Document:

<PAGE>
                                                                     EXHIBIT 4.1

                         REVISED ANNUAL INFORMATION FORM

                      FOR THE YEAR ENDED DECEMBER 31, 2002

Dated:  March 19, 2003

<PAGE>

INCORPORATION
Paramount Resources Ltd. ("Paramount" or the "Company") was incorporated under
the laws of the Province of Alberta on February 14, 1978. The Company commenced
operations as a public company listed on the Alberta Stock Exchange on December
18, 1978, with a successful Initial Public Offering that raised $4.7 million and
a share exchange with a private company, Paramount Oil & Gas Ltd., for certain
crude oil and natural gas assets with book value of $341,000.

On November 30, 1984, Paramount was listed on The Toronto Stock Exchange (TSX)
and is part of the S&P/TSX Composite Index (Oil & Gas Producers sub index).

The head and principal office of the Company is located at Suite 4700, 888 Third
Street S.W., Calgary, Alberta T2P 5C5.

The diagram below depicts Paramount's structure. The Company's assets are held
both directly and indirectly through its principal subsidiaries and Paramount
Resources, a general partnership in which the Company has a 66.66% interest and
Summit Resources Limited has the remaining 33.34% interest.

                               [CHART OMITTED]

The above diagram does not include all of the subsidiaries and partnerships of
Paramount. The aggregate assets and aggregate revenues of the subsidiaries and
partnerships excluded did not exceed 20% of the total consolidated assets and
total consolidated revenues of Paramount as at and for the year ended December
31, 2002, respectively.

MANAGEMENT OF THE COMPANY
The management of the Company is provided by ten officers, two of whom currently
also serve as directors. There are nine non-management directors to complete the
Board of Directors. The names, position with Paramount and principal occupation
of each of the executive officers and directors of the Company can be found in
the Management Information and Proxy Circular dated March 19, 2003, which
information is incorporated by reference herein. The municipality of residence
of each of the executive officers and directors is Calgary, Alberta, with the
exception of Messrs Junge and Knott whose municipality of residence is
Jenkintown, Pennsylvania and Syosset, New York, respectively.

The term of office for each director of the Company is from the date of the
annual meeting at which the director is elected or appointed until the annual
meeting next following or until his successor is elected or appointed. The
current Board of

<PAGE>

Directors was nominated and elected at the Annual Meeting of the Shareholders
held on June 20, 2002. The Board of Directors has an Audit Committee which
consists of Messrs. Gorman, Roy and MacInnes; a Compensation Committee which
consists of Messrs. C. H. Riddell, Roy and Wylie; and an Environmental Committee
which consists of Messrs. MacInnes, Roy and Wylie.

As at December 31, 2002, the directors and officers of the Company as a group
beneficially owned 31,978,795 common shares, representing 53.78 percent of the
59,458,600 issued and outstanding common shares of Paramount Resources Ltd.

Certain directors and officers of Paramount are also directors and/or officers
and/or significant shareholders of other companies engaged in the oil and gas
business generally and which, in certain cases, own interests in oil and gas
properties in which Paramount holds, or may in the future hold, an interest. As
a result, situations may arise where such individuals have a conflict of
interest. Such conflicts of interest will be resolved in accordance with
Paramount's governing corporate statute, the BUSINESS CORPORATIONS ACT (Alberta)
(the "ABCA"), and Paramount's internal policies respecting conflicts of
interest. The ABCA requires that a director or officer of a corporation who is
party to a material contract or proposed material contract with the corporation,
or is a director or an officer of or has a material interest in any person who
is a party to a material contract or proposed material contract with the
corporation, disclose in writing to the corporation or request to have entered
into the minutes of meetings of directors the nature and extent of the
director's or officer's interest; and, if a director, that he or she not vote on
any resolution to approve the contract, except in certain circumstances. The
ABCA also requires that a corporation's directors and officers act honestly and
in good faith with a view to the best interest of the corporation. Paramount's
internal policies respecting conflicts of interest require that directors and
officers of Paramount avoid putting themselves in a conflict of interest
position and, if such a position arises, that disclosure of such position be
made so that Paramount can approve or disapprove such position, with disapproved
conflict of interest positions requiring immediate cessation by the director or
officer.

The 2003 Annual General Meeting will be held on June 26, 2003 in Calgary,
Alberta.

DESCRIPTION AND DEVELOPMENT OF BUSINESS
Paramount Resources Ltd. is a Canadian natural resource company involved in the
exploration, development and production of petroleum and natural gas, primarily
in Alberta but also in British Columbia, Saskatchewan, the Northwest
Territories, California, Montana, North Dakota and Wyoming. In 2002, sales of
natural gas accounted for approximately 81 percent of the Company's total
production.

The Company's ongoing exploration, development and production activities are
designed to establish new reserves of oil and natural gas and increase the
productive capacity of existing fields. In order to optimize its net capacity
and control costs, the Company increases ownership and throughput in existing
plants as economic opportunities arise and occasionally disposes of lower
working interest properties. Paramount strives to maintain a balanced portfolio
of opportunities, increasing its working interest in low to medium risk projects
and entering into joint venture arrangements on select high risk/high return
exploration prospects.

Paramount also participates in the petroleum and natural gas industry through
the focused acquisition of petroleum and natural gas assets within established
core areas. This acquisition strategy focuses on long-term value including
assets which will increase Paramount's current working interest. To take
advantage of opportunities as they arise, the Company maintains a strong balance
sheet which allows such acquisitions to be financed.

At December 31, 2002, approximately 85 percent of Paramount's proved and
probable natural gas reserves were located in Alberta with the balance in
Montana, North Dakota, British Columbia, the Northwest Territories and
Saskatchewan. Oil and natural gas liquids reserves are 60 percent located in
Alberta, with the remainder in Saskatchewan, the Northwest Territories, North
Dakota and Montana. In 2002, Paramount operated 75 percent of its producing
natural gas wells and approximately 60 percent of its producing crude oil wells.

Paramount has established core areas of production in Kaybob, Sturgeon
Lake/Mirage, Northwest Alberta, Liard/Northeast British Columbia and Southern
Alberta/Southeast Saskatchewan/ Montana/North Dakota. Paramount is continuing to
explore actively for petroleum and natural gas reserves in Central and Northwest
Alberta, Northeast British Columbia, Southeast Saskatchewan, the Northwest
Territories, Montana and North Dakota. The Company has also

                                     - 2 -
<PAGE>

established opportunities for heavy oil exploration and development in Northeast
Alberta. The development of new core areas ensures adequate supply for existing
gas markets and contracts, and is accelerated within the limits of the Company's
cash resources when markets are sufficient to support additional supply.

MAJOR EVENTS
a) SUBSEQUENT EVENTS
On May 12, 2002, Paramount announced its intention to create a new royalty trust
that would hold substantially all of Paramount's Northeast Alberta natural gas
assets. The following transactions were completed in the first quarter 2003:

1. On February 3, 2003, Paramount transferred to Paramount Energy Trust ("PET"
or "Trust") assets in the Legend area of Northeast Alberta for consideration
consisting of 9,907,767 units of the Trust and a $30 million note payable.
Paramount later paid $2 million to PET as a result of adjustments in respect of
the transfer.

2. On February 3, 2003, Paramount declared a dividend-in-kind of an aggregate of
9,907,767 trust units of PET. The dividend was paid to holders of Paramount
common shares of record on the close of business on February 11, 2003. The
dividend was declared after PET received all regulatory clearances with respect
to its final prospectus in Canada and its registration statement in the United
States. The final prospectus and registration statement qualified and registered

     (i)  the Dividend Trust Units,

    (ii)  Rights to purchase further Trust Units, which Rights were issued to
          unitholders after the payment of the Dividend, and

   (iii)  the Trust Units issuable upon the exercise of the Rights.

3. On March 11, 2003, in conjunction with the closing of a rights offering by
the Trust, Paramount disposed of additional assets in Northeast Alberta to
Paramount Operating Trust for net proceeds of $175 million, following
adjustments to the purchase price. The combined production of natural gas
including the assets in the Legend area averaged 97 MMcf/d during 2002.

The closing of the above transactions in the first quarter 2003 represent the
completion of the formation and structuring of Paramount Energy Trust.

b) ACQUISITIONS
In July 2002, Paramount completed the acquisition of all the issued and
outstanding shares of Summit Resources Limited for cash consideration of $251.4
million (based on estimate acquisition costs at the time) and the assumption of
net debt. The acquisition increased the Corporation's proven and probable oil
and natural gas liquids reserves at January 1, 2003, by 11.9 MMBbl and proven
and probable natural gas reserves by 91 Bcf. Production was increased by
approximately 5,000 Bbl/d of oil and natural gas liquids and 50 MMcf/d of
natural gas.

c) CAPITAL TRANSACTIONS
Since inception, the Company has raised share capital in public markets on four
occasions. In addition, the shares of Paramount have split twice on a
three-for-one basis. As at December 31, 2002, the Company had 59,458,600 shares
outstanding with an indicated market capitalization of $892 million based upon
the December 31, 2002, $15.00 per share closing price on the Toronto Stock
Exchange. Following is a summary of capital transactions the Company has
completed in the past five years.

1. On October 8, 1999, Paramount issued 2.5 million common shares at an average
price of $21.87 per share pursuant to a private placement flow-through share
offering for gross proceeds of $54.7 million. Proceeds from the issue were used
to fund the 1999-2000 capital expenditure program.

2. On November 13, 1998, Paramount issued 3.0 million common shares at a price
of $15.00 per share for gross proceeds of $45.0 million pursuant to a prospectus
dated November 4, 1998. Proceeds were initially used to reduce bank
indebtedness.

COMPETITIVE CONDITIONS
The petroleum and natural gas industry is highly competitive. Paramount competes
with numerous other participants in the search for and acquisition of crude oil
and natural gas properties and in the marketing of these commodities. Successful
reserve replacement in the future will depend not only on the further
development of present properties, but

                                     - 3 -
<PAGE>

also on the ability to select and acquire suitable prospects for exploratory
drilling and development.

Paramount has firm service for most of its natural gas production as opposed to
interruptible allocations on pipeline systems. The Company closely monitors the
daily production from all of its plants ensuring that contractual obligations
will be met. Balancing contractual commitments, natural gas sales are directed
to those markets where the Company believes prices will be best.

ENVIRONMENTAL PROTECTION
Paramount has in place an Environmental Committee of the Board of Directors
comprised of three non-management directors of the Company. The tenet of the
Company's Environmental Policy is as follows: PARAMOUNT RESOURCES LTD.
"PARAMOUNT" IS COMMITTED TO PROTECTING THE ENVIRONMENT, TO MAINTAINING PUBLIC
HEALTH AND SAFETY, AND TO COMPLIANCE WITH ALL APPLICABLE ENVIRONMENTAL LAWS,
REGULATIONS AND STANDARDS. PARAMOUNT WILL DO ALL THAT IT REASONABLY CAN TO
ENSURE THAT SOUND ENVIRONMENTAL PRACTICES ARE FOLLOWED IN ALL OF ITS OPERATIONS
AND ACTIVITIES.

The Committee is guided by a specific set of principles to ensure that this
policy is supported. These principles apply to all employees of Paramount and
are designed to make certain that all applicable environmental laws, regulations
and standards are complied with. The Company monitors all activities and makes
reasonable efforts to ensure that companies who provide services to Paramount
will operate in a manner consistent with its environmental policy.

In recognition of its Environmental and Safety Policies and to demonstrate
continual improvement in its performance, Paramount has been awarded the
Canadian Association of Petroleum Producers' ("CAPP") Gold Level Certificate for
Stewardship participation, the Silver Champion Level Reporter Recognition level
from Canada's Climate Change Voluntary Challenge and Registry Inc. and the
Alberta Human Resources and Employment Certificate of Recognition for its safety
management program. Paramount is also registered in the Workers' Compensation
Board 'Partners in Injury Reduction' ("PIR") program. Paramount has systems and
procedures in place to manage its safety and environmental affairs effectively
and to meet regulatory compliance.

HUMAN RESOURCES
At January 1, 2003 Paramount had 152 full time head office employees and 128
full time employees at field locations. The Company's compensation of full time
employees includes a combination of salary, benefits and participation in either
a stock option plan or a company-assisted share purchase savings plan. Shares
under the savings plan are purchased in the marketplace by the plan trustee.

LAND
The following table sets forth Paramount's land position at December 31, 2002.
The Company's holdings total 7,675 gross (5,077 net) acres. Approximately 72
percent of the Company's gross land holdings are considered undeveloped, and
approximately 47 percent of the undeveloped land is located in Alberta.

                                     - 4 -
<PAGE>

<TABLE>
<CAPTION>
                                  2002            2001           2000           1999            1998
                                  ----            ----           ----           -----           ----
(THOUSANDS OF ACRES)        GROSS(1)NET(2)    Gross    Net   Gross    Net    Gross   Net    Gross    Net
--------------------------------------------------------------------------------------------------------
UNDEVELOPED LAND
<S>                           <C>   <C>      <C>    <C>     <C>    <C>      <C>   <C>      <C>     <C>
   Alberta                    2,581 1,884    2,138  1,524   2,100  1,475    1,950 1,388    1,789   1,178
   British Columbia             248   164      248    163     178    101      191   105      138      73
   Saskatchewan                  21    15        6      1       7      1      199    39      238      44
   Northwest Territories        843   580      845    580     795    523      494   221      509     220
   Montana, North Dakota        149    70        -      -       -      -        -     -        -       -
   Other                      1,664   832    1,664  1,497   1,664  1,497        -     -        -       -
--------------------------------------------------------------------------------------------------------
   Subtotal                   5,506 3,545    4,901  3,765   4,744  3,597    2,834 1,753    2,674   1,515
--------------------------------------------------------------------------------------------------------
ACREAGE ASSIGNED RESERVES
   Alberta                    2,027 1,461    1,592  1,170   1,408  1,008    1,446 1,027    1,280     866
   British Columbia              32    10        8      3       3      1       17     9       16       9
   Saskatchewan                  12     6        1     0*       -      -       16     4       15      40
   Northwest Territories         74    45       74     45      61     42       60    41       45       3
   Montana, North Dakota         24    10        -      -       -      -        -     -        -       -
--------------------------------------------------------------------------------------------------------
   Subtotal                   2,169 1,532    1,675  1,218   1,472  1,051    1,539 1,081    1,356     918
--------------------------------------------------------------------------------------------------------
TOTAL ACRES                   7,675 5,077    6,575  4,984   6,216  4,648    4,373 2,834    4,030   2,433
--------------------------------------------------------------------------------------------------------
</TABLE>

* Net acreage assigned reserves in Saskatchewan less than 1,000 acres.

(1)  "Gross" acres means the total acreage in which Paramount has a working
     interest, or a royalty interest that may be converted to a working
     interest.

(2)  "Net" acres means the number of acres obtained by multiplying the gross
     acres by Paramount's working interest therein.

DRILLING HISTORY
The following table summarizes the results of Paramount's drilling activity for
each of the last five fiscal years. The working interest in certain of these
wells may change after payout.

<TABLE>
<CAPTION>
                                  2002            2001           2000           1999            1998
                                  ----            ----           -----          -----           ----
                            GROSS(1)NET(2)    Gross    Net   Gross    Net    Gross   Net    Gross    Net
--------------------------------------------------------------------------------------------------------
DEVELOPMENT WELLS(3)
<S>                             <C> <C>       <C>   <C>       <C>  <C>        <C> <C>        <C>   <C>
   Gas                           76  56.3      101   84.4      37   27.0       50  41.9       50    36.3
   Oil                            5   3.1        7    6.1       9    5.8        8   4.0       10     3.9
   Standing/service               1   1.0        -      -       2    1.3        1   0.5        5     3.8
   Dry                            7   4.0        4    3.5       2    2.0        3   2.0        4     3.5
--------------------------------------------------------------------------------------------------------
   Subtotal                      89  64.4      112   94.0      50   36.1       62  48.4       69    47.5
--------------------------------------------------------------------------------------------------------
EXPLORATORY WELLS(4)
   Gas                           38  27.4       66   52.6      88   71.6       42  31.3       59    38.1
   Oil                            4   3.6        5    4.2       2    0.5        1   0.3       13     2.9
   Standing/service               -     -        1    0.5       -      -        2   0.4        6     3.6
   Dry                            4   4.0       12    7.4      23   20.5        7   5.7       25    11.8
--------------------------------------------------------------------------------------------------------
   Subtotal                      46  35.0       84   64.7     113   92.6       52  37.7      103    56.4
--------------------------------------------------------------------------------------------------------
TOTAL WELLS                     135  99.4      196  158.7     163  128.7      114  86.1      172   103.9
--------------------------------------------------------------------------------------------------------
</TABLE>

(1)  "Gross" wells means the number of wells in which Paramount has a working
     interest or a royalty interest that may be converted to a working interest.

(2)  "Net" wells means the aggregate number of wells obtained by multiplying
     each gross well by Paramount's percentage working interest therein.

(3)  "Development" well is a well drilled within or in close proximity to a
     discovered pool of petroleum or natural gas.

(4)  "Exploratory" well is a well drilled either in search of a new and as yet
     undiscovered pool of petroleum or natural gas or with the expectation of
     significantly extending the limit of a pool that is partly discovered.

                                     - 5 -
<PAGE>

OIL AND NATURAL GAS WELLS
As at December 31, 2002, Paramount had an interest in 3,083 gross (2,059.0 net)
producing and non-producing oil and natural gas wells as follows:

<TABLE>
<CAPTION>
                                                                      PRODUCING          NON-PRODUCING (1)
                                                                 ------------------      ---------------
As at December 31, 2002                                          Gross (2)  Net (3)      Gross       Net
--------------------------------------------------------------------------------------------------------
CRUDE OIL WELLS
<S>                                                              <C>        <C>          <C>       <C>
   Alberta                                                             282    168.7        122      70.8
   Saskatchewan                                                        133     66.0         34      15.6
   Northwest Territories                                                 -        -          7       5.6
   Montana                                                              38     25.7          5       3.5
   North Dakota                                                         59     25.0         10       3.9
   Wyoming                                                               -        -          1       0.8
--------------------------------------------------------------------------------------------------------
   Subtotal                                                            512    285.4        179     100.2
--------------------------------------------------------------------------------------------------------
NATURAL GAS WELLS
   Alberta                                                           1,335    958.9        937     672.9
   British Columbia                                                     24      8.8         17       8.8
   Saskatchewan                                                          1        -          1       0.3
   Northwest Territories                                                12      7.1         23      13.3
   Montana                                                              23      1.8         15       1.1
   North Dakota                                                          1        -          -         -
   California                                                            1      0.1          2       0.3
   Subtotal                                                          1,397    976.7        995     696.7
--------------------------------------------------------------------------------------------------------
TOTAL                                                                1,909  1,262.1      1,174     796.9
--------------------------------------------------------------------------------------------------------
</TABLE>

(1)  "Non-producing" wells are wells which Paramount considers capable of
     production but which, for a variety of reasons including but not limited to
     a lack of markets and lack of development, cannot be placed on production
     at the present time.

(2)  "Gross" wells means the number of wells in which Paramount has a working
     interest or a royalty interest that may be convertible to a working
     interest.

(3)  "Net" wells means the aggregate number of wells obtained by multiplying
     each gross well by Paramount's percentage working interest therein.

                                     - 6 -
<PAGE>

RESERVES
The majority of Paramount's assigned reserves of crude oil, natural gas liquids,
and natural gas are located in western Canada, with the remaining reserves in
the United States; specifically Montana and North Dakota. For 2002, all reserves
were determined through independent engineering evaluations completed by
McDaniel & Associates Consultants Ltd. ("McDaniel"), Sproule Associates Limited,
and Sproule Associates Inc. Their reports were prepared effective January 1,
2003. The following table details Paramount's working interest share of
reserves, net reserves after royalties, and present worth values as at December
31, 2002.

<TABLE>
<CAPTION>
                                                                               PRESENT WORTH VALUE
DECEMBER 31, 2002 RESERVE SUMMARY                     GROSS      NET        (BEFORE TAX, $ MILLIONS)
--------------------------------------------------------------------------------------------------------
                                                       (Bcf)   (Bcf)      0%      10%      12%       15%
--------------------------------------------------------------------------------------------------------
NATURAL GAS RESERVES
<S>                                                <C>      <C>      <C>      <C>      <C>       <C>
Proved producing                                      344.2    272.5   925.1    686.3    654.9     613.9
Proved nonproducing                                    75.7     63.2   116.8     69.7     64.1      57.1
Proved undeveloped                                     26.6     23.4    69.7     28.1     24.6      20.5
--------------------------------------------------------------------------------------------------------
Total proved                                          446.5    359.1 1,111.6    784.1    743.6     691.5
--------------------------------------------------------------------------------------------------------
Probable additional                                   172.1    131.8   477.8    227.8    202.5     172.1
50% reduction for risked probable reserves            (86.0)   (65.9) (238.9)  (113.9)  (101.3)    (86.0)
--------------------------------------------------------------------------------------------------------
Risked probable additional                             86.1     65.9   238.9    113.9    101.2      86.1
Total risked natural gas reserves                     532.6    425.0 1,350.5    898.0    844.8     777.6
--------------------------------------------------------------------------------------------------------

                                                       MBbl     MBbl      0%      10%      12%       15%
--------------------------------------------------------------------------------------------------------
CRUDE OIL AND NATURAL GAS LIQUIDS RESERVES
Proved producing                                   14,677.1 12,251.3   237.4    165.7    157.1     146.2
Proved nonproducing                                 1,858.3  1,609.9    36.5     21.7     20.2      18.4
Proved undeveloped                                  1,009.9    934.7    18.5     11.3     10.4       9.3
--------------------------------------------------------------------------------------------------------
Total proved                                       17,545.3 14,795.9   292.4    198.7    187.7     173.9
--------------------------------------------------------------------------------------------------------
Probable additional                                 5,300.5  4,645.1    93.2     47.2     42.6      37.0
50% reduction for risked probable reserves         (2,650.3)(2,322.5)  (46.6)   (23.6)   (21.3)    (18.5)
--------------------------------------------------------------------------------------------------------
Risked probable additional                          2,650.2  2,322.6    46.6     23.6     21.3      18.5
Total risked crude oil and
     natural gas liquids reserves                  20,195.5 17,118.5   339.0    222.3    209.0     192.4
--------------------------------------------------------------------------------------------------------
</TABLE>

The Company's five-year summary of reserves is outlined in the following tables.
Probable reserves reported in the tables below have been arbitrarily reduced by
50 percent to account for risk.

<TABLE>
<CAPTION>

NATURAL GAS RESERVES (Bcf)                                      2002    2001     2000     1999      1998
--------------------------------------------------------------------------------------------------------
Gross before royalties
----------------------
<S>                                                            <C>     <C>      <C>      <C>       <C>
Proved producing                                               344.2   298.9    338.5    370.9     412.8
Proved non-producing, proved undeveloped                       102.3   138.8    179.6    223.8     194.5
--------------------------------------------------------------------------------------------------------
   Total proved                                                446.5   437.7    518.1    594.7     607.3
Probable additional                                            172.1   126.0    139.3    155.1     180.9
--------------------------------------------------------------------------------------------------------
   Total proved and probable                                   618.6   563.7    657.4    749.8     788.2
50% reduction for risked probable reserves                     (86.0)  (63.0)   (69.6)   (77.5)    (90.5)
--------------------------------------------------------------------------------------------------------
   Total risked reserves                                       532.6   500.7    587.8    672.3     697.7
--------------------------------------------------------------------------------------------------------
Net after royalties
-------------------
Proved producing                                               272.5   234.8    265.3    284.0     318.8
Proved non-producing, proved undeveloped                        86.6   118.6    155.1    192.7     173.4
--------------------------------------------------------------------------------------------------------
   Total proved                                                359.1   353.4    420.4    476.7     492.2
Probable additional                                            131.8   103.6    113.4    127.7     150.3
--------------------------------------------------------------------------------------------------------
   Total proved and probable                                   490.9   457.0    533.8    604.4     642.5
50% reduction for risked probable reserves                     (65.9)  (51.8)   (56.7)   (63.8)    (75.2)
--------------------------------------------------------------------------------------------------------
   Total risked reserves                                       425.0   405.2    477.1    540.6     567.3
--------------------------------------------------------------------------------------------------------
</TABLE>

                                     - 7 -
<PAGE>

<TABLE>
<CAPTION>

CRUDE OIL & LIQUIDS RESERVES (MBbl)                    2002       2001       2000       1999        1998
--------------------------------------------------------------------------------------------------------
<S>                                               <C>         <C>        <C>        <C>        <C>
Gross before royalties
Proved producing                                   14,677.1    5,063.0    4,290.0    3,231.1     5,018.0
Proved non-producing, proved undeveloped            2,868.2    1,276.0      419.0    3,032.8     2,877.0
--------------------------------------------------------------------------------------------------------
   Total proved                                    17,545.3    6,339.0    4,709.0    6,263.9     7,895.0
Probable additional                                 5,300.5    1,628.0    1,271.0    2,616.0     3,735.0
--------------------------------------------------------------------------------------------------------
   Total proved and probable                       22,845.8    7,967.0    5,980.0    8,879.9    11,630.0
50% reduction for risked probable reserves         (2,650.3)    (814.0)    (635.5)  (1,308.0)   (1,867.5)
--------------------------------------------------------------------------------------------------------
   Total risked reserves                           20,195.5    7,153.0    5,344.5    7,571.9     9,762.5
--------------------------------------------------------------------------------------------------------
Net after royalties
Proved producing                                   12,251.3    4,037.0    3,325.0    2,569.3     4,102.0
Proved non-producing, proved undeveloped            2,544.6    1,058.0      292.0    2,303.7     2,109.0
--------------------------------------------------------------------------------------------------------
   Total proved                                    14,795.9    5,095.0    3,617.0    4,873.0     6,211.0
Probable additional                                 4,645.1    1,411.0    1,106.0    2,134.6     3,053.0
--------------------------------------------------------------------------------------------------------
   Total proved and probable                       19,441.0    6,506.0    4,723.0    7,007.6     9,264.0
50% reduction for risked probable reserves         (2,322.5)    (706.0)    (553.0)  (1,067.3)   (1,526.5)
--------------------------------------------------------------------------------------------------------
   Total risked reserves                           17,118.5    5,800.0    4,170.0    5,940.3     7,737.5
--------------------------------------------------------------------------------------------------------
</TABLE>

RESERVE RECONCILIATION
The table below sets forth Paramount's reconciliation of gross proved and
probable reserves from January 1, 2002 to January 1, 2003, using escalated
prices and costs. The probable reserves have been reduced by 50 percent to
account for risk.

<TABLE>
<CAPTION>

NATURAL GAS RESERVES (Bcf)                                                  PROVED   PROBABLE      TOTAL
--------------------------------------------------------------------------------------------------------
<S>                                                                         <C>         <C>        <C>
Risk discounted balance at January 1, 2002                                  437.7       63.0       500.7
Revisions of previous estimates                                             (9.7)       19.0         9.3
Extensions and discoveries                                                   30.5        8.8        39.3
Acquisitions of gas in place                                                 76.1       18.3        94.4
Dispositions of gas in place                                                    -          -           -
Production estimate                                                         (88.1)         -       (88.1)
50% reduction for risked probable reserves                                      -      (23.0)      (23.0)
--------------------------------------------------------------------------------------------------------
Balance at January 1, 2003                                                  446.5       86.1       532.6
--------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
CRUDE OIL AND LIQUIDS (MBbl)                                                PROVED   PROBABLE      TOTAL
--------------------------------------------------------------------------------------------------------
<S>                                                                      <C>        <C>         <C>
Risk discounted balance at January 1, 2002                                6,339.0      814.0     7,153.0
Revisions of previous estimates                                           1,244.3      395.8     1,640.1
Extensions and discoveries                                                1,012.0      367.0     1,379.0
Acquisitions of crude oil/liquids in place                               11,017.0    2,910.0    13,927.0
Dispositions of crude oil/liquids in place                                      -          -           -
Production estimate                                                      (2,067.0)         -    (2,067.0)
50% reduction for risked probable reserves                                      -   (1,836.6)   (1,836.6)
--------------------------------------------------------------------------------------------------------
Balance at January 1, 2003                                               17,545.3    2,650.2    20,195.5
--------------------------------------------------------------------------------------------------------
</TABLE>

                                     - 8 -
<PAGE>

The following table sets forth Paramount's reconciliation of gross natural gas
reserves for each of the past five years.

<TABLE>
<CAPTION>

NATURAL GAS RESERVES (Bcf)                                      2002    2001     2000     1999      1998
--------------------------------------------------------------------------------------------------------
<S>                                                           <C>     <C>      <C>      <C>      <C>
Opening balance                                               500.7   587.8    672.3    697.8     559.2
Revisions of previous estimates                                 9.3   (57.6)   (85.1)   (96.3)     71.0
Extensions and discoveries                                     39.3    40.1     59.8     99.4     100.1
Acquisitions of gas in place                                   94.4     5.9     29.0     38.8      64.9
Dispositions of gas in place                                      -       -    (14.0)       -     (16.9)
Production estimate                                           (88.1)  (82.0)   (82.0)   (80.3)    (67.7)
50% reduction for risked probable reserves                    (23.0)    6.5      7.8     12.9     (12.8)
--------------------------------------------------------------------------------------------------------
Closing balance                                               532.6   500.7    587.8    672.3     697.8
--------------------------------------------------------------------------------------------------------
</TABLE>

The following definitions form the basis of classification for reserves
presented in the McDaniel report:

1. "PROVED RESERVES" are those reserves estimated as recoverable under current
technology and existing economic conditions from that portion of a reservoir
which can be reasonably evaluated as economically productive on the basis of
analysis of drilling, geological, geophysical and engineering data, including
the reserves to be obtained by enhanced recovery processes demonstrated to be
economic and technically successful in the subject reservoir. Reserves assigned
to non-producing zones in producing wells were classified as producing if the
reserve quantities were estimated to be minor relative to the Company's reserves
in the area.

i) PROVED PRODUCING RESERVES

Those proved reserves that are actually on production, or if not producing, that
could be recovered from existing wells or facilities and where the reasons for
the current non-producing status is the choice of the owner. An illustration of
such a situation is where a well or zone is capable but is shut-in because its
deliverability is not required to meet contract commitments. Reserves assigned
to non-producing zones in producing wells were classified as producing if the
reserve quantities were estimated to be minor relative to the Company's reserves
in the area.

ii) PROVED NON-PRODUCING RESERVES

Those non-producing proved reserves recoverable from existing wells that require
relatively minor capital expenditures to produce.

iii) PROVED UNDEVELOPED RESERVES

Those reserves expected to be recovered from new wells on undrilled acreage or
from existing wells where a relatively major capital expenditure will be
required.

2. "PROBABLE ADDITIONAL RESERVES" are those reserves which analysis of drilling,
geological, geophysical and engineering data does not demonstrate to be proved
under current technology and existing economic conditions, but where such
analysis suggests the likelihood of their existence and future recovery.
Probable additional reserves to be obtained by the application of enhanced
recovery processes will be the increased recovery over and above that estimated
in the proved category which can be realistically estimated for the pool on the
basis of enhanced recovery processes which can be reasonably expected to be
instituted in the future.

3. "GROSS RESERVES" are defined as the reserves owned before deduction of any
royalties.

4. "NET RESERVES" are defined as the gross reserves of the properties in which
an interest is held, less all royalties and interests owned by others.

MAJOR PRODUCING PROPERTIES
The following table summarizes average production volumes from Paramount's major
producing properties, for each of the last five fiscal years.

                                     - 9 -
<PAGE>

<TABLE>
<CAPTION>

NATURAL GAS (MMcf/d)                                            2002    2001     2000     1999      1998
--------------------------------------------------------------------------------------------------------
NORTHEAST ALBERTA - EAST SIDE
<S>                                                            <C>     <C>      <C>      <C>      <C>
Bohn Lake                                                        2.6     3.4      3.8      4.8         -
Chard                                                            2.3     2.4      2.7      3.5       4.2
Clyde                                                            2.8     3.0      2.8      2.2       2.5
Cold Lake                                                        9.5    11.9     14.4     17.1      13.3
Corner                                                          13.9    15.5     15.1     20.3      25.2
Kettle River                                                     4.5     5.5     10.9     24.9      24.8
Leismer                                                          9.5    11.2      8.0      3.5       3.1
Quigley                                                          3.3     3.0      5.0     10.1      11.6
Thornbury                                                        4.5     4.9      6.1      6.9       6.8
Winefred                                                         4.6     5.5      6.9      7.1       6.5
Other                                                            0.6     0.8      1.1      4.8       4.8
--------------------------------------------------------------------------------------------------------
Subtotal                                                        58.1    67.1     76.8    105.2     102.8
--------------------------------------------------------------------------------------------------------
NORTHEAST ALBERTA - WEST SIDE
East Legend                                                      3.9     4.7      4.5        -         -
East Liege                                                       2.2     3.1      4.2      5.7         -
Legend                                                          19.4    17.3     14.0     14.1      14.6
North Liege                                                      2.8     3.3      3.8      4.6       6.3
South Liege                                                      4.3     5.2      5.8      9.0       9.3
Saleski                                                          4.0     4.1      4.6      5.7       6.7
Teepee Creek                                                     1.7     2.7      5.3      9.3      10.7
Other                                                            0.5     1.2        -        -         -
--------------------------------------------------------------------------------------------------------
Subtotal                                                        38.8    41.6     42.2     48.4      47.6
--------------------------------------------------------------------------------------------------------
KAYBOB*
Clover                                                           3.9     0.3        -        -         -
Fox Creek                                                        4.9     2.5      1.5        -         -
Kakwa                                                            1.1       -        -        -         -
Kaybob                                                          12.2    18.8     18.5      9.8       6.5
Kaybob North                                                    36.5    30.7     31.0     24.5      13.2
Pine Creek                                                       9.7     7.5      7.3      4.9         -
Tony North                                                       3.6     1.8        -        -         -
Two Creeks                                                       2.7       -        -        -         -
Other                                                           12.9     3.7      2.3      8.4       7.4
--------------------------------------------------------------------------------------------------------
Subtotal                                                        87.5    65.3     63.7     47.6      27.1
--------------------------------------------------------------------------------------------------------
STURGEON LAKE/MIRAGE*
Mirage                                                           2.9       -        -        -         -
Saddle Hills                                                     0.8       -        -        -         -
Sturgeon Lake                                                    1.9       -        -        -         -
Other                                                            1.4     3.1        -        -         -
--------------------------------------------------------------------------------------------------------
Subtotal                                                         7.0     3.1        -        -         -
--------------------------------------------------------------------------------------------------------
NORTHWEST ALBERTA
Assumption                                                       1.5     2.7      2.8
Bistcho Lake                                                     8.3     9.5     10.7     10.0       8.0
Cameron Hills                                                    9.0       -        -        -         -
Negus East                                                       4.3     6.7      4.8        -         -
Negus West                                                       2.2     3.6      1.9        -         -
Pedigree                                                         4.9     6.1      5.1      3.3         -
Other                                                            0.2     0.6      0.8      0.7         -
--------------------------------------------------------------------------------------------------------
Subtotal                                                        30.4    29.2     26.1     14.0       8.0
--------------------------------------------------------------------------------------------------------
</TABLE>

                                     - 10 -
<PAGE>

<TABLE>
<CAPTION>

LIARD BASIN - NORTHEAST BRITISH COLUMBIA/NORTHWEST TERRITORIES*
<S>                                                            <C>     <C>      <C>      <C>       <C>
Clarke Lake                                                      3.2       -        -        -         -
Maxhamish/Liard                                                  4.8     5.2      4.6        -         -
Liard Non-Op                                                     1.8     2.5      0.8        -         -
Tattoo                                                           2.5       -        -        -         -
Other                                                              -     1.6        -        -         -
--------------------------------------------------------------------------------------------------------
Subtotal                                                        12.3     9.3      5.4        -         -
--------------------------------------------------------------------------------------------------------
SOUTHERN ALBERTA/SASKATCHEWAN/MONTANA/NORTH DAKOTA*
Chain/Craigmyle                                                  1.8       -        -        -         -
Retlaw                                                           1.3       -        -        -         -
Sylvan Lake                                                      1.0       -        -        -         -
Other                                                            1.3       -        -        -         -
--------------------------------------------------------------------------------------------------------
Subtotal                                                         5.4       -        -        -         -
--------------------------------------------------------------------------------------------------------
NON-CORE                                                         1.9     9.4      5.8      4.8      18.0
--------------------------------------------------------------------------------------------------------
TOTAL                                                          241.4   225.0    220.0    220.0     203.5
--------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>

CRUDE OIL AND LIQUIDS (Bbl/d)
--------------------------------------------------------------------------------------------------------
KAYBOB*
<S>                                                            <C>     <C>       <C>      <C>       <C>
Fox Creek                                                        101       -        -        -         -
Kakwa                                                            116       -        -        -         -
Kaybob 10-2                                                      162       -        -        -         -
Kaybob                                                           110     171      119       89        84
Kaybob North                                                     900     711      498      218       253
Kaybob West                                                      344     576      274      297       323
Pine Creek                                                       437     265      213      152       138
Other                                                            121     132      154       83       223
--------------------------------------------------------------------------------------------------------
Subtotal                                                       2,291   1,855    1,258      839     1,021
--------------------------------------------------------------------------------------------------------
STURGEON LAKE/MIRAGE*
Mirage                                                           182       -        -        -         -
Sturgeon Lake                                                  1,110       -        -        -         -
Sunset                                                            55       -        -        -         -
Other                                                              6       -        -        -         -
--------------------------------------------------------------------------------------------------------
Subtotal                                                       1,353       -        -        -         -
--------------------------------------------------------------------------------------------------------
SOUTHERN ALBERTA/SASKATCHEWAN/MONTANA/NORTH DAKOTA*
Beaver Creek                                                      97       -        -        -         -
Enchant                                                          187       -        -        -         -
Knutson                                                          196       -        -        -         -
Rabbit Hills                                                     129       -        -        -         -
Saskatchewan                                                     534     130      218      852       790
Other                                                            589       -        -        -         -
--------------------------------------------------------------------------------------------------------
Subtotal                                                       1,732     130      218      852       790
--------------------------------------------------------------------------------------------------------
LIARD/NEBC                                                        15      21       95        -         -
--------------------------------------------------------------------------------------------------------
NORTHWEST ALBERTA 35                                               -       -        -        -
-----------------------------------------------------------------------------------------------
NON-CORE                                                         237     159        -      163       177
--------------------------------------------------------------------------------------------------------
TOTAL                                                          5,663   2,165    1,571    1,854     1,988
--------------------------------------------------------------------------------------------------------
</TABLE>

*six-month production volumes with respect to properties acquired in the Summit
acquisition have been averaged over 12 months (annualized).

The following is a summary of Paramount's major producing properties at December
31, 2002. Paramount's exploration efforts are primarily concentrated in Alberta,
British Columbia, Saskatchewan, the Northwest Territories, Montana and North
Dakota. In 2002, production from the Northeast Alberta core area accounted for
40 percent of the Company's total natural gas production. Natural gas production
from the Company's core area in Kaybob accounted for 36 percent of the total
production in 2002. Sturgeon Lake/Mirage, a new core area for the Company
resulting mainly from the Summit acquisition, accounted for 3 percent on an
annualized basis, with 13 percent from Northwest Alberta, 5 percent

                                     - 11 -
<PAGE>

from Liard, 2 percent from the new core area at Southern Alberta/Southeast
Saskatchewan/Montana/North Dakota, and the remaining 1 percent from non-operated
production in non-core areas.

Paramount's natural gas liquids production is from production at the Kaybob core
area, Sturgeon Lake/Mirage and Southern Alberta/Southeast
Saskatchewan/Montana/North Dakota. The majority of the Company's crude oil
production comes from Kaybob (41 percent), Sturgeon Lake (24 percent) and
Southern Alberta (31 percent). Paramount's working interests have been
determined before royalties and after deduction of any third party carried
interests. Production refers to Paramount's working interest before the
deduction of royalties.

NORTHEAST ALBERTA - EAST SIDE - KETTLE
These properties are located in the Company's northeasternmost shallow gas
production area. The natural gas produced from these facilities is Cretaceous in
age at depths up to 450 meters.

Production from this core area was significantly curtailed with the AEUB
decision of May 1, 2000, ordering the shut-in of 22 MMcf/d of net gas sales in
the Surmont area in which Paramount has a working interest. As a result of this
shut-in, the facilities at Chard, Kettle River and Quigley were consolidated
into one plant at Kettle River during third quarter 2000 to improve operating
efficiencies. The Kettle River property description accounted for the acreage
and wells formerly reported separately at Chard and Quigley. Certain of the
wells shut in due to the AEUB decision at Surmont have been recompleted in the
Clearwater zone and successfully placed back on production. Thus, gas from this
region was processed at the Paramount-operated plant at Kettle River, two
non-operated plants at Winefred and Surmont where the Company's gas was
processed for a custom processing fee, and at a third party-operated plant at
Bohn Lake where the Company had a working interest in the facility. Details
relative to each major property and facility are described below.

KETTLE RIVER
113,600 gross (102,585 net) acres of land assigned reserves 29,760 gross (25,190
net) acres undeveloped lands 105 gross (96.0 net) producing wells 52 gross (47.2
net) non-producing wells Average production net to Paramount in 2002: 10.1
MMcf/d

WINEFRED
67,840 gross (29,440 net) acres of land assigned reserves 60,928 gross (22,000
net) acres undeveloped lands 42 gross (36.7 net) producing wells 44 gross (38.5
net) non-producing wells Average production net to Paramount in 2002: 4.6 MMcf/d

BOHN LAKE
46,400 gross (14,272 net) acres of land assigned reserves 1,600 gross (533 net)
acres undeveloped lands 44 gross (12.8 net) producing wells 7 gross (1.9 net)
non-producing wells Average production net to Paramount in 2002: 2.6 MMcf/d

NORTHEAST ALBERTA - EAST SIDE - CORNER
These properties, located in the shallow gas region directly west of Kettle
River, produce natural gas from the high deliverability Colony, McMurray and
Clearwater reservoirs found in this region of the core area.

The Company owned and operated three facilities at Corner, Leismer, and Clyde
Lake at December 31, 2002. Paramount gas was also processed at two
outside-operated facilities at Pony and Thornbury for a custom processing fee.

The major producing properties in this area are further detailed below.

                                     - 12 -
<PAGE>

CORNER
74,240 gross (73,155 net) acres of land assigned reserves
28,160 gross (27,200 net) acres undeveloped lands
61 gross (60.4 net) producing wells
19 gross (18.8 net) non-producing wells
Average production net to Paramount in 2002: 13.9 MMcf/d

LEISMER
114,560 gross (108,078 net) acres of land assigned reserves
91,520 gross (85,151 net) acres undeveloped lands
56 gross (51.2 net) producing wells
79 gross (75.6 net) non-producing wells
Average production net to Paramount in 2002: 9.5 MMcf/d

THORNBURY
48,000 gross (34,252 net) acres of land assigned reserves
3,200 gross (1,152 net) acres undeveloped lands
46 gross (33.9 net) producing wells
22 gross (14.7 net) non-producing wells
Average production net to Paramount in 2002: 4.5 MMcf/d

CLYDE LAKE
12,800 gross (11,771 net) acres of land assigned reserves
14,080 gross (14,080 net) acres undeveloped lands
13 gross (12.3 net) producing wells
8 gross (8.0 net) non-producing wells
Average production net to Paramount in 2002: 2.8 MMcf/d

NORTHEAST ALBERTA - EAST SIDE - COLD LAKE
Cold Lake is located south of the aforementioned properties, still in the
northeastern shallow gas region and producing from Cretaceous age clastic
reservoirs. Gas was processed at two Company-owned plants in this area and at
third-party facilities for a custom processing fee. The Company also has a 5 to
6 percent net profit interest in approximately 159 heavy oil wells from two
different projects in this area.

COLD LAKE
96,001 gross (73,223 net) acres of land assigned reserves
36,160 gross (30,569 net) acres undeveloped lands
111 gross (91.5 net) producing wells
73 gross (58.1 net) non-producing wells
Average production net to Paramount in 2002: 9.5 MMcf/d

NORTHEAST ALBERTA - WEST SIDE
These properties formed the Company's Northeast Alberta - West Side core area at
December 31, 2002. This gas was produced from carbonate reservoirs of Devonian
age at depths ranging from 200 to 600 meters as well as from the Cretaceous
McMurray and Wabiskaw formations. The Company produced gas from six facilities
in this area, five of which the Company owned and operated; Company operated
facilities included Legend, East Liege, North Liege, South Liege and Saleski.
The Company owned 50 percent of the third party-operated plant at Teepee Creek.

These properties are described below.

LEGEND
106,880 gross (89,514 net) acres of land assigned reserves
24,960 gross (24,422 net) acres undeveloped lands
59 gross (48.1 net) producing wells
20 gross (16.8 net) non-producing wells
Average production net to Paramount in 2002: 19.4 MMcf/d

                                     - 13 -
<PAGE>

SOUTH LIEGE
85,920 gross (78,891 net) acres of land assigned reserves
31,360 gross (12,163 net) acres undeveloped lands
26 gross (25.2 net) producing wells
47 gross (42.5 net) non-producing wells
Average production net to Paramount in 2002: 4.3 MMcf/d

SALESKI
65,920 gross (62,342 net) acres of land assigned reserves
22,080 gross (19,424 net) acres undeveloped lands
18 gross (17.2 net) producing wells
12 gross (11.1 net) non-producing wells
Average production net to Paramount in 2002: 4.0 MMcf/d

EAST LEGEND
27,520 gross (27,520 net) acres of land assigned reserves
24,960 gross (24,960 net) acres undeveloped lands
17 gross (17.0 net) producing wells
8 gross (8.0 net) non-producing wells
Average production net to Paramount in 2002: 3.9 MMcf/d

NORTH LIEGE
69,760 gross (63,333 net) acres of land assigned reserves
No undeveloped lands
14 gross (13.3 net) producing wells
23 gross (20.4 net) non-producing wells
Average production net to Paramount in 2002: 2.8 MMcf/d

EAST LIEGE
10,560 gross (9,471 net) acres of land assigned reserves
640 gross (556 net) acres undeveloped lands
11 gross (10.0 net) producing wells
4 gross (3.7 net) non-producing wells
Average production net to Paramount in 2002: 2.2 MMcf/d

TEEPEE CREEK
76,399 gross (39,481 net) acres of land assigned reserves
61,440 gross (46,720 net) acres undeveloped lands
20 gross (10.0 net) producing wells
24 gross (14.0 net) non-producing wells
Average production net to Paramount in 2002: 1.7 MMcf/d

KAYBOB
These properties form one of the Company's core areas in Central Alberta and
produce gas, oil and natural gas liquids from the Cretaceous Viking, Spirit
River, Notikewin and Bluesky/Gething formation as well as the Triassic Montney
formation and the Devonian Swan Hills formation.

Paramount operates natural gas plants at Kaybob North, Kaybob , Clover, and Two
Creeks and an oil battery at Kaybob West. The Company processes gas from Pine
Creek, Clover, Fox Creek, Kaybob South, Pass Creek and Archean at third-party-
operated facilities for a fee.

This core area accounted for 36 percent of the Company's total natural gas
production in 2002 and 41 percent of the crude oil production.

The major producing facilities are described below. All of the production that
came over with the Summit acquisition has been averaged over the total year.

                                     - 14 -
<PAGE>

KAYBOB NORTH
107,680 gross (92,197 net) acres of land assigned reserves
86,880 gross (69,887 net) acres undeveloped lands
147 gross (128.9 net) producing gas wells
30 gross (21.8 net) non-producing gas wells
26 gross (20.8 net) producing oil wells
22 gross (18.6 net) non-producing oil wells
Average production net to Paramount in 2002: 36.5 MMcf/d, 900 Bbl/d

KAYBOB
53,120 gross (47,448 net) acres of land assigned reserves
44,160 gross (29,547 net) acres undeveloped lands
58 gross (51.5 net) producing wells
24 gross (21.6 net) non-producing wells
Average production net to Paramount in 2002: 12.2 MMcf/d, 110 Bbl/d

PINE CREEK
44,480 gross (26,576 net) acres of land assigned reserves
46,080 gross (35,819 net) acres undeveloped lands
55 gross (33.8 net) producing gas wells
17 gross (8.8 net) non-producing gas wells
4 gross (0.3 net) producing oil wells
Average production net to Paramount in 2002: 9.7 MMcf/d, 437 Bbl/d

FOX CREEK
31,840 gross (16,614 net) acres of land assigned reserves
15,200 gross (11,420 net) acres undeveloped lands
34 gross (20.8 net) producing gas wells
15 gross (8.2 net) non-producing gas wells
Average production net to Paramount in 2002: 4.9 MMcf/d, 101 Bbl/d

CLOVER
14,560 gross (4,656 net) acres of land assigned reserves
1,600 gross (1,280 net) acres undeveloped lands
17 gross (15.7 net) producing gas wells
1 gross (1.0 net) non-producing gas wells
1 gross (0.1 net) non-producing oil wells
Average production net to Paramount in 2002: 3.9 MMcf/d, 21 Bbl/d

KAYBOB WEST
3,200 gross (3,200 net) acres of land assigned reserves
640 gross (640 net) acres undeveloped lands
17 gross (17.0 net) producing oil wells
2 gross (2.0 net) non-producing oil wells
Average production net to Paramount in 2002: 0.9 MMcf/d, 344 Bbl/d

KAKWA
25,760 gross (3,352 net) acres of land assigned reserves
3,200 gross (1,532 net) acres undeveloped lands
25 gross (3.4 net) producing oil wells
11 gross (3.1 net) non-producing oil wells
Average production net to Paramount in 2002: 1.1 MMcf/d, 116 Bbl/d

                                     - 15 -
<PAGE>

STURGEON LAKE / MIRAGE
This is a new core area for the Company. Paramount acquired the Sturgeon Lake
plant and property through the Summit acquisition and another acquisition
completed July 1, 2002. Other producing properties gained with the Summit deal
are Mirage, Sunset and Valhalla. The Sturgeon Lake property, located in Central
Alberta, produces light sour crude oil and liquids rich gas from Devonian Leduc
reefs at approximate depths of 9,500 feet. The Mirage property produces light
sour crude oil and solution gas form the Upper and Lower Halfway formation at
depths of approximately 4,525 feet. Sunset produces oil from Montney reservoirs
at depths of about 1,720 feet.

The major producing facilities are described below. Production values for this
core area have been annualized.

STURGEON LAKE
21,160 gross (12,884 net) acres of land assigned reserves
80,440 gross (69,183 net) acres undeveloped lands
13 gross (4.1 net) producing gas wells
17 gross (12.6 net) non-producing gas wells
44 gross (35.9 net) producing oil wells
20 gross (14.5 net) non-producing oil wells
Annualized production net to Paramount in 2002: 1.9 MMcf/d, 1,110 Bbl/d

MIRAGE
11,120 gross (10,213 net) acres of land assigned reserves
22,240 gross (19,440 net) acres undeveloped lands
10 gross (9.0 net) producing gas wells
4 gross (3.6 net) non-producing gas wells
22 gross (22.0 net) producing oil wells
5 gross (5.0 net) non-producing oil wells
Annualized production net to Paramount in 2002: 2.9 MMcf/d, 182 Bbl/d

SUNSET
3,680 gross (1,449 net) acres of land assigned reserves
1,280 gross (753 net) acres undeveloped lands
11 gross (4.7 net) producing oil wells
2 gross (0.9 net) non-producing oil wells
Annualized production net to Paramount in 2002: 55 Bbl/d

NORTHWEST ALBERTA
The Company has five plants in the Northwest Alberta core area at Bistcho Lake,
Cameron Hills, Negus West, Negus East and Assumption. Gas is processed through a
third-party-operated plant at Pedigree for a processing fee. Bistcho Lake is
located approximately 60 kilometers north of the Zama Lake pipeline terminal.
This Company-operated sour gas processing facility at Bistcho Lake produces gas
of Middle Devonian age at depths up to 4,950 feet (1,500 meters). The plant at
Bistcho Lake also processes gas from a third party-operated field to the south
at Larne. Cameron Hills came on production March 29, 2002.

The Negus/Assumption area is east of Rainbow Lake.

The Negus West, Negus East and Assumption Company-operated plants produce gas of
Pleistocene age at depths of 30 to 50 meters and Cretaceous gas from the
Bluesky/Gething formations at depths from 250 to 300 meters.

The major properties are described below.

CAMERON HILLS
44,898 gross (39,668 net) acres of land assigned reserves
40,615 gross (33,928 net) acres undeveloped lands
6 gross (5.2 net) producing gas wells

                                     - 16 -
<PAGE>

8 gross (7.1 net) non-producing gas wells
6 gross (5.3 net) non-producing oil wells
Average production net to Paramount in 2002: 9.0 MMcf/d

BISTCHO LAKE
52,791 gross (26,941 net) acres of land assigned reserves
342,064 gross (203,859 net) acres undeveloped lands
43 gross (22.1 net) producing gas wells
30 gross (16.4 net) non-producing gas wells
Average production net to Paramount in 2002: 8.3 MMcf/d, 35 Bbl/d

PEDIGREE
25,600 gross (14,174 net) acres of land assigned reserves
80,640 gross (49,376 net) acres undeveloped lands
18 gross (11.9 net) producing gas wells
26 gross (13.4 net) non-producing gas wells
Average production net to Paramount in 2002: 4.9 MMcf/d

NEGUS EAST
21,760 gross (18,003 net) acres of land assigned reserves
97,920 gross (94,293 net) acres undeveloped lands
6 gross (5.1 net) producing gas wells
24 gross (20.6 net) non-producing gas wells
Average production net to Paramount in 2002: 4.3 MMcf/d

NEGUS WEST
37,760 gross (77,498 net) acres of land assigned reserves
28,671 gross (41,228 net) acres undeveloped lands
22 gross (21.1 net) producing gas wells
36 gross (24.8 net) non-producing gas wells
Average production to Paramount in 2002: 2.2 MMcf/d

LIARD BASIN, NORTHEAST BRITISH COLUMBIA / NORTHWEST TERRITORIES
The Company operates two gas plants in northeast British Columbia at Tattoo and
Maxhamish.

Maxhamish produces gas of Mississippian age from four wells, three in the
Northwest Territories and one in Northeast British Columbia. The Tattoo gas
plant, constructed in 2001, produces gas of Mississippian age from two wells in
Northeast British Columbia.

Acquired through the Summit acquisition was a non-operated interest in the
Clarke Lake natural gas field located ten miles southeast of the city of Fort
Nelson in British Columbia. This field is largely winter access only and
produces gas from the Upper Devonian Slave Point formation. The Summit
acquisition production has been annualized.

Paramount also produces Devonian-age gas from three wells through a non-operated
gas plant in the Northwest Territories.

MAXHAMISH/LIARD
16,797 gross (6,462 net) acres of land assigned reserves
486,526 gross (204,474 net) acres undeveloped lands
5 gross (2.3 net) producing gas wells
5 gross (2.0 net) non-producing gas wells
Average production net to Paramount in 2002: 4.8 MMcf/d

TATTOO
1,298 gross (649 net) acres of land assigned reserves
18,818 gross (13,302 net) acres undeveloped lands
2 gross (1.0 net) producing gas wells

                                     - 17 -
<PAGE>

1 gross (0.5 net) non-producing gas wells
Average production net to Paramount in 2002: 2.5 MMcf/d

CLARKE LAKE
14,773 gross (5,916 net) acres of land assigned reserves
1,496 gross (544 net) acres undeveloped lands
14 gross (5.4 net) producing gas wells
9 gross (3.7 net) non-producing gas wells
Annualized production net to Paramount in 2002: 3.2 MMcf/d

LIARD NON-OP
14,708 gross (439 net) acres of land assigned reserves
There are no Company interests in undeveloped lands
2 gross (0.1 net) producing gas wells
1 gross (0.1 net) non-producing gas wells
Average production net to Paramount in 2002: 1.8 MMcf/d

SOUTHERN ALBERTA/SOUTHEAST SASKATCHEWAN/MONTANA/NORTH DAKOTA
This is a new core production area for the Company. These properties were part
of the Summit acquisition that closed June 28, 2002.

North of the border, the Company produces gas from the Cretaceous Belly River
Viking, Glauconititc and Ostracod zones, and the Mississippian Banff limestones.
Oil is produced form the Jurassic Sawtooth sandstone in Alberta, and the Midale
beds in Saskatchewan.

Oil is produced from the Middle Jurassic Shaunavan formation in Montana as well
as the the Mississippian Bakken and the Ordovician Red River. Oil production in
North Dakota produces out of the Bakken and the Mission Canyon formation of
Mississippian age.

All of the production volumes have been annualized in the following major
properties summary.

CHAIN/CRAIGMYLE/DELIA
49,127 gross (32,212 net) acres of land assigned reserves
26,960 gross (23,831 net) acres undeveloped lands
62 gross (39.6 net) producing gas wells
22 gross (14.9 net) non-producing gas wells
10 gross (5.4 net) producing oil wells
6 gross (1.4 net) non-producing oil wells
Average production net to Paramount in 2002: 1.8 MMcf/d

RETLAW
6,720 gross (4,608 net) acres of land assigned reserves
480 gross (480 net) acres undeveloped lands
4 gross (4.0 net) producing gas wells
7 gross (6.0 net) non-producing gas wells
1 gross (0.4 net) producing oil wells
1 gross (1.0 net) non-producing oil wells
Average production net to Paramount in 2002: 1.3 MMcf/d

SYLVAN LAKE
2,240 gross (1,553 net) acres of land assigned reserves
2,560 gross (2,560 net) acres undeveloped lands
6 gross (4.9 net) producing gas wells
1 gross (1.0 net) non-producing gas wells

                                     - 18 -
<PAGE>

1 gross (0.8 net) producing oil wells
2 gross (1.5 net) non-producing oil wells
Average production net to Paramount in 2002: 1.0 MMcf/d

BEAVER CREEK, NORTH DAKOTA
3,596 gross (2,452 net) acres of land assigned reserves
2,655 gross (1,922 net) acres undeveloped lands
21 gross (8.2 net) producing oil wells
5 gross (1.8 net) non-producing oil wells
Average production net to Paramount in 2002: 97 Bbl/d

ENCHANT, ALBERTA
3,360 gross (2,122 net) acres of land assigned reserves
1,960 gross (1,654 net) acres undeveloped lands
1 gross (1.0 net) producing gas wells
2 gross (1.0 net) non-producing gas wells
24 gross (20.5 net) producing oil wells
4 gross (3.9 net) non-producing oil wells
Average production net to Paramount in 2002: 187 Bbl/d

KNUTSON, NORTH DAKOTA
1,473 gross (1,426 net) acres of land assigned reserves
4,668 gross (3,722 net) acres undeveloped lands
13 gross (12.7 net) producing oil wells
2 gross (1.9 net) non-producing oil wells
Average production net to Paramount in 2002: 196 Bbl/d

RABBIT HILLS, MONTANA
3,608 gross (2,937 net) acres of land assigned reserves
14,218 gross (13,014 net) acres undeveloped lands
23 gross (1.8 net) producing gas wells
8 gross (0.7 net) non-producing gas wells
18 gross (17.1 net) producing oil wells
3 gross (2.5 net) non-producing oil wells
Average production net to Paramount in 2002: 129 Bbl/d

SASKATCHEWAN
11,684 gross (5,676 net) acres of land assigned reserves
20,760 gross (14,560 net) acres undeveloped lands
1 gross (0.3 net) non-producing gas wells
133 gross (66.0 net) producing oil wells
34 gross (15.7 net) non-producing oil wells
Average production net to Paramount in 2002: 534 Bbl/d

                                     - 19 -
<PAGE>

DAILY SALES VOLUME AND PER-UNIT RESULTS
The following tables summarize daily sales volume results for Paramount on a
quarterly basis for the periods indicated.

<TABLE>
<CAPTION>
                                                                                 PARAMOUNT
                                                                         DAILY SALES VOLUME - 2002
                                                         ---------------------------------------------------------
                                                            Q4              Q3               Q2              Q1
                                                         ---------------------------------------------------------
SALES
<S>                                                       <C>             <C>              <C>             <C>
PRODUCED GAS (MILLION CUBIC FEET/DAY)                     262,642         259,300          231,400         211,500

OIL AND NATURAL GAS LIQUIDS (BARRELS/DAY)                   8,555           7,832            2,639           3,548

</TABLE>

<TABLE>
<CAPTION>
                                                                                 PARAMOUNT
                                                                         DAILY SALES VOLUME - 2001
                                                         ---------------------------------------------------------
                                                            Q4              Q3               Q2              Q1
                                                         ---------------------------------------------------------
SALES
<S>                                                       <C>             <C>              <C>             <C>
PRODUCED GAS (MILLION CUBIC FEET/DAY)                     217,048         232,300          240,000         210,500

OIL AND NATURAL GAS LIQUIDS (BARRELS/DAY)                   2,004           2,457            2,082           2,115
</TABLE>

<TABLE>
<CAPTION>
                                                                                    PARAMOUNT
                                                                         NET PRODUCT PRICE RESULTS - 2002
                                                         ---------------------------------------------------------
                                                            Q4              Q3               Q2              Q1
                                                         ---------------------------------------------------------
PRODUCED GAS ($/THOUSAND CUBIC FEET)

<S>                                                        <C>            <C>             <C>             <C>
Price, net of transportation and selling                    4.94            2.59            4.06            2.35
Royalties                                                  (0.94)          (0.60)          (0.72)          (0.40)
Operating costs(1)                                         (0.79)          (0.64)          (0.98)          (0.78)
                                                         ---------------------------------------------------------
Netback including hedge                                     2.73            2.53            2.77            2.37
Hedge                                                      (0.48)           1.18            0.41            1.20
                                                         ---------------------------------------------------------
Netback excluding hedge                                     3.22            1.35            2.36            1.17
                                                         =========================================================
TOTAL CONVENTIONAL OIL ($/BARREL)
Price, net of transportation and selling                   36.90           40.20           39.95           32.76
Royalties                                                  (7.03)          (9.36)          (7.05)          (5.52)
Operating costs(1)                                         (5.86)          (9.98)          (9.63)         (10.93)
                                                         ---------------------------------------------------------
Netback including hedge                                    22.90           19.84           23.28           16.32
Hedge                                                      (1.11)          (1.03)           0.00            0.00
                                                         ---------------------------------------------------------
Netback excluding hedge                                    24.01           20.86           23.28           16.32
                                                         =========================================================
NATURAL GAS LIQUIDS ($/BARREL)
Price, net of transportation and selling                   34.16           29.44           28.77           22.33
Royalties                                                  (6.51)          (6.86)          (5.08)          (3.76)
                                                         ---------------------------------------------------------
Operating costs(1)                                         (5.42)          (7.31)          (6.93)          (7.45)
                                                         ---------------------------------------------------------
Netback                                                    22.22           15.28           16.76           11.12
                                                         =========================================================
</TABLE>

Note:

(1)  Operating costs include all costs related to the operation of wells,
     facilities and gathering lines. Processing revenue has been deducted from
     these costs.

                                     - 20 -
<PAGE>

<TABLE>
<CAPTION>
                                                                                            PARAMOUNT
                                                                               NET PRODUCT PRICE RESULTS - 2001
                                                                ------------------------------------------------------
                                                                    Q4            Q3            Q2            Q1
                                                                ------------------------------------------------------
PRODUCED GAS ($/THOUSAND CUBIC FEET)
<S>                                                               <C>           <C>            <C>           <C>
Price, net of transportation and selling                           3.05          3.31           6.33         11.31
Royalties                                                         (0.57)        (0.77)         (1.11)        (2.22)
Operating costs(1)                                                (0.80)        (0.60)         (0.70)        (0.67)
                                                                ------------------------------------------------------
Netback including hedge                                            2.80          3.34           4.34          6.69
Hedge                                                              1.13          1.40          (0.18)        (1.73)
                                                                ------------------------------------------------------
Netback excluding hedge                                            1.67          1.94           4.52          8.42
                                                                ======================================================

TOTAL CONVENTIONAL OIL ($/BARREL)
Price, net of transportation and selling                          30.06         34.36          33.84         43.34
Royalties                                                         (5.68)        (7.96)         (5.94)        (8.49)
Operating costs(1)                                                (8.01)        (6.25)         (3.73)        (2.58)
                                                                ------------------------------------------------------
Netback including hedge                                           16.66         20.15          24.18         32.26
Hedge                                                              0.00          0.00           0.00          0.00
                                                                ------------------------------------------------------
Netback excluding hedge                                           16.66         20.15          24.18         32.26
                                                                ======================================================

NATURAL GAS LIQUIDS ($/BARREL)
Price, net of transportation and selling                          30.34         35.43          35.19         45.07
Royalties                                                         (5.68)        (8.21)         (6.17)        (8.83)
                                                                ------------------------------------------------------
Operating costs(1)                                                (8.01)        (6.44)         (3.88)        (2.69)
                                                                ------------------------------------------------------
Netback                                                           16.65         20.78          25.14         33.55
                                                                ======================================================

</TABLE>

Note:

(1)  Operating costs include all costs related to the operation of wells,
     facilities and gathering lines. Processing revenue has been deducted from
     these costs.

                                    PARAMOUNT
               ACQUISITIONS, DISPOSITIONS AND CAPITAL EXPENDITURES
                                   ($ MILLION)

<TABLE>
<CAPTION>
                                                                                            2002
                                                                ------------------------------------------------------
                                                                    Q4            Q3            Q2            Q1
                                                                ------------------------------------------------------
<S>                                                              <C>         <C>              <C>          <C>
Acquisitions (corporate and property)                             13.0         439.7           21.4          10.5
Dispositions (corporate and property)                             (0.4)         (1.2)          (0.8)         (2.6)
Exploration (including drilling)                                   0.0           3.9           14.8          24.0
Development (including facilities)                                13.2          22.0           58.6          76.7
                                                                ------------------------------------------------------
TOTAL                                                             25.8         464.4           94.0         108.6
                                                                ======================================================
</TABLE>

<TABLE>
<CAPTION>
                                                                                            2001
                                                                ------------------------------------------------------
                                                                    Q4            Q3            Q2            Q1
                                                                ------------------------------------------------------
<S>                                                              <C>          <C>            <C>           <C>
Acquisitions (corporate and property)                             14.2          18.2           13.5          12.3
Dispositions (corporate and property)                             (1.9)         (2.7)          (6.1)         (1.1)
Exploration (including drilling)                                   2.8           3.2            7.5          28.0
Development (including facilities)                                46.3           3.8           66.1          76.7
                                                                ------------------------------------------------------
TOTAL                                                             61.4          22.5           81.0         115.9
                                                                ======================================================
</TABLE>

                                     - 21 -
<PAGE>

FUTURE COMMITMENTS

The Company's future commitments as at December 31, 2002 to sell natural gas and
oil and natural gas liquids are set forth on page 52 of the Company's annual
report, which information is incorporated by reference herein.

SELECTED CONSOLIDATED FINANCIAL AND OPERATING INFORMATION

a) ANNUAL FINANCIAL INFORMATION
($ THOUSANDS EXCEPT PER SHARE AMOUNTS) (1)

<TABLE>
<CAPTION>

YEAR ENDED DECEMBER 31                           2002        2001          2000         1999        1998
--------------------------------------------------------------------------------------------------------
<S>                                         <C>          <C>           <C>          <C>        <C>
REVENUES                                    $ 473,942    $ 528,373     $391,470     $211,658   $165,527
--------------------------------------------------------------------------------------------------------
EXPENSES
--------------------------------------------------------------------------------------------------------
Royalties, net of ARTC                         74,444       99,706       80,541       37,567     20,874
Operating                                      86,067       61,045       47,974       39,030     33,005
Interest                                       23,943       19,291       22,313       15,042     12,745
General and administrative (2)                 15,870       12,346        9,660        8,566      4,452
Lease rentals                                   4,552        4,319        5,231        4,056      4,185
Current income taxes and other                  9,150       27,729        2,305        1,567      2,109
--------------------------------------------------------------------------------------------------------
CASH FLOW FROM OPERATIONS                   $ 259,916    $ 303,937     $223,446     $105,830   $ 88,157
   Per share - basic                        $    4.37    $    5.11     $   3.76     $   1.84   $   1.62
   Per share - diluted                      $    4.36    $    5.11     $   3.76     $   1.84   $   1.62

Depreciation and depletion                  $ 169,433    $ 105,433     $ 50,563     $ 47,013   $ 46,554
Dry hole costs                              $ 120,058    $   8,944     $  7,019     $ 10,399   $ 11,667
Net earnings                                $  10,307    $ 118,902     $ 86,062     $ 28,683   $ 18,210
   Per share - basic                        $    0.17    $    2.00     $   1.45     $   0.50   $   0.34
   Per share - diluted                      $    0.16    $    2.00     $   1.45     $   0.50   $   0.34
--------------------------------------------------------------------------------------------------------

BALANCE SHEET INFORMATION
--------------------------------------------------------------------------------------------------------
Capital expenditures (gross)                $ 521,264    $ 261,184   $  249,048     $171,079   $215,982
Gross property/equipment sales              $   4,995    $  11,763   $   34,205     $  1,894   $ 19,042
Working capital (deficiency)                $ (15,973)   $  25,902   $   22,640     $ 16,437   $ (2,346)
Total assets                               $1,536,384   $1,176,323   $1,047,829     $740,454   $624,195
Long-term operating bank debt               $ 539,270    $ 316,600   $  315,000     $268,819   $226,439
Shareholders' equity                        $ 546,105    $ 535,384   $  418,254     $328,992   $262,932
Dividends paid                                      -            -            -     $  2,973   $  2,848
   Per share                                        -            -            -     $   0.05   $   0.05
--------------------------------------------------------------------------------------------------------
SHARE INFORMATION
Average number of common
   shares outstanding (THOUSANDS)              59,458       59,454       59,454       57,529     54,348
Market price
   High                                     $   17.60    $   18.75    $   20.00     $  26.00   $  17.00
   Low                                      $   13.00    $   12.00    $   10.50     $  12.00   $  11.00
--------------------------------------------------------------------------------------------------------
</TABLE>

(1)  All per share amounts are calculated using average number of shares
     outstanding, except dividends paid per share which are based upon actual
     shares outstanding at time of dividend declaration.

(2)  Net of non-cash general and administrative expenses.

                                     - 22 -
<PAGE>

b) ANNUAL OPERATING INFORMATION

<TABLE>
<CAPTION>

YEAR ENDED DECEMBER 31                          2002         2001          2000         1999        1998
--------------------------------------------------------------------------------------------------------
RESERVES (proved and probable)
<S>                                        <C>           <C>           <C>           <C>        <C>
Natural gas (Bcf)                                619          564           657          750         788
Crude oil and liquids (MBbl)                  22,846        7,967         5,980        8,880      11,630
--------------------------------------------------------------------------------------------------------
LAND HOLDINGS (THOUSANDS OF ACRES)
Gross                                          7,675        6,575         6,216        4,373       4,030
Net                                            5,077        4,984         4,648        2,834       2,433
--------------------------------------------------------------------------------------------------------
PRODUCTION
Natural gas (MMcf/d)                           241.4        225.0         220.0        220.0       203.5
   Average natural gas price ($/Mcf)       $    4.08    $    6.12     $    4.59     $   2.43   $    2.02
Crude oil and liquids (Bbl/d)                  5,663        2,165         1,571        1,854       1,988
   Average crude oil price ($/Bbl)         $   34.64    $   35.48     $   37.80     $  24.27   $   19.22
--------------------------------------------------------------------------------------------------------
DRILLING ACTIVITY (GROSS)
Gas wells                                        114          167           126           92         111
Oil wells                                          9           12            11            9          24
Standing/service                                   1            1             2            3           8
Dry and abandoned                                 11           16            24           10          29
--------------------------------------------------------------------------------------------------------
Total                                            135          196           163          114         172
--------------------------------------------------------------------------------------------------------
Success rate (%)                                  92           92            85           91          83
--------------------------------------------------------------------------------------------------------
NUMBER OF EMPLOYEES
Office                                           152          108            89           70          63
Field                                            128           80            68           53          65
--------------------------------------------------------------------------------------------------------
Total                                            280          188           157          123         128
--------------------------------------------------------------------------------------------------------
</TABLE>

c) QUARTERLY FINANCIAL INFORMATION

The following information is presented with respect to each of the last eight
fiscal quarters. ($ thousands except per share amounts)

<TABLE>
<CAPTION>
                                               2002                                         2001
                           -------------------------------------------    -----------------------------------------
                           DEC. 31    SEPT. 30      JUNE 30   MARCH 31    Dec. 31   Sept. 30    June 30    March 31
-------------------------------------------------------------------------------------------------------------------

<S>                      <C>          <C>         <C>         <C>        <C>        <C>        <C>        <C>
Net revenue              $ 110,180    $ 95,780    $ 110,206   $ 83,332   $ 75,232   $ 92,756   $114,358   $ 146,321
Earnings (loss)          $ (41,399)   $  6,180    $  26,614   $ 18,912   $(10,433)  $ 33,249   $ 38,889   $  57,197
   Per share - basic     $   (0.70)   $   0.10    $    0.45   $   0.32   $  (0.18)  $   0.56   $   0.66   $    0.96
   Per share - diluted   $   (0.70)   $   0.10    $    0.44   $   0.32   $  (0.18)  $   0.56   $   0.65   $    0.96
Cash flow                $  62,102    $  8,661    $  80,956   $ 58,197   $ 47,732   $ 66,155   $ 70,654   $ 119,396
   Per share - basic     $    1.04    $   0.99    $    1.36   $   0.98   $   0.80   $   1.11   $   1.19   $    2.01
   Per share - diluted   $    1.04    $   0.99    $    1.36   $   0.98   $   0.80   $   1.11   $   1.18   $    2.01
</TABLE>

Paramount has paid a cash dividend in two of the last five fiscal years. Future
payments will be dependent upon the financial requirements of the Company to
reinvest earnings, the financial condition of the Company and other factors
which the Board of Directors of the Company may consider appropriate. The
following table summarizes the Company's dividend payment record.

<TABLE>
<CAPTION>
                                         2002        2001        2000        1999        1998
-----------------------------------------------------------------------------------------------
<S>                                      <C>         <C>        <C>      <C>        <C>
Per share                                   -           -           -      $0.050     $ 0.050
Dividends paid ($ THOUSANDS)                -           -           -      $2,973     $ 2,848
-----------------------------------------------------------------------------------------------
</TABLE>

                                     - 23 -
<PAGE>

MANAGEMENT'S DISCUSSON AND ANALYSIS
Management's Discussion and Analysis for the fiscal years ended December 31,
2002 and 2001 on pages 26 to 53 of the Company's annual report is incorporated
by reference herein.

MARKET FOR SECURITIES
The Common shares of Paramount Resources Ltd. are listed on The Toronto Stock
Exchange under the trading symbol 'POU'.

ADDITIONAL INFORMATION
Additional information, including directors' and officers' remuneration,
principal holders of Paramount Resources Ltd.'s securities, options to purchase
securities, and interests of insiders in material transactions, where
applicable, is contained in Paramount's Management Information and Proxy
Circular dated March 19, 2003. Additional financial information is contained in
the Company's comparative financial statements for the year ended December 31,
2002.

When the securities of Paramount are in the course of a distribution pursuant to
a short form prospectus or a preliminary short form prospectus has been filed in
respect of a distribution of its securities, Paramount will, upon request to the
President as listed below, provide to any person on the following information:

     (i)  one copy of the Company's Annual Information Form, together with one
          copy of any document, or the pertinent pages of any document,
          incorporated by reference in the Annual Information Form.

     (ii) one copy of the audited consolidated financial statements of Paramount
          for its most recently completed financial year for which financial
          statements have been filed together with the accompanying report of
          the auditor and one copy of the most recent interim financial
          statements of Paramount that have been filed, if any, for any period
          after the end of its most recently completed financial year,

     (iii) one copy of the information circular of Paramount in respect of its
          most recent annual meeting of shareholders that involved the election
          of directors, and

     (iv) one copy of any other documents that are incorporated by reference
          into the preliminary short form prospectus or the short form
          prospectus and are not required to be provided under (i) to (iii)
          above.

At any other time, Paramount will, upon request to the President as listed
below, provide to any person one copy of any of the documents referred to in
(i), (ii) and (iii) above, provided Paramount may require the payment of a
reasonable charge if the request is made by a person or corporation who is not a
security holder of Paramount.

For additional copies of this Annual Information Form or any of the materials
listed in the preceding paragraphs, please contact:

J.H.T. (JIM) RIDDELL
President and Chief Operating Officer

                                     - 24 -Exhibit 4.12

 

 

 

UNIONBANCAL CORPORATION

 

 

and

 

 

BANK ONE TRUST COMPANY, N.A., as Trustee

 

 

Indenture

 

Dated as of [         ]

 

 

Debt Securities

 

 

 

 

CROSS REFERENCE SHEET*

 

Between

 

Provisions of Trust Indenture Act (as defined herein) and Indenture,
dated as of
[             ],
between UNIONBANCAL CORPORATION and BANK ONE TRUST COMPANY, N.A., Trustee:

 

	
  SECTION OF THE ACT

  	
   

  	
  SECTION OF INDENTURE

  
	
  310(a)(1) and (2)

  	
   

  	
  6.9

  
	
  310(a)(3) and (4)

  	
   

  	
  Inapplicable

  
	
  310(b)

  	
   

  	
  6.8 and 6.10(a), (b) and (d)

  
	
  310(c)

  	
   

  	
  Inapplicable

  
	
  311(a)

  	
   

  	
  6.14

  
	
  311(b)

  	
   

  	
  6.14

  
	
  311(c)

  	
   

  	
  Inapplicable

  
	
  312(a)

  	
   

  	
  4.1 and 4.2

  
	
  312(b)

  	
   

  	
  4.2

  
	
  312(c)

  	
   

  	
  4.2

  
	
  313(a)

  	
   

  	
  4.3

  
	
  313(b)(1)

  	
   

  	
  Inapplicable

  
	
  313(b)(2)

  	
   

  	
  4.3

  
	
  313(c)

  	
   

  	
  4.3, 5.11, 6.10, 6.11, 8.2 and 12.2

  
	
  313(d)

  	
   

  	
  4.3

  
	
  314(a)

  	
   

  	
  3.5 and 4.2

  
	
  314(b)

  	
   

  	
  Inapplicable

  
	
  314(c)(1) and (2)

  	
   

  	
  11.5

  
	
  314(c)(3)

  	
   

  	
  Inapplicable

  
	
  314(d)

  	
   

  	
  Inapplicable

  
	
  314(e)

  	
   

  	
  11.5

  
	
  314(f)

  	
   

  	
  Inapplicable

  
	
  315(a), (c) and (d)

  	
   

  	
  6.1

  
	
  315(b)

  	
   

  	
  5.11

  
	
  315(e)

  	
   

  	
  5.12

  
	
  316(a)(1)

  	
   

  	
  5.9 and 5.10

  
	
  316(a)(2)

  	
   

  	
  Not required

  
	
  316(a) (last sentence)

  	
   

  	
  7.4

  
	
  316(b)

  	
   

  	
  5.7

  
	
  317(a)

  	
   

  	
  5.2

  
	
  317(b)

  	
   

  	
  3.4(a) and (b)

  
	
  318(a)

  	
   

  	
  11.7

  

 

*This Cross Reference Sheet is
not part of the Indenture.

 

2

 

TABLE OF CONTENTS

 

	
  ARTICLE
  I

  	
  DEFINITIONS

  
	
   

  
	
  SECTION
  1.1

  	
  CERTAIN TERMS DEFINED

  
	
   

  
	
  ARTICLE II

  	
  SECURITIES

  
	
   

  
	
  SECTION
  2.1

  	
  FORMS GENERALLY

  
	
  SECTION
  2.2

  	
  FORM OF TRUSTEE’S CERTIFICATE OF
  AUTHENTICATION

  
	
  SECTION
  2.3

  	
  AMOUNT UNLIMITED; ISSUABLE IN SERIES

  
	
  SECTION
  2.4

  	
  AUTHENTICATION AND DELIVERY OF SECURITIES

  
	
  SECTION
  2.5

  	
  EXECUTION OF SECURITIES

  
	
  SECTION
  2.6

  	
  CERTIFICATE OF AUTHENTICATION

  
	
  SECTION
  2.7

  	
  DENOMINATION AND DATE OF SECURITIES;
  PAYMENT OF INTEREST

  
	
  SECTION
  2.8

  	
  REGISTRATION, TRANSFER AND EXCHANGE

  
	
  SECTION
  2.9

  	
  MUTILATED, DEFACED, DESTROYED, LOST AND
  STOLEN SECURITIES

  
	
  SECTION
  2.10

  	
  CANCELLATION OF SECURITIES; DESTRUCTION
  THEREOF

  
	
  SECTION
  2.11

  	
  TEMPORARY SECURITIES

  
	
   

  
	
  ARTICLE III

  	
  COVENANTS OF THE ISSUER

  
	
   

  
	
  SECTION
  3.1

  	
  PAYMENT OF PRINCIPAL AND INTEREST

  
	
  SECTION
  3.2

  	
  OFFICES FOR PAYMENTS, ETC

  
	
  SECTION
  3.3

  	
  APPOINTMENT TO FILL A VACANCY IN OFFICE OF
  TRUSTEE

  
	
  SECTION
  3.4

  	
  PAYING AGENTS

  
	
  SECTION
  3.5

  	
  COMPLIANCE CERTIFICATES

  
	
  SECTION
  3.6

  	
  CORPORATE EXISTENCE

  
	
  SECTION
  3.7

  	
  LUXEMBOURG PUBLICATIONS

  
	
   

  
	
  ARTICLE IV

  	
  SECURITYHOLDER LISTS AND REPORTS BY THE
  ISSUER AND THE TRUSTEE

  
	
   

  
	
  SECTION
  4.1

  	
  ISSUER TO FURNISH TRUSTEE INFORMATION AS TO
  NAMES AND ADDRESSES OF SECURITYHOLDERS

  
	
  SECTION
  4.2

  	
  REPORTS
  BY THE ISSUER

  
	
  SECTION
  4.3

  	
  REPORTS
  BY THE TRUSTEE

  
	
   

  
	
  ARTICLE V

  	
  REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
  ON EVENT OF DEFAULT

  
			

 

i

 

	
  SECTION
  5.1

  	
  EVENT OF DEFAULT DEFINED, ACCELERATION OF
  MATURITY; WAIVER OF DEFAULT

  
	
  SECTION
  5.2

  	
  COLLECTION OF INDEBTEDNESS BY TRUSTEE;
  TRUSTEE MAY PROVE DEBT

  
	
  SECTION
  5.3

  	
  APPLICATION OF PROCEEDS

  
	
  SECTION
  5.4

  	
  SUITS FOR ENFORCEMENT

  
	
  SECTION
  5.5

  	
  RESTORATION OF RIGHTS ON ABANDONMENT OF
  PROCEEDINGS

  
	
  SECTION
  5.6

  	
  LIMITATIONS ON SUITS BY SECURITY HOLDERS

  
	
  SECTION
  5.7

  	
  UNCONDITIONAL RIGHT OF SECURITYHOLDERS TO
  INSTITUTE CERTAIN SUITS

  
	
  SECTION
  5.8

  	
  POWERS AND REMEDIES CUMULATIVE; DELAY OR
  OMISSION NOT WAIVER OF DEFAULT

  
	
  SECTION
  5.9

  	
  CONTROL BY HOLDERS OF SECURITIES

  
	
  SECTION
  5.10

  	
  WAIVER OF PAST DEFAULTS

  
	
  SECTION
  5.11

  	
  TRUSTEE TO GIVE NOTICE OF DEFAULT, BUT MAY
  WITHHOLD IN CERTAIN CIRCUMSTANCES

  
	
  SECTION
  5.12

  	
  RIGHT OF COURT TO REQUIRE FILING OF
  UNDERTAKING TO PAY COSTS

  
	
   

  
	
  ARTICLE VI

  	
  CONCERNING THE TRUSTEE

  
	
   

  
	
  SECTION
  6.1

  	
  DUTIES AND RESPONSIBILITIES OF THE TRUSTEE;
  DURING DEFAULT; PRIOR TO DEFAULT

  
	
  SECTION
  6.2

  	
  CERTAIN RIGHTS OF THE TRUSTEE

  
	
  SECTION
  6.3

  	
  TRUSTEE NOT RESPONSIBLE FOR RECITALS,
  DISPOSITION OF SECURITIES OR APPLICATION OF PROCEEDS THEREOF

  
	
  SECTION
  6.4

  	
  TRUSTEE AND AGENTS MAY HOLD SECURITIES OR
  COUPONS; COLLECTIONS, ETC.

  
	
  SECTION
  6.5

  	
  MONEYS HELD BY TRUSTEE

  
	
  SECTION
  6.6

  	
  COMPENSATION AND INDEMNIFICATION OF TRUSTEE
  AND ITS PRIOR CLAIM

  
	
  SECTION
  6.7

  	
  RIGHT OF TRUSTEE TO RELY ON OFFICER’S
  CERTIFICATE, ETC.

  
	
  SECTION
  6.8

  	
  INDENTURES NOT CREATING POTENTIAL
  CONFLICTING INTERESTS FOR THE TRUSTEE

  
	
  SECTION
  6.9

  	
  QUALIFICATION OF TRUSTEE: CONFLICTING
  INTERESTS

  
	
  SECTION
  6.10

  	
  PERSONS ELIGIBLE FOR APPOINTMENT AS TRUSTEE

  
	
  SECTION
  6.11

  	
  RESIGNATION AND REMOVAL; APPOINTMENT OF
  SUCCESSOR TRUSTEE

  
	
  SECTION
  6.12

  	
  ACCEPTANCE OF APPOINTMENT BY SUCCESSOR
  TRUSTEE

  
	
  SECTION
  6.13

  	
  MERGER, CONVERSION, CONSOLIDATION OR
  SUCCESSION TO BUSINESS OF TRUSTEE

  
			

 

ii

 

	
  SECTION
  6.14

  	
  PREFERENTIAL COLLECTION OF CLAIMS AGAINST
  THE ISSUER

  
	
  SECTION
  6.15

  	
  APPOINTMENT OF AUTHENTICATING AGENT

  
	
   

  
	
  ARTICLE VII

  	
  CONCERNING THE SECURITYHOLDERS

  
	
   

  
	
  SECTION
  7.1

  	
  EVIDENCE OF ACTION TAKEN BY SECURITYHOLDERS

  
	
  SECTION
  7.2

  	
  PROOF OF EXECUTION OF INSTRUMENTS AND OF
  HOLDING OF SECURITIES

  
	
  SECTION
  7.3

  	
  HOLDERS TO BE TREATED AS OWNERS

  
	
  SECTION
  7.4

  	
  SECURITIES OWNED BY ISSUER DEEMED NOT
  OUTSTANDING

  
	
  SECTION
  7.5

  	
  RIGHT OF REVOCATION OF ACTION TAKEN

  
	
   

  
	
  ARTICLE VIII

  	
  SUPPLEMENTAL INDENTURES

  
	
   

  
	
  SECTION
  8.1

  	
  SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF
  SECURITYHOLDERS

  
	
  SECTION
  8.2

  	
  SUPPLEMENTAL INDENTURES WITH CONSENT OF
  SECURITYHOLDERS

  
	
  SECTION
  8.3

  	
  EFFECT OF SUPPLEMENTAL INDENTURE

  
	
  SECTION
  8.4

  	
  DOCUMENTS TO BE GIVEN TO TRUSTEE

  
	
  SECTION
  8.5

  	
  NOTATION ON SECURITIES IN RESPECT OF
  SUPPLEMENTAL INDENTURES

  
	
   

  
	
  ARTICLE IX

  	
  CONSOLIDATION, MERGER, SALE OR CONVEYANCE

  
	
   

  
	
  SECTION
  9.1

  	
  ISSUER MAY CONSOLIDATE, ETC., ONLY ON
  CERTAIN TERMS

  
	
  SECTION
  9.2

  	
  SUCCESSOR CORPORATION SUBSTITUTED

  
	
  SECTION
  9.3

  	
  OPINION OF COUNSEL TO BE GIVEN TO TRUSTEE

  
	
   

  
	
  ARTICLE X

  	
  SATISFACTION AND DISCHARGE OF INDENTURE;
  UNCLAIMED MONEYS

  
	
   

  
	
  SECTION
  10.1

  	
  SATISFACTION AND DISCHARGE OF INDENTURE

  
	
  SECTION
  10.2

  	
  APPLICATION BY TRUSTEE OF FUNDS DEPOSITED
  FOR PAYMENT OF SECURITIES

  
	
  SECTION
  10.3

  	
  REPAYMENT OF MONEYS HELD BY PAYING AGENT

  
	
  SECTION
  10.4

  	
  RETURN OF MONEYS HELD BY TRUSTEE AND PAYING
  AGENT UNCLAIMED FOR TWO YEARS

  
	
  SECTION
  10.5

  	
  INDEMNITY FOR U.S. GOVERNMENT OF
  OBLIGATIONS

  
	
  SECTION
  10.6

  	
  EFFECT ON SUBORDINATION PROVISIONS

  
	
   

  
	
  ARTICLE XI

  	
  MISCELLANEOUS PROVISIONS

  
					

 

iii

 

	
  SECTION
  11.1

  	
  INCORPORATORS, STOCKHOLDERS, OFFICERS AND
  DIRECTORS OF ISSUER EXEMPT FROM INDIVIDUAL LIABILITY

  
	
  SECTION
  11.2

  	
  PROVISIONS OF INDENTURE FOR THE SOLE
  BENEFIT OF PARTIES AND HOLDERS OF SECURITIES AND COUPONS

  
	
  SECTION
  11.3

  	
  SUCCESSORS AND ASSIGNS OF ISSUER BOUND BY
  INDENTURE

  
	
  SECTION
  11.4

  	
  NOTICES AND DEMANDS ON ISSUER, TRUSTEE AND
  HOLDERS OF SECURITIES AND COUPONS

  
	
  SECTION
  11.5

  	
  OFFICER’S CERTIFICATES AND OPINIONS OF
  COUNSEL; STATEMENTS TO BE CONTAINED THEREIN

  
	
  SECTION
  11.6

  	
  PAYMENTS DUE ON SATURDAYS, SUNDAYS AND
  HOLIDAYS

  
	
  SECTION
  11.7

  	
  CONFLICT OF ANY PROVISION OF INDENTURE WITH
  TRUST INDENTURE ACT

  
	
  SECTION
  11.8

  	
  THIS INDENTURE AND EACH SECURITY AND COUPON
  SHALL BE DEEMED TO BE A CONTRACT UNDER THE LAWS OF THE STATE OF NEW YORK, AND
  FOR ALL PURPOSES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
  LAWS OF SUCH STATE INCLUDING, WITHOUT LIMITATION, SECTION 5-1401 OF THE NEW
  YORK GENERAL OBLIGATIONS LAW

  
	
  SECTION
  11.9

  	
  COUNTERPARTS

  
	
  SECTION 11.10

  	
  EFFECT OF HEADINGS

  
	
  SECTION 11.11

  	
  SECURITIES IN A FOREIGN CURRENCY

  
	
  SECTION 11.12

  	
  JUDGMENT CURRENCY

  
	
  SECTION 11.13

  	
  AGREEMENT TO SUBORDINATE

  
	
   

  
	
  ARTICLE XII

  	
  REDEMPTION OF SECURITIES AND SINKING FUNDS

  
	
   

  
	
  SECTION
  12.1

  	
  APPLICABILITY OF ARTICLE

  
	
  SECTION
  12.2

  	
  NOTICE OF REDEMPTION; PARTIAL REDEMPTIONS

  
	
  SECTION
  12.3

  	
  PAYMENT OF SECURITIES CALLED FOR REDEMPTION

  
	
  SECTION
  12.4

  	
  EXCLUSION OF CERTAIN SECURITIES FROM
  ELIGIBILITY FOR SELECTION FOR REDEMPTION

  
	
  SECTION
  12.5

  	
  MANDATORY AND OPTIONAL SINKING FUNDS

  
			

 

iv

 

THIS INDENTURE, dated as of
[                    ],
by and between UNIONBANCAL CORPORATION, a Delaware corporation (the “Issuer”),
and BANK ONE TRUST COMPANY, N.A., as trustee (the “Trustee”),

 

W I T N E S S E T H:

 

WHEREAS, the Issuer has duly authorized the issue from time to time of
its unsecured debentures, notes or other evidences of indebtedness to be issued
in one or more series (the “Securities”) up to such principal amount or amounts
as may from time to time be authorized in accordance with the terms of this
Indenture;

 

WHEREAS, the Issuer has duly authorized the execution and delivery of
this Indenture to provide, among other things, for the authentication, delivery
and administration of the Securities; and

 

WHEREAS, all things necessary to make this Indenture a valid indenture
and agreement according to its terms have been done;

 

NOW, THEREFORE:

 

In consideration of the premises and the purchases of the Securities by
the holders thereof, the Issuer and the Trustee mutually covenant and agree for
the equal and proportionate benefit of the respective holders from time to time
of the Securities and of the coupons, if any, appertaining thereto as follows:

 

ARTICLE I

 

DEFINITIONS

 

SECTION 1.1 CERTAIN TERMS DEFINED. 
The following terms (except as otherwise expressly provided or unless
the context otherwise clearly requires) for all purposes of this Indenture and
of any indenture supplemental hereto shall have the respective meanings
specified in this Section.  All other
terms used in this Indenture that are defined in the Trust Indenture Act of
1939, as amended (the “Trust Indenture Act”), or the definitions of which in
the Securities Act of 1933, as amended (the “Securities Act”), are referred to
in the Trust Indenture Act, including terms defined therein by reference to the
Securities Act (except as herein otherwise expressly provided or unless the
context otherwise requires), shall have the meaning assigned to such terms in
the Trust Indenture Act and in the Securities Act as in effect from time to
time.  All accounting terms used herein
and not expressly defined shall have the meanings assigned to such terms in
accordance with generally accepted accounting principles, and the term
“generally accepted accounting principles” means such accounting principles as
are generally accepted at the time of any computation unless a different time
shall be specified with respect to such series of Securities as provided for in
Section 2.3.  The words “herein,”
“hereof” and “hereunder” and other words of similar import refer to this
Indenture as a whole and not to any particular Article, Section or other
subdivision.  The terms defined in this
Article have the meanings assigned to them in this Article and include the
plural as well as the singular.

 

1

 

“Affiliate” has the same meaning as given to that term in Rule 405 of
the Securities Act or any successor provision.

 

“Authenticating Agent” shall have the meaning set forth in Section
6.15.

 

“Authorized Newspaper” means a newspaper (which, in the case of The
City of New York, will, if practicable, be The
Wall Street Journal (Eastern Edition), in the case of the United
Kingdom of Great Britain and Northern Ireland (the “United Kingdom”), will, if
practicable, be The Financial Times
(London Edition) and, in the case of the Grand Duchy of Luxembourg
(“Luxembourg”), will, if practicable, be the Luxemburger
Wort) published in an official or common language of the country of
publication customarily published at least once a day for at least five days in
each calendar week and of general circulation in The City of New York, the
United Kingdom or Luxembourg, as applicable. 
If it shall be impractical in the opinion of the Trustee to make any
publication of any notice required hereby in an Authorized Newspaper, any
publication or other notice in lieu thereof which is made or given with the
approval of the Trustee shall constitute a sufficient publication of such
notice.

 

“Board of Directors” means either the Board of Directors of the Issuer
or any committee of such Board duly authorized to act on its behalf.

 

“Board Resolution” means a copy of one or more resolutions, certified
by the secretary or an assistant secretary of the Issuer to have been duly
adopted or consented to by the Board of Directors and to be in full force and
effect, and delivered to the Trustee.

 

“Business Day” means, with respect to any Security, a day that is not a
day on which banking institutions in the city (or in any of the cities, if more
than one) in which amounts are payable, as specified in the form of such
Security, are authorized or required by any applicable law or regulation to be
closed.

 

“Capital Stock” means, with respect to any corporation, any and all
shares, interests, rights to purchase (other than convertible or exchangeable
indebtedness that is not itself otherwise capital stock), warrants, options,
participations or other equivalents of or interests (however designated) in
stock issued by that corporation.

 

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

 

“Corporate Trust Office” means the office of the Trustee at which the
corporate trust business of the Trustee shall, at any particular time, be
principally administered, which office is, as of the date of this Indenture,
located at One Bank One Plaza, IL1-0126, Chicago, IL 60670.

 

“Coupon” means any interest coupon appertaining to an Unregistered Security.

 

“Covenant Defeasance” shall have the meaning set forth in Section
10.1(C).

 

2

 

“Depositary” means, with respect to the Securities of any series
issuable or issued in the form of one or more Registered Global Securities, the
Person designated as Depositary by the Issuer pursuant to Section 2.3 until a
successor Depositary shall have become such pursuant to the applicable
provisions of this Indenture, and thereafter “Depositary” shall mean or include
each Person who is then a Depositary hereunder, and if at any time there is
more than one such Person, “Depositary” as used with respect to the Securities
of any such series shall mean the Depositary with respect to the Registered
Global Securities of that series.

 

“Dollar” or “$” means the coin or currency of the United States of
America as at the time of payment is legal tender for the payment of public and
private debts.

 

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

 

“Event of Default” means any event or condition specified as such in
Section 5.1.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Fair Value” when used with respect to any Voting Equity Interests of
the Issuer means the fair value as determined in good faith by the Board of
Directors of the Issuer.

 

“Foreign Currency” means any coin, currency, currency unit or composite
currency, including, without limitation, the euro, issued by the government of
one or more countries, other than the United States of America or by any
internationally recognized union, confederation or association of such
governments.

 

“Holder,” “Holder of Securities,” “Securityholder” or any other similar
terms mean (a) in the case of any Registered Security, the person in whose name
such Security is registered in the security register kept by the Issuer for
that purpose in accordance with the terms hereof, and (b) in the case of any
Unregistered Security, the bearer of such Security, or any Coupon appertaining
thereto, as the case may be.

 

“Indenture” means this instrument as originally executed and delivered
or, if amended or supplemented as herein provided, as so amended or
supplemented or both, and shall include the forms and terms of particular
series of Securities established as contemplated hereunder, provided, that, if at any time more than
one Person is acting as Trustee under this instrument, “Indenture” shall mean,
with respect to one or more series of Securities for which such person is
trustee, this instrument as originally executed and delivered or, if amended or
supplemented as herein provided, as so amended or supplemented or both, and
shall include the forms and terms of those particular series of Securities for
which such Person is Trustee established as contemplated hereunder, exclusive,
however, of any provisions or terms which relate solely to other series of
Securities for which such person is not Trustee, regardless of when such terms
or provisions were adopted.

 

3

 

“IRS” means the Internal Revenue Service of the United States
Department of the Treasury, or any successor entity.

 

“Issuer” means (except as otherwise provided in Article IX)  UnionBanCal Corporation, a Delaware corporation,
and, subject to Article IX, its successors and assigns.

 

“Issuer Order” means a written statement, request or order of the
Issuer signed in its name by the chairman of the Board of Directors, the
president, any vice president or the treasurer of the Issuer.

 

“Judgment Currency” has the meaning set forth in Section 11.12.

 

“Non-U.S. Person” means any person that is not a “U.S. person” as such
term is defined in Rule 902 of the Securities Act.

 

“Officer’s Certificate” means a certificate signed by the chairman of
the Board of Directors, the president or any vice president or the treasurer of
the Issuer and delivered to the Trustee. 
Each such certificate shall comply with Section 314 of the Trust
Indenture Act and include the statements provided for in Section 11.5.

 

“Opinion of Counsel” means an opinion in writing signed by legal
counsel who may be an employee of the Issuer or other counsel satisfactory to
the Trustee.  Each such opinion shall
comply with Section 314 of the Trust Indenture Act and include the statements
provided for in Section 11.5.

 

“Original Issue Date” of any Security (or portion thereof) means the
earlier of (a) the date of such Security or (b) the date of any Security (or
portion thereof) for which such Security was issued (directly or indirectly) on
registration of transfer, exchange or substitution.

 

“Original Issue Discount Security” means any Security that 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 5.1.

 

“Outstanding” (except as otherwise provided in Section 7.4), when used
with reference to Securities, means, subject to the provisions of Section 7.4,
as of any particular time, all Securities authenticated and delivered by the
Trustee under this Indenture, except:

 

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

 

(b)                                 Securities, or portions thereof, for the
payment or redemption of which moneys or U.S. Government Obligations (as
provided for in Section 10.1) in the necessary amount shall have been deposited
in trust with the Trustee or with any paying agent (other than the Issuer) or
shall have been set aside, segregated and held in trust by the Issuer for the Holders
of such Securities (if the Issuer shall act as its own paying agent), provided,
that if such Securities, or portions thereof, are to be redeemed prior to the
maturity thereof, notice of such redemption shall have been given as herein
provided, or provisions satisfactory to the Trustee shall have been made for
giving such notice; and

 

4

 

(c)                                  Securities which shall have been paid or
in substitution for which other Securities shall have been authenticated and
delivered pursuant to the terms of Section 2.9 (except with respect to any such
Security as to which proof satisfactory to the Trustee is presented that such
Security is held by a person in whose hands such Security is a legal, valid and
binding obligation of the Issuer).

 

In determining whether the Holders of the requisite principal amount of
Outstanding Securities of any or all series have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, the principal
amount of an Original Issue Discount Security that shall be deemed to be
Outstanding for such purposes shall be the amount of the principal thereof that
would be due and payable as of the date of such determination upon a
declaration of acceleration of the maturity thereof pursuant to Section 5.1.

 

“Periodic Offering” means an offering of Securities of a series from
time to time, the specific terms of which Securities, including, without
limitation, the rate or rates of interest, if any, thereon, the stated maturity
or maturities thereof and the redemption provisions, if any, with respect
thereto, are to be determined by the Issuer or its agents upon the issuance of
such Securities.

 

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

 

“principal” whenever used with reference to the Securities or any
Security or any portion thereof, shall be deemed to include “and premium, if
any,” provided, however, that such inclusion of premium, if any, shall under no
circumstances result in the double counting of such premium for the purpose of
any calculation required hereunder.

 

“record date” shall have the meaning set forth in Section 2.7.

 

“Registered Global Security” means a Security evidencing all or a part
of a series of Registered Securities, issued to the Depositary for such series
in accordance with Section 2.4, and bearing the legend prescribed in Section
2.4 and any other legend required by the Depositary for such series.

 

“Registered Security” means any Security registered on the Security
register of the Issuer.

 

“Required Currency” shall have the meaning set forth in Section 11.12.

 

“Responsible Officer” when used with respect to the Trustee means the
chairman of the board of directors, any vice chairman of the board of
directors, the chairman of the trust committee, the chairman of the executive
committee, any vice chairman of the executive committee, the president, any
vice president (whether or not designated by numbers or words added before or
after the title “Vice President”), the cashier, the secretary, the treasurer,
any trust officer, any assistant trust officer, any assistant vice president,
any assistant cashier, any assistant secretary, any assistant treasurer, or any
other officer or assistant officer of the Trustee customarily performing
functions similar to those performed by the persons who at the time shall

 

5

 

be
such officers, respectively, or to whom any corporate trust matter is referred
because of his or her knowledge of and familiarity with the particular subject.

 

“Security” or “Securities” (except as otherwise provided in Section
7.4) has the meaning stated in the first recital of this Indenture, or, as the
case may be, Securities that have been authenticated and delivered under this
Indenture.

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Senior Indebtedness”, when used with respect to the Subordinated
Securities of  any series, shall have
the meaning established pursuant to Subsection 2.3(9) with respect to the
Subordinated Securities of such series.

 

“Senior Securities” means Securities other than Subordinated
Securities.

 

“Subordinated Securities” means Securities that by the terms
established pursuant  to Subsection
2.3(9) are subordinated in right of payment to Senior Indebtedness of the
Issuer.

 

“Subordination Provisions”, when used with respect to the Subordinated  Securities of any series, shall have the
meaning established pursuant to Subsection 2.3(9)  with respect to the Subordinated Securities of such series.

 

“Subsidiary,” with respect to any Person, means (i) a corporation a
majority of whose Voting Equity Interests is at the time, directly or
indirectly, owned by such Person, by such Person and one or more Subsidiaries
of such Person or by one or more Subsidiaries of such Person, (ii) any other
Person (other than a corporation) in which such Person, one or more
Subsidiaries of such Person, or such Person and one or more Subsidiaries of
such Person, directly or indirectly, at the date of determination thereof has
at least majority ownership interest, or (iii) a partnership in which such
Person or a Subsidiary of such Person is, at the time, a general partner.

 

“Trustee” means the Person identified as “Trustee” in the first
paragraph hereof and, subject to the provisions of Article VI, shall also
include any successor trustee. 
“Trustee” shall also mean or include each Person who is 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 the Securities of such series.

 

“Unregistered Security” means any Security other than a Registered
Security.

 

“U.S. Government Obligations” shall have the meaning set forth in
Section 10.1(A).

 

“Voting Equity Interests” means Equity Interests which at the time are
entitled to vote in the election of, as applicable, directors, members or
partners generally; provided,
that, for the purposes hereof, Equity Interests that carry only the right to
vote conditionally on the happening of an event shall not be considered Voting
Equity Interests whether or not such event shall have happened.

 

6

 

“Yield to Maturity” means the yield to maturity on a series of
securities, calculated at the time of issuance of such series, or, if
applicable, at the most recent redetermination of interest on such series, and
calculated in accordance with accepted financial practice.

 

ARTICLE II

 

SECURITIES

 

SECTION 2.1 FORMS GENERALLY. 
The Securities of each series and the Coupons, if any, to be attached
thereto shall be substantially in such form (not inconsistent with this
Indenture) as shall be established by or pursuant to one or more Board
Resolutions (as set forth in a Board Resolution or, to the extent established
pursuant to but not set forth in a Board Resolution, an Officer’s Certificate
detailing such establishment) 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
imprinted or otherwise reproduced thereon such legend or legends or
endorsements, not inconsistent with the provisions of this Indenture, as may be
required to comply with any law or with any rules or regulations pursuant
thereto, or with any rules of any securities exchange or to conform to general
usage, all as may be determined by the officers executing such Securities and
Coupons, if any, as evidenced by their execution of such Securities and
Coupons.

 

The definitive Securities and Coupons, if any, 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 and
Coupons, if any, as evidenced by their execution of such Securities and
Coupons, if any.

 

SECTION 2.2 FORM OF TRUSTEE’S
CERTIFICATE OF AUTHENTICATION.  The Trustee’s certificate of
authentication on all Securities shall be in substantially the following form:

 

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

 

	
   

  	
  BANK ONE TRUST COMPANY, N.A.,

  
	
   

  	
  as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Authorized Signatory”

  

 

If at any time there shall be an Authenticating Agent appointed with
respect to any series of Securities, then the Trustee’s Certificate of
Authentication to be borne by the Securities of each such series shall be
substantially as follows:

 

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

 

7

 

	
   

  	
   

  
	
   

  	
  as Authenticating Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
   

  
	
   

  	
  Authorized Signatory”

  

 

SECTION 2.3 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
one or more Board Resolutions (and to the extent established pursuant to but
not set forth in a Board Resolution, in an Officer’s Certificate detailing such
establishment) or established in one or more indentures supplemental hereto, prior
to the initial issuance of Securities of any series,

 

(1)                                  the designation of the Securities of the
series, which shall distinguish the Securities of the series from the
Securities of all other series, and which may be part of a series of Securities
previously issued;

 

(2)                                  any limit upon the aggregate principal
amount of the Securities of the series that may be authenticated and delivered
under this Indenture (except for Securities authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other
Securities of the series pursuant to Section 2.8, 2.9, 2.11, 8.5 or 12.3);

 

(3)                                  if other than Dollars, the Foreign
Currency or Foreign Currencies in which the Securities of the series are
denominated;

 

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

 

(5)                                  the rate or rates at which the
Securities of the series shall bear interest, if any, the date or dates from
which such interest shall accrue, on which such interest shall be payable, the
terms and conditions of any deferral of interest and the additional interest,
if any, thereon, the right, if any, of the Issuer to extend the interest
payment periods and the duration of the extensions and (in the case of
Registered Securities) the date or dates on which a record shall be taken for
the determination of Holders to whom interest is payable and/or the method by
which such rate or rates or date or dates shall be determined;

 

(6)                                  the place or places where and the manner
in which, the principal of and any interest on Securities of the series shall
be payable, if other than as provided in Section 3.2;

 

(7)                                  the right, if any, of the Issuer to
redeem Securities, in whole or in part, at its option and the period or periods
within which, or the date or dates on which, the price

 

8

 

or prices at which and any terms and conditions upon which Securities
of the series may be so redeemed, pursuant to any sinking fund or otherwise;

 

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

 

(9)                                  if the Securities of such series are
Subordinated Securities, the terms pursuant to which the Securities of such
series will be made subordinate in right of payment to Senior Indebtedness and
the definition of such Senior Indebtedness with respect to such series (in the
absence of an express statement to the effect that the Securities of such
series are subordinate in right of payment to all such Senior Indebtedness, the
Securities of such series shall not be subordinate to Senior Indebtedness and
shall not constitute Subordinated Securities); and, in the event that the
Securities of such series are Subordinated Securities, such Board Resolution,
Officer’s Certificate or supplemental indenture, as the case may be,
establishing the terms of such series shall expressly state which articles,
sections or other provisions thereof constitute the “Subordination Provisions”
with respect to the Securities of such series;

 

(10)                            if other than denominations of $1,000
and any integral multiple thereof in the case of Registered Securities, or
$1,000 and $5,000 in the case of Unregistered Securities, the denominations in
which Securities of the series shall be issuable;

 

(11)                            the percentage of the principal amount
at which the Securities will be issued, and, if other than the principal amount
thereof, the portion of the principal amount of Securities of the series which
shall be payable upon declaration of acceleration of the maturity thereof;

 

(12)                            if other than the coin, currency or
currencies in which the Securities of the series are denominated, the coin,
currency or currencies in which payment of the principal of or interest on the
Securities of such series shall be payable, including composite currencies or
currency units;

 

(13)                            if the principal of or interest on the
Securities of the series are to be payable, at the election of the Issuer or a
Holder thereof, in a coin or currency other than that in which the Securities
are denominated, the period or periods within which, and the terms and
conditions upon which, such election may be made;

 

(14)                            if the amount of payments of principal
of and interest on the Securities of the series may be determined with
reference to an index or formula based on a coin, currency, composite currency
or currency unit other than that in which the Securities of the series are
denominated, the manner in which such amounts shall be determined;

 

(15)                            whether the Securities of the series
will be issuable as Registered Securities (and if so, whether such Securities
will be issuable as Registered Global

 

9

 

Securities) or Unregistered Securities (with or without Coupons), or
any combination of the foregoing, any restrictions applicable to the offer,
sale or delivery of Unregistered Securities or the payment of interest thereon
and, if other than as provided in Section 2.8, the terms upon which
Unregistered Securities of any series may be exchanged for Registered
Securities of such series and vice versa;

 

(16)                            whether and under what circumstances the
Issuer will pay additional amounts on the Securities of the series held by a
person who is not a U.S. person in respect of any tax, assessment or
governmental charge withheld or deducted and, if so, whether the Issuer will
have the option to redeem the Securities of the series rather than pay such
additional amounts;

 

(17)                            if the Securities of the series are to
be issuable in definitive form (whether upon original issue or upon exchange of
a temporary Security of such series) only upon receipt of certain certificates
or other documents or satisfaction of other conditions, the form and terms of
such certificates, documents or conditions;

 

(18)                            any trustees, depositaries,
authenticating or paying agents, transfer agents or registrars of any other
agents with respect to the Securities of such series;

 

(19)                            any deletion from modification of or
addition to the Events of Default or covenants with respect to the Securities
of such series;

 

(20)                            if the Securities of the series are to
be convertible into or exchangeable for any other security or property of the
Issuer, including, without limitation, securities of another Person held by the
Issuer or its Affiliates and, if so, the terms thereof; and

 

(21)                            any other terms of the series (which
terms shall not be inconsistent with the provisions of this Indenture).

 

All Securities of any one series and Coupons, if any, appertaining
thereto shall be substantially identical, except in the case of Registered
Securities as to denomination and except as may otherwise be provided by or
pursuant to the Board Resolution or Officer’s Certificate referred to above or
as set forth in any indenture supplemental hereto.  All Securities of any one series need not be issued at the same
time and may be issued from time to time without consent of any Holder,
consistent with the terms of this Indenture, unless otherwise provided for in
such Board Resolution, such Officer’s Certificate or in any indenture
supplemental hereto.

 

SECTION 2.4 AUTHENTICATION AND
DELIVERY OF SECURITIES.  The Issuer may deliver Securities of any
series having attached thereto appropriate Coupons, if any, executed by the
Issuer to the Trustee for authentication together with the applicable documents
referred to below in this Section 2.4, and the Trustee shall thereupon
authenticate and deliver such Securities and Coupons, if any, to or upon the
order of the Issuer (contained in the Issuer Order referred to below in this
Section) or pursuant to such procedures acceptable to the Trustee and to such
recipients as may be specified from time to time by an Issuer Order.  The maturity date, original issue date,
interest rate and any other terms of the Securities of such series and Coupons,
if any, appertaining thereto shall be determined by or pursuant to such Issuer
Order and procedures.  If provided for
in such procedures, such Issuer Order may authorize

 

10

 

authentication
and delivery pursuant to oral or electronic instructions from the Issuer or its
duly authorized agent or agents, which instructions, if oral, shall be promptly
confirmed in writing.  In authenticating
such Securities and accepting the additional responsibilities under this
Indenture in relation to such Securities, the Trustee shall be entitled to
receive (in the case of subparagraphs (2), (3) and (4) below only at or before
the time of the first request of the Issuer to the Trustee to authenticate
Securities of such series) and (subject to Section 6.1) shall be fully
protected in relying upon, the following enumerated documents unless and until such
documents have been superseded or revoked:

 

(1)                                  an Issuer Order requesting such
authentication and setting forth delivery instructions if the Securities and
Coupons, if any, are not to be delivered to the Issuer, provided that, with respect to Securities
of a series subject to a Periodic Offering, (a) such Issuer Order may be
delivered by the Issuer to the Trustee prior to the delivery to the Trustee of
such Securities for authentication and delivery, (b) the Trustee shall
authenticate and deliver Securities of such series for original issue from time
to time, in an aggregate principal amount not exceeding the aggregate principal
amount established for such series, pursuant to an Issuer Order or pursuant to
procedures acceptable to the Trustee as may be specified from time to time by
an Issuer Order, (c) the maturity date or dates, original issue date or dates,
interest rate or rates and any other terms of Securities of such series shall
be determined by an Issuer Order or pursuant to such procedures and (d) if
provided for in such procedures, such Issuer Order may authorize authentication
and delivery pursuant to oral or electronic instructions from the Issuer or its
duly authorized agent or agents, which instructions, if oral, shall be promptly
confirmed in writing;

 

(2)                                  any Board Resolution, Officer’s
Certificate and/or executed supplemental indenture referred to in Section 2.1
and 2.3 by or pursuant to which the forms and terms of the Securities and
Coupons, if any, were established;

 

(3)                                  an Officer’s Certificate setting forth
the form or forms and terms of the Securities and Coupons, if any, stating that
the form or forms and terms of the Securities and Coupons, if any, have been
established pursuant to Sections 2.1 and 2.3 and comply with this Indenture,
and covering such other matters as the Trustee may reasonably request; and

 

(4)                                  At the option of the Issuer, either one
or more Opinions of Counsel, or a letter addressed to the Trustee permitting it
to rely on one or more Opinions of Counsel, substantially to the effect that:

 

(a)                                  the form or forms of the Securities and
Coupons, if any, have been duly authorized and established in conformity with
the provisions of this Indenture;

 

(b)                                 in the case of an underwritten offering,
the terms of the Securities have been duly authorized and established in
conformity with the provisions of this Indenture, and, in the case of an
offering that is not underwritten, certain terms of the Securities have been
established pursuant to a Board Resolution, an

 

11

 

Officer’s Certificate or a supplemental indenture in accordance with
this Indenture, and when such other terms as are to be established pursuant to
procedures set forth in an Issuer Order shall have been established, all such
terms will have been duly authorized by the Issuer and will have been
established in conformity with the provisions of this Indenture; and

 

(c)                                  such Securities and Coupons, if any,
when executed by the Issuer and authenticated by the Trustee in accordance with
the provisions of this Indenture and delivered to and duly paid for by the
purchasers thereof, and subject to any conditions specified in such Opinion of
Counsel, will have been duly issued under this Indenture, will be entitled to
the benefits of this Indenture, and will be valid and binding obligations of
the Issuer, enforceable in accordance with their respective terms except as the
enforceability thereof may be limited by (i) bankruptcy, insolvency,
reorganization, liquidation, moratorium, fraudulent transfer or similar laws
affecting creditors’ rights generally, (ii) rights of acceleration, if any, and
(iii) the availability of equitable remedies may be limited by equitable
principles of general applicability and such counsel need express no opinion
with regard to the enforceability of Section 6.6 or of a judgment denominated
in a currency other than Dollars.

 

In rendering such opinions, any counsel may qualify any opinions as to
enforceability by stating that such enforceability may be limited by
bankruptcy, insolvency, reorganization, liquidation, moratorium, fraudulent
transfer and other similar laws affecting the rights and remedies of creditors
and is subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).  Such counsel may rely upon opinions of other
counsel (copies of which shall be delivered to the Trustee) reasonably
satisfactory to the Trustee, in which case the opinion shall state that such
counsel believes he and the Trustee are entitled so to rely.  Such counsel may also state that, insofar as
such opinion involves factual matters, he has relied, to the extent he deems
proper, upon certificates of officers of the Issuer and its subsidiaries and
certificates of public officials.

 

The Trustee shall have the right to decline to authenticate and deliver
any Securities under this section if the Trustee, being advised by counsel,
determines that such action may not lawfully be taken by the Issuer or if the
Trustee in good faith by its board of directors or board of trustees, executive
committee or a trust committee of directors or trustees  shall determine that such action would
expose the Trustee to personal liability to existing Holders or would affect
the Trustee’s own rights, duties or immunities under the Securities, this
Indenture or otherwise.

 

If the Issuer shall establish pursuant to Section 2.3 that the
Securities of a series are to be issued in the form of one or more Registered
Global Securities, then the Issuer shall execute and the Trustee shall, in
accordance with this Section and the Issuer Order with respect to such series,
authenticate and deliver one or more Registered Global Securities that (i)
shall represent and shall be denominated in an amount equal to the aggregate
principal amount of all of the Securities of such series issued and not yet
cancelled, (ii) shall be registered in the name of the Depositary for such
Registered Global Security or Securities or the nominee of such Depositary, (iii)
shall be delivered by the Trustee to such Depositary or delivered or held

 

12

 

pursuant
to such Depositary’s instructions and (iv) shall bear a legend substantially to
the following effect:  “Unless and until
it is exchanged in whole or in part for Securities in definitive registered
form, this Security may not be transferred except as a whole by the Depositary
to the nominee of the Depositary or by a nominee of the Depositary to the
Depositary or another nominee of the Depositary or by the Depositary or any
such nominee to a successor Depositary or a nominee of such successor
Depositary.”

 

Each Depositary designated pursuant to Section 2.3 must, at the time of
its designation and at all times while it serves as Depositary, be a clearing
agency registered under the Exchange Act and any other applicable statute or
regulation.

 

SECTION 2.5 EXECUTION OF
SECURITIES.  The Securities and each Coupon appertaining
thereto, if any, shall be signed on behalf of the Issuer by the chairman or
vice chairman of its Board of Directors or its president, or any executive
(senior or other), a  vice president or
its treasurer, under its corporate seal (except in the case of Coupons) which
may, but need not, be attested.  Such
signatures may be the manual or facsimile signatures of the present or any
future such officers.  The seal of the
Issuer may be in the form of a facsimile thereof and may be impressed, affixed,
imprinted or otherwise reproduced on the Securities.  Typographical and other minor errors or defects in any such
reproduction of the seal or any such signature shall not affect the validity or
enforceability of any Security that has been duly authenticated and delivered
by the Trustee.

 

In case any officer of the Issuer who shall have signed any of the
Securities or Coupons, if any, shall cease to be such officer before the
Security or Coupon so signed (or the Security to which the Coupon so signed
appertains) shall be authenticated and delivered by the Trustee or disposed of
by the Issuer, such Security or Coupon nevertheless may be authenticated and
delivered or disposed of as though the person who signed such Security or
Coupon had not ceased to be such officer of the Issuer; and any Security or
Coupon may be signed on behalf of the Issuer by such persons as, at the actual
date of the execution of such Security or Coupon, shall be the proper officers
of the Issuer, although at the date of the execution and delivery of this
Indenture any such person was not such an officer.

 

SECTION 2.6 CERTIFICATE OF
AUTHENTICATION.  Only such Securities as shall bear thereon a
certificate of authentication substantially in the form hereinbefore recited,
executed by the Trustee by the manual signature of one of its authorized officers,
shall be entitled to the benefits of this Indenture or be valid or obligatory
for any purpose.  No Coupon shall be
entitled to the benefits of this Indenture or shall be valid and obligatory for
any purpose until the certificate of authentication on the Security to which
such Coupon appertains shall have been duly executed by the Trustee.  The execution of such certificate by the
Trustee upon any Security executed by the Issuer shall be conclusive evidence
that the Security so authenticated has been duly authenticated and delivered
hereunder and that the Holder is entitled to the benefits of this Indenture.

 

SECTION 2.7 DENOMINATION AND DATE
OF SECURITIES; PAYMENT OF INTEREST.  The Securities of each series
shall be issuable as Registered Securities or Unregistered Securities in
denominations established as contemplated by Section 2.3 or, with respect to
the Registered Securities of any series, if not so established, in

 

13

 

denominations
of $1,000 and any integral multiple thereof. 
If denominations of Unregistered Securities of any series are not so
established, such Securities shall be issuable in denominations of $1,000 and
$5,000.  The Securities of each series
shall be numbered, lettered or otherwise distinguished in such manner or in
accordance with such plan as the officers of the Issuer executing the same may
determine with the approval of the Trustee, as evidenced by the execution and
authentication thereof.

 

Each Registered Security shall be dated the date of its
authentication.  Each Unregistered
Security shall be dated as provided in the Board Resolution referred to in
Section 2.3.  The Securities of each
series shall bear interest, if any, from the date, and such interest shall be
payable on the dates, established as contemplated by Section 2.3.

 

The person in whose name any Registered Security of any series is
registered at the close of business on any record date applicable to a
particular series with respect to any interest payment date for such series
shall be entitled to receive the interest, if any, payable on such interest
payment date notwithstanding any transfer or exchange of such Registered
Security subsequent to the record date and prior to such interest payment date,
except if and to the extent the Issuer shall default in the payment of the
interest due on such interest payment date for such series, in which case such
defaulted interest shall be paid to the persons in whose names Outstanding
Registered Securities for such series are registered at the close of business
on a subsequent record date (which shall be not less than five Business Days
prior to the date of payment of such defaulted interest) established by notice
given by mail by or on behalf of the Issuer to the Holders of Registered
Securities not less than 15 days preceding such subsequent record date.  The term “record date” as used with respect
to any interest payment date (except a date for payment of defaulted interest)
for the Securities of any series shall mean the date specified as such in the
terms of the Registered Securities of such series established as contemplated
by Section 2.3, or, if no such date is so established, if such interest payment
date is the first day of a calendar month, the fifteenth day of the preceding
calendar month or, if such interest payment date is the fifteenth day of a
calendar month, the first day of such calendar month, whether or not such
record date is a Business Day.

 

SECTION 2.8 REGISTRATION, TRANSFER
AND EXCHANGE.  (a) The Issuer will keep at each office or
agency to be maintained for the purpose as provided in Section 3.2 for each
series of Securities a register or registers in which, subject to such
reasonable regulations as the Issuer may prescribe, it will provide for the
registration of Registered Securities of such series and the registration of
transfer of Registered Securities of such series.  Such register shall be in written form in the English language or
in any other form capable of being converted into such form within a reasonable
time.  At all reasonable times such
register or registers shall be open for inspection by the Trustee.

 

Upon due presentation for registration of transfer of any Registered
Security of any series at any such office or agency to be maintained for the
purpose as provided in Section 3.2, the Issuer shall execute and the Trustee
shall authenticate and deliver in the name of the transferee or transferees a
new Registered Security or Registered Securities of the same series, maturity
date, interest rate and original issue date in authorized denominations for a
like aggregate principal amount.

 

14

 

Unregistered Securities (except for any temporary global Unregistered
Securities) and Coupons (except for Coupons attached to any temporary global
Unregistered Securities) shall be transferable by delivery.

 

At the option of the Holder thereof, Registered Securities of any
series (other than a Registered Global Security, except as set forth below) may
be exchanged for a Registered Security or Registered Securities of such series
having authorized denominations and an equal aggregate principal amount, upon
surrender of such Registered Securities to be exchanged at the agency of the
Issuer that shall be maintained for such purpose in accordance with Section 3.2
and upon payment, if the Issuer shall so require, of the charges hereinafter
provided.  If the Securities of any
series are issued in both registered and unregistered form, at the option of
the Holder thereof, except as otherwise specified pursuant to Section 2.3,
Unregistered Securities of any series may be exchanged for Registered
Securities of such series having authorized denominations and an equal
aggregate principal amount, upon surrender of such Unregistered Securities to
be exchanged at the agency of the Issuer that shall be maintained for such
purpose in accordance with Section 3.2, with, in the case of Unregistered
Securities that have Coupons attached, all unmatured Coupons and all matured
Coupons in default thereto appertaining, and upon payment, if the Issuer shall
so require, of the charges hereinafter provided.  At the option of the Holder thereof, if Unregistered Securities
of any series, maturity date, interest rate and original issue date are issued
in more than one authorized denomination, except as otherwise specified
pursuant to Section 2.3, such Unregistered Securities may be exchanged for
Unregistered Securities of such series having authorized denominations and an
equal aggregate principal amount, upon surrender of such Unregistered
Securities to be exchanged at the agency of the Issuer that shall be maintained
for such purpose in accordance with Section 3.2 or as specified pursuant to
Section 2.3, with, in the case of Unregistered Securities that have Coupons
attached, all unmatured Coupons and all matured Coupons in default thereto
appertaining, and upon payment, if the Issuer shall so require, of the charges
hereinafter provided.  Registered
Securities of any series may not be exchanged for Unregistered Securities of
such series unless (1) otherwise specified pursuant to Section 2.3 and (2) the
Issuer has delivered to the Trustee an Opinion of Counsel that (x) the Issuer
has received from the IRS a ruling or (y) since the date hereof, there has been
a change in the applicable United States Federal income tax law, in either case
to the effect that the inclusion of terms permitting Registered Securities to
be exchanged for Unregistered Securities would result in no United States
Federal income tax effect adverse to the Issuer or to any Holder.  Whenever any Securities are so surrendered
for exchange, the Issuer shall execute, and the Trustee shall authenticate and
deliver, the Securities which the Holder making the exchange is entitled to
receive.  All Securities and Coupons, if
any, surrendered upon any exchange or transfer provided for in this Indenture
shall be promptly cancelled and disposed of by the Trustee in accordance with
its regular procedures, and the Trustee shall deliver a certificate of
disposition thereof to the Issuer.

 

All Registered Securities presented for registration of transfer,
exchange, redemption or payment shall (if so required by the Issuer or the
Trustee) be duly endorsed, or be accompanied by a written instrument or instruments
of transfer in form satisfactory to the Issuer and the Trustee duly executed,
by the Holder or his attorney duly authorized in writing.

 

15

 

The Issuer or the registrar may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any exchange or registration of transfer of Securities.  No service charge shall be made for any such
transaction.

 

The Issuer shall not be required to exchange or register a transfer of
(a) any Securities of any series for a period of 15 days preceding the first
mailing of notice of redemption of Securities of such series to be redeemed or
(b) any Securities selected, called or being called for redemption, in whole or
in part, except, in the case of any Security to be redeemed in part, the
portion thereof not so to be redeemed.

 

Notwithstanding any other provision of this Section 2.8, unless and
until it is exchanged in whole or in part for Securities in definitive
registered form, a Registered Global Security representing all or a portion of
the Securities of a series may not be transferred except as a whole by the
Depositary for such series to a nominee of such Depositary or by a nominee of
such Depositary to such Depositary or another nominee of such Depositary or by
such Depositary or any such nominee to a successor Depositary for such series
or a nominee of such successor Depositary.

 

If at any time the Depositary for any Registered Securities of a series
represented by one or more Registered Global Securities notifies the Issuer
that it is unwilling or unable to continue as Depositary for such Registered
Securities or if at any time the Depositary for such Registered Securities
shall no longer be eligible under Section 2.4, the Issuer shall appoint a
successor Depositary eligible under Section 2.4 with respect to such Registered
Securities.  If a successor Depositary
eligible under Section 2.4 for such Registered Securities is not appointed by
the Issuer within 90 days after the Issuer receives such notice or becomes
aware of such ineligibility, the Issuer’s election pursuant to Section 2.3 that
such Registered Securities be represented by one or more Registered Global
Securities shall no longer be effective and the Issuer will execute, and the
Trustee, upon receipt of an Officer’s Certificate for the authentication and
delivery of definitive Securities of such series, will authenticate and
deliver, Securities of such series in definitive registered form without coupons,
in any authorized denominations, in an aggregate principal amount equal to the
principal amount of the Registered Global Security or Securities representing
such Registered Securities in exchange for such Registered Global Security or
Securities.

 

The Issuer may at any time and in its sole discretion determine that
the Registered Securities of any series issued in the form of one or more
Registered Global Securities shall no longer be represented by a Registered
Global Security or Securities.  In such
event the Issuer will execute, and the Trustee, upon receipt of any Officer’s
Certificate for the authentication and delivery of definitive Securities of
such series, will authenticate and deliver, Securities of such series in
definitive registered form without coupons, in any authorized denominations, in
an aggregate principal amount equal to the principal amount of the Registered
Global Security or Securities representing such Registered Securities, in
exchange for such Registered Global Security or Securities.

 

If specified by the Issuer pursuant to Section 2.3 with respect to
Securities represented by a Registered Global Security, the Depositary for such
Registered Global Security may surrender such Registered Global Security in
exchange in whole or in part for Securities of

 

16

 

the
same series in definitive registered form on such terms as are acceptable to
the Issuer and such Depositary. 
Thereupon, the Issuer shall execute, and the Trustee shall authenticate
and deliver, without service charge,

 

(i)                                     to the Person specified by such
Depositary a new Registered Security or Securities of the same series, of any
authorized denominations as requested by such Person, in an aggregate principal
amount equal to and in exchange for such Person’s beneficial interest in the
Registered Global Security; and

 

(ii)                                  to such Depositary a new Registered
Global Security in a denomination equal to the difference, if any, between the
principal amount of the surrendered Registered Global Security and the
aggregate principal amount of Registered Securities authenticated and delivered
pursuant to clause (i) above.

 

Upon the exchange of a Registered Global Security for Securities in
definitive registered form without coupons, in authorized denominations, such
Registered Global Security shall be cancelled by the Trustee or an agent of the
Issuer or the Trustee.  Securities in
definitive registered form without coupons issued in exchange for a Registered
Global Security pursuant to this Section 2.8 shall be registered in such names
and in such authorized denominations as the Depositary for such Registered
Global Security, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee or an agent of the Issuer
or the Trustee.  The Trustee or such
agent shall deliver such Securities to or as directed by the Persons in whose
names such Securities are so registered.

 

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

 

Notwithstanding anything herein or in the terms of any series of
Securities to the contrary, none of the Issuer, the Trustee or any agent of the
Issuer or the Trustee (any of which, other than the Issuer, shall rely on an
Officer’s Certificate and an Opinion of Counsel) shall be required to exchange
any Unregistered Security for a Registered Security if such exchange would
result in United States Federal income tax consequences adverse to the Issuer
(such as, for example, the inability of the Issuer to deduct from its income,
as computed for United States Federal income tax purposes, the interest payable
on the Unregistered Securities) under then applicable United States Federal
income tax laws.

 

SECTION 2.9 MUTILATED, DEFACED,
DESTROYED, LOST AND STOLEN SECURITIES.  In case any temporary or
definitive Security or any Coupon appertaining to any Security shall be
mutilated, defaced, destroyed, lost or stolen, the Issuer in its discretion may
execute and, upon the written request of any officer of the Issuer, the Trustee
shall authenticate and deliver, a new Security of the same series, maturity
date, interest rate and original issue date, bearing a number or other
distinguishing symbol not contemporaneously outstanding, in exchange and
substitution for the mutilated or defaced Security, or in lieu of and in
substitution for the Security so destroyed, lost or stolen with Coupons
corresponding to the Coupons appertaining to the Securities so mutilated,
defaced, destroyed, lost or stolen, or in exchange or substitution for the
Security to which such mutilated, defaced, destroyed, lost or

 

17

 

stolen
Coupon appertained, with Coupons appertaining thereto corresponding to the
Coupons so mutilated, defaced, destroyed, lost or stolen.  In every case, the applicant for a
substitute Security or Coupon shall furnish to the Issuer and to the Trustee
and any agent of the Issuer or the Trustee such security or indemnity as may be
required by them to indemnify and defend and to save each of them harmless and,
in every case of destruction, loss or theft, evidence to their satisfaction of
the destruction, loss or theft of such Security or Coupon and of the ownership
thereof, and in the case of mutilation or defacement shall surrender the
Security and related Coupons to the Trustee or such agent.

 

Upon the issuance of any substitute Security or Coupon, the Issuer or
the registrar 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) or its agent
connected therewith.  In case any
Security or Coupon which has matured or is about to mature or has been called
for redemption in full shall become mutilated or defaced or be destroyed, lost
or stolen, the Issuer may, instead of issuing a substitute Security, pay or
authorize the payment of the same or the relevant Coupon (without surrender
thereof except in the case of a mutilated or defaced Security or Coupon), if
the applicant for such payment shall furnish to the Issuer and to the Trustee
and any agent of the Issuer or the Trustee such security or indemnity as any of
them may require to save each of them harmless, and, in every case of
destruction, loss or theft, the applicant shall also furnish to the Issuer and
the Trustee and any agent of the Issuer or the Trustee evidence to their
satisfaction of the destruction, loss or theft of such Security or Coupons and
of the ownership thereof.

 

Every substitute Security or Coupon of any series issued pursuant to
the provisions of this Section by virtue of the fact that any such Security or
Coupon is destroyed, lost or stolen shall constitute an additional contractual
obligation of the Issuer, whether or not the destroyed, lost or stolen Security
or Coupon shall be at any time enforceable by anyone and shall be entitled to
all the benefits of (but shall be subject to all the limitations of rights set
forth in) this Indenture equally and proportionately with any and all other
Securities or Coupons of such series duly authenticated and delivered
hereunder.  All Securities and Coupons
shall be held and owned upon the express condition that, to the extent
permitted by law, the foregoing provisions are exclusive with respect to the
replacement or payment of mutilated, defaced or destroyed, lost or stolen
Securities and Coupons and shall preclude any and all other rights or remedies
notwithstanding any law or statute existing or hereafter enacted to the
contrary with respect to the replacement or payment of negotiable instruments
or other securities without their surrender.

 

SECTION 2.10 CANCELLATION OF
SECURITIES; DESTRUCTION THEREOF.  All Securities and Coupons
surrendered for payment, redemption, registration of transfer or exchange, or
for credit against any payment in respect of a sinking or analogous fund, if
any, if surrendered to the Issuer or any agent of the Issuer or the Trustee or
any agent of the Trustee, shall be delivered to the Trustee or its agent for
cancellation or, if surrendered to the Trustee, shall be cancelled by it; and no
Securities or Coupons shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Indenture.  The Trustee or its agent shall dispose of cancelled Securities
and Coupons held by it in accordance with its regular procedures and deliver a
certificate of disposition to the Issuer. 
If the Issuer or its agent shall acquire any of the Securities or
Coupons, such acquisition shall not operate as a redemption or

 

18

 

satisfaction
of the indebtedness represented by such Securities or Coupons unless and until
the same are delivered to the Trustee or its agent for cancellation.

 

SECTION 2.11 TEMPORARY SECURITIES. 
Pending the preparation of definitive Securities for any series, the
Issuer may execute and the Trustee shall authenticate and deliver temporary
Securities for such series (printed, lithographed, typewritten or otherwise
reproduced, in each case in form satisfactory to the Trustee).  Temporary Securities of any series shall be issuable
as Registered Securities without coupons, or as Unregistered Securities with or
without coupons attached thereto, of any authorized denomination, and
substantially in the form of the definitive Securities of such series but with
such omissions, insertions and variations as may be appropriate for temporary
Securities, all as may be determined by the Issuer with the concurrence of the
Trustee as evidenced by the execution and authentication thereof.  Temporary Securities may contain such
references to any provisions of this Indenture as may be appropriate.  Every temporary Security shall be executed
by the Issuer and be authenticated by the Trustee upon the same conditions and
in substantially the same manner, and with like effect, as the definitive Securities.  Without unreasonable delay the Issuer shall
execute and shall furnish definitive Securities of such series and thereupon
temporary Registered Securities of such series may be surrendered in exchange
therefor without charge at each office or agency to be maintained by the Issuer
for that purpose pursuant to Section 3.2 and, in the case of Unregistered
Securities, at any agency maintained by the Issuer for such purpose as
specified pursuant to Section 2.3, and the Trustee shall authenticate and deliver
in exchange for such temporary Securities of such series an equal aggregate
principal amount of definitive Securities of the same series having authorized
denominations and, in the case of Unregistered Securities, having attached
thereto any appropriate Coupons.  Until
so exchanged, the temporary Securities of any series shall be entitled to the
same benefits under this Indenture as definitive Securities of such series,
unless otherwise established pursuant to Section 2.3.  The provisions of this Section are subject to any restrictions or
limitations on the issue and delivery of temporary Unregistered Securities of
any series that may be established pursuant to Section 2.3 (including any
provision that Unregistered Securities of such series initially be issued in
the form of a single global Unregistered Security to be delivered to a
depositary or agency located outside the United States and the procedures
pursuant to which definitive or global Unregistered Securities of such series
would be issued in exchange for such temporary global Unregistered Security).

 

ARTICLE III

 

COVENANTS OF
THE ISSUER

 

SECTION 3.1 PAYMENT OF PRINCIPAL
AND INTEREST.  The Issuer covenants and agrees for the
benefit of each series of Securities that it will duly and punctually pay or
cause to be paid the principal of, and interest on, if any, each of the
Securities of such series (together with any additional amounts payable
pursuant to the terms of such Securities) at the place or places, at the
respective time or times and in the manner provided in such Securities and in
the Coupons, if any, appertaining thereto and in this Indenture.  The interest on Securities with Coupons
attached (together with any additional amounts payable pursuant to the terms of
such Securities) shall be payable only upon presentation and surrender of the
several Coupons for such interest installments as are evidenced thereby as they
severally mature.  If any temporary
Unregistered Security provides that interest thereon may be paid while such
Security

 

19

 

is
in temporary form, the interest on any such temporary Unregistered Security
(together with any additional amounts payable pursuant to the terms of such
Security) shall be paid, as to the installments of interest evidenced by
Coupons attached thereto, if any, only upon presentation and surrender thereof,
and, as to the other installments of interest, if any, only upon presentation
of such Securities for notation thereon of the payment of such interest, in
each case subject to any restrictions that may be established pursuant to
Section 2.3.  The interest, if any, on
Registered Securities (together with any additional amounts payable pursuant to
the terms of such Securities) shall be payable only to or upon the written
order of the Holders thereof and, at the option of the Issuer, may be paid by
wire transfer or by mailing checks for such interest payable to or upon the
written order of such Holders at their last addresses as they appear on the
Securities register of the Issuer.

 

SECTION 3.2 OFFICES FOR PAYMENTS,
ETC.  So long as any Registered Securities are
authorized for issuance pursuant to this Indenture or are outstanding
hereunder, the Issuer will maintain in the Borough of Manhattan, The City of
New York, an office or agency where the Registered Securities of each series
may be presented for payment, where the Securities of each series may be
presented for exchange as is provided in this Indenture and, if applicable,
pursuant to Section 2.3 and where the Registered Securities of each series may
be presented for registration of transfer as in this Indenture provided.

 

The Issuer will maintain one or more offices or agencies in a city or
cities located outside the United States (including any city in which such an
agency is required to be maintained under the rules of any stock exchange on
which the Securities of such series are listed) where the Unregistered
Securities, if any, of each series and Coupons, if any, appertaining thereto
may be presented for payment.  No
payment on any Unregistered Security or Coupon will be made upon presentation
of such Unregistered Security or Coupon at an agency of the Issuer within the
United States, nor will any payment be made by transfer to an account in, or by
mail to an address in, the United States, unless pursuant to applicable United
States laws and regulations then in effect such payment can be made without tax
consequences adverse to the Issuer. 
Notwithstanding the foregoing, payments in Dollars of Unregistered Securities
of any series and Coupons appertaining thereto which are payable in Dollars may
be made at an agency of the Issuer maintained in the Borough of Manhattan, The
City of New York if such payment in Dollars at each agency maintained by the
Issuer outside the United States for payment on such Unregistered Securities is
illegal or effectively precluded by exchange controls or other similar
restrictions.

 

The Issuer will maintain in the Borough of Manhattan, The City of New
York, an office or agency where notices and demands to or upon the Issuer in
respect of the Securities of any series, the Coupons appertaining thereto or
this Indenture may be served.

 

The Issuer will give to the Trustee written notice of the location of
each such office or agency and of any change of location thereof.  In case the Issuer shall fail to maintain
any agency required by this Section to be located in the Borough of Manhattan,
The City of New York, or shall fail to give such notice of the location or for
any change in the location of any of the above agencies, presentations and
demands may be made and notices may be served at the Corporate Trust Office of
the Trustee.

 

20

 

The Issuer may from time to time designate one or more additional
offices or agencies where the Securities of a series and any Coupons
appertaining thereto may be presented for payment, where the Securities of that
series may be presented for exchange as provided in this Indenture and pursuant
to Section 2.3 and where the Registered Securities of that series may be
presented for registration of transfer as in this Indenture provided, and the
Issuer may from time to time rescind any such designation, as the Issuer may
deem desirable or expedient; provided, that no such designation or rescission
shall in any manner relieve the Issuer of its obligations to maintain the
agencies provided for in this Section. 
The Issuer shall give to the Trustee prompt written notice of any such
designation or rescission thereof.

 

SECTION 3.3 APPOINTMENT TO FILL A
VACANCY IN OFFICE OF TRUSTEE.  The Issuer, whenever necessary
to avoid or fill a vacancy in the office of Trustee, will appoint, in the
manner provided in Section 6.10, a Trustee, so that there shall at all times be
a Trustee with respect to each series of Securities hereunder.

 

SECTION 3.4 PAYING AGENTS. 
Whenever the Issuer shall appoint a paying agent other than the Trustee
with respect to the Securities of any series, it will cause such paying agent
to execute and deliver to the Trustee an instrument in which such agent shall
agree with the Trustee, subject to the provisions of this Section,

 

(a)                                  that it will hold all sums received by
it as such agent for the payment of the principal of or interest on the
Securities of such series (whether such sums have been paid to it by the Issuer
or by any other obligor on the Securities of such series) in trust for the
benefit of the Holders of the Securities of such series, or Coupons
appertaining thereto, if any, or of the Trustee;

 

(b)                                 that it will give the Trustee notice of
any failure by the Issuer (or by any other obligor on the Securities of such
series) to make any payment of the principal of or interest on the Securities
of such series when the same shall be due and payable; and

 

(c)                                  that it will pay any such sums so held
in trust by it to the Trustee upon the Trustee’s written request at any time
during the continuance of the failure referred to in the foregoing clause (b).

 

The Issuer will, on or prior to each due date of the principal of or
interest on the Securities of such series, deposit with the paying agent a sum
sufficient to pay such principal or interest so becoming due, and (unless such
paying agent is the Trustee) the Issuer will promptly notify the Trustee of any
failure to take such action.

 

If the Issuer shall act as its own paying agent with respect to the
Securities of any series, it will, on or before each due date of the principal
of or interest on the Securities of such series, set aside, segregate and hold in
trust for the benefit of the Holders of the Securities of such series or the
Coupons appertaining thereto a sum sufficient to pay such principal or interest
so becoming due.  The Issuer will
promptly notify the Trustee of any failure to take such action.

 

Anything in this Section to the contrary notwithstanding, but subject
to Section 10.1, the Issuer may at any time, for the purpose of obtaining a
satisfaction and discharge with respect to one or more or all series of
Securities hereunder, or for any other reason, pay or cause

 

21

 

to
be paid to the Trustee all sums held in trust for any such series by the Issuer
or any paying agent hereunder, as required by this Section, such sums to be
held by the Trustee upon the trusts herein contained.

 

Anything in this Section to the contrary notwithstanding, the agreement
to hold sums in trust as provided in this Section is subject to the provisions
of Sections 10.3 and 10.4.

 

SECTION 3.5 COMPLIANCE
CERTIFICATES.  The Issuer will furnish to the Trustee on or
before January 31 in each year (beginning with
[                ])
a brief certificate (which need not comply with Section 11.5) from the
principal executive, financial or accounting officer of the Issuer stating that
in the course of the performance by the signer of his or her duties as an
officer of the Issuer he or she would normally have knowledge of any default or
non-compliance by the Issuer in the performance of any covenants or conditions
contained in this Indenture, stating whether or not he or she has knowledge of
any such default or non-compliance and, if so, describing each such default or
non-compliance of which the signer has knowledge and the nature thereof.

 

SECTION 3.6 CORPORATE EXISTENCE. 
Subject to Article IX, the Issuer will do or cause to be done all things
necessary to preserve and keep in full force and effect its corporate existence
and the rights (charter and statutory), licenses and franchises of the Issuer
and its Subsidiaries; provided, that
the Issuer shall not be required to preserve any such right, license or
franchise, if, in the judgment of the Issuer, the preservation thereof is no
longer desirable in the conduct of the business of the Issuer and its
Subsidiaries taken as a whole and the loss thereof is not disadvantageous in
any material respect to the Securityholders.

 

SECTION 3.7 LUXEMBOURG
PUBLICATIONS.  In the event of the publication of any
notice pursuant to Section 5.11, 6.11, 6.12, 8.2, 10.4, 11.4 or 12.2, the party
making such publication in the Borough of Manhattan, The City of New York and
London shall also, to the extent that notice is required to be given to Holders
of Securities of any series by applicable Luxembourg law or stock exchange
regulation, as evidenced by an Officer’s Certificate delivered to such party,
make a similar publication in Luxembourg.

 

ARTICLE IV

 

SECURITYHOLDER LISTS AND REPORTS BY
THE

ISSUER AND THE TRUSTEE

 

SECTION 4.1 ISSUER TO FURNISH
TRUSTEE INFORMATION AS TO NAMES AND ADDRESSES OF SECURITYHOLDERS. 
If and so long as the Trustee shall not be the Security registrar for
the Securities of any series, the Issuer and any other obligor on the
Securities will furnish or cause to be furnished to the Trustee a list in such
form as the Trustee may reasonably require of the names and addresses of the
Holders of the Registered Securities of such series pursuant to Section 312 of
the Trust Indenture Act:

 

(a)                                  semi-annually not more than 5 days after
each record date for the payment of interest on such Registered Securities, as
hereinabove specified, as of such record date

 

22

 

and on dates to be determined pursuant to Section 2.3 for non-interest
bearing Registered Securities in each year; and

 

(b)                                 at such other times as the Trustee may
reasonably request in writing, within thirty days after receipt by the Issuer
of any such request as of a date not more than 15 days prior to the time such
information is furnished.

 

SECTION 4.2 REPORTS BY THE ISSUER. 
The Issuer covenants to file with the Trustee, within 15 days after the
Issuer is required to file the same with the Commission, copies of the annual
reports and of the information, documents, and other reports that the Issuer
may be required to file with the Commission pursuant to Section 13 or Section
15(d) of the Exchange Act or pursuant to Section 314 of the Trust Indenture
Act.

 

SECTION 4.3 REPORTS BY THE TRUSTEE.

 

(a)                                  On or before the first July 15 which
occurs not less than 60 days after the earliest date of issuance of any
Securities and on or before July 15 in each year thereafter, so long as any
Securities are Outstanding hereunder, the Trustee shall transmit by mail as
provided below to the Securityholders of each series of outstanding Securities,
as hereinafter in this Section provided, a brief report dated as of the
preceding May 15 with respect to:

 

(i)                                     its eligibility under Section 6.10 and
its qualification under Section 6.9, or in lieu thereof, if to the best of its
knowledge it has continued to be eligible and qualified under such Sections, a
written statement to such effect;

 

(ii)                                  the character and amount of any advances
(and if the Trustee elects to so state, the circumstances surrounding the
making thereof) made by the Trustee (as such) which remain unpaid on the date
of such report and for the reimbursement of which it claims or may claim a lien
or charge, prior to that of the Securities of such series, on any property or
funds held or collected by it as Trustee, except that the Trustee shall not be required
(but may elect) to report such advances if such advances so remaining unpaid
aggregate not more than 0.5% of the principal of the Securities of such series
outstanding on the date of such report;

 

(iii)                               the amount, interest rate and maturity
date of all other indebtedness owing by the Issuer (or any other obligor on the
Securities of such series) to the Trustee in its individual capacity on the
date of such report, with a brief description of any property held as
collateral security therefor, except any indebtedness based upon a creditor
relationship;

 

(iv)                              the property and funds, if any,
physically in the possession of the Trustee (as such) in respect of the
Securities of such series on the date of such report;

 

(v)                                 any additional issue of Securities of
such series which the Trustee has not previously reported; and

 

23

 

(vi)                              any action taken by the Trustee in the
performance of its duties under this Indenture which the Trustee has not
previously reported and which in the Trustee’s opinion materially affects the
Securities of such series, except action in respect of a default, notice of
which has been or is to be withheld by it in accordance with the provisions of
Section 5.11.

 

(b)                                 The Trustee shall transmit to the
Securityholders of each series, as provided in subsection (c) of this Section,
a brief report with respect to the character and amount of any advances (and if
the Trustee elects so to state, the circumstances surrounding the making
thereof) made by the Trustee (as such) in respect of the Securities of such
series since the date of the last report transmitted pursuant to the provisions
of subsection (a) of this Section (or if no such report has yet been so
transmitted, since the date of this Indenture) for the reimbursement of which
it claims or may claim a lien or charge prior to that of the Securities of such
series on property or funds held or collected by it as Trustee and which it has
not previously reported pursuant to this subsection (b), except that the
Trustee shall not be required (but may elect) to report such advances if such
advances remaining unpaid at any time aggregate 10% or less of the principal
amount of Securities of such series outstanding at such time, such report to be
transmitted within 90 days after such time.

 

(c)                                  Reports pursuant to this Section shall
be transmitted by mail to all Holders of Securities of such series, as the
names and addresses of such Holders appear upon the Securities register as of a
date not more than 15 days prior to the mailing thereof.

 

(d)                                 A copy of each such report shall, at the
time of such transmission to Securityholders, be furnished to the Issuer and be
filed by the Trustee with each stock exchange upon which the Securities of such
series are listed and also with the Commission.  The Issuer agrees to notify the Trustee when and as Securities of
any series become listed on any national securities exchange.

 

ARTICLE V

 

REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT

 

SECTION 5.1 EVENT OF DEFAULT
DEFINED, ACCELERATION OF MATURITY; WAIVER OF DEFAULT. 
“Event of Default” with respect to Securities of any series, wherever
used herein, means any one of the following events which shall have occurred
and be continuing (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):

 

(a)                                  default in the payment of any
installment of interest upon any of the Securities of such series as and when
the same shall become due and payable, and continuance of such default for a
period of 30 days; provided that, a valid extension of an

 

24

 

interest payment period by the Issuer in accordance with the terms of
such Securities shall not constitute a failure to pay interest; or

 

(b)                                 default in the payment of all or any
part of the principal or premium (if any) on any of the Securities of such
series as and when the same shall become due and payable either at maturity,
upon any redemption, by declaration or otherwise; or

 

(c)                                  default in the payment of any sinking
fund installment as and when the same shall become due and payable by the terms
of the Securities of such series; or

 

(d)                                 failure on the part of the Issuer duly
to observe or perform any other of the covenants or agreements on the part of
the Issuer in the Securities of such series or contained in this Indenture
(other than a covenant or agreement included in this Indenture solely for the
benefit of a series of Securities other than such series) for a period of 90
days after the date on which written notice specifying such failure, stating
that such notice is a “Notice of Default” hereunder and demanding that the
Issuer remedy the same, shall have been given by overnight or personal
delivery, or by facsimile if confirmed by mail, overnight, or personal
delivery, to the Issuer by the Trustee, or to the Issuer and the Trustee by the
holders of at least 25% in aggregate principal amount of the Outstanding
Securities of the series to which such covenant or agreement relates; or

 

(e)                                  a court having jurisdiction in the
premises shall enter a decree or order for relief in respect of the Issuer in
an involuntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or appointing a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or similar official) of the Issuer
for any substantial part of its or their property or ordering the winding up or
liquidation of its or their affairs, and such decree or order shall remain
unstayed and in effect for a period of 60 consecutive days; or

 

(f)                                    the Issuer shall commence a voluntary
case under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or consent to the entry of an order for relief in an
involuntary case under any such law, or consent to the appointment or taking
possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of the Issuer or for any substantial part of
its or their property, or make any general assignment for the benefit of
creditors; or

 

(g)                                 any other Event of Default provided in
the supplemental indenture or Board Resolution under which such series of
Securities is issued or in the form of Security for such series.

 

If an Event of Default described in clause (a), (b) or (c) occurs and
is continuing, then, and in each and every such case, except for any series of
Securities the principal of which shall have already become due and payable,
either the Trustee or the Holders of not less than 25% in aggregate principal
amount of the Securities of each such affected series then Outstanding
hereunder (each such series voting as a separate class) by notice in writing to
the Issuer (and to the Trustee if given by Securityholders), may declare the
entire principal (or, if the Securities of such series are Original Issue
Discount Securities, such portion of the principal

 

25

 

amount as may be specified in
the terms of such series) of all Securities of such series, and the interest
accrued thereon, if any, to be due and payable immediately, and upon any such
declaration, the same shall become immediately due and payable.

 

Except as otherwise provided in the terms of any series of Senior
Securities pursuant to Section 2.3, if an Event of Default described in clause
(d) or (g) above with respect to all series of the Senior Securities then
Outstanding, occurs and is continuing, then, and in each and every such case,
unless the Principal of all of the Senior Securities shall have already become
due and payable, either the Trustee or the Holders of not less than 25% in
aggregate principal amount of all of the Senior Securities then Outstanding
hereunder (treated as one class) by notice in writing to the Issuer (and to the
Trustee if given by Securityholders), may declare the entire principal (or, if
the Senior Securities of any series are Original Issue Discount Securities,
such portion of the principal amount as may be specified in the terms of such
series) of all of the Senior Securities then Outstanding, and the interest
accrued thereon, if any, to be due and payable immediately, and upon such
declaration, the same shall become immediately due and payable.  If an Event of Default described in clause
(e) or (f) above occurs and is continuing, then the principal amount of all the
Senior Securities then Outstanding, and the interest accrued thereon, if any,
shall become and be immediately due and payable without any declaration or
other act on the part of the Trustee or any Holder.

 

Except as otherwise provided in the terms of any series of Subordinated
Securities pursuant to Section 2.3, if an Event of Default described in clause
(d) or (g) above with respect to all series of Subordinated Securities then
Outstanding, occurs and is continuing, then, and in each and every such case,
unless the Principal of all of the Subordinated Securities shall have already
become due and payable, either the Trustee or the Holders of not less than 25%
in aggregate principal amount of all of the Subordinated Securities then
Outstanding hereunder (treated as one class) by notice in writing to the Issuer
(and to the Trustee if given by Securityholders), may declare the entire
principal (or, if the Subordinated Securities of any series are Original Issue
Discount Securities, such portion of the principal amount as may be specified
in the terms of such series) of all of the Subordinated Securities then
Outstanding, and the interest accrued thereon, if any, to be due and payable
immediately, and upon such declaration, the same shall become immediately due
and payable.  If an Event of Default
described in clause (e) or (f) above occurs and is continuing, then the
principal amount of all of the Subordinated Securities then Outstanding, and
the interest accrued thereon, if any, shall become and be immediately due and
payable without any declaration or other act on the part of the Trustee or any
Holder.

 

If an Event of Default described in clause (d) or (g) occurs and is
continuing, which Event of Default is with respect to less than all series of
Senior Securities then Outstanding, then, and in each and every such case,
except for any series of Senior Securities the principal of which shall have
already become due and payable, either the Trustee or the Holders of not less
than 25% in aggregate principal amount of the Senior Securities of each such
affected series then Outstanding hereunder (each such series voting as a
separate class) by notice in writing to the Issuer (and to the Trustee if given
by Securityholders), may declare the entire principal (or, if the Securities of
such series are Original Issue Discount Securities, such portion of the
principal amount as may be specified in the terms of such series) of all
Securities of such

 

26

 

series,
and the interest accrued thereon, if any, to be due and payable immediately,
and upon any such declaration, the same shall become immediately due and
payable.

 

If an Event of Default described in clause (d) or (g) occurs and is
continuing, which Event of Default is with respect to less than all series of
Subordinated Securities then Outstanding, then, and in each and every such
case, except for any series of Subordinated Securities the principal of which
shall have already become due and payable, either the Trustee or the Holders of
not less than 25% in aggregate principal amount of the Subordinated Securities
of each such affected series then Outstanding hereunder (each such series
voting as a separate class) by notice in writing to the Issuer (and to the
Trustee if given by Securityholders), may declare the entire principal (or, if
the Securities of such series are Original Issue Discount Securities, such
portion of the principal amount as may be specified in the terms of such
series) of all Securities of such series, and the interest accrued thereon, if
any, to be due and payable immediately, and upon any such declaration, the same
shall become immediately due and payable.

 

The foregoing provisions are subject to the condition that if, at any
time after the principal (or, if the Securities are Original Issue Discount
Securities, such portion of the principal as may be specified in the terms
thereof) of the Securities of any series (or of all the Securities, as the case
may be) shall have been so declared due and payable, and before any judgment or
decree for the payment of the moneys due shall have been obtained or entered as
hereinafter provided,

 

(A) the Issuer shall pay or
shall deposit with the Trustee a sum sufficient to pay

 

(i)                                     all matured installments of interest
upon all the Securities of such series (or all the Securities, as the case may
be); and

 

(ii)                                  the principal of any and all Securities
of such series (or of all the Securities, as the case may be) which shall have
become due otherwise than by acceleration; and

 

(iii)                               interest upon such principal and, to the
extent that payment of such interest is enforceable under applicable law, on
overdue installments of interest, at the same rate as the rate of interest or
Yield to Maturity (in the case of Original Issue Discount Securities) specified
in the Securities of such series (or at the respective rates of interest or
Yields to Maturity of all the Securities, as the case may be) to the date of
such payment or deposit; and

 

(iv)                              all amounts payable to the Trustee
pursuant to Section 6.6; and

 

(B) all Events of Default under
the Indenture, other than the non-payment of the principal of Securities which
shall have become due by acceleration, shall have been cured, waived or
otherwise remedied as provided herein,

 

then and in every such case the
Holders of a majority in aggregate principal amount of all the Securities of
such series voting as a separate class (or of all the Securities, as the case
may be, voting as a single class), then Outstanding, by written notice to the
Issuer and to the Trustee, may

 

27

 

waive all defaults with respect
to such series (or with respect to all the Securities, as the case may be) and
rescind and annul such declaration and its consequences, but no such waiver or
rescission and annulment shall extend to or shall affect any subsequent default
or shall impair any right consequent thereon.

 

For all purposes under this Indenture, if a portion of the principal of
any Original Issue Discount Securities shall have been accelerated and declared
due and payable pursuant to the provisions hereof, then, from and after such
declaration, unless such declaration has been rescinded and annulled, the
principal amount of such Original Issue Discount Securities shall be deemed, for
all purposes hereunder, to be such portion of the principal thereof as shall be
due and payable as a result of such acceleration, and payment of such portion
of the principal thereof as shall be due and payable as a result of such
acceleration, together with interest, if any, thereon and all other amounts
owing thereunder, shall constitute payment in full of such Original Issue
Discount Securities.

 

SECTION 5.2 COLLECTION OF
INDEBTEDNESS BY TRUSTEE; TRUSTEE MAY PROVE DEBT. 
The Issuer covenants that (a) in case default shall be made in the
payment of any installment of interest on any of the Securities of any series
when such interest shall have become due and payable, and such default shall
have continued for a period of 30 days, or (b) in case default shall be made in
the payment of all or any part of the principal of any of the Securities of any
series when the same shall have become due and payable, whether upon maturity
of the Securities of such series or upon any redemption or by declaration or
otherwise, then upon demand of the Trustee, the Issuer will pay to the Trustee
for the benefit of the Holders of the Securities of such series the whole
amount that then shall have become due and payable on all Securities of such
series, and such Coupons, for principal and interest, as the case may be (with
interest to the date of such payment upon the overdue principal and, to the
extent that payment of such interest is enforceable under applicable law, on
overdue installments of interest at the same rate as the rate of interest or
Yield to Maturity (in the case of Original Issue Discount Securities) specified
in the Securities of such series); and in addition thereto, such further amount
as shall be sufficient to cover the costs and expenses of collection, and such
other amount due the Trustee under Section 6.6 in respect of Securities of such
series.

 

Until such demand is made by the Trustee, the Issuer may pay the
principal of and interest on the Securities of any series to the registered
Holders, whether or not the Securities of such series be overdue.

 

In case the Issuer shall fail forthwith to pay such amounts upon such
demand, the Trustee, in its own name as trustee of an express trust, shall be
entitled and empowered to institute any action or proceedings at law or in
equity for the collection of the sums so due and unpaid, and may prosecute any
such action or proceedings to judgment or final decree, and may enforce any
such judgment or final decree against the Issuer or other obligor upon the
Securities and collect in the manner provided by law out of the property of the
Issuer or other obligor upon the Securities, wherever situated, all the moneys
adjudged or decreed to be payable.

 

In case there shall be pending proceedings relative to the Issuer or
any other obligor upon the Securities under Title 11 of the United States Code
or any other applicable Federal or state bankruptcy, insolvency or other
similar law, or in case a receiver, assignee or

 

28

 

trustee
in bankruptcy or reorganization, liquidator, sequestrator or similar official
shall have been appointed for or taken possession of the Issuer or its property
or such other obligor, or in case of any other comparable judicial proceedings
relative to the Issuer or other obligor upon the Securities, or to the
creditors or property of the Issuer or such other obligor, the Trustee,
irrespective of whether the principal of the Securities shall then be due and
payable as therein expressed or by declaration or otherwise and irrespective of
whether the Trustee shall have made any demand pursuant to the provisions of
this Section, shall be entitled and empowered, by intervention in such
proceedings or otherwise:

 

(a)                                  to file and prove a claim or claims for
the whole amount of principal and interest (or, if the Securities of any series
are Original Issue Discount Securities, such portion of the principal amount as
may be specified in the terms of such series) owing and unpaid in respect of
the Securities of any series, and to file such other papers or documents as may
be necessary or advisable in order to have the claims of the Trustee (including
any claim for amounts payable to the Trustee under Section 6.6) and of the
Securityholders allowed in any judicial proceedings relative to the Issuer or
other obligor upon the Securities, or to the creditors or property of the
Issuer or such other obligor; and

 

(b)                                 unless prohibited by applicable law and
regulations, to vote on behalf of the holders of the Securities of any series
in any election of a receiver, assignee, trustee or a standby trustee in
arrangement, reorganization, liquidation or other bankruptcy or insolvency
proceedings, custodian or other person performing similar functions in respect
of any such proceedings; and

 

(c)                                  to collect and receive any moneys or
other property payable or deliverable on any such claims, and to distribute all
amounts received with respect to the claims of the Securityholders and of the
Trustee on their behalf; and any trustee, receiver, or liquidator, custodian or
other similar official performing similar functions in respect of any such
proceedings is hereby authorized by each of the Securityholders to make
payments to the Trustee, and, in the event that the Trustee shall consent to
the making of payments directly to the Securityholders, to pay to the Trustee
its costs and expenses of collection and all other amounts due to it pursuant
to Section 6.6.

 

Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or vote for or accept or adopt on behalf of any
Securityholder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities of any series or the rights of any Holder
thereof, or to authorize the Trustee to vote in respect of the claim of any
Securityholder in any such proceeding, except as aforesaid in clause (b).

 

All rights of action and of asserting claims under this Indenture, or
under any of the Securities of any series or Coupons appertaining to such
Securities, may be enforced by the Trustee without the possession of any of the
Securities of such series or Coupons appertaining to such Securities or the
production thereof in any trial or other proceedings relative thereto, and any
such action or proceedings instituted by the Trustee shall be brought in its
own name as trustee of an express trust, and any recovery of judgment shall be
awarded to the Trustee for ratable distribution to the Holders of the
Securities or Coupons appertaining to such Securities in 

 

29

 

respect of which such action
was taken, after payment of all sums due to the Trustee under Section 6.6 in
respect of such Securities.

 

In any proceedings brought by the Trustee (and also any proceedings
involving the interpretation of any provision of this Indenture to which the
Trustee shall be a party) the Trustee shall be held to represent all the
Holders of the Securities or Coupons appertaining to such Securities in respect
to which such action was taken, and it shall not be necessary to make any
Holders of such Securities or Coupons appertaining to such Securities parties
to any such proceedings.

 

SECTION 5.3 APPLICATION OF
PROCEEDS.  Any moneys collected by the Trustee pursuant
to this Article in respect of any series shall be applied in the following
order at the date or dates fixed by the Trustee and, in case of the
distribution of such moneys on account of principal or interest, upon
presentation of the several Securities and Coupons appertaining to such Securities
in respect of which monies have been collected and stamping (or otherwise
noting) thereon the payment, or issuing Securities of such series in reduced
principal amounts in exchange for the presented Securities of like series if
only partially paid, or upon surrender thereof if fully paid:

 

FIRST:  To the payment of costs and expenses
applicable to such series of Securities in respect of which monies have been
collected, including all amounts due to the Trustee and each predecessor
Trustee pursuant to Section 6.6 in respect to such series of Securities;

 

SECOND:  If the Securities of such series are
Subordinated Securities, to the payment of amounts then due and unpaid to the
holders of Senior Indebtedness with respect to such series, to the extent required
pursuant to the Subordination Provisions established with respect to the
Securities of such series pursuant to Section 2.3(9).

 

THIRD: In case the principal of
the Securities of such series in respect of which moneys have been collected
shall not have become and be then due and payable, to the payment of interest
on the Securities of such series in default in the order of the maturity of the
installments on such interest, with interest (to the extent that such interest
has been collected by the Trustee and is permitted by applicable law) upon the
overdue installments of interest at the same rate as the rate of interest or
Yield to Maturity (in the case of Original Issue Discount Securities) specified
in such Securities, such payments to be made ratably to the persons entitled
thereto, without discrimination or preference;

 

FOURTH: In case the principal
of the Securities of such series in respect of which moneys have been collected
shall have become and shall be then due and payable, to the payment of the
whole amount then owing and unpaid upon all the Securities of such series for
principal and interest, with interest upon the overdue principal, and (to the
extent that such interest has been collected by the Trustee and is permitted by
applicable law) upon the overdue installations of interest at the same rate as
the rate of interest or Yield to Maturity (in the case of

 

30

 

Original Issue Discount Securities) specified in the Securities of such
series; and in case such moneys shall be insufficient to pay in full the whole
amount so due and unpaid upon the Securities of such series, then to the
payment of such principal and interest or Yield to Maturity, without preference
or priority of principal over interest or Yield to Maturity, or of interest or
Yield to Maturity over principal, or of any installment of interest over any
other installment of interest or of any Security of such series over any other
Security of such series, ratably to the aggregate of such principal and accrued
and unpaid interest or Yield to Maturity; and

 

FIFTH: To the payment of the
remainder, if any, to the Issuer or to such party as a court of competent
jurisdiction shall direct.

 

SECTION 5.4 SUITS FOR ENFORCEMENT. 
In case an Event of Default has occurred, has not been waived and is
continuing, the Trustee may in its discretion proceed to protect and enforce
the rights vested in it by this Indenture by such appropriate judicial
proceedings as the Trustee shall deem most effectual to protect and enforce any
of such rights, either at law or in equity or in bankruptcy or otherwise,
whether for the specific enforcement of any covenant or agreement contained in
this Indenture or in aid of the exercise of any power granted in this Indenture
or to enforce any other legal or equitable right vested in the Trustee by this
Indenture or by law.

 

SECTION 5.5 RESTORATION OF RIGHTS
ON ABANDONMENT OF PROCEEDINGS.  In case the Trustee shall
have proceeded to enforce any right under this Indenture and such proceedings
shall have been discontinued or abandoned for any reason, or shall have been
determined adversely to the Trustee, then and in every such case the Issuer and
the Trustee shall be restored respectively to their former positions and rights
hereunder, and all rights, remedies and powers of the Issuer, the Trustee and
the Securityholders shall continue as though no such proceedings had been
taken.

 

SECTION 5.6 LIMITATIONS ON SUITS
BY SECURITY HOLDERS.  No Holder of any Security of any series or
of any Coupon appertaining thereto shall have any right by virtue or by
availing of any provision of this Indenture to institute any action or
proceeding at law or in equity or in bankruptcy or otherwise upon or under or
with respect to this Indenture or such Security, or for the appointment of a
trustee, receiver, liquidator, custodian or other similar official or for any
other remedy hereunder or thereunder, unless (a) such Holder previously shall
have given to a Responsible Officer of the Trustee written notice of an Event
of Default with respect to Securities of such series and of the continuance
thereof, as hereinbefore provided, and (b) the Holders of not less than 25% in
aggregate principal amount of the Securities of such affected series then Outstanding
(treated as a single class) shall have made written request upon the Trustee to
institute such action or proceedings in its own name as Trustee hereunder and
shall have offered to the Trustee reasonable security or indemnity satisfactory
to it against the costs, expenses and liabilities to be incurred therein or
thereby, and (c) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity shall have failed to institute any such action
or proceeding, and (d) no direction inconsistent with such written request
shall have been given to the Trustee pursuant to Section 5.9; it being
understood and intended, and being expressly covenanted by the taker and Holder
of every Security or Coupon with every other taker

 

31

 

and Holder and the Trustee, that no one or more Holders of Securities
of any series or Coupons appertaining to such Securities shall have any right
in any manner whatever by virtue or by availing of any provision of this
Indenture or any Security to affect, disturb or prejudice the rights of any
other such taker or Holder of Securities or Coupons appertaining to such
Securities, or to obtain or seek to obtain priority over or preference to any
other such taker or Holder or to enforce any right under this Indenture or any
Security, except in the manner herein provided and for the equal, ratable and
common benefit of all Holders of Securities of the applicable series and
Coupons appertaining to such Securities. 
For the protection and enforcement of the provisions of this Section,
each and every Securityholder and the Trustee shall be entitled to such relief
as can be given either at law or in equity.

 

SECTION 5.7 UNCONDITIONAL RIGHT OF
SECURITYHOLDERS TO INSTITUTE CERTAIN SUITS.  Notwithstanding any other
provision in this Indenture and any provision of any Security, the right of any
Holder of any Security or Coupon to receive payment of the principal of and
interest on such Security or Coupon on or after the respective due dates
expressed in such Security or Coupon or the applicable redemption dates
provided for in such Security, or to institute suit for the enforcement of any
such payment on or after such respective dates, shall not be impaired or
affected without the consent of such Holder.

 

SECTION 5.8 POWERS AND REMEDIES
CUMULATIVE; DELAY OR OMISSION NOT WAIVER OF DEFAULT. 
Except as provided in Section 5.6, no right or remedy herein conferred
upon or reserved to the Trustee or to the Holders of Securities or Coupons is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at
law or in equity or otherwise.  The
assertion or employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other appropriate
right or remedy.

 

No delay or omission of the Trustee or of any Holder of Securities or Coupons
to exercise any right or power accruing upon any Event of Default occurring and
continuing as aforesaid shall impair any such right or power or shall be
construed to be a waiver of any such Event of Default or an acquiescence
therein.  Every power and remedy given
by this Indenture, any Security or law to the Trustee or to the Holders of
Securities or Coupons may be exercised from time to time, and as often as shall
be deemed expedient, by the Trustee or, subject to Section 5.6, by the Holders
of Securities or Coupons.

 

SECTION 5.9 CONTROL BY HOLDERS OF
SECURITIES.  The Holders of a majority in aggregate
principal amount of the Securities of each series affected (with each such
series voting as a separate class) at the time Outstanding 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 by this Indenture;
provided, that such direction shall not be otherwise than in accordance with
law and the provisions of this Indenture; and provided, further, that (subject
to the provisions of Section 6.1) the Trustee shall have the right to decline
to follow any such direction if (a) the Trustee, being advised by counsel,
shall determine that the action or proceeding so directed may not lawfully be
taken; or (b) if the Trustee by its trust committee of directors or Responsible
Officers of the Trustee shall determine in good faith that the action or
proceedings

 

32

 

so directed would involve the Trustee in personal liability; or (c) if
the Trustee in good faith shall so determine that the actions or forbearances
specified in or pursuant to such direction would be unduly prejudicial to the
interests of Holders of the Securities of all affected series not joining in
the giving of said direction, it being understood that (subject to Section 6.1)
the Trustee shall have no duty to ascertain whether or not such actions or
forbearances are unduly prejudicial to such Holders.

 

Nothing in this Indenture shall impair the right of the Trustee in its
discretion to take any action deemed proper by the Trustee and which is not
inconsistent with such direction or directions by Securityholders.

 

SECTION 5.10 WAIVER OF PAST
DEFAULTS.  Prior to the declaration of acceleration of
the maturity of the Securities of any series as provided in Section 5.1, the
Holders of a majority in aggregate principal amount of the Securities of such
series at the time Outstanding (voting as a single class) may on behalf of the
Holders of all such Securities waive any past default or Event of Default
described in Section 5.1 and its consequences, except a default in respect of a
covenant or provision hereof which cannot be modified or amended without the
consent of the Holder of each Security affected.  In the case of any such waiver, the Issuer, the Trustee and the
Holders of all such Securities shall be restored to their former positions and
rights hereunder, respectively, and such default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.

 

SECTION 5.11 TRUSTEE TO GIVE NOTICE
OF DEFAULT, BUT MAY WITHHOLD IN CERTAIN CIRCUMSTANCES. 
The Trustee shall, within ninety days after the occurrence of a default
with respect to the Securities of any series, give notice of all defaults with
respect to that series known to the Trustee (i) if any Unregistered Securities
of that series are then Outstanding, to the Holders thereof, by publication at
least once in an Authorized Newspaper in the Borough of Manhattan, The City of
New York and at least once in an Authorized Newspaper in London (and, if
required by Section 3.7, at least once in an Authorized Newspaper in
Luxembourg) and (ii) to all Holders of Securities of such series in the manner
and to the extent provided in Section 313(c) of the Trust Indenture Act, unless
in each case such defaults shall have been cured before the mailing or
publication of such notice (the term “default” for the purpose of this Section
being hereby defined to mean any event or condition which is, or with notice or
lapse of time or both would become, an Event of Default); provided, that,
except in the case of default in the payment of the principal of or interest on
any of the Securities of such series, or in the payment of any sinking fund
installment on such series, the Trustee shall be protected in withholding such
notice if and so long as the board of directors, the executive committee, or a
trust committee of directors or trustees and/or Responsible Officers of the
Trustee in good faith determines that the withholding of such notice is in the
interests of the Securityholders of such series.

 

SECTION 5.12 RIGHT OF COURT TO
REQUIRE FILING OF UNDERTAKING TO PAY COSTS.  All parties to this Indenture
agree, and each Holder of any Security or Coupon by his acceptance thereof
shall be deemed to have agreed, that any court may in its discretion require,
in any suit for the enforcement of any right or remedy under this

 

33

 

Indenture or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may
in its discretion assess reasonable costs, including reasonable attorneys’
fees, against any party litigant in such suit, having due regard to the merits
and good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the Trustee,
to any suit instituted by any Securityholder or group of Securityholders of any
series holding in the aggregate more than 10% in aggregate principal amount of
the Securities of such series, or, in the case of any suit relating to or
arising under clause (d) or (g) of Section 5.1 (if the suit relates to
Securities of more than one but less than all series), 10% in aggregate
principal amount of Securities then Outstanding and affected thereby, or in the
case of any suit relating to or arising under clause (d) or (g) (if the suit
under clause (d) or (g) relates to all the Securities then Outstanding), or (e)
or (f) of Section 5.1, 10% in aggregate principal amount of all Securities then
Outstanding, or to any suit instituted by any Securityholder for the enforcement
of the payment of the principal of or interest on any Security on or after the
due date expressed in such Security or any date fixed for redemption.

 

ARTICLE VI

 

CONCERNING THE TRUSTEE

 

SECTION 6.1 DUTIES AND
RESPONSIBILITIES OF THE TRUSTEE; DURING DEFAULT; PRIOR TO DEFAULT. 
Prior to the occurrence of an Event of Default with respect to the
Securities of a particular series and after the curing or waiving of all Events
of Default which may have occurred with respect to such series, the Trustee undertakes
to perform such duties and only such duties as are specifically set forth in
this Indenture with respect to such series of Securities.  In case an Event of Default with respect to
the Securities of a series has occurred and has not been cured or waived, the
Trustee shall exercise with respect to such series of Securities such of the
rights and powers vested in it by this Indenture with respect to such series of
Securities, and use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.

 

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

 

(a)                                  prior to the occurrence of an Event of
Default with respect to the Securities of any series and after the curing or
waiving of all such Events of Default with respect to such series which may
have occurred:

 

(i)                                     the duties and obligations of the
Trustee with respect to the Securities of any series shall be determined solely
by the express provisions of this Indenture, and the Trustee shall not be
liable except for the performance of such duties and obligations as are specifically
set forth in this Indenture, and no implied covenants or obligations shall be
read into this Indenture against the Trustee; and

 

34

 

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

 

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

 

(c)                                  the Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders pursuant to Section 5.9 relating
to the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred upon the
Trustee, under this Indenture.

 

None of the provisions contained in this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur personal financial
liability in the performance of any of its duties or in the exercise of any of
its rights or powers, if there shall be reasonable ground for believing that
the repayment of such funds or adequate indemnity against such liability is not
reasonably assured to it.

 

The provisions of this Section 6.1 are in furtherance of and subject to
Section 315 of the Trust Indenture Act.

 

SECTION 6.2 CERTAIN RIGHTS OF THE
TRUSTEE.  In furtherance of and subject to the Trust
Indenture Act, and subject to Section 6.1:

 

(a)                                  the Trustee may conclusively rely and
shall be protected in acting or refraining from acting upon any resolution,
Officer’s Certificate or any other certificate, statement, instrument, opinion,
report, notice, request, consent, order, bond, debenture, note, coupon,
security or other paper or document believed by it to be genuine and to have
been signed or presented by the proper party or parties;

 

(b)                                 any request, direction, order or demand
of the Issuer mentioned herein shall be sufficiently evidenced by an Officer’s
Certificate (unless other evidence in respect thereof is specifically
prescribed herein or in the terms established in respect of any series); and
any resolution of the Board of Directors may be evidenced to the Trustee by a
copy thereof certified by the secretary or an assistant secretary of the
Issuer;

 

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

 

35

 

(d)                                 the Trustee shall be under no obligation
to exercise any of the trusts or powers vested in it by this Indenture at the
request, order or direction of any of the Securityholders pursuant to the
provisions of this Indenture, unless such Securityholders shall have offered to
the Trustee reasonable security or indemnity satisfactory to it against the
costs, expenses and liabilities which might be incurred therein or thereby;

 

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

 

(f)                                    prior to the occurrence of an Event of
Default hereunder and after the curing or waiving of all Events of Default, 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, consent, order, approval, appraisal, bond, debenture, note,
coupon, security, or other paper or document unless (i) requested in writing so
to do by the Holders of not less than a majority in aggregate principal amount
of the Securities of all series affected then Outstanding (treated as one
class) or (ii) otherwise provided in the terms of any series of Securities
pursuant to Section 2.3; provided, that, if the payment within a reasonable
time to the Trustee of the costs, expenses or liabilities likely to be incurred
by it in the making of such investigation is, in the opinion of the Trustee,
not reasonably assured to the Trustee by the security afforded to it by the
terms of this Indenture, the Trustee may require reasonable security or
indemnity satisfactory to it against such expenses or liabilities as a
condition to proceeding; the reasonable expenses of every such investigation
shall be paid by the Issuer or, if paid by the Trustee or any predecessor
trustee, shall be repaid by the Issuer upon demand; and

 

(g)                                 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 not regularly in its employ and the Trustee
shall not be responsible for any misconduct or negligence on the part of any
such agent or attorney appointed with due care by it hereunder.

 

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

 

SECTION 6.3 TRUSTEE NOT
RESPONSIBLE FOR RECITALS, DISPOSITION OF SECURITIES OR APPLICATION OF PROCEEDS
THEREOF.  The recitals contained herein and in the
Securities, except the Trustee’s certificates of authentication, shall be taken
as the statements of the Issuer, and the Trustee assumes no responsibility for
the correctness of the same.  The
Trustee makes no representation as to the validity or sufficiency of this
Indenture or of the Securities or Coupons. 
The Trustee shall not be accountable for the use or application by the
Issuer of any of the Securities or of the proceeds thereof.

 

The Trustee may request that the Issuer deliver an officer’s
certificate setting forth the names of individuals and/or titles of officers
authorized at such time to take specified actions

 

36

 

pursuant to this Indenture, which officers’ certificate may be signed
by any person authorized to sign an officer’s certificate, including any person
specified as so authorized in any such certificate previously delivered and not
superseded.

 

SECTION 6.4 TRUSTEE AND AGENTS MAY
HOLD SECURITIES OR COUPONS; COLLECTIONS, ETC.  The Trustee or any agent of
the Issuer or of the Trustee, in its individual or any other capacity, may
become the owner or pledgee of Securities or Coupons with the same rights it
would have if it were not the Trustee or such agent and may otherwise deal with
the Issuer and receive, collect, hold and retain collections from the Issuer
with the same rights it would have if it were not the Trustee or such agent.

 

SECTION 6.5 MONEYS HELD BY TRUSTEE. 
Subject to the provisions of Section 10.4 hereof, all moneys received by
the Trustee shall, until used or applied as herein provided, be held in trust
for the purposes for which they were received, but need not be segregated from
other funds except to the extent required by mandatory provisions of law.  Neither the Trustee nor any agent of the Issuer
or the Trustee shall be under any liability for interest on any moneys received
by it hereunder.

 

SECTION 6.6 COMPENSATION AND
INDEMNIFICATION OF TRUSTEE AND ITS PRIOR CLAIM. 
The Issuer covenants and agrees to pay to the Trustee from time to time,
and the Trustee shall be entitled to, reasonable compensation (which shall not
be limited by any provision of law in regard to the compensation of a trustee
of an express trust), and the Issuer covenants and agrees to pay or reimburse
the Trustee and each predecessor trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by or on behalf of it in
accordance with any of the provisions of this Indenture (including the
reasonable compensation and the expenses and disbursements of its counsel and
of all agents and other persons not regularly in its employ) except any such
expense, disbursement or advance as may arise from its negligence or bad
faith.  The Issuer also covenants to
indemnify the Trustee and each predecessor trustee for, and to defend and hold
it harmless against, any loss, liability or expense incurred without negligence
or bad faith on its part, arising out of or in connection with the acceptance
or administration of this Indenture or the trusts hereunder and its duties
hereunder, including the costs and expenses of defending itself against or
investigating any claim of liability in the premises.  The obligations of the Issuer under this Section to compensate
and indemnify the Trustee and each predecessor trustee and to pay or reimburse
the Trustee and each predecessor trustee for expenses, disbursements and
advances shall constitute additional indebtedness hereunder and shall survive
the satisfaction and discharge of this Indenture and the resignation or removal
of the Trustee.  Such additional indebtedness
shall be a senior claim to that of the Securities upon all property and funds
held or collected by the Trustee as such, except funds held in trust for the
benefit of the Holders of particular Securities or Coupons, and the Securities
are hereby subordinated to such senior claim.

 

SECTION 6.7 RIGHT OF TRUSTEE TO
RELY ON OFFICER’S CERTIFICATE, ETC.  Subject to Sections 6.1 and
6.2, whenever in the administration of the trusts of this Indenture the Trustee
shall deem it necessary or desirable that a matter be proved or established
prior to taking or suffering or omitting any action hereunder, such matter
(unless other evidence in respect thereof be herein specifically prescribed)
may, in the absence of negligence or bad faith on the part of the Trustee, be
deemed to be conclusively proved and

 

37

 

established by an Officer’s Certificate delivered to the Trustee, and
such certificate, in the absence of negligence or bad faith on the part of the
Trustee, shall be full warrant to the Trustee for any action taken, suffered or
omitted by it under the provisions of this Indenture upon the faith thereof.

 

SECTION 6.8 INDENTURES NOT
CREATING POTENTIAL CONFLICTING INTERESTS FOR THE TRUSTEE. 
The following indentures are hereby specifically described for the
purposes of Section 310(b)(1) of the Trust Indenture Act:  this Indenture with respect to series of
Securities that are of an equal priority and the indenture between the Issuer
and Bank One Trust Company, N.A., dated as of February 19, 1999, as amended,
with respect to any series of securities thereunder that are of an equal
priority to any series of the Securities.

 

SECTION 6.9 QUALIFICATION OF
TRUSTEE: CONFLICTING INTERESTS.  The Trustee shall comply with
Section 310(b) of the Trust Indenture Act.

 

SECTION 6.10 PERSONS ELIGIBLE FOR
APPOINTMENT AS TRUSTEE.  The Trustee for each series of Securities
hereunder shall at all times be a corporation or banking association organized
and doing business under the laws of the United States of America, any State
thereof or the District of Columbia, having a combined capital and surplus of
at least $50,000,000, and which is authorized under such laws to exercise
corporate trust powers and is subject to supervision or examination by Federal,
state or District of Columbia authority. 
If such corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of the aforesaid supervising or
examining authority, then for the purposes of this Section, the combined
capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published.  In case at any time the
Trustee shall cease to be eligible in accordance with the provisions of this
Section, the Trustee shall resign immediately in the manner and with the effect
specified in Section 6.11.

 

The provisions of this Section 6.10 are in furtherance of and subject
to Section 310(a) of the Trust Indenture Act.

 

SECTION 6.11 RESIGNATION AND
REMOVAL; APPOINTMENT OF SUCCESSOR TRUSTEE.  (a) The Trustee, or any
trustee or trustees hereafter appointed, may at any time resign with respect to
one or more or all series of Securities by giving written notice of resignation
to the Issuer and (i) if any Unregistered Securities of a series affected are
then Outstanding, by giving notice of such resignation to the Holders thereof,
by publication at least once in an Authorized Newspaper in the Borough of
Manhattan, The City of New York, and at least once in an Authorized Newspaper
in London (and, if required by Section 3.7, at least once in an Authorized
Newspaper in Luxembourg), (ii) if any Unregistered Securities of a series
affected are then Outstanding, by mailing notice of such resignation to the
Holders thereof who have filed their names and addresses with the Trustee
pursuant to Section 313(c)(2) of the Trust Indenture Act at such addresses as
were so furnished to the Trustee and (iii) by mailing notice of such
resignation to the Holders of then Outstanding Registered Securities of each
series affected at their addresses as they shall appear on the registry
books.  Upon receiving such notice of
resignation, the Issuer shall promptly appoint a successor trustee or trustees
with respect to the

 

38

 

applicable series by written instrument in duplicate, executed by
authority of the Board of Directors, one copy of which instrument shall be
delivered to the resigning Trustee and one copy to the successor trustee or
trustees.  If no successor trustee shall
have been so appointed with respect to any series and have accepted appointment
within 30 days after the mailing of such notice of resignation, the resigning
trustee may petition any court of competent jurisdiction for the appointment of
a successor trustee, or any Securityholder who has been a bona fide Holder of a
Security or Securities of the applicable series for at least six months may,
subject to the provisions of Section 5.12, on behalf of himself and all others
similarly situated, petition any such court for the appointment of a successor
trustee.  Such court may thereupon,
after such notice, if any, as it may deem proper and prescribe, appoint a
successor trustee.

 

(b)                                 In case at any time any of the following
shall occur:

 

(i)                                     the Trustee shall fail to comply with
the provisions of Section 310(b) of the Trust Indenture Act with respect to any
series of Securities after written request therefor by the Issuer or by any
Securityholder who has been a bona fide Holder of a Security or Securities of
such series for at least six months; or

 

(ii)                                  the Trustee shall cease to be eligible
in accordance with the provisions of Section 6.10 and Section 310(a) of the
Trust Indenture Act and shall fail to resign after written request therefor by
the Issuer or by any Securityholder who has been a bona fide Holder of a
Security or Securities of such series for at least six months; or

 

(iii)                               the Trustee shall become incapable of
acting with respect to any series of Securities, or shall be adjudged bankrupt
or insolvent, or a receiver or liquidator 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, the Issuer may remove the Trustee with respect
to the applicable series of Securities and appoint a successor trustee for such
series by written instrument, in duplicate, executed by order of the Board of
Directors of the Issuer, one copy of which instrument shall be delivered to the
Trustee so removed and one copy to the successor trustee, or, subject to the
provisions of Section 315(e) of the Trust Indenture Act, any Securityholder who
has been a bona fide Holder of a Security or Securities 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 removal of the Trustee and
the appointment of a successor trustee with respect to such series.  Such court may thereupon, after such notice,
if any, as it may deem proper and so prescribe, remove the Trustee and appoint
a successor trustee.

 

(c)                                  The Holders of a majority in aggregate
principal amount of the Securities of each series at the time outstanding may
at any time remove the Trustee with respect to Securities of such series and
appoint a successor trustee with respect to the Securities of such series by
delivering to the Trustee so removed, to the successor trustee so appointed

 

39

 

and to the Issuer the evidence provided for in Section 7.1 of the
action in that regard taken by the Securityholders.

 

(d)                                 Any resignation or removal of the
Trustee with respect to any series and any appointment of a successor trustee
with respect to such series pursuant to any of the provisions of this Section
6.11 shall become effective upon acceptance of appointment by the successor
trustee as provided in Section 6.12.

 

SECTION 6.12 ACCEPTANCE OF
APPOINTMENT BY SUCCESSOR TRUSTEE.  Any successor trustee
appointed as provided in Section 6.11 shall execute and deliver to the Issuer
and to its predecessor trustee an instrument accepting such appointment
hereunder, and thereupon the resignation or removal of the predecessor trustee
with respect to all or any applicable series shall become effective and such
successor trustee, without any further act, deed or conveyance, shall become
vested with all rights, powers, duties and obligations with respect to such
series of its predecessor hereunder, with like effect as if originally named as
trustee for such series hereunder; but, nevertheless, on the written request of
the Issuer or of the successor trustee, upon payment of its charges then
unpaid, the trustee ceasing to act shall, subject to Section 10.4, pay over to
the successor trustee all moneys at the time held by it hereunder and shall
execute and deliver an instrument transferring to such successor trustee all
such rights, powers, duties and obligations. 
Upon request of any such successor trustee, the Issuer shall execute any
and all instruments in writing for more fully and certainly vesting in and
confirming to such successor trustee all such rights and powers.  Any trustee ceasing to act shall,
nevertheless, retain a prior claim upon all property or funds held or collected
by such trustee to secure any amounts then due it pursuant to the provisions of
Section 6.6.

 

If a successor trustee is appointed with respect to the Securities of
one or more (but not all) series, the Issuer, the predecessor trustee and each
successor trustee with respect to the Securities of any applicable series shall
execute and deliver an indenture supplemental hereto which shall contain such provisions
as shall be deemed necessary or desirable to confirm that all the rights,
powers, trusts and duties of the predecessor trustee with respect to the
Securities of any series as to which the predecessor trustee is not retiring
shall continue to be vested in the predecessor trustee, and 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 under separate
indentures.

 

No successor trustee with respect to any series of Securities shall
accept appointment as provided in this Section 6.12 unless at the time of such
acceptance such successor trustee shall be qualified under Section 310(b) of
the Trust Indenture Act and eligible under the provisions of Section 6.10.

 

Upon acceptance of appointment by any successor trustee as provided in
this Section 6.12, the Issuer shall give notice thereof (a) if any Unregistered
Securities of a series affected are then Outstanding, to the Holders thereof,
by publication of such notice at least once in an Authorized Newspaper in the
Borough of Manhattan, The City of New York and at least once in an Authorized
Newspaper in London (and, if required by Section 3.7, at least once in an 

 

40

 

Authorized Newspaper in Luxembourg), (b) if any Unregistered Securities
of a series affected are then Outstanding, to the Holders thereof who have
filed their names and addresses with the Trustee pursuant to Section 313(c)(2)
of the Trust Indenture Act, by mailing such notice to such Holders at such
addresses as were so furnished to the Trustee (and the Trustee shall make such
information available to the Issuer for such purpose) and (c) to the Holders of
Registered Securities of each series affected, by mailing such notice to such
Holders at their addresses as they shall appear on the registry books.  If the acceptance of appointment is
substantially contemporaneous with the resignation, then the notice called for
by the preceding sentence may be combined with the notice called for by Section
6.11.  If the Issuer fails to give such
notice within ten days after acceptance of appointment by the successor
trustee, the successor trustee shall cause such notice to be given at the
expense of the Issuer.

 

SECTION 6.13 MERGER, CONVERSION,
CONSOLIDATION OR SUCCESSION TO BUSINESS OF TRUSTEE. 
Any corporation or banking association into which the Trustee may be
merged or converted or with which it may be consolidated, or any corporation or
banking association resulting from any merger, conversion or consolidation to
which the Trustee shall be a party, or any corporation or banking association
succeeding to the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, provided, that such corporation or banking
association shall be qualified under Section 310(b) of the Trust Indenture Act
and eligible under the provisions of Section 6.10, without the execution or
filing of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding.

 

In case at the time such successor to the Trustee shall succeed to the
trusts created by this Indenture any of the Securities of any series shall have
been authenticated but not delivered, any such successor to the Trustee may
adopt the certificate of authentication of any predecessor trustee and deliver
such Securities so authenticated; and, in case at that time any of the
Securities of any series shall not have been authenticated, any such successor
to the Trustee may authenticate such Securities either in the name of any
predecessor hereunder or in the name of the successor Trustee; and in all such
cases such certificate of authentication shall have the full force which under
this Indenture or the Securities of such series it is provided that the
certificate of authentication of the Trustee shall have; provided, that the
right to adopt the certificate of authentication of any predecessor trustee or
to authenticate Securities of any series in the name of any predecessor trustee
shall apply only to its successor or successors by merger, conversion or
consolidation.

 

SECTION 6.14 PREFERENTIAL
COLLECTION OF CLAIMS AGAINST THE ISSUER.  The Trustee shall comply with
Section 311(a) of the Trust Indenture Act, excluding any creditor relationship
listed in Section 311(b) of the Trust Indenture Act.  A Trustee who has resigned or been removed shall be subject to
Section 311(a) of the Trust Indenture Act to the extent indicated.

 

SECTION 6.15 APPOINTMENT OF
AUTHENTICATING AGENT.  As long as any Securities of a series remain
Outstanding, the Trustee may, by an instrument in writing, appoint with the
approval of the Issuer an authenticating agent (the “Authenticating Agent”)
which shall be authorized to act on behalf of the Trustee to authenticate
Securities, including Securities issued upon exchange, registration of
transfer, partial redemption or

 

41

 

pursuant to Section 2.9. 
Securities of each such series authenticated by such Authenticating
Agent shall be entitled to the benefits of this Indenture and shall be valid
and obligatory for all purposes as if authenticated by the Trustee.  Whenever reference is made in this Indenture
to the authentication and delivery of Securities of any series by the Trustee
or to the Trustee’s Certificate of Authentication, such reference shall be
deemed to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent for such series and a Certificate of Authentication
executed on behalf of the Trustee by such Authenticating Agent.  Such Authenticating Agent shall at all times
be a corporation organized and doing business under the laws of the United
States of America or of any State, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
$45,000,000 (determined as provided in Section 6.10 with respect to the
Trustee) and subject to supervision or examination by Federal or state
authority.

 

Any corporation into which any Authenticating Agent may be merged or
converted, or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which any Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency
business of any Authenticating Agent, shall continue to be the Authenticating
Agent with respect to all series of Securities for which it served as
Authenticating Agent without the execution or filing of any paper or any
further act on the part of the Trustee or such Authenticating Agent.  Any Authenticating Agent may at any time,
and if it shall cease to be eligible shall, resign by giving written notice of
resignation to the Trustee and to the Issuer.

 

Upon receiving such a notice of resignation or upon such a termination,
or in case at any time any Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section 6.15 with respect to one or more
series of Securities, the Trustee shall upon receipt of an Issuer Order appoint
a successor Authenticating Agent, and the Issuer shall provide notice of such
appointment to all Holders of Securities of such series in the manner and to
the extent provided in Section 11.4. 
Any successor Authenticating Agent upon acceptance of its appointment
hereunder shall become vested with all rights, powers, duties and
responsibilities of its predecessor hereunder, with like effect as if
originally named as Authenticating Agent. 
The Issuer agrees to pay to the Authenticating Agent for such series
from time to time reasonable compensation. 
The Authenticating Agent for the Securities of any series shall have no
responsibility or liability for any action taken by it as such at the direction
of the Trustee.

 

Sections 6.2, 6.3, 6.4, 6.6 and 7.3 shall be applicable to any
Authenticating Agent.

 

ARTICLE VII

 

CONCERNING THE SECURITYHOLDERS

 

SECTION 7.1 EVIDENCE OF ACTION
TAKEN BY SECURITYHOLDERS.  Any request, demand, authorization,
direction, notice, consent, waiver or other action provided by this Indenture
to be given or taken by a specified percentage in principal amount of the
Securityholders of any or all series may be embodied in and evidenced by one or
more instruments of substantially similar tenor signed by such specified
percentage of Securityholders in person or by agent duly appointed in writing;
and, except as herein otherwise

 

42

 

expressly provided, such action shall become effective when such
instrument or instruments are delivered to the Trustee.  Proof of execution of any instrument or of a
writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Sections 6.1 and 6.2) conclusive in favor of the
Trustee and the Issuer, if made in the manner provided in this Article.

 

SECTION 7.2 PROOF OF EXECUTION OF
INSTRUMENTS AND OF HOLDING OF SECURITIES.  Subject to Sections 6.1 and
6.2, the execution of any instrument by a Securityholder or his agent or proxy
may be proved in accordance with such reasonable rules and regulations as may
be prescribed by the Trustee or in such manner as shall be satisfactory to the
Trustee.  The holding of Registered
Securities shall be proved by the Security register or by a certificate of the
registrar thereof.

 

SECTION 7.3 HOLDERS TO BE TREATED
AS OWNERS.  The Issuer, the Trustee and any agent of the
Issuer or the Trustee may deem and treat the person in whose name any Security
shall be registered upon the Security register for such series as the absolute
owner of such Security (whether or not such Security shall be overdue and
notwithstanding any notation of ownership or other writing thereon) for the
purpose of receiving payment of or on account of the principal of and, subject
to the provisions of this Indenture, interest on such Security and for all
other purposes; and neither the Issuer nor the Trustee nor any agent of the
Issuer or the Trustee shall be affected by any notice to the contrary.  The Issuer, the Trustee and any agent of the
Issuer or the Trustee may treat the Holder of any Unregistered Security and the
Holder of any Coupon as the absolute owner of such Unregistered Security or
Coupon (whether or not such Unregistered Security or Coupon shall be overdue)
for the purpose of receiving payment thereof or on account thereof and for all
other purposes, and neither the Issuer, the Trustee, nor any agent of the
Issuer or the Trustee shall be affected by any notice to the contrary.  All such payments so made to any such
person, or upon his order, shall be valid, and, to the extent of the sum or
sums so paid, effectual to satisfy and discharge the liability for moneys
payable upon any such Unregistered Security or Coupon.

 

SECTION 7.4 SECURITIES OWNED BY
ISSUER DEEMED NOT OUTSTANDING.  In determining whether the
Holders of the requisite aggregate principal amount of Outstanding Securities
of any or all series have concurred in any request, demand, authorization,
direction, notice, consent, waiver or other action by Securityholders under
this Indenture, Securities which are owned by the Issuer or any other obligor
on the Securities with respect to which such determination is being made or by
any person directly or indirectly controlling or controlled by or under direct
or indirect common control with the Issuer or any other obligor on the
Securities with respect to which such determination is being made shall be
disregarded and deemed not to be Outstanding for the purpose of any such
determination, except that for the purpose of determining whether the Trustee
shall be protected in relying on any such action only Securities which the
Trustee knows are 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 Issuer or any other obligor upon the Securities or any
person directly or indirectly controlling or controlled by or under direct or
indirect common control with the Issuer or any other obligor on the
Securities.  In case of a dispute as to
such right, the advice of counsel shall be full protection in respect of any
decision made by the Trustee in

 

43

 

accordance with such advice. 
Upon request of the Trustee, the Issuer shall furnish to the Trustee
promptly an Officer’s Certificate listing and identifying all Securities, if
any, known by the Issuer to be owned or held by or for the account of any of
the above-described persons; and, subject to Sections 6.1 and 6.2, the Trustee
shall be entitled to accept such Officer’s Certificate as conclusive evidence
of the facts therein set forth and of the fact that all Securities not listed
therein are Outstanding for the purpose of any such determination.

 

SECTION 7.5 RIGHT OF REVOCATION OF
ACTION TAKEN.  At any time prior to (but not after) the
evidencing to the Trustee, as provided in Section 7.1, of the taking of any
action by the Holders of the percentage in aggregate principal amount of the
Securities of any or all series, as the case may be, specified in this
Indenture in connection with such action, any Holder of a Security the serial
number of which is shown by the evidence to be included among the serial numbers
of the Securities the Holders of which have consented to such action may, by
filing written notice at the Corporate Trust Office and upon proof of holding
as provided in this Article, revoke such action so far as concerns such
Security.  Except as aforesaid, any such
action taken by the Holder of any Security shall be conclusive and binding upon
such Holder and upon all future Holders and owners of such Security and of any
Securities issued in exchange or substitution therefor or on registration of
transfer thereof, irrespective of whether or not any notation in regard thereto
is made upon any such Security.  Any
action taken by the Holders of the percentage in aggregate principal amount of
the Securities of any or all series, as the case may be, specified in this
Indenture in connection with such action shall be conclusively binding upon the
Issuer, the Trustee and the Holders of all the Securities affected by such
action.

 

ARTICLE VIII

 

SUPPLEMENTAL INDENTURES

 

SECTION 8.1 SUPPLEMENTAL
INDENTURES WITHOUT CONSENT OF SECURITYHOLDERS.  The Issuer, when authorized
by a resolution of its Board of Directors (which resolution may provide general
terms or parameters for such action and may provide that the specific terms of
such action may be determined in accordance with or pursuant to an Issuer
Order), and the Trustee may from time to time and at any time enter into an
indenture or indentures supplemental hereto for one or more of the following
purposes:

 

(a)                                  to convey, transfer, assign, mortgage or
pledge to the Trustee as security for the Securities of one or more series any
property or assets;

 

(b)                                 to evidence the succession of another
corporation to the Issuer, or successive successions, and the assumption by the
successor corporation of the covenants, agreements and obligations of the
Issuer pursuant to Article IX;

 

(c)                                  to add to the covenants of the Issuer
such further covenants, restrictions, conditions or provisions as the Issuer
and the Trustee shall consider to be for the protection of the Holders of Securities
or Coupons, and to make the occurrence, or the occurrence and continuance, of a
default in any such additional covenants, restrictions, conditions or
provisions an Event of Default permitting the enforcement of all or any of the
several remedies provided in this Indenture as herein set forth; provided, that
in

 

44

 

respect of any such additional covenant, restriction, condition or
provision such supplemental indenture may provide for a particular period of
grace after default (which period may be shorter or longer than that allowed in
the case of other defaults) or may provide for an immediate enforcement upon
such an Event of Default or may limit the remedies available to the Trustee
upon such an Event of Default or may limit the right of the Holders of a
majority in aggregate principal amount of the Securities of such series to
waive such an Event of Default;

 

(d)                                 to cure any ambiguity or to correct or
supplement any provision contained herein or in any supplemental indenture
which may be defective or inconsistent with any other provision contained
herein or in any supplemental indenture, or to make any other provisions as the
Issuer may deem necessary or desirable, provided, that no such action shall adversely
affect the interests of the Holders of the Securities or Coupons;

 

(e)                                  to establish the forms or terms of
Securities of any series or of the Coupons appertaining to such Securities as
permitted by Sections 2.1 and 2.3; and

 

(f)                                    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 6.12.

 

The Trustee is hereby authorized to join with the Issuer in the
execution of any such supplemental indenture, to make any further appropriate
agreements and stipulations which may be therein contained and to accept the
conveyance, transfer, assignment, mortgage or pledge of any property
thereunder, but the Trustee 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.

 

Any supplemental indenture authorized by the provisions of this Section
may be executed without the consent of the Holders of any of the Securities at
the time outstanding, notwithstanding any of the provisions of Section 8.2.

 

SECTION 8.2 SUPPLEMENTAL
INDENTURES WITH CONSENT OF SECURITYHOLDERS.

 

(A) Except as set forth in
paragraph (C) below, with the consent (evidenced as provided in Article VII) of
the Holders of not less than a majority in aggregate principal amount of the
Securities at the time Outstanding of all series of Senior Securities affected
by such supplemental indenture (voting as one class), the Issuer, when
authorized by a resolution of its Board of Directors (which resolution may
provide general terms or parameters for such action and may provide that the
specific terms of such action may be determined in accordance with or pursuant
to an Issuer Order), and the Trustee may, from time to time and at any time,
enter into an indenture or indentures supplemental hereto (which shall conform
to the provisions of the Trust Indenture Act as in force and effect at the date
of execution thereof) for the purpose of adding any provisions to or changing
in

 

45

 

any manner or eliminating any of the provisions of this Indenture or of
any supplemental indenture or of modifying in any manner the rights of the
Holders of the Securities of each such series or of the Coupons appertaining to
such Securities.

 

(B) Except as set forth in
paragraph (C) below, with the consent (evidenced as provided in Article VII) of
the Holders of not less than a majority in aggregate principal amount of the
Securities at the time Outstanding of all series of Subordinated Securities
affected by such supplemental indenture (voting as one class), the Issuer, when
authorized by a resolution of its Board of Directors (which resolution may
provide general terms or parameters for such action and may provide that the
specific terms of such action may be determined in accordance with or pursuant
to an Issuer Order), and the Trustee may, from time to time and at any time,
enter into an indenture or indentures supplemental hereto (which shall conform
to the provisions of the Trust Indenture Act as in force and effect at the date
of execution thereof) for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of this Indenture or of any
supplemental indenture or of modifying in any manner the rights of the Holders
of the Securities of each such series or of the Coupons appertaining to such
Securities.

 

(C) No such supplemental
indenture shall (i) extend the final maturity of any Security, or reduce the
principal amount thereof, or premium thereon, if any, or reduce the rate or
extend the time of payment of interest thereon, or reduce any amount payable on
redemption thereof, or make the principal thereof (including any amount in
respect of original issue discount), or premium thereon, if any, or interest
thereon payable in any coin or currency other than that provided in the
Securities and Coupons or in accordance with the terms thereof, or reduce the
amount of the principal of an Original Issue Discount Security that would be
due and payable upon an acceleration of the maturity thereof pursuant to
Section 5.1 or the amount thereof provable in bankruptcy pursuant to Section
5.2, or in the case of Subordinated Securities of any series, modify any of the
Subordination Provisions or the definition of “Senior Indebtedness” relating to
such series in a manner adverse to the holders of such Subordinated Securities,
or alter the provisions of Section 11.11 or 11.12 or impair or affect the right
of any Securityholder to institute suit for the payment thereof when due or, if
the Securities provide therefor, any right of repayment at the option of the
Securityholder, in each case without the consent of the Holder of each Security
so affected, or (ii) reduce the aforesaid percentage of Securities of any
series, the consent of the Holders of which is required for any such
supplemental indenture, without the consent of the Holders of each Security so
affected.

 

(D) 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 Holders of
Securities of such series, or of Coupons appertaining to such Securities, with
respect to such covenant or provision, shall be deemed not to affect the rights
under this Indenture of the Holders of Securities of any other series or of the
Coupons appertaining to such Securities.

 

46

 

Upon the request of the Issuer, accompanied by a copy of a resolution
of the Board of Directors (which resolution may provide general terms or
parameters for such action and may provide that the specific terms of such
action may be determined in accordance with or pursuant to an Issuer Order)
certified by the secretary or an assistant secretary of the Issuer authorizing
the execution of any such supplemental indenture, and upon the filing with the
Trustee of evidence of the consent of the Holders of the Securities as aforesaid
and other documents, if any, required by Section 7.1, the Trustee shall join
with the Issuer in the execution of such supplemental indenture unless such
supplemental indenture affects the Trustee’s own rights, duties or immunities
under this Indenture or otherwise, in which case the Trustee may in its
discretion, but shall not be obligated to, enter into such supplemental
indenture.

 

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

 

Promptly after the execution by the Issuer and the Trustee of any
supplemental indenture pursuant to the provisions of this Section, the Trustee
shall give notice thereof (i) to the Holders of then Outstanding Registered
Securities of each series affected thereby, by mailing a notice thereof by
first-class mail to such Holders at their addresses as they shall appear on the
Security register, (ii) if any Unregistered Securities of a series affected
thereby are then Outstanding, to the Holders thereof who have filed their names
and addresses with the Trustee pursuant to Section 313(c)(2) of the Trust
Indenture Act, by mailing a notice thereof by first-class mail to such Holders
at such addresses as were so furnished to the Trustee and (iii) if any
Unregistered Securities of a series affected thereby are then Outstanding, to
all Holders thereof, by publication of a notice thereof at least once in an
Authorized Newspaper in the Borough of Manhattan, The City of New York and at
least once in an Authorized Newspaper in London (and, if required by Section
3.7, at least once in an Authorized Newspaper in Luxembourg), and in each case
such notice shall set forth in general terms the substance of such supplemental
indenture.  Any failure of the Issuer to
give such notice, or any defect therein, shall not, however, in any way impair
or affect the validity of any such supplemental indenture.

 

SECTION 8.3 EFFECT OF SUPPLEMENTAL
INDENTURE.  Upon the execution of any supplemental
indenture pursuant to the provisions hereof, this Indenture shall be and be
deemed to be modified and amended in accordance therewith and the respective
rights, limitations of rights, obligations, duties and immunities under this
Indenture of the Trustee, the Issuer and the Holders of Securities of each
series affected thereby shall thereafter be determined, exercised and enforced
hereunder subject in all respects to such modifications and amendments, and all
the terms and conditions of any such supplemental indenture shall be and be
deemed to be part of the terms and conditions of this Indenture for any and all
purposes.

 

SECTION 8.4 DOCUMENTS TO BE GIVEN
TO TRUSTEE.  The Trustee, subject to the provisions of
Sections 6.1 and 6.2, may receive an Officer’s Certificate and an Opinion of
Counsel as conclusive evidence that any supplemental indenture executed
pursuant to this Article 8 complies with the applicable provisions of this
Indenture.

 

SECTION 8.5 NOTATION ON SECURITIES
IN RESPECT OF SUPPLEMENTAL INDENTURES.  Securities of any series
authenticated and delivered after

 

47

 

the execution of any supplemental indenture pursuant to the provisions
of this Article may bear a notation in form approved by the Trustee for such
series as to any matter provided for by such supplemental indenture or as to
any action taken by Securityholders.  If
the Issuer or the Trustee shall so determine, new Securities of any series so
modified as to conform, in the opinion of the Trustee and the Board of
Directors, to any modification of this Indenture contained in any such
supplemental indenture may be prepared by the Issuer, authenticated by the
Trustee and delivered in exchange for the Securities of such series then
Outstanding.

 

ARTICLE IX

 

CONSOLIDATION, MERGER, SALE OR CONVEYANCE

 

SECTION 9.1 ISSUER MAY
CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.  The Issuer shall not
consolidate with or merge into any other Person or transfer or lease its
properties and assets substantially as an entirety to any Person, and the
Issuer shall not permit any other Person to consolidate with or merge into the
Issuer, unless:

 

(a)                                  either the Issuer shall be the
continuing corporation, or the successor corporation (if other than the Issuer)
formed by such consolidation or into which the Issuer is merged or to which the
properties and assets of the Issuer substantially as an entirety are
transferred or leased shall be a corporation organized and existing under the
laws of the United States of America, any State thereof or the District of
Columbia and shall expressly assume, by an indenture supplemental hereto,
executed and delivered to the Trustee, in form satisfactory to the Trustee, all
the obligations of the Issuer under the Securities and this Indenture; and

 

(b)                                 immediately after giving effect to such
transaction and treating any indebtedness which becomes an obligation of the
Issuer or a Subsidiary as a result of such transaction as having been incurred
by the Issuer 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.

 

SECTION 9.2 SUCCESSOR CORPORATION
SUBSTITUTED.  The successor corporation formed by such
consolidation or into which the Issuer is merged or to which such transfer or
lease is made shall succeed to and be substituted for, and may exercise every
right and power of, the Issuer under this Indenture with the same effect as if
such successor corporation had been named as the Issuer herein, and thereafter
(except in the case of a lease to another Person) the predecessor corporation
shall be relieved of all obligations and covenants under the Indenture and the
Securities and, in the event of such conveyance or transfer, any such
predecessor corporation may be dissolved and liquidated.

 

SECTION 9.3 OPINION OF COUNSEL TO
BE GIVEN TO TRUSTEE.  The Trustee, subject to the provisions of
Sections 6.1 and 6.2, may receive an Opinion of Counsel as conclusive evidence
that any such consolidation, merger, sale or conveyance, and any such
assumption, complies with the provisions of this Article IX.

 

48

 

ARTICLE X

 

SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS

 

SECTION 10.1 SATISFACTION AND
DISCHARGE OF INDENTURE.

 

(A)                              If at any time (i) the Issuer shall have
paid or caused to be paid the principal of and interest on all the Securities
of any series Outstanding hereunder and all unmatured Coupons appertaining
thereto (other than Securities of such series and Coupons appertaining thereto
which have been destroyed, lost or stolen and which have been replaced or paid
as provided in Section 2.9) as and when the same shall have become due and
payable, or (ii) the Issuer shall have delivered to the Trustee for
cancellation all Securities of any series theretofore authenticated and all
unmatured Coupons appertaining thereto (other than any Securities of such
series and Coupons appertaining thereto which shall have been destroyed, lost
or stolen and which shall have been replaced or paid as provided in Section
2.9) or (iii) in the case of any series of Securities where the exact amount
(including the currency of payment) of principal of and interest due on which
can be determined at the time of making the deposit referred to in clause (b)
below, (a) all the Securities of such series and all unmatured Coupons
appertaining thereto not theretofore delivered to the Trustee for cancellation
shall have become due and payable, or are by their terms to become due and
payable within one year or are to be called for redemption within one year
under arrangements satisfactory to the Trustee for the giving of notice of
redemption, and (b) the Issuer shall have irrevocably deposited or caused to be
deposited with the Trustee as trust funds in trust the entire amount in (i)
cash (other than moneys repaid by the Trustee or any paying agent to the Issuer
in accordance with Section 10.4), (ii) in the case of any series of Securities
the payments on which may only be made in Dollars, direct obligations of the
United States of America, backed by its full faith and credit (“U.S. Government
Obligations”), maturing as to principal and interest at such times and in such
amounts as will insure the availability of cash sufficient to pay at such
maturity or upon such redemption, as the case may be, or (iii) a combination
thereof, sufficient, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, to pay (x) the principal and interest on all
Securities of such series and Coupons appertaining thereto on each date that
such principal or interest is due and payable and (y) any mandatory sinking
fund payments on the dates on which such payments are due and payable in
accordance with the terms of the Indenture and the Securities of such series;
and if, in any such case, the Issuer shall also pay or cause to be paid all
other sums payable hereunder by the Issuer, then this Indenture shall cease to
be of further effect (except as to (i) rights of registration of transfer and
exchange of Securities of such Series and of Coupons appertaining thereto
pursuant to Section 2.8 and the Issuer’s right of optional redemption, if any,
(ii) substitution of mutilated, defaced, destroyed, lost or stolen Securities
or Coupons, (iii) rights of holders of Securities and Coupons appertaining
thereto to receive payments of principal thereof and interest thereon, upon the
original stated due dates therefor (but not upon acceleration), and remaining
rights of the Holders to receive mandatory sinking fund payments, if any, (iv)
any optional redemption rights of such series of Securities to the extent to be
exercised to make such call for redemption within one year, (v) the rights,
obligations, duties and immunities of the Trustee hereunder, including those
under Section 6.6, (vi) the rights of the Holders of Securities of such series
and Coupons appertaining thereto as beneficiaries hereof with respect to the
property so deposited with the Trustee payable to all or any of them, and (vii)

 

49

 

the obligations of the Issuer under Section 3.2) and the Trustee, on
demand of the Issuer accompanied by an Officer’s Certificate and an Opinion of
Counsel and at the cost and expense of the Issuer, shall execute proper
instruments acknowledging such satisfaction of and discharging this Indenture;
provided, that the rights of Holders of the Securities and Coupons to receive
amounts in respect of principal of and interest on the Securities and Coupons
held by them shall not be delayed longer than required by then-applicable
mandatory rules or policies of any securities exchange upon which the
Securities are listed.  The Issuer
agrees to reimburse the Trustee for any costs or expenses thereafter reasonably
and properly incurred and to compensate the Trustee for any services thereafter
reasonably and properly rendered by the Trustee in connection with this
Indenture or the Securities of such series.

 

(B)                                The following provisions shall apply to
the Securities of each series unless specifically otherwise provided in a Board
Resolution, Officer’s Certificate or indenture supplemental hereto provided
pursuant to Section 2.3.  In addition to
discharge of the Indenture pursuant to the next preceding paragraph, in the
case of any series of Securities the exact amounts (including the currency of
payment) of principal of and interest due on which can be determined at the
time of making the deposit referred to in clause (a) below, the Issuer shall be
deemed to have paid and discharged the entire indebtedness on all the
Securities of such a series and the Coupons appertaining thereto on the date of
the deposit referred to in subparagraph (a) below, and the provisions of this
Indenture with respect to the Securities of such series and Coupons
appertaining thereto shall no longer be in effect (except as to (i) rights of
registration of transfer and exchange of Securities of such series and of
Coupons appertaining thereto pursuant to Section 2.8 and the Issuer’s right of
optional redemption, if any, (ii) substitution of mutilated, defaced,
destroyed, lost or stolen Securities or Coupons, (iii) rights of Holders of
Securities and Coupons appertaining thereto to receive payments of principal
thereof and interest thereon, upon the original stated due dates therefor (but
not upon acceleration), and remaining rights of the Holders to receive
mandatory sinking fund payments, if any, (iv) any optional redemption rights of
such series of Securities to the extent to be exercised to make such call for
redemption within one year, (v) the rights, obligations, duties and immunities
of the Trustee hereunder, (vi) the rights of the Holders of Securities of such
series and Coupons appertaining thereto as beneficiaries hereof with respect to
the property so deposited with the Trustee payable to all or any of them and
(vii) the obligations of the Issuer under Section 3.2) and the Trustee, at the
expense of the Issuer, shall at the Issuer’s request, execute proper
instruments acknowledging the same, if

 

(a)                                  with reference to this provision the
Issuer has irrevocably deposited or caused to be irrevocably deposited with the
Trustee as trust funds in trust, specifically pledged as security for, and
dedicated solely to, the benefit of the Holders of the Securities of such
series and Coupons appertaining thereto (i) cash in an amount, or (ii) in the
case of any series of Securities the payments on which may only be made in
Dollars, U.S. Government Obligations, maturing as to principal and interest at
such times and in such amounts as will insure the availability of cash or (iii)
a combination thereof, sufficient, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee, to pay (A) the principal and interest on all
Securities of such series and Coupons appertaining thereto on each date that
such principal or interest is due and payable and (b) any

 

50

 

mandatory sinking fund payments on the dates on which such payments are
due and payable in accordance with the terms of the Indenture and the
Securities of such series;

 

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

 

(c)                                  the Issuer has delivered to the Trustee
an Opinion of Counsel based on the fact that (x) the Issuer has received from,
or there has been published by, the IRS a ruling or (y) since the date hereof,
there has been a change in the applicable United States Federal income tax law,
in either case to the effect that, and such opinion shall confirm that, the
Holders of the Securities of such series and Coupons appertaining thereto will
not recognize income, gain or loss for United States Federal income tax purposes
as a result of such deposit, defeasance and discharge and will be subject to
United States Federal income tax on the same amount and in the same manner and
at the same times, as would have been the case if such deposit, defeasance and
discharge had not occurred; and

 

(d)                                 the Issuer has delivered to the Trustee
an Officer’s Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for relating to the defeasance contemplated by
this provision have been complied with.

 

(C)                                The Issuer shall be released from its
obligations under Sections 3.6 and 9.1 and unless otherwise provided for in the
Board Resolution, Officer’s Certificate or Indenture supplemental hereto
establishing such series of Securities, from all covenants and other
obligations referred to in Section 2.3(19) or 2.3(21) with respect to such
series of Securities, and any Coupons appertaining thereto, outstanding on and
after the date the conditions set forth below are satisfied (hereinafter,
“covenant defeasance”).  For this
purpose, such covenant defeasance means that, with respect to the Outstanding
Securities of any series, the Issuer may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in such
Section, whether directly or indirectly by reason of any reference elsewhere
herein to such Section or by reason of any reference in such Section to any
other provision herein or in any other document and such omission to comply
shall not constitute an Event of Default under Section 5.1, but the remainder
of this Indenture and such Securities and Coupons shall be unaffected
thereby.  The following shall be the
conditions to application of this subsection C of this Section 10.1:

 

(a)                                  The Issuer has irrevocably deposited or
caused to be deposited with the Trustee as trust funds in trust for the purpose
of making the following payments, specifically pledged as security for, and
dedicated solely to, the benefit of the holders of the Securities of such
series and coupons appertaining thereto, (i) cash in an amount, or (ii) in the
case of any series of Securities the payments on which may only be made in
Dollars, U.S. Government Obligations maturing as to principal and interest at
such times and in such amounts as will insure the availability of cash or (iii)
a combination thereof, sufficient, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee, to pay (A) the principal and interest on all
Securities of such series and Coupons appertaining thereof and (B) any
mandatory sinking fund payments on the day on which such

 

51

 

payments are due and payable in accordance with the terms of the Indenture
and the Securities of such series;

 

(b)                                 No Event of Default or event which with
notice or lapse of time or both would become an Event of Default with respect
to the Securities shall have occurred and be continuing on the date of such
deposit;

 

(c)                                  Such covenant defeasance shall not cause
the Trustee to have a conflicting interest as defined in Section 6.9 and for
purposes of the Trust Indenture Act with respect to any securities of the
Issuer;

 

(d)                                 Such covenant defeasance shall not
result in a breach or violation of, or constitute a default under any agreement
or instrument to which the Issuer is a party or by which it is bound;

 

(e)                                  Such covenant defeasance shall not cause
any Securities then listed on any registered national securities exchange under
the Exchange Act to be delisted;

 

(f)                                    The Issuer shall have delivered to the
Trustee an Officer’s Certificate and Opinion of Counsel to the effect that the
Holders of the Securities of such series and Coupons appertaining thereto will
not recognize income, gain or loss for United States Federal income tax
purposes as a result of such covenant defeasance and will be subject to United
States Federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such covenant defeasance had not
occurred; and

 

(g)                                 The Issuer shall have delivered to the
Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that
all conditions precedent provided for relating to the covenant defeasance
contemplated by this provision have been complied with.

 

SECTION 10.2 APPLICATION BY TRUSTEE
OF FUNDS DEPOSITED FOR PAYMENT OF SECURITIES.  Subject to Section 10.4, all
moneys deposited with the Trustee (or other trustee) pursuant to Section 10.1
shall be held in trust and applied by it to the payment, either directly or
through any paying agent (including the Issuer acting as its own paying agent),
to the Holders of the particular Securities of such series and of Coupons
appertaining thereto for the payment or redemption of which such moneys have
been deposited with the Trustee, of all sums due and to become due thereon for
principal and interest; but such money need not be segregated from other funds
except to the extent required by law.

 

SECTION 10.3 REPAYMENT OF MONEYS
HELD BY PAYING AGENT.  In connection with the satisfaction and
discharge of this Indenture with respect to Securities of any series, all
moneys then held by any paying agent under the provisions of this Indenture
with respect to such series of Securities shall, upon demand of the Issuer, be
repaid to it or paid to the Trustee and thereupon such paying agent shall be
released from all further liability with respect to such moneys.

 

SECTION 10.4 RETURN OF MONEYS HELD
BY TRUSTEE AND PAYING AGENT UNCLAIMED FOR TWO YEARS. 
Any moneys deposited with or paid to

 

52

 

the Trustee or any paying agent for the payment of the principal of or
interest on any Security of any series and of any Coupons attached thereto and
not applied but remaining unclaimed for two years after the date upon which
such principal or interest shall have become due and payable, shall, upon the
written request of the Issuer and unless otherwise required by mandatory
provisions of applicable escheat or abandoned or unclaimed property law, be
repaid to the Issuer by the Trustee for such series or such paying agent, and
the Holder of the Securities of such series and of any Coupons appertaining
thereto shall, unless otherwise required by mandatory provisions of applicable
escheat or abandoned or unclaimed property laws, thereafter look only to the
Issuer for any payment which such Holder may be entitled to collect, and all
liability of the Trustee or any paying agent with respect to such moneys shall
thereupon cease; provided, that the Trustee or such paying agent, before being
required to make any such repayment with respect to moneys deposited with it
for any payment (a) in respect of Registered Securities of any series, shall at
the expense of the Issuer, mail by first-class mail to Holders of such
Securities at their addresses as they shall appear on the Security register,
and (b) in respect of Unregistered Securities of any series, shall at the
expense of the Issuer cause to the published once, in an Authorized Newspaper
in the Borough of Manhattan, The City of New York and once in an Authorized
Newspaper in London (and, if required by Section 3.7, once in an Authorized
Newspaper in Luxembourg), notice, that such moneys remain and that, after  a date specified therein, which shall not be
less than thirty days from the date of such mailing or publication, any
unclaimed balance of such money then remaining will be repaid to the Issuer.

 

SECTION 10.5 INDEMNITY FOR U.S.
GOVERNMENT OF OBLIGATIONS.  The Issuer 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 10.1 or the principal
or interest received in respect of such obligations.

 

SECTION 10.6 EFFECT ON
SUBORDINATION PROVISIONS.  Unless otherwise expressly established
pursuant to Section 2.3 with respect to the Subordinated Securities of any
series, the provisions of Section 11.13 hereof, insofar as they pertain to the
Subordinated Securities of such series, and the Subordination Provisions
established pursuant to Section 2.3(9) with respect to such series, are hereby
expressly made subject to the provisions for satisfaction and discharge and
defeasance and covenant defeasance set forth in Section 10.1 hereof and,
anything herein to the contrary notwithstanding, upon the effectiveness of such
satisfaction and discharge and defeasance and covenant  defeasance pursuant to Section 10.1 with
respect to the Securities of such series, such Securities shall thereupon cease
to be so subordinated and shall no longer be subject to the provisions of  Section 11.13 or the Subordination
Provisions established pursuant to Section 2.3(9) with respect to such series
and, without limitation to the foregoing, all moneys, U.S. Government
Obligations and other securities or property deposited with the Trustee (or
other qualifying trustee) in trust in connection with such satisfaction and
discharge, defeasance or covenant defeasance, as the case may be, and all proceeds
therefrom may be applied to pay the principal of, premium, if any, and
interest, if any, on, and mandatory sinking fund payments, if any, with respect
to the Securities of such series as and when the same shall become due and
payable notwithstanding the provisions of Section 11.13 or such Subordination
Provisions.

 

53

 

ARTICLE XI

 

MISCELLANEOUS PROVISIONS

 

SECTION 11.1 INCORPORATORS,
STOCKHOLDERS, OFFICERS AND DIRECTORS OF ISSUER EXEMPT FROM INDIVIDUAL LIABILITY. 
No recourse under or upon any obligation, covenant or agreement
contained in this Indenture, or in any Security, or because of any indebtedness
evidenced thereby, shall be had against any incorporator, as such, or against
any past, present or future stockholder, officer or director, as such, of the
Issuer or of any successor, either directly or through the Issuer or any
successor, under any rule of law, statute or constitutional provision or by the
enforcement of any assessment or by any legal or equitable proceeding or
otherwise, all such liability being expressly waived and released by the
acceptance of the Securities and the Coupons, if any, appertaining thereto by
the Holders thereof and as part of the consideration for the issue of the Securities
and the Coupons appertaining thereto.

 

SECTION 11.2 PROVISIONS OF
INDENTURE FOR THE SOLE BENEFIT OF PARTIES AND HOLDERS OF SECURITIES AND COUPONS. 
Nothing in this Indenture, in the Securities or in the Coupons
appertaining thereto, expressed or implied, shall give or be construed to give
to any person, firm or corporation, other than the parties thereto and their
successors and the Holders of the Securities or Coupons, if any and, in the
case of the Subordinated Securities of any series, the holders of Senior
Indebtedness with respect to such series, any legal or equitable right, remedy
or claim under this Indenture or under any covenant or provision herein
contained, all such covenants and provisions being for the sole benefit of the
parties hereto and their successors and of the Holders of the Securities or
Coupons, if any and, in the case of the Subordinated Securities of any series,
the holders of Senior Indebtedness with respect to such series.

 

SECTION 11.3 SUCCESSORS AND ASSIGNS
OF ISSUER BOUND BY INDENTURE.  All the covenants,
stipulations, promises and agreements in this Indenture contained by or in
behalf of the Issuer shall bind its successors and assigns, whether so
expressed or not.

 

SECTION 11.4 NOTICES AND DEMANDS ON
ISSUER, TRUSTEE AND HOLDERS OF SECURITIES AND COUPONS. 
Any notice or demand which by any provision of this Indenture is
required or permitted to be given or served by the Trustee or by the Holders of
Securities or Coupons, if any, to or on the Issuer may be given or served by being
deposited postage prepaid, first-class mail (except as otherwise specifically
provided herein) addressed (until another address of the Issuer is filed by the
Issuer with the Trustee) to UnionBanCal Corporation, 400 California Street, San
Francisco, California 94104, Attention: 
Secretary.  Any notice,
direction, request or demand by the Issuer or any Holder of Securities or
Coupons, if any, to or upon the Trustee shall be deemed to have been
sufficiently given or served by being deposited postage prepaid, first-class
mail (except as otherwise specifically provided herein) addressed (until
another address of the Trustee is filed by the Trustee with the Issuer) to Bank
One Trust Company, N.A., One Bank One Plaza, IL1-0126, Chicago, IL 60670,
Attention:  Corporate Trust
Administration.

 

54

 

Where this Indenture provides for notice to Holders of Registered
Securities, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and mailed, first-class mail, postage
prepaid, to each Holder entitled thereto, at his last address as it appears in
the Security register.

 

Where this Indenture provides for notice to holders of Unregistered
Securities, such notice shall be sufficiently given (unless otherwise expressly
provided herein) by giving notice to such Holders (a) by publication of such
notice at least once in an Authorized Newspaper in the Borough of Manhattan,
The City of New York, and at least once in an Authorized Newspaper in London
(and, if required by Section 3.7, once in an Authorized Newspaper in
Luxembourg), and (b) by mailing such notice to the Holders of Unregistered
Securities who have filed their names and addresses with the Trustee pursuant
to Section 313(c)(2) of the Trust Indenture Act at such addresses as were so
furnished to the Trustee.

 

In any case where notice to such 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 or irregularities in regular
mail service, it shall be impracticable to mail notice to the Issuer when such
notice is required to the given pursuant to any provision of this Indenture,
then any manner of giving such notice as shall be reasonably satisfactory to
the Trustee shall be deemed to be a sufficient giving of such notice.

 

SECTION 11.5 OFFICER’S CERTIFICATES
AND OPINIONS OF COUNSEL; STATEMENTS TO BE CONTAINED THEREIN. 
Upon any application or demand by the Issuer to the Trustee to take any
action under any of the provisions of this Indenture, the Issuer shall furnish
to the Trustee an Officer’s Certificate stating that all conditions precedent
provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent have been complied with, except that in
the case of any such application or demand as to which the furnishing of such
documents is specifically required by any provision of this Indenture relating
to such particular application or demand, no additional certificate or opinion
need be furnished.

 

Each certificate or opinion provided for in this Indenture and
delivered to the Trustee with respect to compliance with a condition or
covenant provided for in this Indenture shall include (a) a statement that the
person making such certificate or opinion has read such covenant or condition,
(b) 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, (c) a statement that, in the opinion of such
person, he has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant or
condition has been complied with and (d) a statement as to whether or not, in
the opinion of such person, such condition or covenant has been complied with.

 

55

 

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

 

Any certificate, statement or opinion of an officer of the Issuer or of
counsel may be based, insofar as it relates to accounting matters, upon a
certificate or opinion of or representations by an accountant or firm of
accountants in the employ of the Issuer, unless such officer or counsel, as the
case may be, knows that the certificate or opinion of or representations with
respect to the accounting matters upon which his certificate, statement or
opinion may be based as aforesaid are erroneous, or in the exercise of reasonable
care should know that  the same are
erroneous.

 

Any certificate or opinion of any independent firm of public
accountants filed with and directed to the Trustee shall contain a statement
that such firm is independent.

 

SECTION 11.6 PAYMENTS DUE ON SATURDAYS,
SUNDAYS AND HOLIDAYS.  If the date of maturity of interest on or
principal of the Securities of any series or any Coupons appertaining thereto
or the date fixed for redemption or repayment of any such Security or Coupon
shall not be a Business Day, then payment of interest or principal need not be
made on such date, but may be made on the next succeeding Business Day with the
same force and effect as if made on the date of maturity or the date fixed for
redemption, and no interest shall accrue for the period after such date.

 

SECTION 11.7 CONFLICT OF ANY
PROVISION OF INDENTURE WITH TRUST INDENTURE ACT. 
If and to the extent that any provision of this Indenture limits,
qualifies or conflicts with duties imposed by, or with another provision (an
“incorporated provision”) included in this Indenture by operation of Sections
310 to 318, inclusive, of the Trust Indenture Act, such imposed duties or
incorporated provision shall control.

 

SECTION 11.8 NEW YORK LAW TO
GOVERN. THIS INDENTURE AND EACH SECURITY AND COUPON SHALL BE DEEMED TO BE A
CONTRACT UNDER THE LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF SUCH STATE INCLUDING,
WITHOUT LIMITATION, SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.

 

SECTION 11.9 COUNTERPARTS. 
This Indenture may be executed in any number of counterparts, each of
which shall be an original; but such counterparts shall together constitute but
one and the same instrument.

 

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SECTION 11.10 EFFECT OF HEADINGS. 
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.

 

SECTION 11.11 SECURITIES IN A
FOREIGN CURRENCY.  Unless otherwise specified in an Officer’s
Certificate delivered pursuant to Section 2.3 of this Indenture with respect to
a particular series of Securities, whenever for purposes of this Indenture any
action may be taken by the Holders of a specified percentage in aggregate
principal amount of Securities of all series or all series affected by a
particular action at the time Outstanding and, at such time, there are
Outstanding Securities of any series which are denominated in a Foreign
Currency, then the principal amount of Securities of such series which shall be
deemed to be Outstanding for the purpose of taking such action shall be that
amount of Dollars that could be obtained for such amount at the Market Exchange
Rate.  For purposes of this Section
11.11, Market Exchange Rate shall mean the noon Dollar buying rate in The City
of New York for cable transfers of such currency or currencies as published by
the Federal Reserve Bank of New York as of the most recent available date.  If such Market Exchange Rate is not available
for any reason with respect to such currency, the Trustee shall use, in its
sole discretion and without liability on its part, such quotation of the
Federal Reserve Bank of New York or quotations from one or more major banks in
The City of New York or in the country of issue of the currency in question,
which for purposes of the euro shall be any member state of the European Union
that has adopted the euro, as the Trustee shall deem appropriate.  The provisions of this paragraph shall apply
in determining the equivalent principal amount in respect of Securities of a
series denominated in a currency other than Dollars in connection with any
action taken by Holders of Securities pursuant to the terms of this Indenture.

 

All decisions and determinations of the Trustee regarding the Market
Exchange Rate or any alternative determination provided for in the preceding
paragraph shall be in its sole discretion and shall, in the absence of manifest
error, be conclusive to the extent permitted by law for all purposes and
irrevocably binding upon the Issuer and all Holders.

 

SECTION 11.12 JUDGMENT CURRENCY. 
The Issuer agrees, to the fullest extent that it may effectively do so
under applicable law, that (a) if for the purpose of obtaining judgment in any
court it is necessary to convert the sum due in respect of the principal of or
interest on the Securities of any series (the “Required Currency”) into a
currency in which a judgment will be rendered (the “Judgment Currency”), the
rate of exchange used shall be the rate at which in accordance with normal
banking procedures the Trustee could purchase in The City of New York the
Required Currency with the Judgment Currency on the day on which final
unappealable judgment is entered, unless such day is not a New York Banking
Day, then, to the extent permitted by applicable law, the rate of exchange used
shall be the rate at which in accordance with normal banking procedures the
Trustee could purchase in The City of New York the Required Currency with the
Judgment Currency on the New York Banking Day preceding the day on which final
unappealable judgment is entered and (b) its obligations under this Indenture
to make payments in the Required Currency (i) shall not be discharged or
satisfied by any tender, or any recovery pursuant to any judgment (whether or
not entered in accordance with subsection (a)), in any currency other than the
Required Currency, except to the extent that such tender or recovery shall
result in the actual receipt, by the payee, of the full amount of the Required
Currency expressed to be payable in respect of such payments, (ii) shall be
enforceable

 

57

 

as an alternative or additional cause of action for the purpose of
recovering in the Required Currency the amount, if any, by which such actual
receipt shall fall short of the full amount of the Required Currency so
expressed to be payable and (iii) shall not be affected by judgment being
obtained for any other sum due under this Indenture.  For purposes of the foregoing, “New York Banking Day” means any
day except a Saturday, Sunday or a legal holiday in The City of New York or a
day on which banking institutions in The City of New York are authorized or
required by law or executive order to close.

 

SECTION 11.13 AGREEMENT TO
SUBORDINATE.  The Issuer, for itself, its successors and
assigns, covenants and agrees, and each Holder of Subordinated Securities of
any series by his acceptance thereof, likewise covenants and agrees, that the
payment of the principal of (and premium, if any) and interest, if any, on, and
mandatory sinking fund payments, if any, in respect of each and all of the
Subordinated Securities of such series shall be expressly subordinated, to the
extent and in the manner provided in the Subordination Provisions established
with respect to the Subordinated Securities of such series pursuant to Section
2.3(9) hereof, in right of payment to the prior payment in full of all Senior
Indebtedness with respect to such series.

 

ARTICLE XII

 

REDEMPTION OF SECURITIES AND SINKING FUNDS

 

SECTION 12.1 APPLICABILITY OF
ARTICLE.  The provisions of this Article shall be
applicable to the Securities of any series which are redeemable before their
maturity or to any sinking fund for the retirement of Securities of a series
except as otherwise specified as contemplated by Section 2.3 for Securities of
such series.

 

SECTION 12.2 NOTICE OF REDEMPTION;
PARTIAL REDEMPTIONS.  Notice of redemption to the Holders of
Registered Securities of any series to be redeemed as a whole or in part at the
option of the Issuer shall be given by mailing notice of such redemption by
first class mail, postage prepaid, at least 30 days and not more than 60 days
prior to the date fixed for redemption to such Holders of Securities of such series
at their last addresses as they shall appear upon the registry books.  Notice of redemption to the Holders of
Unregistered Securities to be redeemed as a whole or in part, who have filed
their names and addresses with the Trustee pursuant to Section 313(c)(2) of the
Trust Indenture Act shall be given by mailing notice of such redemption, by
first class mail, postage prepaid, at least 30 days and not more than 60 prior
to the date fixed for redemption, to such Holders at such addresses as were so
furnished to the Trustee (and, in the case of any such notice given by the
Issuer, the Trustee shall make such information available to the Issuer for
such purpose).  Notice of redemption to
all other Holders of Unregistered Securities shall be published in an
Authorized Newspaper in the Borough of Manhattan, The City of New York and in
an Authorized Newspaper in London (and, if required by Section 3.7, in an
Authorized Newspaper in Luxembourg), in each case, once in each of three
successive calendar weeks, the first publication to be not less than 30 nor
more than 60 days prior to the date fixed for redemption.  Any notice which is mailed in the manner
herein provided shall be conclusively presumed to have been duly given, whether
or not the Holder receives the notice. 
Failure to give notice by mail, or any defect in the notice to the
Holder of

 

58

 

any Security of a series designated for redemption as a whole or in
part shall not affect the validity of the proceedings for the redemption of
such Security of such series.

 

The notice of redemption to each such Holder shall specify the
principal amount of each Security of such series held by such Holder to be
redeemed, the date fixed for redemption, the redemption price, the place or
places of payment, that payment will be made upon presentation and surrender of
such Securities and, in the case of Securities with Coupons attached thereto,
of all Coupons appertaining thereto maturing after the date fixed for redemption,
that such redemption is pursuant to the mandatory or optional sinking fund, or
both, if such be the case, that interest accrued to the date fixed for
redemption will be paid as specified in such notice and that on and after said
date interest thereon or on the portions thereof to be redeemed will cease to
accrue.  In case any Security of a
series is to be redeemed in part only, the notice of redemption to Holders of
Securities of the series shall state the portion of the principal amount
thereof to be redeemed and shall state that on and after the date fixed for
redemption, upon surrender of such Security, a new Security or Securities of
such series in principal amount equal to the unredeemed portion thereof will be
issued.

 

The notice of redemption of Securities of any series to be redeemed at
the option of the Issuer shall be given by the Issuer or, at the Issuer’s
request, by the Trustee in the name and at the expense of the Issuer.

 

On or before the redemption date specified in the notice of redemption given
as provided in this Section, the Issuer will deposit with the Trustee or with
one or more paying agents (or, if the Issuer is acting as its own paying agent,
set aside, segregate and hold in trust as provided in Section 3.4) an amount of
money sufficient to redeem on the redemption date all the Securities of such
series so called for redemption at the appropriate redemption price, together
with accrued interest to the date fixed for redemption.  The Issuer will deliver to the Trustee at
least 70 days prior to the date fixed for redemption, or such shorter period as
shall be acceptable to the Trustee, an Officer’s Certificate stating the
aggregate principal amount of Securities to be redeemed.  In case of a redemption at the election of
the Issuer prior to the expiration of any restriction on such redemption, the
Issuer shall deliver to the Trustee, prior to the giving of any notice of
redemption to Holders pursuant to this Section, an Officer’s Certificate
stating that such restriction has been complied with.

 

If less than all the Securities of a series are to be redeemed, the
Trustee shall select, in such manner as it shall deemed appropriate and fair,
in its sole discretion, Securities of such series to be redeemed in whole or in
part.  Securities may be redeemed in
part in multiples equal to the minimum authorized denomination for Securities
of such series or any multiple thereof. 
The Trustee shall promptly notify the Issuer in writing of the
Securities of such series selected for redemption and, in the case of any
Securities of such series selected for partial redemption, the principal amount
thereof to be redeemed.  For all
purposes of this Indenture, unless the context otherwise requires, all
provisions relating to the redemption of Securities of any series shall relate,
in the case of any Security redeemed or to be redeemed only in part, to the
portion of the principal amount of such Security which has been or is to be
redeemed.

 

SECTION 12.3 PAYMENT OF SECURITIES
CALLED FOR REDEMPTION.  If notice of redemption has been given as
above provided, the Securities or

 

59

 

portions of Securities specified in such notice shall become due and
payable on the date and at the place stated in such notice at the applicable
redemption price, together with interest accrued to the date fixed for
redemption, and on and after said date (unless the Issuer shall default in the
payment of such Securities at the redemption price, together with interest
accrued to said date) interest on the Securities or portions of Securities so
called for redemption shall cease to accrue, and the unmatured Coupons, if any,
appertaining thereto shall be void, and, except as provided in Sections 6.5 and
10.4, such Securities shall cease from and after the date fixed for redemption
to be entitled to any benefit or security under this Indenture, and the Holders
thereof shall have no right in respect of such Securities except the right to
receive the redemption price thereof and unpaid interest to the date fixed for
redemption.  On presentation and
surrender of such Securities at a place of payment specified in said notice,
together with all Coupons, if any, appertaining thereto maturing after the date
fixed for redemption, said Securities or the specified portions thereof shall
be paid and redeemed by the Issuer at the applicable redemption price, together
with interest accrued thereon to the date fixed for redemption; provided, that
payment of interest becoming due on or prior to the date fixed for redemption
shall be payable in the case of Securities with Coupons attached thereto, to
the Holders of the Coupons for such interest upon surrender thereof, and in the
case of Registered Securities, to the Holder of such Registered Securities
registered as such on the relevant record date, subject to the terms and
provisions of Section 2.3 and 2.7 hereof.

 

If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal shall, until paid or duly
provided for, bear interest from the date fixed for redemption at the rate of
interest or Yield to Maturity (in the case of an Original Issue Discount
Security) borne by such Security.

 

If any Security with Coupons attached thereto is surrendered for
redemption and is not accompanied by all appurtenant Coupons maturing after the
date fixed for redemption, the surrender of such missing Coupon or Coupons may
be waived by the Issuer and the Trustee, if there be furnished to each of them
such security or indemnity as they may require to save each of them harmless.

 

Upon presentation of any Security redeemed in part only, the Issuer
shall execute and the Trustee shall authenticate and deliver to or on the order
of the Holder thereof, at the expense of the Issuer, a new Security or
Securities of such series, of authorized denominations, in principal amount
equal to the unredeemed portion of the Security so presented.

 

SECTION 12.4 EXCLUSION OF CERTAIN
SECURITIES FROM ELIGIBILITY FOR SELECTION FOR REDEMPTION. 
Securities shall be excluded from eligibility for selection for
redemption if they are identified by registration and certificate number in an
Officer’s Certificate delivered to the Trustee at least 40 days prior to the
last date on which notice of redemption may be given as being owned of record
and beneficially by, and not pledged or hypothecated by, either (a) the Issuer
or (b) an entity specifically identified in such written statement as directly
or indirectly controlling or controlled by or under direct or indirect common
control with the Issuer.

 

SECTION 12.5 MANDATORY AND OPTIONAL
SINKING FUNDS.  The minimum amount of any sinking fund
payment provided for by the terms of the Securities of any

 

60

 

series is herein referred to as a “mandatory sinking fund payment,” and
any payment in excess of such minimum amount provided for by the terms of the
Securities of any series is herein referred to as an “optional sinking fund
payment.”  The date on which a sinking
fund payment is to be made is herein referred to as the “sinking fund payment
date.”

 

In lieu of making all or any part of any mandatory sinking fund payment
with respect to any series of Securities in cash, the Issuer may at its option
(a) deliver to the Trustee Securities of such series theretofore purchased or
otherwise acquired (except upon redemption pursuant to the mandatory sinking
fund) by the Issuer or receive credit for Securities of such series (not
previously so credited) theretofore purchased or otherwise acquired (except as
aforesaid) by the Issuer and delivered to the Trustee for cancellation pursuant
to Section 2.10, (b) receive credit for optional sinking fund payments (not
previously so credited) made pursuant to this Section, or (c) receive credit for
Securities of such series (not previously so credited) redeemed by the Issuer
through any optional redemption provision contained in the terms of such
series.  Securities so delivered or
credited shall be received or credited by the Trustee at the sinking fund
redemption price specified in such Securities.

 

On or before the 60th day next preceding each sinking fund payment date
for any series, the Issuer will deliver to the Trustee an Officer’s Certificate
(which need not contain the statements required by Section 11.5) (a) specifying
the portion of the mandatory sinking fund payment to be satisfied by payment of
cash and the portion to be satisfied by credit of Securities of such series and
the basis for such credit, (b) stating that none of the Securities of such
series has theretofore been so credited, (c) stating that no defaults in the
payment of interest or Events of Default with respect to such series have
occurred (which have not been waived or cured) and are continuing and (d)
stating whether or not the Issuer intends to exercise its right to make an
optional sinking fund payment with respect to such series and, if so,
specifying the amount of such optional sinking fund payment which the Issuer
intends to pay on or before the next succeeding sinking fund payment date.  Any Securities of such series to be credited
and required to be delivered to the Trustee in order for the Issuer to be
entitled to credit therefor as aforesaid which have not theretofore been delivered
to the Trustee shall be delivered for cancellation pursuant to Section 2.10 to
the Trustee with such Officer’s Certificate (or reasonably promptly thereafter
if acceptable to the Trustee).  Such
Officer’s Certificate shall be irrevocable and upon its receipt by the Trustee,
the Issuer shall become unconditionally obligated to make all the cash payments
or payments therein referred to, if any, on or before the next succeeding
sinking fund payment date.  Failure of
the Issuer, on or before any such 60th day, to deliver such Officer’s Certificate
and Securities specified in this paragraph, if any, shall not constitute a
default but shall constitute, on and as of such date, the irrevocable election
of the Issuer (i) that the mandatory sinking fund payment for such series due
on the next succeeding sinking fund payment date shall be paid entirely in cash
without the option to deliver or credit Securities of such series in respect
thereof and (ii) that the Issuer will make no optional sinking fund payment
with respect to such series as provided in this Section.

 

If the sinking fund payment or payments (mandatory or optional or both)
to be made in cash on the next succeeding sinking fund payment date plus any
unused balance of any preceding sinking fund payments made in cash shall exceed
$50,000 (or the equivalent thereof in any Foreign Currency) or a lesser sum in
Dollars (or the equivalent thereof in any Foreign Currency) if the Issuer shall
so request with respect to the Securities of any particular series, such

 

61

 

cash shall be applied on the next succeeding sinking fund payment date
to the redemption of Securities of such series at the sinking fund redemption
price together with accrued interest to the date fixed for redemption.  If such amount shall be $50,000 (or the
equivalent thereof in any Foreign Currency) or less and the Issuer makes no
such request then it shall be carried over until a sum in excess of $50,000 (or
the equivalent thereof in any Foreign Currency) is available.  The Trustee shall select, in the manner
provided in Section 12.2, for redemption on such sinking fund payment date a
sufficient principal amount of Securities of such series to absorb said cash,
as nearly as may be, and shall (if requested in writing by the Issuer) inform
the Issuer of the serial numbers of the Securities of such series (or portions
thereof) so selected.  Securities shall
be excluded from eligibility for redemption under this Section if they are
identified by registration and certificate number in an Officer’s Certificate
delivered to the Trustee at least 60 days prior to the sinking fund payment
date as being owned of record and beneficially by, and not pledged or
hypothecated by, either (a) the Issuer or (b) an entity specifically identified
in such Officer’s Certificate as directly or indirectly controlling or
controlled by or under direct or indirect common control with the Issuer.  The Trustee, in the name and at the expense
of the Issuer (or the Issuer, if it shall so request the Trustee in writing) shall
cause notice of redemption of the Securities of such series to be given in
substantially the manner provided in Section 12.2 (and with the effect provided
in Section 12.3) for the redemption of Securities of such series in part at the
option of the Issuer.  The amount of any
sinking fund payments not so applied or allocated to the redemption of
Securities of such series shall be added to the next cash sinking fund payment
for such series and, together with such payment, shall be applied in accordance
with the provisions of this Section. 
Any and all sinking fund moneys held on the stated maturity date of the
Securities of any particular series (or earlier, if such maturity is
accelerated), which are not held for the payment or redemption of particular Securities
of such series shall be applied, together with other moneys, if necessary,
sufficient for the purpose, to the payment of the principal of, and interest
on, the Securities of such series at maturity.

 

On or before each sinking fund payment date, the Issuer shall pay to
the Trustee in cash or shall otherwise provide for the payment of all interest
accrued to the date fixed for redemption on Securities to be redeemed on the
next following sinking fund payment date.

 

The Trustee shall not redeem or cause to be redeemed any Securities of
a series with sinking fund moneys or give any notice of redemption of
Securities for such series by operation of the sinking fund during the
continuance of a default in payment of interest on such Securities or of any Event
of Default except that, where the giving of notice of redemption of any
Securities shall theretofore have been made, the Trustee shall redeem or cause
to be redeemed such Securities, provided that it shall have received from the
Issuer a sum sufficient for such redemption. 
Except as aforesaid, any moneys in the sinking fund for such series at
the time when any such default or Event of Default shall occur, and any moneys
thereafter paid into the sinking fund, shall, during the continuance of such
default or Event of Default be deemed to have been collected under Article Five
and held for the payment of all such Securities.  In case such Event of Default shall have been waived as provided
in Section 5.10 or the default cured on or before the sixtieth day preceding
the sinking fund payment date in any year, such moneys shall thereafter be
applied on the next succeeding sinking fund payment date in accordance with
this Section to the redemption of such Securities.

 

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

 

	
   

  	
  UNIONBANCAL CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
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  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
  Attest:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BANK ONE TRUST COMPANY, N.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
  Attest:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  

 

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