voting securities entitling the holders thereof to elect a majority
of the directors, either at all times or so long as there is no default or
contingency which permits the holders of any other class of securities to vote
for the election of one or more directors, (ii) in the case of a partnership, at
least a majority of the general partnership interests and at least a majority of
total outstanding partnership interests or (iii) in the case of a limited
liability company, at least a majority of the membership interests.

          "TIA" means the Trust Indenture Act of 1939, as amended from time to
time, and as in effect on the date of execution of this Indenture; provided,
however, that in the event the TIA is amended after such date, "TIA" means, to
the extent required by such amendment, the Trust Indenture Act, as so amended.

          "Trustee" means the party named as such above until a successor
becomes such pursuant to this Indenture and thereafter means or includes each
party who is then a trustee hereunder, and if at any time there is more than one
such party, "Trustee" as used with respect to the Securities of any series means
the Trustee with respect to Securities of that series.  If Trustees with respect
to different series of Securities are trustees under this Indenture, nothing
herein shall constitute the Trustees co-trustees of the same trust, and each
Trustee shall be the trustee of a trust separate and apart from any trust
administered by any other Trustee with respect to a different series of
Securities.

          "Trust Officer" means any officer or assistant officer of the Trustee
assigned by the Trustee to administer its corporate trust matters.

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

                                       3

 
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 U.S. Government
Obligation evidenced by such depository receipt.

Section 1.02.  Other Definitions.



               Term                            Defined in Section
               ----                            ------------------
                                          
               "Bankruptcy Law"                      6.01
               "Custodian"                           6.01
               "Event of Default"                    6.01
               "Legal Holiday"                      10.07
               "Paying Agent"                        2.03
               "redemption price"                    3.03
               "Registrar"                           2.03


Section 1.03.  Incorporation by Reference of Trust Indenture Act.

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

               "indenture securities" means the Securities.

               "indenture securityholder" means a Securityholder.

               "indenture to be qualified" means this Indenture.

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

               "obligor" on the Securities means the Company and any successor
obligor on the Securities.

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

Section 1.04.  Rules of Construction.

               Unless the context otherwise requires:

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

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

                                       4

 
                      (iii)  "or" is not exclusive;

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

                      (v)    provisions apply to successive events and
                             transactions.

                                   ARTICLE 2.

                                 THE SECURITIES

Section 2.01.  Unlimited In Amount, Issuable In Series, Form and Dating.

               The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is unlimited.  The Securities
may be issued in one or more series.  There shall be established in or pursuant
to a Board Resolution or an Officers' Certificate pursuant to authority granted
under a Board Resolution or established in one or more indentures supplemental
hereto, prior to the issuance of Securities of any series:

               (a) the title of the Securities of the series (which shall
distinguish the Securities of the series from all other Securities);

               (b) any limit upon the aggregate principal amount of Securities
of the series which may be authenticated and delivered under this Indenture
(except for Securities authenticated and delivered upon registration of transfer
of, or in exchange for, or in lieu of, other Securities of the series pursuant
to this Article 2);

               (c) the price or prices (expressed as a percentage of the
aggregate principal amount thereof) at which the Securities of the series will
be issued;

               (d) the date or dates on which the principal of the Securities of
the series is payable;

               (e) the rate or rates which may be fixed or variable at which the
Securities of the series shall bear interest, if any, or the manner in which
such rate or rates shall be determined, the date or dates from which such
interest shall accrue, the interest payment dates on which such interest shall
be payable and the record dates for the determination of Holders to whom
interest is payable;

               (f) the place or places where the principal of and any interest
on Securities of the series shall be payable, if other than as provided herein;

               (g) the price or prices at which (if any), the period or periods
within which (if any) and the terms and conditions upon which (if other than as
provided herein) Securities of the series may be redeemed, in whole or in part,
at the option, or as an obligation, of the Company;

                                       5

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

          (i) if other than denominations of $1,000 and any multiple thereof,
the denominations in which Securities of the series shall be issuable;

          (j) if other than the principal amount thereof, the portion of the
principal amount of Securities of the series which shall be payable upon
declaration of acceleration of the maturity thereof pursuant to Section 6.02
hereof;

          (k) any addition to or change in the covenants set forth in Article 4
which applies to Securities of the series;

          (l) any Events of Default with respect to the Securities of a
particular series, if not set forth herein;

          (m) the Trustee for the series of Securities;

          (n) whether the Securities of the series shall be issued in whole or
in part in the form of a Global Security or Securities; the terms and
conditions, if any, upon which such Global Security or Securities may be
exchanged in whole or in part for other individual Securities, and the
depositary for such Global Security and Securities;

          (o) the provisions, if any, relating to any security provided for the
Securities of the series;

          (p) the form and terms of any guarantee of the Securities of the
series and the execution of this Indenture by any guarantor;

          (q) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture, but which may modify or
delete any provision of this Indenture with respect to such series; provided,
however, that no such term may modify or delete any provision hereof if imposed
by the TIA; and provided, further, that any modification or deletion of the
rights, duties or immunities of the Trustee hereunder shall have been consented
to in writing by the Trustee).

          All Securities of any series shall be substantially identical except
as to denomination and except as may otherwise be provided in or pursuant to
such Board Resolution or Officers' Certificate or in any such indenture
supplemental hereto.

          The principal of and any interest on the Securities shall be payable
at the office or agency of the Company designated in the form of Security for
the series (each such place herein 

                                       6

 
called the "Place of Payment"); provided, however, that payment of interest may
be made at the option of the Company by check mailed to the address of the
Person entitled thereto as such address shall appear in the register of
Securities referred to in Section 2.03 hereof.

               Each Security shall be in one of the forms approved from time to
time by or pursuant to a Board Resolution or Officers' Certificate, or
established in one or more indentures supplemental hereto. Prior to the delivery
of a Security to the Trustee for authentication in any form approved by or
pursuant to a Board Resolution or Officers' Certificate, the Company shall
deliver to the Trustee the Board Resolution or Officers' Certificate by or
pursuant to which such form of Security has been approved, which Board
Resolution or Officers' Certificate shall have attached thereto a true and
correct copy of the form of Security which has been approved by or pursuant
thereto.

               The Securities may have notations, legends or endorsements
required by law, stock exchange rule or usage. Each Security shall be dated the
date of its authentication.

Section 2.02.  Execution and Authentication.

               Two Officers shall sign the Securities for the Company by manual
or facsimile signature. The Company's seal shall be reproduced on the Securities
manually or by facsimile.

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

               A Security shall not be valid until authenticated by the manual
signature of the Trustee.  The signature shall be conclusive evidence that the
Security has been authenticated under this Indenture.

               At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Securities of any series
executed by the Company to the Trustee for authentication. The Trustee shall
thereupon authenticate and make available for delivery said Securities to or
upon the Written Request of the Company. 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
Section 1.01, shall be fully protected in relying upon:

               (a) A copy of the resolution or resolutions of the Board of
Directors in or pursuant to which the terms and form of the Securities were
established, certified by the Secretary of an Assistant Secretary of the Company
to have been duly adopted by the Board of Directors and to be in full force and
effect as of the date of such certificate, or if the terms and form of such
Securities are established by an Officers' Certificate pursuant to general
authorization of the Board of Directors, such Officers' Certificate;

               (b) an executed supplement indenture, if any; and

                                       7

 
               (c) an Officers' Certificate delivered in accordance with
Sections 10.04 and 10.05.

               The Trustee shall have the right to decline to authenticate and
deliver any Securities under this Section if the Trustee, being advised by
counsel, determines that such action may not lawfully be taken or if the Trustee
in good faith shall determine that such action would expose the Trustee to
personal liability to existing Holders.

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

Section 2.03.  Registrar and Paying Agent.

               The Company shall maintain an office or agency where Securities
of a particular series may be presented for registration of transfer or for
exchange (the "Registrar") and an office or agency where Securities of that
series may be presented for payment (a "Paying Agent"). The Registrar for a
particular series of Securities shall keep a register of the Securities of that
series and of their transfer and exchange. The Company may appoint one or more
co-Registrars and one or more additional paying agents for each series of
Securities. The term "Paying Agent" includes any additional paying agent. The
Company may change any Paying Agent, Registrar or co-Registrar without prior
notice to any Securityholder. The Company shall notify the Trustee in writing of
the name and address of any Agent not a party to this Indenture.

               If the Company fails to maintain a Registrar or Paying Agent for
any series of Securities, the Trustee shall act as such. The Company or any of
its Affiliates may act as Paying Agent, Registrar or co-Registrar.

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

Section 2.04.  Paying Agent to Hold Money in Trust.

                Whenever the Company has one or more Paying Agents it will,
prior to each due date of the principal of or interest on, any Securities,
deposit with a Paying Agent a sum sufficient to pay the principal or interest so
becoming due, such sum to be held in trust for the benefit of the Persons
entitled to such principal 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 shall require each Paying Agent other than the
Trustee to agree in writing that such Paying Agent will hold in trust for the
benefit of the Securityholders of the particular series for which it is acting,
or the Trustee, all money held by the Paying Agent for the payment of principal
or interest on the Securities of such series, and that such Paying Agent will

                                       8

 
notify the Trustee of any Default by the Company or any other obligor of the
series of Securities in making any such payment and 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. If
the Company or an Affiliate acts as Paying Agent, it shall segregate and hold in
a separate trust fund for the benefit of the Securityholders of the particular
series for which it is acting all money held by it as Paying Agent. The Company
at any time may require a Paying Agent to pay all money held by it to the
Trustee. Upon so doing, the Paying Agent (if other than the Company or an
Affiliate of the Company) shall have no further liability for such money. Upon
any bankruptcy or reorganization proceedings relating to the Company, the
Trustee shall serve as Paying Agent for the Securities.

Section 2.05.  Securityholder Lists.

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

Section 2.06.  Transfer and Exchange.

               Where Securities of a series are presented to the Registrar or a
co-Registrar with a request to register a transfer or to exchange them for an
equal principal amount of Securities of the same series of other authorized
denominations, the Registrar shall register the transfer or make the exchange if
its requirements for such transactions are met. To permit registrations of
transfers and exchanges, the Company shall issue and the Trustee shall
authenticate Securities at the Registrar's request.

               No service charge shall be made for any registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any transfer tax or similar governmental charge payable in connection therewith
(other than any such transfer tax or similar governmental charge payable upon
exchanges pursuant to Sections 2.10, 3.06 or 9.04).

               The Company need not issue, and the Registrar or co-Registrar
need not register the transfer or exchange of, (i) any Security of a particular
series during a period beginning at the opening of business 15 days before the
day of mailing of a notice of redemption of Securities of that series under
Section 3.02 and ending at the close of business on the day of such mailing, or
(ii) any Security so selected for redemption in whole or in part, except the
unredeemed portion of any Security of that series being redeemed in part.

                                       9

 
Section 2.07.  Replacement Securities.

               If a mutilated Security is surrendered to the Trustee or if the
Holder of a Security claims that the Security has been lost, destroyed or
wrongfully taken, the Company shall issue and the Trustee shall authenticate a
replacement Security of same series if the Company's and the Trustee's
requirements are met. The Trustee or the Company shall require an indemnity bond
to be furnished which is sufficient in the judgment of both to protect the
Company, the Trustee, and any Agent from any loss which any of them may suffer
if a Security is replaced. The Company may charge such Holder for its expenses
in replacing a Security.

               Every replacement Security is an obligation of the Company and
shall be entitled to all the benefit of the Indenture equally and
proportionately with any and all other Securities of the same series.

Section 2.08.  Outstanding Securities.

               The Securities of any series outstanding at any time are all the
Securities of that series authenticated by the Trustee except for those
cancelled by it, those delivered to it for cancellation, and those described in
this Section as not outstanding.

               If a Security is replaced pursuant to Section 2.07, it ceases to
be outstanding unless the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.

               If Securities are considered paid under Section 4.01, they cease
to be outstanding and interest on them ceases to accrue.

               Except as set forth in Section 2.09 hereof, a Security does not
cease to be outstanding because the Company or an Affiliate holds the Security.

               For each series of Original Issue Discount Securities, the
principal amount of such Securities that shall be deemed to be outstanding and
used to determine whether the necessary Holders have given any request, demand,
authorization, direction, notice, consent or waiver shall be the principal
amount of such Securities that could be declared to be due and payable upon
acceleration upon an Event of Default as of the date of such determination. When
requested by the Trustee, the Company will advise the Trustee of such amount,
showing its computations in reasonable detail.

Section 2.09.  Treasury Securities.

               In determining whether the Holders of the required principal
amount of Securities of any series have concurred in any direction, waiver or
consent, Securities owned by the Company or an Affiliate shall be considered as
though they are not outstanding, except that for the purposes of determining
whether the Trustee shall be protected in relying on any such direction, waiver
or consent, only Securities which a Trust Officer of the Trustee actually knows
are so owned shall be so considered.

                                       10

 
Section 2.10.  Temporary Securities.

               Until definitive Securities are ready for delivery, the Company
may prepare and the Trustee shall authenticate temporary Securities upon a
Company Request signed by one Officer of the Company. Temporary Securities shall
be substantially in the form of definitive Securities but may have variations
that the Company considers appropriate for temporary Securities. Without
unreasonable delay, the Company shall prepare and the Trustee shall authenticate
definitive Securities in exchange for temporary Securities.

               Holders of temporary securities shall be entitled to all of the
benefits of this Indenture.

Section 2.11.  Cancellation.

               The Company at any time may deliver Securities to the Trustee for
cancellation.  The Registrar and Paying Agent shall forward to the Trustee any
Securities surrendered to them for registration of transfer, exchange or
payment.  The Trustee shall cancel all Securities surrendered for registration
of transfer, exchange, payment, replacement or cancellation.  The Company may
not issue new Securities to replace Securities that it has paid or that have
been delivered to the Trustee for cancellation.

Section 2.12.  Defaulted Interest.

               If the Company fails to make a payment of interest on any series
of Securities, it shall pay such defaulted interest plus (to the extent lawful)
any interest payable on the defaulted interest, in any lawful manner. It may
elect to pay such defaulted interest, plus any such interest payable on it, to
the Persons who are Holders of such Securities on which the interest is due on a
subsequent special record date. The Company shall notify the Trustee in writing
of the amount of defaulted interest proposed to be paid on each such Security.
The Company shall fix any such record date and payment date for such payment. At
least 15 days before any such record date, the Company shall mail to
Securityholders affected thereby a notice that states the record date, payment
date, and amount of such interest to be paid.

Section 2.13.  Special Record Dates.

               (a) The Company may, but shall not be obligated to, set a record
date for the purpose of determining the identity of Holders entitled to consent
to any supplement, amendment or waiver permitted by this Indenture. If a record
date is fixed, the Holders of Securities of that series outstanding on such
record date, and no other Holders, shall be entitled to consent to such
supplement, amendment or waiver or revoke any consent previously given, whether
or not such Holders remain Holders after such record date. No consent shall be
valid or effective for more than 90 days after such record date unless consents
from Holders of the principal amount of Securities of that series required
hereunder for such amendment or waiver to be effective shall have also been
given and not revoked within such 90-day period.

                                       11

 
               (b) The Trustee may, but shall not be obligated to, fix any day
as a record date for the purpose of determining the Holders of any series of
Securities entitled to join in the giving or making of any notice of Default,
any declaration of acceleration, any request to institute proceedings or any
other similar direction. If a record date is fixed, the Holders of Securities of
that series outstanding on such record date, and no other Holders, shall be
entitled to join in such notice, declaration, request or direction, whether or
not such Holders remain Holders after such record date; provided, however, that
no such action shall be effective hereunder unless taken on or prior to the date
90 days after such record date.

Section 2.14.  CUSIP Numbers.

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

                                   ARTICLE 3.

                                   REDEMPTION

Section 3.01.  Notices to Trustee.

               If the Company elects to redeem Securities of any series pursuant
to any optional redemption provisions thereof, it shall notify the Trustee of
the redemption date and the principal amount of Securities of that series to be
redeemed.

               The Company shall give the notice provided for in this Section at
least 45 days before the redemption date (unless a shorter notice period shall
be satisfactory to the Trustee), which notice shall specify the provisions of
such Security pursuant to which the Company elects to redeem such Securities.

               If the Company elects to reduce the principal amount of
Securities of any series to be redeemed pursuant to mandatory redemption
provisions thereof, it shall notify the Trustee of the amount of, and the basis
for, any such reduction. If the Company elects to credit against any such
mandatory redemption Securities it has not previously delivered to the Trustee
for cancellation, it shall deliver such Securities with such notice.

Section 3.02.  Selection of Securities to Be Redeemed.

               If less than all the Securities of any series are to be redeemed,
the Trustee shall select the Securities of that series to be redeemed by a
method that complies with the 

                                       12

 
requirements of any exchange on which the Securities of that series are listed,
or, if the Securities of that series are not listed on an exchange, on a pro
rata basis or by lot. The Trustee shall make the selection not more than 75 days
and not less than 30 days before the redemption date from Securities of that
series outstanding and not previously called for redemption. Except as otherwise
provided as to any particular series of Securities, Securities and portions
thereof that the Trustee selects shall be in amounts equal to the minimum
authorized denomination for Securities of the series to be redeemed or any
integral multiple thereof. Provisions of this Indenture that apply to Securities
called for redemption also apply to portions of Securities called for
redemption. The Trustee shall notify the Company promptly in writing of the
Securities or portions of Securities to be called for redemption.

Section 3.03.  Notice of Redemption.

               Except as otherwise provided as to any particular series of
Securities, at least 15 days but not more than 60 days before a redemption date,
the Company shall mail a notice of redemption to each Holder whose Securities
are to be redeemed.

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

               (1)  the redemption date;

               (2) the redemption price fixed in accordance with the terms of
     the Securities of the series to be redeemed, plus accrued interest, if any,
     to the date fixed for redemption (the "redemption price");

               (3) if any Security is being redeemed in part, the portion of the
     principal amount of such Security to be redeemed and that, after the
     redemption date, upon surrender of such Security, a new Security or
     Securities in principal amount equal to the unredeemed portion will be
     issued;

               (4) the name and address of the Paying Agent;

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

               (6) that, unless the Company defaults in payment of the
     redemption price, interest on Securities called for redemption ceases to
     accrue on and after the redemption date; and

               (7) the CUSIP number, if any, of the Securities to be redeemed.

               At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense.  The notice mailed in the
manner herein provided shall be conclusively presumed to have been duly given
whether or not the Holder receives such notice.  

                                       13

 
In any case, failure to give such notice by mail or any defect in the notice of
the Holder of any Security shall not affect the validity of the proceeding for
the redemption of any other Security.

Section 3.04.  Effect of Notice of Redemption.

               Once notice of redemption is mailed in accordance with Section
3.03 hereof, Securities called for redemption become due and payable on the
redemption date for the redemption price. Upon surrender to the Paying Agent,
such Securities will be paid at the Redemption Price.

Section 3.05.  Deposit of Redemption Price.

               On or before 10:00 a.m., Eastern time, on the redemption date,
the Company shall deposit with the Paying Agent (or, if the Company or any
Affiliate is the Paying Agent, shall segregate and hold in trust) money
sufficient to pay the redemption price of all Securities called for redemption
on that date other than Securities which have previously been delivered by the
Company to the Trustee for cancellation. The Paying Agent shall return to the
Company any money not required for that purpose.

Section 3.06.  Securities Redeemed in Part.

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

                                   ARTICLE 4.

                                   COVENANTS

Section 4.01.  Payment of Securities.

               The Company shall pay or cause to be paid the principal of and
interest on the Securities on the dates and in the manner provided in this
Indenture and the Securities.  Principal and interest shall be considered paid
on the date due if the Paying Agent, if other than the Company or an Affiliate,
holds as of 10:00 a.m. Eastern Time on that date immediately available funds
designated for and sufficient to pay all principal and interest then due.

               To the extent lawful, the Company shall pay interest on overdue
principal and overdue installments of interest at the rate per annum borne by
the applicable series of Securities.

Section 4.02.  Maintenance of Office or Agency.

               The Company shall maintain in the Borough of Manhattan, the City
of New York, an office or agency (which may be an office of the Trustee or an
affiliate of the Trustee or Registrar) where Securities may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Company in respect of the Securities and this Indenture may be served. The
Company shall give prompt written notice to the Trustee of the 

                                       14

 
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the corporate trust
office of the Trustee.

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

               The Company hereby designates the Corporate Trust Office of the
Trustee as one such office or agency of the Company in accordance with Section
2.03.

Section 4.03.  Commission Reports.

               The Company shall deliver to the Trustee within 15 days after it
files them 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 by rules and regulations prescribe) which
the Company is required to file with the Commission pursuant to Section 13 or
15(d) of the Exchange Act; provided, however the Company shall not be required
to deliver to the Trustee any materials for which the Company has sought and
received confidential treatment by the Commission. The Company also shall comply
with the other provisions of TIA Section 314(a).

               Delivery of such reports, information and documents to the
Trustee is for informational purposes only and the Trustee's receipt of such
shall not constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).

Section 4.04.  Compliance Certificate.

               The Company shall deliver to the Trustee, within 120 days after
the end of each fiscal year of the Company, an Officers' Certificate stating
that in the course of the performance by the signers of their duties as officers
of the Company, they would normally have knowledge of any failure by the Company
to comply with all conditions, or default by the Company with respect to any
covenants, under this Indenture, and further stating whether or not they have
knowledge of any such failure or default and, if so, specifying each such
failure or default and the nature thereof. For purposes of this Section, such
compliance shall be determined without regard to any period of grace or
requirement of notice provided for in this Indenture. The certificate need not
comply with Section 10.04.

                                       15

 
               The Company shall deliver to the Trustee, as soon as possible and
in any event within five days after the Company becomes aware of the occurrence
of any Event of Default or an event which, with notice or the lapse of time or
both, would constitute an Event of Default, an Officers' Certificate setting
forth the details of such Event of Default or default and the action which the
Company proposes to take with respect thereto.

Section 4.05.  Taxes.

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

Section 4.06.  Stay, Extension and Usury Laws.

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

Section 4.07.  Corporate Existence.

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

Section 4.08.  Calculation of Original Issue Discount.

               The Company shall file with the Trustee promptly at the end of
each calendar year (i) a written notice specifying the amount of original issue
discount (including daily rates and accrual periods) accrued on outstanding
Securities as of the end of such year and (ii) such other specific information
relating to such original issue discount as may then be relevant under the
Internal Revenue Code of 1986, as amended from time to time.

                                       16

 
                                   ARTICLE 5.

                                   SUCCESSORS

Section 5.01.  When Company May Merge, etc.

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

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

               (2) the Person formed by or assuming any such consolidation or
     merger (if other than the Company) or the Person to which such sale,
     assignment, transfer, lease, conveyance or other disposition shall have
     been made assumes by supplemental indenture all the obligations of the
     Company under the Securities and this Indenture; and

               (3) immediately prior to and after giving effect to the
     transaction no Default or Event of Default shall have occurred and be
     continuing.

The Company shall deliver to the Trustee on or prior to the consummation of the
proposed transaction an Officers' Certificate to the foregoing effect and an
Opinion of Counsel stating that the proposed transaction and such supplemental
indenture comply with this Indenture.

Section 5.02.  Successor Corporation Substituted.

               Upon any consolidation or merger, or any transfer by the Company
(other than by lease) of all or substantially all of the assets of the Company
in accordance with Section 5.01, the successor corporation formed by such
consolidation or into which the Company is merged or to which such transfer 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 corporation had been named as the Company herein.  In the event of any
such transfer, the predecessor Company shall be released and discharged from all
liabilities and obligations in respect of the Securities and the Indenture, and
the predecessor Company may be dissolved, wound up or liquidated at any time
thereafter.

                                       17

 
                                   ARTICLE 6.

                             DEFAULTS AND REMEDIES

Section 6.01.  Events of Default.

               An "Event of Default" occurs with respect to Securities of any
particular series if, unless in the establishing Board Resolution, Officers'
Certificate or supplemental indenture hereto, it is provided that such series
shall not have the benefit of said Event of Default:

               (1) the Company defaults in the payment of interest on any
     Security of that series when the same becomes due and payable and the
     Default continues for a period of 30 days;

               (2) the Company defaults in the payment of the principal of any
     Security of that series when the same becomes due and payable at maturity,
     upon redemption or otherwise;

               (3) an Event of Default, as defined in the Securities of that
     series, occurs and is continuing, or the Company fails to comply with any
     of its other agreements in the Securities of that series or in this
     Indenture with respect to that series and the Default continues for the
     period and after the notice specified below;

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

                   (A) commences a voluntary case;

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

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

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

                   (E) admits in writing its inability generally to pay its
          debts as the same become due.

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

                   (A) is for relief against the Company in an involuntary case;

                                       18

 
                        (B) appoints a Custodian of the Company or for all or
               substantially all of its property; or

                        (C) orders the liquidation of the Company;

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

                   (6)  any other Event of Default provided with respect to
               Securities of that series which is specified in a Board
               Resolution, Officers' Certificate or supplemental indenture
               establishing that series of Securities.

               The term "Bankruptcy Law" means Title 11, U.S. Code or any
similar federal or state law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator or similar official under any
Bankruptcy Law.

               A Default under clause (3) above is not an Event of Default with
respect to a particular series of Securities until the Trustee or the Holders of
at least 50% in principal amount of the then outstanding Securities of that
series notify the Company of the Default and the Company does not cure the
Default within 30 days after receipt of the notice.  The notice must specify the
Default, demand that it be remedied and state that the notice is a "Notice of
Default."

Section 6.02.  Acceleration.

               If an Event of Default with respect to Securities of any series
(other than an Event of Default specified in clauses (4) and (5) of Section
6.01) occurs and is continuing, the Trustee by notice to the Company, or the
Holders of at least 50% in principal amount of the then outstanding Securities
of that series by notice to the Company and the Trustee, may declare the unpaid
principal (or, in the case of Original Issue Discount Securities, such lesser
amount as may be provided for in such Securities) of and any accrued interest on
all the Securities of that series to be due and payable on the Securities of
that series. Upon such declaration the principal (or such lesser amount) and
interest shall be due and payable immediately. If an Event of Default specified
in clause (4) or (5) of Section 6.01 occurs, all of such amount shall become and
be immediately due and payable without any declaration or other act on the part
of the Trustee or any Holder. The Holders of a majority in principal amount of
the then outstanding Securities of that series by notice to the Trustee may
rescind an acceleration and its consequences if the rescission would not
conflict with any judgment or decree and if all existing Events of Default with
respect to that series have been cured or waived except nonpayment of principal
(or such lesser amount) or interest that has become due solely because of the
acceleration.

Section 6.03.  Other Remedies.

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

                                       19

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

Section 6.04.  Waiver of Past Defaults.

               Subject to Section 9.02, the Holders of a majority in principal
amount of the then outstanding Securities of any series by notice to the Trustee
may waive an existing Default or Event of Default with respect to that series
and its consequences except a Default or Event of Default in the payment of the
principal (including any mandatory sinking fund or like payment) of or interest
on any Security of that series (provided, however, that the Holders of a
majority in principal amount of the outstanding Securities of any series may
rescind an acceleration and its consequences, including any related payment
default that resulted from such acceleration).

Section 6.05.  Control by Majority.

               The Holders of a majority in principal amount of the then
outstanding Securities of any series may direct the time, method and place of
conducting any proceeding for any remedy with respect to that series available
to the Trustee or exercising any trust or power conferred on it. However, the
Trustee may refuse to follow any direction that conflicts with law or this
Indenture, that is unduly prejudicial to the rights of another Holder of
Securities of that series, or that may involve the Trustee in personal
liability. The Trustee may take any other action which it deems proper which is
not inconsistent with any such direction.

Section 6.06.  Limitation on Suits.

               A Holder of Securities of any series may not pursue a remedy with
respect to this Indenture or the Securities unless:

                   (1) the Holder gives to the Trustee written notice of a
               continuing Event of Default with respect to that series;

                   (2) the Holders of at least 50% in principal amount of the
               then outstanding Securities of that series make a written request
               to the Trustee to pursue the remedy;

                   (3) such Holder or Holders offer to the Trustee indemnity
               satisfactory to the Trustee against any loss, liability or
               expense;

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

                                       20

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

No Holder of any series of Securities may use this Indenture to prejudice the
rights of another Holder of Securities of that series or to obtain a preference
or priority over another Holder of Securities of that series.

Section 6.07.  Rights of Holders to Receive Payment.

               Notwithstanding any other provision of this Indenture, the right
of any Holder of a Security to receive payment of principal of and interest, if
any, on the Security, on or after the respective due dates expressed in the
Security, or to bring suit for the enforcement of any such payment on or after
such respective dates, shall not be impaired or affected without the consent of
the Holder.

Section 6.08.  Collection Suit by Trustee.

               If an Event of Default specified in Section 6.01(1) or (2) occurs
and is continuing with respect to Securities of any series, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Company for the whole amount of principal (or such portion of the principal as
may be specified as due upon acceleration at that time in the terms of that
series of Securities) and interest, if any, remaining unpaid on the Securities
of that series then outstanding, together with (to the extent lawful) interest
on overdue principal and interest, and such further amount as shall be
sufficient to cover the costs and, to the extent lawful, expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel and any other amounts due the Trustee under
Section 7.07.

Section 6.09.  Trustee May File Proofs of Claim.

               The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee and the Securityholders allowed in any judicial proceedings relative to
the Company (or any other obligor on the Securities), its creditors or its
property and shall be entitled to and empowered to collect and receive any money
or other property payable or deliverable on any such claims and to distribute
the same, and any custodian in any such judicial proceedings is hereby
authorized by each Holder to make such payments to the Trustee and, in the event
that the Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agent and
counsel, and any other amounts due the Trustee under Section 7.07.  Nothing
contained herein shall be deemed to authorize the Trustee to authorize or
consent to or accept or adopt on behalf of any Securityholder 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 Securityholder in any such proceeding.

                                       21

 
Section 6.10.  Priorities.

               If the Trustee collects any money with respect to Securities of
any series pursuant to this Article, it shall pay out the money in the following
order:

                 First:    to the Trustee, its agents and attorneys for amounts
                           due under Section 7.07, including payment of all
                           compensation, expense and liabilities incurred, and
                           all advances made, by the Trustee and the costs and
                           expenses of collection;

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

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

               The Trustee may fix a record date and payment date for any
payment to Holders of Securities of any series pursuant to this Section. The
Trustee shall notify the Company in writing reasonably in advance of any such
record date and payment date.

Section 6.11.  Undertaking for Costs.

               In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees and expenses, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defense made by the party
litigant.  This Section does not apply to a suit by the Trustee, a suit by a
Holder pursuant to Section 6.07 or a suit by Holders of more than 10% in
principal amount of the then outstanding Securities.

                                   ARTICLE 7.

                                    TRUSTEE

Section 7.01.  Duties of Trustee.

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

                                       22

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

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

              (ii)  in the absence of bad faith on its part, the Trustee may
                    conclusively rely, as to the truth of the statements and the
                    correctness of the opinions expressed therein, upon
                    certificates or opinions furnished to the Trustee and
                    conforming to the requirements of this Indenture. However,
                    in the case of any such certificates or opinions which by
                    any provision hereof are specifically required to be
                    furnished to the Trustee, the Trustee shall be under a duty
                    to examine the same to determine whether or not they conform
                    to the requirements of this Indenture (but need not confirm
                    or investigate the accuracy of mathematical calculations or
                    other facts stated therein).

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

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

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

              (iii) the Trustee shall not be liable with respect to any action
                    it takes or omits to take in good faith in accordance with a
                    direction received by it pursuant to Section 6.05 hereof.

          (d) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b), and (c) of this Section.

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

                                       23

 
or exercise any right or power unless it receives security and indemnity
satisfactory to it against any loss, liability or expense.

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

Section 7.02.  Rights of Trustee.

          Subject to TIA Section 315(a) through (d):

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

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

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

          (d) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its rights or
powers, unless the Trustee's conduct constitutes negligence.

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

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

          (g) 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 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.

          (h) The Trustee shall not be deemed to have notice of any Default or
Event of Default unless a Trust Officer of the Trustee has actual knowledge
thereof or 

                                       24

 
unless written notice of any event which is in fact such a default is received
by the Trustee its principle corporate trust office, and such notice references
the Securities and this Indenture.

               (i) The rights, privileges, protections, immunities and benefits
given to the Trustee, including, without limitation, its right to be
indemnified, are extended to, and shall be enforceable by, the Trustee in each
of its capacities hereunder, and to each agent, custodian and other Person
employed to act hereunder.

Section 7.03.  Individual Rights of Trustee.

               The Trustee in its individual or any other capacity may become
the owner or pledgee of Securities and may otherwise deal with the Company or an
Affiliate with the same rights it would have if it were not Trustee. Any Agent
may do the same with like rights. However, the Trustee is subject to TIA
Sections 310(b) and 311.

Section 7.04.  Trustee's Disclaimer.

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

Section 7.05.  Notice of Defaults.

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

Section 7.06.  Reports by Trustee to Holders.

               Within 60 days after May 1 in each year, the Trustee with respect
to any series of Securities shall mail to Holders of Securities of that series
as provided in TIA Section 313(c) a brief report dated as of such May 1 that
complies with TIA Section 313(a) (if such report is required by TIA Section
313(a)). The Trustee shall also comply with TIA Section 313(b).

               A copy of each report at the time of its mailing to
Securityholders shall be mailed to the Company and filed with the Commission and
each stock exchange on which any of the Securities are listed, as required by
TIA Section 313(d). The Company shall promptly notify the Trustee when the
Securities are listed on any stock exchange or of any delisting thereof.

                                       25

 
Section 7.07.  Compensation and Indemnity.

               The Company shall pay to the Trustee from time to time such
compensation as shall be agreed upon in writing for its services hereunder.  The
Company shall reimburse the Trustee upon written request for all reasonable out-
of-pocket expenses incurred by it.  Such expenses shall include the reasonable
compensation and out-of-pocket expenses of the Trustee's agents and counsel.

               The Company shall indemnify each of the Trustee and any
predecessor Trustee for any and all loss, damage, claim, expense or liability
incurred by it, without negligence or bad faith on its part, in connection with
the acceptance or administration of this Indenture and its duties hereunder. The
Trustee shall notify the Company promptly of any claim for which it may seek
indemnity. The Company shall defend the claim and the Trustee shall cooperate in
the defense. The Trustee may have separate counsel and the Company shall pay the
reasonable fees and expenses of such counsel. The Company need not pay for any
settlement made without its consent.

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

               If the Trustee incurs expenses or renders services after an Event
of Default specified in Section 6.01(4) or (5) occurs, the expenses and the
compensation for the services will be intended to constitute expenses of
administration under any applicable Bankruptcy Law.

Section 7.08.  Replacement of Trustee.

               A resignation or removal of the Trustee with respect to one or
more or all series of Securities and appointment of a successor Trustee shall
become effective only upon the successor Trustee's acceptance of appointment as
provided in this Section.

               The Trustee may resign with respect to one or more or all series
of Securities by so notifying the Company in writing. The Holders of a majority
in principal amount of the then outstanding Securities of any series may remove
the Trustee as to that series by so notifying the Trustee in writing and may
appoint a successor Trustee with the Company's consent. The Company may remove
the Trustee with respect to one or more or all series of Securities if:

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

                  (2) the Trustee is adjudged a bankrupt or an insolvent;

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

                  (4) the Trustee becomes incapable of acting.

                                       26

 
          If, as to any series of Securities, the Trustee resigns or is removed
or if a vacancy exists in the office of Trustee for any reason, the Company
shall promptly appoint a successor Trustee for that series.  Within one year
after the successor Trustee with respect to any series takes office, the Holders
of a majority in principal amount of the then outstanding Securities of that
series may appoint a successor Trustee to replace the successor Trustee
appointed by the Company.  If a successor Trustee as to a particular series does
not take office within 60 days after the retiring Trustee resigns or is removed,
the retiring Trustee, the Company or the Holders of at least 10% in principal
amount of the then outstanding Securities of that series may petition, at the
expense of the Company, any court of competent jurisdiction for the appointment
of a successor Trustee.

          If the Trustee fails to comply with Section 7.10 with respect to any
series, any Holder of Securities of that series who satisfies the requirements
of TIA Section 310(b) may petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee for that
series.

          A successor Trustee as to any series of Securities shall deliver a
written acceptance of its appointment to the retiring Trustee and to the
Company.  Immediately after that, the retiring Trustee shall promptly transfer
all property held by it as Trustee to the successor Trustee (subject to the lien
provided for in Section 7.07), the resignation or removal of the retiring
Trustee shall become effective, and the successor Trustee shall have all the
rights, powers and duties of the Trustee under this Indenture as to that series.
The successor Trustee shall mail a notice of its succession to the Holders of
Securities of that series.

          Notwithstanding replacement of the Trustee pursuant to this Section
7.08, the Company's obligations under Section 7.07 hereof shall continue for the
benefit of the retiring trustee.

          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)
shall contain such provisions as shall be 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
or desirable to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee; provided, however, that nothing herein or in
such supplemental Indenture shall constitute such Trustee co-trustees of the
same trust and that each such Trustee shall be trustee of a trust hereunder
separate and apart from any trust hereunder administered by any other such
Trustee.

                                       27

 
               Upon the execution and delivery of such supplemental Indenture
the resignation or removal of the retiring Trustee shall become effective to the
extent provided therein and each such successor Trustee, without any further
act, deed or conveyance, shall become vested with all the rights, powers, trusts
and duties of the retiring Trustee with respect to the Securities of that or
those series to which the appointment of such successor Trustee relates.

Section 7.09.  Successor Trustee by Merger, etc.

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

Section 7.10.  Eligibility; Disqualification.

               Each series of Securities shall always have a Trustee who
satisfies the requirements of TIA Section 310(a)(1), (2) and (5). The Trustee as
to any series of Securities shall always have a combined capital and surplus of
at least $25,000,000 as set forth in its most recent published annual report of
condition. The Trustee is subject to TIA Section 310(b).

Section 7.11.  Preferential Collection of Claims Against Company.

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

                                   ARTICLE 8.

                     SATISFACTION AND DISCHARGE DEFEASANCE

Section 8.01.  Satisfaction and Discharge of Indenture.

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

               (a)  either

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

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

                         (1)  have become due and payable, or

                                       28

 
                         (2)  will become due and payable at their stated
               maturity within one year, or

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

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

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

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

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

Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 7.07, and, if money
shall have been deposited with the Trustee pursuant to clause (a) of this
Section or if money or obligations shall have been deposited with or received by
the Trustee pursuant to Section 8.03, the obligations of the Trustee under
Section 8.02 and Section 8.05 shall survive.

Section 8.02.  Application of Trust Funds; Indemnification.

          (a) Subject to the provisions of Section 8.05, all money deposited
with the Trustee pursuant to Section 8.01, all money and U.S. Government
Obligations deposited with the Trustee pursuant to Section 8.03 or 8.04 and all
money received by the Trustee in respect of U.S. Government Obligations
deposited with the Trustee pursuant to Section 8.03 or 8.04, shall be held in
trust and applied by it, in accordance with the provisions of the Securities and
this Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the persons entitled thereto, of the principal and interest for
whose payment such money has been deposited with or received by the Trustee or
to make mandatory sinking fund payments or analogous payments as contemplated by
Sections 8.03 and 8.04.

                                       29

 
          (b) The Company shall pay and shall indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against U.S. Government
Obligations deposited pursuant to Sections 8.03 or 8.04 or the interest and
principal received in respect of such obligations other than any payable by or
on behalf of Holders.

          (c) The Trustee shall deliver or pay to the Company from time to time
upon Company Request any U.S. Government Obligations or money held by it as
provided in Sections 8.03 or 8.04 which, in the opinion of a nationally
recognized firm of independent certified public accountants expressed in a
written certification thereof delivered to the Trustee, are then in excess of
the amount thereof which then would have been required to be deposited for the
purpose for which such U.S. Government Obligations or money were deposited or
received.  This provision shall not authorize the sale by the Trustee of any
U.S. Government Obligations held under this Indenture.

Section 8.03.  Legal Defeasance of Securities of any Series.

               Unless this Section 8.03 is otherwise specified to be
inapplicable to Securities of any series, the Company shall be deemed to have
paid and discharged the entire indebtedness on all the outstanding Securities of
any such series on the 91st day after the date of the deposit referred to in
subparagraph (d) hereof, and the provisions of this Indenture, as it relates to
such outstanding Securities of such series, shall no longer be in effect (and
the Trustee, at the expense of the Company, shall, upon Company Request, execute
proper instruments acknowledging the same), except as to:

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

               (b) the Company's obligations with respect to such Securities of
such series under Sections 2.03, 2.06 and 2.07; and

               (c)  the rights, powers, trust and immunities of the Trustee
hereunder and the duties of the Trustee under Section 8.02 and the duty of the
Trustee to authenticate Securities of such series issued on registration of
transfer of exchange; provided that, the following conditions shall have been
satisfied:

               (d) the Company shall have deposited or caused to be deposited
irrevocably with the Trustee as trust funds in trust for the purpose of making
the following payments, specifically pledged as security for and dedicated
solely to the benefit of the Holders of such Securities, cash in U.S. Dollars
and/or U.S. Government Obligations which through the payment of interest and
principal in respect thereof, in 

                                       30

 
accordance with their terms, will provide (and without reinvestment and assuming
no tax liability will be imposed on such Trustee), not later than one day before
the due date of any payment of money, an amount in cash, sufficient, in the
opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, to pay
and discharge each installment of principal (including mandatory sinking fund or
analogous payments) of and interest, if any, on all the Securities of such
series on the dates such installments of interest or principal are due;

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

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

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

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

               (i) such deposit shall not result in the trust arising from such
deposit constituting an investment company (as defined in the Investment Company
Act of 1940, as amended), or such trust shall be qualified under such Act or
exempt from regulation thereunder; and

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

Section 8.04.  Covenant Defeasance.

               Unless this Section 8.04 is otherwise inapplicable to Securities
of any series, on and after the 91st day after the date of the deposit referred
to in subparagraph (a) hereof, the 

                                       31

 
Company may omit to comply with any term, provision or condition set forth under
Sections 4.03, 4.04, 4.05, 4.06, 4.07 and 5.01 as well as any additional
covenants contained in a supplemental indenture hereto for a particular series
of Securities or a Board Resolution or an Officers' Certificate delivered
pursuant to Section 2.01(n) (and the failure to comply with any such provisions
shall not constitute a Default or Event of Default under Section 6.01) and the
occurrence of any event described in clause (e) of Section 6.01 shall not
constitute a Default or Event of Default hereunder, with respect to the
Securities of such series, provided that the following conditions shall have
been satisfied:

          (a) With reference to this Section 8.04, the Company has deposited or
caused to be irrevocably deposited (except as provided in Section 8.03) with the
Trustee as trust funds in trust, specifically pledged as security for, and
dedicated solely to, the benefit of the Holders of such Securities, cash in U.S.
Dollars and/or U.S. Government Obligations which through the payment of interest
and principal in respect thereof, in accordance with their terms, will provide
(and without reinvestment and assuming no tax liability will be imposed on such
Trustee), not later than one day before the due date of any payment of money, an
amount in cash, sufficient, in the opinion of a nationally recognized firm of
independent certified public accountants expressed in a written certification
thereof delivered to the Trustee, to pay principal and interest, if any, on and
any mandatory sinking fund in respect of the Securities of such series on the
dates such installments of interest or principal are due;

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

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

          (d) The Company shall have delivered to the Trustee an Opinion of
Counsel confirming that Holders of the Securities of such series will not
recognize income, gain or loss for Federal income tax purposes as a result of
such deposit and defeasance 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 deposit and defeasance had not occurred;

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

          (f) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein 

                                       32

 
provided for relating to the defeasance contemplated by this Section have been
complied with.

Section 8.05.  Repayment to Company.

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

                                   ARTICLE 9.

                      SUPPLEMENTS, AMENDMENTS AND WAIVERS

Section 9.01.  Without Consent of Holders.

               The Company and the Trustee as to any series of Securities may
supplement or amend this Indenture or the Securities without notice to or the
consent of any Securityholder:

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

                   (2) to comply with Article 5;

                   (3) to comply with any requirements of the Commission in
               connection with the qualification of this Indenture under the
               TIA;

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

                   (5) to add to, change or eliminate any of the provisions of
               this Indenture in respect of one or more series of Securities,
               provided, however, that any such addition, change or elimination
               (A) shall neither (i) apply to any Security of any series created
               prior to the execution of such supplemental indenture and
               entitled to the benefit of such provision nor (ii) modify the
               rights of the Holder of any such Security with respect to such
               provision or (B) shall become effective only when there is no
               outstanding Security of any series created prior to the execution
               of such supplemental indenture and entitled to the benefit of
               such provision;

                   (6) to make any change that does not adversely affect in any
               material respect the interests of the Securityholders of any
               series; or

                   (7) to establish additional series of Securities as permitted
               by Section 2.01.

                                       33

 
Section 9.02.  With Consent of Holders.

               Subject to Section 6.07, the Company and the Trustee as to any
series of Securities may amend this Indenture or the Securities of that series
with the written consent of the Holders of a majority in principal amount of the
then outstanding Securities of each series affected by the amendment, with each
such series voting as a separate class. The Holders of a majority in principal
amount of the then outstanding Securities of any series may also waive
compliance in a particular instance by the Company with any provision of this
Indenture with respect to that series or the Securities of that series;
provided, however, that without the consent of each Securityholder affected, an
amendment or waiver may not:

                   (1) reduce the percentage of the principal amount of
               Securities whose Holders must consent to an amendment or waiver;

                   (2) reduce the amount of, or postpone the date fixed for, the
               payment of any sinking fund or analogous provision;

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

                   (4) reduce the principal of or change the fixed maturity of
               any Security or waive a redemption payment or alter the
               redemption provisions with respect thereto;

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

                   (6) reduce the principal amount of Original Issue Discount
               Securities payable upon acceleration of the maturity thereof;

                   (7) make any change in Section 6.04, 6.07 or 9.02 (this
               sentence); or

                   (8) waive a default in the payment of the principal of, or
               interest on, any Security, except to the extent otherwise
               provided for in Section 6.02.

               An amendment or waiver under this Section which waives, 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.

                                       34

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

               The Company will mail supplemental indentures to Holders upon
request. Any failure of the Company to mail such notice, or any defect therein,
shall not, however, in any way impair or affect the validity of any such
supplemental indenture or waiver.

Section 9.03.  Revocation and Effect of Consents.

               Until an amendment or waiver becomes effective, a consent to it
by a Holder of a Security is a continuing consent by the Holder and every
subsequent Holder of a Security or portion of a Security that evidences the same
debt as the consenting Holder's Security, even if notation of the consent is not
made on any Security; provided, however, that unless a record date shall have
been established pursuant to Section 2.13(a), any such Holder or subsequent
Holder may revoke the consent as to his Security or portion of a Security if the
Trustee receives the notice of revocation before the date on which the amendment
or waiver becomes effective. An amendment or waiver shall become effective on
receipt by the Trustee of consents from the Holders of the requisite percentage
principal amount of the outstanding Securities of any series, and thereafter
shall bind every Holder of Securities of that series.

Section 9.04.  Notation on or Exchange of Securities.

               If an amendment or waiver changes the terms of a Security: (a)
the Trustee may require the Holder of the Security to deliver it to the Trustee,
the Trustee may place an appropriate notation on the Security about the changed
terms and return it to the Holder and the Trustee may place an appropriate
notation on any Security thereafter authenticated; or (b) if the Company or the
Trustee so determines, the Company in exchange for the Security shall issue and
the Trustee shall authenticate a new Security that reflects the changed terms.

Section 9.05.  Trustee to Sign Amendments, etc.

               The Trustee shall receive an Opinion of Counsel stating that the
execution of any amendment or waiver proposed pursuant to this Article is
authorized or permitted by this Indenture.  Subject to the preceding sentence,
the Trustee shall sign such amendment or waiver if the same does not adversely
affect the rights, duties, liabilities or immunities of the Trustee.  The
Trustee may, but shall not be obligated to, execute any such amendment,
supplement or waiver which affects the Trustee's own rights, duties, liabilities
or immunities under this Indenture or otherwise.

                                       35

 
                                  ARTICLE 10.

                                 MISCELLANEOUS

Section 10.01. Indenture Subject to Trust Indenture Act.

               This Indenture is subject to the provisions of the TIA which are
required to be part of this Indenture, and shall, to the extent applicable, be
governed by such provisions.

Section 10.02. Notices.

               Any notice or communication is duly given if in writing and
delivered in person or sent by first-class mail, telecopier or overnight air
courier guaranteeing next day delivery, addressed as follows:

               If to the Company:

                    Advanced Micro Devices, Inc.
                    One AMD Place
                    Sunnyvale, California 94086
                    Attention:  General Counsel

               If to the Trustee:

                    The Bank of New York
                    101 Barclay Street, Floor 21 West
                    New York, New York 10286
                    Attention: Corporate Trust Trustee Administration

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

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

               Any notice or communication to a Securityholder shall be mailed
by first-class mail to his address shown on the register kept by the Registrar.
Failure to mail a notice or communication to a Securityholder or any defect in
it shall not affect its sufficiency with respect to other Securityholders. If
the Company mails a notice or communication to Securityholders, it shall mail a
copy to the Trustee at the same time.

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

                                       36

 
Section 10.03. Communication By Holders With Other Holders.

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

Section 10.04. Certificate and Opinion as to Conditions Precedent.

               Upon any request or application by the Company to the Trustee to
take any action under this Indenture (except for the initial issuance of
Securities under this Indenture), the Company shall furnish to the Trustee:

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

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

Section 10.05. Statements Required in Certificate or Opinion.

               Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than the certificate
provided for in Section 4.03) shall include:

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

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

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

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

Section 10.06. Rules by Trustee and Agents.

               The Trustee as to Securities of any series may make reasonable
rules for action by or at a meeting of Holders of Securities of that series. The
Registrar and any Paying Agent or 

                                       37

 
Authenticating Agent may make reasonable rules and set reasonable requirements
for their functions.

Section 10.07. Legal Holidays.

               A "Legal Holiday" is a Saturday, a Sunday or a day on which
banking institutions in New York, New York, are not required to be open. If a
payment date is a Legal Holiday at a place of payment, payment may be made at
that place on the next succeeding day that is not a Legal Holiday, and no
interest shall accrue for the intervening period.

Section 10.08. No Recourse Against Others.

               A past, present or future director, officer, employee,
stockholder or incorporator, as such, of the Company or any successor
corporation shall not have any liability for any obligations of the Company
under any series of Securities or the Indenture or for any claim based on, in
respect of, or by reason of such obligations or their creation. Each
Securityholder by accepting a Security waives and releases all such liability.
The waiver and release are part of the consideration of issuance of the
Securities. Such waiver may not be effective to waive liabilities under the
federal securities laws and it is the view of the Commission that such a waiver
is against public policy.

Section 10.09. Counterparts.

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

Section 10.10. Governing Law.

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

Section 10.11. Severability.

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

Section 10.12. Effect of Headings, Table of Contents, etc.

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

                                       38

 
Section 10.13. Successors and Assigns.

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

Section 10.14. No Interpretation of Other Agreements.

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

                                       39

 
                                   SIGNATURES

          IN WITNESS WHEREOF, the parties hereto have executed this Indenture as
of the date first above written.

                              ADVANCED MICRO DEVICES, INC.

                              By  /s/ Richard Previte
                                 __________________________
                                 Name:   Richard Previte
                                 Title:  President

                              THE BANK OF NEW YORK,
                                as Trustee

                              By  /s/ Michael Culhane
                                 __________________________
                                 Name:  Michael Culhane
                                 Title: Vice President

                                       40

EX-4.2

                                                                     EXHIBIT 4.2
 
                         ADVANCED MICRO DEVICES, INC.

                       OFFICERS' CERTIFICATE PURSUANT TO
                   SECTIONS 2.01 AND 10.04 OF THE INDENTURE



     Richard Previte and Thomas M. McCoy do hereby certify that they are the
President, Chief Operating Officer, Chief Financial and Administrative Officer
and Treasurer and Vice President, General Counsel and Secretary, respectively,
of Advanced Micro Devices, Inc., a Delaware corporation (the "Company") and do
further certify, pursuant to resolutions of the Board of Directors of the
Company adopted on August 14, 1997, April 21, 1998 and April 30, 1998 (the
"Resolutions"), and in accordance with Sections 2.01 and 10.04 of the Indenture
(the Indenture as amended and supplemented by this Officers' Certificate is
herein referred to as the "Indenture") dated as of May 8, 1998 between the
Company and The Bank of New York, as trustee (the "Trustee"), as follows:

     1.  A series of subordinated securities to be issued under the Indenture
and designated as the Company's 6% Convertible Subordinated Notes due 2005 (the
"Notes") has been authorized.  The following terms shall apply to the Notes:

          (a)  The aggregate principal amount of Notes that may be authenticated
     and delivered is $450,000,000 plus such aggregate principal amount (which
     may not exceed $67,500,000 principal amount) of Notes as may be purchased
     by the Underwriters on the Option Closing Date pursuant to the Underwriting
     Agreement, dated May 5, 1998, between the Company and Donaldson, Lufkin &
     Jenrette Securities Corporation and Smith Barney Inc., as Underwriters,
     except for Notes authenticated and delivered upon registration of transfer
     of, or in exchange for, or in lieu of, other Securities pursuant to Section
     2.06, 2.07, 2.10, 3.06, or 9.04 of the Indenture or Paragraph 7.1 or 9.2
     hereof;

          (b)  The Notes shall constitute general unsecured obligations of the
     Company, subordinated in right of payment to all existing and future Senior
     Indebtedness (as defined herein) as provided in Paragraph 8 hereof and
     convertible into Common Stock (as defined herein) as provided in Paragraph
     9 hereof;

          (c) The principal amount of the Notes is payable on May 15, 2005,
     unless earlier repaid;

          (d)  The Notes shall bear interest at the rate of 6% per annum from
     May 8, 1998 or from the most recent Interest Payment Date (as defined
     below) to which interest has been paid or provided for, and such interest
     will be payable on May 15 and November 15 of each calendar year (each, an
     "Interest Payment Date"), commencing November 15, 1998, to the persons in
     whose names such Notes are registered at the close of business on the May 1
     and November 1, respectively, immediately preceding the relevant Interest
     Payment Date, whether 

                                       1

 
     or not a Business Day (each, a "Record Date"); such interest shall be
     computed on the basis of a 360-day year composed of twelve 30-day months;

          (e)  The entire principal amount of the Notes shall be issued
     initially as one or more Global Securities in registered form, without
     coupons, and upon issuance shall be deposited with, or on behalf of, The
     Depository Trust Company (the "Depositary") or its nominee and registered
     in the name of the Depositary or its nominee in the form attached hereto as
     Annex A (the "Form of Note") with such changes thereto as may be required
     in the process of printing or otherwise producing the Notes not affecting
     the substance thereof;

          (f)  The Notes may not be transferred as a whole except (i) by the
     Depositary to a nominee of the Depositary, (ii) by a nominee of the
     Depositary to the Depositary or another nominee of the Depositary or (iii)
     by the Depositary or any such nominee to a successor Depositary or a
     nominee of such successor Depositary and shall be exchangeable only if (x)
     the Depositary notifies the Company and the Company notifies the Trustee in
     writing that the Depositary is no longer willing or able to continue as
     Depositary for the Global Securities and a successor Depositary for the
     Global Securities is not appointed by the Company within 90 days after
     delivery of such notice or (y) the Company, in its sole discretion,
     notifies the Trustee in writing that it elects to cause the issuance of
     Notes in definitive form, in which case the Company will execute, and the
     Trustee, upon receipt of an Officers' Certificate requesting the
     authentication and delivery of Notes in definitive form, will authenticate
     and make available for delivery definitive Notes, in an aggregate principal
     amount equal to the principal amount of the Global Securities, in exchange
     for such Global Securities, in denominations of $1,000 and integral
     multiples thereof and registered in such names as the Depositary holding
     such Global Securities shall direct; and

          (g)  Payments in respect of Notes represented by a Global Security
     (including principal and interest) will be made by wire transfer of
     immediately available funds to the accounts specified by the Depositary;
     payments in respect of Notes in definitive form (including principal and
     interest) shall be made at the office or agency of the Company maintained
     for such purpose, which office or agency shall be maintained in the Borough
     of Manhattan, The City of New York (and shall initially be an office or
     agency of the Trustee) except that, at the option of the Company, any
     payments of interest may be made by check mailed on or before the due date
     by first class mail to the address of the persons entitled thereto as shown
     on the Note register.

     2.  The Form of Note sets forth certain of the terms required to be set
forth in this certificate pursuant to Section 2.01 of the Indenture, and said
terms are incorporated herein by reference.  The Notes were issued at the
initial offering price of 100% of the principal amount of the Notes.

                                       2

 
     3.  The Notes will not be subject to redemption prior to May 15, 2001 and
will be redeemable on and after such date at the option of the Company, in whole
or in part, upon not less than 15 nor more than 60 days' notice to each Holder,
at the redemption prices and during the periods specified in the Form of Note,
in each case (subject to the right of Holders of record on a Record Date to
receive interest due on an Interest Payment Date that is on or prior to such
Redemption Date) together with accrued and unpaid interest if, any, to, but
excluding, the Redemption Date; provided, however, that the Notes will not be
redeemable prior to May 15, 2002, unless the last reported sale price of the
Common Stock is at least 130% of the then effective conversion price for at
least 20 trading days within a period of 30 consecutive Trading Days ending
within five Trading Days of the date of the redemption notice.

     In the case of a partial redemption, the Trustee shall select the Notes or
portions thereof for redemption on a pro rata basis, by lot or in such other
manner it deems appropriate and fair. The Notes may be redeemed in part in
multiples of $1,000 only.

     The Notes will not have the benefit of any sinking fund.

     Notice of any redemption will be sent, by first-class mail, at least 15
days and not more than 60 days prior to the Redemption Date, to the Holder of
each Note to be redeemed to such Holder's last address as then shown upon the
registry books of the Registrar. The notice of redemption must state the
Redemption Date, the redemption price and the amount of accrued interest, if
any, to be paid. Any notice that relates to a Note to be redeemed in part only
must state the portion of the principal amount to be redeemed and must state
that on and after the redemption date, upon surrender of such Note, a new Note
or Notes in principal amount equal to the unredeemed portion thereof will be
issued. On and after the Redemption Date, interest will cease to accrue on the
Notes or portions thereof called for redemption, unless the Company defaults in
its obligations with respect thereto.

     4.  In addition to the Events of Default set forth in Section 6.01 of the
Indenture, the following shall constitute Events of Default with respect to the
Notes:

     (a)  any failure by the Company to pay the Repurchase Price on the
Repurchase Date in the manner contemplated in Paragraph 7 hereof, whether or not
such payment is prohibited by Paragraph 8 hereof;

     (b)  failure of the Company or any Significant Subsidiary to make any
payment (after giving effect to any applicable period of grace) at maturity of
any Indebtedness (other than non-recourse obligations) in an amount in excess of
$50,000,000 and the continuance of such failure for 30 days after there has been
given, by registered or certified mail, to the Company by the Trustee or to the
Company and the Trustee by the Holders of at least 25% in aggregate principal
amount of the then outstanding Notes, a written notice specifying such default,
requesting that it be remedied and stating that such notice is a "Notice of
Default" under the Indenture;

     (c)  default by the Company or any Significant Subsidiary with respect to
any Indebtedness (other than non-recourse obligations), which default results in
the acceleration of Indebtedness having a principal amount in excess of
$50,000,000 without such Indebtedness 

                                       3

 
having been discharged or such acceleration having been rescinded or annulled
for 30 days after there has been given, by registered or certified mail, to the
Company by the Trustee or to the Company and the Trustee by the Holders of at
least 25% in aggregate principal amount of the then outstanding Notes, a written
notice specifying such default, requesting that it be remedied and stating that
such notice is a "Notice of Default" under the Indenture; and

     (d)  final unsatisfied judgments not covered by insurance, or the issuance
of any warrant of attachment against any portion of the property or assets of
the Company or any of its Significant Subsidiaries, aggregating in excess of
$50,000,000 at any one time shall have been rendered against the Company or any
of its Significant Subsidiaries and not have been stayed, bonded or discharged
for a period (during which execution shall not be effectively stayed) of 60 days
(or, in the case of any such final judgment which provides for payment over
time, which shall so remain unstayed, unbonded or undischarged beyond any
applicable payment date provided therein).

     5.  In addition to the purposes for which a supplemental indenture may be
entered into without the consent of the Holders of the Notes set forth in
Section 9.01 of the Indenture, the following shall be considered a purpose:

          to make any provision with respect to the conversion rights of Holders
     pursuant to the requirements of Paragraph 9 hereof.

     6.  In addition to the limitations on supplemental indentures with the
consent of Holders set forth in Section 9.02 of the Indenture, the following
limitations, shall apply with respect to the Notes and shall be subject to the
other provisions of Article 9 of the Indenture:

          (i)  reduce the Repurchase Price or alter the Repurchase Offer in a
     manner adverse to the Holders of Notes; and

          (ii)  make any change that adversely affects the right of a Holder to
     convert any Note as provided in Paragraph 9 hereof.

     7.  The Notes shall be subject to repurchase at the option of the Holders
upon the following terms and conditions:

     7.1  Repurchase of Notes at Option of the Holder Upon a Change of Control.
          -------------------------------------------------------------------- 

     (a)  Subject to Paragraph 7.2, in the event that a Change of Control
occurs, the Company shall offer, subject to the terms and conditions of this
Indenture, to purchase all or any part of each Holder's Notes (provided, that
the principal amount of such Notes must be $1,000 or an integral multiple
thereof) on the date (the "Repurchase Date") that is no later than 45 Business
Days (except as hereinafter provided) after the occurrence of such Change of
Control, at a cash price (the "Repurchase Price") equal to 100% of the principal
amount thereof, together with accrued and unpaid interest, if any, to (but
excluding) the Repurchase Date.

                                       4

 
     (b)  In the event that, pursuant to this Paragraph 7.1, the Company shall
be required to commence an offer to purchase Notes (a "Repurchase Offer"), the
Company shall follow the procedures set forth in this Paragraph 7.1 as follows:

          (i)   the Repurchase Offer shall commence within 25 Business Days
     following a Change of Control;

          (ii)  the Repurchase Offer shall remain open for 20 Business Days
     following its commencement, except to the extent that a longer period is
     required by applicable law (the "Repurchase Offer Period").  If required by
     applicable law, the Repurchase Date and the Repurchase Offer Period may be
     extended as so required; provided, however, that it shall constitute an
     Event of Default if the Repurchase Date does not occur within 60 Business
     Days following the Change of Control;

          (iii) upon the expiration of a Repurchase Offer, the Company shall
     purchase all Notes tendered in response to the Repurchase Offer;

          (iv)  if the Repurchase Date is on or after an interest payment record
     date and on or before the related Interest Payment Date, any accrued
     interest will be paid to the Person in whose name a Note is registered at
     the close of business on such record date, and no additional interest will
     be payable to Holders who tender Notes pursuant to the Repurchase Offer;

          (v)   the Company shall provide the Trustee with written notice of the
     Repurchase Offer at least 5 Business Days before the commencement of any
     Repurchase Offer (or such shorter period that is satisfactory to the
     Trustee); and

          (vi)  on or before the commencement of any Repurchase Offer, the
     Company or the Trustee (upon the request and at the expense of the Company)
     shall send, by first-class mail, a notice to each of the Holders, which (to
     the extent consistent with this Indenture) shall govern the terms of the
     Repurchase Offer and shall state:

               (A)  that the Repurchase Offer is being made pursuant to such
          notice and this Paragraph 7.1 and that all Notes, or portions thereof,
          tendered will be accepted for payment;

               (B)  the Repurchase Price (including the amount of accrued and
          unpaid interest, if any), the Repurchase Date and the Repurchase Put
          Date;

               (C)  that any Note, or portion thereof, not tendered and accepted
          for payment will continue to accrue interest;

               (D)  unless the Company defaults in depositing Cash with the
          Paying Agent in accordance with the last paragraph of this clause (b)
          or 

                                       5

 
          such payment is prevented pursuant to Paragraph 8 below, any Note, or
          portion thereof, accepted for payment pursuant to the Repurchase Offer
          shall cease to accrue interest after the Repurchase Date;

               (E)  that Holders electing to have a Note, or portion thereof,
          purchased pursuant to a Repurchase Offer will be required to surrender
          the Note, with the form entitled "Option of Holder to Elect
          Repurchase" on the reverse of the Note completed, to the Paying Agent
          (which may not for purposes of this Paragraph 7.1, notwithstanding
          anything in this Indenture to the contrary, be the Company or any
          Affiliate of the Company) at the address specified in the notice prior
          to the close of business on the earlier of (1) the third Business Day
          prior to the Repurchase Date and (2) the third Business Day following
          the expiration of the Repurchase Offer (such earlier date being the
          "Repurchase Put Date");

               (F)  that Holders will be entitled to withdraw their election, in
          whole or in part, if the Paying Agent (which may not for purposes of
          this Paragraph 7.1, notwithstanding anything in this Indenture to the
          contrary, be the Company or any Affiliate of the Company) receives, up
          to the close of business on the Repurchase Put Date, a facsimile
          transmission or letter setting forth the name of the Holder, the
          principal amount of the Notes the Holder is withdrawing and a
          statement that such Holder is withdrawing his election to have such
          principal amount of Notes purchased; and

               (G)  a brief description of the events resulting in such Change
          of Control.

     Any such Repurchase Offer shall comply with all applicable provisions of
federal and state laws, including those regulating tender offers, if applicable,
and any provisions of this Indenture which conflict with such laws shall be
deemed to be superseded by the provisions of such laws.

     On or before the Repurchase Date, the Company shall (i) accept for payment
Notes or portions thereof properly tendered pursuant to the Repurchase Offer on
or before the Repurchase Put Date, (ii) deposit with the Paying Agent Cash
sufficient to pay the Repurchase Price (together with accrued and unpaid
interest, if any) of all Notes or portions thereof so tendered and (iii) deliver
to the Trustee Notes so accepted together with an Officers' Certificate listing
the Notes or portions thereof being purchased by the Company.  The Paying Agent
shall promptly mail to Holders of Notes so accepted payment in an amount equal
to the Repurchase Price (together with accrued and unpaid interest, if any), and
the Trustee shall promptly authenticate and mail or deliver to such Holders a
new Note or Notes equal in principal amount to any unpurchased portion of the
Notes surrendered.  Any Notes not so accepted shall be promptly mailed or
delivered by the Company to the Holder thereof.  The Company shall publicly
announce the results of the Repurchase Offer on or as soon as practicable after
the Repurchase Date.

                                       6

 
     7.2  Rescission of Change of Control Determination.
          --------------------------------------------- 

     At any time prior to the close of business on the Business Day immediately
preceding the Repurchase Date, the Holders of more than 66-2/3% in aggregate
principal amount of the then outstanding Notes, by written act of said Holders
delivered to the Company and the Trustee, may determine that the event giving
rise to the Change of Control shall not be treated as a Change of Control for
purposes of Paragraph 7.1, in which event:

     (a)  the provisions of Paragraph 7.1(a) shall not apply;

     (b)  if a Repurchase Offer has been made by the Company pursuant to
Paragraph 7.1(b), such Repurchase Offer shall be deemed revoked; and

     (c)  if any Notes have been tendered in response to the revoked Repurchase
Offer, such tenders shall be deemed rescinded and the Notes promptly returned to
the Holders thereof.

     Following a determination by the Holders pursuant to this Paragraph 7.2,
the Company shall mail to all Holders a notice briefly describing such
determination.  Any failure of the Company to mail such notice, or any defect
therein, shall not, however, in any way impair or affect the validity of any
such determination.  An effective determination under this Paragraph 7.2 shall
be binding on all holders.

     For purposes of any such determination by the holders of the outstanding
Notes, Notes held by the Company or an Affiliate of the Company (including any
Person that would become an Affiliate of the Company (or its successor) as a
consequence of the event or series of events that otherwise would be treated as
a Change of Control for purposes of the Indenture) shall be disregarded.

     8.  The Notes shall be subordinated in right of payment to Senior
Indebtedness upon the following terms and conditions:

     8.1  Notes Subordinated to Senior Indebtedness.
          ----------------------------------------- 

     The Company and each Holder, by its acceptance of Notes, agree that (a) the
payment of the principal of and interest on the Notes and (b) any other payment
in respect of the Notes, including on account of the acquisition or redemption
of the Notes by the Company (including, without limitation, pursuant to
Paragraph 7 hereof but specifically excluding payments to the Trustee for its
own benefit), is subordinated, to the extent and in the manner provided in this
Paragraph 8, to the prior payment in full of all Senior Indebtedness of the
Company, whether outstanding at the date of the Indenture or thereafter created,
incurred, assumed or guaranteed, and that these subordination provisions are for
the benefit of the holders of Senior Indebtedness.

     8.2  No Payment on Notes in Certain Circumstances.
          -------------------------------------------- 

     (a)  No payment may be made by the Company, directly or through any
Subsidiary, on account of the principal of or interest on, the Notes, or to
acquire any of the Notes (including 

                                       7

 
repurchases of Notes at the option of the Holder pursuant to a Repurchase Offer)
for cash or property (other than (x) Junior Securities or (y) payments and other
distributions made from any defeasance trust created pursuant to Sections 8.03
or 8.04 of the Indenture), or on account of the redemption provisions of the
Notes, (i) upon the maturity of any Senior Indebtedness, by lapse of time,
acceleration (unless waived) or otherwise, unless and until all principal of or
interest on such Senior Indebtedness are first paid in full (or the prompt
payment thereof is duly provided for in cash), or (ii) in the event of default
in the payment of any principal of or interest on any Senior Indebtedness when
it becomes due and payable, whether at maturity or at a date fixed for
prepayment or by declaration or otherwise (collectively, a "Payment Default"),
unless and until such Payment Default has been cured or waived or otherwise has
ceased to exist.

     (b)  Upon (i) the happening of an event of default (other than a Payment
Default) that permits, or would permit, with (A) the passage of time, (B) the
giving of notice, (C) the making of any payment of the Notes then required to be
made, or (D) any combination thereof (collectively, a "Non-Payment Default"),
the holders of Senior Indebtedness under the Credit Agreement or the holders of
other Senior Indebtedness having a principal amount then outstanding in excess
of $10 million (or with respect to which Senior Indebtedness the holders are
obligated to lend the Company in excess of $10 million principal amount) or
their respective representatives immediately to accelerate the maturity of such
Senior Indebtedness and (ii) written notice of such Non-Payment Default being
given to the Company and the Trustee by the holders of Senior Indebtedness under
the Credit Agreement or the holders of such other Senior Indebtedness or their
representatives (a "Payment Notice"), then, unless and until such Non-Payment
Default has been cured or waived or otherwise has ceased to exist, no payment
(by setoff or otherwise) may be made by or on behalf of the Company, directly or
through any Subsidiary, on account of the principal of or interest on the Notes,
or to acquire or repurchase any of the Notes for cash or property, or on account
of the redemption provisions of the Notes, in any such case other than payments
made with Junior Securities or payments and other distributions made from any
defeasance trust created pursuant to Sections 8.03 or 8.04 of the Indenture.
Notwithstanding the foregoing, unless (i) the Senior Indebtedness in respect of
which such Non-Payment Default exists has been declared due and payable in its
entirety within 179 days after the Payment Notice is delivered as set forth
above (the "Payment Blockage Period"), and (ii) such declaration has not been
rescinded or waived, at the end of the Payment Blockage Period, the Company
shall be required to pay all regularly scheduled payments on the Notes that were
not paid to the Holders of the Notes during the Payment Blockage Period due to
the foregoing prohibitions (and upon the making of such payments any
acceleration of the Notes made during the Payment Blockage Period shall be of no
further force or effect) and to resume all other payments as and when due on the
Notes.  Not more than one Payment Notice may be given in any consecutive 365-day
period, irrespective of the number of defaults with respect to Senior
Indebtedness during such period.  In no event, however, may the total number of
days during which any Payment Blockage Period is or Payment Blockage Periods are
in effect exceed 179 days in the aggregate during any consecutive 365-day
period.

     (c)  In furtherance of the provisions of Paragraph 8.1, in the event that,
notwithstanding the foregoing provisions of this Paragraph 8.2, any payment or
distribution of assets of the Company or any Subsidiary (other than (x) Junior
Securities or (y) payments and other distributions made from any defeasance
trust created pursuant to Sections 8.03 or 8.04 of the 

                                       8

 
Indenture) shall be received by the Holders of the Notes or the Trustee for the
benefit of the Holders or any Paying Agent for the benefit of the Holders at a
time when such payment or distribution is prohibited by the provisions of this
Paragraph 8.2, then such payment or distribution (subject to the provisions of
Article 7 of the Indenture and Paragraphs 8.6, 8.7 and 8.12 hereof) shall be
received and held in trust by such Holder or the Trustee or Paying Agent for the
benefit of the holders of Senior Indebtedness of the Company, and shall be paid
or delivered by such Holders or the Trustee or such Paying Agent, as the case
may be, to the holders of Senior Indebtedness of the Company remaining unpaid or
unprovided for or their representative or representatives, or to the trustee or
trustees under any indenture pursuant to which any instruments evidencing any of
such Senior Indebtedness of the Company may have been issued, ratably according
to the aggregate amounts remaining unpaid on account of the Senior Indebtedness
of the Company held or represented by each, for application to the payment of
all Senior Indebtedness of the Company in full after giving effect to any
concurrent payment or distribution, or provision therefor, to the holders of
such Senior Indebtedness.

     8.3  Notes Subordinated to Prior Payment of All Senior Indebtedness on
          -----------------------------------------------------------------
          Dissolution, Liquidation or Reorganization.
          ------------------------------------------ 

     Upon any distribution of assets of the Company upon any dissolution,
winding up, total or partial liquidation or reorganization of the Company,
whether voluntary or involuntary, in bankruptcy, insolvency, receivership or a
similar proceeding or upon assignment for the benefit of creditors or any
marshaling of assets or liabilities:

     (a)  the holders of all Senior Indebtedness shall first be entitled to
receive payments in full (or have the prompt payment thereof duly provided for
in cash) before the Holders are entitled to receive any payment on account of
the principal of and interest on the Notes (other than (x) Junior Securities or
(y) payments and other distributions made from any defeasance trust created
pursuant to Sections 8.03 or 8.04 of the Indenture);

     (b)  any payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities (other than (x) Junior
Securities or (y) payments and other distributions made from any defeasance
trust created pursuant to Sections 8.03 or 8.04 of the Indenture) to which the
Holders of the Notes or the Trustee on behalf of the Holders would be entitled
(by setoff or otherwise), except for the provisions of this Paragraph 8, shall
be paid by the liquidating trustee or agent or other Person making such a
payment or distribution directly to the holders of Senior Indebtedness or their
representative to the extent necessary to make payment in full of all such
Senior Indebtedness remaining unpaid, after giving effect to any concurrent
payment or distribution, or provision therefor, to the holders of such Senior
Indebtedness (but this Paragraph 8.3(b) shall not apply to payments or
distributions to the Trustee for its own benefit); and

     (c)  in the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company or any Subsidiary of any kind or
character, whether in cash, property or securities (other than (x) Junior
Securities or (y) payments and other distributions made from any defeasance
trust created pursuant to Sections 8.03 or 8.04 of the Indenture), shall be
received by the Trustee for the benefit of the Holders or the Holders or any
Paying Agent for the benefit of 

                                       9

 
the Holders (or, if the Company or any Affiliate of the Company is acting as its
own Paying Agent, money for any such payment or distribution shall be segregated
or held in trust) on account of the principal of or interest on the Notes before
all Senior Indebtedness is paid in full, such payment or distribution (subject
to the provisions of Article 7 of the Indenture and Paragraphs 8.6, 8.7 and 8.12
hereof) shall be received and held in trust by the Trustee or such Holder or
Paying Agent for the benefit of the holders of such Senior Indebtedness, or
their respective representative, ratably according to the respective amounts of
such Senior Indebtedness held or represented by each, to the extent necessary to
make payment as provided herein of all such Senior Indebtedness remaining unpaid
after giving effect to all concurrent payments and distributions to or for the
holders of such Senior Indebtedness, but only to the extent that as to any
holder of such Senior Indebtedness, as promptly as practical following notice
from the Trustee to the holders of such Senior Indebtedness that such prohibited
payment has been received by the Trustee, Holder(s) or Paying Agent (or has been
segregated as provided above), such holder (or a representative therefor)
notifies the Trustee of the amounts then due and owing on such Senior
Indebtedness, if any, held by such holder and only the amounts specified in such
notices to the Trustee shall be paid to the holders of such Senior Indebtedness.

     8.4  Holders of Notes to Be Subrogated to Rights of Holders of Senior
          ----------------------------------------------------------------
          Indebtedness.
          ------------ 

     Subject to the payment in full of all Senior Indebtedness of the Company as
provided herein, the Holders of Notes shall be subrogated to the rights of the
holders of such Senior Indebtedness to receive payments or distributions of
assets of the Company applicable to the Senior Indebtedness until all amounts
owing on the Notes shall be paid in full, and for the purpose of such
subrogation no such payments or distributions to the holders of such Senior
Indebtedness by the Company, or by or on behalf of the Holders by virtue of this
Paragraph 8, which otherwise would have been made to the Holders shall, as
between the Company and the Holders, be deemed to be payment by the Company or
on account of such Senior Indebtedness, it being understood that the provisions
of this Paragraph 8 are and are intended solely for the purpose of defining the
relative rights of the Holders of Notes, on the one hand, and the holders of
such Senior Indebtedness, on the other hand.

     If any payment or distribution to which the Holders of Notes would
otherwise have been entitled but for the provisions of this Paragraph 8 shall
have been applied, pursuant to the provisions of this Paragraph 8, to the
payment of amounts payable under Senior Indebtedness of the Company, then the
Holders shall be entitled to receive from the holders of such Senior
Indebtedness any payments or distributions received by such holders of Senior
Indebtedness in excess of the amount sufficient to pay all amounts payable under
or in respect of such Senior Indebtedness in full.

     8.5  Obligations of the Company Unconditional.
          ---------------------------------------- 

     Nothing contained in this Paragraph 8 or elsewhere in the Indenture or in
the Notes is intended to or shall impair as between the Company and the Holders,
the obligation of each such Person, which is absolute and unconditional, to pay
to the Holders the principal of and interest on, the Notes as and when the same
shall become due and payable in accordance with their terms, or is intended to
or shall affect the relative rights of the Holders and creditors of the 

                                       10

 
Company other than the holders of the Senior Indebtedness, nor shall anything
herein or therein prevent the Trustee or any Holder from exercising all remedies
otherwise permitted by applicable law upon default under the Indenture, subject
to the rights, if any, under this Paragraph 8, of the holders of Senior
Indebtedness in respect of cash, property or securities of the Company received
upon the exercise of any such remedy. Notwithstanding anything to the contrary
in this Paragraph 8 or elsewhere in the Indenture or in the Notes, upon any
distribution of assets of the Company referred to in this Paragraph 8, the
Trustee, subject to the provisions of Paragraphs 8.1 and 8.2, and the Holders
shall be entitled to rely upon any order or decree made by any court of
competent jurisdiction in which such dissolution, winding up, liquidation or
reorganization proceedings are pending, or a certificate of the liquidating
trustee or agent or other Person making any distribution to the Trustee or to
the Holders for the purpose of ascertaining the Persons entitled to participate
in such distribution, the holders of the 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 Paragraph 8 so long as such court has been apprised of the provisions
of, or the order, decree or certificate makes reference to, the provisions of
this Paragraph 8. Nothing in this Paragraph 8.5 shall apply to the claims of, or
payments to, the Trustee under or pursuant to Paragraph 8.7 or otherwise for its
own benefit.

     8.6  Trustee and Other Agents Entitled to Assume Payments Not Prohibited in
          ----------------------------------------------------------------------
          Absence of Notice.
          ----------------- 

     The Company shall give prompt written notice to the Trustee of any fact
known to the Company which would prohibit the making of any payment to or by the
Trustee in respect of the Notes.  Failure to give such notice shall not affect
the subordination of the Notes to Senior Indebtedness.  The Trustee and all
other Agents shall not at any time be charged with knowledge of the existence of
any facts which would prohibit the making of any payment to or by the Trustee
unless and until a Trust officer of the Trustee or any Paying Agent shall have
actually received, no later than one Business Day prior to such payment, written
notice thereof from the Company or from one or more holders of Senior
Indebtedness or from any representative therefor and, prior to the receipt of
any such written notice, the Trustee, subject to the provisions of Paragraphs
8.1 and 8.2, shall be entitled in all respects conclusively to assume that no
such fact exists.

     8.7  Application by Trustee of Assets Deposited with It.
          -------------------------------------------------- 

     Amounts deposited in trust with the Trustee pursuant to and in accordance
with the Indenture shall be, subject to Paragraph 8.7, for the sole benefit of
Holders and, to the extent allocated for the payment of Notes, shall not be
subject to the subordination provisions of this Paragraph 8.  Otherwise, any
deposit of assets with the Trustee or any other Agent (whether or not in trust)
for the payment of principal of or interest on any Notes shall be subject to the
provisions of Paragraphs 8.1, 8.2, 8.3 and 8.4; provided that, if prior to one
Business Day preceding the date on which by the terms of the Indenture any such
assets may become distributable for any purpose (including, without limitation,
the payment of either principal of or interest on any Note) the Trustee or such
Paying Agent shall not have received with respect to such assets the written
notice provided for in Paragraph 8.6, then the Trustee or such Paying 

                                       11

 
Agent shall have full power and authority to receive such assets and to apply
the same to the purpose for which they were received, without liability, and
shall not be affected by any notice to the contrary which may be received by it
on or after such date.

     8.8  Subordination Rights Not Impaired by Acts or Omissions of the Company
          ---------------------------------------------------------------------
          or Holders of Senior Indebtedness.
          --------------------------------- 

     No right of any present or future holders of any Senior Indebtedness to
enforce subordination provisions contained in this Paragraph 8 shall at any time
in any way be prejudiced or impaired by any act or failure to act on the part of
the Company or by any act or failure to act, in good faith, by any such holder,
or by any noncompliance by the Company with the terms of the Indenture,
regardless of any knowledge thereof which any such holder may have or be
otherwise charged with.  The holders of Senior Indebtedness may extend, renew,
modify or amend the terms of the Senior Indebtedness or any security therefor
and release, sell or exchange such security and otherwise deal freely with the
Company, all without affecting the liabilities and obligations of the parties to
the Indenture or the Holders.

     8.9  Holders of Notes Authorize Trustee to Effectuate Subordination of
          -----------------------------------------------------------------
          Notes.
          ----- 

     Each Holder of the Notes by his acceptance thereof authorizes the Trustee
on his behalf to take such action as may be necessary or appropriate to
effectuate the subordination provisions contained in this Paragraph 8 and to
protect the rights of the Holders pursuant to the Indenture, and appoints the
Trustee his attorney-in-fact for such purpose, including, in the event of any
dissolution, winding up, liquidation or reorganization of the Company (whether
in bankruptcy, insolvency or receivership proceedings or upon an assignment for
the benefit of creditors of the Company), the immediate filing of a claim for
the unpaid balance of his Notes in the form required in said proceedings and
cause said claim to be approved.  If the Trustee does not file a proper claim or
proof of debt in the form required in such proceeding prior to 30 days before
the expiration of the time to file such claim or claims, then the holders of the
Senior Indebtedness or their representative are or is hereby authorized to have
the right to file and are or is hereby authorized to file an appropriate claim
for and on behalf of the Holders of said Notes.  Nothing herein contained shall
be deemed to authorize the Trustee or the holders of Senior Indebtedness or
their representative to authorize or consent to or accept or adopt on behalf of
any Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder thereof, or to authorize the
Trustee or the holders of Senior Indebtedness or their representative to vote in
respect of the claim of any Holder in any such proceeding.

     8.10 Right of Trustee to Hold Senior Indebtedness.
          -------------------------------------------- 

     The Trustee shall be entitled to all of the rights set forth in this
Paragraph 8 in respect of any Senior Indebtedness at any time held by it to the
same extent as any other holder of Senior Indebtedness, and nothing in the
Indenture shall be construed to deprive the Trustee of any of its rights as such
holder.  Nothing in this Paragraph 8 shall apply to claims of, or payments to,
the Trustee under or pursuant to Section 7.07 of the Indenture.

                                       12

 
     8.11 Paragraph 8 Not to Prevent Events of Default.
          -------------------------------------------- 

     The failure to make a payment on account of principal of or interest on the
Notes by reason of any provision of this Paragraph 8 shall not be construed as
preventing the occurrence of a Default or an Event of Default under Section 6.01
of the Indenture or in any way prevent the Holders from exercising any right
hereunder other than the right to receive payment on the Notes.

     8.12 No Duty of Trustee and Other Agents to Holders of Senior Indebtedness.
          --------------------------------------------------------------------- 

     The Trustee and the other Agents shall not be deemed  to owe any fiduciary
duty to the holders of Senior Indebtedness, and shall not be liable to any such
holders (other than for its willful misconduct or negligence) if it shall in
good faith mistakenly pay over or distribute to the Holders of Notes or the
Company or any other Person, cash, property or securities to which any holders
of Senior Indebtedness shall be entitled by virtue of this Paragraph 8 or
otherwise.  Nothing in this Paragraph 8.12 shall affect the obligation of any
other such Person receiving such payment or distribution from the Trustee or any
other Agent to hold such payment for the benefit of, and to pay such payment
over to, the holders of Senior Indebtedness or their representative.  With
respect to holders of Senior Indebtedness, the Trustee undertakes to perform or
to observe only such of its covenants or obligations as are specifically set
forth in this Paragraph 8 and no implied covenants or obligations with respect
to holders of Senior Indebtedness shall be read into the Indenture against the
Trustee.

     9.  The Notes shall be convertible into shares of Common Stock of the
Company upon the following terms and conditions:

     9.1  Conversion Privilege.
          -------------------- 

     Subject to and upon compliance with the provisions of this Paragraph 9, at
the option of the Holder thereof, any Note may at any time, be converted, in
whole, or in part in integral multiples of $1,000 principal amount, into fully
paid and non-assessable shares of Common Stock issuable upon conversion of the
Notes, at the conversion price in effect at the Date of Conversion, until and
including, but not after the close of business on the Stated Maturity, unless
such Note or some portion thereof shall have been called for redemption or
delivered for repurchase prior to such date and no default is made in making due
provision for the payment of the redemption price in accordance with the terms
of the Indenture, in which case, with respect to such Note or portion thereof as
has been so called for redemption or delivered for repurchase, such Note or
portion thereof may be so converted until and including, but not after, the
close of business on the Business Day immediately prior to the Redemption Date
or Repurchase Date, as applicable, for such Note, unless the Company
subsequently fails to pay the applicable redemption price or Repurchase Price,
as the case may be.

     9.2  Exercise of Conversion Privilege.
          -------------------------------- 

     In order to exercise the conversion privilege, the Holder of any Note to be
converted shall surrender such Note to the Company at any time during usual
business hours at its office or 

                                       13

 
agency maintained for the purpose in the Borough of Manhattan, The City of New
York, which shall initially be an office or agency of the Trustee, accompanied
by a fully executed written notice, in substantially the form set forth on the
reverse of the Note, that the Holder elects to convert such Note or a stated
portion thereof constituting an integral multiple of $1,000 principal amount,
and, if such Note is surrendered for conversion during the period between the
close of business on any Record Date and the opening of business on the next
following Interest Payment Date and (a) has not been called for redemption on a
Redemption Date which occurs within such period, or (b) is not subject to a
Repurchase Offer during the period from the Record Date to and including the
first Business Day after the next succeeding Interest Payment Date, accompanied
also by payment of an amount equal to the interest payable on such Interest
Payment Date on the principal amount of the Note being surrendered for
conversion, notwithstanding such conversion. Such notice of conversion shall
also state the name or names (with address) in which the certificate or
certificates for shares of Common Stock shall be issued. The Holder of any Note
at the close of business on a Record Date will be entitled to receive the
interest payable on such Note on the corresponding Interest Payment Date
notwithstanding the conversion thereof after such Record Date. The interest
payment with respect to a Note called for redemption or subject to a Repurchase
Offer on a date during the period from the close of business on any Record Date
and the close of business on the corresponding Interest Payment Date will be
payable on the corresponding Interest Payment Date to the registered Holder at
the close of business on that Record Date (notwithstanding the conversion of
such Note before the corresponding Interest Payment Date) and a Holder who
elects to convert need not include funds equal to the interest paid. In all
cases, Holders as of the Record Date immediately preceding May 15, 2001 will
receive the interest payment due on May 15, 2001, even if such Holder surrenders
a Note for conversion after such Record Date as a result of the Company's
exercise of its right to redeem the Notes on or after May 15, 2001.

     Notes surrendered for conversion shall (if reasonably required by the
Company or the Trustee) be duly endorsed by, or be accompanied by a written
instrument or instruments of transfer in form satisfactory to the Company duly
executed by, the Holder or his attorney duly authorized in writing.  As promptly
as practicable after the receipt of such notice and the surrender of such Note
as aforesaid, the Company shall, subject to the provisions of Paragraph 9.8
hereof, issue and deliver at such office or agency to such Holder, or on his
written order, a certificate or certificates for the number of full shares of
Common Stock issuable on such conversion of Notes in accordance with the
provisions of this Paragraph 9 and Cash, as provided in Paragraph 9.3 hereof, in
respect of any fraction of a share of Common Stock otherwise issuable upon such
conversion.  Such conversion shall be deemed to have been effected immediately
prior to the close of business on the date (herein called the "Date of
Conversion") on which such Note shall have been surrendered as aforesaid, and
the person or persons in whose name or names any certificate or certificates for
shares of Common Stock shall be issuable upon such conversion shall be deemed to
have become on the Date of Conversion the holder or holders of record of the
shares represented thereby; provided, however, that any such surrender on any
date when the stock transfer books of the Company shall be closed shall cause
the person or persons in whose name or names the certificate or certificates for
such shares are to be issued to be deemed to have become the record holder or
holders thereof for all purposes at the opening of business on the next
succeeding day on which such stock transfer books are open but such conversion
shall nevertheless be at the conversion price in effect at the close of business
on the 

                                       14

 
date when such Note shall have been so surrendered with the conversion notice.
In the case of conversion of a portion, but less than all, of a Note, the
Company shall as promptly as practicable execute, and the Trustee shall
thereafter authenticate and deliver to the Holder thereof, at the expense of the
Company, a Note or Notes in the aggregate principal amount of the unconverted
portion of the Note surrendered. Except as otherwise expressly provided in the
Indenture, no payment or adjustment shall be made for interest accrued on any
Note (or portion thereof) converted or for dividends or distributions on any
Common Stock issued upon conversion of any Note.

     9.3  Fractional Interests.
          -------------------- 

     No fractions of shares or scrip representing fractions of shares shall be
issued upon conversion of Notes.  If more than one Note shall be surrendered for
conversion at one time by the same holder, the number of full shares which shall
be issuable upon conversion thereof shall be computed on the basis of the
aggregate principal amount of the Notes so surrendered.  If any fraction of a
share of Common Stock would, except for the foregoing provisions of this
Paragraph 9.3, be issuable on the conversion of any Note or Notes, the Company
shall make payment in lieu thereof in an amount of Cash equal to the value of
such fraction computed on the basis of the last sale price of the Common Stock
as reported on the New York Stock Exchange (the "NYSE") (or if not listed for
trading thereon, then on the principal national securities exchange or on the
principal automated quotation system on which the Common Stock is listed or
admitted to trading) at the close of business on the Date of Conversion or if no
such sale takes place on such day, the last sale price for such day shall be the
average of the closing bid and asked prices regular way on the NYSE (or if not
listed for trading thereon, on the principal national securities exchange or on
the principal automated quotation system on which the Common Stock is listed or
admitted to trading) for such day (any such last sale price being hereinafter
referred to as the "Last Sale Price").  If on such Trading Day the Common Stock
is not quoted by any such organization, the fair value of such Common Stock on
such day, as reasonably determined in good faith by the Board of Directors of
the Company, shall be used.

     9.4  Conversion Price.
          ---------------- 

     The conversion price per share of Common Stock issuable upon conversion of
the Notes (as such price may be adjusted, herein called the "Conversion Price")
shall initially be $37.00 (which reflects a conversion rate of approximately
27.0270 shares of Common Stock per $1,000 in principal amount of Notes).

     9.5  Adjustment of Conversion Price.
          ------------------------------ 

     The Conversion Price shall be subject to adjustment from time to time as
follows:

     (a)  In case the Company shall make or pay a dividend or make a
distribution in shares of Common Stock on any class of Capital Stock of the
Company, the Conversion Price in effect immediately following the record date
fixed for the determination of stockholders entitled to receive such dividend or
other distribution shall be reduced by multiplying such Conversion Price by a
fraction of which the numerator shall be the number of shares of Common Stock

                                       15

 
outstanding at the close of business on such date and the denominator shall be
the sum of such number of shares and the total number of shares constituting
such dividend or other distribution.  An adjustment made pursuant to this
subsection (a) shall become effective immediately, except as provided in
subsections (i) and (j) below, after such record date.

     (b)  In case the Company shall (i) subdivide its outstanding shares of
Common Stock into a greater number of shares or (ii) combine or reclassify its
outstanding shares of Common Stock into a smaller number of shares, the
Conversion Price in effect immediately following the effectiveness of such
action shall be adjusted by multiplying such Conversion Price by a fraction of
which the numerator shall be the number of shares of Common Stock outstanding
immediately prior to such subdivision or combination and the denominator shall
be the number of shares outstanding immediately after giving effect to such
subdivision or combination.  An adjustment made pursuant to this subsection (b)
shall become effective immediately, except as provided in subsections (i) and
(j) below, after the effective date of a subdivision or combination.

     (c)  In case the Company shall issue rights, options or warrants to all or
substantially all holders of Common Stock entitling them to subscribe for or
purchase shares of Common Stock at a price per share less than the then current
market price per share of the Common Stock (as determined pursuant to subsection
(g) below) on the record date fixed for determination of the stockholders
entitled to receive such rights, option or warrants, the Conversion Price in
effect immediately following such record date shall be adjusted to a price,
computed to the nearest cent, so that the same shall equal the price determined
by multiplying:

          (i)   such Conversion Price by a fraction, of which

          (ii)  the numerator shall be (A) the number of shares of Common Stock
     outstanding on such record date plus (B) the number of shares which the
     aggregate offering price of the total number of shares so offered for
     subscription or purchase would purchase at such current market price
     (determined by multiplying such total number of shares by the exercise
     price of such rights, options or warrants and dividing the product so
     obtained by such current market price), and of which

          (iii) the denominator shall be (A) the number of shares of Common
     Stock outstanding on such record date plus (B) the number of additional
     shares of Common Stock which are so offered for subscription or purchase.

     Such adjustment shall become effective immediately, except as provided in
subsection (i) and (j) below, after the record date for the determination of
holders entitled to receive such rights, options or warrants; provided, however,
that if any such rights, options or warrants issued by the Company as described
in this subsection (c) are only exercisable upon the occurrence of certain
triggering events, then the Conversion Price will not be adjusted as provided in
this subsection (c) until such triggering events occur.  Upon the expiration or
termination of any rights, options or warrants without the exercise of such
rights, options or warrants, the Conversion Price then in effect shall be
adjusted immediately to the Conversion Price which would have been in effect at
the time of such expiration or termination had such rights, options 

                                       16

 
or warrants, to the extent outstanding immediately prior to such expiration or
termination, never been issued.

     (d)  In case the Company or any Subsidiary of the Company shall distribute
to all or substantially all holders of Common Stock, any of its assets,
evidences of indebtedness, cash or shares of capital stock other than Common
Stock (including securities, but excluding (i) dividends or distributions paid
exclusively in cash, (ii) any dividend or distribution for which an adjustment
is required to be made in accordance with subsection (a) or (c) above and in
mergers and consolidations to which Paragraph 9.6 applies, or (iii) any
distribution of rights or warrants subject to subsection (l) below) then in each
such case the Conversion Price in effect immediately following the record date
fixed for the determination of the stockholders entitled to such distribution
shall be adjusted so that the same shall equal the price determined by
multiplying such Conversion Price by a fraction of which the numerator shall be
the then current market price per share of the Common Stock (determined as
provided in subsection (g) below) on such record date less the then fair market
value (as reasonably determined in good faith by the Board of Directors of the
Company) of the portion of the assets so distributed applicable to one share of
the then outstanding Common Stock, and of which the denominator shall be such
current market price per share of the Common Stock.  Such adjustment shall
become effective immediately, except as provided in subsection (i) and (j)
below, after the record date for the determination of stockholders entitled to
receive such distribution.

     (e)  In case the Company or any Subsidiary of the Company shall make any
distribution consisting exclusively of cash (excluding any cash portion of
distributions for which an adjustment is required to be made in accordance with
subsection (d) above, or cash distributed upon a merger or consolidation to
which Paragraph 9.6 applies) to all or substantially all holders of Common Stock
in an aggregate amount that, combined together with (i) all other such all-cash
distributions made within the then preceding 12 months in respect of which no
adjustment pursuant to this subsection (e) has been made and (ii) any cash and
the fair market value of other consideration paid or payable in respect of any
tender or exchange offer by the Company or any of its Subsidiaries for Common
Stock concluded within the preceding 12 months (other than a Vantis Split-Off)
in respect of which no adjustment has been made, exceeds 15% of the Company's
market capitalization (defined as being the product of the then current market
price of the Common Stock (determined as provided in subsection (g) below) times
the number of shares of Common Stock then outstanding) on the record date fixed
for the determination of the stockholders entitled to such distribution, in each
such case the Conversion Price immediately following such record date shall be
adjusted so that the same shall equal the price determined by multiplying such
Conversion Price by a fraction of which the numerator shall be the then current
market price per share of the Common Stock on such record date less the amount
of the cash and/or fair market value (as reasonably determined in good faith by
the Board of Directors of the Company) of other consideration so distributed
applicable to one share of the then outstanding Common Stock, and of which the
denominator shall be such current market price per share of the Common Stock.
Such adjustment shall become effective immediately, except as provided in
subsection (i) and (j) below, after the record date for the determination of
stockholders entitled to receive such distribution.

                                       17

 
     (f)  In case the Company or any Subsidiary of the Company shall complete a
tender or exchange offer (other than a Vantis Split-Off) for all or any portion
of the Common Stock (any such tender or exchange offer being referred to as an
"Offer") that involves an aggregate consideration having a fair market value as
of the expiration of such Offer (the "Expiration Time") that, together with (i)
any cash and the fair market value of any other consideration payable in respect
of any other tender or exchange offer, as of the expiration of such other tender
or exchange offer, expiring within the 12 months preceding the expiration of
such Offer and in respect of which no Conversion Price adjustment pursuant to
this subsection (f) has been made and (ii) the aggregate amount of any all-cash
distributions referred to in subsection (e) of this Paragraph 9.5 to all holders
of Common Stock within the 12 months preceding the expiration of such Offer for
which no conversion price adjustment pursuant to such subsection (e) has been
made, exceeds 15% of the product of the then current market price per share
(determined as provided in subsection (g) below) of the Common Stock on the
Expiration Time times the number of shares of Common Stock outstanding
(including any tendered shares) on the Expiration Time, the Conversion Price in
effect immediately following such Expiration Time shall be reduced by
multiplying such Conversion Price by a fraction of which the numerator shall be
(iii) the product of the then current market price per share (determined as
provided in subsection (g) below) of the Common Stock on the Expiration Time
times the number of shares of Common Stock outstanding (including any tendered
shares) on the Expiration Time minus (iv) the fair market value of the aggregate
consideration payable to stockholders based on the acceptance (up to any maximum
specified in the terms of the Offer) of all shares validly tendered and not
withdrawn as of the Expiration Time (the shares deemed so accepted being
referred to as the "Purchased Shares") and the denominator shall be the product
of (v) such current market price per share on the Expiration Time times (vi)
such number of outstanding shares on the Expiration Time less the number of
Purchased Shares, such reduction to become effective immediately prior to the
opening of business on the day following the Expiration Time.

     For purposes of this subsection (f), the fair market value of any
consideration with respect to an Offer shall be reasonably determined in good
faith by the Board of Directors of the Company and described in a Board
Resolution.

     (g)  For the purpose of any computation under subsections (c), (d), (e) and
(f) above, the current market price per share of Common Stock on any date shall
be deemed to be the average of the Last Sale Prices of a share of Common Stock
for the five consecutive Trading Days selected by the Company commencing not
more than 20 Trading Days before, and ending not later than, the earlier of the
date in question and the date before the "'ex' date," with respect to the
issuance, distribution or Offer requiring such computation. If on any such
Trading Day the Common Stock is not quoted by any organization referred to in
the definition of Last Sale Price in Paragraph 9.3 hereof, the fair value of the
Common Stock on such day, as reasonably determined in good faith by the Board of
Directors of the Company, shall be used. For purposes of this paragraph, the
term "'ex' date," when used with respect to any issuance, distribution or
payments with respect to an Offer, means the first date on which the Common
Stock trades regular way on the NYSE (or if not listed or admitted to trading
thereon, then on the principal national securities exchange or on the principal
automated quotation system on which the Common Stock is listed or admitted to
trading) without the right to receive such issuance, distribution or Offer.

                                       18

 
     (h)  In addition to the foregoing adjustments in subsections (a), (b), (c),
(d), (e) and (f) above, the Company, from time to time and to the extent
permitted by law, may reduce the Conversion Price by any amount for any period
of at least 20 Business Days, if the Board of Directors has made a
determination, which determination shall be conclusive, that such reduction
would be in the best interests of the Company.  The Company shall cause notice
of such reduction to be mailed to each Holder of Notes, in the manner specified
in Paragraph 9.7, at least 15 days prior to the date on which such reduction
commences.  The Company may, at its option, also make such reductions in the
Conversion Price in addition to those set forth above, as the Board of Directors
deems advisable to avoid or diminish any income tax to holders of shares of
Common Stock resulting from any dividend or distribution of stock (or rights to
acquire stock) or from any event treated as such for United States federal
income tax purposes.

     (i)  In any case in which this Paragraph 9.5 shall require that an
adjustment be made immediately following a record date, the Company may elect to
defer the effectiveness of such adjustment (but in no event until a date later
than the effective time of the event giving rise to such adjustment), in which
case the Company shall, with respect to any Note converted after such record
date and on and before such adjustment shall have become effective (i) defer
paying any Cash payment pursuant to Paragraph 9.3 hereof or issuing to the
Holder of such Note the number of shares of Common Stock and other capital stock
of the Company (or other assets or securities) issuable upon such conversion in
excess of the number of shares of Common Stock and other Capital Stock of the
Company issuable thereupon only on the basis of the Conversion Price prior to
adjustment, and (ii) not later than five Business Days after such adjustment
shall have become effective, pay to such Holder the appropriate Cash payment
pursuant to Paragraph 9.3 hereof and issue to such Holder the additional shares
of Common Stock and other Capital Stock of the Company issuable on such
conversion.

     (j)  No adjustment in the Conversion Price shall be required unless such
adjustment would require an increase or decrease of at least 1.0% of the
Conversion Price as last adjusted; provided, that any adjustments which by
reason of this subsection (j) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment.  All calculations
under this Paragraph 9 shall be made to the nearest cent or to the nearest one-
hundredth of a share, as the case may be.

     (k)  Whenever the Conversion Price is adjusted as herein provided, the
Company shall promptly (i) file with the Trustee and each conversion agent an
Officers' Certificate setting forth the Conversion Price after such adjustment
and setting forth a brief statement of the facts requiring such adjustment,
which certificate shall be conclusive evidence of the correctness of such
adjustment, and (ii) mail or cause to be mailed a notice of such adjustment to
each Holder of Notes at his address as the same appears on the registry books of
the Company.

     (l)  In the event that the Company distributes rights or warrants (other
than those referred to in subsection (c) above) pro rata to holders of Common
Stock, so long as any such rights or warrants have not expired or been redeemed
by the Company, the Company shall make proper provision so that the Holder of
any Note surrendered for conversion will be entitled to receive upon such
conversion, in addition to the shares of Common Stock issuable upon such
conversion (the "Conversion Shares"), a number of rights or warrants to be
determined as follows: (i) if such 

                                       19

 
conversion occurs on or prior to the date for the distribution to the holders of
rights or warrants of separate certificates evidencing such rights or warrants
(the "Distribution Date"), the same number of rights or warrants to which a
holder of a number of shares of Common Stock equal to the number of Conversion
Shares is entitled at the time of such conversion in accordance with the terms
and provisions of and applicable to the rights or warrants, and (ii) if such
conversion occurs after such Distribution Date, the same number of rights or
warrants to which a holder of the number of shares of Common Stock into which
the principal amount of such Note so converted was convertible immediately prior
to such Distribution Date would have been entitled on such Distribution Date in
accordance with the terms and provisions of and applicable to the rights or
warrants.

     9.6  Continuation of Conversion Privilege in Case of Reclassification,
          -----------------------------------------------------------------
          Change, Merger, Consolidation or Sale of Assets.
          ----------------------------------------------- 

     If any of the following shall occur, namely: (a) any reclassification or
change of outstanding shares of Common Stock issuable upon conversion of the
Notes (other than a change in par value, or from par value to no par value, or
from no par value, to par value, or as a result of a subdivision or
combination), (b) any consolidation or merger of the Company with or into any
other Person, or the merger of any other Person with or into the Company (other
than a merger which does not result in any reclassification, change, conversion,
exchange or cancellation of outstanding shares of Common Stock) or (c) any sale,
transfer or conveyance of all or substantially all of the assets of the Company
(computed on a consolidated basis), then the Company, or such successor or
purchasing entity, as the case may be, shall, as a condition precedent to such
reclassification, change, consolidation, merger, sale or conveyance, execute and
deliver to the Trustee a supplemental indenture providing that the Holder of
each Note then outstanding shall have the right to convert such Note only into
the kind and amount of shares of stock and other securities and property
(including cash) receivable upon such reclassification, change, consolidation,
merger, sale, transfer or conveyance by a holder of the number of shares of
Common Stock issuable upon conversion of such Note immediately prior to such
reclassification, change, consolidation, merger, sale, transfer or conveyance
assuming such holder of Common Stock of the Company failed to exercise his
rights of an election, if any, as to the kind or amount of securities, cash and
other property receivable upon such reclassification, change, consolidation,
merger, sale, transfer or conveyance (provided that if the kind or amount of
securities, cash, and other property receivable upon such reclassification,
change, consolidation, merger, sale, transfer or conveyance is not the same for
each share of Common Stock of the Company held immediately prior to such
reclassification, change, consolidation, merger, sale, transfer or conveyance in
respect of which such rights of election shall not have been exercised ("non-
electing share"), then for the purpose of this Paragraph 9.6 the kind and amount
of securities, cash and other property receivable upon such reclassification,
change, consolidation, merger, sale, transfer or conveyance by each non-electing
share shall be deemed to be the kind and amount so receivable per share by a
plurality of the non-electing shares).  Such supplemental indenture shall
provide for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Paragraph 9.  If, in the
case of any such consolidation, merger, sale or conveyance, the stock or other
securities and property (including cash) receivable thereupon by a holder of
shares of Common Stock includes shares of stock or other securities and property
(including cash) of a corporation other than the successor or purchasing
corporation, 

                                       20

 
as the case may be, in such consolidation, merger, sale or conveyance, then such
supplemental indenture shall also be executed by such other corporation and
shall contain such additional provisions to protect the interests of the Holders
of the Notes as the Board of Directors of the Company shall reasonably consider
necessary by reason of the foregoing. The provisions of this Paragraph 9.6 shall
similarly apply to successive consolidations, mergers, sales or conveyances.

     Notice of the execution of each such supplemental indenture shall be mailed
to each Holder of Notes at his address as the same appears on the registry books
of the Company.

     Neither the Trustee nor any conversion agent shall be under any
responsibility to determine the correctness of any provisions contained in any
such supplemental indenture relating either to the kind or amount of shares of
stock or securities or property (including cash) receivable by Holders of Notes
upon the conversion of their Notes after any such reclassification, change,
consolidation, merger, sale or conveyance or to any adjustment to be made with
respect thereto, but, subject to the provisions of Article 7 of the Indenture,
may accept as conclusive evidence of the correctness of any such provisions, and
shall be protected in relying upon, the Officers' Certificate (which the Company
shall be obligated to file with the Trustee prior to the execution of any such
supplemental indenture) with respect thereto.

     9.7  Notice of Certain Events.
          ------------------------ 

     In case:

     (a)  the Company shall declare a dividend (or any other distribution)
payable to the holders of Common Stock (other than cash dividends);

     (b)  the Company shall authorize the granting to the holders of Common
Stock of rights, warrants or options to subscribe for or purchase any shares of
stock of any class or of any other rights;

     (c)  the Company shall authorize any reclassification or change of the
Common Stock (including a subdivision or combination of its outstanding shares
of Common Stock), or any consolidation or merger to which the Company is a party
and for which approval of any stockholders of the Company is required, or the
sale or conveyance of all or substantially all the property or business of the
Company;

     (d)  there shall be proposed any voluntary or involuntary dissolution,
liquidation or winding-up of the Company; or

     (e)  the Company or any of its Subsidiaries shall complete an Offer;

then, the Company shall cause to be filed at the office or agency maintained for
the purpose of conversion of the Notes as provided in Paragraph 9.2 hereof, and
shall cause to be mailed to each Holder of Notes, at his address as it shall
appear on the registry books of the Company, at least 20 days before the date
hereinafter specified (or the earlier of the dates hereinafter specified, in the
event that more than one date is specified), a notice stating the date on which
(i) a record is 

                                       21

 
expected to be taken for the purpose of such dividend, distribution, rights,
warrants or options or Offer, or if a record is not to be taken, the date as of
which the holders of Common Stock of record to be entitled to such dividend,
distribution, rights, warrants or options or to participate in such Offer are to
be determined, or (ii) such reclassification, change, consolidation, merger,
sale, conveyance, dissolution, liquidation or winding-up is expected to become
effective and the date, if any is to be fixed, as of which it is expected that
holders of Common Stock of record shall be entitled to exchange their shares of
Common Stock for securities or other property deliverable upon such
reclassification, change, consolidation, merger, sale, conveyance, dissolution,
liquidation or winding-up.

     9.8  Taxes on Conversion.
          ------------------- 

     The Company will pay any and all documentary, stamp or similar taxes
payable to the United States of America or any political subdivision or taxing
authority thereof or therein in respect of the issue or delivery of shares of
Common Stock on conversion of Notes pursuant thereto; provided, however, that
the Company shall not be required to pay any tax which may be payable in respect
of any transfer involved in the issue or delivery of shares of Common Stock in a
name other than that of the Holder of the Notes to be converted and no such
issue or delivery shall be made unless and until the person requesting such
issue or delivery has paid to the Company the amount of any such tax or has
established, to the satisfaction of the Company, that such tax has been paid.
The Company extends no protection with respect to any other taxes imposed in
connection with conversion of Notes.

     9.9  Company to Provide Stock.
          ------------------------ 

     The Company shall reserve, free from preemptive rights, out of its
authorized but unissued shares, sufficient shares to provide for the conversion
of the Notes from time to time as such Notes are presented for conversion,
provided, that nothing contained herein shall be construed to preclude the
Company from satisfying its obligations in respect of the conversion of Notes by
delivery of repurchased shares of Common Stock which are held in the treasury of
the Company.

     If any shares of Common Stock to be reserved for the purpose of conversion
of Notes hereunder require registration with or approval of any governmental
authority under any federal or state law before such shares may be validly
issued or delivered upon conversion, then the Company covenants that it will in
good faith and as expeditiously as possible use its best efforts to secure such
registration or approval, as the case may be, provided, however, that nothing in
this Paragraph 9.9 shall be deemed to limit in any way the obligations of the
Company provided in this Paragraph 9.

     Before taking any action which would cause an adjustment reducing the
Conversion Price below the then par value, if any, of the Common Stock, the
Company will take all corporate action which may, in the Opinion of Counsel, be
necessary in order that the Company may validly and legally issue fully paid and
non-assessable shares of Common Stock at such adjusted Conversion Price.

                                       22

 
     The Company covenants that all shares of Common Stock which may be issued
upon conversion of Notes will upon issue be fully paid and non-assessable by the
Company and free of preemptive rights.

     9.10 Disclaimer of Responsibility for Certain Matters.
          ------------------------------------------------ 

     Neither the Trustee nor any agent of the Trustee shall at any time be under
any duty or responsibility to any Holder of Notes to determine whether any facts
exist which may require any adjustment of the Conversion Price, or with respect
to the Officers' Certificate referred to in Paragraph 9.5 hereof, or with
respect to the nature or extent of any such adjustment when made, or with
respect to the method employed, or herein or in any supplemental indenture
provided to be employed, in making the same.  Neither the Trustee nor any agent
of the Trustee shall be accountable with respect to the validity or value (or
the kind or amount) of any shares of Common Stock, or of any securities or
property (including cash), which may at any time be issued or delivered upon the
conversion of any Note; and neither the Trustee nor any conversion agent makes
any representation with respect thereto.  Neither the Trustee nor any agent of
the Trustee shall be responsible for any failure of the Company to issue,
register the transfer of or deliver any shares of Common Stock or stock
certificates or other securities or property (including cash) upon the surrender
of any Note for the purpose of conversion or, subject to Article 7 of the
Indenture, to comply with any of the covenants of the Company contained in this
Paragraph 9.

     9.11 Return of Funds Deposited for Redemption of Converted Notes.
          ----------------------------------------------------------- 

     Any funds which at any time shall have been deposited by the Company or on
its behalf with the Trustee or any other Paying Agent for the purpose of paying
the principal of and interest on any of the Notes and which shall not be
required for such purposes because of the conversion of such Notes, as provided
in this Paragraph 9, shall after such conversion be repaid to the Company by the
Trustee or such other Paying Agent.

     10.  In addition to the definitions set forth in Article 1 of the Indenture
or otherwise set forth in the Paragraphs above, the Notes shall include the
following additional definitions, which, in the event of a conflict with the
definitions of terms in the Indenture, shall control:

     "Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
that is not a day on which banking institutions in New York, New York are
authorized or obligated by law or executive order to close.

     "Capital Stock" means, with respect to any corporation, any and all shares,
interests, rights to purchase (other than convertible or exchangeable
indebtedness), warrants, options, participations or other equivalents of or
interest (however designated) in stock issued by that corporation.

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

                                       23

 
     "Change of Control" means (i) an event or series of events as a result of
which any "person" or "group" (as such terms are used in Sections 13(d)(3) and
14(d) of the Exchange Act) (excluding the Company or any wholly owned Subsidiary
thereof) is or becomes, directly or indirectly, the "beneficial owner" (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act, whether or not
applicable) or more than 50% of the combined voting power of the then
outstanding securities entitled to vote generally in elections of directors,
managers or trustees, as applicable, of the Company or any successor entity
("Voting Stock"), (ii) the completion of any consolidation or merger of the
Company with or into any other person, or sale, conveyance, transfer or lease by
the Company of all or substantially all of its assets to any person, or any
merger of any other person into the Company in a single transaction or series of
related transactions, and, in the case of any such transaction or series of
related transactions, the outstanding Common Stock is changed or exchanged as a
result, unless the stockholders of the Company immediately before such
transaction own, directly or indirectly, immediately following such transaction,
at least a majority of the combined voting power of the outstanding voting
securities of the person resulting from such transaction in substantially the
same proportion as their ownership of the Voting Stock immediately before such
transaction, or (iii) such time as the Continuing Directors do not constitute a
majority of the Board of Directors (or, if applicable, a successor corporation
to the Company).

     "Common Stock" means the Company's common stock, par value $.01 per share,
or as such stock may be reconstituted from time to time.

     "Continuing Director" means at any date a member of the Board of Directors
(i) who was a member of such board on the date of initial issuance of the Notes
or (ii) who was nominated or elected by at least a majority of the directors who
were Continuing Directors at the time of such nomination or election or whose
election to the Board of Directors was recommended or endorsed by at least a
majority of the directors who were Continuing Directors at the time of such
nomination or election.

     "Credit Agreement" shall mean the Company's credit agreement among the
Company and the financial institutions party thereto, dated as of July 19, 1996,
as amended.

     "Disqualified Capital Stock" means, with respect to the Company, Capital
Stock of the Company that, by its terms or by the terms of any security into
which it is convertible, exercisable or exchangeable, is, or upon the happening
of an event or the passage of time would be, required to be redeemed or
repurchased (including at the option of the holder thereof) by the Company, in
whole or in part, on or prior to the Stated Maturity of the Notes, provided that
only the portion of such Capital Stock which is so convertible, exercisable,
exchangeable or redeemable or subject to repurchase prior to such Stated
Maturity shall be deemed to be Disqualified Capital Stock.

     "Indebtedness" means, with respect to any person, all obligations, whether
or not contingent, of such person (i)(a) for borrowed money (including, but not
limited to, any indebtedness secured by a security interest, mortgage or other
lien on the assets of such person which is (1) given to secure all or part of
the purchase price of property subject thereto, whether given to the vendor of
such property or to another, or (2) existing on property at the time of

                                       24

 
acquisition thereof), (b) evidenced by a note, debenture, bond or other written
instrument, (c) under a lease required to be capitalized on the balance sheet of
the lessee under GAAP or under any lease or related document (including a
purchase agreement) which provides that such person is contractually obligated
to purchase or to cause a third party to purchase such leased property, (d) in
respect of letters of credit, bank guarantees or bankers' acceptances, (e) with
respect to indebtedness secured by a mortgage, pledge, lien, encumbrance, charge
or adverse claim affecting title or resulting in an encumbrance to which the
property or assets of such person are subject, whether or not the obligation
secured thereby shall have been assumed or guaranteed by or shall otherwise be
such person's legal liability, (f) in respect of the balance of deferred and
unpaid purchase price of any property or assets, (g) under interest rate or
currency swap agreements, cap, floor and collar agreements, spot and forward
contracts and similar agreements and arrangements; (ii) with respect to any
obligation of others of the type described in the preceding clause (i) or under
clause (iii) below assumed by or guaranteed in any manner by such person or in
effect guaranteed by such person through an agreement to purchase (including,
without limitation, "take or pay" and similar arrangements), contingent or
otherwise (and the obligations of such person under any such assumptions,
guarantees or other such arrangements); and (iii) any and all deferrals,
renewals, extensions, refinancings and refundings of, or amendments,
modifications or supplements to, any of the foregoing.

     "Junior Securities" means any Qualified Capital Stock and any Indebtedness
of the Company that is fully subordinated in right of payment to the Notes and
has no scheduled installment of principal due, by redemption, sinking fund
payment or otherwise, on or prior to the Stated Maturity of the Notes.

     "Qualified Capital Stock" means any Capital Stock of the Company that is
not Disqualified Capital Stock.

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

     "Senior Indebtedness" means the principal of, interest on, fees, costs and
expenses in connection with, and other amounts due on Indebtedness of the
Company, whether outstanding on the date of the Indenture or thereafter created,
incurred, assumed or guaranteed by the Company, unless, in the instrument
creating or evidencing or pursuant to which Indebtedness is outstanding, it is
expressly provided that such Indebtedness is not senior in right of payment to
the Notes or is pari passu with, or subordinated to, the Notes. Senior
Indebtedness includes, with respect to the obligations described above, interest
accruing, pursuant to the terms of such Senior Indebtedness, on or after the
filing of any petition in bankruptcy or for reorganization relating to the
Company, whether or not post-filing interest is allowed in such proceeding, at
the rate specified in the instrument governing the relevant obligation.
Notwithstanding anything to the contrary in the foregoing, Senior Indebtedness
shall not include: (a) Indebtedness of or amounts owed by the Company for
compensation to employees, or for goods, services or materials purchased in the
ordinary course of business; (b) Indebtedness of the Company to a Subsidiary of
the Company; or (c) any liability for federal, state, local or other taxes owed
or owing by the Company or any Subsidiary of the Company.

                                       25

 
     "Significant Subsidiary" means any Subsidiary which is a "significant
subsidiary" of the Company within the meaning of Rule 1.02(w) of Regulation S-X
promulgated by the Commission as in effect as of the date of the Indenture.

     "Special Record Date" for payment of any defaulted interest means a date
fixed by the Trustee pursuant to Section 2.13 of the Indenture.

     "Stated Maturity" when used with respect to any Note, means May 15, 2005.

     "Trading Day" means each Monday, Tuesday, Wednesday, Thursday and Friday,
other than any day on which securities are not traded on the applicable
securities exchange or in the applicable securities market.

     "Vantis Split-Off" means a tender or exchange offer pursuant to which the
Company offers to exchange shares of common stock of Vantis Corporation, a
Subsidiary of the Company, for shares of Common Stock in a transaction intended
to qualify as a tax-free distribution for federal income tax purposes.

     11.  Each of the undersigned is authorized to approve the form, terms and
conditions of the Notes pursuant to the Resolutions.

     12.  Attached hereto as Annex B is a true and correct copy of the
Resolutions.

     13.  Attached hereto as Annex C are true and correct copies of the letter
addressed to the Trustee entitling the Trustee to rely on the Opinion of Counsel
attached thereto, which Opinion relates to the Notes and complies with Section
10.04(b) of the Indenture.

     14.  Each of the undersigned has reviewed the provisions of the Indenture,
including the covenants and conditions precedent pertaining to the issuance of
the Notes.

     15.  In connection with this certificate each of the undersigned has
examined documents, corporate records and certificates and has spoken with other
officers of the Company.

     16.  Each of the undersigned has made such examination and investigation as
is necessary to enable him to express an informed opinion as to whether or not
the covenants and conditions precedent of the Indenture pertaining to the
issuance of the Notes have been satisfied.

     17.  In our opinion all of the covenants and conditions precedent provided
for in the Indenture for the issuance of the Notes have been satisfied.

     18.  If and to the extent that any provision of this certificate qualifies
or conflicts with any provision of the Indenture, the provisions of this
certificate shall control.

                                       26

 
     Capitalized terms used herein that are not otherwise defined shall have the
meanings ascribed thereto in the Indenture or the Notes, as the case may be.

     IN WITNESS WHEREOF, each of the undersigned officers has executed this
certificate this 8th day of May, 1998.



                                              /s/ Richard Previte
                                             -----------------------------------
                                                       Richard Previte
                                             President, Chief Operating Officer,
                                             Chief Financial and Administrative
                                                   Officer and Treasurer



 
                                             /s/ Thomas M. McCoy
                                             -----------------------------------
                                                     Thomas M. McCoy
                                               Vice President, General Counsel
                                                      and Secretary

                                       27

EX-4.3

 
                                                                     EXHIBIT 4.3


                              [FORM OF SECURITY]



                         ADVANCED MICRO DEVICES, INC.



                       6% CONVERTIBLE SUBORDINATED NOTE
                                   DUE 2005



No. _____                                                   CUSIP No. 007903 AC1


                                                                   $____________


     Advanced Micro Devices, Inc., a Delaware corporation (hereinafter called
the "Company," which term includes any successors under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
__________________________, or registered assigns, the principal sum of
___________ Dollars, on May 15, 2005.

     Interest Payment Dates: May 15 and November 15; commencing November 15,
1998.

     Record Dates: May 1 and November 1.

     Reference is made to the further provisions of this Security hereinafter
set forth, which will, for all purposes, have the same effect as if set forth at
this place.

                                       1

 
     IN WITNESS WHEREOF, the Company has caused this Instrument to be duly
executed under its corporate seal.


                                ADVANCED MICRO DEVICES, INC., 
                                a Delaware corporation


[Seal]


                                By
                                   ------------------------------------

                                Title
                                      ---------------------------------


                                By
                                   ------------------------------------

                                Title
                                      ---------------------------------

                                       2

 
               [FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]


     This is one of the Notes described in the within-mentioned Indenture.


                                The Bank of New York, as Trustee



                                By
                                   ---------------------------------------
                                             Authorized Signatory

Dated: _____________

                                       3

 
                         ADVANCED MICRO DEVICES, INC.



                       6% Convertible Subordinated Note
                                   due 2005


     Unless and until this Security is exchanged in whole or in part for
Securities in definitive form, this Security may not be transferred except as a
whole by The Depository Trust Company, a New York corporation (the
"Depositary"), to a nominee of the Depositary or by a nominee of the Depositary
to the Depositary or another nominee of the Depositary or by the Depositary or
any such nominee to a successor Depositary or a nominee of such successor
Depositary.  Unless this certificate is presented by an authorized
representative of the Depositary to the Company or its agent for registration of
transfer, exchange or payment, and any certificate issued is registered in the
name of Cede & Co. or in such other name as is requested by an authorized
representative of the Depositary (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of the
Depositary), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY
OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede &
Co., has an interest herein./1/

     1.  Interest.  Advanced Micro Devices, Inc., a Delaware corporation
         --------                                                       
(hereinafter called the "Company," which term includes any successors under the
Indenture hereinafter referred to), promises to pay interest on the principal
amount of this Security at the rate of 6% per annum.  To the extent it is
lawful, the Company promises to pay interest on any interest payment due but
unpaid on such principal amount at a rate of 6% per annum compounded semi-
annually.

     The Company will pay interest semi-annually in cash on May 15 and November
15 of each year (each, an "Interest Payment Date"), commencing November 15,
1998.  Interest on the Securities will accrue from the most recent date to which
interest has been paid or, if no interest has been paid on the Securities, from
May 8, 1998.  Interest will be computed on the basis of a 360-day year
consisting of twelve 30-day months.

     2.  Method of Payment.  The Company shall pay interest on the Securities
         -----------------                                                   
(except defaulted interest) to the Persons who are the registered Holders at the
close of business on the Record Date immediately preceding the Interest Payment
Date.  Holders must surrender Securities to a Paying Agent to collect principal
payments.  Any such interest not so punctually paid, and defaulted interest
relating thereto, may be paid to the Persons who are registered Holders at the
close of business on a Special Record Date for the payment of such defaulted
interest, as more fully provided in the Indenture referred to below.  Except as
provided below, the Company shall pay principal and interest in such coin or
currency of the United States of America as at the time of payment shall be
legal tender for payment of public and private debts ("U.S. Legal Tender").
Payments in respect of Global Securities (including principal and interest) will
be made by wire transfer of immediately available funds to the accounts
specified by the Depositary.  Payments in respect of Securities in definitive
form (including principal and interest) shall be made at the 

- ------------------------
/1/  This paragraph should only be added if the Security is issued in global
     form.

                                       4

 
office or agency of the Company maintained for such purpose, which office or
agency shall be maintained in the Borough of Manhattan, The City of New York
(and shall initially be an office or agency of the Trustee), except that, at the
option of the Company, any payments of interest may be made by check mailed on
or before the due date by first class mail to the address of the persons
entitled thereto as shown in the registry of Holders.

     3.  Paying Agent and Registrar.  The Bank of New York (the "Trustee") will
         --------------------------                                            
act as Paying Agent and Registrar.  The Company may change any Paying Agent,
Registrar or co-Registrar without notice to the Holders.  The Company or any of
its Subsidiaries may, subject to certain exceptions, act as Paying Agent,
Registrar or co-Registrar.

     4.  Indenture.  This Security is one of a duly authorized issue of
         ---------                                                     
securities of the Company issued and to be issued in one or more series under an
Indenture, dated as of May 8, 1998 (as amended or supplemented from time to time
the "Indenture"), between the Company and the Trustee.  Capitalized terms herein
are used as defined in the Indenture unless otherwise defined herein.  The terms
of the Securities include those stated in the Indenture, all indentures
supplemental thereto, those made part of the Indenture by reference to the Trust
Indenture Act (the "TIA"), as in effect on the date of the Indenture, and those
terms stated in the Officers' Certificate dated May 8, 1998 (the "Officers'
Certificate").  The Securities are subject to all such terms, and Holders of
Securities are referred to the Indenture, all indentures supplemental thereto,
said TIA and said Officers' Certificate for a statement of them.  The Securities
are general unsecured obligations of the Company.

     5.  Redemption.  The Securities may be redeemed in whole or from time to
         ----------                                                          
time in part at any time on and after May 15, 2001 at the option of the Company,
at the following redemption prices (expressed as a percentage of principal
amount) set forth below if redeemed during the 12-month periods commencing on
the dates indicated below, in each case (subject to the right of holders of
record on a record date to receive interest due on an Interest Payment Date that
is on or prior to such Redemption Date) plus any accrued but unpaid interest, if
any, to, but excluding, the Redemption Date.  The Securities may not be so
redeemed prior to May 15, 2001; provided, however, that the Securities will not
be redeemable prior to May 15, 2002, unless the last reported sale price of the
Common Stock is at least 130% of the then effective Conversion Price for at
least 20 Trading Days within a period of 30 consecutive Trading Days ending
within 5 Trading Days of the date of the redemption notice.

                                       5

 


                 If redeemed during
                 the 12-month period
                    beginning on             Redemption Price
                --------------------         ----------------
 
                                                  
                    May 15, 2001                 103.429%
                                                        
                    May 15, 2002                 102.571
                                                        
                    May 15, 2003                 101.714
                                                        
                    May 15, 2004                 100.857 


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

     6.  Notice of Redemption.  Notice of redemption will be sent by first class
         --------------------                                                   
mail, at least 15 days and not more than 60 days prior to the Redemption Date to
the Holder of each Security to be redeemed at such Holder's last address as then
shown upon the registry books of the Registrar.  Securities may be redeemed in
part in integral multiples of $1,000 only.

     Except as set forth in the Indenture, from and after any redemption date,
if monies for the redemption of the Securities called for redemption shall have
been deposited with the Paying Agent on such redemption date and payment of the
Securities called for redemption is not prohibited under Paragraph 8 of the
Officers' Certificate, the Securities called for redemption will cease to bear
interest and the only right of the Holders of such Securities will be to receive
payment of the redemption price, plus any accrued and unpaid interest to the
redemption date.

     7.  Denominations; Transfer; Exchange.  The Securities are in registered
         ---------------------------------                                   
form, without coupons, in denominations of $1,000 and integral multiples of
$1,000.  A Holder may register the transfer of, or exchange Securities in
accordance with, the Indenture and the Officers' Certificate.  The Registrar may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture.  The Registrar need not register the transfer of or exchange any
Securities selected for redemption.

     8.  Persons Deemed Owners.  The registered Holder of a Security may be
         ---------------------                                             
treated as the owner of it for all purposes.

     9.  Unclaimed Money.  If money for the payment of principal, or interest
         ---------------                                                     
remains unclaimed for two years, the Trustee and the Paying Agent(s) will pay
the money back to the Company at its written request.  After that, all liability
of the Trustee and such Paying Agent(s) with respect to such money shall cease.

     10.  Amendment; Supplement; Waiver.  Subject to specified exceptions, the
          -----------------------------                                       
Indenture or the Securities may be amended or supplemented, and any existing
Default or Event of Default 

                                       6

 
or compliance with any provision may be waived, with the written consent of the
Holders of a majority in aggregate principal amount of the Securities then
outstanding. Without notice to or consent of any Holder, the parties thereto may
amend or supplement the Indenture or the Securities to, among other things, cure
any ambiguity, defect or inconsistency, or make any other change that does not
adversely affect the rights of any Holder of a Security.

     11.  Conversion Rights.  Subject to the provisions of the Indenture, the
          -----------------                                                  
Holders have the right to convert the principal amount of the Securities into
fully paid and nonassessable shares of Common Stock of the Company at the
initial conversion price per share of Common Stock of $37.00 (which reflects a
conversion rate of approximately 27.0270 shares of Common Stock per $1,000 in
principal amount of Securities), or at the adjusted Conversion Price then in
effect, if adjustment has been made as provided in the Officers' Certificate,
upon surrender of the Security to the Company, together with a fully executed
notice in substantially the form attached hereto and, if required by the
Officers' Certificate, an amount equal to accrued interest payable on such
Security.

     12.  Ranking.  Payment of principal and interest on the Securities is
          -------                                                         
subordinated, in the manner and to the extent set forth in the Indenture, to the
prior payment in full of all Senior Indebtedness.

     13.  Repurchase at Option of Holder Upon a Change of Control.  If there is
          -------------------------------------------------------              
a Change of Control, the Company shall be required, subject to the provisions of
the Indenture, to offer to repurchase on the Repurchase Date all outstanding
Securities at a purchase price equal to 100% of the principal amount thereof,
plus accrued and unpaid interest to the Repurchase Date.  Holders of Securities
will receive a Repurchase Offer from the Company prior to any related Repurchase
Date and may elect to have such Securities purchased by completing the form
entitled "Option of Holder to Elect Repurchase" appearing below.

     14.  Successors.  When a successor assumes all the obligations of its
          ----------                                                      
predecessor under the Securities and the Indenture, the predecessor will be
released from those obligations.

     15.  Defaults and Remedies.  If an Event of Default occurs and is
          ---------------------                                       
continuing (other than as Event of Default relating to certain events of
bankruptcy, insolvency or reorganization), then in every such case, unless the
principal of all of the securities shall have already become due and payable,
either the Trustee or the Holders of 25% in aggregate principal amount of
Securities then outstanding may declare all the Securities to be due and payable
immediately in the manner and with the effect provided in the Indenture.
Holders of Securities may not enforce the Indenture or the Securities except as
provided in the Indenture.  The Trustee may require indemnity satisfactory to it
before it enforces the Indenture or the Securities.  Subject to certain
limitations, Holders of a majority in aggregate principal amount of the
Securities then outstanding may direct the Trustee in its exercise of any trust
or power.  The Trustee may withhold from Holders of Securities notice of any
continuing Default or Event of Default (except a Default in payment of principal
or interest), if it determines that withholding notice is in their interest.

                                       7

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

     17.  No Recourse Against Others.  No stockholder, director, officer or
          --------------------------                                       
employee, as such, past, present or future, of the Company or any successor
corporation shall have any personal liability in respect of the obligations of
the Company under the Securities or the Indenture by reason of his, her or its
status as such stockholder, director, officer or employee.  Each Holder of a
Security by accepting a Security waives and releases all such liability.  The
waiver and release are part of the consideration for the issuance of the
Securities.

     18.  Authentication.  This Security shall not be valid until the Trustee or
          --------------                                                        
authenticating agent signs the certificate of authentication on this Security.

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

     20.  CUSIP Numbers.  Pursuant to a recommendation promulgated by the
          -------------                                                  
Committee on Uniform Security Identification Procedures, the Company will cause
CUSIP numbers to be printed on the Securities as a convenience to the Holders of
the Securities.  No representation is made as to the accuracy of such numbers as
printed on the Securities and reliance may be placed only on the other
identification numbers printed hereon.

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

          Advanced Micro Devices, Inc.
          One AMD Place
          Sunnyvale, CA 94086
          Attention:  General Counsel

     21.  Defeasance Prior to Maturity.  The Indenture contains provisions for
          ----------------------------                                        
defeasance of (i) the entire Indebtedness of the Securities or (ii) certain
covenants and Events of Default with respect to the Securities, in each case
upon compliance with certain conditions set forth therein.

     22.  Governing Law.  The internal laws of the State of New York shall
          -------------                                                   
govern the Indenture and the Securities without regard to conflict of laws
provisions thereof.

                                       8

 
                                 [FORM OF ASSIGNMENT]



I or we assign this Security to
 
- --------------------------------------------------------------------------------

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

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


     Please insert Social Security or other identifying number of assignee

____________________________

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



Dated: ____________________             Signed:_________________________________
                                                   (Sign exactly as your name
                                                   appears on the other side
                                                   of this Security)

Signature Guaranty:  ______________________________

Signatures must be guarantied by an "eligible guarantor institution" meeting the
requirements of the Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guaranty program" as may be determined by the Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.

                                       9

 
                     OPTION OF HOLDER TO ELECT REPURCHASE

     If you want to elect to have this Security repurchased by the Company
pursuant to Paragraph 7 of the Officers' Certificate, check the box:

     If you want to elect to have only part of this Security repurchased by the
Company pursuant to Paragraph 7 of the Officers' Certificate, state the amount
you want to be repurchased:  $__________



Dated: ____________________              Signed:________________________________

                                                   (Sign exactly as your name
                                                   appears on the other side
                                                   of this Security)

Signature Guaranty:  ______________________________


Signatures must be guarantied by an "eligible guarantor institution" meeting the
requirements of the Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guaranty program" as may be determined by the Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.

                                       10

 
                SCHEDULE OF EXCHANGES OF DEFINITIVE SECURITIES



     The following exchanges of a part of this Global Security for Definitive
Securities have been made:



                Amount of Decrease      Amount of Increase       Principal Amount of        
                in Principal Amount     in Principal Amount      this Global Security       Signature of Authorized
Date of              of this                of this                 Following such          Signatory of Trustee or 
Exchange         Global Security        Global Security         Decrease (or Increase)       Securities Custodian
- -----------     ------------------     --------------------     ----------------------     --------------------------
   


                                       11

 
                   CERTIFICATE TO BE DELIVERED UPON EXCHANGE
                   OR REGISTRATION OF TRANSFER OF SECURITIES



Re:  6% CONVERTIBLE SUBORDINATED NOTES DUE 2005 OF ADVANCED MICRO DEVICES, INC.


     This Certificate relates to $______ principal amount of Securities held in
*_______ book-entry or * __________ definitive form by _________ (the
"Transferor").


     1.  The Transferor (check applicable box):


[_]    (a)  has requested the Trustee by written order to deliver in exchange
            for its beneficial interest in the Global Security held by the
            Depositary a Security or Securities in definitive, registered form
            of authorized denominations and an aggregate principal amount equal
            to its beneficial interest in such Global Security (or the portion
            thereof indicated above); or

[_]    (b)  has requested the Trustee by written order to exchange or register
            the transfer of a Security or Securities.



                                [INSERT NAME OF TRANSFEROR]



                                By
                                   --------------------------------------


Date: ___________



     2.  Affiliation with the Company [check if applicable]


[_]    (a)  The undersigned represents and warrants that it is, or at some time
            during which it held this Security was, an Affiliate of the Company.

       (b)  If 2(a) above is checked and if the undersigned was not an Affiliate
            of the Company at all times during which it held this Security,
            indicate the periods during which the undersigned was an Affiliate
            of the Company:

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

                                       12

 
       (c)  If 2(a) above is checked and if the Transferee will not pay the full
            purchase price for the transfer of this Security on or prior to the
            date of transfer indicate when such purchase price will be paid:

If any of the above representations required to be made by the Transferee is not
made, the Registrar shall not be obligated to register this Security in the name
of any person other than the Holder hereof.

THE UNDERSIGNED HEREBY AGREES THAT, UNLESS THE BOX ABOVE UNDER ITEM 2(a) IS
CHECKED, THE UNDERSIGNED SHALL BE DEEMED TO HAVE REPRESENTED THAT IT IS NOT NOR
HAS IT BEEN AT ANY TIME DURING WHICH IT HELD THIS SECURITY AN AFFILIATE, AS
DEFINED IN RULE 144 UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OF THE
COMPANY.

Dated:__________
                                ----------------------------------------------
                                NOTICE: The signature of the Holder to this
                                assignment must correspond with the name as
                                written upon the face of this Security
                                particular, without alteration or enlargement or
                                any change whatsoever.

                                       13

 
                           FORM OF CONVERSION NOTICE

                       To:  Advanced Micro Devices, Inc.


     The undersigned owner of this Security hereby:  (i) irrevocably exercises
the option to convert this Security, or the portion hereof below designated, for
shares of Common Stock of Advanced Micro Devices, Inc. in accordance with the
terms of the Indenture referred to in this Security and (ii) directs that such
shares of Common Stock deliverable upon the conversion, together with any check
in payment for fractional shares and any Security(ies) representing any
unconverted principal amount hereof, be issued and delivered to the registered
holder hereof unless a different name has been indicated below.  If shares are
to be delivered registered in the name of a person other than the undersigned,
the undersigned will pay all transfer taxes payable with respect thereto.  Any
amount required to be paid by the undersigned on account of interest accompanies
this Security.

Dated: _________________



 
                                          --------------------------------------
                                                   Signature


     Fill in for registration of shares if to be delivered, and of Securities if
to be issued, otherwise than to and in the name of the registered holder.



- ----------------------------------------------------- 
                Social Security or other
              Taxpayer Identifying Number

 
- ----------------------------------------------------- 
                         (Name)

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

 
- ----------------------------------------------------- 
                (City, State and Zip Code)
              (Please print name and address)

Principal amount to be converted:
(if less than all)

$_____________________

                                       14

EX-5.1

 
                                                                     EXHIBIT 5.1


                       [LETTERHEAD OF LATHAM & WATKINS]

                                  May 8, 1998


Advanced Micro Devices, Inc.
One AMD Place
Sunnyvale, California  94086

Re:      $517,500,000 Aggregate Principal Amount of 6% Convertible Subordinated
         ----------------------------------------------------------------------
         Notes of Advanced Micro Devices, Inc.
         -------------------------------------

Ladies & Gentlemen:

          In connection with the public offering by Advanced Micro Devices, Inc.
(the "Company") of $517,500,000 aggregate principal amount of the Company's 6%
Convertible Subordinated Notes due 2005 (the "Securities") pursuant to (a) a
registration statement on Form S-3 (Registration No. 333-47243) under the
Securities Act of 1933, as amended (the "Securities Act"), filed with the
Securities and Exchange Commission (the "Commission") on March 3, 1998, as
amended by Amendment No. 1 filed with the Commission on April 17, 1998 (the
"Registration Statement"), (b) a prospectus dated April 20, 1998 and the
accompanying prospectus supplement dated May 5, 1998 (collectively, the
"Prospectus") and (c) an indenture dated as of May 8, 1998 (the "Indenture")
between the Company and The Bank of New York, as trustee (the "Trustee"), you
have requested our opinion with respect to the matters set forth below.

          In our capacity as your special counsel in connection with the
Registration Statement, we are generally familiar with the proceedings taken by
the Company in connection with the authorization and issuance of the Securities.
In addition, we have made such legal and factual examinations and inquiries,
including an examination of originals and copies certified or otherwise
identified to our satisfaction, of all such documents, corporate records and
instruments of the Company as we have deemed necessary or appropriate for
purposes of this opinion.  In our examination, we have assumed the genuineness
of all signatures, the authenticity of all documents submitted to us as
originals, and the conformity to authentic original documents of all documents
submitted to us as copies.

 
Advanced Micro Devices, Inc.
May 8, 1998
Page 2


          We have been furnished with, and with your consent have exclusively
relied upon, certificates of officers of the Company with respect to certain
factual matters.  In addition, we have obtained and relied upon such
certificates and assurances from public officials as we have deemed necessary.

          We are opining herein as to the effect on the subject transaction only
of the federal securities laws of the United States, the General Corporation Law
of the State of Delaware and the internal laws of the State of New York, and we
express no opinion with respect to the applicability thereto, or the effect
thereon, of the laws of any other jurisdiction or, in the case of Delaware, any
other laws, or as to any matters of municipal law or the laws of any local
agencies within any state.

          Subject to the foregoing and the other qualifications set forth
herein, it is our opinion that, as of the date hereof, the Securities have been
duly authorized by the Company, and when the Securities have been duly
authenticated by the Trustee and duly executed and delivered on behalf of the
Company against payment therefor in accordance with the terms and provisions of
the Indenture and as contemplated by the Registration Statement, the Securities
will constitute valid and legally binding obligations of the Company,
enforceable against the Company in accordance with the terms of the Securities.

          Our opinion is subject to the following exceptions, limitations and
qualifications:  (i) the effect of bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to or
affecting the rights and remedies of creditors; (ii) the effect of general
principles of equity, including without limitation, concepts of materiality,
reasonableness, good faith and fair dealing and the possible unavailability of
specific performance or injunctive relief, regardless of whether enforcement is
considered in a proceeding in equity or at law, and the discretion of the court
before which any proceeding therefor may be brought; (iii) the unenforceability
under certain circumstances under law or court decisions of provisions providing
for the indemnification of, or contribution to, a party with respect to a
liability where such indemnification or contribution is contrary to public
policy; and (iv) we express no opinion with respect to whether acceleration of
the Securities may affect the collectibility of any portion of the stated
principal amount thereof which might be determined to constitute unearned
interest thereon or concerning the enforceability of the waiver of rights or
defenses contained in Section 4.06 of the Indenture.

          We assume for purposes of our opinion that the Trustee is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization; that the Trustee is duly qualified to engage in
the activities contemplated by the Indenture; that the Indenture has been duly
authorized, executed and delivered by the Trustee and constitutes a legally
valid, binding and enforceable obligation of the Trustee, enforceable against
the Trustee in accordance with its terms; that the Trustee is in compliance,
generally and with respect to acting as Trustee under the Indenture, with all
applicable laws and regulations; and that the Trustee has the requisite
organizational and legal power and authority to perform its obligations under
the Indenture.

 
Advanced Micro Devices, Inc.
May 8, 1998
Page 3

 

          We consent to your filing this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the caption "Legal
Matters" in the Prospectus included therein.

 

                            Very truly yours,


                            /s/ Latham & Watkins