<PAGE>

                                                                     EXHIBIT 4.2

                                    [FORM OF]

                         THE HOUSTON EXPLORATION COMPANY

                                       TO

                                    [TRUSTEE]

                                     TRUSTEE

                           SUBORDINATED DEBT INDENTURE

                               DATED AS OF [_____]

<PAGE>

                         THE HOUSTON EXPLORATION COMPANY

                 Certain Sections of this Indenture relating to
                   Sections 310 through 318, inclusive, of the
                           Trust Indenture Act of 1939

<TABLE>
<CAPTION>
Trust Indenture
Act Section                                                                               Indenture Section
----------------                                                                          -----------------
<S>                                                                                       <C>
Section 310(a)(1)....................................................................       609
(a)(2)...............................................................................       609
(a)(3)...............................................................................       Not Applicable
(a)(4)...............................................................................       Not Applicable
(b)..................................................................................       608
Section 311(a).......................................................................       613
(b)..................................................................................       613
Section 312(a).......................................................................       701
                                                                                            702
(b)..................................................................................       702
(c)..................................................................................       702
Section 313(a).......................................................................       703
(b)..................................................................................       703
(c)..................................................................................       703
(d)..................................................................................       703
Section 314(a).......................................................................       704
(a)(4)...............................................................................       101
(b)..................................................................................       Not Applicable
(c)(1)...............................................................................       102
(c)(2)...............................................................................       102
(c)(3)...............................................................................       Not Applicable
(d)..................................................................................       Not Applicable
(e)..................................................................................       102
Section 315(a).......................................................................       601
(b)..................................................................................       602
(c)..................................................................................       601
(d)..................................................................................       601
(e)..................................................................................       514
Section 316(a).......................................................................       101
(a)(1)(A)............................................................................       502
                                                                                            512
(a)(1)(B)............................................................................       513
(a)(2)...............................................................................       Not Applicable
(b)..................................................................................       508
(c)..................................................................................       104
Section 317(a)(1)....................................................................       503
(a)(2)...............................................................................       504
(b)..................................................................................       1003
Section 318(a).......................................................................       107
</TABLE>

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

                                       i
<PAGE>

Indenture.

                                       ii
<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<S>                                                                                                                 <C>
ARTICLE I DEFINITIONS AND OTHER PROVISIONS  OF GENERAL
APPLICATION......................................................................................................    1
         SECTION 101.  Definitions...............................................................................    1
         SECTION 102.  Compliance Certificates and Opinions......................................................    9
         SECTION 103.  Form of Documents Delivered to Trustee....................................................    9
         SECTION 104.  Acts of Holders; Record Dates.............................................................   10
         SECTION 105.  Notices, Etc., to Trustee and Company.....................................................   12
         SECTION 106.  Notice to Holders; Waiver.................................................................   12
         SECTION 107.  Conflict with Trust Indenture Act.........................................................   13
         SECTION 108.  Effect of Headings and Table of Contents..................................................   13
         SECTION 109.  Successors and Assigns....................................................................   13
         SECTION 110.  Separability Clause.......................................................................   13
         SECTION 111.  Benefits of Indenture.....................................................................   13
         SECTION 112.  Governing Law.............................................................................   14
         SECTION 113.  Legal Holidays............................................................................   14
         SECTION 114.  No Adverse Interpretation of Other Agreements.............................................   14
         SECTION 115.  No Personal Liability of Directors, Officers, Employees and Stockholders..................   14
         SECTION 116.  Language of Notices, Etc..................................................................   14
ARTICLE II SECURITY FORMS........................................................................................   14
         SECTION 201.  Forms Generally...........................................................................   14
         SECTION 202.  Form of Face of Security..................................................................   15
         SECTION 203.  Form of Reverse of Security...............................................................   16
         SECTION 204.  Form of Legend for Global Securities......................................................   19
         SECTION 205.  Form of Trustee's Certificate of Authentication...........................................   20
ARTICLE III THE SECURITIES.......................................................................................   20
         SECTION 301.  Amount Unlimited; Issuable in Series......................................................   20
         SECTION 302.  Denominations.............................................................................   23
         SECTION 303.  Execution, Authentication, Delivery and Dating............................................   23
         SECTION 304.  Temporary Securities......................................................................   25
         SECTION 305.  Registration, Registration of Transfer and Exchange.......................................   25
         SECTION 306.  Mutilated, Destroyed, Lost and Wrongfully Taken Securities................................   27
         SECTION 307.  Payment of Interest; Interest Rights Preserved............................................   28
         SECTION 308.  Persons Deemed Owners.....................................................................   29
         SECTION 309.  Cancellation..............................................................................   29
         SECTION 310.  Computation of Interest...................................................................   30
         SECTION 311.  CUSIP Numbers.............................................................................   30
ARTICLE IV SATISFACTION AND DISCHARGE............................................................................   30
         SECTION 401.  Satisfaction and Discharge of Indenture...................................................   30
         SECTION 402.  Application of Trust Money................................................................   31
ARTICLE V REMEDIES...............................................................................................   31
         SECTION 501.  Events of Default.........................................................................   31
         SECTION 502.  Acceleration of Maturity; Rescission and Annulment........................................   33
         SECTION 503.  Collection of Indebtedness and Suits for Enforcement by Trustee...........................   34
</TABLE>

                                       i
<PAGE>

<TABLE>
<S>                                                                                                                 <C>
         SECTION 504.  Trustee May File Proofs of Claim..........................................................   34
         SECTION 505.  Trustee May Enforce Claims Without Possession of Securities...............................   35
         SECTION 506.  Application of Money Collected............................................................   35
         SECTION 507.  Limitation on Suits.......................................................................   35
         SECTION 508.  Unconditional Right of Holders to Receive  Principal, Premium and
                       Interest and to Convert...................................................................   36
         SECTION 509.  Restoration of Rights and Remedies........................................................   36
         SECTION 510.  Rights and Remedies Cumulative............................................................   37
         SECTION 511.  Delay or Omission Not Waiver..............................................................   37
         SECTION 512.  Control by Holders........................................................................   37
         SECTION 513.  Waiver of Past Defaults...................................................................   37
         SECTION 514.  Undertaking for Costs.....................................................................   38
         SECTION 515.  Waiver of Usury, Stay or Extension Laws...................................................   38
ARTICLE VI THE TRUSTEE...........................................................................................   38
         SECTION 601.  Certain Duties and Responsibilities.......................................................   38
         SECTION 602.  Notice of Defaults........................................................................   39
         SECTION 603.  Certain Rights of Trustee.................................................................   39
         SECTION 604.  Not Responsible for Recitals or Issuance of Securities....................................   40
         SECTION 605.  May Hold Securities.......................................................................   40
         SECTION 606.  Money Held in Trust.......................................................................   40
         SECTION 607.  Compensation and Reimbursement............................................................   40
         SECTION 608.  Conflicting Interests.....................................................................   41
         SECTION 609.  Corporate Trustee Required; Eligibility...................................................   41
         SECTION 610.  Resignation and Removal; Appointment of Successor.........................................   42
         SECTION 611.  Acceptance of Appointment by Successor....................................................   43
         SECTION 612.  Merger, Conversion, Consolidation or Succession to Business...............................   44
         SECTION 613.  Preferential Collection of Claims Against Company.........................................   44
ARTICLE VII HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY....................................................   44
         SECTION 701.  Company to Furnish Trustee Names and Addresses of Holders.................................   44
         SECTION 702.  Preservation of Information; Communications to Holders....................................   45
         SECTION 703.  Reports by Trustee........................................................................   45
         SECTION 704.  Reports by Company........................................................................   45
ARTICLE VIII CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE...............................................    46
         SECTION 801.  Company May Consolidate, Etc., Only on Certain Terms......................................   46
         SECTION 802.  Successor Substituted.....................................................................   47
ARTICLE IX SUPPLEMENTAL INDENTURES...............................................................................   47
         SECTION 901.  Supplemental Indentures Without Consent of Holders........................................   47
         SECTION 902.  Supplemental Indentures With Consent of Holders...........................................   48
         SECTION 903.  Execution of Supplemental Indentures......................................................   49
         SECTION 904.  Effect of Supplemental Indentures.........................................................   49
         SECTION 905.  Conformity with Trust Indenture Act.......................................................   50
         SECTION 906.  Reference in Securities to Supplemental Indentures........................................   50
         SECTION 907.  Subordination Unimpaired..................................................................   50
ARTICLE X COVENANTS..............................................................................................   50
         SECTION 1001. Payment of Principal, Premium and Interest................................................   50
</TABLE>

                                       ii
<PAGE>

<TABLE>
<S>                                                                                                                 <C>
         SECTION 1002. Maintenance of Office or Agency...........................................................   50
         SECTION 1003. Money for Securities Payments to Be Held in Trust.........................................   51
         SECTION 1004. Statement by Officers as to Default.......................................................   52
         SECTION 1005. Waiver of Certain Covenants...............................................................   52
ARTICLE XI REDEMPTION OF SECURITIES..............................................................................   53
         SECTION 1101. Applicability of Article..................................................................   53
         SECTION 1102. Election to Redeem; Notice to Trustee.....................................................   53
         SECTION 1103. Selection by Trustee of Securities to Be Redeemed.........................................   53
         SECTION 1104. Notice of Redemption......................................................................   54
         SECTION 1105. Deposit of Redemption Price...............................................................   55
         SECTION 1106. Securities Payable on Redemption Date.....................................................   55
         SECTION 1107. Securities Redeemed in Part...............................................................   55
ARTICLE XII SINKING FUNDS........................................................................................   56
         SECTION 1201. Applicability of Article..................................................................   56
         SECTION 1202. Satisfaction of Sinking Fund Payments with Securities.....................................   56
         SECTION 1203. Redemption of Securities for Sinking Fund.................................................   56
ARTICLE XIII DEFEASANCE AND COVENANT DEFEASANCE..................................................................   57
         SECTION 1301. Company's Option to Effect Defeasance or Covenant Defeasance..............................   57
         SECTION 1302. Defeasance and Discharge..................................................................   57
         SECTION 1303. Covenant Defeasance.......................................................................   57
         SECTION 1304. Conditions to Defeasance or Covenant Defeasance...........................................   58
         SECTION 1305. Deposited Money and U.S. Government Obligations to Be Held in Trust;
                       Miscellaneous Provisions..................................................................   59
         SECTION 1306. Reinstatement.............................................................................   61
ARTICLE XIV SUBORDINATION OF SECURITIES..........................................................................   61
         SECTION 1401. Securities Subordinate to Senior Debt.....................................................   61
         SECTION 1402. Payment Over of' Proceeds Upon Dissolution, Etc...........................................   61
         SECTION 1403. Prior Payment to Senior Debt Upon Acceleration of Securities..............................   62
         SECTION 1404. No Payment When Senior Debt in Default....................................................   63
         SECTION 1405. Payment Permitted in Certain Situations...................................................   64
         SECTION 1406. Subrogation to Rights of Holders of Senior Debt...........................................   64
         SECTION 1407. Provisions Solely to Define Relative Rights...............................................   65
         SECTION 1408. Trustee to Effectuate Subordination.......................................................   65
         SECTION 1409. No Waiver of Subordination Provisions.....................................................   65
         SECTION 1410. Notice to Trustee.........................................................................   66
         SECTION 1411. Reliance on Judicial Order or Certificate of Liquidating Agent............................   66
         SECTION 1412. Trustee Not Fiduciary for Holders of Senior Debt..........................................   66
         SECTION 1413. Rights of Trustee as Holder of Senior Debt; Preservation of Trustees
                       Rights....................................................................................   67
         SECTION 1414. Article Applicable to Paying Agents.......................................................   67
</TABLE>

                                      iii
<PAGE>

      SUBORDINATED DEBT INDENTURE, dated as of [_______________], between THE
HOUSTON EXPLORATION COMPANY, a corporation duly organized and existing under the
laws of the State of Delaware (herein called the "COMPANY"), having its
principal office at 1100 Louisiana Street, Suite 2000, Houston, Texas 77002 and
[TRUSTEE], a [___________] banking corporation, as Trustee (herein called the
"TRUSTEE").

                             RECITALS OF THE COMPANY

      The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured
debentures, notes or other evidences of indebtedness (herein called the
"SECURITIES"), to be issued in one or more series as in this Indenture provided.

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

                   NOW, THEREFORE, THIS INDENTURE WITNESSETH:

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

                                   ARTICLE I
                        DEFINITIONS AND OTHER PROVISIONS
                             OF GENERAL APPLICATION

      SECTION 101. DEFINITIONS.

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

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

            (2) all other terms used herein which are defined in the Trust
      Indenture Act, either directly or by reference therein, have the meanings
      assigned to them therein;

            (3) all accounting terms not otherwise defined herein have the
      meanings assigned to them in accordance with generally accepted accounting
      principles;

            (4) unless the context otherwise requires, any reference to an
      "Article" or a "Section" refers to an Article or a Section, as the case
      may be, of this Indenture;

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

                                        1
<PAGE>

            (6) when used with respect to any Security, the words "convert",
      "converted" and "conversion" are intended to refer to the right of the
      Holder or the Company to convert or exchange such Security into or for
      securities or other property in accordance with such terms, if any, as may
      hereafter be specified for such Security as contemplated by Section 301,
      and these words are not intended to refer to any right of the Holder or
      the Company to exchange such Security for other Securities of the same
      series and like tenor pursuant to Section 304, 305, 306, 906 or 1107 or
      another similar provision of this Indenture, unless the context otherwise
      requires; and references herein to the terms of any Security that may be
      converted mean such terms as may be specified for such Security as
      contemplated in Section 301.

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

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

      "APPLICABLE PROCEDURES" of a Depositary means, with respect to any matter
at any time, the policies and procedures of such Depositary, if any, that are
applicable to such matter at such time.

      "BOARD OF DIRECTORS" means either the board of directors of the Company or
any duly authorized committee of that board.

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

      "BUSINESS DAY", when used with respect to any Place of Payment, means each
Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in that Place of Payment are authorized or obligated by law
or executive order to close; provided that, when used with respect to any
Security, "Business Day" may have such other meaning, if any, as may be
specified for such Security as contemplated by Section 301.

      "CAPITAL STOCK" means:

      (i) in the case of a corporation, corporate stock;

      (ii) in the case of a limited liability company or similar entity, any
membership or similar interests therein;

      (iii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock;

                                       2
<PAGE>

      (iv) in the case of a partnership, partnership interests (whether general
or limited); and

      (v) any other interest or participation that confers on a Person the right
to receive a share of the profits and losses of, or distributions of assets of,
the issuing Person.

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

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

      "COMPANY REQUEST" or "COMPANY ORDER" means a written request or order
signed in the name of the Company by any two of the following: a Chairman of the
Board, a Vice Chairman of the Board, a President, a Vice President, a Treasurer,
an Assistant Treasurer, its Secretary or an Assistant Secretary of the Company,
or any other officer or officers of the Company designated in writing by or
pursuant to authority of the Board of Directors and delivered to the Trustee
from time to time.

      "CORPORATE TRUST OFFICE" means the principal office of the Trustee in New
York, New York at which at any particular time its corporate trust business
shall be administered, which at the date hereof is located at
[_________________________________}

      "CORPORATION" means a corporation, association, company (including a
limited liability company), joint-stock company, business trust or other similar
entity.

      "COVENANT DEFEASANCE" has the meaning specified in Section 1303.

      "CREDIT AGREEMENT" means the credit agreement dated as of ________
__,____, among the Company, the financial institutions party thereto as lenders,
and ________________, as administrative agent, together with related documents
thereto including any guarantee agreements and security documents, as amended,
modified supplemented, restated, renewed, refunded, replaced, restructured
repaid or refinanced from time to time (including any agreement extending the
maturity thereof or increasing the amount of available borrowings thereunder or
adding entities as additional borrowers or guarantors thereunder) whether with
the original agents and lenders or otherwise and whether provided under the
original credit agreement or other credit agreements or otherwise.

      "DEFAULTED INTEREST" has the meaning specified in Section 307.

      "DEFEASANCE" has the meaning specified in Section 1302.

      "DEPOSITARY" means, with respect to Securities of any series issuable in
whole or in part in the form of one or more Global Securities, a clearing agency
that is designated to act as Depositary for such Securities as contemplated by
Section 301.

                                       3
<PAGE>

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

      "EVENT OF DEFAULT" has the meaning specified in Section 501.

      "EXCHANGE ACT" means the Securities Exchange Act of 1934 and any statute
successor thereto, in each case as amended from time to time.

      "EXPIRATION DATE" has the meaning specified in Section 104.

      "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 in effect from time to time.

      "GLOBAL SECURITY" means a Security that evidences all or part of the
Securities of any series and bears the legend set forth in Section 204 (or such
legend as may be specified as contemplated by Section 301 for such Securities).

      "HOLDER" means a Person in whose name a Security is registered in the
Security Register.

      "INDEBTEDNESS" means, with respect to any Person, without duplication, any
indebtedness of such Person, whether or not contingent: (i) in respect of
borrowed money; (ii) evidenced by bonds, notes, debentures or similar
instruments or letters of credit (or reimbursement agreements in respect
thereof); (iii) in respect of banker's acceptances; (iv) representing capital
lease obligations; (v) in respect of any guarantee by such Person of production
or payment with respect to a production payment recorded as a liability or
deferred revenue in accordance with GAAP; (vi) representing the balance deferred
and unpaid of the purchase price of any property, except any such balance that
constitutes an accrued expense or trade payable; or (vii) representing any
hedging obligation, if and to the extent any of the foregoing indebtedness
(other than letters of credit and hedging obligations) would appear as a
liability upon a balance sheet of such Person prepared in accordance with GAAP.
In addition, the term "Indebtedness" includes (x) all indebtedness of any other
Person, of the types described above in clauses (i) through (vii), secured by a
lien on any asset of such Person (whether or not such indebtedness is assumed by
such Person), and (y) to the extent not otherwise included, the guarantee by
such Person of any indebtedness of any other Person of the types described above
in clauses (i) through (vii). Notwithstanding the foregoing, the following shall
not constitute "Indebtedness": (a) accrued expenses and trade accounts payable
arising in the ordinary course of business; (b) any obligation in respect of any
production payment recorded as a liability or deferred revenue in accordance
with GAAP, or any obligation in respect of any royalty, overriding royalty, net
profits interest, master limited partnership interest or other interest in oil
and natural gas properties, reserves or the right to receive all or a portion of
the production or the proceeds from the sale of production attributable to such
properties; (c) any obligation in respect of a farm-in agreement; (d) any
indebtedness which has been defeased in accordance with GAAP or defeased
pursuant to the deposit of cash or government securities (in an amount
sufficient to satisfy all

                                       4
<PAGE>

such indebtedness obligations at maturity or redemption, as applicable, and all
payments of interest and premium, if any) in a trust or account created or
pledged for the sole benefit of the holders of such indebtedness, and subject to
no other liens, and the other applicable terms of the instrument governing such
indebtedness; (e) oil or gas balancing liabilities incurred in the ordinary
course of business and consistent with past practice; (f) any obligation in
respect of any oil and natural gas hedging contract; (g) any obligations in
respect of completion bonds, performance bonds, bid bonds, appeal bonds, surety
bonds, bankers acceptances, letters of credit, insurance obligations or bonds
and other similar bonds and obligations incurred by the Company or any
Subsidiary in the ordinary course of business and any guaranties or letters of
credit functioning as or supporting any of the foregoing bonds or obligations;
(h) any obligation arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument drawn against insufficient
funds in the ordinary course of business (provided, however, that such
obligation is extinguished within five business days of its incurrence); (i) any
obligation arising from any agreement providing for indemnities, guarantees,
purchase price adjustments, holdbacks, contingency payment obligations based on
the performance of the acquired or disposed assets or similar obligations (other
than guarantees of Indebtedness) incurred by any Person in connection with the
acquisition or disposition of assets; and (j) obligations in respect of
operating agreements, joint venture agreements, partnership agreements, oil and
gas leases, farm-in agreements, farm-out agreements, assignments, purchase and
sale agreements, division orders, contracts for the sale, purchase, processing,
transportation or exchange of oil or natural gas, unitization and pooling
declarations and agreements, development agreements, area of mutual interest
agreements, royalties, joint interest billing arrangements, net profits
interests, participation agreements, subleases, licenses or subleases and other
agreements similar to any of the foregoing that are customary in the oil and gas
business.

      "INDENTURE" means this instrument as originally executed and as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
including, for all purposes of this instrument and any such supplemental
indenture, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this instrument and any such supplemental indenture,
respectively. The term "Indenture" shall also include the terms of particular
series of Securities established as contemplated by Section 301.

      "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.

      "INTEREST PAYMENT DATE", when used with respect to any Security, means the
Stated Maturity of an installment of interest on such Security.

      "INVESTMENT COMPANY ACT" means the Investment Company Act of 1940 and any
statute successor thereto, in each case as amended from time to time.

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

                                        5
<PAGE>

      "NOTICE OF DEFAULT" means a written notice of the kind specified in
Section 501(4).

      "OFFICERS' CERTIFICATE" means a certificate signed by any two of the
following: a Chairman of the Board, a Vice Chairman of the Board, a President, a
Vice President, a Treasurer, an Assistant Treasurer, a Secretary or an Assistant
Secretary of the Company, or any other officer or officers of the Company
designated in a writing by or pursuant to authority of the Board of Directors
and delivered to the Trustee from time to time. One of the officers signing an
Officers' Certificate given pursuant to Section 1004 shall be the principal
executive, financial or accounting officer of the Company.

      "OPINION OF COUNSEL" means a written opinion of counsel, who may be
counsel for the Company, and who shall be acceptable to the Trustee.

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

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

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

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

            (3) Securities as to which Defeasance has been effected pursuant to
      Section 1302;

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

            (5) Securities as to which any property deliverable upon conversion
      thereof has been delivered (or such delivery has been duly provided for),
      or as to which any other particular conditions have been satisfied, in
      each case as may be provided for such Securities as contemplated in
      Section 301;

provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given, made or taken any
request, demand, authorization, direction, notice, consent, waiver or other
action hereunder as of any date, (A) the principal amount of an Original Issue
Discount Security which shall be deemed to be Outstanding shall be

                                        6
<PAGE>

the amount of the principal thereof which would be due and payable as of such
date upon acceleration of the Maturity thereof to such date pursuant to Section
502, (B) if, as of such date, the principal amount payable at the Stated
Maturity of a Security is not determinable, the principal amount of such
Security which shall be deemed to be Outstanding shall be the amount as
specified or determined as contemplated by Section 301, (C) the principal amount
of a Security denominated in one or more foreign currencies, composite
currencies or currency units which shall be deemed to be Outstanding shall be
the U.S. dollar equivalent, determined as of such date in the manner provided as
contemplated by Section 301, of the principal amount of such Security (or, in
the case of a Security described in Clause (A) or (B) above, of the amount
determined as provided in such Clause), and (D) Securities owned by the Company
or any other obligor upon the Securities or any Affiliate of the Company or of
such other obligor shall be disregarded and deemed not to be Outstanding, except
that, in determining whether the Trustee shall be protected in relying upon any
such request, demand, authorization, direction, notice, consent, waiver or other
action, only Securities which a Responsible Officer of the Trustee actually
knows to be so owned shall be so disregarded. Securities so owned which have
been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Securities and that the pledgee is not the Company or any
other obligor upon the Securities or any Affiliate of the Company or of such
other obligor.

      "PAYING AGENT" means any Person authorized by the Company to pay the
principal of or any premium or interest on any Securities on behalf of the
Company.

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

      "PLACE OF PAYMENT", when used with respect to the Securities of any series
and subject to Section 1002, means the place or places where the principal of
and any premium and interest on the Securities of that series are payable as
specified as contemplated by Section 301.

      "PREDECESSOR SECURITY" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 306 in exchange for or in lieu of a
mutilated, destroyed, lost or wrongfully taken Security shall be deemed to
evidence the same debt as the mutilated, destroyed, lost or wrongfully taken
Security.

      "REDEMPTION DATE", when used with respect to any Security to be redeemed,
means the date fixed for such redemption by or pursuant to this Indenture.

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

      "REGULAR RECORD DATE" for the interest payable on any Interest Payment
Date on the Securities of any series means the date specified for that purpose
as contemplated by Section 301.

      "RESPONSIBLE OFFICER", when used with respect to the Trustee, means any
vice president, any assistant secretary, any assistant treasurer, any trust
officer, any assistant trust officer or any

                                        7
<PAGE>

other officer of the Trustee, in each case, located in the Corporate Trust
Office of the Trustee, and also means, with respect to a particular corporate
trust matter, any other officer to whom such matter is referred because of his
knowledge of and familiarity with the particular subject.

      "SECURITIES" has the meaning stated in the first recital of this Indenture
and more particularly means any Securities authenticated and delivered under
this Indenture.

      "SECURITIES ACT" means the Securities Act of 1933 and any statute
successor thereto, in each case as amended from time to time.

      "SECURITY REGISTER" and "SECURITY REGISTRAR" have the respective meanings
specified in Section 305.

      "SENIOR DEBT" means: (a) indebtedness of the Company under or in respect
of the Credit Agreement, whether for principal, interest (including interest
accruing after the filing of a petition initiating any proceeding pursuant to
any bankruptcy law, whether or not the claim for such interest is allowed as a
claim in such proceeding), reimbursement obligations, fees, commissions,
expenses, indemnities or other amounts; and (b) any other Indebtedness permitted
under the terms of this Indenture, unless the instrument under which such
Indebtedness is incurred expressly provides that it is on a parity with or
subordinated in right of payment to the Securities. Notwithstanding the
foregoing, "Senior Debt" will not include: (i) Equity Interests; (ii) any
liability for federal, state, local or other taxes due or owed by the Company;
(iii) any Indebtedness of the Company to any of its Subsidiaries or Affiliates;
(iv) any trade payables; or (v) any Indebtedness that is incurred in violation
of this Indenture.

      "SPECIAL RECORD DATE" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 307.

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

      "SUBSIDIARY" means any Person a majority of the combined voting power of
the total outstanding ownership interests in which is, at the time of
determination, beneficially owned or held, directly or indirectly, by the
Company or one or more other Subsidiaries. For this purpose, "voting power"
means power to vote in an ordinary election of directors (or, in the case of a
Person that is not a corporation, ordinarily to appoint or approve the
appointment of Persons holding similar positions), whether at all times or only
as long as no senior class of ownership interests has such voting power by
reason of any contingency.

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

      "TRUSTEE" means the Person named as the "Trustee" in the first paragraph
of this instrument until a successor Trustee shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Trustee" shall mean
or include each Person who is

                                        8
<PAGE>

then a Trustee hereunder, and if at any time there is more than one such Person,
"Trustee" as used with respect to the Securities of any series shall mean the
Trustee with respect to Securities of that series.

      "U.S. GOVERNMENT OBLIGATION" has the meaning specified in Section 1304.

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

      SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS.

      Upon any application or request by the Company to the Trustee to take any
action under any provision of this Indenture, the Company shall furnish to the
Trustee such certificates and opinions as may be required under the Trust
Indenture Act; provided, however, that no such opinion shall be required in
connection with the issuance of Securities of any Series. Each such certificate
or opinion shall be given in the form of an Officers' Certificate, if to be
given by an officer of the Company, or an Opinion of Counsel, if to be given by
counsel, and shall comply with the requirements of the Trust Indenture Act and
any other requirements set forth in this Indenture.

      Every certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture shall include:

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

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

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

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

      SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE.

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

                                        9
<PAGE>

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

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

      SECTION 104. ACTS OF HOLDERS; RECORD DATES.

      Any request, demand, authorization, direction, notice, consent, waiver or
other action provided or permitted by this Indenture to be given, made or taken
by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 601) conclusive in favor of the Trustee and
the Company, if made in the manner provided in this Section.

      Without limiting the generality of this Section, unless otherwise provided
in or pursuant to this Indenture, (i) a Holder, including a Depositary or its
nominee that is a Holder of a Global Security, may give, make or take, by an
agent or agents duly appointed in writing, any request, demand, authorization,
direction, notice, consent, waiver or other action provided or permitted in or
pursuant to this Indenture to be given, made or taken by Holders, and a
Depositary or its nominee that is a Holder of a Global Security may duly appoint
in writing as its agent or agents members of, or participants in, such
Depositary holding interests in such Global Security in the records of such
Depositary; and (ii) with respect to any Global Security the Depositary for
which is The Depository Trust Company ("DTC"), any consent or other action
given, made or taken by an "agent member" of DTC by electronic means in
accordance with the Automated Tender Offer Procedures system or other Applicable
Procedures of, and pursuant to authorization by, DTC shall be deemed to
constitute the "Act" of the Holder of such Global Security, and such Act shall
be deemed to have been delivered to the Company and the Trustee upon the
delivery by DTC of an "agent's message or other notice of such consent or other
action having been so given, made or taken in accordance with the Applicable
Procedures of DTC.

      The fact and date of the execution by any Person of any such instrument or
writing may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or

                                       10
<PAGE>

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

      The ownership of Securities shall be proved by the Security Register.

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

      The Company may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities of any series entitled to
give, make or take any request, demand, authorization, direction, notice,
consent, waiver or other action provided or permitted by this Indenture to be
given, made or taken by Holders of Securities of such series, provided that the
Company may not set a record date for, and the provisions of this paragraph
shall not apply with respect to, the giving, making or taking of any notice,
declaration, request or direction referred to in the next paragraph. If any
record date is set pursuant to this paragraph, the Holders of Outstanding
Securities of the relevant series on such record date, and no other Holders,
shall be entitled to give, make or take the relevant action, whether or not such
Holders remain Holders after such record date; provided, however, that no such
action shall be effective hereunder unless given, made or taken on or prior to
the applicable Expiration Date by Holders of the requisite principal amount of
Outstanding Securities of such series on such record date. Nothing in this
paragraph shall be construed to prevent the Company from setting a new record
date for any action for which a record date has previously been set pursuant to
this paragraph (whereupon the record date previously set shall automatically and
with no action by any Person be canceled and of no effect), and nothing in this
paragraph shall be construed to render ineffective any action given, made or
taken by Holders of the requisite principal amount of Outstanding Securities of
the relevant series on the date such action is given, made or taken. Promptly
after any record date is set pursuant to this paragraph, the Company, at its own
expense, shall cause notice of such record date, the proposed action by Holders
and the applicable Expiration Date to be given to the Trustee in writing and to
each Holder of Securities of the relevant series in the manner set forth in
Section 106.

      The Trustee may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities of any series entitled to join
in the giving, making or taking of (i) any Notice of Default, (ii) any
declaration of acceleration referred to in Section 502, (iii) any request to
institute proceedings referred to in Section 507(2) or (iv) any direction
referred to in Section 512, in each case with respect to Securities of such
series. If any record date is set pursuant to this paragraph, the Holders of
Outstanding Securities of such series on such record date, and no other Holders,
shall be entitled to give, make or take 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
given, made or taken on or prior to the

                                       11
<PAGE>

applicable Expiration Date by Holders of the requisite principal amount of
Outstanding Securities of such series on such record date. Nothing in this
paragraph shall be construed to prevent the Trustee from setting a new record
date for any action for which a record date has previously been set pursuant to
this paragraph (whereupon the record date previously set shall automatically and
with no action by any Person be canceled and of no effect), and nothing in this
paragraph shall be construed to render ineffective any action given, made or
taken by Holders of the requisite principal amount of Outstanding Securities of
the relevant series on the date such action is given, made or taken. Promptly
after any record date is set pursuant to this paragraph, the Trustee, at the
Company's expense, shall cause notice of such record date, the proposed action
by Holders and the applicable Expiration Date to be given to the Company in
writing and to each Holder of Securities of the relevant series in the manner
set forth in Section 106.

      With respect to any record date set pursuant to this Section, the party
hereto which sets such record date may designate any day as the "Expiration
Date" and from time to time may change the Expiration Date to any earlier or
later day; provided that no such change shall be effective unless notice of the
proposed new Expiration Date is given to the other party hereto in writing, and
to each Holder of Securities of the relevant series in the manner set forth in
Section 106, on or prior to the existing Expiration Date. If an Expiration Date
is not designated with respect to any record date set pursuant to this Section,
the party hereto which set such record date shall be deemed to have initially
designated the 180th day after such record date as the Expiration Date with
respect thereto, subject to its right to change the Expiration Date to an
earlier day as provided in this paragraph. Notwithstanding the foregoing, no
Expiration Date shall be later than the 180th day after the applicable record
date.

      Without limiting the foregoing, a Holder entitled hereunder to give, make
or take any action hereunder with regard to any particular Security may do so,
in person or by agent duly appointed in writing, with regard to all or any part
of the principal amount of such Security.

      SECTION 105. NOTICES, ETC., TO TRUSTEE AND COMPANY.

      Any request, demand, authorization, direction, notice, consent, waiver or
Act of Holders or other document provided or permitted by this Indenture to be
made upon, given or furnished to, or filed with, (1) the Trustee by any Holder
or by the Company shall be sufficient for every purpose hereunder if made,
given, furnished or filed in writing to or with the Trustee at its Corporate
Trust Office, Attention: Corporate Trust Trustee Administration, or (2) the
Company by the Trustee or by any Holder shall be sufficient for every purpose
hereunder (unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to the Company addressed to it at the address of
its principal office specified in the first paragraph of this instrument or at
any other address previously furnished in writing to the Trustee by the Company.

      SECTION 106. NOTICE TO HOLDERS; WAIVER.

      Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at his address as it appears in the Security Register, not later
than the latest date (if any), and not earlier than the earliest date (if

                                       12
<PAGE>

any), prescribed for the giving of such notice. In any case where notice to
Holders is given by mail, neither the failure to mail such notice, nor any
defect in any notice so mailed, to any particular Holder shall affect the
sufficiency of such notice with respect to other Holders. Where this Indenture
provides for notice in any manner, such notice may be waived in writing by the
Person entitled to receive such notice, either before or after the event, and
such waiver shall be the equivalent of such notice. Waivers of notice by Holders
shall be filed with the Trustee, but such filing shall not be a condition
precedent to the validity of any action taken in reliance upon such waiver.

      In case by reason of the suspension of regular mail service or by reason
of any other cause it shall be impracticable to give such notice by mail, then
such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.

      Where this Indenture provides for Notice of any event to a Holder of a
Global Security, such notice shall be sufficiently given if given to the
Depositary for such Security (or its designee), pursuant to its Applicable
Procedures, not later than the latest date (if any), and not earlier than the
earliest date (if any), prescribed for the giving of such notice.

      SECTION 107. CONFLICT WITH TRUST INDENTURE ACT.

      If any provision hereof limits, qualifies or conflicts with a provision of
the Trust Indenture Act which is required under such Act to be a part of and
govern this Indenture, the latter provision shall control. If any provision of
this Indenture modifies or excludes any provision of the Trust Indenture Act
which may be so modified or excluded, the latter provision shall be deemed to
apply to this Indenture as so modified or to be excluded, as the case may be.

      SECTION 108. EFFECT OF HEADINGS AND TABLE OF CONTENTS.

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

      SECTION 109. SUCCESSORS AND ASSIGNS.

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

      SECTION 110. SEPARABILITY CLAUSE.

      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 111. BENEFITS OF INDENTURE.

      Nothing in this Indenture or in the Securities, express or implied, shall
give to any Person, other than the parties hereto and their successors
hereunder, the holders of Senior Debt and the Holders, any benefit or any legal
or equitable right, remedy or claim under this

                                       13
<PAGE>

Indenture, except as may otherwise be provided pursuant to Section 301 with
respect to any Securities of a particular series or under this Indenture with
respect to such Securities.

      SECTION 112. GOVERNING LAW.

      This Indenture and the Securities and the rights and obligations of the
parties hereto and thereto, including the interpretation, construction, validity
and enforceability thereof, shall be governed by and construed and interpreted
in accordance with the law of the State of New York.

      SECTION 113. LEGAL HOLIDAYS.

      In any case where any Interest Payment Date, Redemption Date or Maturity
of any Security, or any date on which a Holder has the right to convert his
Security, shall not be a Business Day at any Place of Payment, then
(notwithstanding any other provision of this Indenture or of the Securities
(other than a provision of any Security which specifically states that such
provision shall apply in lieu of this Section)) payment of interest or principal
(and premium, if any), or conversion of such Security need not be made at such
Place of Payment on such date, but may be made on the next succeeding Business
Day at such Place of Payment with the same force and effect as if made on the
Interest Payment Date or Redemption Date, or at the Maturity, or on such date
for conversion, as the case may be.

      SECTION 114. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.

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

      SECTION 115. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS.

      No past, present or future director, officer, employee, incorporator or
stockholder of the Company, as such, will have any liability for any obligations
of the Company under the Securities or this Indenture or for any claim based on,
in respect of, or by reason of, such obligations or their creation. Each Holder
of Securities by accepting a Security waives and releases all such liability.
The waiver and release are part of the consideration for issuance of the
Securities. The waiver may not be effective to waive liabilities under the
federal securities laws.

      SECTION 116. LANGUAGE OF NOTICES, ETC.

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

                                   ARTICLE II
                                 SECURITY FORMS

      SECTION 201. FORMS GENERALLY.

                                       14
<PAGE>

      The Securities of each series shall be in substantially the form set forth
in this Article, or in such other form as shall be established by or pursuant to
a Board Resolution or in one or more indentures supplemental hereto, in each
case with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange or Depositary therefor or as may, consistently herewith, be
determined by the officers executing such Securities, as evidenced by their
execution thereof. If the form of Securities of any series is established by
action taken pursuant to a Board Resolution, a copy of an appropriate record of
such action shall be certified by the Secretary or an Assistant Secretary of the
Company and delivered to the Trustee at or prior to the delivery of the Company
Order contemplated by Section 303 for the authentication and delivery of such
Securities.

      The definitive Securities shall be printed, lithographed or engraved on
steel engraved borders or may be produced in any other manner, all as determined
by the officers executing such Securities, as evidenced by their execution of
such Securities.

      SECTION 202. FORM OF FACE OF SECURITY.

      [Insert any legend required by the Internal Revenue Code and the
regulations thereunder.]

                         THE HOUSTON EXPLORATION COMPANY

______________________________________

No _____________ $ _______________

The Houston Exploration Company, a corporation duly organized and existing under
the laws of the State of Delaware (herein called the "COMPANY", which term
includes any successor Person under the Indenture hereinafter referred to), for
value received, hereby promises to pay to ______________________________________
, or registered assigns, the principal sum of __________________
____________________ Dollars on ______________________________________ [if the
Security is to bear interest prior to Maturity, insert -- , and to pay interest
thereon from ____________ or from the most recent Interest Payment Date to which
interest has been paid or duly provided for, semi-annually
on ____________________ and _________ in each year, commencing
________________________, and at the Maturity ______________________________
thereof, at the rate of __________________% per annum, until the principal
hereof is paid or made available for payment [if applicable, insert -- ,
provided that any principal and premium, and any such installment of interest,
which is overdue shall bear interest at the ________________________ rate of ___
% per annum (to the extent that the payment of such interest shall be legally
enforceable), from the dates such amounts are due until they are paid or made
available for payment, and such interest shall be payable on demand]. The
interest so payable, and punctually paid or duly provided for, on any Interest
Payment Date will, as provided in such Indenture, be paid to the Person in whose
name this Security (or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest, which shall be
the ____________ or ____________ (whether or not a Business Day), as the case
may be, next preceding such Interest Payment Date. Any such interest so payable,
but not punctually paid or duly provided for, on any Interest Payment Date will
forthwith cease to be payable to the

                                       15
<PAGE>

Holder on such Regular Record Date and may either be paid to the Person in whose
name this Security (or one or more Predecessor Securities) is registered at the
close of business on a Special Record Date for the payment of such Defaulted
Interest to be fixed by the Trustee, notice whereof shall be given to Holders of
Securities of this series not less than 10 days prior to such Special Record
Date, or be paid in any other lawful manner not inconsistent with the
requirements of any securities exchange on which this Security may be listed,
and upon such notice as may be required by such exchange, all as more fully
provided in said Indenture].

      [If the Security is not to bear interest prior to Maturity, insert -- The
principal of this Security shall not bear interest except in the case of a
default in payment of principal upon acceleration, upon redemption or at Stated
Maturity and in such case the overdue principal and any overdue premium shall
bear interest at the rate of _______ % per annum (to the extent that the payment
of such interest shall be legally enforceable), from the dates such amounts are
due until they are paid or made available for payment. Interest on any overdue
principal or premium shall be payable on demand.]

      Payment of the principal of (and premium, if any) and [if applicable,
insert -- any such) interest on this Security will be made at the office or
agency of the Company maintained for that purpose in New York, New York, in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts, against surrender of this
Security in the case of any payment due at the Maturity of the principal thereof
(other than any payment of interest that first becomes payable on a day other
than an Interest Payment Date); provided, however, that at the option of the
Company, payment of interest may be made by check mailed to the address of the
Person entitled thereto as such address shall appear in the Security Register;
and provided, further, that if this Security is a Global Security, payment may
be made pursuant to the Applicable Procedures of the Depositary as permitted in
said Indenture.

      Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.

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

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

                                                THE HOUSTON EXPLORATION COMPANY

                                                By: ___________________________
                                                    Name:
                                                    Title:

Attest:

      SECTION 203. FORM OF REVERSE OF SECURITY.

                                       16
<PAGE>

      This Security is one of a duly authorized issue of securities of the
Company (herein called the "SECURITIES"), issued and to be issued in one or more
series under a Subordinated Debt Indenture, dated as of _____________ (herein
called the "INDENTURE", which term shall have the meaning assigned to it in such
instrument), between the Company and [Trustee], as Trustee (herein called the
"TRUSTEE", which term includes any successor trustee under the Indenture), and
reference is hereby made to the Indenture for a statement of the respective
rights, limitations of rights, duties and immunities thereunder of the Company,
the Trustee, the holders of Senior Debt and the Holders of the Securities and of
the terms upon which the Securities are, and are to be, authenticated and
delivered. This Security is one of the series designated on the face hereof [if
applicable, insert --, limited in aggregate principal amount to $__________

      [If applicable, insert -- The Securities of this series are subject to
redemption upon not less than 30 days' nor more than 60 days' notice, at any
time [if applicable, insert -- on or after ____________, 20. .], as a whole or
in part, at the election of the Company, at the following Redemption Prices
(expressed as percentages of the principal amount): If redeemed [if applicable,
insert -- on or before ____________ %, and if redeemed] during the 12-month
period beginning _________ of the years indicated,

<TABLE>
<CAPTION>
       Redemption          Redemption
Year     Price      Year     Price
----   ----------   ----   ----------
<S>    <C>          <C>    <C>
</TABLE>

and thereafter at a Redemption Price equal to   % of the principal amount,
together in the case of any such redemption with accrued interest to the
Redemption Date, but interest installments whose Stated Maturity is on or prior
to such Redemption Date will be payable to the Holders of such Securities, or
one or more Predecessor Securities, of record at the close of business on the
relevant Record Dates referred to on the face hereof, all as provided in the
Indenture.]

      [If the Security is subject to redemption of any kind, insert -- In the
event of redemption of this Security in part only, a new Security or Securities
of this series and of like tenor for the unredeemed portion hereof will be
issued in the name of the Holder hereof upon the cancellation hereof.]

      The indebtedness evidenced by this Security is, to the extent provided in
the Indenture, subordinate and subject in right of payment to the prior payment
in full of all Senior Debt, and this Security is issued subject to the
provisions of the Indenture with respect thereto. Each Holder of this Security,
by accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Trustee on his or her behalf to take such actions as
may be necessary or appropriate to effectuate the subordination so provided and
(c) appoints the Trustee his or her attorney-in-fact for any and all such
purposes. Each Holder hereof, by his or her acceptance hereof, waives all notice
of the acceptance of the subordination provisions contained herein and in the
Indenture by each holder of Senior Debt, whether now outstanding or hereafter
created, incurred, assumed or guaranteed, and waives reliance by each such
holder upon said provisions.

      [If applicable, insert -- The Indenture contains provisions for defeasance
at any time of the entire indebtedness of this Security or certain restrictive
covenants and Events of Default

                                       17
<PAGE>

with respect to this Security, in each case upon compliance with certain
conditions set forth in the Indenture.]

      [If the Security is not an Original Issue Discount Security, insert -- If
an Event of Default with respect to Securities of this series shall occur and be
continuing, the principal of the Securities of this series may be declared due
and payable in the manner and with the effect provided in the Indenture.]

      [If the Security is an Original Issue Discount Security, insert -- If an
Event of Default with respect to Securities of this series shall occur and be
continuing, an amount of principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture. Such amount shall be equal to -- insert formula for determining the
amount. Upon payment (i) of the amount of principal so declared due and payable
and (ii) of interest on any overdue principal, premium and interest (in each
case to the extent that the payment of such interest shall be legally
enforceable), all of the Company's obligations in respect of the payment of the
principal of and premium and interest, if any, on the Securities of this series
shall terminate.]

      The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of a majority in principal amount of the Securities at
the time Outstanding of all series to be affected (considered together as one
class for this purpose). The Indenture also contains provisions (i) permitting
the Holders of a majority in principal amount of the Securities at the time
Outstanding of all series to be affected under the Indenture (considered
together as one class for this purpose), on behalf of the Holders of all
Securities of such series, to waive compliance by the Company with certain
provisions of the Indenture and (ii) permitting the Holders of a majority in
principal amount of the Securities at the time Outstanding of any series to be
affected under the Indenture (with each such series considered separately for
this purpose), on behalf of the Holders of all Securities of such series, to
waive certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder of this Security shall be conclusive and binding
upon such Holder and upon all future Holders of this Security and of any
Security issued upon the registration of transfer hereof or in exchange herefor
or in lieu hereof, whether or not notation of such consent or waiver is made
upon this Security.

      As provided in and subject to the provisions of the Indenture, the Holder
of this Security shall not have the right to institute any proceeding with
respect to the Indenture, or for the appointment of a receiver or trustee, or
for any other remedy thereunder, unless such Holder shall have previously given
the Trustee written notice of a continuing Event of Default with respect to the
Securities of this series, the Holders of not less than 25% in principal amount
of the Securities of this series at the time Outstanding shall have made written
request to the Trustee to institute proceedings in respect of such Event of
Default as Trustee and offered the Trustee indemnity reasonably satisfactory to
it, and the Trustee shall not have received from the Holders of a majority in
principal amount of Securities of this series at the time Outstanding a
direction inconsistent with such request, and shall have failed to institute any
such proceeding, for 60 days after receipt of such notice, request and offer of
indemnity. The foregoing shall not apply to any

                                       18
<PAGE>

suit instituted by the Holder of this Security for the enforcement of any
payment of principal hereof or any premium or interest hereon on or after the
respective due dates expressed herein.

      No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and any premium and interest
on this Security at the times, place and rate, and in the coin or currency,
herein prescribed.

      As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in any place where the principal of and any
premium and interest on this Security are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Securities of
this series and of like tenor, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.

      The Securities of this series are issuable only in registered form without
coupons in denominations of $1,000 and any multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, Securities of
this series are exchangeable for a like aggregate principal amount of Securities
of this series and of like tenor of a different authorized denomination, as
requested by the Holder surrendering the same.

      No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

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

      This Security is a Global Security and is subject to the provisions of the
Indenture relating to Global Securities, including the limitations in Section
305 thereof on transfers and exchanges of Global Securities.

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

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

      SECTION 204. FORM OF LEGEND FOR GLOBAL SECURITIES.

      Unless otherwise specified as contemplated by Section 301 for the
Securities evidenced thereby, every Global Security authenticated and delivered
hereunder shall bear a legend in substantially the following form:

                                       19
<PAGE>

      THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A
SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE
REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE
THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.

      SECTION 205. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.

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

      This is one of the Securities of the series designated herein and referred
to in the within-mentioned Indenture.

Dated:                                               [TRUSTEE], AS TRUSTEE

                                                      By: ______________________
                                                          Authorized Signatory

                                  ARTICLE III
                                 THE SECURITIES

      SECTION 301. AMOUNT UNLIMITED; ISSUABLE IN SERIES.

      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 and, subject to Section 303,
set forth, or determined in the manner provided, in an Officers' Certificate, or
established in one or more indentures supplemental hereto, prior to the issuance
of Securities of any series,

            (1) the title of the Securities of the series (which shall
      distinguish the Securities of the series from Securities of any other
      series);

            (2) any limit upon the aggregate principal amount of the Securities
      of the series which may be authenticated and delivered under this
      Indenture (except for Securities authenticated and delivered upon
      registration of transfer of, or in exchange for, or in lieu of, other
      Securities of the series pursuant to Section 304, 305, 306, 906 or 1107
      and except for any Securities which, pursuant to Section 303, are deemed
      never to have been authenticated and delivered hereunder);

            (3) the Person to whom any interest on a Security of the series
      shall be payable, if other than the Person in whose name that Security (or
      one or more

                                       20
<PAGE>

      Predecessor Securities) is registered at the close of business on the
      Regular Record Date for such interest;

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

            (5) the rate or rates at which any Securities of the series shall
      bear interest, if any, the date or dates from which any such interest
      shall accrue, the Interest Payment Dates on which any such interest shall
      be payable and the Regular Record Date for any such interest payable on
      any Interest Payment Date;

            (6) the place or places where the principal of and any premium and
      interest on any Securities of the series shall be payable and the manner
      in which any payment may be made;

            (7) the period or periods within which, the price or prices at which
      and the terms and conditions upon which any Securities of the series may
      be redeemed, in whole or in part, at the option of the Company and, if
      other than by a Board Resolution, the manner in which any election by the
      Company to redeem the Securities shall be evidenced;

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

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

            (10) if the amount of principal of or any premium or interest on any
      Securities of the series may be determined with reference to an index or
      pursuant to a formula, the manner in which such amounts shall be
      determined;

            (11) if other than the currency of the United States of America, the
      currency, currencies, composite currency, composite currencies or currency
      units in which the principal of or any premium or interest on any
      Securities of the series shall be payable and the manner of determining
      the equivalent thereof in the currency of the United States of America for
      any purpose, including for the purposes of making payment in the currency
      of the United States of America and applying the definition of
      "Outstanding" in Section 101;

            (12) if the principal of or any premium or interest on any
      Securities of the series is to be payable, at the election of the Company
      or the Holder thereof, in one or more currencies, composite currencies or
      currency units other than that or those in which such Securities are
      stated to be payable, the currency, currencies, composite currency,
      composite currencies or currency units in which the principal of or any
      premium or interest on such Securities as to which such election is made
      shall be payable, the periods

                                       21
<PAGE>

      within which and the terms and conditions upon which such election is to
      be made and the amount so payable (or the manner in which such amount
      shall be determined);

            (13) if other than the entire principal amount thereof, the portion
      of the principal amount of any Securities of the series which shall be
      payable upon declaration of acceleration of the Maturity thereof pursuant
      to Section 502;

            (14) if the principal amount payable at the Stated Maturity of any
      Securities of the series will not be determinable as of any one or more
      dates prior to the Stated Maturity, the amount which shall be deemed to be
      the principal amount of such Securities as of any such date for any
      purpose thereunder or hereunder, including the principal amount thereof
      which shall be due and payable upon any Maturity other than the Stated
      Maturity or which shall be deemed to be Outstanding as of any date prior
      to the Stated Maturity (or, in any such case, the manner in which such
      amount deemed to be the principal amount shall be determined);

            (15) if applicable, that the Securities of the series, in whole or
      any specified part, shall be defeasible pursuant to Section 1302 or
      Section 1303 or both such Sections, any provisions to permit a pledge of
      obligations other than U.S. Government Obligations (or the establishment
      of other arrangements) to satisfy the requirements of Section 1304(1) for
      defeasance of such Securities and, if other than by a Board Resolution,
      the manner in which any election by the Company to defease such Securities
      shall be evidenced;

            (16) if applicable, that any Securities of the series shall be
      issuable in whole or in part in the form of one or more Global Securities
      and, in such case, the respective Depositaries for such Global Securities,
      the form of any legend or legends which shall be borne by any such Global
      Security in addition to or in lieu of that set forth in Section 204, any
      addition to, elimination of or other change in the circumstances set forth
      in Clause (2) of the last paragraph of Section 305 in which any such
      Global Security may be exchanged in whole or in part for Securities
      registered, and any transfer of such Global Security in whole or in part
      may be registered, in the name or names of Persons other than the
      Depositary for such Global Security or a nominee thereof and any other
      provisions governing exchanges or transfers of any such Global Security;

            (17) any addition to, elimination of or other change in the Events
      of Default which applies to any Securities of the series and any change in
      the right of the Trustee or the requisite Holders of such Securities to
      declare the principal amount thereof due and payable pursuant to Section
      502;

            (18) any addition to, elimination of or other change in the
      covenants set forth in Article X which applies to Securities of the
      series;

            (19) any provisions necessary to permit or facilitate the issuance,
      payment or conversion of any Securities of the series that may be
      converted into securities or other property other than Securities of the
      same series and of like tenor, whether in addition to,

                                       22
<PAGE>

      or in lieu of, any payment of principal or other amount and whether at the
      option of the Company or otherwise;

            (20) if applicable, that Persons other than those specified in
      Section 111 shall have such benefits, rights, remedies and claims with
      respect to any Securities of the series or under this Indenture with
      respect to such Securities, as and to the extent provided for such
      Securities; and

            (21) any other terms of the series (which terms shall not be
      inconsistent with the provisions of this Indenture, except as permitted by
      Section 901(5)).

      All Securities of any one series shall be substantially identical except
as to denomination and except as may otherwise be provided in or pursuant to the
Board Resolution referred to above and (subject to Section 303) set forth, or
determined in the manner provided, in the Officers' Certificate referred to
above or in any such indenture supplemental hereto.

      If any of the terms of the series are established by action taken pursuant
to a Board Resolution, a copy of an appropriate record of such action shall be
certified by the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of the Officers'
Certificate setting forth the terms of the series.

      The Securities shall be subordinated in right of payment to Senior Debt as
provided in Article XIV.

      SECTION 302. DENOMINATIONS.

      The Securities of each series shall be issuable only in registered form
without coupons and only in such denominations as shall be specified as
contemplated by Section 301. In the absence of any such specified denomination
with respect to the Securities of any series, the Securities of such series
shall be issuable in denominations of $1,000 and any multiple thereof.

      SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.

      The Securities shall be executed on behalf of the Company by a Chairman of
the Board, a Vice Chairman of the Board, a President or a Vice President of the
Company (or any other officer of the Company designated in writing by or
pursuant to authority of the Board of Directors and delivered to the Trustee
from time to time), under its corporate seal reproduced thereon attested by a
Secretary or Assistant Secretary of the Company. The signature of any of these
officers on the Securities may be manual or facsimile.

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

      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, together with a Company Order for the
authentication and delivery of such

                                       23
<PAGE>

Securities, and the Trustee in accordance with the Company Order shall
authenticate and deliver such Securities. If the form or terms of the Securities
of the series have been established by or pursuant to one or more Board
Resolutions as permitted by Sections 201 and 301, 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 601) shall be fully protected in relying upon, an Opinion of
Counsel stating,

            (1) if the form of such Securities has been established by or
      pursuant to Board Resolution as permitted by Section 201, that such form
      has been established in conformity with the provisions of this Indenture;

            (2) if the terms of such Securities have been established by or
      pursuant to Board Resolution as permitted by Section 301, that such terms
      have been established in conformity with the provisions of this Indenture;
      and

            (3) that such Securities, when authenticated and delivered by the
      Trustee and issued by the Company in the manner and subject to any
      conditions specified in such Opinion of Counsel, will constitute valid and
      legally binding obligations of the Company enforceable in accordance with
      their terms, subject to bankruptcy, insolvency, fraudulent transfer,
      reorganization, moratorium and similar laws of general applicability
      relating to or affecting creditors' rights and to general equity
      principles.

      If such form or terms have been so established, the Trustee shall not be
required to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will affect the Trustee's own rights, duties or
immunities under the Securities and this Indenture or otherwise in a manner
which is not reasonably acceptable to the Trustee.

      Notwithstanding the provisions of Section 301 and of the preceding
paragraph, if all Securities of a series are not to be originally issued at one
time, it shall not be necessary to deliver the Officers' Certificate otherwise
required pursuant to Section 301 or the Company Order and Opinion of Counsel
otherwise required pursuant to such preceding paragraph at or prior to the
authentication of each Security of such series if such documents are delivered
at or prior to the authentication upon original issuance of the first Security
of such series to be issued.

      Each Security shall be dated the date of its authentication.

      No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any
Security shall be conclusive evidence, and the only evidence, that such Security
has been duly authenticated and delivered hereunder. Notwithstanding the
foregoing, if any Security shall have been authenticated and delivered hereunder
but never issued and sold by the Company, and the Company shall deliver such
Security to the Trustee for cancellation as provided in Section 309, for all
purposes of this Indenture such Security shall be deemed never to have been
authenticated and delivered hereunder and shall never be entitled to the
benefits of this Indenture.

                                       24
<PAGE>

      SECTION 304. TEMPORARY SECURITIES.

      Pending the preparation of definitive Securities of any series, the
Company may execute, and upon Company Order the Trustee shall authenticate and
deliver, temporary Securities which are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities in lieu of which they
are issued and with such appropriate insertions, omissions, substitutions and
other variations as the officers executing such Securities may determine, as
evidenced by their execution of such Securities.

      If temporary Securities of any series are issued, the Company will cause
definitive Securities of that series to be prepared without unreasonable delay.
After the preparation of definitive Securities of such series, the temporary
Securities of such series shall be exchangeable for definitive Securities of
such series upon surrender of the temporary Securities of such series at the
office or agency of the Company in a Place of Payment for that series, without
charge to the Holder. Upon surrender for cancellation of any one or more
temporary Securities of any series, the Company shall execute and the Trustee
shall authenticate and deliver in exchange therefor one or more definitive
Securities of the same series, of any authorized denominations and of like tenor
and aggregate principal amount. Until so exchanged, the temporary Securities of
any series shall in all respects be entitled to the same benefits under this
Indenture as definitive Securities of such series and tenor.

      SECTION 305. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.

      The Company shall cause to be kept at the Corporate Trust Office of the
Trustee a register (the register maintained in such office and in any other
office or agency of the Company in a Place of Payment being herein sometimes
collectively referred to as the "SECURITY REGISTER") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Securities and of transfers of Securities. The Trustee is hereby
appointed "Security Registrar" for the purpose of registering Securities and
transfers of Securities as herein provided.

      Upon surrender for registration of transfer of any Security of a series at
the office or agency of the Company in a Place of Payment for that series, the
Company shall execute, and the Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Securities of
the same series, of any authorized denominations and of like tenor and aggregate
principal amount.

      At the option of the Holder, Securities of any series may be exchanged for
other Securities of the same series, of any authorized denominations and of like
tenor and aggregate principal amount, upon surrender of the Securities to be
exchanged at such office or agency. Whenever any Securities are so surrendered
for exchange, the Company shall execute, and the Trustee shall authenticate and
deliver, the Securities which the Holder making the exchange is entitled to
receive.

                                       25
<PAGE>

      All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.

      Every Security presented or surrendered for registration of transfer or
for exchange shall (if so required by the Company or the Trustee) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed, by the
Holder therefor or his attorney duly authorized in writing.

      No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 304, 906 or 1107 not involving any transfer.

      If the Securities of any series (or of any series and specified tenor) are
to be redeemed in part, the Company shall not be required (A) to issue, register
the transfer of or exchange any Securities of that series (or of that series and
specified tenor, as the case may be) during a period beginning at the opening of
business 15 days before the day of the mailing of a notice of redemption of any
such Securities selected for redemption under Section 1103 and ending at the
close of business on the day of such mailing, or (B) to register the transfer of
or exchange any Security so selected for redemption in whole or in part, except
the unredeemed portion of any Security being redeemed in part.

      The provisions of Clauses (1), (2), (3) and (4) below shall apply only to
Global Securities:

            (1) Each Global Security authenticated under this Indenture shall be
      registered in the name of the Depositary designated for such Global
      Security or a nominee thereof and delivered to such Depositary or a
      nominee thereof custodian therefor, and each such Global Security shall
      constitute a single Security for all purposes of this Indenture.

            (2) Notwithstanding any other provision in this Indenture, and
      subject to such applicable provisions, if any, as may be specified as
      contemplated by Section 301, no Global Security may be exchanged in whole
      or in part for Securities registered, and no transfer of a Global Security
      in whole or in part may be registered, in the name of any Person other
      than the Depositary for such Global Security or a nominee thereof unless
      (A) such Depositary has notified the Company that it (i) is unwilling or
      unable to continue as Depositary for such Global Security or (ii) has
      ceased to be a clearing agency registered under the Exchange Act, (B)
      there shall have occurred and be continuing an Event of Default with
      respect to such Global Security or (C) the Company has executed and
      delivered to the Trustee a Company Order stating that such Global Security
      shall be exchanged in whole for Securities that are not Global Securities
      (in which case such exchange shall promptly be effected by the Trustee).
      If the Company receives a notice of the kind specified in Clause (A) above
      or has delivered a Company Order of the kind specified in Clause (C)
      above, it may, in its sole discretion, designate a successor Depositary
      for such Global Security within 60 days after receiving such notice or

                                       26
<PAGE>

      delivery of such order, as the case may be. If the Company designates a
      successor Depositary as aforesaid, such Global Security shall promptly be
      exchanged in whole for one or more other Global Securities registered in
      the name of the successor Depositary, whereupon such designated successor
      shall be the Depositary for such successor Global Security or Global
      Securities and the provisions of Clauses (1), (2), (3) and (4) of this
      Section shall continue to apply thereto.

            (3) Subject to Clause (2) above and to such applicable provisions,
      if any, as may be specified as contemplated by Section 301, any exchange
      of a Global Security for other Securities may be made in whole or in part,
      and all Securities issued in exchange for a Global Security or any portion
      thereof shall be registered in such names as the Depositary for such
      Global Security shall direct.

            (4) Every Security authenticated and delivered upon registration of
      transfer of, or in exchange for or in lieu of, a Global Security or any
      portion thereof, whether pursuant to this Section, Section 304, 306, 906
      or 1107 or otherwise, shall be authenticated and delivered in the form of,
      and shall be, a Global Security, unless such Security is registered in the
      name of a Person other than the Depositary for such Global Security or a
      nominee thereof.

      SECTION 306. MUTILATED, DESTROYED, LOST AND WRONGFULLY TAKEN SECURITIES.

      If (a) any mutilated Security is surrendered to the Trustee or (b) both
(i) there shall be delivered to the Company and the Trustee (A) a claim by a
Holder as to the destruction, loss or wrongful taking of any Security of such
Holder and a request thereby for a new replacement Security of the same series,
and (B) such indemnity bond as may be required by them to save each of them and
any agent of either of them harmless and (ii) such other reasonable requirements
as may be imposed by the Company as permitted by Section 8-405 of the Uniform
Commercial Code have been satisfied, then, in the absence of notice to the
Company or the Trustee that such Security has been acquired by a "protected
purchaser" within the meaning of Section 8-405 of the Uniform Commercial Code,
the Company shall execute and upon its request the Trustee shall authenticate
and deliver, in lieu of any such mutilated, destroyed, lost or wrongfully taken
Security, a new Security of the same series and of like tenor and principal
amount and bearing a number not contemporaneously Outstanding.

      In case any such mutilated, destroyed, lost or wrongfully taken Security
has become or is about to become due and payable, the Company in its discretion
may, instead of issuing a new Security, pay such Security.

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

      Every new Security of any series issued pursuant to this Section in lieu
of any destroyed, lost or wrongfully taken Security shall constitute an original
additional contractual obligation of the Company, whether or not the destroyed,
lost or wrongfully taken Security shall be at any

                                       27
<PAGE>

time enforceable by anyone, and shall be entitled to all the benefits of this
Indenture equally and proportionately with any and all other Securities of that
series duly issued hereunder.

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

      SECTION 307. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.

      Except as otherwise provided as contemplated by Section 301 with respect
to any Securities of a series, interest on any Security which is payable, and is
punctually paid or duly provided for, on any Interest Payment Date shall be paid
to the Person in whose name that Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest (or, if no business is conducted by the Trustee at its
Corporate Trust Office on such date, at 5:00 P.M. New York City time on such
date).

      Any interest on any Security of any series which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called "DEFAULTED INTEREST") shall forthwith cease to be payable to the Holder
on the relevant Regular

      Record Date by virtue of having been such Holder, and such Defaulted
Interest may be paid by the Company, at its election in each case, as provided
in Clause (1) or (2) below:

            (1) The Company may elect to make payment of any Defaulted Interest
      payable on any Securities of a series to the Persons in whose names such
      Securities (or their respective Predecessor Securities) are registered at
      the close of business on a Special Record Date for the payment of such
      Defaulted Interest, which shall be fixed in the following manner. The
      Company shall notify the Trustee in writing of the amount of Defaulted
      Interest proposed to be paid on each of such Securities and the date of
      the proposed payment, and at the same time the Company shall deposit with
      the Trustee an amount of money equal to the aggregate amount proposed to
      be paid in respect of such Defaulted Interest or shall make arrangements
      satisfactory to the Trustee for such deposit prior to the date of the
      proposed payment, such money when deposited to be held in trust for the
      benefit of the Persons entitled to such Defaulted Interest as in this
      Clause provided. Thereupon the Trustee shall fix a Special Record Date for
      the payment of such Defaulted Interest which shall be not more than 15
      days and not less than 10 days prior to the date of the proposed payment
      and not less than 10 days after the receipt by the Trustee of the notice
      of the proposed payment. The Trustee shall promptly notify the Company of
      such Special Record Date and, in the name and at the expense of the
      Company, shall cause notice of the proposed payment of such Defaulted
      Interest and the Special Record Date therefor to be given to each Holder
      of such Securities in the manner set forth in Section 106, not less than
      10 days prior to such Special Record Date. Notice of the proposed payment
      of such Defaulted Interest and the Special Record Date therefor having
      been so mailed, such Defaulted Interest shall be paid to the Persons in
      whose names such Securities (or their respective Predecessor Securities)
      are registered at the close of business on such Special Record Date and
      shall no longer be payable pursuant to the following Clause (2).

                                       28
<PAGE>

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

      Except as may otherwise be provided in this Section 307 or as contemplated
in Section 301 with respect to any Securities of a series, the Person to whom
interest shall be payable on any Security that first becomes payable on a day
that is not an Interest Payment Date shall be the Holder of such Security on the
day such interest is paid.

      Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other

      Security shall carry the rights to interest accrued and unpaid, and to
accrue, which were carried by such other Security.

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

      SECTION 308. PERSONS DEEMED OWNERS.

      Prior to due presentment of a Security for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name such Security is registered as the owner of such Security
for the purpose of receiving payment of principal of and any premium and
(subject to Section 307) any interest on such Security and for all other
purposes whatsoever, whether or not such Security be overdue, and neither the
Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.

      SECTION 309. CANCELLATION.

      All Securities surrendered for payment, redemption, registration of
transfer or exchange or conversion or for credit against any sinking fund
payment shall, if surrendered to any Person other than the Trustee, be delivered
to the Trustee and shall be promptly canceled by it. The Company may at any time
deliver to the Trustee for cancellation any Securities previously authenticated
and delivered hereunder which the Company may have acquired in any manner

                                       29
<PAGE>

whatsoever, and may deliver to the Trustee (or to any other Person for delivery
to the Trustee) for cancellation any Securities previously authenticated
hereunder which the Company has not issued and sold, and all Securities so
delivered shall be promptly canceled by the Trustee. No Securities shall be
authenticated in lieu of or in exchange for any Securities canceled as provided
in this Section, except as expressly permitted by this Indenture. All canceled
Securities held by the Trustee shall be disposed of as directed by a Company
Order; provided, however, that the Trustee shall not be required to destroy such
canceled Securities.

      SECTION 310. COMPUTATION OF INTEREST.

      Except as otherwise specified as contemplated by Section 301 for
Securities of any series, interest on the Securities of each series shall be
computed on the basis of a 360-day year of twelve 30-day months.

      SECTION 311. 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 redemption and that
reliance may be placed only on the other identification numbers printed on the
Securities. Any such redemption shall not be affected by any defect in or
omission of such numbers.

                                   ARTICLE IV
                           SATISFACTION AND DISCHARGE

      SECTION 401. SATISFACTION AND DISCHARGE OF INDENTURE.

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

            (1) either

                  (A) all Securities theretofore authenticated and delivered
            (other than (i) Securities which have been destroyed, lost or
            wrongfully taken and which have been replaced or paid as provided in
            Section 306 and (ii) Securities for whose payment money has
            theretofore been deposited in trust or segregated and held in trust
            by the Company and thereafter repaid to the Company or discharged
            from such trust, as provided in Section 1003) have been delivered to
            the Trustee for cancellation; or

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

                                       30
<PAGE>

                        (i) have become due and payable, or

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

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

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

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

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

      Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 607 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of Clause (1) of
this Section, the obligations of the Trustee under Section 402 and the last
paragraph of Section 1003 shall survive.

      SECTION 402. APPLICATION OF TRUST MONEY.

      Subject to the provisions of the last paragraph of Section 1003, all money
deposited with the Trustee pursuant to Section 401 shall be held in trust and
applied by it, in accordance with the provisions of the Securities 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 any premium and
interest for whose payment such money has been deposited with the Trustee. All
moneys deposited with the Trustee pursuant to Section 401 (and held by it or any
Paying Agent) for the payment of Securities subsequently converted shall be
returned to the Company upon Company Request.

                                   ARTICLE V
                                    REMEDIES

      SECTION 501. EVENTS OF DEFAULT.

      "EVENT OF DEFAULT", wherever used herein with respect to Securities of any
series, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be occasioned by the provisions of Article
XIV or be voluntary or involuntary or be

                                       31
<PAGE>

effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body):

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

            (2) default in the payment of the principal of or any premium on any
      Security of that series at its Maturity; or

            (3) default in the deposit of any sinking fund payment, when and as
      due by the terms of a Security of that series; or

            (4) default in the performance, or breach, of any covenant or
      warranty of the Company in this Indenture (other than a covenant or
      warranty a default in whose performance or whose breach is elsewhere in
      this Section specifically dealt with or which has expressly been included
      in this Indenture solely for the benefit of series of Securities other
      than that series), and continuance of such default or breach for a period
      of 60 days after there has been given, by registered or certified mail, to
      the Company by the Trustee or to the Company and the Trustee by the
      Holders of at least 10% in principal amount of the Outstanding Securities
      of that series a written notice specifying such default or breach and
      requiring it to be remedied and stating that such notice is a "Notice of
      Default" hereunder; or

            (5) the entry by a court having jurisdiction in the premises of (A)
      a decree or order for relief in respect of the Company in an involuntary
      case or proceeding under any applicable Federal or State bankruptcy,
      insolvency, reorganization or other similar law or (B) a decree or order
      adjudging the Company a bankrupt or insolvent, or approving as properly
      filed a petition seeking reorganization, arrangement, adjustment or
      composition of or in respect of the Company under any applicable Federal
      or State law, or appointing a custodian, receiver, liquidator, assignee,
      trustee, sequestrator or other similar official of the Company or of any
      substantial part of its property, or ordering the winding up or
      liquidation of its affairs, and the continuance of any such decree or
      order for relief or any such other decree or order unstayed and in effect
      for a period of 60 consecutive days (provided that, if any Person becomes
      the successor to the Company pursuant to Article VIII and such Person is a
      corporation, partnership or trust organized and validly existing under the
      law of a jurisdiction outside the United States, each reference in this
      Clause (5) to an applicable Federal or State law of a particular kind
      shall be deemed to refer to such law or any applicable comparable law of
      such non-U.S. jurisdiction, for as long as such Person is the successor to
      the Company hereunder and is so organized and existing); or

            (6) the commencement by the Company of a voluntary case or
      proceeding under any applicable Federal or State bankruptcy, insolvency,
      reorganization or other similar law or of any other case or proceeding to
      be adjudicated a bankrupt or insolvent, or the consent by it to the entry
      of a decree or order for relief in respect of the Company in an
      involuntary case or proceeding under any applicable Federal or State
      bankruptcy, insolvency, reorganization or other similar law or to the
      commencement of any

                                       32
<PAGE>

      bankruptcy or insolvency case or proceeding against it, or the filing by
      it of a petition or answer or consent seeking reorganization or relief
      under any applicable Federal or State law, or the consent by it to the
      filing of such petition or to the appointment of or taking possession by a
      custodian, receiver, liquidator, assignee, trustee, sequestrator or other
      similar official of the Company or of any substantial part of its
      property, or the making by it of an assignment for the benefit of
      creditors, or the admission by it in writing of its inability to pay its
      debts generally as they become due, or the taking of corporate action by
      the Company in furtherance of any such action (provided that, if any
      Person becomes the successor to the Company pursuant to Article VIII and
      such Person is a corporation, partnership or trust organized and validly
      existing under the law of a jurisdiction outside the United States, each
      reference in this Clause (6) to an applicable Federal or State law of a
      particular kind shall be deemed to refer to such law or any applicable
      comparable law of such non-U.S. jurisdiction, for as long as such Person
      is the successor to the Company hereunder and is so organized and
      existing); or

            (7) any other Event of Default provided with respect to Securities
      of that series.

      SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.

      If an Event of Default (other than an Event of Default specified in
Section 501(5) or 501(6)) with respect to Securities of any series at the time
Outstanding occurs and is continuing, then in every such case the Trustee or the
Holders of not less than 25% in principal amount of the Outstanding Securities
of that series may declare the principal amount of all the Securities of that
series (or, in the case of any Security of that series which specifies an amount
to be due and payable thereon upon acceleration of the Maturity thereof, such
amount as may be specified by the terms thereof) to be due and payable
immediately, by a notice in writing to the Company (and to the Trustee if given
by Holders), and upon any such declaration such principal amount (or specified
amount) shall become immediately due and payable. If an Event of Default
specified in Section 501(5) or 501(6) with respect to Securities of any series
at the time Outstanding occurs, the principal amount of all the Securities of
that series (or, in the case of any Security of that series which specifies an
amount to be due and payable thereon upon acceleration of the Maturity thereof,
such amount as may be specified by the terms thereof) shall automatically, and
without any declaration or other action on the part of the Trustee or any
Holder, become immediately due and payable.

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

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

                  (A) all overdue interest on all Securities of that series,

                                       33
<PAGE>

                  (B) the principal of (and premium, if any, on) any Securities
            of that series which have become due otherwise than by such
            declaration of acceleration and any interest thereon at the rate or
            rates prescribed therefor in such Securities,

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

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

            (2) all Events of Default with respect to Securities of that series,
      other than the non-payment of the principal of Securities of that series
      which have become due solely by such declaration of acceleration, have
      been cured or waived as provided in Section 513.

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

      SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
                   TRUSTEE.

      The Company covenants that if

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

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

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

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

      SECTION 504. TRUSTEE MAY FILE PROOFS OF CLAIM.

                                       34
<PAGE>

      In case of any judicial proceeding relative to the Company (or any other
obligor upon the Securities), its property or its creditors, the Trustee shall
be entitled and empowered, by intervention in such proceeding or otherwise, to
take any and all actions authorized under the Trust Indenture Act in order to
have claims of the Holders and the Trustee allowed in any such proceeding. In
particular, the Trustee shall be authorized to collect and receive any moneys or
other property payable or deliverable on any such claims and to distribute the
same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator
or other similar official in any such judicial proceeding is hereby authorized
by each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to
pay to the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 607.

      No provision of this Indenture shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding; provided, however,
that the Trustee may, on behalf of the Holders, vote for the election of a
trustee in bankruptcy or similar official and be a member of a creditors' or
other similar committee.

      SECTION 505. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF SECURITIES.

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

      SECTION 506. APPLICATION OF MONEY COLLECTED.

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

      FIRST: To the payment of all amounts due the Trustee under Section 607;
      and

      SECOND: Subject to Article XIV, to the payment of the amounts then due and
unpaid for principal of and any premium and interest on the Securities in
respect of which or for the benefit of which such money has been collected,
ratably, without preference or priority of any kind, according to the amounts
due and payable on such Securities for principal and any premium and interest,
respectively.

      SECTION 507. LIMITATION ON SUITS.

                                       35
<PAGE>

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

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

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

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

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

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

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

      SECTION 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE
                   PRINCIPAL, PREMIUM AND INTEREST AND TO CONVERT.

      Notwithstanding any other provision in this Indenture, the Holder of any
Security shall have the right, which is absolute and unconditional, to receive
payment of the principal of and any premium and (subject to Section 307)
interest on such Security on the respective Stated Maturities expressed in such
Security (or, in the case of redemption, on the Redemption Date), and, if the
terms of such Security so provide, to convert such Security in accordance with
its terms, and to institute suit for the enforcement of any such payment and, if
applicable, any such right to convert, and such rights shall not be impaired
without the consent of such Holder.

      SECTION 509. RESTORATION OF RIGHTS AND REMEDIES.

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

                                       36
<PAGE>

      SECTION 510. RIGHTS AND REMEDIES CUMULATIVE.

      Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or wrongfully taken Securities in the last paragraph
of Section 306, no right or remedy herein conferred upon or reserved to the
Trustee or to the Holders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.

      SECTION 511. DELAY OR OMISSION NOT WAIVER.

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

      SECTION 512. CONTROL BY HOLDERS.

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

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

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

      SECTION 513. WAIVER OF PAST DEFAULTS.

      The Holders of not less than a majority in principal amount of the
Outstanding Securities of any series may on behalf of the Holders of all the
Securities of such series waive any past default hereunder with respect to such
series and its consequences, except a default

            (1) in the payment of the principal of or any premium or interest on
      any Security of such series, or

            (2) in respect of a covenant or provision hereof which under Article
      IX cannot be modified or amended without the consent of the Holder of each
      Outstanding Security of such series affected.

      Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture; but no such

                                       37
<PAGE>

waiver shall extend to any subsequent or other default or impair any right
consequent thereon. A waiver of any past default and its consequences given by
or on behalf of any Holder of the Securities in connection with a purchase of,
or tender or exchange offer for, such Holder's Securities will not be rendered
invalid by such purchase, tender or exchange.

      SECTION 514. 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, suffered or
omitted by it as Trustee, a court may require any party litigant in such suit to
file an undertaking to pay the costs of such suit, and may assess costs,
including reasonable attorneys' fees and expenses, against any such party
litigant, in the manner and to the extent provided in the Trust Indenture Act;
provided that neither this Section nor the Trust Indenture Act shall be deemed
to authorize any court to require such an undertaking or to make such an
assessment in any suit instituted by the Company or the Trustee or, if
applicable, in any suit for the enforcement of the right to convert any Security
in accordance with its terms.

      SECTION 515. WAIVER OF USURY, STAY OR EXTENSION LAWS.

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

                                   ARTICLE VI
                                   THE TRUSTEE

      SECTION 601. CERTAIN DUTIES AND RESPONSIBILITIES.

      The duties and responsibilities of the Trustee shall be as provided by the
Trust Indenture Act. Notwithstanding the foregoing, no provision of this
Indenture shall require the Trustee to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of its duties hereunder,
or in the exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it. Whether or not therein
expressly so provided, every provision of this Indenture relating to the conduct
or affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section.

                                       38
<PAGE>

      SECTION 602. NOTICE OF DEFAULTS.

      If a default occurs hereunder with respect to Securities of any series,
the Trustee shall give the Holders of Securities of such series notice of such
default as and to the extent provided by the Trust Indenture Act; provided,
however, that in the case of any default of the character specified in Section
501(4) with respect to Securities of such series, no such notice to Holders
shall be given until at least 30 days after the occurrence thereof. For the
purpose of this Section, the term "default" means any event which is, or after
notice or lapse of time or both would become, an Event of Default with respect
to Securities of such series.

      SECTION 603. CERTAIN RIGHTS OF TRUSTEE.

      Subject to the provisions of Section 601:

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

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

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

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

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

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

                                       39
<PAGE>

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

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

            (9) the Trustee shall not be deemed to have notice of any default or
      Event of Default unless a Responsible Officer of the Trustee has actual
      knowledge thereof or unless written notice of any event which is in fact
      such a default is received by the Trustee at the Corporate Trust Office of
      the Trustee, and such notice references the Securities and this Indenture;
      and

            (10) the rights, privileges, protections, immunities and benefits
      given to the Trustee, including its rights to be indemnified, are extended
      to, and shall be enforceable by, the Trustee in each of its capacities
      hereunder.

      SECTION 604. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.

      The recitals contained herein and in the Securities, except the Trustee's
certificates of authentication, shall be taken as the statements of the Company,
and the Trustee does not assume any responsibility for their correctness. The
Trustee makes no representations as to the validity or sufficiency of this
Indenture or of the Securities. The Trustee shall not be accountable for the use
or application by the Company of Securities or the proceeds thereof.

      SECTION 605. MAY HOLD SECURITIES.

      The Trustee, any Paying Agent, any Security Registrar or any other agent
of the Company, in its individual or any other capacity, may become the owner or
pledgee of Securities and, subject to Sections 608 and 613, may otherwise deal
with the Company with the same rights it would have if it were not Trustee,
Paying Agent, Security Registrar or such other agent.

      SECTION 606. MONEY HELD IN TRUST.

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

      SECTION 607. COMPENSATION AND REIMBURSEMENT.

      The Company agrees

                                       40
<PAGE>

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

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

            (3) to indemnify each of the Trustee or any predecessor Trustee for,
      and to hold it harmless against, any and all losses, liabilities, damages,
      claims or expenses including taxes (other than taxes imposed on the income
      of the Trustee) incurred without negligence or bad faith on its part,
      arising out of or in connection with the acceptance or administration of
      the trust or trusts hereunder, including the costs and expenses of
      defending itself against any claim (whether asserted by the Company, a
      Holder or any other Person) or liability in connection with the exercise
      or performance of any of its powers or duties hereunder.

      When the Trustee incurs expenses or renders services in connection with an
Event of Default specified in Section 501(5) or Section 501(6), the expenses
(including the reasonable charges and expenses of its counsel) and the
compensation for the services are intended to constitute expenses of
administration under any applicable Federal or State bankruptcy, insolvency or
other similar law.

      The provisions of this Section shall survive the termination of this
Indenture.

      SECTION 608. CONFLICTING INTERESTS.

      If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture. To the extent
permitted by the Trust Indenture Act, the Trustee shall not be deemed to have a
conflicting interest by virtue of being a trustee under this Indenture with
respect to Securities of more than one series.

      SECTION 609. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.

      There shall at all times be one (and only one) Trustee hereunder with
respect to the Securities of each series, which may be Trustee hereunder for
Securities of one or more other series. Each Trustee shall be a Person that is
eligible pursuant to the Trust Indenture Act to act as such, has a combined
capital and surplus of at least $50,000,000 and has its Corporate Trust Office
in the Borough of Manhattan, The City of New York. If any such Person publishes
reports of condition at least annually, pursuant to law or to the requirements
of its supervising or examining authority, then for the purposes of this Section
and to the extent permitted by the Trust Indenture Act, the combined capital and
surplus of such Person shall be deemed to be its

                                       41
<PAGE>

combined capital and surplus as set forth in its most recent report of condition
so published. If at any time the Trustee with respect to the Securities of any
series shall cease to be eligible in accordance with the provisions of this
Section, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article.

      SECTION 610. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.

      No resignation or removal of the Trustee and no appointment of a successor
Trustee pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee in accordance with the applicable
requirements of Section 611.

      The Trustee may resign at any time with respect to the Securities of one
or more series by giving written notice thereof to the Company. If the
instrument of acceptance by a successor Trustee required by Section 611 shall
not have been delivered to the Trustee within 60 days after the giving of such
notice of resignation, the resigning Trustee may petition, at the expense of the
Company, any court of competent jurisdiction for the appointment of a successor
Trustee with respect to the Securities of such series.

      The Trustee may be removed at any time with respect to the Securities of
any series by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series, delivered to the Trustee and to the
Company. If the instrument of acceptance by a successor Trustee required by
Section 611 shall not have been delivered to the Trustee within 30 days after
the giving of a notice of removal pursuant to this paragraph, the Trustee being
removed may petition, at the expense of the Company, any court of competent
jurisdiction for the appointment of a successor Trustee with respect to the
Securities of such series.

      If at any time:

            (1) the Trustee shall fail to comply with Section 608 after written
      request therefor by the Company or by any Holder who has been a bona fide
      Holder of a Security for at least six months, or

            (2) the Trustee shall cease to be eligible under Section 609 and
      shall fail to resign after written request therefor by the Company or by
      any such Holder, or

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

then, in any such case, (A) the Company by a Board Resolution may remove the
Trustee with respect to all Securities, or (B) subject to Section 514, any
Holder who has been a bona fide Holder of a Security for at least six months
may, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the removal of the Trustee with respect to all
Securities and the appointment of a successor Trustee or Trustees.

      If the Trustee shall resign, be removed or become incapable of acting, or
if a vacancy shall occur in the office of Trustee for any cause, with respect to
the Securities of one or more

                                       42
<PAGE>

series, the Company, by a Board Resolution, shall promptly appoint a successor
Trustee or Trustees with respect to the Securities of that or those series (it
being understood that any such successor Trustee may be appointed with respect
to the Securities of one or more or all of such series and that at any time
there shall be only one Trustee with respect to the Securities of any particular
series) and shall comply with the applicable requirements of Section 611. If,
within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee with respect to the Securities
of any series shall be appointed by Act of the Holders of a majority in
principal amount of the Outstanding Securities of such series delivered to the
Company and the retiring Trustee, the successor Trustee so appointed shall,
forthwith upon its acceptance of such appointment in accordance with the
applicable requirements of Section 611, become the successor Trustee with
respect to the Securities of such series and to that extent supersede the
successor Trustee appointed by the Company. If no successor Trustee with respect
to the Securities of any series shall have been so appointed by the Company or
the Holders and accepted appointment in the manner required by Section 611, any
Holder who has been a bona fide Holder of a Security of such series for at least
six months may, on behalf of himself and all others similarly situated, petition
any court of competent jurisdiction for the appointment of a successor Trustee
with respect to the Securities of such series.

      The Company shall give notice of each resignation and each removal of the
Trustee with respect to the Securities of any series and each appointment of a
successor Trustee with respect to the Securities of any series to all Holders of
Securities of such series in the manner provided in Section 106. Each notice
shall include the name of the successor Trustee with respect to the Securities
of such series and the address of its Corporate Trust Office.

      SECTION 611. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.

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

      In case of the appointment hereunder of a successor Trustee with respect
to the Securities of one or more (but not all) series, the Company, the retiring
Trustee and each successor Trustee with respect to the Securities of one or more
series shall execute and deliver an indenture supplemental hereto wherein each
successor Trustee shall accept such appointment and which (1) shall contain such
provisions as shall be necessary or desirable to transfer and confirm to, and to
vest in, each successor Trustee all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Securities of that or those series to which
the appointment of such successor Trustee relates, (2) if the retiring Trustee
is not retiring with respect to all Securities, shall contain such provisions as
shall be deemed necessary or desirable to confirm that all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities of that
or those

                                       43
<PAGE>

series as to which the retiring Trustee is not retiring shall continue to be
vested in the retiring Trustee, and (3) shall add to or change any of the
provisions of this Indenture as shall be necessary to provide for or facilitate
the administration of the trusts hereunder by more than one Trustee, it being
understood that nothing herein or in such supplemental indenture shall
constitute such Trustees co-trustees of the same trust and that each such
Trustee shall be trustee of a trust or trusts hereunder separate and apart from
any trust or trusts hereunder administered by any other such Trustee; and upon
the execution and delivery of such supplemental indenture 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; but, on request of
the Company or any successor Trustee, such retiring Trustee shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder with respect to the Securities of that or those
series to which the appointment of such successor Trustee relates.

      Upon request of any such successor Trustee, the Company shall execute any
and all instruments for more fully and certainly vesting in and confirming to
such successor Trustee all such rights, powers and trusts referred to in the
first or second preceding paragraph, as the case may be.

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

      SECTION 612. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.

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

      SECTION 613. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.

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

                                  ARTICLE VII
                HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY

      SECTION 701. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS.

                                       44
<PAGE>

      The Company will furnish or cause to be furnished to the Trustee

            (1) semi-annually, not later than May 15 and November 15 in each
      year, a list, in such form as the Trustee may reasonably require, of the
      names and addresses of the Holders of Securities of each series as of the
      immediately preceding May 1 or November 1, as the case may be, and

            (2) at such other times as the Trustee may request in writing,
      within 30 days after the receipt by the Company of any such request, a
      list of similar form and content as of a date not more than 15 days prior
      to the time such list is furnished;

excluding from any such list names and addresses received by the Trustee in its
capacity as Security Registrar.

      SECTION 702. PRESERVATION OF INFORMATION; COMMUNICATIONS TO HOLDERS.

      The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 701 and the names and
addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 701 upon receipt of a new list so furnished.

      The rights of Holders to communicate with other Holders with respect to
their rights under this Indenture or under the Securities, and the corresponding
rights and privileges of the Trustee, shall be as provided by the Trust
Indenture Act.

      Every Holder of Securities, by receiving and holding the same, agrees with
the Company and the Trustee that neither the Company nor the Trustee nor any
agent of either of them shall be held accountable by reason of any disclosure of
information as to names and addresses of Holders made pursuant to the Trust
Indenture Act.

      SECTION 703. REPORTS BY TRUSTEE.

      The Trustee shall transmit to Holders such reports concerning the Trustee
and its actions under this Indenture as may be required pursuant to the Trust
Indenture Act at the times and in the manner provided pursuant thereto.

      Reports so required to be transmitted at stated intervals of not more than
12 months shall be transmitted no later than July 1 and shall be dated as of May
1 in each calendar year, commencing in [_______].

      A copy of each such report shall, at the time of such transmission to
Holders, be filed by the Trustee with each stock exchange upon which any
Securities are listed, with the Commission and with the Company. The Company
will notify the Trustee when any Securities are listed on any stock exchange and
of any delisting thereof.

      SECTION 704. REPORTS BY COMPANY.

                                       45
<PAGE>

      The Company shall file with the Trustee and the Commission, and transmit
to Holders, such information, documents and other reports, and such summaries
thereof, as may be required pursuant to the Trust Indenture Act at the times and
in the manner provided pursuant to such Act; provided that any such information,
documents or reports required to be filed with the Commission pursuant to
Section 13 or 15(d) of the Exchange Act shall be filed with the Trustee within
15 days after the same is so required to be filed with the Commission.

                                  ARTICLE VIII
              CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE

      SECTION 801. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.

      The Company shall not consolidate with or merge into any other Person or
convey, transfer or lease all or substantially all its properties and assets to
any Person, and the Company shall not permit any Person to consolidate with or
merge into the Company, unless:

            (1) in case the Company shall consolidate with or merge into another
      Person or convey, transfer or lease all or substantially all its
      properties and assets to any Person, the Person formed by such
      consolidation or into which the Company is merged or the Person which
      acquires by conveyance or transfer, or which leases, all or substantially
      all the properties and assets of the Company shall be a corporation,
      partnership or trust, shall be organized and validly existing under the
      laws of any domestic or foreign jurisdiction and shall expressly assume,
      by an indenture supplemental hereto, executed and delivered to the
      Trustee, in form satisfactory to the Trustee, the due and punctual payment
      of the principal of and any premium and interest on all the Securities and
      the performance or observance of every covenant of this Indenture on the
      part of the Company to be performed or observed and, for each Security
      that by its terms provides for conversion, shall have provided for the
      right to convert such Security in accordance with its terms;

            (2) immediately after giving effect to such transaction and treating
      any indebtedness which becomes an obligation of the Company or any
      Subsidiary as a result of such transaction as having been incurred by the
      Company or such Subsidiary at the time of such transaction, no Event of
      Default, and no event which, after notice or lapse of time or both, would
      become an Event of Default, shall have happened and be continuing;

            (3) if, as a result of any such consolidation or merger or such
      conveyance, transfer or lease, properties or assets of the Company would
      become subject to a pledge, lien or other similar encumbrance which would
      not be permitted by this Indenture, the Company or such successor Person,
      as the case may be, shall take such steps as shall be necessary
      effectively to secure the Securities equally and ratably with (or prior
      to) all indebtedness secured thereby; and

            (4) the Company has delivered to the Trustee an Officers'
      Certificate and an Opinion of Counsel, each stating that such
      consolidation, merger, conveyance, transfer or lease and, if a
      supplemental indenture is required in connection with such transaction,
      such supplemental indenture comply with this Article and that all
      conditions precedent herein provided for relating to such transaction have
      been complied with.

                                       46
<PAGE>

      SECTION 802. SUCCESSOR SUBSTITUTED.

      Upon any consolidation of the Company with, or merger of the Company into,
any other Person or any conveyance, transfer or lease of all or substantially
all the properties and assets of the Company in accordance with Section 801, the
successor Person formed by such consolidation or into which the Company is
merged or to which such conveyance, transfer or lease is made shall succeed to,
and be substituted for, and may exercise every right and power of, the Company
under this Indenture with the same effect as if such successor Person had been
named as the Company herein, and thereafter, except in the case of a lease, the
predecessor Person shall be relieved of all obligations and covenants under this
Indenture and the Securities.

                                   ARTICLE IX
                             SUPPLEMENTAL INDENTURES

      SECTION 901. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.

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

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

            (2) to add to the covenants of the Company for the benefit of the
      Holders of all or any series of Securities (and if such covenants are to
      be for the benefit of less than all series of Securities, stating that
      such covenants are expressly being included solely for the benefit of such
      series) or to surrender any right or power herein conferred upon the
      Company; or

            (3) to add any additional Events of Default for the benefit of the
      Holders of all or any series of Securities (and if such additional Events
      of Default are to be for the benefit of less than all series of
      Securities, stating that such additional Events of Default are expressly
      being included solely for the benefit of such series); or

            (4) to add to or change any of the provisions of this Indenture to
      such extent as shall be necessary to permit or facilitate the issuance of
      Securities in bearer form, registrable or not registrable as to principal,
      and with or without interest coupons, or to permit or facilitate the
      issuance of Securities in uncertificated form; or

            (5) to add to, change or eliminate any of the provisions of this
      Indenture in respect of one or more series of Securities, provided 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 such
      Security Outstanding; or

                                       47
<PAGE>

            (6) to secure the Securities pursuant to the requirements of Section
      801(3) or Section 1005 or otherwise; or

            (7) to establish the form or terms of Securities of any series as
      permitted by Sections 201 and 301; or

            (8) to evidence and provide for the acceptance of appointment
      hereunder by a successor Trustee with respect to the Securities of one or
      more series and to add to or change any of the provisions of this
      Indenture as shall be necessary to provide for or facilitate the
      administration of the trusts hereunder by more than one Trustee, pursuant
      to the requirements of Section 611; or

            (9) to add to or change any of the provisions of this Indenture with
      respect to any Securities that by their terms may be converted into
      securities or other property other than Securities of the same series and
      of like tenor, in order to permit or facilitate the issuance, payment or
      conversion of such Securities; or

            (10) to cure any ambiguity, to correct or supplement any provision
      herein which may be defective or inconsistent with any other provision
      herein, or to make any other provisions with respect to matters or
      questions arising under this Indenture, provided that such action pursuant
      to this Clause (10) shall not adversely affect the interests of the
      Holders of Securities of any series in any material respect.

      SECTION 902. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.

      With the consent of the Holders of a majority in principal amount of the
Outstanding Securities of all series affected by such supplemental indenture,
considered together as one class for this purpose (plus, if and as the terms
applicable to any such affected series pursuant to Section 301 so provide, the
consent of the Holders of a majority in principal amount of the Outstanding
Securities of such affected series or of any other Persons acting on behalf of
such Holders), by Act of said Holders delivered to the Company and the Trustee,
the Company, when authorized by a Board Resolution, and the Trustee may enter
into an indenture or indentures supplemental hereto for the purpose of adding
any provisions to or changing in any manner or eliminating any of the provisions
of this Indenture or of modifying in any manner the rights of the Holders of
Securities of such series under this Indenture; provided, however, that no such
supplemental indenture shall, without the consent of the Holder of each
Outstanding Security affected thereby,

            (1) change the Stated Maturity of the principal of, or any
      installment of principal of or interest on, any Security, or reduce the
      principal amount thereof or the rate of interest thereon or any premium
      payable upon the redemption thereof, or reduce the amount of the principal
      of an Original Issue Discount Security or any other Security which would
      be due and payable upon a declaration of acceleration of the Maturity
      thereof pursuant to Section 502, or permit the Company to redeem any
      Security if, absent such supplemental indenture, the Company would not be
      permitted to do so, or change any Place of Payment where, or the coin or
      currency in which, any Security or any premium or interest thereon is
      payable, or impair the right to institute suit for the

                                       48
<PAGE>

      enforcement of any such payment on or after the Stated Maturity thereof
      (or, in the case of redemption, on or after the Redemption Date), or

            (2) if any Security provides that the Holder may require the Company
      to repurchase or convert such Security, impair such Holder's right to
      require repurchase or conversion of such Security on the terms provided
      therein, or

            (3) reduce the percentage in principal amount of the Outstanding
      Securities of any one or more series (considered separately or together as
      one class, as applicable), the consent of whose Holders is required for
      any such supplemental indenture, or the consent of whose Holders is
      required for any waiver (of compliance with certain provisions of this
      Indenture or certain defaults hereunder and their consequences) provided
      for in this Indenture, or

            (4) modify any of the provisions of this Section, Section 513 or
      Section 1005, except to increase any such percentage or to provide that
      certain other provisions of this Indenture cannot be modified or waived
      without the consent of the Holder of each Outstanding Security affected
      thereby; provided, however, that this clause shall not be deemed to
      require the consent of any Holder with respect to changes in the
      references to "the Trustee" and concomitant changes in this Section and
      Section 1006, or the deletion of this proviso, in accordance with the
      requirements of Sections 611 and 901(8).

      A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Securities, or which modifies the
rights of the Holders of Securities of such series with respect to such covenant
or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series.

      It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof. A consent to any
indenture supplemental hereto by or on behalf of any Holder of the Securities
given in connection with a purchase of, or tender or exchange offer for, such
Holder's Securities will not be rendered invalid by such purchase, tender or
exchange.

      SECTION 903. EXECUTION OF SUPPLEMENTAL INDENTURES.

      In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 601) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.

      SECTION 904. EFFECT OF SUPPLEMENTAL INDENTURES.

                                       49
<PAGE>

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

      SECTION 905. CONFORMITY WITH TRUST INDENTURE ACT.

      Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act.

      SECTION 906. REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES.

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

      SECTION 907. SUBORDINATION UNIMPAIRED.

      No supplemental indenture shall adversely affect the interests of any
holder of Senior Debt then outstanding under Article XIV in any material respect
unless each holder of Senior Debt so affected (or the group or representative
thereof authorized or required to consent thereto pursuant to the instrument
creating or evidencing, or pursuant to which there is outstanding, such Senior
Debt) consents to such supplemental indenture in writing.

                                   ARTICLE X
                                   COVENANTS

      SECTION 1001. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST.

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

      SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY.

      The Company will maintain in each Place of Payment for any series of
Securities an office or agency where Securities of that series may be presented
or surrendered for payment, where Securities of that series may be surrendered
for registration of transfer or exchange, where Securities may be surrendered
for conversion and where notices and demands to or upon the Company in respect
of the Securities of that series and this Indenture may be served. The Company
will give prompt written notice to the Trustee of the location, and any change
in the location, of such office or agency. If at any time the Company shall fail
to maintain any such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the Corporate Trust

                                       50
<PAGE>

Office of the Trustee, and the Company hereby appoints the Trustee as its agent
to receive all such presentations, surrenders, notices and demands.

      The Company may also from time to time designate one or more other offices
or agencies where the Securities of one or more series may be presented or
surrendered for any or all such purposes and may from time to time rescind 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 each Place of Payment for Securities of any series for such purposes. The
Company will give prompt written notice to the Trustee of any such designation
or rescission and of any change in the location of any such other office or
agency.

      With respect to any Global Security, and except as otherwise may be
specified for such Global Security as contemplated by Section 301, the Corporate
Trust Office of the Trustee shall be the Place of Payment where such Global
Security may be presented or surrendered for payment or for registration of
transfer or exchange, or where successor Securities may be delivered in exchange
therefor, provided, however, that any such payment, presentation, surrender or
delivery effected pursuant to the Applicable Procedures of the Depositary for
such Global Security shall be deemed to have been effected at the Place of
Payment for such Global Security in accordance with the provisions of this
Indenture.

      SECTION 1003. MONEY FOR SECURITIES PAYMENTS TO BE HELD IN TRUST.

      If the Company shall at any time act as its own Paying Agent with respect
to any series of Securities, it will, on or before each due date of the
principal of or any premium or interest on any of the Securities of that series,
segregate and hold in trust for the benefit of the Persons entitled thereto a
sum sufficient to pay the principal and any premium and interest so becoming due
until such sums shall be paid to such Persons or otherwise disposed of as herein
provided and will promptly notify the Trustee of its action or failure so to
act.

      Whenever the Company shall have one or more Paying Agents for any series
of Securities, it will, prior to each due date of the principal of or any
premium or interest on any Securities of that series, deposit (or, if the
Company has deposited any trust funds with a trustee pursuant to Section
1304(1), cause such trustee to deposit) with a Paying Agent a sum sufficient to
pay such amount, such sum to be held as provided by the Trust Indenture Act, and
(unless such Paying Agent is the Trustee) the Company will promptly notify the
Trustee of its action or failure so to act.

      The Company will cause each Paying Agent for any series of Securities
other than the Trustee to execute and deliver to the Trustee an instrument in
which such Paying Agent shall agree with the Trustee, subject to the provisions
of this Section, that such Paying Agent will (1) comply with the provisions of
the Trust Indenture Act applicable to it as a Paying Agent and (2) during the
continuance of any default by the Company (or any other obligor upon the
Securities of that series) in the making of any payment in respect of the
Securities of that series, upon the written request of the Trustee, forthwith
pay to the Trustee all sums held in trust by such Paying Agent for payment in
respect of the Securities of that series.

                                       51
<PAGE>

      The Company may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by
the Company or such Paying Agent, such sums to be held by the Trustee upon the
same trusts as those upon which such sums were held by the Company or such
Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.

      Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of or any premium or
interest on any Security of any series and remaining unclaimed for two years
after such principal, premium or interest has become due and payable shall be
paid to the Company on Company Request, or (if then held by the Company) shall
be discharged from such trust; and the Holder of such Security shall thereafter,
as an unsecured general creditor, look only to the Company for payment thereof,
and all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall thereupon
cease; provided, however, that the Trustee or such Paying Agent, before being
required to make any such repayment, may, at the expense of the Company, cause
to be published once, in a newspaper published in the English language,
customarily published on each Business Day and of general circulation in The
City of New York, notice that such money remains unclaimed and that, after a
date specified therein, which shall not be less than 30 days from the date of
such publication, any unclaimed balance of such money then remaining will be
repaid to the Company.

      SECTION 1004. STATEMENT BY OFFICERS AS TO DEFAULT.

      The Company will deliver to the Trustee, within 120 days after the end of
each fiscal year of the Company ending after the date hereof, an Officers'
Certificate, stating whether or not to the best knowledge of the signers thereof
the Company is in default in the performance and observance of any of the terms,
provisions and conditions of this Indenture (without regard to any period of
grace or requirement of notice provided hereunder) and, if the Company shall be
in default, specifying all such defaults and the nature and status thereof of
which they may have knowledge.

      SECTION 1005. WAIVER OF CERTAIN COVENANTS.

      Except as otherwise specified as contemplated by Section 301 for
Securities of a specific series, the Company may, with respect to the Securities
of any one or more series, omit in any particular instance to comply with any
term, provision or condition set forth in any covenant provided pursuant to
Section 301(18), 901(2) or 901(6) for the benefit of the Holders of such series
or in Article VIII if, before the time for such compliance, the Holders of a
majority in principal amount of the Outstanding Securities of all series
affected by such waiver, considered together as one class for this purpose
(plus, if and as the terms applicable to any such affected series pursuant to
Section 301 so provide, the consent of the Holders of a majority in principal
amount of the Outstanding Securities of such affected series or of any other
Persons acting on behalf of such Holders) shall, by Act of such Holders, either
waive such compliance in such instance or generally waive compliance with such
term, provision or condition, but no such waiver shall extend to or affect such
term, provision or condition except to the extent so

                                       52
<PAGE>

expressly waived, and, until such waiver shall become effective, the obligations
of the Company and the duties of the Trustee in respect of any such term,
provision or condition shall remain in full force and effect. A waiver of
compliance given by or on behalf of any Holder of the Securities in connection
with a purchase of, or tender or exchange offer for, such Holder's Securities
will not be rendered invalid by such purchase, tender or exchange.

                                   ARTICLE XI
                            REDEMPTION OF SECURITIES

      SECTION 1101. APPLICABILITY OF ARTICLE.

      Securities of any series which are redeemable before their Stated Maturity
shall be redeemable in accordance with their terms and (except as otherwise
specified as contemplated by Section 301 for such Securities) in accordance with
this Article.

      SECTION 1102. ELECTION TO REDEEM; NOTICE TO TRUSTEE.

      The election of the Company to redeem any Securities shall be established
in or pursuant to a Board Resolution or in another manner specified as
contemplated by Section 301 for such Securities. In case of any redemption at
the election of the Company of less than all the Securities of any series
(including any such redemption affecting only a single Security), the Company
shall, at least 60 days prior to the Redemption Date fixed by the Company
(unless a shorter notice shall be satisfactory to the Trustee), notify the
Trustee of such Redemption Date, of the principal amount of Securities of such
series to be redeemed and, if applicable, of the tenor of the Securities to be
redeemed. In the case of any redemption of Securities prior to the expiration of
any restriction on such redemption provided in the terms of such Securities or
elsewhere in this Indenture, the Company shall furnish the Trustee with an
Officers' Certificate evidencing compliance with such restriction.

      SECTION 1103. SELECTION BY TRUSTEE OF SECURITIES TO BE REDEEMED.

      If less than all the Securities of any series are to be redeemed (unless
all the Securities of such series and of a specified tenor are to be redeemed or
unless such redemption affects only a single Security), the particular
Securities to be redeemed shall be selected not more than 60 days prior to the
Redemption Date by the Trustee, from the Outstanding Securities of such series
not previously called for redemption, by such method as the Trustee shall deem
fair and appropriate and which may provide for the selection for redemption of a
portion of the principal amount of any Security of such series, provided that
the unredeemed portion of the principal amount of any Security shall be in an
authorized denomination (which shall not be less than the minimum authorized
denomination) for such Security. If less than all the Securities of such series
and of a specified tenor are to be redeemed (unless such redemption affects only
a single Security), the particular Securities to be redeemed shall be selected
not more than 60 days prior to the Redemption Date by the Trustee, from the
Outstanding Securities of such series and specified tenor not previously called
for redemption in accordance with the preceding sentence.

      If any Security selected for partial redemption is converted in part
before termination of the conversion right with respect to the portion of the
Security so selected, the converted portion of such Security shall be deemed (so
far as may be) to be the portion selected for redemption.

                                       53
<PAGE>

Securities which have been converted during a selection of Securities to be
redeemed shall be treated by the Trustee as Outstanding for the purpose of such
selection.

      The Trustee shall promptly notify the Company and each Security Registrar
in writing of the Securities selected for redemption as aforesaid and, in case
of any Securities selected for partial redemption as aforesaid, the principal
amount thereof to be redeemed.

      The provisions of the two preceding paragraphs shall not apply with
respect to any redemption affecting only a single Security, whether such
Security is to be redeemed in whole or in part. In the case of any such
redemption in part, the unredeemed portion of the principal amount of the
Security shall be in an authorized denomination (which shall not be less than
the minimum authorized denomination) for such Security.

      For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to the redemption of Securities shall relate, in the
case of any Securities redeemed or to be redeemed only in part, to the portion
of the principal amount of such Securities which has been or is to be redeemed.

      SECTION 1104. NOTICE OF REDEMPTION.

      Notice of redemption shall be given in the manner provided in Section 106
not less than 30 days nor more than 60 days prior to the Redemption Date, to
each Holder of Securities to be redeemed, at his address appearing in the
Security Register.

      All notices of redemption shall identify the Securities to be redeemed
(including CUSIP numbers, if any) and shall state:

            (1) the Redemption Date,

            (2) the Redemption Price,

            (3) if less than all the Outstanding Securities of any series
      consisting of more than a single Security are to be redeemed, the
      identification (and, in the case of partial redemption of any such
      Securities, the principal amounts) of the particular Securities to be
      redeemed and, if less than all the Outstanding Securities of any series
      consisting of a single Security are to be redeemed, the principal amount
      of the particular Security to be redeemed,

            (4) that on the Redemption Date the Redemption Price will become due
      and payable upon each such Security to be redeemed and, if applicable,
      that interest thereon will cease to accrue on and after said date,

            (5) the place or places where each such Security is to be
      surrendered for payment of the Redemption Price,

            (6) for any Securities that by their terms may be converted, the
      terms of conversion, the date on which the right to convert the Security
      to be redeemed will

                                       54
<PAGE>

      terminate and the place or places where such Securities may be surrendered
      for conversion, and

            (7) that the redemption is for a sinking fund, if such is the case.

      Notice of redemption of Securities to be redeemed at the election of the
Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company and shall be irrevocable.

      SECTION 1105. DEPOSIT OF REDEMPTION PRICE.

      Prior to any Redemption Date, the Company shall deposit with the Trustee
or with a Paying Agent (or, if the Company is acting as its own Paying Agent,
segregate and hold in trust as provided in Section 1003) an amount of money
sufficient to pay the Redemption Price of, and (except if the Redemption Date
shall be an Interest Payment Date) accrued interest on, all the Securities which
are to be redeemed on that date, other than any Securities called for redemption
on that date which have been converted prior to the date of such deposit.

      If any Security called for redemption is converted, any money deposited
with the Trustee or with any Paying Agent or so segregated and held in trust for
the redemption of such Security shall (subject to any right of the Holder of
such Security or any Predecessor Security to receive interest as provided in the
last paragraph of Section 307 or in the terms of such Security) be paid to the
Company upon Company Request or, if then held by the Company, shall be
discharged from such trust.

      SECTION 1106. SECURITIES PAYABLE ON REDEMPTION DATE.

      Notice of redemption having been given as aforesaid, the Securities so to
be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such Security shall
be paid by the Company at the Redemption Price, together with accrued interest
to the Redemption Date; provided, however, that, unless otherwise specified as
contemplated by Section 301, installments of interest whose Stated Maturity is
on or prior to the Redemption Date will be payable to the Holders of such
Securities, or one or more Predecessor Securities, registered as such at the
close of business on the relevant Record Dates according to their terms and the
provisions of Section 307.

      If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal and any premium shall, until paid, bear
interest from the Redemption Date at the rate prescribed therefor in the
Security.

      SECTION 1107. SECURITIES REDEEMED IN PART.

      Any Security which is to be redeemed only in part shall be surrendered at
a Place of Payment therefor (with, if the Company or the Trustee so requires,
due endorsement by, or a written instrument of transfer in form satisfactory to
the Company and the Trustee duly executed

                                       55
<PAGE>

by, the Holder thereof or his attorney duly authorized in writing), and the
Company shall execute, and the Trustee shall authenticate and deliver to the
Holder of such Security without service charge, a new Security or Securities of
the same series and of like tenor, of any authorized denomination as requested
by such Holder, in aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal of the Security so surrendered.

                                  ARTICLE XII
                                 SINKING FUNDS

      SECTION 1201. APPLICABILITY OF ARTICLE.

      The provisions of this Article shall be applicable to any sinking fund for
the retirement of Securities of any series except as otherwise specified as
contemplated by Section 301 for such Securities.

      The minimum amount of any sinking fund payment provided for by the terms
of any Securities is herein referred to as a "mandatory sinking fund payment",
and any payment in excess of such minimum amount provided for by the terms of
such Securities is herein referred to as an "optional sinking fund payment". If
provided for by the terms of any Securities, the cash amount of any sinking fund
payment may be subject to reduction as provided in Section 1202. Each sinking
fund payment shall be applied to the redemption of Securities as provided for by
the terms of such Securities.

      SECTION 1202. SATISFACTION OF SINKING FUND PAYMENTS WITH SECURITIES.

      The Company (1) may deliver Outstanding Securities of a series (other than
any previously called for redemption) and (2) may apply as a credit Securities
of a series which have been converted in accordance with their terms or which
have been redeemed either at the election of the Company pursuant to the terms
of such Securities or through the application of permitted optional sinking fund
payments pursuant to the terms of such Securities, in each case in satisfaction
of all or any part of any sinking fund payment with respect to any Securities of
such series required to be made pursuant to the terms of such Securities as and
to the extent provided for by the terms of such Securities; provided that the
Securities to be so credited have not been previously so credited. The
Securities to be so credited shall be received and credited for such purpose by
the Trustee at the Redemption Price, as specified in the Securities so to be
redeemed (or at such other prices as may be specified for such Securities as
contemplated in Section 301), for redemption through operation of the sinking
fund and the amount of such sinking fund payment shall be reduced accordingly.

      SECTION 1203. REDEMPTION OF SECURITIES FOR SINKING FUND.

      Not less than 90 days (or such shorter period as shall be satisfactory to
the Trustee) prior to each sinking fund payment date for any Securities, the
Company will deliver to the Trustee an Officers' Certificate specifying the
amount of the next ensuing sinking fund payment for such Securities pursuant to
the terms of such Securities, the portion thereof, if any, which is to be
satisfied by payment of cash and the portion thereof, if any, which is to be
satisfied by delivering and crediting Securities pursuant to Section 1202 and
will also deliver to the Trustee any Securities to be so delivered. Not less
than 60 days prior to each such sinking fund payment date,

                                       56
<PAGE>

the Trustee shall select the Securities to be redeemed upon such sinking fund
payment date in the manner specified in Section 1103 and cause notice of the
redemption thereof to be given in the name of and at the expense of the Company
in the manner provided in Section 1104. Such notice having been duly given, the
redemption of such Securities shall be made upon the terms and in the manner
stated in Sections 1106 and 1107.

                                  ARTICLE XIII
                       DEFEASANCE AND COVENANT DEFEASANCE

      SECTION 1301. COMPANY'S OPTION TO EFFECT DEFEASANCE OR COVENANT
                    DEFEASANCE.

      The Company may elect, at its option at any time, to have Section 1302 or
Section 1303 applied to any Securities or any series of Securities, as the case
may be, designated pursuant to Section 301(15) as being defeasible pursuant to
such Section 1302 or 1303, in accordance with any applicable requirements
provided pursuant to Section 301 and upon compliance with the conditions set
forth below in this Article. Any such election shall be evidenced by a Board
Resolution or in another manner specified as contemplated by Section 301 for
such Securities.

      SECTION 1302. DEFEASANCE AND DISCHARGE.

      Upon the Company's exercise of its option (if any) to have this Section
applied to any Securities or any series of Securities, as the case may be, the
Company shall be deemed to have been discharged from its obligations, and the
provisions of Article XIV shall cease to be effective, with respect to such
Securities as provided in this Section on and after the date the conditions set
forth in Section 1304(1) are satisfied (hereinafter called "DEFEASANCE"). For
this purpose, such Defeasance means that the Company shall be deemed to have
paid and discharged the entire indebtedness represented by such Securities and
to have satisfied all its other obligations under such

      Securities and this Indenture insofar as such Securities are concerned
(and the Trustee, at the expense of the Company, shall execute proper
instruments acknowledging the same), subject to the following which shall
survive until otherwise terminated or discharged hereunder: (1) the rights of
Holders of such Securities to receive, solely from the trust fund described in
Section 1304 and as more fully set forth in such Section, payments in respect of
the principal of and any premium and interest on such Securities when payments
are due, (2) the Company's obligations with respect to such Securities under
Sections 304, 305, 306, 1002 and 1003, (3) the rights, powers, trusts, duties
and immunities of the Trustee hereunder and (4) this Article. Subject to
compliance with this Article, the Company may exercise its option (if any) to
have this Section applied to any Securities notwithstanding the prior exercise
of its option (if any) to have Section 1303 applied to such Securities.

      SECTION 1303. COVENANT DEFEASANCE.

      Upon the Company's exercise of its option (if any) to have this Section
applied to any Securities or any series of Securities, as the case may be, (1)
the Company shall be released from its obligations under Section 801(3) and any
covenants provided pursuant to Section 301(18), 901(2) or 901(7) for the benefit
of the Holders of such Securities, (2) the occurrence of any event

                                       57
<PAGE>

specified in Sections 501(4) (with respect to Section 801(3), and any such
covenants provided pursuant to Section 301(18), 901(2) or 901(7)) and 501(7)
shall be deemed not to be or result in an Event of Default and (3) the
provisions of Article XIV shall cease to be effective, in each case with respect
to such Securities as provided in this Section on and after the date the
conditions set forth in Section 1304 are satisfied (hereinafter called "COVENANT
DEFEASANCE"). For this purpose, such Covenant Defeasance means that, with
respect to such Securities, the Company may omit to comply with and shall have
no liability in respect of any term, condition or limitation set forth in any
such specified Section (to the extent so specified in the case of Section
501(4)) or Article XIV, whether directly or indirectly by reason of any
reference elsewhere herein to any such Section or Article or by reason of any
reference in any such Section or Article to any other provision herein or in any
other document, but the remainder of this Indenture and such Securities shall be
unaffected thereby.

      SECTION 1304. CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE.

      The following shall be the conditions to the application of Section 1302
or Section 1303 to any Securities or any series of Securities, as the case may
be:

            (1) The Company shall irrevocably have deposited or caused to be
      deposited with the Trustee (or another trustee which satisfies the
      requirements contemplated by Section 609 and agrees to comply with the
      provisions of this Article applicable to it) as trust funds in trust for
      the purpose of making the following payments, specifically pledged as
      security for, and dedicated solely to, the benefits of the Holders of such
      Securities, (A) money in an amount, or (B) U.S. Government Obligations
      which through the scheduled payment of principal and interest in respect
      thereof in accordance with their terms will provide, not later than one
      day before the due date of any payment, money in an amount, or (C) such
      other obligations or arrangements as may be specified as contemplated by
      Section 301 with respect to such Securities, or (D) a combination thereof,
      in each case sufficient, in the opinion of a nationally recognized firm of
      independent public accountants expressed in a written certification
      thereof delivered to the Trustee, to pay and discharge, and which shall be
      applied by the Trustee (or any such other qualifying trustee) to pay and
      discharge, the principal of and any premium and interest on such
      Securities on the respective Stated Maturities, in accordance with the
      terms of this Indenture and such Securities. As used herein, "U.S.
      GOVERNMENT OBLIGATION" means (x) any security which is (i) a direct
      obligation of the United States of America for the payment of which the
      full faith and credit of the United States of America is pledged or (ii)
      an obligation 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, in either case (i) or (ii), is not
      callable or redeemable at the option of the issuer thereof, and (y) any
      depositary receipt issued by a bank (as defined in Section 3(a) (2) of the
      Securities Act) as custodian with respect to any U.S. Government
      Obligation which is specified in Clause (x) above and held by such bank
      for the account of the holder of such depositary receipt, or with respect
      to any specific payment of principal of or interest on any U.S. Government
      Obligation which is so specified and held, 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 depositary receipt from any

                                       58
<PAGE>

      amount received by the custodian in respect of the U.S. Government
      Obligation or the specific payment of principal or interest evidenced by
      such depositary receipt.

            (2) In the event of an election to have Section 1302 apply to any
      Securities or any series of Securities, as the case may be, the Company
      shall have delivered to the Trustee an Opinion of Counsel stating that (A)
      the Company has received from, or there has been published by, the
      Internal Revenue Service a ruling or (B) since the date of this
      instrument, there has been a change in the applicable Federal income tax
      law, in either case (A) or (B) to the effect that, and based thereon such
      opinion shall confirm that, the Holders of such Securities will not
      recognize gain or loss for Federal income tax purposes as a result of the
      deposit, Defeasance and discharge to be effected with respect to such
      Securities and will be subject to Federal income tax on the same amount,
      in the same manner and at the same times as would be the case if such
      deposit, Defeasance and discharge were not to occur.

            (3) In the event of an election to have Section 1303 apply to any
      Securities or any series of Securities, as the case may be, the Company
      shall have delivered to the Trustee an Opinion of Counsel to the effect
      that the Holders of such Securities will not recognize gain or loss for
      Federal income tax purposes as a result of the deposit and Covenant
      Defeasance to be effected with respect to such Securities and will be
      subject to Federal income tax on the same amount, in the same manner and
      at the same times as would be the case if such deposit and Covenant
      Defeasance were not to occur.

            (4) The Company shall have delivered to the Trustee an Officers'
      Certificate to the effect that neither such Securities nor any other
      Securities of the same series, if then listed on any securities exchange,
      will be delisted as a result of such deposit.

            (5) No event which is, or after notice or lapse of time or both
      would become, an Event of Default with respect to such Securities or any
      other Securities (other than such an event or Event of Default solely with
      respect to such Securities resulting from the borrowing of funds to be
      applied to such deposit) shall have occurred and be continuing at the time
      of such deposit.

            (6) Such Defeasance or Covenant Defeasance shall not result in a
      breach or violation of, or constitute a default under, any other agreement
      or instrument to which the Company is a party or by which it is bound.

            (7) 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 such Securities over the other
      creditors of the Company or with the intent of defeating, hindering,
      delaying or defrauding creditors of the Company.

            (8) The Company shall have delivered to the Trustee an Officers'
      Certificate and an Opinion of Counsel, each stating that all conditions
      precedent with respect to such Defeasance or Covenant Defeasance have been
      complied with.

      SECTION 1305. DEPOSITED MONEY AND U.S. GOVERNMENT OBLIGATIONS TO BE HELD
IN TRUST; MISCELLANEOUS PROVISIONS.

                                       59
<PAGE>

      Subject to the provisions of the last paragraph of Section 1003, all money
and U.S. Government Obligations (including the proceeds thereof) deposited with
the Trustee or other qualifying trustee (solely for purposes of this Section and
Section 1306, the Trustee and any such other trustee are referred to
collectively as the "TRUSTEE") pursuant to Section 1304 in respect of any
Securities shall be held in trust and applied by the Trustee, in accordance with
the provisions of such Securities and this Indenture, to the payment, either
directly or through any such Paying Agent (including the Company acting as its
own Paying Agent) as the Trustee may determine, to the Holders of such
Securities, of all sums due and to become due thereon in respect of principal
and any premium and interest, but money so held in trust need not be segregated
from other funds except to the extent required by law. Money and U.S. Government
Obligations (including the proceeds thereof) so held in trust shall not be
subject to the provisions of Article XIV, provided that the applicable
conditions of the Section 1304 have been satisfied.

      The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 1304 or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is for
the account of the Holders of Outstanding Securities.

      Anything in this Article to the contrary notwithstanding, the Trustee
shall deliver or pay to the Company from time to time upon Company Request any
money or U.S. Government Obligations held by it as provided in Section 1304 with
respect to any Securities which, in the opinion of a nationally recognized firm
of independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount thereof which would then
be required to be deposited to effect the Defeasance or Covenant Defeasance, as
the case may be, with respect to such Securities.

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      SECTION 1306. REINSTATEMENT.

      If the Trustee or the Paying Agent is unable to apply any money in
accordance with this Article with respect to any Securities by reason of any
order or judgment of any court or governmental authority enjoining, restraining
or otherwise prohibiting such application, then the obligations under this
Indenture and such Securities from which the Company has been discharged or
released pursuant to Section 1302 or 1303 shall be revived and reinstated as
though no deposit had occurred pursuant to this Article with respect to such
Securities, until such time as the Trustee or Paying Agent is permitted to apply
all money held in trust pursuant to Section 1305 with respect to such Securities
in accordance with this Article; provided, however, that if the Company makes
any payment of principal of or any premium or interest on any such Security
following such reinstatement of its obligations, the Company shall be subrogated
to the rights (if any) of the Holders of such Securities to receive such payment
from the money so held in trust.

                                  ARTICLE XIV
                           SUBORDINATION OF SECURITIES

      SECTION 1401. SECURITIES SUBORDINATE TO SENIOR DEBT.

      The Company covenants and agrees, and each Holder of a Security, by his
acceptance thereof, likewise covenants and agrees, that, to the extent and in
the manner hereinafter set forth in this Article, the indebtedness represented
by the Securities and the payment of the principal of (and premium, if any) and
interest on each and all of the Securities are hereby expressly made subordinate
and subject in right of payment to the prior payment in full of all Senior Debt.

      Notwithstanding the foregoing, if a deposit referred to in Section 1304(1)
is made pursuant to Section 1302 or Section 1303 with respect to any Securities
(and provided all other conditions set out in Section 1302 or 1303, as
applicable, shall have been satisfied with respect to such Securities), then no
money or U.S. Government Obligations so deposited, and no proceeds thereon, will
be subject to any rights of holders of Senior Debt, including any such rights
arising under this Article XIV.

      SECTION 1402. PAYMENT OVER OF' PROCEEDS UPON DISSOLUTION, ETC.

      In the event of (a) any insolvency or bankruptcy case or proceeding, or
any receivership, liquidation, reorganization or other similar case or
proceeding in connection therewith, relative to the Company or to its creditors,
as such, or to its assets, or (b) any liquidation, dissolution or other winding
up of the Company, whether voluntary or involuntary and whether or not involving
insolvency or bankruptcy, or (c) any assignment for the benefit of creditors or
any other marshalling of assets and liabilities of the Company, then and in any
such event the holders of Senior Debt shall be entitled to receive payment in
full of all amounts due or to become due on or in respect of all Senior Debt
(including any interest accruing thereon after the commencement of any such case
or proceeding), or provision shall be made for such payment in cash or cash
equivalents or otherwise in a manner satisfactory to the holders of Senior Debt,
before the Holders of the Securities are entitled to receive any payment on
account of principal of (or premium, if any) or interest on the Securities, and
to that end the holders of Senior Debt

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<PAGE>

shall be entitled to receive, for application to the payment thereof, any
payment or distribution of any kind or character, whether in cash, property or
securities, including any such payment or distribution which may be payable or
deliverable by reason of the payment of any other indebtedness of the Company
being subordinated to the payment of the Securities, which may be payable or
deliverable in respect of the Securities in any such case, proceeding,
dissolution, liquidation or other winding up event.

      In the event that, notwithstanding the foregoing provisions of this
Section, the Trustee or the Holder of any Security shall have received any
payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, including any such payment or
distribution which may be payable or deliverable by reason of the payment of any
other indebtedness of the Company being subordinated to the payment of the
Securities, before all Senior Debt is paid in full or payment thereof provided
for, and if such fact shall, at or prior to the time of such payment or
distribution, have been made known to the Trustee or, as the case may be, such
Holder, then and in such event such payment or distribution shall be paid over
or delivered forthwith to the trustee in bankruptcy, receiver, liquidating
trustee, custodian, assignee, agent or other Person making payment or
distribution of assets of the Company for application to the payment of all
Senior Debt remaining unpaid, to the extent necessary to pay all Senior Debt in
full, after giving effect to any concurrent payment or distribution to or for
the holders of Senior Debt. Any taxes that have been withheld or deducted from
any payment or distribution in respect of the Securities, or any taxes that
ought to have been withheld or deducted from any such payment or distribution
that have been remitted to the relevant taxing authority, shall not be
considered to be an amount that the Trustee or the Holder of any Security
receives for purposes of this Section.

      For purposes of this Article only, the words "cash, property or
securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other corporation
or other entity, provided for by a plan of reorganization or readjustment which
are subordinated in right of payment to all Senior Debt which may at the time be
outstanding to substantially the same extent as, or to a greater extent than,
the Securities are so subordinated as provided in this Article. The
consolidation of the Company with, or the merger of the Company into, or the
conveyance, transfer or lease by the Company of all or substantially all its
properties and assets to, another Person upon the terms and conditions set forth
in Article VIII, or the liquidation or dissolution of the Company following any
such conveyance or transfer, shall not be deemed a dissolution, winding up,
liquidation, reorganization, assignment for the benefit of creditors or
marshalling of assets and liabilities of the Company for the purposes of this
Section if the Person formed by such consolidation or into which the Company is
merged or the Person which acquires by conveyance, transfer or lease all or
substantially all of such properties and assets, as the case may be, shall, as a
part of such consolidation, merger, conveyance, transfer or lease, comply with
the conditions set forth in Article VIII.

      SECTION 1403. PRIOR PAYMENT TO SENIOR DEBT UPON ACCELERATION OF
                    SECURITIES.

      In the event that any Securities are declared due and payable before their
Stated Maturity, then and in such event the holders of Senior Debt shall be
entitled to receive payment in full of

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<PAGE>

all amounts due or to become due on or in respect of all Senior Debt or
provision shall be made for such payment in cash, before the Holders of the
Securities are entitled to receive any payment (including any payment which may
be payable by reason of the payment of any other indebtedness of the Company
being subordinated to the payment of the Securities) by the Company on account
of the principal of (or premium, if any) or interest on the Securities or on
account of the purchase or other acquisition of Securities; provided, however,
that nothing in this Section shall prevent the satisfaction of any sinking fund
payment in accordance with Article XII by delivering and crediting pursuant to
Section 1202 Securities which have been acquired (upon redemption or otherwise)
prior to such declaration of acceleration.

      In the event that, notwithstanding the foregoing, the Company shall make
any payment to the Trustee or the Holder of any Security prohibited by the
foregoing provisions of this Section, and if such fact shall, at or prior to the
time of such payment, have been made known to the Trustee or, as the case may
be, such Holder, then and in such event such payment shall be paid over and
delivered forthwith to the Company.

      SECTION 1404. NO PAYMENT WHEN SENIOR DEBT IN DEFAULT.

      Subject to the last paragraph of this Section, (a) (i) in the event and
during the continuation of any default in the payment of principal of (or
premium, if any) or interest on any Senior Debt beyond any applicable grace
period with respect thereto, or (ii) in the event that any event of default with
respect to any Senior Debt shall have occurred and be continuing permitting the
holders of such Senior Debt (or a trustee on behalf of the holders thereof) to
declare such Senior Debt due and payable prior to the date on which it would
otherwise have become due and payable, whether or not such Senior Debt has been
so accelerated (provided that, in the case of Clause (i) or Clause (ii), if such
default in payment or event of default shall have been cured or waived or shall
have ceased to exist and any such declaration of acceleration shall have been
rescinded or annulled, then such default in payment or event of default, as the
case may be, shall be deemed not to have occurred for the purposes of this
Section), or (b) in the event that any judicial proceeding shall be pending with
respect to any such default in payment or event of default that shall be deemed
to have occurred for the purpose of this Section, then no payment (including any
payment which may be payable by reason of the payment of any other indebtedness
of the Company being subordinated to the payment of the Securities) shall be
made by the Company on account of principal of (or premium, if any) or interest
on the Securities or on account of the purchase or other acquisition of
Securities; provided, however, that nothing in this Section shall prevent the
satisfaction of any sinking fund payment in accordance with Article XII by
delivering and crediting pursuant to Section 1202 Securities which have been
acquired (upon redemption or otherwise) prior to such default in payment.

      In the event that, notwithstanding the foregoing, the Company shall make
any payment to the Trustee or the Holder of any Security prohibited by the
provisions of this Section, and if such fact shall, at or prior to the time of
such payment, have been made known to the Trustee or, as the case may be, such
Holder, then and in such event such payment shall be paid over and delivered
forthwith to the Company.

      No default in payment or event of default with respect to any Senior Debt
shall be deemed to be a default in payment or event of default of the kind
specified in Clause (a) (i) or (a)

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(ii) of this Section, and no judicial proceeding with respect to any such
default in payment or event of default shall be deemed to be a judicial
proceeding of the kind specified in Clause (b) of this Section, if (x) the
Company shall be disputing the occurrence or continuation of such default in
payment or event of default, or any obligation purportedly giving rise to such
default in payment or event of default, and (y) no final judgment holding that
such default in payment or event of default has occurred and is continuing shall
have been issued. For this purpose, a "final judgment" means a judgment that is
issued by a court having jurisdiction over the Company or its property, is
binding on the Company or its property, is in full force and effect and is not
subject to judicial appeal or review (including because the time within which a
party may seek appeal or review has expired), provided that, if any such
judgment has been issued but is subject to judicial appeal or review, it shall
nevertheless be deemed to be a final judgment unless the Company shall in good
faith be prosecuting such appeal or a proceeding for such review and shall have
obtained a stay of execution pending such appeal or review. Notwithstanding the
foregoing, this paragraph shall not apply to any default in payment or event of
default with respect to any Senior Debt as to which the Company has waived the
application of this paragraph in the instrument evidencing such Senior Debt or
by which such Senior Debt is created, incurred, assumed or guaranteed by the
Company.

      SECTION 1405. PAYMENT PERMITTED IN CERTAIN SITUATIONS.

      Nothing contained in this Article or elsewhere in this Indenture or in any
of the Securities shall prevent (a) the Company, at any time except during the
pendency of any case, proceeding, dissolution, liquidation or other winding up,
assignment for the benefit of creditors or other marshalling of assets and
liabilities of the Company referred to in Section 1402 or under the conditions
described in Section 1403 or 1404, from making payments at any time of or on
account of the principal of (and premium, if any) or interest on the Securities,
or on account of the purchase or other acquisition of Securities, or (b) the
application by the Trustee of any money deposited with it hereunder to the
payment of or on account of the principal of (and premium, if any) or interest
on the Securities or the retention of such payment by the Holders, if, at the
time of such application by the Trustee, it did not have knowledge that such
payment would have been prohibited by the provisions of this Article.

      SECTION 1406. SUBROGATION TO RIGHTS OF HOLDERS OF SENIOR DEBT.

      Subject to the payment in full of all Senior Debt or the provision for
such payment in cash or cash equivalents or otherwise in a manner satisfactory
to the holders of Senior Debt, the Holders of the Securities shall be subrogated
to the extent of the payments or distributions made to the holders of such
Senior Debt pursuant to the provisions of this Article (equally and ratably with
the holders of indebtedness of the Company which by its express terms is
subordinated to indebtedness of the Company to substantially the same extent as
the Securities are subordinated to the Senior Debt and is entitled to like
rights of subrogation) to the rights of the holders of such Senior Debt to
receive payments and distributions of cash, property and securities applicable
to the Senior Debt until the principal of (and premium, if any) and interest on
the Securities shall be paid in full. For purposes of such subrogation, no
payments or distributions to the holders of the Senior Debt of any cash,
property or securities to which the Holders of the Securities or the Trustee
would be entitled except for the provisions of this Article, and no payments
over pursuant to the provisions of this Article to the holders of Senior Debt by
Holders of the

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Securities or the Trustee, shall, as among the Company, its creditors other than
holders of Senior Debt and the Holders of the Securities, be deemed to be a
payment or distribution by the Company to or on account of the Senior Debt.

      SECTION 1407. PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS.

      The provisions of this Article are and are intended solely for the purpose
of defining the relative rights of the Holders of the Securities on the one hand
and the holders of Senior Debt on the other hand. Nothing contained in this
Article or elsewhere in this Indenture or in the Securities is intended to or
shall (a) impair, as among the Company, its creditors other than holders of
Senior Debt and the Holders of the Securities, the obligation of the Company,
which is absolute and unconditional (and which, subject to the rights under this
Article of the holders of Senior Debt, is intended to rank equally with all
other general obligations of the Company), to pay to the Holders of the
Securities the principal of (and premium, if any) and interest on the Securities
as and when the same shall become due and payable in accordance with their
terms; or (b) affect the relative rights against the Company of the Holders of
the Securities and creditors of the Company other than the holders of Senior
Debt; or (c) prevent the Trustee or the Holder of any Security from exercising
all remedies otherwise permitted by applicable law upon default under this
Indenture, subject to the rights, if any, under this Article of the holders of
Senior Debt to receive cash, property and securities otherwise payable or
deliverable to the Trustee or such Holder.

      SECTION 1408. TRUSTEE TO EFFECTUATE SUBORDINATION.

      Each Holder of a Security by his acceptance thereof authorizes and directs
the Trustee on his behalf to take such action as may be necessary or appropriate
to effectuate the subordination provided in this Article and appoints the
Trustee his attorney-in-fact for any and all such purposes.

      SECTION 1409. NO WAIVER OF SUBORDINATION PROVISIONS.

      No right of any present or future holder of any Senior Debt to enforce
subordination as herein provided shall at any time in any way be prejudiced or
impaired by any act or failure to act on the part of the Company or by any act
or failure to act, in good faith, by any such holder, or by any non-compliance
by the Company with the terms, provisions and covenants of this Indenture,
regardless of any knowledge thereof any such holder may have or be otherwise
charged with.

      Without in any way limiting the generality of the foregoing paragraph, the
holders of Senior Debt may, at any time and from time to time, without the
consent of or notice to the Trustee or the Holders of the Securities, without
incurring responsibility to the Holders of the Securities and without impairing
or releasing the subordination provided in this Article or the obligations
hereunder of the Holders of the Securities to the holders of Senior Debt do any
one or more of the following: (i) change the manner, place or terms of payment
or extend the time of payment of, or renew or alter, Senior Debt or otherwise
amend or supplement in any manner Senior Debt or any instrument evidencing the
same or any agreement under which Senior Debt is outstanding; (ii) sell,
exchange, release or otherwise deal with any property pledged, mortgaged

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<PAGE>

or otherwise securing Senior Debt; (iii) release any Person liable in any
manner for the collection of Senior Debt; and (iv) exercise or refrain from
exercising any rights against the Company and any other Person.

      SECTION 1410. NOTICE TO TRUSTEE.

      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 Securities. Notwithstanding the provisions of this
Article or any other provision of this Indenture, the Trustee shall not be
charged with knowledge of the existence of any facts which would prohibit the
making of any payment to or by the Trustee in respect of the Securities, unless
and until the Trustee shall have received written notice thereof from the
Company or a holder of Senior Debt or from any trustee therefor; and, prior to
the receipt of any such written notice, the Trustee, subject to the provisions
of Section 601, shall be entitled in all respects to assume that no such facts
exist.

      Subject to the provisions of Section 601, the Trustee shall be entitled to
rely on the delivery to it of a written notice by a Person representing himself
to be a holder of Senior Debt (or a trustee therefor) to establish that such
notice has been given by a holder of Senior Debt (or a trustee therefor). In the
event that the Trustee determines in good faith that further evidence is
required with respect to the right of any Person as a holder of Senior Debt to
participate in any payment or distribution pursuant to this Article, the Trustee
may request such Person to furnish evidence to the reasonable satisfaction of
the Trustee as to the amount of Senior Debt held by such Person, the extent to
which such Person is entitled to participate in such payment or distribution and
any other facts pertinent to the rights of such Person under this Article, and
if such evidence is not furnished, the Trustee may defer any payment to such
Person pending judicial determination as to the right of such Person to receive
such payment.

      SECTION 1411. RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING
AGENT.

      Upon any payment or distribution of assets of the Company referred to in
this Article, the Trustee, subject to the provisions of Section 601, and the
Holders of the Securities shall be entitled to rely upon any order or decree
entered by any court of competent jurisdiction in which such insolvency,
bankruptcy, receivership, liquidation, reorganization, dissolution, winding up
or similar case or proceeding is pending, or a certificate of the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit
of creditors, agent or other Person making such payment or distribution,
delivered to the Trustee or to the Holders of Securities, for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of Senior Debt and other indebtedness of the Company,
the amount thereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this Article.

      SECTION 1412. TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR DEBT.

      The Trustee shall not be deemed to owe any fiduciary duty to the holders
of Senior Debt and shall not be liable to any such holders or creditors if it
shall in good faith pay over or distribute to Holders of Securities or to the
Company or to any other Person cash, property or

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<PAGE>

securities to which any holders of Senior Debt shall be entitled by virtue of
this Article or otherwise. With respect to the holders of Senior Debt, the
Trustee undertakes to perform or to observe only such of its covenants or
obligations as are specifically set forth in this Article and no implied
covenants or obligations with respect to holders of Senior Debt shall be read
into this Indenture against the Trustee.

      SECTION 1413. RIGHTS OF TRUSTEE AS HOLDER OF SENIOR DEBT; PRESERVATION OF
TRUSTEES RIGHTS.

      The Trustee in its individual capacity shall be entitled to all the rights
set forth in this Article with respect to' any Senior Debt which may at any time
be held by it, to the same extent as any other holder of Senior Debt and nothing
in this Indenture shall deprive the Trustee of any of its rights as such holder.

      Nothing in this Article shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 607.

      SECTION 1414. ARTICLE APPLICABLE TO PAYING AGENTS.

      In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Company and be then acting hereunder, the term "Trustee"
as used in this Article shall in such case (unless the context otherwise
requires) be construed as extending to and including such Paying Agent within
its meaning as fully for all intents and purposes as if such Paying Agent were
named in this Article in addition to or in place of the Trustee.

      This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.

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      IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed as of the day and year first above written.

                                              THE HOUSTON EXPLORATION COMPANY

                                              By: ______________________________


                                              [TRUSTEE]

                                              By: ______________________________

                                       1