Document:

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                           BP CAPITAL MARKETS p.l.c.,
                                                                         COMPANY

                                       AND

                                   BP p.l.c.,
                                                                       GUARANTOR

                                       TO

                              JPMORGAN CHASE BANK,

                                                                         TRUSTEE
                                  -------------

                                    INDENTURE
                            DATED AS OF MARCH 8, 2002

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

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<PAGE>

                           BP CAPITAL MARKETS p.l.c.,
                                       AND
                                    BP p.l.c.
                                       TO
                               JPMORGAN CHASE BANK

                      INDENTURE, DATED AS OF MARCH 8, 2002

         Reference is made to the following  provisions  of the Trust  Indenture
Act of 1939, as amended,  which establish certain duties and responsibilities of
the Company and the Trustee which may not be set forth fully in this Indenture:

SECTION                            SUBJECT

310(b)    Disqualifications of Trustee for conflicting interest

311       Preferential collection of claims of Trustee as creditor of Company

312(a)    Periodic filing of information by Company with Trustee

312(b)    Access of Securityholders to information

313(a)    Annual report of Trustee to Securityholders

313(b)    Additional reports of Trustee to Securityholders

314(a)    Reports by Company, including annual compliance certificate

314(c)    Evidence of compliance with conditions precedent

315(a)    Duties of Trustee prior to default

315(b)    Notice of default from Trustee to Securityholders

315(c)    Duties of Trustee in case of default

315(d)    Provisions relating to responsibility of Trustee

315(e)    Assessment of costs against litigating Securityholders in certain
          circumstances

316(a)    Directions and waivers by Securityholders in certain circumstances

316(b)    Prohibition of impairment of right of Securityholders to payment

316(c)    Right of Company to set record date for certain purposes

317(a)    Special powers of Trustee

318(a)    Provisions of Act to control in case of conflict

<PAGE>

                           BP CAPITAL MARKETS p.l.c.,
                                       AND
                                    BP p.l.c.
                                       TO
                               JPMORGAN CHASE BANK

         RECONCILIATION AND TIE BETWEEN TRUST INDENTURE ACT OF 1939 AND
                      INDENTURE, DATED AS OF MARCH 8, 2002

  TRUST INDENTURE
    ACT SECTION                                               INDENTURE SECTION
Section 310(a)(1)  ........................................   609
           (a)(2)  ........................................   609
           (a)(3)  ........................................   Not Applicable
           (a)(4)  ........................................   Not Applicable
           (a)(5)  ........................................   609
           (b)     ........................................   608
                                                              610
Section 311(a)     ........................................   613(a)
           (b)     ........................................   613(b)
           (b)(2)  ........................................   703(a)(2)
                                                              703(b)
Section 312(a)     ........................................   701
                                                              702(a)
           (b)     ........................................   702(b)
           (c)     ........................................   702(c)
Section 313(a)     ........................................   703(a)
           (b)     ........................................   703(b)
           (c)     ........................................   703(a)
                                                              703(b)
           (d)     ........................................   703(c)
Section 314(a)(1)(2) and (3)...............................   704
           (a)(4)  ........................................   1008
           (b)     ........................................   Not Applicable
           (c)(1)  ........................................   102
           (c)(2)  ........................................   102
           (c)(3)  ........................................   Not Applicable
           (d)     ........................................   Not Applicable
           (e)     ........................................   102
Section 315(a)     ........................................   601(a)
           (b)     ........................................   602
                                                              703(a)(6)
           (c)     ........................................   601
           (d)     ........................................   601
           (d)(1)  ........................................   601
           (d)(2)  ........................................   601
           (d)(3)  ........................................   601
           (e)     ........................................   514
Section 316(a)                                                101
           (a)(1)(A).......................................   502
                                                              512
           (a)(1)(B).......................................   513
           (a)(2)  ........................................   Not Applicable
           (b)     ........................................   508
           (c)     ........................................   513
Section 317(a)(1)  ........................................   503
           (a)(2)  ........................................   504
           (b)     ........................................   1006

-------------
NOTE:  THIS RECONCILIATION AND TIE SHALL NOT, FOR ANY PURPOSE, BE DEEMED TO BE A
       PART OF THE INDENTURE.

<PAGE>

  TRUST INDENTURE
    ACT SECTION                                               INDENTURE SECTION
Section 318(a)     ........................................   107

-------------
NOTE:  THIS RECONCILIATION AND TIE SHALL NOT, FOR ANY PURPOSE, BE DEEMED TO BE A
       PART OF THE INDENTURE.

<PAGE>

                                TABLE OF CONTENTS

                                ----------------
                                                                            PAGE
PARTIES........................................................................1
RECITALS OF THE COMPANY........................................................1
RECITALS OF THE GUARANTOR......................................................1

                                   ARTICLE ONE

             DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

    SECTION 101.    DEFINITIONS................................................1
                    Act........................................................2
                    Affiliate..................................................2
                    Authenticating Agent.......................................2
                    Board of Directors.........................................2
                    Board Resolution...........................................2
                    Business Day...............................................2
                    Commission.................................................2
                    Company....................................................3
                    Company Request............................................3
                    Company Order..............................................3
                    Corporate Trust Office.....................................3
                    corporation................................................3
                    Defaulted Interest.........................................3
                    Depositary.................................................3
                    Event of Default...........................................3
                    Executive Officer's Certificate............................3
                    Global Security............................................3
                    Government Obligations.....................................3
                    Guarantee..................................................4
                    Guarantor..................................................4
                    Holder.....................................................4
                    Indenture..................................................4
                    interest...................................................4
                    Interest Payment Date......................................4
                    Maturity...................................................4
                    Officers' Certificate......................................4
                    Opinion of Counsel.........................................4
                    Original Issue Discount Security...........................5
                    Outstanding................................................5
                    Paying Agent...............................................6
                    Periodic Offering..........................................6
                    Person.....................................................6
                    Place of Payment...........................................6
                    Redemption Date............................................6

-------------
NOTE:  THIS TABLE OF CONTENTS SHALL NOT, FOR ANY PURPOSE, BE DEEMED TO BE A PART
       OF THE INDENTURE.

<PAGE>

                    Redemption Price...........................................6
                    Regular Record Date........................................6
                    Responsible Officer........................................6
                    Securities.................................................6
                    Security Register..........................................6
                    Security Registrar.........................................6
                    Special Record Date........................................7
                    Stated Maturity............................................7
                    Subsidiary.................................................7
                    Trustee....................................................7
                    Trust Indenture Act........................................7
                    United Kingdom.............................................7
                    Vice President.............................................7
    SECTION 102.    COMPLIANCE CERTIFICATES AND OPINIONS.......................7
    SECTION 103.    FORM OF DOCUMENTS DELIVERED TO TRUSTEE.....................8
    SECTION 104.    ACTS OF HOLDERS............................................9
    SECTION 105.    NOTICES, ETC., TO TRUSTEE, COMPANY AND GUARANTOR...........9
    SECTION 106.    NOTICE TO HOLDERS; WAIVER.................................10
    SECTION 107.    CONFLICT WITH TRUST INDENTURE ACT.........................10
    SECTION 108.    EFFECT OF HEADINGS AND TABLE OF CONTENTS..................11
    SECTION 109.    SUCCESSORS AND ASSIGNS....................................11
    SECTION 110.    SEPARABILITY CLAUSE.......................................11
    SECTION 111.    BENEFITS OF INDENTURE.....................................11
    SECTION 112.    GOVERNING LAW.............................................11
    SECTION 113.    LEGAL HOLIDAYS............................................11
    SECTION 114.    SUBMISSION TO JURISDICTION................................12

                                   ARTICLE TWO

                                 SECURITY FORMS

    SECTION 201.    FORMS GENERALLY...........................................13
    SECTION 202.    FORM OF FACE OF SECURITY..................................14
    SECTION 203.    FORM OF REVERSE OF SECURITY...............................17
    SECTION 204.    FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION...........21
    SECTION 205.    FORM OF GUARANTEE.........................................21
    SECTION 206.    FORM OF LEGEND FOR GLOBAL SECURITIES......................25

                                  ARTICLE THREE

                                 THE SECURITIES

    SECTION 301.    AMOUNT UNLIMITED; ISSUABLE IN SERIES......................25
    SECTION 302.    DENOMINATIONS.............................................28
    SECTION 303.    EXECUTION, AUTHENTICATION, DELIVERY AND DATING............28
    SECTION 304.    TEMPORARY SECURITIES......................................30

                                       ii

<PAGE>

    SECTION 305.    REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.......30
    SECTION 306.    MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES..........32
    SECTION 307.    PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED............33
    SECTION 308.    PERSONS DEEMED OWNERS.....................................34
    SECTION 309.    CANCELLATION..............................................34
    SECTION 310.    COMPUTATION OF INTEREST...................................35

                                  ARTICLE FOUR

                           SATISFACTION AND DISCHARGE

    SECTION 401.    SATISFACTION AND DISCHARGE OF INDENTURE...................35
    SECTION 402.    APPLICATION OF TRUST MONEY................................36
    SECTION 403.    DEFEASANCE UPON DEPOSIT OF MONEYS OR GOVERNMENT
                       OBLIGATIONS............................................37

                                  ARTICLE FIVE

                                    REMEDIES

    SECTION 501.    EVENTS OF DEFAULT.........................................39
    SECTION 502.    ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT........41
    SECTION 503.    COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT
                       BY TRUSTEE.............................................42
    SECTION 504.    TRUSTEE MAY FILE PROOFS OF CLAIM..........................43
    SECTION 505.    TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF
                       SECURITIES.............................................44
    SECTION 506.    APPLICATION OF MONEY COLLECTED............................44
    SECTION 507.    LIMITATION ON SUITS.......................................44
    SECTION 508.    UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL,
                       PREMIUM AND INTEREST...................................45
    SECTION 509.    RESTORATION OF RIGHTS AND REMEDIES........................45
    SECTION 510.    RIGHTS AND REMEDIES CUMULATIVE............................46
    SECTION 511.    DELAY OR OMISSION NOT WAIVER..............................46
    SECTION 512.    CONTROL BY HOLDERS........................................46
    SECTION 513.    WAIVER OF PAST DEFAULTS...................................47
    SECTION 514.    UNDERTAKING FOR COSTS.....................................47
    SECTION 515.    WAIVER OF STAY OR EXTENSION LAWS..........................48

                                   ARTICLE SIX

                                   THE TRUSTEE

    SECTION 601.    CERTAIN DUTIES AND RESPONSIBILITIES.......................48

                                      iii

<PAGE>

    SECTION 602.    NOTICE OF DEFAULTS........................................48
    SECTION 603.    CERTAIN RIGHTS OF TRUSTEE.................................49
    SECTION 604.    NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES....50
    SECTION 605.    MAY HOLD SECURITIES.......................................50
    SECTION 606.    MONEY HELD IN TRUST.......................................50
    SECTION 607.    COMPENSATION AND REIMBURSEMENT............................50
    SECTION 608.    DISQUALIFICATION; CONFLICTING INTERESTS...................51
    SECTION 609.    CORPORATE TRUSTEE REQUIRED; ELIGIBILITY...................51
    SECTION 610.    RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.........52
    SECTION 611.    ACCEPTANCE OF APPOINTMENT BY SUCCESSOR....................53
    SECTION 612.    MERGER, CONSOLIDATION OR SUCCESSION TO BUSINESS...........54
    SECTION 613.    PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.........55
    SECTION 614.    APPOINTMENT OF AUTHENTICATING AGENT.......................55

                                  ARTICLE SEVEN

               HOLDERS' LISTS AND REPORTS BY TRUSTEE, COMPANY AND
                                    GUARANTOR

    SECTION 701.    COMPANY AND GUARANTOR TO FURNISH TRUSTEE NAMES AND
                       ADDRESSES OF HOLDERS...................................56
    SECTION 702.    PRESERVATION OF INFORMATION; COMMUNICATIONS TO HOLDERS....57
    SECTION 703.    REPORTS BY TRUSTEE........................................57
    SECTION 704.    REPORTS BY COMPANY AND GUARANTOR..........................58

                                  ARTICLE EIGHT

                CONSOLIDATION, AMALGAMATION, MERGER, CONVEYANCE,
                                TRANSFER OR LEASE

    SECTION 801.    COMPANY OR GUARANTOR MAY CONSOLIDATE, ETC., ONLY
                       ON CERTAIN TERMS.......................................59
    SECTION 802.    SUCCESSOR CORPORATION SUBSTITUTED.........................60

                                  ARTICLE NINE

                             SUPPLEMENTAL INDENTURES

    SECTION 901.    SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS........60
    SECTION 902.    SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS...........62
    SECTION 903.    EXECUTION OF SUPPLEMENTAL INDENTURES......................63

                                       iv

<PAGE>

    SECTION 904.    EFFECT OF SUPPLEMENTAL INDENTURES.........................63
    SECTION 905.    CONFORMITY WITH TRUST INDENTURE ACT.......................63
    SECTION 906.    REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES........64

                                   ARTICLE TEN

                  PARTICULAR COVENANTS OF COMPANY AND GUARANTOR

    SECTION 1001.   PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST BY COMPANY.....64
    SECTION 1002.   MAINTENANCE OF OFFICE OR AGENCY BY COMPANY................64
    SECTION 1003.   RESERVED..................................................65
    SECTION 1004.   RESERVED..................................................65
    SECTION 1005.   MAINTENANCE OF OFFICE OR AGENCY BY GUARANTOR..............65
    SECTION 1006.   MONEY FOR SECURITIES PAYMENTS TO BE HELD IN TRUST.........65
    SECTION 1007.   CORPORATE EXISTENCE.......................................66
    SECTION 1008.   STATEMENT BY EXECUTIVE OFFICERS AS TO COMPLIANCE..........66
    SECTION 1009.   WAIVER OF CERTAIN COVENANTS...............................67
    SECTION 1010.   ADDITIONAL AMOUNTS........................................67

                                 ARTICLE ELEVEN

                            REDEMPTION OF SECURITIES

    SECTION 1101.   APPLICABILITY OF ARTICLE..................................70
    SECTION 1102.   ELECTION TO REDEEM; NOTICE TO TRUSTEE.....................70
    SECTION 1103.   SELECTION BY TRUSTEE OF SECURITIES TO BE REDEEMED.........70
    SECTION 1104.   NOTICE OF REDEMPTION......................................71
    SECTION 1105.   DEPOSIT OF REDEMPTION PRICE...............................71
    SECTION 1106.   SECURITIES PAYABLE ON REDEMPTION DATE.....................72
    SECTION 1107.   SECURITIES REDEEMED IN PART...............................72
    SECTION 1108.   OPTIONAL REDEMPTION DUE TO CHANGES IN TAX TREATMENT.......72

                                 ARTICLE TWELVE

                                  SINKING FUNDS

    SECTION 1201.   APPLICABILITY OF ARTICLE..................................73
    SECTION 1202.   SATISFACTION OF SINKING FUND PAYMENTS WITH SECURITIES.....73
    SECTION 1203.   REDEMPTION OF SECURITIES FOR SINKING FUND.................74

                                       v

<PAGE>

                                ARTICLE THIRTEEN

                                   GUARANTEES

    SECTION 1301.   GUARANTEE.................................................74
    SECTION 1302.   SUBROGATION...............................................75
    SECTION 1303.   EXECUTION AND DELIVERY OF GUARANTEES......................75

TESTIMONIUM...................................................................76
SIGNATURES....................................................................76
ACKNOWLEDGMENTS...............................................................76

                                       vi

<PAGE>

         THIS INDENTURE is dated as of March 8, 2002,  among BP Capital  Markets
p.l.c.,  a corporation duly organized and existing under the laws of England and
Wales (herein called the "Company"),  having its principal  office at Breakspear
Park, Breakspear Way, Hemel Hempstead,  Herts HP24UL,  England, and BP p.l.c., a
corporation duly organized and existing under the laws of England (herein called
the  "Guarantor"),  having its principal  office at Britannic  House, 1 Finsbury
Circus,  London EC2M 7BA,  England,  and JPMorgan Chase Bank, a corporation duly
organized  and  existing  under the laws of the State of New  York,  as  Trustee
(herein called the "Trustee") having its Corporate Trust Office at 450 West 33rd
Street, New York, New York 10001.

                             RECITALS OF THE COMPANY

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

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

                            RECITALS OF THE GUARANTOR

         The Guarantor desires to make the Guarantees provided for herein.

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

         NOW, THEREFORE, THIS INDENTURE WITNESSETH:

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

                                  ARTICLE ONE

                        DEFINITIONS AND OTHER PROVISIONS
                             OF GENERAL APPLICATION

Section 101.  Definitions.

         For all purposes  indenture,  except as otherwise expressly provided or
unless the context otherwise requires:

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

<PAGE>

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

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

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

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

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

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

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

         "Board of  Directors",  when used with  reference to the Company or the
Guarantor,  means either the board of directors,  or any committee of such board
authorized to act for it hereunder,  of the Company or of the Guarantor,  as the
case may be.

         "Board  Resolution",  when used with  reference  to the  Company or the
Guarantor,  means  a copy  of a  resolution  certified  by the  Secretary  or an
Assistant Secretary of the Company or by the Secretary,  a Deputy Secretary,  an
Assistant  Secretary or a Deputy  Assistant  Secretary of the Guarantor,  as the
case may be, to have been duly  adopted by its Board of  Directors  and to be in
full force and effect on the date of such  certification,  and  delivered to the
Trustee.

         "Business Day",  when used with respect to any Place of Payment,  means
each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking or trust institutions in that Place of Payment are authorized  generally
or obligated by law, regulation or executive order to close.

         "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 of this  instrument such Commission is not existing and performing
the duties  now  assigned  to it under the Trust  Indenture  Act,  then the body
performing such duties at such time.

                                        2

<PAGE>

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

         "Company  Request" or "Company  Order" means a written request or order
signed  in the  name of the  Company  or of the  Guarantor,  in the  case of the
Company, by a Director or a senior officer, or, in the case of the Guarantor, by
one of its  Directors  or any other  Person  duly  authorized  thereto  by Board
Resolution and by the Secretary, a Deputy Secretary, an Assistant Secretary or a
Deputy Assistant Secretary, and delivered to the Trustee.

         "Corporate  Trust  Office"  means the office of the Trustee at which at
any  particular   time  its  corporate   trust  business  shall  be  principally
administered,  which  office  at the date  hereof  is  located  at 450 West 33rd
Street, New York, New York 10001.

         "corporation"  means  a  corporation,   association,  company,  limited
liability company or business trust.

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

         "Depositary"  means,  with  respect  to the  Securities  of any  series
issuable  or  issued  in  whole  or in  part in the  form of one or more  Global
Securities,  the clearing agency  registered under the Exchange Act, as amended,
specified for that purpose as contemplated by Section 301.

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

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

         "Executive  Officer's  Certificate"  means a certificate  signed by the
principal executive officer, principal financial officer or principal accounting
officer of the Company or the Guarantor, as the case may be.

         "Global  Security"  means a Security  bearing  the legend  required  by
Section  206  evidencing  all or part of a series of  Securities,  issued to the
Depositary  for such  series or its nominee  and  registered  in the name of the
Depositary or its nominee.

         "Government   Obligations"   means   securities  that  are  (i)  direct
obligations  of the  United  States of America or any  foreign  government  of a
sovereign state for the payment of which its full faith and credit is pledged or
(ii)  obligations  of an entity  controlled  or  supervised  by and acting as an
agency or  instrumentality  of the  United  States of  America  or such  foreign
government  the payment of which is  unconditionally  guaranteed as a full faith
and  credit  obligation  by  the  United  States  of  America  or  such  foreign
government,  as the case may be, which, in either case under clauses (i) or (ii)
are not callable or  redeemable at the option of the issuer  thereof,  and shall
also include a depository receipt issued by a bank or trust company as custodian
with respect to any such Government

                                        3
<PAGE>

Obligation  or a  specific  payment  of  interest  on or  principal  of any such
Government  Obligation held by such custodian for the account of the holder of a
depository receipt,  provided that (except as required by law) such custodian is
not  authorized to make any deduction  from the amount  payable to the holder of
such depository  receipt from any amount received by the custodian in respect of
the Government Obligation or the specific payment of interest on or principal of
the Government Obligation evidenced by such depository receipt.

         "Guarantee" means any guarantee of the Guarantor endorsed on a Security
authenticated  and  delivered  pursuant to this  Indenture and shall include the
guarantee set forth in Section 1301.

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

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

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

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

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

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

         "Officers'  Certificate" means a certificate signed, in the case of the
Company, by a Director or a senior officer, or, in the case of the Guarantor, by
one of its  Directors  or any other  Person  duly  authorized  thereto  by Board
Resolution and by the Secretary, a Deputy Secretary, an Assistant Secretary or a
Deputy Assistant  Secretary,  and delivered to the Trustee.  Each such Officers'
Certificate shall contain the statements required by Section 314(e) of the Trust
Indenture Act if applicable.

         "Opinion of Counsel" means a written opinion of counsel,  who may be an
employee of or counsel to the Company or the Guarantor.  Each such opinion shall

                                        4
<PAGE>

include the statements required by Section 314(e) of the Trust Indenture Act, if
applicable.

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

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

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

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

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

provided,  however,  that in  determining  whether the Holders of the  requisite
principal amount of the Outstanding  Securities have given any request,  demand,
authorization, direction, notice, consent or waiver hereunder, (A) the principal
amount  of an  Original  Issue  Discount  Security  that  shall be  deemed to be
Outstanding  shall be the amount of the principal  thereof that would be due and
payable as of the date of such  determination  upon acceleration of the Maturity
thereof  pursuant to Section 502, (B) if, as of such date, the principal  amount
payable at the Stated Maturity of a Security is not determinable,  the principal
amount of such  Security  which shall be deemed to be  Outstanding  shall be the
amount as  specified  or  determined  as  contemplated  by  Section  301 (C) the
principal amount of a Security  denominated in one or more foreign currencies or
currency  units shall be the U.S.  dollar  equivalent,  determined in the manner
provided as contemplated by Section 301 on the date of original issuance of such
Security of the  principal  amount (or, in the case of a Security  described  in
clause (A) or (B) above, the amount determined  pursuant to such Clause) of such
Security and (D)  Securities  owned by the Company,  the  Guarantor or any other
obligor upon the  Securities or any Affiliate of the Company or the Guarantor or
of such other obligor  shall be  disregarded  and deemed not to be  Outstanding,
except that,  in  determining  whether the Trustee shall be protected in relying

                                        5
<PAGE>

upon any such request,  demand,  authorization,  direction,  notice,  consent or
waiver,  only  Securities  which the  Trustee  knows to be so owned  shall be so
disregarded.  Securities  so owned which have been  pledged in good faith may be
regarded as Outstanding if the pledgee  establishes to the  satisfaction  of the
Trustee the pledgee's  right so to act with respect to such  Securities and that
the pledgee is not the  Company,  the  Guarantor  or any other  obligor upon the
Securities  or any  Affiliate  of the  Company,  the  Guarantor or of such other
obligor.

         "Paying  Agent" means any Person  (which may include the Company or the
Guarantor)  authorized by the Company to pay the  principal of (and premium,  if
any) or interest on any Securities on behalf of the Company.

         "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 thereon,  if any, the Stated Maturity
or  Maturities  thereof and the  redemption  provisions,  if any,  with  respect
thereto,  are  to be  determined  by the  Company  upon  the  issuance  of  such
Securities.

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

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

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

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

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

         "Responsible Officer", when used with respect to the Trustee, means the
Chairman or any  Vice-Chairman  of the board of  directors,  the Chairman or any
Vice-Chairman of the executive committee of the board of directors, the Chairman
of the trust committee, the President, any Vice President or any Corporate Trust
Officer of the Trustee.

         "Securities"  has the  meaning  stated  in the  first  recital  of this
Indenture  and more  particularly  means any  Securities  that have been issued,
authenticated and delivered under this Indenture.

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

                                        6
<PAGE>

         "Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 307.

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

         "Subsidiary"  means any corporation of which at least a majority of the
outstanding stock or equity interest having by the terms thereof ordinary voting
power  to  elect a  majority  of the  board  of  directors  of such  corporation
(irrespective  of whether or not at the time stock of any other class or classes
of such  corporation  shall  have or might  have  voting  power by reason of the
happening of any  contingency)  is at the time directly or  indirectly  owned or
controlled by the Guarantor or by one or more Subsidiaries,  or by the Guarantor
and one or more Subsidiaries.

         "Trustee"  means  the  Person  named  as the  "Trustee"  in  the  first
paragraph of this  instrument  until a successor  Trustee shall have become such
pursuant  to  the  applicable  previsions  of  this  Indenture,  and  thereafter
"Trustee" shall mean or include each Person who is than a Trustee hereunder, and
if at any time  there  is more  than one such  Person,  "Trustee"  as used  with
respect to the  Securities  of any series shall mean the Trustee with respect to
Securities  of that series,  provided that the Trustee shall not be the Company,
the Guarantor or any other  obligor upon the  Securities or any Affiliate of the
Company, the Guarantor or of such other obligor.

         "Trust Indenture Act" means the Trust Indenture Act of 1939, as amended
by the Trust  Indenture  Reform  Act of 1990,  and as in force at the date as of
which this instrument was executed, and as amended thereafter from tine to time.

         "United Kingdom" means the United Kingdom of Great Britain and Northern
Ireland.

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

Section 102.  Compliance Certificates and Opinions.

         Upon any  application or request by the Company or the Guarantor to the
Trustee to take any action under any provision of this Indenture, the Company or
the Guarantor shall furnish to the Trustee such certificates and opinions as may
be required  under the Trust  Indenture  Act. Each such  certificate  or opinion
shall be given in the form of an Officers'  Certificate or an Opinion of Counsel
and shall comply with the  requirements of the Trust Indenture Act and any other
requirements set forth in this Indenture.  Such an Officers'  Certificate  shall
state that all  conditions  precedent,  if any,  provided for in this  Indenture
relating to the  proposed  action have been  complied  with and such  Opinion of
Counsel  shall  state that in the opinion of such  counsel  all such  conditions
precedent,  if any, have been complied with, except that in the case of any such
application  or  request

                                        7
<PAGE>

as to which the  furnishing of such  documents is  specifically  required by any
other  provision of this Indenture  relating to such  particular  application or
request, no additional certificate or opinion need be furnished.

         Every  certificate  or  opinion  with  respect  to  compliance  with  a
condition or covenant provided for in this Indenture (other than the certificate
provided under Section 1008) hereof shall include

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

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

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

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

Section 103.  Form of Documents Delivered to Trustee.

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

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

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

                                        8
<PAGE>

Section 104.  Acts of Holders.

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

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

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

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

         (e) Without limiting the foregoing, a Holder entitled hereunder to take
any action  hereunder  with  regard to any  particular  Security  may do so with
regard to all or any part of the principal  amount of such Security or by one or
more duly appointed  agents each of which may do so pursuant to such appointment
with regard to all or any part of such principal amount.

Section 105.  Notices, Etc., to Trustee, Company and Guarantor.

         Any request, demand, authorization,  direction, notice, consent, waiver
or Act of Holders or other  document  provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with,

          (1) the  Trustee by any Holder or by the  Company or by the  Guarantor
     shall be sufficient for every purpose hereunder if made,  given,  furnished
     or filed

                                       9
<PAGE>

     in writing to or with the Trustee at its Corporate Trust Office, Attention:
     Institutional Trust Services, or

          (2) the Company or the Guarantor by the Trustee or by any Holder shall
     be  sufficient  for  every  purpose   hereunder  (unless  otherwise  herein
     expressly  provided) if made, given,  furnished or filed in writing, in the
     case of the Company,  to or with it at the address of its principal  office
     specified in the first  paragraph of this  instrument,  Attention:  Company
     Secretary,  or at any other address previously  furnished in writing to the
     Trustee by the Company,  with a copy to the  Guarantor,  and in the case of
     the Guarantor,  to or with it at the address of its office specified in the
     first paragraph of this instrument, Attention: Manager, Capital Markets, or
     at any other address previously  furnished in writing to the Trustee by the
     Guarantor, with a copy to the Company.

Section 106.  Notice to Holders; Waiver.

         Where this Indenture  provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly  provided)
if in writing and mailed,  first-class  postage prepaid, to each Holder affected
by such event, at his address as it appears in the Security Register,  not later
than the latest date (if any),  and not earlier than the earliest date (if any),
prescribed for the giving of such notice. In any case where notice to Holders is
given by mail,  neither the failure to mail such  notice,  nor any defect in any
notice so mailed,  to any particular Holder shall affect the sufficiency of such
notice with respect to other Holders.  Where this Indenture  provides for notice
in any manner,  such  notice may be waived in writing by the Person  entitled to
receive such notice,  either before or after the event, and such waiver shall be
the equivalent of such notice.  Waivers of notice by Holders shall be filed with
the Trustee,  but such filing shall not be a condition precedent to the validity
of any action taken in reliance upon such waiver.

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

Section 107.  Conflict with Trust Indenture Act.

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

                                       10
<PAGE>

Section 108.  Effect of Headings and Table of Contents.

         The Article and Section headings  herein,  the  Reconciliation  and tie
between the Trust Indenture Act and this Indenture and the Table of Contents are
for convenience only and shall not affect the construction hereof.

Section 109.  Successors and Assigns.

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

Section 110.  Separability Clause.

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

Section 111.  Benefits of Indenture.

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

Section 112.  Governing Law.

         This Indenture,  the Securities and the Guarantees shall be governed by
and construed in accordance with the laws of the State of New York,  except that
the  authorization  and  execution of this  Indenture,  the  Securities  and the
Guarantees  shall be governed  by the laws of the  respective  jurisdictions  of
organization of the Company and the Guarantor.

Section 113.  Legal Holidays.

         In any case where any Interest Payment Date,  Redemption Date or Stated
Maturity of any  Security  shall not be a Business  Day at any Place of Payment,
then (notwithstanding any other provision of this Indenture or of the Securities
(other than a  provision  of the  Securities  of any series  which  specifically
states  that such  provision  shall apply in lieu of this  Section))  payment of
interest or principal  (and  premium,  if any) need not be made at such Place of
Payment on such date,  but may be made on the next  succeeding  Business  Day at
such Place of Payment  with the same force and effect as if made on the Interest
Payment Date or  Redemption  Date, or at the Stated  Maturity,  provided that no
interest  shall  accrue on the amount so payable  for the period  from and after
such Interest Payment Date,  Redemption Date or Stated Maturity, as the case may
be.

                                       11
<PAGE>

Section 114.  Submission to Jurisdiction.

         The Company  agrees that any legal suit,  action or proceeding  arising
out of or based upon the  Indenture or the  Securities  may be instituted in any
state or Federal  court in the Borough of Manhattan,  The City of New York,  New
York, United States of America,  waives, to the extent it may effectively do so,
any  objection  which it may have now or hereafter to the laying of the venue of
any such suit, action or proceeding, and irrevocably submits to the jurisdiction
of any such  court in any such  suit,  action or  proceeding.  The  Company  has
designated and appointed BP America Inc. (or any successor  corporation)  as the
Company's  authorized  agent to accept and  acknowledge on its behalf service of
any and all process  which may be served in any such suit,  action or proceeding
in any such court and  agrees  that  service  of process  upon said agent at its
office at 667 Madison Avenue, 22nd Floor, New York, New York 10021, attention of
the General  Counsel (or at such other address in the Borough of Manhattan,  The
City of New  York,  as the  Company  may  designate  by  written  notice  to the
Guarantor and the Trustee),  and written  notice of said service to the Company,
mailed or delivered to it, at Breakspear Park,  Breakspear Way, Hemel Hempstead,
Herts HP2 4UL,  England,  attention of the Secretary  (until another  address is
filed  by the  Company  with the  Trustee),  shall be  deemed  in every  respect
effective  service of  process  upon the  Company  in any such  suit,  action or
proceeding  and shall be taken and held to be valid  personal  service  upon the
Company,  whether or not the Company  shall then be doing,  or at any time shall
have  done,  business  within  the State of New York,  and any such  service  of
process  shall be of the same force and validity as if service were made upon it
according to the laws governing the validity and requirements of such service in
such State,  and waives all claim of error by reason of any such  service.  Said
designation and appointment  shall be irrevocable until the Indenture shall have
been  satisfied  and  discharged in  accordance  with Article Four.  The Company
agrees to take all action as may be necessary to continue  the  designation  and
appointment  of BP America Inc. or any successor  corporation  in full force and
effect so that the  Company  shall at all times  have an agent  for  service  of
process  for the above  purposes in the  Borough of  Manhattan,  The City of New
York, New York, United States of America.

         The Guarantor agrees that any legal suit, action or proceeding  arising
out of or based upon the  Indenture or the  Guarantees  may be instituted in any
state or Federal  court in the Borough of Manhattan,  The City of New York,  New
York, United States of America,  waives, to the extent it may effectively do so,
any  objection  which it may have now or hereafter to the laying of the venue of
any such suit, action or proceeding, and irrevocably submits to the jurisdiction
of any such court in any such suit,  action or  proceeding.  The  Guarantor  has
designated and appointed BP America Inc. (or any successor  corporation)  as the
Guarantor's  authorized agent to accept and acknowledge on its behalf service of
any and all process  which may be served in any such suit,  action or proceeding
in any such court and  agrees  that  service  of process  upon said agent at its
office at 667 Madison Avenue, 22nd Floor, New York, New York 10021, attention of
the General  Counsel (or at such other address in the Borough of Manhattan,  The
City of New York,  as the  Guarantor  may  designate  by  written  notice to the
Company and the Trustee),  and written  notice of said service to the Guarantor,
mailed or delivered to it, at Britannic  House, 1 Finsbury  Circus,  London EC2M
7BA, England,  attention of the Secretary (until

                                       12
<PAGE>

another address is filed by the Guarantor with the Trustee),  shall be deemed in
every respect  effective service of process upon the Guarantor in any such suit,
action or proceeding  and shall be taken and held to be valid  personal  service
upon the Guarantor,  whether or not the Guarantor shall then be doing, or at any
time  shall  have  done,  business  within  the State of New York,  and any such
service of process  shall be of the same force and  validity as if service  were
made upon it according to the laws  governing the validity and  requirements  of
such service in such State,  and waives all claim of error by reason of any such
service.  Said  designation  and  appointment  shall be  irrevocable  until  the
Indenture  shall have been satisfied and  discharged in accordance  with Article
Four.  The  Guarantor  agrees to take all action as may be necessary to continue
the designation and appointment of BP America Inc. or any successor  corporation
in full force and effect so that the Guarantor  shall at all times have an agent
for service of process for the above  purposes in the Borough of Manhattan,  The
City of New York, New York, United States of America.

                                  ARTICLE TWO

                                 SECURITY FORMS

Section 201.  Forms Generally.

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

         The Guarantees to be endorsed on the Securities of each series shall be
in  substantially  the form set forth in Section  205,  or in such other form as
shall be established by or pursuant to a Board Resolution of the Guarantor or in
one or more indentures  supplemental  hereto, in each case with such appropriate
insertions,  omissions,  substitutions  and other corrections as are required or
permitted by this Indenture,  and may have such letters,  numbers or other marks
of  identification  and such legends or  endorsements  placed  thereon as may be
required  to  comply  with  the  rules  of any  securities  exchange  or as may,
consistently  herewith,  be  determined  by the person duly  authorized  thereto
executing such  Guarantees,  all as evidenced by such execution.  If the form of
Guarantees  to be endorsed on the  Securities  of any series is  established  by
action

                                       13
<PAGE>

taken pursuant to a Board Resolution of the Guarantor,  a copy of an appropriate
record of such action shall be certified by the Secretary,  a Deputy  Secretary,
an Assistant  Secretary or a Deputy  Assistant  Secretary of the  Guarantor  and
delivered  to the  Trustee  at or prior to the  delivery  of the  Company  Order
contemplated  by  Section  303  for  the  authentication  and  delivery  of such
Securities.

         The Trustee's  certificates of authentication shall be in substantially
the form set forth in this Article.

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

Section 202.  Form of Face of Security.

         [INSERT ANY REQUIRED UNITED KINGDOM SELLING RESTRICTION AND/OR TAXATION
LEGEND.]

                            BP CAPITAL MARKETS P.L.C.

          [.....%] GUARANTEED [ZERO COUPON] [NOTE] [DEBENTURE] DUE.....

No......................                                       $................

         BP CAPITAL  MARKETS P.L.C.,  a corporation  duly organized and existing
under the laws of England and Wales  (herein  called the  "Company",  which term
includes any successor corporation under the Indenture hereinafter referred to),
for      value      received,      hereby      promises      to      pay      to
.........................................,  or registered assigns,  the principal
sum of ..............  [Dollars] on .......................  [If the Security is
to bear interest prior to Maturity,  insert --, and to pay interest thereon from
.........................  or from the most recent Interest Payment Date to which
interest   has   been   paid   or   duly   provided   for,    semi-annually   on
.............................. and ................................ in each year,
commencing  .............................,  at the rate of  .......%  per annum,
until the principal  hereof is paid or made available for payment [If applicable
insert --, and (to the extent that the payment of such interest shall be legally
enforceable)  at the rate of  .....%  per  annum on any  overdue  principal  and
premium and on any overdue  installment  of interest].  The interest so payable,
and punctually paid or duly provided for, on any Interest  Payment Date will, as
provided in such  Indenture,  be paid to the Person in whose name this  Security
(or one or more  Predecessor  Securities) is registered at the close of business
on the Regular Record Date for such interest,  which shall be the  .............
or  .............  (whether  or not a Business  Day),  as the case may be,  next
preceding such Interest  Payment Date. Any such interest not so punctually  paid
or duly  provided for will  forthwith  cease to be payable to the Holder on such
Regular  Record  Date and may  either be paid to the  Person in whose  name this
Security (or one or more  Predecessor  Securities) is registered at the close of
business on a Special Record Date for the payment of such Defaulted  Interest to
be fixed by the Trustee,  notice whereof shall be given to Holders of Securities
of this series not less than 10 days prior to such Special  Record  Date,  or be
paid  at any  time  in  any  other  lawful  manner  not  inconsistent  with  the
requirements  of any

                                       14
<PAGE>

securities  exchange on which the  Securities of this series may be listed,  and
upon such notice as may be required by such exchange, all as more fully provided
in said Indenture].

         If any  deduction  or  withholding  for any  present  or future  taxes,
assessments or other governmental  charges of the jurisdiction (or any political
subdivision  or taxing  authority  thereof or  therein)  in which the Company is
incorporated,  shall at any time be required by such  jurisdiction  (or any such
political  subdivision or taxing authority) in respect of any amounts to be paid
by the Company of principal of or interest on a Security of any series, then the
Company  will pay to the Holder of a Security  of such  series  such  additional
amounts as may be necessary in order that the net amounts paid to such Holder of
such  Security  who,  with  respect  to  any  such  tax,   assessment  or  other
governmental charge, is not resident in such jurisdiction,  after such deduction
or withholding, shall be not less than the amounts specified in such Security to
which such Holder is entitled;  provided, however, that the Company shall not be
required to make any payment of additional  amounts (1) for or on account of any
such tax,  assessment or governmental charge imposed by the United States or any
political  subdivision or taxing  authority  thereof or therein or (2) for or on
account of:

         (a) any tax,  assessment or other  governmental  charge which would not
have been imposed but for (i) the existence of any present or former  connection
between such Holder (or between a  fiduciary,  settlor,  beneficiary,  member or
shareholder of, or possessor of a power over, such Holder,  if such Holder is an
estate,  trust,  partnership or corporation) and the taxing  jurisdiction or any
political  subdivision or territory or possession thereof or area subject to its
jurisdiction,  including,  without  limitation,  such Holder (or such fiduciary,
settlor,  beneficiary,  member, shareholder or possessor) being or having been a
citizen or resident  thereof or being or having been present or engaged in trade
or business therein or having or having had a permanent establishment therein or
(ii) the  presentation  of a Security  of such  series  (where  presentation  is
required)  for  payment on a date more than 30 days after the date on which such
payment  became  due and  payable or the date on which  payment  thereof is duly
provided for, whichever occurs later;

         (b) any estate, inheritance, gift, sale, transfer, personal property or
similar tax, assessment or other governmental charge;

         (c) any tax,  assessment or other governmental  charge which is payable
otherwise than by withholding  from payments of (or in respect of) principal of,
or any interest on, the Securities of such series;

         (d) any tax, assessment or other governmental charge that is imposed or
withheld by reason of the failure by the Holder or the  beneficial  owner of the
Security of such series (i) to provide  information  concerning the nationality,
residence or identity of the Holder or such beneficial owner or (ii) to make any
declaration  or other  similar  claim or satisfy any  information  or  reporting
requirements,  which,  in the case of (i) or (ii),  is  required or imposed by a
statute,   treaty,   regulation  or   administrative   practice  of  the  taxing

                                       15
<PAGE>

jurisdiction  as a  precondition  to  exemption  from  all or part of such  tax,
assessment or other governmental charge;

         (e) any tax,  assessment or other governmental charge which such Holder
would have been able to avoid by  presenting  such  Security  to another  Paying
Agent;

         (f) any tax,  assessment or other governmental  charge which is imposed
on a payment pursuant to any European Union Directive on the taxation of savings
implementing  the  conclusions of the ECOFIN Council  meeting of November 26 and
27, 2000, or any law implementing such directive; or

         (g) any combination of items (a), (b), (c), (d), (e) and (f) above; nor
shall  additional  amounts be paid with respect to any payment of the  principal
of, or any  interest  on,  any  Security  of such  series to any Holder who is a
fiduciary or partnership or other than the sole beneficial owner of such payment
to the extent such payment would be required by the laws of the jurisdiction (or
any political subdivision or taxing authority thereof or therein) to be included
in the income for tax purposes of a beneficiary  or settlor with respect to such
fiduciary or a member of such  partnership  or a beneficial  owner who would not
have been  entitled  to such  additional  amounts had it been the Holder of such
Security.

         The  foregoing   provisions   shall  apply  mutatis   mutandis  to  any
withholding  or  deduction  for or on  account of any  present or future  taxes,
assessments or governmental  charges of whatever  nature of any  jurisdiction in
which any  successor  Person  to the  Company  is  organized,  or any  political
subdivision or taxing authority thereof or therein.

         [If the Security is not to bear interest  prior to Maturity,  insert --
The principal of this Security  shall not bear interest  except in the case of a
default in payment of principal upon acceleration,  upon redemption or at Stated
Maturity  and in such case the overdue  principal  of this  Security  shall bear
interest at the rate of .....% per annum (to the extent that the payment of such
interest shall be legally enforceable), which shall accrue from the date of such
default in payment to the date payment of such  principal  has been made or duly
provided for. Interest on any overdue principal shall be payable on demand.  Any
such interest on any overdue  principal that is not so paid on demand shall bear
interest at the rate of .....% per annum (to the extent that the payment of such
interest shall be legally enforceable), which shall accrue from the date of such
demand for payment to the date  payment of such  interest  has been made or duly
provided for, and such interest shall also be payable on demand.]

         Payment of the principal of (and premium,  if any) and [if  applicable,
insert -- any such]  interest  on this  Security  will be made at the  office or
agency of the Company  maintained  for that purpose in  ..................,  [in
such coin or currency of the United  States of America as at the time of payment
is legal  tender  for  payment  of public  and  private  debts]  [specify  other
currency] [if applicable,  insert --; provided,  however,  that at the option of
the Company  payment of interest  may be made by check  mailed to the address of
the  Person  entitled  thereto  as such  address  shall  appear in the  Security
Register].

                                       16
<PAGE>

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

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

         IN WITNESS  WHEREOF,  the Company has caused this instrument to be duly
executed.

Dated:

                            BP CAPITAL MARKETS P.L.C.

                                           By...................................

         Attest:

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

Section 203.  Form of Reverse of Security.

         This  Security is one of a duly  authorized  issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or more
series under an Indenture,  dated as of , 2002 (herein called the  "Indenture"),
among the  Company,  as  Issuer,  BP p.l.c.,  as  Guarantor  (herein  called the
"Guarantor"),  and JPMorgan Chase Bank, as Trustee (herein called the "Trustee",
which  term  includes  any  successor  trustee  under the  Indenture),  to which
Indenture and all indentures supplemental thereto reference is hereby made for a
statement of the respective rights,  limitation of rights, duties and immunities
thereunder  of the Company,  the  Guarantor,  the Trustee and the Holders of the
Securities  and of the terms  upon  which  the  Securities  are,  and are to be,
authenticated  and delivered.  This Security is one of the series  designated on
the face hereof [, limited in aggregate principal amount to [$]..............].

         [If applicable,  insert -- The Securities of this series are subject to
redemption upon not less than 30 days' notice by mail, [if applicable, insert --
(1) on  .................  in any year commencing  with the year ..........  and
ending with the year ...........  through operation of the sinking fund for this
series at a Redemption Price equal to 100% of the principal amount,  and (2)] at
any time [on or after ......................,  20......], as a whole or in part,
at the election of the Company, at the following Redemption Prices (expressed as
percentages   of  the   principal   amount):   If   redeemed   [on   or   before
.................., .....%, and if redeemed] during the 12-month period beginning
.................... of the years indicated,

                                       17
<PAGE>

                   REDEMPTION                                REDEMPTION
    YEAR              PRICE                 YEAR                PRICE
------------ ------------------------- -------------- --------------------------

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

         [If applicable insert -- The Securities of this series are subject to
redemption upon not less than 30 days' notice by mail, (1) on ............... in
any year commencing with the year ....... and ending with the year ......
through operation of the sinking fund for this series at the Redemption Prices
for redemption through operation of the sinking fund (expressed as percentages
of the principal amount) set forth in the table below, and (2) at any time [on
or after ........................], as a whole or in part, at the election of
the Company, at the Redemption Prices for redemption otherwise than through
operation of the sinking fund (expressed as percentages of the principal amount)
set forth in the table below: If redeemed during the 12-month period beginning
...................... of the years indicated,

                          REDEMPTION PRICE              REDEMPTION PRICE FOR
                           FOR REDEMPTION               REDEMPTION OTHERWISE
                          THROUGH OPERATION            THAN THROUGH OPERATION
    YEAR                 OF THE SINKING FUND             OF THE SINKING FUND
------------ ---------------------------------------- --------------------------

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

                                       18
<PAGE>

         [Notwithstanding   the  foregoing,   the  Company  may  not,  prior  to
.......................,  redeem any Securities of this series as contemplated by
[Clause (2) of] the preceding paragraph as a part of, or in anticipation of, any
refunding  operation  by the  application,  directly  or  indirectly,  of moneys
borrowed  having an interest cost to the Company  (calculated in accordance with
generally accepted financial practice) of less than .......% per annum.]

         [The  sinking  fund for this  series  provides  for the  redemption  on
.......................  in each year beginning with the year  .............  and
ending  with  the  year  ............   of  [not  less  than]  [$]..............
[("mandatory  sinking  fund")  and not more  than  [$]..............]  aggregate
principal  amount of  Securities  of this  series.  [Securities  of this  series
acquired or redeemed by the Company otherwise than through  [mandatory]  sinking
fund  payments  may be credited  against  subsequent  [mandatory]  sinking  fund
payments  otherwise  required to be made -- in the  inverse  order in which they
become due.]

         In the  event  of  redemption  of this  Security  in part  only,  a new
Security or Securities of this series for the unredeemed  portion hereof will be
issued in the name of the Holder hereof upon the cancellation hereof.

         [If the Security is not subject to redemption,  -- This Security is not
redeemable  prior to Stated  Maturity[,  except  pursuant to Section 1108 of the
Indenture. The date specified for the Securities of this series, for purposes of
said Section 1108, is .............] .]

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

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

         The Indenture permits, with certain exceptions as therein provided, the
amendment  thereof and the  modification  of the rights and  obligations  of the
Company and the  Guarantor  and the rights of the Holders of the  Securities  of
each series to be affected  under the Indenture at any time by the Company,  the
Guarantor  and the  Trustee  with the  consent of the  Holders of a majority  in
principal  amount of the Securities at the time Outstanding of each series to be
affected.  The Indenture  also  contains  provisions  permitting  the Holders of
specified  percentages  in principal  amount of the Securities of each series at
the time Outstanding, on behalf of the Holders of all Securities of such

                                       19
<PAGE>

series,  to waive  compliance  by the Company or the  Guarantor,  or both,  with
certain  provisions  of the  Indenture  and  certain  past  defaults  under  the
Indenture  and their  consequences.  Any such consent or waiver by the Holder of
this  Security  shall be  conclusive  and binding  upon such Holder and upon all
future Holders of this Security and of any Security issued upon the registration
of transfer  hereof or in  exchange  herefor or in lieu  hereof,  whether or not
notation of such consent or waiver is made upon this Security.

         As provided  in and subject to the  provisions  of the  Indenture,  the
Holder of this  Security  shall not have the right to institute  any  proceeding
with respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder,  unless such Holder shall have previously given
the Trustee written notice of a continuing  Event of Default with respect to the
Securities of this series,  the Holders of not less than 25% in principal amount
of the Securities of this series at the time Outstanding shall have made written
request to the  Trustee  to  institute  proceedings  in respect of such Event of
Default as Trustee and offered the Trustee reasonable indemnity, and the Trustee
shall not have  received  from the Holders of a majority in principal  amount of
Securities of this series at the time Outstanding a direction  inconsistent with
such  request,  and shall have failed to institute any such  proceeding,  for 60
days after receipt of such notice, request and offer of indemnity. The foregoing
shall not apply to any suit  instituted  by the Holder of this  Security for the
enforcement of any payment of principal hereof or any premium or interest hereon
on or after the respective due dates expressed or provided for herein.

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

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

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

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

                                       20
<PAGE>

         Prior to due presentment of this Security for registration of transfer,
the  Company,  the  Guarantor,  the  Trustee and any agent of the  Company,  the
Guarantor  or the  Trustee  may treat the Person in whose name this  Security is
registered  as the owner hereof for all purposes  (subject to Section 307 of the
Indenture),  whether or not this  Security be overdue,  and neither the Company,
the Guarantor, the Trustee nor any such agent shall be affected by notice to the
contrary.

         The  Indenture  provides  that the  Company and the  Guarantor,  at the
Guarantor's  option,  (a) will be  discharged  from any and all  obligations  in
respect of the  Securities  (except for  certain  obligations  to  register  the
transfer  or  exchange  of  Securities,   replace  stolen,   lost  or  mutilated
Securities,  maintain  paying  agencies and hold moneys for payment in trust) or
(b) need not comply with certain restrictive covenants of the Indenture, in each
case if the Company or the Guarantor deposits,  in trust, with the Trustee money
or  Government  Obligations  which  through the payment of interest  thereon and
principal  thereof in  accordance  with their terms will  provide  money,  in an
amount sufficient to pay all the principal (including any mandatory sinking fund
payments) of, and (premium, if any) and interest on, the Securities on the dates
such  payments  are due in  accordance  with the  terms of such  Securities  and
Guarantees, and certain other conditions are satisfied.

         [If  applicable  insert--  Except in limited the limited  circumstances
described in Section 305 of the  Indenture,  the Securities of this series shall
be  issued in the form of one or more  Global  Securities  and  ................
Shall be the Depositary for such Global Security or Securities.]  All terms used
in this  Security  which are defined in the  Indenture  shall have the  meanings
assigned to them in the Indenture.

Section 204.  Form of Trustee's Certificate of Authentication.

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

                                                   JPMorgan Chase Bank,
                                                        as Trustee

                                         By.....................................
                                         Authorized Officer

Section 205.  Form of Guarantee

         Guarantees to be endorsed on the Securities  shall,  subject to Section
201, be in  substantially  the form set forth below;  words enclosed in brackets
shall be inserted if applicable:

                             GUARANTEE OF BP P.L.C.

         For value  received,  BP  p.l.c.,  a  corporation  duly  organized  and
existing under the laws of England  (herein called the  "Guarantor",  which term
includes  any  successor  corporation  under the  Indenture  referred  to in the
Security  upon  which  this  Guarantee  is

                                       21
<PAGE>

endorsed),  hereby unconditionally guarantees to the Holder of the Security upon
which  this  Guarantee  is  endorsed  and to the  Trustee  referred  to in  such
Indenture due and prompt  payment of the principal of (and premium,  if any) and
interest on such  Security  [and the due and prompt  payment of the sinking fund
payments  provided  for  therein,]  when and as the same  shall  become  due and
payable,  whether at the Stated Maturity,  by declaration of acceleration,  call
for redemption or otherwise, according to the terms thereof and of the Indenture
referred to  therein.  In case of the failure of BP CAPITAL  MARKETS  P.L.C.,  a
corporation  duly  organized  and  existing  under the laws of England and Wales
(herein  called the  "Company",  which term includes any  successor  corporation
under such  Indenture)  punctually  to make any such  principal,  premium,  [or]
interest [or sinking fund]  payment,  the  Guarantor  hereby agrees to cause any
such  payment  to be made  promptly  when and as the same  shall  become due and
payable,  whether at the Stated Maturity,  by declaration of acceleration,  call
for redemption or otherwise, and as if such payment were made by the Company.

         The Guarantor  hereby further  agrees,  subject to the  limitations and
exceptions set forth below, that if any deduction or withholding for any present
or future taxes,  assessments or other governmental  charges of the jurisdiction
(or any political  subdivision or taxing authority  thereof or therein) in which
the  Guarantor  is  incorporated,   shall  at  any  time  be  required  by  such
jurisdiction (or any such political  subdivision or taxing authority) in respect
of any amounts to be paid by the Guarantor under this  Guarantee,  the Guarantor
will pay to the Holder of a Security of such series such  additional  amounts as
may be  necessary  in order  that the net  amounts  paid to such  Holder of such
Security  who, with respect to any such tax,  assessment  or other  governmental
charge,  is  not  resident  in  such  jurisdiction,   after  such  deduction  or
withholding,  shall be not less than the amounts  specified in such  Security to
which such Holder is entitled;  provided,  however, that the Guarantor shall not
be required to make any payment of  additional  amounts (1) for or on account of
any such tax,  assessment or governmental charge imposed by the United States or
any political  subdivision or taxing authority  thereof or therein or (2) for or
on account of:

         (a) any tax,  assessment or other  governmental  charge which would not
have been imposed but for (i) the existence of any present or former  connection
between such Holder (or between a  fiduciary,  settlor,  beneficiary,  member or
shareholder of, or possessor of a power over, such Holder,  if such Holder is an
estate,  trust,  partnership or corporation) and the taxing  jurisdiction or any
political  subdivision or territory or possession thereof or area subject to its
jurisdiction,  including,  without  limitation,  such Holder (or such fiduciary,
settlor,  beneficiary,  member, shareholder or possessor) being or having been a
citizen or resident  thereof or being or having been present or engaged in trade
or business therein or having or having had a permanent establishment therein or
(ii) the  presentation  of a Security  of such  series  (where  presentation  is
required)  for  payment on a date more than 30 days after the date on which such
payment  became  due and  payable or the date on which  payment  thereof is duly
provided for, whichever occurs later;

         (b) any estate, inheritance, gift, sale, transfer, personal property or
similar tax, assessment or other governmental charge;

                                       22
<PAGE>

         (c) any tax,  assessment or other governmental  charge which is payable
otherwise than by withholding  from payments of (or in respect of) principal of,
or any interest on, the Securities of such series;

         (d) any tax, assessment or other governmental charge that is imposed or
withheld by reason of the failure by the Holder or the  beneficial  owner of the
Security of such series (i) to provide  information  concerning the nationality,
residence or identity of the Holder or such beneficial owner or (ii) to make any
declaration  or other  similar  claim or satisfy any  information  or  reporting
requirements,  which,  in the case of (i) or (ii),  is  required or imposed by a
statute,   treaty,   regulation  or   administrative   practice  of  the  taxing
jurisdiction  as a  precondition  to  exemption  from  all or part of such  tax,
assessment or other governmental charge;

         (e) any tax,  assessment or other governmental charge which such Holder
would have been able to avoid by  presenting  such  Security  to another  Paying
Agent;

         (f) any tax,  assessment or other governmental  charge which is imposed
on a payment pursuant to any European Union Directive on the taxation of savings
implementing  the  conclusions of the ECOFIN Council  meeting of November 26 and
27, 2000, or any law implementing such directive;

         or (g) any  combination of items (a), (b), (c), (d), (e) and (f) above;
nor  shall  additional  amounts  be paid  with  respect  to any  payment  of the
principal  of, or any interest on, any Security of such series to any Holder who
is a fiduciary or  partnership or other than the sole  beneficial  owner of such
payment  to the  extent  such  payment  would  be  required  by the  laws of the
jurisdiction  (or any  political  subdivision  or taxing  authority  thereof  or
therein)  to be  included in the income for tax  purposes  of a  beneficiary  or
settlor with  respect to such  fiduciary  or a member of such  partnership  or a
beneficial owner who would not have been entitled to such additional amounts had
it been the Holder of such Security.

         The  foregoing   provisions   shall  apply  mutatis   mutandis  to  any
withholding  or  deduction  for or on  account of any  present or future  taxes,
assessments or governmental  charges of whatever  nature of any  jurisdiction in
which any  successor  Person to the  Guarantor is  organized,  or any  political
subdivision or taxing authority thereof or therein.

         The Guarantor hereby agrees that its obligations  hereunder shall be as
if it were  principal  debtor and not merely  surety,  and shall be absolute and
unconditional,  irrespective  of, and shall be  unaffected  by, any  invalidity,
irregularity or unenforceability of such Security or such Indenture, any failure
to enforce the  provisions  of such Security or such  Indenture,  or any waiver,
modification or indulgence  granted to the Company with respect thereto,  by the
Holder of such Security or such  Trustee,  or any other  circumstance  which may
otherwise  constitute a legal or equitable  discharge of a surety or  guarantor;
provided,   however,  that,  notwithstanding  the  foregoing,  no  such  waiver,
modification or indulgence shall, without the consent of the Guarantor, increase
the principal  amount of such Security or the interest rate thereon or impose or
increase any premium  payable upon  redemption  thereof.  The  Guarantor  hereby
waives diligence,

                                       23
<PAGE>

presentment,  demand of  payment,  filing of claims with a court in the event of
merger or  bankruptcy  of the Company,  any right to require a proceeding  first
against  the  Company,  protest or notice with  respect to such  Security or the
indebtedness  evidenced  thereby [or with  respect to any sinking  fund  payment
required  under such  Security] and all demands  whatsoever,  and covenants that
this Guarantee will not be discharged except by payment in full of the principal
of (and premium,  if any) and interest on such Security.  This is a guarantee of
payment and not of collection.

         The  Guarantor  shall be subrogated to all rights of the Holder of such
Security  against the  Company in respect of any amounts  paid to such Holder by
the Guarantor pursuant to the provisions of this Guarantee;  provided,  however,
that the Guarantor shall not be entitled to enforce,  or to receive any payments
arising out of or based upon,  such right of subrogation  until the principal of
(and premium,  if any) and interest on all  Securities of the same series issued
under such Indenture shall have been paid in full.

         No  reference  herein  to  such  Indenture  and no  provision  of  this
Guarantee  or of such  Indenture  shall  alter or impair  the  guarantee  of the
Guarantor, which is absolute and unconditional,  of the due and punctual payment
of the  principal of (and  premium,  if any) and  interest on the Security  upon
which this  Guarantee is endorsed at the times,  place and rate, and in the coin
or currency prescribed therein.

         This  Guarantee  shall not be valid or obligatory for any purpose until
the  certificate  of  authentication  of such Security  shall have been manually
executed by or on behalf of the Trustee under such Indenture.

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

         IN WITNESS  WHEREOF,  the  Guarantor  has caused this  Guarantee  to be
signed manually or in facsimile by a person duly authorized in that behalf.

                                                                       BP P.L.C.

                                              ..................................
                                              AUTHORIZED SIGNATORY

         Attest:

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

Dated the date on the face hereof.

                                       24
<PAGE>

Section 206.  Form of Legend for Global Securities.

         Any Global Security  authenticated and delivered hereunder shall bear a
legend  in  substantially  the  following  form  or  such  other  form as may be
determined pursuant to Section 201:

         "This Security is a Global Security within the meaning of the Indenture
hereinafter  referred  to and is  registered  in the name of a  Depositary  or a
nominee of a Depositary.  This Global  Security is  exchangeable  for Securities
registered in the name of a Person other than the Depositary or its nominee only
in the limited circumstances described in the Indenture, and no transfer of this
Security (other than a transfer of this Security as a whole by the Depositary to
a nominee of the  Depositary or by a nominee of the Depositary to the Depositary
or another nominee of the  Depositary) may be registered  except in such limited
circumstances."

                                 ARTICLE THREE

                                 THE SECURITIES

Section 301.  Amount Unlimited; Issuable in Series.

         The aggregate principal amount of Securities which may be authenticated
and delivered under this Indenture is unlimited.

         The  Securities  may be issued in one or more  series.  There  shall be
established  by or  pursuant  to a  Board  Resolution  of  the  Company  or  the
Guarantor,  as  appropriate,  and set forth in (or  determined in the manner set
forth  in)  an  Officers'  Certificate  of the  Company  or  the  Guarantor,  as
appropriate, or established in one or more indentures supplemental hereto, prior
to the issuance of Securities of any series,

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

          (2) any limit upon the aggregate principal amount of the Securities of
     the series which may be  authenticated  and delivered  under this Indenture
     (except for Securities  authenticated  and delivered upon  registration  of
     transfer  of, or in exchange  for, or in lieu of, other  Securities  of the
     series pursuant to Section 304, 305, 306, 906 or 1107);

          (3) the Person to whom any  interest on a Security of the series shall
     be payable, if other than the Person in whose name such Security (or one or
     more Predecessor  Securities) is registered at the close of business on the
     Regular Record Date for such interest;

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

                                       25
<PAGE>

          (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,
     the Interest  Payment Dates on which such interest shall be payable and the
     Regular Record Date for the interest payable on any Interest Payment Date;

          (6) the place or places where the principal of (and  premium,  if any)
     and interest on Securities of the series shall be payable;

          (7) if applicable,  the period or periods  within which,  the price or
     prices at which and the terms and conditions  upon which  Securities of the
     series may be redeemed,  in whole or in part, at the option of the Company,
     including the date referred to in Section 1108;

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

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

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

          (11) if other  than  such coin or  currency  of the  United  States of
     America as at the time of payment is legal  tender for payment of public or
     private debts, the coin or currency  (including any composite  currency) in
     which payment of the principal of (and premium, if any) and interest on the
     Securities of the series shall be  denominated or payable and the manner of
     determining the equivalent  thereof in the currency of the United States of
     America for the purposes of the definition of "Outstanding" in Section 101;

          (12) if the  principal  of (and  premium,  if any) or  interest on the
     Securities of the series are to be payable,  at the election of the Company
     or a  Holder  thereof,  in a coin  or  currency  (including  any  composite
     currency) other than that in which the Securities are stated to be payable,
     the period or periods within which, and the terms and condition upon which,
     such election may be made;

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

                                       26
<PAGE>

     manner in which such  amount  deemed to be the  principal  amount  shall be
     determined);

          (14) if the amounts of payments of principal of (and premium,  if any)
     or  interest  on the  Securities  of the  series  may  be  determined  with
     reference  to  an  index,  the  manner  in  which  such  amounts  shall  be
     determined;

          (15) the  Guarantee  of the  Securities  of such  series  pursuant  to
     Article Thirteen hereof;

          (16) whether the  Securities of the series shall be issued in whole or
     in  part in the  form of one or more  Global  Securities  and,  if so,  the
     Depositary for such Global Security or Securities;

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

          (18) with respect to such series of Securities, the "Stated Intervals"
     and the  "Record  Date" for  purposes  of  Section  312(a)  (in the case of
     non-interest  bearing  Securities) and 316(c),  respectively,  of the Trust
     Indenture Act;

          (19) if  additional  amounts  pursuant  to  Section  1010  will not be
     payable by the Company or the Guarantor; and

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

         All  Securities  of any one  series  shall be  substantially  identical
except as to denomination  and number and except as may otherwise be provided in
or pursuant to such Board Resolutions and set forth (or determined in the manner
provided  in)  in  such  Officers'   Certificates   or  in  any  such  indenture
supplemental hereto.

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

         With respect to Securities of a series offered in a Periodic  Offering,
the Board Resolution (or action taken pursuant thereto),  Officers'  Certificate
or  supplemental  indenture  referred  to above  may  provide  general  terms or
parameters  for  Securities of such series and provide  either that the specific
terms of  particular  Securities  of such series shall be specified in a Company
Order or that such terms shall be determined  by the Company in accordance  with
other  procedures  specified  in a Company  Order as  contemplated  by the third
paragraph of Section 303.

                                       27
<PAGE>

         Notwithstanding  Section 301(2) herein and unless  otherwise  expressly
provided with respect to a series of Securities,  the aggregate principal amount
of a series of  Securities  may be increased and  additional  Securities of such
series may be issued up to the maximum  aggregate  principal  amount  authorized
with respect to such series as increased.

Section 302.  Denominations.

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

Section 303.  Execution, Authentication, Delivery and Dating.

         The Securities shall be executed on behalf of the Company by one of its
Directors  or  senior  officers  and  attested  by one of its  Directors  or its
Secretary  or one of its  Assistant  Secretaries.  The  signature of any of such
director or officer on the Securities may be manual or facsimile.

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

         At any time and from time to time after the  execution  and delivery of
this Indenture, the Company may deliver Securities of any series executed by the
Company  having  endorsed  thereon  Guarantees  executed by the Guarantor to the
Trustee for authentication, together with a Company Order for the authentication
and delivery of such Securities,  and the Trustee in accordance with the Company
Order shall authenticate and deliver such Securities; provided, however, that in
the case of  Securities  offered  in a  Periodic  Offering,  the  Trustee  shall
authenticate  and deliver such  Securities  from time to time in accordance with
such other procedures (including, without limitation, the receipt by the Trustee
of oral or  electronic  instructions  from the  Company  or its duly  authorized
agents,  promptly  confirmed  in  writing)  acceptable  to the Trustee as may be
specified by or pursuant to a Company  Order  delivered to the Trustee  prior to
the time of the first  authentication  of Securities of such series. If the form
or terms of the Securities of the series or the form of the Guarantees  endorsed
thereon have been established by or pursuant to one or more Board Resolutions as
permitted  by  Sections  201 and 301, in  authenticating  such  Securities,  and
accepting the  additional  responsibilities  under this Indenture in relation to
such Securities,  the Trustee shall be entitled to receive, and (subject to 601)
shall be fully protected in relying upon, an Opinion of Counsel stating,

                                       28
<PAGE>

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

          (b) if the  terms  of such  Securities  have  been,  or in the case of
     Securities of a series offered in a Periodic Offering, will be, established
     by or pursuant to Board  Resolution  as permitted by Section 301, that such
     terms  have been,  or in the case of  Securities  of a series  offered in a
     Periodic  Offering,  will be, established in conformity with the provisions
     of this Indenture,  subject,  in the case of Securities of a series offered
     in a Periodic  Offering,  to any  conditions  specified  in such Opinion of
     Counsel;

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

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

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

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

         With respect to Securities of a series offered in a Periodic  Offering,
the Trustee may rely, as to the  authorization  by the Company and the Guarantor
of any of such Securities and the related Guarantees, the form and terms thereof
and the legality,  validity, binding effect and enforceability thereof, upon the
Opinion of Counsel and the

                                       29
<PAGE>

other documents  delivered pursuant to Sections 201 and 301 and this Section, as
applicable,  in connection with the first  authentication  of Securities of such
series.

         Each Security shall be dated the date of its authentication.

         No  Security or  Guarantee  endorsed  thereon  shall be entitled to any
benefit under this  Indenture or be valid or obligatory  for any purpose  unless
there appears on such Security a certificate of authentication  substantially in
the form provided for herein  executed by the Trustee by manual  signature of an
authorized  officer,  and such certificate upon any Security shall be conclusive
evidence, and the only evidence,  that such Security has been duly authenticated
and  delivered  hereunder and that such Security or Guarantee is entitled to the
benefits of this Indenture.

Section 304.  Temporary Securities.

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

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

Section 305.  Registration, Registration of Transfer and Exchange.

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

                                       30
<PAGE>

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

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

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

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

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

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

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

         Notwithstanding  the  foregoing,   except  as  otherwise  specified  as
contemplated by Section 301, any Global Security shall be exchangeable  pursuant
to this Section 305 for

                                       31
<PAGE>

Securities registered in the names of Persons other than the Depositary for such
series or its nominee if, but only if, (i) such Depositary  notifies the Company
that it is unwilling or unable to continue as  Depositary  for such series or at
any time ceases to be a clearing  agency  registered  as such under the Exchange
Act, as amended,  and the Company  and/or the Guarantor  notify the Trustee that
they are unable to locate a  qualified  successor  Depositary,  (ii) the Company
and/or the  Guarantor  executes and delivers to the Trustee a Company Order that
such Global Security shall be so exchangeable or (iii) there shall have occurred
and be  continuing  an Event of Default with respect to the  Securities  of such
series and beneficial  owners of the Securities  evidencing not less than 50% of
the aggregate  unpaid  principal  amount of the Securities of such series advise
the  Trustee  and the  Depositary  through  participants  in  writing  that  the
continuation  of a book-entry  system is no longer in the best  interests of the
beneficial owners of the Securities of such series.  Any Global Security that is
exchangeable  pursuant  to the  preceding  sentence  shall be  exchangeable  for
Securities registered in such names as such Depositary shall direct.

         Notwithstanding  any  other  provision  of  this  Indenture,  a  Global
Security may not be  transferred  except as a whole by the  Depositary  for such
Global  Security  to a  nominee  of  such  Depositary  or by a  nominee  of such
Depositary to such Depositary or another nominee of such Depositary.

Section 306.  Mutilated, Destroyed, Lost and Stolen Securities.

         If any mutilated  Security is surrendered  to the Trustee,  the Company
shall  execute  and the  Trustee  shall  authenticate  and  deliver in  exchange
therefor a new  Security  of the same  series  and of like  tenor and  principal
amount, having endorsed thereon a Guarantee duly executed by the Guarantor,  and
bearing a number not contemporaneously outstanding.

         If there shall be delivered to the Company and the Trustee (i) evidence
to their satisfaction of the destruction, loss or theft of any Security and (ii)
such  security or  indemnity as may be required by them to save each of them and
any agent of either of them  harmless,  then,  in the  absence  of notice to the
Company or the  Trustee  that such  Security  has been  acquired  by a bona fide
purchaser,  the Company  shall  execute  and upon its request the Trustee  shall
authenticate  and  deliver,  in  lieu of any  such  destroyed,  lost  or  stolen
Security,  a new  Security  of the same  series and of like tenor and  principal
amount, having endorsed thereon a Guarantee duly executed by the Guarantor,  and
bearing a number not contemporaneously Outstanding.

         In case any such  mutilated,  destroyed,  lost or stolen  Security  has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security,  pay such Security upon  compliance  with the
foregoing conditions.

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

                                       32
<PAGE>

         Every new  Security of any series  issued  pursuant to this  Section in
lieu of any  destroyed,  lost or stolen  Security  shall  constitute an original
additional contractual  obligation of the Company and the Guarantor,  whether or
not the destroyed,  lost or stolen Security shall be at any time  enforceable by
anyone,  and shall be entitled to all the benefits of this Indenture equally and
proportionately  with any and all other  Securities  of that  series duly issued
hereunder.

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

Section 307.  Payment of Interest; Interest Rights Preserved.

         Except as  otherwise  provided  as  contemplated  by  Section  301 with
respect to any series of Securities,  interest on any Security which is payable,
and is punctually paid or duly provided for, on any Interest  Payment Date shall
be paid to the Person in whose name that  Security  (or one or more  Predecessor
Securities)  is registered  at the close of business on the Regular  Record Date
for such interest.

         Any interest on any Security of any series which is payable, but is not
punctually  paid or duly  provided  for, on any  Interest  Payment  Date (herein
called  "Defaulted  Interest") shall forthwith cease to be payable to the Holder
on the relevant  Regular  Record Date by virtue of having been such Holder,  and
such  Defaulted  Interest  may be paid by the  Company,  at its election in each
case, as provided in Clause (1) or (2) below:

          (1) The Company may elect to make payment of any Defaulted Interest to
     the  Persons  in whose  names  the  Securities  of such  series  (or  their
     respective Predecessor  Securities) are registered at the close of business
     on a Special Record Date for the payment of such Defaulted Interest,  which
     shall be fixed in the  following  manner.  The  Company  shall  notify  the
     Trustee in writing of the amount of Defaulted  Interest proposed to be paid
     on each Security or such series and the date of the proposed  payment,  and
     at the same time the Company  shall  deposit  with the Trustee an amount of
     money equal to the aggregate  amount proposed to be paid in respect of such
     Defaulted  Interest or shall make arrangements  satisfactory to the Trustee
     for such deposit prior to the date of the proposed payment, such money when
     deposited  to be held in trust for the benefit of the  Persons  entitled to
     such Defaulted  Interest as in this Clause provided.  Thereupon the Trustee
     shall fix a Special Record Date for the payment of such Defaulted  Interest
     which shall be not more than 15 days and not less than 10 days prior to the
     date of the proposed payment and not less than 10 days after the receipt by
     the  Trustee of the  notice of the  proposed  payment.  The  Trustee  shall
     promptly  notify the Company of such  Special  Record Date and, in the name
     and at the  expense of the  Company,  shall  cause  notice of the  proposed
     payment of such Defaulted  Interest and the Special Record Date therefor to
     be mailed,  first class  postage  prepaid,  to each Holder of Securities of
     such series at his address as it appears in the Security Register, not less
     than 10 days prior to such  Special  Record  Date.  Notice of the  proposed
     payment of such  Defaulted  Interest and the

                                       33
<PAGE>

     Special Record Date therefor having been so mailed, such Defaulted Interest
     shall be paid to the Persons in whose names the  Securities  of such series
     (or their respective Predecessor Securities) are registered at the close of
     business  on such  Special  Record  Date and  shall no  longer  be  payable
     pursuant to the following Clause (2).

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

         Subject to the  foregoing  provisions  of this  Section,  each Security
delivered  under this Indenture upon  registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest  accrued
and unpaid, and to accrue, which were carried by such other Security.

Section 308.  Persons Deemed Owners.

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

         No holder of any beneficial interest in any Global Security held on its
behalf by a Depositary  shall have any rights under this  Indenture with respect
to such Global Security,  and such Depositary may be treated by the Company, the
Guarantor,  the  Trustee,  and any agent of the  Company,  the  Guarantor or the
Trustee  as the  owner of such  Global  Security  for all  purposes  whatsoever.
Notwithstanding  the  foregoing,  nothing  herein  shall  impair,  as  between a
Depositary and such holders of beneficial interests,  the operation of customary
practices  governing  the exercise of the rights of the  Depositary as Holder of
any Security.

         None of the  Company,  the  Guarantor,  the Trustee or any agent of the
Company, the Guarantor or the Trustee shall have any responsibility or liability
for any  aspect of the  records  relating  to or  payments  made on  account  of
beneficial  ownership  interests  in  a  Global  Security  or  for  maintaining,
supervising  or  reviewing  any records  relating to such  beneficial  ownership
interests.

Section 309.  Cancellation.

         All Securities  surrendered  for payment,  redemption,  registration of
transfer or exchange or for credit  against any sinking fund payment  shall,  if
surrendered  to any

                                       34
<PAGE>

Person other than the Trustee, be delivered to the Trustee and shall be promptly
cancelled  by it. The Company or the  Guarantor  may at any time  deliver to the
Trustee for cancellation any Securities  previously  authenticated and delivered
hereunder  which the Company or the  Guarantor  may have  acquired in any manner
whatsoever,  and may deliver to the Trustee (or to any other Person for delivery
to  the  Trustee)  for  cancellation  any  Securities  previously  authenticated
hereunder  which the  Company  has not issued and sold,  and all  Securities  so
delivered  shall be promptly  cancelled by the Trustee.  No Securities  shall be
authenticated in lieu of or in exchange for any Securities cancelled as provided
in this Section, except as expressly permitted by this Indenture.  All cancelled
Securities held by the Trustee shall be disposed of by the Trustee in accordance
with its customary procedures or as directed by a Company Order.

Section 310.  Computation of Interest.

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

                                  ARTICLE FOUR

                           SATISFACTION AND DISCHARGE

Section 401.  Satisfaction and Discharge of Indenture.

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

          (1) either

               (A) all Securities theretofore authenticated and delivered (other
          than (i)  Securities  which  have been  destroyed,  lost or stolen and
          which have been  replaced  or paid as provided in Section 306 and (ii)
          Securities for whose payment money has  theretofore  been deposited in
          trust or segregated  and held in trust by the Company or the Guarantor
          and  thereafter  repaid to the Company or the  Guarantor or discharged
          from such trust,  as provided in Section 1006) have been  delivered to
          the Trustee for cancellation; or

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

                    (i) have become due and payable, or

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

                                       35
<PAGE>

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

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

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

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

         Notwithstanding  the satisfaction and discharge of this Indenture,  the
obligations  of the Company and the  Guarantor to the Trustee under Section 607,
the  obligations  of the Company and the Guarantor to any  Authenticating  Agent
under  Section  614 and,  if money  shall have been  deposited  with the Trustee
pursuant to subclause (B) of clause (1) of this Section,  the obligations of the
Trustee under Section 402 and the last paragraph of Section 1006 shall survive.

Section 402.  Application of Trust Money.

         Subject to the  provisions of the last  paragraph of Section 1006,  all
money and the proceeds of any Government  Obligations deposited with the Trustee
pursuant  to  Section  401 or 403 shall be held in trust and  applied  by it, in
accordance  with the  provisions of the Securities  and this  Indenture,  to the
payment,  either directly or through any Paying Agent  (including the Company or
the  Guarantor  acting as Paying  Agent) as the  Trustee may  determine,  of the
principal  (and  premium,  if any) and  interest to the Holders of the series of
Securities  for the  payment in  respect of which such money has been  deposited
with the Trustee.

         The  Company  or the  Guarantor  shall pay and  indemnify  the  Trustee
against  any  tax,  fee or other  charge  imposed  on or  assessed  against  the
Government  Obligations  deposited  pursuant to Section 403 or the principal and
interest  received  in respect  thereof  other  than any such tax,  fee or other
charge which by law is for the account of the Holders of Outstanding Securities.
The  obligations  of the Company and the  Guarantor  pursuant to this  paragraph
shall be joint and several.

                                       36
<PAGE>

         Anything in this Article to the contrary  notwithstanding,  the Trustee
shall  deliver  or pay to the  Company or the  Guarantor  from time to time upon
Company  Request any money or Government  Obligations  held by it as provided in
Section 403 with respect to any Securities which, in the opinion of a nationally
recognized  firm  of  independent  public  accountants  expressed  in a  written
certification  thereof  delivered  to the  Trustee,  are in excess of the amount
thereof  which would then be required to be deposited to effect the Discharge or
Covenant Defeasance, as the case may be, with respect to such Securities.

Section 403.  Defeasance Upon Deposit of Moneys or Government Obligations.

         At the  Guarantor's  option,  either (a) the Company and the  Guarantor
shall  each be  deemed to have  been  Discharged  (as  defined  below)  from its
respective  obligations with respect to any series of Securities on the 91st day
after the  applicable  conditions set forth below have been satisfied or (b) the
Company and the Guarantor  shall cease to be under any obligation to comply with
any  term,  provision  or  condition  set  forth in  Sections  801 or 802 or any
covenant set forth in any indenture  supplemental to this Indenture or otherwise
established  pursuant to Section 301, and  noncompliance  with such  Sections or
covenants  shall not give rise to any Event of Default under  Section  501(4) or
under  Section  501(7)  ("Covenant  Defeasance"),  with respect to any series of
Securities at any time after the applicable conditions set forth below have been
satisfied:

          (1) the Company or the Guarantor  shall have deposited or caused to be
     deposited  irrevocably  with the  Trustee  or its  agent 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 (i) money in an
     amount, or (ii) Government Obligations of the government in the currency of
     which the  Securities  of such  series are  denominated  which  through the
     payment of interest and  principal in respect  thereof in  accordance  with
     their terms will provide, not later than the due date of any payment, money
     in an amount,  or (iii) a combination of (i) and (ii),  sufficient,  in the
     opinion (with respect to (ii) and (iii)) of a nationally recognized firm of
     independent public accountants expressed in a written certification thereof
     delivered  to the  Trustee,  to  pay  and  discharge  each  installment  of
     principal  (including  mandatory sinking fund payments) of and interest on,
     the outstanding Securities of such series on the dates such installments of
     interest or  principal  are due or to and  including  the  Redemption  Date
     irrevocably  designated  by the  Guarantor  pursuant  to  subparagraph  (5)
     hereof;

          (2) if the  Securities  of such series are then listed on the New York
     Stock  Exchange,  the Company or the Guarantor  shall have delivered to the
     Trustee an Opinion of Counsel to the effect that the exercise of the option
     under this Section 403 would not cause such Securities to be delisted;

          (3) no Event of  Default or event  which with  notice or lapse of time
     would become an Event of Default under Section 501(1), (2), (3), (5) or (6)
     with respect to the  Securities  of such series shall have  occurred and be
     continuing on the date of such deposit;

                                       37
<PAGE>

          (4) the Company or the Guarantor  shall have  delivered to the Trustee
     an Opinion of Counsel to the effect that holders of the  Securities of such
     series  will not  recognize  income,  gain or loss for  Federal  income tax
     purposes as a result of the  exercise of the option  under this Section 403
     and will be  subject to  Federal  income tax on the same  amount and in the
     same  manner  and at the same  times as  would  have  been the case if such
     option  had not  been  exercised,  and,  in the  case of  Securities  being
     Discharged, such opinion shall be accompanied by a private letter ruling to
     that effect received from the United States  Internal  Revenue Service or a
     revenue  ruling  pertaining  to a comparable  form of  transaction  to that
     effect published by the United States Internal Revenue Service;

          (5) if the  Company or the  Guarantor  has  deposited  or caused to be
     deposited money or Government Obligations to pay or discharge the principal
     of (and premium,  if any) and interest on the  Outstanding  Securities of a
     series to and  including a Redemption  Date  pursuant to  subparagraph  (1)
     hereof,  such  Redemption  Date shall be irrevocably  designated by a Board
     Resolution  delivered  to the Trustee on or prior to the date of deposit of
     such money or Government  Obligations  and such Board  Resolution  shall be
     accompanied by an irrevocable  Company Request that the Trustee give notice
     of such  redemption  in the name and at the expense of the Company not less
     than 30 nor more than 60 days prior to such  Redemption  Date in accordance
     with Section 1104; and

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

"Discharged"  means that the Company and Guarantor  shall be deemed to have paid
and discharged the entire  indebtedness  represented by, and obligations  under,
the  Securities of such series and the Guarantees  endorsed  thereon and to have
satisfied all the obligations under this Indenture relating to the Securities of
such series and the Guarantees endorsed thereon (and the Trustee, at the expense
of the Company, shall execute proper instruments acknowledging the same), except
(A) the rights of holders of  Securities  of such  series to  receive,  from the
trust fund  described  in clause (1) above  payment of the  principal of and the
interest on such Securities when such payments are due; (B) the Company's or the
Guarantor's  obligations,  as the case may be, with  respect to such  Securities
under  Sections  305,  306,  1002,  1005 and 1006;  and (C) the rights,  powers,
trusts, duties and immunities of the Trustee hereunder.

         Notwithstanding  any Covenant  Defeasance  with respect to Sections 801
and 802, any  corporation  or Person that would  otherwise have been required to
assume the obligations of the Company or the Guarantor pursuant to said Sections
shall be required,  as a condition to any merger,  consolidation,  amalgamation,
transfer, conveyance or lease contemplated thereby, to assume the obligations of
the Company or the Guarantor,  as the case may be, to the Trustee under Sections
402 and 607.

                                       38
<PAGE>

                                  ARTICLE FIVE

                                    REMEDIES

Section 501.  Events of Default.

         "Event of Default",  wherever used herein with respect to Securities of
a particular series,  means any one of the following events (whatever the reason
for such Event of Default and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order,  rule or regulation of any  administrative  or  governmental
body):

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

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

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

          (4) default in the performance, or breach, of any covenant or warranty
     of the Company or the Guarantor in this Indenture (other than a covenant or
     warranty a default in whose  performance  or whose  breach is  elsewhere in
     this Section  specifically  dealt with or which has expressly been included
     in this Indenture solely for the benefit of series of Securities other than
     that series),  and continuance of such default or breach for a period of 90
     days after there has been given,  by registered  or certified  mail, to the
     Company and the  Guarantor by the Trustee or to the Company,  the Guarantor
     and the Trustee by the Holders of at least 25% in  principal  amount of the
     Outstanding  Securities  of that series a written  notice  specifying  such
     default or breach and  requiring  it to be remedied  and stating  that such
     notice is a "Notice of Default" hereunder; or

          (5) the entry by a court having  jurisdiction in the premises of (A) a
     decree or order for relief in respect of the Company or the Guarantor in an
     involuntary case or proceeding under any applicable bankruptcy, insolvency,
     reorganization  or other similar law of the United  Kingdom or (B) a decree
     or order adjudging the Company or the Guarantor a bankrupt or insolvent, or
     approving  as properly  filed a petition  filed  against the Company or the
     Guarantor seeking reorganization, arrangement, adjustment or composition of
     or in respect of the Company or the Guarantor  under any  applicable law of
     the United Kingdom, or appointing without the consent of the Company or the
     Guarantor a custodian, receiver, liquidator, assignee, trustee, sequestrate
     or other  similar  official of the Company or the Guarantor or of the whole
     or  substantially  all of its  property,  or  ordering  the  winding  up or
     liquidation of its affairs, and the

                                       39
<PAGE>

     continuance of any such decree or order for relief or any such other decree
     or order unstayed and in effect for a period of 90 consecutive days;

          (6) the  commencement  by the Company or the  Guarantor of a voluntary
     case  or   proceeding   under  any   applicable   bankruptcy,   insolvency,
     reorganization  or other similar law of the United  Kingdom or of any other
     case or  proceeding  to be  adjudicated  a bankrupt  or  insolvent,  or the
     consent  by it to the entry of a decree or order for  relief in  respect of
     the Company or the Guarantor in an involuntary case or proceeding under any
     applicable bankruptcy,  insolvency,  reorganization or other similar law of
     the United Kingdom or to the  commencement  of any bankruptcy or insolvency
     case or proceeding  against it, or the filing by it of a petition or answer
     or  consent   seeking   reorganization   or  relief  under  any  applicable
     bankruptcy,  insolvency,  reorganization or other similar law of the United
     Kingdom,  or the  consent  by it to the filing of such  petition  or to the
     appointment of or taking possession by a custodian,  receiver,  liquidator,
     assignee,  trustee,  sequestrater or similar official of the Company or the
     Guarantor  or of the whole or  substantially  all of its  property,  or the
     making  by it of an  assignment  for  the  benefit  of  creditors,  or  the
     admission by it in writing of its  inability to pay its debts  generally as
     they become due,  or the taking of  corporate  action by the Company or the
     Guarantor in furtherance of any such action; or

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

         Upon  receipt by the Trustee of any Notice of Default  pursuant to this
Section 501, (i) with respect to  Securities of a series all or part of which is
represented  by a Global  Security,  a record date shall be  established,  which
record date shall be at the close of  business  on the day the Trustee  receives
such Notice of Default, and (ii) with respect to any other series of Securities,
the Trustee may, but shall not be obligated to, establish a record date, in each
case for the purpose of determining  Holders of  Outstanding  Securities of such
series entitled to join in such Notice of Default. If such record date is fixed,
the Holders on such record date, or their duly designated proxies, and only such
Persons,  shall be entitled  to join in such  Notice of Default,  whether or not
such Holders  remain  Holders after such record date;  provided,  however,  that
unless Holders of at least the requisite principal amount (which amount shall be
25% in the case of subclause (4) of this Section) of the Outstanding  Securities
of such series,  or their  proxies,  shall have joined in such Notice of Default
prior to the day which is 90 days after such record date, such Notice of Default
and the Act of  Holders,  or their  proxies,  joining in such  Notice of Default
shall  automatically  and without further action by any Holders be cancelled and
of no effect.  Nothing in this paragraph shall prevent a Holder, or a proxy of a
Holder, from giving, (i) after expiration of such 90-day period, a new Notice of
Default to the same  effect as that  cancelled  pursuant  to the  proviso to the
preceding  sentence,  or (ii)  during any such  90-day  period in respect of any
Notice of Default with respect to a prospective Event of Default with respect to
Securities of such series,  an additional  Notice of Default with respect to any
other prospective Event of Default (other than a prospective Event of Default as
to which such a 90-day  period has not expired)  with respect to  Securities  of
such  series,  in either of which  events a new record date shall or may, as the
case may be,

                                       40
<PAGE>

be established pursuant to the provisions of this Section 501 in respect of such
new or additional Notice of Default.

Section 502.  Acceleration of Maturity; Rescission and Annulment.

         If an Event of Default with respect to  Securities of any series at the
time Outstanding  occurs and is continuing,  then in every such case the Trustee
or the  Holders  of not less than 25% in  principal  amount  of the  Outstanding
Securities  of  that  series  may  declare  the  principal  amount  (or,  if the
Securities of that series are Original Issue Discount  Securities,  such portion
of the principal  amount as may be specified in the terms of that series) of all
of the Securities of that series to be due and payable immediately,  by a notice
in writing to the  Company  and the  Guarantor  (and to the  Trustee if given by
Holders),  and upon any such  declaration  such  principal  amount (or specified
amount) shall become immediately due and payable.

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

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

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

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

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

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

     and

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

                                       41
<PAGE>

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

         Upon  receipt by the Trustee of any written  notice  declaring  such an
acceleration,   or  rescission  and  annulment  thereof,  (i)  with  respect  to
Securities of a series all or part of which is represented by a Global Security,
a record date shall be  established,  which record date shall be at the close of
business on the day the Trustee  receives such notice,  and (ii) with respect to
any other series of Securities, the Trustee may, but shall not be. obligated to,
establish a record date, in each case for the purpose of determining  Holders of
Outstanding  Securities of such series entitled to join in such notice.  If such
record date is fixed,  the Holders on such record date, or their duly designated
proxies,  and only  such  Persons,  shall be  entitled  to join in such  notice,
whether or not such Holders  remain  Holders  after such record date;  provided,
however,  that  unless such  declaration  of  acceleration,  or  rescission  and
annulment,  as the case may be,  shall have  become  effective  by virtue of the
requisite  percentage  having joined in such notice prior to the day which is 90
days after such record date,  such notice of  declaration  of  acceleration,  or
rescission and annulment,  as the case may be, and the Act of Holders,  or their
proxies,  joining in such notice shall  automatically and without further action
by any Holders be cancelled and of no effect.  Nothing in this  paragraph  shall
prevent a Holder,  or a proxy of a Holder,  of  Securities  of any  series  from
giving,  (i) after  expiration of such 90-day  period,  a new written  notice of
declaration of acceleration,  or rescission and annulment  thereof,  as the case
may be, to the same  effect as that  cancelled  pursuant  to the  proviso to the
preceding  sentence,  or (ii)  during any such  90-day  period in respect of any
written  notice of  declaration  of  acceleration  or  rescission  and annulment
thereof,  as the case may be, with  respect to any Event of Default with respect
to Securities of such series,  an additional  written  notice of  declaration of
acceleration,  or  rescission  and annulment  thereof,  as the case may be, with
respect  to any other  Event of  Default  (other  than an Event of Default as to
which such a 90-day  period has not expired)  with respect to Securities of such
series,  in either of which  events a new record  date shall or may, as the case
may be, be established pursuant to the provisions of this Section 502 in respect
of such new or additional written notice.

Section 503.  Collection of Indebtedness and Suits for Enforcement by Trustee.

         The Company covenants that if

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

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

the Company will, upon demand of the Trustee,  pay to it, for the benefit of the
Holders  of such  Securities,  the whole  amount  then due and  payable  on such
Securities for principal (and premium, if any) and interest,  and, to the extent
that  payment of such  interest  shall be legally  enforceable,  interest on any
overdue principal (and premium, if any) and on

                                       42
<PAGE>

any  overdue  interest,  at the  rate  or  rates  prescribed  therefor  in  such
Securities, and, in addition thereto, such further amount as shall be sufficient
to cover  the  costs  and  expenses  of  collection,  including  the  reasonable
compensation,  expenses,  disbursements and advances of the Trustee,  its agents
and counsel.

         If the Company  fails to pay such amounts  forthwith  upon such demand,
the Trustee, in its own name and as trustee of an express trust, may institute a
judicial  proceeding  for the  collection  of the  sums so due and  unpaid,  may
prosecute  such  proceeding to judgment or final decree and may enforce the same
against the Company, the Guarantor or any other obligor upon such Securities and
collect the moneys  adjudged or decreed to be payable in the manner  provided by
law out of the property of the Company,  the Guarantor or any other obligor upon
such Securities, wherever situated.

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

Section 504.  Trustee May File Proofs of Claim.

         In case of the pendency of any receivership,  insolvency,  liquidation,
bankruptcy,  reorganization,   arrangement,  adjustment,  composition  or  other
similar judicial proceeding relative to the Company,  the Guarantor of any other
obligor upon the Securities or the property of the Company,  the Guarantor or of
such other obligor or their creditors,  the Trustee (irrespective of whether the
principal of the Securities  shall then be due and payable as therein  expressed
or by  declaration  or otherwise and  irrespective  of whether the Trustee shall
have made any demand on the Company or the  Guarantor for the payment of overdue
principal or interest) shall be entitled and empowered,  by intervention in such
proceeding or otherwise,  to take any and all actions authorized under the Trust
Indenture Act in order to have claims of the Holders and the Trustee  allowed in
any such proceeding. In particular, the Trustee shall be authorized,

          (i) to file and prove a claim for the whole amount of  principal  (and
     premium, if any) and interest owing and unpaid in respect of the Securities
     in  accordance  with the terms  thereof  and to file such  other  papers or
     documents  as may be  necessary or advisable in order to have the claims of
     the Trustee (including any claim for the reasonable compensation, expenses,
     disbursements  and advances of the Trustee,  its agents and counsel) and of
     the Holders allowed in such judicial proceeding, and

          (ii) to collect and receive  any moneys or other  property  payable or
     deliverable on any such claims and to distribute the same;

                                       43
<PAGE>

and any custodian, receiver, assignee, trustee, liquidator, sequestrate or other
similar  official in any such judicial  proceeding is hereby  authorized by each
Holder to make such  payments to the Trustee  and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders,  to pay to
the  Trustee  any  amount  due it for  the  reasonable  compensation,  expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 607.

         Nothing  herein  contained  shall be deemed to authorize the Trustee to
authorize  or  consent to or accept or adopt on behalf of any Holder any plan of
reorganization,  arrangement, adjustment or composition affecting the Securities
or the  rights of any  Holder  thereof or to  authorize  the  Trustee to vote in
respect of the claim of any Holder in any such proceeding.

Section 505.  Trustee May Enforce Claims Without Possession of Securities.

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

Section 506.  Application of Money Collected.

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

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

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

Section 507.  Limitation on Suits.

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

                                       44
<PAGE>

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

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

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

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

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

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

Section 508.  Unconditional  Right of Holders to Receive Principal,  Premium and
Interest.

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

Section 509.  Restoration of Rights and Remedies.

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

                                       45
<PAGE>

Section 510.  Rights and Remedies Cumulative.

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

Section 511.  Delay or Omission Not Waiver.

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

Section 512.  Control by Holders.

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

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

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

          (3) subject to the  provisions  of Section 601, the Trustee shall have
     the right to decline to follow any such  direction  if the  Trustee in good
     faith shall, by a Responsible Officer or Officers of the Trustee, determine
     that the  proceeding  so  directed  would  involve  the Trustee in personal
     liability.

         Upon receipt by the Trustee of any written  notice  directing the time,
method or place of conducting  any such  proceeding or exercising any such trust
or power,  (i) with  respect to  Securities  of a series all or part of which is
represented  by a Global  Security,  a record date shall be  established,  which
record date shall be at the close of  business  on the day the Trustee  receives
such  notice,  and (ii) with  respect  to any other  series of  Securities,  the
Trustee  may, but shall not be obligated  to,  establish a record date,  in each
case for the purpose of determining  Holders of  Outstanding  Securities of such
series  entitled  to join in such  notice.  If such  record  date is fixed,  the
Holders on such record date,  or their duly  designated  proxies,  and only such
Persons,  shall be entitled to join in such notice,  whether or not such Holders
remain  Holders  after such  record  date;

                                       46
<PAGE>

provided,  however,  that  unless the  Holders  of not less than a  majority  in
principal amount of the Outstanding  Securities of such series shall have joined
in such notice prior to the date which is 90 days after such record  date,  such
notice and the Act of Holders,  or their  proxies,  joining in such notice shall
automatically  and without  further action by any Holders be cancelled and of no
effect.  Nothing  in this  paragraph  shall  prevent a  Holder,  or a proxy of a
Holder, from giving, (i) after expiration of such 90-day period, a new notice to
the same  effect as that  cancelled  pursuant  to the  proviso to the  preceding
sentence,  or (ii) during any such 90-day period in respect of any notice, a new
notice giving directions  contrary to or otherwise different from such notice in
either of which  events a new record  date shall or may,  as the case may be, be
established  pursuant to the  provisions  of this Section 512 in respect of such
new notice.

Section 513.  Waiver of Past Defaults.

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

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

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

         With  respect to any series of  Securities,  the Company may, but shall
not be obligated to,  establish a record date for the purpose of determining the
Persons entitled to waive any past default hereunder. If a record date is fixed,
the Holders on such record date, or their duly designated proxies, and only such
Persons,  shall be entitled to waive any default hereunder,  whether or not such
Holders remain Holders after such record date;  provided,  however,  that unless
such Holders of not less than a majority in principal  amount of the Outstanding
Securities of such series shall have waived such default prior to the date which
is 90 days after such  record  date,  any such  waiver  previously  given  shall
automatically  and without  further  action by any Holder be cancelled and of no
effect.

         Upon any such waiver,  such default  shall cease to exist and any Event
of  Default  arising  therefrom  shall be deemed to have been  cured,  for every
purpose of this Indenture;  but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.

Section 514.  Undertaking for Costs.

         All parties to this Indenture agree, and each Holder of any Security 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  Indenture,  or in any suit  against  the  Trustee  for any  action  taken,
suffered or omitted by it as Trustee,  the

                                       47
<PAGE>

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, in
the manner and to the extent provided in the Trust Indenture Act;  provided that
neither  this Section nor the Trust  Indenture  Act shall be deemed to authorize
any court to require such an  undertaking  or to make such an  assessment in any
suit instituted by the Company, the Guarantor or the Trustee.

Section 515.  Waiver of Stay or Extension Laws.

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

                                  ARTICLE SIX

                                   THE TRUSTEE

Section 601.  Certain Duties and Responsibilities.

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

Section 602.  Notice of Defaults.

         Within 90 days after the occurrence known to the Trustee of any default
hereunder  with  respect to the  Securities  of any series,  the  Trustee  shall
transmit by mail to all Holders of Securities of such series, as their names and
addresses  appear  in  the  Security  Register,  notice  of  all  such  defaults
hereunder,  unless  such  default  shall  have been  cured or  waived  provided,
however,  that,  except in the case of a default in the payment of the principal
of (or  premium,  if any) or interest  on any  Security of such series or in the
payment of any sinking  fund  installment  with  respect to  Securities  of such
series, the Trustee shall be protected in withholding such notice if and so long
as the board of  directors,  the  executive  committee  or a trust  committee of
directors or  Responsible  Officers of the Trustee in good faith  determine that
the  withholding  of such

                                       48
<PAGE>

notice is in the  interest  of the Holders of  Securities  of such  series;  and
provided,  further,  that, in the case of any default of the character specified
in Section  501(4) with respect to Securities of such series,  no such notice to
Holders shall be given until at least 30 days after the occurrence thereof.  For
the purpose of this  Section,  the term  "default"  means any event which is, or
after  notice or lapse of time or both would  become,  an Event of Default  with
respect to Securities of such series.

Section 603.  Certain Rights of Trustee.

         Subject to the provisions of Section 601:

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

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

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

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

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

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

                                       49
<PAGE>

     and premises of the Company and the  Guarantor,  personally  or by agent or
     attorney; 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 and the Trustee shall not be  responsible  for any  misconduct or
     negligence on the part of any agent or attorney  appointed with due care by
     it hereunder.

Section 604.  Not Responsible for Recitals or Issuance of Securities.

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

Section 605.  May Hold Securities.

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

Section 606.  Money Held in Trust.

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

Section 607.  Compensation and Reimbursement.

         The Company and the Guarantor agree

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

          (2) except as otherwise  expressly  provided herein,  to reimburse the
     Trustee upon its request for all  reasonable  expenses,  disbursements  and
     advances  incurred or made by the Trustee in accordance  with any provision
     of this Indenture  (including the reasonable  compensation and the expenses
     and

                                       50
<PAGE>

     disbursements  of  its  agents  and  counsel),  except  any  such  expense,
     disbursement  or advance as may be  attributable  to its  negligence or bad
     faith; and

          (3) to indemnify the Trustee for, and to hold it harmless against, any
     loss,  liability or expense incurred without negligence or bad faith on its
     part, arising out of or in connection with the acceptance or administration
     of the trust or trusts  hereunder,  including  the  costs and  expenses  of
     defending itself against (but not of instituting) any claim or liability in
     connection  with the exercise or performance of any of its powers or duties
     hereunder.

         As security for the performance of the obligations of the Company under
this  Section,  the Trustee shall have a lien prior to the  Securities  upon all
property and funds held or  collected by the Trustee as such,  except funds held
in trust for the payment of  principal of (and  premium,  if any) or interest on
such Securities.

         The  obligations  of the Company and the  Guarantor  under this Section
shall be joint and several.

         The  provisions  of this Section  shall  survive the  satisfaction  and
discharge of this Indenture.

Section 608.  Disqualification; Conflicting Interests.

         If the Trustee has or shall acquire a conflicting  interest  within the
meaning of the Trust  Indenture Act, the Trustee  shall,  as soon as practicable
and in any event within 90 days after  ascertaining that it has such conflicting
interest,  and if the Event of Default  (as  defined in Section  501  hereof) to
which such  conflicting  interest  relates  has not been cured or duly waived or
otherwise eliminated before the end of such 90-day period, either eliminate such
conflicting  interest or resign to the extent and in the manner provided by, and
subject to the provisions of, the Trust Indenture Act and this Indenture. To the
extent  permitted  by such  Act,  the  Trustee  shall  not be  deemed  to have a
conflicting  interest  by virtue of being a trustee  under this  Indenture  with
respect  to  Securities  of more than one series or by virtue of being a trustee
under this Indenture and under any indenture listed in Annex A hereto.

Section 609.  Corporate Trustee Required; Eligibility.

         There  shall at all times be one and only one  Trustee  hereunder  with
respect to the Securities of each series,  which may be a Trustee  hereunder for
Securities of one or more other  series.  Each Trustee shall be a Person that is
eligible  pursuant to the Trust Indenture Act to act as such, and has a combined
capital  and  surplus  of  at  least  $50,000,000,  subject  to  supervision  or
examination by Federal or state authority.  If such Person publishes  reports of
condition  at least  annually,  pursuant to law or to the  requirements  of said
supervising or examining authority, then for the purposes of this Section and to
the extent  permitted  by the Trust  Indenture  Act,  the  combined  capital and
surplus of such Person shall be deemed to be its combined capital and surplus as
set forth in its most recent  report of condition so  published.  If at any time
the  Trustee  with  respect to the  Securities  of any series  shall cease to be
eligible in accordance  with the  provisions

                                       51
<PAGE>

of this Section,  it shall resign  immediately in the manner and with the effect
hereinafter specified in this Article.

Section 610.  Resignation and Removal; Appointment of Successor.

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

         (b) The Trustee may resign at any time with  respect to the  Securities
of one or more series by giving written  notice  thereof to the Company.  If the
instrument of acceptance  by a successor  Trustee  required by Section 611 shall
not have been  delivered to the Trustee  within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of competent
jurisdiction  for the  appointment  of a successor  Trustee  with respect to the
Securities of such series.

         (c) In accordance with the  requirements of Section 315(e) of the Trust
Indenture  Act,  the  Trustee  may be  removed  at any time with  respect to the
Securities of any series by Act of the Holders of a majority in principal amount
of the  Outstanding  Securities of such series,  delivered to the Trustee and to
the Company and the Guarantor.

         (d) If at any time:

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

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

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

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

         (e) If the Trustee  shall  resign,  be removed or become  incapable  of
acting, or if a vacancy shall occur in the office of Trustee for any cause, with
respect  to the  Securities  of one or  more  series,  the  Company,  by a Board
Resolution,  shall promptly appoint a successor Trustee or Trustees with respect
to the Securities of that or those series (it

                                       52
<PAGE>

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

         (f) The Company shall give notice of each  resignation and each removal
of the Trustee with respect to the Securities of any series and each appointment
of a successor  Trustee with respect to the  Securities of any series by mailing
written  notice of such  event by  first-class  mail,  postage  prepaid,  to all
Holders of Securities of such series as their names and addresses  appear in the
Security  Register.  Each notice shall include the name of the successor Trustee
with respect to the  Securities  of such series and the address of its Corporate
Trust Office.

Section 611.  Acceptance of Appointment by Successor.

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

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

                                       53
<PAGE>

Securities of that or those series to which the  appointment  of such  successor
Trustee relates, (2) if the retiring Trustee is not retiring with respect to all
Securities,  shall  contain  such  provisions  as shall be deemed  necessary  or
desirable  to  confirm  that all the  rights,  powers,  trusts and duties of the
retiring  Trustee with respect to the  Securities  of that or those series as to
which the retiring  Trustee is not retiring  shall  continue to be vested in the
retiring  Trustee,  and (3) shall add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the  administration
of the trusts  hereunder  by more than one  Trustee,  it being  understood  that
nothing herein or in such supplemental  indenture shall constitute such Trustees
cotrustees  of the same trust and that each such  Trustee  shall be trustee of a
trust or trusts hereunder  separate and apart from any trust or trusts hereunder
administered  by any other such Trustee;  and upon the execution and delivery of
such  supplemental  indenture the resignation or removal of the retiring Trustee
shall become  effective to the extent  provided  therein and each such successor
Trustee,  without any further act, deed or conveyance,  shall become vested with
all the rights,  powers,  trusts and duties of the retiring Trustee with respect
to the  Securities  of that or those  series  to which the  appointment  of such
successor  Trustee relates;  but, on request of the Company and the Guarantor or
any successor  Trustee,  such retiring  Trustee shall duly assign,  transfer and
deliver to such  successor  Trustee all property and money held by such retiring
Trustee  hereunder  with  respect to the  Securities  of that or those series to
which the appointment of such successor Trustee relates.

         (c) Upon  request of any such  successor  Trustee,  the Company and the
Guarantor  shall  execute any and all  instruments  for more fully and certainly
vesting in and confirming to such successor Trustee all such rights,  powers and
trusts referred to in paragraph (a) or (b) of this Section, as the case may be.

         (d) No successor  Trustee  shall accept its  appointment  unless at the
time of such acceptance  such successor  Trustee shall be qualified and eligible
under the requirements of the Trust Indenture Act.

Section 612.  Merger, Consolidation or Succession to Business.

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

                                       54
<PAGE>

Section 613.  Preferential Collection of Claims Against Company.

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

Section 614.  Appointment of Authenticating Agent.

         At any time when any of the Securities  remain  Outstanding the Trustee
may appoint an Authenticating Agent or Agents with respect to one or more series
of  Securities  which  shall be  authorized  to act on behalf of the  Trustee to
authenticate  Securities of such series issued upon  exchange,  registration  of
transfer  or  partial  redemption  thereof  or  pursuant  to  Section  306,  and
Securities so authenticated  shall be entitled to the benefits of this Indenture
and shall be valid and  obligatory for all purposes as if  authenticated  by the
Trustee  hereunder.  Wherever  reference  is  made  in  this  Indenture  to  the
authentication  and  delivery  of  Securities  by the  Trustee or the  Trustee's
certificate  of  authentication,  such  reference  shall be  deemed  to  include
authentication and delivery on behalf of the Trustee by an Authenticating  Agent
and a  certificate  of  authentication  executed  on behalf of the Trustee by an
Authenticating  Agent.  Each  Authenticating  Agent shall be  acceptable  to the
Company and shall at all times be a  corporation  organized  and doing  business
under  the laws of the  United  States of  America,  any  state  thereof  or the
District of Columbia, authorized under such laws to act as Authenticating Agent,
having a combined  capital and surplus of not less than  $50,000,000 and subject
to  supervision  or  examination  by  Federal  or  state   authority.   If  such
Authenticating Agent publishes reports of condition at least annually,  pursuant
to law or to the requirements of said supervising or examining  authority,  then
for the  purposes  of this  Section,  the  combined  capital and surplus of such
Authenticating  Agent shall be deemed to be its combined  capital and surplus as
set forth in its most recent report of condition so published. If at any time an
Authenticating  Agent  shall  cease  to  be  eligible  in  accordance  with  the
provisions of this Section,  such Authenticating  Agent shall resign immediately
in the manner and with the effect specified in this Section.

         Any  corporation  into which an  Authenticating  Agent may be merged or
converted or with which it may be  consolidated,  or any  corporation  resulting
from any merger,  conversion or consolidation to which such Authenticating Agent
shall be a party,  or any  corporation  succeeding  to the  corporate  agency or
corporate  trust business of an  Authenticating  Agent,  shall continue to be an
Authenticating  Agent,  provided such  corporation  shall be otherwise  eligible
under this Section,  without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.

         An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time terminate
the agency of an  Authenticating  Agent by giving written notice thereof to such
Authenticating  Agent  and to the  Company.  Upon  receiving  such a  notice  of
resignation  or  upon  such  a  termination,   or  in  case  at  any  time  such
Authenticating  Agent  shall  cease  to  be  eligible  in  accordance  with  the
provisions of this Section,  the Trustee may appoint a successor

                                       55
<PAGE>

Authenticating  Agent  which shall be  acceptable  to the Company and shall mail
written notice of such appointment by first-class mail, postage prepaid,  to all
Holders of  Securities  of the series with respect to which such  Authenticating
Agent will serve, as their names and addresses appear in the Security  Register.
Any successor  Authenticating Agent upon acceptance of its appointment hereunder
shall become  vested with all the rights,  powers and duties of its  predecessor
hereunder,  with like effect as if originally named as an Authenticating  Agent.
No successor  Authenticating  Agent shall be appointed unless eligible under the
provisions of this Section.

         The Company and the Guarantor agree to pay to each Authenticating Agent
from time to time reasonable compensation for its services under this Section.

         If an  appointment  with respect to one or more series is made pursuant
to this Section,  the  Securities of such series may have endorsed  thereon,  in
addition  to  the  Trustee's   certificate  of   authentication,   an  alternate
certificate of authentication in the following form:

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

                                                           JPMorgan Chase Bank,
                                                               As Trustee

                                               By...............................
                                                     As Authenticating Agent

                                               By...............................
                                                       Authorized Signatory

                                 ARTICLE SEVEN

          HOLDERS' LISTS AND REPORTS BY TRUSTEE, COMPANY AND GUARANTOR

Section 701.  Company and Guarantor to Furnish Trustee Names and
              Addresses of Holders.

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

          (a)  semi-annually,  not more than 15 days after each  Regular  Record
     Date for any series of Securities at the time Outstanding (or after each of
     the  dates  to be  specified  for such  purpose  for  non-interest  bearing
     Securities  as  contemplated  by Section  301), a list, in such form as the
     Trustee may reasonably require of the names and addresses of the Holders of
     Securities of such series as of such Regular Record Date, and

                                       56
<PAGE>

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

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

Section 702.  Preservation of Information; Communications to Holders.

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

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

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

Section 703.  Reports by Trustee.

         (a) The Trustee  shall,  within 60 days after each January 15 following
the date of this Indenture,  transmit annually by mail to all Holders,  as their
names and addresses appear in the Security Register, a brief report with respect
to any of the following  events which may have  occurred  within the previous 12
months (but if no such event has  occurred  within such  period,  no such report
need be transmitted):

          (1)  any  change  to  its  eligibility   under  Section  609  and  its
     qualifications under Section 608;

          (2) the creation of or any material change to a relationship specified
     in Section 3l0(b)(l) through Section 3l0(b)(l0) of the Trust Indenture Act;

          (3) 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) 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, 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 to the Holders of  Securities of any series
     if such advances so remaining  unpaid

                                       57
<PAGE>

     aggregate not more than 1/2 of 1% of the principal amount of the Securities
     of such series Outstanding on thE date of such report;

          (4) any change to the amount,  interest  rate and maturity date of all
     other  indebtedness  owing by the Company or the Guarantor (or by any other
     obligor on the  Securities) 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 an indebtedness based upon a creditor
     relationship  arising in any manner  described in Section  311(b) (2), (3),
     (4) or (6) of the Trust Indenture Act;

          (5) any change to the property and funds,  if any,  physically  in the
     possession of the Trustee as such on the date of such report;

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

          (7) any action taken by the Trustee in the  performance  of its duties
     hereunder  which it has not  previously  reported  and which in its opinion
     materially  affects the Securities,  except action in respect of a default,
     notice of which has been or is to be withheld by the Trustee in  accordance
     with Section 602.

         (b) The Trustee shall  transmit by mail to all Holders,  as their names
and addresses  appear in the Security  Register,  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)
since the date of the last report transmitted pursuant to Subsection (a) of this
Section  (or if no such  report has yet been so  transmitted,  since the date of
execution of this  instrument) for the  reimbursement  of which it claims or may
claim a lien or charge,  prior to that of the  Securities,  on property or funds
held or  collected  by it as Trustee  and which it has not  previously  reported
pursuant to this Subsection,  except that the Trustee shall not be required (but
may elect) to report such advances to the Holders of Securities of any series if
such  advances  remaining  unpaid  at any  time  aggregate  10% or  less  of the
principal amount of the Securities of such series Outstanding at such time, such
report to be transmitted within 90 days after such time.

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

Section 704.  Reports by Company and Guarantor.

         The Company and the Guarantor shall:

          (1) file with the  Trustee,  within 15 days  after the  Company or the
     Guarantor,  as the  case may be,  is  required  to file  the same  with the
     Commission, copies of the annual reports and of the information,  documents
     and other  reports (or copies of such  portions of any of the  foregoing as
     the  Commission may from

                                       58
<PAGE>

     time to time by rules and regulations  prescribe)  which the Company or the
     Guarantor may be required to file with the  Commission  pursuant to Section
     13 or  Section  15(d)  of the  Exchange  Act;  or,  if the  Company  or the
     Guarantor  is not  required  to  file  information,  documents  or  reports
     pursuant  to either of said  Sections,  then it shall file with the Trustee
     and the Commission,  in accordance  with rules and  regulations  prescribed
     from time to time by the Commission, such of the supplementary and periodic
     information,  documents  and  reports  which may be  required  pursuant  to
     Section  13 of the  Exchange  Act  in  respect  of a  security  listed  and
     registered on a national securities exchange as may be prescribed from time
     to time in such rules and regulations;

          (2) file  with  the  Trustee  and the  Commission,  such  information,
     documents and other reports, and such summaries thereof, as may be required
     pursuant to the Trust Indenture Act at the times and in the manner provided
     in such Act; and

          (3)  transmit by mail to all  Holders,  as their  names and  addresses
     appear in the Security  Register,  within 30 days after the filing  thereof
     with the Trustee, such summaries of any information,  documents and reports
     required to be filed by the Company or the  Guarantor,  as the case may be,
     pursuant to  paragraphs  (1) and (2) of this  Section as may be required by
     rules and regulations prescribed from time to time by the Commission.

                                 ARTICLE EIGHT

       CONSOLIDATION, AMALGAMATION, MERGER, CONVEYANCE, TRANSFER OR LEASE

Section 801.  Company or Guarantor May Consolidate, Etc., Only on Certain Terms.

         Neither  the  Company  nor  the  Guarantor  shall  consolidate  with or
amalgamate with or merge into any other corporation or convey, transfer or lease
its  properties  and assets  substantially  as an entirety  to any  Person,  and
neither the Company nor the Guarantor  shall permit any Person to consolidate or
amalgamate  with or merge  into it nor shall the  Company  permit  any Person to
convey, transfer or lease its properties and assets substantially as an entirety
to the Company, unless:

          (1) in case the Company or the  Guarantor,  as the case may be,  shall
     consolidate or amalgamate with or merge into another corporation or convey,
     transfer or lease its properties and assets substantially as an entirety to
     any Person, the corporation formed by such consolidation or amalgamation or
     into which the Company or the  Guarantor,  as the case may be, is merged or
     the Person which acquires by conveyance or transfer,  or which leases,  the
     properties and assets of the Company or the Guarantor,  as the case may be,
     substantially as an entirety shall be a corporation  organized and existing
     under the laws of England or some other political subdivision of the United
     Kingdom,  the United States or a political  subdivision  thereof, and shall
     expressly  assume,  by  an  indenture  supplemental  hereto,  executed  and
     delivered to the Trustee,  in form satisfactory to the Trustee,

                                       59
<PAGE>

     in the case of the Company,  the due and punctual  payment of the principal
     of (and  premium,  if any)  and  interest  on all  the  Securities  and the
     performance  of every covenant of this Indenture on the part of the Company
     to be performed or observed, and, in the case of the Guarantor, the due and
     punctual  performance  of the  Guarantees  and  the  performance  of  every
     covenant of this  Indenture on the part of the Guarantor to be performed or
     observed;

          (2) immediately  after giving effect to such  transaction and treating
     any  indebtedness  which  becomes  an  obligation  of  the  Company  or the
     Guarantor,  as the case may be, or any of its  Subsidiaries  as a result of
     such  transaction  as having been incurred by the Company or the Guarantor,
     as the case may be, 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; and

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

Section 802.  Successor Corporation Substituted.

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

                                  ARTICLE NINE

                             SUPPLEMENTAL INDENTURES

Section 901.  Supplemental Indentures Without Consent of Holders.

         Without the consent of any Holders,  the Company,  when authorized by a
Board  Resolution,  the  Guarantor,  when  authorized  by or pursuant to a Board
Resolution  and the Trustee,  at any time and from time to time,  may enter into
one or more indentures

                                       60
<PAGE>

supplemental  hereto,  in  form  satisfactory  to the  Trustee,  for  any of the
following purposes:

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

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

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

          (4) to add  any  additional  present,  future  or  contingent  payment
     obligation  of the  Guarantor  under any  Guarantee  for the benefit of the
     Holders of all or any series of Securities (and if such additional  payment
     obligations  are  to be  for  the  benefit  of  less  than  all  series  of
     Securities,  stating that such additional payment obligations are expressly
     being included solely for the benefit of such series); or

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

          (6) to add to,  change  or  eliminate  any of the  provisions  of this
     Indenture  in  respect  of one or  more  series  of  Securities,  provided,
     however,  that  any such  addition,  change  or  elimination  shall  become
     effective only when there is no Security  Outstanding of any series created
     prior to the execution of such supplemental  indenture which is entitled to
     the benefit of such  provision;  or

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

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

                                       61
<PAGE>

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

Section 902.  Supplemental Indentures with Consent of Holders.

         With  the  consent  of the  Holders  of not  less  than a  majority  in
principal  amount of the Outstanding  Securities of each series affected by such
supplemental  indenture,  by Act of said Holders  delivered to the Company,  the
Guarantor and the Trustee,  the Company,  when authorized by a Board Resolution,
the Guarantor,  when  authorized by or pursuant to a Board  Resolution,  and the
Trustee may enter into an indenture or  indentures  supplemental  hereto for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the  provisions of this Indenture or of modifying in any manner the rights of
the  Holders  of  Securities  of such  series  under this  Indenture;  provided,
however,  that no such supplemental  indenture shall, without the consent of the
Holder of each Outstanding Security affected thereby,

          (1) change the Stated Maturity of the principal of, or any installment
     of  principal  of or interest  on, any  Security,  or reduce the  principal
     amount thereof or the rate of interest  thereon or any premium payable upon
     the  redemption  thereof,  or  reduce  the  amount of the  principal  of an
     Original  Issue  Discount  Security or any other Security that would be due
     and payable upon a  declaration  of  acceleration  of the Maturity  thereof
     pursuant to Section 502, or change any Place of Payment where,  or the coin
     or currency in which,  any Security or any premium or the interest  thereon
     is payable,  or impair the right to institute  suit for the  enforcement of
     any such payment on or after the Stated  Maturity  thereof (or, in the case
     of redemption, on or after the Redemption Date), or

          (2) reduce  the  percentage  in  principal  amount of the  Outstanding
     Securities of any series,  the consent of whose Holders is required for any
     such  supplemental  indenture,  or the consent of whose Holders is required
     for any waiver (of compliance with certain  provisions of this Indenture or
     certain  defaults  hereunder and their  consequences)  provided for in this
     Indenture, or

          (3) modify  any of the  provisions  of this  Section,  Section  513 or
     Section  1009,  except to increase any such  percentage  or to provide that
     certain  other  provisions of this  Indenture  cannot be modified or waived
     without the  consent of the Holder of each  Outstanding  Security  affected
     thereby, provided, however, that this clause shall not be deemed to require
     the consent of any Holder with respect to changes in the references to "the
     Trustee" and  concomitant  changes in this Section and Section 1009, or the
     deletion of this proviso,  in accordance with the  requirements of Sections
     611(b) and 901(8), or

          (4) change in any manner  adverse to the  interests  of the Holders of
     Securities the terms and conditions of the  obligations of the Guarantor in
     respect

                                       62
<PAGE>

     of the due and prompt  payment of the principal  thereof (and  premium,  if
     any) and interest thereon or any sinking fund payments  provided in respect
     thereof.

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

         With  respect to any series of  Securities,  the Company may, but shall
not be obligated to,  establish a record date for the purpose of determining the
Persons entitled to consent to any indenture  supplemental  hereto.  If a record
date is fixed,  the  Holders  on such  record  date,  or their  duly  designated
proxies,  and  only  such  Persons,   shall  be  entitled  to  consent  to  such
supplemental  indenture,  whether or not such Holders  remain Holders after such
record  date;  provided,  however,  that unless such  consent  shall have become
effective by virtue of the requisite  percentage  having been obtained  prior to
the date which is 90 days after such record date,  any such  consent  previously
given shall  automatically and without further action by any Holder be cancelled
and of no effect.

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

Section 903.  Execution of Supplemental Indentures.

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

Section 904.  Effect of Supplemental Indentures.

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

Section 905.  Conformity with Trust Indenture Act.

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

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<PAGE>

Section 906.  Reference in Securities to Supplemental Indentures.

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

                                  ARTICLE TEN

                  PARTICULAR COVENANTS OF COMPANY AND GUARANTOR

Section 1001.  Payment of Principal, Premium and Interest by Company.

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

Section 1002.  Maintenance of Office or Agency by Company.

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

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

                                       64
<PAGE>

Section 1003.  Reserved.

Section 1004.  Reserved.

Section 1005.  Maintenance of Office or Agency by Guarantor.

         The Guarantor  will maintain in each Place of Payment for any series of
Securities an office or agency where  Securities of that series may be presented
or  surrendered  for payment  under the  Guarantees  endorsed  thereon and where
notices  and  demands to or upon the  Guarantor  in  respect  of the  Guarantees
endorsed on the Securities of that series and this Indenture may be served.  The
Guarantor will give prompt  written  notice to the Trustee of the location,  and
any  change  in the  location,  of such  office  or  agency.  If at any time the
Guarantor  shall fail to maintain  any such  required  office or agency or shall
fail to furnish  the  Trustee  with the  address  thereof,  such  presentations,
surrenders,  notices and demands  may be made or served at the  Corporate  Trust
Office of the  Trustee,  and the  Guarantor  hereby  appoints the Trustee as its
agent to receive all such presentations, surrenders, notices and demands.

         The  Guarantor  may also from time to time  designate one or more other
offices or agencies  where the Securities of one or more series may be presented
or  surrendered  for such purpose or where such notices or demands may be served
and may from time to time rescind such designations;  provided, however, that no
such  designation or rescission shall in any manner relieve the Guarantor of its
obligation  to  maintain  an  office  or agency  in each  Place of  Payment  for
Securities  of any series for such  purposes.  The  Guarantor  will give  prompt
written  notice to the Trustee of any such  designation or rescission and of any
change in the location of any such other office or agency.

Section 1006.  Money for Securities Payments to Be Held in Trust.

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

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

         The Company will cause each Paying  Agent for any series of  Securities
other than the Trustee to execute and  deliver to the Trustee an  instrument  in
which such Paying Agent shall agree with the Trustee,  subject to the provisions
of this Section, that such Paying Agent will:

                                       65
<PAGE>

          (i) comply with the  provisions of the Trust  Indenture Act applicable
     to it as a Paying Agent and

          (ii) during the continuance of any such default by the Company (or any
     other  obligor  on the  Securities  of that  series)  in the  making of any
     payment in respect  of the  Securities  of that  series,  upon the  written
     request of the Trustee, forthwith pay to the Trustee all sums held in trust
     by such  Paying  Agent for  payment in respect  of the  Securities  of such
     series.

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

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

Section 1007.  Corporate Existence.

         Subject to Article  Eight,  the Company and the Guarantor will preserve
and keep in full force and effect their respective corporate existences.

Section 1008.  Statement by Executive Officers as to Compliance.

         The Company and the Guarantor will each deliver to the Trustee,  within
120 days after the end of each fiscal  year of the  Guarantor  ending  after the
date hereof, an Executive Officer's  Certificate (which need not comply with the
requirements  of Section 102),  stating  whether or not to the best knowledge of
the  signers  thereof  the  Company  or the  Guarantor,  as the case may be, has
complied  with all  conditions  and

                                       66
<PAGE>

covenants on their part  contained in this  Indenture,  and if such signers have
obtained  knowledge  of any  default  by the  Company  or the  Guarantor  in the
performance,  observance  or  fulfillment  of any such  condition  or  covenant,
specifying all such defaults and the nature and status thereof of which they may
have  knowledge.  For the purpose of this Section 1008, such compliance with the
terms,  conditions  and covenants of the Indenture  shall be determined  without
regard to any period of grace or requirement of notice provided hereunder.

Section 1009.  Waiver of Certain Covenants.

         The Company and the  Guarantor may omit in any  particular  instance to
comply with any term, provision or condition set forth in any covenant set forth
in any  indenture  supplemental  to  this  Indenture  or  otherwise  established
pursuant  to Section  301 with  respect to the  Securities  of any series or the
Guarantees  endorsed  thereon if before the time for such compliance the Holders
of at least a majority in principal amount of the Outstanding Securities of such
series  shall,  by Act of such  Holders,  either waive such  compliance  in such
instance or generally waive  compliance with such term,  provision or condition,
but no such waiver shall  extend to or affect such term,  provision or condition
except to the extent so expressly  waived,  and,  until such waiver shall become
effective,  the  obligations  of the Company and the Guarantor and the duties of
the Trustee in respect of any such term,  provision or condition shall remain in
full force and effect.

         With  respect to any series of  Securities,  the Company may, but shall
not be obligated to,  establish a record date for the purpose of determining the
Persons  entitled to waive any such term,  provision or  condition.  If a record
date is fixed,  the  Holders  on such  record  date,  or their  duly  designated
proxies,  and only such  Persons,  shall be  entitled  to waive  any such  term,
provision or condition  hereunder,  whether or not such Holders  remain  Holders
after such record date; provided, however, that unless the Holders of at least a
majority in principal amount of the Outstanding  Securities of such series shall
have waived such term, provision or condition prior to the date which is 90 days
after such record date, any such waiver previously given shall automatically and
without further action by any Holder be cancelled and of no effect.

Section 1010.  Additional Amounts.

         Unless  otherwise  specified in any Board  Resolution of the Company or
the Guarantor establishing the terms of Securities of a series or the Guarantees
relating thereto in accordance with Section 301, if any deduction or withholding
for any present or future taxes,  assessments or other  governmental  charges of
the  jurisdiction (or any political  subdivision or taxing authority  thereof or
therein) in which the Company or the  Guarantor  is  incorporated,  shall at any
time be required by such  jurisdiction  (or any such  political  subdivision  or
taxing  authority)  in  respect  of any  amounts  to be paid by the  Company  of
principal of or interest on a Security of any series,  or by the Guarantor under
the  Guarantees,  the Company or the Guarantor,  as the case may be, will pay to
the  Holder of a  Security  of such  series  such  additional  amounts as may be
necessary  in order that the net amounts  paid to such  Holder of such  Security
who, with respect to any such tax,  assessment or other governmental  charge, is
not resident in such jurisdiction, after such

                                       67
<PAGE>

deduction or withholding,  shall be not less than the amounts  specified in such
Security to which such Holder is entitled;  provided,  however, that the Company
or the Guarantor,  as the case may be, shall not be required to make any payment
of  additional  amounts  (1) for or on  account of any such tax,  assessment  or
governmental charge imposed by the United States or any political subdivision or
taxing authority thereof or therein or (2) for or on account of:

         (a) any tax,  assessment or other  governmental  charge which would not
have been imposed but for (i) the existence of any present or former  connection
between such Holder (or between a  fiduciary,  settlor,  beneficiary,  member or
shareholder of, or possessor of a power over, such Holder,  if such Holder is an
estate,  trust,  partnership or corporation) and the taxing  jurisdiction or any
political  subdivision or territory or possession thereof or area subject to its
jurisdiction,  including,  without  limitation,  such Holder (or such fiduciary,
settlor,  beneficiary,  member, shareholder or possessor) being or having been a
citizen or resident  thereof or being or having been present or engaged in trade
or business therein or having or having had a permanent establishment therein or
(ii) the  presentation  of a Security  of such  series  (where  presentation  is
required)  for  payment on a date more than 30 days after the date on which such
payment  became  due and  payable or the date on which  payment  thereof is duly
provided for, whichever occurs later;

         (b) any estate, inheritance, gift, sale, transfer, personal property or
similar tax, assessment or other governmental charge;

         (c) any tax,  assessment or other governmental  charge which is payable
otherwise than by withholding  from payments of (or in respect of) principal of,
or any interest on, the Securities of such series;

         (d) any tax, assessment or other governmental charge that is imposed or
withheld by reason of the failure by the Holder or the  beneficial  owner of the
Security of such series (i) to provide  information  concerning the nationality,
residence or identity of the Holder or such beneficial owner or (ii) to make any
declaration  or other  similar  claim or satisfy any  information  or  reporting
requirements,  which,  in the case of (i) or (ii),  is  required or imposed by a
statute,   treaty,   regulation  or   administrative   practice  of  the  taxing
jurisdiction  as a  precondition  to  exemption  from  all or part of such  tax,
assessment or other governmental charge;

         (e) any tax,  assessment or other governmental charge which such Holder
would have been able to avoid by  presenting  such  Security  to another  Paying
Agent;

         (f) any tax,  assessment or other governmental  charge which is imposed
on a payment pursuant to any European Union Directive on the taxation of savings
implementing  the  conclusions of the ECOFIN Council  meeting of November 26 and
27, 2000, or any law implementing such directive; or

         (g) any combination of items (a), (b), (c), (d), (e) and (f) above; nor
shall  additional  amounts be paid with respect to any payment of the  principal
of, or any  interest

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<PAGE>

on, any Security of such series to any Holder who is a fiduciary or  partnership
or other than the sole  beneficial  owner of such  payment  to the  extent  such
payment  would be required  by the laws of the  jurisdiction  (or any  political
subdivision or taxing authority thereof or therein) to be included in the income
for tax purposes of a beneficiary or settlor with respect to such fiduciary or a
member  of such  partnership  or a  beneficial  owner  who  would  not have been
entitled to such additional amounts had it been the Holder of such Security.

         The  foregoing   provisions   shall  apply  mutatis   mutandis  to  any
withholding  or  deduction  for or on  account of any  present or future  taxes,
assessments or governmental  charges of whatever  nature of any  jurisdiction in
which any successor Person to the Company or the Guarantor,  as the case may be,
is  organized,  or any  political  subdivision  or taxing  authority  thereof or
therein;  provided,  however,  that such  payment of  additional  amounts may be
subject to such further  exceptions as may be  established  in the terms of such
Securities established as contemplated by Section 301.

         Subject to the foregoing  provisions,  whenever in this Indenture there
is mentioned,  in any context, the payment of the principal of or any premium or
interest  on, or in  respect  of, any  Security  of any series or payment of any
related  coupon or the net  proceeds  received  on the sale or  exchange  of any
Security of any series,  such mention shall be deemed to include  mention of the
payment of additional  amounts  provided for in this Section to the extent that,
in such  context,  additional  amounts are,  were or would be payable in respect
thereof  pursuant to the  provisions of this Section and express  mention of the
payment of additional amounts (if applicable) in any provisions hereof shall not
be construed as excluding  additional  amounts in those provisions  hereof where
such express mention is not made.

         If the terms of the Securities of a series  established as contemplated
by Section 301 do not specify that  additional  amounts  pursuant to the Section
will not be payable by the Company or the  Guarantor,  at least 10 days prior to
the first Interest Payment Date with respect to that series of Securities (or if
the  Securities  of that series will not bear  interest  prior to Maturity,  the
first day on which a payment of principal and any premium is made), and at least
10 days prior to each date of payment of  principal  and any premium or interest
if there  has been any  change  with  respect  to the  matters  set forth in the
below-mentioned Officers' Certificate, the Company or the Guarantor will furnish
the Trustee and the Company's  principal Paying Agent or Paying Agents, if other
than the Trustee, with an Officers' Certificate instructing the Trustee and such
Paying  Agent or Paying  Agents  whether  such  payment of  principal of and any
premium  or  interest  on the  Securities  of that  series or under the  related
Guarantees  shall  be made to  Holders  of  Securities  of that  series  without
withholding  for or on  account  of any tax,  assessment  or other  governmental
charge described in the Securities of that series or the related Guarantees.  If
any such withholding  shall be required,  then such Officers'  Certificate shall
specify by country the amount,  if any, required to be withheld on such payments
to such  Holders  of  Securities  and the  Company or the  Guarantor  (only if a
payment under said  Guarantees is then due), as the case may be, will pay to the
Trustee or such Paying Agent or Paying Agents the additional amounts required by
this Section.

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<PAGE>

         Each of the Company and the Guarantor covenants to indemnify each of
the Trustee and any Paying Agent for, and to hold each of them harmless against,
any loss, liability or expense arising out of or in connection with actions
taken or omitted by any of them in reliance on any Officers' Certificate
furnished pursuant to this Section, except to the extent that any such loss,
liability or expense is due to its own negligence or bad faith.

                                 ARTICLE ELEVEN

                            REDEMPTION OF SECURITIES

Section 1101.  Applicability of Article.

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

Section 1102.  Election to Redeem; Notice to Trustee.

         The election of the Company to redeem any Securities shall be evidenced
by a Board  Resolution or in another manner specified as contemplated by Section
301 for  such  Securities.  In case of any  redemption  at the  election  of the
Company,  the Company shall, at least 45 days prior to the Redemption Date fixed
by the Company  (unless a shorter notice shall be  satisfactory to the Trustee),
notify  the  Trustee  of such  Redemption  Date and of the  principal  amount of
Securities  of such  series to be  redeemed.  In the case of any  redemption  of
Securities  (a) prior to the expiration of any  restriction  on such  redemption
provided in the terms of such Securities or elsewhere in this Indenture,  or (b)
pursuant to an election of the Company which is subject to a condition specified
in the terms of such  Securities  or  elsewhere in this  Indenture,  the Company
shall furnish the Trustee with an Officers'  Certificate  evidencing  compliance
with such restriction or condition.

Section 1103.  Selection by Trustee of Securities to Be Redeemed.

         If less  than  all the  Securities  of any  series  are to be  redeemed
(unless  such  redemption  affects  only  a  single  Security),  the  particular
Securities  to be redeemed  shall be selected not more than 60 days prior to the
Redemption Date by the Trustee,  from the Outstanding  Securities of such series
not previously  called for redemption,  by such method as the Trustee shall deem
fair and  appropriate  and which may provide for the selection for redemption of
portions (equal to the minimum  authorized  denomination  for Securities of that
series or any integral  multiple  thereof) of the principal amount of Securities
of such series of a denomination larger than the minimum authorized denomination
for Securities of that series.

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

         The  provisions  of the two preceding  paragraphs  shall not apply with
respect  to any  redemption  affecting  only a  single  Security,  whether  such
Security  is to be  redeemed

                                       70
<PAGE>

in whole or in part. In the case of any such  redemption in part, the unredeemed
portion  of the  principal  amount  of the  Security  shall be in an  authorized
denomination  (which shall not be less than the minimum authorized  denomination
for such Security).

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

Section 1104.  Notice of Redemption.

         Notice  of  redemption  shall  be given by  first-class  mail,  postage
prepaid,  mailed not less than 30 nor more than 60 days prior to the  Redemption
Date, to each Holder of Securities to be redeemed,  at his address  appearing in
the Security Register.

         All notices of redemption shall state:

          (1) the Redemption Date,

          (2) the Redemption Price or, if not then ascertainable,  the manner of
     calculation thereof,

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

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

          (5) the place or places where such  Securities  are to be  surrendered
     for payment of the Redemption Price, and

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

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

Section 1105.  Deposit of Redemption Price.

         Prior to any  Redemption  Date,  the  Company  shall  deposit  with the
Trustee or with a Paying  Agent (or,  if the Company is acting as its own Paying
Agent,  segregate  and hold in trust as provided  in Section  1006) an amount of
money  sufficient to pay the

                                       71
<PAGE>

Redemption  Price of, and  (except if the  Redemption  Date shall be an Interest
Payment Date) accrued  interest on, all the Securities  which are to be redeemed
on that date.

Section 1106.  Securities Payable on Redemption Date.

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

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

Section 1107.  Securities Redeemed in Part.

         Any Security  which is to be redeemed only in part shall be surrendered
at a Place of Payment therefor (with, if the Company or the Trustee so requires,
due endorsement by, or a written  instrument of transfer in form satisfactory to
the Company and the Trustee duly executed by, the Holder thereof or his attorney
duly  authorized  in writing),  and the Company shall  execute,  and the Trustee
shall  authenticate  and deliver to the Holder of such Security  without service
charge,  a new  Security or  Securities  of the same series,  of any  authorized
denomination as requested by such Holder, in aggregate principal amount equal to
and in exchange  for the  unredeemed  portion of the  principal  of the Security
surrendered;  provided,  that if a Global Security is so  surrendered,  such new
Security so issued shall be a new Global Security in a denomination equal to the
unredeemed portion of the principal of the Global Security so surrendered.

Section 1108.  Optional Redemption Due to Changes in Tax Treatment.

         With  respect to each  series of  Securities,  if, as the result of any
change  in or  any  amendment  to the  laws  of the  United  Kingdom,  or of any
political  subdivision  or  taxing  authority  thereof  or  therein,   affecting
taxation,  or any change in an application or interpretation of such laws either
generally or in relation to any particular series of Securities, which change or
amendment to such laws becomes effective on or after the date specified for such
series   pursuant  to  Section   301(7)  or  which  change  in   application  or
interpretation  is  notified to the  Company or the  Guarantor  on or after such
date, it is  determined by the Company or the Guarantor  that the Company or the
Guarantor  would be  required  to make  payments  of  additional  amounts (i) in
respect of interest on the next succeeding Interest Payment Date pursuant to the
terms of the  Securities or the

                                       72
<PAGE>

Guarantees endorsed on the Securities of such series, as applicable,  assuming a
payment in respect of such interest were required to be made pursuant thereto on
such Interest Payment Date, or (ii) in respect of the principal of any series of
Original Issue Discount Securities at the date of such determination pursuant to
the terms of the Securities or the Guarantees endorsed on the Securities of such
series,  as  applicable,  assuming a payment in respect of such  principal  were
required to be made pursuant thereto on such date, in either case the Company or
the Guarantor  may, at its option,  redeem such series of Securities in whole at
any time (except in the case of a series of Securities  that has a variable rate
of interest, which may be redeemed on any Interest Payment Date) at a Redemption
Price equal to 100 percent of the principal amount thereof plus accrued interest
to the  date  fixed  for  redemption  (except  in the  case  of  any  series  of
Outstanding  Original  Issue  Discount  Securities  which may be redeemed at the
Redemption Price specified by the terms of such series). Prior to any redemption
of such a series of  Securities  pursuant  to this  Section,  the Company or the
Guarantor  shall  provide  the  Trustee  with an  Opinion  of  Counsel  that the
conditions precedent to the right of the Company or the Guarantor to redeem such
series of  Securities  pursuant to this Section have  occurred.  Such Opinion of
Counsel shall be based on the laws and application and interpretation thereof in
effect on the date of such opinion or to become  effective on or before the next
succeeding Interest Payment Date.

                                 ARTICLE TWELVE

                                  SINKING FUNDS

Section 1201.  Applicability of Article.

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

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

Section 1202.  Satisfaction of Sinking Fund Payments with Securities.

         The Company (1) may deliver  Outstanding  Securities of a series (other
than  any  previously  called  for  redemption)  and (2) may  apply  as a credit
Securities  of a series which have been  redeemed  either at the election of the
Company  pursuant to the terms of such  Securities or through the application of
permitted  optional  sinking  fund  payments  pursuant  to  the  terms  of  such
Securities,  in each case in satisfaction of all or any part of any sinking fund
payment  with  respect to the  Securities  of such  series  required  to be

                                       73
<PAGE>

made  pursuant to the terms of such  Securities  as provided for by the terms of
such series, provided, however, that such Securities have not been previously so
credited. Such Securities shall be received and credited for such purpose by the
Trustee at the  Redemption  Price  specified in such  Securities  for redemption
through  operation  of the  sinking  fund and the  amount of such  sinking  fund
payment shall be reduced accordingly.

Section 1203.  Redemption of Securities for Sinking Fund.

         Not less than 45 days prior to each  sinking  fund payment date for any
series of  Securities,  the Company  will  deliver to the  Trustee an  Officers'
Certificate  specifying the amount of the next ensuing  sinking fund payment for
that series pursuant to the terms of that series,  the portion thereof,  if any,
which is to be  satisfied  by payment of cash and the portion  thereof,  if any,
which is to be satisfied by delivering  and crediting  Securities of that series
pursuant  to Section  1202 and  stating  the basis for such credit and that such
Securities  have not been  previously  so credited  and will also deliver to the
Trustee any  Securities  to be so  delivered.  Not more than 60 days before each
such sinking fund payment  date the Trustee  shall select the  Securities  to be
redeemed upon such sinking fund payment date in the manner  specified in Section
1103 and cause notice of the  redemption  thereof to be given in the name of and
at the  expense of the  Company in the manner  provided  in Section  1104.  Such
notice having been duly given,  the redemption of such Securities  shall be made
upon the terms and in the manner stated in Sections 1106 and 1107.

                                ARTICLE THIRTEEN

                                   GUARANTEES

Section 1301.  Guarantee.

         The  Guarantor  hereby  unconditionally  guarantees to each Holder of a
Security of each series  authenticated  and  delivered by the Trustee and to the
Trustee the due and prompt payment of the principal of (and premium, if any) and
interest on such  Security  and the due and prompt  payment of any sinking  fund
payments  provided for pursuant to the terms of such  Security,  when and as the
same  shall  become  due  and  payable,  whether  at  the  Stated  Maturity,  by
declaration of acceleration,  call for redemption or otherwise, according to the
terms of such  Security  and of this  Indenture.  In case of the  failure of the
Company punctually to make any such principal, premium, interest or sinking fund
payment,  the  Guarantor  hereby  agrees  to cause any such  payment  to be made
promptly  when and as the same  shall  become  due and  payable,  whether at the
Stated  Maturity,  by  declaration  of  acceleration,  call  for  redemption  or
otherwise, and as if such payment were made by the Company.

         The Guarantor hereby agrees that its obligations  hereunder shall be as
if it were  principal  debtor and not merely  surety,  and shall be absolute and
unconditional,  irrespective  of, and shall be  unaffected  by, any  invalidity,
irregularity  or  unenforceability  of  any  Security  of  any  series  or  this
Indenture,  any failure to enforce the  provisions of any Security of any series
or this  Indenture,  or any waiver,  modification  or indulgence

                                       74
<PAGE>

granted to the Company  with respect  thereto,  by the Holder of any Security of
any  series or the  Trustee,  or any  other  circumstance  which  may  otherwise
constitute a legal or equitable  discharge  of a surety or  guarantor;  provided
however, that,  notwithstanding the foregoing,  no such waiver,  modification or
indulgence shall,  without the consent of the Guarantor,  increase the principal
amount of a Security  or the  interest  rate  thereon or  increase  any  premium
payable  upon  redemption  thereof.   The  Guarantor  hereby  waives  diligence,
presentment,  demand of  payment,  filing of claims with a court in the event of
merger or  bankruptcy  of the Company,  any right to require a proceeding  first
against  the  Company,  protest or notice  with  respect to any  Security or the
indebtedness  evidenced  thereby or with  respect to any  sinking  fund  payment
required pursuant to the terms of a Security issued under this Indenture and all
demands  whatsoever,  and covenants  that this  Guarantee will not be discharged
with respect to any Security  except by payment in full of the principal of (and
premium, if any) and interest on such Security.  The Guarantees shall constitute
guarantees of payment and not of collection.

Section 1302.  Subrogation.

         The  Guarantor  shall be  subrogated  to all  rights of the Holder of a
Security  against the  Company in respect of any amounts  paid to such Holder by
the Guarantor pursuant to the provisions of this Guarantee;  provided,  however,
that the Guarantor shall not be entitled to enforce,  or to receive any payments
arising out of or based upon,  such right of subrogation  until the principal of
(and  premium,  if any) and interest on all  Securities  of the relevant  series
shall have been paid in full.

Section 1303.  Execution and Delivery of Guarantees.

         To evidence its  guarantee  set forth in Section  1301,  the  Guarantor
hereby agrees to execute the Guarantee in a form established pursuant to Section
205, to be endorsed on each Security authenticated and delivered by the Trustee.
Each such  Guarantee  shall be signed  manually or by facsimile by a person duly
authorized thereto by Board Resolution of the Guarantor.

         Guarantees bearing the facsimile signature of any individual who was at
any time such an authorized  person of the Guarantor  shall bind the  Guarantor,
notwithstanding  that such individual shall have ceased to be such an authorized
person prior to the  authentication  and delivery of the  Securities  upon which
such Guarantees are endorsed or was not such an authorized person at the date of
such  Securities.

         The delivery of any Security by the Trustee,  after the  authentication
thereof  hereunder,  shall  constitute  due delivery of the  Guarantee  endorsed
thereon on behalf of the Guarantor.

                                  *     *     *

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

                                       75
<PAGE>

         IN WITNESS WHEREOF, the Company and the Trustee hereto have caused this
Indenture to be duly executed, and the Guarantor has caused this Indenture to be
signed on its behalf by Gary Admans, its duly appointed attorney,  all as of the
day and year first above written.

                                              BP CAPITAL MARKETS P.L.C.

                                              By: /s/ HEATHER BOWLEY
                                                 -------------------------------
                                              Name:  Heather Bowley
                                              Title: Manager, Group Finance and
                                                     Capital Markets

Attest:

By: /s/ ANDREA THOMAS
   -----------------------------
Name:  Andrea Thomas
Title: Company Secretary

                                              BP p.l.c.

                                              By: /s/ GARY ADMANS
                                                 -------------------------------
                                              Name:  Gary Admans
                                              Title: Attorney-in-fact

                                              JPMORGAN CHASE BANK, AS TRUSTEE

                                              By: /s/ WILLIAM KEENAN
                                                 -------------------------------
                                              Name:  William Keenan
                                              Title: Assistant Vice President

Attest:

By: /s/ VIRGINIA DOMINGUEZ
   ------------------------------
Name:  Virginia Dominguez
Title: Trust Officer

                                       2<PAGE>
                                                                  Exhibit 10.3.1

                                  WESTCORP 2001

                                STOCK OPTION PLAN

                                FEBRUARY 13, 2001

<PAGE>
                                  WESTCORP 2001

                                STOCK OPTION PLAN

1.    PURPOSE.

      The purpose of the Westcorp 2001 Stock Option Plan (the "Plan") is to
provide incentives to, and to encourage the ownership of Westcorp, a California
corporation, common stock (hereinafter "Common Stock"), by certain employees and
directors of the Company and its subsidiaries (collectively, unless the context
indicates otherwise, the "Company"). The Plan provides for stock options which
qualify as Incentive Stock Options ("ISOs") under Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code") and Non-Statutory Stock Options
("NSOs") which are not intended to be ISOs. The Plan is not a qualified deferred
compensation plan under Section 401(a) of the Code and is not subject to the
provisions of the Employee Retirement Income Security Act of 1974 ("ERISA").

2.    ADMINISTRATION.

      2.1 The Plan shall be administered by the Board of Directors of the
Company (the "Board") or, if so designated by the Board, by the Compensation
Committee of the Board, consisting of not less than two members of the Board.
The administrator of the Plan is hereinafter referred to as the "Committee". In
addition, the composition of the Committee shall be made in an attempt to
satisfy:

            (a)   Such requirements as the Securities and Exchange Commission
                  may establish for administrators acting under plans intended
                  to qualify for exemption under Rule 16b-3 (or its successor)
                  under the Securities Exchange Act, and

            (b)   Such requirements as the Internal Revenue Service may
                  establish for outside directors acting under plans intended to
                  qualify for exemption under Internal Revenue Code
                  Section 162(m)(4)(C).

      2.2 Subject to the limitations of the Plan, the Committee shall have the
sole and complete authority (a) to select those directors or employees (who may
also be officers or directors of the Company or any subsidiary of the Company)
who shall be eligible to have awards made to them under the Plan
("Participants"), (b) to determine the type and amount of awards to be granted
each Participant in conformity with the Plan, (c) to impose such limitations,
restrictions, and conditions upon awards as it shall deem appropriate, (d) to
interpret the Plan, adopt agreements, and to adopt, amend, and rescind
administrative guidelines and other rules and regulations relating to the Plan,
and (e) to make all other determinations and to take all other actions necessary
or advisable for the proper administration of the Plan. Determinations of fair
market value under the Plan shall be made in accordance with the methods and
procedures established by the Committee. The Committee's determinations on
matters within its authority shall be conclusive and binding on the Company and
all other parties. No member of the Board or the Committee shall be liable for
any action or determination made in good faith with respect to the Plan or any
award made under it. The Committee may select one of its members as its
Chairman, and shall

                                      -1-
<PAGE>
hold meetings at such times and places as it may determine. Acts by a majority
of the Committee, or acts reduced to or approved in writing by a majority of the
members of the Committee without a meeting, shall be the valid acts of the
Committee.

      2.3 The "fair market value" on a specified date shall mean the closing
price for a Share on the stock exchange, if any, on which Shares are primarily
traded, but if no Shares were traded on such date, then on the last previous
date on which a Share was so traded, or, if Shares are not primarily traded on a
stock exchange, the average of the bid and asked closing prices at which one
Share is traded on the over-the-counter market, as reported on the National
Association of Securities Dealers Automated Quotation System, or, if none of the
above is applicable, the value of a Share as established by the Board of
Directors for such date using any reasonable method of valuation.

3.    TYPE OF AWARD.

      Awards under the Plan shall be based on Common Stock of the Company
("Common Stock") and shall be issued as stock options, qualifying as either NSOs
or ISOs. No awards shall be granted under the Plan after ten years from the date
the Plan is approved by the shareholders of the Company (or, if earlier, the
date the Plan is adopted by the Board), which expiration date shall be February
13, 2011.

4.    SHARES SUBJECT TO PLAN AND ELIGIBLE EMPLOYEES.

      4.1 Subject to adjustment as provided in Section 7 below, the aggregate
number of shares of Common Stock which may be issued upon exercise of either
NSOs or ISOs hereunder shall not exceed 3 million shares of Common Stock of the
Company. In the future, if another company is acquired by the Company or any of
its subsidiaries, any Common Stock covered by or issued as a result of the
assumption or substitution of outstanding grants of the acquired company shall
not be deemed issued under the Plan and shall not be subtracted from the Common
Stock available for grant under the Plan. The Common Stock deliverable under the
Plan shall consist in whole or in part of authorized and unissued shares of the
Company. Notwithstanding the foregoing, if any award is forfeited, or an award
is terminated or expires without issuance of Common Stock or other
consideration, the Common Stock subject to such award shall again be available
for grant pursuant to the Plan.

      4.2 The class eligible to have awards made to them under the Plan shall
all be employees or directors of the Company and/or its subsidiaries and shall
be selected by the Committee. In general, Participants shall be selected by the
Committee from the directors, executive officers and other key employees of the
Company and its subsidiaries who occupy responsible managerial or professional
positions and/or who have the capacity to or who have already shown their
ability to make a substantial contribution to the success of the Company.

      4.3 The form of Option shall be determined from time to time by the
Committee. The terms and provisions of the Option shall be set forth in writing
in a Stock Option Certificate Agreement (the "Agreement"), signed by the Option
holder and on behalf of the Company by the Chairman of the Board or an
authorized officer. The Agreement shall state whether or not the Option is an
Incentive Stock Option. The Committee may establish such other condition(s) as
it may determine provided that, with respect to a

                                      -2-
<PAGE>
grant of Incentive Stock Options, such condition(s) are not inconsistent with
Section 422 of the Internal Revenue Code.

5.    STOCK OPTIONS.

      All stock options granted under the Plan shall be subject to the following
terms and conditions:

      5.1 The Committee may, from time to time, subject to the provisions of the
Plan and such other terms and conditions as the Committee may prescribe, grant
to any Participant options to purchase Common Stock, which options may, but need
not, be ISOs. As more fully set forth in Section 14, the grant of an option
shall be evidenced by a signed written agreement ("Stock Option Agreement")
containing such terms and conditions, not inconsistent with this Plan, as the
Committee may from time to time prescribe. Options granted under the Plan as
ISOs shall be designated as ISOs in the Stock Option Agreement covering such
options.

      5.2 Each Stock Option Certificate Agreement shall specify the exercise
price of each Option. The price per share of the shares subject to each option
shall be set by the Committee; provided, however, that with respect to ISOs,
such price shall not be less than one hundred percent (100%) of the fair market
value of a Common Share as of the date the option is granted; and provided
further, that such price shall be no less than one hundred ten percent (110%) of
the fair market value of a Common Share as of the date the option is granted if
such option is granted to a person who owns ten percent (10%) or more of the
issued and outstanding Common Stock of the Company as of such date. The exercise
price under an NSO shall in no event be less than 85% of the fair market value
of a Common Share as of the date the option is granted. In the case of an NSO, a
Stock Option Agreement may specify an exercise price that varies in accordance
with a predetermined formula while the NSO is outstanding.

      5.3 The term of an option shall be set by the Committee in its discretion;
provided, however, that the term shall not be more than seven years from the
date an ISO is granted, or, in the case of an option granted to a person who
owns ten percent (10%) or more of the issued and outstanding Common Stock of the
Company as of the date the option is granted, the term shall not be more than
five years from the date an ISO is granted.

      5.4 At any time after grant of an option the Committee may, in its sole
discretion, subject to whatever terms and conditions it selects, and to the
extent applicable, accelerate the period during which an option vests.

      5.5 No portion of an option which is unexercisable at the time a
Participant terminates employment with the Company or a subsidiary of the
Company shall thereafter become exercisable. However, for purposes of
understanding the previous sentence, an option shall not be considered
unexercisable if at that time a Participant terminates the only impediment to
his or her exercise of the option is the fact that the Participant is subject to
a closed window period which restricts the exercise of the option as a matter of
law. Further, the existence of a closed window period will not extend the time
within which options hereunder may be exercised.

                                      -3-
<PAGE>
      5.6 For those Participants who are employees of the Company or any of its
affiliated companies or subsidiaries, an option shall be exercisable by a
Participant only while he or she is an employee and up to three months following
the cessation or termination of employment with the Company and any and all
subsidiaries or no later than three months after the Participant ceases to be a
Director. The preceding notwithstanding, the Committee may determine that an
option may be exercised subsequent to a Participant's termination of employment
or directorship, subject to the following limitations:

            (a) An option, to the extent not previously exercised, shall
      terminate no later than seven (7) years from the Grant Date (the "Option
      Term").

      If Employee ceases to be employed by the Company because of Employee's
      retirement, disability or death, the option may, to the extent it was
      outstanding and exercisable on the date of such retirement, disability or
      death, be exercised only during the following periods: (i) if the
      termination was due to Employee's disability (within the meaning of
      Section 22(e)(3) of the Code), the one-year period following the date of
      such termination; (ii) if the termination was due to Employee's death, the
      six-month period following the date of issuance of letters testamentary or
      letters of administration to the executor or administrator of Employee's
      estate, but not later than one year after Employee's death; and (iii) if
      the termination was due to Employee's retirement after attaining age 65,
      or to Employee's disability other than as described in (i) above, the
      three-month period following the date of such termination. In no event,
      however, shall any such period set forth in the previous sentence extend
      beyond the Option Term.

            (b) In the event of Employee's death, an option may be exercised by
      Employee's legal representative(s), but only to the extent that the option
      would otherwise have been exercisable by Employee.

            (c) A transfer of Employee's employment between the Company and any
      subsidiary of the Company, or between any subsidiaries of the Company,
      shall not be deemed to be a termination of Employee's employment.

            (d) Notwithstanding any other provisions set forth herein or in any
      Stock Option Agreement, if an Employee shall (i) commit any act of
      malfeasance or wrongdoing affecting the Company or any subsidiary or
      affiliate of the Company, (ii) breach any covenant not to compete, or
      employment contract, with the Company or any subsidiary or affiliate of
      the Company, or (iii) engage in conduct that would warrant Employee's
      discharge for cause (excluding general dissatisfaction with the
      performance of Employee's duties, but including any act of disloyalty or
      any conduct clearly tending to bring discredit upon the Company or any
      subsidiary or affiliate of the Company), any unexercised portion of the
      option shall immediately terminate and be void.

      5.7 An exercisable option may be exercised in whole or in part. However,
an option shall not be exercisable with respect to fractional shares and the
Committee may require that, by the terms of the option, a partial exercise only
be with respect to a minimum number of shares.

      5.8 All or a portion of an exercisable option shall be deemed exercised
upon:

                                      -4-
<PAGE>
            (a) Delivery of all of the following to the Secretary of the Company
      or his or her office:

                  (i) A written notice complying with the applicable rules
            established by the Committee or the Company stating that the option,
            or a portion thereof, is exercised. The notice shall be signed by
            the Participant or other person then entitled to exercise the option
            or such portion;

                  (ii) Such representations and documents as the Committee, in
            its absolute discretion, deems necessary or advisable to effect
            compliance with all applicable federal or state securities laws or
            regulations. The Committee may, in its absolute discretion, also
            take whatever additional actions it deems appropriate to effect such
            compliance, including, without limitation, placing legends on share
            certificates and issuing stop-transfer notices to agents and
            registrars; and

                  (iii) In the event that the option shall be exercised pursuant
            to Section 5.6(b) by any person or persons other than the
            Participant, appropriate proof of the right of such person or
            persons to exercise the option; and

            (b) Full cash payment to the Secretary of the Company for the shares
      with respect to which the option, or portion thereof, is exercised.
      However, at the discretion of the Committee, the terms of the option may
      allow, or provide the Committee with the continuous discretion to allow:
      (i) a delay in payment up to thirty days from the date the option, or
      portion thereof, is exercised, (ii) payment, in whole or in part, through
      the delivery of Common Stock owned by the Participant for at least six
      months, (iii) delivery (in a form prescribed or approved by the Committee
      or the Company) of an irrevocable direction to a securities broker to sell
      all or part of the Common Stock being purchased under the Plan and to
      deliver all or part of the sales proceeds to the Company to cover the
      exercise price and any applicable withholding taxes; or (iv) payment, in
      whole or in part, through the delivery of property of any kind which
      constitutes good and valuable consideration.

            (c) If Participant fails to pay for any or all of the option shares
      specified in the notice of exercise or fails to accept delivery thereof,
      Participant's right to purchase such option shares may be terminated by
      the Company, without notice. The date specified in Participant's notice of
      exercise as the date of exercise shall be deemed the date of exercise of
      the option, provided that payment in full for the option shares to be
      purchased upon such exercise shall have been received by such date.

      5.9 As soon as practicable after receipt by the Company, pursuant to
Section 5.8(b), of full cash payment for the shares with respect to which an
option, or portion thereof, is exercised by a Participant, with respect to each
such exercise, the Company shall transfer to the Participant the number of
shares equal to the quotient of:

                                      -5-
<PAGE>
            (a) The amount of the payment made by the Participant to the Company
      pursuant to Section 5.8(b), and

            (b) The price per share of the shares subject to the option as
      determined pursuant to Section 5.2.

      5.10 The Company shall not be required to issue or to deliver any
certificate or certificates for shares of stock purchased upon the exercise of
any option or portion thereof prior to fulfillment of all of the following
conditions:

            (a) The completion of any registration or other qualification of
      such shares under any state or federal law, or under the rulings or
      regulations of the Securities and Exchange Commission or any other
      governmental regulatory body which the Committee shall, in its absolute
      discretion, deem necessary or advisable;

            (b) Obtaining any approval or other clearance from any state or
      federal governmental agency that the Committee shall, in its absolute
      discretion, determine to be necessary or advisable;

            (c) The lapse of such reasonable period of time following the
      exercise of the option as the Committee may establish from time to time
      for reasons of administrative convenience; and

            (d) The receipt by the Company of full payment for such shares,
      including payment of any applicable withholding tax.

            (e) The execution and delivery by Participant of a counterpart Stock
      Option Agreement between the Company and Participant.

      5.11 To the extent that the aggregate fair market value of stock with
respect to which any ISOs are exercisable for the first time by a Participant
during any calendar year (under the Plan and all other incentive stock option
plans of the Company or any Company subsidiary) exceeds $100,000, such options
shall be treated as NSOs to the extent required by Section 422 of the Code. For
purposes of this Section 5.11, the fair market value of stock shall be
determined as of the time the option, with respect to such stock, is granted.

      5.12 Within the limitations of the Plan, the Committee may modify, extend
or assume outstanding options or may accept the cancellation of outstanding
options (whether granted by the Company or by another issuer) in return for the
grant of new options for the same or a different number of shares and at the
same or a different exercise price. The foregoing notwithstanding, no
modification of an Option shall, without the consent of the Participant, alter
or impair his or her rights or obligations under such Option.

                                      -6-
<PAGE>
6.    NONASSIGNABILITY OF AWARDS.

      No award granted under the Plan shall be assigned, transferred, pledged,
or otherwise encumbered by a Participant, otherwise than by will or by the laws
of descent and distribution and, in the case of NSOs only, by instrument to an
inter vivos or testamentary trust in which the option is to be passed to
beneficiaries upon the death of the Participant, or by gift to a member of
Participant's immediate family (as such term is defined in Rule 16a-1(e) of the
Exchange Act) or pursuant to a qualified domestic relations order. Each award
shall be exercisable during the Participant's lifetime only by the Participant.
Any attempt to assign, transfer, pledge or otherwise encumber any such award or
of any right or privilege conferred thereby, contrary to this Section 6, or the
sale or levy or similar process upon the rights and privileges conferred
thereby, shall be null and void.

7.    PROTECTION AGAINST DILUTION.

      7.1 Reorganizations. In the event of any change affecting the Common Stock
by reason of any sale, merger, consolidation, spin-off, or other reorganization
of the Company or any subsidiary or affiliated company, the Committee may, but
shall not be obligated to, make such substitution or adjustment in the aggregate
number or class of shares which may be distributed under the Plan and in the
number, class, and option price or other price of shares subject to the
outstanding awards granted under the Plan or in any vesting schedule as the
Committee in its sole discretion deems to be appropriate in order to maintain
the purpose of the original grant. Any determination of the Committee as to any
question that may arise with respect to any adjustment or lack of adjustment of
shares or vesting shall be final.

            The Committee shall be authorized to make adjustments in the terms
and conditions of other awards in recognition of unusual or non-recurring events
affecting the Company or its financial statements or changes in applicable laws,
regulations, or accounting principles. The Committee may correct any defect,
supply any omission or reconcile any inconsistency in the Plan or any award in
the manner and to the extent it shall deem desirable to carry it into effect.

      7.2 Adjustments. If prior to the complete exercise of any Option there
shall be a subdivision of the outstanding Company stock, a declaration of a
dividend payable in Common Stock, a combination or consolidation of the
outstanding Common Stock (by reclassification or otherwise) into a lesser number
of shares of Common Stock, a recapitalization, or a similar occurrence or change
in the capitalization of the Company which occurrence or change is neither a
rights offering nor related to a merger, sale or other reorganization set forth
in Section 7.1, the Option, to the extent that it has not been exercised, shall
entitle the Participant upon the future exercise of the Option to such number
and kind of securities or other property subject to the terms of the Option to
which the Participant would have been entitled had the Participant actually
owned the Common Stock subject to the unexercised portion of the Option at the
time of the occurrence of such stock dividend, combination, consolidation,
conversion, exchange, reclassification or substitution; and the aggregate
purchase price upon the future exercise of the Option shall be the same as if
the originally optioned Common Stock was being purchased thereunder. Any
fractional shares shall be payable in cash.

                                      -7-
<PAGE>
7.3   Certain Corporate Events.

            (a) Corporate Reorganizations. Upon the dissolution or liquidation
      of the Company, or upon a reorganization, merger or consolidation of the
      Company as a result of which the outstanding securities of the class then
      subject to Options hereunder are changed into or exchanged for cash or
      property or securities not of the Company's issue, or any combination
      thereof, or upon a sale of substantially all the property of the Company
      to, or the acquisition of stock representing both (i) more than fifty
      percent (50%) of the voting power of the stock of the Company then
      outstanding by, another corporation or person and (ii) a change in the
      "Effective Control" (as defined below) of the Company (any of which being
      a "Corporate Event"), the Plan shall terminate, and all Options
      theretofore granted hereunder shall terminate, unless provision is made in
      writing in connection with such transaction for the continuance of the
      Plan and/or for the assumption of Options covering the stock of a
      successor corporation, or a parent or a subsidiary thereof (such successor
      corporation or parent or subsidiary, as the case may be, being the
      "successor corporation"), with appropriate adjustments as to the number
      and kind of shares and prices, in which event the Plan and Options
      theretofore granted shall continue in the manner and under the terms so
      provided. If the Plan and unexercised Options shall terminate pursuant to
      the foregoing sentence, all persons entitled to exercise any unexercised
      portions of Options then outstanding shall have the right, at such time
      prior to the consummation of the transaction causing such termination as
      the Company shall designate, to exercise the unexercised portions of their
      Options, including the portions thereof which would, but for this Section
      entitled "Corporate Reorganizations," not yet be exercisable. For purposes
      of this paragraph, the term "Effective Control" shall mean a change in
      share ownership such that the person or persons in Control (as defined in
      Rule 405 under the Securities Act of 1933, as amended (the "Securities
      Act")) of the Company before the Corporate Event are not in Control of the
      Company after the Corporate Event.

            (b) Termination of Employment Following Corporate Event. If a
      Participant's employment is terminated (other than for reasons set forth
      in Section 5.6(d) herein) by the Company or a successor employer
      corporation (or a parent or a subsidiary of either of them) within two (2)
      years following the effective date of a Corporate Event (as defined in
      subparagraph (a) above) in which Options are assumed, such Participant's
      Options (or replacement options) will immediately become exercisable,
      including the portions thereof which would, but for this Section entitled
      "Termination of Employment Following Corporate Event," not yet be
      exercisable. Any such Option will remain exercisable until the expiration
      of the Option or earlier termination of the Option in accordance with its
      terms.

            (c) Termination of Plan or Options Following Corporate Event. If
      either the Plan is continued by a successor corporation (as defined in
      subparagraph (a) above) to the Company or Options are assumed by such
      successor corporation, or both, as provided in subparagraph (a) above, and
      thereafter within two (2) years following the effective date of a
      Corporate Event (as described under subparagraph (a) above), the Plan and
      unexercised Options (or replacement options) are proposed to be terminated
      for any reason (including but not limited to a successor corporation's
      Corporate Event), then all persons entitled to exercise any unexercised
      portions of

                                      -8-
<PAGE>
      Options then outstanding shall have the right, until seven (7) days prior
      to the termination of the Plan and unexercised Options (or replacement
      options), or such later time as the successor corporation shall designate,
      to exercise the unexercised portions of their Options (or replacement
      options), including the portions thereof which would, but for this Section
      entitled "Termination of Plan or Options Following Corporate Event," not
      yet be exercisable.

            Notwithstanding the foregoing, a transaction shall not constitute a
Change in Control if its sole purpose is to change the state of the Company's
incorporation or to create a holding company that will be owned in substantially
the same proportions by the persons who held the Company's securities
immediately before such transaction.

8.    WITHHOLDING.

      At the Committee's discretion, the recipient of any award under the Plan
may pay to the Company, in cash, Common Stock (provided it has been held by the
Participant for at least six months) or other property, or a combination
thereof, the amount of any taxes required to be withheld with respect to such
award or, in the case of an award in the form of Common Stock, the Company shall
have the right to retain from such award a sufficient number of shares of Common
Stock to satisfy the applicable withholding tax obligation.

9.    SUBSIDIARIES.

      For purposes of the Plan, a "subsidiary" of the Company means any
corporation (other than the Company) in an unbroken chain of corporations
beginning with the Company if each of the corporations other than the last
corporation in the chain owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in the
chain.

10.   FINANCIAL ASSISTANCE.

      The Company is vested with authority under this Plan to assist any
employee to whom an option is granted hereunder (including any director or
officer of the Company or any of its subsidiaries) in the payment of the
purchase price payable on exercise of that option, by lending the amount of such
purchase price to such employee on such terms and at such rates of interest and
upon such security (or unsecured) as shall have been authorized by or under
authority of the Board.

11.   LIMITATIONS OF RIGHTS OF PARTICIPANTS.

      11.1 A person to whom an option is granted under this Plan shall not have
any interest in the optioned shares or in any dividends paid thereon, and shall
not have any of the rights or privileges of a stockholder with respect to such
shares until the certificates therefor have been issued and delivered to him or
her.

                                      -9-
<PAGE>
      11.2 No shares of stock issuable under the Plan shall be issued and no
certificate therefor delivered unless and until, in the opinion of legal counsel
for the Company, such securities may be issued and delivered without causing the
Company to be in violation of or to incur any liability under any federal, state
or other securities law, or any other requirement of law or of any regulatory
body having jurisdiction over the Company.

      11.3 The receipt of an option does not give the Participant any right to
continued employment by the Company or a subsidiary for any period, nor shall
the granting of the option or the issuance of shares on exercise thereof give
the Company or any subsidiary any right to the continued services of the
Participant for any period.

      11.4 Nothing contained in this Plan shall constitute the granting of an
option hereunder, which shall occur only pursuant to express authorization by
the Committee and under the terms of a Stock Option Agreement.

12.   AMENDMENT AND TERMINATION.

      The Board may alter, amend, suspend or terminate this Plan, provided that
no such action shall, without the consent of a Participant, alter or impair any
rights or obligations under any stock option granted to such Participant. An
amendment of the Plan shall be subject to the approval of the Company's
shareholders only to the extent required by applicable laws, regulations or
rules.

13.   STOCK OPTION AGREEMENTS.

      Each option awarded to a Participant shall be evidenced by a written Stock
Option Agreement in a form approved by the Committee, which shall be executed by
the Participant and an authorized officer of the Company and which shall contain
such terms and conditions as the Committee shall determine, consistent with this
Plan. Stock option agreements evidencing ISOs shall contain such terms and
conditions as may be necessary to meet the applicable provisions of Section 422
of the Code.

14.   GOVERNING LAW.

      The place of administration of the Plan and all Stock Option Agreements
shall be in the State of California. The corporate law of the Company's state of
incorporation shall govern issues related to the validity and issuance of
shares. Otherwise, this Plan and each Stock Option Agreement shall be construed
and administered in accordance with the laws of the State of California, without
giving effect to principles relating to conflict of laws.

15.   USE OF PROCEEDS.

      Any cash proceeds received by the Company from the sale of shares pursuant
to grants made under this Plan shall be used for general corporate purposes.

                                      -10-
<PAGE>
16.   REGULATORY APPROVALS.

      The implementation of the Plan, the granting of any option hereunder, and
the issuance of stock upon the exercise or surrender of any such option shall be
subject to the Company's procurement of all approvals and permits required by
regulatory authorities having jurisdiction over the Plan, the options granted
under it, and the stock issued pursuant to it.

17.   RESTRICTIONS ON RESALE.

      Certain officers and directors of the Company may be deemed to be
"affiliates" of the Company, as that term is defined under the Securities Act.
Common Stock acquired under the Plan by an affiliate may only be re-offered or
resold pursuant to an effective registration statement or pursuant to Rule 144
under the Securities Act or another exemption from the registration requirements
of the Securities Act.

18.   EFFECTIVE DATE.

      This Plan shall become effective upon adoption by the Company's Board of
Directors, subject to the subsequent approval of the Plan by the stockholders of
the Company within 12 months from the date of said adoption. Stock options may
be granted prior to such stockholder approval, provided that such options shall
not be exercisable prior to the time when this Plan is approved by the
stockholders, and provided further that if such approval has not been obtained
at the end of said 12-month period, all options previously granted under this
Plan shall thereupon be cancelled and become null and void.

19.   FINANCIAL STATEMENTS.

      Participant shall receive financial statements of the Company at least
annually.

(2001 stock option)

                                      -11-

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