S-4

As filed with the Securities and Exchange Commission on December 30, 2002

Registration No. 333-          

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM S-4

REGISTRATION STATEMENT

Under

THE SECURITIES ACT OF 1933

SUSQUEHANNA BANCSHARES, INC.

(Exact Name of Registrant as Specified in Its Charter)

Pennsylvania	6021	23-2201716
(State or Other Jurisdiction of Incorporation or Organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification No.)

26 North Cedar Street

Lititz, Pennsylvania 17543

(717) 626-4721

(Address, Including Zip Code, and Telephone Number, Including Area Code,

of Registrant’s Principal Executive Offices)

William J. Reuter

Chairman of the Board and Chief Executive Officer

Susquehanna Bancshares, Inc.

26 North Cedar Street

Lititz, Pennsylvania 17543

(717) 626-4721

(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent For Service)

Copies of all communications to:

Lawrence H. Berger	Lisa M. Cavage
Morgan, Lewis & Bockius LLP	Vice President, Secretary and Counsel
1701 Market Street	26 North Cedar Street
Philadelphia, Pennsylvania 19103-2921	Lititz, Pennsylvania 17543
(215) 963-5000	(717) 625-6453

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.  ¨

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to be Registered	Principal Amount to be Registered		Proposed Maximum Offering Price Per Unit (1)		Proposed Maximum Aggregate Offering Price (1)		Amount of Registration Fee
6.05% Subordinated Notes due 2012	$	75,000,000	100	%	$	75,000,000	$	6,900

(1) Estimated solely for the purpose of computing the registration fee in accordance with Rule 457(f)(2) under the Securities Act of 1933, as amended.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act, as amended, or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the prospectus is delivered in final form. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

Subject to Completion, dated December 30, 2002

PROSPECTUS

SUSQUEHANNA BANCSHARES, INC.

EXCHANGE OFFER FOR

$75,000,000 6.05% SUBORDINATED NOTES DUE 2012

We are offering to exchange an aggregate principal amount of up to $75,000,000 6.05% subordinated notes due 2012, which have been registered under the Securities Act of 1933, as amended, for a like amount of our outstanding $75,000,000 6.05% subordinated notes due 2012. When we refer to “exchange notes,” we are referring to the exchange 6.05% subordinated notes due 2012 registered with the Securities and Exchange Commission. When we refer to “outstanding notes” we are referring to the outstanding 6.05% subordinated notes due 2012.

The exchange offer will expire at 5:00 p.m., New York City time, on            , unless extended.

Terms of the Exchange Offer

• We will exchange all outstanding notes that are validly tendered and not withdrawn prior to the expiration of the exchange offer.

• You may withdraw tendered outstanding notes at any time prior to the close of business, New York City time, on the last business day before the expiration date of the exchange offer.

• We believe that the exchange of outstanding notes will not be a taxable exchange for United States federal income tax purposes, but you should see the section entitled “Certain United States Federal Tax Consequences” on page 38 for more information.

• The terms of the exchange notes are substantially identical to the terms of the outstanding notes, except for transfer restrictions and registration rights relating to the outstanding notes.

• We will not receive any proceeds from the exchange offer.

• There is no existing market for the exchange notes to be issued, and we do not intend to apply for their listing on any securities exchange or automated quotation system.

See the section entitled “Risk Factors” on page 7 for a discussion of the risks that you should consider prior to tendering your outstanding notes for exchange.

The notes are not deposits or obligations of a bank or savings association and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency.

Neither the Securities and Exchange Commission nor any state securities commission or regulatory authority has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

The date of this prospectus is             .

TABLE OF CONTENTS

Where You Can Find More Information	ii
Forward-Looking Statements	iii
Prospectus Summary	1
Risk Factors	7
Selected Historical Financial Data	12
Consolidated Ratios of Earnings to Fixed Charges	13
Use of Proceeds	13
Capitalization	14
Regulation and Supervision	15
The Exchange Offer	19
Description of the Notes	26
Exchange Offer; Registration Rights	34
Certain United States Federal Tax Consequences	38
Plan of Distribution	39
Legal Matters	40
Experts	40

You should rely only upon the information contained in, or incorporated into, this prospectus. We have not authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not making an offer to sell the exchange notes in any jurisdiction where the offer or sale is not permitted. You should assume the information appearing in this document is accurate only as of the date on the front cover of this prospectus. Our business, financial condition, results of operations and prospects may have changed since that date.

This prospectus incorporates important business and financial information about us that is not included in or delivered with this document. See “Where You Can Find More Information” on page ii of this prospectus.

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WHERE YOU CAN FIND MORE INFORMATION

We file reports and other information with the Securities and Exchange Commission, or SEC. You may read and copy this information at the Public Reference Room, 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the Public Reference Room.

Copies of these materials can also be obtained by mail at prescribed rates from the Public Reference Room of the SEC, 450 Fifth Street, N.W., Washington, D.C. 20549 or by calling the SEC at 1-800-SEC-0330. The SEC maintains a website that contains reports, proxy statements and other information regarding us. The address of the SEC website is http://www.sec.gov.

We have filed with the SEC a registration statement on Form S-4 under the Securities Act of 1933, as amended, with respect to the exchange notes offered hereby. This prospectus is a part of that registration statement. This prospectus does not contain all the information set forth in the registration statement or in the exhibits to the registration statement, certain portions of which have been omitted as permitted by the rules and regulations of the SEC. For further information with respect to us and the exchange notes offered hereby, reference is made to the registration statement and the exhibits and the financial statements, notes and schedules filed as a part thereof or incorporated by reference therein, which may be inspected in the manner set forth above. Statements made in this prospectus concerning the contents of any documents referred to in this prospectus are not necessarily complete, and in each instance are qualified in all respects by reference to the copy of the document filed as an exhibit to the registration statement.

This prospectus incorporates by reference the documents listed below that we have previously filed with the SEC. The information incorporated by reference in this prospectus as set forth below is considered to be part of this prospectus, and later information contained in this prospectus or filed with the SEC may modify and supersede this information or any information contained in this prospectus. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this prospectus.

• Annual Report on Form 10-K for the year ended December 31, 2001;

• Quarterly Reports on Form l0-Q for the quarters ended March 31, 2002, June 30, 2002 and September 30, 2002; and

• Current Reports on Form 8-K filed on May 3, 2002, July 1, 2002, September 20, 2002, October 23, 2002, October 29, 2002 and November 5, 2002.

In addition, we also incorporate by reference all future filings that we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended, after the date of this prospectus until the expiration of the exchange offer. These documents include periodic reports, such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K (other than Current Reports furnished under Item 9 of Form 8-K), as well as proxy statements.

The information incorporated by reference contains information about us and our financial condition and is an important part of this prospectus.

We will provide without charge to each person to whom a copy of this prospectus is delivered upon the written or oral request of such person, a copy of any or all of the documents incorporated by reference (other than exhibits to such documents, unless such exhibits are specifically incorporated by reference into the information that this prospectus incorporates). To obtain timely delivery of this information, we must receive your request no later than five (5) business days before the expiration date of the exchange offer.

Requests should be directed to:

Susquehanna Bancshares, Inc.

26 North Cedar Street

Lititz, PA 17543

Attention: Lisa M. Cavage, Vice President, Secretary and Counsel

Telephone: (717) 626-4721

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FORWARD-LOOKING STATEMENTS

This prospectus and the documents incorporated by reference in this prospectus contain express and implied statements relating to our future financial condition, results of operations, plans, objectives, performance and business, which are considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These include statements that relate to, among other things, profitability, liquidity, loan loss reserve adequacy, plans for growth, interest rate sensitivity, market risk, regulatory compliance and financial and other goals. These forward-looking statements are subject to risks, uncertainties and assumptions, including, among other things:

• adverse changes in our loan and lease portfolios and the resulting credit risk-related losses and expenses;

• interest rate fluctuations and other economic conditions;

• continued levels of our loan quality and origination volume;

• the adequacy of loss reserves;

• our ability to attract core deposits;

• continued relationships with major customers;

• adverse changes in the economy that could increase credit-related losses and expenses;

• compliance with laws and regulatory requirements of federal and state agencies;

• changes in competition and pricing environments;

• the inability to hedge certain risks economically;

• acquisitions or restructuring;

• technological changes;

• changes in consumer spending and saving habits;

• our success in managing the risks involved in the foregoing;

• other factors, including those matters discussed in the section titled “Risk Factors”; and

• other risks and uncertainties detailed from time to time in our filings with the SEC.

Although the expectations in the forward-looking statements are based on our current beliefs and expectations, we do not assume responsibility for the accuracy and completeness of such statements. Further, we are under no duty to update any of the forward-looking statements after the date of this prospectus to conform such statements to actual results.

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PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed information, including our financial statements and related notes, included or incorporated by reference in this prospectus. Unless the context otherwise requires, the terms “Susquehanna,” “we,” “us” and “our” refer to Susquehanna Bancshares, Inc. and its subsidiaries.

The Company

Susquehanna Bancshares, Inc., headquartered in Lititz, Pennsylvania, is a financial holding company that provides a wide range of retail and commercial banking and financial services. As of September 30, 2002, we had total assets of $5.4 billion, consolidated net loans and leases of $3.8 billion, deposits of $3.8 billion and stockholders’ equity of $528.1 million.

As a financial holding company with operations in multiple states, our strategy has been to manage our subsidiaries on a local community basis and to allow each subsidiary operating in different markets to retain its name and board of directors. We believe that this strategy differentiates us from other large competitors because it enables our subsidiaries greater flexibility to better serve their markets and increase responsiveness to the needs of local customers. We continue, however, to implement consolidations in selected lines of business, operations and support functions in order to achieve greater economies of scale and cost savings. We also provide our banking subsidiaries guidance in the areas of credit policy and administration, risk assessment, investment advisory administration, strategic planning, investment portfolio management, asset liability management, liquidity management and other financial and administrative services.

Our bank subsidiaries operate as an extensive branch network and maintain a strong market presence in our primary markets. As of September 30, 2002, core deposits funded 70.8% of our lending and investing activities. The chart below reflects the total assets, loans and deposits of our banking operations in each of our primary markets:

	Assets		Percent of Total		Loans		Percent of Total		Deposits		Percent of Total
	(dollars in millions)
Central Pennsylvania	$	2,076	40.1	%	$	1,474	40.2	%	$	1,516	40.1	%
Suburban Philadelphia and Southern New Jersey		646	12.5			425	11.6			531	14.0
Suburban Baltimore and Central Maryland		1,203	23.2			970	26.4			782	20.7
Western Maryland and Southwestern Pennsylvania		1,251	24.2			802	21.8			954	25.2
Total	$	5,176	100.0	%	$	3,671	100.0	%	$	3,783	100.0	%

We are managed from a long-term perspective with financial objectives that emphasize loan quality, balance sheet liquidity and earnings stability. Consistent with this approach, we emphasize a low-risk loan portfolio derived from our local markets. In addition, we focus on not having any portion of our business dependent upon a single customer or limited group of customers or a substantial portion of our loans or investments concentrated within a single industry or a group of related industries. Our net charge-offs over the past five years have averaged 0.20% of total loans and leases.

As of September 30, 2002, our total loans and leases (net) in dollars and by percentage were as follows:

	(dollars in millions)
Commercial, financial and agricultural	$	473	12.6	%
Real estate—construction		424	11.2
Real estate secured—residential		1,221	32.5
Real estate secured—commercial		955	25.4
Consumer		351	9.4
Leases		333	8.9
Total loans and leases	$	3,757	100.0	%

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As of September 30, 2002, our nonperforming assets were $21.9 million or 0.58% of total loans and leases and other real estate owned, and our allowance for loan and lease losses was 1.05% of our total loans and leases and 211.34% of nonperforming loans and leases. For the nine months ended September 30, 2002, our net charge-offs were an annualized 0.19% of average total loans. Also as of September 30, 2002, we held $1.1 billion in investment securities with an average life of less than two years, including U.S. Treasuries, U.S. government agency securities and mortgage-backed securities.

We provide a broad range of banking-related services, including trust and asset management, through our subsidiaries Susquehanna Trust & Investment Company and Valley Forge Asset Management Corp., comprehensive consumer vehicle financing services through our subsidiary Boston Service Company, Inc. (t/a Hann Financial Service Corp.) and insurance brokerage services through our subsidiary The Addis Group, Inc.

The following table sets forth information, for the nine months ended September 30, 2002, regarding our bank subsidiaries and our non-bank subsidiaries that, as of September 30, 2002, had annualized revenues in excess of $5.0 million:

Subsidiary	Assets			Percent of Total		Revenues(1)		Percent of Total		Net Income			Percent of Total
Central Pennsylvania:
Farmers FirstBank	$	1,443,949		26.6	%	$	48,885	23.3	%	$	16,520		35.7	%
First Susquehanna Bank & Trust		342,454		6.3			11,640	5.5			3,469		7.5
WNB Bank		289,361		5.3			11,465	5.5			3,804		8.2
Suburban Philadelphia and Southern New Jersey:
Equity Bank(2)		646,198		11.9			29,276	14.0			5,929		12.8
Suburban Baltimore and Central Maryland:
Susquehanna Bank		1,203,243		22.2			29,684	14.1			6,620		14.3
Western Maryland and Southwestern Pennsylvania:
Farmers and Merchants Bank & Trust		815,509		15.1			26,833	12.8			5,484		11.8
Citizens Bank of Southern Pennsylvania		240,179		4.4			7,923	3.8			1,759		3.8
First American Bank of Pennsylvania		195,591		3.6			6,380	3.0			1,633		3.5
Non-Bank Subsidiaries:
Susquehanna Trust & Investment Company		2,569		0.0			3,889	1.9			86		0.2
Valley Forge Asset Management Corp		19,224		0.4			6,295	3.0			1,024		2.2
Boston Service Company, Inc. (t/a Hann Financial Service Corp.)		409,817		7.6			25,069	11.9			3,680		7.9
The Addis Group, Inc.(3)		21,825		0.4			1,709	0.8			261		0.6
Consolidation adjustments and other non-bank subsidiaries		(204,301	)	-3.8			808	0.4			(3,955	)	-8.5
TOTAL	$	5,425,618		100.0	%	$	209,856	100.0	%	$	46,314		100.0	%

(1) Revenue equals net interest income and other income.

(2) Includes the results of our subsidiary Founders’ Bank, which was merged into Equity Bank on August 2, 2002.

(3) The Addis Group, Inc. was acquired on June 28, 2002.

We routinely evaluate possible future acquisitions of other banks, and may also seek to enter businesses closely related to banking or that are financial in nature, or to acquire existing companies already engaged in such activities, including investment advisory services and insurance brokerage services.

As of September 30, 2002, Susquehanna had 450 full-time and 46 part-time employees, and, together with our subsidiaries, on a consolidated basis, had 1,730 full-time and 290 part-time employees.

Susquehanna was incorporated in Pennsylvania in 1982. Its executive offices are located at 26 North Cedar Street, Lititz, Pennsylvania 17543, and its telephone number is (717) 626-4721.

Additional information about us and our subsidiaries is included in documents incorporated by reference in this prospectus. See “Where You Can Find More Information.”

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The Exchange Offer

On November 4, 2002, we completed the private offering of $75 million aggregate principal amount of 6.05% subordinated notes due 2012 in a transaction exempt from the registration requirements of the Securities Act. Simultaneously with that transaction, we entered into a registration rights agreement with the initial purchasers of the outstanding notes, in which we agreed to deliver this prospectus to you and to complete an exchange offer for the outstanding notes. Below is a summary of the exchange offer.

Terms of the Offer We are offering to exchange a like amount of exchange notes for the outstanding notes in denominations of $1,000 in principal amount and integral multiples thereof. In order to be exchanged, an outstanding note must be properly tendered and accepted. All outstanding notes that are validly tendered and not withdrawn will be exchanged. As of the date of this prospectus, there are $75 million principal amount of outstanding notes. We will issue exchange notes promptly after the expiration of the exchange offer.

Expiration Time The exchange offer expires at 5:00 P.M., New York City time, on             , 2003, unless extended.

Procedures For Tendering To tender outstanding notes, you must complete and sign a letter of transmittal in accordance with the instructions contained in it and forward it by mail, facsimile or hand delivery, together with any other documents required by the letter of transmittal, to the exchange agent, either with the outstanding notes to be tendered or in compliance with the specified procedures for guaranteed delivery of outstanding notes. Certain brokers, dealers, commercial banks, trust companies and other nominees may also effect tenders by book-entry transfer. Holders of outstanding notes registered in the name of a broker, dealer, commercial bank, trust company or other nominee are urged to contact such person promptly if they wish to tender outstanding notes pursuant to the exchange offer. See “The Exchange Offer—Procedures for Tendering.” Letters of transmittal and outstanding notes should not be sent to us. Such documents should only be sent to the exchange agent. Questions regarding how to tender outstanding notes and requests for additional information regarding the exchange offer should be directed to the exchange agent. See “The Exchange Offer—Exchange Agent.”

Acceptance of Outstanding Notes For Exchange; Issuance of Exchange Notes Subject to the conditions stated in “The Exchange Offer—Conditions to the Exchange Offer,” we will accept for exchange any and all outstanding notes which are properly tendered in the exchange offer before the expiration time. The exchange notes will be delivered promptly after the expiration time.

United States Federal Income Tax Consequences We believe your exchange of outstanding notes for exchange notes to be issued in the exchange offer will not result in any gain or loss to you for United States federal income tax consequences. See “Certain United States Federal Tax Consequences.”

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Withdrawal Rights You may withdraw your tender at any time prior to the close of business, New York City time, on the last business day before the expiration date of the exchange offer.

Resales of Exchange Notes Based on interpretations by the staff of the SEC, as detailed in a series of no-action letters issued to third parties, we believe that the exchange notes would generally be freely transferable by holders after the exchange offer without further registration under the Securities Act if:

• you acquire the exchange notes in the ordinary course of your business;

• you have no arrangement or understanding with any person to participate in the distribution of the outstanding notes or exchange notes;

• you are not an “affiliate” of Susquehanna, as defined in Rule 405 of the Securities Act;

• you are not a broker-dealer, you are not engaged in, and do not intend to engage in, the distribution of the exchange notes;

• you are a broker-dealer, you receive exchange notes for your own account in exchange for outstanding notes that were acquired as a result of market-making activities or other trading activities and you deliver a prospectus in connection with any resale of the exchange notes; and

• you are not acting on behalf of any person who could not truthfully make the foregoing representations.

Each broker-dealer that receives exchange notes for its own account in exchange for outstanding notes, where such outstanding notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such registered notes. See “Plan of Distribution.”

Exchange Agent J.P. Morgan Trust Company, National Association is serving as the exchange agent in connection with the exchange offer. The address and telephone and facsimile numbers of the exchange agent are listed under the heading “The Exchange Offer—Exchange Agent.”

Use of Proceeds We will not receive any proceeds from the issuance of exchange notes in the exchange offer.

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The Exchange Notes

The terms of the exchange notes and the outstanding notes are identical in all material respects, except:

• the exchange notes will have been registered under the Securities Act;

• the exchange notes will not contain transfer restrictions and registration rights that relate to the outstanding notes; and

• the exchange notes will not contain provisions relating to the payment of special interest to the holders of the outstanding notes under the circumstances related to the timing of the exchange offer.

When we refer to “notes” in this prospectus, we are referring to both the outstanding notes and the exchange notes. A brief description of the material terms of the exchange notes follows.

Securities Offered Up to $75 million of 6.05% Subordinated Notes due 2012.

Issuer Susquehanna Bancshares, Inc.

Maturity Date November 1, 2012.

Interest Payment Dates May 1 and November 1, commencing on May 1, 2003.

Interest We will pay interest on the notes semi-annually on May 1 and November 1 of each year, beginning May 1, 2003, at a rate of 6.05% per annum.

Ranking The notes will be:

• unsecured obligations of Susquehanna;

• subordinated in right of payment to all of Susquehanna’s senior indebtedness;

• effectively subordinated to all existing and future debt and all other liabilities of Susquehanna’s subsidiaries; and

• equal in right of payment to all of Susquehanna’s other subordinated indebtedness.

As of September 30, 2002, we had the following obligations that are senior to the notes:

• $55.0 million of outstanding senior indebtedness, which consists of $35.0 million of our 6.30% Senior Notes and $20.0 million of certain term notes of our subsidiaries that are guaranteed by us;

• $43.4 million in obligations under outstanding letters of credit issued at the holding company level; and

• approximately $4.9 billion in the aggregate of other debt and liabilities of our subsidiaries, including deposit liabilities, letters of credit and similar liabilities.

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In addition, as of September 30, 2002, we had $50.0 million of outstanding subordinated indebtedness that will rank equally with the notes. See “Description of Notes—Subordination.”

Redemption The notes are not redeemable prior to maturity.

Risk Factors

For a discussion of certain factors that you should consider in connection with your participation in the exchange offer, see “Risk Factors.”

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RISK FACTORS

Before tendering outstanding notes in the exchange offer, you should carefully review the information contained elsewhere in this prospectus and should particularly consider the following discussion on the risks involved.

Risks Related to the Exchange Offer

You may have difficulty selling the outstanding notes you do not exchange.

If you do not exchange your outstanding notes for exchange notes in the exchange offer, you will continue to be subject to the restrictions on transfer of your outstanding notes as described in the legend on the global security representing the outstanding notes. There are restrictions on transfer of your outstanding notes because we issued the outstanding notes under an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. In general, you may only offer or sell the outstanding notes if they are registered under the Securities Act and applicable state securities laws or offered and sold under an exemption from, or in a transaction not subject to, these requirements. We do not intend to register any outstanding notes not tendered in the exchange offer and, upon consummation of the exchange offer, you will not be entitled to any rights to have your untendered outstanding notes registered under the Securities Act. In addition, the trading market, if any, for the remaining outstanding notes will be adversely affected depending on the extent to which outstanding notes are tendered and accepted in the exchange offer.

You may have difficulty selling the exchange notes because there is no existing trading market for them.

The exchange notes are being offered to the holders of the outstanding notes, which were issued on November 4, 2002 to a small number of institutional investors. There is no existing trading market for the exchange notes. We do not intend to apply for listing or quotation of the exchange notes on any exchange and no one has informed us that they intend to make a market in the exchange notes. Consequently, we do not know the extent to which investor interest will lead to the development of a trading market or how liquid that market might be. As a result, the market price of the exchange notes could be adversely affected.

Broker-dealers may need to comply with the registration and prospectus delivery requirements of the Securities Act.

Any broker-dealer that (1) exchanges its outstanding notes in the exchange offer for the purpose of participating in a distribution of the exchange notes or (2) resells exchange notes that were received by it for its own account in the exchange offer may be deemed to have received restricted notes and may be required to comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction by that broker-dealer. Any profit on the resale of the exchange notes and any commission or concessions received by a broker-dealer may be deemed to be underwriting compensation under the Securities Act.

You may not receive exchange notes in the exchange offer if the exchange offer procedure is not followed.

We will issue the exchange notes in exchange for your outstanding notes only if you tender the outstanding notes and deliver a properly completed and duly executed letter of transmittal and other required documents before expiration of the exchange offer. You should allow sufficient time to ensure timely delivery of the necessary documents. Neither the exchange agent nor we are under any duty to give notification of defects or irregularities with respect to the tenders of outstanding notes for exchange. If you are the beneficial holder of outstanding notes that are registered in the name of your broker, dealer, commercial bank, trust company or other nominee, and you wish to tender in the exchange offer, you should promptly contact the person in whose name your outstanding notes are registered and instruct that person to tender on your behalf.

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Risks Relating to Our Business

We may not be able to continue to grow our business, which may adversely impact our results of operations.

Our total assets have grown from approximately $3.5 billion at December 31 , 1997, prior to restatements for pooling of interests, to approximately $5.4 billion at September 30, 2002. Our business strategy calls for continued expansion. Our ability to continue to grow depends, in part, upon our ability to open new branch locations, successfully attract deposits, identify favorable loan and investment opportunities and acquire other bank and non-bank entities. In the event that we do not continue to grow, our results of operations could be adversely impacted.

Our ability to grow successfully will depend on whether we can continue to fund this growth while maintaining cost controls and asset quality, as well as on factors beyond our control, such as national and regional economic conditions and interest rate trends. If we are not able to control costs and maintain asset quality, such growth could adversely impact our earnings and financial condition.

Loss of certain of our key officers would adversely affect our business.

Our future operating results are substantially dependent on the continued service of William J. Reuter, our Chairman, President and Chief Executive Officer, Gregory A. Duncan, our Executive Vice President and Chief Operating Officer and Drew K. Hostetter, our Executive Vice President and Chief Financial Officer. Certain of our operations are also dependent upon certain executives of our subsidiaries, for example Michael J. Wimmer, Chairman and Chief Executive Officer of Boston Service Company, Inc. (t/a Hann Financial Services Corp.). The loss of the services of Mr. Reuter, Mr. Duncan, Mr. Hostetter or Mr. Wimmer would have a negative impact on our business because of their expertise and years of industry experience. In addition, the loss of the services of Mr. Reuter would have a negative impact on our business because of his business development skills and community involvement and the loss of Mr. Wimmer would have a negative effect on our automobile financing operations. We do not maintain key man life insurance on any of Mr. Reuter, Mr. Duncan, Mr. Hostetter or Mr. Wimmer.

Our exposure to credit risk, because we focus on commercial lending, could adversely affect our earnings and financial condition.

There are certain risks inherent in making loans. These risks include interest rate changes over the time period in which loans may be repaid, risks resulting from changes in the economy, risks inherent in dealing with borrowers and, in the case of a loan backed by collateral, risks resulting from uncertainties about the future value of the collateral.

Commercial loans, including commercial real estate, are generally viewed as having a higher credit risk than residential real estate or consumer loans because they usually involve larger loan balances to a single borrower and are more susceptible to a risk of default during an economic downturn. Our consolidated commercial lending operations include commercial, financial and agricultural lending, real estate construction lending and commercial mortgage lending, which comprised 12.6%, 11.2% and 25.4% of our total loan portfolio, respectively, as of September 30, 2002. Construction financing typically involves a higher degree of credit risk than commercial mortgage lending. Risk of loss on a construction loan depends largely on the accuracy of the initial estimate of the property’s value at completion of construction compared to the estimated cost (including interest) of construction. If the estimated property value proves to be inaccurate, the loan may be inadequately collateralized.

Because our loan portfolio contains a significant number of commercial real estate loans, commercial and industrial loans and construction loans, the deterioration of these loans may cause a significant increase in nonperforming loans. An increase in nonperforming loans could cause an increase in loan charge-offs and a

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corresponding increase in the provision for loan losses, which could adversely impact our financial condition and results of operations.

If our allowance for loan and lease losses is not sufficient to cover actual loan and lease losses, our earnings would decrease.

In an attempt to mitigate any loan and lease losses that we may incur, we maintain an allowance for loan and lease losses based on, among other things, national and regional economic conditions, historical loss experience and delinquency trends. However, we cannot predict loan and lease losses with certainty and we cannot assure you that charge-offs in future periods will not exceed the allowance for loan and lease losses. If charge-offs exceed our allowance, our earnings would decrease. In addition, regulatory agencies, as an integral part of their examination process, review our allowance for loan and lease losses and may require additions to the allowance based on their judgment about information available to them at the time of their examination. Factors that require an increase in our allowance for loan and lease losses could reduce our earnings.

Changes in interest rates may adversely affect our earnings and financial condition.

Our net income depends primarily upon our net interest income. Net interest income is income that remains after deducting, from total income generated by earning assets, the interest expense attributable to the acquisition of the funds required to support earning assets. Income from earning assets includes income from loans, investment securities and short-term investments. The amount of interest income is dependent on many factors including the volume of earning assets, the general level of interest rates, the dynamics of the change in interest rates and the levels of nonperforming loans. The cost of funds varies with the amount of funds necessary to support earning assets, the rates paid to attract and hold deposits, rates paid on borrowed funds and the levels of non-interest-bearing demand deposits and equity capital. Due to declining interest rates our net interest margin decreased to 3.93% for the quarter ended September 30, 2002, compared to a net interest margin of 4.08% for the quarter ended June 30, 2002, and our net interest income, on a taxable equivalent basis, decreased from $48.4 million to $47.8 million.

Different types of assets and liabilities may react differently, and at different times, to changes in market interest rates. We expect that we will periodically experience “gaps” in the interest rate sensitivities of our assets and liabilities. That means either our interest-bearing liabilities will be more sensitive to changes in market interest rates than our interest earning assets, or vice versa. When interest-bearing liabilities mature or reprice more quickly than interest-earning assets, an increase in market rates of interest could reduce our net interest income. Likewise, when interest-earning assets mature or reprice more quickly than interest-bearing liabilities, falling interest rates could reduce our net interest income. We are unable to predict changes in market interest rates, which are affected by many factors beyond our control, including inflation, recession, unemployment, money supply, domestic and international events and changes in the United States and other financial markets. As an asset sensitive financial institution (assets reprice faster than liabilities), further interest rate declines could continue to decrease our net interest margin and net interest income.

We attempt to manage risk from changes in market interest rates, in part, by controlling the mix of interest rate sensitive assets and interest rate sensitive liabilities. However, interest rate risk management techniques are not exact. A rapid increase or decrease in interest rates could adversely affect our results of operations and financial performance.

Adverse economic and business conditions in our market area may have an adverse effect on our earnings.

Substantially all of our business is with customers located within Pennsylvania, Maryland and New Jersey. Generally, we make loans to small to mid-sized businesses whose success depends on the regional economy. These businesses generally have fewer financial resources in terms of capital or borrowing capacity than larger entities. Adverse economic and business conditions in our market area could reduce our growth rate, affect our

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borrowers ability to repay their loans and, consequently, adversely affect our financial condition and performance. For example, a loss of market confidence in vehicle leasing paper could have a negative effect on our vehicle leasing subsidiary’s ability to fund future vehicle lease originations. If this should occur, our vehicle leasing subsidiary’s revenues and earnings would be adversely affected. Further, we place substantial reliance on real estate as collateral for our loan portfolio. A sharp downturn in real estate values in our market area could leave many of our loans inadequately collateralized. If we are required to liquidate the collateral securing a loan to satisfy the debt during a period of reduced real estate values, our earnings could be adversely affected.

Competition from other financial institutions in originating loans, attracting deposits and providing various financial services may adversely affect our profitability.

Our banking subsidiaries face substantial competition in originating loans, both commercial and consumer. This competition comes principally from other banks, savings institutions, mortgage banking companies and other lenders. Many of our competitors enjoy advantages, including greater financial resources and higher lending limits, a wider geographic presence, more accessible branch office locations, the ability to offer a wider array of services or more favorable pricing alternatives, as well as lower origination and operating costs. This competition could reduce our net income by decreasing the number and size of loans that our banking subsidiaries originate and the interest rates they may charge on these loans.

In attracting business and consumer deposits, our banking subsidiaries face substantial competition from other insured depository institutions such as banks, savings institutions and credit unions, as well as institutions offering uninsured investment alternatives, including money market funds. Many of our competitors enjoy advantages, including greater financial resources, more aggressive marketing campaigns and better brand recognition and more branch locations. These competitors may offer higher interest rates than we do, which could decrease the deposits that we attract or require us to increase our rates to retain existing deposits or attract new deposits. Increased deposit competition could adversely affect our ability to generate the funds necessary for lending operations which could increase our cost of funds.

Our banking and non-banking subsidiaries also compete with non-bank providers of financial services, such as brokerage firms, consumer finance companies, credit unions, insurance companies and governmental organizations which may offer more favorable terms. Some of our non-bank competitors are not subject to the same extensive regulations that govern our banking operations. As a result, such non-bank competitors may have advantages over our banking and non-banking subsidiaries in providing certain products and services. This competition may reduce or limit our margins on banking, and non-banking services, reduce our market share and adversely affect our earnings and financial condition.

We continually encounter technological change, and we may have fewer resources than many of our competitors to continue to invest in technological improvements, which could reduce our ability to effectively compete.

The financial services industry is undergoing rapid technological changes with frequent introduction of new technology-driven products and services. In addition to better serving customers, the effective use of technology increases efficiency and enables financial service institutions to reduce costs. Our future success will depend, in part, upon our ability to address the needs of our customers by using technology to provide products and services to enhance customer convenience, as well as to create additional efficiencies in our operations. Many of our competitors have substantially greater resources to invest in technological improvements. We cannot assure you that we will be able to effectively implement new technology-driven products and services, which could reduce our ability to effectively compete.

Government regulation significantly affects our business.

The banking industry is heavily regulated, and such regulations are intended primarily for the protection of depositors and the federal deposit insurance funds, not shareholders or holders of subordinated debt. As a

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financial holding company, we are subject to regulation by the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”). Our eight bank subsidiaries, as of September 30, 2002, each have their own federal regulator (the Federal Deposit Insurance Corporation or the Federal Reserve Board) and are also subject to regulation by the state banking departments of the state in which they are chartered. These regulations affect lending practices, capital structure, investment practices, dividend policy and growth, which are described in more detail under the section of this prospectus entitled “Regulation and Supervision.” In addition, we have non-bank operating subsidiaries from which we derive income. Several of these non-bank subsidiaries engage in providing investment management and insurance brokerage services, which industries are also heavily regulated on both a state and federal level. In addition, changes in laws, regulations and regulatory practices affecting the financial service industry may limit the manner in which we may conduct our business. Such changes may adversely affect us, including our ability to offer new products and services, obtain financing, attract deposits, make loans and leases and achieve satisfactory spreads, and may also result in the imposition of additional costs on us. As a public company, we are also subject to the corporate governance standards set forth in the recently enacted Sarbanes-Oxley Act of 2002, as well as any applicable rules or regulations promulgated by the SEC or The Nasdaq Stock Market, Inc. Complying with these standards, rules and regulations may impose administrative costs and burdens on us.

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SELECTED HISTORICAL FINANCIAL DATA

The following table sets forth selected historical financial data for Susquehanna and its consolidated subsidiaries as of and for the nine-month periods ended September 30, 2002 and 2001 and as of and for each of the years in the five-year period ended December 31, 2001. The financial information as of and for the nine-month periods ended September 30, 2002 and 2001 has not been audited and in the opinion of management reflects all adjustments (consisting of only normal recurring adjustments) necessary for the fair presentation of such information. Results for the nine month period ended September 30, 2002 are not necessarily indicative of the operating results that may be expected for any subsequent interim period or for the year ended December 31, 2002 as a whole. All of the consolidated financial information presented below has been derived from and is qualified in its entirety by reference to the more detailed information and financial statements included in the documents incorporated by reference in this prospectus. See “Where You Can Find More Information.”

	As of / For the Nine Months Ended September 30,						As of / For the Year Ended December 31,
	2002			2001			2001			2000			1999			1998			1997
	(dollars in thousands except per share)
Balance Sheet Data:
Assets	$	5,425,618		$	5,045,950		$	5,051,092		$	4,792,856		$	4,804,997		$	4,589,287		$	4,130,138
Loans and leases, net of unearned income		3,756,659			3,532,316			3,519,498			3,433,610			3,469,661			3,248,818			3,072,685
Investment securities		1,085,816			1,033,034			1,021,091			898,604			912,048			951,744			723,745
Deposits		3,765,090			3,311,832			3,484,331			3,249,013			3,180,520			3,216,879			3,041,466
Borrowings		984,919			1,146,858			1,016,845			1,030,812			1,157,025			915,676			652,926
Stockholders’ equity		528,058			489,797			493,536			453,437			415,022			412,587			382,772
Income Statement Data:
Net interest income		139,371			127,375			172,244			164,952			161,560			159,349			155,882
Provisions for loan and lease losses		7,079			5,419			7,310			3,726			11,203			5,780			4,806
Other income		70,485			62,506			84,166			74,010			53,459			39,106			31,126
Other expense		135,945			124,548			167,763			155,581			141,788			124,014			116,485
Income before taxes		66,832			59,914			81,337			79,655			62,028			68,661			65,717
Net income		46,314			41,041			55,716			54,962			43,523			46,804			44,770
Diluted earnings per share		1.16			1.04			1.41			1.40			1.10			1.18			1.15
Earnings Performance Ratios(1):
Return on average total assets		1.19	%		1.14	%		1.14	%		1.15	%		0.94	%		1.06	%		1.14	%
Return on average stockholders’ equity		12.17			11.75			11.78			13.01			10.45			11.75			12.43
Net interest margin		3.98			3.91			3.91			3.83			3.82			3.98			4.34
Asset Quality Ratios(1):
Net loans and leases charged off to average loans and leases		0.19	%		0.16	%		0.21	%		0.23	%		0.18	%		0.18	%		0.19	%
Non-performing assets to period-end loans and leases and other real estate owned		0.58			0.65			0.55			0.60			0.79			0.81			0.92
Allowance for loan and lease losses to non-performing loans and leases		211			200			243			225			195			182			166
Allowance for loan and lease losses to total loans and leases		1.05			1.09			1.07			1.08			1.28			1.21			1.28
Capital Ratios:
Average stockholders’ equity to average assets		9.76	%		9.70	%		9.72	%		8.85	%		8.95	%		9.05	%		9.17	%
Leverage ratio		8.56			8.74			8.68			8.82			9.11			8.83			8.83
Tier 1 risk-based capital ratio		10.60			11.02			10.81			11.18			12.70			12.24			12.11
Total risk-based capital ratio		11.89			12.79			12.53			13.28			15.56			15.28			15.33

(1) Returns, net interest margin and charge-off data for the nine-month periods ended September 30, 2002 and 2001 are annualized.

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CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES

Our ratios of earnings to fixed charges were as follows for the nine months ended September 30, 2002 and 2001 and for each of the years in the five-year period ended December 31, 2001:

	As of / For the Nine Months Ended September 30,		As of / For the Year Ended December 31,
	2002	2001	2001	2000	1999	1998	1997
Earnings to Fixed Charges:
Excluding Interest on Deposits	2.8x	2.3x	2.3x	2.1x	1.9x	2.1x	2.6x
Including Interest on Deposits	1.7x	1.5x	1.5x	1.4x	1.4x	1.4x	1.4x

For purposes of computing the above ratios, earnings represent net income from continuing operations plus total taxes based on income and fixed charges. Fixed charges, excluding interest on deposits, include interest expense (other than on deposits), one third (the proportion deemed representative of the interest factor) of rents, net of income from subleases and capitalized interest. Fixed charges, including interest on deposits, include all interest expense, one third (the proportion deemed representative of the interest factor) of rents, net of income from subleases and capitalized interest.

USE OF PROCEEDS

We will not receive proceeds from the issuance of the exchange notes offered hereby. In consideration for issuing the exchange notes in exchange for outstanding notes as described in this prospectus, we will receive outstanding notes of like principal amount. The outstanding notes surrendered in exchange for the exchange notes will be retired and canceled.

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CAPITALIZATION

The following table sets forth our consolidated capitalization as of September 30, 2002 on both an actual and as adjusted basis. The figures in the column entitled “As Adjusted” give effect to the offering and sale of the outstanding notes and the application of the net proceeds to the repayment of certain of our indebtedness maturing and to be repaid in February and July 2003, as described in “Use of Proceeds,” as if such transactions had occurred on September 30, 2002. The information should be read together with the financial information incorporated by reference in this prospectus. See “Where You Can Find More Information.” Other than as set forth in this prospectus, including the documents incorporated by reference herein, there has been no material change in our capitalization since September 30, 2002.

	As of September 30, 2002
	Actual		As Adjusted
	(dollars in thousands)
Long Term Debt:
Subsidiaries(1):
Term notes due July, 2003	$	10,000	$	—
Term notes due July, 2003		5,000		—
Term notes due July, 2004		5,000		5,000
Parent:
6.30% Senior notes due February, 2003		35,000		—
9.00% Subordinated notes due February, 2005		50,000		50,000
6.05% Subordinated notes due November, 2012		—		75,000
Total long-term debt	$	105,000	$	130,000
Stockholders’ Equity:
Preferred stock, without par value; 5,000,000 shares authorized; no shares issued or outstanding		—		—
Common stock; $2.00 par value; 100,000,000 authorized; 39,614,548 shares outstanding		79,229		79,229
Surplus		62,164		62,164
Retained earnings		368,158		368,158
Accumulated other comprehensive income, net of taxes		18,507		18,507
Total stockholders’ equity	$	528,058	$	528,058
Total long-term debt and stockholders’ equity	$	633,058	$	658,058
Capital Ratios:
Leverage ratio		8.56		8.56
Tier 1 risk-based capital ratio		10.60		10.59
Total risk-based capital ratio		11.89		13.65

(1) Guaranteed by parent.

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REGULATION AND SUPERVISION

General

We are a financial holding company registered with the Federal Reserve Board and are subject to regulation under the Bank Holding Company Act of 1956, as amended. The Bank Holding Company Act requires prior approval of an acquisition of assets or of ownership or control of voting shares of any bank if the acquisition would give us more than 5% of the voting shares of any bank or bank holding company. It also imposes restrictions, summarized below, on the assets or voting shares of non-banking companies that we may acquire.

Our insured depository institution subsidiaries are also subject to regulation and supervision. Farmers First Bank, Citizens Bank of Southern Pennsylvania, First Susquehanna Bank & Trust, First American Bank of Pennsylvania and WNB Bank are all Pennsylvania state banks, subject to regulation and periodic examination by the Pennsylvania Department of Banking and the FDIC. Equity Bank is a New Jersey state member bank subject to regulation and periodic examination by the New Jersey Department of Banking and Insurance and the Federal Reserve Board. Farmers & Merchants Bank and Trust and Susquehanna Bank are both Maryland state banks subject to regulation and periodic examination by the Division of Financial Regulation of the Maryland Department of Labor, Licensing and Regulation, or the Maryland DFR, and the FDIC. Susquehanna Trust & Investment Company is a Pennsylvania non-depository trust company subject to regulation and periodic examination by the Pennsylvania Department of Banking. Because we are a financial holding company, all of our subsidiaries are subject to examination by the Federal Reserve Board, even if not otherwise regulated by the Federal Reserve Board.

Consistent with the requirements of the Bank Holding Company Act, our only lines of business consist of providing our customers with banking, trust and other financial services and products. These services include commercial banking through our eight subsidiary banks, trust services through Susquehanna Trust & Investment Company, consumer vehicle financing through Boston Service Company, Inc. (t/a Hann Financial Service Corp.), investment advisory services through Valley Forge Asset Management Corp. and property and casualty insurance brokerage services through The Addis Group, Inc. Of these activities, commercial banking activities accounted for 84% of our gross revenues in 2002 and 85% of our gross revenues in 2001.

Regulations governing Susquehanna and our subsidiary depository institutions restrict extensions of credit by such institutions to Susquehanna and, with some exceptions, the other Susquehanna affiliates. For these purposes, extensions of credit include loans and advances to and guarantees and letters of credit on behalf of Susquehanna and such affiliates. These regulations also restrict investments by our depository institution subsidiaries in the stock or other securities of Susquehanna and the covered affiliates, as well as the acceptance of such stock or other securities as collateral for loans to any borrower, whether or not related to Susquehanna.

Our insured depository institution subsidiaries are subject to comprehensive federal and state regulations dealing with a wide variety of subjects, including reserve requirements, loan limitations, restrictions as to interest rates on loans and deposits, restrictions as to dividend payments, requirements governing the establishment of branches and numerous other aspects of their operations. These regulations generally have been adopted to protect depositors and creditors rather than shareholders or holders of subordinated debt.

Payment of Dividends

Susquehanna is a legal entity separate and distinct from our subsidiaries. Our principal source of funds is dividends from our banking subsidiaries, and there are various legal and regulatory limitations under federal and state law on the extent to which banking subsidiaries can finance or otherwise supply funds to their holding companies. Under applicable banking statutes, at September 30, 2002, our banking subsidiaries could have declared additional dividends of approximately $16.9 million without further regulatory approval. Also, our non-bank subsidiaries had approximately $54.6 million which they could dividend to us without regulatory approval.

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Each of our banking subsidiaries is subject to dividend limits under the laws of the state in which it is chartered. Dividends from a Pennsylvania-chartered bank may be declared and paid only out of accumulated net earnings. Dividends from a New Jersey-chartered bank may only be paid if, following the payment of such dividend, the capital stock of the bank will be unimpaired, the bank will have a surplus of not less than 50% of its capital stock, and the payment of such dividend will not reduce the surplus of the bank. Cash dividends from a Maryland-chartered bank may be declared, after providing for due or accrued expenses, losses, interest and taxes, only from the bank’s undivided profits or with the prior approval of the Maryland DFR, its surplus in excess of its required capital stock. Stock dividends may be declared by a Maryland-chartered bank only if the bank’s surplus, after the increase in capital stock, is equal to at least 20% of the outstanding capital stock as increased.

In addition, Equity Bank is a member bank of the Federal Reserve System, subject to the limits of the Federal Reserve Board on dividends. The Federal Reserve Board allows a member bank to make dividends or other capital distributions in an amount not exceeding the current calendar year’s net income, plus retained net income of the preceding two years. Distributions in excess of this limit require prior approval of the Federal Reserve Board.

In addition, Federal Reserve Board policy provides that, as a matter of prudent banking, a financial holding company generally should not maintain a rate of cash dividends unless its net income available to common stockholders has been sufficient to fully fund the dividends, and the prospective rate of earnings retention appears to be consistent with the holding company’s capital needs, asset quality and overall financial condition.

Under federal law, a depository institution is prohibited from paying a dividend if the depository institution would thereafter be “undercapitalized” as determined by the federal bank regulatory agencies. The relevant federal regulatory agencies and the state regulatory agencies also have authority to prohibit a bank from engaging in what the agency determines to constitute an unsafe or unsound practice in conducting its business. The payment of dividends could, depending upon the financial condition of our bank subsidiaries, be deemed to constitute such an unsafe or unsound practice.

Capital Adequacy

Bank holding companies, under applicable risk-based capital requirements, must maintain a ratio of total capital to risk-weighted assets (including the asset equivalent of certain off-balance sheet activities such as acceptances and letters of credit) of not less than 8% (10% in order to be considered “well-capitalized”). At least 4% out of the total capital (6% to be well-capitalized) must be composed of common stock, retained earnings, noncumulative perpetual preferred stock and minority interests in the equity accounts of consolidated subsidiaries, after deducting goodwill and certain other intangibles (tier 1 capital). The remainder of total capital (tier 2 capital) may consist of mandatory convertible debt securities and a limited amount of subordinated debt, qualifying preferred stock and loan loss allowance.

As of September 30, 2002, our tier 1 capital and total capital (i.e., tier 1 capital plus tier 2 capital) ratios were 10.6% and 11.9%, respectively.

The Federal Reserve Board has also established minimum leverage ratio guidelines for bank holding companies. These guidelines mandate a minimum leverage ratio of tier 1 capital to adjusted quarterly average total assets less certain amounts (leverage amounts) equal to 3% for bank holding companies meeting certain criteria (including those having the highest regulatory rating). All other banking organizations are generally required to maintain a leverage ratio of at least 3% plus an additional cushion of at least 100 basis points and in some cases more. The Federal Reserve Board’s guidelines also provide that bank holding companies experiencing internal growth or making acquisitions are expected to maintain capital positions substantially above the minimum supervisory levels without significant reliance on intangible assets. Furthermore, the guidelines indicate that the Board will continue to consider a “tangible tier 1 leverage ratio” (i.e., after deducting all intangibles) in evaluating proposals for expansion or new activities. The Federal Reserve Board has not

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advised us of any specific minimum leverage ratio applicable to us. As of September 30, 2002, our leverage ratio was 8.6%.

Subordinated debt of the type we are issuing may be included in our tier 2 capital, up to an amount equal to 50% of our tier I capital. As of September 30, 2002, our tier 1 capital was approximately $450 million, meaning that the tier 2 ceiling on our subordinated debt is approximately $225 million.

Our subsidiary depository institutions are all subject to similar capital standards promulgated by their respective federal regulatory agencies. No such agency has advised any of our subsidiary institutions of any specific minimum leverage ratios applicable to them. As of September 30, 2002, each of our subsidiary depository institutions had tier 1 and total risk-based capital above 6% and 10%, respectively, and a tier 1 leverage ratio above 4%.

Source of Strength Doctrine

Under Federal Reserve Board policy, a bank holding company is expected to serve as a source of financial strength to each of its subsidiary banks and to stand prepared to commit resources to support each of them. There are not specific quantitative rules on the holding company’s potential liability. If one of our subsidiary banks were to encounter financial difficulty, the Federal Reserve Board could invoke the doctrine and require a capital contribution from us. In addition, and as a separate legal matter, a holding company is required to guarantee the capital plan of an undercapitalized subsidiary bank. See “Prompt Corrective Action” below.

Cross Guarantees

Our insured depository institution subsidiaries are also subject to cross-guaranty liability under federal law. This means that if one FDIC-insured depository institution subsidiary of a multi-institution bank holding company fails or requires FDIC assistance, the FDIC may assess “commonly controlled” depository institutions for the estimated losses suffered by the FDIC. Such liability could have a material adverse effect on the financial condition of any assessed subsidiary institution and on Susquehanna as the common parent. While the FDIC’s cross-guaranty claim is generally junior to the claims of depositors, holders of secured liabilities, general creditors and subordinated creditors, it is generally superior to the claims of shareholders and affiliates.

Prompt Corrective Action

The Federal Deposit Insurance Corporation Improvement Act of 1991, or FDICIA, requires federal regulators to take prompt corrective action against any undercapitalized institution. FDICIA establishes five capital categories: well-capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized. Well-capitalized institutions significantly exceed the required minimum level for each capital measure (currently, risk-based and leverage). Adequately capitalized institutions include depository institutions that meet the required minimum level for each capital measure. Undercapitalized institutions consist of those that fail to meet the required minimum level for one or more relevant capital measures. Significantly undercapitalized characterizes depository institutions with capital levels significantly below the minimum requirements. Critically undercapitalized refers to depository institutions with minimal capital and at serious risk for government seizure.

Under certain circumstances, a well-capitalized, adequately capitalized or undercapitalized institution may be treated as if the institution were in the next lower capital category. A depository institution is generally prohibited from making capital distributions, including paying dividends, or paying management fees to a holding company if the institution would thereafter be undercapitalized. Institutions that are adequately but not well-capitalized cannot accept, renew or roll over brokered deposits except with a waiver from the FDIC and are subject to restrictions on the interest rates that can be paid on such deposits. Undercapitalized institutions may not accept, renew or roll over brokered deposits.

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The banking regulatory agencies are permitted or, in certain cases, required to take certain actions with respect to institutions falling within one of the three undercapitalized categories. Depending on the level of an institution’s capital, the agency’s corrective powers include, among other things:

• prohibiting the payment of principal and interest on subordinated debt;

• prohibiting the holding company from making distributions without prior regulatory approval;

• placing limits on asset growth and restrictions on activities;

• placing additional restrictions on transactions with affiliates;

• restricting the interest rate the institution may pay on deposits;

• prohibiting the institution from accepting deposits from correspondent banks; and

• in the most severe cases, appointing a conservator or receiver for the institution.

A banking institution that is undercapitalized is required to submit a capital restoration plan, and such a plan will not be accepted unless, among other things, the banking institution’s holding company guarantees the plan up to a certain specified amount. Any such guarantee from a depository institution’s holding company is entitled to a priority of payment in bankruptcy. As of September 30, 2002, all of our depository institution subsidiaries exceeded the required capital ratios for classification as “well capitalized.”

Future Legislation

Various legislation is from time to time introduced in Congress and state legislatures with respect to the regulation of financial institutions. Such legislation may change banking statutes and our operating environment or that of our subsidiaries in substantial and unpredictable ways. We cannot determine the ultimate effect that potential legislation, if enacted, or implementing regulations, would have upon our financial condition or results of operations of our subsidiaries.

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THE EXCHANGE OFFER

Purpose and Effect of the Exchange Offer

In connection with the sale of the outstanding notes, we entered into a registration rights agreement with the initial purchasers of the outstanding notes, pursuant to which we agreed to file and to use our reasonable best efforts to cause to be declared effective by the SEC a registration statement with respect to the exchange of the outstanding notes for the exchange notes. We are making the exchange offer to fulfill our contractual obligations under that agreement. A copy of the registration rights agreement has been filed as an exhibit to the registration statement of which this prospectus is a part.

Pursuant to the exchange offer, we will issue the exchange notes in exchange for the outstanding notes. The form and terms of the exchange notes are the same as the form and terms of the outstanding notes, except that the exchange notes (1) will have been registered under the Securities Act and therefore will not be subject to certain restrictions on transfer applicable to the outstanding notes and (2) will not contain registration rights or provide for any increase in the interest rate related to the obligation to register. See “Description of Notes” for more information on the terms of the respective notes and the differences between them.

We are not making the exchange offer to, and will not accept tenders for exchange from, holders of outstanding notes in any jurisdiction in which the exchange offer or the acceptance thereof would not be in compliance with the outstanding notes or blue sky laws of such jurisdiction. Unless the context requires otherwise, the term “holder” with respect to the exchange offer means any person in whose name the outstanding notes are registered on our books or any other person who has obtained a properly completed bond power from the registered holder, or any person whose outstanding notes are held of record by The Depository Trust Company, or DTC, who desires to deliver such outstanding notes by book-entry transfer at DTC.

We make no recommendation to the holders of outstanding notes as to whether to tender or refrain from tendering all or any portion of their outstanding notes pursuant to the exchange offer. In addition, no one has been authorized to make any such recommendation. Holders of outstanding notes must make their own decision whether to tender pursuant to the exchange offer and, if so, the aggregate amount of outstanding notes to tender, after reading this prospectus and the letter of transmittal and consulting with their advisers, if any, based on their own financial position and requirements.

Terms of the Exchange

Upon the terms and conditions described in this prospectus and in the accompanying letter of transmittal, which together constitute the exchange offer, we will accept for exchange outstanding notes that are properly tendered at or before the expiration time and not withdrawn as permitted below. As of the date of this prospectus, $75 million aggregate principal amount of the outstanding notes is outstanding. This prospectus, together with the letter of transmittal, is first being sent on or about             to all holders of outstanding notes known to us. Outstanding notes tendered in the exchange offer must be in denominations of principal amount of $1,000 and any integral multiple thereof.

Our acceptance of the tender of outstanding notes by a tendering holder will form a binding agreement between the tendering holder and us upon the terms and subject to the conditions provided in this prospectus and in the accompanying letter of transmittal.

Expiration, Extension and Amendment

The expiration time of the exchange offer is 5:00 P.M., New York City time, on             . However, we may, in our sole discretion, extend the period of time for which the exchange offer is open and set a later expiration date. The term “expiration time” as used herein means the latest time and date to which we extend the exchange offer. If we decide to extend the exchange offer period, we will then delay acceptance of any outstanding notes

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by giving oral or written notice of an extension to the holders of outstanding notes as described below. During any extension period, all outstanding notes previously tendered will remain subject to the exchange offer and may be accepted for exchange by us. Any outstanding notes not accepted for exchange will be returned to the tendering holder after the expiration or termination of the exchange offer.

Our obligation to accept outstanding notes for exchange in the exchange offer is subject to the conditions described below under “—Conditions to the Exchange Offer.” We may decide to waive any of the conditions in our discretion. Furthermore, we reserve the right to amend or terminate the exchange offer, and not to accept for exchange any outstanding notes not previously accepted for exchange, upon the occurrence of any of the conditions of the exchange offer specified below under the same heading. We will give oral or written notice of any extension, amendment, non-acceptance or termination to the holders of the outstanding notes as promptly as practicable. If we materially change the terms of the exchange offer, we will resolicit tenders of the outstanding notes, file a post-effective amendment to the prospectus and provide notice to you. If the change is made less than five business days before the expiration of the exchange offer, we will extend the offer so that the you have at least five business days to tender or withdraw. We will notify you of any extension by means of a press release or other public announcement no later than 9:00 a.m., New York City time, on the first business day after the previously scheduled expiration time.

Procedures for Tendering

Valid Tender

Except as described below, a tendering holder must, prior to the expiration time, transmit to J.P. Morgan Trust Company, National Association, the exchange agent, at the address listed under the heading “—Exchange Agent”:

• a properly completed and duly executed letter of transmittal, including all other documents required by the letter of transmittal; or

• if notes are tendered in accordance with the book-entry procedures listed below, an agent’s message.

In addition, you must:

• deliver certificates, if any, for the outstanding notes to the exchange agent at or before the expiration time; or

• deliver a timely confirmation of book-entry transfer of the outstanding notes into the exchange agent’s account at DTC, the book-entry transfer facility, along with the letter of transmittal or an agent’s message; or

• comply with the guaranteed delivery procedures described below.

The term “agent’s message” means a message, transmitted by DTC to and received by the exchange agent and forming a part of a book-entry confirmation, that states that DTC has received an express acknowledgment that the tendering holder agrees to be bound by the letter of transmittal and that we may enforce the letter of transmittal against this holder.

If the letter of transmittal is signed by a person other than the registered holder of outstanding notes, the letter of transmittal must be accompanied by a written instrument of transfer or exchange in satisfactory form duly executed by the registered holder with the signature guaranteed by an eligible institution. The outstanding notes must be endorsed or accompanied by appropriate powers of attorney. In either case, the outstanding notes must be signed exactly as the name of any registered holder appears on the outstanding notes.

If the letter of transmittal or any outstanding notes or powers of attorney are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or

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representative capacity, these persons should so indicate when signing. Unless waived by us, proper evidence satisfactory to us of their authority to so act must be submitted.

By tendering, each holder will represent to us that, among other things, the exchange notes are being acquired in the ordinary course of business of the person receiving the exchange notes, whether or not that person is the holder and neither the holder nor the other person has any arrangement or understanding with any person to participate in the distribution of the exchange notes. In the case of a holder that is not a broker-dealer, that holder, by tendering, will also represent to us that the holder is not engaged in and does not intend to engage in a distribution of the exchange notes.

The method of delivery of outstanding notes, letters of transmittal and all other required documents is at your election and risk. If the delivery is by mail, we recommend that you use registered mail, properly insured, with return receipt requested. In all cases, you should allow sufficient time to assure timely delivery. You should not send letters of transmittal or outstanding notes to us.

If you are a beneficial owner whose outstanding notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee, and wish to tender, you should promptly instruct the registered holder to tender on your behalf. Any registered holder that is a participant in DTC’s book-entry transfer facility system may make book-entry delivery of the outstanding notes by causing DTC to transfer the outstanding notes into the exchange agent’s account.

Signature Guarantees

Signatures on a letter of transmittal or a notice of withdrawal must be guaranteed, unless the outstanding notes surrendered for exchange are tendered:

• by a registered holder of the outstanding notes who has not completed the box entitled “Special Issuance Instructions” or “Special Delivery Instructions” on the letter of transmittal, or

• for the account of an “eligible institution.”

If signatures on a letter of transmittal or a notice of withdrawal are required to be guaranteed, the guarantees must be by an “eligible institution.” An “eligible institution” is a financial institution, including most banks, savings and loan associations and brokerage houses, that is a participant in the Securities Transfer Agents Medallion Program, the New York Stock Exchange Medallion Signature Program or the Stock Exchanges Medallion Program.

Book-Entry Transfer

The exchange agent will make a request to establish an account for the outstanding notes at DTC for purposes of the exchange offer within two business days after the date of this prospectus. Any financial institution that is a participant in DTC’s systems must make book-entry delivery of outstanding notes by causing DTC to transfer those outstanding notes into the exchange agent’s account at DTC in accordance with DTC’s procedure for transfer. The participant should transmit its acceptance to DTC at or prior to the expiration time or comply with the guaranteed delivery procedures described below. DTC will verify this acceptance, execute a book-entry transfer of the tendered outstanding notes into the exchange agent’s account at DTC and then send to the exchange agent confirmation of this book-entry transfer. The confirmation of this book-entry transfer will include an agent’s message confirming that DTC has received an express acknowledgment from this participant that this participant has received and agrees to be bound by the letter of transmittal and that we may enforce the letter of transmittal against this participant.

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Delivery of exchange notes issued in the exchange offer may be effected through book-entry transfer at DTC. However, the letter of transmittal or facsimile of it or an agent’s message, with any required signature guarantees and any other required documents, must:

• be transmitted to and received by the exchange agent at the address listed under “—Exchange Agent” at or prior to the expiration time; or

• comply with the guaranteed delivery procedures described below.

Delivery of documents to DTC in accordance with DTC’s procedures does not constitute delivery to the exchange agent.

Guaranteed Delivery

If a registered holder of outstanding notes desires to tender the outstanding notes, and the outstanding notes are not immediately available, or time will not permit the holder’s outstanding notes or other required documents to reach the exchange agent before the expiration time, or the procedure for book-entry transfer described above cannot be completed on a timely basis, a tender may nonetheless be made if:

• the tender is made through an eligible institution;

• prior to the expiration time, the exchange agent received from an eligible institution a properly completed and duly executed notice of guaranteed delivery, substantially in the form provided by us, by facsimile transmission, mail or hand delivery:

• stating the name and address of the holder of outstanding notes and the amount of outstanding notes tendered,

• stating that the tender is being made, and

• guaranteeing that within three New York Stock Exchange trading days after the expiration time, the certificates for all physically tendered outstanding notes, in proper form for transfer, or a book-entry confirmation, as the case may be, and a properly completed and duly executed letter of transmittal, or an agent’s message, and any other documents required by the letter of transmittal will be deposited by the eligible institution with the exchange agent; and

• the certificates for all physically tendered outstanding notes, in proper form for transfer, or a book-entry confirmation, as the case may be, and a properly completed and duly executed letter of transmittal, or an agent’s message, and all other documents required by the letter of transmittal, are received by the exchange agent within three New York Stock Exchange trading days after the expiration time.

Determination of Validity

We will determine in our sole discretion all questions as to the validity, form and eligibility of outstanding notes tendered for exchange. This discretion extends to the determination of all questions concerning the timing of receipts and acceptance of tenders. These determinations will be final and binding. We reserve the right to reject any particular outstanding notes not properly tendered or of which our acceptance might, in our judgment or our counsel’s judgment, be unlawful. We also reserve the right to waive any defects or irregularities or conditions of the exchange offer as to any particular outstanding notes either before or after the expiration time, including the right to waive the ineligibility of any tendering holder. Our interpretation of the terms and conditions of the exchange offer as to any particular outstanding notes either before or after the expiration time, including the letter of transmittal and the instructions to the letter of transmittal, shall be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of outstanding notes must be cured within a reasonable period of time.

None of us, the exchange agent or any other person will be under any duty to give notification of any defect or irregularity in any tender of outstanding notes. Moreover, none of us, the exchange agent or any other person will incur any liability for failing to give notification of any defect or irregularity.

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Acceptance of Outstanding Notes for Exchange; Issuance of Exchange Notes

Upon the terms and subject to the conditions of the exchange offer, we will accept, promptly after the expiration time, all outstanding notes properly tendered. We will issue the exchange notes promptly after acceptance of the outstanding notes. For purposes of the exchange offer, we will be deemed to have accepted properly tendered outstanding notes for exchange when, as and if we have given oral or written notice to the exchange agent, with prompt written confirmation of any oral notice.

In all cases, issuance of exchange notes for outstanding notes will be made only after timely receipt by the exchange agent of:

• certificates for the outstanding notes, or a timely book-entry confirmation of the outstanding notes, into the exchange agent’s account at the book-entry transfer facility;

• a properly completed and duly executed letter of transmittal or an agent’s message; and

• all other required documents.

Unaccepted or non-exchanged outstanding notes will be returned without expense to the tendering holder of the outstanding notes. In the case of outstanding notes tendered by book-entry transfer in accordance with the book-entry procedures described above, the non-exchanged outstanding notes will be credited to an account maintained with DTC as promptly as practicable after the expiration or termination of the exchange offer. For each outstanding note accepted for exchange, the holder of the outstanding note will receive an exchange note having a principal amount equal to that of the surrendered outstanding note.

Interest Payments on the Exchange Notes

The exchange notes will bear interest from the most recent date to which interest has been paid on the outstanding notes exchanged therefor or, if no interest has been paid on such outstanding notes, from November 4, 2002. Accordingly, registered holders of exchange notes on the relevant record date for the first interest payment date following the consummation of the exchange offer will receive interest accruing from the most recent date on which interest has been paid or, if no interest has been paid, from November 4, 2002. Outstanding notes accepted for exchange will cease to accrue interest from and after the date of consummation of the exchange offer. Holders of outstanding notes whose outstanding notes are accepted for exchange will not receive any payment in respect of accrued interest on such outstanding notes otherwise payable on any interest payment date the record date for which occurs on or after consummation of the exchange offer.

Withdrawal Rights

Tenders of outstanding notes may be withdrawn at any time prior to the close of business, New York City time, on the last business day before the expiration date of the exchange offer.

For a withdrawal to be effective, the exchange agent must receive a written notice of withdrawal at the address or, in the case of eligible institutions, at the facsimile number, indicated under “—Exchange Agent” prior to the close of business, New York City time, on the last business day before the expiration date of the exchange offer. Any notice of withdrawal must:

• specify the name of the person, referred to as the depositor, having tendered the outstanding notes to be withdrawn;

• identify the outstanding notes to be withdrawn, including the certificate number or numbers and principal amount of the outstanding notes;

• contain a statement that the holder is withdrawing its election to have the outstanding notes exchanged;

• be signed by the holder in the same manner as the original signature on the letter of transmittal by which the outstanding notes were tendered, including any required signature guarantees, or be accompanied by documents of transfer to have the trustee with respect to the outstanding notes register the transfer of the outstanding notes in the name of the person withdrawing the tender; and

• specify the name in which the outstanding notes are registered, if different from that of the depositor.

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If certificates for outstanding notes have been delivered or otherwise identified to the exchange agent, then, prior to the release of these certificates the withdrawing holder must also submit the serial numbers of the particular certificates to be withdrawn and signed notice of withdrawal with signatures guaranteed by an eligible institution, unless this holder is an eligible institution. If outstanding notes have been tendered in accordance with the procedure for book-entry transfer described above, any notice of withdrawal must specify the name and number of the account at the book-entry transfer facility to be credited with the withdrawn outstanding notes.

Any outstanding notes properly withdrawn will be deemed not to have been validly tendered for exchange. Exchange notes will not be issued in exchange unless the outstanding notes so withdrawn are validly re-tendered. Properly withdrawn outstanding notes may be re-tendered by following the procedures described under “—Procedures for Tendering” above at any time at or before the expiration time.

We will determine all questions as to the validity, form and eligibility, including time of receipt, of notices of withdrawal.

Conditions to the Exchange Offer

Notwithstanding any other provisions of the exchange offer, or any extension of the exchange offer, we will not be required to accept for exchange, or to exchange, any outstanding notes for any exchange notes, and, as described below, may terminate the exchange offer, whether or not any outstanding notes have been accepted for exchange, or may waive any of the conditions to or amend the exchange offer, if any of the following conditions has occurred or exists:

• the exchange offer, or the making of an exchange by a holder of outstanding notes, violates any applicable law or any applicable interpretation of the staff of the SEC;

• any action or proceeding shall have been instituted or threatened in any court or by or before any governmental agency with respect to the exchange offer which, in our judgment, would reasonably be expected to impair our ability to proceed with the exchange offer; and

• the holders of the outstanding notes do not tender their outstanding notes in accordance with the exchange offer.

If we determine in our sole discretion that either of the foregoing events or conditions has occurred or exists, we may, subject to applicable law, terminate the exchange offer, whether or not any outstanding notes have been accepted for exchange, or may waive either such condition or otherwise amend the terms of the exchange offer in any respect. See “—Expiration, Extension and Amendment” above.

Exchange Agent

We have appointed J.P. Morgan Trust Company, National Association as the exchange agent for the exchange offer. Delivery of the letters of transmittal and any other required documents should be directed to the exchange agent as follows:

J.P. Morgan Trust Company, National Association, as Exchange Agent

By Registered or Certified Mail:	By Overnight Courier:	By Hand:	By Facsimile:
			(214) 468-6494
J.P. Morgan Trust Company,	J.P. Morgan Trust Company	J.P. Morgan Chase Bank,	Attn: Frank Ivins
National Association	National Association	New York Window
2001 Bryan Street, 9th Floor	2001 Bryan Street, 9th Floor	4 New York Plaza	Confirm by
Dallas, TX 75201	Dallas, TX 75201	New York, NY 10004	Telephone:
Attn: Frank Ivins	Attn: Frank Ivins	Attn: Frank Ivins	(214) 468-6464

For Information Call: 1-800-275-2048

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Delivery of the letter of transmittal to an address other than as set forth above or transmission of such letter of transmittal via facsimile other than as set forth above does not constitute a valid delivery of such letter of transmittal.

Fees and Expenses

The solicitation is being made by mail by J.P. Morgan Trust Company, National Association, as exchange agent. We will pay the exchange agent customary fees for its services, reimburse the exchange agent for its reasonable out-of-pocket expenses incurred in connection with the provision of these services and pay other registration expenses, including fees and expenses of the trustee under the indenture relating to the exchange notes, filing fees, blue sky fees and printing and distribution expenses.

Transfer Taxes

Holders who tender their outstanding notes for exchange will not be obligated to pay any transfer taxes on the exchange. If, however, exchange notes are to be delivered to, or are to be issued in the name of, any person other than the registered holder of the outstanding notes tendered, or if a transfer tax is imposed for any reason other than the exchange of outstanding notes in connection with the exchange offer, then the amount of any such transfer taxes (whether imposed on the registered holder or any other persons) will be payable by the tendering holder. If satisfactory evidence of payment of such taxes or exemption therefrom is not submitted with the letter of transmittal, the amount of such transfer taxes will be billed directly to such tendering holder.

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DESCRIPTION OF NOTES

In this “Description of Notes,” unless otherwise indicated, “Susquehanna,” “we,” “us,” and “our” refer only to Susquehanna Bancshares Inc. and not to any of its subsidiaries. When we refer to “notes,” we are referring collectively to the outstanding notes and the exchange notes.

General

The terms of the exchange notes and the outstanding notes are identical in all material respects, except:

• the exchange notes will have been registered under the Securities Act;

• the exchange notes will not contain transfer restrictions and registration rights that relate to the outstanding notes; and

• the exchange notes will not contain provisions relating to the payment of special interest to the holders of the outstanding notes under the circumstances related to the timing of the exchange offer.

We issued the outstanding notes and will issue the exchange notes under an indenture dated as of November 4, 2002, between us and J.P. Morgan Trust Company, National Association, as trustee, as the same may be amended or supplemented from time to time. By its terms the indenture incorporated certain provisions of the Trust Indenture Act of 1939, as amended, as in effect on the date of the indenture. We urge you to read the indenture because it, and not this description, defines your rights as a holder of the notes.

The following describes the general terms and provisions of the notes. The following description of the notes is not complete and is subject to, and is qualified in its entirety by reference to, all the provisions of the indenture.

The outstanding notes and the exchange notes each will constitute separate series of debt securities to be issued under the indenture. The exchange notes will be issued only in fully registered form without coupons, in denominations of $1,000 and integral multiples of $1,000 in excess thereof. We do not intend to apply for listing of the notes on any securities exchange or include them in any automated quotation system. Payment of the full principal amount of the notes will be due on November 1, 2012. The notes are obligations of ours and will rank junior to our secured obligations and senior indebtedness (as defined below), and equally with our other subordinated indebtedness, including our 9.00% Subordinated Notes due 2005, or the 1995 notes. The notes are not deposits or other obligations of a bank or savings association and are not insured or guaranteed by the FDIC or any other governmental agency.

We are a financial holding company and we conduct substantially all of our operations through our subsidiaries. As a result, our ability to make payments on the notes will depend primarily upon the receipt of dividends and other distributions from our subsidiaries. There are various regulatory restrictions on the ability of our subsidiary banks to pay dividends or make other payments to us. See “Regulation and Supervision.” In addition, our right to participate in any distribution of assets of any of our subsidiaries upon the subsidiary’s liquidation or otherwise, and thus your ability as a holder of the notes to benefit indirectly from such distribution, will be subject to the prior claims of creditors of that subsidiary (including, in the case of our subsidiary banks, their depositors), except to the extent that we are a creditor of such subsidiary with claims that are recognized. As a result, the notes effectively will be subordinated to all existing and future liabilities and obligations of our subsidiaries, including deposit liabilities.

Interest

The notes will bear interest at a fixed rate of 6.05% per annum beginning on May 1, 2003, through but excluding their maturity date, which is November 1 , 2012. We will pay interest semi-annually on May 1 and

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November 1 of each year, beginning May 1, 2003 . All payments of interest will be made to the persons in whose names the notes are registered on the 15th calendar day prior to the interest payment date, whether or not such day is a business day. Interest on the notes at maturity will be payable to the persons to whom principal is payable. A “business day” means any day other than a Saturday or a Sunday, a legal holiday or a day on which banking institutions in New York, New York, or Pittsburgh, Pennsylvania, are authorized or required by law, regulation or executive order to remain closed.

We will compute the amount of interest payable on the notes for any full semi-annual period on the basis of a 360-day year of twelve 30-day months. The amount of interest payable for any partial semi-annual period will be computed based on the actual number of days elapsed during that 180-day period.

If any interest payment date or the date of maturity of the notes is not a business day, then we will pay the amount payable on that date on the next succeeding day that is a business day, without making any additional interest or other payments because of the delay.

Payments of principal, interest and other amounts on the notes issued in book-entry form will be made as described below under “—Global Notes and Book-Entry System.”

Redemption

The notes may not be redeemed, in whole or in part, prior to maturity. The redemption price for the notes at maturity will be 100% of the principal amount thereof plus accrued interest to but excluding the date of redemption. The notes are not subject to any sinking fund.

Subordination

The notes will constitute direct and unsecured obligations of Susquehanna and will be subordinated in right of payment to all of our “senior indebtedness,” as defined below. This means that, in certain circumstances where we may not be making payments on all our debt obligations as they become due, the holders of all our senior indebtedness will be entitled to receive payment in full of all amounts that are due or will become due on their debt securities before you as holders of the notes will be entitled to receive any amounts due with respect to the notes. These circumstances include when we make a payment or distribute assets to creditors upon our liquidation, dissolution, winding up or reorganization.

In addition, the notes will be “structurally subordinated” to all indebtedness and other liabilities, including deposits, trade payables and lease obligations, of our subsidiaries. This occurs because our right to receive any assets of any of our subsidiaries upon its liquidation or reorganization, and thus the right of you as the holders of the notes to participate in those assets, will be effectively subordinated to the claims of that subsidiary’s creditors, including depositors and trade creditors.

As of September 30, 2002, we had the following obligations that are senior to the notes: $55.0 million of outstanding senior indebtedness which consists of $35.0 million of our 6.30% Senior Notes and $20.0 million of certain term notes of our subsidiaries which are guaranteed by us; $42.1 million in obligations under outstanding letters of credit issued at the holding company level; and approximately $4.9 billion in the aggregate of other debt and liabilities of our subsidiaries, including deposit liabilities, letters of credit and similar liabilities. In addition, as of September 30, 2002, we had $50.0 million of outstanding subordinated indebtedness that will rank equally with the notes. The indenture does not limit or prohibit us from incurring additional senior indebtedness or additional indebtedness ranking pari passu with the notes, nor does it prohibit our subsidiaries from incurring additional indebtedness.

“Senior indebtedness” is defined in the indenture as:

• all of our “indebtedness for money borrowed,” as defined below, whether now outstanding or subsequently created, assumed or incurred, other than (i) the notes, (ii) any obligation ranking on a parity with the notes including the 1995 notes or (iii) any obligation ranking junior to the notes;

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• all of our obligations to make payment or delivery pursuant to the terms of any financial instrument such as (i) securities contracts and foreign currency exchange contracts, (ii) derivative instruments, such as swap agreements (including interest rate and foreign exchange rate swap agreements), cap or floor agreements, interest rate agreements, commodity contracts or options or (iii) any similar financial instruments or agreements (in each case, other than any such obligation ranking on a parity with the notes or ranking junior to the notes), and, any deferrals, renewals or extensions of any such senior indebtedness.

The term “indebtedness for money borrowed” is defined in the indenture as:

• any of our obligations for, or any obligation guaranteed by us for the repayment of, borrowed money, whether or not evidenced by bonds, debentures, notes or other written instruments; and

• any deferred obligation for the payment of the purchase price of property or assets (excluding trade accounts payable or accrued liabilities in the ordinary course of business).

The term “ranking junior to the notes” is defined in the indenture to mean any of our obligations which ranks junior to and not equally with or senior to the notes in right of payment upon the occurrence of any insolvency, receivership, conservatorship, reorganization, readjustment of debt, marshalling of assets and liabilities or similar proceedings or any liquidation or winding-up of or relating to us as a whole, whether voluntary or involuntary.

The term “ranking on a parity with the notes” is defined in the indenture to mean any of our obligations which ranks equally with and not senior to the notes in right of payment upon the occurrence of any insolvency, receivership, conservatorship, reorganization, readjustment of debt, marshalling of assets and liabilities or similar proceedings or any liquidation or winding-up of or relating to us as a whole, whether voluntary or involuntary.

We may not make any payment on account of the principal of or interest in respect of the notes if:

• a default in payment with respect to any senior indebtedness has occurred and is continuing; or

• an event of default with respect to any senior indebtedness permitting the acceleration of the maturity thereof has occurred.

Upon any payment or distribution of assets to creditors upon any insolvency, receivership, conservatorship, reorganization, readjustment of debt, marshalling of assets and liabilities or similar proceedings or any liquidation or winding-up of or relating to us as a whole, whether voluntary or involuntary, the holders of all senior indebtedness will first be entitled to receive payment in full before the holders of the notes will be entitled to receive any payment in respect of the principal of or interest on the notes.

If the holders of notes receive payment and are aware at the time of receiving payment that all senior indebtedness has not been paid in full, then such payment shall be held in trust for the benefit of the holders of senior indebtedness.

By reason of the subordination provisions described above, in the event of our insolvency, holders of the notes may recover less, ratably, than holders of our senior indebtedness.

Events of Default; Limited Rights of Acceleration

The only “events of default” under the indenture with respect to the notes are specified events involving our bankruptcy, insolvency or reorganization. Accordingly, there will be no right of acceleration of the payment of principal of the notes upon a default in the payment of principal or interest on the notes or in the performance of any of our other covenants or agreements contained in the notes or in the indenture for the notes. However, in the

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event of a default in the payment of principal or interest, you will have the right to institute a suit directly against us for the collection of such overdue payment, without first instituting suit against the trustee or any other person.

If an event of default occurs and is continuing with respect to the notes, the trustee or the holders of not less than 25% in aggregate principal amount of the outstanding notes may declare the principal amount of all the notes to be due and payable immediately. At any time after the trustee or the holders have accelerated the notes, but before the trustee has obtained a judgment or decree for payment of money due or delivery of the maturity consideration, the holders of a majority in aggregate principal amount of outstanding notes may rescind and annul that acceleration and its consequences, provided that all payments due and payable, other than those due as a result of acceleration, have been made and all events of default have been remedied or waived.

Defaults and Remedies

The following are “defaults” under the indenture with respect to the notes:

• any event of default as described above;

• default in the payment of any principal on the notes when due;

• default in the payment of any interest on the notes when due, which continues for 30 days; and

• default in the performance of any other obligation contained in the notes or in the indenture for the benefit of the holders of notes, which continues for 60 days after written notice.

If a default occurs and is continuing under the indenture, the trustee may, in its discretion and subject to certain conditions, seek to enforce its rights and the rights of the holders of the notes by appropriate judicial proceedings, which may include demanding payment of any amounts then due and payable on the notes. The trustee may not accelerate the maturity of the notes upon the occurrence of a default that does not also constitute an “event of default” described above.

The holders of a majority in principal amount of the outstanding notes may waive any default with respect to the notes, except a default:

• in the payment of any amounts due and payable under the notes; or

• in an obligation contained in, or a provision of, the indenture which cannot be modified without the consent of each holder of the notes.

The holders of a majority in principal amount of the outstanding notes may 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 notes, provided that any direction is not in conflict with any rule of law or the indenture. Subject to the provisions of the indenture relating to the duties of the trustee, before proceeding to exercise any right or power under the indenture at the direction of the holders, the trustee is entitled to receive from those holders reasonable indemnity against the costs, expenses and liabilities that it might incur in complying with any direction.

A holder of notes will have the right to institute a proceeding with respect to the indenture or for any remedy under the indenture with respect to the notes, only if:

• such holder previously gives to the trustee written notice of a continuing default with respect to the notes;

• the holders of not less than a majority in aggregate principal amount of the outstanding notes also have made written request and offered the trustee indemnity satisfactory to the trustee to institute that proceeding as trustee;

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• the trustee has failed to institute the proceeding within 60 days after receipt of the request from the holders of notes; and

• the trustee has not received from the holders of a majority in principal amount of the outstanding notes a direction inconsistent with such request during that 60 day period.

Notwithstanding the foregoing, any holder of a note has the absolute right to institute suit for any defaulted payment after the due date for such payment.

We are required to furnish to the trustee annually a statement as to the performance of our obligations under the indenture and as to any default in that performance.

Modification and Waiver

We and the trustee may amend and modify the indenture with the consent of holders of at least 66 2/3% in principal amount of the notes affected. However, without the consent of each holder of any notes affected thereby, we may not amend or modify the indenture to:

• change the stated maturity date of the principal of, or any installment of principal or interest on, any note;

• reduce the principal amount of, or the rate of interest on, any note;

• change the place or currency of payment of principal or interest on any note;

• impair the right to institute suit for the enforcement of any payment or delivery on or with respect to any note;

• reduce the percentage in principal amount of notes, the consent of whose holders is required to modify or amend the indenture or to waive compliance with certain provisions of the indenture;

• make any change relating to the subordination of the notes in a manner adverse to the holders of the notes or in a manner adverse to holders of senior indebtedness, unless the holders of senior indebtedness consent to that change under the terms of that senior indebtedness; or

• reduce the percentage in principal amount of the notes, the consent of whose holders is required to waive any past default.

The holders of at least a majority in principal amount of the outstanding notes may waive past defaults under the indenture, except as described under “—Defaults and Remedies.”

We and the trustee may also amend and modify the indenture without the consent of any holder for any of the following purposes:

• to evidence the succession of another person to us;

• to add to our covenants for the benefit of the holders of all of the notes;

• to add events or occurrences which will constitute a default or an event of default;

• to change or eliminate any of the provisions of the indenture, so long as any such change or elimination will become effective only when there is no outstanding security which is entitled to the benefit of that provision;

• to evidence and provide for the acceptance of appointment by a successor trustee;

• to cure any ambiguity, to correct or supplement any provision in the indenture or to make any other provisions with respect to matters or questions arising under the indenture, so long as the interests of holders of notes are not adversely affected in any material respect under the indenture;

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• to convey, transfer, assign, mortgage or pledge any property to or with the trustee securing the notes; or

• to provide for conversion rights of the holders of the notes to enable those holders to convert the notes into other securities.

Consolidation, Merger and Sale of Assets

We may consolidate or merge with or into any other corporation, and we may sell, lease or convey our properties and assets substantially as an entirety to any corporation, provided that:

• the resulting corporation, if other than us, is a corporation organized and existing under the laws of the United States of America or any U.S. state and assumes all of our obligations to:

• pay the principal of, and interest on, the notes; and

• perform and observe all of our other obligations under the indenture; and

• we are not, or any successor corporation, as the case may be, is not, immediately after any such transaction, in default under the indenture.

The indenture does not provide for any right of acceleration in the event of a consolidation, merger, sale of all or substantially all of the assets, recapitalization or change in our stock ownership. In addition, the indenture does not contain any provision which would protect the holders of notes against a sudden and dramatic decline in our credit quality resulting from any merger, sale, recapitalization or similar restructuring.

Global Notes and Book-Entry System

The notes will be in book-entry form and will be represented by one or more permanent global certificates in fully registered form without interest coupons, or the Global Notes, and will be deposited with the trustee as custodian for DTC and registered in the name of Cede & Co. or another nominee designated by DTC.

Beneficial interests in the Global Notes (and any notes issued in exchange for any of the Global Notes) may not be exchanged for Certificated Notes (as defined below) except in the circumstances described below. The notes will be subject to certain restrictions on transfer set forth in the indenture and will bear the legend regarding these restrictions set forth under the heading “Notice to Investors.”

Transfer or Exchange from Global Notes to Certificated Notes

We will issue physical certificates, or Certificated Notes, to holders of beneficial interests in a Global Note, or their nominees, if:

• DTC notifies us that it is unwilling or unable to continue as depositary and we are unable to locate a qualified successor within 90 days or if at any time DTC, or any successor depositary, ceases to be a “clearing agency” under the Securities Exchange Act of 1934;

• an event of default or a default occurs under the indenture; or

• we decide in our sole discretion to terminate the book-entry system through DTC.

If we issue Certificated Notes in exchange for beneficial interests in a Global Note, the trustee will notify all holders through DTC participants of the availability of these Certificated Notes. Upon surrender by DTC of the definitive global note representing the series of notes and receipt of instructions for reregistration, the trustee will reissue the notes in certified form to holders or their nominees.

Although DTC has agreed to the following procedures in order to facilitate transfers of interests in the Global Notes among participants of DTC, it is under no obligation to perform or continue to perform these

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procedures, and these procedures may be discontinued at any time. None of Susquehanna, the trustee or any of their respective agents will have any responsibility for the performance by DTC of its obligations under the rules and procedures governing their operations.

Depository Procedures

DTC is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds securities that its participants (“Direct Participants”) deposit with DTC. DTC also facilitates the clearance or settlement among Direct Participants of securities transactions, like transfers and pledges, in deposited securities through electronic computerized book-entry changes in Direct Participants’ accounts, thereby eliminating the need for physical movement of securities certificates. Direct Participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. DTC is owned by a number of its Direct Participants and by The New York Stock Exchange, Inc., the American Stock Exchange LLC and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others like securities brokers and dealers, banks and trust companies that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). The rules applicable to DTC and its Direct and Indirect Participants are on file with the SEC.

Purchases of Global Notes under the DTC system must be made by or through Direct Participants, which will receive a credit for Global Notes on DTC’s records. The ownership interest of each actual purchaser of each Global Note (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase, but Beneficial Owners are expected to receive written confirmation providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Global Notes are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Global Notes, except in the event that use of the book-entry system for the Global Notes is discontinued.

To facilitate subsequent transfers, all Global Notes deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Global Notes with DTC and their registration in the name of Cede & Co. or any other nominee do not elect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Global Notes. DTC’s records reflect only the identity of the Direct Participants to whose accounts those Global Notes are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time.

None of DTC, Cede & Co., or any other nominee will consent or vote with respect to the Global Notes. Under its usual procedures, DTC mails an omnibus proxy to us as soon as possible after the record date. The omnibus proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts the Global Notes are credited on the record date (identified in a listing attached to the omnibus proxy).

Redemption proceeds and principal and interest payments on the Global Notes will be made to Cede & Co., or any other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts, upon DTC’s receipt of funds and corresponding detail information from us or the

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trustee on the payment date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not that of DTC, the trustee or us, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions and dividends to Cede & Co. (or other nominee requested by an authorized representative of DTC) is the responsibility of us or the trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.

Although DTC has agreed to the foregoing procedures in order to facilitate transfer of interests in the Global Notes among DTC Participants, DTC may discontinue providing its services as securities depository with respect to the Global Notes at any time by giving reasonable notice to us or the trustee. Under these circumstances, in the event that a successor securities depository is not obtained, Certificated Notes form are required to be printed and delivered to each holder.

We may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, Certificated Notes will be printed and delivered.

The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that we believe to be reliable, but we take no responsibility for the accuracy of this information.

The laws of some states may require that certain persons take physical delivery of securities in certificated form. Consequently, the ability to transfer beneficial interests in a Global Note to those persons may be limited. In addition, because DTC can act only on behalf of Direct Participants, which, in turn, act on behalf of Indirect Participants and certain banks, the ability of a person having a beneficial interest in a Global Note to pledge or transfer that interest to persons or entities that do not participate in the DTC system, or otherwise take actions in respect of that interest, may be affected by the lack of a physical certificate evidencing that interest.

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EXCHANGE OFFER; REGISTRATION RIGHTS

We have agreed pursuant to a registration rights agreement with the initial purchasers of the outstanding notes, for the benefit of the holders of the outstanding notes, that we will, at our cost,

• file a registration statement relating to a registered exchange offer (the “exchange offer”) for the notes with the SEC on or prior to the 90th day after the date that the notes are first issued;

• use our reasonable best efforts to cause the SEC to declare the exchange offer registration statement effective under the Securities Act no later than the 180th day after the notes are first issued;

• use our reasonable best efforts to cause this registration statement to remain effective until the closing of the exchange offer; and

• use our reasonable best efforts to complete the exchange offer no later than 45 days after the exchange offer registration statement becomes effective.

Once the registration statement that this prospectus is a part of is declared effective, we will offer to all holders of outstanding notes who are legally eligible to participate in the exchange offer the opportunity to exchange their outstanding notes for exchange notes. This offer will remain open for not less than 20 business days (or longer, if required by applicable law or otherwise extended by us, at our option) after the date notice of the exchange offer is mailed to the holders of the outstanding notes.

Under existing interpretations of the Securities Act by the staff of the SEC contained in several no-action letters to third parties, and subject to the immediately following sentence, we believe that the exchange notes would generally be freely transferable by holders after the exchange offer without further registration under the Securities Act (subject to certain representations required to be made by each holder of notes, as set forth below). However, any purchaser of notes who is one of our “affiliates,” who intends to participate in the exchange offer for the purpose of distributing the exchange notes or who is a broker-dealer who purchased notes from us to resell pursuant to Rule 144A or any other available exemption under the Securities Act (1) will not be able to rely on the interpretations of the staff of the SEC, (2) will not be able to tender its notes in the exchange offer and (3) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any sale or transfer of the notes unless that sale or transfer is made pursuant to an exemption from these requirements.

If you wish to exchange your outstanding notes for exchange notes in the exchange offer, you will be required to make certain representations. These representations include that:

• any exchange notes to be received by you will be acquired in the ordinary course of your business;

• you have no arrangement or understanding with any person to participate in the distribution of the notes or exchange notes;

• you are not our “affiliate” (as defined in Rule 405 under the Securities Act);

• if you are not a broker-dealer, you are not engaged in and do not intend to engage in, the distribution of the exchange notes;

• if you are a broker-dealer, you will receive exchange notes for your own account in exchange for outstanding notes that were acquired as a result of market-making activities or other trading activities and that you will deliver a prospectus in connection with any resale of these exchange notes; and

• you are not acting on behalf of any person who could not truthfully make the foregoing representations.

In addition, in connection with any resales of exchange notes, any broker-dealer (a “Participating Broker-Dealer”) that acquired the outstanding notes for its own account as a result of market-making or other trading activities must deliver a prospectus meeting the requirements of the Securities Act. The SEC has taken the

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position that Participating Broker-Dealers may fulfill their prospectus delivery requirements with respect to the exchange notes (other than a resale of an unsold allotment from the original sale of the notes) with this prospectus. We will agree to make available for a period ending on the earlier to occur of (1) the date when all exchange notes held by Participating Broker-Dealers have been sold and (2) 180 days after consummation of the exchange offer, a copy of this prospectus to any Participating Broker-Dealer and all other persons, if any, with similar prospectus delivery requirements, for use in connection with any resale of exchange notes. A Participating Broker-Dealer or any other person that delivers such a prospectus to purchasers in connection with such resales will be subject to certain of the civil liability provisions under the Securities Act and will be bound by the provisions of the Registration Rights Agreement (including certain indemnification rights and obligations thereunder).

Shelf Registration

We may be required to file a shelf registration statement to permit certain holders of Registrable Notes (as defined below) who were not eligible to participate in the exchange offer to resell the Registrable Notes periodically without being limited by the transfer restrictions.

We will only be required to file a shelf registration statement if:

• after the date on which the outstanding notes were issued, there is a change in law or applicable interpretations of the law by the staff of the SEC, and as a result we are not permitted to effect the exchange offer as contemplated by the Registration Rights Agreement; or

• (a) the exchange offer registration statement is not declared effective within 180 days after the date the outstanding notes were issued or (b) the exchange offer is not consummated within 45 days after the exchange offer registration statement is declared effective, but we may terminate the shelf registration statement at any time, without penalty, if the exchange offer registration statement is declared effective or the exchange offer is consummated.

If a shelf registration statement is required, we will:

• file the shelf registration statement with the SEC no later than (a) the 180th day after the date the outstanding notes were first issued or (b) the 60th day after that filing obligation arises, whichever is later;

• use our reasonable best efforts to cause the shelf registration statement to be declared effective by the SEC as promptly as practicable, but in no event later than the 225th day after the outstanding notes were first issued; and

• use our reasonable best efforts to keep the shelf registration statement continuously effective for a period of two years after the latest date on which any outstanding notes were originally issued or, if earlier, until all the Registrable Notes covered by the shelf registration statement are sold thereunder, become eligible for resale pursuant to Rule 144(k) under the Securities Act or cease to be Registrable Notes.

Notwithstanding the foregoing, during any 365-day period we may, by notice to holders of Registrable Notes, suspend the availability of a shelf registration statement and the use of the related prospectus for up to two periods of up to 45 consecutive days each but not more than an aggregate of 90 days during any 365-day period if:

• such action is required by applicable law;

• such action is taken by us in good faith and for valid business reasons, including the acquisition or divestiture of assets or a material corporate transaction or event; or

• the happening of any event or the discovery of any fact that makes any statement made in the shelf registration statement or the related prospectus untrue in any material respect or constitutes an omission to state a material fact in the shelf registration statement or the related prospectus.

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Each holder of Registrable Notes will be required to discontinue disposition of Registrable Notes pursuant to the shelf registration statement upon receipt of notice from us.

The shelf registration statement will permit only certain holders to resell their outstanding notes from time to time. In particular, these holders must:

• provide certain information in connection with the shelf registration statement; and

• agree in writing to be bound by all provisions of the Registration Rights Agreement (including certain indemnification obligations).

A holder who sells outstanding notes pursuant to the shelf registration statement will be required to be named as a selling security holder in the related prospectus and to deliver a copy of the prospectus to purchasers. If we are required to file a shelf registration statement, we will provide to each holder of outstanding notes copies of the prospectus that is a part of the shelf registration statement and notify each of these holders when the shelf registration statement becomes effective. These holders will be subject to certain of the civil liability provisions under the Securities Act in connection with those sales, and will be bound by the provisions of the Registration Rights Agreement which are applicable to these holders (including certain indemnification obligations).

Additional Interest

If a Registration Default (as defined below) occurs, then we will be required to pay additional interest to each holder of Registrable Notes. During the first 90-day period that a Registration Default occurs and is continuing, we will pay additional interest on the Registrable Notes at a rate of 0.25% per annum. If a Registration Default occurs and continues for a period of more than 90 days, then the amount of additional interest we are required to pay on the Registrable Notes will increase effective from the 91st day, in such period by an additional 0.25% per annum until all Registration Defaults have been cured. However, in no event will the rate of additional interest exceed 0.50% per annum. Such additional interest will accrue only for those days that a Registration Default occurs and is continuing. All accrued additional interest will be paid to the holders of the outstanding notes in the same manner as interest payments on the outstanding notes, with payments being made of the interest payment dates for outstanding notes. Following the cure of all Registration Defaults, no more additional interest will accrue unless a subsequent Registration Default occurs. Additional interest will not be payable on any notes other than Registrable Notes.

You will not be entitled to receive any additional interest on any Registrable Notes if you are, at any time while the exchange offer is pending, eligible to exchange, and do not validly tender, your Registrable Notes for exchange notes in the exchange offer.

A “Registration Default” would occur if:

• the exchange offer registration statement is not declared effective by the SEC on or prior to 180th day after the outstanding notes were first issued;

• we fail to complete the exchange offer on or prior to 45 days after the exchange offer registration statement becomes effective;

• if a shelf registration statement is required to be filed, the shelf registration statement is declared effective but thereafter ceases to be effective or usable in connection with resales of the outstanding notes during the periods specified in the Registration Rights Agreement, except as a result of the exercise by us of our right to suspend use of the shelf registration statement and the related prospectus as described under “—Shelf Registration” above;

• if required, the shelf registration statement is not filed with the SEC on or prior to (i) the 180th day after the outstanding notes were first issued, or (ii) the 60th day after the filing obligation arises, whichever is later;

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• if required, the shelf registration statement is not declared effective on or prior to the 225th day following the date on which a shelf registration statement is required to be filed; or

• the exchange offer registration statement is declared effective but ceases to be effective or usable in connection with resales of the exchange notes during the periods specified in the Registration Rights Agreement.

“Registrable Notes” means the outstanding notes; provided, however, that any outstanding notes shall cease to be Registrable Notes when (1) a registration statement with respect to those outstanding notes has been declared effective under the Securities Act and those notes have been disposed of pursuant to the registration statement, (2) those outstanding notes have been sold to the public pursuant to Rule 144 (or any similar provision then in force, but not Rule 144A) under the Securities Act, (3) those outstanding notes have ceased to be outstanding or (4) those outstanding notes have been exchanged for exchange notes which have been registered pursuant to the exchange offer registration statement upon consummation of the exchange offer, subject, in the case of this clause (4), to certain exceptions.

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CERTAIN UNITED STATES FEDERAL TAX CONSEQUENCES

The following summary describes certain material U.S. federal income tax consequences resulting from the exchange of the outstanding notes for exchange notes pursuant to the exchange offer and the ownership and disposition of the exchange notes. This summary applies only to a holder of an exchange note who acquired an outstanding note at the initial offering and who acquires the exchange note in the exchange offer. This summary is based on the Internal Revenue Code of 1986, as amended (the “Code”), existing and proposed Treasury regulations promulgated thereunder, and judicial and administrative interpretations of the foregoing, all as currently in effect and all of which are subject to change, possibly with retroactive effect. This summary does not address the tax consequences to subsequent purchasers of the exchange notes and is limited to investors who hold the exchange notes as capital assets within the meaning of Section 1221 of the Code. This summary does not deal with holders that may be subject to special tax rules (including, but not limited to, insurance companies, tax exempt organizations, financial institutions, retirement plans, regulated investment companies, dealers in securities or currencies, traders in securities who elect to apply the marked-to-market method of accounting, expatriates, foreign persons, holders whose functional currency is not the United States dollar, and holders of notes held as part of a “straddle,” “hedge” or “conversion transaction” for federal income tax purposes, or as part of an integrated investment). This summary is for general information only and does not address all aspects of United States federal income taxation that may be relevant to holders of notes in light of their particular circumstances, and it does not address any tax consequences arising under the laws of any state, local or foreign taxing jurisdiction. Holders of notes should consult their tax advisors as to the application of U.S. federal tax laws to their particular situations, as well as any tax consequences arising under the laws of any state, local, or foreign jurisdiction.

Exchange Offer

A holder of outstanding notes will not recognize any taxable gain or loss on the exchange of the outstanding notes for exchange notes pursuant to the exchange offer, and the holder will have the same adjusted tax basis and holding period in the exchange notes as such holder had in the outstanding notes immediately before the exchange.

Interest

Interest on an exchange note generally will be taxable to a holder as ordinary income as it accrues or is received in accordance with the holder’s method of accounting for U.S. federal income tax purposes.

Disposition of Exchange Notes

Upon the sale, exchange, redemption, retirement, or other disposition (collectively, a “disposition”) of an exchange note, a holder generally will recognize gain or loss equal to the difference between the amount realized upon the disposition (not including amounts attributable to accrued but unpaid interest, which will be taxable as ordinary income) and such holder’s adjusted tax basis in the exchange note. Such gain or loss generally will be capital gain or loss, and will be long-term capital gain or loss if, at the time of such disposition, the holder’s holding period in the exchange note exceeds more than one year. Long-term capital gain recognized by an individual investor will generally be subject to reduced rates of taxation. Certain limitations may apply to the holder’s use of capital losses.

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PLAN OF DISTRIBUTION

Each broker-dealer that receives exchange notes for its own account under the exchange offer must acknowledge that it will deliver a prospectus in connection with any resale of those notes. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer for resales of exchange notes received in exchange for outstanding notes that had been acquired as a result of market-making or other trading activities. We have agreed that, for a period of 180 days after the expiration date of the exchange offer, we will make this prospectus, as it may be amended or supplemented, available to any broker-dealer for use in connection with any such resale. Any broker-dealers required to use this prospectus and any amendments or supplements to this prospectus for resales of the exchange notes must notify us of this fact by checking the box on the letter of transmittal requesting additional copies of these documents.

Notwithstanding the foregoing, we are entitled under the registration rights agreements to suspend the use of this prospectus by broker-dealers under specified circumstances. For example, we may suspend the use of this prospectus if:

• the SEC or any state securities authority requests an amendment or supplement to this prospectus or the related registration statement or additional information;

• the SEC or any state securities authority issues any stop order suspending the effectiveness of the registration statement or initiates proceedings for that purpose;

• we receive notification of the suspension of the qualification of the exchange notes for sale in any jurisdiction or the initiation or threatening of any proceeding for that purpose;

• the suspension is required by law; or

• an event occurs which makes any statement in this prospectus untrue in any material respect or which constitutes an omission to state a material fact in this prospectus.

If we suspend the use of this prospectus, the 180-day period referred to above will be extended by a number of days equal to the period of the suspension.

We will not receive any proceeds from any sale of exchange notes by broker-dealers. Exchange notes received by broker-dealers for their own account under the exchange offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on those notes or a combination of those methods, at market prices prevailing at the time of resale, at prices related to prevailing market prices or at negotiated prices. Any resales may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from the selling broker-dealer or the purchasers of the exchange notes. Any broker-dealer that resells exchange notes received by it for its own account under the exchange offer and any broker or dealer that participates in a distribution of the exchange notes may be deemed to be an “underwriter” within the meaning of the Securities Act and any profit on any resale of exchange notes and any commissions or concessions received by these persons may be deemed to be underwriting compensation under the Securities Act. The letter of transmittal states that, by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act.

We have agreed to pay all expenses incidental to the exchange offer other than commissions and concessions of any broker or dealer and will indemnify holders of the notes, including any broker-dealers, against certain liabilities, including liabilities under the Securities Act.

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LEGAL MATTERS

Certain legal matters with respect to the sale of the notes will be passed upon for us by Morgan, Lewis & Bockius LLP, Philadelphia, Pennsylvania. Certain legal matters with respect to the sale of the notes will be passed upon for the initial purchasers by Alston & Bird LLP, Washington, D.C.

EXPERTS

The consolidated financial statements incorporated in this prospectus by reference to the Annual Report on Form 10-K for the year ended December 31, 2001 have been so incorporated in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting.

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No dealer, salesperson or other person is authorized to give any information or to represent anything not contained in this prospectus. You must not rely on any unauthorized information or representations. This prospectus is an offer to sell only the notes offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is current only as of its date.

Until            , all dealers that effect transactions in these notes, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealer’s obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

All tendered outstanding securities, executed letters of transmittal and other related documents should be directed to the exchange agent at the numbers and address below.

The exchange agent for the exchange offer is:

J.P. Morgan Trust Company, National Association

For Information Call: 1-800-275-2048

By Registered or Certified Mail:	By Overnight Courier:	By Hand:	By Facsimile:
			(214) 468-6494
J.P. Morgan Trust Company,	J.P. Morgan Trust Company,	J.P. Morgan Chase Bank,	Attn: Frank Ivins
National Association	National Association	New York Window
2001 Bryan Street, 9th Floor	2001 Bryan Street, 9th Floor	4 New York Plaza	Confirm by
Dallas, TX 75201	Dallas, TX 75201	New York, NY 10004	Telephone:
Attn: Frank Ivins	Attn: Frank Ivins	Attn: Frank Ivins	(214) 468-6464

PROSPECTUS

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 20.    Indemnification of Directors and Officers.

Sections 1741 and 1742 of the Pennsylvania Business Corporation Law of 1 988, as amended (the “BCL”), provide that a business corporation may indemnify directors and officers against liabilities they may incur as such provided that the particular person acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the corporation, and, with respect to any criminal proceeding, had no reasonable cause to believe his or her conduct was unlawful. In the case of actions against a director or officer by or in the right of the corporation, the power to indemnify extends only to expenses (not judgments and amounts paid in settlement) and such power generally does not exist if the person otherwise entitled to indemnification shall have been adjudged to be liable to the corporation unless it is judicially determined that, despite the adjudication of liability but in view of all the circumstances of the case, the person is fairly and reasonably entitled to indemnification for specified expenses. Under Section 1743 of the BCL, the corporation is required to indemnify directors and officers against expenses they may incur in defending actions against them in such capacities if they are successful on the merits or otherwise in the defense of such actions. Under Section 1745 of the BCL, a corporation may pay the expenses of a director or officer incurred in defending an action or proceeding in advance of the final disposition thereof upon receipt of an undertaking from such person to repay the amounts advanced unless it is ultimately determined that such person is entitled to indemnification from the corporation. Article XIV of Susquehanna’s Bylaws provides indemnification of directors, officer and other agents of Susquehanna and advancement of expenses to the extent otherwise permitted by Sections 1741, 1742 and 1745 of the BCL.

Section 1746 of the BCL grants a corporation broad authority to indemnify its directors, officers and other agents for liabilities and expenses incurred in such capacity, except in circumstances where the act giving rise to the claim for indemnification is determined by a court to have constituted willful misconduct or recklessness. Pursuant to the authority of Section 1746 of the BCL, Susquehanna has also entered into employment agreements with certain principal officers which also provide for indemnification in connection with the performance of their offices.

Article XIV conditions any indemnification or advancement of expenses upon a determination, made in accordance with the procedures specified in Section 1 744 of the BCL, by Susquehanna’ s directors or shareholders that indemnification or advancement of expenses is proper because the director or officer met the standard of conduct set forth in Section 1 74 1 or 1742 of the BCL, as applicable.

As authorized by Section 1747 of the BCL and Article XIV, Susquehanna maintains, on behalf of its directors and officers, insurance protection against certain liabilities arising out of the discharge of their duties, as well as insurance covering Susquehanna for indemnification payments made to its directors and officers for certain liabilities. The premiums for such insurance are paid by Susquehanna.

Item 21.    Exhibits and Financial Statement Schedules.

Exhibit No.	Description
4.1+	Indenture dated as of November 4, 2002 by and between Susquehanna Bancshares, Inc., and J.P. Morgan Trust Company, National Association relating to the 6.05% subordinated notes due 2012.
4.2+	Form of Global Note relating to the 6.05% subordinated notes due 2012 (included as part of the Indenture at Exhibit 4.1).
4.3+	Registration Rights Agreement dated as of November 4, 2002 by and among Susquehanna Bancshares, Inc., and Keefe Bruyette & Woods Inc. and Sandler O’Neill Partners, L.P.
5.1+	Opinion of Morgan, Lewis & Bockius LLP.
12.1+	Statements re computation of ratios.
23.1+	Consent of PricewaterhouseCoopers LLP.
23.2+	Consent of Morgan, Lewis & Bockius LLP (included in its opinion filed as Exhibit 5 hereto).

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Exhibit No.	Description
24.1+	Powers of Attorney (included on the signature page of this Registration Statement).
25.1+	Statement of Eligibility of Trustee on Form T-1.
99.1+	Form of Letter of Transmittal.
99.2+	Form of Notice of Guaranteed Delivery.
99.3+	Form of Letter to brokers, dealers, commercial banks, issuer companies and other nominees.
99.4+	Form of Letter from brokers, dealers, commercial banks, issuer companies and other nominees to their Clients.

+ Filed herewith.

Item 22.    Undertakings.

(a)    The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1 93 3 (the “ Securities Act”), each filing of the registrant’s annual report pursuant to Section 13(a) or 1 5(d) of the Securities Exchange Act of 1 934 (the “Exchange Act”) (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof

(b)    Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

(c)    The undersigned registrant hereby undertakes to respond to requests for information that is incorporated by reference into the prospectus pursuant to Item 4, 10(b), 11 or 13 of this form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request.

(d)    The undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective.

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Lititz, Pennsylvania, on December 30, 2002.

SUSQUEHANNA BANCSHARES, INC.
By:	/s/    WILLIAM J. REUTER
	William J. Reuter President and Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated.

Each person in so signing also makes, constitutes and appoints William J. Reuter, President and Chief Executive Officer of Susquehanna, and Drew K. Hostetter, Chief Financial Officer of Susquehanna, and each of them acting alone, his true and lawful attorney-in-fact, with full power of substitution, to execute and cause to be filed with the Securities and Exchange Commission pursuant to the requirements of the Securities and Exchange Commission pursuant to the requirements of the Securities Act of 1933, as amended, any and all amendments and post-effective amendments to this Registration Statement, and including any Registration Statement for the same offering that is to be effective upon filing pursuant to rule 462(b) under the Securities Act, with exhibits thereto and other documents in connection therewith, and hereby ratifies and confirms all that said attorney-in-fact or his substitute or substitutes may do or cause to be done by virtue hereof.

Signature	Title	Date
/s/    WILLIAM J. REUTER         William J. Reuter	President and Chief Executive Officer (principal executive officer), and Director	December 30, 2002
/s/    DREW K. HOSTETTER         Drew K. Hostetter	Executive Vice President, Treasurer and Chief Financial Officer (principal financial and accounting officer)	December 30, 2002
/s/    C. WILLIAM HETZER, JR.         C. William Hetzer, Jr.	Director	December 30, 2002
/s/    OWEN O. FREEMAN, JR.         Owen O. Freeman, Jr.	Director	December 30, 2002
/s/    GUY W. MILLER, JR.         Guy W. Miller, Jr.	Director	December 30, 2002
/s/    ROBERT S. BOLINGER         Robert S. Bolinger	Director	December 30, 2002
/s/    HENRY H. GIBBEL         Henry H. Gibbel	Director	December 30, 2002
/s/    GEORGE J. MORGAN         George J. Morgan	Director	December 30, 2002
/s/    ROGER V. WIEST         Roger V. Wiest	Director	December 30, 2002
/s/    M. ZEV ROSE         M. Zev Rose	Director	December 30, 2002

II-3

Signature	Title	Date
/s/    WAYNE E. ALTER, JR.         Wayne E. Alter, Jr.	Director	December 30, 2002
/s/    JAMES G. APPLE         James G. Apple	Director	December 30, 2002
/s/    JOHN M. DENLINGER         John M. Denlinger	Director	December 30, 2002
/s/    CHLOÉ R. EICHELBERGER         Chloé R. Eichelberger	Director	December 30, 2002
/s/    T. MAX HALL         T. Max Hall	Director	December 30, 2002
/s/    WILLIAM B. ZIMMERMAN         William B. Zimmerman	Director	December 30, 2002
/s/    BRUCE A. HEPBURN         Bruce A. Hepburn	Director	December 30, 2002

II-4

Index to Exhibits

Exhibit No.	Description
4.1+	Indenture dated as of November 4, 2002 by and between Susquehanna Bancshares, Inc., and J.P. Morgan Trust Company, National Association relating to the 6.05% subordinated notes due 2012.
4.2+	Form of Global Note relating to the 6.05% subordinated notes due 2012 (included as part of the Indenture at Exhibit 4.1).
4.3+	Registration Rights Agreement dated as of November 4, 2002 by and among Susquehanna Bancshares, Inc., and Keefe Bruyette & Woods Inc. and Sandler O’Neill Partners, L.P.
5.1+	Opinion of Morgan, Lewis & Bockius LLP.
12.1+	Statements re computation of ratios.
23.1+	Consent of PricewaterhouseCoopers LLP.
23.2+	Consent of Morgan, Lewis & Bockius LLP (included in its opinion filed as Exhibit 5.1 hereto).
24.1+	Powers of Attorney (included on the signature page of this Registration Statement).
25.1+	Statement of Eligibility of Trustee on Form T-1.
99.1+	Form of Letter of Transmittal.
99.2+	Form of Notice of Guaranteed Delivery.
99.3+	Form of Letter to brokers, dealers, commercial banks, issuer companies and other nominees.
99.4+	Form of Letter from brokers, dealers, commercial banks, issuer companies and other nominees to their Clients.

+ Filed herewith.

II-5

EX-4.1

                                                                     Exhibit 4.1


                          SUSQUEHANNA BANCSHARES, INC.

                                       and

                J. P. MORGAN TRUST COMPANY, NATIONAL ASSOCIATION



                                    INDENTURE

                          Dated as of November 4, 2002

                          SUBORDINATED DEBT SECURITIES






                                                    SUSQUEHANNA BANCSHARES, INC.

                                RECONCILIATION AND TIE BETWEEN TRUST INDENTURE ACT OF 1939 AND
                                             INDENTURE, DATED AS OF NOVEMBER 4, 2002

          TRUST INDENTURE
            ACT SECTION                                                                     INDENTURE SECTION
            -----------                                                                     -----------------
                                                                                                
             3.10(a)(1) .........................................................................  8.09
             3.10(a)(2) .........................................................................  8.09
             3.10(a)(3) .........................................................................  N/A
             3.10(a)(4) .........................................................................  N/A
             3.10(a)(5) .........................................................................  8.09
             3.10(b) ............................................................................  8.08
             3.10(c) ............................................................................  N/A

             3.11(a) ............................................................................  8.13
             3.12(a) ............................................................................  6.01(a)
             3.12(b) ............................................................................  6.02(ii)
             3.12(c) ............................................................................  6.02(iii)
             3.13(a) ............................................................................  6.03(i)
             3.13(d) ............................................................................  6.03(ii)
             3.13(c) ............................................................................  6.03(i) and (ii)

             3.14(a)(1), (2) and (3) ............................................................  6.04
             3.14(b) ............................................................................  N/A
             3.14(c)(1) .........................................................................  1.02
             3.14(c)(2) .........................................................................  1.02
             3.14(c)(3) .........................................................................  N/A
             3.14(d) ............................................................................  N/A
             3.14(e) ............................................................................  1.02
             3.14(f) ............................................................................  N/A

             3.15(a) ............................................................................  8.01(i)
             3.15(b) ............................................................................  8.02
             3.15(c) ............................................................................  8.01(ii)
             3.15(d) ............................................................................  8.01(iii)
             3.15(d)(1) .........................................................................  8.01(iii)(a)
             3.15(d)(2) .........................................................................  8.01(iii)(b)
             3.15(d)(3) .........................................................................  8.01(iii)(c)
             3.15(e) ............................................................................  7.14

             3.16(a)(1) .........................................................................  7.12
             3.16(a)(1)(A) ......................................................................  7.12
             3.16(a)(1)(B) ......................................................................  7.13
             3.16(a)(2) .........................................................................  N/A
             3.16(b) ............................................................................  7.08
             3.16(c) ............................................................................  1.04(vii)

             3.17(a)(1) .........................................................................  7.03
             3.17(a)(2) .........................................................................  7.04
             3.17(b) ............................................................................  5.03

             3.18(a) ............................................................................  1.08



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






                                         TABLE OF CONTENTS

                                                                                                               Page
                                                                                                               ----
                                                                                                          
ARTICLE I             DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION ................................   1

         SECTION 1.01.              Definitions ..............................................................   1
         SECTION 1.02.              Compliance Certificates and Opinions .....................................   9
         SECTION 1.03.              Form of Documents Delivered to Trustee ...................................  10
         SECTION 1.04.              Acts of Securityholders ..................................................  10
         SECTION 1.05.              Notices, etc., to Trustee and Company ....................................  12
         SECTION 1.06.              Notices to Securityholders; Waiver .......................................  13
         SECTION 1.07.              Language of Notices, Etc .................................................  14
         SECTION 1.08.              Conflict with Trust Indenture Act ........................................  14
         SECTION 1.09.              Effect of Headings and Table of Contents .................................  14
         SECTION 1.10.              Successors and Assigns ...................................................  14
         SECTION 1.11.              Separability Clause ......................................................  14
         SECTION 1.12.              Benefits of Indenture ....................................................  14
         SECTION 1.13.              Legal Holidays ...........................................................  14
         SECTION 1.14.              Governing Law ............................................................  15
         SECTION 1.15.              Judgment Currency; Payment to be in Proper Currency ......................  15
         SECTION 1.16.              Moneys of Different Currencies to be Segregated ..........................  16

ARTICLE II            SECURITY FORMS .........................................................................  16
         SECTION 2.01.              Forms Generally ..........................................................  16
         SECTION 2.02.              Form of Securities .......................................................  17
         SECTION 2.03.              Form of Trustee's Certificate of Authentication ..........................  17

ARTICLE III           THE SECURITIES .........................................................................  18
         SECTION 3.01.              Title and Terms ..........................................................  18
         SECTION 3.02.              Denominations ............................................................  20
         SECTION 3.03.              Execution, Authentication, Delivery and Dating ...........................  21
         SECTION 3.04.              Temporary Securities .....................................................  22
         SECTION 3.05.              Registration, Registration of Transfer and Exchange ......................  24
         SECTION 3.06.              Mutilated, Destroyed, Lost and Stolen Securities .........................  27
         SECTION 3.07.              Payment of Interest; Interest Rights Preserved ...........................  28




                                       i


                                      TABLE OF CONTENTS
                                        (continued)




                                                                                                               Page
                                                                                                               ----
                                                                                                          
         SECTION 3.08.              Persons Deemed Owners ....................................................  30
         SECTION 3.09.              Cancellation .............................................................  30
         SECTION 3.10.              Computation of Interest ..................................................  31
         SECTION 3.11.              Forms of Certification ...................................................  31
         SECTION 3.12.              Payment in Currencies ....................................................  31
         SECTION 3.13.              CUSIP Numbers ............................................................  33

ARTICLE IV            REDEMPTION OF SECURITIES ...............................................................  34
         SECTION 4.01.              Applicability of Article .................................................  34
         SECTION 4.02.              Election to Redeem; Notice to Trustee ....................................  34
         SECTION 4.03.              Selection by Trustee of Securities to be Redeemed ........................  34
         SECTION 4.04.              Notice of Redemption .....................................................  35
         SECTION 4.05.              Deposit of Redemption Price ..............................................  35
         SECTION 4.06.              Securities Payable on Redemption Date ....................................  35
         SECTION 4.07.              Securities Redeemed in Part ..............................................  36
         SECTION 4.08.              Redemption Suspended During Event of Default .............................  36

ARTICLE V             COVENANTS ..............................................................................  37
         SECTION 5.01.              Payment of Principal, Premium, if any, Maturity Consideration and Interest  37
         SECTION 5.02.              Maintenance of Office or Agency ..........................................  37
         SECTION 5.03.              Money or Other Property for Security Payments and Deliveries to
                                    be Held in Trust .........................................................  38
         SECTION 5.04.              Additional Amounts .......................................................  40
         SECTION 5.05.              Corporate Existence ......................................................  40
         SECTION 5.06.              Statement as to Compliance ...............................................  41
         SECTION 5.07.              Waiver of Certain Covenants ..............................................  41
         SECTION 5.08.              Calculation of Original Issue Discount ...................................  41
         SECTION 5.09.              Statement by Officers as to Default ......................................  42

ARTICLE VI            HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY ......................................  42
         SECTION 6.01.              Company to Furnish Trustee Names and Addresses of Holders ................  42




                                       ii


                               TABLE OF CONTENTS
                                  (continued)



                                                                                                               Page
                                                                                                               ----
                                                                                                          
         SECTION 6.02.              Preservation of Information; Communications to Holders ...................  42
         SECTION 6.03.              Reports by Trustee .......................................................  43
         SECTION 6.04.              Reports by the Company ...................................................  44

ARTICLE VII           REMEDIES ...............................................................................  45
         SECTION 7.01.              Events of Default ........................................................  45
         SECTION 7.02.              Acceleration of Maturity; Rescission and Annulment .......................  45
         SECTION 7.03.              Collection of Indebtedness and Suits for Enforcement by Trustee ..........  46
         SECTION 7.04.              Trustee May File Proofs of Claim .........................................  47
         SECTION 7.05.              Trustee May Enforce Claims Without Possession of Securities ..............  48
         SECTION 7.06.              Application of Money or Other Property Collected .........................  48
         SECTION 7.07.              Limitation on Suits ......................................................  49
         SECTION 7.08.              Unconditional Right of Securityholders to Receive Principal, Premium,
                                    Maturity Consideration and Interest ......................................  50
         SECTION 7.09.              Restoration of Rights and Remedies .......................................  50
         SECTION 7.10.              Rights and Remedies Cumulative ...........................................  51
         SECTION 7.11.              Delay or Omission Not Waiver .............................................  51
         SECTION 7.12.              Control by Securityholders ...............................................  51
         SECTION 7.13.              Waiver of Past Defaults ..................................................  52
         SECTION 7.14.              Undertaking for Costs ....................................................  52
         SECTION 7.15.              Waiver of Stay or Extension Laws .........................................  52

ARTICLE VIII          THE TRUSTEE ............................................................................  53
         SECTION 8.01.              Certain Duties and Responsibilities ......................................  53
         SECTION 8.02.              Notice of Default ........................................................  54
         SECTION 8.03.              Certain Rights of Trustee ................................................  54
         SECTION 8.04.              Not Responsible for Recitals or Issuance of Securities ...................  55
         SECTION 8.05.              May Hold Securities ......................................................  56
         SECTION 8.06.              Money or Other Property Held in Trust ....................................  56
         SECTION 8.07.              Compensation and Reimbursement ...........................................  56
         SECTION 8.08.              Disqualification; Conflicting Interests ..................................  57




                                      iii


                                     TABLE OF CONTENTS
                                        (continued)



                                                                                                               Page
                                                                                                               ----
                                                                                                         
         SECTION 8.09.              Corporate Trustee Required; Eligibility ..................................  57
         SECTION 8.10.              Resignation and Removal; Appointment of Successor ........................  58
         SECTION 8.11.              Acceptance of Appointment by Successor ...................................  60
         SECTION 8.12.              Merger, Conversion, Consolidation or Succession to Business of Trustee ...  61
         SECTION 8.13.              Preferential Collection of Claims against Company ........................  61
         SECTION 8.14.              Appointment of Authenticating Agent ......................................  61

ARTICLE IX            SUPPLEMENTAL INDENTURES ................................................................  63
         SECTION 9.01.              Supplemental Indentures Without Consent of Securityholders ...............  63
         SECTION 9.02.              Supplemental Indentures With Consent of Securityholders ..................  64
         SECTION 9.03.              Execution of Supplemental Indentures .....................................  66
         SECTION 9.04.              Effect of Supplemental Indentures ........................................  66
         SECTION 9.05.              Conformity with Trust Indenture Act ......................................  66
         SECTION 9.06.              Reference in Securities to Supplemental Indentures .......................  66

ARTICLE X             CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER ..........................................  67
         SECTION 10.01.             Company May Consolidate, etc., Only on Certain Terms .....................  67
         SECTION 10.02.             Successor Corporation Substituted ........................................  67

ARTICLE XI            SATISFACTION AND DISCHARGE .............................................................  68
         SECTION 11.01.             Satisfaction and Discharge of Indenture ..................................  68
         SECTION 11.02.             Application of Trust Money or Property ...................................  70

ARTICLE XII           IMMUNITY OF INCORPORATORS, STOCKHOLDERS,  OFFICERS AND DIRECTORS .......................  70
         SECTION 12.01.             Exemption from Individual Liability ......................................  70

ARTICLE XIII          SINKING FUNDS ..........................................................................  70
         SECTION 13.01.             Applicability of Article .................................................  70
         SECTION 13.02.             Satisfaction of Sinking Fund Payments with Securities ....................  71
         SECTION 13.03.             Redemption of Securities for Sinking Fund ................................  71

ARTICLE XIV           SUBORDINATION ..........................................................................  71
         SECTION 14.01.             Agreement to Subordinate .................................................  71




                                       iv


                                             TABLE OF CONTENTS
                                               (continued)


                                                                                                               Page
                                                                                                               ----
                                                                                                         
         SECTION 14.02.             Distribution on Dissolution, Liquidation and Reorganization; Subrogation
                                    of Securities ............................................................  72
         SECTION 14.03.             Payments on Securities Prohibited During Event of Default Under Senior
                                    Indebtedness .............................................................  74
         SECTION 14.04.             Reserved .................................................................  75
         SECTION 14.05.             Authorization of Holders to Trustee to Effect Subordination ..............  75
         SECTION 14.06.             Notice to Trustee ........................................................  75
         SECTION 14.07.             Right of Trustee to Hold Senior Indebtedness .............................  76
         SECTION 14.08.             Article Fourteen Not to Prevent Defaults or Events of Default ............  76
         SECTION 14.09.             Trustee Compensation, Etc. Not Prejudiced ................................  76

ARTICLE XV            MISCELLANEOUS ..........................................................................  76
         SECTION 15.01.             Counterparts .............................................................  76





                                       v






                                             
         EXHIBIT A                  Form of Certificate to be Given by Person Entitled to Receive Bearer Note Certificate

         EXHIBIT                    B Form of Certificate to be Given by Euroclear and Clearstream in Connection with
                                    the Exchange of a Portion of a Temporary Global Note Certificate

         EXHIBIT C                  Form of Certificate to be Given by Euroclear and Clearstream to Obtain Interest Prior to
                                    an Exchange Date Certificate

         EXHIBIT D                  Form of Certificate to be Given by Beneficial Owners to Obtain Interest Prior to an
                                    Exchange Date Certificate

         EXHIBIT E                  Additional Provisions Relating to Book-Entry Securities and Transfers in Certain
                                    Situations


                                       vi



         THIS INDENTURE is dated as of November 4, 2002 between SUSQUEHANNA
BANCSHARES, INC., a corporation duly organized and existing under the laws of
the Commonwealth of Pennsylvania (hereinafter called the "Company"), having its
principal executive office at 26 North Cedar Street, Lititz, Pennsylvania, 17543
and J. P. MORGAN TRUST COMPANY, NATIONAL ASSOCIATION (hereinafter called the
"Trustee"), having a designated corporate trust office located in Pittsburgh,
Pennsylvania.

                             RECITALS OF THE COMPANY

         The Company deems it necessary from time to time to issue its unsecured
subordinated debentures, notes or other evidence of indebtedness to be issued in
one or more series (hereinafter called the "Securities") as hereinafter set
forth, and to provide therefor the Company has duly authorized the execution and
delivery of this Indenture;

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

         NOW, THEREFORE, THIS INDENTURE WITNESSETH:

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

                                   ARTICLE I

             DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

SECTION 1.01. Definitions.

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

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

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

         (3) all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles
and, except as otherwise herein expressly provided, the term "generally accepted
accounting principles" with respect to any computation required or permitted
hereunder shall mean such accounting principles as are generally accepted at the
date of such computation; and

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

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



         "Act", when used with respect to any Holder, has the meaning specified
in Section 1.04.

         "Affiliate" means, with respect to a specified Person, any Person
directly or indirectly controlling, controlled by, or under common control with
the specified Person.

         "Authenticating Agent" means any Person authorized to act on behalf of
the Trustee to authenticate Securities pursuant to Section 8.14.

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

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

         "Bearer Security" means any Security in the form established pursuant
to Section 2.02 which is payable to bearer.

         "Board of Directors" means either the board of directors of the
Company, any duly authorized committee of that board, the Chairman, any Vice
Chairman, the President or any Vice President of the Company duly authorized by
the Board of Directors of the Company to take a specified action or make a
specified determination.

         "Board Resolution" means a resolution duly adopted by the Board of
Directors.

         "Business Day" means any day other than a Saturday or Sunday, that is
neither a legal holiday nor a day on which banking institutions are authorized
or obligated by law, regulation or executive order to close in The City of New
York or in Pittsburgh, Pennsylvania, or, with respect to Securities denominated
in a Foreign Currency, in the city specified in the Board Resolution pursuant to
Section 3.01, and with respect to Securities which will bear interest based on a
specified percentage of London interbank offered quotations, a day which is also
a day on which banks in London, England are open for business (including
dealings in foreign exchange and foreign currency deposits).

         "Commission" means the Securities and Exchange Commission as from time
to time constituted, created under the Securities Exchange Act of 1934, as
amended, or if any time after the execution and delivery 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 on such date.

         "Common Depository" has the meaning specified in Section 3.04.

                                       2



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

         "Company Request" or "Company Order" mean, respectively, a written
request or order signed in the name of the Company by any two Authorized
Officers and delivered to the Trustee.

         "Components", with respect to a composite currency means the currency
amounts that are components of such composite currency on the conversion date
with respect to such composite currency. After such conversion date if the
official unit of any component currency is altered by way of combination or
subdivision, the number of units of such currency in the Component shall be
proportionately divided or multiplied. After such conversion date if two or more
component currencies are consolidated into a single currency, the amounts of
those currencies as Components shall be replaced by an amount in such single
currency equal to the sum of the amounts of such consolidated component
currencies expressed in such single currency, and such amount shall thereafter
be a Component. If after such conversion date any component currency shall be
divided into two or more currencies, the amount of such currency as a Component
shall be replaced by amounts of such two or more currencies, each of which shall
be equal to the amount of such former component currency divided by the number
of currencies into which such component currency was divided, and such amounts
shall thereafter be Components.

         "Corporate Trust Office" means the designated corporate trust office of
the Trustee, at which at any particular time its corporate trust business shall
be administered, which office, at the date of execution of this Agreement, is
located at One Oxford Centre, Suite 1100, Pittsburgh, Pennsylvania 15217.

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

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

         "Default" has the meaning specified in Section 7.07.

         "Defaulted Interest" has the meaning specified in Section 3.07.

         "Euro" means the single currency of participating member states which
was introduced on January 1, 1999 at the commencement of the third stage of
European economic and monetary union pursuant to the Treaty establishing the
European Communities as amended by the Treaty on European Union.

         "Event of Default" has the meaning specified in Section 7.01.

         "Exchange Date" has the meaning specified in Section 3.04.

         "Exchange Rate" means (a) if pursuant to Section 3.12(i) payment is to
be made in U.S. dollars with respect to a Security denominated in a Foreign
Currency, the highest firm bid quotation for U.S. dollars received by the
Exchange Rate Agent at approximately 11:00 A.M.,

                                        3



New York City time on the second Business Day preceding the applicable payment
date (or, if no such rates are quoted on such date, the last date on which such
rates were quoted), from three recognized foreign exchange dealers in The City
of New York selected by the Exchange Rate Agent and approved by the Company (one
of which may be the Exchange Rate Agent) for the purchase by the quoting dealer,
for settlement on such payment date, of the aggregate amount of the Foreign
Currency payable on such payment date in respect of all Securities denominated
in such Foreign Currency and (b) if an Exchange Rate is to be computed for
purposes of any provisions other than Section 3.l2(i), the rate determined
pursuant to the foregoing clause (a) on such date and at such time as may be
specified in the relevant provision.

         In the case of clause (a) above, if no such bid quotations are
available, payments pursuant to Section 3.12(i) will be made in the applicable
Foreign Currency, unless such Foreign Currency is unavailable due to the
imposition of exchange controls (or, in the case of a composite currency, such
currency ceases to be used for the purposes for which it was established as
provided in Section 3.12(iv)) or other circumstances beyond the control of the
Company, in which case the Company will be entitled to make payments in U.S.
dollars on the basis of the Market Exchange Rate for such Foreign Currency.

         If for any reason any of the foregoing rates are not available with
respect to one or more Foreign Currencies for which an Exchange Rate is
required, the Company shall use the most recently available quotation of the
Federal Reserve Bank of New York, or quotations from one or more commercial
banks in The City of New York or in the country of issue of the Foreign Currency
in question, or such other quotations as the Company, in each case, shall deem
appropriate; provided, however, that if there is more than one market for
dealing in any Foreign Currency by reason of foreign exchange regulations or
otherwise, the market to be used for such quotations shall be the largest market
upon which a nonresident issuer of securities designated in such Foreign
Currency would purchase such Foreign Currency in order to make payments in
respect of such securities.

         "Exchange Rate Agent" means the New York clearing house bank designated
by the Company to act as such for any series of Securities for that series (with
notice to the Trustee for that series), or any successor thereto, and may be the
Trustee for that series.

         "Exchange Rate Officer's Certificate", with respect to any date for the
payment of principal of (and premium, if any) and interest on any series of
Securities, means a certificate signed by an officer of the Exchange Rate Agent
and delivered to the Company and to the Trustee, setting forth (i) the
applicable Market Exchange Rate or Exchange Rate and (ii) the U.S. dollar or
Foreign Currency amount of principal (and premium, if any) and interest payable
with respect to a Security of any series on the basis of the Market Exchange
Rate or Exchange Rate, as the case may be (on an aggregate basis and on the
basis of a Security having the lowest denomination principal amount pursuant to
Section 3.02 in the relevant currency).

         "Foreign Currency" means a currency issued by the government of any
country (other than a currency of the United States of America) or any composite
currency based on the aggregate value of currencies of any group of countries.

         "Holder", when used with respect to any Security, means a
Securityholder.

                                        4



         "Indebtedness Ranking Junior to the Securities" means any obligation of
the Company which ranks junior to and not equally with or senior to the
Securities in right of payment upon the occurrence of any insolvency,
receivership, conservatorship, reorganization, readjustment of debt, marshalling
of assets and liabilities or similar proceedings or any liquidation or
winding-up of or relating to the Company as a whole, whether voluntary or
involuntary.

         "Indebtedness Ranking on a Parity with the Securities" means any
obligation of the Company which ranks equally with and not senior to the
Securities in right of payment upon the occurrence of any insolvency,
receivership, conservatorship, reorganization, readjustment of debt, marshalling
of assets and liabilities or similar proceedings or any liquidation or
winding-up of or relating to the Company as a whole, whether voluntary or
involuntary.

         "Indenture" means with respect to each series of Securities for which a
Person is acting as Trustee, this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof
and shall include the terms of any particular series of Securities for which
such Person is Trustee established as contemplated by Section 3.01 exclusive,
however, of any provisions or terms which relate solely to other series of
Securities for which such Person is not Trustee, regardless of when such terms
or provisions were adopted, and exclusive of any provisions or terms adopted by
means of one or more indentures supplemental hereto executed and delivered after
such Person had become such Trustee but to which such Person, as such Trustee,
was not a party.

         "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 series of
Securities, means the Stated Maturity of an installment of interest on such
Security.

         "Judgment Currency" has the meaning specified in Section 1.15.

         "Market Exchange Rate" means (a) if pursuant to Section 3.12(iv)
payment is to be made in U.S. dollars with respect to a Security denominated in
a Foreign Currency (other than a composite currency), the noon buying rate in
The City of New York for cable transfers of such Foreign Currency as certified
by the Federal Reserve Bank of New York on the second Business Day preceding the
applicable payment date and (b) if pursuant to Section 3.12(iv) payment is to be
made in U.S. dollars with respect to a Security denominated in a composite
currency, for each Component of such composite currency, the Market Exchange
Rate determined pursuant to the foregoing clause (a) on the second Business Day
preceding the applicable payment date.

         In the event a Market Exchange Rate as described in clause (a) or (b)
above is not available, the Company will be entitled to make payments in U.S.
dollars pursuant to Section 3.12(iv) on the basis of the most recently available
Market Exchange Rate for such Foreign Currency or each Component of such
composite currency, as the case may be.

         "Maturity", when used with respect to any Security, means the date on
which the principal or Maturity Consideration of such Security (or any
installment of principal or Maturity

                                        5



Consideration) becomes due and payable or deliverable as therein or herein
provided, whether at the Stated Maturity or by declaration of acceleration, call
for redemption or otherwise.

         "Maturity Consideration" means securities, which may be issued by the
Company or another Person, or a combination of cash, such securities and/or
other property that may be delivered to Holders of Securities of any series to
satisfy the Company's obligations with regard to payment upon Maturity, or upon
any redemption or required repurchase or in connection with any exchange
provisions, or any interest payment.

         "New York Banking Day" has the meaning specified in Section 1.15.

         "1995 Notes" means the Company's 9.00% Subordinated Notes Due 2005
issued in the original aggregate principal amount of $50,000,000.

         "Officers' Certificate" means a certificate signed by two Authorized
Officers and delivered to the Trustee. Each such certificate shall contain the
statements set forth in Section 1.02.

         "Opinion of Counsel" means a written opinion of counsel, who may
(except as otherwise expressly provided in this Indenture) be an employee of the
Company, and who shall be acceptable to the Trustee.

         "Original Issue Discount Security" means any Security which provides
for an amount less than the principal amount thereof to be due and payable upon
a declaration of acceleration of the Maturity thereof pursuant to Section 7.02.

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

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

                  (ii) such Securities for whose payment or redemption money in
         the necessary amount has been theretofore deposited with the Trustee
         for such series or any Paying Agent in trust for the Holders of such
         Securities, provided that, if such Securities are to be redeemed,
         notice of such redemption has been duly given pursuant to this
         Indenture or provision therefor satisfactory to the Trustee has been
         made; and

                  (iii) such Securities which have been paid pursuant to Section
         3.06 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
         protected purchaser (within the meaning of Article 8 of the Uniform
         Commercial Code) 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 such Securities Outstanding have given any request, demand,
authorization, direction, notice,

                                        6



consent or waiver hereunder, the principal amount of Original Issue Discount
Securities that shall be deemed to be Outstanding for such purposes shall be the
amount of the principal thereof that would be due and payable as of the date of
such determination upon a declaration of acceleration of the Maturity thereof
pursuant to Section 7.02, and Securities owned by the Company or any other
obligor upon the Securities or any Affiliate of the Company or of such other
obligor shall be disregarded and deemed not to be Outstanding, except that, in
determining whether the Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Securities which are registered in the Security Register in the name of the
Company, any obligor stated to be so obligated on such Securities or any
Affiliate of the Company or such obligor which is listed as such on an Officers'
Certificate delivered to the Trustee for that Series shall be disregarded.
Securities so owned which have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the Trustee the
pledgee's right so to act with respect to such Securities and that the pledgee
is not the Company or any other obligor upon the Securities or any Affiliate of
the Company or of such other obligor. The Trustee shall be entitled to
conclusively rely upon an Officers' Certificate as conclusive evidence regarding
the ownership or pledge of Securities by the Company or any Affiliate of the
Company.

         "Paying Agent" means, with respect to any series of Securities, any
Person authorized by the Company to pay or deliver the principal of (and
premium, if any), Maturity Consideration or interest on, any Securities of that
series on behalf of the Company.

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

         "Place of Payment", when used with respect to the Securities of any
series, means the place or places where, subject to the provisions of Section
5.02, the principal of (and premium, if any), Maturity Consideration and
interest on the Securities of that series are payable or deliverable as
specified in accordance with Section 3.01.

         "Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 3.06 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.

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

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

         "Registered Security" means any Security in the form established
pursuant to Section 2.01 which is registered in the Security Register.

                                        7



         "Regular Record Date" for the interest payable on any Security on any
Interest Payment Date means the date, if any, specified in such Security as the
"Regular Record Date".

         "Required Currency" means the currency in which principal of (and
premium, if any), Maturity Consideration and interest on a Security is payable
pursuant to Section 3.12.

         "Responsible Officer", means, when used with respect to the Trustee, an
officer within the corporate trust department, who has direct responsibility for
the administration of this Indenture and any other officer of the Trustee to
whom corporate trust matters are referred because of his knowledge and
familiarity with the particular subject.

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

         "Securityholder" means, in the case of a Registered Security, the
Person in whose name the Security is registered in the Security Register and, in
the case of a Bearer Security (or any temporary global Security in bearer form),
the bearer thereof and, when used with respect to any coupon, the bearer
thereof.

         "Security Register" has the meaning specified in Section 3.05.

         "Security Registrar" and "Co-Security Registrar" have the meanings
specified in Section 3.05.

         "Senior Indebtedness" means all obligations of the Company, whether
outstanding on the date of the execution of this Indenture or thereafter
created, assumed or incurred, to make payment or delivery pursuant to the terms
of (i) the Company's indebtedness for money borrowed (as defined herein), other
than (a) the Securities, (b) any Indebtedness Ranking Junior to the Securities
and (c) any Indebtedness Ranking on a Parity with the Securities, including the
1995 Notes, (ii) financial instruments such as (a) securities contracts and
foreign currency exchange contracts, (b) derivative instruments, such as swap
agreements (including interest rate and foreign exchange rate swap agreements),
cap agreements, floor agreements, interest rate agreements, commodity contracts
or options, and (c) in the case of (ii)(a) and (ii)(b) above, similar financial
instruments, and (iii) any deferrals, renewals or extensions of any such Senior
Indebtedness. The term "indebtedness for money borrowed" as used in the
foregoing sentence shall include, without limitation, any obligation of the
Company, or any obligation guaranteed by the Company, for the repayment of
borrowed money, whether or not evidenced by bonds, debentures, notes or other
written instruments, and any deferred obligation of the Company for the payment
of the purchase price of property or assets (excluding trade accounts payable or
accrued liabilities in the ordinary course of business). Senior Indebtedness may
also include other obligations of the Company to the extent specifically
provided in the terms of a series of Securities established pursuant to Section
3.01.

         "Special Record Date" for the payment of any Defaulted Interest (as
defined in Section 3.07) means the date fixed by the Trustee pursuant to Section
3.07.

         "Specified Currency" means the currency in which the Securities of any
series are denominated.

                                        8



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

         "Subsidiary", means a Corporation more than 50% of the Voting Stock of
which is owned, directly or indirectly, by the Company or by one or more other
Subsidiaries or by the Company and one or more other 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 provisions of this Indenture, and thereafter
"Trustee" shall mean or include each Person who is then a Trustee hereunder, and
if at any time there is more than one such Person, "Trustee" as used with
respect to the Securities of any series shall mean the Trustee with respect to
securities of that series.

         "Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939,
as amended by the Trust Indenture Reform Act of 1990, as in force at the date as
of which this instrument was executed, except as provided in Section 9.05.

         "United States" means the United States of America (including the
States and the District of Columbia), its territories, its possessions and other
areas subject to its jurisdiction.

         "United States Alien" means any Person who, for United States federal
income tax purposes, is a foreign corporation, a non-resident alien individual,
a non-resident alien subsidiary of a foreign estate or trust, or a foreign
partnership one or more of the members of which is, for United States federal
income tax purposes, a foreign corporation, a non-resident alien individual or a
non-resident alien fiduciary of a foreign estate or trust.

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

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

         SECTION 1.02. Compliance Certificates and Opinions.

         Upon any application or request by the Company to the Trustee to take
any action under any provision of this Indenture, the Company shall furnish to
the Trustee an Officers' Certificate stating that all conditions precedent
(including any covenants, compliance with which constitutes a condition
precedent), if any, provided for in this Indenture relating to the proposed
action have been complied with and an Opinion of Counsel stating that in the
opinion of such counsel that such action is authorized or permitted by this
Indenture and that all such conditions precedent (including any covenants,
compliance with which constitutes a condition precedent), if any, have

                                        9



been complied with, except that in the case of any such application or request
as to which the furnishing of such documents is specifically required by any
provision of this Indenture relating to such particular application or request,
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 annual
certificates provided pursuant to Section 5.10) shall include:

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

                  (ii) 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;

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

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

         SECTION 1.03. Form of Documents Delivered to Trustee.

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

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

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

         SECTION 1.04. Acts of Securityholders.

                                       10



                  (i) Any request, demand, authorization, direction, notice,
         consent, waiver or other action provided by this Indenture to be given
         or taken by Securityholders of any series may be embodied in and
         evidenced by one or more instruments of substantially similar tenor
         signed by such Securityholders in person or by an agent duly appointed
         in writing; and, except as herein otherwise expressly provided, such
         action shall become effective when such instrument or instruments are
         delivered to the Trustee, and, where it is hereby expressly required,
         to the Company. Such instrument or instruments (and the action embodied
         therein and evidenced thereby) are herein sometimes referred to as the
         "Act" of the Securityholders signing such instrument or instruments.
         Proof of execution of any such instrument or of a writing appointing
         any such agent shall be sufficient for any purpose of this Indenture
         and (subject to Section 8.01) conclusive in favor of the Trustee and
         the Company, if made in the manner provided in this Section.

                  (ii) 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 the 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 or on behalf of
         any legal entity other than an individual, such certificate or
         affidavit shall also constitute proof of the authority of the Person
         executing the same. 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 provided in any other manner which the Trustee deems
         sufficient.

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

                  (iv) The principal amount and serial numbers of Bearer
         Securities held by any Person, and the date of holding the same, may be
         proved by the production of such Bearer Securities or by a certificate
         executed, as depository, by any trust company, bank, banker or other
         depositary, wherever situated, if such certificate shall be deemed by
         the Trustee to be satisfactory, showing that at the date therein
         mentioned such Person had on deposit with such depositary, or exhibited
         to it, the Bearer Securities therein described; or such facts may be
         proved by the certificate or affidavit of the Person holding such
         Bearer Security, if such certificate or affidavit is deemed by the
         Trustee to be satisfactory. The Trustee and the Company may assume that
         such ownership of any Bearer Security continues until (1) another
         certificate or affidavit bearing a later date issued in respect of the
         same Bearer Security is produced, or (2) such Bearer Security is
         produced to the Trustee by some other Person, or (3) such Bearer
         Security is surrendered in exchange for a Registered Security, or (4)
         such Bearer Security is no longer Outstanding.

                  (v) The fact and date of execution of any such instrument or
         writing, the authority of the Person executing the same and the
         principal amount and serial numbers of Bearer Securities held by the
         Person so executing such instrument or writing and the date of holding
         the same may also be proved in any other manner which the

                                       11



         Trustee deems sufficient; and the Trustee may in any instance require
         further proof with respect to any of the matters referred to in this
         Section.

                  (vi) Any request, demand, authorization, direction, notice,
         consent, waiver or other action by 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 or the Holder of any Predecessor
         Security, in respect of any action taken, suffered or omitted by the
         Trustee or the Company in reliance thereon, whether or not notation of
         such action is made upon such Security.

                  (vii) For purposes of determining the principal amount of
         Outstanding Securities of any series, or if such Outstanding Securities
         are not payable at Maturity for a fixed principal amount, the issue
         price of Outstanding Securities of any series, the Securityholders of
         which are required, requested or permitted to give any request, demand,
         authorization, direction, notice, consent, waiver or take any other Act
         under the Indenture, each Security denominated in a Foreign Currency
         shall be deemed to have a principal amount or issue price determined by
         converting the principal amount or issue price of such Security in the
         currency or currencies in which such Security is denominated into U.S.
         dollars at the Exchange Rate(s) as of 9:00 A.M. New York City time as
         determined by an Exchange Rate Agent (as evidenced by a certificate of
         such Exchange Rate Agent) on the date such Act is delivered to the
         Trustee pursuant to Section 1.04(i). Any such determination by the
         Company or an Exchange Rate Agent shall be conclusive and binding on
         the Holders and the Trustee for such series, and neither the Company
         nor such Exchange Rate Agent shall be liable therefor in the absence of
         bad faith.

                  (viii) The Company may, but shall not be obligated to, set a
         record date for purposes of determining the identity of Holders
         entitled to vote or consent to any action by vote or consent authorized
         or permitted under this Indenture. If a record date is fixed, those
         persons who were Holders of Securities at such record date (or their
         duly designated proxies), and only those persons, shall be entitled to
         take such action by vote or consent or to revoke any vote or consent
         previously given, whether or not such persons continue to be Holders
         after such record date. No such vote or consent shall be valid or
         effective for more than 120 days after such record date.

         SECTION 1.05. Notices, etc., to Trustee and Company.

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

                  (i) the Trustee by any Securityholder or by the Company shall
         be sufficient for every purpose hereunder if made, delivered or filed
         in writing to or with the Trustee and received at its Corporate Trust
         Office; or

                                       12



                  (ii) the Company by any Securityholder or by the Trustee shall
         be sufficient for every purpose hereunder (unless otherwise herein
         expressly provided) if in writing and mailed, first-class, postage
         prepaid, to the Company addressed to the attention of its Secretary at
         the address of its principal office specified in the first paragraph of
         this Indenture, or at any other address previously furnished in writing
         to the Trustee by an Authorized Officer of the Company.

         SECTION 1.06. Notices to Securityholders; Waiver.

         Where this Indenture or any Security provides for notice to Holders of
any series of Securities of any event:

                  (1) Such notice shall be sufficiently given (unless otherwise
         herein, or in such Security, expressly provided) if in writing and
         mailed, first-class postage prepaid, to each Holder of a Registered
         Security affected by such event, at his address as it appears in the
         Security Register, not later than the latest date, and not earlier than
         the earliest date, prescribed for the giving of such notice.

                  (2) Such notice shall be sufficiently given to Holders of
         Bearer Securities if published in an Authorized Newspaper in The City
         of New York and, if the Securities of such series are then listed on
         The International Stock Exchange of the United Kingdom and the Republic
         of Ireland Limited and such stock exchange shall so require, in London
         and, if the Security of such series are then listed on the Luxembourg
         Stock Exchange and such stock exchange shall so require, in Luxembourg
         and, if the Security of such series are then listed on any other stock
         exchange and such stock exchange shall so require, in any other
         required city outside the United States or, if not practicable,
         elsewhere in Europe on a Business Day at least twice, the first such
         publication to be not earlier than the earliest date, and not later
         than the latest date, prescribed for the giving of such notice; it
         being understood that the Company shall notify the Trustee of any of
         the foregoing requirements a reasonable amount of time prior to the
         date on which such notice must be given (but in no event less than five
         Business Days).

         In case by reason of the suspension of regular mail service in the
applicable country or countries or by reason of any other case it shall be
impracticable to give such notice to Holders of Registered Securities by mail,
then such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder. In any case
where notice to Holders of Registered Securities is given by mail, neither the
failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder of a Registered Security shall affect the sufficiency of such
notice with respect to other Holders of Registered Securities or the sufficiency
of any notice by publication to Holders of Bearer Securities given as provided
above.

         In case by reason of the suspension of publication of any Authorized
Newspaper or Authorized Newspapers or by reason of any other cause it shall be
impracticable to publish any notice to Holders of Bearer Securities as provided
above, then such notification to Holders of Bearer Securities as shall be given
with the approval of the Trustee shall constitute sufficient

                                       13



notice to such Holders for every purpose hereunder. Neither the failure to give
notice by publication to Holders of Bearer Securities as provided above, nor any
defect in any notice so published, shall affect the sufficiency of any notice
mailed to Holders of Registered Securities as provided above.

         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. Such waivers of notice by Securityholders 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.

         SECTION 1.07. Language of Notices, Etc.

         Any request, demand, authorization, direction, notice, consent, or
waiver required or permitted under this Indenture shall be in the English
language, except that any published notice may be in an official language of the
country of publication, as may be specified in a form of Security or, in the
absence of such specification, as directed in writing by the Company.

         SECTION 1.08. Conflict with Trust Indenture Act.

         If and to the extent that any provision hereof limits, qualifies or
conflicts with the duties imposed by any of Sections 310 to 317, inclusive, of
the Trust Indenture Act through operation of Section 318(c) thereof, such
imposed duties shall control.

         SECTION 1.09. Effect of Headings and Table of Contents.

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

         SECTION 1.10. Successors and Assigns.

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

         SECTION 1.11. Separability Clause.

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

         SECTION 1.12. Benefits of Indenture.

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

         SECTION 1.13. Legal Holidays.

                                       14



         In any case where any Interest Payment Date, Stated Maturity or
Redemption Date of any Security or any date on which any Defaulted Interest is
proposed to be paid or delivered shall not be a Business Day at any Place of
Payment, then (notwithstanding any other provisions of the Securities or this
Indenture) payment or delivery of the principal of (and premium, if any),
Maturity Consideration or interest on any Securities need not be made at such
Place of Payment on such date, but may be made on the next succeeding Business
Day or such other Business Day as may be specified in an Officers' Certificate
delivered to the appropriate Trustee pursuant to Section 3.01 hereof, at such
Place of Payment with the same force and effect as if made on the Interest
Payment Date, Stated Maturity or Redemption Date or on the date on which
Defaulted Interest is proposed to be paid or delivered, and, if such payment or
delivery is made, no interest shall accrue on such payment or delivery for the
period from and after any such Interest Payment Date, Stated Maturity,
Redemption Date or on the date on which Defaulted Interest is proposed to be
paid or delivered, as the case may be.

         SECTION 1.14. Governing Law.

         This Indenture and the Securities shall be construed in accordance with
and governed by the laws of the State of New York without regard to conflicts of
laws principles thereof.

         SECTION 1.15. Judgment Currency; Payment to be in Proper Currency.

         Each reference in any Security to any currency shall be of the essence.
Subject to Section 3.12(iv), the Company agrees, to the fullest extent that it
may effectively do so under applicable law, that (a) if for the purpose of
obtaining judgment in any court it is necessary to convert the sum or amount of
Maturity Consideration due or payable in respect of the principal of (and
premium, if any), Maturity Consideration or interest on the Securities of any
series in a Specified Currency into a currency in which a judgment will be
rendered (the "Judgment Currency"), the rate of exchange used shall be the
Exchange Rate (as determined by the Exchange Rate Agent) as of 11:00 A.M. New
York City time on the New York Banking Day immediately preceding that on which
final unappealable judgment is given and (b) its obligations to make any payment
or delivery of principal of (and premium, if any), Maturity Consideration and
interest on any Security (i) shall not be discharged or satisfied by any tender
by the Company, or recovery by the Trustee, either pursuant to any judgment
(whether or not entered in accordance with subsection (a) above) or otherwise,
in any currency other than the Required Currency except to the extent that such
tender or recovery shall result in the Trustee timely holding the full amount of
the Required Currency then due and payable in respect of such payments, (ii)
shall be enforceable as an alternative or additional cause of action for the
purpose of recovering, in the Required Currency, the amount, if any, by which
such timely holding shall fall short of the full amount of the Required Currency
so expressed to be then due and (iii) shall not be affected by judgment being
obtained for any other sum due under this Indenture. For purposes of the
foregoing, "New York Banking Day" means any day except a Saturday, Sunday or a
legal holiday in The City of New York or a day on which banking institutions in
The City of New York are authorized or required by law or executive order to
close. Except as permitted under Section 3.12(iv), if any such tender or
recovery is in a currency other than the Required Currency, the Trustee may take
such actions as it considers appropriate to exchange such currency for the
Required Currency; provided, however, the Trustee shall have no obligation to
make any payment in any currency tendered to or recovered by such Trustee. The
costs and risks of any such exchange, including

                                       15



without limitation the risks of delay and exchange rate fluctuation, shall be
borne by the Company, and the Company shall remain fully liable for any
shortfall or delinquency in the full amount of the Required Currency then due
and payable, and in no circumstances shall the Trustee be liable therefor. The
Company hereby waives any defense of payment based upon any such tender or
recovery which is not in the Required Currency, or which, when exchanged for the
Required Currency by the Trustee, is less than the full amount of the Required
Currency then due and payable.

         SECTION 1.16. Moneys of Different Currencies to be Segregated.

         The Trustee shall, to the extent required by law, segregate all moneys,
funds and accounts held by the Trustee hereunder in one currency from any money,
funds or accounts in any other currencies, notwithstanding any provision herein
which would otherwise permit the Trustee to commingle such moneys, funds and
accounts.

                                   ARTICLE II

                                 SECURITY FORMS

         SECTION 2.01. 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 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, a copy of an appropriate record of such
action shall be delivered to the Trustee at or prior to the delivery of the
Company Order contemplated by Section 3.03 for the authentication and delivery
of such Securities. If temporary Securities of any series are issued in global
form as permitted by Section 3.04, the form thereof also shall be established as
provided in the preceding sentence.

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

         Unless otherwise provided as contemplated by Section 3.01 with respect
to any series of Securities, the Securities of each series shall be issuable in
registered form without coupons. If so provided as contemplated by Section 3.01,
the Securities of a series shall be issuable solely in bearer form, or in both
registered and bearer form. Unless otherwise specified as contemplated by
Section 3.01, Securities in bearer form shall have interest coupons attached.

         The definitive Securities shall be printed, lithographed or engraved or
produced by any combination of these methods on a steel engraved border or 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.

                                       16



         SECTION 2.02. Form of Securities.

         Each Security shall be in one of the forms approved from time to time
by or pursuant to a Board Resolution. Upon or prior to the delivery of a
Security in any such form to the Trustee for authentication, the Company shall
deliver to the Trustee the following:

                  (i) the Officers' Certificate required by Section 3.01 of this
         Indenture;

                  (ii) the Company Order required by Section 3.03 of this
         Indenture; and

                  (iii) the Opinion of Counsel required by Section 3.03 of this
         Indenture.

         SECTION 2.03. Form of Trustee's Certificate of Authentication.

TRUSTEE'S CERTIFICATE OF AUTHENTICATION

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

                                       J. P. MORGAN TRUST COMPANY, NATIONAL
                                       ASSOCIATION,
                                       as Trustee

                                       By:
                                          ----------------------------------
                                          Authorized Officer

                                       17



                                  ARTICLE III

                                 THE SECURITIES

         SECTION 3.01. Title and Terms.

         The aggregate principal amount of Securities which may be authenticated
and delivered under this Indenture is unlimited. The Securities may be issued up
to the aggregate principal amount of Securities from time to time authorized by
or pursuant to a Board Resolution.

         The Securities may be issued in one or more series. All Securities of
each series issued under this Indenture shall in all respects be equally and
ratably entitled to the benefits hereof with respect to such series without
preference, priority or distinction on account of the actual time or times of
the authentication and delivery or Maturity of the Securities of such series.
There shall be established in or pursuant to a Board Resolution, and set forth
in an Officers' Certificate reasonably acceptable to the Trustee, or established
in one or more indentures supplemental hereto, prior to the issuance of
Securities of any series,

                  (i) the title of the Securities, including CUSIP numbers, of
         the series (which shall distinguish the Securities of the series from
         all other Securities);

                  (ii) the Trustee for the Securities of the series (which
         Trustee shall be the Trustee named herein or a successor Trustee
         appointed in accordance with the terms of this Indenture);

                  (iii) 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 that series pursuant to this Article Three or Sections
         4.07 or 9.06);

                  (iv) the date or dates on which the principal or Maturity
         Consideration of the Securities of the series is payable or
         deliverable;

                  (v) the rate or rates, or the method to be used in
         ascertaining 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 or deliverable and the Regular Record Date for the interest
         payable or deliverable on any Interest Payment Date;

                  (vi) the place or places where, subject to the provisions of
         Section 5.02, the principal of (and premium, if any), Maturity
         Consideration and interest, if any, on Securities of the series shall
         be payable or deliverable;

                  (vii) the office or offices or agency where the Registered
         Securities may be presented for registration of transfer or exchange
         and the place or places where notices and demands to or upon the
         Company in respect of the Securities of such series may be made;

                                       18



                  (viii) the period or periods within which, the price, prices
         or Maturity Consideration 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;

                  (ix) 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 such series shall be
         redeemed or purchased, in whole or in part, pursuant to such
         obligation;

                  (x) the denominations in which Securities of the series shall
         be issuable;

                  (xi) (A) the currency of denomination of the Securities of the
         series, which may be in U.S. dollars or any Foreign Currency, (B) if
         such currency of denomination of such series is a composite currency
         other than the Euro, the agency or organization, if any, responsible
         for overseeing such composite currency and (C) if such Securities are
         denominated in a Foreign Currency, the financial center relative to
         such Foreign Currency;

                  (xii) the designation of the currency or currencies in which
         payment of the principal of (and premium, if any) and interest on the
         Securities of the series will be made (which shall be either U.S.
         dollars or the Foreign Currency in which such Security is denominated),
         and if in U.S. dollars on a Security denominated in a Foreign Currency,
         whether the Holders thereof may elect to have such payments made in
         such Foreign Currency;

                  (xiii) if the Securities of the series are to be denominated
         in a Foreign Currency, the designation of an Exchange Rate Agent for
         purposes of determining the amounts payable or deliverable with respect
         to such Securities in U.S. dollars or a Foreign Currency and exchanging
         a Foreign Currency into U.S. dollars or U.S. dollars into a Foreign
         Currency, as the case may be;

                  (xiv) if other than the principal amount thereof, the portion
         of the principal amount of Securities of the series which shall be
         payable or deliverable upon declaration of acceleration of the Maturity
         thereof pursuant to Section 7.02;

                  (xv) if the amount of payments of principal of (and premium,
         if any), Maturity Consideration or interest, if any, on Securities of
         the series may be determined with reference to an index based on a coin
         or currency other than that in which the Securities are to be payable
         or deliverable, the method or methods by which such amounts shall be
         determined;

                  (xvi) the extent to which any of the Securities will be
         issuable in temporary or permanent global form, and the manner in which
         any interest payable or deliverable on a temporary or permanent global
         Security shall be paid or delivered;

                                       19



                  (xvii) any addition to or modification or deletion of any
         Event of Default, Default or covenants of the Company with respect to
         the Securities of the series, whether or not such Events of Default or
         covenants are consistent with the Events of Default or covenants set
         forth herein;

                  (xviii) any covenants solely for the benefit of the Securities
         of the series;

                  (xix) the appointment of any Paying Agent or Agents for the
         Securities of the series;

                  (xx) whether, and the terms and conditions relating to when
         the Company may satisfy all or part of its obligations with regard to
         payment or delivery upon Maturity, or any redemption or required
         repurchase or in connection with any exchange provisions, or any
         interest payment, by paying or delivering Maturity Consideration to the
         Holders of the Securities;

                  (xxi) any restrictions on transfer of the Securities of the
         series;

                  (xxii) any additional obligation of the Company to be included
         as Senior Indebtedness;

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

                  (xxiv) any legends to be placed on the Securities of the
         series;

                  (xxv) whether the Securities of the series may be issued in
         registered form, bearer form or a combination;

                  (xxvi) whether Securities shall vote and consent together with
         other Securities as a single class and/or shall constitute a single
         series with other Securities; and

                  (xxvii) whether the Securities are subject to the additional
         provisions relating to book-entry securities and transfers in certain
         situations set forth in Exhibit E attached hereto.

         All Securities of any one series and the coupons appertaining to Bearer
Securities of such series, if any, shall be substantially identical except as to
denomination and except as may otherwise be provided in or pursuant to a Board
Resolution and set forth in such Officers' Certificate or in any such indenture
supplemental hereto.

         All Securities shall be subordinate and junior in right of payment to
the obligations of the Company to holders of Senior Indebtedness of the Company
as provided in Article Fourteen.

         At the option of the Company, interest on the Securities of any series
that bear interest may be paid by mailing a check to the address of the Person
entitled thereto as such address shall appear in the Security Register.

                                       20



         SECTION 3.02. Denominations.

         The Securities of each series shall be issuable in such form and
denominations as shall be specified as contemplated by Section 3.01. In the
absence of any specification with respect to the Securities of any series, the
Registered Securities of each series shall be issuable only as Securities
without coupons in minimum denominations of $250,000 and any integral multiple
of $1,000 in excess thereof and the Bearer Securities of each series, if any,
shall be issuable with coupons and in denominations of $10,000 and $50,000.

         SECTION 3.03. Execution, Authentication, Delivery and Dating.

         The Securities shall be executed on behalf of the Company by its
Chairman of the Board, its Chief Executive Officer, its President, one of its
Vice Chairmen or one of its Vice Presidents. The signatures of any or all of
these officers on the Securities may be manual or facsimile. Coupons shall bear
the facsimile signature of the Company's Chairman of the Board, its Chief
Executive Officer, its President, a Vice Chairman of the Board, its Chief
Financial Officer, one of its Executive Vice Presidents or the Treasurer.

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

         At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Securities of any series, together with
any coupons appertaining thereto, executed by the Company to the Trustee for
authentication, together with a Company Order for the authentication and
delivery of such Securities and such other documents as the Trustee may
reasonably request, and the Trustee shall, upon receipt of the Company Order,
authenticate and deliver such Securities as provided in this Indenture and not
otherwise; provided, however, that, in connection with its original issuance, no
Bearer Security shall be mailed or otherwise delivered to any location in the
United States; and provided, further, that a definitive Bearer Security may be
delivered in connection with its original issuance only if the Person entitled
to receive such Bearer Security shall have delivered to the Trustee, or such
other Person as shall be specified in a temporary global Security delivered
pursuant to Section 3.04, a certificate in the form required by Section 3.11(i).

         In authenticating such Securities, and accepting the additional
responsibilities under this Indenture in relation to such Securities, the
Trustee shall be entitled to receive, and (subject to Section 8.01) shall be
fully protected in relying upon, an Opinion of Counsel complying with Section
1.02 and stating that,

                  (i) the form of such Securities has been established in
         conformity with the provisions of this Indenture;

                  (ii) the terms of such Securities have been established in
         conformity with the provisions of this Indenture;

                                       21



                  (iii) all conditions precedent to the authentication and
         delivery of such Securities have been complied with and 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, reorganization, moratorium and other
         laws of general applicability relating to or affecting the enforcement
         of creditors' rights and to general principles of equity; and

                  (iv) such other matters as the Trustee may reasonably request.

         The Trustee shall not be required to authenticate such Securities if
the issue thereof will adversely affect the Trustee's own rights, duties or
immunities under the Securities and this Indenture or otherwise in a manner
which is not reasonably acceptable to the Trustee. Notwithstanding the
generality of the foregoing, the Trustee will not be required to authenticate
Securities denominated in a Foreign Currency if the Trustee reasonably believes
that it would be unable to perform its duties with respect to such Securities.

         Each Registered Security shall be dated the date of its authentication;
and unless otherwise specified as contemplated by Section 3.01, each Bearer
Security and any temporary global Security referred to in Section 3.04 shall be
dated as of the date of issuance of such Security.

         No Security or coupon shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose, unless there appears on
such Security a certificate of authentication substantially in the form provided
for herein executed by the Trustee by manual signature, and such certificate
upon any Security shall be conclusive evidence, and the only evidence that such
Security has been duly authenticated and delivered hereunder and is entitled to
the benefits under this Indenture. Notwithstanding the foregoing, if any
Security shall have been authenticated and delivered hereunder but never issued
and sold by the Company, and the Company shall deliver such Security to the
Trustee for cancellation as provided in Section 3.09 together with a written
statement (which need not comply with Section 1.02 and need not be accompanied
by an Opinion of Counsel but upon which the Trustee may conclusively rely and
shall be protected in acting upon in accordance with Section 8.03 hereof)
stating that such Security has never been issued or sold by the Company, for all
purposes of this Indenture, such Security shall be deemed never to have been
authenticated and delivered under this Indenture and shall never be entitled to
the benefits of this Indenture.

         SECTION 3.04. Temporary Securities.

         Pending the preparation of definitive Securities of any series, the
Company may execute, and upon delivery of a Company Order, the Trustee of such
series shall authenticate and deliver, temporary Securities which are printed,
lithographed, typewritten, mimeographed or otherwise produced, in any authorized
denominations, substantially of the tenor of the definitive Securities in lieu
of which they are issued in registered form or, if authorized, in bearer form
with one or more coupons or without coupons and with such appropriate
insertions, omissions, substitutions and other variations as the officers
executing such Securities may determine, as evidenced by

                                       22



their execution of such Securities. In the case of any series which may be
issuable as Bearer Securities, such temporary Securities may be in global form,
representing such of the Outstanding Securities of such series as shall be
specified therein.

         Except in the case of temporary Securities in global form, each of
which shall be exchanged in accordance with the provisions of the following
paragraph, if temporary Securities of any series are issued, the Company will
cause definitive Securities of such series to be prepared without unreasonable
delay. After the preparation of definitive Securities, 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 a like principal amount of
definitive Securities of such series of authorized denominations provided,
however, that no definitive Bearer Security shall be delivered in exchange for a
temporary Registered Security; and provided, further, that a definitive Bearer
Security shall be delivered in exchange for a temporary Bearer Security only in
compliance with the conditions set forth in Section 3.03. Until so exchanged
the, temporary Securities of any series shall in all respects be entitled to the
same benefits under this Indenture as definitive Securities of such series.

         If temporary Securities of any series are issued in global form, any
such temporary global Security shall, unless otherwise provided in such
temporary global Security, be delivered to the London office of a depository or
common depository (the "Common Depository"), as directed by the Company, for the
benefit of the operator of the Euroclear System ("Euroclear") and Clearstream
Banking, societe anonyme ("Clearstream"), for credit to the respective accounts
of the beneficial owners of such Securities (or to such other accounts as they
may direct). Upon receipt of a Company Order, the Trustee or any Authenticating
Agent shall authenticate such temporary global Security and make such indication
to reflect the initial principal amount, or an increase in the principal amount,
of Outstanding Securities represented thereby. Until such initial
authentication, such temporary global Security shall not evidence any obligation
of the Company. Such temporary global Security shall at any time represent the
aggregate principal amount of Outstanding Securities theretofore indicated
thereon as provided above, subject to reduction to reflect exchanges as
described below.

         Unless otherwise specified in such temporary global Security, and
subject to the second proviso in the following paragraph, the interest of a
beneficial owner of Securities in a series in a temporary global Security shall
be exchanged for definitive Securities of such series and of like tenor
following the Exchange Date when the account holder instructs Euroclear or
Clearstream, as the case may be, to request such exchange on his behalf and
delivers to Euroclear or Clearstream, as the case may be, a certificate in the
form required by Section 3.11(i), dated no earlier than fifteen days prior the
Exchange Date, copies of which certificate shall be available from the offices
of Euroclear and Clearstream, the Trustee, any Authenticating Agent appointed
for such series of Securities and each Paying Agent. Unless otherwise specified
in such temporary global Security, any such exchange shall be made free of
charge to the beneficial owners of such temporary global Security, except that
the Company may charge any Person receiving definitive Securities for the cost
of insurance, postage, transportation and the like in the

                                       23



event that such Person does not take delivery of such definitive Securities in
person at the offices of Euroclear or Clearstream.

         Without unnecessary delay but in any event not later than five Business
Days prior to the date specified in, or determined pursuant to the terms of, any
such temporary global Security as the "Exchange Date" (the "Exchange Date"), the
Company shall deliver to the Trustee, or, if the Trustee appoints an
Authenticating Agent pursuant to Section 8.14, to any such Authenticating Agent,
definitive Securities in aggregate principal amount equal to the principal
amount of such temporary global Security, executed by the Company. Unless
otherwise specified as contemplated by Section 3.01, such definitive Securities
shall be in the form of Bearer Securities or Registered Securities, or any
combination thereof, as may be specified by the Company to the Trustee or any
such Authenticating Agent, as may be appropriate. On or after the Exchange Date,
such temporary global Security shall be surrendered by the Common Depository to
the Trustee or any such Authenticating Agent, as the Company's agent for such
purpose, to be exchanged, in whole or from time to time in part, for definitive
Securities without charge to the Common Depository and the Trustee or any such
Authenticating Agent shall authenticate and deliver, in exchange for each
portion of such temporary global Securities, an equal aggregate principal amount
of definitive Securities of the same series, of authorized denominations and of
like tenor as the portion of such temporary global Security to be exchanged,
which, except as otherwise specified as contemplated by Section 3.01, shall be
in the form of Bearer Securities or Registered Securities, or any combination
thereof, as shall be specified by the beneficial owner thereof; provided,
however, that, unless otherwise specified in such temporary global Security,
upon such presentation by the Common Depository, such temporary global Security
is accompanied by a certificate dated the Exchange Date or a subsequent date and
signed by Euroclear as to the portion of such temporary global Security held for
its account then to be exchanged and a certificate dated the Exchange Date or a
subsequent date and signed by Clearstream, as to the portion of such temporary
global Security held for its account then to be exchanged, each in the form
required by Section 3.11(ii); and provided, further, that a definitive Bearer
Security shall be delivered in exchange for a portion of a temporary global
Security only in compliance with the conditions set forth in Section 3.03.

         Upon any exchange of a portion of any such temporary global Security,
the Trustee or any such Authenticating Agent or the Common Depository, as the
case may be, shall indicate upon such temporary global Security, the amount of
such exchange to reflect the reduction of the principal amount evidenced
thereby, whereupon its remaining principal amount shall be reduced for all
purposes by the amount so exchanged. Until so exchanged in full, such temporary
global Security shall in all respects be entitled to the same benefits under
this Indenture as definitive Securities of such series authenticated and
delivered hereunder, except that, unless otherwise specified as contemplated by
Section 3.01, interest payable on such temporary global Security on an Interest
Payment Date for Securities of such series occurring prior to the applicable
Exchange Date shall be payable, without interest, to Euroclear and Clearstream
on or after such Interest Payment Date upon delivery by Euroclear and
Clearstream to the Trustee or such Authenticating Agent, as the case may be, of
a certificate or certificates in the form required by Section 3.11(iii), for
credit on or after such Interest Payment Date to the respective accounts of the
Persons who are the beneficial owners of such temporary global Security on such
Interest Payment Date and who have each delivered to Euroclear or Clearstream,
as the case may be, a certificate in the form required by Section 3.11(iv).

                                       24



         SECTION 3.05. Registration, Registration of Transfer and Exchange.

         With respect to Registered Securities, the Company shall keep or cause
to be kept at the office of the Security Registrar designated pursuant to this
Section 3.05 or Section 5.02 a register (being the combined register of the
Security Registrar and all Co-Security Registrars and herein sometimes
collectively referred to as the "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Securities and the registration of transfers of Securities and
the Company shall appoint a Security Registrar, and any Co-Security Registrar as
may be appropriate, to keep the Security Register. The Trustee is hereby
initially appointed Security Registrar with respect to the series of Securities
for which it is acting as Trustee. Such Security Register shall be in written
form or in any other form capable of being converted into written form within a
reasonable time. At all reasonable times the information contained in such
Security Register shall be available for inspection by the Trustee at the office
of the Security Registrar. In the event that any Registered Securities issued
hereunder have The City of New York as a Place of Payment, the Company shall
appoint either a Security Registrar or Co-Security Registrar located in The City
of New York.

         Upon surrender for registration of transfer by the Securityholder of
any Registered Security of any series at the office or agency of the Company in
a Place of Payment, 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 Stated Maturity.

         At the option of the Holder, Registered Securities of any series may be
exchanged for other Registered Securities of the same series, of any authorized
denominations and of like aggregate principal amount and Stated Maturity, 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
Securityholder making the exchange is entitled to receive.

         Registered Securities may not be exchanged for Bearer Securities.
Bearer Securities may not be exchanged for Bearer Securities of other authorized
denominations.

         At the option of the Holder, Bearer Securities of any series may be
exchanged for Registered Securities of the same series of any authorized
denominations and of a like aggregate principal amount and tenor, upon surrender
of the Bearer Securities to be exchanged at any such office or agency, with all
unmatured coupons and all matured coupons in default appertaining thereto. If
the Holder of a Bearer Security is unable to produce any such unmatured coupon
or coupons or matured coupon or coupons in default, such exchange may be
effected if the Bearer Securities are accompanied by payment in funds acceptable
to the Company in an amount equal to the face amount of such missing coupon or
coupons, or the surrender of such missing coupon or coupons may be waived by the
Company and the Trustee if there be furnished to them such security or indemnity
as they may require to save each of them and any Paying Agent harmless. If
thereafter the Holder of such Security shall surrender to any Paying Agent any
such missing coupon in respect of which such a payment shall have been made,
such Holder shall be entitled to receive the amount of such payment from the
Company; provided, however, that interest

                                       25



represented by coupons shall be payable only upon presentation and surrender of
those coupons at an office or agency of a Paying Agent located outside the
United States. Notwithstanding the foregoing, in case a Bearer Security of any
series is surrendered at any such office or agency in exchange for a Registered
Security of the same series and like tenor after the close of business at such
office or agency on (i) any Regular Record Date and before the opening of
business at such office or agency on the relevant Interest Payment Date, or (ii)
any Special Record Date and before the opening of business at such office or
agency on the related date for payment of Defaulted Interest, such Bearer
Security shall be surrendered without the coupon relating to such Interest
Payment Date or proposed date for payment, as the case may be.

         Whenever any Securities are so surrendered for exchange, the Company
shall execute, and the Trustee shall authenticate and deliver, the Securities
which the Holder making the exchange is entitled to receive.

         Notwithstanding the foregoing, except as otherwise provided in or
pursuant to this Indenture, any global Security shall be exchangeable for
definitive Securities only if (i) the depositary notifies the Company that it is
unwilling, unable or ineligible to continue as depositary and a successor
depositary is not appointed by the Company within 90 days of the date the
Company is so informed in writing, (ii) the depository ceases to be a "clearing
agency" under the Securities Exchange Act of 1934, as amended, (iii) the
Company, at its option, executes and delivers to the Trustee a Company Order to
the effect that such global Security shall be so exchangeable into definitive
securities, or (iv) an Event of Default has occurred and is continuing with
respect to the Securities. If the beneficial owners of interests in a global
Security are entitled to exchange such interests for definitive Securities, then
without unnecessary delay but in any event not later than the earliest date on
which such interests may be so exchanged, the Company shall deliver to the
Trustee definitive Securities in such form and denominations as are required by
or pursuant to this Indenture, and of the same series, containing identical
terms and in aggregate principal amount equal to the principal amount of such
global Security, executed by the Company. On or after the earliest date on which
such interests may be so exchanged, such global Security shall be surrendered
from time to time by the depositary as shall be specified in the Company Order
with respect thereto, and in accordance with instructions given to the Trustee
and the depositary (which instructions shall be in writing, but need not be
contained in or accompanied by an Officers' Certificate or be accompanied by an
Opinion of Counsel but upon which the Trustee may conclusively rely and shall be
protected in acting upon in accordance with Section 8.03 hereof), as shall be
specified in the Company Order with respect thereto to the Trustee, as the
Company's agent for such purpose, to be exchanged, in whole or in part, for
definitive Securities as described above without charge. The Trustee shall
authenticate and make available for delivery, in exchange for each portion of
such surrendered global Security, a like aggregate principal amount of
definitive Securities of the same series of authorized denominations and of like
tenor as the portion of such global Security to be exchanged; provided, however,
that no such exchanges may occur during a period beginning at the opening of
business 15 days before any selection of Securities of the same series to be
redeemed and ending on the relevant Redemption Date; and provided, further, that
(unless otherwise provided in or pursuant to this Indenture) no Bearer Security
delivered in exchange for a portion of a global Security shall be mailed or
otherwise delivered to any location in the United States. Promptly following any
such exchange in part, such global Security shall be returned by the Trustee to
the depositary in accordance with the instructions of the Company referred to
above. If a Registered Security is

                                       26



issued in exchange for any portion of a global Security after the close of
business at the office or agency of such global Security where such exchange
occurs on or after (i) any Regular Record Date for such Security and before the
opening of business at such office or agency on the next Interest Payment Date,
or (ii) any Special Record Date for such Security and before the opening of
business at such office or agency on the related proposed date for payment of
interest or Default Interest, as the case may be, interest shall not be payable
on such Interest Payment Date or proposed date for payment, as the case may be,
in respect of such Registered Security, but shall be payable on such Interest
Payment Date or proposed date for payment, as the case may be, only to the
Person to whom interest in respect of such portion of such global Security shall
be payable in accordance with the provisions of this Indenture.

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

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

         Unless otherwise provided in the Securities to be transferred or
exchanged, no service charge shall be made to the Holder for any registration of
transfer or exchange of Securities, but the Company may (unless otherwise
provided in such Securities) 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 3.04, 4.07, or 9.06 not involving any transfer.

         None of the Company, the Security Registrar or any Co-Security
Registrar shall be required (i) to issue, register the transfer of or exchange
any 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 that series selected for redemption under Section 4.03 and ending at
the close of business on (A) if Securities of the series are issuable only as
Registered Securities, the day of the mailing of the relevant notice of
redemption of Registered Securities of such series so selected for redemption,
or (B) if Securities of the series are issuable as Bearer Securities, the day of
the first publication of the relevant notice of redemption or, if Securities of
the series are also issuable as Registered Securities and there is no
publication, the mailing of the relevant notice of redemption, or (ii) to
register the transfer or exchange of any Securities so selected for redemption
in whole or in part.

         SECTION 3.06. Mutilated, Destroyed, Lost and Stolen Securities.

         If (i) any mutilated Security or Security with a mutilated coupon,
surrendered to the Trustee or the Security Registrar, or if the Company, the
Trustee and the Security Registrar receive evidence to their satisfaction of the
destruction, loss or theft of any Security or coupon, and (ii) there is
delivered to the Company, the Trustee and the Security Registrar such security
or indemnity as may be required by them to save each of them harmless, then, in
the absence of

                                       27



notice to the Company, the Trustee or the Security Registrar that such Security
has been acquired by a protected purchaser (within the meaning of Article 8 of
the Uniform Commercial Code), the Company shall execute and upon its request the
Trustee shall authenticate and deliver, in lieu of any such mutilated,
destroyed, lost or stolen Security or in exchange for the Security to which a
destroyed, lost or stolen coupon appertains (with all appurtenant coupons not
destroyed, lost or stolen), a new Security of the same series and Stated
Maturity and of like tenor and principal amount, bearing a number not
contemporaneously outstanding and, if applicable, with coupons corresponding to
the coupons appertaining thereto.

         In case any such mutilated, destroyed, lost or stolen Security or
coupon has become or is about to become due and payable, the Company in its
discretion may, instead of issuing a new Security, pay such Security or deliver
the Maturity Consideration deliverable thereon; provided, however, that payment
of principal of (and premium, if any), Maturity Consideration and any interest
on Bearer Securities shall be payable only at an office or agency located
outside the United States, and, in the case of interest, unless otherwise
specified as contemplated by Section 3.01, only upon presentation and surrender
of the coupons appertaining thereto.

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

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

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

         SECTION 3.07. Payment of Interest; Interest Rights Preserved.

         Unless otherwise provided, as contemplated by Section 3.01, interest on
any Registered Security which is payable or deliverable, and is punctually paid,
delivered or duly provided for, on any Interest Payment Date shall unless
otherwise provided in such Security be paid or delivered 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; provided,
however, that in the case of a Registered Security originally issued between a
Regular Record Date and the Interest Payment Date or on an Interest Payment Date
relating to such Regular Record Date, interest for the period beginning on the
date of issue and ending on such Interest Payment Date shall be paid or
delivered on the next succeeding Interest Payment Date to the Person in whose
name such Registered Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date with respect to
such succeeding

                                       28



Interest Payment Date. Unless otherwise specified as contemplated by Section
3.01, in case a Bearer Security of any series is surrendered in exchange for a
Registered Security of such series after the close of business (at an office or
agency referred to in Section 3.05) on any Regular Record Date and before the
opening of business (at such office or agency) on the next succeeding Interest
Payment Date, such Bearer Security shall be surrendered without the coupon
relating to such Interest Payment Date and interest will not be payable or
deliverable on such Interest Payment Date in respect of the Registered Security
issued in exchange for such Bearer Security, but will be payable or deliverable
only to the Holder of such coupon when due in accordance with the provisions of
this Indenture.

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

                  (i) The Company may elect to make payment or delivery of any
         Defaulted Interest to the Persons in whose names any such Registered
         Securities of such series (or their respective Predecessor Securities)
         are registered at the close of business on a Special Record Date for
         the payment or delivery 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 or
         delivered on each Registered Security of such series and the date of
         the proposed payment or delivery, and at the same time the Company
         shall deposit with the Trustee an amount of money or other property
         equal to the aggregate amount proposed to be paid or delivered in
         respect to such Defaulted Interest or shall make arrangements
         satisfactory to the Trustee for such deposit prior to the date of the
         proposed payment or delivery, such money or other property when
         deposited to be held in trust for the benefit of the Persons entitled
         to such Defaulted Interest as provided in this clause (i). Thereupon
         the Trustee shall fix a Special Record Date for the payment or delivery
         of such Defaulted Interest which shall be not more than 15 nor less
         than 10 days prior to the date of the proposed payment or delivery and
         not less than 10 days after the receipt by the Trustee of the notice of
         the proposed payment or delivery. 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 or delivery
         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 or delivery of such Defaulted Interest and the Special
         Record Date therefor having been so mailed, such Defaulted Interest
         shall be paid or delivered to the Persons in whose names such
         Registered Securities of such series (or their respective Predecessor
         Securities) are registered at the close of business on such Special
         Record Date and shall no longer be payable or deliverable pursuant to
         the following clause (ii). In case a Bearer Security of any series is
         surrendered at the office or agency in a Place of Payment for such
         series in exchange for a Registered Security of such series after the
         close of business at such office or agency on any Special Record Date
         and before the opening of business at such office or agency on the
         related proposed

                                       29



         date of payment or delivery of Defaulted Interest, such Bearer Security
         shall be surrendered without the coupon relating to such proposed date
         for payment or delivery and Defaulted Interest will not be payable or
         deliverable on such proposed date for payment or delivery in respect of
         the Registered Security issued in exchange for such Bearer Security,
         but will be payable only to the Holder of such coupon when due in
         accordance with the provisions of this Indenture.

                  (ii) The Company may make payment or delivery 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
         the Securities, with respect to which there exists such default, 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 or delivery pursuant to this clause, such 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 right to interest accrued
and unpaid, and to accrue, which were carried by such other Security.

         SECTION 3.08. Persons Deemed Owners.

         Title to any Bearer Security, any coupons appertaining thereto and any
temporary global Security in bearer form shall pass by delivery.

         Prior to due presentment of a Security of any series for registration
of transfer of any Registered Security, the Company, the Trustee and any agent
of the Company or the Trustee may treat the Person in whose name such Security
is registered as the owner of such Security for the purpose of receiving payment
or delivery of principal of (and premium, if any), Maturity Consideration in
respect of, and (subject to Section 3.07) interest on such Security, and for all
purposes whatsoever, whether or not such Security is overdue, and neither the
Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.

         The Company, the Trustee and any agent of the Company or the Trustee
may treat the bearer of any Bearer Security and the bearer of any coupon, as the
case may be, as the absolute owner of such Security or coupon for the purpose of
receiving payment thereof or on account thereof and for all other purposes
whatsoever, whether or not such Security or coupon be overdue, and neither the
Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.

         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
Trustee and any agent of the Company or the Trustee as the owner of such global
security for all purposes whatsoever. Notwithstanding the foregoing, nothing
herein shall prevent the Company, the Trustee or any agent of the Company or the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by a depositary or impair, as between a depositary and
such holders of

                                       30



beneficial interests, the operation of customary practices governing the
exercise of rights of the depositary (or its nominee) as Holder of any Security.

         SECTION 3.09. Cancellation.

         All Securities and coupons surrendered for payment, registration of
transfer, exchange, repayment, redemption or for credit against any sinking fund
payment shall, if surrendered to any Person other than the Trustee, be delivered
to the Trustee. All Securities so delivered or surrendered directly to the
Trustee for any such purpose shall be promptly canceled by it. The Company may
at any time deliver to the Trustee for cancellation any Securities previously
authenticated and delivered hereunder which the Company may have acquired in any
manner whatsoever, and all Securities so delivered shall be promptly canceled by
the Trustee. No Securities shall be authenticated in lieu of or in exchange for
any Securities canceled as provided in this Section, except as expressly
permitted by this Indenture or such Securities. All canceled Securities or
coupons held by the Trustee shall be disposed of by the Trustee in accordance
with its customary procedures and the Trustee shall deliver a certificate of
such disposition to the Company, if requested by the Company in writing.

         SECTION 3.10. Computation of Interest.

         Except as otherwise specified as contemplated by Section 3.01 for
Securities of any series, interest on the Securities of each series shall be
computed on the basis of a 360-day year consisting of twelve 30-day months.

         SECTION 3.11. Forms of Certification.

                  (i) Whenever any provision of this Indenture or the forms of
         Securities contemplate that certifications be given by a Person
         entitled to receive a Bearer Security, such certification shall be
         provided to the Company and the Trustee substantially in the form of
         Exhibit A hereto, with only such changes as shall be approved by the
         Company.

                  (ii) Whenever any provision of this Indenture or the forms of
         Securities contemplate that certification be given by Euroclear and
         Clearstream in connection with the exchange of a portion of a temporary
         global Security, such certification shall be provided substantially in
         the form of Exhibit B hereto, with only such changes as shall be
         approved by the Company.

                  (iii) Whenever any provision of the Indenture or the forms of
         Securities contemplate that certification be given by Euroclear and
         Clearstream in connection with payment of interest with respect to a
         temporary global Security prior to the related Exchange Date, such
         certification shall be provided substantially in the form of Exhibit C
         hereto, with only such changes as shall be approved by the Company.

                  (iv) Whenever any provision of the Indenture or the forms of
         securities contemplate that certification be given by a beneficial
         owner of a portion of a temporary global Security in connection with
         payment or delivery of interest in respect to a

                                       31



         temporary global Security prior to the related Exchange Date, such
         certification shall be provided to the Company and the Trustee
         substantially in the form of Exhibit D hereto, with only such changes
         as shall be approved by the Company.

         SECTION 3.12. Payment in Currencies.

                  (i) Unless otherwise provided in Section 3.01 hereof, subject
         to Subsection (ii) hereof, payment of the principal of (and premium, if
         any), Maturity Consideration if the Maturity Consideration is to be
         satisfied by a cash payment, and interest on the Securities of any
         series, whether or not denominated in a Foreign Currency pursuant to
         Section 3.01 shall be made in U.S. dollars. If a series of Securities
         is denominated in a Foreign Currency, the amount receivable in U.S.
         dollars by the Holders of such series shall be determined as provided
         in Section 3.12(iii).

                  (ii) If authorized pursuant to Section 3.01, any Holder of a
         Security of a series of Securities denominated in a Foreign Currency
         may elect to receive payments in the Foreign Currency in which such
         Security is denominated pursuant to Section 3.01. A Holder may make
         such election by delivering to the Trustee a written notice thereof, in
         such form as may be acceptable to the Trustee, not later than the close
         of business on the Regular Record Date or Special Record Date, as the
         case may be, immediately preceding the applicable Interest Payment Date
         or the fifteenth day immediately preceding the Maturity of an
         installment of principal, as the case may be. Such election shall
         remain in effect with respect to such Holder until such Holder delivers
         to the Trustee a written notice rescinding such election; provided,
         however, that any such notice must be delivered to such Trustee not
         later than the close of business on the Regular Record Date or Special
         Record Date, as the case may be, immediately preceding the next
         Interest Payment Date or the fifteenth day immediately preceding the
         Maturity of an installment of principal, as the case may be, in order
         to be effective for the payment to be made thereon; and provided,
         further, that no such rescission may be made with respect to payments
         to be made on any Security with respect to which notice of redemption
         has been given by the Company pursuant to Article Four. The Trustee
         will advise the Company in writing of the aggregate amount payable in a
         Foreign Currency pursuant to an election under this subsection (ii).

                  (iii) For each series of Securities denominated in a Foreign
         Currency, the Exchange Rate Agent shall deliver to the Company and to
         the Trustee, by personal delivery, telecopy or other means reasonably
         acceptable to such Trustee and the Company, not later than the close of
         business on the second Business Day prior to the date each payment is
         required to be made with respect to the Securities of such series, a
         copy of the Exchange Rate Officer's Certificate relating to each such
         Foreign Currency. Payments in U.S. dollars pursuant to Section 3.12(i)
         shall be equal to the sum obtained by converting the specified Foreign
         Currency, which is to be paid in U.S. dollars pursuant to Section
         3.12(i), at the applicable Exchange Rate or Market Exchange Rate set
         forth in such Exchange Rate Officer's Certificate.

                  (iv) If the Foreign Currency, other than a composite currency,
         in which a series of Securities is denominated is not available to the
         Company for making payment

                                       32



         thereof due to the imposition of exchange controls or other
         circumstances beyond the control of the Company, then with respect to
         each date for the payment of principal of (and premium, if any) and
         interest on such series of Securities occurring after the last date on
         which the Foreign Currency was so used, all payments with respect to
         the Securities of any such series shall be made in U.S. dollars. If
         payment is to be made in U.S. dollars to the Holders of any such series
         of Securities pursuant to the provisions of the preceding sentence,
         then the amount to be paid in U.S. dollars on a payment date by the
         Company to the Trustee for the series and by such Trustee or any Paying
         Agent to Holders of Securities of such series shall be determined by an
         Exchange Rate Agent and shall be equal to the sum obtained by
         converting the specified Foreign Currency into U.S. dollars at the
         applicable Market Exchange Rate set forth in an Exchange Rate Officer's
         Certificate.

                  (v) All decisions and determinations of the Company or an
         Exchange Rate Agent regarding the Exchange Rate, Market Exchange Rate
         or conversion of Foreign Currency into U.S. dollars pursuant to Section
         1.04(vii) or this Subsection shall, in the absence of manifest error,
         be conclusive for all purposes and irrevocably binding upon the Company
         (in the case of a determination by an Exchange Rate Agent), the Trustee
         for the series, any Paying Agent and all Holders of the Securities of
         such series. If a Foreign Currency (other than a composite currency) in
         which payment of a series of Securities may be made, pursuant to
         Subsection (i) above, is not available to the Company for making
         payments thereof due to the imposition of exchange controls or other
         circumstances beyond the control of the Company, the Company, after
         learning thereof, will give notice thereof to the Trustee promptly (and
         the Trustee promptly thereafter will give notice to the Holders of such
         series denominated in a Foreign Currency in the manner provided in
         Section 1.06) specifying the last date on which such Foreign Currency
         was used for the payment of principal of (and premium, if any) or
         interest on such series of Securities. In the event any composite
         currency in which a Security is denominated or payable ceases to be
         used for the purposes for which it was established or is not available
         due to circumstances beyond the control of the Company, the Company,
         after learning thereof, will give notice thereof to the Trustee for
         such series promptly (and such Trustee thereafter will give notice to
         the Holders of such series of Securities denominated in a Foreign
         Currency in the manner provided in Section 1.06). In the event of any
         subsequent change in any Component of any composite currency in which a
         series of securities is denominated or payable, the Company, after
         learning thereof, will give notice to the Trustee for the series
         similarly (and such Trustee promptly thereafter will give notice to the
         Holders in the manner provided in Section 1.06). The Trustee for such
         series shall be fully justified and protected in reasonably relying and
         acting upon the information so received by it from the Company and from
         any Exchange Rate Agent and shall not otherwise have any duty or
         obligation to determine such information independently. The Company
         agrees to appoint and maintain an Exchange Rate Agent as is necessary
         for the performance of the obligations of the Exchange Rate Agent
         specified herein.

         SECTION 3.13. CUSIP Numbers.

                                       33



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

                                   ARTICLE IV

                            REDEMPTION OF SECURITIES

         SECTION 4.01. 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 3.01 for Securities of any
series, in accordance with this Article.

         SECTION 4.02. Election to Redeem; Notice to Trustee.

         The election of the Company to redeem any Securities redeemable at the
option of the Company shall be evidenced by a Board Resolution. In case of any
redemption at the election of the Company, the Company shall, at least 60 days
prior to the Redemption Date fixed by the Company (unless a shorter notice shall
be satisfactory to the Trustee), notify the Trustee of such Redemption Date and
of the principal amount or amount of Maturity Consideration of Securities of
such series to be redeemed. In the case of any redemption of Securities prior to
the expiration of any restriction on suc h redemption provided in the terms of
such Securities or elsewhere in this Indenture, the Company shall furnish the
Trustee with an Officers' Certificate evidencing compliance with such
restriction.

         SECTION 4.03. Selection by Trustee of Securities to be Redeemed.

         If less than all the Securities of any series are to be redeemed, the
particular Securities to be redeemed shall be selected not more than 60 days nor
less than 30 days prior to the Redemption Date by the Trustee from the
Outstanding Securities of such series not previously called for redemption, by
such method as the Trustee shall deem fair and appropriate and which may provide
for the selection for redemption of portions of the principal amount or issue
price of Securities of such series or a denomination equal to or larger than the
minimum authorized denomination for Securities of such series. Unless otherwise
provided by the terms of the Securities of any series, the denominations of the
Securities so selected for partial redemption shall be, in the case of
Registered Securities, equal in value to $100,000 or an integral multiple of
$1,000 in excess thereof, or, in the case of Bearer Securities, equal to $10,000
or $50,000, and the principal amount of any such Securities which remains
outstanding shall not be less than the minimum authorized denomination for
Securities of such series.

                                       34



         The Trustee shall promptly notify the Company and the Co-Security
Registrar, if any, in writing of the Securities selected for redemption and, in
the case of any Security selected for partial redemption, the principal amount
or Maturity Consideration thereof to be redeemed.

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

         SECTION 4.04. 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 identify the Securities to be redeemed
(including CUSIP numbers) and shall state:

                  (i) the Redemption Date;

                  (ii) the Redemption Price;

                  (iii) if less than all Outstanding Securities of any series
         are to be redeemed, the identification (and, in the case of partial
         redemption, the respective principal amounts) of the particular
         Securities to be redeemed;

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

                  (v) the place or places where such Securities, together in the
         case of Bearer Securities with all remaining coupons appertaining
         thereto, if any, maturing after the Redemption Date, are to be
         surrendered for payment of the Redemption Price; and

                  (vi) 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, on Company Request, by the Trustee
in the name and at the expense of the Company. The notice if mailed in the
manner herein provided shall be conclusively presumed to have been duly given,
whether or not the Holder receives such notice. In any case, a failure to give
such notice by mail or any defect in the notice to the Holder of any Security
designated for redemption as a whole or in part shall not affect the validity of
the proceedings for the redemption of any other Security.

         SECTION 4.05. Deposit of Redemption Price.

         Prior to 10:00 A.M., New York City time, on any Redemption Date, the
Company shall deposit or cause to be deposited with the Trustee or with a Paying
Agent (or, if the Company is

                                       35



acting as its own Paying Agent, segregate and hold in trust as provided in
Section 5.03) an amount of money sufficient to pay the Redemption Price of all
the Securities which are to be redeemed on that date.

         SECTION 4.06. 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) such Securities
shall cease to bear interest and the coupons for such interest appertaining to
any Bearer Securities so to be redeemed, except to the extent provided below,
shall be void. Upon surrender of any such Securities for redemption in
accordance with said notice, such Securities shall be paid by the Company at the
Redemption Price; provided, however, that installments of interest on Bearer
Securities whose Stated Maturity is on or prior to the Redemption Date shall be
payable only at an office or agency located outside the United States and,
unless otherwise specified as contemplated by Section 3.01, only upon
presentation and surrender of coupons for such interest. Installments of
interest on Registered Securities whose Stated Maturity is on or prior to the
Redemption Date shall be payable to the Holders of such Securities, or one or
more Predecessor Securities, registered as such on the close of business on the
relevant Regular Record Dates according to their terms and the provisions of
Section 3.07.

         If any Bearer Security surrendered for redemption shall not be
accompanied by all appurtenant coupons maturing after the Redemption Date, such
Security may be paid after deducting from the Redemption Price an amount equal
to the face amount of all such missing coupons, or the surrender of such missing
coupon or coupons may be waived by the Company and the Trustee if there be
furnished to them such security or indemnity as they may required to save each
of them and any Paying Agent harmless. If thereafter the Holder of such Bearer
Security shall surrender to the Trustee or any Paying Agent any such missing
coupon in respect of which a deduction shall have been made from the Redemption
Price, such Holder shall be entitled to receive the amount so deducted from the
Company; provided, however, that interest represented by coupons shall be
payable only at an office or agency located outside the United States and,
unless otherwise specified as contemplated by Section 3.01, only upon
presentation and surrender of those coupons.

         If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal (and premium, if any) shall,
until paid, bear interest from the Redemption Date at the rate borne by such
Security, or as otherwise provided in such Security.

         SECTION 4.07. 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 of such Security 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 to the Holder, a new Security or Securities of the same series
and Stated

                                       36



Maturity of any authorized denominations as requested by such Holder, in
aggregate principal amount equal to and in exchange for the unredeemed portion
of the principal of the Security so surrendered.

         SECTION 4.08. Redemption Suspended During Event of Default.

         The Trustee shall not redeem any Securities (unless all Securities then
Outstanding are to be redeemed) or commence the giving of any notice of
redemption of Securities during the continuance of any Event of Default known to
the Trustee, except that where the giving of notice of redemption of any
Securities shall theretofore have been made, the Trustee shall, subject to the
provisions of Section 14.04, redeem such Securities, provided funds are
deposited with it for such purpose. Subject to the rights of the holders of
Senior Indebtedness, except as aforesaid, any moneys theretofore or thereafter
received by the Trustee shall, during the continuance of such Event of Default,
be held in trust for the benefit of the Securityholders and applied in the
manner set forth in Section 7.06; provided, however, that in case such Event of
Default shall have been waived as provided herein or otherwise cured, such
moneys shall thereafter be held and applied in accordance with the provisions of
this Article.

                                   ARTICLE V

                                    COVENANTS

         SECTION 5.01. Payment of Principal, Premium, if any, Maturity
Consideration and Interest.

         The Company covenants and agrees for the benefit of each series of
Securities that it will duly and punctually pay or deliver the principal of (and
premium, if any), Maturity Consideration and interest (if any) on the Securities
of such series and any additional amounts described in Section 5.04 in
accordance with the terms of the Securities of such series, any coupons
appertaining thereto and this Indenture. Unless otherwise specified as
contemplated by Section 3.01 with respect to any series of Securities, any
interest due on Bearer Securities on or before Maturity shall be payable or
deliverable only outside the United States upon presentation and surrender of
the several coupons for such interest installments as are evidenced thereby as
they severally mature. Any payment by the Company to a Paying Agent hereunder
shall be made in the applicable currency or currencies in which the respective
payments are required to be made.

         SECTION 5.02. Maintenance of Office or Agency.

         If Securities of a series are issuable only as Registered Securities,
the Company will maintain in each Place of Payment for any such series of
Securities an office or agency where Securities of that series may be presented
or surrendered for payment or delivered for Maturity Consideration, 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. If Securities of a
series may be issuable as Bearer Securities, the Company will maintain an office
or agency where any Securities of that series may be presented or surrendered
for payment (A) in the Borough of Manhattan, The City of New York, (B) subject
to any laws or regulations applicable thereto, in a Place of Payment for that

                                       37



series which is located outside the United States, an office or agency where
Securities of that series and related coupons may be presented and surrendered
for payment (including payment of any additional amounts payable on Securities
of that series pursuant to Section 5.04); provided, however, that if the
Securities of that series are listed on The International Stock Exchange of the
United Kingdom and the Republic of Ireland Limited or the Luxembourg Stock
Exchange or any other stock exchange located outside the United States and such
stock exchange shall so require, the Company will maintain a Paying Agent for
the Securities of that series in London or Luxembourg or any other required city
located outside the United States, as the case may be, so long as the Securities
of that series are listed on such exchange, and (C) subject to any laws or
regulations applicable thereto, in a Place of Payment for such series located
outside the United States an office or agency where any Registered Securities of
that series may be surrendered for registration of transfer, where Securities of
that series may be surrendered for exchange and where notices and demands to or
upon the Company in respect of the Securities of that series and this Indenture
may be served. The Company will give prompt written notice to the Trustee of the
location, and any change in the location, of any such office or agency. If at
any time the Company shall fail to maintain any such required office or agency
in respect of any series of Securities or shall fail to furnish the Trustee with
the address thereof, such presentations, surrenders, notices and demands may be
made or served at the Corporate Trust Office of the Trustee, except that the
Bearer Securities of that series and the related coupons may be presented and
surrendered for payment (including payment of any additional amounts payable on
Bearer Securities of that series pursuant to Section 5.04) at the place
specified for the purpose as contemplated by Section 3.01, and the Company
hereby appoints the Trustee as its agent to receive such respective
presentations, surrenders, notices and demands. Notwithstanding any other
provisions, to the contrary, the Company at its option may make payment of
principal (and premium if any), Maturity Consideration and interest with respect
to Registered Securities by check mailed to the address of the Person entitled
thereto, as such address appears on the registry books of the Company.

         No payment or delivery of principal, premium, Maturity Consideration or
interest on Bearer Securities shall be made at any office or agency of the
Company in the United States or by check mailed to any address in the United
States or by transfer to an account maintained with a bank located in the United
States.

         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 of such purposes specified above in this Section
and may from time to time rescind such designations; provided, however, that no
such designation, appointment 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 for such series of any such designation or
rescission and of any change in the location of any such other office or agency.
Unless and until the Company rescinds such appointment, the Company hereby
appoints the Trustee, acting through its Corporate Trust Office, as its Paying
Agent with respect to all series of Securities.

         SECTION 5.03. Money or Other Property for Security Payments and
Deliveries to be Held in Trust.

                                       38



         If the Company shall at any time act as its own Paying Agent for any
series of Securities, it will, on or before each due date of the principal of
(and premium, if any), Maturity Consideration or interest on any of the
Securities of such series, segregate and hold in trust for the benefit of the
Persons entitled thereto a sum or other property sufficient to pay or deliver
the principal (and premium, if any), Maturity Consideration or interest so
becoming due until such sums or other property shall be paid or delivered to
such Persons or otherwise disposed of as herein provided, and will promptly
notify the Trustee of its action or failure so to act. If the Company chooses to
act as its own Paying Agent, the Company shall notify the Trustee 15 Business
Days prior to such action.

         Whenever the Company shall have one or more Paying Agents for any
series of Securities, it will, prior to the opening of business on each due date
of the principal of (and premium, if any), Maturity Consideration or interest on
any Securities of such series, deposit with a Paying Agent a sum or other
property sufficient to pay or deliver the principal (and premium, if any),
Maturity Consideration or interest so becoming due, such sum or other property
to be held in trust for the benefit of the Persons entitled to such principal
(and premium, if any), Maturity Consideration or interest, and (unless such
Paying Agent is the Trustee) the Company will promptly notify the Trustee of its
action or failure so to act.

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

                  (i) hold all sums or other property held by it for the payment
         of or delivery of the principal (and premium, if any), Maturity
         Consideration or interest on Securities of such series in trust for the
         benefit of the Persons entitled thereto until such sums or other
         property shall be paid or delivered to such Persons or otherwise
         disposed of as herein provided;

                  (ii) give the Trustee notice of any default by the Company (or
         any other obligor upon the Securities of such series) in the making of
         any payment or delivery of principal (and premium, if any), Maturity
         Consideration or interest on the Securities of such series; and

                  (iii) at any time during the continuance of any such Default,
         upon the written request of the Trustee, forthwith pay or deliver to
         the Trustee all sums or other property so held in trust by such Paying
         Agent.

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

                                       39



         Any money or other property deposited with the Trustee or any Paying
Agent, or then held by the Company, in trust for the payment or delivery of the
principal of (and premium, if any), Maturity Consideration or interest on any
Security of any series and remaining unclaimed for two years after such
principal (and premium, if any), Maturity Consideration or interest has become
due and payable or deliverable shall be paid or delivered to the Company on
Company Request, or (if then held by the Company) shall be discharged from such
trust; and the Holder of such Security shall thereafter, as an unsecured general
creditor, look only to the Company for payment or delivery thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money
or other property, and all liability of the Company as trustee thereof, shall
thereupon cease; provided, however, that the Trustee or such Paying Agent,
before being required to make any such repayment or delivery, may at the expense
of the Company cause to be published once, in an Authorized Newspaper in each
Place of Payment, notice that such money or other property 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 or other
property then remaining will be repaid or delivered to the Company.

         SECTION 5.04. Additional Amounts.

         If the Securities of a series provide for the payment of additional
amounts, the Company will pay to the Holder of any Security of any series or any
coupon appertaining thereto additional amounts as provided therein. Whenever in
this Indenture there is mentioned, in any context, the payment of the principal
of (or premium, if any) or interest on, or in respect to, any Security of any
series or payment of any related coupon or the net proceeds received on the sale
or exchange of any Securities 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 Securities of a series provided for the payment of additional
amounts, at least 15 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 or delivery of
principal (and premium, if any) or Maturity Consideration is made), and at least
15 days prior to each date of payment or delivery of principal of (and premium,
if any) or Maturity Consideration or interest if there has been any change with
respect to the matters set forth in the below-mentioned Officers' Certificate,
the Company will furnish the Trustee and the Company's principal Paying Agent or
Paying Agents, if other than the Trustee, with an Officers' Certificate
instructing the Trustee and such Paying Agent or Paying Agents whether such
payment or delivery of principal of (and premium, if any) or Maturity
Consideration or interest on the Securities of that series shall be made to
Holders of Securities of that series or any related coupons who are United
States Aliens without withholding for or on account of any tax, assessment or
other governmental charge described in the Securities of that series. If any
such withholding shall be required, then such Officers' Certificate shall
specify by country the amount, if any, required to be withheld on such payments
or deliveries to such Holders of Securities or coupons and the Company will pay
to the Trustee or such Paying Agent the additional amounts required by this
Section. The Company covenants to indemnify the Trustee

                                       40



and any Paying Agent for, and to hold them harmless against any loss, liability
or expense reasonably incurred without negligence or bad faith on their part
arising out of or in connection with actions taken or omitted by any of them in
reliance on any Officers' Certificate furnished pursuant to this Section.

         SECTION 5.05. Corporate Existence.

         Subject to Article Ten, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence and the rights (charter and statutory) and franchises of the Company;
provided, however, that the Company shall not be required to preserve any such
right or franchise if the Company shall determine that the preservation thereof
is no longer desirable in the conduct of the business of the Company and its
Subsidiaries considered as a whole and that the loss thereof is not
disadvantageous in any material respect to the Holders of Securities.

         SECTION 5.06. Statement as to Compliance.

         The Company will deliver to the Trustee, within 120 days after the end
of each fiscal year, commencing with the first calendar year following the
issuance of securities of any series under this Indenture, a brief certificate,
which need not comply with Section 1.02, signed by the principal executive
officer, the chief financial officer or the controller of the Company, covering
the period from the date of issuance of such Securities to the end of the
calendar year in which such Securities were issued in the case of the first such
certificate, and covering the preceding calendar year, in the case of each
subsequent certificate, stating, as to each signer thereof, that

                  (1) a review of the activities of the Company during such year
         and of performance under this Indenture has been made under his
         supervision, and

                  (2) to the best of his knowledge, based on such review, (a)
         the Company has complied with all conditions and covenants on its part
         contained in this Indenture throughout such year, or, if there has been
         a Default by the Company in the performance, observance or fulfillment
         of any such condition or covenant, specifying each such Default known
         to him and the nature and status thereof, and (b) no event has occurred
         and is continuing which is, or after notice or lapse of time or both
         would become, an Event of Default, or, if such an event has occurred
         and is continuing, specifying each such event known to him and the
         nature and status thereof.

         For the purpose of this Section 5.06, compliance shall be determined
without regard to any grace period or requirement of notice provided pursuant to
the terms of this Indenture.

         SECTION 5.07. Waiver of Certain Covenants.

                                       41



         The Company may omit in any particular instance to comply with any
term, provision or condition set forth in Section 5.05 with respect to the
Securities of any series if before the time for such compliance the Holders of
at least 50% in principal amount, or if such Securities are not payable at
Maturity for a fixed principal amount, 50% of the aggregate issue price, 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
duties of the Trustee for such series in respect of any such term, provision or
condition shall remain in full force and effect.

         SECTION 5.08. Calculation of Original Issue Discount.

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

         SECTION 5.09. Statement by Officers as to Default.

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

                                   ARTICLE VI

                HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY

         SECTION 6.01. Company to Furnish Trustee Names and Addresses of
Holders.

         The Company will furnish or cause to be furnished to the Trustee for
each series

                  (a) semiannually, not more than 15 days after each Regular
         Record Date, a list, in such form as the Trustee may reasonably
         require, containing the names and addresses of the Holders of
         Registered Securities as of such Regular Record Date, and

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

except that no such lists need to be furnished so long as the Trustee is in
possession thereof by reason of its acting as Security Registrar for such
series.

                                       42



         SECTION 6.02. Preservation of Information; Communications to Holders.

                  (i) 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
         6.01 and the names and addresses of Holders of Securities received by
         the Trustee in its capacity as the Security Registrar or Co-Security
         Registrar, if so acting. The Trustee may destroy any list furnished to
         it as provided in Section 6.01 upon receipt of a new list so furnished.

                  (ii) If three or more Holders of Securities of any series
         (hereinafter referred to as "applicants") apply in writing to the
         Trustee, and furnish to the Trustee reasonable proof that each such
         applicant has owned a Security of such series for a period of at least
         six months preceding the date of such application, and such application
         states that the applicants desire to communicate with other Holders of
         Securities of such series or with the Holders of all Securities with
         respect to their rights under this Indenture or under such Securities
         and is accompanied by a copy of the form of proxy or other
         communication which such applicants propose to transmit, then the
         Trustee shall, within five Business Days after the receipt of such
         application, at its election, either

                           (a) afford such applicants access to the information
                  preserved at the time by the Trustee in accordance with
                  Section 6.02(i), or

                           (b) inform such applicants as to the approximate
                  number of Holders of Securities of such series or all
                  Securities, as the case may be, whose names and addresses
                  appear in the information preserved at the time by the Trustee
                  in accordance with Section 6.02(i), and as to the approximate
                  cost of mailing such Holders the form of proxy or other
                  communication, if any, specified in such application.

         If the Trustee shall elect not to afford such applicants access to such
information, the Trustee shall, upon the written request of such applicants,
mail at the Company's expense, to each Holder of a Security of such series or
all Holders of Securities, as the case may be, whose names and addresses appear
in the information preserved at the time by the Trustee in accordance with
Section 6.02(i), a copy of the form of proxy or other communication which is
specified in such request, with reasonable promptness after a tender to the
Trustee of the material to be mailed and of payment, or provision for the
payment, of the reasonable expenses of mailing, unless, within five days after
such tender, the Trustee shall mail at the Company's expense, to such applicants
and file with the Commission, together with a copy of the material to be mailed,
a written statement to the effect that, in the opinion of the Trustee, such
mailing would be contrary to the best interests of the Holders of Securities of
such series or all Securities, as the case may be, or would be in violation of
applicable law. Such written statement shall specify the basis of such opinion.
If the Commission, after opportunity for a hearing upon the objections specified
in the written statement so filed, shall enter an order refusing to sustain any
of such objections or if, after the entry of an order sustaining one or more of
such objections, the Commission shall find, after notice and opportunity for
hearing, that all the objections so sustained have been met and shall enter an
order so declaring, the Trustee shall mail copies of such material to all such
Holders of Securities with reasonable promptness after the entry of such

                                       43



order and the renewal of such tender; otherwise, the Trustee shall be relieved
of any obligation or duty to such applicants respecting their application.

                  (iii) Every Holder of Securities, by receiving and holding the
         same, agrees with the Company and the Trustee that neither the Company
         nor the Trustee nor any agent of either of them shall be held
         accountable by reason of the disclosure of any such information as to
         the names and addresses of the Holders of Securities in accordance with
         Section 6.02(ii), regardless of the source from which such information
         was derived, and that the Trustee shall not be held accountable by
         reason of mailing any material pursuant to a request made under Section
         6.02(ii).

         SECTION 6.03. Reports by Trustee.

                  (i) The term "reporting date", as used in this Section, shall
         be May 15 of each year, commencing with the later of May 15, 2003 or
         the first May 15 after the first issuance of Securities of a series for
         which the Trustee is acting as Trustee pursuant to this Indenture.
         Within 60 days after the reporting date in each year, the Trustee shall
         transmit by mail to all Holders of Registered Securities as provided in
         Section 313(c) of the Trust Indenture Act, as their names and addresses
         appear in the Security Register, a brief report dated as of such
         reporting date if required by Section 313(a) of the Trust Indenture
         Act.

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

         SECTION 6.04. Reports by the Company.

         The Company shall:

                  (i) file with the Trustee, within 15 days after the Company is
         required to file the same with the Commission, copies of the annual
         reports and of the information, documents and other reports (or copies
         of such portions of any of the foregoing as the Commission may from
         time to time by rules and regulations prescribe) which the Company may
         be required to file with the Commission pursuant to Section 13 or
         Section 15(d) of the Securities Exchange Act of 1934, as amended, or,
         if the Company 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 Securities Exchange Act of
         1934, as amended, in respect of securities listed and registered on a
         national securities exchange as may be prescribed from time to time in
         such rules and regulations;

                  (ii) file with the Trustee and the Commission, in accordance
         with rules and regulations prescribed from time to time by the
         Commission, such additional

                                       44



         information, documents and reports with respect to compliance by the
         Company with the conditions and covenants of this Indenture as may be
         required from time to time by such rules and regulations; and

                  (iii) transmit by mail to Holders of Securities, 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
         pursuant to Paragraphs (i) and (ii) of this Section as may be required
         by rules and regulations prescribed from time to time by the
         Commission.

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

                                  ARTICLE VII

                                    REMEDIES

         SECTION 7.01. Events of Default.

         "Event of Default", with respect to any series of Securities, wherever
used herein, 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),
unless it is either inapplicable to a particular series or it is specifically
deleted or modified in the supplemental indenture under which such series of
Securities is issued or in the form of Security for such series:

                  (i) the entry of a decree or order by a court having
         jurisdiction in the premises granting relief in respect of the Company
         in an involuntary case under the Federal Bankruptcy Code, adjudging the
         Company a bankrupt, or approving as properly filed a petition seeking
         reorganization, arrangement, adjustment or composition of or in respect
         of the Company under the Federal Bankruptcy Code or any other
         applicable federal or state bankruptcy, insolvency or other similar
         law, or appointing a receiver, liquidator, custodian, assignee,
         trustee, sequestrator (or other similar official) of the Company or of
         substantially all of its properties, or ordering the winding up or
         liquidation of its affairs under any such law, and the continuance of
         any such decree or order unstayed and in effect for a period of 60
         consecutive days; or

                  (ii) the institution by the Company of proceedings to be
         adjudicated a bankrupt, or the consent by the Company to the
         institution of bankruptcy proceedings against it, or the filing by the
         Company of a petition or answer or consent seeking reorganization or
         relief under the Federal Bankruptcy Code or any other applicable
         federal or state bankruptcy, insolvency or other similar law, or the
         consent by the Company to the filing of any such petitioner to the
         appointment of a receiver, liquidator,

                                       45



         custodian, assignee, trustee, sequestrator (or other similar official)
         of the Company, or of substantially all of its respective properties,
         under any such law; or

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

         SECTION 7.02. Acceleration of Maturity; Rescission and Annulment.

         If an Event of Default with respect to any series of Securities for
which there are Securities Outstanding occurs and is continuing, then, and in
every such case, the Trustee or the Holders of not less than 25% in aggregate
principal amount or, if such Securities are not payable at Maturity for a fixed
principal amount, 25% of the aggregate issue price of the Outstanding Securities
of such series may declare the principal amount or Maturity Consideration of all
of the Securities of such series (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) to be immediately due and payable or
deliverable, by a notice in writing to the Company (and to the Trustee if given
by Securityholders), and upon any such declaration the same shall become
immediately due and payable or deliverable.

         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 or other property due or deliverable has been obtained by
the Trustee as hereinafter in this Article provided, the Holders of a majority
in principal amount or, if such Securities are not payable at Maturity for a
fixed principal amount, the aggregate issue price of the Outstanding Securities
of such series, by written notice to the Company and the Trustee, may rescind
and annul such declaration and its consequences if

                  (i) the Company has paid or deposited with, or delivered to,
         the Trustee a sum or other property sufficient to pay

                           (a) all overdue installments of interest on all
                  Securities of such series,

                           (b) the principal of (and premium, if any), or
                  Maturity Consideration of 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 by the terms of the Securities of such
                  series,

                           (c) to the extent that payment of such interest is
                  lawful, interest upon overdue installments of interest at the
                  rate or rates prescribed therefor by the terms of the
                  Securities of such series, and

                           (d) all sums paid or advanced by the Trustee
                  hereunder and the reasonable compensation, expenses,
                  disbursements and advances of the Trustee, the Security
                  Registrar, Co-Security Registrar, any Paying Agent, and their
                  agents and counsel; and

                                       46



                  (ii) all other Defaults with respect to Securities of that
         series, other than the non-payment of the principal of, or non-delivery
         of the Maturity Consideration of, Securities of that series which have
         become due solely by such declaration of acceleration, have been cured
         or waived as provided in Section 7.13.

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

         SECTION 7.03. Collection of Indebtedness and Suits for Enforcement by
Trustee.

         The Company covenants that if

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

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

the Company will, upon demand of the Trustee, pay or deliver to it, for the
benefit of the Holder of any such Security or coupon appertaining thereto, if
any, the whole amount or other property then due and payable or deliverable on
any such Security or coupon for principal (and premium, if any), Maturity
Consideration and interest, with interest on the overdue principal (and premium,
if any), Maturity Consideration and (to the extent that payment of such interest
shall be lawful) upon overdue installments of interest, at the rate or rates
prescribed therefor by the terms of any such Security; and, in addition thereto,
such further amount as shall be sufficient to cover the reasonable costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel and any other
amounts due the Trustee under Section 8.07.

         If the Company fails to pay or deliver such amounts and/or other
consideration 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 or other property so due and unpaid or not delivered, and
may prosecute such proceeding to judgment or final decree, and may enforce the
same against the Company or any other obligor upon such Securities and collect
the moneys or other property adjudged or decreed to be payable or deliverable in
the manner provided by law out of the property of the Company or any other
obligor upon such Securities, wherever situated.

         If a Default with respect to any series of Securities 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 7.04. Trustee May File Proofs of Claim.

                                       47



         In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, judgment, composition or other judicial
proceeding relative to the Company or any other obligor upon the Securities or
the property of the Company or of such other obligor or their creditors, the
Trustee (irrespective of whether the principal or Maturity Consideration of any
Securities shall then be due and payable or deliverable as therein expressed or
by declaration or otherwise and irrespective of whether the Trustee shall have
made any demand on the Company for the payment of overdue principal (and
premium, if any), Maturity Consideration or interest) shall be entitled and
empowered, by intervention in such proceeding or otherwise,

                  (i) to file and prove a claim for the whole amount of
         principal (and premium, if any), Maturity Consideration and interest
         owing and unpaid or undelivered in respect of the Securities of each
         series and to file such other papers or documents as may be necessary
         or advisable in order to have the claims of the Trustee (including any
         claim for the reasonable compensation, expenses, disbursements and
         advances of the Trustee, its agents and counsel and any other amounts
         due the Trustee under Section 8.07) and of the Securityholders allowed
         in such judicial proceeding, and

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

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Securityholder to make such payments or deliveries to the Trustee, and in
the event that the Trustee shall consent to the making of such payments or
deliveries directly to the Securityholders, to pay to the Trustee any amount due
to 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 8.07.

         Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder of a Security
or coupon 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 of a Security or
coupon in any such proceeding.

         SECTION 7.05. Trustee May Enforce Claims Without Possession of
Securities.

         All rights of action and claims under this Indenture or under the
Securities of any series or coupons (if any) appertaining thereto, may be
prosecuted and enforced by the Trustee without the possession of any of the
Securities of such series or coupons appertaining thereto 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 and any other amounts due the Trustee under Section 8.07,
be for the ratable benefit of the Holders of the Securities of such series and
coupons appertaining thereto in respect of which such judgment has been
recovered.

         SECTION 7.06. Application of Money or Other Property Collected.

                                       48



         Subject to the rights of holders of Senior Indebtedness, any money or
other property collected by the Trustee with respect to a series of Securities
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 or
other property on account of principal (or premium, if any), Maturity
Consideration or interest upon presentation of the Securities of such series or
coupons appertaining thereto, if any, or both, as the case may be, and the
notation thereon of the payment if only partially paid and upon surrender
thereof if fully paid:

                                    First: To the payment of all amounts due the
                           Trustee under Section 8.07;

                                    Second: To the payment of the amounts then
                           due and unpaid upon the Securities of such series and
                           coupons for principal of (and premium if any),
                           Maturity Consideration and interest, respectively.
                           Subject to 3.12(iv), the Holders of each series of
                           Securities denominated in a Foreign Currency shall be
                           entitled to receive a ratable portion of the amount
                           determined by an Exchange Rate Agent by converting
                           the principal amount Outstanding of such series of
                           Securities in the currency in which such series of
                           Securities is denominated into U.S. dollars at the
                           Exchange Rate (as determined by the Exchange Rate
                           Agent) as of the date of declaration of acceleration
                           of the Maturity of the Securities (or, if there is no
                           such rate on such date for the reasons specified in
                           Section 3.12(iv), such rate of the date specified in
                           such section);

                                    Third: The balance, if any, to the persons
                           entitled thereto.

         SECTION 7.07. Limitation on Suits.

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

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

                  (ii) the Holders of not less than a majority in principal
         amount or, if such Securities are not payable at Maturity for a fixed
         principal amount, the aggregate issue price of the Outstanding
         Securities of such series shall have made written request to the
         Trustee to institute proceedings in respect of such Default in its own
         name as Trustee hereunder;

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

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


                                       49



                  (v) no direction inconsistent with such written request has
         been given to the Trustee during such 60-day period by the Holders of a
         majority in principal amount or, if such Securities are not payable at
         Maturity for a fixed principal amount, the aggregate issue price of the
         Outstanding Securities of such series;

         it being understood and intended that no one or more Holders of
         Securities of such series shall have any right in any manner whatever
         by virtue of, or by availing of, any provision of this Indenture to
         affect, disturb or prejudice the rights of any other Holders of
         Securities of such series of Holders of any other series, or to obtain
         or to seek to obtain priority or preference over any other 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 the
         Holders of Securities of such series.

         The following events shall be "Defaults" with respect to any series of
Securities under this Indenture:

                           (a) an Event of Default with respect to such series
                  specified in Section 7.01; or

                           (b) default in the payment of principal of or
                  premium, if any, on any Securities of such series at its
                  Maturity; or

                           (c) default in the delivery or payment of Maturity
                  Consideration when due; or

                           (d) default in the payment of any interest upon any
                  Securities of such series as and when the same shall become
                  due and payable, and continuance of such default for a period
                  of 30 days; or

                           (e) failure on the part of the Company to duly
                  observe or perform any of the other covenants or agreements on
                  its part in the Securities of such series or in this Indenture
                  and continuance of such failure for a period of sixty days
                  after the date on which written notice of such failure,
                  requiring the Company to remedy the same and stating that such
                  notice is a "Notice of Default" hereunder, shall have been
                  given by registered mail to the Company by the Trustee, or to
                  the Company and the Trustee by the holders of at least a
                  majority in aggregate principal amount or, if such Securities
                  are not payable at Maturity for a fixed principal amount, a
                  majority of the aggregate issue price, of the Securities of
                  such series at the time Outstanding; or

                           (f) any other Default provided with respect to
                  Securities of that Series.

         SECTION 7.08. Unconditional Right of Securityholders to Receive
Principal, Premium, Maturity Consideration and Interest.

                                       50



         Notwithstanding any other provision in this Indenture, the Holder of
any Security or coupon shall have the right, which is absolute and
unconditional, to receive payment or delivery of the principal of (and premium,
if any), Maturity Consideration and (subject to Section 3.07) interest on such
Security or payment of such coupon on the respective Stated Maturity or
Maturities expressed in such Security or coupon (or, in the case of redemption,
on the Redemption Date) and to institute suit for the enforcement of such
payment or delivery, and such rights shall not be impaired without the consent
of such Holder.

         SECTION 7.09. Restoration of Rights and Remedies.

         If the Trustee or any Holder of a Security or coupon 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 the Company, the Trustee and the Holders shall, subject to any
determination in such proceeding, be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies of the
Trustee and the Holders shall continue as though no such proceeding had been
instituted.

         SECTION 7.10. Rights and Remedies Cumulative.

         Except as otherwise provided with respect to the replacement or payment
of mutilated, lost, destroyed or stolen Securities or coupons in the last
paragraph of Section 3.06, 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 7.11. Delay or Omission Not Waiver.

         No delay or omission of the Trustee or of any Holder of any Security or
coupon to exercise any right or remedy accruing upon any Default shall impair
any such right or remedy or constitute a waiver of any such 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 7.12. Control by Securityholders.

         The Holders of not less than a majority in principal amount, or if such
Securities are not payable at Maturity for a fixed principal amount, the
aggregate issue price 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:

                  (i) such direction shall not be in conflict with any rule of
         law or with this Indenture;

                                       51



                  (ii) such direction is not unjustly prejudicial to the rights
         of Holders of such series not taking part in such direction;

                  (iii) subject to the provisions of Section 8.01, 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 Trustees in personal liability; and

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

         SECTION 7.13. Waiver of Past Defaults.

         The Holders of not less than a majority in principal amount, or if such
Securities are not payable at Maturity for a fixed principal amount, the
aggregate issue price, 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 and its consequences, except a Default not theretofore cured

                  (i) in the payment or delivery of the principal of (and
         premium, if any), Maturity Consideration or interest on any Security of
         such series, or

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

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

         SECTION 7.14. 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 filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may in
its discretion assess reasonable costs, including reasonable attorneys' fees and
expenses, against any party litigant in such suit, having due regard to the
merits and good faith of the claims or defenses made by such party litigant; but
the provisions of this Section shall not apply to any suit instituted by the
Company, to any suit instituted by the Trustee, to any suit instituted by any
Securityholder, or group of Securityholders, holding in the aggregate more than
10% in principal amount, or if such Securities are not payable at Maturity for a
fixed principal amount, the aggregate issue price of the Outstanding Securities
of any series, or to any suit instituted by any Holder of Securities or coupons
for the enforcement of the payment of the principal of (and premium, if any),
Maturity Consideration or interest on any Security or payment of any coupon on
or after the respective Stated Maturities expressed in such Security or coupon
(or, in the case of redemption, on or after the Redemption Date).

                                       52



         SECTION 7.15. Waiver of Stay or Extension Laws.

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

                                  ARTICLE VIII

                                   THE TRUSTEE

         SECTION 8.01. Certain Duties and Responsibilities.

                  (i) Except during the continuance of a Default with respect to
         any series of Securities,

                           (a) the Trustee undertakes to perform such duties and
                  only such duties as are specifically set forth in this
                  Indenture and only with respect to any series of Securities as
                  to which it is Trustee, and no implied covenants or
                  obligations shall be read into this Indenture against the
                  Trustee; and

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

                  (ii) In case a Default has occurred and is continuing as to a
         series of Securities as to which it is Trustee, the Trustee shall
         exercise such of the rights and powers vested in it by this Indenture,
         and use the same degree of care and skill in their exercise, as a
         prudent person would exercise or use under the circumstances in the
         conduct of his or her own affairs.

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

                                       53



                           (a) this Subsection shall not be construed to limit
                  the effect of Subsection (i) of this Section or Section 8.03;

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

                           (c) the Trustee shall not be liable with respect to
                  any action taken, suffered or omitted to be taken by it in
                  good faith in accordance with the direction of the Holders of
                  a majority in principal amount, or, if such Securities are not
                  payable at Maturity for a fixed principal amount, the
                  aggregate issue price of the Outstanding Securities of any
                  series, relating to the time, method and place of conducting
                  any proceeding for any remedy available to the Trustee, or
                  exercising any trust or power conferred upon the Trustee,
                  under this Indenture with respect to Securities of such
                  series; and

                           (d) 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.

                  (iv) 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 Trustees shall be subject
         to the provisions of this Section.

         SECTION 8.02. Notice of Default.

         Within 90 days after the occurrence of any default hereunder known to
the Trustee with respect to 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 such default 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), Maturity Consideration or interest on any Security of such series, or
in the payment of any sinking fund installment with respect to Securities of
such series, the Trustee shall be protected in withholding such notice if and so
long as the board of directors, the executive committee or a trust committee of
directors and/or Responsible Officers of the Trustee in good faith determines
that the withholding of such notice is in the interests of the Holders of
Securities of such series; and provided further, that in the case of any default
of the character specified in Section 7.07(d) with respect to Securities of such
series, no such notice to Holders of Securities of such series shall be given
until at least 30 days after the occurrence thereof. For the purpose of this
Section, the term "default" with respect to Securities of any series, means any
event which is, or after notice or lapse of time, or both, would become, a
Default or Event of Default with respect to Securities of such series.

                                       54



         SECTION 8.03. Certain Rights of Trustee.

         Subject to the provisions of Section 8.01:

                  (i) the Trustee may conclusively 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 to be genuine and to have been
         signed or presented by the proper party or parties;

                  (ii) any request or direction of the Company mentioned herein
         shall be sufficiently evidenced by a Company Request or Company Order;

                  (iii) 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;

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

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

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

                  (vii) 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 (including
         Paying Agents) or attorney appointed with due care by it hereunder;

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

                                       55



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

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

                  (xi) except for information provided by the Trustee concerning
         the Trustee, the Trustee shall have no responsibility with respect to
         any information in any offering memorandum or other disclosure material
         distributed with respect to the Securities, and the Trustee shall have
         no responsibility for compliance with securities laws in connection
         with issuance and sale of the Securities; and

                  (xii) in the event the Trustee shall receive inconsistent or
         conflicting requests and indemnity from two or more groups of Owners,
         each representing less than a majority of the aggregate principal
         amount of the Securities then Outstanding, the Trustee, in its sole
         discretion, may determine what action, if any, shall be taken; and

                  (xiii) except as otherwise expressly provided by the
         provisions of this Indenture, the trustee shall not be obligated and
         may not be required to give or furnish any notice, demand, report,
         request, reply, statement advice or opinion to the Owner of any
         Securities or to the Company or any other Person, and the Trustee shall
         not incur any liability for its failure or refusal to give or furnish
         the same unless obligated or required to do so by express provisions
         hereof.

         SECTION 8.04. Not Responsible for Recitals or Issuance of Securities.

         The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and neither the Trustee nor any Authenticating Agent assumes
responsibility for their correctness. The Trustee makes no representations as to
the validity or sufficiency of this Indenture or of the Securities. Neither the
Trustee nor any Authenticating Agent shall be accountable for the use or
application by the Company of Securities or the proceeds thereof. The Trustee
shall not be responsible for the use or application of any monies received by
any Paying Agent other than the Trustee.

         SECTION 8.05. May Hold Securities.

         The Trustee, any Authenticating Agent, any Paying Agent, the Security
Registrar, any Co-Security Registrar or any other agent of the Company, in its
individual or any other capacity, may become the owner or pledgee of Securities
and, subject to Sections 8.08 and 8.13, may otherwise deal with the Company with
the same rights it would have if it were not Trustee, Authenticating Agent,
Paying Agent, Security Registrar, Co-Security Registrar or such other agent.

                                       56



         SECTION 8.06. Money or Other Property Held in Trust.

         Subject to Section 1.16, money or other property held by the Trustee or
any Paying Agent in trust hereunder need not be segregated from other funds or
other property except to the extent required by law. Neither the Trustee nor any
Paying Agent shall be under any liability for interest on any money or other
property received by it hereunder except as otherwise agreed with the Company.

         SECTION 8.07. Compensation and Reimbursement.

         The Company agrees:

                  (i) to pay to each of the Trustee, any Co-Trustee, the
         Security Registrar, any Co-Security Registrar and Paying Agent, as the
         case may be, from time to time such compensation as shall be agreed in
         writing between the Company and the Trustee for all services rendered
         by them hereunder (which compensation shall not be limited by any
         provisions of law in regard to the compensation of a trustee of an
         express trust);

                  (ii) except as otherwise expressly provided herein, to pay to
         or to reimburse each of the Trustee, any Co-Trustee, the Security
         Registrar, any Co-Security Registrar and any Paying Agent, as the case
         may be, upon their request for all reasonable expenses, disbursements
         and advances incurred or made by any one of them in accordance with any
         provision of this Indenture (including the reasonable compensation and
         the expenses and disbursements of their agents and counsel), except any
         such expense, disbursement or advance as may be attributable to their
         negligence or bad faith; and

                  (iii) to indemnify each of the Trustee, any Co-Trustee, the
         Security Registrar, any Co-Security Registrar and any Paying Agent, as
         the case may be, for, and to hold each of them harmless against any and
         all loss, liability, damage, claim or expense, including taxes (other
         than taxes based on the income of the Trustee) incurred without
         negligence or bad faith on the part of such entity, arising out of or
         in connection with the acceptance or administration of the trust or
         trusts hereunder, including the costs and expenses of defending
         themselves against any claim (whether asserted by the Company, a Holder
         or any other Person) or liability in connection with the exercise or
         performance of any of its powers or duties hereunder. The provisions of
         this Section 8.07(iii) shall survive the termination and discharge of
         the Indenture and the resignation or removal of the Trustee for any
         reason.

         As security for the performance of the obligations of the Company
pursuant to this Section 8.07, the Trustee for the Securities of any series
shall have a lien prior to the Securities of all such series 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, if any, on
Securities of any such series. The claims of the Trustee under this Section
shall not be subject to the provisions of Article Fourteen.

                                       57



         The obligations of the Company under this Section shall survive the
resignation and removal of the Trustee and the satisfaction and discharge of
this Indenture.

         When the Trustee incurs expenses or renders services in connection with
an Event of Default specified in Section 7.01(i) or Section 7.01(ii), the
expenses (including the reasonable charges and expenses of its counsel) and the
compensation for the services are intended to constitute expenses or
administration under any applicable Federal or state bankruptcy, insolvency or
other similar law.

         SECTION 8.08. Disqualification; Conflicting Interests.

         The Trustee for the Securities of any series issued hereunder shall be
subject to the provisions of Section 310(b) of the Trust Indenture Act during
the period of time provided for therein. In determining whether the Trustee has
a conflicting interest as defined in Section 310(b) of the Trust Indenture Act
with respect to the Securities of any series, there shall be excluded this
Indenture with respect to Securities of any particular series of Securities
other than that series.

         Nothing herein shall prevent the Trustee from filing with the
Securities and Exchange Commission the application referred to in the second to
last paragraph of Section 310(b) of the Trust Indenture Act.

         SECTION 8.09. Corporate Trustee Required; Eligibility.

         There shall at all times be a Trustee with respect to each series of
Securities hereunder which shall at all times be either

                  (i) a Corporation or association 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 exercise
         corporate trust powers and subject to supervision or examination by
         federal, state or District of Columbia authority or

                  (ii) a Corporation or association organized or other Person
         organized and doing business under the laws of a foreign government
         that is permitted to act as Trustee pursuant to a rule, regulation or
         order of the Commission, authorized under such laws to exercise
         corporate trust powers, and subject to supervision or examination by
         authority of such foreign government or a political subdivision thereof
         substantially equivalent to supervision or examination applicable to
         United States institutional trustees, in either case having a combined
         capital and surplus of at least $50,000,000.

         If such Corporation or national banking association publishes reports
of condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such Corporation or national
banking association shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. Neither the
Company nor any person directly or indirectly controlling, controlled by, or
under common control with the Company shall serve as trustee for the Securities
of any series issued hereunder. If at any time the Trustee with respect to any
series of Securities shall cease to be eligible in accordance with

                                       58



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

         SECTION 8.10. Resignation and Removal; Appointment of Successor.

                  (i) 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 8.11.

                  (ii) The Trustee may resign with respect to any series of
         Securities at any time by giving written notice thereof to the Company.
         If an instrument of acceptance by a successor Trustee, required by
         Section 8.11, shall not have been delivered to the resigning Trustee
         within 30 days after the giving of such notice of resignation, the
         resigning Trustee may petition, at the expense of the Company, any
         court of competent jurisdiction for the appointment of a successor
         Trustee with respect to Securities of such series.

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

                  (iv) If at any time:

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

                           (b) the Trustee shall cease to be eligible under
                  Section 8.09 with respect to any series of Securities and
                  shall fail to resign after written request therefor by the
                  Company or by any Holder of Securities of such series; or

                           (c) the Trustee shall become incapable of acting with
                  respect to any series of Securities 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, (1) the Company by a Board Resolution may remove the
Trustee with respect to all Securities, or (2) subject to Section 7.14, any
Securityholder 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

                                       59



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.

                  (v) If the Trustee shall resign, be removed or become
         incapable of acting with respect to any series of Securities, or if a
         vacancy shall occur in the office of Trustee with respect to any series
         of Securities for any cause, the Company, by a Board Resolution, shall
         promptly appoint a successor Trustee or Trustees with respect to the
         Securities of that or those series (it being understood that any such
         successor Trustee may be appointed with respect to the Securities of
         one or more or all of such series and that at any time there shall be
         only one Trustee with respect to other Securities of any particular
         series) and shall comply with the applicable requirements of Section
         8.11. If, within one year after such resignation, removal or
         incapability, or the occurrence of such vacancy, a successor Trustee
         with respect to such series of Securities shall be appointed by the Act
         of the Holders of a majority in principal amount of the Outstanding
         Securities of such series delivered to the Company and the retiring
         Trustee with respect to such series, the successor Trustee so appointed
         shall, forthwith upon its acceptance of such appointment in accordance
         with the applicable requirements of Section 8.11, become the successor
         Trustee with respect to such series and to that extent supersede the
         successor Trustee appointed by the Company with respect to such series.
         If no successor Trustee with respect to such series shall have been so
         appointed by the Company or the Holders of Securities of such series
         and accepted appointment in the manner hereinafter provided, any
         Securityholder 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 such series.

                  (vi) 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 Registered
         Securities of such series as their names and addresses appear in the
         Security Register and, if Securities of such series are issuable as
         Bearer Securities, by publishing notice of such event once in an
         Authorized Newspaper in each Place of Payment located outside the
         United States. 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 8.11. Acceptance of Appointment by Successor.

                  (i) In the case of the appointment hereunder of a successor
         Trustee with respect to any series of Securities, every such successor
         Trustee so appointed shall execute, acknowledge and deliver to the
         Company and to the retiring Trustee or Trustees an instrument accepting
         such appointment and thereupon the resignation or removal of the
         retiring Trustee or Trustees shall become effective with respect to all
         or any series as to which it is resigning as Trustee, 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 or Trustees with respect to all or any such series;
         but, on request of the Company or such successor Trustee, such retiring
         Trustee or Trustees shall upon

                                       60



         payment of its charges and all amounts owing under Section 8.07,
         execute and deliver an instrument transferring to such successor
         Trustee all the rights, powers and trusts of such retiring Trustee or
         Trustees with respect to all or any such series; and shall duly assign,
         transfer and deliver to such successor Trustee all property and money
         held by such retiring Trustee or Trustees hereunder with respect to all
         or any such series.

                  (ii) In case of the appointment hereunder of a successor
         Trustee with respect to the Securities of one or more (but not all)
         series, the Company, the retiring Trustee and each successor Trustee
         with respect to the Securities of one or more series shall execute and
         deliver an indenture supplemental hereto wherein each successor Trustee
         shall accept such appointment and which (a) shall contain such
         provisions as shall be necessary or desirable to transfer and confirm
         to, and to vest in, each successor Trustee all the rights, powers,
         trusts and duties of the retiring Trustee with respect to the
         Securities of that or those series to which the appointment of such
         successor Trustee relates, (b) 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
         (c) shall add to or change any of the provisions of this Indenture as
         shall be necessary to provide for or facilitate the administration of
         the trusts hereunder by more than one Trustee, it being understood that
         nothing herein or in such supplemental indenture shall constitute such
         Trustees co-trustees of the same trust and that each such Trustee shall
         be trustee of a trust or trusts hereunder separate and apart from any
         trust or trusts hereunder administered by any other such Trustee and
         that no Trustee shall be responsible for any notice given to, or
         received by, or any act or failure to act on the part of any other
         Trustee hereunder, 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, such
         retiring Trustee shall with respect to the Securities of that or those
         series to which the appointment of such successor Trustee relates have
         no further responsibility for the exercise of rights and powers or for
         the performance of the duties and obligations vested in the Trustee
         under this Indenture, and each 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 to the Company or any
         successor Trustee, such retiring Trustee shall duly assign, transfer
         and deliver to such successor Trustee, to the extent contemplated by
         such supplemental indenture, 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.

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

                                       61



                  (iv) No successor Trustee with respect to a series of
         Securities shall accept its appointment unless at the time of such
         acceptance such successor Trustee shall be qualified and eligible with
         respect to such series under this Article.

         SECTION 8.12. Merger, Conversion, Consolidation or Succession to
Business of Trustee.

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

         SECTION 8.13. Preferential Collection of Claims against Company.

         The Trustee shall comply with Section 311(a) of the Trust Indenture Act
with respect to each series of Securities for which it is Trustee.

         SECTION 8.14. Appointment of Authenticating Agent.

         At any time when any of the Securities of any series remain Outstanding
the Trustee may appoint an Authenticating Agent or Agents with respect to one or
more series of Securities, which may include any Affiliate of the Company. Such
Authenticating Agent or Agents, at the option of the Trustee, 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 3.06, 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 a
Trustee or the Trustee's certificate of authentication or the delivery of
Securities to the Trustee for authentication, such reference shall be deemed to
include authentication and delivery on behalf of the Trustee by an
Authenticating Agent, a certificate of authentication executed on behalf of the
Trustee by an Authenticating Agent and delivery of Securities to the
Authenticating Agent on behalf of the Trustee. Each Authenticating Agent shall
be acceptable to the Company and shall at all times be a corporation or national
banking association 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 as most recently reported or determined by it sufficient under the laws
of any jurisdiction under which it is organized and in which it is doing
business to conduct a trust business, and which is otherwise authorized under
such laws to conduct such business and is subject to supervision or examination
by federal or state authority. Notwithstanding the foregoing, an Authenticating
Agent located outside the United States may be appointed by the

                                       62



Trustee if previously approved in writing by the Company and if such
Authenticating Agent has a combined capital and surplus as most recently
reported or determined by it sufficient under the laws of any jurisdiction under
which it is organized and in which it is doing business to conduct a trust
business. 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.

         The Trustee shall initially act as Authenticating Agent located within
the United States for each series of Securities issued hereunder.

         Any corporation or national banking association into which an
Authenticating Agent may be merged or converted or with which it may be
consolidated, or any corporation or national banking association resulting from
any merger, conversion or consolidation to which such Authenticating Agent shall
be a party, or any corporation or national banking association succeeding to all
or substantially all of the corporate agency or corporate trust business of an
Authenticating Agent, shall continue to be an Authenticating Agent, provided
such corporation or national banking association 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 (and upon
request by the Company shall) 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 termination, or in case
at any time such Authenticating Agent shall cease to be eligible in accordance
with the provisions of this Section, the Trustee may appoint a successor
Authenticating Agent which shall be acceptable to the Company and shall 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 agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section.

         The provisions of Sections 3.08, 8.04 and 8.05 shall be applicable to
each Authenticating Agent.

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

                                       63



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

                                           J. P. MORGAN TRUST COMPANY, NATIONAL
                                           ASSOCIATION,
                                           as Trustee

                                           By:
                                              ----------------------------------
                                           As Authenticating Agent



                                           By:
                                              ----------------------------------
                                              Authorized Officer

                                   ARTICLE IX

                             SUPPLEMENTAL INDENTURES

         SECTION 9.01. Supplemental Indentures Without Consent of
Securityholders.

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

                  (i) to evidence the succession of another corporation to the
         Company, and the assumption by any such successor of the covenants of
         the Company herein and in the Securities in accordance with Section
         10.01 hereof; or

                  (ii) to evidence and provide for the acceptance of appointment
         hereunder by a successor Trustee with respect to one or more series of
         Securities and to add to or change 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 Section
         8.11; or

                  (iii) to add to the covenants of the Company, for the benefit
         of the Holders of Securities of all or any series (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 rights or
         power herein conferred upon the Company; or

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

                                       64



                  (v) to add any additional Defaults or Events of Default with
         respect to all or any series of the Securities (and, if such Default or
         Event of Default is applicable to less than all series of Securities,
         specifying the series to which such Default or Event of Default is
         applicable); or

                  (vi) to add to or change any of the provisions of this
         Indenture to provide that Bearer Securities may be registerable as to
         principal, to change or eliminate any restrictions on the payment of
         principal of (or premium, if any), Maturity Consideration or any
         interest on Bearer Securities, to permit Bearer Securities to be issued
         in exchange for Registered Securities, to permit Bearer Securities to
         be issued in exchange for Bearer Securities of other authorized
         denominations or to permit the issuance of Securities in uncertificated
         form, provided any such action shall not adversely affect the interests
         of the Holders of Securities of any series or any related coupons in
         any material respect; or

                  (vii) to change or eliminate any of the provisions of this
         Indenture, provided that, any such change or elimination shall become
         effective only when there is no Security Outstanding of any series
         created prior to the execution of such supplemental indenture which is
         adversely affected in any material respect by such change in or
         elimination of such provisions; or

                  (viii) to establish the form or terms of a Security of any
         series as permitted by Sections 2.01 and 3.01; or

                  (ix) to convey, transfer, assign, mortgage or pledge any
         property to or with the Trustee securing any series of Security; or

                  (x) to provide for conversion rights of the Holders of the
         Securities of any series to enable such Holders to convert such
         Securities into other securities of the Company.

         SECTION 9.02. Supplemental Indentures With Consent of Securityholders.

         With the consent of the Holders of not less than 66 2/3% in principal
amount or, if such Securities are not payable at Maturity for a fixed principal
amount, 66 2/3% of the aggregate issue price of the Outstanding Securities of
each series affected by such supplemental indenture or indentures, by Act of
said Holders delivered to the Company and the Trustee, the Company, when
authorized by a Board Resolution, and the Trustee may enter into an indenture or
indentures supplemental hereto for the purposes 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 each such
series and any related coupons under this Indenture; provided, however, that no
such supplemental indenture shall, without the consent of the Holders of each
Outstanding Security affected thereby:

                  (i) change the Stated Maturity of the principal of, or the
         Stated Maturity of any installment of principal of or interest (or
         premium, if any) or any Maturity Consideration on, any Outstanding
         Security, or reduce the principal amount or Maturity Consideration
         thereof (or premium, if any, thereon) or the rate of interest

                                       65



         thereon, or change the obligation of the Company to pay additional
         amounts pursuant to Section 5.04 (except as contemplated by Section
         10.01(i) and permitted by Section 9.01), or reduce the amount of the
         principal of an Original Issue Discount Security that would be due and
         payable or deliverable upon a declaration of acceleration of the
         Maturity thereof pursuant to Section 7.02, or change the method of
         calculating interest thereon or the Place of Payment where, or the coin
         or currency unit or other property in which any Outstanding Security
         (or premium, if any, thereon) or the interest therefor is payable or
         deliverable or impair the right to institute suit for the enforcement
         of any such payment or delivery on or after the Stated Maturity thereof
         (or, in the case of redemption, on or after the Redemption Date); or

                  (ii) reduce the percentage in principal amount or issue price
         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 of certain Defaults hereunder and their
         consequences) provided for in this Indenture; or

                  (iii) change any obligations of the Company to maintain an
         office or agency in the places and for the purposes specified in
         Section 5.02; or

                  (iv) make any change relating to the subordination of the
         Securities in a manner adverse to the Holders of such Securities; or

                  (v) make any change relating to the subordination of the
         Securities in a manner adverse to holders of Senior Indebtedness unless
         the holders of such Senior Indebtedness consent to such change under
         the terms of such Senior Indebtedness; or

                  (vi) modify any of the provisions of this Section or Section
         7.13, 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 5.09 or the deletion of this proviso, in accordance with the
         requirements of Sections 8.11(ii) and 9.01(ii).

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

         It shall not be necessary for any Act of Securityholders 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 9.03. Execution of Supplemental Indentures.

                                       66



         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,
in addition to the documents required by Section 1.02, and (subject to Section
8.01) shall be fully protected in relying upon, an Opinion of Counsel stating
that the execution of such supplemental indenture is authorized or permitted by
and complies with this Indenture and has been duly authorized, executed and
delivered and is enforceable in accordance with its terms. The Trustee may, but
shall not be obligated to, enter into any such supplemental indenture which
affects the Trustee's own rights, liabilities, duties or immunities under this
Indenture or otherwise.

         SECTION 9.04. Effect of Supplemental Indentures.

         Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith and any 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 bounded thereby.

         SECTION 9.05. Conformity with Trust Indenture Act.

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

         SECTION 9.06. 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 of the series, bear a notation in form approved by
the Trustee as to any matter provided for in such supplemental indenture. If the
Company shall so determine, new Securities so modified as to conform, in the
opinion of the Trustee and the Company, to any such supplemental indenture may
be prepared and executed by the Company and authenticated and delivered by the
Trustee in exchange for Outstanding Securities.

                                   ARTICLE X

                  CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER

         SECTION 10.01. Company May Consolidate, etc., Only on Certain Terms.

         The Company shall not consolidate with or merge into any other
corporation or convey or transfer its properties and assets substantially as an
entirety to any Person, unless

                  (i) the corporation formed by such consolidation or into which
         the Company is merged or the Person which acquires by conveyance or
         transfer or which leases the properties and assets of the Company
         substantially as an entirety shall be a corporation organized and
         existing under the laws of the United States of America, any State
         thereof or the District of Columbia and shall expressly assume, by an
         indenture supplemental hereto, executed and delivered to the Trustee,
         in form satisfactory to the Trustee, the due and punctual payment or
         delivery of the principal of (and premium, if

                                       67



         any), Maturity Consideration and interest on (including all additional
         amounts, if any, payable pursuant to Section 5.04) all the Securities
         and the performance of every covenant of this Indenture on the part of
         the Company to be performed or observed;

                  (ii) immediately after giving effect to such transaction, no
         Default, and no event which, after notice or lapse of time, or both,
         would become a Default, shall have happened and be continuing; and

                  (iii) the Company has delivered to the Trustee an Officers'
         Certificate and an Opinion of Counsel each stating that such
         consolidation, merger, conveyance or transfer and such supplemental
         indenture comply with this Article and that all conditions precedent
         herein provided for relating to such transaction have been complied
         with;

provided, that, the provisions of this Section 10.01 may be changed as to any
series of Securities if and to the extent provided in an Officer's Certificate
delivered pursuant to Section 3.01 establishing the terms of such series of
Securities.

                  SECTION 10.02. Successor Corporation Substituted.

         Upon any consolidation or merger, or any conveyance or transfer of the
properties and assets of the Company substantially as an entirety in accordance
with Section 10.01, the successor corporation formed by such consolidation or
into which the Company is merged or to which such conveyance or transfer is made
shall succeed to, and be substituted for, and may exercise every right and power
of, the Company under this Indenture with the same effect as if such successor
corporation had been named as the Company herein. In the event of any such
conveyance or transfer, the Company as the predecessor corporation shall be
relieved of all obligations and covenants under this Indenture and may be
dissolved, wound up and liquidated at any time thereafter.

         Such successor corporation may cause to be signed, and may issue either
in its own name or in the name of the Company, any or all of the Securities
issuable hereunder which theretofore shall not have been signed by the Company
and delivered to the Trustee; and, upon the order of such successor corporation
instead of the Company and subject to all the terms, conditions and limitations
in this Indenture prescribed, the Trustee shall authenticate and shall deliver
any Securities which previously shall have been signed and delivered by the
officers of the Company to the Trustee for authentication pursuant to such
provisions and any Securities which such successor corporation thereafter shall
cause to be signed and delivered to the Trustee on its behalf for the purpose
pursuant to such provisions. All the Securities so issued shall in all respects
have the same legal rank and benefit under this Indenture as the Securities
theretofore or thereafter issued in accordance with the terms of this Indenture
as though all of such Securities had been issued at the date of the execution
hereof.

         In case of any such consolidation, merger, sale or conveyance, such
changes in phraseology and form may be made in the Securities thereafter to be
issued as may be appropriate.

                                       68



                                   ARTICLE XI

                           SATISFACTION AND DISCHARGE

         SECTION 11.01. 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 rights to receive payments thereon
and any right to receive additional amounts, as provided in Section 5.04), and
each Trustee, on demand of and at the expense of the Company, shall execute
proper instruments acknowledging satisfaction and discharge of this Indenture,
when

                  (i) either

                           (a) all Securities theretofore authenticated and
                  delivered (other than (1) coupons appertaining to Bearer
                  Securities surrendered for exchange for Registered Securities
                  and maturing after such exchange, whose surrender is not
                  required or has not been waived as provided in Section 3.05,
                  (2) coupons appertaining to Bearer Securities called for
                  redemption and maturing after the relevant Redemption Date,
                  whose surrender has been waived as provided in Section 4.07,
                  (3) Securities and coupons which have been destroyed, lost or
                  stolen and which have been replaced or paid as provided in
                  Section 3.06, and (4) Securities for whose payment money has
                  theretofore been deposited in trust or segregated and held in
                  trust by the Company and thereafter repaid to the Company or
                  discharged from such trust, as provided in Section 5.03) have
                  been delivered to the Trustee for cancellation; or

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

                                    (1) have become due and payable, or

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

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

                  and the Company, in the case of (b)(1), (2) or (3) above, has
                  deposited or caused to be deposited with the Trustee, as trust
                  funds in trust for the purpose, an amount (said amount to be
                  immediately due and payable to the Holders) sufficient to pay
                  and discharge the entire indebtedness on such Securities and
                  coupons of the relevant series not theretofore delivered to
                  the Trustee for cancellation, for principal (and premium, if
                  any) and

                                       69



         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;

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

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

         Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 8.07, the obligations of
the Company to any Authenticating Agent under Section 8.14 and, if money shall
have been deposited with the Trustee pursuant to subclause (b) of clause (i) of
this Section, the obligations of the Trustee under Section 11.02 and the last
paragraph of Section 5.03 shall survive such satisfaction and discharge. The
Trustee may give notice to the Holders of Securities Outstanding of the
immediate availability of the amount referred to in Clause (i) of this Section
11.01. Funds held pursuant to this Section shall not be subject to the
provisions of Article Fourteen.

         In the event there are Securities of two or more series hereunder, the
Trustee shall be required to execute an instrument acknowledging satisfaction
and discharge of the Indenture only if requested to do so with respect to
Securities of all series as to which it is Trustee and if the other conditions
thereto are met. The effectiveness of any such instrument shall be conditional
upon receipt of such instruments from the Trustee.

         SECTION 11.02. Application of Trust Money or Property.

         Subject to the provisions of the last paragraph of Section 5.03, all
money or property deposited with the Trustee pursuant to Section 11.01 in
respect of Securities of a series shall be held in trust and applied by it, in
accordance with the provisions of such Securities, the coupons, if any, and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent), as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any), Maturity Consideration and interest for whose payment such money has been
deposited with the Trustee; unless otherwise specified herein, such money need
not be segregated from other funds except to the extent required by law.

                                  ARTICLE XII

                    IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
                             OFFICERS AND DIRECTORS

         SECTION 12.01. Exemption from Individual Liability.

         No recourse under or upon any obligation, covenant or agreement of this
Indenture, or of any Security or coupon, or for any claim based thereon or
otherwise in respect thereof, shall be had against any incorporator,
stockholder, officer or director, as such, past, present or future, of the
Company or of any successor corporation, either directly or through the Company,
whether

                                       70



by virtue of any constitution, statute or rule of law, or by the enforcement of
any assessment or penalty or otherwise; it being expressly understood that this
Indenture and the obligations issued hereunder are solely corporate obligations
of the Company, and that no such personal liability whatever shall attach to, or
is or shall be incurred by, the incorporators, stockholders, officers or
directors, as such, of the Company or of any successor corporation, or any of
them, because of the creation of the indebtedness hereby authorized, or under or
by reason of the obligations, covenants or agreements contained in this
Indenture or in any of the Securities or coupons or implied therefrom; and that
any and all such personal liability, either at common law or in equity or by
constitution or statute, of, and any and all such rights and claims against,
every such incorporator, stockholder, officer or director, as such, because of
the creation of the indebtedness hereby authorized, or under or by reason of the
obligations, covenants or agreements contained in this Indenture or in any of
the Securities or coupons or implied therefrom, are hereby expressly waived and
released as a condition of, and as a consideration for, the execution of this
Indenture and the issuance of the Securities.

                                  ARTICLE XIII

                                  SINKING FUNDS

         SECTION 13.01. 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 3.01 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 13.02. 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 13.02. Satisfaction of Sinking Fund Payments with Securities.

         The Company (i) may deliver Outstanding Securities of a series (other
than any previously called for redemption), together in the case of any Bearer
Securities of such series, with all unmatured coupons appertaining thereto and
(ii) 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 made pursuant to the terms of such Securities as provided for by
the terms of such series; provided that such Securities have not been previously
so credited. Such Securities shall be received and credited for such purpose by
the Trustee for 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.

                                       71



         SECTION 13.03. Redemption of Securities for Sinking Fund.

         Not less than 90 days prior to each sinking fund payment date for any
series of Securities, the Company will deliver to the Trustee and the Security
Registrar an Officers' Certificate specifying (i) the amount of the next ensuing
sinking fund payment for that series pursuant to the terms of that series, (ii)
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 13.02 (such Security to be
credited, or proof of ownership thereof by the Company satisfactory to the
Trustee, to be delivered together with the Officers' Certificate), and (iii)
that none of such Securities has theretofore been so credited and stating the
basis for such credit, and will also deliver to the Trustee any Securities to be
so delivered. Not less than 30 days before each 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 4.03 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 4.04. Such notice having been duly given, the
redemption of such Securities shall be made upon the terms and in the manner
stated in Section 4.06 and 4.07 and subject to the limitations set forth in
Section 4.08.

                                  ARTICLE XIV

                                  SUBORDINATION

         SECTION 14.01. Agreement to Subordinate.

         The Company, for itself, its successors and assigns, covenants and
agrees, and each Holder of a Security by his acceptance thereof, likewise
covenants and agrees, that the payment or delivery of the principal of and
premium, if any, Maturity Consideration and interest on each and all of the
Securities is hereby expressly subordinated, to the extent and in the manner
hereinafter set forth, in right of payment or delivery to the prior payment or
satisfaction in full of all Senior Indebtedness.

         SECTION 14.02. Distribution on Dissolution, Liquidation and
Reorganization; Subrogation of Securities.

         (a) In the event of any distribution of assets of the Company upon any
dissolution, winding up, liquidation or reorganization of the Company, whether
in bankruptcy, insolvency, reorganization or receivership proceedings or upon an
assignment for the benefit of creditors or any other marshalling of the assets
and liabilities of the Company (subject to the power of a court of competent
jurisdiction to make other equitable provision reflecting the rights conferred
in this Indenture upon the Senior Indebtedness and the holders thereof with
respect to the Securities and the Holders thereof by a lawful plan of
reorganization under applicable bankruptcy law),

                  (i) the holders of all Senior Indebtedness shall first be
         entitled to receive payment or delivery in full in accordance with the
         terms of such Senior Indebtedness of the principal thereof, premium, if
         any, and the interest due thereon (including interest accruing
         subsequent to the commencement of any proceeding for the

                                       72



         bankruptcy or reorganization of the Company under any applicable
         bankruptcy, insolvency, or similar law now or hereafter in effect)
         before the Holders of the Securities are entitled to receive any
         payment or delivery upon the principal of or premium, if any, Maturity
         Consideration or interest on indebtedness evidenced by the Securities;

                  (ii) any payment or distribution of assets of the Company of
         any kind or character, whether in cash, property or securities, to
         which the Holders of the Securities or the Trustee would be entitled
         except for the provisions of this Article Fourteen, including any such
         payment or distribution which may be payable or deliverable by reason
         of the payment of any other indebtedness of the Company being
         subordinated to the payment of the Securities, shall be paid by the
         liquidating trustee or agent or other person making such payment or
         distribution, whether a trustee in bankruptcy, a receiver or
         liquidating trustee or otherwise, directly to the holders of Senior
         Indebtedness or their representative or representatives or to the
         trustee or trustees under any indenture under which any instruments
         evidencing any of such Senior Indebtedness may have been issued, in
         accordance with the priorities then existing among holders of Senior
         Indebtedness for payment of the aggregate amounts remaining unpaid on
         account of the principal of and premium, if any, and interest
         (including interest accruing subsequent to the commencement of any
         proceeding for the bankruptcy or reorganization of the Company under
         any applicable bankruptcy, insolvency, or similar law now or hereafter
         in effect) on the Senior Indebtedness held or represented by each, to
         the extent necessary to make payment in full of all Senior Indebtedness
         remaining unpaid, after giving effect to any concurrent payment or
         distribution to the holders of such Senior Indebtedness; it being
         understood that if the Holders of Securities shall fail to file a
         proper claim in the form required by any proceeding referred to in this
         subparagraph (ii) prior to thirty days before the expiration of the
         time to file such claim or claims, then the holders of Senior
         Indebtedness are hereby authorized to file an appropriate claim or
         claims for and on behalf of the Holders of Securities in the form
         required in any such proceeding; and

                  (iii) in the event that, notwithstanding the foregoing, any
         payment or distribution of assets of the Company of any kind or
         character, whether in cash, property or securities, including any such
         payment or distribution which may be payable or deliverable by reason
         of the payment of any other indebtedness of the Company being
         subordinate to the payment of the Securities, shall be received by the
         Trustee or Holders of the Securities before all Senior Indebtedness is
         paid in full, such payment or distribution shall be held for the
         benefit of and shall be paid over to the holders of such Senior
         Indebtedness or their representative or representatives or to the
         trustee or trustees under any indenture under which any instruments
         evidencing any of such Senior Indebtedness may have been issued, as
         aforesaid, for application to the payment of all Senior Indebtedness
         remaining unpaid until all such Senior Indebtedness shall have been
         paid in full, after giving effect to any concurrent payment or
         distribution (or provision thereof) to the holders of such Senior
         Indebtedness.

         (b) Subject to the payment in full of all Senior Indebtedness, the
Holders of the Securities shall be subrogated (equally and ratably with the
holders of all indebtedness of the Company which by its express terms is
subordinated to indebtedness of the Company to

                                       73



substantially the same extent as the Securities are subordinated and is entitled
to like rights of subordination) to the rights of the holders of Senior
Indebtedness to receive payments or distributions of cash, property or
securities of the Company applicable to the Senior Indebtedness until the
principal of and premium, if any, Maturity Consideration and interest on the
Securities shall be paid in full and no such payments or distributions to
holders of such Senior Indebtedness to which the Holders of the Securities would
be entitled except for the provisions hereof of cash, property or securities
otherwise distributable to the Senior Indebtedness shall, as between the
Company, its creditors, other than the holders of Senior Indebtedness, and the
Holders of the Securities, be deemed to be a payment by the Company to or on
account of the Senior Indebtedness.

         (c) It is understood that the provisions of this Article Fourteen are
intended solely for the purpose of defining the relative rights of the Holders
of the Securities, on the one hand, and the holders of Senior Indebtedness, on
the other hand. Nothing contained in this Article Fourteen or elsewhere in this
Indenture or in the Securities is intended to or shall (i) impair, as between
the Company, and the Holders of the Securities, the obligation of the Company,
which is unconditional and absolute (and which, subject to the rights under this
Article Fourteen of the holders of Senior Indebtedness, is intended to rank
equally with all other general obligations of the Company), to pay to the
Holders of the Securities the principal of, premium, if any, Maturity
Consideration and interest (including interest accruing subsequent to the
commencement of any proceeding for the bankruptcy or reorganization of the
Company under any applicable bankruptcy, insolvency or similar law now or
hereafter in effect) on the Securities as and when the same shall become due and
payable in accordance with their terms, (ii) affect the relative rights of the
Holders of the Securities and creditors of the Company, other than the holders
of the Senior Indebtedness, (iii) prevent the Trustee or the Holder of any
Security from exercising all remedies otherwise permitted by applicable law upon
Default under this Indenture, subject to the rights, if any, under this Article
Fourteen of the holders of Senior Indebtedness, in respect of cash, property or
securities of the Company received upon the exercise of any such remedy or (iv)
prevent the application by the Trustee or any Paying Agent of any moneys
deposited with it hereunder to the payment of or on account of the principal of
or premium, if any, Maturity Consideration or interest on the Securities or
prevent the receipt by the Trustee or any Paying Agent of such moneys, if, prior
to the second Business Day prior to such deposit, the Trustee or such Paying
Agent did not have written notice, in accordance with Section 14.06 hereof, of
any event prohibiting the making of such deposit by the Company and the Trustee
shall not be affected by any notice which may be received by it on or after such
second Business Day.

         (d) Upon any payment or distribution of assets of the Company referred
to in this Article Fourteen, the Trustee, subject to the provisions of Section
8.01, and the Holders of the Securities shall be entitled to rely upon any order
or decree of a court of competent jurisdiction in which such dissolution,
winding up, liquidation or reorganization proceedings are pending or upon a
certificate of the liquidating trustee or agent or other person making any
distribution to the Trustee or to the Holders of the Securities for the purpose
of ascertaining the persons entitled to participate in such distribution, the
holders of the Senior Indebtedness and other indebtedness of the Company, the
amount thereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this Article Fourteen. In
the absence of any such liquidating trustee, agent or other person or any
certification by any such person, the Trustee shall be entitled to rely upon a
written notice by a Person representing himself to be a

                                       74



holder of Senior Indebtedness (or a trustee or representative on behalf of such
holder) as evidence that such Person is a holder of Senior Indebtedness (or is
such a trustee or representative). In the event that the Trustee determines, in
good faith, that further evidence is required with respect to the right of any
Person, as a holder of Senior Indebtedness, to participate in any payment or
distribution pursuant to this Section, the Trustee may request such Person to
furnish evidence to the reasonable satisfaction of the Trustee as to the amount
of Senior Indebtedness held by such Person, as to the extent to which such
Person is entitled to participation in such payment or distribution, and as to
other facts pertinent to the rights of such Person under this Section, and if
such evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment.

         (e) With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Indenture, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee. The Trustee, however, shall not be
deemed to owe any fiduciary duty to the holders of Senior Indebtedness, and
shall not be liable to any such holders if it shall mistakenly pay over or
distribute to or on behalf of Holders of Securities or the Company moneys or
assets to which any holders of Senior Indebtedness shall be entitled by virtue
of this Article Fourteen.

         SECTION 14.03. Payments on Securities Prohibited During Event of
Default Under Senior Indebtedness.

         In the event and during the continuation of any default in the payment
of principal of, or premium, if any, or interest on, any Senior Indebtedness
beyond any applicable period of grace, or in the event that any event of default
with respect to any Senior Indebtedness shall have occurred and be continuing,
or would occur as a result of the payment referred to hereinafter, permitting
the holders of such Senior Indebtedness (or a trustee on behalf of the holders
thereof) to accelerate the maturity thereof, then, unless and until such default
or event of default shall have been cured or waived or shall have ceased to
exist, no payment or delivery of principal of, or premium, Maturity
Consideration or interest on the Securities, or in respect of any redemption,
retirement, purchase or other acquisition of any of the Securities, shall be
made by the Company.

         SECTION 14.04. Reserved.

         SECTION 14.05. Authorization of Holders to Trustee to Effect
Subordination.

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

         SECTION 14.06. Notice to Trustee.

         Notwithstanding the provisions of this Article or any other provisions
of the Indenture, neither the Trustee nor any Paying Agent shall be charged with
knowledge of the existence of

                                       75



any Senior Indebtedness or of any event which would prohibit the making of any
payment of moneys to or by the Trustee or such Paying Agent, unless and until a
Responsible Officer of the Trustee assigned to its Corporate Trust Department or
such Paying Agent shall have received written notice thereof from the Company or
from the holder of any Senior Indebtedness or from the representative of any
such holder and prior to receipt of any such written notice the Trustee shall be
entitled to assume that no such indebtedness or event exists; provided, however,
that if a Responsible Officer of the Trustee shall not have received, at least
three Business Days prior to the date upon which by the terms hereof any such
money may become payable for any purpose (including, without limitation, the
payment of the principal, issue price, accrued original issue discount,
redemption price or interest, if any, as the case may be, in respect of any
Security), the notice with respect to such money provided for in this Section
14.06, then, anything herein contained to the contrary notwithstanding, the
Trustee shall have full power and authority to receive such money and to apply
the same to the purpose for which such money was received and shall not be
affected by any notice to the contrary which may be received by it within three
Business Days prior to such date.

         Subject to the provisions of Section 8.01, the Trustee shall be
entitled to conclusively rely on the delivery to it of a written notice by a
Person representing himself to be a holder of Senior Indebtedness (or a trustee
or agent on behalf of such holder) to establish that such notice has been given
by a holder of Senior Indebtedness (or a trustee or agent on behalf of any such
holder). In the event that the Trustee determines in good faith that further
evidence is required with respect to the right of any Person as a holder of
Senior Indebtedness to participate in any payment or distribution pursuant to
this Article, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness
held by such Person, the extent to which such Person is entitled to participate
in such payment or distribution and any other facts pertinent to the rights of
such Person under this Article, and if such evidence is not furnished, the
Trustee may defer any payment which it may be required to make for the benefit
of such Person pursuant to the terms of this Indenture pending judicial
determination as to the rights of such Person to receive such payment.

         SECTION 14.07. Right of Trustee to Hold Senior Indebtedness.

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

         SECTION 14.08. Article Fourteen Not to Prevent Defaults or Events of
Default.

         The failure to make a payment pursuant to the Securities by reason of
any provision in this Article shall not be construed as preventing the
occurrence of a Default or an Event of Default.

         SECTION 14.09. Trustee Compensation, Etc. Not Prejudiced.

         Nothing in this Article shall apply to claims of, or payments to, the
Trustee pursuant to Section 8.07 or to funds held by the Trustee pursuant to
Section 11.01.

                                       76



                                   ARTICLE XV

                                  MISCELLANEOUS

         SECTION 15.01. Counterparts.

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

                                       77



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

                            SUSQUEHANNA BANCSHARES, INC.


                            By: /s/ William J. Reuter
                                --------------------------------------------
                                Name: William J. Reuter
                                Title: President and Chief Executive Officer

                            J. P. MORGAN TRUST COMPANY, NATIONAL
                            ASSOCIATION,
                            as Trustee

                            By: /s/ E. D. Renn
                                --------------------------------------------
                                Name: E. D. Renn
                                Title: Vice President

                                       78



                                    EXHIBIT A
                       FORM OF CERTIFICATE TO BE GIVEN BY
                     PERSON ENTITLED TO RECEIVE BEARER NOTE
                                   CERTIFICATE

- -------------------------------------
[Insert title or sufficient description of Securities to be delivered]
         This is to certify that the above-captioned Securities are not being
acquired by or on behalf of a United States person, or, if a beneficial interest
in the Securities is being acquired by or on behalf of a United States person,
that such United States person is a financial institution within the meaning of
Section 1.165-12(c)(1)(v) of the United States Treasury regulations which agrees
to comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the
Internal Revenue Code of 1986, and the regulations thereunder. If the
undersigned is a dealer, the undersigned agrees to obtain a similar certificate
from each person entitled to delivery of any of the above-captioned Securities
in bearer form purchased from it; provided, however, that, if the undersigned
has actual knowledge that the information contained in such a certificate is
false, the undersigned will not deliver a Security in temporary or definitive
bearer form to the person who signed such certificate notwithstanding the
delivery of such certificate to the undersigned.

         As used herein, "United States person" means any citizen or resident of
the United States, any corporation, partnership or other entity created or
organized in or under the laws of the United States and any estate or trust the
income of which is subject to United States federal income taxation regardless
of its source, and "United States" means the United States of America (including
the States and the District of Columbia), its territories, its possessions and
other areas subject to its jurisdiction.

         We undertake to advise you by telex if the above statement as to
beneficial ownership is not correct on the date of delivery of the
above-captioned Securities in bearer form as to all of such Securities.

         We understand that this certificate is required in connection with
certain tax legislation in the United States. If administrative or legal
proceedings are commenced or threatened in connection with which this
certificate is or would be relevant, we irrevocably authorize you to produce
this certificate or a copy thereof to any interested party in such proceedings.

Dated:                       , 20
       ----------------------    --

                                  [Name of Person Entitled to Receive Bearer
                                      Security]


                                  ------------------------------------------
                                  (Authorized Signatory)



                                    EXHIBIT B
                FORM OF CERTIFICATE TO BE GIVEN BY EUROCLEAR AND
                 CLEARSTREAM IN CONNECTION WITH THE EXCHANGE OF
                      A PORTION OF A TEMPORARY GLOBAL NOTE
                                   CERTIFICATE

- ------------------------------------
[Insert title or sufficient description of Securities to be delivered]
         This is to certify with respect to $_____________ principal amount of
the above-captioned Securities (i) that we have received from each of the
persons appearing in our records as persons entitled to a portion of such
principal amount (our "Qualified Account Holders") a certificate with respect to
such portion substantially in the form attached hereto, and (ii) that we are not
submitting herewith for exchange any portion of the temporary global Security
representing the above-captioned Securities excepted in such certificates.

         We further certify that as of the date hereof we have not received any
notification from any of our Qualified Account Holders to the effect that the
statements made by such Qualified Account Holders with respect to any portion of
the part submitted herewith for exchange are no longer true and cannot be relied
upon as of the date hereof.

Dated:                                   , 20
       ----------------------------------    --
[To be dated no earlier than the Exchange Date]

                             [Euroclear Bank, S.A./N.V., as Operator of the
                                 Euroclear System] [Clearstream Banking, S.A.]
                                 Security]


                             By:
                                ------------------------------------------



                                    EXHIBIT C
                FORM OF CERTIFICATE TO BE GIVEN BY EUROCLEAR AND
            CLEARSTREAM TO OBTAIN INTEREST PRIOR TO AN EXCHANGE DATE
                                   CERTIFICATE

- ------------------------------------------
[Insert title or sufficient description of Securities]
         This is to certify that, as of the Interest Payment Date on [Insert
Date], the undersigned, which is a holder of an interest in the temporary global
Security representing the above Securities, is not a United States person.

         As used herein, "United States person" means any citizen or resident of
the United States, any corporation, partnership or other entity created or
organized in or under the laws of the United States and any estate or trust the
income of which is subject to United States Federal income taxation regardless
of its source, and "United States" means the United States of America (including
the States and the District of Columbia), its territories, its possessions and
other areas subject to its jurisdiction.

         We confirm that the interest payable on such Interest Payment Date will
be paid to each of the persons appearing in our records as being entitled to
interest to be paid on the above date from whom we have received a written
certification dated not earlier than 15 days prior to such Interest Payment date
to the effect that the beneficial owner of such portion with respect to which
interest is to be paid on such date either is not a United States person or is a
United States person which is a financial institution which has provided an
Internal Revenue Service Form W-9 or is an exempt recipient as defined in United
States Treasury Regulations ss. 1.6049-4(c)(1)(ii). We undertake to retain
certificates received from our member organizations in connection herewith for
four years from the end of the calendar year in which such certificates are
received.



                                    EXHIBIT D
             FORM OF CERTIFICATE TO BE GIVEN BY BENEFICIAL OWNERS TO
                    OBTAIN INTEREST PRIOR TO AN EXCHANGE DATE
                                   CERTIFICATE

- ------------------------------------------
[Insert title or sufficient description of Securities]
         This is to certify that as of the date hereof, no portion of the
temporary global Security representing the above-captioned Securities and held
by you for our account is beneficially owned by a United States person or, if
any portion thereof held by you for our account is beneficially owned by a
United States person, such United States person is a financial institution
within the meaning of Section 1.165-12(c)(1)(v) of the United States Treasury
regulations which agrees to comply with Section 165(j)(3)(A), (B) or (C) of the
Internal Revenue Code of 1986 and the regulations thereunder, and certifies that
either it has provided an Internal Revenue Service Form W-9 or is an exempt
recipient as defined in Section 1.6049-4(c)(1)(ii) of the United States Treasury
regulations.

         As used herein, "United States person" means any citizen or resident of
the United States, any corporation, partnership or other entity created or
organized in or under the laws of the United States and any estate or trust the
income of which is subject to United States Federal income taxation regardless
of its source, and "United States" means the United States of America (including
the States and the District of Columbia), its territories, its possessions and
other areas subject to its jurisdiction.

         We undertake to advise you by telex if the above statement as to
beneficial ownership is not correct on the Interest Payment Date on [Insert
Date] as to any such portion of such temporary global Security.



         We understand that this certificate is required in connection with
certain tax legislation in the United States. If administrative or legal
proceedings are commenced or threatened in connection with which this
certificate is or would be relevant, we irrevocably authorize you to produce
this certificate or a copy thereof to any interested party in such proceedings.


Dated:                                   , 20
       ----------------------------------    --
[To be dated no earlier than 15 days prior to the Exchange Date]

                             [Name of Person Entitled to Receive Bearer
                                 Security]


                             ------------------------------------------
                                 (Authorized Signatory)


                             Name:
                             Title:

         The foregoing reflects any advice received subsequent to the date of
any certificate stating that the statements contained in such certificate are no
longer correct.

Dated:                                   , 20
       ----------------------------------    --
[To be dated on or after the relevant Interest Payment Date)

                             [Euroclear Bank, S.A./N.V., as Operator of the
                                  Euroclear System] [Clearstream Banking S.A.]


                             By:
                                ------------------------------------------

         We understand that this certificate is required in connection with
certain tax legislation in the United States. If administrative or legal
proceedings are commenced or threatened in connection with which this
certificate is or would be relevant, we irrevocably authorize you to produce
this certificate or a copy thereof to any interested party in such proceedings.

Dated:                                   , 20
       ----------------------------------    --
[To be dated on or after the 15th day before the relevant Interest Payment Date]

                             [Name of Account Holder]


                             ------------------------------------------
                                 (Authorized Signatory)


                             Name:
                             Title:

                                       2



                                    EXHIBIT E
           ADDITIONAL PROVISIONS RELATING TO BOOK-ENTRY SECURITIES AND
                        TRANSFERS IN CERTAIN SITUATIONS

The following provisions shall only be applicable if the terms of the Securities
of the series provide for their inclusion as permitted under Section 3.03 of the
Indenture:

SECTION 3.13. Book-Entry Provisions.

          (a) Securities offered and sold to qualified institutional buyers, as
such terms is defined in Rule 144A promulgated under the Securities Act of 1933,
as amended (the "Securities Act") ("QIB") in reliance on Rule 144A promulgated
under the Securities Act ("Rule 144A Notes") shall be represented by one or more
Securities in registered, global form without interest coupons (collectively,
the "Restricted Global Note"). Securities offered and sold in offshore
transactions in reliance on Regulation S promulgated under the Securities Act
("Regulation S Notes") initially shall be represented by one or more Securities
in registered, global form without interest coupons (collectively, the
"Regulation S Global Note," and, together with the Restricted Global Note and
any other global notes representing Notes, the "Global Notes"). The Global Notes
initially shall (i) be registered in the name of the Depositary Trust Company or
another person designated as depositary by the Company, which person must be a
clearing agency registered under the Securities Exchange Act of 1934, as amended
(the "Depository") or the nominee of such Depository, in each case for credit to
an account of an Agent Member (or, in the case of the Regulation S Global Notes,
of Euroclear System ("Euroclear") and Clearstream Banking Luxembourg
("Clearstream")), (ii) be delivered to the Trustee as custodian for such
Depository.

         Members of, or direct or indirect participants in, the Depository
("Agent Members") shall have no rights under this Indenture with respect to any
Global Note held on their behalf by the Depository, or the Trustee as its
custodian, or under the Global Notes, and the Depository may be treated by the
Company, the Trustee and any agent of the Company or the Trustee as the absolute
owner of the Global Note for all purposes whatsoever. Notwithstanding the
foregoing, nothing herein shall prevent the Company, the Trustee or any agent of
the Company or the Trustee from giving effect to any written certification,
proxy or other authorization furnished by the Depository or impair, as between
the Depository and its Agent Members, the operation of customary practices
governing the exercise of the rights of a Holder of any Note.

         (b) Transfers of Global Notes shall be limited to transfer in whole,
but not in part, to the Depository, its successors or their respective nominees.
Interests of beneficial owners in the Global Notes may be transferred or
exchanged for definitive Securities in accordance with the rules and procedures
of the Depository and the provisions of Section 3.05. In all cases, definitive
Securities delivered in exchange for any Global Note or beneficial interests
therein shall be registered in the names, and issued in any approved
denominations, requested by or on behalf of the Depository (in accordance with
its customary procedures).

         (c) In connection with any transfer or exchange of a portion of the
beneficial interest in any Global Note to beneficial owners of definitive
Securities pursuant to paragraph

                                       3



(b), the Registrar shall reflect on its books and records the date and a
decrease in the principal amount of the Global Note in an amount equal to the
principal amount of the beneficial interest in the Global Note to be transferred
or exchanged, and the Company shall execute, and the Trustee shall upon receipt
of a written order from the Company authenticate and make available for
delivery, one or more definitive Securities of like tenor and amount.

         (d) In connection with the transfer of Global Notes as an entirety to
beneficial owners pursuant to paragraph (b), the Global Notes shall be deemed to
be surrendered to the Trustee for cancellation, and the Company shall execute,
and the Trustee shall authenticate and deliver, to each beneficial owner
identified by the Depository in writing in exchange for its beneficial interest
in the Global Notes, an equal aggregate principal amount of definitive
Securities of authorized denominations

         (e) On or prior to the 40th day after the later of the commencement of
the offering of the Securities represented by the Regulation S Global Note and
the issue date of such Securities (such period through and including such 40th
day, the "Restricted Period"), a beneficial interest in a Regulation S Global
Note may be transferred to a Person who takes delivery in the form of an
interest in the corresponding Restricted Global Note only upon receipt by the
Trustee of a written certification from the transferor to the effect that such
transfer is being made (i)(a) to a person that the transferor reasonably
believes is a QIB in a transaction meeting the requirements of Rule 144A or (b)
pursuant to another exemption from the registration requirements under the
Securities Act which is accompanied by an opinion of counsel regarding the
availability of such exemption and (ii) in accordance with all applicable
securities laws of any state of the United States or any other jurisdiction.

         (f) Beneficial interests in the Restricted Global Note may be
transferred to a person who takes delivery in the form of an interest in the
Regulation S Global Note, whether before or after the expiration of the
Restricted Period, only if the transferor first delivers to the Trustee a
written certificate to the effect that such transfer is being made in accordance
with Regulation S or Rule 144 (if available) and that, if such transfer occurs
prior to the expiration of the Restricted Period, the interest transferred will
be held immediately thereafter through Euroclear or Clearstream.

         (g) Any beneficial interest in one of the Global Notes that is
transferred to a person who takes delivery in the form of an interest in another
Global Note shall, upon transfer, cease to be an interest in such Global Note
and become an interest in such other Global Note and, accordingly, shall
thereafter be subject to all transfer restrictions and other procedures
applicable to beneficial interests in such other Global Note for as long as it
remains such an interest.

         (h) The holder of any Global Note may grant proxies and otherwise
authorize any person, including Agent Members and persons that may hold
interests through Agent Members, to take any action which a Holder is entitled
to take under this Indenture or the Securities.

                                        4



SECTION 3.15. Special Transfer Provisions.

         (a) Transfers to QIBs. The following provisions shall apply with
respect to the registration or any proposed registration of transfer of a
Security constituting a Restricted Note to a QIB (excluding transfers to
Non-U.S. Persons):

                  (i) the Registrar shall register the transfer if such transfer
         is being made by a proposed transferor to a transferee who has advised
         the Company and the Registrar in writing, that it is purchasing the
         Security for its own account or an account with respect to which it
         exercises sole investment discretion and that it and any such account
         is a QIB within the meaning of Rule 144A, and is aware that the sale to
         it is being made in reliance on Rule 144A and acknowledges that it has
         received such information regarding the Company as it has requested
         pursuant to Rule 144A or has determined not to request such information
         and that it is aware that the transferor is relying upon its foregoing
         representations in order to claim the exemption from registration
         provided by Rule 144A; and

                  (ii) if the proposed transferee is an Agent Member, and the
         Notes to be transferred consist of definitive Securities which after
         transfer are to be evidenced by an interest in the Global Note, upon
         receipt by the Registrar of instructions given in accordance with the
         Depository's and the Registrar's procedures, the Registrar shall
         reflect on its books and records the date and an increase in the
         principal amount of the Global Note in an amount equal to the principal
         amount of the definitive Securities to be transferred, and the Trustee
         shall cancel the definitive Securities so transferred.

         (b) Private Placement Legend. Upon the registration of transfer,
exchange or replacement of Notes not bearing a private placement legend, the
Registrar shall deliver Securities that do not bear a private placement legend.
Upon the registration of transfer, exchange or replacement of Securities bearing
a private placement legend, the Registrar shall deliver only Securities that
bear a private placement legend unless (i) there is delivered to the Registrar
an opinion of counsel reasonably satisfactory to the Company and the Trustee to
the effect that neither such legend nor the related restrictions on transfer are
required in order to maintain compliance with the provisions of the Securities
Act or (ii) such Security has been sold pursuant to an effective registration
statement under the Securities Act and the Registrar has received an Officers'
Certificate from the Company to such effect.

         (c) General. By its acceptance of any Security bearing a private
placement legend, each Holder of such Note acknowledges the restrictions on
transfer of such Note set forth in this Indenture and in the Private Placement
Legend and agrees that it will transfer such Note only as provided in this
Indenture.

         The Registrar shall retain for a period of two years copies of all
letters, notices and other written communications received pursuant to this
section and the previous section. The Company shall have the right to inspect
and make copies of all such letters, notices or other written communications at
any reasonable time upon the giving of reasonable notice to the Registrar.

                                        5

EX-4.3

                                                                     Exhibit 4.3


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

                          REGISTRATION RIGHTS AGREEMENT

                          Dated as of November 4, 2002

                                      among

                          SUSQUEHANNA BANCSHARES, INC.,

                          KEEFE BRUYETTE & WOODS, INC.,

                                       AND

                          THE OTHER INITIAL PURCHASERS
                               REFERRED TO HEREIN

                            as the Initial Purchasers


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



                          REGISTRATION RIGHTS AGREEMENT

         REGISTRATION RIGHTS AGREEMENT (the "Agreement") dated as of November ,
2002 among Susquehanna Bancshares, Inc., a Pennsylvania corporation (the
"Company"), Keefe Bruyette & Woods, Inc. (the "Representative"), and the other
parties referred to in Annex A hereto (each, an "Initial Purchaser" and
collectively, the "Initial Purchasers").

         This Agreement is made pursuant to the Purchase Agreement, dated
November 4, 2002, by and among the Company and the Initial Purchasers (the
"Purchase Agreement"), which provides for the sale by the Company to the Initial
Purchasers of $75,000,000 aggregate principal amount of the Company's 6.05%
Subordinated Notes due 2012 (the "Notes"). In order to induce the Initial
Purchasers to enter into the Purchase Agreement and in satisfaction of a
condition to the Initial Purchasers' obligations thereunder, the Company has
agreed to provide to the Initial Purchasers and their respective direct and
indirect transferees and assigns the registration rights set forth in this
Agreement. The execution and delivery of this Agreement is a condition to the
closing under the Purchase Agreement.

         In consideration of the foregoing, the parties hereto agree as follows:

         1. Definitions. As used in this Agreement, the following capitalized
defined terms shall have the following meanings:

                  "1933 Act" shall mean the Securities Act of 1933, as amended
         from time to time, and the rules and regulations of the SEC promulgated
         thereunder.

                  "1934 Act" shall mean the Securities Exchange Act of 1934, as
         amended from time to time, and the rules and regulations of the SEC
         promulgated thereunder.

                  "Additional Interest" shall have the meaning set forth in
         Section 2(e) hereof.

                  "Closing Time" shall mean November 4, 2002.

                  "Depositary" shall mean The Depository Trust Company, or any
         other depositary appointed by the Company, including any agent thereof;
         provided, however, that any such depositary must at all times have an
         address in the Borough of Manhattan, The City of New York.

                  "Event Date" shall have the meaning set forth in Section 2(e).

                  "Exchange Offer" shall mean the exchange offer by the Company
         of Exchange Securities for Registrable Securities pursuant to Section
         2(a) hereof.

                  "Exchange Offer Registration" shall mean a registration under
         the 1933 Act effected pursuant to Section 2(a) hereof.

                  "Exchange Offer Registration Statement" shall mean an exchange
         offer registration statement on Form S-4 (or, if applicable, on another
         appropriate form) covering the Registrable Securities, and all
         amendments and supplements to such



         registration statement, in each case including the Prospectus contained
         therein, all exhibits thereto and all material incorporated or deemed
         to be incorporated by reference therein.

                  "Exchange Securities" shall mean the Notes, issued by the
         Company under the Indenture containing terms identical to the Notes
         (except that (i) interest thereon shall accrue from the last date to
         which interest has been paid or duly provided for on the Securities or,
         if no such interest has been paid or duly provided for, from the
         Interest Accrual Date, (ii) provisions relating to an increase in the
         stated rate of interest thereon upon the occurrence of a Registration
         Default shall be eliminated, (iii) the transfer restrictions, minimum
         purchase requirements and legends relating to restrictions on ownership
         and transfer thereof as a result of the issuance of the Securities
         without registration under the 1933 Act shall be eliminated and (iv)
         such securities will be issuable in denominations of $1,000 and
         integral multiples of $1,000 in excess thereof) to be offered to
         Holders of Registrable Securities in exchange for Registrable
         Securities pursuant to the Exchange Offer.

                  "Holders" shall mean (i) the Initial Purchasers, for so long
         as they own any Registrable Securities, and each of their respective
         successors, assigns and direct and indirect transferees who become
         registered owners of Registrable Securities under the Indenture and
         (ii) each Participating Broker-Dealer that holds Exchange Securities
         for so long as such Participating Broker-Dealer is required to deliver
         a prospectus meeting the requirements of the 1933 Act in connection
         with any resale of such Exchange Securities.

                  "Indenture" shall mean the Indenture, dated as of November 4,
         2002, by and between the Company and U.S. Bank Trust National
         Association, as trustee, as the same may be further amended or
         supplemented from time to time in accordance with the terms thereof.

                  "Interest Accrual Date" means November 4, 2002.

                  "Initial Purchasers" shall have the meaning set forth in the
         preamble of this Agreement.

                   "Majority Holders" shall mean the Holders of a majority of
         the aggregate principal amount of Registrable Securities outstanding,
         excluding Exchange Securities referred to in clause (ii) of the
         definition of "Holders" above; provided that whenever the consent or
         approval of Holders of a specified percentage of Registrable Securities
         or Exchange Securities is required hereunder, Registrable Securities
         and Exchange Securities held by the Company or any of its affiliates
         (as such term is defined in Rule 405 under the 1933 Act) shall also be
         disregarded in determining whether such consent or approval was given
         by the Holders of such required percentage.

                  "NASD" shall mean the National Association of Securities
         Dealers, Inc.

                  "Notifying Broker-Dealer" shall have the meaning set forth in
         Section 3(f).

                  "Participating Broker-Dealer" shall have the meaning set forth
         in Section 3(f).



                  "Person" shall mean an individual, partnership, joint venture,
         limited liability company, corporation, trust or unincorporated
         organization, or a government or agency or political subdivision
         thereof.

                  "Private Exchange Securities" shall have the meaning set forth
         in Section 2(a) hereof.

                  "Prospectus" shall mean the prospectus included in a
         Registration Statement, including any preliminary prospectus, and any
         such prospectus as amended or supplemented by any prospectus
         supplement, including a prospectus supplement with respect to the terms
         of the offering of any portion of the Registrable Securities covered by
         a Shelf Registration Statement, and by all other amendments and
         supplements to a prospectus, including post-effective amendments, and
         in each case including all material incorporated or deemed to be
         incorporated by reference therein.

                  "Purchase Agreement" shall have the meaning set forth in the
         preamble to this Agreement.

                  "Registrable Securities" shall mean the Notes; provided,
         however, that any Notes shall cease to be Registrable Securities when
         (i) a Registration Statement with respect to such Notes shall have been
         declared effective under the 1933 Act and such Notes shall have been
         disposed of pursuant to such Registration Statement, (ii) such Notes
         shall have been sold to the public pursuant to Rule 144 (or any similar
         provision then in force, but not Rule 144A) under the 1933 Act, (iii)
         such Notes shall have ceased to be outstanding, (iv) such Notes have
         been exchanged for Exchange Securities which have been registered
         pursuant to the Exchange Offer Registration Statement upon consummation
         of the Exchange Offer unless, in the case of any Exchange Securities
         referred to in this clause (iv), such Exchange Securities are held by
         Participating Broker-Dealers or otherwise are not freely tradable
         without any limitations or restrictions under the 1933 Act (in which
         case such Exchange Securities will be deemed to be Registrable
         Securities until the earlier of (A) 180 days after the completion of
         the Exchange Offer and (B) such time as such Exchange Securities are
         sold to a purchaser in whose hands such Exchange Securities are freely
         tradeable without any limitations or restrictions under the 1933 Act)
         or (v) such Notes have been exchanged for Private Exchange Securities
         under this Agreement (in which case such Private Exchange Securities
         will be deemed to be Registrable Securities until the earlier of (A)
         180 days after the completion of the Exchange Offer and (B) such time
         as such Private Exchange Securities are sold to a purchaser in whose
         hands such Private Exchange Securities are freely tradeable without any
         limitations or restrictions under the 1933 Act).

                  "Registration Default" shall have the meaning set forth in
         Section 2(e).

                  "Registration Expenses" shall mean any and all expenses
         incident to performance of or compliance by the Company with this
         Agreement, including without limitation: (i) all SEC, stock exchange or
         NASD registration and filing fees, (ii) all fees and expenses incurred
         in connection with compliance with state or other securities or blue
         sky laws and compliance with the rules of the NASD (including
         reasonable fees and disbursements of



         counsel for any underwriters or Holders in connection with
         qualification of any of the Exchange Securities or Registrable
         Securities under state or other securities or blue sky laws and any
         filing with and review by the NASD), (iii) all expenses of any Persons
         in preparing, printing and distributing any Registration Statement, any
         Prospectus, any amendments or supplements thereto, any underwriting
         agreements, securities sales agreements, and certificates representing
         the Notes, Private Exchange Securities (if any) or Exchange Securities
         and other documents relating to the performance of and compliance with
         this Agreement, (iv) all rating agency fees, (v) all fees and expenses
         incurred in connection with the listing, if any, of any of the Notes or
         Exchange Securities on any securities exchange or exchanges or on any
         quotation system, (vi) all fees and disbursements relating to the
         qualification of the Indenture under applicable securities laws, (vii)
         the fees and disbursements of counsel for the Company and the fees and
         expenses of independent public accountants for the Company or for any
         other Person, business or assets whose financial statements are
         included in any Registration Statement or Prospectus, including the
         expenses of any special audits or "cold comfort" letters required by or
         incident to such performance and compliance, (viii) the fees and
         expenses of a "qualified independent underwriter" as defined by Conduct
         Rule 2720 of the NASD (if required by the NASD rules) and the
         reasonable fees and disbursements of its counsel, (ix) the fees and
         expenses of the Trustee, any registrar, any depositary, any paying
         agent, any escrow agent or any custodian, in each case including
         reasonable fees and disbursements of their respective counsel, (x) the
         reasonable fees and expenses of the Initial Purchasers in connection
         with the Exchange Offer, including the reasonable fees and
         disbursements of one counsel to the Initial Purchasers in connection
         therewith, (xi) the reasonable fees and disbursements, if any, of
         special counsel representing the Holders of Registrable Securities and
         (xii) in the case of an underwritten offering, any fees and
         disbursements of the underwriters customarily paid by issuers and
         sellers of securities and the fees and expenses of any special experts
         retained by the Company in connection with any Registration Statement
         but excluding (except as otherwise provided herein) fees and
         disbursements of counsel to the underwriters and the Holders and
         underwriting discounts and commissions and transfer taxes, if any,
         relating to the sale or disposition of Registrable Securities by a
         Holder.

                  "Registration Statement" shall mean any registration statement
         of the Company relating to any offering of the Exchange Securities or
         Registrable Securities pursuant to the provisions of this Agreement
         (including, without limitation, any Exchange Offer Registration
         Statement and any Shelf Registration Statement), and all amendments and
         supplements to any such Registration Statement, including
         post-effective amendments, in each case including the Prospectus
         contained therein, all exhibits thereto and all material incorporated
         or deemed to be incorporated by reference therein.

                  "Representative" shall have the meaning set forth in the
         preamble of this Agreement.

                  "SEC" shall mean the Securities and Exchange Commission or any
         successor thereto.



                  "Shelf Registration" shall mean a registration effected
         pursuant to Section 2(b) hereof.

                  "Shelf Registration Statement" shall mean a "shelf"
         registration statement of the Company pursuant to the provisions of
         Section 2(b) of this Agreement which covers all of the Registrable
         Securities or Private Exchange Securities (if any), as the case may be,
         on an appropriate form under Rule 415 under the 1933 Act, or any
         similar rule that may be adopted by the SEC, and all amendments and
         supplements to such registration statement, including post-effective
         amendments, in each case including the Prospectus contained therein,
         all exhibits thereto and all material incorporated or deemed to be
         incorporated by reference therein.

                  "TIA" shall mean the Trust Indenture Act of 1939, as amended
         from time to time, and the rules and regulations of the SEC promulgated
         thereunder.

                  "Trustee" shall mean the trustee with respect to the Notes,
         the Private Exchange Securities (if any) and the Exchange Securities
         under the Indenture.

         For purposes of this Agreement, (i) all references in this Agreement to
any Registration Statement, Prospectus or any amendment or supplement to any of
the foregoing shall be deemed to include the copy filed with the SEC pursuant to
its Electronic Data Gathering, Analysis and Retrieval system ("EDGAR"); (ii) all
references in this Agreement to financial statements and schedules and other
information which is "contained", "included" or "stated" in any Registration
Statement or Prospectus (or other references of like import) shall be deemed to
mean and include all such financial statements and schedules and other
information which is incorporated or deemed to be incorporated by reference in
such Registration Statement or Prospectus, as the case may be; (iii) all
references in this Agreement to amendments or supplements to any Registration
Statement or Prospectus shall be deemed to mean and include the filing of any
document under the 1934 Act which is incorporated or deemed to be incorporated
by reference in such Registration Statement or Prospectus, as the case may be;
(iv) all references in this Agreement to Rule 144, Rule 144A or Rule 405 under
the 1933 Act, and all references to any sections or subsections thereof or terms
defined therein, shall in each case include any successor provisions thereto;
and (v) all references in this Agreement to days (but not to business days)
shall mean calendar days.

         2. Registration Under the 1933 Act.

         (a) Exchange Offer Registration. The Company shall (A) file with the
SEC on or prior to the 90th day after the Closing Time an Exchange Offer
Registration Statement covering the offer by the Company to the Holders to
exchange all of the Registrable Securities for a like aggregate principal amount
of Exchange Securities, (B) use its reasonable best efforts to cause such
Exchange Offer Registration Statement to be declared effective by the SEC no
later than the 180th day after the Closing Time, (C) use its reasonable best
efforts to cause such Registration Statement to remain effective until the
closing of the Exchange Offer and (D) use its reasonable best efforts to
consummate the Exchange Offer no later than 45 days after the effective date of
the Exchange Offer Registration Statement. Upon the effectiveness of the
Exchange Offer Registration Statement, the Company shall promptly commence the
Exchange Offer, it being the



objective of such Exchange Offer to enable each Holder eligible and electing to
exchange Registrable Securities for Exchange Securities (assuming that such
Holder is not an affiliate of the Company within the meaning of Rule 405 under
the 1933 Act, acquires the Exchange Securities in the ordinary course of such
Holder's business and has no arrangements or understandings with any Person to
participate in the Exchange Offer for the purpose of distributing such Exchange
Securities) to trade such Exchange Securities from and after their receipt
without any limitations or restrictions under the 1933 Act or under the
securities or blue sky laws of the states of the United States.

         In connection with the Exchange Offer, the Company shall:

                  (i) promptly mail to each Holder a copy of the Prospectus
         forming part of the Exchange Offer Registration Statement, together
         with an appropriate letter of transmittal and related documents;

                  (ii) keep the Exchange Offer open for not less than 20
         business days (or longer, if required by applicable law) after the date
         notice thereof is mailed to the Holders and, during the Exchange Offer,
         offer to all Holders who are legally eligible to participate in the
         Exchange Offer the opportunity to exchange their Registrable Securities
         for Exchange Securities;

                  (iii) use the services of a depositary with an address in the
         Borough of Manhattan, The City of New York for the Exchange Offer;

                  (iv) permit Holders to withdraw tendered Registrable
         Securities at any time prior to the close of business, New York City
         time, on the last business day on which the Exchange Offer shall remain
         open, by sending to the institution specified in the Prospectus or the
         related letter of transmittal or related documents a facsimile
         transmission or letter setting forth the name of such Holder, the
         principal amount of Registrable Securities delivered for exchange, and
         a statement that such Holder is withdrawing its election to have such
         Notes exchanged;

                  (v) notify each Holder that any Registrable Security not
         tendered will remain outstanding and continue to accrue interest, but
         will not retain any rights under this Agreement (except in the case of
         the Initial Purchasers and Participating Broker-Dealers as provided
         herein); and

                  (vi) otherwise comply in all material respects with all
         applicable laws relating to the Exchange Offer.

         If, at or prior to the consummation of the Exchange Offer, any of the
Initial Purchasers holds any Notes acquired by it and having the status of an
unsold allotment in the initial distribution, the Company shall, upon the
request of any such Initial Purchaser, simultaneously with the delivery of the
Exchange Securities in the Exchange Offer, issue and deliver to such Initial
Purchaser in exchange for such Notes a like principal amount of debt securities
of the Company that are identical (except that such debt securities shall be
subject to transfer restrictions and minimum purchase requirements, and shall
bear a legend relating to restrictions on ownership and transfer, identical to
those applicable to the Notes as a result of the issuance



thereof without registration under the 1933 Act and shall provide for the
payment of Additional Interest) to the Exchange Securities (the "Private
Exchange Securities"). The Company shall use its reasonable best efforts to have
the Private Exchange Securities bear the same CUSIP number as the Exchange
Securities and, if unable to do so, the Company will, at such time as any
Private Exchange Security may be sold publicly pursuant to Rule 144(k) under the
1933 Act, permit any such Private Exchange Security to be exchanged for a like
principal amount of Exchange Securities. The Company shall not have any
liability under this Agreement solely as a result of any such Private Exchange
Securities not bearing the same CUSIP number as the Exchange Securities.

         The Exchange Securities and the Private Exchange Securities (if any)
shall be issued under the Indenture, which shall be qualified under the TIA. The
Notes shall provide that the Exchange Securities issued in respect thereof, the
Private Exchange Securities (if any) issued in respect thereof and the Notes
shall vote and consent together on all matters as a single class and shall
constitute a single series of debt securities issued under the Indenture.

         As soon as practicable after the close of the Exchange Offer, the
Company shall:

                   (i) accept for exchange all Registrable Securities duly
         tendered and not validly withdrawn pursuant to the Exchange Offer in
         accordance with the terms of the Exchange Offer Registration Statement
         and the letter of transmittal which is an exhibit thereto;

                  (ii) deliver, or cause to be delivered, to the Trustee for
         cancellation all Registrable Securities so accepted for exchange by the
         Company; and

                 (iii) cause the Trustee promptly to authenticate and deliver
         Exchange Securities to each Holder of Registrable Securities so
         accepted for exchange equal in principal amount to the principal amount
         of the Registrable Securities of such Holder so accepted for exchange.

         Interest on each Exchange Security and each Private Exchange Security
(if any) will accrue from the last date on which interest was paid or duly
provided for on the Securities surrendered in exchange therefor or, if no
interest has been paid or duly provided for on such Securities, from the
Interest Accrual Date. The Exchange Offer shall not be subject to any
conditions, other than (i) that the Exchange Offer, or the making of any
exchange by a Holder, does not violate any applicable law or any applicable
interpretation of the staff of the SEC, (ii) that no action or proceeding shall
have been instituted or threatened in any court or by or before any governmental
agency with respect to the Exchange Offer which, in the Company's judgment,
would reasonably be expected to impair the ability of the Company to proceed
with the Exchange Offer, and (iii) that the Holders tender the Registrable
Securities to the Company in accordance with the Exchange Offer. Each Holder of
Registrable Securities (other than Participating Broker-Dealers) who wishes to
exchange such Registrable Securities for Exchange Securities in the Exchange
Offer will be required to represent that (i) it is not an affiliate (as defined
in Rule 405 under the 1933 Act) of the Company, (ii) any Exchange Securities to
be received by it will be acquired in the ordinary course of business and (iii)
it has no arrangement with any Person to participate in the distribution (within
the meaning of the 1933 Act) of the



Exchange Securities, and shall be required to make such other representations as
may be reasonably necessary under applicable SEC rules, regulations or
interpretations to render the use of Form S-4 or another appropriate form under
the 1933 Act available. To the extent permitted by law, the Company shall inform
the Initial Purchasers of the names and addresses of the Holders of Securities
to whom the Exchange Offer is made and, to the extent such information is
available to the Company, the names and addresses of the beneficial owners of
such Securities, and the Initial Purchasers shall have the right to contact such
Holders and beneficial owners and otherwise facilitate the tender of Registrable
Securities in the Exchange Offer.

         (b) Shelf Registration. (i) If, because of any change in law or
applicable interpretations thereof by the staff of the SEC, the Company is not
permitted to effect the Exchange Offer as contemplated by Section 2(a) hereof,
or (ii) if for any other reason (A) the Exchange Offer Registration Statement is
not declared effective within 180 days following the Closing Time or (B) the
Exchange Offer is not consummated within 45 days after effectiveness of the
Exchange Offer Registration Statement (provided that if the Exchange Offer
Registration Statement shall be declared effective after such 180-day period or
if the Exchange Offer shall be consummated after such 45-day period, then the
Company's obligations under this clause (ii) arising from the failure of the
Exchange Offer Registration Statement to be declared effective within such
180-day period or the failure of the Exchange Offer to be consummated within
such 45-day period, respectively, shall terminate), or (iii) upon the request of
any Holder (other than an Initial Purchaser holding Notes acquired directly from
the Company) within 30 days following the consummation of the Exchange Offer who
is not eligible to participate in the Exchange Offer or who elects to
participate in the Exchange Offer but does not receive Exchange Securities which
are freely tradeable without any limitations or restrictions under the 1933 Act,
or (iv) upon the request of any of the Initial Purchasers within 90 days
following the consummation of the Exchange Offer (provided that, in the case of
this clause (iv), such Initial Purchaser shall hold Registrable Securities
(including, without limitation, Private Exchange Securities) from an initial
allotment that it acquired directly from the Company), the Company shall, at its
cost:

                  (A) as promptly as practicable, but no later than (a) the
         180th day after the Closing Time or (b) the 60th day after any such
         filing obligation arises, whichever is later, file with the SEC a Shelf
         Registration Statement relating to the offer and sale of the
         Registrable Securities by the Holders from time to time in accordance
         with the methods of distribution elected by the Majority Holders of
         such Registrable Securities and set forth in such Shelf Registration
         Statement;

                  (B) use its reasonable best efforts to cause such Shelf
         Registration Statement to be declared effective by the SEC as promptly
         as practicable, but in no event later than the 225th day after the
         Closing Time (or, in the case of a request by any of the Initial
         Purchasers pursuant to clause (iv) above, within 90 days after such
         request). In the event that the Company is required to file a Shelf
         Registration Statement pursuant to clause (iii) or (iv) above, the
         Company shall file and use its reasonable best efforts to have declared
         effective by the SEC both an Exchange Offer Registration Statement
         pursuant to Section 2(a) with respect to all Registrable Securities and
         a Shelf Registration Statement (which may be a combined Registration
         Statement with the Exchange Offer Registration Statement) with respect
         to offers and sales of Registrable Securities held by such Holder or
         such Initial Purchaser, as applicable;



                  (C) use its reasonable best efforts to keep the Shelf
         Registration Statement continuously effective, supplemented and amended
         as required, in order to permit the Prospectus forming part thereof to
         be usable by Holders for a period of two years after the latest date on
         which any Securities are originally issued by the Company (subject to
         extension pursuant to the last paragraph of Section 3) (or, solely in
         the case of clause (iv) above of this Section 2(b), 180 days after
         completion of the Exchange Offer) or, if earlier, when all of the
         Registrable Securities covered by such Shelf Registration Statement (i)
         have been sold pursuant to the Shelf Registration Statement in
         accordance with the intended method of distribution thereunder, (ii)
         become eligible for resale pursuant to Rule 144(k) under the 1933 Act
         or (iii) cease to be Registrable Securities; and

                  (D) notwithstanding any other provisions hereof, use its
         reasonable best efforts to ensure that (i) any Shelf Registration
         Statement and any amendment thereto and any Prospectus forming a part
         thereof and any supplements thereto comply in all material respects
         with the 1933 Act and the rules and regulations thereunder, (ii) any
         Shelf Registration Statement and any amendment or supplement thereto
         does not, when it becomes effective, contain an untrue statement of a
         material fact or omit to state a material fact required to be stated
         therein or necessary to make the statements therein not misleading and
         (iii) any Prospectus forming part of any Shelf Registration Statement
         and any amendment or supplement to such Prospectus does not include an
         untrue statement of a material fact or omit to state a material fact
         necessary in order to make the statements therein, in the light of the
         circumstances under which they were made, not misleading.

         The Company shall not permit any securities other than Registrable
Securities to be included in the Shelf Registration Statement without the prior
written consent of the Representative. The Company further agrees, if necessary,
to supplement or amend the Shelf Registration Statement if reasonably requested
by the Majority Holders with respect to information relating to the Holders and
otherwise as required by Section 3(b) below, to use its reasonable best efforts
to cause any such amendment to become effective and such Shelf Registration
Statement to become usable as soon as practicable thereafter and to furnish to
the Holders of Registrable Securities copies of any such supplement or amendment
promptly after its being used or filed with the SEC.

         (c) Expenses. The Company shall pay all Registration Expenses in
connection with the registration pursuant to Section 2(a) and 2(b) and, in the
case of any Shelf Registration Statement, will reimburse the Holders or the
Initial Purchasers for the reasonable fees and disbursements of one counsel
designated in writing by the Majority Holders (or, if a Shelf Registration
Statement is filed solely pursuant to clause (iv) of the first paragraph of
Section 2(b), designated by the Initial Purchasers) to act as counsel for the
Holders of the Registrable Securities in connection therewith. Each Holder shall
pay all fees and disbursements of its counsel other than as set forth in the
preceding sentence or in the definition of Registration Expenses and all
underwriting discounts and commissions and transfer taxes, if any, relating to
the sale or disposition of such Holder's Registrable Securities pursuant to a
Shelf Registration Statement.



         (d) Effective Registration Statement.

                  (i) The Company shall be deemed not to have used its
         reasonable best efforts to cause the Exchange Offer Registration
         Statement or any Shelf Registration Statement, as the case may be, to
         become, or to remain, effective during the requisite periods set forth
         herein if the Company voluntarily takes any action that could
         reasonably be expected to result in any such Registration Statement not
         being declared effective or remaining effective or in the Holders of
         Registrable Securities (including, under the circumstances contemplated
         by Section 3(f) hereof, Exchange Securities) covered thereby not being
         able to exchange or offer and sell such Registrable Securities during
         that period unless (A) such action is required by applicable law or (B)
         such action is taken by the Company in good faith and for valid
         business reasons (but not including avoidance of the Company's
         obligations hereunder), including the acquisition or divestiture of
         assets or a material corporate transaction or event so long as the
         Company promptly complies with the notification requirements of Section
         3(k) hereof, if applicable. Nothing in this paragraph shall prevent the
         accrual of Additional Interest on any Registrable Securities.

                  (ii) An Exchange Offer Registration Statement pursuant to
         Section 2(a) hereof or a Shelf Registration Statement pursuant to
         Section 2(b) hereof shall not be deemed to have become effective unless
         it has been declared effective by the SEC; provided, however, that if,
         after such Registration Statement has been declared effective, the
         offering of Registrable Securities pursuant to a Registration Statement
         is interfered with by any stop order, injunction or other order or
         requirement of the SEC or any other governmental agency or court, such
         Registration Statement shall be deemed not to have been effective
         during the period of such interference until the offering of
         Registrable Securities pursuant to such Registration Statement may
         legally resume.

                  (iii) During any 365 day period, the Company may, by notice as
         described in Section 3(e), suspend the availability of a Shelf
         Registration Statement (and, if the Exchange Offer Registration
         Statement is being used in connection with the resale of Exchange
         Securities by Participating Broker Dealers as contemplated by Section
         3(f), the Exchange Offer Registration Statement) and the use of the
         related Prospectus for up to 45 consecutive days each, but no more than
         an aggregate of 90 days during any 365 day period, upon the happening
         of any event or the discovery of any fact or the taking of any action
         referred to in Section 3(e)(vi), but subject to compliance by the
         Company with its obligations under the last paragraph of Section 3.

         (e) Increase in Interest Rate. In the event that:

                  (i) the Exchange Offer Registration Statement is not filed
         with the SEC on or prior to the 90th day following the Closing Time, or

                  (ii) the Exchange Offer Registration Statement is not declared
         effective by the SEC on or prior to the 180th day following the Closing
         Time, or

                  (iii) the Exchange Offer is not consummated on or prior to the
         45th day following the effective date of the Exchange Offer
         Registration Statement, or



                  (iv) if required, a Shelf Registration Statement is not filed
         with the SEC on or prior to (A) the 180th day following the Closing
         Time or (B) the 60th day after the filing obligation arises, whichever
         is later, or

                  (v) if required, a Shelf Registration Statement is not
         declared effective on or prior to the 225th day following the Closing
         Time (or, if a Shelf Registration Statement is required to be filed
         upon the request of any Initial Purchaser, within 90 days after such
         request), or

                  (vi) a Shelf Registration Statement is declared effective by
         the SEC but such Shelf Registration Statement ceases to be effective or
         such Shelf Registration Statement or the Prospectus included therein
         ceases to be usable in connection with resales of Registrable
         Securities for any reason and (A) the aggregate number of days in any
         consecutive 365-day period for which the Shelf Registration Statement
         or such Prospectus shall not be effective or usable exceeds 90 days,
         (B) the Shelf Registration Statement or such Prospectus shall not be
         effective or usable for more than two periods (regardless of duration)
         in any consecutive 365-day period or (C) the Shelf Registration
         Statement or such Prospectus shall not be effective or usable for a
         period of more than 45 consecutive days, or

                  (vii) the Exchange Offer Registration Statement is declared
         effective by the SEC but, if the Exchange Offer Registration Statement
         is being used in connection with the resale of Exchange Securities as
         contemplated by Section 3(f)(B) of this Agreement, the Exchange Offer
         Registration Statement ceases to be effective or the Exchange Offer
         Registration Statement or the Prospectus included therein ceases to be
         usable in connection with resales of Exchange Securities for any reason
         during the 180-day period referred to in Section 3(f)(B) of this
         Agreement (as such period may be extended pursuant to the last
         paragraph of Section 3 of this Agreement) and (A) the aggregate number
         of days in any consecutive 365-day period for which the Exchange Offer
         Registration Statement or such Prospectus shall not be effective or
         usable exceeds 90 days, (B) the Exchange Offer Registration Statement
         or such Prospectus shall not be effective or usable for more than two
         periods (regardless of duration) in any consecutive 365-day period or
         (C) the Exchange Offer Registration Statement or the Prospectus shall
         not be effective or usable for a period of more than 30 consecutive
         days,

(each of the events referred to in clauses (i) through (vii) above being
hereinafter called a "Registration Default"), the per annum interest rate borne
by the Registrable Securities shall be increased ("Additional Interest") by
one-quarter of one percent (0.25%) per annum immediately following such 90-day
period in the case of clause (i) above, immediately following such 180-day
period in the case of clause (ii) above, immediately following such 45-day
period in the case of clause (iii) above, immediately following any such 180-day
period or 60-day period, whichever ends later, in the case of clause (iv) above,
immediately following any such 225-day period or 90-day period, whichever ends
first, in the case of clause (v) above, immediately following the 90th day in
any consecutive 365-day period, as of the first day of the third period in any
consecutive 365-day period or immediately following the 45th consecutive day,
whichever occurs first, that a Shelf Registration Statement shall not be
effective or a Shelf Registration Statement or the Prospectus included therein
shall not be usable as contemplated by



clause (vi) above, or immediately following the 90th day in any consecutive
365-day period, as of the first day of the third period in any consecutive
365-day period or immediately following the 30th consecutive day, whichever
occurs first, that the Exchange Offer Registration Statement shall not be
effective or the Exchange Offer Registration Statement or the Prospectus
included therein shall not be usable as contemplated by clause (vii) above,
which rate will be increased by an additional one-quarter of one percent (0.25%)
per annum immediately following the first 90-day period that any Additional
Interest continues to accrue under any circumstances; provided that the
aggregate increase in such annual interest rate under this Section 2(e) may in
no event exceed one-half of one percent (0.50%) per annum. Upon the filing of
the Exchange Offer Registration Statement after the 90-day period described in
clause (i) above, the effectiveness of the Exchange Offer Registration Statement
after the 180-day period described in clause (ii) above, the consummation of the
Exchange Offer after the 45-day period described in clause (iii) above, the
filing of the Shelf Registration Statement after the 180-day period or 60-day
period day, as the case may be, described in clause (iv) above, the
effectiveness of a Shelf Registration Statement after the 225-day period or
90-day period, as the case may be, described in clause (v) above, the Shelf
Registration Statement once again being effective or the Shelf Registration
Statement and the Prospectus included therein becoming usable in connection with
resales of Registrable Securities, as the case may be, in the case of clause
(vi) above, or the Exchange Offer Registration Statement once again becoming
effective or the Exchange Offer Registration Statement and the Prospectus
included therein becoming usable in connection with resales of Exchange
Securities, as the case may be, in the case of clause (vii) thereof, the
interest rate borne by the Securities from the date of such filing,
effectiveness, consummation or resumption of effectiveness or useability, as the
case may be, shall be reduced to the original interest rate so long as no other
Registration Default shall have occurred and shall be continuing at such time
and the Company is otherwise in compliance with this paragraph; provided,
however, that, if after any such reduction in interest rate, one or more
Registration Defaults shall again occur, the interest rate shall again be
increased pursuant to the foregoing provisions.

         The Company shall notify the Trustee within three business days after
each and every date on which an event occurs or fails to occur in respect of
which Additional Interest is required to be paid (an "Event Date"). Additional
Interest shall be paid by depositing with the Trustee, in trust, for the benefit
of the Holders of Registrable Securities, on or before the applicable
seminannual interest payment date, immediately available funds in sums
sufficient to pay the Additional Interest then due. The Additional Interest due
shall be payable on each interest payment date to the record Holder of
Securities entitled to receive the interest payment to be paid on such date as
set forth in the Indenture. Each obligation to pay Additional Interest shall be
deemed to accrue from and including the day following the applicable Event Date.

         Anything herein to the contrary notwithstanding, any Holder who was, at
the time the Exchange Offer was pending and consummated, eligible to exchange,
and did not validly tender, its Notes for Exchange Securities in the Exchange
Offer will not be entitled to receive any Additional Interest. For purposes of
clarity, it is hereby acknowledged and agreed that, under current
interpretations of law by the SEC, Initial Purchasers holding unsold allotments
of Notes acquired from the Company are not eligible to participate in the
Exchange Offer.

         (f) Specific Enforcement. Without limiting the remedies available to
the Initial Purchasers and the Holders, the Company acknowledges that any
failure by the Company to



comply with its obligations under Sections 2(a) through 2(d) hereof may result
in material irreparable injury to the Initial Purchasers, the Holders or the
Participating Broker-Dealers for which there is no adequate remedy at law, that
it will not be possible to measure damages for such injuries precisely and that,
in the event of any such failure, the Initial Purchasers, any Holder and any
Participating Broker-Dealer may obtain such relief as may be required to
specifically enforce the Company's obligations under Sections 2(a) through 2(d)
hereof.

         3. Registration Procedures. In connection with the obligations of the
Company with respect to the Registration Statements pursuant to Sections 2(a)
and 2(b) hereof, the Company shall:

                  (a) prepare and file with the SEC a Registration Statement or,
         if required, Registration Statements, within the time periods specified
         in Section 2, on the appropriate form under the 1933 Act, which form
         (i) shall be selected by the Company, (ii) shall, in the case of a
         Shelf Registration Statement, be available for the sale of the
         Registrable Securities by the selling Holders thereof and (iii) shall
         comply as to form in all material respects with the requirements of the
         applicable form and include or incorporate by reference all financial
         statements required by the SEC to be filed therewith, and use its
         reasonable best efforts to cause such Registration Statement to become
         effective and remain effective in accordance with Section 2 hereof;

                  (b) prepare and file with the SEC such amendments and
         post-effective amendments to each Registration Statement as may be
         necessary under applicable law to keep such Registration Statement
         effective for the applicable period; cause each Prospectus to be
         supplemented by any required prospectus supplement, and as so
         supplemented to be filed pursuant to Rule 424 under the 1933 Act; and
         comply with the provisions of the 1933 Act and the 1934 Act with
         respect to the disposition of all Notes covered by each Registration
         Statement during the applicable period in accordance with the intended
         method or methods of distribution by the selling Holders thereof;

                  (c) in the case of a Shelf Registration, (i) notify each
         Holder of Registrable Securities, at least ten business days prior to
         filing, that a Shelf Registration Statement with respect to the
         Registrable Securities is being filed and advising such Holders that
         the distribution of Registrable Securities will be made in accordance
         with the method elected by the Majority Holders; (ii) furnish to each
         Holder of Registrable Securities, to counsel for the Initial
         Purchasers, to counsel for the Holders, if any, and to each underwriter
         of an underwritten offering of Registrable Securities, if any, without
         charge, as many copies of each Prospectus, including each preliminary
         Prospectus, and any amendment or supplement thereto and such other
         documents as such Holder, counsel or underwriter may reasonably
         request, including financial statements and schedules and, if such
         Holder, counsel or underwriter so requests, all exhibits (including
         those incorporated by reference) in order to facilitate the public sale
         or other disposition of the Registrable Securities; and (iii) subject
         to the penultimate paragraph of this Section 3, the Company hereby
         consents to the use of the Prospectus, including each preliminary
         Prospectus, or any amendment or supplement thereto by each of the
         Holders and underwriters of Registrable Securities in connection with
         the offering and sale of the Registrable Securities covered by any
         Prospectus or any amendment or supplement thereto;



                  (d) use its reasonable best efforts to register or qualify the
         Registrable Securities under all applicable state securities or "blue
         sky" laws of such jurisdictions as any Holder of Registrable Securities
         covered by a Registration Statement and each underwriter of an
         underwritten offering of Registrable Securities shall reasonably
         request, to cooperate with the Holders and the underwriters of any
         Registrable Securities in connection with any filings required to be
         made with the NASD, to keep each such registration or qualification
         effective during the period such Registration Statement is required to
         be effective and do any and all other acts and things which may be
         reasonably necessary or advisable to enable such Holder to consummate
         the disposition in each such jurisdiction of such Registrable
         Securities owned by such Holder; provided, however, that the Company
         shall not be required to (i) qualify as a foreign corporation or as a
         dealer in securities in any jurisdiction where it would not otherwise
         be required to qualify but for this Section 3(d) or (ii) take any
         action which would subject it to general service of process or taxation
         in any such jurisdiction if it is not then so subject;

                  (e) in the case of a Shelf Registration, notify each Holder of
         Registrable Securities and counsel for such Holders promptly and, if
         requested by such Holder or counsel, confirm such advice in writing
         promptly (i) when a Registration Statement has become effective and
         when any post-effective amendments and supplements thereto become
         effective, (ii) of any request by the SEC or any state securities
         authority for post-effective amendments or supplements to a
         Registration Statement or Prospectus or for additional information
         after a Registration Statement has become effective, (iii) of the
         issuance by the SEC or any state securities authority of any stop order
         suspending the effectiveness of a Registration Statement or the
         initiation of any proceedings for that purpose, (iv) if between the
         effective date of a Registration Statement and the closing of any sale
         of Registrable Securities covered thereby the representations and
         warranties of the Company contained in any underwriting agreement,
         securities sales agreement or other similar agreement, if any, relating
         to such offering cease to be true and correct, (v) of the receipt by
         the Company of any notification with respect to the suspension of the
         qualification of the Registrable Securities for sale in any
         jurisdiction or the initiation or threatening of any proceeding for
         such purpose, (vi) of the suspension of use of the Prospectus as a
         result of the happening of any event or the discovery of any facts or
         the taking of any action during the period a Shelf Registration
         Statement is effective which is contemplated in Section 2(d)(i)(A) or
         2(d)(i)(B) or which makes any statement made in such Shelf Registration
         Statement or the related Prospectus untrue in any material respect or
         which constitutes an omission to state a material fact in such Shelf
         Registration Statement or Prospectus and (vii) of any determination by
         the Company that a post-effective amendment to a Registration Statement
         would be appropriate. Without limitation to any other provisions of
         this Agreement, the Company agrees that this Section 3(e) shall also be
         applicable, mutatis mutandis, with respect to the Exchange Offer
         Registration Statement and the Prospectus included therein to the
         extent that such Prospectus is being used by Participating
         Broker-Dealers as contemplated by Section 3(f);

                  (f) (A) in the case of an Exchange Offer, (i) include in the
         Exchange Offer Registration Statement (x) a "Plan of Distribution"
         section substantially in the form set forth in Annex B hereto or other
         such form as is reasonably acceptable to the



         Representative covering the use of the Prospectus included in the
         Exchange Offer Registration Statement by broker-dealers who have
         exchanged their Registrable Securities for Exchange Securities for the
         resale of such Exchange Securities and (y) a statement to the effect
         that any such broker-dealers who wish to use the related Prospectus in
         connection with the resale of Exchange Securities acquired as a result
         of market-making or other trading activities will be required to notify
         the Company to that effect, together with instructions for giving such
         notice (which instructions shall include a provision for giving such
         notice by checking a box or making another appropriate notation on the
         related letter of transmittal) (each such broker-dealer who gives
         notice to the Company as aforesaid being hereinafter called a
         "Notifying Broker-Dealer"), (ii) furnish to each Notifying
         Broker-Dealer who desires to participate in the Exchange Offer, without
         charge, as many copies of each Prospectus included in the Exchange
         Offer Registration Statement, including any preliminary prospectus, and
         any amendment or supplement thereto, as such broker-dealer may
         reasonably request, (iii) include in the Exchange Offer Registration
         Statement a statement that any broker-dealer who holds Registrable
         Securities acquired for its own account as a result of market-making
         activities or other trading activities (a "Participating
         Broker-Dealer"), and who receives Exchange Securities for Registrable
         Securities pursuant to the Exchange Offer, may be a statutory
         underwriter and must deliver a prospectus meeting the requirements of
         the 1933 Act in connection with any resale of such Exchange Securities,
         (iv) subject to the penultimate paragraph of this Section 3, the
         Company hereby consents to the use of the Prospectus forming part of
         the Exchange Offer Registration Statement or any amendment or
         supplement thereto by any Notifying Broker-Dealer in connection with
         the sale or transfer of Exchange Securities, and (v) include in the
         transmittal letter or similar documentation to be executed by an
         exchange offeree in order to participate in the Exchange Offer the
         following provision:

                  "If the undersigned is not a broker-dealer, the undersigned
         represents that it is not engaged in, and does not intend to engage in,
         a distribution of Exchange Securities. If the undersigned is a
         broker-dealer that will receive Exchange Securities for its own account
         in exchange for Registrable Securities, it represents that the
         Registrable Securities to be exchanged for Exchange Securities were
         acquired by it as a result of market-making activities or other trading
         activities and acknowledges that it will deliver a prospectus meeting
         the requirements of the 1933 Act in connection with any resale of such
         Exchange Securities pursuant to the Exchange Offer; however, by so
         acknowledging and by delivering a prospectus, the undersigned will not
         be deemed to admit that it is an "underwriter" within the meaning of
         the 1933 Act;"

                  (B) to the extent any Notifying Broker-Dealer participates in
         the Exchange Offer, (i) the Company shall use its reasonable best
         efforts to maintain the effectiveness of the Exchange Offer
         Registration Statement for a period of 180 days (subject to extension
         pursuant to the last paragraph of this Section 3) following the last
         date on which exchanges are accepted pursuant to the Exchange Offer,
         and (ii) the Company will comply, insofar as relates to the Exchange
         Offer Registration Statement, the Prospectus included therein and the
         offering and sale of Exchange Securities pursuant thereto, with its
         obligations under Section 2(b)(D), the last paragraph of Section 2(b),
         Section 3(c), 3(d), 3(e), 3(i), 3(j), 3(k), 3(o) and 3(p), and the last
         two paragraphs of this Section 3 as if



         all references therein to a Shelf Registration Statement, the
         Prospectus included therein and the Holders of Registrable Securities
         referred, mutatis mutandis, to the Exchange Offer Registration
         Statement, the Prospectus included therein and the applicable Notifying
         Broker-Dealers and, for purposes of this Section 3(f), all references
         in any such paragraphs or sections to the "Majority Holders" shall be
         deemed to mean, solely insofar as relates to this Section 3(f), the
         Notifying Broker-Dealers who are the Holders of the majority in
         aggregate principal amount of the Exchange Securities which are
         Registrable Securities;

                  (C) the Company shall not be required to amend or supplement
         the Prospectus contained in the Exchange Offer Registration Statement
         as would otherwise be contemplated by Section 3(b) or 3(k) hereof, or
         take any other action as a result of this Section 3(f), at any time
         after the 180th day (subject to extension pursuant to the last
         paragraph of this Section 3) after the last date on which exchanges are
         accepted pursuant to the Exchange Offer, and neither Notifying
         Broker-Dealers nor any other Person shall be authorized by the Company
         to, and shall not, deliver such Prospectus after such period in
         connection with resales contemplated by this Section 3; and

                  (D) In the case of any Exchange Offer Registration Statement,
         the Company agrees to deliver to the Initial Purchasers on behalf of
         the Participating Broker-Dealer upon the effectiveness of the Exchange
         Offer Registration Statement (i) an opinion of counsel or opinions of
         counsel reasonably satisfactory to the Initial Purchasers, (ii)
         officers' certificates substantially in the form customarily delivered
         in a public offering of debt securities and (iii) a comfort letter or
         comfort letters in customary form to the extent permitted by Statement
         on Auditing Standards No. 72 of the American Institute of Certified
         Public Accountants (or if such a comfort letter is not permitted, an
         agreed upon procedures letter in customary form) from the Company's
         independent certified public accountants (and, if necessary, any other
         independent certified public accountants of any subsidiary of the
         Company or of any business acquired by the Company for which financial
         statements are, or are required to be, included in the Registration
         Statement) at least as broad in scope and coverage as the comfort
         letter or comfort letters delivered to the Initial Purchasers in
         connection with the initial sale of the Notes to the Initial
         Purchasers;

                  (g)(i) in the case of an Exchange Offer, furnish counsel for
         the Initial Purchasers and (ii) in the case of a Shelf Registration,
         furnish counsel for the Holders of Registrable Securities and counsel
         for any underwriters of Registrable Securities copies of any request by
         the SEC or any state securities authority for amendments or supplements
         to a Registration Statement or Prospectus or for additional
         information;

                  (h) use its reasonable best effort to obtain the withdrawal of
         any order suspending the effectiveness of a Registration Statement as
         soon as practicable and provide immediate notice to each Holder of the
         withdrawal of any such order;

                  (i) in the case of a Shelf Registration, furnish to each
         Holder of Registrable Securities, without charge, at least one
         conformed copy of each Registration Statement and any post-effective
         amendments thereto (without documents incorporated or deemed



         to be incorporated therein by reference or exhibits thereto, unless
         requested), if such documents are not available via the SEC EDGAR
         database;

                  (j) in the case of a Shelf Registration, cooperate with the
         selling Holders of Registrable Securities to facilitate the timely
         preparation and delivery of certificates representing Registrable
         Securities to be sold and not bearing any restrictive legends; and
         cause such Registrable Securities to be in such denominations
         (consistent with the provisions of the Indenture) and in a form
         eligible for deposit with the Depositary and registered in such names
         as the selling Holders or the underwriters, if any, may reasonably
         request in writing at least two business days prior to the closing of
         any sale of Registrable Securities;

                  (k) in the case of a Shelf Registration, upon the occurrence
         of any event or the discovery of any facts as contemplated by Section
         3(e)(vi) hereof, use its reasonable best efforts to prepare a
         supplement or post-effective amendment to a Registration Statement or
         the related Prospectus or any document incorporated or deemed to be
         incorporated therein by reference or file any other required document
         so that, as thereafter delivered to the purchasers of the Registrable
         Securities, such Prospectus will not contain at the time of such
         delivery any untrue statement of a material fact or omit to state a
         material fact necessary in order to make the statements therein, in
         light of the circumstances under which they were made, not misleading.
         The Company agrees to notify each Holder to suspend use of the
         Prospectus as promptly as practicable after the occurrence of such an
         event, and each Holder hereby agrees to suspend use of the Prospectus
         until the Company has amended or supplemented the Prospectus to correct
         such misstatement or omission or, alternatively, to notify the Holders
         that no such amendment or supplement is necessary. At such time as such
         public disclosure is otherwise made or the Company determines that such
         disclosure is not necessary, in each case to correct any misstatement
         of a material fact or to include any omitted material fact, the Company
         agrees promptly to notify each Holder of such determination and to
         furnish each Holder such number of copies of the Prospectus, as amended
         or supplemented, as such Holder may reasonably request;

                  (l) obtain CUSIP numbers for all Exchange Securities or
         Registrable Securities, as the case may be, not later than the
         effective date of a Registration Statement, and provide the Trustee
         with printed or word-processed certificates for the Exchange Securities
         or Registrable Securities, as the case may be, in a form eligible for
         deposit with the Depositary;

                  (m)(i) cause the Indenture to be qualified under the TIA in
         connection with the registration of the Exchange Securities or
         Registrable Securities, as the case may be, (ii) cooperate with the
         Trustee and the Holders to effect such changes, if any, to the
         Indenture as may be required for the Indenture to be so qualified in
         accordance with the terms of the TIA and (iii) execute, and use its
         best efforts to cause the Trustee to execute, all documents as may be
         required to effect such changes, if any, and all other forms and
         documents required to be filed with the SEC to enable the Indenture to
         be so qualified in a timely manner;



                  (n) in the case of a Shelf Registration, the holders of a
         majority in principal amount of the Registrable Securities registered
         pursuant to such Shelf Registration Statement shall have the right to
         direct the Company to effect not more than one underwritten
         registration and, in connection with such underwritten registration,
         the Company shall enter into agreements (including underwriting
         agreements or similar agreements) and take all other customary and
         appropriate actions (including those reasonably requested by the
         holders of a majority in principal amount of the Registrable Securities
         being sold) in order to expedite or facilitate the disposition of such
         Registrable Securities and in such connection, in a manner that is
         reasonable and customary:

                           (i) make representations and warranties to the
                  Holders of such Registrable Securities and the underwriters in
                  such form, substance and scope as are customarily made by
                  issuers to underwriters in similar underwritten offerings as
                  may be reasonably requested by such Holders and the managing
                  underwriter(s);

                           (ii) obtain opinions of counsel to the Company (which
                  counsel and opinions (in form, scope and substance) shall be
                  reasonably satisfactory to the managing underwriter(s), and
                  the Holders of a majority in principal amount of the
                  Registrable Securities being sold) addressed to each selling
                  Holder and the underwriters, covering the matters customarily
                  covered in opinions requested in sales of debt securities or
                  underwritten offerings of debt securities and such other
                  matters as may be reasonably requested by such Holders and the
                  managing underwriter(s);

                           (iii) obtain "cold comfort" letters and updates
                  thereof with respect to such Shelf Registration Statement and
                  the Prospectus included therein, all amendments and
                  supplements thereto and all documents incorporated or deemed
                  to be incorporated by reference therein from the Company's
                  independent certified public accountants and from the
                  independent certified public accountants for any other Person
                  or any business or assets whose financial statements are
                  included or incorporated by reference in the Shelf
                  Registration Statement, each addressed to the underwriters,
                  and use reasonable best efforts to have such letters addressed
                  to the selling Holders of Registrable Securities, such letters
                  to be in customary form and covering matters of the type
                  customarily covered in "cold comfort" letters to underwriters
                  in connection with similar underwritten offerings and such
                  letters to be delivered at the time of the pricing of such
                  underwritten registration with an update to such letter to be
                  delivered at the time of closing of such underwritten
                  registration;

                           (iv) if an underwriting agreement or other similar
                  agreement is entered into, cause the same to set forth
                  indemnification and contributions provisions and procedures
                  substantially equivalent to the indemnification and
                  contributions provisions and procedures set forth in Section 5
                  hereof with respect to the underwriters and all other parties
                  to be indemnified pursuant to Section 5 hereof or such other
                  indemnification and contributions as shall be satisfactory to
                  the



                  Company, the managing underwriter(s) and the Holders of the
                  majority in principal amount of the Registrable Securities
                  being sold; and

                           (v) deliver such other documents and certificates as
                  may be reasonably requested and as are customarily delivered
                  in similar underwritten offerings of debt securities.

         The documents referred to in Sections 3(n)(ii) and 3(n)(v) shall be
         delivered at the closing under any underwriting or similar agreement as
         and to the extent required thereunder. In the case of any such
         underwritten offering, the Company shall provide written notice to the
         Holders of all Registrable Securities of such underwritten offering at
         least 30 days prior to the filing of a prospectus supplement for such
         underwritten offering. Such notice shall (x) offer each such Holder the
         right to participate in such underwritten offering, (y) specify a date,
         which shall be no earlier than 15 days following the date of such
         notice, by which such Holder must inform the Company of its intent to
         participate in such underwritten offering and (z) include the
         instructions such Holder must follow in order to participate in such
         underwritten offering;

                  (o) in the case of a Shelf Registration, make available for
         inspection by representatives of the Holders of the Registrable
         Securities and any underwriters participating in any disposition
         pursuant to a Shelf Registration Statement and any counsel or
         accountant retained by such Holders or underwriters, all financial
         statements and other records, documents and properties of the Company
         reasonably requested by any such Persons, and cause the respective
         officers, directors, employees, and any other agents of the Company to
         supply all information reasonably requested by any such Persons in
         connection with a Shelf Registration Statement;

                  (p)(i) in the case of an Exchange Offer, a reasonable time
         prior to the filing of any Exchange Offer Registration Statement, any
         Prospectus forming a part thereof, any amendment to an Exchange Offer
         Registration Statement or amendment or supplement to such Prospectus,
         provide copies of such documents to the Initial Purchasers, and make
         such changes in any such documents prior to the filing thereof as the
         Initial Purchasers or their counsel may reasonably request; (ii) in the
         case of a Shelf Registration, a reasonable time prior to filing any
         Shelf Registration Statement, any Prospectus forming a part thereof,
         any amendment to such Shelf Registration Statement or amendment or
         supplement to such Prospectus, provide copies of such document to the
         Holders of Registrable Securities, to the Initial Purchasers, to the
         underwriter or underwriters, of an underwritten offering of Registrable
         Securities, and to counsel for any such Holders, Initial Purchasers or
         underwriters, and make such changes in any such document prior to the
         filing thereof as the Holders of Registrable Securities, the Initial
         Purchasers, any such underwriter or underwriters or any of their
         respective counsel may reasonably request; and (iii) cause the
         representatives of the Company to be available for discussion of such
         documents as shall be reasonably requested by the Holders of
         Registrable Securities, the Initial Purchasers on behalf of such
         Holders or the underwriters, and shall not at any time make any filing
         of any such document of which such Holders, the Initial Purchasers on
         behalf of such Holders, their counsel or any underwriter shall not have
         previously been advised and furnished a copy or to which such Holders,
         the Initial Purchasers on behalf of



         such Holders, their counsel or any underwriter shall reasonably object
         within a reasonable time period;

                  (q) in the case of a Shelf Registration, use its reasonable
         best efforts to cause the Registrable Securities to be rated with the
         appropriate rating agencies, if so requested by the Majority Holders or
         by the underwriters of an underwritten offering, unless the Registrable
         Securities are already so rated;

                  (r) otherwise use its reasonable best efforts to comply with
         all applicable rules and regulations of the SEC and, with respect to
         each Registration Statement and each post-effective amendment, if any,
         thereto and each filing by the Company of an Annual Report on Form
         10-K, make available to its security holders, as soon as reasonably
         practicable, an earnings statement covering at least twelve months
         which shall satisfy the provisions of Section 11(a) of the 1933 Act and
         Rule 158 thereunder;

                  (s) cooperate and assist in any filings required to be made
         with the NASD and in the performance of any due diligence investigation
         by any underwriter and its counsel;

                  (t) in the case of a Shelf Registration, a reasonable time
         prior to the filing of any Registration Statement, any Prospectus, any
         amendment to a Registration Statement or amendment or supplement to a
         Prospectus or any document which is to be incorporated by reference
         into a Registration Statement or a Prospectus after the initial filing
         of a Registration Statement, provide copies of such document to the
         Initial Purchasers on behalf of such Holders; and make representatives
         of the Company as shall be reasonably requested by the Holders of
         Registrable Securities, or the Initial Purchasers on behalf of such
         Holders, available for discussion of such document; and

                  (u) in the case of a Shelf Registration, use its reasonable
         best efforts to cause all Registrable Securities to be listed on any
         securities exchange or quotation system on which similar debt
         securities issued by the Company are then listed if requested by the
         Majority Holders or by the underwriters of an underwritten offering of
         Registrable Securities, if any.

         In the case of a Shelf Registration Statement, the Company may (as a
condition to such Holder's participation in the Shelf Registration) require each
Holder of Registrable Securities to furnish to the Company such information
regarding such Holder and the proposed distribution by such Holder of such
Registrable Securities as the Company may from time to time reasonably request
in writing and require such Holder to agree in writing to be bound by all
provisions of this Agreement applicable to such Holder.

         In the case of a Shelf Registration Statement, each Holder agrees and,
in the event that any Participating Broker-Dealer is using the Prospectus
included in the Exchange Offer Registration Statement in connection with the
sale of Exchange Securities pursuant to Section 3(f), each such Participating
Broker-Dealer agrees that, upon receipt of any notice from the Company of the
happening of any event or the discovery of any facts of the kind described in
Section 3(e)(ii), 3(e)(iii) or 3(e)(v) through 3(e)(vii) hereof, such Holder or
Participating Broker-Dealer, as the case may be, will forthwith discontinue
disposition of Registrable Securities



pursuant to a Registration Statement until receipt by such Holder or
Participating Broker-Dealer, as the case may be, of (i) the copies of the
supplemented or amended Prospectus contemplated by Section 3(k) hereof or (ii)
written notice from the Company that the Shelf Registration Statement or the
Exchange Offer Registration Statement, respectively, are once again effective or
that no supplement or amendment is required. If so directed by the Company, such
Holder or Participating Broker-Dealer, as the case may be, will deliver to the
Company (at the Company's expense) all copies in its possession, other than
permanent file copies then in its possession, of the Prospectus covering such
Registrable Securities current at the time of receipt of such notice. Nothing in
this paragraph shall prevent the accrual of Additional Interest on any Notes or
Exchange Securities.

         If the Company shall give any such notice to suspend the disposition of
Registrable Securities pursuant to the immediately preceding paragraph, the
Company shall use its reasonable best efforts to file and have declared
effective (if an amendment) as soon as practicable thereafter an amendment or
supplement to the Shelf Registration Statement or the Exchange Offer
Registration Statement or both, as the case may be, or the Prospectus included
therein and shall extend the period during which the Shelf Registration
Statement or the Exchange Offer Registration Statement or both, as the case may
be, shall be maintained effective pursuant to this Agreement (and, if
applicable, the period during which Participating Broker-Dealers may use the
Prospectus included in the Exchange Offer Registration Statement pursuant to
Section 3(f) hereof) by the number of days during the period from and including
the date of the giving of such notice to and including the earlier of the date
when the Holders or Participating Broker-Dealers, respectively, shall have
received copies of the supplemented or amended Prospectus necessary to resume
such dispositions and the effective date of written notice from the Company to
the Holders or Participating Broker-Dealers, respectively, that the Shelf
Registration Statement or the Exchange Offer Registration Statement,
respectively, are once again effective or that no supplement or amendment is
required.

         4. Underwritten Registrations. In the event that the Company fails to
effect the Exchange Offer or file any Shelf Registration Statement and maintain
the effectiveness of any Shelf Registration Statement as provided herein, the
Company shall not file any Registration Statement with respect to any securities
(within the meaning of Section 2(l) of the 1933 Act) of the Company other than
Registrable Securities.

         If any of the Registrable Securities covered by any Shelf Registration
are to be sold in an underwritten offering, the investment banker or investment
bankers and manager or managers that will manage the offering will be selected
by the Majority Holders of such Registrable Securities included in such
offering, subject to the consent of the Company, which consent shall not be
unreasonably withheld.

         No Holder of Registrable Securities may participate in any underwritten
registration hereunder unless such Holder (a) agrees to sell such Holder's
Registrable Securities on the basis provided in any underwriting arrangements
approved by the Persons entitled hereunder to approve such arrangements and (b)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the terms of such
underwriting arrangements.



         5. Indemnification and Contribution.

         (a) The Company agrees to indemnify and hold harmless each Initial
Purchaser, Holder, Participating Broker-Dealer, underwriter who participates in
an offering of Registrable Securities (each, an "Underwriter"), and each Person,
if any, who controls any Initial Purchaser, Holder, Participating Broker-Dealer
or Underwriter within the meaning of either Section 15 of the 1933 Act or
Section 20 of the 1934 Act, as follows:

                  (i) against any and all loss, liability, claim, damage and
         expense whatsoever, as incurred, arising out of any untrue statement or
         alleged untrue statement of a material fact contained in any
         Registration Statement pursuant to which Exchange Securities or
         Registrable Securities were registered under the 1933 Act, including
         all documents incorporated therein by reference, or any omission or
         alleged omission therefrom of a material fact required to be stated
         therein or necessary to make the statements therein not misleading, or
         arising out of any untrue statement or alleged untrue statement of a
         material fact contained in any preliminary prospectus or Prospectus or
         any omission or alleged omission therefrom of a material fact necessary
         in order to make the statements therein, in the light of the
         circumstances under which they were made, not misleading;

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

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

provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Initial Purchaser, Holder, Participating Broker-Dealer or Underwriter with
respect to such Initial Purchaser, Holder, Participating Broker-Dealer or
Underwriter expressly for use in the Registration Statement (or any amendment
thereto) or the Prospectus (or any amendment or supplement thereto) or made in
reliance upon the Statements of Eligibility and Qualification of Trustees (Form
T-1) under the 1939 Act filed as exhibits to the Registration Statement.

         (b) Each Initial Purchaser, Holder, Participating Broker-Dealer and
Underwriter severally but not jointly, agrees to indemnify and hold harmless the
Company, each director and officer of the Company, each other Initial Purchaser,
selling Holder, Participating Broker-Dealer and



Underwriter, and each Person, if any, who controls the Company or any Initial
Purchaser, other selling Holder, Participating Broker-Dealer or Underwriter
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
against any and all loss, liability, claim, damage and expense described in the
indemnity contained in Section 5(a) hereof, as incurred, with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in any
Registration Statement pursuant to which Exchange Securities or Registrable
Securities were registered under the 1933 Act (or any amendment thereto) or any
Prospectus included therein (or any amendment or supplement thereto) in reliance
upon and in conformity with written information with respect to such Initial
Purchaser, Holder, Participating Broker-Dealer or Underwriter furnished to the
Company by such Initial Purchaser, Holder, Participating Broker-Dealer, or
Underwriter, respectively, expressly for use in the Shelf Registration Statement
(or any amendment thereto) or such Prospectus (or any amendment or supplement
thereto); provided, however, that no such Initial Purchaser, Holder,
Participating Broker-Dealer or Underwriter shall be liable for any claims
hereunder in excess of the amount of net proceeds received by such Initial
Purchaser, Holder, Participating Broker-Dealer or Underwriter from the sale of
Registrable Securities pursuant to such Shelf Registration Statement.

         (c) Each indemnified party shall give notice as promptly as reasonably
practicable to each indemnifying party of any action commenced against it in
respect of which indemnity may be sought hereunder, but failure so to notify an
indemnifying party shall not relieve such indemnifying party from any liability
which it may have otherwise than on account of this indemnity agreement. An
indemnifying party may participate at its own expense in the defense of such
action; provided, however, that counsel to the indemnifying party shall not
(except with the consent of the indemnified party) also be counsel to the
indemnified party. In no event shall the indemnifying parties be liable for the
fees and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever in
respect of which indemnification or contribution could be sought under this
Section 5 (whether or not the indemnified parties are actual or potential
parties thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.

         (d) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in this Section 5 is
for any reason unavailable to or insufficient to hold harmless an indemnified
party in respect of any losses, liabilities, claims, damages or expenses
referred to therein, then each indemnifying party shall contribute to the
aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, in such proportion as is
appropriate to reflect the relative fault of the indemnifying party or parties
on the one hand and of the indemnified party or parties on the other hand in
connection with the statements or omissions that resulted in such losses,
liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations. The relative



fault of such indemnifying party or parties on the one hand and the indemnified
party or parties on the other hand shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by such indemnifying party or parties or such indemnified party or
parties, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.

         (e) The Company, the Initial Purchasers, the Holders, the Participating
Broker-Dealers and the Underwriters agree that it would not be just or equitable
if contribution pursuant to this Section 5 were determined by pro rata
allocation (even if the Initial Purchasers were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in paragraph (d) above. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 5 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.

         Notwithstanding the provisions of this Section 5, no Initial Purchaser,
Holder, Participating Broker-Dealer or Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
Registrable Securities sold by it were offered exceeds the amount of any damages
that such Initial Purchaser, Holder, Participating Broker-Dealer or Underwriter
has otherwise been required to pay by reason of any such untrue or alleged
untrue statement or omission or alleged omission.

         No Person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.

         For purposes of this Section 5, each Person, if any, who controls an
Initial Purchaser, Holder, Participating Broker-Dealer or Underwriter within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have
the same rights to contribution as such Initial Purchaser, Holder, Participating
Broker-Dealer or Underwriter, as the case may be, and each director and officer
of the Company who signed the Registration Statement and each Person, if any,
who controls the Company within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act shall have the same rights to contribution as the
Company. The respective obligations of the Initial Purchasers, Holders,
Participating Broker-Dealers and Underwriters to contribute pursuant to this
Section 5 are several in proportion to the principal amount of Notes purchased
by them and not joint.

         The indemnity and contribution provisions contained in this Section 5
shall remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf of
any Initial Purchaser, Holder, Participating Broker-Dealer, Underwriter, or any
Person controlling any Initial Purchaser, Holder, Participating Broker-Dealer or
Underwriter, or by or on behalf of the Company, its officers or directors or any
Person



controlling the Company, (iii) acceptance of any of the Exchange Securities and
(iv) any sale of Registrable Securities or Exchange Securities pursuant to a
Shelf Registration Statement.

         6. Miscellaneous.

         (a) Rule 144 and Rule 144A. For so long as the Company is subject to
the reporting requirements of Section 13 or 15 of the 1934 Act, the Company
covenants that it will file all reports required to be filed by it under Section
13(a) or 15(d) of the 1934 Act and the rules and regulations adopted by the SEC
thereunder, that if it ceases to be so required to file such reports, it will
upon the request of any Holder or beneficial owner of Registrable Securities (i)
make publicly available such information (including, without limitation, the
information specified in Rule 144(c)(2) under the 1933 Act) as is necessary to
permit sales pursuant to Rule 144 under the 1933 Act, (ii) deliver or cause to
be delivered, promptly following a request by any Holder or beneficial owner of
Registrable Securities or any prospective purchaser or transferee designated by
such Holder or beneficial owner, such information (including, without
limitation, the information specified in Rule 144A(d)(4) under the 1933 Act) as
is necessary to permit sales pursuant to Rule 144A under the 1933 Act, and (iii)
take such further action that is reasonable in the circumstances, in each case
to the extent required from time to time to enable such Holder to sell its
Registrable Securities without registration under the 1933 Act within the
limitation of the exemptions provided by (x) Rule 144 under the 1933 Act, as
such Rule may be amended from time to time, (y) Rule 144A under the 1933 Act, as
such Rule may be amended from time to time, or (z) any similar rules or
regulations hereafter adopted by the SEC. Upon the request of any Holder or
beneficial owner of Registrable Securities, the Company will deliver to such
Holder a written statement as to whether it has complied with such requirements.

         (b) No Inconsistent Agreements. The Company has not entered into nor
will the Company on or after the date of this Agreement enter into any agreement
which is inconsistent with the rights granted to the Holders of Registrable
Securities in this Agreement or otherwise conflicts with the provisions hereof,
without the written consent of the Holders of at least a majority in aggregate
principal amount of the outstanding Registrable Securities.

         (c) Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given, unless the Company has obtained the written consent of Holders of at
least a majority in aggregate principal amount of the outstanding Registrable
Securities affected by such amendment, modification, supplement, waiver or
departure.

         (d) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telecopier, or any courier guaranteeing overnight delivery (i)
if to a Holder or Participating Broker-Dealer (other than an Initial Purchaser),
at the most current address set forth on the records of the registrar under the
Indenture, (ii) if to an Initial Purchaser, at the most current address given by
such Initial Purchaser to the Company by means of a notice given in accordance
with the provisions of this Section 6(d), which address initially is the address
set forth in the Purchase Agreement; and (iii) if to the Company, initially at
the address set forth in the Purchase Agreement and thereafter



at such other address, notice of which is given in accordance with the
provisions of this Section 6(d).

         All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, first class, postage prepaid, if mailed;
when receipt is acknowledged, if telecopied; and on the next business day if
timely delivered to a courier guaranteeing overnight delivery.

         Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee, at the
address specified in the Indenture.

         (e) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors, assigns and transferees of each of the
parties, including, without limitation and without the need for an express
assignment, subsequent Holders; provided that nothing herein shall be deemed to
permit any assignment, transfer or other disposition of Registrable Securities
in violation of the terms hereof or of the Purchase Agreement or the Indenture.
If any transferee of any Holder shall acquire Registrable Securities, in any
manner, whether by operation of law or otherwise, such Registrable Securities
shall be held subject to all of the terms of this Agreement, and by taking and
holding such Registrable Securities, such Person shall be conclusively deemed to
have agreed to be bound by and to perform all of the terms and provisions of
this Agreement, including the restrictions on resale set forth in this Agreement
and, if applicable, the Purchase Agreement, and such Person shall be entitled to
receive the benefits hereof.

         (f) Third Party Beneficiary. Each Holder, Participating Broker-Dealer
and Underwriter shall be a third party beneficiary of the agreements made
hereunder between the Company, on the one hand, and the Initial Purchasers, on
the other hand, and shall have the right to enforce such agreements directly to
the extent it deems such enforcement necessary or advisable to protect its
rights or the rights of other Holders hereunder. Each Holder, by its acquisition
of Notes, shall be deemed to have agreed to the provisions of Section 5(b)
hereof.

         (g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

         (h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.

         (i) Restriction on Resales. If (i) the Company or any of its
subsidiaries or affiliates (as defined in Rule 144 under the 1933 Act) shall
redeem, purchase or otherwise acquire any Registrable Security or any Exchange
Security which is a "restricted security" within the meaning of Rule 144 under
the 1933 Act, the Company will deliver or cause to be delivered such Registrable
Security or Exchange Security, as the case may be, to the Trustee for
cancellation and neither the Company nor any of its subsidiaries or affiliates
will hold or resell such Registrable Security or Exchange Security or issue any
new Security or Exchange Security to replace the same.



         (j) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

         (k) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.

                            [SIGNATURE PAGE FOLLOWS]



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

                              SUSQUEHANNA BancSHARES, Inc.


                              By: /s/ William J. Reuter
                                  --------------------------------------------
                                  Name: William J. Reuter
                                  Title: President and Chief Executive Officer



This Registration Rights Agreement is confirmed and accepted as of the date
first above written by the undersigned for itself and on behalf of the other
Initial Purchasers.

KEEFE, BRUYETTE & WOODS, INC.



By:  /s/ Scott R. Anderson
     ---------------------------
     Name: Scott R. Anderson
     Title:  Managing Director


                                                                         ANNEX A

                               INITIAL PURCHASERS

                          KEEFE, BRUYETTE & WOODS, INC.

                        SANDLER O'NEILL & PARTNERS, L.P.

                      LEGG MASON WOOD WALKER, INCORPORATED

                           JANNEY MONTGOMERY SCOTT LLC

                        FERRIS, BAKER WATTS, INCORPORATED



                                                                         ANNEX B

                              PLAN OF DISTRIBUTION

         Each broker-dealer that receives new notes for its own account under
the exchange offer must acknowledge that it will deliver a prospectus in
connection with any resale of those notes. This prospectus, as it may be amended
or supplemented from time to time, may be used by a broker-dealer for resales of
new notes received in exchange for original notes that had been acquired as a
result of market-making or other trading activities. We have agreed that, for a
period of 180 days after the expiration date of the exchange offer, we will make
this prospectus, as it may be amended or supplemented, available to any
broker-dealer for use in connection with any such resale. Any broker-dealers
required to use this prospectus and any amendments or supplements to this
prospectus for resales of the new notes must notify us of this fact by checking
the box on the letter of transmittal requesting additional copies of these
documents.

         Notwithstanding the foregoing, we are entitled under the registration
rights agreement to suspend the use of this prospectus by broker-dealers under
specified circumstances. For example, we may suspend the use of this prospectus
if:

o    the SEC or any state securities authority requests an amendment or
     supplement to this prospectus or the related registration statement or
     additional information;

o    the SEC or any state securities authority issues any stop order suspending
     the effectiveness of the registration statement or initiates proceedings
     for that purpose;

o    we receive notification of the suspension of the qualification of the new
     notes for sale in any jurisdiction or the initiation or threatening of any
     proceeding for that purpose;

o    the suspension is required by law; or

o    an event occurs which makes any statement in this prospectus untrue in any
     material respect or which constitutes an omission to state a material fact
     in this prospectus.

         If we suspend the use of this prospectus, the 180-day period referred
to above will be extended by a number of days equal to the period of the
suspension.

         We will not receive any proceeds from any sale of new notes by
broker-dealers. New notes received by broker-dealers for their own account under
the exchange offer may be sold from time to time in one or more transactions in
the over-the-counter market, in negotiated transactions, through the writing of
options on those notes or a combination of those methods, at market prices
prevailing at the time of resale, at prices related to prevailing market prices
or at negotiated prices. Any resales may be made directly to purchasers or to or
through brokers or dealers who may receive compensation in the form of
commissions or concessions from the selling broker-dealer or the purchasers of
the new notes. Any broker-dealer that resells new notes received by it for its
own account under the exchange offer and any broker or dealer that



participates in a distribution of the new notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit on any
resale of new notes and any commissions or concessions received by these persons
may be deemed to be underwriting compensation under the Securities Act. The
letter of transmittal states that, by acknowledging that it will deliver and by
delivering a prospectus, a broker- dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act.

         We have agreed to pay all expenses incidental to the exchange offer
other than commissions and concessions of any broker or dealer and will
indemnify holders of the notes, including any broker-dealers, against certain
liabilities, including liabilities under the Securities Act.

EX-5.1

                                                                     Exhibit 5.1

                   [Letterhead of Morgan, Lewis & Bockius LLP]

December 30, 2002

Susquehanna Bancshares, Inc.
26 North Cedar Street
Lititz, PA  17543

Re:      Susquehanna Bancshares, Inc. 6.05% Subordinated Notes due 2012
         Registration Statement on Form S-4

Ladies and Gentlemen:

         We have acted as counsel to Susquehanna Bancshares, Inc., a
Pennsylvania corporation (the "Company"), in connection with the filing by the
Company of a Registration Statement on Form S-4 (the "Registration Statement")
under the Securities Act of 1933, as amended (the "Act"), relating to the public
offering of up to $75,000,000 of the Company's 6.05% Subordinated Notes due 2012
(the "Exchange Notes"). The Exchange Notes are to be issued pursuant to an
exchange offer (the "Exchange Offer") in exchange for a like principal amount of
the Company's issued and outstanding 6.05% Subordinated Notes due 2012 (the
"Outstanding Notes") under an Indenture, dated as of November 4, 2002 (the
"Indenture"), by and between the Company and J.P. Morgan Trust Company, National
Association, as trustee (the "Trustee"), and as contemplated by the Registration
Rights Agreement, dated as of November 4, 2002 (the "Registration Rights
Agreement") , by and among the Company, Keefe, Bruyette & Woods, Inc. and
Sandler O'Neill & Partners, L.P..

         In rendering the opinion set forth below, we have reviewed (i) the
Registration Statement, (ii) the Indenture, (iii) the Registration Rights
Agreement, (iv) the Company's Articles of Incorporation, as amended, and Amended
and Restated Bylaws, (v) certain resolutions of the Company's Board of
Directors, relating to, among other things, the Exchange Offer, the issuance of
the Outstanding Notes and the Indenture, (vi) the Form T-1 of the Trustee
attached as Exhibit 25.1 to the Registration Statement and (vii) such other
documents, certificates and records as we have deemed relevant. In our
examination, we have assumed the genuineness of all signatures,




Susquehanna Bancshares, Inc.
December 30, 2002
Page 2



the authenticity of all documents submitted to us as originals and the
conformity with the original of all documents submitted to us as copies thereof.

         Our opinion set forth below is limited to the laws of the Commonwealth
of Pennsylvania. To the extent relevant to the opinion set forth below, we have
assumed that the Trustee is duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization; that the Trustee is
duly qualified to engage in the activities contemplated by the Indenture; that
the Trustee is duly qualified and eligible under the terms of the Indenture to
act as trustee thereunder; that the Indenture was duly authorized, executed and
delivered by the Trustee; that the Indenture is a legal, valid and binding
obligation of the Trustee; and that the Trustee has the requisite organizational
and legal power and authority to perform its obligations under the Indenture.

         Based upon the foregoing, and subject to the effectiveness of the
Registration Statement under the Act and the qualification of the Indenture
under the Trust Indenture Act of 1939, as amended, we are of the opinion that
when the Exchange Notes are duly executed, attested, issued and delivered by
duly authorized officers of the Company and are duly authenticated by the
Trustee, all in accordance with the terms of the Indenture, against surrender
and cancellation of an identical principal amount of Outstanding Notes, the
Exchange Notes will constitute valid and legally binding obligations of the
Company enforceable against the Company in accordance with their terms, except
to the extent that enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent conveyances and
transfers), reorganization, moratorium or other similar laws relating to or
affecting enforcement of creditors' rights generally, or by general principles
of equity (regardless of whether such enforcement is considered in a proceeding
in equity or at law).

         We hereby consent to the use of this opinion as Exhibit 5.1 to the
Registration Statement and further consent to the reference to us under the
caption "Legal Matters" in the prospectus included in the Registration
Statement. In giving such opinion, we do not hereby admit that we are acting
within the category of persons whose consent is required under Section 7 of the
Act and the rules and regulations of the Securities and Exchange Commission
thereunder.

Very truly yours,

/s/ Morgan, Lewis & Bockius LLP

EX-12.1

                                                                    Exhibit 12.1

                          Susquehanna Bancshares, Inc.
                Computation of Ratio of Earnings to Fixed Charges


                                                                                                  


                                  Year - to - Date September 30                 For the year ended December 31
                                  -----------------------------------------------------------------------------------------
                                       2002              2001           2001       2000        1999        1998       1997
                                  ---------------    -----------     ------------------------------------------------------
                                                             (Dollars in thousands)
Pre-tax Income from Operations      $66,832           $59,914           $81,337    $79,655     $62,028    $68,661     $65,717

Fixed Charges

      Interest on deposits           63,018            84,595           108,690    115,005     106,012    114,704     110,850

      Other interest expense         35,901            45,939            60,361     73,459      67,514     61,561      39,057

      Rent Expense                    1,215             1,102             4,468      3,887       3,475      3,113       2,915


Earnings to Fixed Charges Ratio:
- ---------------------------------

Excluding interest on deposits          2.8               2.3               2.3        2.1         1.9        2.1         2.6

Including interest on deposits          1.7               1.5               1.5        1.4         1.4        1.4         1.4

EX-23.1

                                                                    Exhibit 23.1

                  Consent of Independent Public Accountants

We hereby consent to the incorporation by reference in this Registration
Statement on Form S-4 of Susquehanna Bancshares, Inc. of our report dated
January 22, 2002 relating to the consolidated financial statements, which
appears in Susquehanna Bancshares, Inc.'s Annual Report on Form 10-K for the
year ended December 31, 2001. We also consent to the reference to us under the
heading "Experts" in such Registration Statement

/s/ PricewaterhouseCoopers LLP

Harrisburg, Pennsylvania
December  27, 2002

EX-25.1

                                                                    Exhibit 25.1

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549

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

                                    FORM T-1

                            STATEMENT OF ELIGIBILITY
                    UNDER THE TRUST INDENTURE ACT OF 1939 OF
                   A CORPORATION DESIGNATED TO ACT AS TRUSTEE

                   -------------------------------------------
               CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
                     A TRUSTEE PURSUANT TO SECTION 305(b)(2)

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

                J. P. MORGAN TRUST COMPANY, NATIONAL ASSOCIATION
               (Exact name of trustee as specified in its charter)

                                                                      95-4655078
(State of incorporation                                         (I.R.S. employer
if not a national bank)                                      identification No.)

101 California Street, Floor 38
San Francisco, California                                                  94111
(Address of principal executive offices)                              (Zip Code)

                               William H. McDavid
                                 General Counsel
                                 270 Park Avenue
                            New York, New York 10017
                               Tel: (212) 270-2611
            (Name, address and telephone number of agent for service)

                  --------------------------------------------
                          Susquehanna Bancshares, Inc.
               (Exact name of obligor as specified in its charter)

     Pennsylvania                                                25-0659306
(State or other jurisdiction of                               (I.R.S. employer
incorporation or organization)                               identification No.)

26 North Cedar Street
Lititz, Pennsylvania                                               17543
(Address of principal executive offices)                         (Zip Code)


                               Subordinated Notes
                       (Title of the indenture securities)
- --------------------------------------------------------------------------------



Item 1.  General Information.

         Furnish the following information as to the trustee:

         (a)  Name and address of each examining or supervising authority to
              which it is subject.

              Comptroller of the Currency, Washington, D.C.
              Board of Governors of the Federal Reserve System, Washington, D.C.

         (b)  Whether it is authorized to exercise corporate trust powers.

              Yes.

Item 2.  Affiliations with Obligor.

         If the Obligor is an affiliate of the trustee, describe each such
affiliation.

        None.

Item 16. List of Exhibits.

         List below all exhibits filed as part of this statement of eligibility.

         Exhibit 1. Articles of Association of the Trustee as Now in Effect (see
                    Exhibit 1 to Form T-1 filed in connection with Form 8K of
                    the Southern California Water Company filing, dated December
                    7, 2001, which is incorporated by reference).

         Exhibit 2. Certificate of Authority of the Trustee to Commence Business
                    (see Exhibit 2 to Form T-1 filed in connection with
                    Registration Statement No. 333-41329, which is incorporated
                    by reference).

         Exhibit 3. Authorization of the Trustee to Exercise Corporate Trust
                    Powers (contained in Exhibit 2).

         Exhibit 4. Existing By-Laws of the Trustee (see Exhibit 4 to Form T-1
                    filed in connection with Form 8K of the Southern California
                    Water Company filing, dated December 7, 2001, which is
                    incorporated by reference).

         Exhibit 5. Not Applicable

         Exhibit 6. The consent of the Trustee required by Section 321 (b) of
                    the Act (see Exhibit 6 to Form T-1 filed in connection with
                    Registration Statement No. 333-41329, which is incorporated
                    by reference).

         Exhibit 7. A copy of the latest report of condition of the Trustee,
                    published pursuant to law or the requirements of its
                    supervising or examining authority.

         Exhibit 8. Not Applicable

         Exhibit 9. Not Applicable


                                        2



                                    SIGNATURE

         Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, J. P. Morgan Trust Company, National Association, has duly caused this
statement of eligibility and qualification to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of San Francisco, and
State of California, on the 30th day of December, 2002.

                                J. P. Morgan Trust Company, National Association


                                   By  /s/ Elaine D. Renn
                                     ----------------------------------
                                       Elaine D. Renn
                                       Vice President


                                        3



Exhibit 7.          Report of Condition of the Trustee.
- --------------------------------------------------------------------------------




Consolidated Report of Condition of  J.P. Morgan Trust Company, N.A., (formerly
                                    --------------------------------------------
Chase Manhattan Bank and Trust Company, N.A.)
- -----------------------------------------------
                                         (Legal Title)

Located at     1800 Century Park East, Ste. 400    Los Angeles,      CA   90067
           ---------------------------------------------------------------------
                   (Street)                          (City)       (State) (Zip)

as of close of business on     September 30, 2002
                           ---------------------------
================================================================================

================================================================================

                                              ($000)
                                              ------

Assets

  Cash and Due From Banks                      $9,685

  Securities                                  101,834

  Loans and Leases                            141,553

  Premises and Fixed Assets                     5,549

  Intangible Assets                           154,231

  Other Assets                                 27,391
                                           ----------

    Total Assets                             $440,243
                                           ==========



                                        4




Liabilities

  Deposits                                   $ 91,278

  Other Liabilities                            42,911
                                           ----------
    Total Liabilities                         134,189


Equity Capital

  Common Stock                                    600

  Surplus                                     277,263

  Retained Earnings                            28,186
                                           ----------
    Total Equity Capital                      306,054
                                           ----------


    Total Liabilities and Equity Capital     $440,243
                                           ==========


                                        5

EX-99.1

Exhibit 99.1

LETTER OF TRANSMITTAL

SUSQUEHANNA BANCSHARES, INC.

Offer To Exchange

$75,000,000 6.05% Subordinated Notes Due 2012

For

6.05% Subordinated Notes Due 2012

That Have Been Registered Under The Securities Act Of 1933, As Amended

PURSUANT TO THE PROSPECTUS DATED                     , 2003

The Exchange Offer Will Expire At 5:00 P.M. New York City Time, On             , 2003, Unless Extended (The “Expiration Date”). Tenders May Be Withdrawn Prior To 5:00 P.M., New York City Time, On The Last Business Day Before The Expiration Date.

The Exchange Agent for the Exchange Offer is:

J. P. MORGAN TRUST COMPANY, NATIONAL ASSOCIATION

For Information Call: 1-800-275-2048

By Registered or Certified Mail:	By Overnight Courier:	By Hand:	By Facsimile:
J. P. Morgan Trust Company, National Association 2001 Bryan Street, 9th Floor Dallas, TX 75201 Attn: Frank Ivins	J. P. Morgan Trust Company, National Association 2001 Bryan Street, 9th Floor Dallas, TX 75201 Attn: Frank Ivins	J. P. Morgan Chase Bank New York Window 4 New York Plaza New York, NY 10004	(214) 468-6494 Attn: Frank Ivins Confirm by Telephone: (214) 468-6464

Transmission of this letter of transmittal via facsimile to a number other than as set forth above or delivery of this letter of transmittal to an address other than as set forth above will not constitute a valid delivery.

The undersigned hereby acknowledges that he or she has received and reviewed the Prospectus, dated,                     , 2003 (the “Prospectus”), of Susquehanna Bancshares, Inc., a Pennsylvania corporation (the “Company”), and this Letter of Transmittal (the “Letter”), which together constitute the Company’s offer (the “Exchange Offer”) to exchange an aggregate principal amount of up to $75,000,000 of its 6.05% subordinated notes due 2012 (the “Exchange Notes”) which have been registered under the Securities Act of 1933, as amended (the “Securities Act”), for like principal amounts of the Company’s issued and outstanding $75,000,000 6.05% subordinated notes due 2012 (the “Outstanding Notes”) from the registered holders thereof (the “Holders”).

For each Outstanding Note accepted for exchange, the Holder of such Outstanding Note will receive an Exchange Note having a principal amount equal to that of the surrendered Outstanding Note. The Exchange Note will bear interest from the most recent date to which interest has been paid on the Outstanding Note exchanged therefor or, if no interest has been paid on such Outstanding Note, from                     , 2003. Accordingly, registered holders of Exchange Notes on the relevant record date for the first interest payment date following the consummation of the Exchange Offer will receive interest accruing from the most recent date on which interest has been paid or, if no interest has been paid, from                     , 2003. Outstanding Notes accepted for exchange will cease to accrue interest from and after the date of consummation of the Exchange Offer. Holders of Outstanding Notes whose Outstanding Notes are accepted for exchange will not receive any payment in respect of accrued interest on such Outstanding Notes otherwise payable on any interest payment date the record date for which occurs on or after consummation of the Exchange Offer.

This Letter is to be completed by a Holder of Outstanding Notes either if certificates are to be forwarded herewith or if a tender of certificates for Outstanding Notes, if available, is to be made by book-entry transfer to the account maintained by the Exchange Agent at The Depository Trust Company (the “Book-Entry Transfer Facility”) pursuant to the procedures set forth in “The Exchange Offer—Procedures for Tendering” section of the Prospectus. Holders of Outstanding Notes whose certificates are not immediately available, or who are unable to deliver their certificates or confirmation of the book-entry tender of their Outstanding Notes into the Exchange Agent’s account at the Book-Entry Transfer Facility (a “Book-Entry Confirmation”), and all other documents required by this Letter to be delivered to the Exchange Agent on or prior to the Expiration Date, must tender their Outstanding Notes according to the guaranteed delivery procedures set forth in “The Exchange Offer—Procedures for Tendering” section of the Prospectus. See Instruction 1.

Delivery of documents to the Book-Entry Transfer Facility does not constitute delivery to the Exchange Agent.

The undersigned has completed the appropriate boxes below and signed this Letter to indicate the action the undersigned desires to take with respect to the Exchange Offer.

2

List below the Outstanding Notes to which this Letter relates. If the space provided below is inadequate, the certificate numbers and principal amount of Outstanding Notes should be listed on a separate signed schedule affixed hereto.

Description Of Outstanding Notes

Name(s) And Address(es) Of Registered Holder(s) (Please Fill In, If Blank)	Certificate Number(s)*	Aggregate Principal Amount Represented	Principal Amount Tendered**
	TOTAL

* Need not be completed if Outstanding Notes are being tendered by book-entry transfer.

** Unless otherwise indicated in this column, a holder will be deemed to have tendered ALL of the Outstanding Notes represented by the Outstanding Notes indicated in column 2, entitled “Aggregate Principal Amount Represented.” See Instruction 2. Outstanding Notes tendered hereby must be in denominations of principal amount of $1,000 and any integral multiple thereof. See Instruction 1.

¨ Check here if tendered Outstanding Notes are being delivered by book-entry transfer made to the account maintained by the Exchange Agent with DTC and complete the following:

Name of Tendering Institution:

DTC Account Number:

Transaction Code Number:

¨ Check here and enclose a photocopy of the notice of guaranteed delivery if tendered Outstanding Notes are being delivered pursuant to a notice of guaranteed delivery previously sent to the Exchange Agent and complete the following:

Name(s) of Registered Holder:

Window Ticket Number (if any):

Date of Execution of Notice of Guaranteed Delivery:

Name of Institution that Guaranteed Delivery:

If guaranteed delivery is to be made by book-entry transfer:

Name of Tendering Institution:

DTC Account Number:

Transaction Code Number:

¨ Check here if tendered Outstanding Notes are enclosed herewith.

¨ Check here if you are a broker-dealer and wish to receive 10 additional copies of the Prospectus and 10 copies of any amendments or supplements thereto.

Name:

Address:

3

If the undersigned is not a broker-dealer, the undersigned represents that it acquired the Exchange Notes in the ordinary course of its business, it is not engaged in, and does not intend to engage in, a distribution of Exchange Notes. If the undersigned is a broker-dealer that will receive Exchange Notes for its own account in exchange for Outstanding Notes, it represents that the Outstanding Notes to be exchanged for Exchange Notes were acquired by it as a result of market-making activities or other trading activities and acknowledges that it will deliver a prospectus in connection with any resale of such Exchange Notes; however, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act.

4

PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY

Ladies and Gentlemen:

Upon the terms and subject to the conditions of the Exchange Offer, the undersigned hereby tenders to the Company the aggregate principal amount of Outstanding Notes indicated above. Subject to, and effective upon, the acceptance for exchange of the Outstanding Notes tendered hereby, the undersigned hereby exchanges, assigns and transfers to, or upon the order of, the Company all right, title and interest in and to such Outstanding Notes as are being tendered hereby.

The undersigned hereby irrevocably constitutes and appoints the Exchange Agent as the undersigned’s true and lawful agent and attorney-in-fact with respect to such tendered Outstanding Notes, with full power of substitution, among other things, to cause the Outstanding Notes to be assigned, transferred and exchanged. The undersigned hereby represents and warrants that the undersigned has full power and authority to tender, exchange, assign and transfer the Outstanding Notes, and to acquire Exchange Notes issuable upon the exchange of such tendered Outstanding Notes, and that, when the same are accepted for exchange, the Company will acquire good and unencumbered title thereto, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claim when the same are accepted by the Company. The undersigned hereby further represents that (i) any Exchange Notes acquired in exchange for Outstanding Notes tendered hereby will have been acquired in the ordinary course of business of the person receiving such Exchange Notes, whether or not such person is the undersigned, (ii) neither the Holder of such Outstanding Notes nor any such other person is participating in, intends to participate in or has an arrangement or understanding with any person to participate in the distribution of such Exchange Notes, and (iii) neither the Holder of such Outstanding Notes nor any such other person is an “affiliate,” as defined in Rule 405 under the Securities Act, of the Company.

The undersigned acknowledges that this Exchange Offer is being made in reliance on interpretations by the staff of the Securities and Exchange Commission (the “SEC”), as set forth in no-action letters issued to third parties, that the Exchange Notes issued pursuant to the Exchange Offer in exchange for the Outstanding Notes may be offered for resale, resold and otherwise transferred by Holders thereof (other than any such Holder that is an “affiliate” of the Company within the meaning of Rule 405 under the Securities Act), without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that such Exchange Notes are acquired in the ordinary course of such Holders’ respective business and such Holders have no arrangements with any person to participate in the distribution of such Exchange Notes. However, the SEC has not considered the Exchange Offer in the context of a no-action letter and there can be no assurance that the staff of the SEC would make a similar determination with respect to the Exchange Offer as in other circumstances. If the undersigned is not a broker-dealer, the undersigned represents that it is not engaged in, and does not intend to engage in, a distribution of Exchange Notes and has no arrangement or understanding to participate in a distribution of Exchange Notes. If any Holder is an affiliate of the Company, or is engaged in or intends to engage in or has any arrangement or understanding with respect to the distribution of the Exchange Notes to be acquired pursuant to the Exchange Offer, such Holder (i) could not rely on the applicable interpretations of the staff of the SEC and (ii) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction. If the undersigned is a broker-dealer that will receive Exchange Notes for its own account in exchange for Outstanding Notes, it represents that the Outstanding Notes to be exchanged for the Exchange Notes were acquired by it as a result of market-making activities or other trading activities and acknowledges that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of such Exchange Notes; however, by so acknowledging and by delivering a prospectus meeting the requirements of the Securities Act, the undersigned will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act.

5

The undersigned will, upon request, execute and deliver any additional documents deemed by the Company to be necessary or desirable to complete the exchange, assignment and transfer of the Outstanding Notes tendered hereby. All authority conferred or agreed to be conferred in this Letter and every obligation of the undersigned hereunder shall be binding upon the successors, assigns, heirs, executors, administrators, trustees in bankruptcy and legal representatives of the undersigned and shall not be affected by, and shall survive, the death or incapacity of the undersigned. This tender may be withdrawn only in accordance with the procedures set forth in “The Exchange Offer—Withdrawal Rights” section of the Prospectus.

Unless otherwise indicated herein in the box entitled “Special Issuance Instructions” below, please deliver the Exchange Notes (and, if applicable, substitute certificates representing Outstanding Notes for any Outstanding Notes not exchanged) in the name of the undersigned or, in the case of a book-entry delivery of Outstanding Notes, please credit the account indicated above maintained at the Book-Entry Transfer Facility. Similarly, unless otherwise indicated under the box entitled “Special Delivery Instructions” below, please send the Exchange Notes (and, if applicable, substitute certificates representing Outstanding Notes for any Outstanding Notes not exchanged) to the undersigned at the address shown above in the box entitled “Description of Outstanding Notes.”

The undersigned, by completing the box entitled “Description of Outstanding Notes” above and signing this letter, will be deemed to have tendered the Outstanding Notes as set forth in such box above.

6

Special Issuance Instructions

(See Instructions 3 and 4)

To be completed ONLY if certificates for Outstanding Notes not exchanged and/or Exchange Notes are to be issued in the name of and sent to someone other than the person or persons whose signature(s) appear(s) on this Letter above, or if Outstanding Notes delivered by book-entry transfer that are not accepted for exchange are to be returned by credit to an account maintained at the Book-Entry Transfer Facility other than the account indicated above.

Issue Exchange Notes and/or Outstanding Notes to:

Name(s):
	(Please Type or Print)
	(Please Type or Print)
Address:
	(Include Zip Code)
	(Taxpayer Identification or Social Security Number) (See Substitute Form W-9 herein)

¨ Credit unexchanged Outstanding Notes delivered by book-entry transfer to the Book-Entry Transfer Facility account set forth below.

Book-Entry Transfer Facility (Account Number, if applicable)

Special Delivery Instructions

(See Instructions 3 and 4)

To be completed ONLY if certificates for Outstanding Notes not exchanged and/or Exchange Notes are to be sent to someone other than the person or persons whose signature(s) appear(s) on this Letter above or to such person or persons at an address other than shown in the box entitled “Description of Outstanding Notes” on this Letter above.

Mail Exchange Notes and/or Outstanding Notes to:

Name(s):
	(Please Type or Print)
	(Please Type or Print)
Address:
	(Include Zip Code)

7

IMPORTANT: THIS LETTER OR A FACSIMILE HEREOF (TOGETHER WITH THE CERTIFICATES

FOR OUTSTANDING NOTES OR A BOOK-ENTRY CONFIRMATION AND ALL OTHER REQUIRED

DOCUMENTS OR THE NOTICE OF GUARANTEED DELIVERY) MUST BE RECEIVED BY THE

EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.

PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL

CAREFULLY BEFORE COMPLETING ANY BOX ABOVE.

PLEASE SIGN HERE:

(TO BE COMPLETED BY ALL TENDERING HOLDERS)

(COMPLETE ACCOMPANYING SUBSTITUTE FORM W-9 BELOW)

X
X
	(Signature(s) of Owner)	(Date)
Area Code and Telephone Number:

If a holder is tendering any Outstanding Notes, this Letter must be signed by the registered holder(s) as the name(s) appear(s) on the certificate(s) for the Outstanding Notes or by any person(s) authorized to become registered holder(s) by endorsements and documents transmitted herewith. If signature is by a trustee, executor, administrator, guardian, officer or other person acting in a fiduciary or representative capacity, please set forth full title. See Instruction 3.

Name(s):
	(Please Type or Print)
Capacity:
Address:
	(Include Zip Code)

SIGNATURE GUARANTEE

(IF REQUIRED BY INSTRUCTION 3)

Signature(s) Guaranteed by an Eligible Institution:

(Authorized Signature)

(Title)

(Name and Firm)

Dated:

8

INSTRUCTIONS

SUSQUEHANNA BANCSHARES, INC.

FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER

FOR THE 6.05% SUBORDINATED NOTES DUE 2012

IN EXCHANGE FOR THE

6.05% SUBORDINATED NOTES DUE 2012

THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT

OF 1933, AS AMENDED, PURSUANT TO THE PROSPECTUS, DATED                , 2003

1.    DELIVERY OF THIS LETTER AND NOTES; GUARANTEED DELIVERY PROCEDURES

This Letter is to be completed by Holders of Outstanding Notes either if certificates are to be forwarded herewith or if tenders are to be made pursuant to the procedures for delivery by book-entry transfer set forth in “The Exchange Offer—Procedures for Tendering” section of the Prospectus. Certificates for all physically tendered Outstanding Notes, or Book-Entry Confirmation, as the case may be, as well as a properly completed and duly executed Letter (or manually signed facsimile hereof) and any other documents required by this Letter, must be received by the Exchange Agent at the address set forth herein on or prior to the Expiration Date, or the tendering holder must comply with the guaranteed delivery procedures set forth below. Outstanding Notes tendered hereby must be in denominations of principal amount of $1,000 and any integral multiple thereof.

Holders whose certificates for Outstanding Notes are not immediately available or who cannot deliver their certificates and all other required documents to the Exchange Agent on or prior to the Expiration Date, or who cannot complete the procedure for book-entry transfer on a timely basis, may tender their Outstanding Notes pursuant to the guaranteed delivery procedures set forth in “The Exchange Offer—Procedures for Tendering” section of the Prospectus. Pursuant to such procedures, (i) such tender must be made through an Eligible Institution (as defined herein), (ii) prior to 5:00 P.M., New York City time, on the Expiration Date, the Exchange Agent must receive from such Eligible Institution a properly completed and duly executed Letter (or a facsimile thereof) and Notice of Guaranteed Delivery, substantially in the form provided by the Company (by facsimile transmission, mail or hand delivery), setting forth the name and address of the Holder of Outstanding Notes and the amount of Outstanding Notes tendered, stating that the tender is being made thereby and guaranteeing that within three New York Stock Exchange (“NYSE”) trading days after the Expiration Date, the certificates for all physically tendered Outstanding Notes, in proper form for transfer, or a Book-Entry Confirmation, as the case may be, and any other documents required by this Letter will be deposited by the Eligible Institution with the Exchange Agent, and (iii) the certificates for all physically tendered Outstanding Notes, in proper form for transfer, or a Book-Entry Confirmation, as the case may be, and all other documents required by this Letter, must be received by the Exchange Agent within three NYSE trading days after the Expiration Date.

The method of delivery of this Letter, the Outstanding Notes and all other required documents is at the election and risk of the tendering Holders, but the delivery will be deemed made only when actually received or confirmed by the Exchange Agent. If Outstanding Notes are sent by mail, it is suggested that the mailing be registered mail, properly insured, with return receipt requested, made sufficiently in advance of the Expiration Date to permit delivery to the Exchange Agent prior to 5:00 P.M., New York City time, on the Expiration Date.

See “The Exchange Offer” section of the Prospectus.

9

2.    PARTIAL TENDERS (NOT APPLICABLE TO HOLDERS WHO TENDER BY BOOK-ENTRY TRANSFER)

If less than all of the Outstanding Notes evidenced by a submitted certificate are to be tendered, the tendering Holder(s) should fill in the aggregate principal amount of Outstanding Notes to be tendered in the box above entitled “Description of Outstanding Notes—Principal Amount Tendered.” A reissued certificate representing the balance of non-tendered Outstanding Notes will be sent to such tendering Holder, unless otherwise provided in the appropriate box on this Letter, promptly after the Expiration Date. ALL OF THE OUTSTANDING NOTES DELIVERED TO THE EXCHANGE AGENT WILL BE DEEMED TO HAVE BEEN TENDERED UNLESS OTHERWISE INDICATED.

3.    SIGNATURES ON THIS LETTER; BOND POWERS AND ENDORSEMENTS; GUARANTEE OF SIGNATURES

If this Letter is signed by the registered Holder of the Outstanding Notes tendered hereby, the signature must correspond exactly with the name as written on the face of the certificates without any change whatsoever.

If any tendered Outstanding Notes are owned of record by two or more joint owners, all of such owners must sign this Letter.

If any tendered Outstanding Notes are registered in different names on several certificates, it will be necessary to complete, sign and submit as many separate copies of this Letter as there are different registrations of certificates.

When this Letter is signed by the registered Holder or Holders of the Outstanding Notes specified herein and tendered hereby, no endorsements of certificates or separate bond powers are required. If, however, the Exchange Notes are to be issued, or any untendered Outstanding Notes are to be reissued, to a person other than the registered Holder, then endorsements of any certificates transmitted hereby or separate bond powers are required. Signatures on such certificate(s) must be guaranteed by an Eligible Institution.

If this Letter is signed by a person other than the registered Holder or Holders of any certificate(s) specified herein, such certificate(s) must be endorsed or accompanied by appropriate bond powers, in either case signed exactly as the name or names of the registered Holder or Holders appear(s) on the certificate(s) and signatures on such certificate(s) must be guaranteed by an Eligible Institution.

If this Letter or any certificates or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and, unless waived by the Company, proper evidence satisfactory to the Company of their authority to so act must be submitted.

Endorsements on certificates for Outstanding Notes or signatures on bond powers required by this Instruction 3 must be guaranteed by a firm that is a financial institution (including most banks, savings and loan associations and brokerage houses) that is a participant in the Securities Transfer Agents Medallion Program, the New York Stock Exchange Medallion Signature Program or the Stock Exchanges Medallion Program (each an Eligible Institution”).

Signatures on this Letter need not be guaranteed by an Eligible Institution, provided the Outstanding Notes are tendered: (i) by a registered Holder of Outstanding Notes (which term, for purposes of the Exchange Offer, includes any participant in the Book-Entry Transfer Facility system whose name appears on a security position listing as the Holder of such Outstanding Notes) who has not completed the box entitled “Special Issuance Instructions” or “Special Delivery Instructions” on this Letter, or (ii) for the account of an Eligible Institution.

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4.    SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS

Tendering Holders of Outstanding Notes should indicate in the applicable box the name and address to which Exchange Notes issued pursuant to the Exchange Offer and or substitute certificates evidencing Outstanding Notes not exchanged are to be issued or sent, if different from the name or address of the person signing this Letter. In the case of issuance in a different name, the employer identification or social security number of the person named must also be indicated. Holders tendering Outstanding Notes by book-entry transfer may request that Outstanding Notes not exchanged be credited to such account maintained at the Book-Entry Transfer Facility as such Holder may designate hereon. If no such instructions are given, such Outstanding Notes not exchanged will be returned to the name and address of the person signing this Letter.

5.    TAXPAYER IDENTIFICATION NUMBER

Federal income tax law generally requires that a tendering Holder whose Outstanding Notes are accepted for exchange must provide the Company (as payor) with such Holder’s correct Taxpayer Identification Number (“TIN”) on Substitute Form W-9 below, which in the case of a tendering Holder who is an individual, is his or her social security number. If the Company is not provided with the current TIN or an adequate basis for an exemption from backup withholding, such tendering Holder may be subject to a $50 penalty imposed by the Internal Revenue Service. In addition, the Exchange Agent may be required to withhold 30% of the amount of any reportable payments made after the exchange to such tendering Holder of Exchange Notes. If withholding results in an overpayment of taxes, a refund may be obtained.

Exempt Holders of Outstanding Notes (including, among others, certain corporations and certain foreign individuals) are not subject to these backup withholding and reporting requirements. See the enclosed Guidelines of Certification of Taxpayer Identification Number on Substitute Form W9 (the “W-9 Guidelines”) for additional instructions.

To prevent backup withholding, each tendering Holder of Outstanding Notes must provide its correct TIN by completing the Substitute Form W-9 set forth below, certifying, under penalties of perjury, that the TIN provided is correct (or that such Holder is awaiting a TIN) and that (i) the Holder is exempt from backup withholding, or (ii) the Holder has not been notified by the Internal Revenue Service that such Holder is subject to backup withholding as a result of a failure to report all interest or dividends or (iii) the Internal Revenue Service has notified the Holder that such Holder is no longer subject to backup withholding. If the tendering Holder of Outstanding Notes is a nonresident alien or foreign entity not subject to backup withholding, such Holder must give the Exchange Agent a completed Form W-8BEN “Certificate of Beneficial Owner for United States Tax Withholding” or other appropriate Form W-8 such as (i) Form W-8ECI “Certificate of Foreign Person’s Claim for Exemption from Withholding on Income Effectively Connected with the Conduct of a Trade or Business in the United States” (ii) Form W-8 IMY “Certificate of Foreign Intermediary, Foreign Flow-Through Entity, or Certain U.S. Branches for United States Tax Withholding”; or (iii) Form W-8EXP “Certificate of Foreign Government or Other Foreign Organization for United States Tax Withholding.” These forms may be obtained from the Exchange Agent. If the Outstanding Notes are in more than one name or are not in the name of the actual owner, such Holder should consult the W-9 Guidelines for information on which TIN to report. If such Holder does not have a TIN, such Holder should consult the W-9 Guidelines for instructions on applying for a TIN, write “applied for” in lieu of its TIN, and fill in the Certificate of Awaiting Taxpayer Identification Number. If no TIN is provided, the Exchange Agent will retain 30% of reportable payments made to a Holder during the sixty (60) day period following the date of the Substitute Form W-9. If the Holder furnishes the Exchange Agent with his or her TIN within sixty (60) days of the Substitute Form W-9, the Exchange Agent generally will remit such amounts retained during such sixty (60) day period to such Holder and no further amounts will be retained or withheld from payments made to the Holder thereafter. The Exchange Agent, however, will not remit to a Holder any amounts attributable to reportable payments that are made to the Holder’s account beginning no later than seven (7) business days after the Exchange Agent receives the Certificate of Awaiting Taxpayer Identification Number; such amounts will be remitted to the Internal Revenue Service as backup withholding. In addition, if a Holder does not provide its TIN to the Exchange Agent within such sixty (60) day period, the Exchange Agent will remit such previously withheld amounts to the Internal Revenue Service as backup withholding and will withhold 30% of all reportable payments to the Holder thereafter until such Holder furnishes its TIN to the Exchange Agent.

11

6.    TRANSFER TAXES

The Company will pay all transfer taxes, if any, applicable to the transfer of Outstanding Notes to it or its order pursuant to the Exchange Offer. If, however, Exchange Notes and/or substitute Outstanding Notes not exchanged are to be delivered to, or are to be registered or issued in the name of, any person other than the registered Holder of the Outstanding Notes tendered hereby, or if tendered Outstanding Notes are registered in the name of any person other than the person signing this Letter, or if a transfer tax is imposed for any reason other than the transfer of Outstanding Notes to the Company or its order pursuant to the Exchange Offer, the amount of any such transfer taxes (whether imposed on the registered holder or any other persons) will be payable by the tendering Holder. If satisfactory evidence of payment of such taxes or exemption therefrom is not submitted herewith, the amount of such transfer taxes will be billed directly to such tendering Holder.

7.    WAIVER OF CONDITIONS

The Company reserves the absolute right to waive satisfaction of any or all conditions enumerated in the Prospectus.

8.    NO CONDITIONAL TENDERS

No alternative, conditional, irregular or contingent tenders will be accepted. All tendering Holders of Outstanding Notes, by execution of this Letter, shall waive any right to receive notice of the acceptance of their Outstanding Notes for exchange.

Neither the Company, the Exchange Agent nor any other person is obligated to give notice of any defect or irregularity with respect to any tender of Outstanding Notes nor shall any of them incur any liability for failure to give any such notice.

9.    MUTILATED, LOST, STOLEN OR DESTROYED OUTSTANDING NOTES

Any Holder whose Outstanding Notes have been mutilated, lost, stolen or destroyed should contact the Exchange Agent at the address indicated above for further instructions.

10.    WITHDRAWAL RIGHTS

Tenders of Outstanding Notes may be withdrawn at any time prior to 5:00 P.M., New York City time, on the last business day before the Expiration Date.

For a withdrawal of a tender of Outstanding Notes to be effective, a written notice of withdrawal must be received by the Exchange Agent at the address set forth above prior to 5:00 P.M., New York City time, on the last business day before the Expiration Date. Any such notice of withdrawal must (i) specify the name of the person having tendered the Outstanding Notes to be withdrawn (the “Depositor”), (ii) identify the Outstanding Notes to be withdrawn (including certificate number or numbers and the principal amount of such Outstanding Notes), (iii) contain a statement that such Holder is withdrawing his election to have such Outstanding Notes exchanged, (iv) be signed by the Holder in the same manner as the original signature on the Letter by which such Outstanding Notes were tendered (including any required signature guarantees) or be accompanied by documents of transfer to have the Trustee with respect to the Outstanding Notes register the transfer of such Outstanding Notes in the name of the person withdrawing the tender and (v) specify the name in which such Outstanding Notes are registered, if different from that of the Depositor. If Outstanding Notes have been tendered pursuant to the procedure for book-entry transfer set forth in “The Exchange Offer—Procedures for Tendering” section of the Prospectus, any notice of withdrawal must specify the name and number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn Outstanding Notes and otherwise comply with the procedures of such facility. All questions as to the validity, form and eligibility (including time of receipt) of such notices will be determined by the Company, whose determination shall be final and binding on all parties. Any

12

Outstanding Notes so withdrawn will be deemed not to have been validly tendered for exchange for purposes of the Exchange Offer and no Exchange Notes will be issued with respect thereto unless the Outstanding Notes so withdrawn are validly retendered. Any Outstanding Notes that have been tendered for exchange, but that are not exchanged for any reason, will be returned to the Holder thereof without cost to such Holder (or, in the case of Outstanding Notes tendered by book-entry transfer into the Exchange Agent’s account at the Book-Entry Transfer Facility pursuant to the book-entry transfer procedures set forth in “The Exchange Offer—Procedures for Tendering” section of the Prospectus, such Outstanding Notes will be credited to an account maintained with the Book-Entry Transfer Facility for the Outstanding Notes) as soon as practicable after withdrawal, rejection of tender or termination of the Exchange Offer. Properly withdrawn Outstanding Notes may be retendered by following the procedures described above at any time on or prior to 5:00 P.M., New York City time, on the Expiration Date.

11.    REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES

Questions relating to the procedure for tendering, as well as requests for additional copies of the Prospectus and this Letter, and requests for Notices of Guaranteed Delivery and other related documents may be directed to the Exchange Agent, at the address and telephone number indicated above.

13

Complete Substitute Form W-9

SUBSTITUTE Form W-9 Department of the Treasury Internal Revenue Service Payer’s Request for Taxpayer Identification Number (TIN)		PART I—NAME AND TAXPAYER IDENTIFICATION NUMBER—FOR ALL ACCOUNTS, ENTER NAME AND TAXPAYER IDENTIFICATION NUMBER AT BOX AT RIGHT AND CERTIFY BY SIGNING AND DATING BELOW. Note: If the account is in more than one name, see the chart in the enclosed guidelines to determine which number to give the payer.	Print Name Social Security Number or Employer Identification Number
		PART II—Check the box if you are exempt from backup withholding (see enclosed guidelines):  ¨
	PART III—CERTIFICATION.    UNDER PENALTIES OF PERJURY, I CERTIFY THAT: (1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a number to be issued to me), (2) I am not subject to backup withholding because: (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal Revenue Service (the “IRS”) that I am subject to backup withholding as a result of a failure to report all interest or dividends or (c) the IRS has notified me that I am no longer subject to backup withholding and (3) I am a U.S. person (including a U.S. resident alien). CERTIFICATION INSTRUCTION—You must cross out item (2) above if you have been notified by the IRS that you are currently subject to backup withholding because of underreporting of interest of dividends on your tax return and you have not been notified by the IRS that you are no longer subject to backup withholding. (Also, see instructions in the enclosed guidelines.).
		SIGNATURE:                                                                        DATE:
NOTE: Failure to complete and return this form may result in backup withholding of 30% of any payments made to you pursuant to the merger. Please review the enclosed guidelines for certification of taxpayer identification number on Substitute Form W-9 for additional details. You must write “Applied For” in Part I if you are awaiting (or will soon apply for) a taxpayer identification number and, in addition to completing Parts I, II, and III above, complete the following Certificate.

Certificate of Awaiting Taxpayer Identification Number

I certify, under penalties of perjury, that a taxpayer identification number has not been issued to me, and that I mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office (or I intend to mail or deliver an application in the near future). I understand that, notwithstanding the information I provided in Part III of the Substitute Form W-9 above (and the fact that I have completed this Certificate of Awaiting Taxpayer Identification Number), if I do not provide a taxpayer identification number to the depositary within sixty (60) days, the depositary is required to withhold 30% of all cash payments made to me thereafter until I provide a number. In addition during such sixty (60) day period, the depository will backup withhold on any reportable payments made to your account beginning no later than seven (7) business days after the depository receives this Certificate.

Signature:	Date:	, 2002
Name (Please Print):

14

GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION

NUMBER ON SUBSTITUTE FORM W-9

Guidelines for Determining the Proper Identification Number to Give the Payor—Social Security Numbers (SSNs) have nine digits separated by two hyphens: i.e., 000-00-0000. Employer Identification Numbers (EINs) have nine digits separated by only one hyphen: i.e, 00-0000000. The table below will help determine the number to give the payor.

For this type of account:		Give the NAME and SOCIAL SECURITY NUMBER of —
1.	One individual	The individual
2.	Two or more individuals (joint account)	The actual owner of the account or, if combined funds, the first individual on the account (1)
3.	Husband and wife (joint account)	The actual owner of the account or, if combined funds, the first person on the account (1)
4.	Custodian account of a minor (Uniform Gift to Minors Act)	The minor (2)
5.	Adult and minor (joint account)	The actual owner of the account or, if combined funds, the first individual on the account (1)
6.	Account in the name of guardian or committee for a designated ward, minor, or incompetent person	The ward, minor, or incompetent (3)
7.	a. The usual revocable savings trust (grantor is also trustee)	The grantor-trustee (1)
	b. So-called trust account that is not a legal or valid trust under state law	The actual owner (1)
8.	Sole proprietorship and single-member limited liability companies (LLCs)	The owner (4)

For this type of account:		Give the NAME and SOCIAL SECURITY NUMBER of —
9.	A valid trust, estate, or pension trust	Legal entity (Do not furnish the identifying number of the personal representative or trustee unless the legal entity itself is not designated in the account title.) (5)
10.	Corporation	The corporation
11.	Association, club, religious, charitable, educational, or other tax-exempt organization	The organization
12.	Partnership account held in the name of the business	The partnership (6)
13.	A broker or registered nominee	The broker or nominee
14.	Account with the Department of Agriculture in the name of a public entity (such as a state or local government, school district, or prison) that receives agricultural program payments	The public entity

(1) List first and circle the name of the person whose number you furnish. If only one person on a joint account has an SSN, that person’s number must be furnished.

(2) Circle the minor’s name and furnish the minor’s SSN.

(3) Circle the ward’s name, the minor’s name, or the incompetent person’s name and furnish such person’s SSN.

(4) Show the name of the owner. The name of the business or the “doing business as” name may also be entered. Either the SSN or EIN may be used. In addition to entering their owner’s name, single member LLCs must enter their name as “doing business as”.

(5) List first and circle the name of the legal trust, estate, or pension trust.

(6) This also applies to LLCs with at least two members.

NOTE: If no name is circled when there is more than one name, the number will be considered to be that of the first name listed.

15

GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION

NUMBER ON SUBSTITUTE FORM W-9

Page 2

Obtaining a number

If you do not have a taxpayer identification number or you do not know your number, obtain Form SS-5, Application for a Social Security Card (for individuals), or Form W-7, Application for IRS Individual Taxpayer Identification Number, or Form SS-4, Application for Employer Identification Number (for businesses and all other entities), from the local office of the Social Security Administration or the Internal Revenue Service and apply for a number.

Payees Exempt from Backup Withholding

Payees specifically exempted from backup withholding on interest and dividend payments include the following:

• Certain corporations.

• Certain financial institutions.

• An organization exempt from tax under Section 501(a) of the Internal Revenue Code of 1986, as amended (the “Code”), an individual retirement account, or a custodial account under Section 403(b)(7) if the account satisfies the requirements of Section 401(f)(2).

• The United States or any agency or instrumentality thereof.

• A state, the District of Columbia, a possession of the United States, or any political subdivision or instrumentality thereof.

• A foreign government, a political subdivision of a foreign government, or any agency or instrumentality thereof.

• An international organization or any agency or instrumentality thereof.

• Certain dealers in securities or commodities required to register in the U.S., Washington, D.C., or a possession of the U.S.

• Certain real estate investment trusts.

• Certain common trust funds operated by a bank under Section 584(a) of the Code.

• Certain exempt charitable remainder trusts, described in Section 664 of the Code, and certain non-exempt trusts described in Section 4947 of the Code.

• Certain entities registered at all times under the Investment Company Act of 1940.

• Certain foreign central banks of issue.

• A middleman known in the investment community as a nominee or custodian.

Payments Exempt from Backup Withholding

Payments of dividends and patronage dividends not generally subject to backup withholding include the following:

• Payments to nonresident aliens subject to withholding under Section 1441 of the Code.

• Payments to partnerships not engaged in a trade or business in the U.S. and which have at least one nonresident alien partner.

• Payments of patronage dividends where the amount received is not paid in money.

• Payments made by certain foreign organizations.

• Section 404(k) payments made by an ESOP.

Payments of interest not generally subject to backup withholding include the following:

• Payments of interest on obligations issued by individuals.

Note:    You will be subject to backup withholding if this interest is $600 or more and is paid in the course of the payor’s trade or business and you have not provided your correct taxpayer identification number to the payor.

• Payments of tax-exempt interest (including exempt-interest dividends under Section 852 of the Code).

• Payments described in Section 6049(b)(5) of the Code to nonresident aliens.

• Payments on tax-free covenant bonds under Section 1451 of the Code.

• Payments made by certain foreign organizations.

• Payments of mortgage interest or student loan interest to you.

Exempt payees described above should file Substitute Form W-9 with the payor to avoid possible erroneous backup withholding. FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE “EXEMPT” ON THE FACE OF THE FORM, AND RETURN IT TO THE PAYOR. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE FORM. IF YOU ARE A NONRESIDENT ALIEN OR A FOREIGN ENTITY NOT SUBJECT TO BACKUP WITHHOLDING, FILE WITH PAYOR A COMPLETED INTERNAL REVENUE FORM W-8 (CERTIFICATE OF FOREIGN STATUS).

Certain payments other than interest, dividends, and patronage dividends, that are not subject to information reporting are also not subject to backup withholding. For details, see the regulations under Sections 6041, 6041(a), 6042, 6044, 6045, 6049, 6050A, and 6050N of the Code.

Privacy Act Notice—Section 6109 of the Code requires you to give correct taxpayer identification numbers to payors who must report the payments to the IRS. The IRS uses the numbers for identification purposes and to help verify the accuracy of your tax return. Payors must be given the numbers whether or not recipients are required to file a tax return. Payors must generally withhold 30% (29% after December 31, 2003) of taxable interest, dividend, and certain other payments to a payee who does not furnish a correct taxpayer identification number to a payor. Certain penalties may also apply.

Penalties

(1)    Penalty for Failure to Furnish Taxpayer Identification Number—If you fail to furnish your correct taxpayer identification number to a requester, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect.

(2)    Civil Penalty for False Information with Respect to Withholding—If you make a false statement with no reasonable basis that results in no imposition of backup withholding, you are subject to a penalty of $500.

(3)    Criminal Penalty for Falsifying Information—Willfully falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment.

FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE SERVICE.

16

EX-99.2

Exhibit 99.2

NOTICE OF GUARANTEED DELIVERY

FOR TENDER OF

6.05% SUBORDINATED NOTES DUE 2012

OF

SUSQUEHANNA BANCSHARES, INC.

PURSUANT TO THE PROSPECTUS DATED                     , 2003

THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON                     , 2003, UNLESS EXTENDED.

THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:

J.P. MORGAN TRUST COMPANY, NATIONAL ASSOCIATION

By Registered or Certified Mail:	By Overnight Courier:	By Hand:	By Facsimile:
J. P. Morgan Trust Company, National Association 2001 Bryan Street, 9th Floor Dallas, TX 75201 Attn:  Frank Ivins	J. P. Morgan Trust Company, National Association 2001 Bryan Street, 9th Floor Dallas, TX 75201 Attn:  Frank Ivins	J. P. Morgan Chase Bank New York Window 4 New York Plaza New York, NY 10004	(214) 468-6494 Attn:  Frank Ivins Confirm by Telephone: (214) 468-6464

This notice of guaranteed delivery, or one substantially equivalent to this form, must be used to accept the Exchange Offer (as defined below) if (1) certificates for Susquehanna Bancshares, Inc.’s 6.05% Subordinated Notes due 2012 (the “Outstanding Notes”) are not immediately available, (2) Outstanding Notes, the letter of transmittal and all other required documents cannot be delivered to the exchange agent prior to the Expiration Time (as defined in the Prospectus as defined below) or (3) the procedures for delivery by book-entry transfer cannot be completed prior to the Expiration Time. This notice of guaranteed delivery may be transmitted by facsimile or delivered by mail, hand or overnight courier to the exchange agent prior to the Expiration Time. See “The Exchange Offer—Procedures for Tendering” in the Prospectus.

TRANSMISSION OF THIS NOTICE OF GUARANTEED DELIVERY VIA FACSIMILE TO A NUMBER OTHER THAN AS SET FORTH ABOVE OR DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.

THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF AN “ELIGIBLE INSTITUTION” IS REQUIRED TO GUARANTEE A SIGNATURE ON A LETTER OF TRANSMITTAL PURSUANT TO THE INSTRUCTIONS THEREIN, SUCH SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX IN THE LETTER OF TRANSMITTAL.

Ladies and Gentlemen:

The undersigned hereby tenders to Susquehanna Bancshares, Inc., a Pennsylvania corporation, upon the terms and subject to the conditions set forth in the prospectus dated                     , 2003 (as it may be amended or supplemented from time to time, the “Prospectus”) and the related letter of transmittal (which together constitute the “Exchange Offer”), receipt of which is hereby acknowledged, the aggregate principal amount of Outstanding Notes set forth below pursuant to the guaranteed delivery procedures set forth in the Prospectus under the caption “The Exchange Offer—Procedures for Tendering—Guaranteed Delivery.”

Aggregate Principal Amount Tendered

Certificate Numbers (If available)

DTC Account Number

(If tendering by book-entry transfer)

Date

Signature

Name of Registered Holder

Telephone Number (Include area code)

Address (Include zip code)

2

GUARANTEE OF DELIVERY

(THIS SECTION MUST BE COMPLETED; NOT TO BE USED FOR SIGNATURE GUARANTEE)

The undersigned, a firm or other entity identified in Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended, as an “eligible guarantor institution,” which is a financial institution that is a participant in the Securities Transfer Agents Medallion Program, the New York Stock Exchange, Inc. Medallion Signature Program or the Stock Exchanges Medallion Program, hereby guarantees to deliver to the exchange agent, at its number or address set forth above, either the Outstanding Notes tendered hereby in proper form for transfer or confirmation of the book-entry transfer of such Outstanding Notes to the exchange agent’s account at The Depository Trust Company (“DTC”), pursuant to the procedures for book-entry transfer set forth in the Prospectus, in either case together with one or more properly completed and duly executed letters of transmittal (or facsimile thereof), or an agent’s message (as defined in the Prospectus), and any other required documents prior to 5:00 P.M., New York City time, on the third New York Stock Exchange, Inc. trading date after the Expiration Time.

The undersigned acknowledges that it must deliver the letters of transmittal, or an agent’s message, and the Outstanding Notes tendered hereby, or a book-entry confirmation, to the exchange agent within the time period set forth above and that failure to do so could result in financial loss to the undersigned.

Name of Firm

Telephone Number (Include area code)

Address (Include zip code)

Authorized Signature

Title

Date

DO NOT SEND OUTSTANDING NOTES WITH THIS NOTICE OF GUARANTEED DELIVERY. ACTUAL SURRENDER OF OUTSTANDING NOTES MUST BE MADE PURSUANT TO, AND BE ACCOMPANIED BY, A PROPERLY COMPLETED AND DULY EXECUTED LETTER OF TRANSMITTAL, OR AN AGENT’S MESSAGE, AND ANY OTHER REQUIRED DOCUMENTS.

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EX-99.3

Exhibit 99.3

SUSQUEHANNA BANCSHARES, INC.

OFFER TO EXCHANGE

ITS 6.05% SUBORDINATED NOTES DUE 2012

WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,

NOTES DUE 2012 AND ITS 6.05% SUBORDINATED NOTES DUE 2012

THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT

5:00 P.M., NEW YORK CITY TIME, ON                 , 2003, UNLESS EXTENDED.

, 2003

To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees:

We are offering, upon the terms and subject to the conditions set forth in the prospectus dated             , 2003 (the “Prospectus”) and the accompanying letter of transmittal enclosed herewith (which together constitute the “Exchange Offer”), to exchange up to $75,000,000 aggregate principal amount of our 6.05% Subordinated Notes due 2012 (the “Exchange Notes”), which have been registered under the Securities Act of 1933, as amended (the “Securities Act”), for a like principal amount of our outstanding 6.05% Subordinated Notes due 2012 (the “Outstanding Notes”). As set forth in the Prospectus, the terms of the Exchange Notes are identical in all material respects to the Outstanding Notes, except that the Exchange Notes have been registered under the Securities Act and therefore will not be subject to certain restrictions on their transfer and will not contain certain provisions providing for an increase in the interest rate thereon under the circumstances set forth in the registration rights agreement described in the Prospectus. Outstanding Notes may be tendered in a principal amount of $1,000 and integral multiples of $1,000.

The Exchange Offer is subject to certain conditions. See “The Exchange Offer—Conditions to the Exchange Offer” in the Prospectus.

Enclosed herewith for your information and forwarding to your clients are copies of the following documents:

1. the Prospectus;

2. the letter of transmittal for your use and for the information of your clients (facsimile copies of the letter of transmittal may be used to tender Outstanding Notes);

3. a form of letter which may be sent to your clients for whose accounts you hold Outstanding Notes registered in your name or in the name of your nominee, with space provided for obtaining such clients’ instructions with regard to the Exchange Offer; and

4. a notice of guaranteed delivery.

Your prompt action is requested. Please note the Exchange Offer will expire at 5:00 p.m., New York City time, on             , 2003, unless extended. Please furnish copies of the enclosed materials to those of your clients for whom you hold Outstanding Notes registered in your name or in the name of your nominee as quickly as possible.

In all cases, exchanges of Outstanding Notes pursuant to the Exchange Offer will be made only after timely receipt by the exchange agent (as defined in the Prospectus) of (1) certificates representing such Outstanding Notes, or a book-entry confirmation (as defined in the Prospectus), as the case may be, (2) the letter of transmittal (or facsimile thereof), properly completed and duly executed, or an agent’s message (as defined in the Prospectus), and (3) any other required documents.

Holders who wish to tender their Outstanding Notes and (1) whose Outstanding Notes are not immediately available or (2) who cannot deliver their Outstanding Notes, the letter of transmittal or an agent’s message and any other documents required by the letter of transmittal to the exchange agent prior to 5:00 P.M., New York City time, on             , 2003 must tender their Outstanding Notes according to the guaranteed delivery procedures set forth under the caption “The Exchange Offer—Procedures for Tendering—Guaranteed Delivery” in the Prospectus.

We are not making the Exchange Offer to, nor will we accept tenders from, or on behalf of, holders of Outstanding Notes residing in any jurisdiction in which the making of the Exchange Offer or the acceptance of tenders would not be in compliance with the laws of such jurisdiction.

We will not make any payments to brokers, dealers or other persons for soliciting acceptances of the Exchange Offer. We will, however, upon request, reimburse you for customary clerical and mailing expenses incurred by you in forwarding any of the enclosed materials to your clients. We will pay or cause to be paid any transfer taxes payable on the transfer of Outstanding Notes to us, except as otherwise provided in instruction 10 of the letter of transmittal.

Questions and requests for assistance with respect to the Exchange Offer or for copies of the Prospectus and letter of transmittal may be directed to the exchange agent at its numbers and address set forth in the Prospectus.

Very truly yours,

SUSQUEHANNA BANCSHARES, INC.

Nothing contained in this letter or in the enclosed documents shall constitute you or any other person our agent or the agent of any of our affiliates, or authorize you or any other person to make any statements or use any document on behalf of any of us in connection with the Exchange Offer other than the enclosed documents and the statements contained therein.

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EX-99.4

Exhibit 99.4

SUSQUEHANNA BANCSHARES, INC.

OFFER TO EXCHANGE

ITS 6.05% SUBORDINATED NOTES DUE 2012

WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,

AS AMENDED, FOR ANY AND ALL OF ITS OUTSTANDING

6.05% SUBORDINATED NOTES DUE 2012

THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT

5:00 P.M., NEW YORK CITY TIME, ON                     , 2003, UNLESS EXTENDED.

                    , 2003

To Our Clients:

Enclosed for your consideration is a prospectus dated                     , 2003 (the “Prospectus”) and the accompanying letter of transmittal (which together constitute the “Exchange Offer”) relating to the offer by Susquehanna Bancshares, Inc. to exchange up to $75,000,000 aggregate principal amount of its 6.05% Subordinated Notes due 2012 (the “Exchange Notes”) which have been registered under the Securities Act of 1933, as amended (the “Securities Act”), for a like principal amount of its outstanding 6.05% Subordinated Notes due 2012 (the “Outstanding Notes”). As set forth in the Prospectus, the terms of the Exchange Notes are identical in all material respects to the Outstanding Notes, except that the Exchange Notes have been registered under the Securities Act and therefore will not be subject to certain restrictions on their transfer and will not contain certain provisions providing for an increase in the interest rate thereon under the circumstances set forth in the Registration Rights Agreement described in the Prospectus. Outstanding Notes may be tendered in a principal amount of $1,000 and integral multiples of $1,000.

We are forwarding the enclosed material to you as the beneficial owner of Outstanding Notes held by us for your account or benefit but not registered in your name. Only we may tender Outstanding Notes in the Exchange Offer as the registered holder, if you so instruct us. Therefore, Susquehanna Bancshares, Inc. urges beneficial owners of Outstanding Notes registered in the name of a broker, dealer, commercial bank, trust company or other nominee to contact such holder promptly if they wish to exchange Outstanding Notes in the Exchange Offer.

Accordingly, we request instructions as to whether you wish us to exchange any or all Outstanding Notes held by us for your account or benefit pursuant to the terms and conditions set forth in the Prospectus and letter of transmittal. We urge you to read carefully the Prospectus and letter of transmittal before instructing us to exchange your Outstanding Notes.

You should forward instructions to us as promptly as possible in order to permit us to exchange Outstanding Notes on your behalf before the Exchange Offer expires at 5:00 P.M., New York City time, on                     , 2003, unless extended. A tender of Outstanding Notes may be withdrawn at any time prior to the expiration time, which means 5:00 P.M., New York City time, on                     , 2003 or the latest time to which the Exchange Offer is extended.

We call your attention to the following:

1.    The Exchange Offer is for the exchange of $1,000 principal amount of Exchange Notes for each $1,000 principal amount of Outstanding Notes. $75,000,000 aggregate principal amount of the Outstanding Notes was outstanding as of                     , 2002.

2.    The Exchange Offer is subject to certain conditions. See “The Exchange Offer—Conditions to the Exchange Offer” in the Prospectus.

3.    Susquehanna Bancshares, Inc. has agreed to pay certain of the expenses of the Exchange Offer. It will pay any transfer taxes incident to the transfer of Outstanding Notes from the tendering holder to Susquehanna Bancshares, Inc., except as provided in the Prospectus and the letter of transmittal. See [“The Exchange Offer—Fees and Expenses”] in the Prospectus and instruction—of the letter of transmittal.

Susquehanna Bancshares, Inc. is not making the Exchange Offer to, nor will it accept tenders from or on behalf of, holders of Outstanding Notes residing in any jurisdiction in which the making of the Exchange Offer or the acceptance of tenders would not be in compliance with the laws of such jurisdiction.

If you wish us to tender any or all of your Outstanding Notes held by us for your account or benefit, please so instruct us by completing, executing and returning to us the attached instruction form. The accompanying letter of transmittal is furnished to you for informational purposes only and may not be used by you to exchange Outstanding Notes held by us and registered in our name for your account or benefit.

[See instructions on following page]

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INSTRUCTIONS

The undersigned acknowledge(s) receipt of your letter and the material enclosed with and referred to in your letter relating to the Exchange Offer of Susquehanna Bancshares, Inc.

This will instruct you to tender for exchange the aggregate principal amount of Outstanding Notes indicated below (or, if no aggregate principal amount is indicated below, all Outstanding Notes) held by you for the account or benefit of the undersigned, pursuant to the terms and conditions set forth in the Prospectus and the letter of transmittal.

Aggregate principal amount of Outstanding Notes to be tendered for exchange:*

$                                         

* I (we) understand that if I (we) sign this instruction form without indicating an aggregate principal amount of Outstanding Notes in the space above, all Outstanding Notes held by you for my (our) account will be tendered for exchange.

Signature(s)

Name(s) (Please print)

Taxpayer Identification or

Social Security Number(s)

Capacity (full title), if signing in a

fiduciary or representative capacity

Telephone (Include area code)

Address (Include zip code)

Date

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