POGO PRODUCING CO, S-3, 1994-02-28

POGO PRODUCING CO
S-3, 1994-02-28
CRUDE PETROLEUM & NATURAL GAS

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<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 28, 1994
REGISTRATION NO. 33---------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM S-3

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

POGO PRODUCING COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 5 GREENWAY PLAZA, SUITE 2700
(STATE OR OTHER JURISDICTION OF HOUSTON, TEXAS 77046
INCORPORATION OR ORGANIZATION) (713) 297-5000
74-1659398
(I.R.S. EMPLOYER
IDENTIFICATION NO.)

(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

D. STEPHEN SLACK
SENIOR VICE PRESIDENT, CHIEF
FINANCIAL OFFICER AND TREASURER
POGO PRODUCING COMPANY
5 GREENWAY PLAZA, SUITE 2700
HOUSTON, TEXAS 77046
(713) 297-5000

(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER
INCLUDING AREA CODE, OF AGENT FOR SERVICE)

WITH COPIES TO:

STEPHEN A. MASSAD T. MARK KELLY
BAKER & BOTTS, L.L.P. VINSON & ELKINS L.L.P.
3000 ONE SHELL PLAZA 2500 FIRST CITY TOWER
HOUSTON, TEXAS 77002 1001 FANNIN STREET
(713) 229-1234 HOUSTON, TEXAS 77002-6760
(713) 758-2222

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.

If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. / /
<TABLE>
CALCULATION OF REGISTRATION FEE

<CAPTION>
PROPOSED
PROPOSED MAXIMUM
TITLE OF EACH CLASS AMOUNT MAXIMUM AGGREGATE AMOUNT OF
OF SECURITIES TO BE OFFERING PRICE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED(1) PER NOTE(2) PRICE(2) FEE
<S> <C> <C> <C> <C>
% Convertible Subordinated
Notes due 2004(3)--------------- $86,250,000 100% $86,250,000 $29,741

(1) Includes $11,250,000 aggregate principal amount of Notes subject to an
option granted to the Underwriters to cover over-allotments, if any.

(2) Estimated solely for the purpose of calculating the registration fee.

(3) There is also registered hereunder such indeterminate number of shares of
common stock, par value $1 per share, of the Registrant as may be issuable
upon conversion of the ___% Convertible Subordinated Notes due 2004.
</TABLE>

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 OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE>
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED FEBRUARY 28, 1994

PROSPECTUS
$75,000,000
POGO PRODUCING COMPANY

% CONVERTIBLE SUBORDINATED NOTES DUE 2004

The % Convertible Subordinated Notes due 2004 (the 'Notes') are
convertible at any time prior to maturity, unless previously redeemed, into
shares of common stock, par value $1 per share (the 'Common Stock') of Pogo
Producing Company (the 'Company'), at a conversion price of $ per share,
subject to adjustment upon the occurrence of certain events. On February 25,
1994, the closing sale price of the Common Stock on the New York Stock Exchange
was $18 1/2 per share. The Common Stock is traded under the symbol 'PPP.'

Interest on the Notes is payable semi-annually on March 15 and September 15
of each year, commencing September 15, 1994. The Notes will mature on March 15,
2004 unless earlier redeemed or converted. The Notes will be redeemable at the
option of the Company, in whole or in part, at any time on or after March 15,
1998, at the redemption prices set forth herein plus accrued and unpaid interest
to the date of redemption. No sinking fund is provided for the Notes. The Notes
are redeemable at the option of the holder, upon the occurrence of a Repurchase
Event (as defined herein), at 100% of the principal amount thereof, plus accrued
interest. See 'Description of the Notes.'

The Notes will be unsecured obligations of the Company, will be subordinated
in right of payment to all existing and future Senior Indebtedness (as defined
herein) of the Company, and will be effectively subordinated to all indebtedness
and liabilities of subsidiaries of the Company. The Indenture with respect to
the Notes will not restrict the incurrence of any other indebtedness or
liabilities by the Company or its subsidiaries. See 'Description of the Notes.'

SEE 'INVESTMENT CONSIDERATIONS' FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED IN EVALUATING AN INVESTMENT IN THE NOTES.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC (1) DISCOUNT(2) COMPANY(1)(3)
<S> <C> <C> <C>
Per Note---------------------------------- % % %
Total(4)---------------------------------- $ $ $

(1) Plus accrued interest, if any, from , 1994.

(2) The Company has agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See 'Underwriting.'

(3) Before deducting expenses payable by the Company estimated at $ .

(4) The Company has granted the Underwriters a 30-day option to purchase up to
an additional $11,250,000 principal amount of Notes on the same terms set
forth above to cover over-allotments, if any. If the Underwriters exercise
such option in full, the Price to Public, Underwriting Discount and Proceeds
to Company would be $ , $ and $ ,
respectively. See 'Underwriting.'
</TABLE>
The Notes are being offered by the several Underwriters, subject to prior
sale, when, as and if issued to and accepted by the Underwriters, and certain
other conditions. The Underwriters reserve the right to withdraw, cancel or
modify such offer and to reject orders in whole or in part. It is expected that
delivery of the Notes will be made in New York, New York, on or about March ,
1994.

MERRILL LYNCH & CO.
GOLDMAN, SACHS & CO.
PAINEWEBBER INCORPORATED

The date of this Prospectus is March , 1994.
********************************************************************************
* INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A *
* REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE *
* SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY *
* OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT *
* BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR *
* THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE *
* SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE *
* UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF *
* ANY SUCH STATE. *
********************************************************************************
<PAGE>
AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the 'Exchange Act'), and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the 'Commission'). Such reports, proxy
statements and other information filed by the Company with the Commission may be
inspected and copied at the Public Reference Section of the Commission at Room
1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549, and at
the following Regional Offices of the Commission: Chicago Regional Office,
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60601-2511; and New York Regional Office, Seven World Trade Center, New
York, New York 10048. Copies of such material may also be obtained from the
Public Reference Section of the Commission at its principal office at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. The Company's registration statements, reports, proxy statements and
other information may also be inspected at the offices of the New York Stock
Exchange, 20 Broad Street, New York, New York 10005 and the Pacific Stock
Exchange, 301 Pine Street, San Francisco, California 94104.

This Prospectus, which constitutes a part of a registration statement on
Form S-3 (the 'Registration Statement') filed by the Company with the Commission
under the Securities Act of 1933, as amended (the 'Securities Act'), omits
certain of the information set forth in the Registration Statement. Reference is
hereby made to the Registration Statement and to the exhibits thereto for
further information with respect to the Company and the securities offered
hereby. Statements contained herein concerning the provisions of such documents
are necessarily summaries of such documents, and each such statement is
qualified in its entirety by reference to the copy of the applicable document
filed with the Commission. Copies of the Registration Statement and the exhibits
thereto are on file at the offices of the Commission and may be obtained upon
payment of the fee prescribed by the Commission, or may be examined without
charge at the public reference facilities of the Commission described above.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The Company's Annual Report on Form 10-K for the year ended December 31,
1993 (the 'Annual Report') is incorporated herein by reference.

All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Notes hereunder (the 'Offering') shall be
deemed to be incorporated by reference in this Prospectus and to be part hereof
from the date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference shall be deemed to be
modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed incorporated
document or in any accompanying prospectus supplement modifies or supersedes
such statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus.

Copies of all documents incorporated herein by reference other than exhibits
to such documents (unless such exhibits are specifically incorporated by
reference) will be provided without charge to each person who receives a copy of
this Prospectus upon written or oral request to Gerald A. Morton, Associate
General Counsel, Pogo Producing Company, P.O. Box 2504, Houston, Texas
77252-2504 (telephone: (713) 297-5017).

IN CONNECTION WITH THE OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES OFFERED
HEREBY OR THE COMMON STOCK, OR EACH OF THEM, AT A LEVEL ABOVE THAT WHICH MIGHT
OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE
NEW YORK STOCK EXCHANGE, THE PACIFIC STOCK EXCHANGE, IN THE OVER-THE-COUNTER
MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME.

2
<PAGE>
PROSPECTUS SUMMARY

THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY, AND SHOULD BE READ IN
CONJUNCTION WITH, THE MORE DETAILED INFORMATION AND FINANCIAL STATEMENTS
APPEARING ELSEWHERE OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS. EXCEPT AS
OTHERWISE SPECIFIED, THE INFORMATION IN THIS PROSPECTUS ASSUMES NO EXERCISE OF
THE UNDERWRITERS' OVER-ALLOTMENT OPTION. SEE 'GLOSSARY OF OIL AND GAS TERMS' FOR
DEFINITIONS OF CERTAIN TERMS USED IN THIS PROSPECTUS. INVESTORS SHOULD CAREFULLY
CONSIDER THE INFORMATION SET FORTH UNDER THE CAPTION 'INVESTMENT
CONSIDERATIONS.'

THE COMPANY

Pogo Producing Company is an independent oil and gas exploration and
production company, based in Houston, Texas, with an extensive Gulf of Mexico
reserve and acreage position. The Company is also active in the Permian Basin of
New Mexico, and has a 31.7% working interest in a 2.6 million acre concession
license in the Gulf of Thailand. At December 31, 1993, the Company had interests
in 597 gross oil and gas wells. At January 1, 1994, the Company's proved
reserves, as estimated by Ryder Scott Company Petroleum Engineers ('Ryder
Scott'), totaled 28.3 MMBbls of oil, condensate and natural gas liquids and
232.9 Bcf of natural gas. See 'Business and Properties -- Reserves.'

The Company's business strategy is to maximize profitability and shareholder
value by (i) steadily increasing hydrocarbon production levels, leading to
increased revenues, cash flow, and earnings, (ii) expanding its hydrocarbon
reserves base, (iii) maintaining appropriate levels of debt and interest
expense, and controlling overhead and operating costs, and (iv) expanding
exploration and production activities into new and promising geographic areas
consistent with Company expertise.

To implement its business strategy, the Company currently is focusing
substantial attention and resources in the following geographic areas:

THE GULF OF MEXICO. Approximately 68% of the Company's proved oil and gas
reserves are located in the Gulf of Mexico. Most of these proved reserves are
concentrated in five significant producing areas, including eight fields in the
Eugene Island area located off the Louisiana coast. This concentration allows
the Company to closely manage costs and to develop detailed geologic and other
information relating to its properties. The Company believes that the Gulf of
Mexico will continue to provide the Company with substantial opportunities to
expand its hydrocarbon reserves and to increase its deliverability. The Company
is utilizing its extensive inventory of 3-D seismic data (covering 24 of the
Company's lease blocks and 81 other lease blocks in the Gulf of Mexico) and
conventional 2-D seismic data (approximately one-half million miles of which are
located in the Gulf of Mexico) to locate low risk exploration and development
projects. In addition to conventional vertical and deviated drilling, the
Company will also utilize horizontal drilling (the Company participated in seven
horizontal wells in 1993 alone) to accelerate development of its offshore
projects. To expand its reserves base and increase its deliverability, the
Company will rely on its 24 years of experience in the Gulf of Mexico, where it
holds an extensive acreage position. The Company currently holds interests in 76
offshore blocks, and will continue to evaluate and acquire additional acreage
with significant exploration and development potential. The Company, which
historically has not operated a substantial percentage of its offshore
properties, has assumed the operation of certain of its properties where the
Company believes that its technical expertise and ability to control overhead
and operating costs will enhance its economic interests. In its role as
operator, the Company recently used a 3-D seismic survey to pinpoint the
location of potentially recoverable shallow natural gas reserves on a portion of
its Eugene Island Block 295 field, and horizontal drilling technology, including
five horizontal wells, to optimize the exploitation of the field's shallow
natural gas reserves.
3

<PAGE>

NEW MEXICO. The Company continues to enjoy substantial success in its
efforts to increase liquids production from its properties in southeastern New
Mexico. The Company is currently one of the most active companies
drilling for oil and gas in the southeastern New Mexico portion
of the Permian Basin, where, from late 1989 through the end of
1993, the Company and its partners have drilled and completed as productive 151
consecutive wells, including 58 wells during 1993 alone. The Company has
achieved rapid cost recovery with respect to its New Mexico wells drilled to
date because of relatively low capital costs and high initial rates of
production. Due to its historical drilling success, its current undeveloped
acreage position and its commitment to additional drilling, the Company expects
its New Mexico operations to continue to be a source of significant reserves and
of liquids production. The Company's primary drilling objective in southeastern
New Mexico is the Brushy Canyon (Delaware) formation, which produces oil at
depths of approximately 6,000 to 9,000 feet. The Company's net revenue interest
portion of daily liquid hydrocarbon production in New Mexico averaged
approximately 3,700 Bbls during 1993, compared to approximately 2,050 Bbls per
day during 1992, an increase of approximately 80%.

THE GULF OF THAILAND. The Company has conducted international exploration
activities since the late 1970's in numerous oil and gas provinces in various
parts of the world. The Company pursues a strategy of evaluating potentially
high return prospects in areas of the world with a stable political and
financial climate, such as certain European and ASEAN ('Association of Southeast
Asian Nations') countries. Consistent with this strategy, in August 1991, the
Company and its joint venture partners were awarded a license to explore for oil
and gas on a 2.6 million acre concession, Block B8/32, in the Gulf of Thailand.
The concession is located in a basin on trend with several oil and gas fields
operated by Unocal Thailand Ltd. Through November 1993, Unocal Thailand Ltd. has
reported cumulative production from more than 700 wells in these fields totaling
approximately 2 trillion cubic feet of natural gas and 71 MMBbls of oil and
condensate. Following an initial evaluation of the Thailand concession area, the
Company and its joint venture partners drilled five exploratory wells on three
separately identified seismic structures. The first well drilled, the Tantawan
No. 1, successfully tested a large, complexly faulted, anticlinal structure with
production tests from five intervals resulting in calculated cumulative flow
rates of 6,260 Bbls of oil and condensate and 25,750 Mcf of natural gas per day.
During 1993, the Company and its joint venture partners shot, processed and
evaluated approximately 9,000 kilometers of new 3-D seismic data over and around
the Tantawan No. 1 well. In late 1993, the Company drilled the Tantawan No. 2
and the Tantawan No. 3 exploratory wells on the Tantawan structure. The Tantawan
No. 2 well successfully delineated a previously untested fault block to the east
of the Tantawan No. 1 well with production tests from six intervals resulting in
calculated cumulative flow rates of 70,300 Mcf of natural gas and 1,720 Bbls of
condensate per day. The Tantawan No. 3 well successfully delineated a third
untested fault block on the Tantawan structure located approximately two miles
north of the Tantawan No. 1 and No. 2 wells. Production tests from this third
Tantawan well were reported in January 1994, with production tests from five
intervals resulting in calculated cumulative flow rates of 40,660 Mcf of natural
gas and 8,684 Bbls of oil and condensate per day. As a result of its successful
exploration drilling program, the Company's Thailand concession now accounts for
approximately 14% of the Company's total estimated net proved reserves of
natural gas, approximately 19% of the Company's total estimated net proved
reserves of oil, condensate and natural gas liquids and approximately 16% of the
Company's total net proved oil and gas equivalent reserves. During 1994,
additional delineation wells on the Tantawan structure are planned. Based upon
the results of such drilling, the Company and its partners will agree upon the
type of development plan needed to commence production in this area. In
addition, in late 1993, the Company and its joint venture partners began
shooting and processing additional 3-D seismic data on a different portion of
Block B8/32. Following evaluation of this seismic data, additional exploratory
wells are expected to be drilled by the
4
<PAGE>

Company and its joint venture partners on as yet untested seismic structures
identified on Block B8/32.

While maintaining an active exploration and development program, the Company
also continues to focus on its strategy of maintaining appropriate levels of
debt and interest expense. The Company has reduced its total debt and production
payment obligations from $472,400,000 as of January 1, 1988, to $134,539,000 as
of December 31, 1993, a decrease of approximately 72%.

The reduction of total debt and production payment obligations has allowed
the Company to devote increased amounts of its cash flow toward exploration and
development of its premium property base. The Company's drilling successes have
resulted in increased equivalent oil and gas production during 1992 and 1993, as
compared to the prior five years, while simultaneously expanding its reserves
base. In 1992 and 1993, the Company replaced 143% and 204%, respectively, of its
total production of proved hydrocarbon reserves. The Company believes that the
increased liquidity and increased average maturity of its outstanding
indebtedness resulting from the Offering will provide the Company with
additional financial flexibility to pursue its business strategy and maximize
shareholder value. For 1994, the Company's Board of Directors has authorized
capital and exploration expenditures of $75,000,000, approximately equal to the
Company's capital and exploration expenditures of approximately $74,600,000 in
1993. See 'The Company,' 'Management's Discussion and Analysis of Financial
Condition and Results of Operations' and 'Business and Properties.'
<TABLE>
THE OFFERING

<S> <C>
Notes Offered------------------------ $75,000,000 principal amount of % Convertible
Subordinated Notes due 2004 (excluding $11,250,000 aggregate
principal amount of Notes subject to the Underwriters'
over-allotment option).

Interest Payment Dates--------------- March 15 and September 15 of each year, commencing September
15, 1994.

Conversion Rights-------------------- Convertible into Common Stock of the Company at the option
of the holder at any time before maturity (unless earlier
redeemed) at $ per share (equivalent to a conversion
rate of approximately shares per $1,000 principal
amount of Notes), subject to adjustment upon the occurrence
of certain events. See 'Description of the
Notes -- Conversion Rights.'

Ranking------------------------------ The Notes will be unsecured and subordinated to all existing
and future Senior Indebtedness of the Company and
effectively subordinated to all indebtedness and other
liabilities of subsidiaries of the Company. The Indenture
relating to the Notes contains no limitation on the
incurrence of indebtedness or other liabilities by the
Company or its subsidiaries. The Notes will rank PARI PASSU
with the Company's one other issue of convertible
subordinated indebtedness that will remain outstanding after
application of the proceeds of the Offering. See 'Use of
Proceeds,' 'Capitalization' and 'Description of the
Notes -- Subordination.'

5
<PAGE>
Optional Redemption------------------ The Notes are redeemable at the option of the Company, in
whole or in part, at any time on or after March 15, 1998, at
the redemption prices set forth herein plus accrued interest
to the date of redemption. Accrued and unpaid interest to
the redemption date shall be payable with respect to Notes
that are converted after a notice of redemption has been
mailed and prior to the redemption date. See 'Description of
the Notes -- Redemption at Option of Company.'

Repurchase at Holder's
Option----------------------------- Upon the occurrence of a Repurchase Event, each holder of
Notes shall have the right, at the holder's option, to
require the Company to repurchase such Notes at 100% of
their principal amount, plus accrued interest. The term
Repurchase Event is limited to certain transactions
involving a Change of Control (as defined herein) in which
(i) the market price of the Common Stock at the time of, and
the aggregate fair market value of the consideration
received in, such transaction is less than 105% of the
conversion price and (ii) the Notes become convertible into
securities other than publicly traded common stock. See
'Description of the Notes -- Certain Rights to Require
Repurchase of Notes.'

Use of Proceeds---------------------- The net proceeds from the Offering will be used to repay
certain indebtedness of the Company. See 'Use of Proceeds.'

Absence of Public Market------------- The Notes are a new issue for which there is currently no
public market. The Company does not intend to apply for
listing of the Notes on a securities exchange or for
quotation on the NASDAQ National Market. If an active public
market does not develop, the market price and liquidity of
the Notes may be adversely affected. See 'Investment
Considerations -- Absence of Public Market' and
'Underwriting.'
</TABLE>
For additional information concerning the Notes, see 'Description of the Notes.'

<PAGE>
SUMMARY FINANCIAL AND OPERATING DATA

The Summary Financial and Operating Data presented below for, and as of the
end of, each of the years in the five-year period ended December 31, 1993, are
derived from the consolidated financial statements of the Company and its
subsidiaries, which have been audited by independent public accountants. The
information presented under the captions 'Production (Sales) Data,' 'Selected
Ratios' and 'Reserve Data' is unaudited. This data should be read in conjunction
with the consolidated financial statements and related notes thereto and
'Management's Discussion and Analysis of Financial Condition and Results of
Operations' included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1993 1992 1991 1990 1989
(EXPRESSED IN THOUSANDS, EXCEPT PER SHARE AND UNIT
AMOUNTS, EXCEPT AS NOTED)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Total revenues----------------------- $ 139,554 $ 140,830 $ 124,469 $ 154,820(a) $ 120,947
Operating income--------------------- 50,533 47,141 37,239 72,940(a) 37,375
Net interest expense----------------- 10,505 18,645 24,309 30,700 36,352
Net income--------------------------- 25,061 18,495 11,658 44,036(a) 2,638
Primary and fully diluted earnings
per share-------------------------- $ 0.76 $ 0.66 $ 0.42 $ 1.69(a) $ 0.11
OTHER FINANCIAL DATA:
EBITDA(b)---------------------------- $ 96,381 $ 99,339 $ 81,637 $ 116,760(a) $ 87,384
Capital and exploration expenditures
(excluding capitalized
interest)-------------------------- 74,600 41,300 53,100 39,500 25,800

<CAPTION>
YEAR ENDED DECEMBER 31,
1993 1992 1991 1990 1989
(EXPRESSED IN THOUSANDS, EXCEPT PER SHARE
AND UNIT AMOUNTS)
<S> <C> <C> <C> <C> <C>
SELECTED RATIOS:
EBITDA/Net interest expense---------- 9.2 5.3 3.4 3.8 2.4
Ratio of earnings to fixed
charges(c)------------------------- 4.5 2.5 1.6 2.3 1.0
Long-term obligations/Total proved
reserves (BOE)(d)------------------ $ 1.95 $ 2.52 $ 4.22 $ 4.70 $ 5.49
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1993
ACTUAL AS ADJUSTED(E)
(EXPRESSED IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Total assets--------------------- $ 239,774 $ 242,302
Long-term obligations, including
current portion---------------- 134,539 137,539
Shareholders' equity------------- 33,803 33,496

(a) In late 1990, the Company entered into a settlement agreement with the
Internal Revenue Service for a refund of $8,607,000 in taxes for taxable
years 1976 through 1985 which, together with accrued interest of
$20,395,000, resulted in a refund receivable of $29,002,000 through December
31, 1990. The refund and interest income, together with the reversal of
previously accrued interest expense of $2,104,000, contributed $22,499,000
to total revenues and $23,456,000 or $0.90 per share to earnings in 1990.
The refund along with additional accrued interest was received by the
Company on May 31, 1991.

(b) EBITDA represents income from continuing operations before provision for
income taxes, interest expense, interest income, interest capitalized,
depreciation and amortization, and dry hole and impairment costs. EBITDA is
presented as a measure of the Company's debt service ability, and not as an
alternative to (i) operating income (as determined in accordance with
generally accepted accounting principles) as an indicator of the Company's
operating performance, or (ii) cash flows from operating activities (as
determined in accordance with generally accepted accounting principles) as a
measure of liquidity.

(c) Income before taxes and extraordinary item plus fixed charges (net of
capitalized interest) divided by fixed charges. Fixed charges are defined as
interest expense plus the portion of rental expense representing interest.

(d) Long-term obligations include long-term debt (excluding current maturities)
and the non-current portion of the Eugene Island Block 330 production
payment obligation until such obligation was satisfied in 1993. Total proved
reserves are expressed on an energy equivalent basis. BOE means Bbls of oil
on an energy equivalent basis. See 'Glossary of Oil and Gas Terms.'

(e) Adjusted to give effect to the Offering and the use of proceeds therefrom.
</TABLE>
7

<PAGE>
<TABLE>
SUMMARY FINANCIAL AND OPERATING DATA -- (CONTINUED)

<CAPTION>
YEAR ENDED DECEMBER 31,
1993 1992 1991 1990 1989
(EXPRESSED IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)
<S> <C> <C> <C> <C> <C>
PRODUCTION (SALES) DATA:
Net daily average and weighted
average price:
Natural gas:
Mcf per day-------------------- 91,700 105,200 104,200 107,300 111,300
Price per Mcf------------------ $ 1.98 $ 1.75 $ 1.66 $ 1.89 $ 1.88
Crude oil-condensate:
Bbls per day------------------- 9,851 8,699 7,108 6,209 6,013
Price per Bbl------------------ $ 17.81 $ 20.17 $ 20.98 $ 23.84 $ 18.86
Natural gas liquids:
Bbls per day------------------- 1,678 1,181 663 697 948
Price per Bbl------------------ $ 11.90 $ 13.50 $ 14.21 $ 13.75 $ 10.16
RESERVE DATA:
Estimated proved reserves
Crude oil, condensate and natural
gas liquids (MBbls)------------ 28,268 22,556 18,818 19,090 17,658
Natural gas (MMcf)--------------- 232,866 207,068 202,735 217,500 234,112
Natural gas equivalent
(MMcfe)(f)--------------------- 402,474 342,404 315,643 332,040 340,060
Estimated future net revenues
before income taxes, discounted
at 10%------------------------- $ 403,840 $ 405,101 $ 349,754 $ 525,173 $ 441,917

(f) MMcfe means MMcf on an energy equivalent basis.
</TABLE>
8
<PAGE>
INVESTMENT CONSIDERATIONS

Prospective purchasers of the Notes offered hereby should carefully consider
the following factors, as well as the information contained elsewhere in this
Prospectus, before purchasing the Notes.

VOLATILITY OF OIL AND GAS MARKETS

The Company's profitability and cash flow are highly dependent upon the
prices of oil and natural gas, which historically have been seasonal, cyclical
and volatile. In general, prices of oil and gas are dependent upon numerous
factors beyond the control of the Company, including various weather, economic,
political and regulatory conditions. In the past, when natural gas prices in the
United States were lower than they are currently, the Company at times elected
to curtail certain quantities of its production capacity. Should natural gas
prices fall in the future, the Company may again elect to curtail certain
quantities of its natural gas production capacity. Any significant decline in
oil or gas prices could have a material adverse effect on the Company's
operations and financial condition and could, under certain circumstances,
result in a reduction in funds available under the Credit Agreement (as defined
herein) and the Company's ability to meet its debt service obligations. Because
it is impossible to predict future oil and gas price movements with any
certainty, the Company from time to time enters into contracts on a portion of
its production to hedge against the volatility in oil and gas prices. Such
hedging transactions historically have not exceeded 50% of the Company's total
oil and gas production on an energy equivalent basis for any given period. While
intended to limit the negative effect of price declines, such transactions could
effectively limit the Company's participation in price increases for the covered
period, which price increases could be significant. See ' -- Subordination of
Notes; Leverage and Debt Service' and 'Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources.'

ESTIMATES OF RESERVES AND FUTURE NET REVENUES

There are numerous uncertainties inherent in estimating the quantity of
proved oil and gas reserves and in projecting the future rates of production and
timing of development expenditures. Engineering of oil and gas reserves is a
subjective process of estimating underground accumulations of oil and gas that
cannot be measured precisely, and estimates of other engineers might differ
materially from those prepared by Ryder Scott, the independent engineering firm
retained by the Company. The accuracy of any reserve estimate is a function of
the quality of available data and of engineering and geological interpretation
and judgment. Results of drilling, testing and production subsequent to the date
of the estimates may justify revisions of such estimates. Accordingly, reserve
estimates are generally different from the quantities of oil and gas that are
ultimately recovered. In addition, estimates of the Company's future net
revenues from proved reserves and the present value thereof are based on certain
assumptions regarding future oil and gas prices, production levels and operating
and development costs that may not prove to be correct. Any significant variance
in these assumptions could materially affect the estimated quantity of reserves
and future net revenues therefrom set forth in this Prospectus. See 'Business
and Properties -- Reserves.'

OPERATING AND UNINSURED RISKS

The Company's operations are subject to risks inherent in the exploration
for and production of oil and natural gas, such as blowouts, cratering,
explosions, uncontrollable flows of oil, natural gas or well fluids, fires,
pollution and other environmental risks. Offshore oil and gas operations are
subject to the additional hazards of marine operations, such as capsizing,
collision and adverse weather and sea conditions. These hazards could result in
substantial losses to the Company due to injury or loss of life, severe damage
to and destruction of property and equipment, pollution and other environmental
damage and suspension of operations. The Company carries insurance which it
believes is in
9

<PAGE>
accordance with customary industry practices, but is not fully insured against
all risks incident to its business.

Drilling activities are subject to numerous risks, including the risk that
no commercially productive hydrocarbon reserves will be encountered. The cost of
drilling, completing and operating wells is often uncertain. The Company's
drilling operations may be curtailed, delayed or canceled as a result of
numerous factors, including weather conditions, compliance with governmental
requirements and shortages or delays in the delivery of equipment. The
availability of a ready market for the Company's natural gas production depends
on a number of factors, including the demand for and supply of natural gas, the
proximity of natural gas reserves to pipelines, the capacity of such pipelines
and government regulations.

SUBORDINATION OF NOTES; LEVERAGE AND DEBT SERVICE

The Notes will be subordinated obligations of the Company and, as such, will
be subordinated to all of the Company's existing and future Senior Indebtedness.
After giving effect to the Offering and the application of proceeds therefrom,
approximately $19,000,000 principal amount of Senior Indebtedness will be
outstanding. The Company may incur additional Senior Indebtedness from time to
time in the future under the Credit Agreement or otherwise, and the Indenture
relating to the Notes will not restrict the incurrence of any other indebtedness
or liabilities by the Company or its subsidiaries. Upon any distribution of
assets, liquidation, dissolution, reorganization or any similar proceeding by or
relating to the Company, the holders of Senior Indebtedness of the Company would
be entitled to receive payment in full before the holders of the Notes would be
entitled to receive any payment. The terms and conditions of the subordination
provisions pertinent to the Notes are described in more detail in 'Description
of the Notes -- Subordination.'

Further, the Notes will be effectively subordinated to claims of holders of
any preferred stock and claims of creditors (other than the Company) of the
Company's subsidiaries, including trade creditors, secured creditors, taxing
authorities, creditors holding guarantees, and tort claimants. In the event of a
liquidation, reorganization, or similar proceeding relating to a subsidiary,
these persons generally would have priority as to the assets of such subsidiary
over the claims and equity interest of the Company and, thereby indirectly,
holders of the Company's indebtedness, including the Notes. As of December 31,
1993, there were no material outstanding liabilities of subsidiaries of the
Company, but such liabilities may be incurred in the future.

On a pro forma basis after giving effect to the Offering, as of December 31,
1993, the Company's long-term debt (including the current portion) would have
been $137,539,000 and shareholders' equity would have been $33,496,000, and thus
the Company may continue to be considered highly leveraged. See
'Capitalization.' The Company believes that its cash flow from operations,
together with the proceeds from the Offering, the funds available under the
Credit Agreement and its other sources of liquidity, will be adequate to meet
its anticipated requirements for working capital, capital expenditures, interest
payments and scheduled principal payments. See 'Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources.' However, the Company's ability to meet its debt service
obligations will be dependent upon its future performance, which, in turn, will
be subject to general economic conditions and to financial, business and other
factors affecting the operations of the Company, many of which are beyond its
control. Upon the occurrence of a Repurchase Event, the Company may be required,
subject to certain conditions, to purchase some or all of the outstanding Notes
at a price equal to 100% of the principal amount thereof, plus accrued interest.
There can be no assurance that the Company would have sufficient financial
resources at the time of such required purchase to enable it to purchase such
Notes. See 'Description of the Notes -- Certain Rights to Require Repurchase of
Notes.'

GOVERNMENT REGULATION AND ENVIRONMENTAL RISKS

The Company's business is subject to certain laws and regulations relating
to taxation, exploration for and development and production of oil and gas, and
environmental and safety matters in
10

<PAGE>
both the United States and the foreign countries in which the Company or any of
its subsidiaries operates or owns property. Various laws and regulations often
require permits for drilling wells and also cover spacing of wells, the
prevention of waste of oil and gas, including maintenance of certain gas/oil
ratios, rates of production and other matters. The effect of these statutes and
regulations, as well as other regulations that could be promulgated by the
jurisdictions in which the Company has production, could be to limit allowable
production from the Company's properties and thereby to limit its revenues.

The discharge of oil, natural gas or other pollutants into the air, soil or
water may give rise to liabilities to the government and third parties and may
require the Company to incur costs to remedy the discharge. Oil or natural gas
may be discharged in many ways, including from a well or drilling equipment at a
drill site, leakage from storage tanks, pipelines or other gathering and
transportation facilities and discharges resulting from damage to oil or natural
gas wells related to accidents during normal operations, as well as blowouts,
cratering and explosions. Discharged oil and gas may migrate through soil to
water supplies or adjoining properties, giving rise to additional liabilities. A
variety of laws and regulations govern the environmental aspects of oil and gas
production, transportation and processing and may, in addition to other laws,
impose liability in the event of discharges (whether or not accidental), for
failure to notify the proper authorities of a discharge and for
other failures to comply with those laws. For example, the Oil
Pollution Act of 1990 (the 'OPA') imposes a variety of
regulations related to the prevention of oil spills and liability
for damages resulting from such spills in United States waters. On August 25,
1993, the Department of the Interior's Mineral Management Service (the 'MMS')
published an advance notice of intention to adopt a rule under OPA requiring
operators such as the Company to establish $150,000,000 in financial
responsibility. The Company cannot predict the final form of the financial
responsibility rule that will be adopted by the MMS, but such rule has the
potential to result in the imposition of substantial additional annual costs on
the Company or otherwise materially adversely affect the Company. Environmental
laws may also affect the costs of the Company's acquisitions of oil and gas
properties. The Company does not believe that its environmental risks are
materially different from those of comparable companies in the oil and gas
industry. Nevertheless, no assurance can be given that environmental laws will
not, in the future, result in a curtailment of production or a material increase
in the costs of production, development or exploration or otherwise adversely
affect the Company's operations and financial condition. Pollution and similar
environmental risks generally are not fully insurable.

RISKS OF FOREIGN OPERATIONS

Ownership of property interests and production operations in Thailand and
other areas outside the United States are subject to the various risks inherent
in foreign operations. These risks include, among others, currency restrictions
and exchange rate fluctuations, loss of revenue, property and equipment as a
result of hazards such as expropriation, nationalization, war, insurrection and
other political risks, risks of increases in taxes and governmental royalties,
and renegotiation of contracts with governmental entities, as well as changes in
laws and policies governing operations of foreign-based companies.

ABSENCE OF PUBLIC MARKET

The Notes are a new issue for which there is currently no public market. The
Company does not intend to apply for listing of the Notes on any securities
exchange or for quotation on NASDAQ. The Company has been advised by the
Underwriters that, following the completion of the Offering, each of the
Underwriters presently intends to make a market in the Notes, although the
Underwriters are under no obligation to do so and may discontinue any market
making at any time without notice. No assurance can be given regarding the
liquidity of the trading market for the Notes or that an active trading market
for the Notes will develop. If an active public market does not develop, the
market price and liquidity of the Notes may be adversely affected.
See "Underwriting."

<PAGE>
THE COMPANY

GENERAL

The Company is an independent oil and gas exploration and production
company, based in Houston, Texas, with an extensive Gulf of Mexico reserve and
acreage position. The Company is also active in the Permian Basin of New Mexico,
and has a 31.7% working interest in a 2.6 million acre concession license in the
Gulf of Thailand. At December 31, 1993, the Company had interests in 597 gross
oil and gas wells. At January 1, 1994, the Company's proved reserves, as
estimated by Ryder Scott, totaled 28.3 MMBbls of oil, condensate and natural gas
liquids and 232.9 Bcf of natural gas. See 'Business and Properties -- Reserves.'

BUSINESS STRATEGY

To implement its business strategy, the Company currently is focusing
substantial attention and resources in the following geographic areas:

<PAGE>
significant reserves and of liquids production. The Company's primary drilling
objective in southeastern New Mexico is the Brushy Canyon (Delaware) formation,
which produces oil at depths of approximately 6,000 to 9,000 feet. The Company's
net revenue interest portion of daily liquid hydrocarbon production in New
Mexico averaged approximately 3,700 Bbls during 1993, compared to approximately
2,050 Bbls per day during 1992, an increase of approximately 80%.

THE GULF OF THAILAND. The Company has conducted international exploration
activities since the late 1970's in numerous oil and gas provinces in various
parts of the world. The Company pursues a strategy of evaluating potentially
high return prospects in areas of the world with a stable political and
financial climate, such as certain European and ASEAN countries. Consistent with
this strategy, in August 1991, the Company and its joint venture partners were
awarded a license to explore for oil and gas on a 2.6 million acre concession,
Block B8/32, in the Gulf of Thailand. The concession is located in a basin on
trend with several oil and gas fields operated by Unocal Thailand Ltd. Through
November 1993, Unocal Thailand Ltd. has reported cumulative production from more
than 700 wells in these fields totaling approximately 2 trillion cubic feet of
natural gas and 71 MMBbls of oil and condensate. Following an initial evaluation
of the Thailand concession area, the Company and its joint venture partners
drilled five exploratory wells on three separately identified seismic
structures. The first well drilled, the Tantawan No. 1, successfully tested a
large, complexly faulted, anticlinal structure with production tests from five
intervals resulting in calculated cumulative flow rates of 6,260 Bbls of oil and
condensate and 25,750 Mcf of natural gas per day. During 1993, the Company and
its joint venture partners shot, processed and evaluated approximately 9,000
kilometers of new 3-D seismic data over and around the Tantawan No. 1 well. In
late 1993, the Company drilled the Tantawan No. 2 and the Tantawan No. 3
exploratory wells on the Tantawan structure. The Tantawan No. 2 well
successfully delineated a previously untested fault block to the east of the
Tantawan No. 1 well with production tests from six intervals resulting in
calculated cumulative flow rates of 70,300 Mcf of natural gas and 1,720 Bbls of
condensate per day. The Tantawan No. 3 well successfully delineated a third
untested fault block on the Tantawan structure located approximately two miles
north of the Tantawan No. 1 and No. 2 wells. Production tests from this third
Tantawan well were reported in January 1994, with production tests from five
intervals resulting in calculated cumulative flow rates of 40,660 Mcf of natural
gas and 8,684 Bbls of oil and condensate per day. As a result of its successful
exploration drilling program, the Company's Thailand concession now accounts for
approximately 14% of the Company's total estimated net proved reserves of
natural gas, approximately 19% of the Company's total estimated net proved
reserves of oil, condensate and natural gas liquids and approximately 16% of the
Company's total net proved oil and gas equivalent reserves. During 1994,
additional delineation wells on the Tantawan structure are planned. Based upon
the results of such drilling, the Company and its partners will agree upon the
type of development plan needed to commence production in this area. In
addition, in late 1993, the Company and its joint venture partners began
shooting and processing additional 3-D seismic data on a different portion of
Block B8/32. Following evaluation of this seismic data, additional exploratory
wells are expected to be drilled by the Company and its joint venture partners
on as yet untested seismic structures identified on Block B8/32.

<PAGE>
will provide the Company with additional financial flexibility to pursue its
business strategy and maximize shareholder value. For 1994, the Company's Board
of Directors has authorized capital and exploration expenditures of $75,000,000,
approximately equal to the Company's capital and exploration expenditures of
approximately $74,600,000 in 1993. See 'The Company,' 'Management's Discussion
and Analysis of Financial Condition and Results of Operations' and 'Business and
Properties.'

The Company's principal executive offices are located at 5 Greenway Plaza,
Suite 2700, Houston, Texas 77046. Its mailing address is P.O. Box 2504, Houston,
Texas 77252-2504. The telephone number is (713) 297-5000.

USE OF PROCEEDS

The net proceeds to the Company from the sale of the Notes offered hereby
are estimated to be approximately $ (after deducting underwriting
discounts and expenses of the Offering), or approximately $ if the
Underwriters' over-allotment option is exercised in full. The Company intends to
apply approximately $24,500,000 (including prepayment premiums) of the net
proceeds of the Offering to retire its 10.25% Convertible Subordinated Notes due
1999 (the '10.25% Notes'). The Company intends to apply the balance of the net
proceeds to repay outstanding Senior Indebtedness under the Credit Agreement
which, as of December 31, 1993, stood at $67,000,000 and bore interest at a
floating rate that was approximately 5 3/8%. The Company may borrow additional
amounts under the Credit Agreement or otherwise from time to time to fund
capital expenditures or for other corporate purposes. The Company believes that
the increased liquidity and increased average maturity of its outstanding
indebtedness resulting from the Offering will provide the Company with
additional financial flexibility to pursue its business strategy and maximize
shareholder value. Pending application of the proceeds of the Offering as
described above, a portion of such proceeds may be invested in short-term
instruments. See 'The Company,' 'Capitalization,' and 'Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources.'

<PAGE>
CAPITALIZATION

The following table sets forth the consolidated capitalization of the
Company and its subsidiaries at December 31, 1993 (assuming net proceeds of
approximately $72,300,000). The table has also been adjusted to reflect the
issuance of the Notes offered hereby and the application of the net proceeds
therefrom as described under 'Use of Proceeds.' This table should be read in
conjunction with the Consolidated Financial Statements and related notes thereto
included elsewhere in this Prospectus.
DECEMBER 31, 1993
HISTORICAL AS ADJUSTED
(IN THOUSANDS)
Long-term debt (including current
portion):
Credit Agreement indebtedness------ $ 67,000 $ 19,000
% Convertible Subordinated Notes
due 2004------------------------- -- 75,000
10.25% Convertible Subordinated
Notes due 1999------------------- 24,000 --
8% Convertible Subordinated
Debentures due 2005-------------- 43,539 43,539
Total long-term debt------------- 134,539 137,539
Shareholders' equity:
Preferred stock, $1 par value;
2,000,000 shares authorized; no
shares issued and
outstanding-------------------- -- --
Common stock, $1 par value;
43,333,333 shares authorized;
32,449,197 shares issued--------- 32,449 32,449
Additional capital----------------- 125,919 125,919
Retained earnings (deficit)-------- (124,241) (124,548)(a)
Treasury stock, at cost------------ (324) (324)
Total shareholders' equity------- 33,803 33,496
Total capitalization----------------- $ 168,342 $ 171,035

(a) Adjusted to reflect the after-tax effect of the early redemption of
$16,000,000 of 10.25% Notes at 102.95% of their principal amount.

<PAGE>
PRICE RANGE OF COMMON STOCK AND DIVIDENDS

The following table shows the range of low and high sales prices of the
Company's Common Stock on the New York Stock Exchange composite tape where the
Company's Common Stock trades under the symbol PPP. The Company's Common Stock
is also listed on the Pacific Stock Exchange.

LOW HIGH
1992
1st Quarter---------------------- $ 5 1/8 $ 6 1/2
2nd Quarter---------------------- 5 1/8 6 3/8
3rd Quarter---------------------- 5 1/2 10 3/8
4th Quarter---------------------- 9 3/4 13 7/8
1993
1st Quarter---------------------- $ 9 3/4 $ 17 1/4
2nd Quarter---------------------- 16 1/8 21
3rd Quarter---------------------- 13 5/8 19 1/8
4th Quarter---------------------- 14 3/8 19 3/4
1994
1st Quarter (through February 25,
1994)-------------------------- $ 16 1/2 $ 21 5/8

The closing sale price of the Company's Common Stock on the New York Stock
Exchange as of a recent date is set forth on the cover page of this Prospectus.

DIVIDEND POLICY

The Board of Directors of the Company has not declared cash dividends on the
Company's Common Stock since the fourth quarter of 1986, and has no current
plans to pay dividends. See 'Description of Capital Stock.'

Pursuant to various agreements under which the Company has borrowed funds,
the Company may not, subject to certain exceptions, pay any dividends on its
capital stock or make any other distributions on shares of its capital stock
(other than dividends or distributions payable solely in shares of such capital
stock) or acquire for value any shares of its capital stock if (after giving
effect to the proposed payment, distribution, or acquisition) the aggregate
amount of all such payments, distributions or acquisitions on and after a
specified date would exceed an amount determined based on the consolidated
income or cash flow of the Company and its consolidated subsidiaries from and
after such date. As of December 31, 1993, $33,803,000 was available for
dividends under the most restrictive of such limitations.

16
<PAGE>
SELECTED FINANCIAL AND OPERATING DATA

The selected financial data presented below for, and as of the end of, each
of the years in the five-year period ended December 31, 1993, are derived from
the consolidated financial statements of the Company and its subsidiaries, which
have been audited by independent public accountants. The information presented
under the caption 'Production (Sales) Data' and 'Other Financial Data and
Selected Ratios' is unaudited. This data should be read in conjunction with the
consolidated financial statements and related notes thereto and 'Management's
Discussion and Analysis of Financial Condition and Results of Operations'
included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1993 1992 1991 1990 1989
(EXPRESSED IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues:
Crude oil and condensate----------- $ 64,042 $ 64,224 $ 54,420 $ 54,018 $ 41,396
Natural gas------------------------ 66,173 67,366 63,225 74,111 76,287
Natural gas liquids---------------- 7,288 5,833 3,442 3,496 3,516
Other, net------------------------- (950) 1,705 3,338 794 (79)
Oil and gas revenues------------- 136,553 139,128 124,425 132,419 121,120
Interest on tax refunds------------ 2,322(a) -- -- 22,499(a) --
Gains (losses) on sales------------ 679 1,702 44 (98) (173)
Total------------------------ 139,554 140,830 124,469 154,820 120,947
Operating costs and expenses:
Lease operating-------------------- 26,633 25,842 28,192 24,558 22,377
General and administrative--------- 14,550 13,129 14,555 13,458 11,829
Exploration------------------------ 2,455 3,102 2,408 2,029 2,078
Dry hole and impairment------------ 4,690 9,314 4,554 5,501 8,443
Depreciation, depletion and
amortization--------------------- 40,693 42,302 37,521 36,334 38,845
Total------------------------ 89,021 93,689 87,230 81,880 83,572
Operating income--------------------- 50,533 47,141 37,239 72,940 37,375
Interest:
Charges-------------------------- (10,956) (19,036) (24,946) (31,441) (37,458)
Income--------------------------- 14 191 1,686 1,244 1,615
Capitalized---------------------- 451 391 637 741 1,106
Income before income taxes and
extraordinary item----------------- 40,042 28,687 14,616 43,484 2,638
Income tax (expense) benefit--------- (14,981) (10,192) (4,294) 552 --
Income before extraordinary item----- 25,061 18,495 10,322 44,036 2,638
Extraordinary gain on purchase of
debt------------------------------- -- -- 1,336 -- --
Net income--------------------------- $ 25,061 $ 18,495 $ 11,658 $ 44,036 $ 2,638
Primary and fully diluted earnings
per share:
Before extraordinary item-------- $ 0.76 $ 0.66 $ 0.37 $ 1.69 $ 0.11
Extraordinary item--------------- -- -- 0.05 -- --
Net income----------------------- $ 0.76 $ 0.66 $ 0.42 $ 1.69 $ 0.11

(TABLE CONTINUED ON FOLLOWING PAGE)
17
<PAGE>
SELECTED FINANCIAL AND OPERATING DATA -- (CONTINUED)

<CAPTION>
YEAR ENDED DECEMBER 31,
1993 1992 1991 1990 1989
(EXPRESSED IN THOUSANDS, EXCEPT PER SHARE AND UNIT AMOUNTS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA (AT PERIOD END):
Total assets------------------------- $ 239,774 $ 206,347 $ 213,772 $ 244,226 $ 227,508
Long-term debt, excluding current
portion---------------------------- 130,539 129,260 184,260 217,000 264,000
Production payment obligation,
excluding current portion---------- -- 14,337 37,805 43,019 47,036
Shareholders' equity (deficit)------- 33,803 5,648 (56,636) (68,429) (132,557)
PRODUCTION (SALES) DATA:
Net daily average and weighted
average price:
Natural gas:
Mcf per day---------------------- 91,700 105,200 104,200 107,300 111,300
Price per Mcf-------------------- $ 1.98 $ 1.75 $ 1.66 $ 1.89 $ 1.88
Crude oil and condensate:
Bbls per day--------------------- 9,851 8,699 7,108 6,209 6,013
Price per Bbl-------------------- $ 17.81 $ 20.17 $ 20.98 $ 23.84 $ 18.86
Natural gas liquids:
Bbls per day--------------------- 1,678 1,181 663 697 948
Price per Bbl-------------------- $ 11.90 $ 13.50 $ 14.21 $ 13.75 $ 10.16
OTHER FINANCIAL DATA AND SELECTED
RATIOS:
Capital and exploration expenditures
(excludes capitalized interest)---- $ 74,600 $ 41,300 $ 53,100 $ 39,500 $ 25,800
EBITDA(b)---------------------------- $ 96,381 $ 99,339 $ 81,637 $ 116,760 $ 87,384
EBITDA/Net interest expense---------- 9.2 5.3 3.4 3.8 2.4
Ratio of earnings to fixed
charges(c)------------------------- 4.5 2.5 1.6 2.3 1.0
Long-term obligations/Total proved
reserves (BOE)(d)------------------ $ 1.95 $ 2.52 $ 4.22 $ 4.70 $ 5.49

(a) In late 1990, the Company entered into a settlement agreement with the
Internal Revenue Service (the 'IRS') for a refund of $8,607,000 in taxes for
taxable years 1976 through 1985 which, together with accrued interest of
$20,395,000, resulted in a refund receivable of $29,002,000 through December
31, 1990. The refund and interest income together with the reversal of
previously accrued interest expense of $2,104,000 contributed $23,456,000 or
$0.90 per share to earnings in 1990. The refund and the additional accrued
interest was received by the Company on May 31, 1991. In late 1993, the
Company recognized $2,322,000 of interest income related to a settlement
with the IRS for the refund of $998,000 in taxes for taxable years 1976
through 1984. The interest income contributed $1,509,000 or $0.05 per share
to earnings in 1993.

(d) Long-term obligations include long-term debt (excluding current maturities)
and the non-current portion of the Eugene Island Block 330 Production
Payment obligation until such obligation was satisfied in 1993. Total proved
reserves are expressed on an energy equivalent basis.
</TABLE>
18
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

The Company reported net income for 1993 of $25,061,000 or $0.76 per share
compared to net income for 1992 of $18,495,000 or $0.66 per share and net income
for 1991 of $11,658,000 or $0.42 per share. Included in net income for 1991 are
extraordinary gains of $1,336,000 or $0.05 per share in connection with
purchases at less than face value of the Company's 8% Convertible Subordinated
Debentures due 2005 (the '8% Debentures'). Earnings per common share are based
on the weighted average number of shares of common and common equivalent shares
outstanding for 1993 of 32,860,000 compared to 27,929,000 for 1992 and
27,611,000 for 1991. The increases in the weighted average number of common and
common equivalent shares outstanding for 1993 primarily related to the issuance
of 4,500,000 shares of Common Stock in December 1992 as set forth in the
Consolidated Statements of Shareholders' Equity included in the 'Financial
Statements' attached to, and forming a part of, this Prospectus.

The Company's total revenues for 1993 were $139,554,000, or approximately
equal to total revenues of $140,830,000 for 1992, and an increase of
approximately 12% from total revenues of $124,469,000 for 1991. The Company's
oil and gas revenues for 1993 were $136,553,000, a slight decrease of
approximately 2% from oil and gas revenues of $139,128,000 for 1992, and an
increase of approximately 10% from oil and gas revenues of $124,425,000 for
1991. The following table reflects an analysis of variances in the Company's oil
and gas revenues between 1993 and the previous two years:

1993 COMPARED TO
1992 1991
(IN THOUSANDS)
Increase (decrease) in oil and gas
revenues resulting from
variances in:
Natural gas
Price------------------------ $ 8,738 $ 11,984
Production------------------- (9,931) (9,036)
(1,193) 2,948
Crude oil and condensate
Price------------------------ (7,514) (8,209)
Production------------------- 7,332 17,831
(182) 9,622
Natural gas liquids
Price------------------------ (689) (560)
Production------------------- 2,144 4,406
1,455 3,846
Other, net----------------------- (2,655) (4,288)
Increase (decrease) in oil and gas
revenues--------------------------- $ (2,575) $ 12,128

Average natural gas prices received by the Company for the two years prior
to 1991 were relatively stable. Though seasonal variations were experienced, the
average annual prices received per Mcf were $1.88 for 1989 and $1.89 for 1990.
The industry's perceived ability to deliver more natural gas on a daily basis
than demanded by customers resulted in a decrease in the average annual price
for 1991 to $1.66 per Mcf. Prices of natural gas reached a low in February 1992,
when the Company's prices averaged only $1.13 per Mcf, during a time of
typically high winter prices, due, in part, to decreased demand resulting from a
milder than anticipated winter. The natural gas prices received by

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<PAGE>
the Company then began recovering again, averaging $1.75 per Mcf for
1992 and $1.98 per Mcf for 1993. Prices recovered after February 1992
due to late winter cold snaps which drew down natural gas storage
supplies and created demand in the spring and summer to
replenish storage facilities. In late August 1992, production in the
Gulf of Mexico was shut-in for approximately four days as a result of Hurricane
Andrew. This shut-in and decreased production from hurricane damage put upward
pressure on natural gas prices for the balance of the year. Natural gas prices
continued to strengthen in 1993, partially as a result of severe late winter
weather that drew down natural gas storage supplies which, coupled with
relatively high crude oil prices that inhibited fuel switching from natural gas
to residual heating oil at that time, created a substantial demand in the spring
and the summer to replenish depleted storage facilities and to supply natural
gas for the industrial and electric generation markets.

Natural gas production in 1993 averaged 91.7 MMcf per day, a decrease of
approximately 13% from average production of 105.2 MMcf per day in 1992, and a
decrease of approximately 12% from average production of 104.2 MMcf per day in
1991. The Company's decrease in natural gas production during 1993 compared to
prior periods was primarily related to decreased natural gas deliverability from
certain of the Company's Gulf of Mexico wells; production downtime due to
drilling, workover and maintenance operations designed to increase the Company's
deliverability; weather related problems and the exchange of properties
discussed in 'Business and Properties -- Domestic Offshore Acquisitions; Lease
Acquisitions' which temporarily reduced the Company's delivery capacity. The
Company anticipates that, as a result of its workover and drilling program, when
natural gas production commences from its new platform currently under
construction on Eugene Island Block 295 (which construction is scheduled,
weather permitting, to be completed during March 1994) the Company's natural gas
production will increase substantially from its average 1993 production rates.

Crude oil and condensate prices averaged $17.81 per Bbl in 1993 compared to
$20.17 per Bbl in 1992 and $20.98 per Bbl in 1991. Crude oil and condensate
prices were relatively stable during 1991, 1992 and the first six months of
1993. However, commencing in July 1993, the average price per Bbl that the
Company received for its production began to decline until, by December 1993,
the average price per Bbl for crude oil and condensate that the Company received
for its production averaged only $13.39 per Bbl. The decrease in the average
price that the Company receives for its crude oil and condensate production has
resulted primarily from a worldwide excess of crude oil supplies resulting from
increased production from both Organization of Petroleum Exporting Countries
('OPEC') and certain non-OPEC countries coupled with flat or only marginally
increased demand from consumer countries. The Company has entered into a crude
oil swap agreement with another party in which it swapped the floating market
price it would receive from purchasers of its crude oil for a fixed price of
$16.00 per Bbl on 1,000 Bbls per day of its production. The agreement expires
July 31, 1994, but may be extended through January 31, 1995, at the other
party's option.

Crude oil and condensate production for 1993 averaged 9,851 Bbls per day, an
increase of approximately 13% from 8,699 Bbls per day for 1992, and an increase
of approximately 39% from 7,108 Bbls per day for 1991. The increase in crude oil
and condensate production was a result of ongoing development programs both
offshore (primarily in the Eugene Island area) and onshore in several fields
located in Lea and Eddy counties of southeastern New Mexico.

Liquid products are often extracted from natural gas streams and sold
separately as natural gas liquids ('NGL'). The Company's NGL production averaged
1,678 Bbls per day for 1993, an increase of approximately 42% from an average of
1,181 Bbls per day for 1992 and an increase of approximately 153% from an
average of 663 Bbls per day for 1991. The Company's NGL production during 1993,
compared to prior periods, increased primarily as a result of extracting liquids
from several new high Btu content wells, increased ownership interest in plants,
and capital improvements which increased plant efficiency.

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<PAGE>
The Company's total liquids production during 1993, including crude oil,
condensate and NGL, averaged 11,529 Bbls per day, an increase of approximately
17% from an average total liquids production of 9,880 Bbls per day for 1992,
and an increase of approximately 48% from an average total liquids production
of 7,771 Bbls per day for 1991.

'Other, net' revenues for 1993, 1992, and 1991 included, among others, the
following significant items:

1993 1992 1991
(IN THOUSANDS)
Offset of FERC Order 93A adjustments
against FERC Order 94A
obligations------------------------ $ -- $ 1,642 $ --
Natural gas sales contract
settlement------------------------- -- -- 2,750
Gains on retirement of debt---------- -- -- 646
Settlement of federal and state
royalty disputes------------------- (803) (65) --
Other, net--------------------------- (147) 128 (58)
$ (950) $ 1,705 $ 3,338

For 1993 and 1992, the Company made adjustments to its revenues to reflect
the settlement of certain litigation with the State of Louisiana regarding past
royalty disputes pertaining to the Company's offshore state leases. For 1992
additional adjustments were also made to reflect an agreement with the MMS to
allow the Company to offset Federal Energy Regulatory Commission ('FERC') Order
93A payments previously made by the Company on behalf of the MMS against FERC
Order 94A obligations due from the Company and the resulting overaccrual of
related interest expenses. For 1991, the Company recorded adjustments to reflect
the settlement of a dispute regarding a natural gas sales contract and the
purchase, at a discount, of certain of 8% Debentures on the open market.

Lease operating expenses for 1993 were $26,633,000, an increase of
approximately 3% from lease operating expenses of $25,842,000 for 1992, but a
decrease of approximately 6% from lease operating expenses of $28,192,000 for
1991. The increase in lease operating expenses for 1993, compared to 1992, was
primarily related to increased operating costs on existing properties, as well
as increased operating costs related to additional properties brought on
production in the second half of 1992. The increased operating costs were
partially offset by lower maintenance costs. The decrease in lease operating
expenses for 1993, compared to 1991, was primarily related to a decrease in
special maintenance projects and to a decrease in lifting costs.

General and administrative expenses for 1993 were $14,550,000, an increase
of approximately 11% from general and administrative expenses of $13,129,000 for
1992, but were essentially equal to general and administrative expenses of
$14,555,000 for 1991. The increase in general and administrative expenses for
1993, compared to 1992, was primarily related to increased business insurance
premiums resulting from the Company's increased drilling activity and insurance
premium rate increases resulting from the insurance industry's recent loss
experience in general, rather than losses specifically relating to the Company's
operations, as well as normal salary adjustments and a 4% increase in the
Company's work force resulting from increased activity.

Exploration expenses consist primarily of delay rentals and geological and
geophysical ('G&G') costs which are expensed as incurred. Exploration expenses
for 1993 were $2,455,000, a decrease of approximately 21% from exploration
expenses of $3,102,000 for 1992, and a slight increase of approximately 2% from
exploration expenses of $2,408,000 for 1991. The decline in exploration expenses
for 1993, compared to 1992, was primarily related to the costs of conducting a
G&G survey, primarily in 1992, on the Company's oil and gas concession in the
Kingdom of Thailand.

Dry hole and impairment expenses relate to costs of unsuccessful wells
drilled along with impairments to the associated unproved property costs and
impairments to previously proved property costs as a result of decreases in
expected reserves. The Company's dry hole and impairment

21
<PAGE>
expenses for 1993 were $4,690,000, a decrease of approximately 50% from dry
hole and impairment expenses of $9,314,000 for 1992, but a slight increase of
approximately 3% from dry hole and impairment expenses of $4,554,000 for 1991.

The Company accounts for its oil and gas activities using the successful
efforts method of accounting. Under the successful efforts method, lease
acquisition costs and all development costs are capitalized. Unproved properties
are reviewed quarterly to determine if there has been impairment of the carrying
value, with any such impairment charged to expense in the period. Exploratory
drilling costs are capitalized until the results are determined. If proved
reserves are not discovered, the exploratory drilling costs are expensed. Other
exploratory costs are expensed as incurred.

The provision for depreciation, depletion and amortization ('DD&A') is
determined on a field-by-field basis using the units of production method. The
Company's DD&A expense for 1993 was $40,693,000, a decrease of approximately 4%
from DD&A expenses of $42,302,000 for 1992, but an increase of approximately 8%
from DD&A expenses of $37,521,000 for 1991. The decreases in the Company's DD&A
expenses for 1993, compared to 1992, were primarily due to a decrease in natural
gas production. The increases in the Company's DD&A expenses for 1993, compared
to 1991, were primarily related to increased volumes produced (largely related
to the increased crude oil and condensate production discussed earlier) and, to
a lesser extent, an increase in the composite DD&A rate. See 'Financial
Statements -- Note 1 of Notes to Consolidated Financial Statements.'

Interest charges for 1993 were $10,956,000, a decrease of approximately 42%
from interest charges of $19,036,000 for 1992 and a decrease of approximately
56% from interest charges of $24,946,000 for 1991. The decrease in interest
expense for 1993, compared to 1992 and 1991, related primarily to the retirement
or refinancing of high cost debt at more favorable interest rates and the
reduction in total debt to $134,539,000 on December 31, 1993, from $158,114,000
(including the production payment obligation) on December 31, 1992, a decrease
of approximately 15%. In addition, interest expense has also been reduced, to a
limited extent, by decreases in applicable floating interest rates. As of
December 31, 1993, the Company had entered into swap agreements on $15,000,000
of its bank debt, $5,000,000 of which terminated in January 1994 and $10,000,000
of which terminates in July 1994. The swap agreements on the bank debt
effectively change the interest the Company pays on its bank debt from variable
rates to fixed rates which average 5.78% on the $15,000,000.

LIQUIDITY AND CAPITAL RESOURCES

The Consolidated Statement of Cash Flows for the year ended December 31,
1993 reflects net cash provided by operating activities of $83,144,000, proceeds
from sales of tubular stock and non-strategic properties of $2,713,000 and cash
received from stock options exercised of $2,026,000. The Company invested
$62,353,000 of such cash flow in capital projects during 1993. The Company
continued to reduce its total debt and production payment obligation from
$158,114,000 at December 31, 1992 to $134,539,000 at December 31, 1993, a
decrease of $23,575,000 or approximately 15% of the Company's combined debt and
Eugene Island 330 production payment obligation since the end of 1992, and a
decline of approximately 42% in its combined debt and Eugene Island 330
production payment obligation since the end of 1991. During 1993, the Company
retired its Eugene Island 330 production payment obligation. The Company's cash
and cash investments were $6,713,000 at December 31, 1993.

The Company's capital and exploration budget for 1994 has been established
by the Company's Board of Directors at $75,000,000, or approximately equal to
the Company's capital and exploration expenditures of approximately $74,600,000
for 1993, an increase of 82% over capital and exploration expenditures of
approximately $41,300,000 for 1992 and an increase of 41% over capital and
exploration expenditures of approximately $53,100,000 for 1991.

In addition to anticipated capital and exploration expenses as of December
31, 1993, other material 1994 cash requirements that the Company anticipates
include ongoing operating, general
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<PAGE>
and administrative, income tax, and interest expenses. Cash requirements for
future payments of federal income taxes are expected to be greater
than those experienced in the immediate past. The increased
tax payments result from expected increases in taxable income,
increased tax rates and the utilization in 1993 and prior years
of available tax credits and net operating tax loss carry-forwards. The Company
currently anticipates that cash provided by operating activities and funds
available under its Credit Agreement will be sufficient to fund the Company's
ongoing expenses and the Company's 1994 capital and exploration budget. See 'Use
of Proceeds.'

As of December 31, 1993, the Company amended its bank credit agreement (the
'Credit Agreement'). The Credit Agreement currently provides for a $100,000,000
revolving/term credit facility which will be fully revolving until June 29,
1996, after which the balance will be due in eight quarterly term loan
installments, commencing July 31, 1996. The amount that may be borrowed under
the Credit Agreement may not exceed a borrowing base, determined semiannually by
the lenders in accordance with the Credit Agreement, based on the discounted
present value of certain of the Company's oil and gas reserves. The borrowing
base currently exceeds $100,000,000. The Credit Agreement is governed by various
financial and other covenants, including requirements to maintain positive
working capital and a specified fixed charge ratio and limitations on debt,
dividends, mergers and consolidations and asset dispositions. See 'Price Range
of Common Stock and Dividends.' Upon the occurrence or declaration of certain
events, the banks would be entitled to a security interest in the borrowing base
properties, which include substantially all of the Company's domestic
properties. Borrowings under the Credit Agreement bear interest at Base (Prime)
rate plus 1/4%, a certificate of deposit rate plus 1 7/8%, or LIBOR plus
1 3/4%, at the Company's option. A commitment fee of 1/2 of 1% per annum of the
unborrowed amount under the Credit Agreement is also due. As of December 31,
1993, indebtedness in the principal amount of $67,000,000 was outstanding under
the Credit Agreement.

The outstanding principal amount of the 10.25% Notes was $24,000,000 as of
December 31, 1993. The 10.25% Notes are convertible into Common Stock at $23.95
per share, subject to adjustment in certain circumstances, including stock
splits, and require annual sinking fund payments of $4,000,000 each April, with
a final maturity of April 1, 1999. A portion of the proceeds of the Offering
will be used to repay the 10.25% Notes in full. See 'Use of Proceeds.' The
outstanding principal amount of the 8% Debentures was $43,539,000 as of December
31, 1993. The 8% Debentures are convertible into Common Stock at $39.50 per
share, subject to adjustment in certain circumstances, including stock splits,
and are also subject to mandatory annual sinking fund requirements of $3,000,000
due each December, with a final maturity of December 31, 2005. The Company
currently has $4,460,000 face amount of 8% Debentures which it may tender in
satisfaction of future sinking fund requirements. See 'Financial
Statements -- Note 3 to Notes to Consolidated Financial Statements.'

OTHER MATTERS

Publicly held companies are asked to comment on the effects of inflation on
their business. Currently annual inflation in terms of the decrease in the
general purchasing power of the dollar is running much below the general annual
inflation rates of several years ago. While the Company, like other companies,
continues to be affected by fluctuations in the purchasing power of the dollar,
such effect is not currently considered significant.

<PAGE>
BUSINESS AND PROPERTIES

GENERAL

The Company was incorporated in 1970 and is engaged in oil and gas
exploration, development and production activities on its properties located
offshore in the Gulf of Mexico and onshore in the United States. The Company is
also engaged in exploration of its license concession in the Gulf of Thailand,
and is evaluating a development program in connection with its recently
announced oil and gas discoveries on that concession. The Company has interests
in 76 lease blocks offshore Louisiana and Texas, approximately 93,000 gross
acres onshore in the United States, approximately 2,635,000 gross acres offshore
in the Kingdom of Thailand, and approximately 1,965,000 gross acres in
Australia. The Company, which historically has not operated a substantial
percentage of its offshore properties, has assumed operatorship of certain of
its properties where the Company believes that its technical expertise and
ability to control overhead and operating costs will enhance its economic
interests.

DOMESTIC OFFSHORE OPERATIONS

Historically, the Company's interests have been concentrated in the Gulf of
Mexico, where approximately 81% of the Company's domestic proved reserves and
68% of its total proved reserves are now located. During 1993, approximately 75%
of the Company's natural gas equivalent production was from its domestic
offshore properties, contributing approximately 75% of consolidated oil and gas
revenues. Four offshore producing areas, Eugene Island, South Marsh Island, Main
Pass and East Cameron, account for approximately 52% of the Company's net proved
natural gas reserves and approximately 56% of the Company's proved crude oil,
condensate and natural gas liquids reserves. Eugene Island is the Company's
largest producing area with 1993 average net revenue interest production (net to
the Company's interest and net of royalty burdens) of 24 MMcf per day of natural
gas and 4,600 Bbls per day of oil, condensate and natural gas liquids.

LEASE ACQUISITIONS

The Company has participated with other companies in bidding on and
acquiring interests in federal leases offshore in the Gulf of Mexico since
December 1970. As a result of such sales and subsequent activities, the Company
owns interests in 70 federal leases offshore Louisiana and Texas. Federal leases
generally have primary terms of five years, subject to extension by development
and production operations. The Company also owns interests in six leases in
state waters offshore Louisiana.

As part of its strategy, the Company intends to continue an active lease
evaluation program in the Gulf of Mexico in order to identify exploration and
exploitation opportunities. The Department of the Interior has announced its
intention to hold two lease sales during 1994 covering federal acreage in the
Central and Western portions of the Gulf of Mexico; and it is anticipated that
various states will also hold sales covering state acreage from time to time. As
in the case of prior sales, the extent to which the Company participates in
future bidding will depend on the availability of funds and its estimates of
hydrocarbon deposits, operating expenses and future revenues which reasonably
may be expected from available lease blocks. Such estimates typically take into
account, among other things, estimates of future hydrocarbon prices, federal
regulations, and taxation policies applicable to the petroleum industry.

It is also the Company's objective to acquire certain producing properties
where additional low_risk drilling or improved production methods by the Company
can provide attractive rates of return. During 1993, the Company acquired a 50%
working interest in South Pass Block 50 and acquired an additional approximately
17% working interest in Ship Shoal Block 240. In late 1993, the Company effected
an exchange of working interests in certain federal offshore lease blocks with
another working interest owner in such blocks. As a result of this exchange, the
Company increased its working interest in the following five blocks: Eugene
Island 256 (from 41.5% to 69.2%), Eugene Island 295 (from 60% to 100% on 3,125
acres above 3,000 feet, from 12% to 20% on 1,875 acres

24
<PAGE>
above 3,000 feet and from 12% to 20% on all of the block below 3,000 feet),
Eugene Island 261 (from 43.3% to 66.6%) and West Cameron blocks 252 and 253
(from 24% to 80%). In exchange, the Company assigned various working interests
in 13 blocks to the other working interest owner. The Company effected the
exchange primarily because it believes that this exchange will result in
significant increased exploitation and exploration potential in the Eugene
Island and West Cameron areas. This exchange of working interests is also
consistent with the Company's strategy of increasing its working interest in its
core areas. In connection with this exchange, the Company became the operator
for the joint venture partners on certain of these blocks.

EXPLORATION AND DEVELOPMENT

The scope of exploration and development programs relating to the Company's
offshore interests is affected by prices for oil and gas, and by federal, state
and local legislation, regulations and ordinances applicable to the petroleum
industry. The Company's domestic offshore capital and exploration expenditures
for 1993 were approximately $39,000,000, or 122% higher than the Company's
domestic offshore capital and exploration expenditures of approximately
$17,600,000 for 1992 and 23% higher than the Company's domestic offshore capital
and exploration expenditures of approximately $31,700,000 for 1991. Development
and production related projects represented 86% of the Company's 1993 domestic
offshore capital and exploration expenditures. See 'Management's Discussion and
Analysis of Financial Condition and Results of Operations.'

Leases acquired by the Company and other participants in its bidding groups
are customarily committed, on a block-by-block basis, to separate operating
agreements under which the appointed operator supervises exploration and
development operations for the account and at the expense of the group. These
agreements usually contain terms and conditions which have become relatively
standardized in the industry. Major decisions regarding development and
operations typically require the consent of at least a majority (in working
interest) of the participants. Because the Company generally has a meaningful
working interest position, the Company believes it can influence decisions
regarding development and operations even though it may not be the operator of a
particular lease. The Company, which historically has not operated a substantial
portion of its offshore properties, has assumed the operation of certain of its
properties where the Company believes that its technical expertise and ability
to control overhead and operating costs will enhance its economic interest.

Platforms are installed on a block when, in the judgment of the lease
interest owners, the necessary capital expenditures are justified. A decision to
install a platform generally is made after the drilling of one or more
exploratory wells with contracted drilling equipment. Platforms are used to
accommodate both development drilling and additional exploratory drilling. In
recent years, the gross cost of production platforms to the joint ventures in
which the Company has varying net interests has been less than $11,000,000 per
platform. Platform costs vary and more expensive platforms could be required in
the future depending on, among other factors, the number of slots, water depth,
currents, and sea floor conditions. During 1993, the Company commenced
installation of an additional platform on Eugene Island Block 295 and announced
its intention to set a platform on Main Pass Block 123. See '-- Principal
Properties.'

In 1989, the Company entered into a limited partnership agreement as general
partner of Pogo Gulf Coast, Ltd., a Texas limited partnership ('Pogo Gulf
Coast'), in which the Company agreed to be responsible for investing as much as
$60,000,000 on behalf of Pogo Gulf Coast for acquisition and exploration in
state and federal waters in the Gulf of Mexico. As of December 31, 1993, Pogo
Gulf Coast had interests in 24 federal offshore leases, and had invested a total
of $41,750,000 of the aforementioned $60,000,000. The Company owns 40% of any
interest in properties acquired by the limited partnership. Unless otherwise
noted, the statistical data reported in this Prospectus reflect only the
Company's share of Pogo Gulf Coast's holdings.

25
<PAGE>
DOMESTIC ONSHORE OPERATIONS

The Company has onshore division staffs in Houston and Midland, Texas. Its
onshore activities are concentrated in known oil and gas provinces, principally
the Permian Basin of southeastern New Mexico and West Texas and the onshore Gulf
Coast area. As of December 31, 1993, the Company and its partners had drilled
and completed as productive 151 consecutive wells in Lea and Eddy Counties in
southeastern New Mexico, including 58 wells in 1993 alone. The Company's primary
drilling objective in southeastern New Mexico is the Brushy Canyon (Delaware)
formation which produces oil at depths of 6,000 to 9,000 feet. The Company's net
revenue interest portion of daily liquid hydrocarbon production in New Mexico
averaged approximately 3,700 Bbls during 1993, which represented approximately
32% of the Company's total average daily production of oil, condensate and
liquid plant products during 1993.

The Company generally conducts its onshore activities through joint ventures
and other interest-sharing arrangements with major and independent oil
companies. The Company operates many of its onshore properties using independent
contractors.

The Company's domestic onshore capital and exploration expenditures were
approximately $29,400,000 for 1993, or 44% higher than the Company's domestic
onshore capital and exploration expenditures of approximately $20,400,000 for
1992 and 56% higher than the Company's domestic onshore capital and exploration
expenditures of approximately $18,800,000 for 1991. Development and production
related projects represented 82% of the Company's 1993 domestic onshore capital
and exploration expenditures. As of December 31, 1993, the Company held leases
on 56,155 net acres onshore in the United States. Onshore reserves as of
December 31, 1993, accounted for approximately 19% of the Company's domestic
proved reserves and approximately 16% of its total proved reserves. During 1993,
approximately 25% of the Company's natural gas equivalent production was from
its domestic onshore properties, contributing approximately 25% of consolidated
oil and gas revenues.

INTERNATIONAL OPERATIONS

The Company has conducted international exploration activities since the
late 1970's in numerous oil and gas areas in various parts of the world. The
Company pursues a strategy of evaluating potentially high return prospects in
areas of the world with a stable political and financial climate such as certain
European and ASEAN countries. In 1988, the Company sold its United Kingdom
reserves which were located in the North Sea. Since that time, the Company has
analyzed several opportunities and has obtained a concession in the Kingdom of
Thailand and a concession in Australia. The Company's international capital and
exploration expenditures were approximately $6,000,000 for 1993, or 131% higher
than the Company's international capital and exploration expenditures of
approximately $2,600,000 for 1992. Substantially all of the Company's
international capital and exploration expenditures for 1993 were related to the
Company's license in the Kingdom of Thailand. However, the Company continues to
evaluate other international opportunities that are consistent with the
Company's international exploration strategy.

In 1990, the Company invited Rutherford/Moran Oil Company
('Rutherford/Moran'), Maersk Olie og Gas A/S ('Maersk') and Sophonpanich Co.,
Ltd. ('Sophonpanich') to join it in bidding for a concession license on Block
B8/32, a 2.6 million acre tract in the Gulf of Thailand. In August 1991, the
Company, Rutherford/Moran, Maersk and Sophonpanich were awarded a license from
the Kingdom of Thailand to explore for and produce oil and gas on the tract. The
Company's working interest in the concession is 31.67%. Maersk is the operator
with a similar 31.67% interest.

Exploration activities in Thailand are consistent with the Company's
objectives of expanding its international operations in areas that have
geological features which the Company believes may be favorable for hydrocarbon
accumulation, low entry costs, an acceptable political risk profile and
operational or other similarities with the Company's existing activities.
Thailand is expected to be a net importer of hydrocarbons at least through the
year 2000, which should provide an attractive

26
<PAGE>
market for hydrocarbons produced locally. The Company's acreage is located 150
miles south southeast of Bangkok in 250 feet of water and is on trend with
several producing oil and gas fields including, among others, the Erawan, Surat
and Satun fields. The tract is traversed by a major natural gas pipeline. The
Company understands that a contract has been entered into for construction of a
second, parallel pipeline owned by an entity controlled by the government of the
Kingdom of Thailand, with completion scheduled for early 1996. The Company
anticipates that by the time production can commence from this concession, there
should be ample transportation capacity available on these pipelines.

Following an initial evaluation of the Thailand concession area, the Company
and its joint venture partners drilled five exploratory wells on three
separately identified seismic structures. In October 1992, the first well
drilled, the Tantawan No. 1, successfully tested a large, complexly faulted,
anticlinal structure with production tests from five intervals in that well
resulting in calculated cumulative flow rates of 6,260 Bbls of oil and
condensate and 25,750 Mcf of natural gas per day. During 1993, the Company and
its joint venture partners shot, processed and evaluated approximately 9,000
kilometers of new 3-D seismic data over and around the Tantawan No. 1 well. In
late 1993, the Company drilled the Tantawan No. 2 and the Tantawan No. 3
exploratory wells on the Tantawan structure. The Tantawan No. 2 well
successfully delineated a previously untested fault block to the east of the
Tantawan No. 1 well with production tests from six intervals resulting in
calculated cumulative flow rates of 70,300 Mcf of natural gas and 1,720 Bbls of
condensate per day. The Tantawan No. 3 well successfully delineated a third
untested fault block on the Tantawan structure located approximately two miles
north of the Tantawan No. 1 and No. 2 wells. Production tests from this third
Tantawan well were reported in January 1994, with production tests from five
intervals resulting in calculated cumulative flow rates of 40,660 Mcf of natural
gas and 8,684 Bbls of oil and condensate per day.

As a result of its successful exploration drilling program, the Company's
Thailand concession now accounts for approximately 14% of the Company's total
estimated net proved reserves of natural gas, approximately 19% of the Company's
total estimated net proved reserves of oil, condensate and natural gas liquids
and approximately 16% of the Company's total net proved oil and gas equivalent
reserves. Additional delineation wells on the Tantawan structure are planned
during 1994. Based upon the results of such drilling, the Company and its
partners will agree upon the type of development plan needed to commence
production in this area. In addition, in late 1993, the Company and its joint
venture partners began shooting and processing additional new 3-D seismic data
in a different portion of Block B8/32. Following evaluation of this seismic
data, additional exploratory wells are expected to be drilled by the Company and
its joint venture partners on as yet untested seismic structures identified on
Block B8/32.

Production from the concession will be subject to a royalty ranging from 5%
to 15% of oil and gas sales, plus certain fixed dollar amounts payable at
specified cumulative production levels. Revenue from production in Thailand will
also be subject to income taxes and other governmental charges. As set forth in
the August 1991 concession, the exploratory term of the concession is for a
period of up to six years; provided, however, that after the expiration of four
years, a portion of the acreage in Block B8/32 must be relinquished by the
Company and its joint venture partners and removed from the concession license.
The Company must identify and release this acreage no later than August 1, 1995.
During the remainder of the concession's exploratory period, the Company and its
joint venture partners have certain work commitments involving the drilling of
four more exploratory wells or the expenditure of certain sums of money on
exploration activities. The Company anticipates, based on the joint venture's
current exploration budget and capital spending plans, that it and its joint
venture partners will satisfy the remainder of the concession's work commitments
by the middle of 1995. Following the commencement of production, the initial
production period of the concession is 20 years, subject to extension.

27
<PAGE>
The Company also holds interests in three Authority to Prospect ('ATP')
licenses in Australia. One ATP, in which the Company holds a 7.5% interest,
covers 480,000 acres and expires in February 1995 unless certain expenditures
are made. The Company has farmed out the other two ATP's to a third party and
retained a small carried interest. None of the ATP's requires material
expenditures by the Company.

PRINCIPAL PROPERTIES

As of January 1, 1994, approximately 81% of the Company's domestic proved
oil and gas equivalent reserves and approximately 68% of the Company's total
proved oil and gas equivalent reserves were located on properties in the Gulf of
Mexico. Five significant producing areas, of which four are located in the Gulf
of Mexico and the fifth is located in New Mexico, accounted for approximately
59% of the estimated proved natural gas reserves and approximately 74% of the
estimated oil, condensate and natural gas liquids reserves of the Company as of
January 1, 1994. These producing areas accounted for approximately 60% of
natural gas production and 90% of oil, condensate and natural gas liquids
production for 1993. Reserves and production data for the five principal
producing areas, as estimated by Ryder Scott, are shown in the following table.
No other major producing area accounted for more than 5% of the estimated
discounted future net revenues attributable to the Company's estimated proved
reserves as of January 1, 1994. However, the Company's Thailand concession,
which is currently not a producing property, accounts for approximately 14% of
the Company's total estimated net proved reserves of natural gas, approximately
19% of the Company's total estimated net proved reserves of oil, condensate and
natural gas liquids and approximately 16% of the Company's total net proved oil
and gas equivalent reserves.
<TABLE>
SIGNIFICANT PRODUCING AREAS

<CAPTION>
NET PROVED RESERVES 1993 AVERAGE NET
AS OF JANUARY 1, 1994 DAILY PRODUCTION
NATURAL GAS LIQUIDS(A) NATURAL GAS LIQUIDS(A)
(MMCF) % (MBBLS) % (MCF) % (BBLS) %
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OFFSHORE
Eugene Island---------------------- 92,742 39.8% 10,448 37.0% 24,000 27.1% 4,600 39.8%
South Marsh Island----------------- 6,811 2.9 2,579 9.1 2,101 2.4 1,378 11.9
Main Pass-------------------------- 9,186 3.9 2,722 9.6 3,721 4.2 598 5.2
East Cameron----------------------- 12,423 5.3 75 0.3 13,852 15.6 76 0.7
ONSHORE
New Mexico
Lea/Eddy Counties---------------- 16,219 7.0 4,994 17.7 9,660 10.9 3,714 32.1

<CAPTION>
DISCOUNTED
FUTURE
NET
REVENUES(B)
%
<S> <C>
OFFSHORE
Eugene Island---------------------- 53.3%
South Marsh Island----------------- 5.1
Main Pass-------------------------- 4.5
East Cameron----------------------- 4.2
ONSHORE
New Mexico
Lea/Eddy Counties---------------- 9.9

(a) 'Liquids' includes oil, condensate and natural gas liquids.
(b) Before income taxes, discounted at 10%.
</TABLE>
Set forth below are descriptions of certain of the Company's significant
producing areas. Contained in certain of these descriptions and elsewhere in
this Prospectus are production rate test results with regard to certain wells
and fields in which the Company has an interest. Such production rate tests,
while accurate, are never indicative of actual sustained production rates.

EUGENE ISLAND

The Company's most significant reserves are in the Eugene Island area
located off the Louisiana coast in the Gulf of Mexico. The Eugene Island area
has been an important part of the Company's operations since the first lease in
that area was purchased in 1970 and production began in 1973. The Company
currently holds interests in 13 blocks in the Eugene Island area. These comprise
eight fields containing 90 gross oil and gas wells producing from multiple
reservoirs and horizons.

The Eugene Island Block 330 field is the Company's most significant asset,
with 28 productive Pleistocene horizons between 4,000 and 8,000 feet, containing
multiple reservoirs. The field, located

<PAGE>
in 245 feet of water, contains three drilling and production platforms in which
the Company holds a 35% working interest, as well as an additional platform in
which the Company holds a 30% working interest. There are currently 18 wells
producing primarily natural gas and 35 wells producing primarily oil on the
block. In 1993, a successful five well drilling program was completed in the
field which included one horizontal and four vertical wells. A multi-well
program off of the field's 'D' platform commenced in early January 1994. Since
initial production in 1973, the Eugene Island Block 330 field has produced
approximately 619 Bcf of natural gas and 122 MMBbls of oil and condensate (167
Bcf and 35 MMBbls, attributable to the Company's net revenue interest). Reserves
have been added to this field consistently since production commenced. These
increases have been derived from new exploratory horizons, infill drilling,
field expansions and higher than anticipated recovery efficiencies.

Another significant field to the Company is Eugene Island Block 295. In
production since 1973, this block has recorded gross production of over 387 Bcf
of natural gas and over 2.9 MMBbls of oil and condensate during its twenty-year
life. In August 1993, the Company effected an exchange of working interests in
Eugene Island Block 295 with another working interest owner in such block.
Pursuant to this exchange, the Company increased its working interest in Eugene
Island Block 295 to 100% on 3,125 acres above 3,000 feet, to 20% on 1,875 acres
above 3,000 feet and to 20% on all of the block below 3,000 feet. During the
fourth quarter of 1993, the Company successfully drilled and completed five
horizontal wells to exploit the natural gas potential located in certain shallow
reservoirs on this block in an area where it has a 100% working interest. These
five wells tested at a gross calculated cumulative daily flow rate of 100 MMcf
of natural gas per day, although platform compression capacity and lease burdens
dictate that ultimate net production volumes will be substantially less than
this amount. The Company completed construction of a production platform
over these wells and commenced initial production from the first of these wells
in late February 1994.

The Eugene Island 212 field consists of Eugene Island Blocks 211 and 212 and
Ship Shoal Block 175. The field contains eight productive horizons which have
four oil wells and one natural gas well producing from a platform set in 1985.
The Company and its partners drilled a successful infill development well in
this field during the second half of 1993.

SOUTH MARSH ISLAND

The Company currently owns five blocks in the South Marsh Island area,
located offshore Louisiana. Three of the leases were acquired in 1974, a fourth
in 1980 and the most recent in 1992. Three blocks contain a total of five
drilling and production platforms. These platforms currently have 44 oil and gas
wells producing from Pleistocene age sandstone reservoirs located at depths from
5,000 to 10,000 feet.

The South Marsh Island 128 field, in which the Company owns a 16% working
interest, comprises South Marsh Island Blocks 125, 127 and 128. This field
primarily produces oil, with 36 oil wells and six natural gas wells producing
from 20 separate reservoirs. The first four wells in a supplemental five-well
drilling program in this field were completed in 1993. The current drilling
program is based on the ongoing analysis of a 3-D seismic survey in conjunction
with a detailed reservoir study of the field.

The Company also owns a 25% working interest in the South Marsh Island Block
160 field which is producing from two oil wells at a depth of approximately
9,700 feet. A single platform was set on this block in 1983. A two-well drilling
program is currently being considered in this field as a result of recent
analysis of a 3-D seismic survey on the block.

MAIN PASS

The Company's nine blocks in the Main Pass area are located near the mouth
of the Mississippi River in the Gulf of Mexico and include leases purchased from
1974 to 1992. The primary drilling

<PAGE>
objectives in these fields are Pliocene and Miocene sandstone reservoirs with
productive formation depths from 5,000 to 12,000 feet. The Company's interests
in the Main Pass area include 57 producing oil and gas wells producing from six
platforms.

A field including Main Pass Blocks 72, 73 and 72/74 was unitized in 1982
with the Company's working interest at 14%. This field contains 33 oil wells and
11 natural gas wells operated by one of the Company's joint venture partners.
The field is located in 125 feet of water with 38 mapped horizons adjacent to
and surrounding a salt dome. These horizons contain over 150 separate reservoirs
between 5,000 and 12,000 feet. A successful three-well workover program in this
field was completed in 1992. Many of the producing reservoirs in this field have
consistently outperformed their initial recovery estimates. Based on the high
historical recovery efficiency, it is anticipated that some of the multiple
behind pipe reservoirs remaining will also outperform their existing reserve
estimates.

Main Pass Block 123 was acquired in the federal lease sale of 1990. Pogo
Gulf Coast, for which the Company is the general partner, has a 75% working
interest and is the operator on the block. Along with its non-operating joint
venture partner, Pogo Gulf Coast drilled two discovery wells on the block in
1993 and is currently planning additional drilling as well as the installation
of a production platform in late 1994.

EAST CAMERON

The original lease purchased by the Company and its partners in the East
Cameron area off the Texas/Louisiana border in the Gulf of Mexico commenced
production in February 1973. Presently, the Company has interests in 4 offshore
blocks in this area which contain three fields and 16 producing gas wells.

During 1992, the Company and its partners conducted a 3-D seismic survey of
the East Cameron Block 334/335 field area where the Company has a 42% working
interest. The Company currently anticipates commencing a multi-well drilling
program in this field during the first half of 1994.

NEW MEXICO

The Company considers southeastern New Mexico to be an area of significant
growth in both production and reserves as a result of recent exploration and
development activities. The Company believes that during the past four years it
has been one of the most active companies drilling for oil and natural gas in
the southeastern New Mexico (Lea and Eddy Counties) portion of the Permian Basin
where the Company has interests in over 50,000 gross acres. The Company's
primary drilling objective is the Brushy Canyon (Delaware) formation. Fields in
the Brushy Canyon (Delaware) formation in the southeastern New Mexico portion of
the Permian Basin are generally characterized by production from relatively
shallow depths (6,000 to 9,000 feet), multiple producing zones in most wells and
relatively high initial rates of production (frequently equaling the top field
allowables which range from of 142 Bbls to 230 Bbls per day, depending on the
depth of production from the field). The Company has achieved rapid cost
recovery with respect to its New Mexico wells drilled to date because of
relatively low capital costs and high initial rates of production.

Through December 31, 1993, the Company and its partners had drilled and
completed as productive 151 consecutive wells in Lea and Eddy Counties
including, among others, 52 wells in the Sand Dunes field where the Company's
working interest ranges from 4% to 89%; 27 wells in the East Loving field where
the Company's working interest ranges from 33% to 98%; 43 wells in the
Livingston Ridge field where the Company's working interest ranges from 41% to
83%; and 8 wells in the Red Tank field where the Company's working interest
ranges from 89% to 100%. The oil fields in this area are generally developed on
40 acre spacings. The Company anticipates drilling many additional locations in
these and other fields in southeastern New Mexico during 1994 and in future
years.

<PAGE>
RESERVES

The following table sets forth information as to the Company's net proved
and proved developed reserves as of December 31, 1993, 1992, and 1991, and the
present value as of such dates (based on an annual discount rate of 10%) of the
estimated future net revenues from the production and sale of those reserves, as
estimated by Ryder Scott in accordance with criteria prescribed by the
Commission. The summary report of Ryder Scott on the reserve estimates, which
includes definitions and assumptions, is set forth as an exhibit to the Annual
Report.
AS OF DECEMBER 31,
1993 1992 1991
Total Proved Reserves:
Oil, condensate, and natural gas
liquids (MBbls)
Located in the United States----- 22,843 19,979 18,818
Located in the Kingdom of
Thailand----------------------- 5,425 2,577 --
Total Company-------------------- 28,268 22,556 18,818
Natural Gas (MMcf)
Located in the United States----- 199,392 196,400 202,735
Located in the Kingdom of
Thailand----------------------- 33,474 10,668 --
Total Company-------------------- 232,866 207,068 202,735
Present value of estimated future
net revenues, before income taxes
(in thousands)
Located in the United States----- $386,674 $390,893 $349,754
Located in the Kingdom of
Thailand----------------------- 17,166 14,208 --
Total Company-------------------- $403,840 $405,101 $349,754
Proved Developed Reserves (all
located in the United States):
Oil, condensate, and natural gas
liquids (MBbls)---------------- 20,976 18,798 17,550
Natural Gas (MMcf)--------------- 183,139 175,523 188,090
Present value of estimated future
net revenues, before income
taxes (in thousands)----------- $375,287 $378,300 $337,524

Natural gas liquids comprise approximately 14% of the Company's total proved
liquids reserves and approximately 18% of the Company's proved developed liquids
reserves. All hydrocarbon liquid reserves are expressed in standard 42 gallon
Bbls. All gas volumes and gas sales are expressed in MMcf at the pressure and
temperature bases of the area where the gas reserves are located.

Because of the direct relationship between quantities of proved undeveloped
reserves and development plans, only reserves assigned to undeveloped locations
that will definitely be drilled and reserves assigned to the undeveloped
portions of secondary or tertiary projects that will definitely be developed
have been included as proved undeveloped reserves.

The Company has interests in certain tracts that may have substantial
additional hydrocarbon quantities which cannot be classified as proved. The
Company has active exploratory and development drilling programs which may
result in the reclassification of significant additional quantities as proved
reserves.

The Company does not believe that any other major discovery or other
favorable or adverse event causing a significant change in the estimated
quantities of proved reserves has occurred since January 1, 1994.

<PAGE>
ACREAGE

The following table shows the Company's interest in developed and
undeveloped oil and gas acreage as of December 31, 1993:

DEVELOPED UNDEVELOPED ACREAGE
ACREAGE (A) (B)
GROSS NET GROSS NET
ONSHORE
Arkansas------------------------- -- -- 118 20
Colorado------------------------- -- -- 7,963 7,963
Louisiana------------------------ 869 258 -- --
New Mexico----------------------- 14,013 6,950 36,317 29,161
Oklahoma------------------------- 3,840 374 -- --
Texas---------------------------- 11,677 4,541 17,849 6,853
Wyoming-------------------------- -- -- 120 35
Total Onshore---------------- 30,399 12,123 62,367 44,032
OFFSHORE
Louisiana (State)---------------- 7,804 2,964 -- --
Louisiana (Federal)(c)----------- 169,193 51,734 89,989 19,765
Texas (Federal)------------------ 46,080 7,971 17,280 3,340
Total Offshore--------------- 223,077 62,669 107,269 23,105
TOTAL DOMESTIC------------------- 253,476 74,792 169,636 67,137
INTERNATIONAL
Thailand (Offshore)-------------- -- -- 2,635,116 878,372
Australia (Onshore)-------------- -- -- 1,964,800 42,960
TOTAL INTERNATIONAL-------------- -- -- 4,599,916 921,332
TOTAL COMPANY------------------------ 253,476 74,792 4,769,552 988,469

(a) 'Developed acreage' consists of lease acres spaced or assignable to
production on which wells have been drilled or completed to a point that
would permit production of commercial quantities of oil and natural gas.

(b) Approximately 38% of the Company's total offshore net undeveloped acreage
is under leases that have terms expiring in 1994, if not held by
production, and another approximately 21% of offshore net undeveloped
acreage will expire in 1995 if not also held by production. Approximately
16% of onshore net undeveloped acreage is under leases that have terms
expiring in 1994, if not held by production, and another approximately
39% of onshore net undeveloped acreage will expire in 1995 if not also
held by production.

(c) The Company also owns overriding royalty interests in one federal lease
offshore Louisiana totaling 5,000 gross and 1,250 net acres.

<PAGE>
PRODUCTIVE WELLS AND DRILLING ACTIVITY

The following table shows the Company's interest in productive oil and
natural gas wells as of December 31, 1993. Productive wells are producing wells
plus wells 'capable of production' (e.g., natural gas wells waiting for pipeline
connections or necessary governmental certification to commence deliveries and
oil wells waiting to be connected to production facilities).

NATURAL GAS
OIL WELLS(A) WELLS(A)
GROSS NET GROSS NET
Offshore United States--------------- 199 36.6 170 46.8
Onshore United States---------------- 163 92.2 65 24.6
Total-------------------- 362 128.8 235 71.4

(a) One or more completions in the same bore hole are counted as one well. The
data in the above table includes 30 gross (5.8 net) oil wells and 16 gross
(5.8 net) gas wells with multiple completions.

The following table shows the number of successful gross and net exploratory
and development wells in which the Company has participated and the number of
gross and net wells abandoned as dry holes during the periods indicated. An
onshore well is considered successful upon the installation of permanent
equipment for the production of hydrocarbons. Successful offshore wells consist
of exploratory or development wells that have been completed or are 'suspended'
pending completion (which has been determined to be feasible and economic) and
exploratory test wells that were not intended to be completed and that
encountered commercially producible hydrocarbons. A well is considered a dry
hole upon reporting of permanent abandonment to the appropriate agency.
<TABLE>
<CAPTION>
1993 1992 1991
SUCCESSFUL DRY SUCCESSFUL DRY SUCCESSFUL DRY
<S> <C> <C> <C> <C> <C> <C>
GROSS WELLS
Offshore United States
Exploratory---------------------- 5.0 1.0 -- 2.0 2.0 3.0
Development---------------------- 15.0 0 5.0 -- 13.0 --
Onshore United States
Exploratory---------------------- 3.0 4.0 4.0 2.0 2.0 4.0
Development---------------------- 61.0 1.0 34.0 -- 32.0 --
Offshore Kingdom of Thailand
Exploratory---------------------- 2.0 2.0 1.0 -- -- --
Total-------------------- 86.0 8.0 44.0 4.0 49.0 7.0
NET WELLS
Offshore United States
Exploratory---------------------- 1.7 0.1 -- 0.7 0.2 0.4
Development---------------------- 7.7 -- 1.5 -- 4.0 --
Onshore United States
Exploratory---------------------- 2.0 3.2 2.8 0.9 1.0 2.3
Development---------------------- 33.1 0.4 23.2 -- 18.2 --
Offshore Kingdom of Thailand
Exploratory---------------------- 0.6 0.6 0.3 -- -- --
Total-------------------- 45.1 4.3 27.8 1.6 23.4 2.7
</TABLE>
As of December 31, 1993, the Company was participating in the drilling of 4
gross (0.9 net) offshore domestic wells and 4 gross (2.7 net) onshore wells.

<PAGE>
PRODUCTION AND SALES

The following table summarizes the Company's average daily production, net
of all royalties, overriding royalties and other outstanding interests, for the
periods indicated. Natural gas production refers only to marketable production
of natural gas on an 'as sold' basis.

1993 1992 1991
Production Sales:
Natural Gas (Mcf per day)-------- 91,700 105,200 104,200
Crude Oil and Condensate (Bbls
per day)----------------------- 9,851 8,699 7,108
Natural Gas Liquids (Bbls per day):
Leasehold Ownership-------------- 1,538 1,037 609
Plant Ownership------------------ 140 144 54
Total------------------------ 1,678 1,181 663

The following table shows the average sales prices received by the Company
for its production and the average production (lifting) costs per unit of
production during the periods indicated.

1993 1992 1991
Sales Prices:
Natural Gas (per Mcf)------------ $ 1.98 $ 1.75 $ 1.66
Crude Oil and Condensate (per
Bbl)--------------------------- $ 17.81 $ 20.17 $ 20.98
Natural Gas Liquids (per Bbl)---- $ 11.90 $ 13.50 $ 14.21
Production (Lifting) Costs(a)
Natural Gas, Crude Oil,
Condensate and Natural Gas
Liquids (per equivalent Mcf of
Natural Gas)------------------- $ 0.45 $ 0.43 $ 0.51

(a) Production costs were converted to common units of measure on the basis of
relative energy content. Such production costs exclude all depletion and
amortization associated with property and equipment.

The Company has entered into a crude oil swap agreement with another party
in which it swapped the floating market price it received from purchasers of its
crude oil for a fixed price of $16.00 per barrel on 1,000 Bbls per day of its
production. The agreement expires July 31, 1994, but may be extended through
January 31, 1995, at the other party's option.

EMPLOYEES

As of December 31, 1993, the Company had 102 employees. None of the
Company's employees are presently represented by a union for collective
bargaining purposes. The Company considers its relations with its employees to
be excellent.

34
<PAGE>
MANAGEMENT

Set forth below is certain information concerning the executive officers and
directors of the Company as of February 15, 1994:
<TABLE>
<CAPTION>
NUMBER OF
YEARS OF
SERVICE WITH
NAME AGE POSITION COMPANY
<S> <C> <C> <C>
Paul G. Van Wagenen------------------ 48 Chairman of the Board, President and Chief 14
Executive Officer and Director
D. Stephen Slack--------------------- 44 Senior Vice President -- Finance, Chief 5
Financial Officer, Treasurer and Director
Tobin Armstrong---------------------- 70 Director 16
Jack S. Blanton---------------------- 66 Director 2
W. M. Brumley, Jr.------------------- 65 Director 23
John B. Carter, Jr.------------------ 69 Director 16
William L. Fisher-------------------- 61 Director 1
William E. Gipson-------------------- 69 Director 23
Gerrit W. Gong----------------------- 40 Director --
John Stuart Hunt--------------------- 72 Director 10
Frederick A. Klingenstein------------ 62 Director 6
Nicholas R. Petry-------------------- 75 Director 12
Jack A. Vickers---------------------- 68 Director 8
Kenneth R. Good---------------------- 56 Senior Vice President -- Land and Budgets 16
Stuart P. Burbach-------------------- 41 Vice President and Offshore Division Manager 6
Jerry A. Cooper---------------------- 45 Vice President and Western Division Manager 14
Harvey L. Gold----------------------- 58 Vice President -- Engineering 16
Thomas E. Hart----------------------- 51 Vice President and Controller 16
R. Phillip Laney--------------------- 53 Vice President and International Division 16
Manager
John O. McCoy, Jr.------------------- 42 Vice President and Chief Administrative 16
Officer
J. D. McGregor----------------------- 49 Vice President -- Sales 12
Sammie M. Shaw----------------------- 62 Vice President -- Operations 12
Ronald B. Manning-------------------- 40 Associate General Counsel and Corporate 6
Secretary
</TABLE>
Paul G. Van Wagenen became Chairman of the Board and Chief Executive Officer
of the Company in March 1991. He had previously been elected to the office of
President of the Company in October 1990. From 1986 to 1990, he served as Senior
Vice President and General Counsel of the Company and was elected a Director of
the Company in 1988. Mr. Van Wagenen joined the Company in 1979.

D. Stephen Slack has been Senior Vice President -- Finance of the Company
since 1988 and a Director of the Company since 1989. Mr. Slack was, from 1982
until 1988, Vice President and regional manager of the Southwest Energy and
Minerals Division of Chemical Bank of New York.

Tobin Armstrong has been engaged for more than five years in ranching. He
became a Director of the Company in 1977.

<PAGE>
Jack S. Blanton is President of Eddy Refining Company and Chairman of the
Board of Houston Endowment, Inc. He became a Director of the Company in
September 1991. Mr. Blanton also serves
as a Director for Ashland Oil, Inc., Texas Commerce Bancshares, Inc.,
Southwestern Bell Corporation, Baker Hughes Incorporated and Burlington
Northern, Inc.

W.M. Brumley, Jr., is a retired Senior Vice President -- Administration and
Accounting of the Company and has been a member of the Board of Directors for
more than five years. He became a Director of the Company in 1977.

John B. Carter, Jr., is Chairman of Houston National Bank. He was elected to
his current term as a Director in 1990. From 1987 to 1990, Mr. Carter was an
Advisory Director of the Company. Prior to 1987, Mr. Carter was Senior Vice
President -- Finance of the Company, a Director and a member of the Executive
Committee.

William L. Fisher is Director of the Bureau of Economic Geology and the
Director of the Geology Foundation at the University of Texas at Austin. Dr.
Fisher was formerly the Assistant Secretary -- Energy and Minerals of the U.S.
Department of the Interior. Dr. Fisher has been a Director of the Company since
February 1992. Dr. Fisher is also a Director of Diamond Shamrock, Inc.

William E. Gipson, formerly President and Chief Operating Officer of the
Company, is Chairman of Gas Investment, Inc. He has been a Director of the
Company since 1970.

Gerrit W. Gong is the Director for Asian Studies for the Center for
Strategic and International Studies, in Washington, D.C., and has served in that
capacity for more than the last five years. From 1987 to 1989 he also served as
special assistant to two U.S. Ambassadors to China. He was elected a Director of
the Company in May 1993.

John Stuart Hunt has been engaged for more than five years in managing his
personal investments. He became a Director of the Company in 1983. Mr. Hunt is
also a Director of Nomeco Oil & Gas Co. and SILCO, Inc.

Frederick A. Klingenstein has been Chairman of Klingenstein, Fields & Co.,
L.P., since January 1, 1989. He served as Chairman and Chief Executive Officer
of Wertheim Schroder & Co., Incorporated from 1972 until 1986 and as Co-chairman
and a Director of such firm from 1986 until 1988. Mr. Klingenstein has been a
Director of the Company since 1987.

Nicholas R. Petry is Chairman of the Board of Petry Company and Managing
Partner of N.G. Petry Construction Company and Mill Iron Ranches. He has been
engaged in such businesses for more than five years. He has served as a Director
of the Company since 1981. Mr. Petry is also a Director of First Bank System,
Inc.

Jack A. Vickers, as owner of the Vickers Companies, has been engaged for
more than five years in managing his investments. He became a Director of the
Company in 1985.

DESCRIPTION OF THE NOTES

The following description sets forth certain terms and provisions of the
Notes. The Notes will be issued under an Indenture (the 'Indenture') to be
entered into by the Company and Shawmut Bank Connecticut, National Association,
as trustee (the 'Trustee'), prior to the issuance of any such Notes, the form of
which is filed as an exhibit to the Registration Statement of which this
Prospectus is a part.

The terms of the Notes include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939, as
amended (the 'Trust Indenture Act'). The Notes are subject to all such terms,
and prospective purchasers of the Notes are referred to the Indenture and the
Trust Indenture Act for a statement of those terms. The statements under this
caption relating to the Notes are summaries and do not purport to be complete.
Such summaries use
36
<PAGE>
certain terms that are defined in the Indenture and are qualified in their
entirety by express reference to the Indenture. The article and section
references below are to articles and sections of the Indenture.

GENERAL

The Notes will be unsecured, subordinated obligations of the Company, will
be limited in aggregate principal amount to $75,000,000, or up to $86,250,000 if
the Underwriters exercise their over-allotment option in full, and will mature
on March 15, 2004, unless previously converted or redeemed. (Section 301)

The Company will pay interest on the Notes semi-annually following the
issuance thereof, at the rate per annum set forth on the cover of this
Prospectus, on March 15th and September 15th of each year, commencing September
15, 1994. Interest on the Notes will be paid to the persons who are registered
holders of the Notes (the 'Holders') at the close of business on the March 1st
and September 1st next preceding such interest payment date. Interest will be
computed on the basis of a 360-day year of twelve 30-day months. Principal (and
premium, if any) and interest will be payable, and the Notes may be presented
for conversion, exchange or registration of transfer, at the office or agency of
the Company maintained for such purposes in New York, New York, or at such other
office or agency as may be maintained by the Company for such purpose, except
that payment of interest may, at the option of the Company, be made by check
mailed on or before the due date to the address of the person entitled thereto
as it appears on the security register. The Notes are to be issued only in
registered form without coupons, in denominations of $1,000 or any integral
multiple thereof. (Sections 203, 301, 302, 305, 307, 310 and 1002) The Company
may maintain banking relationships in the ordinary course of business with the
Trustee or its affiliates.

CONVERSION RIGHTS

The Holder of any Note will have the right, at the Holder's option, to
convert the principal amount thereof (or any portion thereof that is an integral
multiple of $1,000) into shares of Common Stock at any time prior to maturity,
initially at the conversion price of $ per share of Common Stock (subject to
adjustments as described below), except that if a Note is called for redemption,
the right to convert such called Note will terminate at the close of business on
the Business Day (as such term is defined in the Indenture) immediately
preceding the redemption date. No payment of interest and no adjustment in
respect of dividends will be made upon the conversion of any Note, and the
Holder will lose any right to payment of interest on the Notes surrendered for
conversion; provided, however, that upon a call for redemption as described
herein by the Company, accrued and unpaid interest to the redemption date shall
be payable with respect to Notes that are converted after a notice of redemption
has been mailed and prior to the redemption date. Notes surrendered for
conversion during the period from the regular record date for an interest
payment to the corresponding interest payment date (except Notes called for
redemption as described herein) must be accompanied by payment of an amount
equal to the interest thereon which the Holder is to receive on such interest
payment date. No fractional shares will be issued upon conversion but, in lieu
thereof, an appropriate amount will be paid in cash by the Company based on the
reported last sale price for the shares of Common Stock on the day of
conversion. (Sections 1301, 1303 and 1305)

The conversion price will be subject to adjustment in certain events,
including: the issuance of stock as a dividend on the Common Stock; subdivisions
or combinations of the Common Stock; the issuance to all holders of Common Stock
of certain rights or warrants (expiring within 45 days after the record date for
determining stockholders entitled to receive them) to subscribe for or purchase
Common Stock at a price less than the current market price; or the distribution
to substantially all Holders of Common Stock of evidences of indebtedness of the
Company, cash (excluding quarterly cash dividends paid or to be paid on a
regular basis), other assets or rights or warrants to subscribe for or purchase
any securities (other than those referred to herein). No adjustment of the
conversion price will be required to be made until cumulative adjustments amount
to one percent or more of the

<PAGE>
then current conversion price; however, any adjustment not made will be carried
forward. (Section 1304)

The Company from time to time may decrease the conversion price by any
amount for any period of at least 20 days, in which case the Company shall give
at least 15 days notice to the Holders of the Notes of such decrease. The
Company may also, at its option, make such decreases in the conversion rate as
the Board of Directors of the Company deems advisable to avoid or diminish any
income tax to holders of Common Stock resulting from any dividend or
distribution of stock (or rights to acquire stock) or from any event treated as
such for income tax purposes. (Section 1304)

Generally, no gain or loss should be recognized for federal income tax
purposes upon the conversion of a Note into Common Stock (except to the extent
of cash received in lieu of fractional shares or with respect to accrued
interest). The Holder of a Note converted into Common Stock should generally
have a carryover basis in such shares and the holding period for the Common
Stock should include the holding period of the Note.

If the conversion price of the Notes is reduced (other than a reduction
pursuant to the antidilution provisions of the Indenture, provided such
provisions are deemed bona fide and reasonable under the circumstances), Holders
of Notes would be treated as receiving a deemed distribution for federal income
tax purposes that could, depending upon the then existing facts and
circumstances relating to the Common Stock and Notes, be subject to income
taxation. For example, a taxable deemed distribution is likely to occur if the
conversion price of the Notes is reduced in connection with the payment of cash
dividends to holders of Common Stock. Holders of Notes could therefore have
taxable income as a result of an event pursuant to which they received no cash
or property that could be used to pay the related income tax.

In case of any reclassification of the Common Stock, any consolidation of
the Company with, or merger of the Company into, any other person, any merger of
any person into the Company (other than a merger which does not result in any
reclassification, conversion, exchange or cancellation of outstanding shares of
Common Stock), any sale or other disposition of the assets of the Company
substantially as an entirety or any compulsory share exchange whereby the Common
Stock is converted into other securities, cash or other property, then provision
shall be made such that the Holder of Notes then outstanding shall have the
right thereafter, during the period such Notes shall be convertible, to convert
such Notes only into the kind and amount of securities, cash and other property
receivable upon such reclassification, consolidation, merger, sale, disposition
or share exchange by a holder of the number of shares of Common Stock into which
such Notes might have been converted immediately prior to such reclassification,
consolidation, merger, sale, disposition or share exchange. (Section 1306)

SUBORDINATION

Payment of the principal of and premium, if any, and interest on the Notes
will be subordinated in right of payment, as set forth in the Indenture, to the
prior payment in full of all Senior Indebtedness of the Company when due in
accordance with the terms thereof. Senior Indebtedness is defined in the
Indenture as the principal of, premium, if any, and unpaid interest (including,
without limitation, any interest accruing subsequent to the commencement of a
case or other proceeding under any bankruptcy or other similar law with respect
to the Company) on, and other obligations in respect of the following, whether
outstanding at the date of the Indenture or thereafter incurred or created: (a)
indebtedness of the Company for money borrowed (including purchase money
obligations) evidenced by notes or other written obligations, (b) indebtedness
of the Company evidenced by notes, debentures, bonds or other securities issued
under the provisions of an indenture or similar instrument, (c) indebtedness
secured by any mortgage, pledge, lien or other encumbrance existing on property
which is owned or held by the Company subject to such mortgage, pledge or
encumbrance, whether or not indebtedness secured thereby shall have been assumed
by the Company, (d) obligations of the Company as lessee under capitalized
leases and under leases of property made as part of

<PAGE>

any sale and leaseback transactions, (e) obligations of the Company in respect
of letters of credit issued for its account and 'swaps' of interest rates,
commodity prices or currencies (and other interest rate, commodity price or
foreign currency hedging agreements) to which the Company is a party,
(f) indebtedness of others of any of the kinds described in the preceding
clauses (a) through (e) assumed or guaranteed by the Company and (g) renewals,
extensions and refundings of, and indebtedness and obligations of a successor
person issued in exchange for or in replacement of, indebtedness or obligations
of the kinds described in the preceding clauses (a) through (f); provided,
however, that the following will not constitute Senior Indebtedness: (i) any
indebtedness or obligation which by its terms refers explicitly to the Notes and
states that such indebtedness or obligation shall not be senior in right of
payment thereto, (ii) any indebtedness or obligation of the Company in respect
of the Notes and (iii) any indebtedness or obligation of the Company to a
subsidiary. (Sections 101 and 1401) Notwithstanding the foregoing, all
indebtedness and obligations of the Company in respect of the 8% Debentures and
the 10.25% Notes shall rank PARI PASSU with the Notes and shall not constitute
Senior Indebtedness under the Indenture.

Upon the sale of the Notes and the application of the proceeds therefrom,
approximately $19,000,000 aggregate principal amount of Senior Indebtedness is
expected to be outstanding. See 'Use of Proceeds' and 'Capitalization.' There
are no restrictions on the incurrence of indebtedness, including Senior
Indebtedness, or other liabilities by the Company or its subsidiaries in the
Indenture.

By reason of such subordination, in the event of dissolution, insolvency,
bankruptcy or other similar proceeding, Holders of the Notes may recover less,
ratably, than holders of Senior Indebtedness and other general creditors of the
Company, and, upon any distribution of assets, the Holders of Notes will be
required to pay over their share of such distribution to the holders of Senior
Indebtedness until such Senior Indebtedness is paid in full. In addition, such
subordination may affect the Company's obligation to make principal and interest
payments with respect to the Notes if any Notes are declared due and payable
prior to their stated maturity, or in the event of any default in the payment of
principal of or premium, if any, or interest on any Senior Indebtedness, or in
the payment of any commitment or other fees in respect thereof, or in the event
of any default with respect to Senior Indebtedness that would permit
acceleration of the maturity thereof, or in the event a judicial proceeding is
pending with respect to any such Senior Indebtedness default. (Sections 1402,
1403 and 1404)

REDEMPTION AT OPTION OF COMPANY

The Notes are not redeemable prior to March 15, 1998. On and after March 15,
1998, the Notes are redeemable at the option of the Company, in whole or in
part, at any time during the 12-month periods beginning March 15 of the years
indicated at the following Redemption Prices (expressed as percentages of the
principal amount):

REDEMPTION
YEAR PRICE
1998-------------------------------------------------------------
1999-------------------------------------------------------------
2000-------------------------------------------------------------
2001-------------------------------------------------------------
2002-------------------------------------------------------------
2003-------------------------------------------------------------

together in each case with accrued and unpaid interest to the date fixed for
redemption (subject to the right of Holders of record on the regular record date
to receive interest due on an interest payment date). (Sections 203, 1101 and
1108)
39

<PAGE>

Notes in any denomination equal to or larger than $1,000 may be redeemed in
whole or in part in multiples of $1,000. On and after the redemption date,
interest will cease to accrue on Notes or portions thereof called for
redemption. (Sections 1104 and 1107)

Accrued and unpaid interest to the redemption date shall be payable with
respect to Notes that are converted after a notice of redemption has been mailed
and prior to the redemption date. (Section 1303)

Notice of redemption will be mailed at least 30 but not more than 60 days
prior to the redemption date to each Holder of Notes to be redeemed at the
address appearing in the security register maintained by the Company. If less
than all the outstanding Notes are to be redeemed, the Trustee will select the
Notes (or a portion thereof equal to $1,000 or any integral multiple thereof) to
be redeemed by such method as the Trustee shall deem fair and appropriate.
(Sections 1104 and 1105)

CERTAIN RIGHTS TO REQUIRE REPURCHASE OF NOTES

In the event of any Change in Control (as hereafter defined) of the Company
which constitutes a Repurchase Event (as hereafter defined) occurring after the
initial date of issuance of the Notes, each Holder of Notes will have the right,
at the Holder's option, to require the Company to repurchase all or any part of
the Holder's Notes on a date (the 'Repurchase Date') selected by the Company
that is not more than 75 days after the date the Company gives notice of the
Repurchase Event as described below at a price (the 'Repurchase Price') equal to
100% of the principal amount thereof, together with accrued and unpaid interest
to the Repurchase Date. On or prior to the Repurchase Date, the Company shall
deposit with the Trustee or a Paying Agent an amount of money sufficient to pay
the Repurchase Price of the Notes which are to be repaid on or promptly
following the Repurchase Date. (Sections 1201 and 1203)

On or before the 15th day after the occurrence of a Repurchase Event, the
Company is obligated to mail to all Holders of Notes a notice of the occurrence
of such Repurchase Event, Repurchase Date, the date by which the repurchase
right must be exercised, the Repurchase Price and the procedures which the
Holder must follow to exercise this right. To exercise the Repurchase Right, the
Holder of Notes must deliver, on or before the close of business on the Business
Day next preceding the Repurchase Date, written notice to the Company (or an
agent designated by the Company for such purpose) and to the Trustee of the
Holder's intent to exercise such rights, together with the Notes with respect to
which the right is being exercised, duly endorsed for transfer. Such written
notice will be irrevocable. (Section 1202)

A 'Change in Control' shall occur when: (i) the Company's assets are sold or
otherwise disposed of substantially as an entirety to any person or related
group of persons in any one transaction or a series of related transactions;
(ii) there shall be consummated any consolidation or merger of the Company (A)
in which the Company is not the continuing or surviving corporation (other than
a consolidation or merger with a wholly owned subsidiary of the Company in which
all shares of Common Stock outstanding immediately prior to the effectiveness
thereof are changed into or exchanged for the same number of shares of common
stock of such subsidiary) or (B) pursuant to which the Common Stock would be
converted into cash, securities or other property, in each case, other than a
consolidation or merger of the Company in which the holders of the Common Stock
immediately prior to the consolidation or merger have, directly or indirectly,
at least a majority of the common stock of the continuing or surviving
corporation immediately after such consolidation or merger; or (iii) any person,
or any persons acting together which would constitute a 'group' for purposes of
Section 13(d) of the Exchange Act (other than the Company, any Subsidiary, any
employee stock purchase plan, stock option plan or other stock incentive plan or
program, retirement plan or automatic dividend reinvestment plan or any
substantially similar plan of the Company or any Subsidiary or any person
holding securities of the Company for or pursuant to the terms of any such
employee benefit plan), together with any affiliates thereof, shall acquire
beneficial ownership
40

<PAGE>
(as defined in Rule 13d-3 under the Exchange Act) of at least 50% of the total
voting power of all classes of capital stock of the Company entitled to vote
generally in the election of directors of the Company. (Section 1206)

A Change in Control as described above shall constitute a Repurchase Event
unless (i) the Current Market Price of the Common Stock on the date the Change
in Control shall have occurred is at least equal to 105% of the conversion price
of the Notes in effect immediately preceding the time of such Change in Control,
or (ii) all of the consideration (excluding cash payments for fractional shares)
in the transaction giving rise to such Change in Control to the holders of
Common Stock consists of shares of common stock that are, or immediately upon
issuance will be, listed on a national securities exchange or quoted on the
NASDAQ National Market, and as a result of such transaction the Notes become
convertible solely into such common stock, or (iii) the consideration in the
transaction giving rise to such Change in Control to the holders of Common Stock
consists of cash, securities that are, or immediately upon issuance will be,
listed on a national securities exchange or quoted on the NASDAQ National
Market, or a combination of cash and such securities and the aggregate fair
market value of such consideration (which, in the case of such securities, shall
be equal to the average of the daily Closing Prices of such securities during
the ten consecutive trading days commencing with the sixth trading day following
consummation of such transaction) is at least 105% of the conversion price of
the Notes in effect on the date immediately preceding the closing date of such
transaction. (Section 1206)

The right to require the Company to repurchase Notes as a result of the
occurrence of a Repurchase Event could create an event of default under Senior
Indebtedness of the Company, as a result of which any repurchase could, absent a
waiver, be blocked by the subordination provisions of the Notes. See
' -- Subordination.' Failure by the Company to repurchase the Notes when
required would result in an Event of Default (as herein defined) with respect to
the Notes whether or not such repurchase were permitted by the subordination
provisions. See '-- Defaults and Remedies.' The Company's ability to pay cash to
the Holders of Notes upon a repurchase might be limited by certain financial
covenants contained in the Company's Senior Indebtedness. In addition, there can
be no assurance that the Company would have sufficient financial resources at
the time of any such required purchase to enable it to purchase the Notes.
(Sections 501 and 1404)

In the event a Repurchase Event occurs and the Holders exercise their rights
to require the Company to repurchase Notes, the Company intends to comply with
applicable tender offer rules under the Exchange Act, including Rules 13e-4 and
14e-1, as then in effect, with respect to any such purchase.

The foregoing provisions would not necessarily afford Holders of Notes
protection in the event of highly leveraged or other transactions involving the
Company that may adversely affect Holders. In addition, the foregoing provisions
may discourage open market purchases of the Common Stock or a non-negotiated
tender or exchange offer for such stock and accordingly, may limit a
shareholder's ability to realize a premium over the market price of the Common
Stock in connection with any such transaction.

CONSOLIDATION, MERGER AND SALE OF ASSETS

The Company, without the consent of any Holders of Notes, may consolidate or
merge with or into any person, or convey, transfer, lease or otherwise dispose
of its assets substantially as an entirety to any person, and any person may
consolidate or merge with, or into, or transfer or lease its assets
substantially as an entirety to, the Company, provided that (i) the person (if
other than the Company) formed by such consolidation or into which the Company
is merged or which acquires or leases the assets of the Company substantially as
an entirety is organized and existing under the laws of the United States, any
state thereof or the District of Columbia, and assumes the Company's obligations
on the Notes and under the Indenture, (ii) after giving effect to such
transaction, no Event of Default
41

<PAGE>
and no event that, after notice or lapse of time or both, would become an Event
of Default, shall have happened and be continuing and (iii) certain procedural
conditions are met. (Article Eight)

DEFAULTS AND REMEDIES

The Indenture defines the following as Events of Default: default for 30
days in payment of interest on the Notes; default in payment of principal of or
premium, if any, on the Notes; default for more than 10 days after a Repurchase
Date in payment of the Repurchase Price; failure by the Company for 60 days
after written notice to it to comply with any of its other covenants in the
Indenture; default by the Company under any instrument or other evidence of
indebtedness of the Company for money borrowed, or under any guarantee of
payment by the Company for money borrowed, in an amount in excess of five
percent of Consolidated Net Tangible Assets (as defined below), unless such
default has been cured or waived; and certain events of bankruptcy, insolvency
or reorganization relative to the Company. (Section 501)

'Consolidated Net Tangible Assets' means the total amount of assets of the
Company and its Subsidiaries (less depreciation, depletion, valuation and other
reserves) after deducting (i) all current liabilities, (ii) all goodwill, trade
names, trademarks, patents, unamortized debt discount and expense and other like
intangibles and (iii) minority interests in the equity of Subsidiaries. (Section
101)

If an Event of Default occurs and is continuing, the Trustee or Holders of
at least 25% in aggregate principal amount of the Notes outstanding may declare
the principal of the Notes to be due and payable immediately, but under certain
conditions, such acceleration may be rescinded by the Holders of a majority in
principal amount of the Notes then outstanding. (Sections 502 and 513).

Holders of Notes may not enforce the Indenture except as provided in such
Indenture and except that, subject to any applicable subordination provisions,
nothing shall prevent the Holders of Notes from enforcing payment of the
principal of or premium, if any, or interest on, their Notes. The Trustee may
refuse to enforce the Indenture unless it receives reasonable security or
indemnity. Subject to certain limitations, Holders of a majority in aggregate
principal amount of the Notes may direct the Trustee in its exercise of any
trust or power under the Indenture. (Sections 507, 508, 512 and 603)

The Company will annually furnish the Trustee with an officers' certificate
with respect to compliance with the terms of the Indenture. (Section 1005)

MODIFICATION

Modification and amendment of the Indenture may be effected by the Company
and the Trustee with the consent of the Holders of a majority in aggregate
principal amount of the Notes then outstanding under the Indenture, provided
that no such modification or amendment may, without the consent of each Holder
affected thereby, (i) reduce the rate or change the time or place for payment of
principal, premium if any, or interest on any Note, (ii) reduce the principal of
or rate of interest thereon, or the premium, if any, payable upon the redemption
of, or change the fixed maturity of, any Note, (iii) make any Note payable in a
currency other than U.S. dollars, (iv) impair the right to institute suit for
the enforcement of any payment on or with respect to any such Note, (v) make any
change that adversely affects the right convert any Note or (vi) reduce the
amount of Notes whose Holders must consent to a modification or amendment or
waive compliance with certain provisions of the Indenture. The Indenture also
contains provisions permitting the Company and the Trustee to effect certain
minor modifications to the Indenture not adversely affecting the rights of
Holders of Notes in any material respect. (Sections 901 and 902)

GOVERNING LAW

The Notes and the Indenture provide that they are governed by the laws of
the State of New York, without regard to the principles of conflicts of laws.
(Section 112)
42

<PAGE>
CONCERNING THE TRUSTEE

The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any such
claim as security or otherwise. The Trustee will be permitted
to engage in other transactions with the Company; provided, however, if it
acquires any conflicting interest and there exists a default with respect to the
Notes, it must eliminate such conflict or resign. (Sections 608 and 613)

The Holders of a majority in aggregate principal amount of all outstanding
Notes will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy or power available to the Trustee under the
Indenture, provided that such direction does not conflict with any rule of law
or with the Indenture and would not involve the Trustee in personal liability or
be unduly prejudicial to Holders of Notes not joining in such action (as
determined by the Trustee in good faith). (Section 512)

In case a default or an Event of Default under the Indenture shall occur and
be continuing and if it is known to the Trustee, the Trustee shall mail to each
Holder of Notes notice of the default or Event of Default within 90 days after
it occurs. Except in the case of a default or an Event of Default in payment of
the principal of, premium, if any, or interest on any Note, the Trustee may
withhold the notice if and so long as the Trustee in good faith determines that
withholding the notice is in the interest of Holders of Notes. Subject to such
provisions, when the Trustee incurs expenses or renders services after an Event
of Default, the expenses and the compensation for the services are intended to
constitute expenses of administration under any bankruptcy law. (Sections 602
and 607)

DESCRIPTION OF CAPITAL STOCK

AUTHORIZED AND OUTSTANDING CAPITAL STOCK

The authorized capital stock of the Company consists of 43,333,333 shares of
Common Stock, of which 32,433,622 shares were issued and outstanding as of
December 31, 1993; and 2,000,000 shares of preferred stock, par value $1 per
share (the 'Preferred Stock'), of which no shares are issued and outstanding.
The following summary description of the capital stock of the Company is
qualified in its entirety by reference to the Company's Restated Certificate of
Incorporation and Bylaws, copies of which are incorporated by reference as
exhibits to the Registration Statement of which this Prospectus is a part.

COMMON STOCK

Subject to any preferential rights of any outstanding shares of Preferred
Stock, the holders of the Common Stock are entitled to such dividends as may be
declared from time to time in the discretion of the Board of Directors out of
funds legally available therefor. See 'Price Range of Common Stock and
Dividends.' Holders of Common Stock are entitled to share ratably in the net
assets of the Company upon liquidation after payment or provision for all
liabilities and any preferential liquidation rights of any Preferred Stock then
outstanding. The rights of holders of Common Stock are subject to the rights of
holders of any Preferred Stock which may be issued in the future. The holders of
Common Stock have no preemptive rights to purchase additional shares of capital
stock of the Company. Shares of Common Stock are not subject to any redemption
or sinking fund provisions and are not convertible into any other securities of
the Company.

Each share of Common Stock entitles the holder thereof to one vote at all
meetings of the stockholders of the Company. The affirmative vote of the holders
of at least 80% of the outstanding shares of Common Stock is required (i) to
approve a merger, similar reorganization or certain other transactions involving
the Company if the other party already owns or controls five percent of the
outstanding Common Stock and the Board of Directors of the Company has not
approved the transaction; (ii) to approve an amendment to the Company's Restated
Certificate of Incorporation to alter or change the provision establishing a
'classified' Board of Directors of not less than three nor more than thirteen
members, elected one-third annually; and (iii) to amend the foregoing and
certain other provisions of the Restated Certificate of Incorporation.

<PAGE>
The Company's capital stock has noncumulative voting rights, meaning that
the holders of more than 50% of the voting power of the shares voting for the
election of directors can elect 100% of the directors if they choose to do so.
In such event, the holders of the remaining less-than-50% of the voting power of
the shares voting for the election of directors will not be able to elect any
directors.

PREFERRED STOCK

The Board of Directors of the Company is empowered, without approval of the
stockholders, to cause shares of Preferred Stock to be issued in one or more
series, with the number of shares of each series and the rights, preferences and
limitations of each series to be determined by it. Among the specific matters
that may be determined by the Board of Directors are the description and number
of shares to constitute each series, the annual dividend rate, whether such
dividends shall be cumulative, the time and price of redemption and the
liquidation preference applicable to the series, whether the series will be
subject to the operation of a 'sinking' or 'purchase' fund and, if so, the terms
and provisions thereof, whether the shares of such series shall be convertible
into shares of any other class or classes and the terms and provisions of such
conversion rights, and the voting powers, if any, of the shares of such series.
The Board of Directors may change the designation, rights, preferences,
descriptions and terms of, and the number of shares in, any series of which no
shares have theretofore been issued.

The issuance of one or more series of Preferred Stock could adversely affect
the voting power of the holders of the Common Stock and could have the effect of
discouraging or making more difficult any attempt by a person or group to obtain
control of the Company.

TRANSFER AGENTS AND REGISTRARS

The Transfer Agents and Registrars for the Common Stock are Harris Trust
Company of New York, New York, and Society National Bank, Houston, Texas.

DELAWARE LAW

The Company is subject to Section 203 of the Delaware General Corporation
Law. In general, Section 203 prevents an interested stockholder (defined
generally as any person owning 15% or more of the Company's outstanding voting
stock) from engaging in a business combination (as defined herein) with a
Delaware corporation for a period of three years from the date such person
becomes an interested stockholder, unless (i) before such person became an
interested stockholder, the board of directors of the corporation approved the
transaction in which the interested stockholder became an interested stockholder
or approved the business combination; (ii) upon consummation of the transaction
that resulted in the interested stockholder's becoming an interested
stockholder, the interested stockholder owned at least 85% of the voting stock
of the corporation outstanding at the time the transaction commenced (excluding
stock held by directors who are also officers of the corporation and by employee
stock plans that do not provide employees with the rights to determine
confidentially whether the shares held subject to the plan will be tendered in a
tender or exchange offer); or (iii) following the transaction in which such
person became an interested stockholder, the business combination is approved by
the board of directors of the corporation and authorized at a meeting of
stockholders by the affirmative vote of the holders of at least two-thirds of
the outstanding voting stock of the corporation not owned by the interested
stockholder. Under Section 203, the restrictions described above also do not
apply to certain business combinations proposed by an interested stockholder
following the announcement or notification of one of certain extraordinary
transactions involving the corporation and a person who had not been an
interested stockholder during the previous three years or who became an
interested stockholder with the approval of a majority of the corporation's
directors, if such extraordinary transaction is approved or not opposed by a
majority of the directors who were directors prior to any person becoming an
interested stockholder during the previous three years or who were recommended
for election or elected to succeed such directors by a majority of such
directors. By restricting the ability of the Company to engage in business
combinations with an interested person, the application of Section 203 to the
Company may provide a barrier to hostile or unwanted takeovers.

<PAGE>
UNDERWRITING

Subject to the terms and conditions set forth in a purchase agreement (the
'Purchase Agreement') among the Company and Merrill Lynch, Pierce, Fenner &
Smith Incorporated, Goldman, Sachs & Co. and PaineWebber Incorporated (the
'Underwriters'), the Company has agreed to sell to the Underwriters, and the
Underwriters have severally agreed to purchase, the principal amount of Notes
set forth opposite their respective names below (excluding the Notes subject to
the Underwriters' overallotment option):

PRINCIPAL
UNDERWRITER AMOUNT
Merrill Lynch, Pierce, Fenner & Smith
Incorporated-------------- $
Goldman, Sachs & Co.-----------------
PaineWebber Incorporated-------------
Total--------------------- $75,000,000

The Purchase Agreement provides that, subject to the terms and conditions
set forth therein, the Underwriters will be obligated to purchase the entire
principal amount of the Notes offered hereby (other than those covered by the
over-allotment option described herein) if any such Notes are purchased.

The Company has granted to the Underwriters an option, exercisable for 30
days from the date of this Prospectus, to purchase up to an additional
$11,250,000 aggregate principal amount of the Notes at the initial public
offering price, less the underwriting discount, set forth on the cover page of
this Prospectus. The Underwriters may exercise such option solely to cover
over-allotments, if any, in the sale of the Notes.

The Company has been advised by the several Underwriters that they propose
to initially offer the Notes to the public at the public offering price set
forth on the cover page of this Prospectus, and to certain dealers at such price
less a concession not in excess of % of the principal amount thereof. The
Underwriters may allow, and such dealers may reallow, a discount not in excess
of % of the principal amount of the Notes to certain other dealers. After the
initial public offering of the Notes, the public offering price, concession and
discount may be changed by the Underwriters.

The Notes are a new issue for which there is currently no public market. The
Company does not intend to apply for listing of the Notes on any securities
exchange or for quotation on the NASDAQ National Market. The Company has been
advised by the Underwriters that, following the completion of the Offering, each
of the Underwriters presently intends to make a market in the Notes, as
permitted by applicable law and regulations. The Underwriters are under no
obligation, however, to do so and may discontinue any market-making activities
at any time without notice. No assurance can be given as to the liquidity of the
trading market for the Notes or that an active trading market for the Notes will
develop. If an active public market does not develop, the market price and
liquidity of the Notes may be adversely affected.

The Company has agreed that it will not offer, sell, contract to sell or
otherwise dispose of, or register under the Securities Act on behalf of another
person, any shares of Common Stock or preferred stock, any securities
convertible into or exercisable or exchangeable for shares of Common Stock or
any rights to acquire shares of Common Stock for a period of 90 days from the
date of the Prospectus without the written consent of the Underwriters, except
that the Company may, without such consent, issue (i) shares of Common Stock
issuable upon conversion of the Notes, (ii) shares of Common Stock issuable upon
conversion of the 10.25% Notes or the 8% Debentures, (iii) shares of Common
Stock issuable pursuant to options or similar rights granted to directors,
officers or employees, and (iv) shares of Common Stock issuable pursuant to any
other employee benefit plans of the Company.

The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities arising under the Securities Act, and to
contribute to payments the Underwriters may be required to make in respect of
such liabilities.

<PAGE>
LEGAL OPINIONS

Certain legal matters in connection with the Notes being offered hereby will
be passed upon for the Company by Baker & Botts, L.L.P., Houston, Texas and for
the Underwriters by Vinson & Elkins L.L.P., Houston, Texas.

EXPERTS

The consolidated financial statements and schedules of the Company included
or incorporated by reference in this Prospectus and elsewhere in the
Registration Statement have been audited by Arthur Andersen & Co., independent
public accountants, as indicated in their reports with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in giving
said reports.

The estimates of oil and gas reserves and discounted present values of
estimated future net revenues therefrom set forth herein are extracted from the
report of Ryder Scott attached as an exhibit to the Annual Report. Such
information is included herein in reliance upon the authority of said firm as
experts with respect to the matters contained in such report.

<PAGE>
GLOSSARY OF OIL AND GAS TERMS

The following are abbreviations and definitions of terms commonly used in
the oil and gas industry and in this Prospectus.

'Bcf' means billion cubic feet.

'Bbl' means barrel.

'Mcf' means thousand cubic feet.

'MMcf' means million cubic feet.

'MBbls' means thousand barrels.

'MMBbls' means million barrels.

'Deliverability' means a measure of the quantity of natural gas that a
natural gas well can produce into a pipeline against a specific contractual
back pressure.

'Development well' means a well drilled within areas already proved to be
productive.

'Energy equivalent basis' means equating natural gas based on relative
energy content, using the ratio of six Mcf of natural gas to one Bbl of
crude oil, condensate or natural gas liquids.

'Exploratory well' means a well drilled to find commercially productive
hydrocarbons in an unproved area.

'Gross' oil and gas wells or 'gross' acres are the total number of wells or
acres in which the Company has an interest, without regard to the size of
that interest.

'Net' oil and gas wells or 'net' acres are determined by multiplying gross
wells or acres by the Company's working interest in those wells or acres.

'Net revenue interest' means the percentage of production to which the owner
of a working interest is entitled. For example, the owner of a 100% working
interest in a well burdened only by a typical landowner's royalty would have
an 87.5% net revenue interest in that well.

'Proved Reserves' means estimated quantities of natural gas and crude oil,
condensate and natural gas liquids, on a net revenue interest basis, that
geological and engineering data demonstrate with reasonable certainty to be
recoverable in the future from known reservoirs under existing economic and
operating conditions.

'Royalty' means an interest in an oil and gas lease that gives the owner of
the interest the right to receive a portion of the production from the
leased acreage (or of the proceeds of the sale thereof), but does not
require the owner to pay any portion of the costs of drilling or operating
the wells on the leased acreage. Royalties may be either landowner's
royalties, which are reserved by the owner of the leased acreage at the time
the lease is granted, or overriding royalty interests, which are usually
reserved by a leasehold owner upon a transfer to a subsequent owner.

'Undeveloped acreage' means acreage on which wells have not been drilled or
completed for commercial production, whether or not such acreage contains
proved reserves.

'Working interest' means an interest in an oil and gas lease that gives the
owner of the interest the right to drill for and produce oil and gas on the
leased acreage and requires the owner to pay a share of the costs of
drilling and production operations. The share of production to which a
working interest owner is entitled will always be smaller than the share of
costs that the working interest owner is required to bear, with the balance
of the production accruing to the owners of royalties. See the definitions
of 'net revenue interest' and 'royalty' above. For example, the owner of
100% working interest in a lease burdened only by a typical landowner's
royalty would be required to pay 100% of the costs of a well but would be
entitled to retain 87.5% of the production. The remaining 12.5% would accrue
to the royalty owners.

'Workover' means operations on a producing well to restore or increase
production.

47
<PAGE>
INDEX TO FINANCIAL STATEMENTS

PAGE
Report of Independent Public
Accountants------------------ F-2
Consolidated Statements of
Income----------------------- F-3
Consolidated Balance
Sheets----------------------- F-4
Consolidated Statements of
Cash Flows------------------- F-5
Consolidated Statements of
Shareholders' Equity--------- F-6
Notes to Consolidated
Financial Statements--------- F-7
Unaudited Supplementary
Financial Data--------------- F-14

F-1

<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Shareholders and Board of Directors of Pogo Producing Company:

We have audited the accompanying consolidated balance sheets of Pogo
Producing Company (a Delaware corporation) and subsidiaries as of December 31,
1993 and 1992, and the related consolidated statements of income, shareholders'
equity and cash flows for each of the three years in the period ended December
31, 1993. These financial statements and the schedules referred to below are the
responsibility of Pogo's management. Our responsibility is to express an opinion
on these financial statements and schedules based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Pogo Producing Company and
subsidiaries as of December 31, 1993 and 1992, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1993, in conformity with generally accepted accounting principles.

ARTHUR ANDERSEN & CO.

Houston, Texas
February 8, 1994

F-2

<PAGE>
POGO PRODUCING COMPANY & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME

YEAR ENDED DECEMBER 31,
1993 1992 1991
(EXPRESSED IN THOUSANDS,
EXCEPT PER SHARE AMOUNTS)
Revenues:
Oil and gas---------------------- $ 136,553 $ 139,128 $ 124,425
Interest on tax refund----------- 2,322 -- --
Gains on sales------------------- 679 1,702 44
Total------------------------ 139,554 140,830 124,469
Operating Costs and Expenses:
Lease operating------------------ 26,633 25,842 28,192
General and administrative------- 14,550 13,129 14,555
Exploration---------------------- 2,455 3,102 2,408
Dry hole and impairment---------- 4,690 9,314 4,554
Depreciation, depletion and
amortization------------------- 40,693 42,302 37,521
Total------------------------ 89,021 93,689 87,230
Operating Income--------------------- 50,533 47,141 37,239
Interest:
Charges-------------------------- (10,956) (19,036) (24,946)
Income--------------------------- 14 191 1,686
Capitalized---------------------- 451 391 637
Income Before Taxes and Extraordinary
Item--------------------------------- 40,042 28,687 14,616
Income Tax Expense------------------- (14,981) (10,192) (4,294)
Income Before Extraordinary Item----- 25,061 18,495 10,322
Extraordinary Gains on Purchase of
Debt, net of tax------------------- -- -- 1,336
Net Income--------------------------- $ 25,061 $ 18,495 $ 11,658
Primary and Fully Diluted Earnings
per
Common Share:
Before extraordinary item-------- $0.76 $0.66 $0.37
Extraordinary item--------------- -- -- 0.05
Net income----------------------- $0.76 $0.66 $0.42

The accompanying notes to consolidated financial statements are an integral part
hereof.

F-3

<PAGE>
POGO PRODUCING COMPANY & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

DECEMBER 31,
1993 1992
(EXPRESSED IN
THOUSANDS)
ASSETS
Current Assets:
Cash and cash investments-------- $ 6,713 $ 5,037
Accounts receivable-------------- 18,480 22,652
Other receivables---------------- 10,123 4,173
Federal income taxes and interest
receivable--------------------- 3,320 --
Inventories---------------------- 1,105 1,383
Other---------------------------- 727 367
Total current assets--------- 40,468 33,612
Property and Equipment:
Oil and gas, on the basis of
successful efforts accounting
Proved properties being
amortized------------------ 817,218 869,192
Unproved properties and
properties under
development, not being
amortized------------------ 6,465 5,962
Other, at cost------------------- 6,961 6,851
830,644 882,005
Less -- accumulated depreciation,
depletion, and amortization,
including $4,452 and $4,032,
respectively, applicable to
other property----------------- 638,658 717,428
191,986 164,577
Other-------------------------------- 7,320 8,158
$ 239,774 $ 206,347

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities:
Accounts payable----------------- $ 8,307 $ 9,899
Other payables------------------- 22,955 5,541
Current portion of long-term
debt--------------------------- 4,000 4,000
Current portion of production
payment------------------------ -- 10,517
Accrued interest payable--------- 1,202 1,122
Accrued payroll and related
benefits----------------------- 1,005 942
Other---------------------------- 122 142
Total current liabilities---- 37,591 32,163
Long-Term Debt----------------------- 130,539 129,260
Production Payment------------------- -- 14,337
Deferred Federal Income Tax---------- 29,724 17,435
Deferred Credits--------------------- 8,117 7,504
Total liabilities------------ 205,971 200,699
Shareholders' Equity:
Preferred stock, $1 par;
2,000,000 shares authorized---- -- --
Common stock, $1 par; 43,333,333
shares authorized, 32,449,197
and 32,103,864 shares issued,
respectively------------------- 32,449 32,104
Additional capital--------------- 125,919 122,846
Retained earnings (deficit)------ (124,241) (149,302)
Treasury stock, at cost---------- (324) --
Total shareholders'
equity--------------------- 33,803 5,648
$ 239,774 $ 206,347

The accompanying notes to consolidated financial statements are an integral part
hereof.

F-4

<PAGE>
POGO PRODUCING COMPANY & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

YEAR ENDED DECEMBER 31,
1993 1992 1991
(EXPRESSED IN THOUSANDS)
Cash flows from operating activities:
Cash received from customers------- $ 141,012 $ 135,877 $ 125,029
Operating, exploration, and general
and administrative expenses
paid------------------------------ (45,051) (41,360) (46,746)
Interest paid---------------------- (10,912) (21,262) (26,701)
Payment of royalties and related
interest on FERC Order 94-A
refunds--------------------------- -- (4,872) --
Federal income taxes paid---------- (2,800) (1,500) (2,900)
Federal income taxes and interest
received-------------------------- -- -- 30,836
Settlement of natural gas sales
contract-------------------------- -- -- 3,300
Proceeds of life insurance
policy---------------------------- -- -- 2,568
Other------------------------------ 895 828 2,974
Net cash provided by
operating activities------- 83,144 67,711 88,360
Cash flows from investing activities:
Capital expenditures--------------- (62,353) (30,304) (51,284)
Purchase of proved reserves-------- -- (8,924) (5,077)
Proceeds from the sale of property
and tubular stock----------------- 2,713 4,017 2,150
Net cash used in investing
activities----------------- (59,640) (35,211) (54,211)
Cash flows from financing activities:
Net borrowings (payments) under
revolving credit agreements------- 8,000 (1,000) 17,000
Principal payments of other
long-term debt obligations-------- (7,000) (54,000) (42,000)
Principal payments of production
payment obligation---------------- (24,854) (20,621) (14,611)
Proceeds from exercise of stock
options--------------------------- 2,026 703 123
Proceeds from issuance of common
stock----------------------------- -- 43,313 --
Debt issue expenses paid----------- -- (1,100) --
Increase in production payment----- -- -- 13,193
Purchase of 8% debentures, due
2005------------------------------ -- -- (7,621)
Net cash used in financing
activities----------------- (21,828) (32,705) (33,916)
Net increase (decrease) in cash and
cash investments-------------------- 1,676 (205) 233
Cash and cash investments at the
beginning of the year--------------- 5,037 5,242 5,009
Cash and cash investments at the end
of the year------------------------- $ 6,713 $ 5,037 $ 5,242
Reconciliation of net income to net
cash provided by operating
activities:
Net income------------------------- $ 25,061 $ 18,495 $ 11,658
Adjustments to reconcile net income
to net cash provided by operating
activities --
Gains on purchase of 8%
debentures, due 2005:
Ordinary----------------------- -- -- (646)
Extraordinary, net of taxes---- -- -- (1,336)
Gains on sales------------------- (679) (1,702) (44)
Depreciation, depletion and
amortization-------------------- 40,693 42,302 37,521
Dry hole and impairment---------- 4,690 9,314 4,554
Interest capitalized------------- (451) (391) (637)
Change in assets and liabilities:
Decrease in United Kingdom tax
escrow deposit---------------- -- -- 2,083
(Increase) decrease in accounts
receivable-------------------- 4,172 (1,191) 4,799
(Increase) decrease in federal
income taxes and interest
receivable-------------------- (3,320) -- 29,002
Increase in other current
assets------------------------ (360) (27) (32)
(Increase) decrease in other
assets------------------------ 838 (3,515) 1,641
Increase (decrease) in accounts
payable----------------------- (1,592) 733 (1,322)
Increase (decrease) in accrued
interest payable-------------- 80 (2,480) (1,342)
Increase (decrease) in accrued
payroll and related
benefits---------------------- 63 (244) 375
Increase (decrease) in other
current liabilities----------- (20) (9) 62
Increase in deferred federal
income taxes------------------ 13,356 8,669 1,268
Increase (decrease) in deferred
credits----------------------- 613 (2,243) 756
Net cash provided by operating
activities-------------------------- $ 83,144 $ 67,711 $ 88,360

The accompanying notes to consolidated financial statements are an integral part
hereof.

F-5

<PAGE>
<TABLE>
POGO PRODUCING COMPANY & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

<CAPTION>
SHARE-
RETAINED HOLDERS'
SHARES COMMON ADDITIONAL EARNINGS TREASURY EQUITY
OUTSTANDING STOCK CAPITAL (DEFICIT) STOCK (DEFICIT)
(DOLLARS EXPRESSED IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1990--------- 27,428,652 $ 27,428 $ 83,598 $ (179,455) $ -- $ (68,429)
Net income--------------------------- -- -- -- 11,658 -- 11,658
Exercise of stock options------------ 28,170 29 106 -- -- 135
Balance at December 31, 1991--------- 27,456,822 27,457 83,704 (167,797) -- (56,636)
Net income--------------------------- -- -- -- 18,495 -- 18,495
Issuance of common stock------------- 4,500,000 4,500 38,368 -- -- 42,868
Exercise of stock options------------ 147,042 147 774 -- -- 921
Balance at December 31, 1992--------- 32,103,864 32,104 122,846 (149,302) -- 5,648
Net income--------------------------- -- -- -- 25,061 -- 25,061
Exercise of stock options------------ 345,308 345 3,072 -- -- 3,417
Acquisition of treasury stock at cost (15,575) -- -- -- (324) (324)
Conversion of debenture-------------- 25 -- 1 -- -- 1
Balance at December 31, 1993--------- 32,433,622 $ 32,449 $ 125,919 $ (124,241) $ (324) $ 33,803
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
hereof.
F-6
<PAGE>
POGO PRODUCING COMPANY & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION --

The consolidated financial statements include the accounts of Pogo Producing
Company and its wholly-owned subsidiaries (the 'Company'), after elimination of
all significant intercompany transactions.

INVENTORIES --

Inventories consist primarily of tubular goods used in the Company's
operations and are stated at the lower of average cost or market value.

INTEREST CAPITALIZED --

Interest costs related to financing major oil and gas projects in progress
are capitalized until the projects are evaluated.

EARNINGS PER SHARE --

Earnings per common and common equivalent share are based on weighted
average shares of Common Stock outstanding assuming exercise of dilutive stock
options. The 8% convertible subordinated debentures, due 2005 are common stock
equivalents and were anti-dilutive in all periods presented. The 10.25%
convertible subordinated notes, due 1999 are not common stock equivalents and
were anti-dilutive in all periods presented. The weighted average number of
common and common stock equivalent shares outstanding for primary earnings per
share was 32,860,000, 27,929,000, and 27,611,000 in 1993, 1992, and 1991,
respectively. The additional shares which would be assumed to be outstanding in
the fully diluted calculation are not sufficient to change the earnings per
share amounts reported in the primary calculation.

PRODUCTION IMBALANCES --

Owners of an oil and gas property often take more or less production from a
property than entitled to based on their ownership percentages in the property.
This results in a condition known in the industry as a production imbalance. The
Company follows the 'take' (cash) method of accounting for production
imbalances. Under this method, the Company recognizes revenues on production as
it is taken and delivered to its purchasers. The Company's crude oil imbalances
are not significant. At December 31, 1993, the Company had taken approximately
10,195 MMcf of natural gas less than it was entitled to based on its interest in
those properties, and approximately 7,295 MMcf more than its entitlement on
other properties placing the Company at year end in a net under-delivered
position of approximately 2,900 MMcf of natural gas based on its working
interest ownership in the properties.

OIL AND GAS ACTIVITIES AND DEPRECIATION, DEPLETION, AND AMORTIZATION --

The Company follows the successful efforts method of accounting for its oil
and gas activities. Under the successful efforts method, lease acquisition costs
and all development costs are capitalized. Unproved properties are reviewed
quarterly to determine if there has been impairment of the carrying value, with
any such impairment charged to expense in the period. Exploratory drilling costs
are capitalized until the results are determined. If proved reserves are not
discovered, the exploratory drilling costs are expensed. Other exploratory costs
are expensed as incurred. The provision for depreciation, depletion and
amortization is determined on a field-by-field basis using the units of
production method.

F-7

<PAGE>
POGO PRODUCING COMPANY & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Other properties are depreciated on a straight-line method in amounts which
in the opinion of management are adequate to allocate the cost of the properties
over their estimated useful lives.

CONSOLIDATED STATEMENTS OF CASH FLOWS --

For the purpose of cash flows, the Company considers all highly liquid
investments with a maturity date of three months or less to be cash equivalents.
Significant transactions may occur which do not directly affect cash balances
and as such will not be disclosed in the Consolidated Statement of Cash Flows.
Certain such noncash transactions are disclosed in the Consolidated Statements
of Shareholders' Equity relating to the acquisition of treasury stock in
exchange for stock options exercised and the conversion of a debenture into
Common Stock. In addition, the Company exchanged its working interest in
thirteen Gulf of Mexico oil and gas properties for an increased working interest
in five other Gulf of Mexico oil and gas properties in a noncash 'like kind'
exchange. The oil and gas property and accumulated depreciation, depletion and
amortization accounts as reflected in the Consolidated Balance Sheets have been
adjusted to reflect the appropriate amounts to record the working interests
acquired and disposed of. The oil and gas reserves acquired and disposed of are
reflected as purchases and sales in the roll forward 'Estimates of Proved
Reserves' included in the 'Unaudited Supplementary Financial Data' included
elsewhere herein.

COMMITMENTS AND CONTINGENCIES --

The Company's rent expense was $868,000, $808,000, and $1,069,000 in 1993,
1992, and 1991, respectively. The Company has lease commitments for office space
of $809,000 per year in each year for 1994 through 1997 and $777,000 in 1998.

(2) INCOME TAXES

The components of federal income tax expense (benefit) for each of the three
years in the period ended December 31, 1993, are as follows (expressed in
thousands):

1993 1992 1991
United States
Current-------------------------- $ 2,800 $ 1,500 $ 2,900
Deferred (a)--------------------- 12,360 8,672 1,125
Foreign
Current-------------------------- (179) 20 269
Total------------------------ $ 14,981 $ 10,192 $ 4,294

(a) Excludes $688,000 of deferred taxes on a $2,024,000 extraordinary item in
1991.

Total federal income tax expense (benefit) for each of the three years in
the period ended December 31, 1993, differs from the amounts computed by
applying the statutory federal income tax rate to income before taxes as follows
(expressed as a percent of pretax income):

1993 1992 1991
Federal statutory income tax rate---- 35.0% 34.0% 34.0%
Increases (reductions) resulting
from:
Statutory depletion in excess of
tax basis---------------------- (0.4) (0.1) (0.9)
Foreign taxes-------------------- 2.9 1.4 1.8
Life insurance loan proceeds----- -- -- (5.9)
Other---------------------------- -- 0.2 0.4
37.5% 35.5% 29.4%

F-8

<PAGE>
POGO PRODUCING COMPANY & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The deferred federal income tax provision is the result of the difference
between deferred tax liabilities determined at each balance sheet date. The
deferred tax liabilities are determined by applying current tax laws to
temporary differences in the recognition of revenue and expense for tax and
financial purposes. Temporary differences arise primarily from the amortization
of productive intangible drilling costs which are capitalized and amortized for
financial statement purposes but are deducted for income tax purposes and
differences in depreciation rates for tangible assets for financial and tax
reporting purposes.

As of December 31, 1993, the Company has general business credits of
approximately $1,400,000, which can be used to reduce future income taxes. In
addition, the Company has alternative minimum tax credits of approximately
$4,235,000 which can be used to reduce future regular income taxes payable.

(3) LONG-TERM DEBT

Long-term debt and the amount due within one year at December 31, 1993 and
1992, consists of the following (dollars expressed in thousands):

DECEMBER 31,
1993 1992
Senior debt --
Bank revolving credit agreements
debt:
Prime rate loans------------- $ 27,000 $ 9,000
LIBO Rate loans-------------- 40,000 50,000
Certificate of deposit rate
loans---------------------- -- --
Total senior debt-------------------- 67,000 59,000
Subordinated debt --
10.25% Convertible subordinated
notes, due 1999,
$4,000 annual sinking fund
requirement-------------------- 24,000 28,000
8% Convertible subordinated
debentures, due 2005,
$1,540 sinking fund requirement
in 1995 and a
$3,000 annual sinking fund
requirement thereafter--------- 43,539 46,260
Total subordinated debt-------------- 67,539 74,260
Total debt--------------------------- 134,539 133,260
Amount due within one year --
Current portion of long-term
debt, consisting of sinking
fund
requirement on 10.25% notes---- (4,000) (4,000)
Long-term debt----------------------- $ 130,539 $ 129,260

The bank revolving credit agreement entered into in December 1993, extends
to the Company a $100,000,000 revolving/term credit facility which will be fully
revolving until June 29, 1996 and will convert to a term loan with eight
quarterly installments commencing July 31, 1996. The amount that may be borrowed
under the facility may not exceed a borrowing base, determined semiannually by
the lenders based on the discounted present value of the Company's oil and gas
reserves and the provisions of the agreement. The borrowing base currently
exceeds $100,000,000. The agreement provides that total debt and total debt for
borrowed money, as defined, may not exceed $230,000,000 and $200,000,000,
respectively. The facility is governed by various financial covenants including
the maintenance of positive working capital (excluding current maturities of
debt), a fixed charge ratio, as defined, of 1.7 or greater, a $10,000,000 limit
on other senior debt, and a $10,000,000 limit on prepayment (without
refinancing) of subordinated debt in any one year and $20,000,000 in total
through July 31, 1996. Upon the occurrence of an event of default or certain
other specified events, the banks would be entitled to a security interest in
the borrowing base properties, which constitute substantially all of the
Company's domestic oil and gas properties. Borrowings under the facility bear

F-9

<PAGE>
POGO PRODUCING COMPANY & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

interest at Base (Prime) rate plus 1/4%, a certificate of deposit rate plus
1 7/8%, or LIBOR plus 1 3/4%, at the Company's option. A commitment fee of 1/2
of 1% per annum of the unborrowed amount under the facility is also due. The
Company incurred commitment fees of $149,000 in 1993, $80,000 in 1992, and
$132,000 in 1991 under this and prior revolving credit agreements.

The 10.25% convertible notes are convertible into Common Stock at $23.95 per
share subject to adjustment under certain circumstances, including stock splits.
The convertible debentures are redeemable at the option of the Company at 103.7%
through April 1, 1994, at 102.95% through April 1, 1995, and decreasing
percentages thereafter, under certain market conditions, and are subject to
mandatory annual sinking fund requirements of $4,000,000 which commenced April
1, 1990. The sinking fund requirements will be sufficient to retire 90% of the
issue prior to maturity.

The 8% convertible debentures are convertible into Common Stock at $39.50
per share subject to adjustment under certain circumstances, including stock
splits. These convertible debentures are redeemable at the option of the Company
at 102.8% through December 30, 1994, and decreasing percentages thereafter, and
are subject to mandatory annual sinking fund requirements of $3,000,000 which
commenced December 31, 1990. Such requirements will be sufficient to retire 75%
of the issue prior to maturity. To date, the Company has purchased $13,740,000
principal amount of the bonds at less than face value resulting in ordinary
gains of $646,000 and $902,000 in 1991 and 1990, respectively, on the bonds
purchased in satisfaction of sinking fund requirements in those years, and a
$1,336,000 extraordinary gain (net of taxes) in 1991 on the bonds purchased in
excess of current sinking fund requirements. The Company currently has
$4,460,000 face amount of the bonds purchased in excess of current sinking fund
requirements which may be tendered in satisfaction of future sinking fund
requirements. The Company elected to make the December 31, 1993 sinking fund
payment in cash.

Current maturities and sinking fund requirements during the next five years
in connection with the above long-term debt are $4,000,000 in 1994, $5,540,000
in 1995, $27,100,000 in 1996, $40,500,000 in 1997 and $20,400,000 in 1998.
Included in the current maturities reflected above are $20,100,000 in 1996,
$33,500,000 in 1997, and $13,400,000 in 1998 relative to bank debt. The Company
has established a history of refinancing its bank debt before scheduled
maturities and expects to do so again before the amortization of bank debt
commences in 1996.

In 1993, the Company entered into interest rate swap agreements on
$15,000,000 of its bank debt, $5,000,000 of which terminated in January, 1994
and $10,000,000 of which terminates in July, 1994. The swap agreements
effectively change the interest rates from variable to fixed rates which average
5.78% on the $15,000,000.

(4) SALES TO MAJOR CUSTOMERS

The Company is an oil and gas exploration and production company that until
recently sold its production to relatively few customers. As a result of recent
changes in the natural gas industry, the Company, like many other producers, now
sells its natural gas to numerous customers on a month-to-month basis. The
Company no longer has a significant amount of its natural gas reserves committed
to long-term (multiple year) contracts at higher than prevailing market prices.
Sales to the following customers exceeded 10 percent of oil and gas revenues
during the years indicated (expressed in thousands):

1993 1992 1991
Scurlock Oil Company----------------- $ 38,510 $ 39,729 $ 38,554
United Gas Pipeline Company---------- $ -- $ -- $ 21,074
Enron Corp--------------------------- $ 16,437 $ -- $ --

F-10

<PAGE>
POGO PRODUCING COMPANY & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(5) EMPLOYEE BENEFITS

A total of 2,353,069 shares of Common Stock are reserved for issuance to key
employees and non-employee directors under the Company's stock option plans. The
stock option plans authorize the granting of options at prices equivalent to the
market value at the date of grant. Options generally become exercisable in three
annual installments commencing one year after the date granted and, if not
exercised, expire 10 years from the date of grant. At January 1, 1993, 1,544,484
shares were issuable under stock options outstanding. Options for 291,500 shares
were granted during 1993 at prices ranging from $15.13 to $19.00 per share.
During 1993, 345,308 options were exercised at prices ranging from $4.38 to
$16.25 per share and no options were cancelled. At December 31, 1993, options to
purchase 1,490,676 shares were outstanding (1,098,815 were exercisable) at
prices ranging from $4.38 to $19.00.

The Company has a tax-advantaged savings plan in which all salaried
employees may participate. Under such plan, a participating employee may
allocate up to 10% of his salary, and the Company makes matching contributions
of up to 6% thereof. Funds contributed by the employee and the matching funds
contributed by the Company are held in trust by a bank trustee in six separate
funds. Funds contributed by the employee and earnings and accretions thereon may
be used to purchase shares of Common Stock, invest in a money market fund or
invest in four stock, bond, or blended stock and bond mutual funds according to
instructions from the employee. Matching funds contributed to the savings plan
by the Company are invested only in Common Stock. The Company contributed
$125,000 to the savings plan in 1993, $288,000 in 1992, and $265,000 in 1991.

A trusteed retirement plan has been adopted by the Company for its salaried
employees. The benefits are based on years of service and the employee's average
compensation for five consecutive years within the final ten years of service
which produce the highest average compensation. The Company makes annual
contributions to the plan in the amount of retirement plan cost accrued or the
maximum amount which can be deducted for federal income tax purposes. The
following table sets forth the plan's funded status (in thousands of dollars) as
of December 31, 1993, 1992, and 1991.

1993 1992 1991
Actuarial present value (discounted
at 7 1/2, 8 1/4, and 8 1/2%,
respectively) of benefit
obligations:
Accumulated benefit
obligations --
Vested----------------------- $ 4,019 $ 3,120 $ 2,997
Nonvested-------------------- 717 701 657
Total accumulated benefit
obligations------------------ 4,736 3,821 3,654
Projected salary increases
(escalated at 6%) and other
changes------------------------ 1,500 2,653 2,441
Projected benefit obligations for
service rendered to date------- 6,236 6,474 6,095
Plan assets at fair value, primarily
listed securities with an expected
long-term rate of return of
8 1/4%----------------------------- 13,481 13,830 13,505
Plan assets in excess of projected
benefit obligations---------------- 7,245 7,356 7,410
Unrecognized:
Net overfunding being recognized
over 15 years------------------ (750) (853) (957)
Net gain arising from the
difference between actual
experience and that assumed---- (3,209) (3,956) (4,438)
Prior service cost--------------- (473) (41) (45)
Accrued retirement plan asset-------- $ 2,813 $ 2,506 $ 1,970

(TABLE CONTINUED ON FOLLOWING PAGE)

F-11

<PAGE>
POGO PRODUCING COMPANY & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

1993 1992 1991
Retirement plan cost (benefit) for
1993, 1992, and 1991 included the
following components:
Service cost, benefits accruing
each year with proration for
future salary increases-------- $ 611 $ 514 $ 501
Interest cost on projected
benefit obligations------------ 524 451 508
Actual return on plan assets----- (1,164) (1,141) (3,882)
Net amortization and deferral---- (278) (360) 2,853
Accrued retirement plan cost
(benefit)---------------------- $ (307) $ (536) $ (20)

Effective January 1, 1992, the Company adopted the provisions of the
Statement of Financial Accounting Standards No. 106, 'Employers' Accounting for
Postretirement Benefits Other Than Pensions.' The Company currently provides
full medical benefits to its retired employees and dependents. For current
employees, the Company assumes all or a portion of postretirement medical and
term life insurance costs based on the employee's age and length of service with
the Company. The postretirement medical plan has no assets and is currently
funded by the Company on a pay-as-you-go basis.

The following is an analysis (in thousands of dollars) of the annual expense
and activity in the deferred cost and benefits obligation accounts for 1992 and
1993. The computation assumes that future increases in medical costs will trend
down from 13% to 7% per year over the next 12 years for purposes of estimating
future costs. The medical cost trend rate assumption has a significant effect on
the amounts reported. Increasing the assumed medical cost trend rate by one
percent in each year would increase the aggregate of service and interest cost
components of net periodic postretirement benefits cost for 1993 by $164,000 and
the accumulated postretirement benefits obligation as of December 31, 1993 by
$1,171,000.
<TABLE>
<CAPTION>
ANNUAL DEFERRED BENEFITS
EXPENSE COSTS OBLIGATION
<S> <C> <C> <C>
Transition obligation at January 1, 1992------------------------------ $ 4,263 $ (4,263)
Amortization of transition cost over 14 years representing the average
remaining service period of eligible employees---------------------- $ 305 (305) 305
Service cost, including interest-------------------------------------- 303
Interest cost on transition obligation-------------------------------- 362
1992 expense---------------------------------------------------------- $ 970 (970)
Current benefits paid------------------------------------------------- 170
Balance at December 31, 1992------------------------------------------ 3,958 (4,758)
Amortization of transition costs over 14 years------------------------ $ 305 (305) 305
Service cost, including interest-------------------------------------- 368
Interest cost on transition obligation-------------------------------- 407
1993 expense---------------------------------------------------------- $ 1,080 (1,080)
Current benefits paid------------------------------------------------- 246
Unrecognized loss----------------------------------------------------- (1,400)
Balance at December 31, 1993------------------------------------------ $ 3,653
Plan assets at fair value--------------------------------------------- --
Funded status at December 31, 1993 (discounted at 7 1/2%)------------- $ (6,687)
</TABLE>
F-12

<PAGE>
POGO PRODUCING COMPANY & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The accumulated postretirement benefit obligation (in thousands of dollars)
at December 31, 1993 is attributable to the following groups:

Retirees and beneficiaries------------------- $ 2,739
Dependents of retirees----------------------- 1,188
Fully eligible active employees-------------- 577
Active employees, not fully eligible--------- 2,183
$ 6,687

(6) FAIR VALUE OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to estimate
that value.

CASH AND CASH INVESTMENTS

The carrying value approximates fair value because of the short maturity of
these investments.

DEBT

INSTRUMENT BASIS OF FAIR VALUE ESTIMATE
Bank revolving credit agreement
debt------------------------------- Fair value is carrying value based on
recent 1993 renegotiation with banks
10.25% Convertible subordinated
notes, due 1999-------------------- Fair value is 103.7% of carrying value
based on the redemption premium at
December 31, 1993
8% Convertible subordinated
debentures, due 2005--------------- Fair value is 99.5% of carrying value
based on the quoted market price for
this publicly traded debt at
December 31, 1993

The estimated fair value of the Company's financial instruments (in
thousands of dollars) are as follows:

CARRYING FAIR
VALUE VALUE
Cash and cash investments------------ $ 6,713 $ 6,713
Debt--------------------------------- (134,539) (135,209)

F-13
<PAGE>
UNAUDITED SUPPLEMENTARY FINANCIAL DATA

OIL AND GAS PRODUCING ACTIVITIES

The results of operations from oil and gas producing activities excludes
non-oil and gas revenues, general and administrative expenses, interest charges,
interest income and interest capitalized. United States income tax expense was
determined by applying the statutory rates to pretax operating results with
adjustments for permanent differences. Kingdom of Thailand tax expense was
determined by applying the statutory tax rate to Thailand taxable income.

UNITED KINGDOM OF
TOTAL STATES THAILAND
(EXPRESSED IN THOUSANDS)
1993

Oil and gas revenues----------------- $ 136,553 $ 136,525 $ 28
Lease operating expense-------------- (26,633) (26,633) --
Exploration expense------------------ (2,455) (1,060) (1,395)
Dry hole and impairment expense------ (4,690) (2,737) (1,953)
Depreciation, depletion and
amortization expense--------------- (40,224) (40,193) (31)
Pretax operating results------------- 62,551 65,902 (3,351)
Income tax (expense) benefit--------- (22,712) (22,891) 179
Operating results-------------------- $ 39,839 $ 43,011 $ (3,172)

1992

Oil and gas revenues----------------- $ 139,128 $ 139,128 $ --
Lease operating expense-------------- (25,842) (25,842) --
Exploration expense------------------ (3,102) (1,876) (1,226)
Dry hole and impairment expense------ (9,314) (9,314) --
Depreciation, depletion and
amortization expense--------------- (41,849) (41,834) (15)
Pretax operating results------------- 59,021 60,262 (1,241)
Income tax expense------------------- (20,510) (20,490) (20)
Operating results-------------------- $ 38,511 $ 39,772 $ (1,261)

1991

Oil and gas revenues----------------- $ 124,425 $ 124,425 $ --
Lease operating expense-------------- (28,192) (28,192) --
Exploration expense------------------ (2,408) (2,261) (147)
Dry hole and impairment expense------ (4,554) (4,554) --
Depreciation, depletion and
amortization expense--------------- (36,970) (36,965) (5)
Pretax operating results------------- 52,301 52,453 (152)
Income tax expense------------------- (17,725) (17,698) (27)
Operating results-------------------- $ 34,576 $ 34,755 $ (179)

The following table sets forth Pogo's capitalized costs (expressed in
thousands) incurred for oil and gas producing activities during the years
indicated.

1993 1992 1991
Capitalized costs incurred:
Property acquisition (United
States)------------------------ $ 1,520 $ 11,578 $ 7,697
Exploration --
United States---------------- 8,267 3,865 3,546
Kingdom of Thailand---------- 4,583 1,412 --
Development --
United States---------------- 57,648 20,717 37,025
Kingdom of Thailand---------- -- -- --
Interest capitalized (United
States)------------------------ 451 391 637
$ 72,469 $ 37,963 $ 48,905
Provision for depreciation,
depletion, and amortization:
United States---------------- $ 40,193 $ 41,834 $ 36,965
Kingdom of Thailand---------- 31 15 5
$ 40,224 $ 41,849 $ 36,970

F-14

<PAGE>
UNAUDITED SUPPLEMENTARY FINANCIAL DATA -- (CONTINUED)

The following information regarding estimates of the Company's proved oil
and gas reserves, which are located offshore in United States waters of the Gulf
of Mexico, onshore in the United States and offshore in the Kingdom of Thailand
is based on reports prepared by Ryder Scott Company Petroleum Engineers. Their
summary report dated January 28, 1994 is set forth as an exhibit to the Annual
Report and includes definitions and assumptions as set forth therein and which
serve as the basis for the discussion under the caption 'Business and
Properties-- Reserves.'Such definitions and assumptions should be referred to
in connection with the following information.

ESTIMATES OF PROVED RESERVES

OIL,
CONDENSATE AND
NATURAL GAS
LIQUIDS NATURAL GAS
(BBLS.) (MMCF)
Proved reserves (located in the
United States) as of
December 31, 1990------------------ 19,090,376 217,500
Revisions of previous
estimates---------------------- 782,707 3,531
Extensions, discoveries, and
other additions---------------- 1,612,983 16,157
Purchase of properties----------- 263,495 4,913
Sales of properties-------------- (5) (4)
Estimated 1991 production-------- (2,931,465) (39,362)
Proved reserves (located in the
United States) as of
December 31, 1991------------------ 18,818,091 202,735
Revisions of previous
estimates---------------------- 1,721,385 20,284
Extensions, discoveries, and
other additions (including
2,576,907 barrels and 10,668
MMcf located in the Kingdom of
Thailand)---------------------- 5,486,273 19,126
Purchase of properties----------- 335,750 10,237
Sales of properties-------------- (194,606) (4,733)
Estimated 1992 production-------- (3,611,105) (40,581)
Proved reserves (located in the
United States except for 2,576,907
barrels and 10,668 MMcf located in
the Kingdom of Thailand) as of
December 31, 1992------------------ 22,555,788 207,068
Revisions of previous
estimates---------------------- 342,022 1,148
Extensions, discoveries, and
other additions (including
2,847,906 barrels and 22,806
MMcf located in the
Kingdom of Thailand)----------- 9,764,408 55,626
Purchase of properties----------- 182,610 13,192
Sales of properties-------------- (356,514) (11,849)
Estimated 1993 production-------- (4,219,873) (32,319)
Proved reserves (located in the
United States except for 5,424,813
barrels and 33,474 MMcf located in
the Kingdom of Thailand) as of
December 31, 1993------------------ 28,268,441 232,866
Proved developed reserves (located in
the United States) as of:
December 31, 1990---------------- 17,841,751 202,471
December 31, 1991---------------- 17,549,830 188,090
December 31, 1992---------------- 18,798,149 175,523
December 31, 1993---------------- 20,976,194 183,139

F-15

<PAGE>
STANDARDIZED MEASURE OF DISCOUNTED FUTURE
NET CASH FLOWS RELATED TO PROVED OIL AND GAS RESERVES

1993
TOTAL UNITED KINGDOM OF
COMPANY STATES THAILAND
(EXPRESSED IN THOUSANDS)
Future gross revenues---------------- $ 869,783 $ 744,201 $ 125,582
Future production costs:
Lease operating expense---------- (186,464) (158,934) (27,530)
Future development and abandonment
costs------------------------------ (133,258) (79,735) (53,523)
Future net cash flows before income
taxes------------------------------ 550,061 505,532 44,529
Discount at 10% per annum------------ (146,221) (118,858) (27,363)
Discounted future net cash flow
before income taxes---------------- 403,840 386,674 17,166
Future income taxes, net of discount
at 10% per annum------------------- (103,580) (98,788) (4,792)
Standardized measure of discounted
future net cash flows relating to
proved oil and gas reserves-------- $ 300,260 $ 287,886 $ 12,374

1992

Future gross revenues---------------- $ 856,238 $ 791,865 $ 64,373
Future production costs:
Lease operating expense---------- (179,721) (173,355) (6,366)
Future development and abandonment
costs------------------------------ (105,843) (80,887) (24,956)
Future net cash flows before income
taxes------------------------------ 570,674 537,623 33,051
Discount at 10% per annum------------ (165,573) (146,730) (18,843)
Discounted future net cash flow
before income taxes---------------- 405,101 390,893 14,208
Future income taxes, net of discount
at 10% per annum------------------- (97,444) (91,848) (5,596)
Standardized measure of discounted
future net cash flows relating to
proved oil and gas reserves-------- $ 307,657 $ 299,045 $ 8,612

1991

Future gross revenues---------------- $ 725,360 $ 725,360 $ --
Future production costs:
Lease operating expense---------- (163,262) (163,262) --
Future development and abandonment
costs------------------------------ (67,671) (67,671) --
Future net cash flows before income
taxes------------------------------ 494,427 494,427 --
Discount at 10% per annum------------ (144,673) (144,673) --
Discounted future net cash flow
before income taxes---------------- 349,754 349,754 --
Future income taxes, net of discount
at 10% per annum------------------- (76,423) (76,423) --
Standardized measure of discounted
future net cash flows relating to
proved oil and gas reserves-------- $ 273,331 $ 273,331 $ --

The standardized measure of discounted future net cash flows from the
production of proved reserves is developed as follows:

1. Estimates are made of quantities of proved reserves and the future
periods in which they are expected to be produced based on year end economic
conditions.

F-16

<PAGE>
STANDARDIZED MEASURE OF DISCOUNTED FUTURE
NET CASH FLOWS RELATED TO PROVED OIL AND GAS RESERVES -- (CONTINUED)

2. The estimated future gross revenues from proved reserves are priced on
the basis of year end prices, except in those instances where fixed and
determinable natural gas price escalations are covered by contracts.

3. The future gross revenue streams are reduced by estimated future costs
to develop and to produce the proved reserves, as well as certain abandonment
costs based on year end cost estimates, and the estimated effect of future
income taxes.

The standardized measure of discounted future net cash flows does not
purport to present the fair market value of Pogo's oil and gas reserves. An
estimate of fair value would also take into account, among other things, the
recovery of reserves in excess of proved reserves, anticipated future changes in
prices and costs, a discount factor more representative of the time value of
money and the risks inherent in reserve estimates.

The following are the principal sources of change in the standardized
measure of discounted future net cash flows. All amounts are related to changes
in reserves located in the United States unless otherwise noted.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1993
TOTAL UNITED KINGDOM OF
COMPANY STATES THAILAND
(EXPRESSED IN THOUSANDS)
<S> <C> <C> <C>
Beginning balance-------------------- $ 307,657 $ 299,045 $ 8,612
Revisions to prior years' proved
reserves:
Net changes in prices and
production costs--------------- (41,775) (34,842) (6,933)
Net changes due to revisions
in quantity estimates------------ 4,066 4,066 --
Net changes in estimates of
future development costs------- 662 (871) 1,533
Accretion of discount------------ 40,510 39,089 1,421
Changes in production rate------- 5,134 6,728 (1,594)
Other---------------------------- 2,278 3,935 (1,657)
Total revisions-------------- 10,875 18,105 (7,230)
New field discoveries and extensions,
net of future production and
development costs:----------------- 39,247 29,059 10,188
Purchases of properties-------------- 22,516 22,516 --
Sales of properties------------------ (19,633) (19,633) --
Sales of oil and gas produced, net of
production costs------------------- (110,870) (110,870) --
Previously estimated development
costs incurred--------------------- 56,604 56,604 --
Net change in income taxes----------- (6,136) (6,940) 804
Net change in
standardized measure of
discounted future net
cash flows------------- (7,397) (11,159) 3,762
Ending balance----------------------- $ 300,260 $ 287,886 $ 12,374
</TABLE>
F-17

<PAGE>
<TABLE>
STANDARDIZED MEASURE OF DISCOUNTED FUTURE
NET CASH FLOWS RELATED TO PROVED OIL AND GAS RESERVES -- (CONTINUED)

<CAPTION>
YEAR ENDED DECEMBER 31,
1992 1991
(EXPRESSED IN THOUSANDS)
<S> <C> <C>
Beginning balance-------------------- $ 273,331 $ 400,937
Revisions to prior years' proved
reserves:
Net changes in prices and
production costs--------------- 38,348 (174,464)
Net changes due to revisions in
quantity estimates------------- 42,829 9,940
Net changes in estimates of
future development costs------- (21,015) (28,740)
Accretion of discount------------ 34,975 52,517
Changes in production rate------- (5,733) (6,518)
Other---------------------------- 6,607 (7,404)
Total revisions-------------- 96,011 (154,669)
New field discoveries and extensions,
net of future production and
development costs:
United States---------------- 29,552 28,286
Kingdom of Thailand---------- 14,208 --
Purchases of properties-------------- 13,870 6,827
Sales of properties------------------ (7,430) (7)
Sales of oil and gas produced, net of
production costs------------------- (111,581) (92,895)
Previously estimated development
costs incurred--------------------- 20,717 37,039
Net change in income taxes:
United States---------------- (15,425) 47,813
Kingdom of Thailand---------- (5,596) --
Net change in
standardized measure of
discounted future net
cash flows------------- 34,326 (127,606)
Ending balance----------------------- $ 307,657 $ 273,331
</TABLE>
F-18

<PAGE>
QUARTERLY RESULTS

Summaries of Pogo's results of operations by quarter for the years 1993 and
1992 are as follows:
<TABLE>
<CAPTION>
QUARTER ENDED
MAR. 31 JUNE 30 SEPT. 30 DEC. 31
(EXPRESSED IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
1993
Revenues----------------------------- $ 34,681 $ 34,533 $ 37,210 $ 33,130
Gross profit(a)---------------------- $ 17,331 $ 15,391 $ 17,903 $ 14,458
Net income--------------------------- $ 7,160 $ 5,596 $ 7,161 $ 5,144
Earnings per share
(primary and fully diluted)-------- $ 0.22 $ 0.17 $ 0.22 $ 0.16
1992
Revenues----------------------------- $ 28,347 $ 34,072 $ 34,907 $ 43,504
Gross profit(a)---------------------- $ 7,147 $ 12,646 $ 16,165 $ 24,312
Net income (loss)-------------------- $ (1,216) $ 3,276 $ 5,535 $ 10,900
Earnings (loss) per share
(primary and fully diluted)-------- $ (0.04) $ 0.12 $ 0.20 $ 0.38

(a) Represents revenues less lease operating, exploration, dry hole and
impairment, and depreciation, depletion and amortization expenses.
</TABLE>
F-19
<PAGE>

NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE NOTES IN ANY JURISDICTION
WHERE, OR TO ANY INDIVIDUAL WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS
NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS
OF THE COMPANY SINCE THE DATE HEREOF.

TABLE OF CONTENTS

PAGE
Available Information---------------- 2
Incorporation of Certain Documents by
Reference-------------------------- 2
Prospectus Summary------------------- 3
Investment Considerations------------ 9
The Company-------------------------- 12
Use of Proceeds---------------------- 14
Capitalization----------------------- 15
Price Range of Common Stock and
Dividends-------------------------- 16
Selected Financial and Operating
Data------------------------------- 17
Management's Discussion and Analysis
of Financial Condition and Results
of Operations---------------------- 19
Business and Properties-------------- 24
Management--------------------------- 35
Description of the Notes------------- 36
Description of Capital Stock--------- 43
Underwriting------------------------- 45
Legal Opinions----------------------- 46
Experts------------------------------ 46
Glossary of Oil and Gas Terms-------- 47
Index to Financial Statements-------- F-1

$75,000,000

LOGO

POGO PRODUCING COMPANY
% CONVERTIBLE
SUBORDINATED NOTES DUE 2004

PROSPECTUS

MERRILL LYNCH & CO.
GOLDMAN, SACHS & CO.
PAINEWEBBER INCORPORATED

MARCH , 1994
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The estimated expenses to be incurred in connection with the Offering
described in this Registration Statement are as follows:

Securities and Exchange
Commission registration fee---- $ 29,741
National Association of
Securities Dealers, Inc. filing
fee---------------------------- 9,125
Printing and engraving
expenses----------------------- 75,000
Accounting fees and expenses----- 40,000
Legal fees and expenses---------- 100,000
Trustee's fees and expenses------ 8,000
Blue Sky fees and expenses------- 10,000
Rating agency fees--------------- 45,000
Miscellaneous-------------------- 33,134
Total------------------------ $350,000

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 145 of the Delaware General Corporation Law, inter alia, empowers a
Delaware corporation to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding (other than an action by or in the right of the corporation)
by reason of the fact that such person is or was a director, officer, employee
or agent of another corporation or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding if
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. Similar indemnity is authorized for such persons against expenses
(including attorneys' fees) actually and reasonably incurred in connection with
the defense or settlement of any such threatened, pending or completed action or
suit if such person acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the corporation, and provided
further that (unless a court of competent jurisdiction otherwise provides) such
person shall not have been adjudged liable to the corporation. Any such
indemnification may be made only as authorized in each specific case upon a
determination by the shareholders or disinterested directors or by independent
legal counsel in a written opinion that indemnification is proper because the
indemnitee has met the applicable standard of conduct.

Section 145 further authorizes a corporation to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation or enterprise,
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the corporation
would otherwise have the power to indemnify him under Section 145. The Company
maintains policies insuring its and its subsidiaries' officers and directors
against certain liabilities for actions taken in such capacities, including
liabilities under the Securities Act of 1933, as amended.

II-1

<PAGE>
The Bylaws of the Registrant contain the following provisions:

ARTICLE VII
INDEMNIFICATION

SECTION 1. RIGHT TO INDEMNIFICATION.

The Corporation shall indemnify and hold harmless, to the fullest extent
permitted by applicable law as it presently exists or may hereafter be amended,
any person who was or is made or is threatened to be made a party or is
otherwise involved in any action, suit or proceeding, whether civil, criminal,
administrative or investigative (a 'proceeding') by reason of the fact that he,
or a person for whom he is the legal representative, is or was a director,
officer, employee or agent of the Corporation or is or was serving at the
request of the Corporation as a director, officer, employee, fiduciary or agent
of another corporation or of a partnership, joint venture, trust, enterprise or
non-profit entity including service with respect to employee benefit plans,
against all liability and loss suffered and expenses reasonably incurred by such
person. The Corporation shall indemnify a person in connection with a proceeding
initiated by such person only if the proceeding was authorized by the Board of
Directors of the Corporation.

SECTION 2. PREPAYMENT OF EXPENSES.

The Corporation shall pay the expenses incurred in defending any proceeding
in advance of its final disposition, provided, however, that the payment of
expenses incurred by a director or officer in his capacity as a director or
officer (except with regard to service to an employee benefit plan or non-profit
organizations) in advance of the final disposition of the proceeding shall be
made only upon receipt of an undertaking by the director or officer to repay all
amounts advanced if it should be ultimately determined that the director or
officer is not entitled to be indemnified under this Article or otherwise.

SECTION 3. CLAIMS.

If a claim for indemnification or payment of expenses under this Article is
not paid in full within ninety days after a written claim therefor has been
received by the Corporation the claimant may file suit to recover the unpaid
amount of such claim and, if successful in whole or in part, shall be entitled
to be paid the expense of prosecuting such claim. In any such action the
Corporation shall have the burden of proving that the claimant was not entitled
to the requested indemnification or payment of expenses under applicable law.

SECTION 4. NON-EXCLUSIVITY OF RIGHTS.

The rights conferred on any person by this Article shall not be exclusive of
any other rights which such person may have or hereafter acquire under any
statute, provision of the Certificate of Incorporation, these Bylaws, agreement,
vote of stockholders or disinterested directors or otherwise.

SECTION 5. AMENDMENT OR REPEAL.

Any repeal or modification of the foregoing provisions of this Article VII
shall not adversely affect any right or protection hereunder of any person in
respect of any act or omission occurring prior to the time of such repeal or
modification.

The Registrant has placed in effect insurance which purports (a) to insure
it against certain costs of indemnification which may be incurred by it pursuant
to the aforementioned Bylaw provision or otherwise and (b) to insure the
officers and directors of the Company and of specified subsidiaries against
certain liabilities incurred by them in the discharge of their functions as
officers and directors except for liabilities arising from their own
malfeasance.

Reference is made to the Purchase Agreement contained in Exhibit 1 hereof
for provisions regarding indemnification under certain circumstances of the
Registrant and its directors, officers and controlling persons.

See 'Item 17. Undertakings' for information concerning the position of the
Securities and Exchange Commission regarding indemnification provisions.

II-2

<PAGE>
ITEM 16. EXHIBITS.

1 -- Form of Purchase Agreement.

*3(a) -- Restated Certificate of Incorporation
of Registrant (Form 10-K, December
31, 1987, SEC File No. 0-5468,
Exhibit 3(a)).

*3(b) -- Bylaws of Registrant, as amended and
restated through July 24, 1990 (Form
10-K, December 31, 1991, SEC File No.
0-5468, Exhibit 3(b)).

4(a) -- Form of Indenture to be entered into
between the Company and Shawmut Bank
Connecticut, National Association, as
Trustee.

4(b) -- Form of Note, included in Exhibit 4(a).

5 -- Opinion of Baker & Botts, L.L.P.

12 -- Statement regarding computation of
ratios.

23(a) -- Consent of Arthur Andersen & Co.

23(b) -- Consent of Ryder Scott Company
Petroleum Engineers.
23(c) -- Consent of Baker & Botts, L.L.P.
(contained in their opinion filed as
Exhibit 5).
24 -- Powers of Attorney.
25 -- Form T-1 Statement of Eligibility and
Qualification under the Trust
Indenture Act of 1939 of Shawmut Bank
Connecticut, National Association.

* Incorporated by reference.

ITEM 17. UNDERTAKINGS.

The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 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.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 15 above, 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 Securities Act of 1933 and is, therefore, unenforceable. In the
event that a claim for and 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
Securities Act of 1933 and will be governed by the final adjudication of such
issue.

The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Securities Act of 1933 shall be deemed to be part of the
Registration Statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus 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.

II-3

<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Houston, State of Texas, on the 28th day of February,
1994.

POGO PRODUCING COMPANY
(REGISTRANT)

By: PAUL G. VAN WAGENEN
PAUL G. VAN WAGENEN
(CHAIRMAN OF THE BOARD, PRESIDENT
AND CHIEF EXECUTIVE OFFICER)

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF
OF THE REGISTRANT AND IN THE CAPACITIES INDICATED ON FEBRUARY 28, 1994.

SIGNATURE TITLE

PAUL G. VAN WAGENEN Chairman of the Board, President and Chief Executive
PAUL G. VAN WAGENEN Officer
(Principal Executive Officer and Director)

D. STEPHEN SLACK Senior Vice President -- Finance, Chief Financial Officer
D. STEPHEN SLACK and Treasurer
(Principal Financial Officer and Director)

THOMAS E. HART Vice President and Controller
THOMAS E. HART (Principal Accounting Officer)

TOBIN ARMSTRONG* Director
TOBIN ARMSTRONG

JACK S. BLANTON* Director
JACK S. BLANTON

W. M. BRUMLEY, JR.* Director
W. M. BRUMLEY

JOHN B. CARTER, JR.* Director
JOHN B. CARTER, JR.

WILLIAM L. FISHER* Director
WILLIAM L. FISHER*

WILLIAM E. GIPSON* Director
WILLIAM E. GIPSON

GERRIT W. GONG* Director
GERRIT W. GONG

J. STUART HUNT* Director
J. STUART HUNT

FREDERICK A. KLINGENSTEIN* Director
FREDERICK A. KLINGENSTEIN

NICHOLAS R. PETRY* Director
NICHOLAS R. PETRY

JACK A. VICKERS* Director
JACK A. VICKERS

*By: THOMAS E. HART
(THOMAS E. HART, ATTORNEY-IN-FACT)

II-4
<PAGE>
INDEX TO FINANCIAL STATEMENT SCHEDULES

SCHEDULE PAGE
NUMBER DESCRIPTION OF SCHEDULE NUMBER
Report of Independent Public
Accountants-------------------------- S-2
V. Property and Equipment--------------- S-3
VI. Reserves for Depreciation, Depletion
and Amortization of
Property and Equipment--------------- S-3
X. Supplementary Income Statement
Information-------------------------- S-4

S-1

<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Shareholders and Board of Directors of Pogo Producing Company:

We have audited in accordance with generally accepted auditing standards,
the consolidated financial statements of Pogo Producing Company and subsidiaries
included in this registration statement and have issued our report thereon dated
February 8, 1994. Our audits were made for the purpose of forming an opinion on
the basic financial statements taken as a whole. The schedules contained in this
registration statement are the responsibility of the Company's management and
are presented for the purpose of complying with the Securities and Exchange
Commission's rules and are not part of the basic financial statements. These
schedules have been subjected to the auditing procedures applied in the audits
of the basic financial statements and, in our opinion, fairly state in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.

ARTHUR ANDERSEN & CO.

Houston, Texas
February 8, 1994

S-2

<PAGE>
SCHEDULE V & VI
<TABLE>
POGO PRODUCING COMPANY AND SUBSIDIARIES
SCHEDULE V -- PROPERTY AND EQUIPMENT
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992, AND 1991
(EXPRESSED IN THOUSANDS)

<CAPTION>
BALANCE BALANCE
BEGINNING ADDITIONS RETIREMENT OTHER END OF
DESCRIPTION OF PERIOD AT COST OR SALES CHANGES PERIOD
<S> <C> <C> <C> <C> <C>
1993:
Oil and gas---------------------- $ 875,154 $ 72,469 $ (120,893) $ (3,047) $ 823,683
Other---------------------------- 6,851 163 (48) (5) 6,961
Total---------------------------- $ 882,005 $ 72,632 $ (120,941) $ (3,052) $ 830,644
1992:
Oil and gas---------------------- $ 907,336 $ 37,963 $ (61,182) $ (8,963) $ 875,154
Other---------------------------- 6,680 589 -- (418) 6,851
Total---------------------------- $ 914,016 $ 38,552 $ (61,182) $ (9,381) $ 882,005
1991:
Oil and gas---------------------- $ 867,183 $ 48,905 $ (4,264) $ (4,488) $ 907,336
Other---------------------------- 9,270 2,416 (5,017) 11 6,680
Total---------------------------- $ 876,453 $ 51,321 $ (9,281) $ (4,477) $ 914,016
</TABLE>
<TABLE>
SCHEDULE VI -- RESERVES FOR DEPRECIATION, DEPLETION,
AND AMORTIZATION OF PROPERTY AND EQUIPMENT
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992, AND 1991
(EXPRESSED IN THOUSANDS)

<CAPTION>
CHARGED TO RETIREMENT
BALANCE PROFIT AND RENEWALS BALANCE
BEGINNING LOSS OR AND OTHER END OF
DESCRIPTION OF PERIOD INCOME REPLACEMENTS CHANGES PERIOD
<S> <C> <C> <C> <C> <C>
1993:
Oil and gas---------------------- $ 713,396 $ 40,224 $ (120,160) $ 746 $ 634,206
Other---------------------------- 4,032 469 (49) 4,452
Total---------------------------- $ 717,428 $ 40,693 $ (120,209) $ 746 $ 638,658
1992:
Oil and gas---------------------- $ 730,835 $ 41,849 $ (60,887) $ 1,599 $ 713,396
Other---------------------------- 3,578 453 -- 1 4,032
Total---------------------------- $ 734,413 $ 42,302 $ (60,887) $ 1,600 $ 717,428
1991:
Oil and gas---------------------- $ 696,459 $ 36,970 $ (2,622) $ 28 $ 730,835
Other---------------------------- 7,148 551 (4,089) (32 ) 3,578
Total---------------------------- $ 703,607 $ 37,521 $ (6,711) $ (4 ) $ 734,413
</TABLE>

S-3

<PAGE>
SCHEDULE X

POGO PRODUCING COMPANY AND SUBSIDIARIES
SCHEDULE X -- SUPPLEMENTARY INCOME STATEMENT INFORMATION
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992, AND 1991
(EXPRESSED IN THOUSANDS)

1993 1992 1991
Maintenance and repairs-------------- $ 3,658 $ 4,435 $ 6,498
Taxes, other than payroll and income
taxes:
Severance, ad valorem, franchise
and other------------------------ $ 3,133 $ 2,423 $ 2,222

S-4

<PAGE>
EXHIBIT 1
POGO PRODUCING COMPANY

___% CONVERTIBLE SUBORDINATED NOTES DUE 2004

PURCHASE AGREEMENT

Dated: March ___, 1994

<PAGE>

POGO PRODUCING COMPANY
(A DELAWARE CORPORATION)

___% CONVERTIBLE SUBORDINATED NOTES DUE 2004

PURCHASE AGREEMENT

March ___, 1994

MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
GOLDMAN, SACHS & CO.
PAINEWEBBER INCORPORATED
c/o MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
Merrill Lynch World Headquarters
World Financial Center, North Tower
New York, NY 10281-1305

Dear Sirs:

Pogo Producing Company, a Delaware corporation (the "Company"),
proposes to issue and to sell to the Underwriters named in Schedule I
an aggregate of $75,000,000 principal amount, and, at the election of
such Underwriters, up to an additional $11,250,000 principal amount,
of its ____% Convertible Subordinated Notes due 2004 specified in
Schedule II (the "Notes") on the terms and conditions stated herein
and in Schedule II. The aggregate of $75,000,000 principal amount of
Notes to be sold by the Company is herein called the "Firm Notes" and
the aggregate of $11,250,000 additional principal amount of Notes to
be sold by the Company at the election of the Underwriters is herein
called the "Optional Notes." The Firm Notes and the Optional Notes
which the Underwriters elect to purchase pursuant to Section 2 hereof
are collectively herein sometimes called the "Notes." The Notes are
to be issued pursuant to an indenture dated as of _______________,
1994 (the "Indenture") between the Company and Shawmut Bank
Connecticut, National Association, as trustee (the "Trustee"). The
Notes will be convertible into shares of the Company's common stock,
par value $1 per share (the "Common Stock"). The shares of Common
Stock issuable upon conversion of the Notes are collectively herein
called the "Common Shares". The Notes and the Common Shares are more
fully described in the Prospectus referred to below and are
collectively herein sometimes called the "Securities."

<PAGE>

As used herein, unless the context otherwise requires, the term
"you" or the "Underwriters" shall mean the firms named as Underwriters
in Schedule I.

The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-3 (No. 33-
_______) and a related preliminary prospectus for the registration of
the Securities under the Securities Act of 1933, as amended (the "1933
Act"), has filed such amendment thereto, if any, and such amended
prospectus as may have been required to the date hereof, and will file
such additional amendments thereto and such amended prospectuses as
may hereafter be required. Such registration statement (as amended,
if applicable) and the prospectus constituting a part thereof
(including in each case all documents, if any, incorporated by
reference therein and the information, if any, deemed to be a part
thereof pursuant to Rule 430A(b) of the rules and regulations of the
Commission under the 1933 Act (the "1933 Act Regulations")), as from
time to time amended or supplemented pursuant to the 1933 Act or
otherwise, are hereinafter referred to as the "Registration Statement"
and the "Prospectus", respectively, except that if any revised
prospectus shall be provided to the Underwriters by the Company in
connection with the offering of the Securities which differs from the
Prospectus on file at the Commission at the time the Registration
Statement becomes effective (whether or not such revised prospectus is
required to be filed by the Company pursuant to Rule 424(b) of the
1933 Act Regulations), the term "Prospectus" shall refer to such
revised prospectus from and after the time it is first provided to the
Underwriters for such use.

The Company understands that the Underwriters propose to make a
public offering of the Firm Notes as soon as the Underwriters deem
advisable after the Registration Statement becomes effective.

Section 1. REPRESENTATIONS AND WARRANTIES. (a) The Company
represents and warrants to you that:

(i) At the time the Registration Statement becomes
effective, the Registration Statement will comply in all material
respects with the requirements of the 1933 Act and the 1933 Act
Regulations and the Trust Indenture Act of 1939, as amended, (the
"1939 Act"), and the rules and regulations of the Commission
thereunder (the "1939 Act Regulations"), and will not contain an
untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading. The Prospectus, as of its
date and at each Closing Time referred to in Section 2 hereof,
will not contain 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; PROVIDED, HOWEVER, that the
representations and warranties in this subsection shall not apply
to statements in or omissions from the Registration Statement or
Prospectus made in reliance upon and in conformity with
information furnished to the Company in writing by any
Underwriter expressly for use in the

-2-
<PAGE>
Registration Statement or Prospectus. The Indenture, at the time
the Registration Statement becomes effective and at all
subsequent times to and including each Closing Time, will comply
with all applicable provisions of the 1939 Act and the 1939 Act
Regulations.

(ii) All documents filed by the Company under the Securities
Exchange Act of 1934, as amended (the "1934 Act"), that are
incorporated by reference (in whole or in part) in the Prospectus,
at the time they were filed with the Commission, complied in all
material respects, to the extent so incorporated, with the
requirements of the 1934 Act and the rules and
regulations of the Commission thereunder (the "1934 Act
Regulations") and, when read together and with the other
information contained or incorporated by reference in the
Prospectus as of the issuance date of the Prospectus, and at all
times subsequent thereto to and including each Closing Time, will
not contain an 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.

(iii) The accountants who certified the financial statements
and supporting schedules included or incorporated by reference in
the Registration Statement are independent public accountants as
required by the 1933 Act and the 1933 Act Regulations.

(iv) The consolidated financial statements included or
incorporated by reference in the Prospectus present fairly the
consolidated financial position of the Company and its
subsidiaries as of the dates indicated and the consolidated
results of operations and cash flows of the Company and its
subsidiaries for the periods specified. Such financial
statements have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis
throughout the periods involved, except as otherwise specifically
noted therein. The financial statement schedules, if any,
included or incorporated by reference in the Prospectus present
fairly the information required to be stated therein. The
selected financial data included in the Prospectus present fairly
the information shown therein and have been compiled on a basis
consistent with that of the audited consolidated financial
statements included or incorporated by reference in the
Prospectus.

(v) The Company had, at the date indicated, the authorized
and outstanding shares of capital stock as set forth in the
Prospectus under the caption "Capitalization", and such capital
stock, the Indenture and Notes conform in all material respects
to the descriptions thereof contained in the Prospectus.

(vi) This Agreement has been duly authorized, executed and
delivered by the Company.
-3-
<PAGE>
(vii) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Delaware, with corporate power and authority under such laws to
own, lease and operate its properties and conduct its business as
described in the Prospectus; and the Company is duly qualified to
transact business as a foreign corporation and is in good
standing in each other jurisdiction in which it owns or leases
property of a nature, or transacts business of a type, that would
make such qualification necessary, except to the extent that the
failure to so qualify or be in good standing would not have a
material adverse effect on the condition (financial or
otherwise), earnings or business affairs the Company and its
subsidiaries, considered as one enterprise.

(viii) Each corporate subsidiary of the Company which is a
significant subsidiary (each a "Significant Subsidiary") as
defined in Rule 405 of Regulation C of the 1933 Act Regulations
is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation.
Each Significant Subsidiary has the corporate power and authority
to own, lease and operate its properties and to conduct its business
as described in the Prospectus; and each Significant
Subsidiary is duly qualified to transact business as a foreign
corporation and is in good standing in each other jurisdiction in
which it owns or leases property of a nature, or transacts
business of a type, that would make such qualification necessary,
except to the extent that the failure to so qualify or be in good
standing would not have a material adverse effect on the
condition (financial or otherwise), earnings or business affairs
of the Company and its subsidiaries, considered as one
enterprise. All of the outstanding shares of capital stock of
each Significant Subsidiary have been duly authorized and validly
issued, are fully paid and nonassessable and are owned by the
Company directly or through one or more Significant Subsidiaries,
free and clear of any pledge, lien, security interest, charge,
claim, equity or other adverse claim. Pogo Gulf Coast, Ltd.
("PGCL") is a limited partnership duly organized pursuant to the
provisions of the Texas Revised Limited Partnership Act and is
validly existing as a limited partnership in good standing under
the laws of the State of Texas, has the partnership power and
authority to own, lease and operate its properties and to conduct
its business as described in the Prospectus and is duly qualified
to transact business as a foreign partnership and is in good
standing in each other jurisdiction in which it owns or leases
property of a nature, or transacts business of a type, that would
make such qualification necessary, except to the extent that the
failure to so qualify or be in good standing would not have a
material adverse effect on the condition (financial or
otherwise), earnings or business affairs of the Company and its
subsidiaries, considered as one enterprise.

-4-
<PAGE>
(ix) Since the respective dates as of which information is
given in the Prospectus, except as otherwise stated therein or
contemplated thereby, there has not been (A) any material adverse
change in the condition (financial or otherwise), earnings or
business affairs or prospects of the Company and its
subsidiaries, considered as one enterprise, whether or not
arising in the ordinary course of business or (B) any transaction
entered into by the Company, any subsidiary or PGCL, other than
in the ordinary course of business, that is material to the
Company and its subsidiaries, considered as one enterprise.

(x) Neither the Company , PGCL nor any Significant
Subsidiary is in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, loan agreement, note, lease or
other agreement or instrument to which it is a party or by which
it may be bound or to which any of its properties may be subject,
except for such defaults that would not have a material adverse
effect on the condition (financial or otherwise), earnings or
business affairs of the Company and its subsidiaries, considered
as one enterprise. The execution and delivery by the Company of
this Agreement and the Indenture, the issuance and delivery of
the Notes, the consummation by the Company of the other
transactions contemplated herein and in the Prospectus and
compliance by the Company with the terms of this Agreement, the
Notes and the Indenture have been duly authorized by all
necessary corporate action on the part of the Company and do not
and will not result in any violation of the charter or by-laws of
the Company or any Significant Subsidiary, and do not and will
not conflict with, or result in a breach of any of the terms or
provisions of, or constitute a default under, or result in the
creation or imposition of any lien, charge or encumbrance upon
any property or assets of the Company, PGCL or any Significant
Subsidiary under (A) any indenture, mortgage, loan agreement,
note, lease or other agreement or instrument to which the
Company, PGCL or any Significant Subsidiary is a party or by
which it may be bound or to which any of its properties may be
subject or (B) any existing applicable law, rule, regulation,
judgment, order or decree of any government, governmental
instrumentality or court, domestic or foreign, having
jurisdiction over the Company, PGCL or any Significant Subsidiary
or any of its properties.

(xi) Except as disclosed in the Registration Statement,
there is no action, suit or proceeding before or by any court or
governmental agency or body, domestic or foreign, now pending, or
to the knowledge of the Company, threatened, against or affecting
the Company or any of its subsidiaries, which is required to be
disclosed in the Registration Statement, or which might
materially adversely affect the consummation by the Company of
the transactions contemplated by this Agreement; and there are no
contracts or documents of the Company or any of its subsidiaries
which are required to be filed as exhibits to the Registration
Statement by the 1933 Act or by the 1933 Act Regulations which
have not been so filed.
-5-
<PAGE>
(xii) The Notes have been duly authorized for issuance and
sale to the Underwriters pursuant to this Agreement and, when
executed and delivered by the Company, and authenticated by the
Trustee, pursuant to the provisions of the Indenture and this
Agreement against payment by you of the consideration set forth
in Schedule II, will constitute valid and binding obligations of
the Company entitled to the benefits of the Indenture and
enforceable in accordance with their terms, except that such
enforcement may be subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws relating to creditors'
rights generally and general equitable principles (regardless of
whether such enforcement is considered in a proceeding in equity
or at law). The Common Shares have been duly authorized and
reserved for issuance and, when issued and delivered upon
conversion of the Notes in accordance with the provisions of the
Indenture, will be duly authorized and validly issued, fully paid
and nonassessable, and such issuance of the Common Shares will
not be subject to any preemptive or similar rights.

(xiii) All of the outstanding shares of Common Stock have
been duly authorized and validly issued, are fully paid and
nonassessable.

(xiv) No authorization, approval or consent of any court or
governmental agency or body, domestic or foreign, is necessary in
connection with the sale of the Securities hereunder except such
as may be required under the 1933 Act or the 1933 Act Regulations
or state securities laws and the qualification of the Indenture
under the 1939 Act or the 1939 Act Regulations.

(xv) Each of the Company, its subsidiaries and PGCL has
(A) generally satisfactory title to all their interest in their
oil and gas properties, title investigations having been carried
out by the Company in accordance with the practice in the oil and
gas industry in the areas in which the Company operates, (B) good
and marketable title to all other real property to the extent
necessary to carry on their business, and (C) good and marketable
title to all personal property owned by them, in each case free
and clear of all liens, encumbrances and defects except such as
are described in the Prospectus or such as do not materially
affect the value of such property and do not interfere with the
use made and proposed to be made of such property by the Company
and its subsidiaries, considered as one enterprise.

(xvi) Each of the Company, its subsidiaries and PGCL owns,
possesses or has obtained all material governmental licenses,
permits, certificates, consents, orders, approvals and other
authorizations necessary to own or lease, as the case may be, and
to operate its properties and to carry on its business as
presently conducted, and, except as disclosed in the Prospectus,
neither the Company, any subsidiary nor PGCL has received any
notice of proceedings relating to revocation or modification of
any such licenses, permits, certificates, consents, orders,
approvals or authorizations which, singly or in the aggregate, if
the subject of an unfavorable decision, ruling or finding, would
have a material adverse effect on the condition (financial or

-6-
<PAGE>
otherwise) or the earnings or business affairs of the Company and
its subsidiaries, considered as one enterprise.

(xvii) Each of the Company, its subsidiaries and PGCL (i) is
in compliance with any and all applicable federal, state and
local laws and regulations relating to the protection of human
health and safety, the environment or hazardous or toxic
substances or waste, pollutants or contaminants ("Environmental
Laws"), (ii) has received all permits, licenses or other
approvals required of it under applicable Environmental Laws to
conduct its business and (iii) is in compliance with all terms
and conditions of any such permit, license or approval, except
for such noncompliance with Environmental Laws, failure to
receive required permits, licenses or other approvals or failure
to comply with the terms and conditions of such permits, licenses
or approvals that would not, singly or in the aggregate, have a
material adverse effect on the condition (financial or otherwise)
or the earnings or business affairs of the Company and its
subsidiaries, considered as one enterprise.

(xviii) Neither the Company nor any affiliate thereof does
business with the government of Cuba or with any person located
in Cuba.

(xix) There are no holders of securities of the Company who
by reason of the filing of the Registration Statement under the
1933 Act have the right (except to the extent waived) to request
the Company to register under the 1933 Act securities held by
them.

(xx) The Company is not a "holding company" as defined in
Section 2(a)(7) of the Public Utility Holding Company Act of
1935, as amended.

(b) Any certificate signed by any officer of the Company and
delivered to you or your counsel in connection with the offering of
the Notes shall be deemed a representation and warranty by the Company
to each of you as to the matters covered thereby.

Section 2. PURCHASE AND SALE. (a) On the basis of the
representations and warranties herein contained and subject to the
terms and conditions herein set forth, (i) the Company agrees to sell
to each Underwriter, and each Underwriter agrees, severally and not
jointly, to purchase from the Company, at the purchase price to the
Underwriters set forth in Schedule II, the principal amount of the
Firm Notes set forth opposite the name of such Underwriter in
Schedule I, and (ii) in the event and to the extent that the
Underwriters shall exercise the election to purchase Optional Notes as
provided below, the Company agrees to sell to each of the
Underwriters, and each of the Underwriters agrees, severally and not
jointly, to purchase from the Company, at such purchase price, that
portion of the aggregate principal amount of Optional Notes as to
which such election shall have been exercised determined by
multiplying such aggregate principal amount by a fraction the
numerator of which is the maximum aggregate principal amount of
Optional Notes which such Underwriter is entitled to purchase as set
forth opposite the name of such Underwriter

-7-
<PAGE>

in Schedule I and the denominator of which is the maximum aggregate
principal amount of the Optional Notes which all of the Underwriters
are entitled to purchase hereunder.

(b) The Company hereby grants to the Underwriters the right to
purchase at their election up to $11,250,000 principal amount of
Optional Notes, at the purchase price referred to in clause (i) of the
paragraph above, for the sole purpose of covering over-allotments in
the sale of the Firm Notes. Any such election to purchase Optional
Notes may be exercised only once, either in whole or in part, by
written notice from you to the Company, given within a period of 30
calendar days after the date of this Agreement and setting forth the
aggregate principal amount of Optional Notes to be purchased and the
date on which such Optional Notes are to be delivered, as determined
by you but in no event earlier than the First Closing Time or, unless
you and the Company otherwise agree in writing, earlier than two or
later than ten business days after the date of such notice.

(c) Payment of the purchase price for, and delivery of, the Firm
Notes shall be made at the date, time and location specified in
Schedule II, or at such other date, time or location as shall be
agreed upon by the Company and you, or as shall otherwise be provided
in Section 10. In addition, in the event that any of the Optional
Notes is purchased by the Underwriters, payment of the purchase price
for, and delivery of, such Optional Notes shall be made on the date
specified by you in the written notice given by you of the
Underwriters' election to purchase such Optional Notes and at the time
and location specified in Schedule II, or at such other date, time or
location as shall be agreed upon by the Company and you, or as shall
otherwise be provided in Section 10. Such time and date of delivery
of the Firm Notes is herein called the "First Closing Time," such time
and date of delivery of the Optional Notes is herein called the
"Second Closing Time," and each such time and date of delivery is
herein called a "Closing Time." Unless otherwise specified in
Schedule II, payment shall be made to the Company by you hereunder by
certified or official bank check or checks in New York Clearing House
funds or similar next-day funds payable to the order of the Company,
against delivery of the appropriate Notes to your respective accounts.
The Notes to be delivered at each Closing Time shall be in definitive
form and in such authorized denominations and registered in such names
as you may request in writing at least two full business days before
such Closing Time. The Notes to be delivered at each Closing Time
will be made available in New York City for examination and packaging
by you not later than 10:00 A.M. on the business day prior to such
Closing Time.

Section 3. CERTAIN COVENANTS OF THE COMPANY. The Company
covenants with each of the Underwriters as follows:

(a) The Company will notify the Underwriters immediately,
and confirm the notice in writing of (i) the effectiveness of the
Registration Statement and any amendment thereto (including any
post-effective amendment), (ii) the receipt of any comments from
the Commission, (iii) any request by the Commission for any
amendment to the Registration Statement or any amendment or
supplement to the Prospectus or for additional information, and
(iv) the issuance by the Commission

-8-
<PAGE>

of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for
that purpose. The Company will make every reasonable effort to
prevent the issuance of any stop order and, if any stop order is
issued, to obtain the lifting thereof at the earliest practicable
moment.

(b) The Company will give the Underwriters notice of its
intention to file or prepare any amendment to the Registration
Statement (including any document incorporated by reference
therein and any post-effective amendment) or any amendment or
supplement to the Prospectus (including any document incorporated
by reference therein and any revised prospectus that the Company
proposes for use by the Underwriters in connection with the
offering of the Securities which differs from the prospectus on
file at the Commission at the time the Registration Statement
becomes effective, whether or not such revised prospectus is
required to be filed pursuant to Rule 424(b) of the 1933 Act
Regulations), will furnish the Underwriters copies of any such
amendment or supplement a reasonable amount of time prior to such
proposed filing or use, as the case may be, and will not file any
such amendment or supplement, except as required by Section 3(e),
or use any such prospectus to which the Underwriters or counsel
for the Underwriters shall object.

(c) The Company will deliver to the Underwriters as many
signed copies of the Registration Statement as originally filed
and of each amendment thereto (including exhibits filed therewith
or incorporated by reference therein) as the Underwriters may
reasonably request and will also deliver to the Underwriters a
conformed copy of the Registration Statement as originally filed
and of each amendment thereto (without exhibits).

(d) The Company will furnish to each Underwriter, from time
to time during the period when the Prospectus is required to be
delivered under the 1933 Act or the 1934 Act, such number of
copies of the Prospectus (as amended or supplemented) as such
Underwriter may reasonably request for the purposes contemplated
by the 1933 Act or the 1934 Act or the respective applicable
rules and regulations of the Commission thereunder.

(e) If any event shall occur as a result of which it is
necessary, in the opinion of counsel for the Company or counsel
for the Underwriters, to amend or supplement the Prospectus in
order to make the Prospectus not misleading in the light of the
circumstances existing at the time it is delivered to a
purchaser, the Company will forthwith amend or supplement the
Prospectus so that, as so amended and supplemented, the
Prospectus will 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
existing at the time it is delivered to the purchaser, not
misleading, and the Company will furnish to the Underwriters a
reasonable number of copies of such amendment or supplement.

-9-
<PAGE> (f) The Company will endeavor, in cooperation with the
Underwriters, to qualify the Securities for offering and sale
under the applicable securities laws of such states and other
jurisdictions of the United States as the Underwriters may
designate; PROVIDED, HOWEVER, that the Company shall not be
obligated to qualify as a foreign corporation in any jurisdiction
in which it is not so qualified. In each jurisdiction in which
the Securities have been so qualified, the Company will file such
statements and reports as may be required by the laws of such
jurisdiction to continue such qualification in effect for a
period of not less than one year from the effective date of the
Registration Statement.

(g) The Company will make generally available to its
security holders as soon as practicable, but not later than 90
days after the close of the period covered thereby, an earnings
statement (in form complying with the provisions of Rule 158 of
the 1933 Act Regulations) covering a twelve-month period
beginning not later than the first day of the Company's fiscal
quarter next following the "effective date" (as defined in said
Rule 158) of the Registration Statement.

(h) The Company will use the net proceeds received by it
from the sale of the Notes in the manner specified in the
Prospectus under "Use of Proceeds".

(i) If, at the time that the Registration Statement becomes
effective, any information shall have been omitted therefrom in
reliance upon Rule 430A of the 1933 Act Regulations, then the
Company will prepare and file or transmit for filing with the
Commission, in accordance with such Rule 430A and Rule 424(b) of
the 1933 Act Regulations, copies of an amended Prospectus or, if
required by such Rule 430A, a post-effective amendment to the
Registration Statement (including an amended Prospectus),
containing all information so omitted.

(j) The Company will use its best efforts to cause the
Common Shares to be duly authorized for listing on the New York
Stock Exchange and the Pacific Stock Exchange on or before the
First Closing Time.

(k) For a period of five years from the effectiveness of the
Registration Statement, the Company will furnish to the
Underwriters as soon as they are publicly available copies of all
annual reports and quarterly reports that it shall file with the
Commission on Forms 10-K and 10-Q, or such other similar forms as
may be designated by the Commission, and such other documents,
reports and information as shall be furnished by the Company to
its public stockholders generally.

-10-
<PAGE>
(l) The Company will not offer, sell, contract to sell or
otherwise dispose of, or register under the 1933 Act on behalf of
another person, any shares of Common Stock or preferred stock,
any securities convertible into or exercisable or exchangeable
for shares of Common Stock or any rights to acquire shares of
Common Stock for a period of 90 days after the date hereof
without the prior written consent of the Underwriters (other than
the Common Shares, any shares of Common Stock issuable upon
conversion of any currently outstanding convertible securities or
pursuant to exercise of options or similar rights granted to
directors, officers or employees and any other shares of Common
Stock issued in connection with any other employee benefit plans
of the Company).

Section 4. PAYMENT OF EXPENSES. The Company will pay all
expenses incident to the performance of its obligations under this
Agreement, including (i) the printing and filing of the Registration
Statement as originally filed and each amendment thereto, (ii) the
reproduction of this Agreement and the Indenture, (iii) the
preparation, issuance and delivery of the Notes in definitive form to
the Underwriters, (iv) the fees and disbursements of the Company's
counsel, engineers and accountants, (v) the qualification of the
Securities under securities laws in accordance with the provisions of
Section 3(f), including filing fees and the reasonable fees and
disbursements of counsel for the Underwriters in connection therewith
and in connection with the preparation of the blue sky survey and any
legal investment survey, (vi) the printing and delivery to the
Underwriters of copies of the Registration Statement as originally
filed and each amendment thereto, of the preliminary prospectuses and
of the Prospectus and any amendments or supplements thereto, (vii) the
fees and expenses of the Trustee, (viii) the reproduction and delivery
to the Underwriters of copies of the blue sky survey and any legal
investment survey, (ix) the fee of the National Association of
Securities Dealers, Inc., (the "NASD"), and (x) the fees charged by
the rating agencies in connection with the rating of the Notes.

If this Agreement is terminated by the Underwriters in accordance
with the provisions of Section 5 or Section 9(a)(i), the Company shall
reimburse the Underwriters for all of their out-of-pocket expenses,
including the reasonable fees and disbursements of counsel for the
Underwriters.

Section 5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The
obligations of the Underwriters to purchase and pay for the Notes to
be delivered at either Closing Time pursuant to this Agreement are
subject to the accuracy of the representations and warranties of the
Company contained herein or in certificates of any officer of the
Company delivered pursuant to the provisions hereof, to the
performance by the Company of its obligations hereunder, and to the
following further conditions:

(a) The Registration Statement shall have become effective
not later than 5:30 P.M. on the date hereof, or with the consent
of Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill
Lynch"), at a later time and date, not later, however, that 5:30
P.M. on the first business day following the date hereof, or at
such later
-11-
<PAGE>
time and date as may be approved by the majority in interest of
the Underwriters; and at such Closing Time no stop order
suspending the effectiveness of the Registration Statement shall
have been issued under the 1933 Act or proceedings therefor
initiated or threatened by the Commission. If the Company has
elected to rely upon Rule 430A of the 1933 Act Regulations, the
price of the Notes and any price-related information previously
omitted from the effective Registration Statement pursuant to
such Rule 430A shall have been transmitted to the Commission for
filing pursuant to Rule 424(b) of the 1933 Act Regulations within
the prescribed time period, and prior to the First Closing Time
the Company shall have provided evidence satisfactory to the
Underwriters of such timely filing, or a post-effective amendment
providing such information shall have been promptly filed and
declared effective in accordance with the requirements of
Rule 430A of the 1933 Act Regulations.

(b) All consents and approvals from any regulatory authority
having jurisdiction over the Company necessary for the
consummation of the transactions contemplated hereby shall have
been obtained by the Company and shall be in full force and
effect at such Closing Time.

(c) At such Closing Time, you shall have received the
following favorable opinions of counsel, each dated as of such
Closing Time, in form and substance reasonably satisfactory to
the Underwriters and counsel for the Underwriters:

(i) An opinion of Baker & Botts, L.L.P., special
counsel to the Company, to the effect set forth in Exhibit A
hereto; and

(ii) An opinion of Gerald A. Morton, Associate General
Counsel of the Company, to the effect set forth in Exhibit B
hereto.

(d) At such Closing Time, you shall have received the
favorable opinion of Vinson & Elkins L.L.P., counsel for the
Underwriters, dated as of such Closing Time, with respect to the
incorporation of the Company, the validity of the Notes being
delivered at such Closing Time, the Indenture, this Agreement,
the Prospectus and such other related matters as you may require.
In giving such opinion, such counsel may rely, as to all matters
governed by the laws of jurisdictions other than the law of the
State of Texas, the federal law of the United States and the
General Corporation Law of the State of Delaware, upon the
opinions of counsel satisfactory to you. Such counsel may also
state that, insofar as such opinion involves factual matters,
they have relied, to the extent they deem proper, upon
certificates of officers of the Company and certificates of
public officials.

(e) At such Closing Time, there shall not have been since
the date hereof or since the respective dates as of which
information is given in the Registration Statement and the
Prospectus, any material adverse change in the condition

-12-
<PAGE>
(financial or otherwise), earnings or business affairs or
prospects of the Company and its subsidiaries, considered as one
enterprise, whether or not arising in the ordinary course of
business, and the Underwriters shall have received a certificate
of the President or a Vice President of the Company and the chief
financial or chief accounting officer of the Company, dated as of
such Closing Time, to the effect that: (i) there has been no such
material adverse change, (ii) the representations and warranties
in Section 1 are true and correct with the same force and effect
as though expressly made at and as of such Closing Time,
(iii) the Company has complied with all agreements and satisfied
all conditions on its part to be performed or satisfied at or
prior to such Closing Time, and (iv) no stop order suspending the
effectiveness of the Registration Statement has been issued and
no proceedings for that purpose have been initiated or threatened
by the Commission. As used in this Section 5(e), the term
"Prospectus" means the Prospectus in the form first used to
confirm sales of the Notes.

(f) At the time that this Agreement is executed by the
Company, the Underwriters shall have received from Arthur
Andersen & Co. a letter, dated such date, in form and substance
satisfactory to the Underwriters, confirming that they are
independent public accountants with respect to the Company and
its subsidiaries within the meaning of the 1933 Act and the 1933
Act Regulations, and stating in effect that:

(i) in their opinion, the audited consolidated
financial statements and the related financial statement
schedules included or incorporated by reference in the
Registration Statement comply as to form in all material
respects with the applicable accounting requirements of the
1933 Act and the 1933 Act Regulations.

(ii) on the basis of procedures (but not an audit in
accordance with generally accepted auditing standards)
consisting of a reading of the latest available unaudited
interim consolidated financial statements of the Company, a
reading of the minutes of all meetings of the stockholders
and directors of the Company and its subsidiaries and the
Audit and Compensation Committees of the Company's Board of
Directors from the date of the latest audited financial
statements of the Company and its subsidiaries, inquiries of
certain officials of the Company responsible for financial
and accounting matters and such other inquiries and
procedures as may be specified in such letter, nothing came
to their attention that caused them to believe that:

(A) any unaudited financial statements included or
incorporated by reference in the Registration Statement
do not comply as to form in all material respects with
the applicable accounting requirements of the 1933 Act
and the 1933 Act Regulations or that such unaudited
financial statements are not in conformity with
generally accepted
-13-
<PAGE>
accounting principles applied on a basis substantially
consistent with that of audited financial statements
referred to above, except as disclosed in the notes to
such unaudited financial statements or as otherwise
described in the Registration Statement.

(B) at a specified date not more than five
business days prior to the date of this Agreement,
there was any change (other than as a result of
issuance of capital stock related to employee benefit
plans) in the consolidated capital stock or any
increase in the consolidated long-term debt of the
Company and its subsidiaries or any decrease in the
consolidated net assets or common shareholders' equity
of the Company and its subsidiaries, in each case as
compared with amounts shown in the December 31, 1993
balance sheet included or incorporated by reference in
the Registration Statement, except in each case for
changes or decreases that the Registration Statement
discloses have occurred or may occur, or

(C) for the period from January 1, 1994 to a
specified date not more than five business days prior
to the date of this Agreement, there was any decrease
in consolidated revenues, consolidated net income or
consolidated net income per share, in each case as
compared with the comparable period in the preceding
year, except in each case for any decreases that the
Registration Statement discloses have occurred or may
occur; and

(iii) in addition to the procedures referred to in
clause (ii) above, they have performed other specified
procedures, not constituting an audit, with respect to
certain amounts, percentages, numerical data and financial
information appearing in the Registration Statement, which
have previously been specified by you and which shall be
specified in such letter, and have compared certain of such
items with, and have found such items to be in agreement
with, the accounting and financial records of the Company
and its subsidiaries identified in such letter.

(g) At such Closing Time, the Underwriters shall have
received from Arthur Andersen & Co. a letter, in form and
substance satisfactory to you and dated as of such Closing Time,
to the effect that they reaffirm the statements made in the
letter furnished pursuant to Section 5(f), except that the
specified date referred to shall be a date not more than five
business days prior to such Closing Time.

(h) The Common Shares shall have been duly authorized for
listing by the New York Stock Exchange, subject only to official
notice of issuance.
-14-
<PAGE>
(i) Between the date of this Agreement and such Closing
Time, there shall not have occurred any downgrading in the rating
accorded to any of the Company's debt securities by any
"nationally recognized statistical rating organization" (as
defined in Rule 436(g) under the 1933 Act), or any public
announcement that any such organization has under surveillance or
review its rating of any debt securities of the Company (other
than an announcement with positive implications of a possible
upgrading, and no implication of a possible downgrading, of such
rating).

(j) The Company shall have furnished to you and counsel for
the Underwriters, in form and substance satisfactory to you and
to them, such other documents, certificates and opinions as such
counsel may reasonably request for the purpose of enabling such
counsel to pass upon the matters referred to in Section 5(d) and
in order to evidence the accuracy and completeness of any of the
representations, warranties or statements, the performance of any
covenant by the Company theretofore to be performed, or the
compliance with any of the conditions in this Agreement.

If any of the conditions specified in this Section 5 shall not
have been fulfilled when and as required by this Agreement to be
fulfilled, this Agreement may be terminated by you on notice to the
Company at any time at or prior to such Closing Time, and such
termination shall be without liability of any party to any other
party, except as provided in Section 4. Notwithstanding any such
termination, the provisions of Section 6, Section 7 and Section 8
shall remain in effect.

Section 6. INDEMNIFICATION. (a) The Company agrees to indemnify
and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the 1933
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 the Registration Statement (or any
amendment thereto), including the information deemed to be a
part of the Registration Statement pursuant to Rule 430A(b)
of the 1933 Act Regulations, if applicable, or the 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 the Prospectus
(or amendment or supplement thereto) or the 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;

-15-
<PAGE>
(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 (A) any litigation,
(B) any investigation or proceeding by any governmental
agency or body, commenced or threatened, or (C) any claim
whatsoever based upon such untrue statement or omission, or
any such alleged untrue statement or omission, if such
settlement is effected with the written consent of the
Company; and

(iii) against any and all expense whatsoever, as
incurred (including, subject to Section 6(c) hereof, the
fees and disbursements of counsel chosen by the
Underwriters), reasonably incurred in investigating,
preparing or defending against any litigation, or any
investigation or proceeding by a 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 (i) or (ii) above;

PROVIDED, HOWEVER, that (A) the foregoing indemnity
agreement shall not apply to any loss, liability, claim,
damage or expense to the extent it arises 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
Underwriter expressly for use in the Registration Statement
(or any amendment thereto) or any preliminary prospectus or
the Prospectus (or any amendment or supplement thereto) and
(B) such indemnity with respect to any preliminary
prospectus shall not inure to the benefit of any Underwriter
(or any person controlling such Underwriter) from whom the
person asserting such loss, liability, claim, damage or
expense purchased the Notes which are the subject thereof if
such person did not receive a copy of the Prospectus at or
prior to the confirmation of the sale of such Securities to
such person in any case where such delivery is required by
the 1933 Act and the untrue statement or omission of a
material fact contained in such preliminary prospectus was
corrected in the Prospectus, provided the Company has
delivered the Prospectus to the Underwriters on a timely
basis to permit the Prospectus to be sent or given.

(b) Each Underwriter severally agrees to indemnify and hold
harmless the Company, its directors, each of its officers who signed
the Registration Statement, and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act against any
and all loss, liability, claim, damage and expense described in the
indemnity contained in subsection (a) of this Section as incurred, but
only with respect to untrue statements or omissions, or alleged untrue
statements or omissions, made in the Registration Statement (or any
amendment thereto) or any preliminary prospectus or the Prospectus (or
any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by such
Underwriter expressly for use in the

-16-
<PAGE>
Registration Statement (or any amendment thereto) or such preliminary
prospectus or the Prospectus (or any amendment or supplement thereto).

(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 any such action. If it so elects within a reasonable time after
receipt of such notice, an indemnifying party, jointly with any other
parties receiving such notice, may assume the defense of such action
with counsel chosen by it and approved by the indemnified parties
defendant in such action, unless such indemnified parties reasonably
object to such assumption on the ground that there may be legal
defenses available to them which are different from or in addition to
those available to such indemnifying party. If an indemnifying party
assumes the defense of such action, the indemnifying parties shall not
be liable for any fees and expenses of counsel for the indemnified
parties incurred thereafter in connection with such action. In no
event shall any indemnifying party be liable for 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.

Section 7. CONTRIBUTION. In order to provide for just and
equitable contribution in circumstances in which the indemnity
agreement provided for in Section 6 is for any reason held to be
unenforceable by the indemnified parties although applicable in
accordance with its terms, the Company and the Underwriters shall
contribute to the aggregate losses, liabilities, claims, damages and
expenses of the nature contemplated by said indemnity agreement
incurred by the Company and one or more Underwriters, as incurred, in
such proportions that the Underwriters are responsible for that
portion represented by the percentage that the underwriting discount
appearing on the cover page of the Prospectus bears to the initial
public offering price appearing thereon and the Company is responsible
for the balance; PROVIDED, HOWEVER, that 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, each person, if any, who controls an Underwriter within
the meaning of Section 15 of the 1933 Act shall have the same rights
to contribution as such Underwriter, and each director of the Company,
each 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, shall have the same rights to contribution
as the Company.
-17-
<PAGE>
Section 8. REPRESENTATIONS, WARRANTIES, AGREEMENTS TO SURVIVE
DELIVERY. The representations, warranties, indemnities, agreements
and other statements of the Company or its officers set forth in or
made pursuant to this Agreement will remain operative and in full
force and effect regardless of any investigation made by or on behalf
of the Company or any Underwriter or controlling person and will
survive delivery of and payment for the Notes.

Section 9. TERMINATION OF AGREEMENT. (a) You may terminate this
Agreement, by notice to the Company at any time at or prior to a
Closing Time (i) if there has been, since the date of this Agreement
or the respective dates as of which information is given in the
Prospectus, any material adverse change in the condition (financial or
otherwise), earnings or business affairs or prospects of the Company
and its subsidiaries, considered as one enterprise, whether or not
arising in the ordinary course of business or (ii) if there has
occurred any material adverse change in the financial markets, or any
outbreak of hostilities or escalation thereof or other calamity or
crisis the effect of which is such as to make it, in your judgment,
impracticable to market the Notes or enforce contracts for the sale of
the Notes or (iii) if trading in any securities of the Company has
been suspended by the Commission, by the NASD, or on any exchange or
generally in the over-the-counter market, or if trading generally on
the New York Stock Exchange or in the over-the-counter market has been
suspended or materially limited, or minimum or maximum prices for
trading have been fixed, or maximum ranges for prices for securities
have been required, by such exchange or by order of the Commission,
the NASD or any other governmental authority or (iv) if a banking
moratorium has been declared by federal or New York authorities.

(b) If this Agreement is terminated pursuant to this Section,
such termination shall be without liability of any party to any other
party, except to the extent provided in Section 4. Notwithstanding
any such termination, the provisions of Section 6, Section 7 and
Section 8 shall remain in effect.

Section 10. DEFAULT BY ONE OR MORE OF THE UNDERWRITERS. (a) If
any one of the Underwriters shall fail at either Closing Time to
purchase the Notes which it was obligated to purchase under this
Agreement (the "Defaulted Notes"), the non-defaulting Underwriters
shall have the right but not the obligation within 24 hours thereafter
to make arrangements to purchase all but not less than all of the
Defaulted Notes in such amounts as may be agreed upon and upon the
terms herein set forth; if, however, such Underwriters shall not have
completed such arrangements within such 24-hour period, then this
Agreement shall terminate without liability on the part of the non-
defaulting Underwriters.

(b) No action taken pursuant to this Section shall relieve the
defaulting Underwriter from liability in respect of its default.

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<PAGE>
(c) In the event of any such default which does not result in the
termination of this Agreement, either the Underwriters or the Company
shall have the right to postpone such Closing Time for a period not
exceeding seven days in order to effect any required changes in the
Prospectus or in any other documents or arrangements.

Section 11. NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly
given if mailed or transmitted by standard form of telecommunication.
Notices to the Underwriters shall be directed to them c/o Merrill
Lynch at Merrill Lynch World Headquarters, World Financial Center,
North Tower, New York, New York 10281-1201, Attention: Syndicate
Operations; notices to the Company shall be directed to it at
5 Greenway Plaza, Suite 2700, Houston, Texas 77046, Attention:
D. Stephen Slack, Senior Vice President.

Section 12. PARTIES. This Agreement shall inure to the benefit
of and be binding upon the Underwriters and the Company and their
respective successors. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any person, firm
or corporation other than the Underwriters and the Company and their
respective successors and the controlling persons and officers and
directors referred to in Sections 6 and 7 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under
or in respect of this Agreement or any provision herein contained.
This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the Underwriters and the
Company and their respective successors, and said controlling persons
and officers and directors and their heirs and legal representatives,
and for the benefit of no other person, firm or corporation. No
purchaser of Notes from any Underwriter shall be deemed to be a
successor by reason merely of such purchase.

Section 13. UNDERWRITERS' ACTS. In all dealings hereunder, the
parties hereto shall be entitled to act and rely upon any statement,
request, notice or agreement on behalf of any Underwriter made or
given by you jointly or by Merrill Lynch on behalf of you.

Section 14. GOVERNING LAW AND TIME. This Agreement shall be
governed by the internal laws of the State of New York. Specified
times of day refer to New York City time.

Section 15. COUNTERPARTS. This Agreement may be executed in one
or more counterparts and when a counterpart has been executed by each
party, all such counterparts taken together shall constitute one and
the same agreement.

Section 16. CONSENT AS TO COMPANY SPECIAL COUNSEL. The
Underwriters acknowledge that Baker & Botts, L.L.P., which will be
acting as special counsel to the Company in connection with offer and
sale of the Notes, also acts as counsel from time to time to one or
more of the Underwriters in connection with unrelated matters. The
Company and the Underwriters consent to such firm's so acting as
special counsel to the Company.
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<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof,
whereupon this instrument will become a binding agreement between the
Company and the Underwriters in accordance with its terms.

Very truly yours,

POGO PRODUCING COMPANY

By:____________________________________
D. Stephen Slack, Senior Vice
President, Chief Financial Officer
and Treasurer

CONFIRMED AND ACCEPTED as of
the date first above written:

MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith Incorporated

By:______________________________
Name:

GOLDMAN, SACHS & CO.

By:______________________________
(Goldman, Sachs & Co.)

PAINEWEBBER INCORPORATED

By:______________________________
Name:
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<PAGE>
SCHEDULE I

AGGREGATE
PRINCIPAL
AGGREGATE AMOUNT OF
PRINCIPAL OPTIONAL NOTES
AMOUNT OF TO BE
UNDERWRITER FIRM NOTES PURCHASED IF
TO MAXIMUM OPTION
BE PURCHASED EXERCISED

MERRILL LYNCH, PIERCE, FENNER
& SMITH $ 25,000,000 3,750,000
INCORPORATED . . . . . .
GOLDMAN, SACHS & CO. . . . . 25,000,000 3,750,000

PAINEWEBBER INCORPORATED . . 25,000,000 3,750,000

TOTAL . . . . . . . . . . $75,000,000 $11,250,000

<PAGE>
SCHEDULE II

POGO PRODUCING COMPANY

___% CONVERTIBLE SUBORDINATED NOTES DUE 2004

Principal amount to
be issued: $75,000,000 plus up to an additional
$11,250,000 at the Underwriters'
election to cover overallotments

Ratings: Standard & Poor's Corporation: _____
Moody's Investors Service, Inc.: _____

Interest rate: ____%, payable semiannually on
September 15 and March 15, commencing
September 15, 1994

Date of maturity: March 15, 2004

Conversion rights: Convertible into Common Stock of the
Company at the option of the holder at
any time before maturity (unless earlier
redeemed) at $_________ per share
(equivalent to a conversion rate of
approximately ________ shares per $1,000
principal amount of Notes) subject to
adjustment upon the occurrence of
certain events

Redemption provisions: Not redeemable prior to March 15, 1998;
on or after that date, the Notes will be
redeemable, at the option of the
Company, in whole or in part, as set
forth in the following table:

12-Month Period Redemption
Beginning March 15, Price

1998 %
1999
2000
2001
2002
2003

; plus in each case accrued and unpaid interest to the date of
redemption.

<PAGE>

Repurchase provisions: Upon the occurrence of a Repurchase
Event (as defined in the Indenture),
each holder of Notes shall have the
right, at the holder's option, to
require the Company to repurchase such
Notes at 100% of their principal amount,
plus accrued interest

Sinking fund requirements: None

Ranking: The Notes will be unsecured and
subordinated to all existing and future
Senior Indebtedness of the Company (as
defined in the Indenture); the Notes
will rank pari passu with the Company's
two outstanding issues of convertible
subordinated indebtedness

Initial public
offering price: ____% of the principal amount plus
accrued interest from March __, 1994, if
any

Purchase price: ___% of the principal amount plus
accrued interest from March __, 1994
(payable in next day funds)

First Closing Time,
date and location: March __, 1994, at 10:00 A.M., New York
City time, at the offices of Merrill
Lynch, 250 Vesey Street, New York, New
York 10281-1305

Second Closing Time,
date and location: On the date notified by Merrill Lynch to
the Company, at 10:00 A.M., New York
City time, at the offices of Merrill
Lynch, 250 Vesey Street, New York, New
York 10281-1305

Listing requirements: None for the Notes; NYSE for the Common
Shares

Book-entry arrangements: None

Other terms and conditions: [None]

-2-
<PAGE>
EXHIBIT A
TO
PURCHASE AGREEMENT

OPINION OF SPECIAL COUNSEL TO THE COMPANY

(i) The Company is duly incorporated, validly existing and
in good standing under the laws of the State of Delaware.

(ii) The Purchase Agreement has been duly authorized,
executed and delivered by the Company.

(iii) The Notes being delivered at such Closing Time are in
the form contemplated by the Indenture (based upon the specimen
examined by such counsel) and, when executed and delivered by the
Company and authenticated by the Trustee, pursuant to the
provisions of the Indenture and the Purchase Agreement against
payment by the Underwriters of the consideration set forth in
Schedule II to the Purchase Agreement, will constitute valid and
legally binding obligations of the Company entitled to the
benefits of the Indenture and enforceable in accordance with
their terms, except that such enforcement may be subject to
applicable bankruptcy, insolvency, reorganization, moratorium or
other laws relating to creditors' rights generally and general
equitable principles (regardless of whether such enforcement is
considered in a proceeding in equity or at law). The Indenture
(A) has been duly and validly authorized, executed and delivered
by the Company, (B) is duly qualified under the 1939 Act and
(C) (assuming the due authorization, execution and delivery by
the Trustee) constitutes the valid and legally binding agreement
of the Company, enforceable in accordance with its terms, except
that such enforcement may be subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws relating to
creditors' rights generally and general equitable principles
(regardless of whether such enforcement may be sought in a
proceeding at law or in equity).

(iv) The Common Shares have been duly authorized and
reserved for issuance and, when issued and delivered upon
conversion of the Notes being delivered at such Closing Time in
accordance with the terms of the Notes, will be validly issued,
fully paid and nonassessable; and there are no preemptive or
similar rights with respect to such issuance of the Common
Shares.

(v) The Notes being delivered at such Closing Time and the
Indenture conform as to legal matters in all material respects to
the description thereof contained in the Prospectus under the
caption "Description of the Notes."

(vi) The execution and delivery by the Company of the
Purchase Agreement and the Indenture, the issuance and delivery
of the Notes being delivered at such Closing Time, the
application by the Company of the proceeds of the sale of such
Notes as contemplated by the Prospectus and compliance by the
Company with the

<PAGE>

terms of the Purchase Agreement, such Notes and the Indenture
have been duly authorized by all necessary corporate action on
the part of the Company and do not and will not result in any
violation of the charter or by-laws of the Company.

(vii) The Registration Statement has become effective under
the 1933 Act and, to their knowledge, no stop order suspending
the effectiveness of the Registration Statement has been issued
under the 1933 Act or proceedings therefor initiated or
threatened by the Commission.

(viii) At the time the Registration Statement became
effective, the Registration Statement (excluding the Statement of
Eligibility and Qualification of the Trustee on Form T-1 (the "T-
1") filed with the Commission) appeared on its face to comply as
to form in all material respects with the requirements of the
1933 Act, the 1933 Act Regulations, the 1939 Act and the 1939
Act Regulations (except that such counsel need express no opinion
as to any documents incorporated therein by reference or as to
the exhibits, financial statements, schedules and other
financial, reserve or statistical information contained in the
Registration Statement or the Prospectus or incorporated by
reference therein).

(ix) No authorization, approval, consent or license of any
government, governmental instrumentality or court (other than
pursuant to the securities or blue sky laws of the various
states) is required to be obtained by the Company for the sale of
the Notes being delivered at such Closing Time under the Purchase
Agreement or for the reservation and issuance of the Common
Shares.

In addition, counsel shall state that they have participated in
conferences with officers and other representatives of the Company,
counsel employed by the Company, representatives of the independent
public accountants for the Company, representatives of the
Underwriters and counsel for the Underwriters, at which conferences
the contents of the Registration Statement and the Prospectus and
related matters were discussed and, although such counsel are not
passing upon, and do not assume any responsibility for, the accuracy,
completeness or fairness of the statements contained in the
Registration Statement or the Prospectus except as set forth in
paragraphs (viii) and (xi) above and have not made any independent
check or verification thereof, on the basis of the foregoing (relying
as to materiality to a large extent upon officers and other
representatives of the Company and upon your representatives), no
facts have come to such counsel's attention that lead them to believe
that (A) the Registration Statement (including documents incorporated
by reference therein), at the time it became effective, contained an
untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading or (B) the Prospectus (including documents
incorporated by reference therein), at the time it was issued or at
such Closing Time, contained an untrue statement of a material fact or
omitted to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that such counsel need not comment on the T-1 and
the
-2-
<PAGE>

exhibits, financial statements, schedules and other financial, reserve
or statistical information included or incorporated by reference in
the Registration Statement or the Prospectus.

-3-

<PAGE>
EXHIBIT 4(a)
POGO PRODUCING COMPANY

SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION
Trustee

INDENTURE

Dated as of __________, 1994

__% Convertible Subordinated Notes due 2004

<PAGE>
Pogo Producing Company
Reconciliation and tie between Trust Indenture
Act of 1939 and Indenture, dated as of _____________, 1994

Trust Indenture
Act Section Indenture Section

310 (a)(1) . . . . . . . . . . . . . . . . . 609
(a)(2) . . . . . . . . . . . . . . . . . 609
(a)(3) . . . . . . . . . . . Not Applicable
(a)(4) . . . . . . . . . . . Not Applicable
(a)(5) . . . . . . . . . . . . . . . . . 609
(b) . . . . . . . . . . . . . . . . . 608
. . . . . . . . . . . . . . . . . 610
(c) . . . . . . . . . . . Not Applicable

311 (a) . . . . . . . . . . . . . . . . . 613
(b) . . . . . . . . . . . . . . . . . 613
(c) . . . . . . . . . . . Not Applicable

312 (a) . . . . . . . . . . . . . . . . . 701
. . . . . . . . . . . . . . . . . 702
(b) . . . . . . . . . . . . . . . . . 702
(c) . . . . . . . . . . . . . . . . . 702

313 (a) . . . . . . . . . . . . . . . . . 703
(b)(1) . . . . . . . . . . . Not Applicable
(b)(2) . . . . . . . . . . . . . . . . . 703
(c) . . . . . . . . . . . . . . . . . 703
(d) . . . . . . . . . . . . . . . . . 703

314 (a) . . . . . . . . . . . . . . . . . 704
(a)(4) . . . . . . . . . . . . . . . . . 102
1005
(b) . . . . . . . . . . . Not Applicable
(c)(1) . . . . . . . . . . . . . . . . . 102
(c)(2) . . . . . . . . . . . . . . . . . 102
(c)(3) . . . . . . . . . . . Not Applicable
(d) . . . . . . . . . . . Not Applicable
(e) . . . . . . . . . . . . . . . . . 102
(f) . . . . . . . . . . . . . . . . . 102
1005

315 (a) . . . . . . . . . . . . . . . . . 601
(b) . . . . . . . . . . . . . . . . . 602
(c) . . . . . . . . . . . . . . . . . 601

-1-
<PAGE>
(d) . . . . . . . . . . . . . . . . . 601
(e) . . . . . . . . . . . . . . . . . 514

316 (a) (last sentence) . . . . . . . . . 101
(a)(1)(A) . . . . . . . . . . . . . . . 512
(a)(1)(B) . . . . . . . . . . . . . . . 513
(a)(2) . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . 508
(c) . . . . . . . . . . . . . . . . . 104

317 (a)(1) . . . . . . . . . . . . . . . . . 503
(a)(2) . . . . . . . . . . . . . . . . . 504
(b) . . . . . . . . . . . . . . . . 1003

318 (a) . . . . . . . . . . . . . . . . . 107
(b) . . . . . . . . . . . . Not Applicable
(c) . . . . . . . . . . . . . . . . . . 107

____________________

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

-2-
<PAGE>
TABLE OF CONTENTS
Page

PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

RECITALS OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . 1

ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION . . . . . . . . . . . . . . 1

Section 101. Definitions . . . . . . . . . . . . . . . . . . . 1
Act . . . . . . . . . . . . . . . . . . . . . . . 2
Affiliate . . . . . . . . . . . . . . . . . . . . 2
Authenticating Agent . . . . . . . . . . . . . . . 2
Board of Directors . . . . . . . . . . . . . . . . 2
Board Resolution . . . . . . . . . . . . . . . . . 2
Business Day . . . . . . . . . . . . . . . . . . . 2
Closing Price . . . . . . . . . . . . . . . . . . 2
Common Stock . . . . . . . . . . . . . . . . . . . 2
Commission . . . . . . . . . . . . . . . . . . . . 3
Company . . . . . . . . . . . . . . . . . . . . . 3
Company Request or Company Order . . . . . . . . . 3
Consolidated Net Tangible Assets . . . . . . . . . 3
Corporate Trust Office . . . . . . . . . . . . . . 3
Corporation . . . . . . . . . . . . . . . . . . . 3
Defaulted Interest . . . . . . . . . . . . . . . . 3
Event of Default . . . . . . . . . . . . . . . . . 3
Exchange Act . . . . . . . . . . . . . . . . . . . 3
Holder . . . . . . . . . . . . . . . . . . . . . . 3
Indenture . . . . . . . . . . . . . . . . . . . . 4
Interest Payment Date . . . . . . . . . . . . . . 4
Issue Date . . . . . . . . . . . . . . . . . . . . 4
Maturity . . . . . . . . . . . . . . . . . . . . . 4
Officers' Certificate . . . . . . . . . . . . . . 4
Opinion of Counsel . . . . . . . . . . . . . . . . 4
Outstanding . . . . . . . . . . . . . . . . . . . 4
Paying Agent . . . . . . . . . . . . . . . . . . . 5
Person . . . . . . . . . . . . . . . . . . . . . . 5
Predecessor Security . . . . . . . . . . . . . . . 5
Redemption Date . . . . . . . . . . . . . . . . . 5
Redemption Price . . . . . . . . . . . . . . . . . 5
Regular Record Date . . . . . . . . . . . . . . . 5
Repurchase Date . . . . . . . . . . . . . . . . . 5
Repurchase Event . . . . . . . . . . . . . . . . . 5
Repurchase Price . . . . . . . . . . . . . . . . . 5
Responsible Officer . . . . . . . . . . . . . . . 5
Securities . . . . . . . . . . . . . . . . . . . . 5

-i-
<PAGE>
Security . . . . . . . . . . . . . . . . . . . . . 5
Security Register" and "Security Registrar . . . . 6
Senior Indebtedness . . . . . . . . . . . . . . . 6
Special Record Date . . . . . . . . . . . . . . . 6
Stated Maturity . . . . . . . . . . . . . . . . . 6
Subsidiary . . . . . . . . . . . . . . . . . . . . 6
Trading Day . . . . . . . . . . . . . . . . . . . 7
Trustee . . . . . . . . . . . . . . . . . . . . . 7
Trust Indenture Act . . . . . . . . . . . . . . . 7
Vice President . . . . . . . . . . . . . . . . . . 7
Section 102. Compliance Certificates and Opinions . . . . . . . 7
Section 103. Form of Documents Delivered to Trustee . . . . . . 8
Section 104. Acts of Holders . . . . . . . . . . . . . . . . . 8
Section 105. Notices, Etc., to Trustee and Company . . . . . . 9
Section 106. Notice to Holders; Waiver . . . . . . . . . . . . 9
Section 107. Conflict with Trust Indenture Act . . . . . . . . 10
Section 108. Effect of Headings and Table of Contents . . . . . 10
Section 109. Successors and Assigns . . . . . . . . . . . . . . 10
Section 110. Separability Clause . . . . . . . . . . . . . . . 10
Section 111. Benefits of Indenture . . . . . . . . . . . . . . 10
Section 112. Governing Law . . . . . . . . . . . . . . . . . . 10
Section 113. Legal Holidays . . . . . . . . . . . . . . . . . . 10
Section 114. Rules by Trustee, Paying Agent and
Registrar . . . . . . . . . . . . . . . . . . . . 11

ARTICLE TWO SECURITY FORMS . . . . . . . . . . . . . . . . . . 11

Section 201. Forms Generally . . . . . . . . . . . . . . . . . 11
Section 202. Form of Face of Security . . . . . . . . . . . . . 11
Section 203. Form of Reverse of Security . . . . . . . . . . . 12
Section 204. Form of Trustee's Certificate of Authentication . 16
Section 205. Form of Election to Convert . . . . . . . . . . . 17
Section 206. Form of Assignment . . . . . . . . . . . . . . . . 17

ARTICLE THREE THE SECURITIES . . . . . . . . . . . . . . . . . . 18

Section 301. Title and Terms . . . . . . . . . . . . . . . . . 18
Section 302. Denominations . . . . . . . . . . . . . . . . . . 19
Section 303. Execution, Authentication, Delivery and Dating . . 19
Section 304. Temporary Securities . . . . . . . . . . . . . . . 19
Section 305. Registration, Registration of Transfer and
Exchange . . . . . . . . . . . . . . . . . . . . . 20
Section 306. Mutilated, Destroyed, Lost and Stolen Securities . 21
Section 307. Payment of Interest; Interest Rights Preserved . . 21
Section 308. Persons Deemed Owners . . . . . . . . . . . . . . 23
Section 309. Cancellation . . . . . . . . . . . . . . . . . . . 23
Section 310. Computation of Interest . . . . . . . . . . . . . 23

-ii-
<PAGE>

ARTICLE FOUR SATISFACTION AND DISCHARGE . . . . . . . . . . . . 23

Section 401. Satisfaction and Discharge of Indenture . . . . . 23
Section 402. Application of Trust Money . . . . . . . . . . . . 25
Section 403. Reinstatement . . . . . . . . . . . . . . . . . . 25

ARTICLE FIVE REMEDIES . . . . . . . . . . . . . . . . . . . . . 25

Section 501. Events of Default . . . . . . . . . . . . . . . . 25
Section 502. Acceleration of Maturity; Rescission and
Annulment. . . . . . . . . . . . . . . . . . . . . 27
Section 503. Collection of Indebtedness and Suits
for Enforcement by Trustee . . . . . . . . . . . . 28
Section 504. Trustee May File Proofs of Claim . . . . . . . . . 28
Section 505. Trustee May Enforce Claims Without Possession of
Securities . . . . . . . . . . . . . . . . . . . . 29
Section 506. Application of Money Collected . . . . . . . . . . 29
Section 507. Limitation on Suits . . . . . . . . . . . . . . . 30
Section 508. Unconditional Right of Holders to Receive Principal,
Premium and Interest and to Convert . . . . . . . 31
Section 509. Restoration of Rights and Remedies . . . . . . . . 31
Section 510. Rights and Remedies Cumulative . . . . . . . . . . 31
Section 511. Delay or Omission Not Waiver . . . . . . . . . . . 31
Section 512. Control by Holders . . . . . . . . . . . . . . . . 31
Section 513. Waiver of Past Defaults . . . . . . . . . . . . . 32
Section 514. Undertaking for Costs . . . . . . . . . . . . . . 32
Section 515. Waiver of Stay or Extension Laws . . . . . . . . . 33

ARTICLE SIX THE TRUSTEE . . . . . . . . . . . . . . . . . . . 33

Section 601. Certain Duties and Responsibilities . . . . . . . 33
Section 602. Notice of Defaults . . . . . . . . . . . . . . . . 33
Section 603. Certain Rights of Trustee . . . . . . . . . . . . 34
Section 604. Not Responsible for Recitals or
Issuance of Securities . . . . . . . . . . . . . . 35
Section 605. May Hold Securities . . . . . . . . . . . . . . . 35
Section 606. Money Held in Trust . . . . . . . . . . . . . . . 35
Section 607. Compensation and Reimbursement . . . . . . . . . . 35
Section 608. Disqualification; Conflicting Interests . . . . . 36
Section 609. Corporate Trustee Required; Eligibility . . . . . 36
Section 610. Resignation and Removal; Appointment of Successor 36
Section 611. Acceptance of Appointment by Successor . . . . . . 37
Section 612. Merger, Conversion, Consolidation or Succession to
Business . . . . . . . . . . . . . . . . . . . . . 38
Section 613. Preferential Collection of Claims Against Company 38
Section 614. Appointment of Authenticating Agent . . . . . . . 38

-iii-
<PAGE>

ARTICLE SEVEN HOLDERS' LISTS AND REPORTS
BY TRUSTEE AND COMPANY . . . . . . . . . . . . . . 40

Section 701. Company to Furnish Trustee Names and Addresses of
Holders. . . . . . . . . . . . . . . . . . . . . . 40
Section 702. Preservation of Information; Communications
To Holders . . . . . . . . . . . . . . . . . . . . 40
Section 703. Reports by Trustee . . . . . . . . . . . . . . . . 41
Section 704. Reports by Company . . . . . . . . . . . . . . . . 41

ARTICLE EIGHT CONSOLIDATION, MERGER, CONVEYANCE,
TRANSFER OR LEASE . . . . . . . . . . . . . . . . 41

Section 801. Company May Consolidate, Etc., Only on Certain
Terms . . . . . . . . . . . . . . . . . . . . . . 41
Section 802. Successor Legal Entity Substituted . . . . . . . . 42

ARTICLE NINE SUPPLEMENTAL INDENTURES . . . . . . . . . . . . . 42

Section 901. Supplemental Indentures Without Consent of Holders 42
Section 902. Supplemental Indentures With Consent of Holders . 43
Section 903. Execution of Supplemental Indentures . . . . . . . 44
Section 904. Effect of Supplemental Indentures . . . . . . . . 44
Section 905. Conformity with Trust Indenture Act . . . . . . . 44
Section 906. Reference in Securities to Supplemental Indentures 44

ARTICLE TEN COVENANTS . . . . . . . . . . . . . . . . . . . . 45

Section 1001. Payment of Principal, Premium and Interest . . . . 45
Section 1002. Maintenance of Office or Agency . . . . . . . . . 45
Section 1003. Money for Security Payments to Be Held in Trust . 45
Section 1004. Existence . . . . . . . . . . . . . . . . . . . . 46
Section 1005. Statement by Officers as to Default . . . . . . . 47
Section 1006. Waiver of Certain Covenants . . . . . . . . . . . 47

ARTICLE ELEVEN REDEMPTION OF SECURITIES . . . . . . . . . . . . . 47

Section 1101. Right of Redemption . . . . . . . . . . . . . . . 47
Section 1102. Applicability of Article . . . . . . . . . . . . . 47
Section 1103. Election to Redeem; Notice to Trustee . . . . . . 48
Section 1104. Selection by Trustee of Securities to Be Redeemed 48
Section 1105. Notice of Redemption . . . . . . . . . . . . . . . 48
Section 1106. Deposit of Redemption Price . . . . . . . . . . . 49
Section 1107. Securities Payable on Redemption Date . . . . . . 49
Section 1108. Securities Redeemed in Part . . . . . . . . . . . 50

-iv-
<PAGE>

ARTICLE TWELVE RIGHT TO REQUIRE REPURCHASE . . . . . . . . . . . 50

Section 1201. Right to Require Repurchase. . . . . . . . . . . . 50
Section 1202. Notice; Method of Exercising Repurchase Right. . . 50
Section 1203. Deposit of Repurchase Price . . . . . . . . . . . 51
Section 1204. Securities Not Repurchased on Repurchase Date . . 51
Section 1205. Securities Repurchased in Part . . . . . . . . . . 52
Section 1206. "Change in Control" and "Repurchase Event" Defined 52

ARTICLE THIRTEEN CONVERSION OF SECURITIES . . . . . . . . . . . . 53

Section 1301. Right of Conversion . . . . . . . . . . . . . . . 53
Section 1302. Issuance of Common Stock; Time of Conversion . . . 54
Section 1303. No Adjustments in Respect of Interest or Dividends 55
Section 1304. Adjustment of Conversion Price . . . . . . . . . . 55
Section 1305. No Fractional Shares . . . . . . . . . . . . . . . 58
Section 1306. Reclassification, Consolidation, Merger or Sale of
Assets . . . . . . . . . . . . . . . . . . . . . . 59
Section 1307. Prior Notice of Certain Events . . . . . . . . . . 60
Section 1308. Shares to be Reserved; Accounting Treatment of
Consideration. . . . . . . . . . . . . . . . . . . 60
Section 1309. Registration and Listing of Shares . . . . . . . . 61
Section 1310. Taxes and Charges . . . . . . . . . . . . . . . . 61
Section 1311. Trustee and Conversion Agents Not Liable . . . . . 61

ARTICLE FOURTEEN SUBORDINATION OF SECURITIES . . . . . . . . . . 62

Section 1401. Securities Subordinate to Senior Indebtedness . . 62
Section 1402. Payment Over of Proceeds Upon Dissolution, Etc . . 62
Section 1403. Prior Payment to Senior Indebtedness Upon Acceleration
of Securities . . . . . . . . . . . . . . . . . . 63
Section 1404. No Payment When Senior Indebtedness in Default . . 64
Section 1405. Acknowledgment of Reliance . . . . . . . . . . . . 64
Section 1406. Subrogation to Rights of Holders of Senior
Indebtedness . . . . . . . . . . . . . . . . . . . 65
Section 1407. Provisions Solely to Define Relative Rights . . . 65
Section 1408. Trustee to Effectuate Subordination . . . . . . . 65
Section 1409. No Waiver of Subordination Provisions . . . . . . 65
Section 1410. Notice to Trustee . . . . . . . . . . . . . . . . 66
Section 1411. Reliance on Judicial Order or Certificate of
Liquidating Agent. . . . . . . . . . . . . . . . . 67
Section 1412. Trustee Not Fiduciary for Holders of Senior
Indebtedness . . . . . . . . . . . . . . . . . . . 67
Section 1413. Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights . . . . . . . . . 67
Section 1414. Article Applicable to Paying Agents . . . . . . . 67
Section 1415. Certain Conversions Deemed Payment . . . . . . . . 68

-v-
<PAGE>
INDENTURE, dated as of __________, 1994, between POGO
PRODUCING COMPANY, a corporation duly organized and validly existing
under the laws of the State of Delaware (herein called the "Company"),
having its principal office at 5 Greenway Plaza, Suite 2700, Houston,
Texas 77046, and SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION, a
national banking association, as Trustee (herein called the
"Trustee").

RECITALS OF THE COMPANY

The Company has duly authorized the creation of an
issue of its __% Convertible Subordinated Notes due 2004 (herein
called the "Securities") of substantially the tenor and amount
hereinafter set forth, and to provide therefor the Company has duly
authorized the execution and delivery of this Indenture.

All things necessary to make the Securities, when
executed by the Company and authenticated and delivered hereunder and
duly issued by the Company, the valid obligations of the Company, and
to make this Indenture a valid agreement of the Company, in accordance
with their and its terms, have been done.

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

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

ARTICLE ONE

DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION

Section 101. DEFINITIONS.

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

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

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

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

(4) the words "Article" and "Section" refer to
an Article and Section, respectively, of this Indenture; and

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

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

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

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

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

"Board of Directors" means either the board of
directors of the Company or any duly authorized committee of that
board.

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

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

"Closing Price" for any Trading Day means the last
reported sale price (or, if none on any day, the mean between the bid
and asked quotations on such day) of the securities in question for
such date, in either case on the New York Stock Exchange or, if the
securities are not listed or admitted to trading on such exchange, on
the principal national securities exchange on which such securities
are listed or admitted to trading or, if not listed or admitted to
trading on any national securities exchange, on the National
Association of Securities Dealers Automated Quotations National Market
System, or if the securities are not listed or admitted to trading on
any national securities exchange or quoted on such National Market
System, the average of the closing bid and asked prices in the over-
the-counter market as furnished by any New York Stock Exchange member
firm selected by the Company for such purpose.

"Common Stock" initially means the class designated as
Common Stock, par value $1.00 per share, of the Company as of the date
hereof.
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"Commission" means the Securities and Exchange
Commission, as from time to time constituted, created under the
Securities Exchange Act of 1934, or, if at any time after the
execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture
Act, then the body performing such duties at such time.

"Company" means the Person named as the "Company" in
the first paragraph of this instrument until a successor Person shall
have become such pursuant to the applicable provisions of this
Indenture, and thereafter "Company" shall mean such successor Person,
and in each case shall include any other obligor upon the Securities.

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

"Consolidated Net Tangible Assets" means the total of
all assets included in a consolidated balance sheet of the Company
and its Subsidiaries, prepared in accordance with generally accepted
accounting principles (and as of a date not more than 90 days prior to
the date as of which Consolidated Net Tangible Assets are to be
determined), less the sum of the following items each as included in
such balance sheet:

(i) all current liabilities;

(ii) all depreciation, depletion, valuation and
other reserves;

(iii) all goodwill, trade names, trademarks,
patents, unamortized debt discount and expense and other
like intangibles; and

(iv) minority interests in the equity of
Subsidiaries.

"Corporate Trust Office" means the principal office of
the Trustee at ___________________________________________________, at
which its corporate trust business shall be administered.

"Corporation" means a corporation, partnership,
association, company, joint-stock company or business trust.

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

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

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

"Holder" means a Person in whose name a Security is
registered in the Security Register.
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"Indenture" means this instrument as originally
executed or as it may from time to time be supplemented or amended by
one or more indentures supplemental hereto entered into pursuant to
the applicable provisions hereof.

"Interest Payment Date" means the Stated Maturity of an
installment of interest on the Securities.

"Issue Date" means __________, 1994.

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

"Officers' Certificate" means a certificate signed by
the principal executive officer and the principal financial officer or
principal accounting officer, of the Company, and delivered to the
Trustee.

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

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

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

(ii) Securities for whose payment or redemption
money in the necessary amount has been theretofore deposited
with the Trustee or any Paying Agent (other than the
Company) in trust or set aside and segregated in trust by
the Company (if the Company shall act as its own Paying
Agent) for the Holders of such Securities in accordance with
the terms of this Indenture; 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) Securities in exchange for or in lieu of
which other Securities have been authenticated and delivered
pursuant to this Indenture, other than any such Securities
in respect of which there shall have been presented to the
Trustee proof satisfactory to it that such Securities are
held by a bona fide purchaser in whose hands such Securities
are valid obligations of the Company;

PROVIDED, HOWEVER, that in determining whether the Holders of the
requisite principal amount of the Outstanding Securities have given
any request, demand, authorization, direction, notice, consent or
waiver hereunder, 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 the Trustee knows to be so
owned shall be so disregarded. Securities so

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owned which have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Securities
and that the pledgee is not the Company or any other obligor upon the
Securities or any Affiliate of the Company or of such other obligor.

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

"Person" means any individual, Corporation or
government or any agency or political subdivision thereof.

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

"Purchase Agreement" has the meaning specified in
Section 301.

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

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

"Regular Record Date" for the interest payable on any
Interest Payment Date means the 1st of March or 1st of September
(whether or not a Business Day), as the case may be, next preceding
such Interest Payment Date.

"Repurchase Date" has the meaning specified in Section
1201.

"Repurchase Event" has the meaning specified in Section
1206.

"Repurchase Price" has the meaning specified in Section
1201.

"Responsible Officer", when used with respect to the
Trustee, means the chairman or any vice chairman of the board of
directors, the chairman or any vice chairman of the executive
committee of the board of directors, the chairman of the trust
committee, the president, any vice president, the secretary, the
treasurer, the cashier, any trust officer or assistant trust officer
or the controller or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above
designated officers and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is
referred because of his knowledge of and familiarity with the
particular subject.

"Securities" has the meaning set forth in the recitals
of this Indenture.

"Security" means any of the Securities.

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

"Senior Indebtedness" means the principal of, premium,
if any, and unpaid interest (including, without limitation, any
interest accruing subsequent to the commencement of a case or other
proceeding under any bankruptcy or other similar law with respect to
the Company) on, and other obligations in respect of, the following,
whether outstanding at the date hereof or thereafter incurred or
created: (a) indebtedness of the Company for money borrowed
(including purchase-money obligations) evidenced by notes or other
written obligations, (b) indebtedness of the Company evidenced by
notes, debentures, bonds or other securities issued under the
provisions of an indenture or similar instrument, (c) indebtedness
secured by any mortgage, pledge, lien or other encumbrance existing on
property which is owned or held by the Company subject to such
mortgage, pledge or encumbrance, whether or not indebtedness secured
thereby shall have been assumed by the Company, (d) obligations of the
Company as lessee under capitalized leases and under leases of
property made as part of any sale and leaseback transactions,
(e) obligations of the Company in respect of letters of credit issued
for its account and "swaps" of interest rates, commodity prices or
foreign currencies (and other interest rate, commodity price or
foreign currency hedging agreements) to which the Company is a party,
(f) indebtedness of others of any of the kinds described in the
preceding clauses (a) through (e) assumed or guaranteed by the Company
and (g) renewals, extensions and refundings of, and indebtedness and
obligations of a successor Person issued in exchange for or in
replacement of, indebtedness or obligations of the kinds described in
the preceding clauses (a) through (f); PROVIDED, HOWEVER, that the
following shall not constitute Senior Indebtedness: (i) any
indebtedness or obligation which by its terms refers explicitly to the
Securities and states that such indebtedness or obligation shall not
be senior in right of payment thereto, (ii) any indebtedness or
obligation of the Company in respect of the Securities and (iii) any
indebtedness or obligation of the Company to any Subsidiary.
Notwithstanding the foregoing, all indebtedness and obligations of the
Company in respect of each of the following shall rank equally with
the Securities and shall not constitute "Senior Indebtedness"
hereunder: (x) the 8% Convertible Subordinated Debentures due 2005
and (y) the 10.25% Convertible Subordinated Notes due 1999.

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

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

"Subsidiary" means a Corporation more than 50% of the
outstanding voting stock or other voting or managing ownership
interest 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. For the purposes of this definition, "voting
stock" means stock which ordinarily has voting power for the election
of directors, whether at all times or only so long as no senior class
of stock has such voting power by reason of any contingency.

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"Trading Day", with respect to any stock exchange or
securities market, means any Monday, Tuesday, Wednesday, Thursday or
Friday on which such stock exchange or securities market is open for
business.

"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 such successor Trustee.

"Trust Indenture Act" means the Trust Indenture Act of
1939 as in force at the date as of which this instrument was executed,
except as provided in Section 905; PROVIDED, HOWEVER, that in the
event the Trust Indenture Act is amended after such date, Trust
Indenture Act means, to the extent required by any such amendment, the
Trust Indenture Act as so amended.

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

Section 102. COMPLIANCE CERTIFICATES AND OPINIONS.

Upon any application or request by the Company to the
Trustee to take any action under any provision of this Indenture, the
Company shall furnish to the Trustee an Officers' Certificate stating
that all conditions 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 all such
conditions precedent, if any, have 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 shall
include:

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

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

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

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

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Section 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE.

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

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

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

Section 104. ACTS OF HOLDERS.

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

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

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

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

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

(1) the Trustee by any Holder or by the Company
shall be sufficient for every purpose hereunder (unless
otherwise herein expressly provided) if made, given,
furnished or filed in writing to or with the Trustee at its
Corporate Trust Office, Attention: Corporate Trust
Department, or

(2) the Company by the Trustee or by any Holder
shall be sufficient for every purpose hereunder (unless
otherwise herein expressly provided) if in writing and
mailed, first-class postage prepaid, to the Company
addressed to it at the address of its principal office
specified in the first paragraph of this instrument or at
any other address previously furnished in writing to the
Trustee by the Company. If a notice or communication is
mailed in the manner provided above, it is duly given,
whether or not received by the addressee.

Section 106. NOTICE TO HOLDERS; WAIVER.

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

In case by reason of the suspension of regular mail
service or by reason of any other cause it shall be impracticable to
give such notice by mail, then such notification as shall

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be made with the approval of the Trustee shall constitute a sufficient
notification for every purpose hereunder.

Section 107. CONFLICT WITH TRUST INDENTURE ACT.

If any provision hereof limits, qualifies or conflicts
with another provision hereof which is required to be included in this
Indenture by any of the provisions of the Trust Indenture Act, such
required provision shall control. If any provision of this Indenture
modifies or excludes any provision of the Trust Indenture Act that may
be so modified or excluded, the latter provision shall be deemed to
apply to this Indenture as so modified or to be excluded, as the case
may be.

Section 108. EFFECT OF HEADINGS AND TABLE OF CONTENTS.

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

Section 109. SUCCESSORS AND ASSIGNS.

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

Section 110. SEPARABILITY CLAUSE.

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

Section 111. BENEFITS OF INDENTURE.

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

Section 112. GOVERNING LAW.

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

Section 113. LEGAL HOLIDAYS.

In any case where any Interest Payment Date, Redemption
Date or Stated Maturity of any Security or the last date on which a
Holder has the right to convert his Securities shall not be a Business
Day, then (notwithstanding any other provision of this Indenture or of
the Securities) payment of interest or principal (and premium, if any)
or conversion of the Securities
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need not be made on such date, but may be made on the next succeeding
Business Day with the same force and effect as if made on the Interest
Payment Date or Redemption Date, or at the Stated Maturity, or on such
last day for conversion, PROVIDED that no interest shall accrue for
the period from and after such Interest Payment Date, Redemption Date
or Stated Maturity, as the case may be.

Section 114. RULES BY TRUSTEE, PAYING AGENT AND REGISTRAR.

The Trustee may make reasonable rules for action by or
a meeting of Holders. The Registrar and Paying Agent may make
reasonable rules for their functions.

ARTICLE TWO

SECURITY FORMS

Section 201. FORMS GENERALLY.

The Securities and the Trustee's certificates of
authentication shall be in substantially the forms set forth in this
Article, 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.

The definitive Securities shall be printed,
lithographed or engraved or produced by any combination of these
methods or may be produced in any other manner permitted by the rules
of any securities exchange on which the Securities may be listed, all
as determined by the officers executing such Securities, as evidenced
by their execution of such Securities.

Section 202. FORM OF FACE OF SECURITY.

POGO PRODUCING COMPANY

__% Convertible Subordinated
Note due 2004

No. _________________ $______________

POGO PRODUCING COMPANY, a corporation duly organized
and existing under the laws of Delaware (herein called the "Company",
which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay
to ________________, or registered assigns, the principal sum of
________________________ ___________________ Dollars on March 15,
2004, and to pay interest thereon from __________, 1994 or from the
most recent Interest Payment Date to which interest has been paid or
duly provided for, semiannually on March 15 and September 15, in each
year, commencing
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September 15, 1994, at the rate of __% per annum until the principal
hereof is paid or made available for payment. Interest on the
Securities shall be computed on the basis of a 360-day year consisting
of twelve 30-day months. The interest so payable, and punctually paid
or duly provided for, on any Interest Payment Date will, as provided
in such Indenture, be paid to the Person in whose name this Security
(or one or more Predecessor Securities) is registered at the close of
business on the Regular Record Date for such interest, which shall be
the March 1st or September 1st (whether or not a Business Day), as the
case may be, next preceding such Interest Payment Date. Any such
interest not so punctually paid or duly provided for will forthwith
cease to be payable to the Holder on such Regular Record Date and may
either be paid to the Person in whose name this Security (or one or
more Predecessor Securities) is registered at the close of business on
a Special Record Date for the payment of such Defaulted Interest to be
fixed by the Trustee, notice whereof shall be given to Holders of
Securities not less than 10 days prior to such Special Record Date, or
be paid at any time in any other lawful manner not inconsistent with
the requirements of any securities exchange on which the Securities
may be listed, and upon such notice as may be required by such
exchange, all as more fully provided in said Indenture. Payment of
the principal of (and premium, if any) and interest on this Security
will be made at the office or agency of the Company maintained for
that purpose in New York, New York, in such coin or currency of the
United States of America as at the time of payment is legal tender for
payment of public and private debts. The Company, however, may pay
principal and interest by check payable in such money. At the option
of the Company, payment of interest may be made by check mailed on or
before the due date to the address of the Person entitled thereto as
such address shall appear in the Security Register.

Reference is hereby made to the further provisions of
this Security set forth on the reverse hereof, which further
provisions shall for all purposes have the same effect as if set forth
at this place. The Indenture includes limitations on the right of the
Holder to institute a proceeding, judicial or otherwise, with respect
to the Indenture, for the appointment of a receiver or trustee, or for
any other remedy under the Indenture.

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

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

Dated:
POGO PRODUCING COMPANY

By:___________________________
Attest:

______________________________

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Section 203. FORM OF REVERSE OF SECURITY.

This Security is one of a duly authorized issue of
Securities of the Company designated as its __% Convertible
Subordinated Notes due 2004 (herein called the "Securities"), limited
in aggregate principal amount to $75,000,000 (subject to increase to
up to $86,250,000 aggregate principal amount), issued and to be issued
under an Indenture, dated as of __________, 1994 (herein called the
"Indenture"), between the Company and Shawmut Bank Connecticut,
National Association, as Trustee (herein called the "Trustee", which
term includes any successor trustee under the Indenture), to which
Indenture and all indentures supplemental thereto reference is hereby
made for a statement of the respective rights, limitations of rights,
duties and immunities thereunder of the Company, the Trustee, the
holders of Senior Indebtedness and the Holders of the Securities and
of the terms upon which the Securities are, and are to be,
authenticated and delivered.

Subject to the provisions of the Indenture, the Holder
hereof has the right, at his option, at any time prior to maturity, to
convert the principal amount of this Security (or any portion of the
principal amount hereof which is an integral multiple of $1,000) into
fully paid and nonassessable shares of Common Stock of the Company at
the conversion price of $_____ of principal amount of this Security
per share of Common Stock, subject to such adjustment, if any, of the
conversion price and the securities or other property issuable upon
conversion as may be required by the provisions of the Indenture
(except that, in case this Security (or any portion hereof) shall be
called for redemption before maturity, such right shall terminate at
the close of business on the Business Day immediately preceding the
Redemption Date for this Security (or such portion hereof), unless in
any such case the Company shall default in payment due upon such
redemption), but only upon surrender of this Security for the purpose
of such conversion to the Company at the designated office or agency
of the Company in New York, New York or any other office or agency
designated by the Company for such purpose pursuant to the provisions
of the Indenture, accompanied by written notice that the Holder elects
to convert this Security or any portion hereof and specifying the name
or names (with address or addresses) in which a certificate or
certificates for shares of Common Stock are to be issued and (if so
required by the Company or the Trustee) by a written instrument or
instruments of transfer in form satisfactory to the Company and the
Trustee duly executed by the registered Holder or his duly authorized
legal representative and transfer tax stamps or funds therefor, if
required pursuant to the provisions of the Indenture and, in case such
surrender shall be made during the period from the close of business
on any Regular Record Date to the opening of business on the next
succeeding Interest Payment Date (unless this Security or the portion
thereof being converted has been called for redemption), also
accompanied by payment in funds acceptable to the Company of an amount
equal to the interest payable on such Interest Payment Date on the
principal amount of this Security then being converted. Subject to
the aforesaid requirement with respect to payment in the event of
conversion after the close of business on a Regular Record Date, no
adjustment is to be made on conversion for interest accrued hereon or
for dividends on shares of Common Stock issued on conversion;
provided, however, that upon a call for redemption by the Company,
accrued and unpaid interest to the Redemption Date shall be payable
with respect to Notes converted after the redemption call and prior to
the Redemption Date. No fractional shares are issuable upon any
conversion, but in lieu thereof the Company shall pay therefor in cash
as provided in the Indenture.
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<PAGE>

The Securities are subject to redemption upon not less
than 30 nor more than 60 days' notice by first-class mail, postage
prepaid, at any time on or after March 15, 1998, as a whole or in
part, at the election of the Company, at the following Redemption
Prices (expressed as percentages of the principal amount): if
redeemed during the 12-month period beginning March 15 of the years
indicated,

YEAR REDEMPTION PRICE YEAR REDEMPTION PRICE

1998 . . . . 2001 . . . .
1999 . . . . 2002 . . . .
2000 . . . . 2003 . . . .

; PROVIDED, HOWEVER, that in the case of any such redemption, the
Redemption Price shall include accrued and unpaid interest to the
Redemption Date, but interest installments whose Stated Maturity is on
or prior to such Redemption Date will be payable to the Holders of
such Securities, or one or more Predecessor Securities, of record at
the close of business on the relevant Record Dates referred to on the
face hereof, all as provided in the Indenture.

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

Under certain circumstances involving a Change in Control
(as defined in the Indenture), the Company may be required to offer to
purchase the Securities at a purchase price equal to 100% of the
principal amount thereof, together with accrued and unpaid interest to
the Repurchase Date.

The indebtedness evidenced by the Securities is, to the
extent and in the manner provided in the Indenture, expressly
subordinate and subject in right of payment to the prior payment in
full of any Senior Indebtedness of the Company or provision for such
payment, whether outstanding at the date of the Indenture or
thereafter incurred, and this Security is issued subject to the
provisions of the Indenture with respect thereto. Each Holder of this
Security, by his acceptance hereof, agrees to and shall be bound by
such provisions of the Indenture and authorizes and directs the
Trustee in his behalf to take such action as may be necessary or
appropriate to effectuate such subordination and appoints the Trustee
his attorney-in-fact for any and all such purposes.

If an Event of Default, as defined in the Indenture, shall
occur and be continuing, the principal of all the Securities may be
declared due and payable in the manner and with the effect provided in
the Indenture.

The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Holders of the
Securities under the Indenture at any time by the Company and the
Trustee with the consent of the Holders of at least a majority in
aggregate principal amount of the Securities at the time Outstanding.
The Indenture also contains provisions permitting the Holders of at

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<PAGE>

least a majority in aggregate principal amount of the Securities at
the time Outstanding, on behalf of the Holders of all the Securities,
to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the Holder of this
Security shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange herefor or in lieu
hereof, whether or not notation of such consent or waiver is made upon
this Security.

The Indenture provides that no Holder of any Security may
enforce any remedy under the Indenture except in the case of failure
of the Trustee to act after notice of default and after request by the
Holders of 25% in aggregate principal amount of the Outstanding
Securities and the offer and, if requested, provision to the Trustee
of reasonable indemnity satisfactory to the Trustee; PROVIDED,
HOWEVER, that such provision shall not prevent the Holder hereof from
enforcing payment of the principal of (and premium, if any) or
interest on this Security after the same shall have become due.

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

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

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

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

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

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<PAGE>
This Security and the rights of the Holder hereof shall be
governed by and construed in accordance with the laws of the State of
New York without regard to principles of conflicts of laws.

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

OPTION OF HOLDER TO ELECT PURCHASE

If you want to elect to have this Security purchased by the
Company pursuant to Article Twelve of the Indenture, check
the box:[ ]

If you want to elect to have only part of this Security
purchased by the Company pursuant to Article Twelve of the Indenture,
state the amount (in integral multiples of $1,000): $___________

Date:_________________ Your Signature:___________________________
(Sign exactly as your name
appears on the other side of
this Security)

Your Social Security or
Tax Identification Number:_________________________

Signature Guarantee:_______________________________

Note: Signature(s) must be guaranteed by an eligible guarantor
institution meeting the requirements of the Trustee, which
requirements will include membership or participation in
STAMP or such other "signature guarantee program" as may be
determined by the Trustee in addition to, or in substitution
for, STAMP, all in accordance with the Securities Exchange
Act of 1934, as amended.

Section 204. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.

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

SHAWMUT BANK CONNECTICUT,
NATIONAL ASSOCIATION,
as Trustee

By____________________________
Authorized Signatory

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<PAGE>

Section 205. FORM OF ELECTION TO CONVERT.

To Pogo Producing Company:

The undersigned owner of this Security hereby irrevocably
exercises the option to convert this Security, or the portion below
designated, into shares of Common Stock of Pogo Producing Company in
accordance with the terms of the Indenture referred to in this
Security, and directs that the shares issuable and deliverable upon
conversion, together with any check in payment for fractional shares,
be issued in the name of and delivered to the undersigned, unless a
different name has been indicated in the assignment below. If shares
are to be issued in the name of a Person other than the undersigned,
the undersigned will pay all transfer taxes payable with respect
thereto.

Dated:__________________________

Portion of Security to be converted
($1,000 or an integral multiple thereof):
$______________________ _______________________________
Signature (for conversion only)
Please Print or Type Name and Address,
Including Zip Code, and Social Security
or Other Identifying Number:

______________________________
______________________________
______________________________

Section 206. FORM OF ASSIGNMENT.

ASSIGNMENT

For value received _______________________________________________
hereby sell(s), assign(s) and transfer(s) unto
_____________________________________________________,
__________________________________ [Please insert social security or
other identifying number of assignee], the within Security, hereby
irrevocably constituting and appointing ______________________________
attorney to transfer the said Security on the books of the Company,
with full power of substitution in the premises.

Date:__________________ ____________________________
Signature(s)

Note: The signature(s) to this
assignment must correspond with the
name as it appears upon the face of
the within Security in every
particular, without alteration, or
enlargement or any change whatever.

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<PAGE>
________________________
Signature Guarantee

ARTICLE THREE

THE SECURITIES

Section 301. TITLE AND TERMS.

The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is limited to the sum
of (a) $75,000,000 and (b) such aggregate principal amount (which may
not exceed $11,250,000 aggregate principal amount) of Securities, if
any, as shall be purchased by the "Underwriters" at the "Second
Closing Time" (both as defined in the Purchase Agreement) pursuant to
and in accordance with the terms and provisions of the Purchase
Agreement, dated __________, 1994, between the Company and Merrill
Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Goldman, Sachs & Co. and PaineWebber Incorporated, except for
Securities authenticated and delivered upon registration of transfer
of, or in exchange for, or in lieu of, other Securities pursuant to
Section 304, 305, 306, 906, 1108, 1205 or 1301.

The Securities shall be known and designated as the "__%
Convertible Subordinated Notes due 2004" of the Company. Their Stated
Maturity shall be March 15, 2004 and they shall bear interest at the
rate of __% per annum, from __________, 1994 or from the most recent
Interest Payment Date to which interest has been paid or duly provided
for, as the case may be, payable semiannually on March 15 and
September 15, commencing September 15, 1994, until the principal
thereof is paid or made available for payment.

The principal of (and premium, if any) and interest on the
Securities shall be payable at the office or agency of the Company in
New York, New York, maintained for such purpose and at any other
office or agency maintained by the Company for such purpose; PROVIDED,
HOWEVER, that at the option of the Company payment of interest may be
made by check mailed on or before the due date to the address of the
Person entitled thereto as such address shall appear in the Security
Register.

The Securities shall be redeemable as provided in Article
Eleven.

The Securities shall be subject to repurchase at the option
of the Holders as provided in Article Twelve.

The Securities shall be convertible as provided in Article
Thirteen.
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<PAGE>
The Securities shall be subordinated in right of payment to
Senior Indebtedness as provided in Article Fourteen.

Section 302. DENOMINATIONS.

The Securities shall be issuable only in registered form
without coupons and only in denominations of $1,000 and any integral
multiple thereof.

Section 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.

The Securities shall be executed on behalf of the Company by
its Chairman of the Board, its President or one of its Vice
Presidents, under its corporate seal reproduced thereon attested by
its Secretary or one of its Assistant Secretaries. The signature of
any of these officers on the Securities may be manual or facsimile.

Securities bearing the manual or facsimile signatures of
individuals who were at the 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
executed by the Company to the Trustee for authentication, together
with a Company Order for the authentication and delivery of such
Securities; and the Trustee in accordance with such Company Order
shall authenticate and deliver such Securities as in this Indenture
provided and not otherwise.

Each Security shall be dated the date of its authentication.

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

Section 304. TEMPORARY SECURITIES.

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

If temporary Securities are issued, the Company will cause
definitive Securities to be prepared without unreasonable delay.
After the preparation of definitive Securities, the temporary
Securities shall be exchangeable for definitive Securities upon
surrender of the
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<PAGE>

temporary Securities at any office or agency of the Company designated
pursuant to Section 1002, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Securities the
Company shall execute and the Trustee shall authenticate and deliver
in exchange therefor a like principal amount of definitive Securities
of authorized denominations. Until so exchanged the temporary
Securities shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities.

Section 305. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.

The Company shall cause to be kept at the Corporate Trust
Office of the Trustee a register (the register maintained in such
office and in any other office or agency designated pursuant to
Section 1002 being herein sometimes collectively referred to as the
"Security Register") in which, subject to such reasonable regulations
as it may prescribe, the Company shall provide for the registration of
Securities and of transfers of Securities. The Trustee is hereby
appointed "Security Registrar" for the purpose of registering
Securities and transfers of Securities as herein provided.

Upon surrender for registration of transfer of any Security
at an office or agency of the Company designated pursuant to
Section 1002 for such purpose, 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 any
authorized denominations and of a like aggregate principal amount.

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

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

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

No service charge shall be made to the Holder for any
registration of transfer or exchange of Securities, but the Company
may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any
registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 304, 906, 1108, 1205 or 1301 not
involving any transfer.

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<PAGE>
Neither the Company nor the Trustee nor any agent of either
shall be required (i) to issue, register the transfer of or exchange
any Security during a period beginning at the opening of business 15
days before the day of the mailing of a notice of redemption of
Securities selected for redemption under Section 1104 and ending at
the close of business on the day of such mailing or (ii) to register
the transfer of or exchange any Security so selected for redemption in
whole or in part, except the unredeemed portion of any Security being
redeemed in part.

Section 306. MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES.

If any mutilated Security is surrendered to the Trustee, the
Company shall execute and the Trustee shall authenticate and deliver
in exchange therefor a new Security of like tenor and principal amount
and bearing a number not contemporaneously outstanding.

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

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

Upon 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 reasonable expenses (including the expenses of
the Trustee) connected therewith.

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

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

Section 307. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.

Interest on any Security which is payable, and is punctually
paid or duly provided for, on any Interest Payment Date shall be paid
to the Person in whose name that Security (or

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<PAGE>

one or more Predecessor Securities) is registered at the close of
business on the Regular Record Date for such interest.

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

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

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

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

In the case of any Security which is converted after any
Regular Record Date and on or prior to the next succeeding Interest
Payment Date (other than any Security whose Maturity is prior to such
Interest Payment Date), interest whose Stated Maturity is on such

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<PAGE>

Interest Payment Date shall be payable on such Interest Payment Date
notwithstanding such conversion, and such interest (whether or not
punctually paid or duly provided for) shall be paid to the Person in
whose name that Security (or one or more Predecessor Securities) is
registered at the close of business on such Regular Record Date. Upon
a call for redemption by the Company, accrued and unpaid interest to
the Redemption Date shall be payable with respect to Securities
converted after the notice of redemption has been mailed and prior to
the Redemption Date. Except as otherwise expressly provided in this
paragraph, in the case of any Security which is converted, interest
whose Stated Maturity is after the date of conversion of such Security
shall not be payable.

Section 308. PERSONS DEEMED OWNERS.

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

Section 309. CANCELLATION.

All Securities surrendered for payment, redemption,
registration of transfer or exchange or conversion shall, if
surrendered to any Person other than the Trustee, be delivered to the
Trustee and shall be promptly cancelled 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 cancelled by the Trustee. No Securities shall be
authenticated in lieu of or in exchange for any Securities cancelled
as provided in this Section, except as expressly permitted by this
Indenture. All cancelled Securities held by the Trustee shall be
disposed of as directed by a Company Order. The Company shall, within
120 days of a request therefor by the Trustee, deliver a Company Order
directing the destruction of cancelled Securities. If the Company
fails to respond to such a request within such 120-day period, the
Trustee may destroy any or all cancelled Securities, in which case the
Trustee shall deliver a certificate as to such destruction to the
Company.

Section 310. COMPUTATION OF INTEREST.

Interest on the Securities shall be computed on the basis of
a 360-day year consisting of twelve 30-day months.

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ARTICLE FOUR

SATISFACTION AND DISCHARGE

Section 401. SATISFACTION AND DISCHARGE OF INDENTURE.

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

(1) either

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

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

(i) have become due and payable, or

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

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

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

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

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

Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 607, the
obligations of the Trustee to any Authenticating Agent under
Section 614 and, if money shall have been deposited with the Trustee
pursuant to subclause (B) of clause (1) of this Section, the
obligations of the Trustee under Section 402 and the last paragraph of
Section 1003 shall survive.

Section 402. APPLICATION OF TRUST MONEY.

Subject to the provisions of the last paragraph of
Section 1003, all money deposited with the Trustee pursuant to
Section 401 shall be held in trust and applied by it, in accordance
with the provisions of the Securities and this Indenture, to the
payment, either directly or through any Paying Agent (including the
Company acting as its own Paying Agent) as the Trustee may determine,
to the Persons entitled thereto, of the principal (and premium, if
any) and interest for whose payment such money has been deposited with
the Trustee. All moneys deposited with the Trustee pursuant to
Section 401 (and held by it or any Paying Agent) for the payment of
Securities subsequently converted shall be returned to the Company
upon Company Request.

Section 403. REINSTATEMENT.

If the Trustee or Paying Agent is unable to apply any money
deposited with respect to Securities of any series in accordance with
Section 401 by reason of any legal proceeding or by reason of any
order or judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, the Company's
obligations under this Indenture with respect to the Securities of
such series and the Securities of such series shall be revived and
reinstated as though no deposit had occurred pursuant to Section 401
until such time as the Trustee or Paying Agent is permitted to apply
all such money in accordance with Section 401; provided, however, that
if the Company has made any payment of principal of (or premium, if
any) or interest on any Securities because of the reinstatement of its
obligations, the Company shall be subrogated to the rights of the
Holders of such Securities to receive such payment from the money held
by the Trustee or Paying Agent.

ARTICLE FIVE

REMEDIES

Section 501. EVENTS OF DEFAULT.

"Event of Default", wherever used herein, means any one of
the following events (whatever the reason for such Event of Default
and whether it shall be occasioned by the provisions of Article
Fourteen or be voluntary or involuntary or be effected by operation of
law
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<PAGE>

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

(1) default in the payment of any interest upon any
Security when it becomes due and payable, whether or not such
payment is prohibited by the provisions of Article Fourteen, and
continuance of such default for a period of 30 days; or

(2) default in the payment of the principal of (or premium,
if any, on) any Security at its Maturity, whether or not such
payment is prohibited by the provisions of Article Fourteen; or

(3) default in the payment of the Repurchase Price in
respect of any Security on the Repurchase Date and continuance of
such default for more than 10 days thereafter in accordance with
the provisions of Article Twelve, whether or not such payment is
prohibited by the provisions of Article Fourteen; or

(4) default in the performance, or breach, of any covenant
or warranty of the Company in this Indenture (other than a
covenant or warranty, a default in whose performance or whose
breach is elsewhere in this Section specifically dealt with), and
continuance of such default or breach for a period of 60 days
after there has been given, by registered or certified mail, to
the Company by the Trustee or to the Company and the Trustee by
the Holders of at least 25% in aggregate principal amount of the
Outstanding Securities a written notice specifying such default
or breach and requiring it to be remedied and stating that such
notice is a "Notice of Default" hereunder; or

(5) default under any bond, debenture, note or other
evidence of indebtedness for money borrowed or under any
mortgage, indenture or other instrument under which there may be
issued or by which there may be secured or evidenced any
indebtedness for money borrowed by the Company or under any
guarantee of payment by the Company of indebtedness for money
borrowed, whether such indebtedness or guarantee now exists or
shall hereafter be created, which default extends beyond any
period of grace provided with respect thereto and which default
relates to (a) the obligation to pay the principal of or interest
on any such indebtedness or guarantee or (b) an obligation other
than the obligation to pay the principal of or interest on any
such indebtedness, if the effect of such event of default is to
cause the acceleration of a principal amount of such indebtedness
and such other indebtedness or guarantee shall not have been paid
within ten days after there has been given to the Company by the
Trustee or to the Company and the Trustee by the Holders of at
least 25% in aggregate principal amount of the Outstanding
Securities a written notice specifying such event of default and
stating that such notice is a "Notice of Default" hereunder;
PROVIDED, HOWEVER, that no default under this Section 501(5)
shall exist if all such defaults do not relate to such
indebtedness or such guarantees with an aggregate principal
amount in excess of 5% of Consolidated Net Tangible Assets; and
PROVIDED FURTHER, that if any such event of default has been
cured or waived and any acceleration with respect thereto
rescinded, or if such other indebtedness has been repaid or
otherwise discharged, the Event of Default arising under this
Section 501(5) by virtue thereof shall not be deemed to have
occurred and any
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acceleration under this Section 501(5) pursuant to Section 502
hereof shall IPSO FACTO be rescinded so long as such rescission
does not conflict with any judgment or decree;

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

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

Section 502. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.

If an Event of Default occurs and is continuing, then and in
every such case the Trustee or the Holders of not less than 25% in
aggregate principal amount of the Outstanding Securities may declare
the principal of all the Securities and the interest accrued thereon
to be due and payable immediately, by a notice in writing to the
Company (and to the Trustee if given by Holders) and upon any such
declaration such principal and interest shall become immediately due
and payable.

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

(1) the Company has paid or deposited with the Trustee a
sum sufficient to pay
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(A) all overdue interest on all Securities,

(B) the principal of (and premium, if any, on) any
Securities which have become due otherwise than by such
declaration of acceleration and interest thereon at the rate
borne by the Securities,

(C) to the extent that payment of such interest is
lawful, interest upon overdue interest at the rate borne by
the Securities, and

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

and

(2) all Events of Default, other than the nonpayment of the
principal of Securities which have become due solely by such
declaration of acceleration, have been cured or waived as
provided in Section 513.

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

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

The Company covenants that if

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

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

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

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

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

Section 504. TRUSTEE MAY FILE PROOFS OF CLAIM.

In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment,
composition or other 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 of the Securities shall then be due and
payable as therein expressed or by declaration or otherwise and
irrespective of whether the Trustee shall have made any demand on the
Company for the payment of overdue principal 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) and interest owing and unpaid in
respect of the Securities, subject to the provisions of Article
Fourteen, and to file such other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and
counsel) and of the Holders allowed in such judicial proceeding,
subject to the provisions of Article Fourteen, and

(ii) subject to the provisions of Article Fourteen, to
collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;

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

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

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

All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without the
possession of any of the Securities or the

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production thereof in any proceeding relating thereto, and any such
proceeding instituted by the Trustee shall be brought in its own name
as trustee of an express trust, and any recovery of judgment shall,
after provision for the payment of the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and
counsel, be for the ratable benefit of the Holders of the Securities
in respect of which such judgment has been recovered. In any such
proceeding brought by the Trustee, the Trustee shall be deemed to
represent all Holders without the necessity of joining any Holders as
parties.

Section 506. APPLICATION OF MONEY COLLECTED.

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

FIRST: To the payment of all costs and expenses in
connection with the collection of such money and to the payment
of all amounts due the Trustee under Section 607; and

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

Section 507. LIMITATION ON SUITS.

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

(1) such Holder has previously given written notice to the
Trustee of a continuing Event of Default;

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

(3) such Holder or Holders offer and, if requested, provide
to the Trustee indemnity satisfactory to the Trustee against the
costs, expenses and liabilities to be incurred in compliance with
such request;

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

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

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

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

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

Section 509. RESTORATION OF RIGHTS AND REMEDIES.

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

Section 510. RIGHTS AND REMEDIES CUMULATIVE.

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

Section 511. DELAY OR OMISSION NOT WAIVER.

No delay or omission of the Trustee or of any Holder of any
Security to exercise any right or remedy accruing upon any Event of
Default shall impair any such right or remedy or constitute a waiver
of any such Event of Default or an acquiescence therein. Every right
and
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<PAGE>

remedy given by this Article or by law to the Trustee or to the
Holders may be exercised from time to time, and as often as may be
deemed expedient, by the Trustee or by the Holders, as the case may
be.

Section 512. CONTROL BY HOLDERS.

The Holders of a majority in aggregate principal amount of
the Outstanding Securities shall have the right to direct in writing
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, PROVIDED that

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

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

(3) subject to the provisions of Section 601, the Trustee
shall have the right to decline to follow any such direction if
the Trustee in good faith shall determine that the action so
directed would involve the Trustee in personal liability or would
be unduly prejudicial to Holders not joining in such direction.

This Section 512 shall be in lieu of Section 316(a)(1)(A) of
the Trust Indenture Act and said Section 316(a)(1)(A) is hereby
expressly excluded from this Indenture, as permitted by the Trust
Indenture Act.

Section 513. WAIVER OF PAST DEFAULTS.

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

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

(2) 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 affected.

Upon any such waiver, such default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been
cured, for every purpose of this Indenture; but no such waiver shall
extend to any subsequent or other default or impair any right
consequent thereon. This Section 513 shall be in lieu of Section
316(a)(1)(B) of the Trust Indenture Act and said Section 316(a)(1)(B)
is hereby expressly excluded from this Indenture, as permitted by the
Trust Indenture Act.
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Section 514. UNDERTAKING FOR COSTS.

All parties to this Indenture agree, and each Holder of any
Security by his acceptance thereof shall be deemed to have agreed,
that any court may in its discretion require, in any suit for the
enforcement of any right or remedy under this Indenture, or in any
suit against the Trustee for any action taken, suffered or omitted by
it as Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in
its discretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such suit, having due
regard to the merits and good faith of the claims or defenses made by
such party litigant; but the provisions of this Section shall not
apply to any suit instituted by the Company, to any suit instituted by
the Trustee, to any suit instituted by any Holder, or group of
Holders, holding more than 10% in aggregate principal amount of the
Outstanding Securities, or to any suit instituted by any Holder for
the enforcement of the payment of the principal of (or premium, if
any) or interest on any Security on or after the respective Stated
Maturities expressed in such Security (or, in the case of redemption,
on or after the Redemption Date) or for the enforcement of the right
to convert any Security in accordance with Article Thirteen. This
Section 514 shall be in lieu of Section 315(e) of the Trust Indenture
Act and said Section 315(e) is hereby expressly excluded from this
Indenture, as permitted by the Trust Indenture Act.

Section 515. 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 execution of every such power as though no such law had been
enacted.

ARTICLE SIX

THE TRUSTEE

Section 601. CERTAIN DUTIES AND RESPONSIBILITIES.

The duties and responsibilities of the Trustee shall be as
provided by the Trust Indenture Act. Notwithstanding the foregoing,
no provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any
of its rights or powers, if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it. Whether or
not therein expressly so provided, every provision of this Indenture
relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this
Section.
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Section 602. NOTICE OF DEFAULTS.

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

Section 603. CERTAIN RIGHTS OF TRUSTEE.

Subject to the provisions of Section 601:

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

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

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

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

(e) the Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Indenture at the
request, order 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;

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

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

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

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

Section 605. MAY HOLD SECURITIES.

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

Section 606. MONEY HELD IN TRUST.

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

Section 607. COMPENSATION AND REIMBURSEMENT.

The Company agrees

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

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

(3) to indemnify the Trustee for, and to hold it harmless
against, any loss, liability or expense incurred without
negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of this trust,
including the costs and
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<PAGE>
expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers
or duties hereunder.

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

When the Trustee incurs expenses or renders services after
an Event of Default specified in Section 501(6) or (7) occurs, the
expenses (including the reasonable charges and expenses of its agents,
attorneys and counsel) and the compensation for services shall be
preferred over the status of the Holders in any reorganization or
similar proceeding and are intended to constitute expenses of
administration under any reorganization, bankruptcy or similar law.

Section 608. DISQUALIFICATION; CONFLICTING INTERESTS.

If the Trustee has or shall acquire a conflicting interest
within the meaning of the Trust Indenture Act, the Trustee shall
either eliminate such interest or resign, to the extent and in the
manner provided by, and subject to the provisions of, the Trust
Indenture Act and this Indenture.

Section 609. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.

There shall at all times be a Trustee hereunder which shall
be a Person that is eligible pursuant to the Trust Indenture Act to
act as such, has an office or agency in New York, New York, and has a
combined capital and surplus of at least $50,000,000 (or is a member
or subsidiary of a bank holding system with aggregate combined capital
and surplus of at least $50,000,000). If such corporation or other
Person publishes reports of condition at least annually, pursuant to
law or to the requirements of said supervising or examining authority,
then for the purposes of this Section, the combined capital and
surplus of such corporation shall be deemed to be its combined capital
and surplus as set forth in its most recent report of condition so
published. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, it shall resign
immediately in the manner and with the effect hereinafter specified in
this Article. No obligor upon any Securities issued under this
Indenture or Person directly or indirectly controlling, controlled by
or under common control with such obligor shall serve as Trustee under
this Indenture.

Section 610. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.

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

(b) The Trustee may resign at any time by giving written
notice thereof to the Company. If an instrument of acceptance by a
successor Trustee shall not have been delivered

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to the Trustee within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.

(c) The Trustee may be removed at any time by Act of the
Holders of a majority in aggregate principal amount of the Outstanding
Securities specifying such removal, delivered to the Trustee and to
the Company.

(d) If at any time:

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

(2) the Trustee shall cease to be eligible under
Section 609 and shall fail to resign after written request
therefor by the Company or by any such bona fide Holder
described in (d)(1) above, or

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

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

(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of
Trustee for any cause, the Company, by a Board Resolution, shall
promptly appoint a successor Trustee. If, within one year after such
resignation, removal or incapability, or the occurrence of such
vacancy, a successor Trustee shall be appointed by Act of the Holders
of a majority in aggregate principal amount of the Outstanding
Securities delivered to the Company and the retiring Trustee, the
successor Trustee so appointed shall, forthwith upon its acceptance of
such appointment, become the successor Trustee and supersede the
successor Trustee appointed by the Company. If no successor Trustee
shall have been so appointed by the Company or the Holders and
accepted appointment in the manner hereinafter provided, any Holder
who has been a bona fide Holder of a Security for at least six months
may, on behalf of himself and all others similarly situated, petition
any court of competent jurisdiction for the appointment of a successor
Trustee.

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

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Section 611. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.

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

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

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

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

Section 613. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.

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

Section 614. APPOINTMENT OF AUTHENTICATING AGENT.

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

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

An Authenticating Agent may resign at any time by giving 30
days' written notice thereof to the Trustee and to the Company. The
Trustee may at any time terminate the agency of an Authenticating
Agent by giving 30 days' written notice thereof to such Authenticating
Agent and to the Company. Upon receiving such a notice of resignation
or upon such a termination, or in case at any time such Authenticating
Agent shall cease to be eligible in accordance with the provisions of
this Section, the Trustee may appoint a successor 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 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 Trustee agrees to pay to each Authenticating Agent from
time to time reasonable compensation for its services under this
Section, and the Trustee shall be entitled to be reimbursed for such
payments, subject to the provisions of Section 607.

If an appointment is made pursuant to this Section, the
Securities may have endorsed thereon, in addition to the Trustee's
certificate of authentication, an alternate certificate of
authentication in the following form:
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This is one of the Securities described in the within-
mentioned Indenture.

SHAWMUT BANK CONNECTICUT,
NATIONAL ASSOCIATION,
As Trustee

By ___________________________
As Authenticating Agent

By ___________________________
Authorized Signatory

ARTICLE SEVEN

HOLDERS' LISTS AND REPORTS
BY TRUSTEE AND COMPANY

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

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

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

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

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

Section 702. PRESERVATION OF INFORMATION; COMMUNICATIONS TO HOLDERS.

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

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

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

Section 703. REPORTS BY TRUSTEE.

(a) The Trustee shall transmit to Holders such reports
concerning the Trustee and its actions under this Indenture as may be
required pursuant to the Trust Indenture Act at the times and in the
manner provided pursuant thereto. Reports so required to be
transmitted at stated intervals of not more than 12 months shall be
transmitted no later than May 15 of each year, commencing with the
May 15 first following the issuance of the Securities.

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

Section 704. REPORTS BY COMPANY.

The Company shall file with the Trustee and the Commission,
and transmit to Holders, such information, documents and other
reports, and such summaries thereof, as may be required pursuant to
the Trust Indenture Act at the times and in the manner provided
pursuant to such Act; PROVIDED that any such information, documents or
reports required to be filed with the Commission pursuant to
Section 13 or 15(d) of the Exchange Act shall be filed with the
Trustee within 15 days after the same is so required to be filed with
the Commission. In the event the Company is not subject to the
requirements of Section 13 or 15(d) of the Exchange Act, the Company
shall file with the Trustee (a) within 60 days after the end of each
of the Company's first three fiscal quarters in each fiscal year, a
report containing unaudited financial statements with respect to such
fiscal quarter and (b) within 105 days after the end of the Company's
fiscal year, a report containing audited financial statements with
respect to such fiscal year.

ARTICLE EIGHT

CONSOLIDATION, MERGER, CONVEYANCE,
TRANSFER OR LEASE

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

The Company shall not consolidate with or merge into any
other Person or convey, transfer, lease or otherwise dispose of its
properties and assets substantially as an entirety to any Person, and
the Company shall not permit any Person to consolidate with or merge
into the Company or convey, transfer, lease or otherwise dispose of
its properties and assets substantially as an entirety to the Company,
unless:
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(1) in case the Company shall consolidate with or merge
into another Person or convey, transfer, lease or otherwise
dispose of its properties and assets substantially as an entirety
to any Person, the Person formed by such consolidation or into
which the Company is merged or the Person which acquires by
conveyance or transfer or otherwise, or which leases, the
properties and assets of the Company substantially as an entirety
shall be a Corporation or other legal entity, shall be organized
and validly 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 of the principal of (and
premium, if any) and interest on all the Securities and the
performance of every covenant of this Indenture on the part of
the Company to be performed or observed and shall have provided
for conversion rights in accordance with Section 1306;

(2) immediately after giving effect to such transaction, no
Event of Default, and no event which, after notice or lapse of
time or both, would become an Event of Default, shall have
happened and be continuing; and

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

Section 802. SUCCESSOR LEGAL ENTITY SUBSTITUTED.

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

SUPPLEMENTAL INDENTURES

Section 901. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.

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

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

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

(2) to add to the covenants of the Company for the benefit
of the Holders or to surrender any right or power herein
conferred upon the Company; or

(3) to make provision with respect to the conversion rights
of Holders pursuant to the requirements of Section 1306; or

(4) 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 such
action pursuant to this clause (4) shall not adversely affect the
interests of the Holders in any material respect.

Section 902. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.

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

(1) change the Stated Maturity of the principal of, or any
installment of interest on, any Security, or reduce the principal
amount thereof or the rate of interest thereon or any premium
payable upon the redemption thereof, or change the place of
payment where, or the coin or currency in which, any Security or
any premium or the interest thereon is payable, or impair the
right to institute suit for the enforcement of any such payment
on or after the Stated Maturity thereof (or, in the case of
redemption, on or after the Redemption Date), or adversely affect
the right to convert any Security as provided in Article Thirteen
(except as permitted by Section 901(3)), or

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

(3) modify any of the provisions of this Section,
Section 513 or Section 1006, except to increase any such
percentage or to provide that certain other provisions of this

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Indenture cannot be modified or waived without the consent of the
Holder of each Outstanding Security affected thereby.

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

The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Holders entitled to consent to
any indenture supplemental hereto. If a record date is fixed, then
those persons who were Holders at such record date (or their duly
designated proxies), and only those persons, shall be entitled to
consent to such supplemental Indenture or to revoke any consent
previously given, whether or not such persons continue to be Holders
after such record date. No such consent shall be valid or effective
for more than 90 days after such record date.

Section 903. EXECUTION OF SUPPLEMENTAL INDENTURES.

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

Section 904. EFFECT OF SUPPLEMENTAL INDENTURES.

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

Section 905. CONFORMITY WITH TRUST INDENTURE ACT.

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

Section 906. REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES.

Securities authenticated and delivered after the execution
of any supplemental indenture pursuant to this Article may, and shall
if required by the Trustee, bear a notation in form approved by the
Trustee as to any matter provided for in such supplemental indenture.
If the Company shall so determine, new Securities 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.
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ARTICLE TEN

COVENANTS

Section 1001. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST.

The Company will duly and punctually pay the principal of
(and premium, if any) and interest on the Securities in accordance
with the terms of the Securities and this Indenture.

Section 1002. MAINTENANCE OF OFFICE OR AGENCY.

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

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

Section 1003. MONEY FOR SECURITY PAYMENTS TO BE HELD IN TRUST.

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

Whenever the Company shall have one or more Paying Agents,
it will, prior to each due date of the principal of (and premium, if
any) or interest on any Securities, deposit in immediately available
funds with a Paying Agent a sum sufficient to pay the principal (and
premium, if any) or interest so becoming due, such sum to be held in
trust for the benefit of the
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Persons entitled to such principal, premium 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 to execute and deliver to the Trustee an instrument in which
such Paying Agent shall agree with the Trustee, subject to the
provisions of this Section, that such Paying Agent will:

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

(2) at any time during the continuance of any default, upon
the written request of the Trustee, forthwith pay to the Trustee
all sums 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 by Company Order direct any Paying Agent to pay, to
the Trustee all sums held in trust by the Company or such Paying
Agent, such sums to be held by the Trustee upon the same trusts as
those upon which such sums were held by the Company or such Paying
Agent; and, upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect
to such money.

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

Section 1004. EXISTENCE.

Subject to Article Eight, the Company will do or cause to be
done all things necessary to preserve and keep in full force and
effect its existence, rights (charter and statutory) and franchises;
PROVIDED, HOWEVER, that the Company shall not be required to preserve
any such right or franchise if a transaction that would result in the
termination of the Company's existence or any such right or franchise
is permissible under Article Eight or if the Board of Directors shall
determine that the preservation thereof is no longer desirable in the
conduct of the business
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of the Company and that the loss thereof is not disadvantageous in any
material respect to the Holders.

Section 1005. STATEMENT BY OFFICERS AS TO DEFAULT.

The Company will deliver to the Trustee, within 120 days
after the end of each fiscal year of the Company, in each case ending
after the date hereof, an Officers' Certificate, stating that a review
of the activities of the Company during the preceding fiscal year has
been made under the supervision of the signing officers with a view to
determining whether the Company has kept, observed, performed and
fulfilled its obligations under this Indenture, and further stating,
as to each such officer signing such certificate, that to the best of
his knowledge the Company is not in default in the performance or
observance of any of the terms, provisions and conditions hereof or,
if a default or Event of Default shall have occurred, describing all
such defaults or Events of Default of which he may have knowledge and
that to the best of his knowledge no event has occurred and remains in
existence by reason of which payments on account of the principal of
or interest, if any, on the Securities are prohibited or if such event
has occurred, a description of the event.

Section 1006. WAIVER OF CERTAIN COVENANTS.

The Company may omit in any particular instance to comply
with any covenant or condition set forth in Section 1004, if before
the time for such compliance the Holders of at least a majority in
aggregate principal amount of the Outstanding Securities shall, by Act
of such Holders, either waive such compliance in such instance or
generally waive compliance with such covenant or condition, but no
such waiver shall extend to or affect such covenant 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 in respect of any such covenant or condition shall remain in
full force and effect.

ARTICLE ELEVEN

REDEMPTION OF SECURITIES

Section 1101. RIGHT OF REDEMPTION.

The Securities may be redeemed at the election of the
Company, as a whole or from time to time in part, at any time on or
after March 15, 1998, at the Redemption Prices specified in the form
of Security hereinbefore set forth, together with accrued interest to
the Redemption Date.

Section 1102. APPLICABILITY OF ARTICLE.

Redemption of Securities at the election of the Company or
otherwise, as permitted or required by any provision of this
Indenture, shall be made in accordance with such provision and this
Article.
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Section 1103. ELECTION TO REDEEM; NOTICE TO TRUSTEE.

The election of the Company to redeem any Securities
pursuant to Section 1101 shall be evidenced by a Board Resolution. In
case of any redemption at the election of the Company of less than all
the Securities, the Company shall, at least 45 days prior to the
Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee of such Redemption
Date and of the principal amount of Securities to be redeemed and
whether the Trustee is to give the notice of redemption.

Section 1104. SELECTION BY TRUSTEE OF SECURITIES TO BE REDEEMED.

If less than all the Securities are to be redeemed pursuant
to Section 1101, the particular Securities to be redeemed shall be
selected not more than 45 days prior to the Redemption Date by the
Trustee, from the Outstanding Securities not previously called for
redemption, by such method (including pro rata or by lot) as the
Trustee shall deem fair and appropriate and which may provide for the
selection for redemption of portions (equal to $1,000 or any integral
multiple thereof) of the principal amount of Securities of a
denomination larger than $1,000.

If any Security selected for partial redemption is converted
in part before termination of the conversion right with respect to the
portion of the Security so selected, the converted portion of such
Security shall be deemed (so far as may be) to be the portion selected
for redemption. Securities which have been converted during a
selection of Securities to be redeemed shall be treated by the Trustee
as Outstanding for the purpose of such selection.

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

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

Section 1105. NOTICE OF REDEMPTION.

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

All notices of redemption shall state:

(1) the Redemption Date;

(2) the Redemption Price;

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

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

(5) the conversion price, the date on which the right to
convert the principal of the Securities to be redeemed will
terminate and the place or places where such Securities may be
surrendered for conversion; and

(6) the place or places where such Securities are to be
surrendered for payment of the Redemption Price.

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

Section 1106. DEPOSIT OF REDEMPTION PRICE.

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

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

Section 1107. SECURITIES PAYABLE ON REDEMPTION DATE.

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

Section 1108. SECURITIES REDEEMED IN PART.

Any Security which is to be redeemed only in part shall be
surrendered at an office or agency of the Company designated for that
purpose pursuant to Section 1002 (with, if the Company or Trustee so
requires, due endorsement by, or a written instrument of transfer in
form satisfactory to the Company and the Trustee duly executed by, the
Holder thereof or his attorney duly authorized in writing), and the
Company shall execute, and the Trustee shall authenticate and deliver
to the Holder of such Security without service charge, a new Security
or Securities, of any authorized denomination as requested by such
Holder, in aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal of the Security so surrendered.

ARTICLE TWELVE

RIGHT TO REQUIRE REPURCHASE

Section 1201. RIGHT TO REQUIRE REPURCHASE.

In the event that there shall occur a Change in Control (as
defined in Section 1206) which constitutes a Repurchase Event (as
defined in Section 1206), then each Holder shall have the right, at
such Holder's option to require the Company to purchase, and upon the
exercise of such right, the Company shall, subject to the provisions
of Article Fourteen, purchase all or any part of such Holder's
Securities on a date (the "Repurchase Date") selected by the Company
that is not more than 75 days after the date the Company gives notice
of the Repurchase Event as contemplated in Section 1202(a) at a price
(the "Repurchase Price") equal to 100% of the principal amount
thereof, together with accrued and unpaid interest to the Repurchase
Date.

Section 1202. NOTICE; METHOD OF EXERCISING REPURCHASE RIGHT.

(a) On or before the 15th day after the Repurchase Event,
the Company, or at Company Request, the Trustee (in the name and at
the expense of the Company), shall give notice of the occurrence of
the Repurchase Event and of the repurchase right set forth herein
arising as a result thereof by first-class mail, postage prepaid, to
each Holder of the Securities at such Holder's address appearing in
the Security Register. The Company shall also deliver a copy of such
notice of a repurchase right to the Trustee.

Each notice of a repurchase right shall state:

(1) the event constituting the Repurchase Event and
the date thereof,

(2) the Repurchase Date,

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(3) the date by which the repurchase right must be
exercised,

(4) the Repurchase Price, and

(5) the instructions a Holder must follow to exercise
a repurchase right.

No failure of the Company to give the foregoing notice shall
limit any Holder's right to exercise a repurchase right. The Trustee
shall have no affirmative obligation to determine if there shall have
occurred a Repurchase Event.

(b) To exercise a repurchase right, a Holder shall deliver
to the Company (or an agent designated by the Company for such purpose
in the notice referred to in (a) above) and to the Trustee on or
before the close of business on the Business Day immediately preceding
the Repurchase Date (i) written notice of the Holder's exercise of
such right, which notice shall set forth the name of the Holder, the
principal amount of the Security or Securities (or portion of a
Security) to be repurchased, and a statement that an election to
exercise the repurchased right is being made thereby, and (ii) the
Security or Securities with respect to which the repurchase right is
being exercised, duly endorsed for transfer to the Company. Such
written notice shall be irrevocable. If the Repurchase Date falls
between any Regular Record Date and the next succeeding Interest
Payment Date, Securities to be repurchased must be accompanied by
payment from the Holder of an amount equal to the interest thereon
which the registered Holder thereof is to receive on such Interest
Payment Date.

(c) In the event a repurchase right shall be exercised in
accordance with the terms hereof, then subject to Article Fourteen,
the Company shall on or promptly following the Repurchase Date pay or
cause to be paid in cash to the Holder thereof the Repurchase Price of
the Security or Securities as to which the repurchase right had been
exercised. In the event that a repurchase right is exercised with
respect to less than the entire principal amount of a surrendered
Security, the Company shall execute and deliver to the Trustee and the
Trustee shall authenticate for issuance in the name of the Holder a
new Security or Securities in the aggregate principal amount of the
unrepurchased portion of such surrendered security.

Section 1203. DEPOSIT OF REPURCHASE PRICE.

On or prior to the Repurchase Date and subject to Article
Fourteen, the Company shall deposit with the Trustee or with a Paying
Agent (or, if the Company is acting as its own Paying Agent, segregate
and hold in trust as provided in Section 1003) an amount of money, in
immediately available funds, sufficient to pay the Repurchase Price of
the Securities which are to be repaid on or promptly following the
Repurchase Date.

Section 1204. SECURITIES NOT REPURCHASED ON REPURCHASE DATE.

If any Security surrendered for repurchase shall not be paid
by the 10th day following the Repurchase Date, the principal shall,
until paid, bear interest to the extent permitted by applicable law
from the eleventh day following the Repurchase Date at a rate per
annum borne by such Security.
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Section 1205. SECURITIES REPURCHASED IN PART.

Any Security which is to be repurchased only in part shall
be surrendered at any office or agency of the Company designated for
that purpose pursuant to Section 1002 (with, if the Company or the
Trustee so requires, due endorsement by, or written instrument of
transfer in form satisfactory to the Company and the Trustee duly
executed by, the Holder thereof or his attorney duly authorized in
writing), and the Company shall execute, and the Trustee shall
authenticate and deliver to the Holder of such Security without
service charge, a new Security or Securities of any authorized
denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the repurchased portion of the
principal of the Security so surrendered.

Section 1206. "CHANGE IN CONTROL" AND "REPURCHASE EVENT" DEFINED.

(a) For purposes of this Article, "Change in Control" means
any of the following events that occurs after the Issue Date of the
Securities and so long as any Securities are Outstanding:

(1) the Company's assets are sold or otherwise
disposed of substantially as an entirety to any Person or
related group of Persons in any one transaction or a series
of related transactions;

(2) there shall be consummated any consolidation or
merger of the Company (A) in which the Company is not the
continuing or surviving corporation (other than a
consolidation or merger with a wholly-owned Subsidiary of
the Company in which all shares of Common Stock outstanding
immediately prior to the effectiveness thereof are changed
into or exchanged for the same number of shares of common
stock of such Subsidiary) or (B) pursuant to which the
Common Stock is converted into cash, securities or other
property, in each case other than a consolidation or merger
of the Company in which the holders of the Common Stock
immediately prior to the consolidation or merger have,
directly or indirectly, at least a majority of the common
stock of the continuing or surviving Corporation immediately
after such consolidation or merger; or

(3) any Person, or any Persons acting together which
would constitute a "group" for purposes of Section 13(d) of
the Exchange Act (a "Group") (other than the Company, any
Subsidiary, any employee stock purchase plan, stock option
plan or other stock incentive plan or program, retirement
plan or automatic dividend reinvestment plan or any
substantially similar plan of the Company or any Subsidiary
or any Person holding securities of the Company for or
pursuant to the terms of any such employee benefit plan,
which may file or become obligated to file a report under or
in response to Schedule 13D or Schedule 14D-1 (or any
successor schedule, form or report) under the Exchange Act),
together with any Affiliates thereof, shall acquire
beneficial ownership (as defined in Rule 13d-3 of the
Exchange Act) of at least 50% of the total voting

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power of all classes of capital stock of the Company
entitled to vote generally in the election of directors of
the Company.

(b) A Change in Control as described in Section 1206(a)
shall constitute a "Repurchase Event" giving rise to a repurchase
right on the part of each Holder of a Security unless:

(1) the Current Market Price of the Common Stock on
the date the Change in Control shall have occurred is at
least equal to 105% of the conversion price in effect
immediately preceding the time of such Change in Control, or

(2) all of the consideration (excluding cash payments
for fractional shares) in the transaction giving rise to
such Change in Control to the holders of Common Stock
consists of shares of common stock that are, or immediately
upon issuance will be, listed on a national securities
exchange or quoted in the NASDAQ National Market System, and
as a result of such transaction the Securities become
convertible solely into such shares of common stock, or

(3) the consideration in the transaction giving rise
to such Change in Control to the holders of Common Stock
consists of cash, securities that are, or immediately upon
issuance will be, listed on a national securities exchange
or quoted in the NASDAQ National Market System, or a
combination of cash and such securities and the aggregate
fair market value of such consideration (which, in the case
of each such security, shall be equal to the average of the
daily Closing Prices of each such security during the 10
consecutive Trading Days commencing with the sixth Trading
Day following consummation of such transaction) to be
received by a holder of Common Stock with respect to one
share of Common Stock is at least 105% of the conversion
price in effect on the date immediately preceding the
closing date of such transaction.

For purposes of this definition, "Current Market Price" on
any date means the average daily Closing Prices for the 5 consecutive
Trading Days selected by the Company commencing not more than 10
Trading Days before, and ending not later than, the date in question.

ARTICLE THIRTEEN

CONVERSION OF SECURITIES

Section 1301. RIGHT OF CONVERSION.

The Holder of any Security or Securities shall have the
right at any time prior to maturity, at his option, to convert,
subject to the terms and provisions of this Article Thirteen, the
principal of any such Security or Securities (or any portion of the
principal thereof which is $1,000 or an integral multiple of $1,000)
into fully paid and nonassessable shares of Common

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Stock of the Company at the conversion price of $_____ of principal
amount of Securities per share of Common Stock or, in case an
adjustment therein has taken place pursuant to the provisions of
Section 1304, then at the price as so adjusted (except that with
respect to any Security or Securities, or any such portion, which
shall be called for redemption, such right shall terminate, except as
provided in the last paragraph of Section 1302, at the close of
business on the Business Day immediately preceding the Redemption Date
for such Security or Securities or portion unless the Company shall
default in payment due upon redemption thereof). Such right shall be
exercised by the surrender of the Security or Securities, the
principal of which is so to be converted, to the Company at any time
during usual business hours at any office or agency to be maintained
by it in accordance with the provisions of Section 1002, accompanied
by written notice that the Holder elects to convert such Security or
Securities or any portion thereof and specifying the name or names
(with address) in which a certificate or certificates for Common Stock
are to be issued and (if so required by the Company or the Trustee) by
a written instrument or instruments of transfer in form satisfactory
to the Company and the Trustee, duly executed by the Holder or his
attorney, duly authorized in writing and transfer tax stamps or funds
therefor, if required pursuant to Section 1310. For convenience, the
conversion of all or a portion, as the case may be, of the principal
of any Security into the Common Stock of the Company is hereinafter
sometimes referred to as the conversion of such Security. All
Securities surrendered for conversion shall, if surrendered to the
Company or any conversion agent, be delivered to the Trustee for
cancellation and cancelled by it or, if surrendered to the Trustee,
shall be cancelled by it; and, subject to the next succeeding
sentence, no Securities shall be issued in lieu thereof. In the case
of any Security which is converted in part only, upon such conversion
the Company shall execute and the Trustee shall authenticate and
deliver to the Holder thereof, at the expense of the Company, a new
Security or Securities of authorized denominations in an aggregate
principal amount equal to the unconverted portion of the principal
amount of such Security.

Section 1302. ISSUANCE OF COMMON STOCK; TIME OF CONVERSION.

As promptly as practicable after the surrender, as herein
provided, of any Security or Securities for conversion, the Company
shall deliver or cause to be delivered at any office or agency to be
maintained by it in accordance with the provisions of Section 1002 to
or upon the written order of the Holder of the Security or Securities
so surrendered a certificate or certificates representing the number
of fully paid and nonassessable shares of Common Stock of the Company
into which such Security or Securities (or portion thereof) may be
converted in accordance with the provisions of this Article Thirteen.
Subject to the following provisions of this paragraph and of
Section 1304, such conversion shall be deemed to have been made
immediately prior to the close of business on the date that such
Security or Securities shall have been surrendered in satisfactory
form for conversion, so that the rights of the Holder as a Holder
shall cease with respect to such Security or Securities (or the
portion thereof being converted) at such time, and the Person or
Persons entitled to receive the shares of Common Stock deliverable
upon conversion of such Security or Securities shall be treated for
all purposes as having become the record holder or holders of such
shares of Common Stock at such time, and such conversion shall be at
the conversion price in effect at such time; PROVIDED, HOWEVER, that
no such surrender on any date when the stock transfer books of the
Company shall be closed shall be effective to constitute the Person or
Persons entitled to receive the shares of Common Stock deliverable
upon such conversion as the record holder or holders of such shares of

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Common Stock on such date, but such surrender shall be effective to
constitute the Person or Persons entitled to receive such shares of
Common Stock as the record holder or holders thereof for all purposes
immediately prior to the close of business on the next succeeding day
on which such stock transfer books are open, and such conversion shall
be deemed to have been made at, and shall be made at the conversion
rate in effect at, such time on such next succeeding day.

If the last day for the exercise of the conversion right
shall not be a Business Day, then such conversion right may be
exercised on the next succeeding Business Day.

Section 1303. NO ADJUSTMENTS IN RESPECT OF INTEREST OR DIVIDENDS.

Securities surrendered for conversion during the period from
the close of business on any Regular Record Date to the opening of
business on the next succeeding Interest Payment Date shall (except in
the case of Securities or portions thereof which have been called for
redemption) be accompanied by payment in New York Clearing House funds
or other funds acceptable to the Company of an amount equal to the
interest payable on such Interest Payment Date on the principal amount
of Securities being surrendered for conversion. Upon a call for
redemption by the Company, accrued and unpaid interest to the
Redemption Date shall be payable with respect to Securities converted
after the redemption notice has been mailed and prior to the
Redemption Date. Except as provided in this Section 1303 and subject
to the last paragraph of Section 307, no payment or adjustment shall
be made upon any conversion on account of any interest accrued on the
Securities surrendered for conversion or on account of any dividends
on the shares of Common Stock issued upon conversion.

Section 1304. ADJUSTMENT OF CONVERSION PRICE.

The conversion price, and consequently the number of shares
of Common Stock into which a Security is convertible, shall be subject
to adjustment from time to time as follows:

(a) In case the Company shall (i) pay a dividend on Common
Stock or make a distribution on its Common Stock that is paid or
made (1) in shares of any class of capital stock of the Company
or (2) in rights to purchase any stock or other securities if
such rights are not separable from the Common Stock except upon
the occurrence of a contingency, (ii) subdivide its outstanding
shares of Common Stock into a greater number of shares or
(iii) combine its outstanding shares of Common Stock into a
smaller number of shares, then in each such case the conversion
price in effect immediately prior thereto shall be adjusted
retroactively as provided below so that the Holder of any
Security thereafter surrendered for conversion shall be entitled
to receive the number of shares of Common Stock and other shares
and rights to purchase stock or other securities (or, in the
event of the redemption of any such shares or rights, any cash,
property or securities paid in respect of such redemption) which
such Holder would have owned or have been entitled to receive
after the happening of any of the events described above had such
Security been converted immediately prior to the happening of
such event. An adjustment made pursuant to this Subsection
(a) shall become effective immediately after the record date in
the case of a dividend or distribution and shall become effective
immediately after the effective date in the case of a subdivision
or combination.
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(b) In case the Company shall issue rights or warrants to
all holders of its Common Stock entitling them (for a period
expiring within 45 days after the date fixed for determination
mentioned below) to subscribe for or purchase shares of Common
Stock at a price per share less than the current market price per
share (determined as provided in paragraph (d) of this Section)
of the Common Stock on the date fixed for the determination of
stockholders entitled to receive such rights or warrants, then
the conversion price in effect at the opening of business on the
day following the date fixed for such determination shall be
decreased by multiplying such conversion price by a fraction of
which the denominator shall be the number of shares of Common
Stock outstanding at the close of business on the date fixed for
such determination plus the number of shares of Common Stock so
offered for subscription or purchase, and the numerator shall be
the number of shares of Common Stock outstanding at the close of
business on the date fixed for such determination plus the number
of shares of Common Stock which the aggregate of the offering
price of the total number of shares of Common Stock so offered
for subscription or purchase would purchase at such current
market price, such reduction to become effective immediately
after the opening of business on the day following the date fixed
for such determination; PROVIDED, HOWEVER, in the event that all
the shares of Common Stock offered for subscription or purchase
are not delivered upon the exercise of such rights or warrants,
upon the expiration of such rights or warrants the conversion
price shall be readjusted to the conversion price which would
have been in effect had the numerator and the denominator of the
foregoing fraction and the resulting adjustment been made based
upon the number of shares of Common Stock actually delivered upon
the exercise of such rights or warrants rather than upon the
number of shares of Common Stock offered for subscription or
purchase. For the purposes of this paragraph (b), the number of
shares of Common Stock at any time outstanding shall not include
shares held in the treasury of the Company.

(c) In case the Company shall, by dividend or otherwise,
distribute to substantially all holders of its Common Stock
evidences of its indebtedness, cash (excluding quarterly cash
dividends paid or to be paid on a regular basis), other assets or
rights or warrants to subscribe for or purchase any securities
(excluding those referred to in paragraphs (a) and (b) above),
then in each such case, the conversion price shall be adjusted
retroactively so that the same shall equal the price determined
by multiplying the conversion price in effect immediately prior
to the close of business on the date fixed for the determination
of stockholders entitled to receive such distribution by a
fraction of which the denominator shall be the current market
price per share (determined as provided in paragraph (d) of this
Section) of the Common Stock on the date fixed for such
determination and the numerator shall be such current market
price per share of the Common Stock less the amount of cash and
the then fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and described
in a Board Resolution filed with the Trustee) of the portion of
the assets, rights, warrants or evidences of indebtedness so
distributed applicable to one share of Common Stock, such
adjustment to become effective immediately prior to the opening
of business on the day following the date fixed for the
determination of stockholders entitled to receive such
distribution.
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(d) For the purpose of any computation under paragraphs
(b) and (c) of this Section, the current market price per share
of Common Stock on any date shall be deemed to be the average of
the daily closing prices for the 30 consecutive trading days
commencing with the 45th trading day before the day in question.
The closing price for each day shall be the last reported sales
price regular way or, in case no such reported sale takes place
on such day, the average of the reported closing bid and asked
prices regular way, in either case on the composite tape of the
principal national securities exchange upon which the Common
Stock is listed or on the NASDAQ National Market System (based on
the aggregate dollar value of all securities listed or admitted
to trading) or, if the Common Stock is not listed or admitted to
trading on any national securities exchange or quoted on the
NASDAQ National Market System, the average of the closing bid and
asked prices in the over-the-counter market as furnished by any
New York Stock Exchange member firm selected from time to time by
the Company for that purpose, or, if such prices are not
available, the fair market value set by, or in a manner
established by, the Board of Directors of the Company in good
faith. "Trading day" shall mean a day on which the national
securities exchange or the NASDAQ National Market System used to
determine the closing price is open for the transaction of
business or the reporting of trades or, if the closing price is
not so determined, a day on which the New York Stock Exchange is
open for the transaction of business.

(e) No adjustment in the conversion price shall be required
unless such adjustment would require an increase or decrease of
at least 1% in such price; PROVIDED, HOWEVER, that the Company
may make any such adjustment at its election; and PROVIDED,
FURTHER, that any adjustments which by reason of this paragraph
(e) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All
calculations under this Article Thirteen shall be made to the
nearest cent or to the nearest one-hundredth of a share, as the
case may be.

(f) Whenever the conversion price is adjusted as provided
in any provision of this Article Thirteen:

(i) the Company shall compute the adjusted conversion
price in accordance with paragraph (d) and shall prepare a
certificate signed by the principal financial officer of the
Company setting forth the adjusted conversion price and
showing in reasonable detail the facts and calculations upon
which such adjustment is based, and such certificate shall
forthwith be filed with the Trustee and at each office or
agency maintained for the purpose of conversion of
Securities; and

(ii) a notice stating that the conversion price has
been adjusted and setting forth the adjusted conversion
price shall forthwith be required, and as soon as
practicable after it is required, such notice shall be
mailed by the Company to all Holders at their last addresses
as they shall appear in the Security Register.

(g) In the event that at any time, as a result of any
adjustment made pursuant to this Article Thirteen, the Holder of
any Security thereafter surrendered for conversion

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shall become entitled to receive any shares of the Company other
than shares of Common Stock or to receive any other securities,
the number of such other shares or securities so receivable upon
conversion of any Security shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as
practicable to the provisions contained in this Article Thirteen
with respect to the Common Stock.

(h) The Company from time to time may, by Board Resolution
delivered to the Trustee, decrease the conversion price by any
amount for any period of time if the period is at least 20 days
and if the decrease is irrevocable during the period. Whenever
the conversion price is so decreased, the Company shall mail to
the Holders a notice of the decrease at least 15 days before the
date the decreased conversion price takes effect, and such notice
shall state the decreased conversion price and the period it will
be in effect.

(i) The Company may make such decreases in the conversion
price, in addition to those required or allowed by this Article
Thirteen, as shall be determined by it, as evidenced by a Board
Resolution delivered to the Trustee, to be advisable in order to
avoid or diminish any income tax to holders of Common Stock
resulting from any dividend or distribution of stock or issuance
of rights or warrants to purchase or subscribe for stock or from
any event treated as such for income tax purposes.

(j) In any case in which this Section 1304 provides that an
adjustment shall become effective immediately after a record date
for an event, the Company may defer until the occurrence of such
event (i) issuing to the holder of any Security converted after
such record date and before the occurrence of such event the
additional shares of Common Stock issuable upon such conversion
by reason of the adjustment required by such event over and above
the Common Stock issuable upon such conversion before giving
effect to such adjustment and (ii) paying to such holder any
amount in cash in lieu of any fraction pursuant to Section 1305.

Section 1305. NO FRACTIONAL SHARES.

No fractional shares or scrip representing fractional shares
of Common Stock shall be issued upon conversion of Securities. If
more than one Security shall be surrendered for conversion at one time
by the same Holder, the number of full shares issuable upon conversion
thereof shall be computed on the basis of the aggregate principal
amount of the Securities (or specified portions thereof) so
surrendered. Instead of any fractional share of Common Stock which
would otherwise be issuable upon conversion of any Security or
Securities (or specified portions thereof), the Company shall pay a
cash adjustment in respect of such fraction in an amount equal to the
same fraction of the closing price per share of Common Stock as quoted
on the composite tape of the principal national securities exchange
upon which the Common Stock is listed or the NASDAQ National Market
System or, in case no such reported sale takes place on such day, the
average of the reported closing bid and asked prices regular way, in
either case on the NASDAQ National Market System or, if the Common
Stock is not listed or admitted to trading on any national securities
exchange or quoted on the NASDAQ National Market System, the average
of the closing bid and asked prices in the over-the-counter market as
furnished by any New York Stock Exchange member firm selected from
time to time
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by the Company for that purpose, or, if such prices are not available,
the fair market value set by, or in a manner established by, the Board
of Directors of the Company in good faith, all of the above to be
determined as of the close of business on the day of conversion.

Section 1306. RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE OF
ASSETS.

In case of any reclassification of the Common Stock, any
consolidation of the Company with, or merger of the Company into, any
other Person, any merger of another Person into the Company (other
than a merger which does not result in any reclassification,
conversion, exchange or cancellation of outstanding shares of Common
Stock of the Company), any sale or other disposition of the assets of
the Company substantially as an entirety or any compulsory share
exchange pursuant to which share exchange the Common Stock is
converted into other securities, cash or other property, then the
Holder of each Security then outstanding shall have the right
thereafter, during the period such Security shall be convertible,
pursuant to Section 1301, to convert such Security only into the kind
and amount of securities, cash and other property receivable upon such
reclassification, consolidation, merger, sale, other disposition or
share exchange by a holder of the number of shares of Common Stock of
the Company into which such Security might have been converted
immediately prior to such reclassification, consolidation, merger,
sale, other disposition or share exchange assuming such holder of
Common Stock (i) is not a Person with which the Company consolidated
or into which the Company merged or which merged into the Company, to
which such sale or other disposition was made or a party to such share
exchange, as the case may be ("constituent Person"), or an Affiliate
of a constituent Person and (ii) failed to exercise his rights of
election, if any, as to the kind or amount of securities, cash and
other property receivable upon such reclassification, consolidation,
merger, sale, other disposition or share exchange (provided that if
the kind or amount of securities, cash and other property receivable
upon such reclassification, consolidation, merger, sale, other
disposition or share exchange is not the same for each share of Common
Stock held immediately prior to such reclassification, consolidation,
merger, sale, other disposition or share exchange by others than a
constituent Person or an Affiliate thereof and in respect of which
such rights of election shall not have been exercised ("non-electing
share"), then for the purpose of this Article the kind and amount of
securities, cash and other property receivable upon such
reclassification, consolidation, merger, sale, other disposition or
share exchange by each non-electing share shall be deemed to be the
kind and amount so receivable per share by a plurality of the
non-electing shares). The Company or the Person formed by such
consolidation or resulting from such merger or which acquires such
assets or which acquires the Company's shares, as the case may be,
shall execute and deliver to the Trustee a supplemental indenture to
establish such right. Such supplemental indenture shall provide for
adjustments which, for events subsequent to the effective date of such
supplemental indenture, shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Article. The
above provisions of this Section shall similarly apply to successive
reclassifications, consolidations, mergers, sales, other dispositions
or share exchanges.

Notice of the execution of such a supplemental indenture
shall be given by the Company to each Holder by mailing such notice to
his last address appearing on the Security Register.

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Neither the Trustee nor any conversion agent shall be under
any responsibility to determine the correctness of any provisions
contained in any such supplemental indenture relating either to the
kind or amount of shares of stock or securities or cash or property
receivable by Holders of Securities upon the conversion of their
Securities after any such reclassification, change, consolidation,
merger, sale or other disposition or to any such adjustment, but,
subject to the provisions of Section 601, may accept as conclusive
evidence of the correctness of any such provisions, and shall be
protected in relying upon, an Opinion of Counsel with respect thereto,
which the Company shall cause to be furnished to the Trustee upon
request.

Section 1307. PRIOR NOTICE OF CERTAIN EVENTS.

In case:

(a) the Company shall (i) declare any dividend (or any
other distribution) on its Common Stock other than (1) a dividend
payable in shares of Common Stock or (2) a quarterly cash
dividend paid or to be paid on a regular basis or (ii) declare or
authorize a redemption or repurchase of in excess of 10% of the
then outstanding shares of Common Stock; or

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

(c) of any reclassification of the Common Stock of the
Company (other than a subdivision or combination of its
outstanding Common Stock, or a change in par value, or from par
value to no par value, or from no par value to par value), or of
any consolidation or merger to which the Company is a party and
for which approval of any stockholders of the Company is
required, or of the sale or other disposition of the assets of
the Company substantially as an entirety or of any compulsory
share exchange whereby the Common Stock is converted into other
securities, cash or other property; or

(d) of the voluntary or involuntary dissolution,
liquidation or winding up of the Company;

then the Company shall cause to be filed with the Trustee and to be
mailed to each Holder of Securities at his last address appearing on
the Security Register, as promptly as possible but in any event at
least 15 days prior to the applicable date hereinafter specified, a
notice stating (x) the date on which a record is to be taken for the
purpose of such dividend, distribution or granting of rights or
warrants or, if a record is not to be taken, the date as of which the
holders of Common Stock of record to be entitled to such dividend,
distribution, rights or warrants are to be determined, or (y) the date
on which such reclassification, consolidation, merger, sale, other
disposition, share exchange, dissolution, liquidation or winding up is
expected to become effective, and the date as of which it is expected
that holders of Common Stock of record shall be entitled to exchange
their shares of Common Stock for securities or other property
deliverable
-60-
<PAGE>

upon such reclassification, consolidation, merger, sale, other
disposition, share exchange, dissolution, liquidation or winding up.

Section 1308. SHARES TO BE RESERVED; ACCOUNTING TREATMENT OF
CONSIDERATION.

The Company covenants that it will at all times reserve and
keep available out of its authorized but unissued Common Stock, free
from preemptive rights solely for the purpose of issue upon conversion
of Securities as herein provided, such number of shares of Common
Stock as shall then be issuable upon the conversion of all outstanding
Securities. The Company covenants that all shares of Common Stock
which shall be so issuable shall, when issued, be duly and validly
issued and fully paid and nonassessable.

The Company covenants that, upon conversion of Securities as
herein provided, there will be credited to the Common Stock capital
account from the consideration for which the shares of Common Stock
issuable upon such conversion are issued an amount per share of Common
Stock so issued as determined by the Board of Directors, which amount
shall not be less than the amount required by law and by the Company's
certificate of incorporation, as amended, as in effect on the date of
such conversion. For the purposes of this covenant the principal
amount of the Securities converted, less any cash paid in respect of
fractional share interests upon such conversion, shall be deemed to be
the amount of consideration for which the shares of Common Stock
issuable upon such conversion are issued.

Section 1309. REGISTRATION AND LISTING OF SHARES.

The Company covenants that if any shares of Common Stock
required to be reserved for purposes of conversion of Securities
hereunder require registration with or approval of any governmental
authority under any federal or state law before such shares may be
issued upon conversion, the Company will in good faith and as
expeditiously as possible endeavor to cause such shares to be duly
registered or approved, as the case may be. The Company further
covenants that so long as the Common Stock of the Company is listed on
any national securities exchange or on the NASDAQ National Market
System, the Company will, if permitted by the rules thereof, list and
keep listed thereon, upon official notice of issuance, all shares of
Common Stock issuable upon conversion of Securities.

Section 1310. TAXES AND CHARGES.

The issuance of certificates for shares of Common Stock upon
the conversion of Securities shall be made without charge to the
converting Holder of Securities for such certificates or for any tax
in respect of the issuance of such certificates or the securities
represented thereby, and such certificates shall be issued in the
respective names of, or in such names as may be directed by, the
Holders of the Securities converted; PROVIDED, HOWEVER, that the
Company shall not be required to pay any tax which may be payable in
respect of any transfer involved in the issuance and delivery of any
such certificate in a name other than that of the Holder of the
Security converted, and the Company shall not be required to issue or
deliver such certificates unless or until the Person or Persons
requesting the issuance thereof shall have paid to the Company the
amount of such tax or shall have established to the satisfaction of
the Company that such tax has been paid.

-61-
<PAGE>

Section 1311. TRUSTEE AND CONVERSION AGENTS NOT LIABLE.

Neither the Trustee nor any conversion agent shall at any
time be under any duty or responsibility to any Holder of Securities
to determine whether any facts exist which may require any adjustment
of the conversion rate, or with respect to the nature or extent of any
such adjustment when made, or with respect to the method employed, or
herein or in any supplemental indenture provided to be employed, in
making the same. Neither the Trustee nor any conversion agent shall
be accountable with respect to the validity or value (or the kind or
amount) of any shares of Common Stock or of any securities or cash or
other property which may at any time be issued or delivered upon the
conversion of any Security, or makes any representation with respect
thereto. Neither the Trustee nor any conversion agent shall be
responsible for any failure of the Company to make any cash payment or
to issue, transfer or deliver any shares of Common Stock or stock
certificates or other securities or property upon the surrender of any
Security for the purpose of conversion, or, subject to Section 601,
with any of the covenants of the Company contained in this Article
Thirteen.
ARTICLE FOURTEEN

SUBORDINATION OF SECURITIES

Section 1401. SECURITIES SUBORDINATE TO SENIOR INDEBTEDNESS.

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

Section 1402. PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC.

Upon any distribution of assets of the Company in the event
of (a) any insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, reorganization or other similar case or
proceeding in connection therewith, relative to the Company or to its
creditors, as such, or to its assets, or (b) any liquidation,
dissolution or other winding up of the Company, whether voluntary or
involuntary and whether or not involving insolvency or bankruptcy, or
(c) any assignment for the benefit of creditors or any other
marshalling of assets and liabilities of the Company, then and in any
such event the holders of Senior Indebtedness shall be entitled to
receive payment in full of all amounts due or to become due on or in
respect of all Senior Indebtedness, or provision shall be made for
such payment in money or money's worth, before the Holders of the
Securities are entitled to receive any payment on account of principal
of (or premium, if any) or interest on the Securities, and to that end
the holders of Senior Indebtedness shall be entitled to receive, for
application to the payment thereof, any payment or distribution of any
kind or character, whether in cash, property or securities, including
any such payment or distribution which may be payable or deliverable
by reason of the payment of any other indebtedness of the Company
being subordinated to the payment of the

-62-

Securities, which may be payable or deliverable in respect of the
Securities in any such case, proceeding, dissolution, liquidation or
other winding up or event. In furtherance of the foregoing, but not by
way of limitation thereof, in the event of any case or proceeding
described in clause (a) above with the result that the Company is
excused from the obligation to pay all or any part of the interest
otherwise payable in respect of any Senior Indebtedness during the
period subsequent to the commencement of any such case or proceeding,
all or such part, as the case may be, of such interest shall be
payable out of, and to that extent shall diminish and be at the
expense of, reorganization dividends or other distributions in respect
of the Notes.

In the event that, notwithstanding the foregoing provisions
of this Section, the Trustee or the Holder of any Security shall have
received any payment or distribution of assets of the Company of any
kind or character, whether in cash, property or securities, including
any such payment or distribution which may be payable or deliverable
by reason of the payment of any other indebtedness of the Company
being subordinated to the payment of the Securities, before all Senior
Indebtedness is paid in full or payment thereof provided for, and if
such fact shall then have been made known to the Trustee, or, as the
case may be, such Holder, then and in such event such payment or
distribution shall be paid over or delivered forthwith to the trustee
in bankruptcy, receiver, liquidating trustee, custodian, assignee,
agent or other Person making payment or distribution of assets of the
Company for application to the payment of all Senior Indebtedness
remaining unpaid, to the extent necessary to pay all Senior
Indebtedness in full, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Indebtedness.

For purposes of this Article only, the words "cash, property
or securities" shall not be deemed to include shares of stock of the
Company as reorganized or readjusted, or securities of the Company or
any other corporation provided for by a plan of reorganization or
readjustment the payment of which is subordinated at least to the
extent provided in this Article with respect to the Securities to the
payment of all Senior Indebtedness which may at the time be
outstanding; PROVIDED, HOWEVER, that (i) such Senior Indebtedness is
assumed by the new corporation, if any, resulting from any such
reorganization or readjustment, and (ii) the rights of the holders of
the Senior Indebtedness are not, without the consent of such holders,
altered by such reorganization or readjustment. The consolidation of
the Company with, or the merger of the Company into, another Person or
the liquidation or dissolution of the Company following the conveyance
or other disposition of its properties and assets substantially as an
entirety to another Person upon the terms and conditions set forth in
Article Eight shall not be deemed a dissolution, winding up,
liquidation, reorganization, assignment for the benefit of creditors
or marshalling of assets and liabilities of the Company for the
purposes of this Section if the Person formed by such consolidation or
into which the Company is merged or the Person which acquires by
conveyance or other disposition such properties and assets
substantially as an entirety, as the case may be, shall, as a part of
such consolidation, merger, conveyance or other disposition, comply
with the conditions set forth in Article Eight.

Section 1403. PRIOR PAYMENT TO SENIOR INDEBTEDNESS UPON ACCELERATION
OF SECURITIES.

In the event that any Securities are declared due and
payable before their Stated Maturity, then and in such event the
holders of Senior Indebtedness outstanding at the time such Securities
so become due and payable shall be entitled to receive payment in full
of all amounts
-63-
<PAGE>

due or to become due on or in respect of all such Senior Indebtedness,
or provision shall be made for such payment in money or money's worth,
before the Holders of the Securities are entitled to receive any
payment (including any payment which may be payable by reason of the
payment of any other indebtedness of the Company being subordinated to
the payment of the Securities) by the Company on account of the
principal of (or premium, if any) or interest on the Securities or on
account of the purchase or other acquisition of Securities.

In the event that, notwithstanding the foregoing, the
Company shall make any payment to the Trustee or the Holder of any
Securities prohibited by the foregoing provisions of this Section, and
if such facts shall then have been made known to the Trustee or, as
the case may be, such Holder, then and in such event such payment
shall be paid over and delivered forthwith to the Company for the
benefit of the holders of Senior Indebtedness.

The provisions of this Section shall not apply to any
payment with respect to which Section 1402 would be applicable.

Section 1404. NO PAYMENT WHEN SENIOR INDEBTEDNESS IN DEFAULT.

(a) In the event and during the continuation of any default
in the payment of principal (or premium, if any) or interest on any
Senior Indebtedness, or in the payment of any commitment or other fees
in respect thereof, or in the event that any event of default with
respect to any Senior Indebtedness shall have occurred and be
continuing permitting the holders of such Senior Indebtedness (or a
trustee on behalf of the holders thereof) to declare such Senior
Indebtedness due and payable prior to the date on which it would
otherwise have become due and payable, unless and until such event of
default shall have been cured or waived or shall have ceased to exist
and such acceleration shall have been rescinded or annulled, or (b) in
the event any judicial proceeding shall be pending with respect to any
such default in payment or event of default; then no payment
(including any payment which may be payable by reason of the payment
of any other indebtedness of the Company being subordinated to the
payment of the Securities) shall be made by the Company on account of
principal of (or premium, if any) or interest on the Securities or on
account of the purchase or other acquisition of Securities.

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

The provisions of this Section shall not apply to any
payment with respect to which Section 1402 would be applicable.

Section 1405. ACKNOWLEDGMENT OF RELIANCE.

Each Holder of Notes by his acceptance thereof acknowledges
and agrees that the subordination provisions included herein are, and
are intended to be, an inducement and a consideration to each holder
of any Senior Indebtedness, whether such Senior Indebtedness was
created or acquired before or after the issuance of Notes, to acquire
and/or continue to hold such
-64-
<PAGE>

Senior Indebtedness, and such holder of Senior Indebtedness shall be
deemed conclusively to have relied on such subordination provisions in
acquiring and/or continuing to hold such Senior Indebtedness.

Section 1406. SUBROGATION TO RIGHTS OF HOLDERS OF SENIOR
INDEBTEDNESS.

Subject to the payment in full of all Senior Indebtedness,
the Holders of the Securities shall be subrogated to the extent of the
payments or distributions made to the holders of such Senior
Indebtedness pursuant to the provisions of this Article to the rights
of the holders of such Senior Indebtedness to receive payments or
distributions of cash, property or securities applicable to the Senior
Indebtedness until the principal of (and premium, if any) and interest
on the Securities shall be paid in full. For purposes of such
subrogation, no payments or distributions to the holders of the Senior
Indebtedness of any cash, property or securities to which the Holders
of the Securities or the Trustee would be entitled except for the
provisions of this Article, and no payments over pursuant to the
provisions of this Article to the Company or to the holders of Senior
Indebtedness by Holders of the Securities or the Trustee shall, as
between the Company, its creditors other than holders of Senior
Indebtedness and the Holders of the Securities, be deemed to be a
payment or distribution by the Company to or on account of the
Securities.

Section 1407. PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS.

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

Section 1408. TRUSTEE TO EFFECTUATE SUBORDINATION.

Each Holder of a Security by his acceptance thereof
authorizes and directs the Trustee on his behalf to take such action
as may be necessary or appropriate to effectuate the subordination
provided in this Article and appoints the Trustee his attorney-in-fact
for any and all such purposes.
-65-
<PAGE>

Section 1409. NO WAIVER OF SUBORDINATION PROVISIONS.

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

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

Section 1410. NOTICE TO TRUSTEE.

The Company shall give prompt written notice to the Trustee
of any fact known to the Company which would prohibit the making of
any payment to or by the Trustee in respect of the Securities.
Failure to give such notice shall not affect the subordination of the
Securities to Senior Indebtedness. Notwithstanding the provisions of
this Article or any other provision of this Indenture, the Trustee
shall not be charged with knowledge of the existence of any facts
which would prohibit the making of any payment to or by the Trustee in
respect of the Securities, unless and until a Responsible Officer of
the Trustee shall have received written notice thereof from the
Company or a holder of Senior Indebtedness or from any trustee
therefor; and, prior to the receipt of any such written notice, the
Trustee, subject to the provisions of Section 601, shall be entitled
in all respects to assume that no such facts exist; PROVIDED, HOWEVER,
that if 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 of, and premium, if any, or interest on any
Security), the notice with respect to such money provided for in this
Section, 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 601, the Trustee shall
be entitled to rely on the delivery to it of a written notice by a
Person representing himself to be a holder of Senior Indebtedness (or
a trustee on behalf of such holder) to establish that such notice has
been given
-66-
<PAGE>

by a holder of Senior Indebtedness (or a trustee 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 to such Person pending judicial
determination as to the right of such Person to receive such payment.

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

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

Section 1412. TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR
INDEBTEDNESS.

The Trustee 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 in good faith mistakenly pay over or distribute to
Holders of Securities or to the Company or to any other Person cash,
property or securities to which any holders of Senior Indebtedness
shall be entitled by virtue of this Article or otherwise.

Section 1413. RIGHTS OF TRUSTEE AS HOLDER OF SENIOR INDEBTEDNESS;
PRESERVATION OF TRUSTEE'S RIGHTS.

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

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

Section 1414. ARTICLE APPLICABLE TO PAYING AGENTS.

In case at any time any Paying Agent other than the Trustee
shall have been appointed by the Company and be then acting hereunder,
the term "Trustee" as used in this
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<PAGE>

Article shall in such case (unless the context otherwise requires) be
construed as extending to and including such Paying Agent within its
meaning as fully for all intents and purposes as if such Paying Agent
were named in this Article in addition to or in place of the Trustee;
PROVIDED, HOWEVER, that Section 1413 shall not apply to the Company or
any Affiliate of the Company if it or such Affiliate acts as Paying
Agent.

Section 1415. CERTAIN CONVERSIONS DEEMED PAYMENT.

For the purposes of this Article only, (1) the issuance and
delivery of junior securities upon conversion of Securities in
accordance with Article Thirteen shall not be deemed to constitute a
payment or distribution on account of the principal of or premium or
interest on Securities or on account of the purchase or other
acquisition of Securities, and (2) the payment, issuance or delivery
of cash, property or securities (other than junior securities) upon
conversion of a Security shall be deemed to constitute payment on
account of the principal of such Security. For the purposes of this
Section, the term "junior securities" means (a) shares of any stock of
any class of the Company and (b) securities of the Company which are
subordinated in right of payment to all Senior Indebtedness which may
be outstanding at the time of issuance or delivery of such securities
to substantially the same extent as, or to a greater extent than, the
Securities are so subordinated as provided in this Article. Nothing
contained in this Article or elsewhere in this Indenture or in the
Securities is intended to or shall impair, as among the Company, its
creditors, other than holders of Senior Indebtedness and the Holders
of the Securities, the right, which is absolute and unconditional, of
the Holder of any Security to convert such Security in accordance with
Article Thirteen.
* * * *

This instrument may be executed in any number of
counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one
and the same instrument.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, all as of the day and year first above
written.

POGO PRODUCING COMPANY

By________________________________

SHAWMUT BANK CONNECTICUT,
NATIONAL ASSOCIATION,
as Trustee

By________________________________

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<PAGE>
EXHIBIT 5

G-30,463-135 February 28, 1994

Pogo Producing Company
5 Greenway Plaza
Suite 2700
Houston, Texas 77046

Ladies and Gentlemen:

As set forth in the Registration Statement on Form S-3
("Registration Statement"), filed by Pogo Producing Company, a
Delaware corporation (the "Company"), under the Securities Act of
1933, as amended (the "Act"), relating to $75,000,000 aggregate
principal amount of ____% Convertible Subordinated Notes due 2004 of
the Company (the "Notes") and to the shares of Common Stock, par value
$1 per share, of the Company issuable upon conversion of the Notes
(the "Common Shares"), certain legal matters in connection with the
Notes are being passed upon for you by us. The Notes are to be issued
under an indenture (the "Indenture") between the Company and Shawmut
Bank Connecticut, National Association, as trustee (the "Trustee").
At your request, this opinion is being furnished to you for filing as
Exhibit 5 to the Registration Statement.

We have acted as counsel for the Company in connection with
the registration and sale of the Notes. In such capacity, we have
examined the Company's Restated Certificate of Incorporation and
Bylaws, each as amended to date, and have examined the originals, or
copies certified or otherwise identified, of corporate records of the
Company, certificates of public officials and of representatives of
the Company, statutes and other records, instruments and documents as
a basis for the opinions hereinafter expressed.

Based upon our examination as aforesaid, and subject to the
assumptions, qualifications, limitations and exceptions set forth
herein, we are of the opinion that:

1. The Company is a corporation duly organized and validly
existing under the laws of the State of Delaware.
<PAGE>
Pogo Producing Company -2- February 28, 1994

2. When the Indenture has been duly executed and delivered
by the officers authorized by the Board of Directors of the
Company or a duly authorized committee thereof to execute and
deliver the same, it will constitute a legal, valid and binding
instrument of the Company, enforceable against the Company in
accordance with its terms.

3. When (i) the Board of Directors of the Company or a
duly authorized Committee thereof shall have duly authorized the
issuance of the Notes and shall have fixed the terms thereof,
(ii) the Company's officers shall have duly executed the Notes
(manually or in facsimile) pursuant to such authorization,
(iii) the Notes shall have been duly authenticated by the Trustee
under the Indenture and sold pursuant to such authorization, and
(iv) payment of the agreed consideration for the Notes shall have
been received by the Company, the Notes will constitute legal,
valid and binding obligations of the Company, enforceable against
the Company in accordance with their terms, and the Common
Shares, when duly issued upon conversion of the Notes in accordance
with the terms thereof, will be validly issued, fully paid and
non-assessable.

The opinions as to enforceability of obligations set forth
in paragraphs 2 and 3 above are each subject to the effect on such
enforceability of (i) bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or affecting creditors' rights
and (ii) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).

We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement and to the use of our name under
the caption "Legal Opinions."

Very truly yours,

/s/ Baker & Botts, L.L.P.

<PAGE>
EXHIBIT 12
<TABLE>
POGO PRODUCING COMPANY & SUBSIDIARIES
RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN THOUSANDS)

<CAPTION>
YEAR ENDED DECEMBER 31,
1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
EARNINGS:
Income before taxes and
extraordinary item----------------- $ 40,042 $ 28,687 $ 14,616 $ 43,484 $ 2,638
Add --
Fixed charges------------------ 11,245 19,305 25,302 31,797 37,850
Less --
Capitalized interest----------- (451) (391) (637) (741) (1,106)
Total earnings--------------- $ 50,836 $ 47,601 $ 39,281 $ 74,540 $ 39,382
FIXED CHARGES:
Interest expense--------------------- $ 10,956 $ 19,036 $ 24,946 $ 31,441 $ 37,458
Portion of rental expense
representing interest-------------- 289 269 356 356 392
Total fixed charges---------- $ 11,245 $ 19,305 $ 25,302 $ 31,797 $ 37,850
RATIO OF EARNINGS TO FIXED
CHARGES---------------------------- 4.5 2.5 1.6 2.3 1.0
</TABLE>

<PAGE>
EXHIBIT 23(A)

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use in this
registration statement of our reports dated February 8, 1994 included herein and
to all references to our Firm included in this registration statement.

ARTHUR ANDERSEN & CO.

February 28, 1994

<PAGE>
EXHIBIT 23(b)

CONSENT OF INDEPENDENT PETROLEUM ENGINEERS

We hereby consent to the use of our name in the Pogo
Producing Company Registration Statement on Form S-3, initially filed
in February 1994 as amended, as referenced therein under the heading
"Experts". We further consent to the inclusion of our estimates of
reserves and present value of future net reserves in such registration
statement.

/s/ Ryder Scott Company
Petroleum Engineers

RYDER SCOTT COMPANY
PETROLEUM ENGINEERS

Houston, Texas
February 28, 1994

<PAGE>
EXHIBIT 24
POWER OF ATTORNEY

WHEREAS, POGO PRODUCING COMPANY, a Delaware corporation (the
"Company"), intends to file with the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Act"), a Registration Statement on Form S-3 (the
"Registration Statement") in order to register certain securities
pursuant to the Act as have been approved by the Board of Directors
pursuant to resolutions adopted thereby, and also to file any and all
exhibits and other documents relating to said Registration Statement
that are necessary or advisable;

NOW, THEREFORE, I Tobin Armstrong, in my capacity as a
director of the Company, do hereby appoint PAUL G. VAN WAGENEN, D.
STEPHEN SLACK, and THOMAS E. HART, and each of them severally, my true
and lawful attorney or attorneys with power to act with or without the
others, and with full power of substitution and resubstitution, to
execute in my name, place and stead in my capacity as a director of
the Company, said Registration Statement, any and all amendments to
said Registration Statement and all instruments as said attorneys or
any of them shall deem necessary or incidental in connection therewith
and to file the same with the Commission. Each of said attorneys
shall have full power and authority to do and perform in my name and
on my behalf in my capacity as a director any act whatsoever that is
necessary or desirable to be done in the premises as fully and to all
intents and purposes as I might or could do in person, and by my
signature hereto, I hereby ratify and approve all of such acts of said
attorneys and each of them.

IN WITNESS WHEREOF, the undersigned has executed this
instrument on this 21st day of February, 1994.

/s/TOBIN ARMSTRONG
Tobin Armstrong

<PAGE>
POWER OF ATTORNEY

NOW, THEREFORE, I Jack S. Blanton, in my capacity as a
director of the Company, do hereby appoint PAUL G. VAN WAGENEN, D.
STEPHEN SLACK, and THOMAS E. HART, and each of them severally, my true
and lawful attorney or attorneys with power to act with or without the
others, and with full power of substitution and resubstitution, to
execute in my name, place and stead in my capacity as a director of
the Company, said Registration Statement, any and all amendments to
said Registration Statement and all instruments as said attorneys or
any of them shall deem necessary or incidental in connection therewith
and to file the same with the Commission. Each of said attorneys
shall have full power and authority to do and perform in my name and
on my behalf in my capacity as a director any act whatsoever that is
necessary or desirable to be done in the premises as fully and to all
intents and purposes as I might or could do in person, and by my
signature hereto, I hereby ratify and approve all of such acts of said
attorneys and each of them.

IN WITNESS WHEREOF, the undersigned has executed this
instrument on this 22nd day of February, 1994.

/s/JACK S. BLANTON
Jack S. Blanton
<PAGE>
POWER OF ATTORNEY

NOW, THEREFORE, I W. M. Brumley, Jr., in my capacity as a
director of the Company, do hereby appoint PAUL G. VAN WAGENEN, D.
STEPHEN SLACK, and THOMAS E. HART, and each of them severally, my true
and lawful attorney or attorneys with power to act with or without the
others, and with full power of substitution and resubstitution, to
execute in my name, place and stead in my capacity as a director of
the Company, said Registration Statement, any and all amendments to
said Registration Statement and all instruments as said attorneys or
any of them shall deem necessary or incidental in connection therewith
and to file the same with the Commission. Each of said attorneys
shall have full power and authority to do and perform in my name and
on my behalf in my capacity as a director any act whatsoever that is
necessary or desirable to be done in the premises as fully and to all
intents and purposes as I might or could do in person, and by my
signature hereto, I hereby ratify and approve all of such acts of said
attorneys and each of them.

IN WITNESS WHEREOF, the undersigned has executed this
instrument on this 22nd day of February, 1994.

/s/W. M. BRUMLEY, JR.
W. M. Brumley, Jr.

<PAGE>
POWER OF ATTORNEY

NOW, THEREFORE, I John B. Carter, Jr., in my capacity as a
director of the Company, do hereby appoint PAUL G. VAN WAGENEN, D.
STEPHEN SLACK, and THOMAS E. HART, and each of them severally, my true
and lawful attorney or attorneys with power to act with or without the
others, and with full power of substitution and resubstitution, to
execute in my name, place and stead in my capacity as a director of
the Company, said Registration Statement, any and all amendments to
said Registration Statement and all instruments as said attorneys or
any of them shall deem necessary or incidental in connection therewith
and to file the same with the Commission. Each of said attorneys
shall have full power and authority to do and perform in my name and
on my behalf in my capacity as a director any act whatsoever that is
necessary or desirable to be done in the premises as fully and to all
intents and purposes as I might or could do in person, and by my
signature hereto, I hereby ratify and approve all of such acts of said
attorneys and each of them.

IN WITNESS WHEREOF, the undersigned has executed this
instrument on this 22nd day of February, 1994.

/s/JOHN B. CARTER, JR.
John B. Carter, Jr.
<PAGE>
POWER OF ATTORNEY

NOW, THEREFORE, I William L. Fisher, in my capacity as a
director of the Company, do hereby appoint PAUL G. VAN WAGENEN, D.
STEPHEN SLACK, and THOMAS E. HART, and each of them severally, my true
and lawful attorney or attorneys with power to act with or without the
others, and with full power of substitution and resubstitution, to
execute in my name, place and stead in my capacity as a director of
the Company, said Registration Statement, any and all amendments to
said Registration Statement and all instruments as said attorneys or
any of them shall deem necessary or incidental in connection therewith
and to file the same with the Commission. Each of said attorneys
shall have full power and authority to do and perform in my name and
on my behalf in my capacity as a director any act whatsoever that is
necessary or desirable to be done in the premises as fully and to all
intents and purposes as I might or could do in person, and by my
signature hereto, I hereby ratify and approve all of such acts of said
attorneys and each of them.

IN WITNESS WHEREOF, the undersigned has executed this
instrument on this 21st day of February, 1994.

/s/WILLIAM L. FISHER
William L. Fisher
<PAGE>
POWER OF ATTORNEY

NOW, THEREFORE, I William E. Gipson, in my capacity as a
director of the Company, do hereby appoint PAUL G. VAN WAGENEN, D.
STEPHEN SLACK, and THOMAS E. HART, and each of them severally, my true
and lawful attorney or attorneys with power to act with or without the
others, and with full power of substitution and resubstitution, to
execute in my name, place and stead in my capacity as a director of
the Company, said Registration Statement, any and all amendments to
said Registration Statement and all instruments as said attorneys or
any of them shall deem necessary or incidental in connection therewith
and to file the same with the Commission. Each of said attorneys
shall have full power and authority to do and perform in my name and
on my behalf in my capacity as a director any act whatsoever that is
necessary or desirable to be done in the premises as fully and to all
intents and purposes as I might or could do in person, and by my
signature hereto, I hereby ratify and approve all of such acts of said
attorneys and each of them.

IN WITNESS WHEREOF, the undersigned has executed this
instrument on this 23rd day of February, 1994.

/s/WILLIAM E. GIPSON
William E. Gipson
<PAGE>
POWER OF ATTORNEY

NOW, THEREFORE, I Gerrit W. Gong, in my capacity as a
director of the Company, do hereby appoint PAUL G. VAN WAGENEN, D.
STEPHEN SLACK, and THOMAS E. HART, and each of them severally, my true
and lawful attorney or attorneys with power to act with or without the
others, and with full power of substitution and resubstitution, to
execute in my name, place and stead in my capacity as a director of
the Company, said Registration Statement, any and all amendments to
said Registration Statement and all instruments as said attorneys or
any of them shall deem necessary or incidental in connection therewith
and to file the same with the Commission. Each of said attorneys
shall have full power and authority to do and perform in my name and
on my behalf in my capacity as a director any act whatsoever that is
necessary or desirable to be done in the premises as fully and to all
intents and purposes as I might or could do in person, and by my
signature hereto, I hereby ratify and approve all of such acts of said
attorneys and each of them.

IN WITNESS WHEREOF, the undersigned has executed this
instrument on this 22nd day of February, 1994.

/s/GERRIT W. GONG
Gerrit W. Gong
<PAGE>
POWER OF ATTORNEY

NOW, THEREFORE, I J. Stuart Hunt, in my capacity as a
director of the Company, do hereby appoint PAUL G. VAN WAGENEN, D.
STEPHEN SLACK, and THOMAS E. HART, and each of them severally, my true
and lawful attorney or attorneys with power to act with or without the
others, and with full power of substitution and resubstitution, to
execute in my name, place and stead in my capacity as a director of
the Company, said Registration Statement, any and all amendments to
said Registration Statement and all instruments as said attorneys or
any of them shall deem necessary or incidental in connection therewith
and to file the same with the Commission. Each of said attorneys
shall have full power and authority to do and perform in my name and
on my behalf in my capacity as a director any act whatsoever that is
necessary or desirable to be done in the premises as fully and to all
intents and purposes as I might or could do in person, and by my
signature hereto, I hereby ratify and approve all of such acts of said
attorneys and each of them.

IN WITNESS WHEREOF, the undersigned has executed this
instrument on this 21st day of February, 1994.

/s/J. STUART HUNT
J. Stuart Hunt
<PAGE>
POWER OF ATTORNEY

NOW, THEREFORE, I Frederick A. Klingenstein, in my capacity
as a director of the Company, do hereby appoint PAUL G. VAN WAGENEN,
D. STEPHEN SLACK, and THOMAS E. HART, and each of them severally, my
true and lawful attorney or attorneys with power to act with or
without the others, and with full power of substitution and
resubstitution, to execute in my name, place and stead in my capacity
as a director of the Company, said Registration Statement, any and all
amendments to said Registration Statement and all instruments as said
attorneys or any of them shall deem necessary or incidental in
connection therewith and to file the same with the Commission. Each
of said attorneys shall have full power and authority to do and
perform in my name and on my behalf in my capacity as a director any
act whatsoever that is necessary or desirable to be done in the
premises as fully and to all intents and purposes as I might or could
do in person, and by my signature hereto, I hereby ratify and approve
all of such acts of said attorneys and each of them.

IN WITNESS WHEREOF, the undersigned has executed this
instrument on this 22nd day of February, 1994.

/s/FREDERICK A. KLINGENSTEIN
Frederick A. Klingenstein
<PAGE>
POWER OF ATTORNEY

NOW, THEREFORE, I Nicholas R. Petry, in my capacity as a
director of the Company, do hereby appoint PAUL G. VAN WAGENEN, D.
STEPHEN SLACK, and THOMAS E. HART, and each of them severally, my true
and lawful attorney or attorneys with power to act with or without the
others, and with full power of substitution and resubstitution, to
execute in my name, place and stead in my capacity as a director of
the Company, said Registration Statement, any and all amendments to
said Registration Statement and all instruments as said attorneys or
any of them shall deem necessary or incidental in connection therewith
and to file the same with the Commission. Each of said attorneys
shall have full power and authority to do and perform in my name and
on my behalf in my capacity as a director any act whatsoever that is
necessary or desirable to be done in the premises as fully and to all
intents and purposes as I might or could do in person, and by my
signature hereto, I hereby ratify and approve all of such acts of said
attorneys and each of them.

IN WITNESS WHEREOF, the undersigned has executed this
instrument on this 22nd day of February, 1994.

/s/NICHOLAS R. PETRY
Nicholas R. Petry
<PAGE>
POWER OF ATTORNEY

NOW, THEREFORE, I Jack A. Vickers, in my capacity as a
director of the Company, do hereby appoint PAUL G. VAN WAGENEN, D.
STEPHEN SLACK, and THOMAS E. HART, and each of them severally, my true
and lawful attorney or attorneys with power to act with or without the
others, and with full power of substitution and resubstitution, to
execute in my name, place and stead in my capacity as a director of
the Company, said Registration Statement, any and all amendments to
said Registration Statement and all instruments as said attorneys or
any of them shall deem necessary or incidental in connection therewith
and to file the same with the Commission. Each of said attorneys
shall have full power and authority to do and perform in my name and
on my behalf in my capacity as a director any act whatsoever that is
necessary or desirable to be done in the premises as fully and to all
intents and purposes as I might or could do in person, and by my
signature hereto, I hereby ratify and approve all of such acts of said
attorneys and each of them.

IN WITNESS WHEREOF, the undersigned has executed this
instrument on this 25th day of February, 1994.

/s/JACK A. VICKERS
Jack A. Vickers

<PAGE> EXHIBIT 25
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM T-1

STATEMENT OF ELIGIBILITY AND QUALIFICATION 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)

SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION
(Exact name of trustee as specified in its charter)

NOT APPLICABLE 06-0850628
(State of incorporation if (I.R.S. Employer
not a national bank) Identification No.)

777 MAIN STREET, HARTFORD, CONNECTICUT 06115
(Address of principal executive offices) (Zip Code)

PATRICIA BEAUDRY, 777 MAIN STREET, HARTFORD, CT 203-728-2065
(Name, address and telephone number of agent for service)

POGO PRODUCING COMPANY
(Exact name of obligor as specified in its charter)

Delaware 74-1659398
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

5 GREENWAY PLAZA, SUITE 2700, HOUSTON, TEXAS 77046
(Address of principal executive offices) (Zip Code)

$86,250,000 OF CONVERTIBLE SUBORDINATED NOTES DUE 2004
(Title of the indenture securities)
<PAGE>

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:

THE COMPTROLLER OF THE CURRENCY,
WASHINGTON, D.C.

FEDERAL RESERVE BANK OF BOSTON
BOSTON, MASSACHUSETTS

FEDERAL DEPOSIT INSURANCE CORPORATION
WASHINGTON, D.C.

(b) Whether it is authorized to exercise corporate
trust powers:

THE TRUSTEE IS SO AUTHORIZED.

Item 2. AFFILIATIONS WITH OBLIGOR. If the obligor is an
affiliate of the trustee, describe each such
affiliation.

NONE WITH RESPECT TO THE TRUSTEE; NONE WITH RESPECT
TO HARTFORD NATIONAL CORPORATION, SHAWMUT
CORPORATION, SHAWMUT SERVICE CORPORATION AND
SHAWMUT NATIONAL CORPORATION (THE "AFFILIATES").

Item 16. LIST OF EXHIBITS. List below all exhibits filed as a
part of this statement of eligibility and qualification.

1. A COPY OF THE ARTICLES OF ASSOCIATION OF THE
TRUSTEE AS NOW IN EFFECT.

2. A COPY OF THE CERTIFICATE OF AUTHORITY OF THE
TRUSTEE TO DO BUSINESS.

3. A COPY OF THE CERTIFICATION OF FIDUCIARY
POWERS OF THE TRUSTEE.

4. A COPY OF THE BY-LAWS OF THE TRUSTEE AS NOW IN
EFFECT.

5. CONSENT OF THE TRUSTEE REQUIRED BY SECTION
321(B) OF THE ACT.

6. A COPY OF THE LATEST CONSOLIDATED REPORTS OF
CONDITION AND INCOME OF THE TRUSTEE, PUBLISHED
PURSUANT TO LAW OR THE REQUIREMENTS OF ITS
SUPERVISING OR EXAMINING AUTHORITY.

-2-
<PAGE>
NOTES

Inasmuch as this Form T-1 is filed prior to the
ascertainment by the trustee of all facts on which to
base the answer to Item 2 the answer to said Item is
based upon incomplete information. Said Item may,
however, be considered correct unless amended by an
amendment to this Form T-1.
<PAGE>
SIGNATURE

Pursuant to the requirements of the Trust Indenture
Act of 1939, the trustee, Shawmut Bank Connecticut,
National Association, a national banking association
organized and existing under the laws of the United
States, has duly caused this statement of eligibility to
be signed on its behalf by the undersigned, thereunto
duly authorized, all in the City of Hartford, and State
of Connecticut, on the 23rd day of February, 1994.

SHAWMUT BANK CONNECTICUT,
NATIONAL ASSOCIATION,
Trustee

By /s/ PABLO DE LA CANAL
Pablo de la Canal
Corporate Trust Officer

<PAGE>
EXHIBIT 1
ARTICLES OF ASSOCIATION

SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION

FIRST. The title of this Association, which shall carry on the
business of banking under the laws of the United States, shall be
"Shawmut Bank Connecticut, National Association".

SECOND. The main office of the Association shall be in Hartford,
County of Hartford, State of Connecticut. The general business of the
Association shall be conducted at its main office and its branches.

THIRD. The board of directors of this Association shall consist of
not less than five (5) nor more than twenty-five (25) shareholders,
the exact number of directors within such minimum and maximum limits
to be fixed and determined from time to time by resolution of a
majority of the full board of directors or by resolution of the
shareholders at any annual or special meeting thereof. Unless
otherwise provided by the laws of the United States, any vacancy in
the board of directors for any reason, including an increase in the
number thereof, may be filled by action of the board of directors.

FOURTH. The annual meeting of the shareholders for the election of
directors and the transaction of whatever other business may be
brought before said meeting shall be held at the main office or such
other place as the board of directors may designate, on the day of
each year specified therefor in the bylaws, but if no election is held
on that day, it may be held on any subsequent day according to the
provisions of law; and all elections shall be held according to such
lawful regulations as may be prescribed by the board of directors.

FIFTH. The authorized amount of capital stock of this Association
shall be three million five hundred thousand (3,500,000) shares of
common stock of the par value of six and 25/100 dollars ($6.25) each,
but said capital stock may be increased or decreased from time to
time, in accordance with the provisions of the laws of the United
States.

No holder of shares of the capital stock of any class of the
corporation shall have any pre-emptive or preferential right of
subscription to any shares of any class of stock of the corporation,
whether now or hereafter authorized, or to any obligations convertible
into stock of the corporation, issued or sold, nor any right of
subscription to any thereof other than such, if any, as the board of
directors, in its discretion, may from time to time determine and at
such price as the board of directors may from time to time fix.

The Association, at any time and from time to time, may authorize and
issue debt obligations, whether or not subordinated, without the
approval of the shareholders.

<PAGE>

SIXTH. The board of directors shall appoint one of its members
president of this Association, who shall be chairman of the board,
unless the board appoints another director to be the chairman. The
board of directors shall have the power to appoint one or more vice
presidents; and to appoint a secretary and such other officers and
employees as may be required to transact the business of this
Association.

The board of directors shall have the power to define the duties of
the officers and employees of the Association; to fix the salaries to
be paid to them; to dismiss them; to require bonds from them and to
fix the penalty thereof; to regulate the manner in which any increase
of the capital of the Association shall be made; to manage and
administer the business and affairs of the Association; to make all
bylaws that it may be lawful for them to make; and generally to do and
perform all acts that it may be legal for a board of directors to do
and perform.

SEVENTH. The board of directors shall have the power to change the
location of the main office to any other place within the limits of
the City of Hartford, Connecticut, without the approval of the
shareholders but subject to the approval of the Comptroller of the
Currency; and shall have the power to establish or change the location
of any branch or branches of the Association to any other location,
without the approval of the shareholders but subject to the approval
of the Comptroller of the Currency.

EIGHTH. The corporate existence of this Association shall continue
until terminated in accordance with the laws of the United States.

NINTH. The board of directors of this Association, or any three or
more shareholders owning, in the aggregate, not less than ten percent
(10%) of the stock of this Association, may call a special meeting of
shareholders at any time. Unless otherwise provided by the laws of
the United States, a notice of the time, place and purpose of every
annual and special meeting of the shareholders shall be given by first
class mail, postage prepaid, mailed at least ten (10) days prior to
the date of such meeting to each shareholder of record at his address
as shown upon the books of this Association.

TENTH. Any person, his heirs, executors, or administrators may be
indemnified or reimbursed by the Association for reasonable expenses
actually incurred in connection with any action, suit, or proceeding,
civil or criminal, to which he or they shall be made a party by reason
of his being or having been a director, officer, or employee of the
Association or any firm, corporation, or organization which he served
in any such capacity at the request of the Association: provided, that
no person shall be so indemnified or reimbursed in relation to any
matter in such action, suit, or proceeding as to which he shall
finally be adjudged to have been guilty of or liable for gross
negligence, willful misconduct or criminal acts in the performance of
his duties to the Association: and, provided further, that no person
shall be so indemnified or reimbursed in relation to any matter in
such action, suit, or proceeding which has been made the subject of a
compromise settlement except with the approval of a court of competent
jurisdiction, or the holders of record of a majority of the
outstanding shares of the Association, or the board of directors,
acting by vote of directors not parties to the same or substantially
the same action, suit, or proceeding, constituting a majority of the
whole number of directors. The foregoing right of indemnification or
reimbursement shall not be exclusive of other rights to which such
person, his heirs, executors, or administrators may be entitled as a
matter of law.

<PAGE>

The Association may, upon the affirmative vote of a majority of its
board of directors, purchase insurance for the purpose of indemnifying
its directors, officers and other employees to the extent that such
indemnification is allowed in the preceding paragraph. Such insurance
may, but need not, be for the benefit of all directors, officers, or
employees.

ELEVENTH. These articles of association may be amended at any regular
or special meeting of the shareholders by the affirmative vote of the
holders of a majority of the stock of this Association, unless the
vote of the holders of greater amount of stock is required by law, and
in that case by the vote of the holders of such greater amount. The
notice of any shareholders' meeting at which an amendment to the
articles of association of this Association is to be considered shall
be given as hereinabove set forth.

I hereby certify that the articles of association of this Association,
in their entirety, are listed above in items first through eleventh.

Andrea Turlo Assistant Secretary

Dated at Hartford, CT, as of February 24, 1994.

Revision of January 11, 1993

<PAGE>
{LOGO}
EXHIBIT 2
COMPTROLLER OF THE CURRENCY
ADMINISTRATOR OF NATIONAL BANKS

Washington, D.C. 20219
CERTIFICATE

I, Eugene A. Ludwig, Comptroller of the Currency, do hereby certify
that:

1. The Comptroller of the Currency, pursuant to Revised Statutes
324, et seq., as amended, 12 U.S.C. 1, et seq., as amended, has
possession, custody and control of all records pertaining to the
chartering, regulation and supervision of all National Banking
Associations.

2. "Shawmut Bank Connecticut, National Association", Hartford,
Connecticut,, (Charter No. 1338), is a National Banking Association
formed under the laws of the United States and is authorized
thereunder to transact the business of banking on the date of this
Certificate.
IN TESTIMONY WHEREOF, I have
hereunto subscribed my
name and caused my seal of
office to be affixed to these
presents at the Treasury
Department, in the City of
Washington and District of
Columbia, this 9th day of
December, 1993.

/s/ EUGENE A. LUDWIG
Comptroller of the Currency
<PAGE>
EXHIBIT 3
{LOGO}
COMPTROLLER OF THE CURRENCY
ADMINISTRATOR OF NATIONAL BANKS

Washington, D.C. 20219

CERTIFICATION OF FIDUCIARY POWERS

I, Eugene A. Ludwig, Comptroller of the Currency, do hereby certify
the records in this Office evidence "Shawmut Bank Connecticut,
National Association", Hartford, Connecticut, (Charter No. 1338), was
granted, under the hand and seal of the Comptroller, the right to act
in all fiduciary capacities authorized under the provisions of The Act
of Congress approved September 28, 1962, 76 Stat. 668, 12 U.S.C. 92a.
I further certify the authority so granted remains in full force and
effect.
IN TESTIMONY WHEREOF, I have
hereunto subscribed my name and
caused my seal of Office of the
Comptroller of the Currency to be
affixed to these presents at the
Treasury Department, in the City of
Washington and District of Columbia,
this 9th day of December, 1993.

/s/ EUGENE A. LUDWIG
<PAGE>
EXHIBIT 4
BYLAWS OF SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION

ARTICLE I

MEETINGS OF SHAREHOLDERS

Section 1.1 Annual Meeting. The regular annual meeting of the
shareholders to elect directors and transact whatever other business
may properly come before the meeting, shall be held at the main office
of the association, city of Hartford, state of Connecticut or such
other places as the board of directors may designate, at 1:00 o'clock,
on the third Wednesday of April of each year, or if that date falls on
a legal holiday in the state in which the association is located, on
the next following banking day. If, for any cause, an election of
directors is not made on that date, or in the event of a legal
holiday, on the next following banking day, an election may be held on
any subsequent day within 60 days of the date fixed, to be designated
by the board directors, or, if the directors fail to fix the date, by
shareholders representing two-thirds of the shares.

Section 1.2. Special Meetings. Except as otherwise specifically
provided by statute, special meetings of the shareholders may be
called for any purpose at any time by the board of directors or upon
call of the Chairman or at the written request of shareholders owning,
in the aggregate, not less than ten (10) percent of the stock of the
association.

Section 1.3. Notice of Meetings. Unless otherwise provided by the
laws of the United States, a notice of the time, place and purpose of
every regular annual meeting or special meeting of shareholders shall
be given by first-class mail, postage pre-paid, mailed at least ten
(10) days prior to the date of such meeting to each shareholder of
record at his address as shown upon the books of the association. If
an annual or special shareholders' meeting is adjourned to a different
date, time, or place, notice need not be given of the new date, time
or place, if the new date, time or place is announced at the meeting
before adjournment, unless any additional items of business are to be
considered, or the association becomes aware of an intervening event
materially affecting any matter to be voted on more than 10 days prior
to the date to which the meeting is adjourned. If a new record date
for the adjourned meeting is fixed, however, notice of the adjourned
meeting must be given to persons who are shareholders as of the new
record date.

Section 1.4. Proxies. Shareholders may vote at any meeting of the
shareholders by proxies duly authorized in writing. Proxies shall be
valid only for one meeting, to be specified therein, and any
adjournments of such meeting. Proxies shall be dated and filed with
the records of the meeting. Proxies with rubber-stamped facsimile
signatures may be used and unexecuted proxies may be counted upon
receipt of a confirming telegram from the shareholder. Proxies
meeting the above requirements submitted at any time during a meeting
shall be accepted.

<PAGE>

Section 1.5. Quorum. A majority of the outstanding capital stock,
represented in person or by proxy, shall constitute a quorum at any
meeting of shareholders, but less than a quorum may adjourn any
meeting, from time to time, and the meeting may be held, as adjourned,
without further notice.

Section 1.6. Voting. In deciding on questions at meetings of
shareholders, except in the election of directors, each shareholder
shall be entitled to one vote for each share of stock held. A
majority of votes cast shall decide each matter submitted to the
shareholders at the meeting except in cases where by law a larger vote
is required.

ARTICLE II

DIRECTORS

Section 2.1. Board of Directors. The board of directors shall manage
and administer the business and affairs of the association. Except as
expressly limited by law, all corporate powers of the association
shall be vested in and may be exercised by the board.

Section 2.2. Number. The board shall consist of not less than five
nor more than twenty-five shareholders, the exact number within such
minimum and maximum limits to be fixed and determined from time to
time by resolution of a majority of the full board or by resolution of
a majority of the shareholders at any meeting thereof.

Section 2.3. Term. The directors of this association shall hold
office for one year and until their successors are elected and have
qualified.

Section 2.4. Oath. Each person elected or appointed a director of
this association must take the oath of such office as prescribed by
the laws of the United States. No person elected or appointed a
director of this association shall exercise the functions of such
office until he has taken such oath.

Section 2.5. Honorary Directors. There may not be more than five
honorary directors of the association who shall be entitled to attend
meetings of the board and take part in its proceedings but without the
right to vote. Honorary directors shall be appointed at the annual
meeting of the board of directors to hold office until the next annual
meeting provided, however, that the board may at any regularly
constituted meeting between annual meetings of the board of directors
appoint honorary directors within the limitations imposed by this
bylaw.
Section 2.6. Vacancies. Any vacancies occurring in the board of
directors for any reason, including an increase in the number thereof,
may be filled, in accordance with the laws of the United States, by
appointment by the remaining directors, and any director so appointed
shall hold office until the next annual meeting and until his
successor is elected and has qualified.

-2-
<PAGE>

Section 2.7. Organization Meeting. The annual meeting of the board
of directors shall be held at the main office of the association to
organize the new board and appoint committees of the board and
officers of the association for the succeeding year, and for
transacting such other business as properly may come before the
meeting. Such meeting shall be held on the day of the election of
directors or as soon thereafter as practicable, and, in any event,
within 30 days thereof. If, at the time fixed for such meeting, there
shall not be a quorum, the directors present may adjourn the meeting,
from time to time, until a quorum is obtained.

Section 2.8. Regular Meetings. The regular meetings of the board of
directors shall be held, without notice, at the main office, or at
such other place as has been duly authorized by the board, on such day
and at such time as the board shall determine. When any regular
meeting of the board falls upon a holiday, the meeting shall be held
on the next banking business day unless the board shall designate
another day.

Section 2.9. Special Meetings. Special meetings of the board of
directors may be called by the chairman, the president, or at the
request of seven or more directors. Each member of the board of
directors shall be given notice stating the time and place by
telegram, letter, or in person, of each special meeting.

Section 2.10. Quorum. A majority of the members of the board shall
constitute a quorum at any meeting. If the number of directors is
reduced below the number that would constitute a quorum, no business
may be transacted, except selecting directors to fill vacancies in
conformance with these bylaws. If a quorum is present, the board of
directors may take action through the vote of a majority of the
directors who are in attendance.

Section 2.11. Record Time. The board of directors may fix a day and
hour, not exceeding fifty (50) days preceding the date fixed for the
payment of any dividend or for any meeting of the shareholders as a
record time for the determination of shareholders entitled to receive
such dividend, or as the time as of which shareholders entitled to
notice of and to vote at such meeting shall be determined, as the case
may be, and only shareholders of record at the time so fixed shall be
entitled to receive such dividend or to notice of and to vote at such
meeting.

Section 2.12. Fees. All directors other than directors who are
officers of the association or its affiliates shall be entitled to
reasonable fees for their services as such directors and as members of
committees of the board, said fees to be fixed by vote of the board.

ARTICLE III

COMMITTEES OF THE BOARD

Section 3.1. Executive Committee. The board of directors may
establish an executive committee consisting of the chairman, not less
than five directors, not officers, who are appointed by the board, and
such other directors as the
-3-
<PAGE>

board may appoint. The board shall designate the chairman thereof.
The Executive Committee shall possess and may exercise such powers as
are provided in these bylaws and all other delegable powers of the
board and shall meet at the call of any member thereof. All action of
said committee shall be reported to the board at the next regular
board meeting thereafter. Four members of the Committee, of whom not
less than three shall be directors who are not officers, shall be
necessary to constitute a quorum.

Section 3.2. Loan and Investment Committee. The board of directors
shall establish a loan and investment committee consisting of the
chairman, the president, not less than four directors, not officers,
who are appointed by the board, and such other directors as the board
may appoint. The committee shall ensure that the association's credit
and investment policies are adequate and that lending and investment
activities are conducted in accordance with the association's policies
and with applicable laws and regulations. The committee shall
exercise oversight and receive reports with respect to lending
activities and credit risk management. The committee shall also
exercise oversight and receive reports with respect to the
association's securities portfolio and securities portfolio activities
to ensure appropriate portfolio diversification, asset quality,
liquidity, and profitability. The committee shall also have oversight
responsibilities with respect to the association's investment policy,
liquidity policy, liquidity contingency planning and interest rate
risk exposure. All action by the committee shall be reported to the
board at the next regular board meeting thereafter. Four members of
the committee, of whom not less than two shall be directors who are
not officers, shall be necessary to constitute a quorum.

Section 3.3. Trust Committee. The board of directors shall establish
a trust committee consisting of the president and not less than four
directors, not officers, who are appointed by the board and such other
directors as the board may appoint. The trust committee shall have
authority, between meetings of the board, to discharge the
responsibilities of the association with respect to the exercise of
fiduciary powers, except as the board may by resolution or other
appropriate action otherwise from time to time determine. All action
by said committee shall be reported to the board at the next regular
board meeting thereafter. Four members of the trust committee, of
whom at least two shall be directors who are not officers, shall be
necessary to constitute a quorum.

Section 3.4. Audit Committee. The audit committee of Shawmut National
Corporation, no member of whom is an officer of the association, is
designated to oversee the audit affairs of the association. Members
of the association's board of directors, none of whom may be officers
of the association, may serve on the audit committee of Shawmut
National Corporation. In addition, the board may, from time to time,
appoint an audit committee consisting of not less than four members of
the board, no one of whom shall be an executive officer of the
association, to perform such audit functions as may be assigned by the
board. The duty of the audit committee shall be to examine at least
once during each calendar year and within 15 months of the last
examination of affairs of the association or cause suitable
examination to be made by auditors responsible only to the board of
directors and to report the result of such examination in writing to
the board at the next regular meeting

-4-
<PAGE>
thereafter. Such report shall state whether the association is in a
sound condition, whether fiduciary powers have been administered
according to law and sound fiduciary principles, whether adequate
internal controls and procedures are being maintained, and shall
recommend to the board of directors such changes in the manner of
conducting the affairs of the association as shall be deemed
advisable. Section 3.5. Community Affairs Committee. The board of
directors shall establish a community affairs committee consisting of
not less than four directors and such other persons as shall be
appointed by the board. The community affairs committee shall oversee
compliance by the association with the policies and provisions of the
Community Reinvestment Act of 1978, as amended; shall establish and
supervise policies relating to voluntary corporate contributions and
other matters of business and community conduct, all as the board or
the chairman may from time to time specify or request. All actions by
said committee shall be reported to the board at the next regular
board meeting thereafter. Three members of the committee, of whom at
least two shall be directors who are not officers, shall be necessary
to constitute a quorum.

Section 3.6. Substitute Committee Members. In the case of the absence
of any member of any committee of the board from any meeting of such
committee, the directors who are not officers and are present at such
meeting, or the senior officer present if no such directors are there,
may designate a substitute to serve in lieu of such absent member.
Such substitute need not be a director unless such absent member is a
director but in any case when the board of directors shall have
designated one or more alternate members for such committee, the
substitute shall be selected from such of said alternates as are then
available.

Section 3.7. Additional Committees. The board of directors may by
resolution designate one or more additional committees, each
consisting of two or more of the directors. Any such additional
committee shall have and may exercise such powers as the board may
from time to time prescribe for furthering the business and affairs of
the association.

ARTICLE IV

WAIVER OF NOTICE; WRITTEN CONSENT; PARTICIPATION BY TELEPHONE

Section 4.1. Waiver of Notice. Notice of the time, place and purpose
of any regular meeting of the board of directors or a committee
thereof may be waived in writing by any director or member of such
committee, as the case may be, either before or after such meeting.
Attendance in person at a meeting of the board of directors or a
committee thereof shall be deemed to constitute a waiver of notice
thereof.

Section 4.2. Written Consent. Unless otherwise restricted by the
articles of association or these bylaws, any action required or
permitted to be taken at any meeting of the board of directors or a
committee thereof may be taken without a meeting if a consent in
writing, setting forth the action to so be

-5-
<PAGE>

taken, shall be signed before or after such action by all of the
directors, or all of the members of a committee thereof, as the case
may be. Such written consent shall be filed with the records of the
association.

Section 4.3. Participation by Telephone. One or more directors
may participate in a meeting of the board of directors, of a committee of
the board, or of the shareholders, by means of conference telephone or
similar communications equipment by means of which all persons
participating in the meeting can hear each other. Participation in
this manner shall constitute presence in person at such meeting.

ARTICLE V

OFFICERS AND EMPLOYEES

Section 5.1. Officers. The officers of the association shall consist
of a chairman, a president, one or more vice chairmen, one or more
executive vice presidents, one or more senior vice presidents, one or
more vice presidents, a secretary, an auditor and such other officers
as may be appropriate for the prompt and orderly transaction of the
business of the association. Any officer may hold more than one
office, except that the chairman and president may not also serve as
secretary. The chairman, the president, any vice chairman, and the
auditor shall be elected annually by the board of directors to serve
for one year and until his successor is elected and qualifies. All
other officers shall be appointed to hold office during the pleasure
of the board, which may in its discretion delegate the authority to
appoint and remove any officer or officers (other than the auditor)
below the ranks of president and vice chairman.

Section 5.2. Chairman. The chairman shall preside or designate the
presiding officer at all meetings of the board of directors and
shareholders. The chairman shall be the chief executive officer of
the association unless otherwise designated by the board, and may have
and exercise such further powers and duties as from time to time may
be conferred upon or assigned to the chairman by the board of
directors. The chairman may establish advisory committees for any
branch, region, or division of the association to advise on the
affairs of such branch, region, or division; provided that such
advisory committee members shall not attend meetings of the board of
directors or any committee thereof, and shall not participate in the
management of the association. If at any time the office of chairman
shall be vacant, the powers and duties of that office shall devolve
upon the president; if the office of president shall be vacant, the
powers and duties of that office shall devolve upon the chairman; and
if the office of the chairman and president are vacant, the board
shall designate one or more officers of the association to perform the
duties of chairman until such time as a new chairman is appointed.

Section 5.3. President. The president shall have general executive
powers and may also have and exercise such further powers and duties
as may be conferred upon or assigned by the board or the chairman.

-6-
<PAGE>

Section 5.4. Vice Chairman. Each Vice Chairman shall perform such
duties as may be assigned from time to time by the board of directors
or the chairman.

Section 5.5. Secretary. The secretary of the
association, or other designated officer of the association, shall
keep accurate minutes of all meetings of the board of directors; shall
attend to the giving of all notices required by these bylaws; shall be
custodian of the corporate seal, records, documents and papers of the
association; shall provide for the keeping of proper records of all
transactions of the association; shall have and may exercise any and
all other powers and duties pertaining by law, regulation or practice,
or imposed by the bylaws; and shall also perform such other duties as
may be assigned from time to time, by the board of directors or the
chairman.
Section 5.6. Auditor. The general auditor of the association, or his
designee, shall be the officer in charge of auditing. Said officer
shall be responsible for the conduct of a program of continuous audits
of the association and all of its departments and shall make, or cause
to be made, further examinations as he deems necessary or are required
from time to time by the responsible audit committee or the board.
Said officer shall report the results of audit activities periodically
to the responsible audit committee or the board.

Section 5.7. Other Officers. All other officers shall perform such
duties and exercise such powers as shall pertain to their respective
offices, or as shall be imposed by law, or as may be conferred upon,
or assigned to them by the board of directors or the chairman.

Section 5.8. Resignation. An officer may resign at any time by
delivering notice to the association. A resignation is effective when
the notice is given unless the notice specifies a later effective
date.
ARTICLE VI

SIGNING AUTHORITY

Section 6.1. Signing Authority. Each officer of this association,
excluding the auditor and each other officer whose primary duties are
auditing in nature, shall have authority for and on behalf of this
association to execute, deliver, sign and endorse checks, drafts,
pledges, certificates, receipts for money, warehouse receipts, bills
of lading or similar documents, contracts arising in the ordinary
course of the business of the association, bankers' acceptances made
by the association, commercial credits of the association, securities
and property received in trust or for deposit, proxies to vote stock
held by the association in any capacity, petitions, foreclosures and
other deeds, powers, leases, assignments, discharges, releases,
extensions, purchase agreements, conveyances, and other written
instruments pertaining to real estate or interest therein and, where
indicated, to affix the corporate seal of the association to any of
the foregoing; to guarantee and witness signatures upon securities,
documents or other written
-7-
<PAGE>

instruments; to purchase, sell, assign, pledge or transfer funds or
other securities of the association or within its control as a
fiduciary; and, subject to the approval of such officer or committee
as the board may designate, to accept trusts and appointments and to
execute trust indentures and any other instruments establishing trusts
or making appointments. Each officer at the level of senior vice
president or above, shall be empowered to authorize another person or
persons, whether or not such other person or persons are officers or
employees of the association, to sign or endorse any of the foregoing
documents on behalf of the association in a particular transaction;
but such officer shall by signed entry personally note the fact of
such authorization on the records of the association relating to such
transaction. The officer in charge of the international division of
the association, or in his absence his designee, shall be empowered to
authorize another person or persons, whether or not such other person
or persons are officers or employees of the association, to execute
documents and do such other acts and things as may be required in
connection with a particular loan or extension of credit, proceeding
before a court or other judicial or administrative body, or other
transaction; but such officer shall by signed entry personally note
the fact of such authorization on the records of the association
relating to such act or transaction. Any one officer at the level of
senior vice president or above shall have authority for and on behalf
of the association to borrow money. The chairman, the president, any
vice chairman, any executive vice president, and the senior vice
president or other officer in charge of investment administration or
such other officers as may be designated by the chairman may each,
acting singly, authorize borrowings and request advances from any
Federal Reserve Bank or any Federal Home Loan Bank, as the case may
be, and may agree with said bank upon appropriate terms and collateral
for such transactions. The officers and other employees of the
association shall have such further signature powers as may be
specified by the board of directors or by the chairman or his
designee.

ARTICLE VII

STOCK AND STOCK CERTIFICATES

Section 7.1. Transfers. Shares of stock shall be transferable on the
books of the association, and a transfer book shall be kept in which
all transfers of stock shall be recorded. Every person becoming a
shareholder by such transfer shall in proportion to his or her shares,
succeed to all rights of the prior holder of such shares. The board
of directors may impose conditions upon the transfer of the stock
reasonably calculated to simplify the work of the association with
respect to stock transfer, voting shareholder meetings, and related
matters and to protect it against fraudulent transfer.

Section 7.2. Stock Certificates. Certificates of stock
shall bear the signature of the chairman
or president (which may be engraved, printed or
impressed), and shall be signed manually or by facsimile process by
the secretary or assistant secretary, and the seal of the association
shall be engraved thereon. Each certificate shall recite on its face
that the stock represented thereby is transferable only upon the books
of the association properly endorsed.

-8-
<PAGE>
ARTICLE VIII
CORPORATE SEAL

Section 8. Corporate Seal. The board of directors shall provide a
seal for the association. The secretary shall have custody thereof
and may designate such other officers as may have counterparts.

ARTICLE IX
MISCELLANEOUS PROVISIONS

Section 9.1. Fiscal Year. The fiscal year of the association shall be
the calendar year.

Section 9.2. Records. The articles of association, the
bylaws and the proceedings of all meetings of the
shareholders, the board of directors, and standing committees of the
board, shall be recorded in appropriate minute books provided for that
purpose. The minutes of each meeting shall be signed by the secretary
or other officer appointed to act as secretary of the meeting.

ARTICLE X
BYLAWS

Section 10. Amendments. These bylaws may be altered, amended, or
added to or repealed by a vote of a majority of the members of the
board then in office at any meeting, provided that notice thereof
shall have been given in the notice of such meeting.
A true copy
Attest:

Andrea Turlo Assistant Secretary

Dated at Hartford, CT, as of February 24, 1994.

Revision of January 11, 1993
-9-
Comptroller of the Currency

<PAGE> EXHIBIT 5
CONSENT OF THE TRUSTEE REQUIRED BY SECTION 321(b)
OF THE TRUST INDENTURE ACT OF 1939

The undersigned, as Trustee under an Indenture entered
into between Pogo Producing Company and Shawmut Bank Connecticut,
National Association, Trustee, does hereby consent that, pursuant to
Section 321(b) of the Trust Indenture Act of 1939, reports of
examinations with respect to the undersigned by Federal, State,
Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon request
therefor.
SHAWMUT BANK CONNECTICUT,
NATIONAL ASSOCIATION,
Trustee

By /s/ PABLO DE LA CANAL
Pablo de la Canal
Corporate Trust Officer

Dated: February 23, 1994
<PAGE>
EXHIBIT 6
Federal Financial Institutions Examination Council

Board of Governors of the Federal Reserve System
OMB Number: 7100-0036
Federal Deposit Insurance Corporation
OMB Number: 3064-0052
Office of the Comptroller of the Currency
OMB Number: 1557-0081
Expires February 28,1995
- ------------------------------------------------------------------------------

[LOGO] Please refer to page i, / 1 /
Table of Contents,
for the required disclosure
of estimated burden.

CONSOLIDATED REPORTS OF CONDITION AND INCOME FOR
A BANK WITH DOMESTIC AND FOREIGN OFFICES--FFIEC 031

(931231)
REPORT AT THE CLOSE OF BUSINESS DECEMBER 30, 1993 -----------
(RCRI 9999)

This report is required by law: 12 U.S.C. Section 324 (State member
banks); 12 U.S.C. Section 1817 (State nonmember banks); and 12 U.S.C. Section
161 (National banks).

This report form is to be filed by banks with branches and consolidated
subsidiaries in U.S. territories and possessions, Edge or Agreement
subsidiaries, foreign branches, consolidated foreign subsidiaries, or
International Banking Facilities.

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

NOTE: The Reports of Condition and Income must be signed by an authorized
officer and the Report of Condition must be attested to by not less than two
directors (trustees) for State nonmember banks and three directors for State
member and National banks.

I, Romolo C. Santarosa, SVP and Controller
-----------------------------------------------------------
Name and Title of Officer Authorized to Sign Report

of the named bank do hereby declare that these Reports of Condition and
Income (including the supporting schedules) have been prepared in conformance
with the instructions issued by the appropriate Federal regulatory authority
and are true to the best of my knowledge and belief.

/S/ ROMOLO C. SANTAROSA
- --------------------------------------------------------------
Signature of Officer Authorized to Sign Report

January 31, 1994
- --------------------------------------------------------------
Date of Signature

The Reports of Condition and Income are to be prepared in accordance with
Federal regulatory authority instructions. NOTE: These instructions may in some
cases differ from generally accepted accounting principles.

We, the undersigned directors (trustees), attest to the correctness of
this Report of Condition (including the supporting schedules) and declare
that it has been examined by us and to the best of our knowledge and belief has
been prepared in conformance with the instructions issued by the appropriate
Federal regulatory authority and is true and correct.

/S/
- ------------------------------------------------------------
Director (Trustee)

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

FOR BANKS SUBMITTING HARD COPY REPORT FORMS:

STATE MEMBER BANKS: Return the original and one copy to the appropriate
Federal Reserve District Bank.

STATE NONMEMBER BANKS: Return the original only in the special return address
envelope provided. If express mail is used in lieu of the special return
address envelope, return the original only to the FDIC, c/o Quality Data
Systems, 2139 Espey Court, Crofton, MD 21114.

NATIONAL BANKS: Return the original only in the special return address
envelope provided. If express mail is used in lieu of the special return
address envelope, return the original only to the FDIC, c/o Quality Data
Systems, 2139 Espey Court, Crofton, MD 21114.

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

CALL NO. 186 31 12-31-93

CERT: 02499 10582 STBK 09-0590

SHAWMUT BANK CONNECTICUT,
NATIONAL ASSOCIATION
777 MAIN STREET
HARTFORD, CT 06115

Board of Governors of the Federal Reserve System, Federal Deposit Insurance
Corporation, Office of the Comptroller of the Currency
<PAGE>
FFIEC 031
Page i
Consolidated Reports of Condition and Income for /2/
A Bank With Domestic and Foreign Offices
- --------------------------------------------------------------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
SIGNATURE PAGE COVER
<S> <C>
REPORT OF INCOME
Schedule RI--Income Statment.................. RI-1,2,3
Schedule RI-A--Changes in Equity Capital...... RI-3
Schedule RI-B--Charge-offs and Recoveries and
Changes in Allowance for Loan and Lease
Losses...................................... RI-4,5
Schedule RI-C--Applicable Income Taxes by
Taxing Authority............................ RI-5
Schedule RI-D--Income from
International Operations.................... RI-6
Schedule RI-E--Explanations................... RI-7,8
</TABLE>

Disclosure of Estimated Burden

The estimated average burden associated with this information collection is 29.2
hours per respondent and is estimated to vary from 14.6 to 150 hours per
response, depending on individual circumstances. Burden estimates include the
time for reviewing instructions, gathering and maintaining data in the required
form, and completing the information collection, but exclude the time for
compiling and maintaining business records in the normal course of a
respondent's activities. Comments concerning the accuracy of this burden
estimate and suggestions for reducing this burden should be directed to the
Office of Information and Regulatory Affairs, Office of Management and Budget,
Washington, D.C. 20503, and to one of the following:

Secretary
Board of Governors of the Federal Reserve System
Washington, D.C. 20551

Legislative and Regulatory Analysis Division
Office of the Comptroller of the Currency
Washington, D.C. 20219

Assistant Executive Secretary
Federal Deposit Insurance Corporation
Washington, D.C. 20429
<PAGE>
<TABLE>
<CAPTION>
REPORT OF CONDITION
<S> <C>
Schedule RC--Balance Sheet.................... RC-1,2
Schedule RC-A--Cash and Balances Due From
Depository Institutions..................... RC-3
Schedule RC-B--Securities..................... RC-4,5
Schedule RC-C--Loans and Lease Financing
Receivables:
Part I. Loans and Leases.................. RC-6,7
Part II. Loans to Small Businesses and
Small Farms (included in the forms for
June 30 only).......................... RC-7a,7b
Schedule RC-D--Assets Held in Trading Accounts
in Domestic Offices Only (to be completed
only by banks with $1 billion or more in
total assets)............................... RC-8
Schedule RC-E--Deposit Liabilities............ RC-9,10
Schedule RC-F--Other Assets................... RC-11
Schedule RC-G--Other Liabilities.............. RC-11
Schedule RC-H--Selected Balance Sheet Items
for Domestic Offices........................ RC-12
Schedule RC-I--Selected Assets and Liabilities
of IBFs..................................... RC-12
Schedule RC-K--Quarterly Averages............. RC-13
Schedule RC-L--Off-Balance Sheet Items........ RC-14,15
Schedule RC-M--Memoranda...................... RC-16,17
Schedule RC-N--Past Due and Nonaccrual Loans,
Leases, and Other Assets.................... RC-18,19
Schedule RC-O--Other Data for Deposit
Insurance Assessments....................... RC-19,20
Schedule RC-R--Risk-Based Capital............. RC-21,22
Optional Narrative Statement Concerning the
Amounts Reported in the Reports of
Condition and Income........................ RC-23
Special Report (TO BE COMPLETED BY ALL BANKS)
Schedule RC-J--Repricing Opportunities
(sent only to and to be completed only by
savings banks)
</TABLE>

For information or assistance, national and state nonmember banks should contact
the FDIC's Call Reports Analysis Unit, 550 17th Street, NW, Washington, D.C.
20429, toll free on (800) 688-FDIC (3342), Monday through Friday between 8:00
a.m. and 5:00 p.m., Eastern time. State member banks should contact their
Federal Reserve District Bank.

<TABLE>
<S> <C> <C> <C> <C> <C>
Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 9/30/93 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RI-1
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
-----------
</TABLE>

Consolidated Report of Income
for the period January 1, 1993-September 30, 1993

All Report of Income schedules are to be reported on a calendar
year-to-date basis in thousands of dollars.

Schedule RI--Income Statement

<TABLE>
<CAPTION>
1480 <-
------------
Dollar Amounts in Thousands RIAD Bil Mil Thou
- --------------------------------------------------------------------------------------- ----- ------------
<S> <C> <C>
1. Interest income: ///////////////////
a. Interest and fee income on loans: ///////////////////
(1) In domestic offices: ///////////////////
(a) Loans secured by real estate............................................ 4011 336,044 1.a.(1)(a)
(b) Loans to depository institutions........................................ 4019 164 1.a.(1)(b)
(c) Loans to finance agricultural production and other loans to farmers..... 4024 173 1.a.(1)(c)
(d) Commercial and industrial loans......................................... 4012 142,406 1.a.(1)(d)
(e) Acceptances of other banks.............................................. 4026 8 1.a.(1)(e)
(f) Loans to individuals for household, family, and other personal ///////////////////
expenditures: ///////////////////
(1) Credit cards and related plans....................................... 4054 3,591 1.a.(1)(f)(1)
(2) Other................................................................ 4055 26,626 1.a.(1)(f)(2)
(g) Loans to foreign governments and official institutions.................. 4056 0 1.a.(1)(g)
(h) Obligations (other than securities and leases) of states and political ///////////////////
subdivisions in the U.S.: ///////////////////
(1) Taxable obligations................................................. 4503 17 1.a.(1)(h)(1)
(2) Tax-exempt obligations.............................................. 4504 3,362 1.a.(1)(h)(2)
(i) All other loans in domestic offices..................................... 4058 19,530 1.a.(1)(i)
2. In foreign offices, Edge and Agreement subsidiaries, and IBFs...................... 4059 0 1.a.(2)
b. Income from lease financing receivables: ///////////////////
(1) Taxable leases.............................................................. 4505 32 1.b.(1)
(2) Tax-exempt leases........................................................... 4307 0 1.b.(2)
c. Interest income on balances due from depository institutions:(1) ///////////////////
(1) In domestic offices......................................................... 4105 141 1.c.(1)
(2) In foreign offices, Edge and Agreement subsidiaries, and IBFs............... 4106 0 1.c.(2)
d. Interest and dividend income on securities: ///////////////////
(1) U.S. Treasury securities and U.S. Government agency and corporation ///////////////////
obligations................................................................. 4027 182,360 1.d.(1)
(2) Securities issued by states and political subdivisions in the U.S.: ///////////////////
(a) Taxable securities...................................................... 4506 0 1.d.(2)(a)
(b) Tax-exempt securities................................................... 4507 50 1.d.(2)(b)
(3) Other domestic debt securities.............................................. 3657 46,193 1.d.(3)
(4) Foreign debt securities..................................................... 3658 196 1.d.(4)
(5) Equity securities (including investments in mutual funds)................... 3659 1,400 1.d.(5)
e. Interest income from assets held in trading accounts............................. 4069 0 1.e.
</TABLE>
- -------------
(1) Includes interest income on time certificates on deposit not held in
trading accounts.

3
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 12/31/93 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RI-2
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
-----------
</TABLE>

Schedule RI--Continued

Dollar Amounts in Thousands Year-to-date
- ---------------------------------------------------------------- ------------
<S> <C> <C> <C> <C> <C>
1. Interest Income (continued) RIAD Bil Mil Thou
---- ------------
f. Interest income on federal funds sold and securities //////////////////
purchased under agreements to resell in domestic offices //////////////////
of the bank and of its Edge and Agreement subsidiaries, //////////////////
and in IBFs............................................. 4020 11,211 1.f.
g. Total interest income (sum of items 1.a through 1.f).... 4107 773,504 1.g.
2. Interest expense: //////////////////
a. Interest on deposits: //////////////////
(1) Interest on deposits in domestic offices: //////////////////
(a) Transaction accounts (NOW accounts, ATS //////////////////
accounts, and telephone and preauthorized //////////////////
transfer accounts).............................. 4508 12,644 2.a.(1)(a)
(b) Nontransaction accounts: //////////////////
(1) Money market deposit accounts (MMDAs)....... 4509 12,410 2.a.(1)(b)(1)
(2) Other savings deposits...................... 4511 41,316 2.a.(1)(b)(2)
(3) Time certificates of deposit of $100,000 //////////////////
or more..................................... 4174 23,002 2.a.(1)(b)(3)
(4) All other time deposits..................... 4512 68,330 2.a.(1)(b)(4)
(2) Interest on deposits in foreign offices, Edge and //////////////////
Agreement subsidiaries, and IBFs.................... 4172 4,338 2.a.(2)
b. Expense of federal funds purchased and securities sold //////////////////
under agreements to repurchase in domestic offices of //////////////////
the bank and of its Edge and Agreement subsidiaries, //////////////////
and in IBFs............................................. 4180 96,690 2.b.
c. Interest on demand notes issued to the U.S. Treasury //////////////////
and on other borrowed money............................. 4185 4,322 2.c.
d. Interest on mortgage indebtedness and obligations under //////////////////
capitalized leases...................................... 4072 888 2.d.
e. Interest on subordinated notes and debentures........... 4200 0 2.e.
f. Total interest income (sum of items 2.a through 2.e).... 4073 263,940 2.f.
3. Net interest income (item 1.g minus 2.f)................... ////////////////// RIAD 4074 509,564 3.
4. Provisions: //////////////////
a. Provision for loan and lease losses..................... ////////////////// RIAD 4230 78,268 4.a.
b. Provision for allocated transfer risk................... ////////////////// RIAD 4243 0 4.b.
5. Noninterest income: //////////////////
a. Income from fiduciary activities........................ 4070 72,197 5.a.
b. Service charges on deposit accounts in domestic //////////////////
offices................................................. 4080 67,148 5.b.
c. Trading gains (losses) and fees from foreign exchange //////////////////
transactions............................................ 4075 1,904 5.c.
d. Other foreign transaction gains (losses)................ 4076 0 5.d.
e. Gains (losses) and fees from assets held in trading //////////////////
accounts................................................ 4077 2,796 5.e.
f. Other noninterest income: //////////////////
(1) Other fee income.................................... 5407 42,705 5.f.(1)
(2) All other noninterest income*....................... 5408 91,646 5.f.(2)
g. Total noninterest income (sum of items 5.a through //////////////////
5.f).................................................... ////////////////// RIAD 4079 278,396 5.g.
6. Gains (losses) on securities not held in trading //////////////////
accounts................................................... ////////////////// RIAD 4091 (12,428) 6.
7. Noninterest expense: //////////////////
a. Salaries and employee benefits.......................... 4135 271,794 7.a.
b. Expenses of premises and fixed assets (net of rental //////////////////
income) (excluding salaries and employee benefits and //////////////////
mortgage interest)...................................... 4217 84,244 7.b.
c. Other noninterest expense*.............................. 4092 269,565 7.c.
d. Total noninterest expense (sum of items 7.a through //////////////////
7.c).................................................... ////////////////// RIAD 4093 625,603 7.d.
8. Income (loss) before income taxes and extraordinary items //////////////////
and other adjustments (item 3 plus or minus items 4.a, 4.b, //////////////////
5.g, 6, and 7.d)........................................... ////////////////// RIAD 4301 71,661 8.
9. Applicable income taxes (on item 8)........................ ////////////////// RIAD 4302 (14,895) 9.
10. Income (loss) before extraordinary items and other //////////////////
adjustments (item 8 minus 9)............................... ////////////////// RIAD 4300 86,556 10.
</TABLE>

- ---------------
* Describe on Schedule RI-E--Explanations.
4
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 12/31/93 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RI-3
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
-----------
</TABLE>

Schedule RI--Continued

<TABLE>
<CAPTION>
Year-to-date
------------
Dollar Amounts in Thousands RIAD Bil Mil Thou
- -------------------------------------------------------------------------- ----- ------------
<S> <C> <C> <C> <C>
1. Extraordinary items and other adjustments: ///////////////////
a. Extraordinary items and other adjustments, gross of income taxes*. 4310 31,011 11.a.
b. Applicable income taxes (on item 11.a)*........................... 4315 (1,750) 11.b.
c. Extraordinary items and other adjustments, net of income taxes ///////////////////
(item 11.a minus 11.b)............................................ /////////////////// RIAD 4320 32,761 11.c.
2. Net income (loss) (sum of items 10 and 11.c)......................... /////////////////// RIAD 4340 119,317 12.
</TABLE>

Memoranda

<TABLE>
<CAPTION>
Year-to-date
------------
Dollar Amounts in Thousands RIAD Bil Mil Thou
- ------------------------------------------------------------------------------------------------- ----- ------------
<S> <C> <C>
1. Interest expense incurred to carry tax-exempt securities, loans, and leases acquired after ///////////////////
August 7, 1986, that is not deductible for federal income tax purposes...................... 4513 10 M.1.
2. Not applicable.............................................................................. ///////////////////
3. Estimated foreign tax credit included in applicable income taxes, items 9 and 11.b above.... 4309 0 M.3.
4. To be completed only by banks with $1 billion or more in total assets: ///////////////////
Taxable equivalent adjustment to "Income (loss) before income taxes and extraordinary ///////////////////
items and other adjustments" (item 8 above)................................................. 1244 2,165 M.4.
5. Number of full-time equivalent employees on payroll at end of current period (round to //// Number
nearest whole number)....................................................................... 4150 5,935 M.5.
</TABLE>

Schedule RI-A--Changes in Equity Capital
Indicate decreases and losses in parentheses.
<TABLE>
<CAPTION>
I483 <-
------------
Dollar Amounts in Thousands RIAD Bil Mil Thou
- ------------------------------------------------------------------------------------------------- ----- ------------
<S> <C> <C>
1. Total equity capital originally reported in the December 31, 1992, Reports of Condition ///////////////////
and Income.................................................................................. 3215 880,908 1.
2. Equity capital adjustments from amended Reports of Income, net*............................. 3216 0 2.
3. Amended balance end of previous calendar year (sum of items 1 and 2)........................ 3217 880,908 3.
4. Net income (loss) (must equal Schedule RI, item 12)......................................... 4340 119,317 4.
5. Sale, conversion, acquisition, or retirement of capital stock, net.......................... 4346 0 5.
6. Changes incident to business combinations, net.............................................. 4356 43,729 6.
7. LESS: Cash dividends declared on preferred stock............................................ 4470 0 7.
8. LESS: Cash dividends declared on common stock............................................... 4460 0 8.
9. Cumulative effect of changes in accounting principles from prior years* (see instructions ///////////////////
for this schedule).......................................................................... 4411 0 9.
10. Corrections of material accounting errors from prior years* (see instructions for this ///////////////////
schedule).................................................................................... 4412 0 10.
11. Change in net unrealized loss on marketable equity securities................................ 4413 1,372 11.
12. Foreign currency translation adjustments..................................................... 4414 0 12.
13. Other transactions with parent holding company* (not included in items 5, 7, or 8 above)..... 4415 86,300 13.
14. Total equity capital end of current period (sum of items 3 through 13) (must equal Schedule ///////////////////
RC, item 28)................................................................................. 3210 1,131,626 14.
</TABLE>
- ---------------
* Describe on Schedule RI-E--Explanations.

5
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 12/3/93 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RI-4
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
-----------
</TABLE>

Schedule RI-B--Charge-offs and Recoveries and Changes
in Allowance for Loan and Lease Losses

Part I. Charge-Offs and Recoveries on Loans and Leases

Part I excludes charge-offs and recoveries through
the allocated transfer risk reserve.

<TABLE>
<CAPTION>
I486 <-
(Column A) (Column B)
Charge-offs Recoveries
-------------------- --------------------
calendar year-to-date
--------------------------------------------
Dollar Amounts in Thousands RIAD Bil Mil Thou RIAD Bil Mil Thou
- -------------------------------------------------------------------- ----- ------------ ----- ------------
<S> <C> <C> <C>
1. Loans secured by real estate: /////////////////// ///////////////////
a. To U.S. addressees (domicile)............................... 4651 116,676 4661 11,848 1.a.
b. To non-U.S. addressees (domicile)........................... 4652 0 4662 0 1.b.
2. Loans to depository institutions and acceptances of other /////////////////// ///////////////////
banks: /////////////////// ///////////////////
a. To U.S. banks and other U.S. depository institutions........ 4653 197 4663 450 2.a.
b. To foreign banks............................................ 4654 0 4664 0 2.b.
3. Loans to finance agricultural production and other loans to /////////////////// ///////////////////
farmers........................................................ 4655 104 4665 92 3.
4. Commercial and industrial loans: /////////////////// ///////////////////
a. To U.S. addressees (domicile)............................... 4645 27,921 4617 10,125 4.a.
b. To non-U.S. addressees (domicile)........................... 4646 0 4618 0 4.b.
5. Loans to individuals for household, family, and other personal /////////////////// ///////////////////
expenditures: /////////////////// ///////////////////
a. Credit cards and related plans.............................. 4656 1,472 4666 416 5.a.
b. Other (includes single payment, installment, and all student /////////////////// ///////////////////
loans)...................................................... 4657 5,016 4667 2,435 5.b.
6. Loans to foreign governments and official institutions......... 4643 0 4627 0 6.
7. All other loans................................................ 4644 2,101 4628 553 7.
8. Lease financing receivables: /////////////////// ///////////////////
a. Of U.S. addressees (domicile)............................... 4658 0 4668 0 8.a.
b. Of non-U.S. addressees (domicile)........................... 4659 0 4669 0 8.b.
9. Total (sum of items 1 through 8)............................... 4635 153,487 4605 25,919 9.
</TABLE>

<TABLE>
<CAPTION>
Cumulative Cumulative
Charge-offs Recoveries
Jan. 1, 1986 Jan. 1, 1986
Memoranda through through
Dollar Amounts in Thousands Dec. 31, 1989 Report Date
- --------------------------------------------------------------------- ------------------- -------------------
To be completed by national banks only. RIAD Bil Mil Thou RIAD Bil Mil Thou
---- ------------ ---- ------------
<S> <C> <C> <C>
1. Charge-offs and recoveries of Special-Category Loans, as defined /////////////////// ///////////////////
for this Call Report by the Comptroller of the Currency.......... /////////////////// 4784 513 M.1.
</TABLE>

<TABLE>
<CAPTION>
(Column A) (Column B)
Memorandum items 2 and 3 are to be completed by all banks. Charge-offs Recoveries
-------------------------------------------
calendar year-to-date
-------------------------------------------
RIAD Bil Mil Thou RIAD Bil Mil Thou
---- ------------ ---- ------------
<S> <C> <C> <C>
2. Loans to finance commercial real estate, construction, and land /////////////////// ///////////////////
development activities (not secured by real estate) included in /////////////////// ///////////////////
Schedule RI-B, part I, items 4 and 7, above..................... 5409 6,525 5410 2,499 M.2.
3. Loans secured by real estate in domestic offices (included in /////////////////// ///////////////////
Schedule RI-B, part I, item 1, above): /////////////////// ///////////////////
a. Construction and land development............................ 3582 24,028 3583 3,576 M.3.a.
b. Secured by farmland.......................................... 3584 249 3585 0 M.3.b.
c. Secured by 1-4 family residential properties: /////////////////// ///////////////////
(1) Revolving, open-end loans secured by 1-4 family residential /////////////////// ///////////////////
properties and extended under lines of credit............. 5411 2,635 5412 217 M.3.c.(1)
(2) All other loans secured by 1-4 family residential /////////////////// ///////////////////
properties............................................... 5413 19,992 5414 2,379 M.3.c.(2)
d. Secured by multifamily (5 or more) residential properties.... 3588 5,853 3589 1,035 M.3.d.
e. Secured by nonfarm nonresidential properties................. 3590 63,917 3591 4,641 M.3.e.
</TABLE>

6
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 12/31/93 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RI-5
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
-----------
</TABLE>

Schedule RI-B--Continued

Part II. Changes in Allowance for Loan and Lease Losses and in Allocated
Transfer Risk Reserve

<TABLE>
<CAPTION>
(Column A) (Column B)
Allowance for Allocated
Loan and Lease Transfer Risk
Losses Reserve
------------------- --------------------
Dollar Amounts in Thousands RIAD Bil Mil Thou RIAD Bil Mil Thou
- --------------------------------------------------------------------------- ---- ------------ ---- -------------
<S> <C> <C> <C>
Balance originally reported in the December 31, 1992, Reports of /////////////////// ////////////////////
Condition and Income....................................................... 3124 400,200 3131 0 1.
Recoveries (column A must equal part I, item 9, column B above)............ 4605 25,919 3132 0 2.
LESS: Charge-offs (column A must equal part I, item 9, column A above)..... 4635 153,487 3133 0 3.
Provision (column A must equal Schedule RI, item 4.a; column B must /////////////////// ////////////////////
equal Schedule RI, item 4.b)............................................... 4230 78,268 4243 0 4.
Adjustments* (see instructions for this schedule).......................... 4815 0 3134 0 5.
Balance end of current period (sum of items 1 through 5) (column A must /////////////////// ////////////////////
equal Schedule RC, item 4.b; column B must equal Schedule RC, /////////////////// ////////////////////
item 4.c).................................................................. 3123 350,900 3128 0 6.
</TABLE>

- ---------------
* Describe on Schedule RI-E--Explanations.

Schedule RI-C--Applicable Income Taxes by Taxing Authority

Schedule RI-C is to be reported with the December Report of Income.

<TABLE>
<CAPTION>
I489 <-
-------------
Dollar Amounts in Thousands RIAD Bil Mil Thou
- --------------------------------------------------------------------------------------------------- ---- -------------
<S> <C> <C>
1. Federal......................................................................................... 4780 (16,268) 1.
2. State and local................................................................................. 4790 (377) 2.
3. Foreign......................................................................................... 4795 0 3.
4. Total (sum of items 1 through 3) (must equal sum of Schedule RI, items 9 and 11.b).............. 4770 (16,645) 4.
5. Deferred portion of item 4.................................................. RIAD 4772 24,264 //////////////////// 5.
</TABLE>

7
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 12/31/93 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RI-6
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
-----------
</TABLE>

Schedule RI-D--Income from International Operations

For all banks with foreign offices, Edge or Agreement subsidiaries, or IBFs
where international operations account for more than 10 percent of total
revenues, total assets, or net income.

Part I. Estimated Income from International Operations

<TABLE>
<CAPTION>
1492 <-
-------------
Year-to-Date
-------------
Dollar Amounts in Thousands RIAD Bil Mil Thou
- --------------------------------------------------------------------------------------- ---- -------------
<S> <C> <C>
1. Interest income and expense booked at foreign offices, Edge and Agreement subsidiaries, /////////////////////
and IBFs: /////////////////////
a. Interest income booked.............................................................. 4837 N/A 1.a.
b. Interest expense booked............................................................. 4838 N/A 1.b.
c. Net interest income booked at foreign offices, Edge and Agreement subsidiaries, and /////////////////////
IBFs (item 1.a minus 1.b)........................................................... 4839 N/A 1.c
2. Adjustments for booking location of international operations: /////////////////////
a. Net interest income attributable to international operations booked at domestic /////////////////////
offices.............................................................................. 4840 N/A 2.a.
b. Net interest income attributable to domestic business booked at foreign offices..... 4841 N/A 2.b.
c. Net booking location adjustment (item 2.a minus 2.b)................................ 4842 N/A 2.c.
3. Noninterest income and expense attributable to international operations: /////////////////////
a. Noninterest income attributable to international operations......................... 4097 N/A 3.a.
b. Provision for loan and lease losses attributable to international operations........ 4235 N/A 3.b.
c. Other noninterest expense attributable to international operations.................. 4239 N/A 3.c.
d. Net noninterest income (expense) attributable to international operations (item 3.a. /////////////////////
minus 3.b. and 3.c)................................................................ 4843 N/A 3.d.
4. Estimated pretax income attributable to international operations before capital /////////////////////
allocation adjustment (sum of items 1.c, 2.c, and 3.d)................................ 4844 N/A 4.
5. Adjustment to pretax income for internal allocations to international operations to /////////////////////
reflect the effects of equity capital on overall bank funding costs................... 4845 N/A 5.
6. Estimated pretax income attributable to international operations after capital /////////////////////
allocation adjustment (sum of items 4 and 5).......................................... 4846 N/A 6.
7. Income taxes attributable to income from international operations as estimated in /////////////////////
item 6................................................................................ 4797 N/A 7.
8. Estimated net income attributable to international operations (item 6 minus 7)........ 4341 N/A 8.
</TABLE>

Memoranda

<TABLE>
<CAPTION>
Dollar Amounts in Thousands RIAD Bil Mil Thou
- --------------------------------------------------------------------------------------- ---- -------------
<S> <C> <C>
1. Intracompany interest income included in item 1.a above............................. 4847 N/A M.1.
2. Intracompany interest expense included in item 1.b above............................ 4848 N/A M.2.
</TABLE>

Part II. Supplementary Details on Income from International Operations Required
by the Departments of Commerce and Treasury for Purposes of the U.S.
International Accounts and the U.S. National Income and Product Accounts

<TABLE>
<CAPTION>
Year-to-Date
-------------
Dollar Amounts in Thousands RIAD Bil Mil Thou
- --------------------------------------------------------------------------------------- ---- -------------
<S> <C> <C>
1. Interest income booked at IBFs...................................................... 4849 N/A 1.
2. Interest expense booked at IBFs..................................................... 4850 N/A 2.
3. Noninterest income attributable to international operations booked at domestic /////////////////////
offices (excluding IBFs): /////////////////////
a. Gains (losses) and extraordinary items............................................ 5491 N/A 3.a
b. Fees and other noninterest income................................................. 5492 N/A 3.b.
4. Provision for loan and lease losses attributable to international operations booked /////////////////////
at domestic offices (excluding IBFs)................................................. 4852 N/A 4.
5. Other noninterest expense attributable to international operations booked at /////////////////////
domestic offices (excluding (IBFs).................................................... 4853 N/A 5.
</TABLE>

8
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 12/31/93 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RI-7
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
-----------
</TABLE>

Schedule RI-E--Explanations

Schedule RI-E is to be completed each quarter on a calendar year-to-date basis.

Detail all adjustments in Schedules RI-A and RI-B, all extraordinary items and
other adjustments in Schedule RI, and all significant items of other noninterest
income and other noninterest expense in Schedule RI. (See instructions for
details.)

<TABLE>
<CAPTION>
I495 <-
--------
Year-to-date
-------------
Dollar Amounts in Thousands RIAD Bil Mil Thou
- ---------------------------------------------------------------------------------------------- ---- -------------
<S> <C> <C>
1. All other noninterest income (from Schedule RI, item 5.f.(2)) ////////////////////
Report amounts that exceed 10% of Schedule RI, item 5.f.(2): ////////////////////
a. Net gains on other real estate owned................................................. 5415 0 1.a.
b. Net gains on sales of loans.......................................................... 5416 25,413 1.b.
c. Net gains on sales of premises and fixed assets...................................... 5417 0 1.c.
Itemize and describe the three largest other amounts that exceed 10% of ////////////////////
Schedule RI, item 5.f.(2): ////////////////////
d. TEXT 4461 OPERATING EXPENSE CHARGEBACK TO AFFILIATES 4461 55,698 1.d.
e. TEXT 4462 FORECLOSED PROPERTIES RENTAL INCOME 4462 9,660 1.e.
f. TEXT 4463 4463 1.f.
2. Other noninterest expense (from Schedule RI, item 7.c): ////////////////////
a. Amortization expense of intangible assets............................................ 4531 12,072 2.a.
Report amounts that exceed 10% of Schedule RI, item 7.c: ////////////////////
b. Net losses on other real estate owned................................................ 5418 46,116 2.b.
c. Net losses on sales of loans......................................................... 5419 0 2.c.
d. Net losses on sales of premises and fixed assets..................................... 5420 0 2.d.
Itemize and describe the three largest other amounts that exceed 10% ////////////////////
of Schedule RI, item 7.c: ////////////////////
e. TEXT 4464 4464 2.e.
f. TEXT 4467 4467 2.f.
g. TEXT 4468 4468 2.g.
3. Extraordinary items and other adjustments (from Schedule RI, item 11.a) and ////////////////////
applicable income tax effect (from Schedule RI, item 11.b) (itemize and describe ////////////////////
all extraordinary items and other adjustments): ////////////////////
a. (1) TEXT 6440 Effect of adopting FASB Statement No. 109, "Accounting for Income ////////////////////
Taxes" 6440 36,061 3.a.(1)
(2) Applicable income tax effect RIAD 4486 0 //////////////////// 3.a.(2)
b. (1) TEXT 4487 Cumulative effect of adoption of FASB 112 4487 (5,050) 3.b.(1)
(2) Applicable income tax effect RIAD 4488 //////////////////// 3.b.(2)
c. (1) TEXT 4489 4489 3.c.(1)
(2) Applicable income tax effect RIAD 4491 //////////////////// 3.c.(2)
4. Equity capital adjustments from amended Reports of Income (from Schedule RI-A, ////////////////////
item 2) (itemize and describe all adjustments): ////////////////////
a. TEXT 4492 4492 4.a.
b. TEXT 4493 4493 4.b.
5. Cumulative effect of changes in accounting principles from prior years (from ////////////////////
Schedule RI-A, item 9) (itemize and describe all changes in accounting principles): ////////////////////
a. TEXT 4494 4494 5.a.
b. TEXT 4495 4495 5.b.
6. Corrections of material accounting errors from prior years (from Schedule RI-A, ////////////////////
item 10) (itemize and describe all corrections): ////////////////////
a. TEXT 4496 4496 6.a.
b. TEXT 4497 4497 6.b.

</TABLE>

9
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 12/31/93 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RI-8
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
-----------
</TABLE>

Schedule RI-E--Continued

<TABLE>
<CAPTION>
Year-to-date
------------
Dollar Amounts in Thousands RIAD Bil Mil Thou
- -------------------------------------------------------------------------------------- ----- ------------
<S> <C> <C>
7. Other transactions with parent holding company (from Schedule RI-A, item 13) //////////////////
(itemize and describe all such transactions): //////////////////
a. TEXT 4498 CAPITAL CONTRIBUTION FROM THE PARENT COMPANY 4498 86,300 7.a.
b. TEXT 4499 4499 7.b.
8. Adjustments to allowance for loan and lease losses (from Schedule RI-B, part II, //////////////////
item 5) (itemize and describe all adjustments): //////////////////
a. TEXT 4521 4521 8.a.
b. TEXT 4522 4522 8.b.
--------------------
9. Other explanations (the space below is provided for the bank to briefly describe, I498 I499 <-
at its option, any other significant items affecting the Report of Income):
No comment / / (RIAD 4769)
Other explanations (please type or print clearly):
(TEXT 4769)
</TABLE>

10
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 12/31/93 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-1
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
-----------
</TABLE>

Consolidated Report of Condition for Insured Commercial
and State-Chartered Savings Banks for September 30, 1993

All schedules are to be reported in thousands of dollars. Unless
otherwise indicated, report the amount outstanding as of the last business day
of the quarter.

Schedule RC--Balance Sheet

C400 <-
------------
Dollars Amounts in Thousands RCFD Bil Mil Thou
- ---------------------------------------------------------------------------------------------- ---- ------------
<S> <C> <C>
ASSETS ////////////////////
1. Cash and balances due from depository institutions (from Schedule RC-A): ////////////////////
a. Noninterest-bearing balances and currency and coin(1).................................. 0081 934,562 1.a.
b. Interest-bearing balances(2)........................................................... 0071 0 1.b.
2. Securities (from Schedule RC-B)........................................................... 0390 4,856,073 2.
3. Federal funds sold and securities purchased under agreements to resell in domestic offices ////////////////////
of the bank and of its Edge and Agreement subsidiaries, and in IBFs: ////////////////////
a. Federal funds sold..................................................................... 0276 0 3.a.
b. Securities purchased under agreements to resell........................................ 0277 0 3.b.
4. Loans and lease financing receivables: ////////////////////
a. Loans and leases, net of unearned income (from Schedule ////////////////////
RC-C)......................................................... RCFD 2122 7,535,968 //////////////////// 4.a.
b. LESS: Allowance for loan and lease losses..................... RCFD 3123 359,000 //////////////////// 4.b.
c. LESS: Allocated transfer risk reserve......................... RCFD 3128 0 //////////////////// 4.c.
d. Loans and leases, net of unearned income, ////////////////////
allowance, and reserve (item 4.a minus 4.b and 4.c).................................... 2125 7,834,389 4.d.
5. Assets held in trading accounts........................................................... 2146 0 5.
6. Premises and fixed assets (including capitalized leases).................................. 2145 168,724 6.
7. Other real estate owned (from Schedule RC-M).............................................. 2150 27,827 7.
8. Investments in unconsolidated subsidiaries and associated companies (from Schedule ////////////////////
RC-M)..................................................................................... 2130 0 8.
9. Customers' liability to this bank on acceptances outstanding.............................. 2155 30,676 9.
10. Intangible assets (from Schedule RC-M).................................................... 2143 73,719 10.
11. Other assets (from Schedule RC-F)......................................................... 2160 582,139 11.
12. Total assets (sum of items 1 through 11).................................................. 2170 14,508,109 12.
</TABLE>

- ---------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held in trading accounts.

11
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 12/31/93 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-2
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
-----------
</TABLE>

Schedule RC--Continued

<TABLE>
<CAPTION>
Dollar Amounts in Thousands ///////// Bil Mil Thou
- ----------------------------------------------------------------------------------------- ---------- ------------
<S> <C> <C>
LIABILITIES ///////////////////////
13. Deposits: ///////////////////////
a. In domestic offices (sum of totals of columns A and C from Schedule RC-E, ///////////////////////
part I).......................................................................... RCON 2200 8,134,364 13.a.
(1) Noninterest-bearing(1)..................................RCON 6631 2,878,991 /////////////////////// 13.a.(1)
(2) Interest-bearing........................................RCON 6636 5,255,373 /////////////////////// 13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule ///////////////////////
RC-E, part II)................................................................... RCFN 2200 280,241 13.b.
(1) Noninterest-bearing......................................RCFN 6631 0 /////////////////////// 13.b.(1)
(2) Interest-bearing.........................................RCFN 6636 280,241 /////////////////////// 13.b.(2)
14. Federal funds purchased and securities sold under agreements to repurchase in ///////////////////////
domestic offices of the bank and of its Edge and Agreement subsidiaries, and ///////////////////////
in IBFs: ///////////////////////
a. Federal funds purchased.......................................................... RCFD 0278 862,958 14.a.
b. Securities sold under agreements to repurchase................................... RCFD 0279 3,536,716 14.b.
15. Demand notes issued to the U.S. Treasury............................................ RCON 2840 399,965 15.
16. Other borrowed money................................................................ RCFD 2850 42,298 16.
17. Mortgage indebtedness and obligations under capitalized leases...................... RCFD 2910 9,973 17.
18. Bank's liability on acceptances executed and outstanding............................ RCFD 2920 30,676 18.
19. Subordinated notes and debentures................................................... RCFD 3200 0 19.
20. Other liabilities (from Schedule RC-G).............................................. RCFD 2930 79,292 20.
21. Total liabilities (sum of items 13 through 20)...................................... RCFD 2948 13,376,483 21.
///////////////////////
22. Limited-life preferred stock and related surplus.................................... RCFD 3282 0 22.
EQUITY CAPITAL ///////////////////////
23. Perpetual preferred stock and related surplus....................................... RCFD 3838 0 23.
24. Common stock........................................................................ RCFD 3230 19,489 24.
25. Surplus (exclude all surplus related to preferred stock)............................ RCFD 3839 849,190 25.
26. a. Undivided profits and capital reserves........................................... RCFD 3632 261,575 26.a.
b. LESS: Net unrealized loss on marketable equity securities........................ RCFD 0297 (1,372) 26.b.
27. Cumulative foreign currency translation adjustments................................. RCFD 3284 0 27.
28. Total equity capital (sum of items 23 through 27)................................... RCFD 3210 1,131,626 28.
29. Total liabilities, limited-life preferred stock, and equity capital (sum of ///////////////////////
items 21, 22, and 28)............................................................... RCFD 3300 14,508,109 29.

Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that best Number
describes the most comprehensive level of auditing work performed for the bank ----------
by independent external auditors as of any date during 1992......................... RCFD 6724 N/A M.1.
</TABLE>

1 = Independent audit of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm which
submits a report on the bank
2 = Independent audit of the bank's parent holding company conducted in
accordance with generally accepted auditing standards by a certified public
accounting firm which submits a report on the consolidated holding company
(but not on the bank separately)
3 = Directors' examination of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm (may be
required by state chartering authority)
4 = Directors' examination of the bank performed by other external auditors (may
be required by state chartering authority)
5 = Review of the bank's financial statements by external auditors
6 = Compilation of the bank's financial statements by external auditors
7 = Other audit procedures (excluding tax preparation work)
8 = No external audit work

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

(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.

12
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 12/31/93 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-3
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
-----------
</TABLE>

Schedule RC-A--Cash and Balances Due From Depository Institutions

Exclude assets held in trading accounts.

<TABLE>
<CAPTION>
C405 <-
-------
(Column A) (Column B)
Consolidated Domestic
Bank Offices
------------------- -------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou RCON Bil Mil Thou
- -------------------------------------------------------------------------- ---- ------------ ---- ------------
<S> <C> <C> <C>
1. Cash items in process of collection, unposted debits, and currency /////////////////// ///////////////////
and coin............................................................. 0022 704,656 /////////////////// 1.
a. Cash items in process of collection and unposted debits........... /////////////////// 0020 551,342 1.a.
b. Currency and coin................................................. /////////////////// 0080 153,314 1.b.
2. Balances due from depository institutions in the U.S................. /////////////////// 0082 91,824 2.
a. U.S. branches and agencies of foreign banks (including their /////////////////// ///////////////////
IBFs)............................................................. 0083 0 /////////////////// 2.a.
b. Other commercial banks in the U.S. and other depository /////////////////// ///////////////////
institutions in the U.S. (including their IBFs)................... 0085 91,824 /////////////////// 2.b.
3. Balances due from banks in foreign countries and foreign central /////////////////// ///////////////////
banks................................................................ /////////////////// 0070 4,942 3.
a. Foreign branches of other U.S. banks.............................. 0073 120 /////////////////// 3.a.
b. Other banks in foreign countries and foreign central banks........ 0074 4,822 /////////////////// 3.b.
4. Balances due from Federal Reserve Banks.............................. 0090 133,140 0090 133,140 4.
5. Total (sum of items 1 through 4) (total of column A must equal /////////////////// ///////////////////
Schedule RC, item 1)................................................. 0010 934,562 0010 934,562 5.
</TABLE>

<TABLE>
<CAPTION>
Memorandum Dollar Amounts in Thousands RCON Bil Mil Thou
- -------------------------------------------------------------------------------------------------- ---- ------------
<S> <C> <C>
1. Noninterest-bearing balances due from commercial banks in the U.S. (included in item 2, ///////////////////
column B above).............................................................................. 0050 91,824 M.1.
</TABLE>

13
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 12/31/93 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-4
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
-----------
</TABLE>

Schedule RC-B--Securities
xclude assets held in trading accounts.

C410 <-
-------
Consolidated Bank Domestic offices
-------------------------------------------- -------------------
(Column A) (Column B) (Column C)
Book Value Market Value(1) Book Value
-------------------- -------------------- -------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou RCFD Bil Mil Thou RCON Bil Mil Thou
- ----------------------------------------------- ---- ------------ ---- ------------ ---- ------------
<S> <C> <C> <C> <C>
1. U.S. Treasury securities.................... 0400 2,119,457 0401 2,113,304 0400 2,119,457 1.
2. U.S. Government agency and corporation /////////////////// /////////////////// ///////////////////
obligations: /////////////////// /////////////////// ///////////////////
a. All holdings of U.S. Government-issued or /////////////////// /////////////////// ///////////////////
-guaranteed certificates of participation /////////////////// /////////////////// ///////////////////
in pools of residential mortgages: /////////////////// /////////////////// ///////////////////
(1) Issued by FNMA and FHLMC............. 3760 1,692,402 3761 1,721,515 3760 1,692,402 2.a.(1)
(2) Guaranteed by GNMA (exclude FNMA /////////////////// /////////////////// ///////////////////
and FHLMC issues).................... 3762 116,174 3763 114,974 3762 116,174 2.a.(2)
b. All other................................ 0604 0 0605 0 /////////////////// 2.b.
(1) Collateralized mortgage obligations /////////////////// /////////////////// ///////////////////
issued by FNMA and FHLMC (include /////////////////// /////////////////// ///////////////////
REMICs).............................. /////////////////// /////////////////// 3764 0 2.b.(1)
(2) All other U.S. Government-sponsored /////////////////// /////////////////// ///////////////////
agency obligations(2)................ /////////////////// /////////////////// 3765 0 2.b.(2)
(3) All other U.S. Government agency /////////////////// /////////////////// ///////////////////
obligations(3)....................... /////////////////// /////////////////// 3766 0 2.b.(3)
3. Securities issued by states and political /////////////////// /////////////////// ///////////////////
subdivisions in the U.S..................... 0402 154 0403 154 /////////////////// 3.
a. General obligations...................... /////////////////// /////////////////// 3767 154 3.a.
b. Revenue obligations...................... /////////////////// /////////////////// 3768 0 3.b.
c. Industrial development and similar /////////////////// /////////////////// ///////////////////
obligations.............................. /////////////////// /////////////////// 3769 0 3.c.
4. Other domestic debt securities: /////////////////// /////////////////// ///////////////////
a. All holdings of private (i.e., /////////////////// /////////////////// ///////////////////
nongovernment-issued or -guaranteed) /////////////////// /////////////////// ///////////////////
certificates of participation in pools of /////////////////// /////////////////// ///////////////////
residential mortgages.................... 0408 21,652 0409 19,586 0408 21,652 4.a.
b. All other domestic debt securities: /////////////////// /////////////////// ///////////////////
(1) Privately-issued collateralized /////////////////// /////////////////// ///////////////////
mortgage obligations (include /////////////////// /////////////////// ///////////////////
REMICs).............................. 5361 134,040 5362 134,039 5361 134,040 4.b.(1)
(2) All other............................ 5363 743,868 5364 760,807 5363 743,868 4.b.(2)
5. Foreign debt securities..................... 3635 3,250 3636 3,264 3635 3,250 5.
6. Equity securities: /////////////////// /////////////////// ///////////////////
a. Marketable equity securities: /////////////////// /////////////////// ///////////////////
(1) Investments in mutual funds.......... 3637 0 3638 0 3637 0 6.a.(1)
(2) Other marketable equity securities... 3639 0 3640 0 3639 0 6.a.(2)
(3) LESS: Net unrealized loss on /////////////////// /////////////////// ///////////////////
marketable equity securities......... 3641 0 /////////////////// 3641 0 6.a.(3)
b. Other equity securities (includes /////////////////// /////////////////// ///////////////////
Federal Reserve stock)................... 3642 25,076 3643 25,076 3642 25,076 6.b.
7. Total (sum of items 1 through 6) (total of /////////////////// /////////////////// ///////////////////
column A must equal Schedule RC, item 2).... 0390 4,856,073 0391 4,892,719 0390 4,856,073 7.
</TABLE>
- ---------------

(1) See discussion in Glossary entry for "market value of securities."
(2) Includes obligations (other than certificates of participation in pools of
residential mortgages, CMOs, and REMICs) issued by the Farm Credit System,
the Federal Home Loan Bank System, the Federal Home Loan Mortgage
Corporation, the Federal National Mortgage Association, the Financing
Corporation, Resolution Funding Corporation, the Student Loan Marketing
Association, and the Tennessee Valley Authority.
(3) Includes Small Business Administration "Guaranteed Loan Pool Certificates,"
U.S. Maritime Administration obligations, and Export-Import Bank
participation certificates.

14
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 12/31/93 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-5
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
-----------
</TABLE>

Schedule RC-B--Continued

<TABLE>
<CAPTION>
Consolidated Bank
-------------------
Book Value
Memoranda -------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou
- ------------------------------------------------------------------------------------------------ ---- ------------
<S> <C> <C>
1. Pledged securities........................................................................... 0416 4,164,182 M.1.
2. Maturity and repricing data for debt securities(1),(2) (excluding those in nonaccrual status): ///////////////////
a. Fixed rate debt securities with a remaining maturity of: ///////////////////
(1) Three months or less.................................................................. 0343 26,955 M.2.a.(1)
(2) Over three months through 12 months................................................... 0344 14,639 M.2.a.(2)
(3) Over one year through five years...................................................... 0345 1,554,785 M.2.a.(3)
(4) Over five years....................................................................... 0346 3,072,364 M.2.a.(4)
(5) Total fixed rate debt securities (sum of Memorandum items 2.a.(1) through 2.a.(4)).... 0347 4,668,743 M.2.a.(5)
b. Floating rate debt securities with a repricing frequency of: ///////////////////
(1) Quarterly or more frequently.......................................................... 4544 66,193 M.2.b.(1)
(2) Annually or more frequently, but less frequently than quarterly....................... 4545 96,061 M.2.b.(2)
(3) Every five years or more frequently, but less frequently than annually................ 4551 0 M.2.b.(3)
(4) Less frequently than every five years................................................. 4552 0 M.2.b.(4)
(5) Total floating rate debt securities (sum of Memorandum items 2.b.(1) through 2.b.(4)). 4553 162,254 M.2.b.(5)
c. Total debt securities (sum of Memorandum items 2.a.(5) through 2.b.(5)) (must equal total ///////////////////
debt securities from Schedule RC-B, sum of items 1 through 5, column A, minus ///////////////////
nonaccrual debt securities included in Schedule RC-N, item 9, column C)................... 0393 4,830,997 M.2.c.
3. Taxable securities issued by states and political subdivisions in the U.S. (included in ///////////////////
Schedule RC-B, item 3, column A, above)...................................................... 0301 0 M.3.
4. Debt securities restructured and in compliance with modified terms (included in ///////////////////
Schedule RC-B, items 3 through 5, column A, above)........................................... 5365 0 M.4.
5. Debt securities held for sale (included in Schedule RC-B, items 1 through 5, column A, ///////////////////
above)....................................................................................... 5366 1,452,531 M.5.
6. Floating rate debt securities with a remaining maturity of one year or less (included in ///////////////////
Memorandum item 2.b.(5) above)............................................................... 5519 1,750 M.6.
</TABLE>

- ---------------
(1) Exclude equity securities, e.g., investments in mutual funds, Federal
Reserve stock, common stock, and preferred stock.
(2) Memorandum item 2 is not applicable to savings banks that must complete
supplemental Schedule RC-J.

15
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 12/31/93 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-6
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
-----------
</TABLE>

Schedule RC-C--Loans and Lease Financing Receivables

Part I. Loans and Leases

Do not deduct the allowance for loan and lease losses from amounts
reported on this schedule. Report total loans and leases, net of unearned
income. Exclude assets held in trading accounts.

<TABLE>
<CAPTION>
C415 <-
--------------------
(Column A) (Column B)
Consolidated Domestic
Bank Offices
-------------------- --------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou RCON Bil Mil Thou
- -------------------------------------------------------------------- ----- ------------ ----- ------------
<S> <C> <C> <C>
1. Loans secured by real estate................................... 1410 4,273,021 /////////////////// 1.
a. Construction and land development........................... /////////////////// 1415 87,386 1.a.
b. Secured by farmland (including farm residential and other /////////////////// ///////////////////
improvements)............................................... /////////////////// 1420 1,571 1.b.
c. Secured by 1-4 family residential properties: /////////////////// ///////////////////
(1) Revolving, open-end loans secured by 1-4 family /////////////////// ///////////////////
residential properties and extended under lines of credit /////////////////// 1797 409,706 1.c.(1)
(2) All other loans secured by 1-4 family residential /////////////////// ///////////////////
properties: /////////////////// ///////////////////
(a) Secured by first liens.............................. /////////////////// 5367 2,414,262 1.c.(2)(a)
(b) Secured by junior liens............................. /////////////////// 5368 178,212 1.c.(2)(b)
d. Secured by multifamily (5 or more) residential properties... /////////////////// 1460 88,115 1.d.
e. Secured by nonfarm nonresidential properties................ /////////////////// 1480 1,093,769 1.e.
2. Loans to depository institutions: /////////////////// ///////////////////
a. To commercial banks in the U.S.............................. /////////////////// 1505 6,582 2.a.
(1) To U.S. branches and agencies of foreign banks.......... 1506 0 /////////////////// 2.a.(1)
(2) To other commercial banks in the U.S.................... 1507 6,582 /////////////////// 2.a.(2)
b. To other depository institutions in the U.S................. 1517 0 1517 0 2.b.
c. To banks in foreign countries............................... /////////////////// 1510 0 2.c.
(1) To foreign branches of other U.S. banks................. 1513 0 /////////////////// 2.c.(1)
(2) To other banks in foreign countries..................... 1516 0 /////////////////// 2.c.(2)
3. Loans to finance agricultural production and other loans to /////////////////// ///////////////////
farmers........................................................ 1590 1,606 1590 1,606 3.
4. Commercial and industrial loans: /////////////////// ///////////////////
a. To U.S. addressees (domicile)............................... 1763 2,593,798 1763 2,593,798 4.a.
b. To non-U.S. addressees (domicile)........................... 1764 0 1764 0 4.b.
5. Acceptances of other banks: /////////////////// ///////////////////
a. Of U.S. banks............................................... 1756 228 1756 228 5.a.
b. Of foreign banks............................................ 1757 0 1757 0 5.b.
6. Loans to individuals for household, family, and other personal /////////////////// ///////////////////
expenditures (i.e., consumer loans) (includes purchased /////////////////// ///////////////////
paper)......................................................... /////////////////// 1975 370,720 6.
a. Credit cards and related plans (includes check credit and /////////////////// ///////////////////
other revolving credit plans).................................. 2008 28,083 /////////////////// 6.a.
b. Other (includes single payment, installment, and all student /////////////////// ///////////////////
loans)......................................................... 2011 342,637 /////////////////// 6.b.
7. Loans to foreign governments and official institutions /////////////////// ///////////////////
(including foreign central banks).............................. 2081 0 2081 0 7.
8. Obligations (other than securities and leases) of states and /////////////////// ///////////////////
political subdivisions in the U.S. (includes nonrated industrial /////////////////// ///////////////////
development obligations): /////////////////// ///////////////////
a. Taxable obligations......................................... 2033 290 2033 290 8.a.
b. Tax-exempt obligations...................................... 2079 55,452 2079 55,452 8.b.
9. Other loans.................................................... 1563 885,160 /////////////////// 9.
a. Loans for purchasing or carrying securities (secured and /////////////////// ///////////////////
unsecured).................................................. /////////////////// 1545 366,513 9.a.
b. All other loans (exclude consumer loans).................... /////////////////// 1564 518,647 9.b.
10. Lease financing receivables (net of unearned income)........... /////////////////// 2165 1,970 10.
a. Of U.S. addressees (domicile)............................... 2182 1,970 /////////////////// 10.a.
b. Of non-U.S. addressees (domicile)........................... 2183 0 /////////////////// 10.b.
11. LESS: Any unearned income on loans reflected in items 1-9 /////////////////// ///////////////////
above.......................................................... 2123 3,538 2123 3,538 11.
12. Total loans and leases, net of unearned income (sum of items 1 /////////////////// ///////////////////
through 10 minus item 11) (total of column A must equal /////////////////// ///////////////////
Schedule RC, item 4.a)......................................... 2122 8,185,289 2122 8,185,289 12.
</TABLE>

16
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 12/310/93 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-7
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
-----------
</TABLE>

Schedule RC-CA--Continued

Part I. Continued

<TABLE>
<CAPTION>
(Column A) (Column B)
Consolidated Domestic
Bank Offices
Memoranda --------------------------------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou RCON Bil Mil Thou
- -------------------------------------------------------------------------- ---- ------------ ----- ------------
<S> <C> <C> <C>
1. Commercial paper included in Schedule RC-C, part I, above.............. 1496 0 1496 0 M.1.
2. Loans and leases restructured and in compliance with modified terms /////////////////// ///////////////////
(included in Schedule RC-C, part I, above): /////////////////// ///////////////////
a. Loans secured by real estate: /////////////////// ///////////////////
(1) To U.S. addressees (domicile).................................... 1687 33,291 M.2.a.(1)
(2) To non-U.S. addressees (domicile)................................ 1689 0 M.2.a.(2)
b. Loans to finance agricultural production and other loans to farmers.. 1613 0 M.2.b.
c. Commercial and industrial loans: ///////////////////
(1) To U.S. addressees (domicile).................................... 1758 7,479 M.2.c.(1)
(2) To non-U.S. addressees (domicile)................................ 1759 0 M.2.c.(2)
d. All other loans (exclude loans to individuals for household, ///////////////////
family, and other personal expenditures)............................. 1615 0 M.2.d.
e. Lease financing receivables: ///////////////////
(1) Of U.S. addressees (domicile).................................... 1789 0 M.2.e.(1)
(2) Of non-U.S. addressees (domicile)................................ 1790 0 M.2.e.(2)
f. Total (sum of Memorandum items 2.a through 2.e)...................... 1616 40,770 M.2.f.
3. Maturity and repricing data for loans and leases(1) (excluding those ///////////////////
in nonaccrual status): ///////////////////
a. Fixed rate loans and leases with a remaining maturity of: ///////////////////
(1) Three months or less............................................. 0348 492,955 M.3.a.(1)
(2) Over three months through 12 months.............................. 0349 59,706 M.3.a.(2)
(3) Over one year through five years................................. 0356 685,285 M.3.a.(3)
(4) Over five years.................................................. 0357 1,699,047 M.3.a.(4)
(5) Total fixed rate loans and leases (sum of ///////////////////
Memorandum items 3.a.(1) through 3.a.(4))........................ 0358 2,936,993 M.3.a.(5)
b. Floating rate loans with a repricing frequency of: ///////////////////
(1) Quarterly or more frequently..................................... 4554 4,661,203 M.3.b.(1)
(2) Annually or more frequently, but less frequently than
quarterly........................................................ 4555 270,835 M.3.b.(2)
(3) Every five years or more frequently, but less frequently than ///////////////////
annually......................................................... 4561 139,066 M.3.b.(3)
(4) Less frequently than every five years............................ 4564 0 M.3.b.(4)
(5) Total floating rate loans (sum of Memorandum items 3.b.(1) ///////////////////
through 3.b.(4))................................................. 4567 5,071,104 M.3.b.(5)
c. Total loans and leases (sum of Memorandum items 3.a.(5) and 3.b.(5)) ///////////////////
(must equal the sum of total loans and leases, net, from ///////////////////
Schedule RC-C, part I, item 12, plus unearned income from ///////////////////
Schedule RC-C, part I, item 11, minus total nonaccrual loans and ///////////////////
leases from Schedule RC-N, sum of items 1 through 8, column C)....... 1479 8,008,097 M.3.c.
4. Loans to finance commercial real estate, construction, and land ///////////////////
development activities (not secured by real estate) included in ///////////////////
Schedule RC-C, part I, items 4 and 9, column A, page RC-6(2)............ 2746 44,662 M.4.
5. Loans and leases held for sale (included in Schedule RC-C, part I, ///////////////////
above).................................................................. 5369 415,812 M.5.
6. Adjustable rate closed-end loans secured by first liens on 1-4 family ///////////////////
residential properties (included in Schedule RC-C, part I, item /////////////////// RCON Bil Mil Thou
1.c.(2)(a), column 8, page RC-6)........................................ /////////////////// 5370 1,115,563 M.6.
</TABLE>

- ---------------
(1) Memorandum item 3 is not applicable to savings banks that must complete
supplemental Schedule RC-J.
(2) Exclude loans secured by real estate that are included in Schedule RC-C,
part I, item 1, column A.

17
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 12/31/93 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-8
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
-----------
</TABLE>

Schedule RC-D is to be completed only by banks with $1 billion or more in total
assets.

Schedule RC-D--Assets Held in Trading Accounts in Domestic Offices Only

<TABLE>
<CAPTION>
C420 <-
-------------
Domestic Offices
---------------------
Dollar Amounts in Thousands RCON Bil Mil Thou
- --------------------------------------------------------------------------------------------------- ---- -------------
<S> <C> <C> <C>
1. U.S. Treasury securities........................................................................ 1010 0 1.
2. U.S. Government agency and corporation obligations.............................................. 1020 0 2.
3. Securities issued by states and political subdivisions in the U.S. ............................. 1025 0 3.
4. Other bonds, notes, and debentures.............................................................. 1045 0 4.
5. Certificates of deposit......................................................................... 1026 0 5.
6. Commercial paper................................................................................ 1027 0 6.
7. Banker's acceptances............................................................................ 1028 0 7.
8. Other........................................................................................... 1029 0 8.
9. Total (sum of items 1 through 8)................................................................ 2146 0 9.
</TABLE>
18
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 12/31/93 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-9
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
-----------
</TABLE>

Schedule RC-E--Deposit Liabilities
Part I. Deposits in Domestic Offices

<TABLE>
<CAPTION>
C425 <-
------------------
Nontransaction
Transaction Accounts Accounts
--------------------------------------- ------------------
(Column A)
Total transaction (Column B) (Column C)
accounts Memo: Total Total
(including demand deposits nontransaction
total demand (included in accounts
deposits) column A) (including MMDAs)
------------------ ------------------ ------------------
Dollar Amounts in Thousands RCON Bil Mil Thou RCON Bil Mil Thou RCON Bil Mil Thou
- ------------------------------------------------- ---- ------------ ---- ------------ ---- ------------
<S> <C> <C> <C> <C>
Deposits of: ////////////////// ////////////////// //////////////////
1. Individuals, partnerships, and ////////////////// ////////////////// //////////////////
corporations................................ 2201 3,301,136 2240 2,307,810 2346 4,046,255 1.
2. U.S. Government............................. 2202 41,263 2280 41,263 2520 0 2.
3. States and political subdivisions in the ////////////////// ////////////////// //////////////////
U.S......................................... 2203 193,111 2290 164,781 2530 185,962 3.
4. Commercial banks in the U.S................. 2206 225,125 2310 225,125 ////////////////// 4.
a. U.S. branches and agencies of foreign ////////////////// ////////////////// //////////////////
banks....................................... ////////////////// ////////////////// 2347 0 4.a.
b. Other commercial banks in the U.S........ ////////////////// ////////////////// 2348 1,500 4.b.
5. Other depository institutions in the U.S.... 2207 89,142 2312 89,142 2349 0 5.
6. Banks in foreign countries.................. 2213 1,430 2320 1,430 ////////////////// 6.
a. Foreign branches of other U.S. banks..... ////////////////// ////////////////// 2367 0 6.a.
b. Other banks in foreign countries......... ////////////////// ////////////////// 2373 0 6.b.
7. Foreign governments and official ////////////////// ////////////////// //////////////////
institutions ////////////////// ////////////////// //////////////////
(including foreign central banks)........... 2216 468 2300 468 2377 0 7.
8. Certified and official checks............... 2330 48,972 2330 48,972 ////////////////// 8.
9. Total (sum of items 1 through 8) (sum of ////////////////// ////////////////// //////////////////
columns A and C must equal Schedule RC, ////////////////// ////////////////// //////////////////
item 13.a).................................. 2215 3,900,647 2210 2,878,991 2385 4,233,717 9.
</TABLE>

<TABLE>
<CAPTION>
Memoranda Dollar Amounts in Thousands RCON Bil Mil Thou
- ---------------------------------------------------------------------------------------------- ---- ------------
<S> <C> <C>
1. Selected components of total deposits (i.e., sum of item 9, colums A and C): //////////////////
a. Total Individual Retirement Accounts (IRA) and Keogh Plan accounts.................... 6835 804,140 M.1.a.
b. Total brokered deposits............................................................... 2365 41,218 M.1.b.
c. Fully insured brokered deposits (included in Memorandum item 1.b above): //////////////////
(1) Issued in denominations of less than $100,000..................................... 2343 48 M.1.c.(1)
(2) Issued either in denominations of $100,000 or in denominations greater than //////////////////
$100,000 and participated out by the broker in shares of $100,000 or less......... 2344 29,218 M.1.c.(2)
d. Total deposits denominated in foreign currencies...................................... 3776 0 M.1.d
e. Preferred deposits (deposits of states and political subdivisions in the U.S. reported //////////////////
in item 3 above which are secured or collateralized)..................................... 5590 379,072 M.1.e.
2. Components of total nontransaction accounts (sum of Memoranda items 2.a through 2.d must //////////////////
equal item 9, column C above): //////////////////
a. Savings deposits: //////////////////
(1) Money market deposit accounts (MMDAs)............................................. 6810 498,396 M.2.a.(1)
(2) Other savings deposits (excludes MMDAs)........................................... 0352 2,008,155 M.2.a.(2)
b. Total time deposits of less than $100,000............................................. 6648 1,395,922 M.2.b.
c. Time certificates of deposit of $100,000 or more...................................... 6645 331,244 M.2.c.
d. Open-account time deposits of $100,000 or more........................................ 6646 0 M.2.d.
3. All NOW accounts (included in column A above)............................................ 2398 1,021,654 M.3.
</TABLE>

19
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 12/31/93 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-10
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
-----------
</TABLE>

Schedule RC-E--Continued

Part I. Continued
Memoranda (continued)

<TABLE>
<CAPTION>
Deposit Totals for FDIC Insurance Assessments(1)
Dollar Amounts in Thousands RCON Bil Mil Thou
- --------------------------------------------------------------------------------------------- ----- ------------
<S> <C> <C>
4. Total deposits in domestic offices (sum of item 9, column A and item 9, column C) ///////////////////
(must equal Schedule RC, item 13.a)..................................................... 2200 8,134,364 M.4.
///////////////////
a. Total demand deposits (must equal item 9, column B).................................. 2210 2,878,991 M.4.a.
b. Total time and savings deposits(2) (must equal item 9, column A plus item 9, column C ///////////////////
minus item 9, column B).............................................................. 2350 5,255,373 M.4.b.
</TABLE>
- ---------------
(1) An amended Certified Statement should be submitted to the FDIC if the
deposit totals reported in this item are amended after the semiannual
Certified Statement originally covering this report date has been filed
with the FDIC.
(2) For FDIC insurance assessment purposes, "total time and savings deposits"
consists of nontransaction accounts and all transaction accounts other
than demand deposits.

<TABLE>
<CAPTION>
Dollar Amounts in Thousands RCON Bil Mil Thou
- --------------------------------------------------------------------------------------------- ----- ------------
<S> <C> <C>
5. Time deposits of less than $100,000 and open-account time deposits of $100,000 or more ///////////////////
(included in Memorandum items 2.b and 2.d above) with a remaining maturity or repricing ///////////////////
frequency of:(1) ///////////////////
a. Three months or less................................................................. 0359 600,696 M.5.a.
b. Over three months through 12 months (but not over 12 months)......................... 3644 371,860 M.5.b.
6. Maturity and repricing data for time certificates or deposit of $100,000 or more:(1) ///////////////////
a. Fixed rate certificates of deposit of $100,000 or more with a remaining maturity of: ///////////////////
(1) Three months or less............................................................. 2761 223,046 M.6.a.(1)
(2) Over three months through 12 months.............................................. 2762 52,965 M.6.a.(2)
(3) Over one year through five years................................................. 2763 51,624 M.6.a.(3)
(4) Over five years.................................................................. 2765 3,609 M.6.a.(4)
(5) Total fixed rate time certificates of deposit of $100,000 or more (sum of ///////////////////
Memorandum items 6.a.(1) through 6.a.(4)......................................... 2767 331,244 M.6.a.(5)
b. Floating rate time certificates of deposit of $100,000 or more with a repricing ///////////////////
frequency of: ///////////////////
(1) Quarterly or more frequently..................................................... 4568 0 M.6.b.(1)
(2) Annually or more frequently, but less frequently than quarterly.................. 4569 0 M.6.b.(2)
(3) Every five years or more frequently, but less frequently than annually........... 4571 0 M.6.b.(3)
(4) Less frequently than every five years............................................ 4572 0 M.6.b.(4)
(5) Total floating rate time certificates of deposit of $100,000 or more (sum of ///////////////////
Memorandum items 6.b.(1) through 6.b.(4)......................................... 4573 0 M.6.b.(5)
c. Total time certificates of deposit of $100,000 or more (sum of Memorandum items ///////////////////
6.a.(5) and 6.b.(5)) (must equal Memorandum item 2.c. above)......................... 6645 331,244 M.6.c.
</TABLE>
- ---------------
(1) Memorandum items 5 and 6 are not applicable to savings banks that must
complete supplemental Schedule RC-J.

20
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 12/31/93 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-11
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
-----------
</TABLE>

Schedule RC-E--Continued

Part II. Deposits in Foreign Offices (including Edge and Agreement subsidiaries
and IBFs)

<TABLE>
<CAPTION>
Dollar Amounts in Thousands RCFN Bil Mil Thou
- -------------------------------------------------------------------------------------------------- --------------------
<S> <C> <C>
Deposits of: //////////////////
1. Individuals, partnerships, and corporations.................................................. 2621 280,241 1.
2. U.S. banks (including IBFs and foreign branches of U.S. banks)............................... 2623 0 2.
3. Foreign banks (including U.S. branches and //////////////////
agencies of foreign banks, including their IBFs)............................................. 2625 0 3.
4. Foreign governments and official institutions (including foreign central banks).............. 2650 0 4.
5. Certified and official checks................................................................ 2330 0 5.
6. All other deposits........................................................................... 2668 0 6.
7. Total (sum of items 1 through 6) (must equal Schedule RC, item 13.b)......................... 2200 280,241 7.
</TABLE>

Schedule RC-F--Other Assets

<TABLE>
<CAPTION>
C430 <-
------------
Dollar Amounts in Thousands ////////// Bil Mil Thou
- --------------------------------------------------------------------------------------------- ---------- ------------
<S> <C> <C>
1. Income earned, not collected on loans................................................... RCFD 2164 29,444 1.
2. Net deferred tax assets(1).............................................................. RCFD 2148 112,308 2.
3. Excess residential mortgage servicing fees receivable................................... RCFD 5371 0 3.
4. Other (itemize amounts that exceed 25% of this item).................................... RCFD 2168 440,387 4.
a. TEXT 3549 RCFD 3549 /////////////////////// 4.a.
b. TEXT 3550 RCFD 3550 /////////////////////// 4.b.
c. TEXT 3551 RCFD 3551 /////////////////////// 4.c.
5. Total (sum of items 1 through 4) (must equal Schedule RC, item 11)...................... RCFD 2160 582,139 5.
</TABLE>

Memorandum

<TABLE>
<CAPTION>
Dollar Amounts in Thousands ////////// Bil Mil Thou
- --------------------------------------------------------------------------------------------- ---------- ------------
<S> <C> <C> <C>
1. Deferred tax assets disallowed for regulatory capital purposes.......................... RCFD 5610 0 M.1.
</TABLE>

Schedule RC-G--Other Liabilities

<TABLE>
<CAPTION>
C435 <-
------------
Dollar Amounts in Thousands ///////// Bil Mil Thou
- --------------------------------------------------------------------------------------------- --------- ------------
<S> <C> <C>
1. a. Interest accrued and unpaid on deposits in domestic offices(2)....................... RCON 3645 8,133 1.a.
b. Other expenses accrued and unpaid (includes accrued income taxes payable)............ RCFD 3646 50,085 1.b.
2. Net deferred tax liabilities(1)......................................................... RCFD 3049 0 2.
3. Minority interest in consolidated subsidiaries.......................................... RCFD 3000 0 3.
4. Other (itemize amounts that exceed 25% of this item).................................... RCFD 2938 21,074 4.
a. TEXT 3552 RCFD 3552 /////////////////////// 4.a.
b. TEXT 3553 RCFD 3553 /////////////////////// 4.b.
c. TEXT 3554 RCFD 3554 /////////////////////// 4.c.
5. Total (sum of items 1 through 4) (must equal Schedule RC, item 20)...................... RCFD 2930 79,292 5.
</TABLE>

- ---------------
(1) See discussion of deferred income taxes in Glossary entry on "income taxes."
(2) For savings banks, include "dividends" accrued and unpaid on deposits.

21
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 12/31/93 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-12
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
-----------
</TABLE>

Schedule RC-H--Selected Balance Sheet Items for Domestic Offices

<TABLE>
<CAPTION>
C440
------------------
Domestic Offices <-
------------------
Dollar Amounts in Thousands RCON Bil Mil Thou
- ---------------------------------------------------------------------------------------------------- ---- -------------
<S> <C> <C>
Customers' liability to this bank on acceptances outstanding................................... 2155 30,676 1.
Bank's liability on acceptances executed and outstanding....................................... 2920 30,676 2.
Federal funds sold and securities purchased under agreements to resell......................... 1350 0 3.
Federal funds purchased and securities sold under agreements to repurchase..................... 2800 4,399,674 4.
Other borrowed money........................................................................... 2850 42,298 5.
EITHER //////////////////
Net due from own foreign offices, Edge and Agreement subsidiaries, and IBFs.................... 2163 N/A 6.
OR //////////////////
Net due to own foreign offices, Edge and Agreement subsidiaries, and IBFs...................... 2941 280,241 7.
Total assets (excludes net due from foreign offices, Edge and Agreement subsidiaries, and //////////////////
IBFs).......................................................................................... 2192 14,508,109 8.
Total liabilities (excludes net due to foreign offices, Edge and Agreement subsidiaries, and //////////////////
IBFs).......................................................................................... 3129 13,096,240 9.
Memorandum (to be completed only by banks with IBFs and other "foreign" offices)
</TABLE>

<TABLE>
<CAPTION>
Dollar Amounts in Thousands RCON Bil Mil Thou
- --------------------------------------------------------------------------------------------------- ---- -------------
<S> <C> <C>
EITHER //////////////////
Net due from the IBF of the domestic offices of the reporting bank............................ 3051 N/A M.1.
OR //////////////////
Net due to the IBF of the domestic offices of the reporting bank.............................. 3059 N/A M.2.
</TABLE>

Schedule RC-I--Selected Assets and Liabilities of IBFs

To be completed only by banks with IBFs and other "foreign" offices.

<TABLE>
<CAPTION>
C445 <-
------------------
Dollar Amounts in Thousands RCFN Bil Mil Thou
- ---------------------------------------------------------------------------------------------------- ---- ------------
<S> <C> <C>
1. Total IBF assets of the consolidated bank (component of Schedule RC, item 12).................. 2133 N/A 1.
2. Total IBF loans and lease financing receivables (component of Schedule RC-C, part I, item 12, //////////////////
column A)...................................................................................... 2076 N/A 2.
3. IBF commercial and industrial loans (component of Schedule RC-C, part I, item 4, column A)..... 2077 N/A 3.
4. Total IBF liabilities (component of Schedule RC, item 21)...................................... 2898 N/A 4.
5. IBF deposit liabilities due to banks, including other IBFs (component of Schedule RC-E, //////////////////
part II, items 2 and 3)........................................................................ 2379 N/A 5.
6. Other IBF deposit liabilities (component of Schedule RC-E, part II, items 1, 4, 5, and 6)...... 2381 N/A 6.
</TABLE>

22
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 12/31/93 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-13
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
-----------
</TABLE>

Schedule RC-K--Quarterly Averages(1)

<TABLE>
<CAPTION>
C455 <-
------------------------
Dollar Amounts in Thousands ///////// Bil Mil Thou
- ---------------------------------------------------------------------------------------- ------------------------
<S> <C> <C>
ASSETS ///////////////////////
1. Interest-bearing balances due from depository institutions.......................... RCFD 3381 0 1.
2. U.S. Treasury securities and U.S. Government agency and corporation obligations..... RCFD 3382 4,055,350 2.
3. Securities issued by states and political subdivisions in the U.S. ................. RCFD 3383 143 3.
4. a. Other debt securities............................................................ RCFD 3647 843,208 4.a.
b. Equity securities (includes investments in mutual funds and Federal Reserve stock) RCFD 3648 23,863 4.b.
5. Federal funds sold and securities purchased under agreements to resell in domestic ///////////////////////
offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs......... RCFD 3365 96,431 5.
6. Loans: ///////////////////////
a. Loans in domestic offices: ///////////////////////
(1) Total Loans.................................................................. RCON 3360 7,629,112 6.a.(1)
(2) Loans secured by real estate................................................. RCON 3385 4,179,034 6.a.(2)
(3) Loans to finance agricultural production and other loans to farmers.......... RCON 3386 2,030 6.a.(3)
(4) Commercial and industrial loans.............................................. RCON 3387 2,408,262 6.a.(4)
(5) Loans to individuals for household, family, and other personal expenditures.. RCON 3388 361,790 6.a.(5)
(6) Obligations (other than securities and leases) of states and political ///////////////////////
subdivisions in the U.S. .................................................... RCON 3389 57,620 6.a.(6)
b. Total loans in foreign offices, Edge and Agreement subsidiaries, and IBFs........ RCFN 3360 0 6.b.
7. Assets held in trading accounts..................................................... RCFD 3401 0 7.
8. Lease financing receivables (net of unearned income)................................ RCFD 3484 31 8.
9. Total assets........................................................................ RCFD 3368 13,861,620 9.
LIABILITIES ///////////////////////
10. Interest-bearing transaction accounts in domestic offices (NOW accounts, ATS accounts, ///////////////////////
and telephone and preauthorized transfer accounts) (exclude demand deposits)........ RCON 3485 962,566 10.
11. Nontransaction accounts in domestic offices: ///////////////////////
a. Money market deposit accounts (MMDAs)............................................ RCON 3486 555,279 11.a.
b. Other savings deposits........................................................... RCON 3487 2,000,011 11.b.
c. Time certificates of deposit of $100,000 or more................................. RCON 3345 419,052 11.c.
d. All other time deposits.......................................................... RCON 3469 1,419,599 11.d.
12. Interest-bearing deposits in foreign offices, Edge and Agreement subsidiaries, and
IBFs................................................................................ RCFN 3404 192,571 12.
13. Federal funds purchased and securities sold under agreements to repurchase in domestic ///////////////////////
offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs......... RCFD 3353 4,403,315 13.
14. Other borrowed money................................................................ RCFD 3355 35,894 14.
</TABLE>

- ---------------
(1) For all items, banks have the option of reporting either (1) an average of
daily figures for the quarter, or (2) an average of weekly figures (i.e.,
the Wednesday of each week of the quarter).

23
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 12/31/93 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-14
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
-----------
</TABLE>

Schedule RC-L--Off-Balance Sheet Items

Please read carefully the instructions for the preparation of Schedule RC-L.
Some of the amounts reported in Schedule RC-L are regarded as volume indicators
and not necessarily as measures of risk.

<TABLE>
<CAPTION>
C460 <-
------------
Dollar Amounts in Thousands RCFD Bil Mil Thou
- --------------------------------------------------------------------------------------------- ---- ------------
<S> <C> <C>
1. Unused commitments: //////////////////
a. Revolving, open-end lines secured by 1-4 family residential properties, e.g., home //////////////////
equity lines.......................................................................... 3814 402,071 1.a.
b. Credit card lines..................................................................... 3815 0 1.b.
c. Commercial real estate, construction, and land development: //////////////////
(1) Commitments to fund loans secured by real estate.................................. 3816 32,122 1.c.(1)
(2) Commitments to fund loans not secured by real estate.............................. 6550 20,669 1.c.(2)
d. Securities underwriting............................................................... 3817 0 1.d.
e. Other unused commitments.............................................................. 3818 3,907,464 1.e.
2. Financial standby letters of credit and foreign office guarantees........................ 3819 661,791 2.
a. Amount of financial standby letters of credit conveyed to others... RCFD 3820 1,940 ////////////////// 2.a.
3. Performance standby letters of credit and foreign office guarantees...................... 3821 49,122 3.
a. Amount of performance standby letters of credit conveyed to //////////////////
others............................................................ RCFD 3822 0 ////////////////// 3.a.
4. Commercial and similar letters of credit................................................. 3411 7,200 4.
5. Participations in acceptances (as described in the instructions) conveyed to others by //////////////////
the reporting bank....................................................................... 3428 0 5.
6. Participations in acceptances (as described in the instructions) //////////////////
acquired by the reporting (nonaccepting) bank............................................ 3429 0 6.
7. Securities borrowed...................................................................... 3432 0 7.
8. Securities lent (including customers' securities lent where the customer is indemnified //////////////////
against loss by the reporting bank)...................................................... 3433 0 8.
9. Mortgages transferred (i.e., sold or swapped) with recourse that have been treated as //////////////////
sold for Call Report purposes: //////////////////
a. FNMA and FHLMC residential mortgage loan pools: //////////////////
(1) Outstanding principal balance of mortgages transferred as of the report date...... 3650 163,670 9.a.(1)
(2) Amount of recourse exposure on these mortgages as of the report date.............. 3651 163,670 9.a.(2)
b. Private (nongovernment-issued or -guaranteed) residential mortgage //////////////////
loan pools: //////////////////
(1) Outstanding principal balance of mortgages transferred as of the report date...... 3652 0 9.b.(1)
(2) Amount of recourse exposure on these mortgages as of the report date.............. 3653 0 9.b.(2)
c. Farmer Mac agricultural mortgage loan pools: //////////////////
(1) Outstanding principal balance of mortgages transferred as of the report date...... 3654 0 9.c.(1)
(2) Amount of recourse exposure on these mortgages as of the report date.............. 3655 0 9.c.(2)
10. When-issued securities: //////////////////
a. Gross commitments to purchase......................................................... 3434 0 10.a.
b. Gross commitments to sell............................................................. 3435 0 10.b.
11. Interest rate contracts (exclude when-issued securities): //////////////////
a. Notional value of interest rate swaps................................................. 3450 2,059,000 11.a.
b. Futures and forward contracts......................................................... 3823 1,689,000 11.b.
c. Option contracts (e.g., options on Treasuries): //////////////////
(1) Written option contracts.......................................................... 3824 1,329,250 11.c.(1)
(2) Purchased option contracts........................................................ 3825 1,729,250 11.c.(2)
12. Foreign exchange rate contracts: //////////////////
a. Notional value of exchange swaps (e.g., cross-currency swaps)......................... 3826 0 12.a.
b. Commitments to purchase foreign currencies and U.S. dollar exchange (spot, forward, //////////////////
and futures).......................................................................... 3415 6,418,533 12.b.
c. Option contracts (e.g., options on foreign currency): //////////////////
(1) Written option contracts.......................................................... 3827 0 12.c.(1)
(2) Purchased option contracts........................................................ 3828 0 12.c.(2)
</TABLE>

24
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 12/31/93 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-15
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
-----------
</TABLE>

Schedule RC-L--Continued

<TABLE>
<CAPTION>
C461 <-
------------
Dollar Amounts in Thousands RCFD Bil Mil Thou
- ----------------------------------------------------------------------------------------------- ---- ------------
<S> <C> <C>
13. Contracts on other commodities and equities: //////////////////
a. Notional value of other swaps (e.g., oil swaps).......................................... 3829 0 13.a.
b. Futures and forward contracts (e.g., stock index and commodity--precious metals, //////////////////
wheat, cotton, (livestock--contracts).................................................... 3830 0 13.b.
c. Option contracts (e.g., options on commodities, individual stock and stock indexes): //////////////////
(1) Written option contracts............................................................. 3831 0 13.c.(1)
(2) Purchased option contracts........................................................... 3832 1,687 13.c.(2)
14. All other off-balance sheet liabilities (itemize and describe each component of this item //////////////////
over 25% of Schedule RC, item 28, "Total equity capital")................................... 3430 0 14.
//////////////////
a. TEXT 3555 RCFD 3555 ////////////////// 14.a.
b. TEXT 3556 RCFD 3556 ////////////////// 14.b.
c. TEXT 3557 RCFD 3557 ////////////////// 14.c.
d. TEXT 3558 RCFD 3558 ////////////////// 14.d.
15. All other off-balance sheet assets (itemize and describe each component of this item //////////////////
over 25% of Schedule RC, item 28, "Total equity capital")................................... 5591 0 15.
//////////////////
a. TEXT 5592 RCFD 5592 ////////////////// 15.a.
b. TEXT 5593 RCFD 5593 ////////////////// 15.b.
c. TEXT 5594 RCFD 5594 ////////////////// 15.c.
d. TEXT 5595 RCFD 5595 ////////////////// 15.d.
</TABLE>

Memoranda

<TABLE>
<CAPTION>
Dollar Amounts in Thousands RCFD Bil Mil Thou
- ----------------------------------------------------------------------------------------------- ---- ------------
<S> <C> <C>
1. Loans originated by the reporting bank that have been sold or participated to others during //////////////////
the calendar quarter ending with the report date (exclude the portions of such loans //////////////////
retained by the reporting bank; see instructions for other exclusions)...................... 3431 4,842 M.1.
2. Loans purchased by the reporting bank during the calendar quarter ending with the //////////////////
report date (see instructions for exclusions)............................................... 3488 1,341,264 M.2.
3. Unused commitments with an original maturity exceeding one year that are reported in //////////////////
Schedule RC-L, items 1.a through 1.e, above (report only the unused portions of commitments //////////////////
that are fee paid or otherwise legally binding)............................................. 3833 2,277,171 M.3.
a. Participations in commitments with an original maturity //////////////////
exceeding one year conveyed to others........................... RCFD 3834 18,201 ////////////////// M.3.a.
4. To be completed only by banks with $1 billion or more in total assets: //////////////////
Standby letters of credit and foreign office guarantees (both financial and performance) //////////////////
issued to non-U.S. addressees (domicile) included in Schedule RC-L, items 2 and 3, above.... 3377 213,815 M.4.
5. To be completed for the September report only: //////////////////
Installment loans to individuals for household, family, and other personal expenditures that //////////////////
have been securitized and sold without recourse (with servicing retained), amount //////////////////
outstanding by type of loan: //////////////////
a. Loans to purchase private passenger automobiles.......................................... 2741 N/A M.5.a.
b. Credit cards and related plans........................................................... 2742 N/A M.5.b.
c. All other consumer installment credit (including mobile home loans)...................... 2743 N/A M.5.c.
</TABLE>

25
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 12/31/93 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-16
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
-----------
</TABLE>

Schedule RC-M--Memoranda

<TABLE>
<CAPTION>
C465 <-
------------
Dollar Amounts in Thousands RCFD Bil Mil Thou
- ----------------------------------------------------------------------------------------------- ---- ------------
<S> <C> <C>
1. Extensions of credit by the reporting bank to its executive officers, directors, principal ///////////////////
shareholders, and their related interests as of the report date: ///////////////////
a. Aggregate amount of all extensions of credit to all executive officers, directors, ///////////////////
principal shareholders, and their related interests.................................... 6164 2,535 1.a.
b. Number of executive officers, directors, and principal shareholders to whom the amount ///////////////////
of all extensions of credit by the reporting bank (including extensions of credit to ///////////////////
related interests) equals or exceeds the lesser of $500,000 or 5 percent Number ///////////////////
of total capital as defined for this purpose in agency regulations. RCFD 6165 6 /////////////////// 1.b.
2. Federal funds sold and securities purchased under agreements to resell with U.S. branches ///////////////////
and agencies of foreign banks(1) (included in Schedule RC, items 3.a and 3.b)............. 3405 0 2.
3. Not applicable. ///////////////////
4. Outstanding principal balance of 1-4 family residential mortgage loans serviced for others ///////////////////
(include both retained servicing and purchased servicing): ///////////////////
a. Mortgages serviced under a GNMA contract............................................... 5500 31,012 4.a.
b. Mortgages serviced under a FHLMC contract: ///////////////////
(1) Serviced with recourse to servicer................................................. 5501 99,011 4.b.(1)
(2) Serviced without recourse to servicer.............................................. 5502 700,906 4.b.(2)
c. Mortgages serviced under a FNMA contract: ///////////////////
(1) Serviced under a regular option contract........................................... 5503 67,000 4.c.(1)
(2) Serviced under a special option contract........................................... 5504 2,126,124 4.c.(2)
d. Mortgages serviced under other servicing contracts..................................... 5505 4,122,566 4.d.
5. To be completed only by banks with $1 billion or more in total assets: ///////////////////
Customers' liability to this bank on acceptances outstanding (sum of items 5.a and 5.b ///////////////////
must equal Schedule RC, item 9): ///////////////////
a. U.S. addresses (domicile).............................................................. 2103 30,676 5.a.
b. Non-U.S. addressees (domicile)......................................................... 2104 0 5.b.
6. Intangible assets: ///////////////////
a. Mortgage servicing rights.............................................................. 3164 18,466 6.a.
b. Other identifiable intangible assets: ///////////////////
(1) Purchased credit card relationships................................................ 5506 0 6.b.(1)
(2) All other identifiable intangible assets........................................... 5507 0 6.b.(2)
c. Goodwill............................................................................... 3163 55,253 6.c.
d. Total (sum of items 6.a through 6.c) (must equal Schedule RC, item 10)................. 2143 73,719 6.d.
e. Intangible assets that have been grandfathered for regulatory capital purposes......... 6442 0 6.e.

7. Does your bank have any mandatory convertible debt that is part of your primary or YES NO
secondary capital?........................................................................ 6167 /// X 7.

If yes, complete items 7.a through 7.e: RCFD Bil Mil Thou
----- ------------
a. Total equity contract notes, gross..................................................... 3290 N/A 7.a.
b. Common or perpetual preferred stock dedicated to redeem the above notes................ 3291 N/A 7.b.
c. Total equity commitment notes, gross................................................... 3293 N/A 7.c.
d. Common or perpetual preferred stock dedicated to redeem the above notes................ 3294 N/A 7.d.
e. Total (item 7.a minus 7.b plus 7.c minus 7.d).......................................... 3295 N/A 7.e.
</TABLE>

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

(1) Do not report federal funds sold and securities purchased under
agreements to resell with other commercial banks in the U.S. in this item.

26
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 12/31/93 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-17
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
-----------
</TABLE>

Schedule RC-M--Continued

<TABLE>
<CAPTION>
Dollar Amounts in Thousands ///////// Bil Mil Thou
- --------------------------------------------------------------------------------------- ---------- ------------
<S> <C> <C>
1. a. Other real estate owned: ///////////////////////
(1) Direct and indirect investments in real estate ventures....................... RCFD 5372 0 8.a.(1)
(2) All other real estate owned: ///////////////////////
(a) Construction and land development in domestic offices..................... RCON 5508 7,701 8.a.(2)(a)
(b) Farmland in domestic offices.............................................. RCON 5509 0 8.a.(2)(b)
(c) 1-4 family residential properties in domestic offices..................... RCON 5510 4,345 8.a.(2)(c)
(d) Multifamily (5 or more) residential properties in domestic offices........ RCON 5511 396 8.a.(2)(d)
(e) Nonfarm nonresidential properties in domestic offices..................... RCON 5512 15,385 8.a.(2)(e)
(f) In foreign offices........................................................ RCFN 5513 0 8.a.(2)(f)
(3) Total (sum of items 8.a.(1) and 8.a.(2)) (must equal Schedule RC, item 7)..... RCFD 2150 27,827 8.a.(3)
b. Investments in unconsolidated subsidiaries and associated companies: ///////////////////////
(1) Direct and indirect investments in real estate ventures....................... RCFD 5374 0 8.b.(1)
(2) All other investments in unconsolidated subsidiaries and associated ///////////////////////
companies..................................................................... RCFD 5375 0 8.b.(2)
(3) Total (sum of items 8.b.(1) and 8.b.(2)) (must equal Schedule RC, item 8)..... RCFD 2130 0 8.b.(3)
c. Total assets of unconsolidated subsidiaries and associated companies.............. RCFD 5376 0 8.c.
2. Noncumulative perpetual preferred stock and related surplus included in Schedule RC, ///////////////////////
item 23, "Perpetual preferred stock and related surplus"............................. RCFD 3778 0 9.
</TABLE>

<TABLE>
<CAPTION>
Memorandum Dollar Amounts in Thousands RCFD Bil Mil Thou
- -------------------------------------------------------------------------------------------- ---- ------------
<S> <C> <C>
1. Interbank holdings of capital instruments (to be completed for the December report only): //////////////////
a. Reciprocal holdings of banking organizations' capital instruments..................... 3836 0 M.1.a.
b. Nonreciprocal holdings of banking organizations' capital instruments.................. 3837 0 M.1.b.
</TABLE>

27
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 12/31/93 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-18
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
-----------
</TABLE>

Schedule RC-N--Past Due and Nonaccrual Loans, Leases,
and Other Assets

The FFIEC regards the information reported in
all of Memorandum item 1, in items 1 through 10, C470 <-
column A, and in Memorandum items 2 and 3, ------------------
column A, as confidential. (Column A) (Column B) (Column C)
Past due Past due 90 Nonaccrual
30 through 89 days or more
days and still and still
accruing accruing
-------------------- ------------------ ------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou RCFD Bil Mil Thou RCFD Bil Mil Thou
- ------------------------------------------------- ---- ------------ ---- ------------ ---- ------------
<S> <C> <C> <C>
1. Loans secured by real estate: C ////////////////// //////////////////
a. To U.S. addressees (domicile)............ O 1246 12,507 1247 139,415 1.a.
b. To non-U.S. addressees (domicile)........ N 1249 0 1250 0 1.b.
2. Loans to depository institutions and F ////////////////// //////////////////
acceptances of other banks: I ////////////////// //////////////////
a. To U.S. banks and other U.S. depository D ////////////////// //////////////////
institutions............................. E 5378 0 5379 0 2.a.
b. To foreign banks......................... N 5381 0 5382 0 2.b.
3. Loans to finance agricultural production and T ////////////////// //////////////////
other loans to farmers...................... I 1597 15 1583 35 3.
4. Commercial and industrial loans: A ////////////////// //////////////////
a. To U.S. addressees (domicile)............ L 1252 2,276 1253 34,686 4.a.
b. To non-U.S. addressees (domicile)........ 1255 0 1256 0 4.b.
5. Loans to individuals for household, family, ////////////////// //////////////////
and other personal expenditures: ////////////////// //////////////////
a. Credit Cards and related plans........... 5384 74 5385 655 5.a.
b. Other (includes single payment, ////////////////// //////////////////
installment, and all student loans)......... 5387 554 5388 2,697 5.b.
6. Loans to foreign governments and official ////////////////// //////////////////
institutions................................ 5390 0 5391 0 6.
7. All other loans............................. 5460 1,071 5461 3,242 7.
8. Lease financing receivables: ////////////////// //////////////////
a. Of U.S. addressees (domicile)............ 1258 0 1259 0 8.a.
b. Of non-U.S. addressees (domicile)........ 1272 0 1791 0 8.b.
9. Debt securities and other assets (exclude ////////////////// //////////////////
other real estate owned and other ////////////////// //////////////////
repossessed assets)......................... 3506 0 3507 0 9.

</TABLE>
==============================================================================
Amounts reported in items 1 through 8 above include guaranteed and
unguaranteed portions of past due and nonaccrual loans and leases. Report in
item 10 below certain guaranteed loans and leases that have already been
included in the amounts reported in items 1 through 8.

<TABLE>
<CAPTION>
RCFD Bil Mil Thou RCFD Bil Mil Thou RCFD Bil Mil Thou
----- ------------ ----- ------------ ----- ------------
<S> <C> <C> <C> <C>
10. Loans and leases reported in items 1 ////////////////// //////////////////
through 8 above which are wholly or ////////////////// //////////////////
partially guaranteed by the ////////////////// //////////////////
U.S. Government............................. CONFIDENTIAL 5613 0 5614 555 10.
a. Guaranteed portion of loans and leases ////////////////// //////////////////
included in item 10 above................ 5616 0 5617 546 10.a.
</TABLE>

28
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 12/31/93 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-19
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
-----------
</TABLE>

Schedule RC-N--Continued

<TABLE>
<CAPTION>
C473 <-
Memoranda ------------
Dollar Amounts in Thousands RCFD Bil Mil Thou RCFD Bil Mil Thou RCFD Bil Mil Thou
- --------------------------------------------- ---- ------------ ---- ------------ ---- ------------
<S> <C> <C> <C>
1. Restructured loans and leases included ////////////////// //////////////////
in Schedule RC-N, items 1 through 8, ////////////////// //////////////////
above................................... C C O N F I D E N T I A L M.1.
2. Loans to finance commercial real estate, O ////////////////// //////////////////
construction, and land development N ////////////////// //////////////////
activities (not secured by real estate) F ////////////////// //////////////////
included in Schedule RC-N, items 4 I ////////////////// //////////////////
and 7, above............................ D 6559 0 6560 6,140 M.2.
3. Loans secured by real estate in domestic E RCON Bil Mil Thou RCON Bil Mil Thou
offices (included in Schedule RC-N, N ---- ------------ ---- ------------
item 1, above): T ////////////////// //////////////////
a. Construction and land development.... I 2769 245 3492 21,517 M.3.a.D
b. Secured by farmland.................. A 3494 747 3495 465 M.3.b.
c. Secured by 1-4 family residential L ////////////////// //////////////////
properties: ////////////////// //////////////////
(1) Revolving, open-end loans secured ////////////////// //////////////////
by 1-4 family residential ////////////////// //////////////////
properties and extended under ////////////////// //////////////////
lines of credit.................. 5399 51 5400 1,087 M.3.c.(1)
(2) All other loans secured by 1-4
family residential properties.... 5402 5,221 5403 27,820 M.3.c.(2)
d. Secured by multifamily (5 or more) ////////////////// //////////////////
residential properties............... 3500 216 3501 11,626 M.3.d.
e. Secured by nonfarm nonresidential
properties........................... 3503 6,027 3504 76,900 M.3.e.
</TABLE>

Schedule RC-O--Other Data for Deposit Insurance Assessments

An amended Certified Statement should be submitted to the FDIC if the amounts
reported in items 1 through 9 of this schedule are amended after the
semiannual Certified Statement originally covering this report date has been
filed with the FDIC.

<TABLE>
<CAPTION>
C475 <-
------------
Dollar Amounts in Thousands RCON Bil Mil Thou
- --------------------------------------------------------------------------------------------- ---- ------------
<S> <C> <C>
1. Unposted debits (see instructions): //////////////////
a. Actual amount of all unposted debits................................................. 0030 N/A 1.a.
OR //////////////////
b. Separate amount of unposted debits: //////////////////
(1) Actual amount of unposted debits to demand deposits.............................. 0031 0 1.b.(1)
(2) Actual amount of unposted debits to time and savings deposits(1)................. 0032 0 1.b.(2)
2. Unposted credits (see instructions): //////////////////
a. Actual amount of all unposted credits................................................ 3510 N/A 2.a.
OR //////////////////
b. Separate amount of unposted credits: //////////////////
(1) Actual amount of unposted credits to demand deposits................................ 3512 179,474 2.b.(1)
(2) Actual amount of unposted credits to time and savings deposits(1)................... 3514 0 2.b.(2)
3. Univested trust funds (cash) held in bank's own trust department (not included in total //////////////////
deposits in domestic offices)........................................................... 3520 0 3.
4. Deposits of consolidated subsidiaries in domestic offices and in insured branches in //////////////////
Puerto Rico and U.S. territories and possessions (not included in total deposits): //////////////////
a. Demand deposits of consolidated subsidiaries......................................... 2211 12,198 4.a.
b. Time and savings deposits(1) of consoldiated subsidiaries............................ 2351 0 4.b.
c. Interest accrued and unpaid on deposits of consolidated subsidiaries................. 5514 0 4.c.
5. Deposits in insured branches in Puerto Rico and U.S. territories and possessions: //////////////////
a. Demand deposits in insured branches (included in Schedule RC-E, Part II)............. 2229 0 5.a.
b. Time and savings deposits(1) in insured branches (included in Schedule RC-E, //////////////////
Part II)............................................................................. 2383 0 5.b.
c. Interest accrued and unpaid on deposits in insured branches //////////////////
(included in Schedule RC-G, item 1.b)................................................ 5515 0 5.c.
</TABLE>

- ---------------
(1) For FDIC insurance assessment purposes, "time and savings deposits" consists
of nontransaction accounts and all transaction accounts other than demand
deposits.

29
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 12/31/93 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-20
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
-----------
</TABLE>

Schedule RC-O--Continued

<TABLE>
<CAPTION>
Dollar Amounts in Thousands RCON Bil Mil Thou
- --------------------------------------------------------------------------------------------- ---- --------------
<S> <C> <C>
Item 6 is not applicable to state nonmember banks that have not been authorized by the //////////////////
Federal Reserve to act as pass-through correspondents. //////////////////
6. Reserve balances actually passed through to the Federal Reserve by the reporting bank on //////////////////
behalf of its respondent depository institutions that are also reflected as deposit //////////////////
liabilities of the reporting bank: //////////////////
a. Amount reflected in demand deposits (included in Schedule RC-E, Part I, //////////////////
Memorandum item 4.a)................................................................. 2314 0 6.a.
b. Amount reflected in time and savings deposits(1) (included in Schedule RC-E, Part I, //////////////////
Memorandum item 4.b)................................................................. 2315 0 6.b.
7. Unamortized premiums and discounts on time and savings deposits:(1) //////////////////
a. Unamortized premiums................................................................. 5516 0 7.a.
b. Unamortized discounts................................................................ 5517 0 7.b.
- -----------------------------------------------------------------------------------------------------------------------------
8. To be completed by banks with "Oakar deposits."
Total "Adjusted Attributable Deposits" of all institutions acquired under Section //////////////////
5(d)(3) of the Federal Deposit Insurance Act (from most recent FDIC Oakar Transaction
Worksheet(s))........................................................................... 5518 N/A 8.
- -----------------------------------------------------------------------------------------------------------------------------
9. Deposits in lifeline accounts........................................................... 5596 ///////////// 9.
</TABLE>

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

(1) For FDIC insurance assessment purposes, "time and savings deposits" consists
of nontransaction accounts and all transaction accounts other than demand
deposits.

<TABLE>
<CAPTION>
Memoranda (to be completed each quarter except as noted)
Dollar Amounts in Thousands RCON Bil Mil Thou
- -------------------------------------------------------------------------------------------- ---- --------------
<S> <C>
1. Total deposits in domestic offices of the bank (sum of Memorandum items 1.a.(1) and //////////////////
1.b.(1) must equal Schedule RC, item 13.a): //////////////////
a. Deposit accounts of $100,000 or less: //////////////////
(1) Amount of deposit accounts of $100,000 or less.................................. 2702 4,598,798 M.1.a.(1)
(2) Number of deposit accounts of $100,000 or less (to be Number //////////////////
completed for the June report only) ......................... RCON 3779 N/A ////////////////// M.1.a.(2)
b. Deposit accounts of more than $100,000: //////////////////
(1) Amount of deposit accounts of more than $100,000......................... Number 2710 3,535,566 M.1.b.(1)
(2) Number of deposit accounts of more than $100,000............. RCON 2722 7,184 ////////////////// M.1.b.(2)
2. Estimated amount of uninsured deposits in domestic offices of the bank:
a. An estimate of your bank's uninsured deposits can be determined by multiplying the
number of deposit accounts of more than $100,000 reported in Memorandum item 1.b.(2)
above by $100,000 and subtracting the result from the amount of deposit accounts of
more than $100,000 reported in Memorandum item 1.b.(1) above.

Indicate in the appropriate box at the right whether your bank has a method or YES NO
procedure for determining a better estimate of uninsured deposits than the estimate --------------------
described above..................................................................... 6861 /// x M.2.a.
b. If the box marked YES has been checked, report the estimate of uninsured deposits RCON Bil Mil Thou
determined by using your bank's method or procedure................................. 5597 N/A M.2.b.
- --------------------------------------------------------------------------------------------------------------------------------
Person to whom questions about Reports of Condition and Income should be directed: C477 <-
ROBERT DUFF, ASSISTANT VICE PRESIDENT (203) 986-2474
- --------------------------------------------------------------------------------------------- --------------------------------
Name and Title (TEXT 8901) Area code and phone number (TEXT
8902)
</TABLE>

30
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 12/31/93 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-21
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
-----------
</TABLE>

Schedule RC-R--Risk-Based Capital

This schedule must be completed by all banks as follows: Banks that
reported total assets of $1 billion or more in Schedule RC, Item 12, for June
30, 1992, must complete items 2 through 9 and Memorandum item 1. Banks with
assets of less than $1 billion must complete items 1 through 3 below or Schedule
RC-R in its entirety, depending on their response to item 1 below.

<TABLE>
<S> <C> <C> <C> <C> <C>
Test for determining the extent to which Schedule RC-R must be completed. To be
completed only by banks with total assets of less than $1 billion. Indicate in the C480 <-
appropriate box at the right whether the bank has total capital greater than or YES NO
equal to eight percent of adjusted total assets..................................... RCFD 6056 //// 1.
</TABLE>

For purposes of this test, adjusted total assets equals total assets less
cash, U.S. Treasuries, U.S. Government agency obligations, and 80
percent of U.S. Government-sponsored agency obligations plus the allowance for
loan and lease losses and selected off-balance sheet items as reported on
Schedule RC-L (see instructions).

If the box marked YES has been checked, then the bank only has to complete
items 2 and 3 below. If the box marked NO has been checked, the bank
must complete the remainder of this schedule.

A NO response to item 1 does not necessarily mean that the bank's actual
risk-based capital ratio is less than eight percent or that the bank is
not in compliance with the risk-based capital guidelines.

<TABLE>
<CAPTION>
(Column A) (Column B)
Subordinated Debt(1) Other
and Intermediate Limited-
Term Preferred Life Capital
Items 2 and 3 are to be completed by all banks. Stock Instruments
------------------ ------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou RCFD Bil Mil Thou
- ----------------------------------------------------------------------- ----- ------------ ---- ------------
<S> <C> <C> <C>
1. Subordinated debt(1) and other limited-life capital instruments ////////////////// //////////////////
(original weighted average maturity of at least five years) with ////////////////// //////////////////
a remaining maturity of: ////////////////// //////////////////
a. One year or less.............................................. 3780 0 3786 0 2.a.
b. Over one year through two years............................... 3781 0 3787 0 2.b.
c. Over two years through three years............................ 3782 0 3788 0 2.c.
d. Over three years through four years........................... 3783 0 3789 0 2.d.
e. Over four years through five years............................ 3784 0 3790 0 2.e.
f. Over five years............................................... 3785 0 3791 0 2.f.

RCFD Bil Mil Thou
2. Total qualifying capital (i.e., Tier 1 and Tier 2 capital) allowable under the risk-based ---- ------------
capital guidelines........................................................................ 3792 1,210,840 3.
</TABLE>

<TABLE>
<CAPTION>
(Column A) (Column B)
Assets Credit Equivalent
Items 4-9 and Memorandum item 1 are to be completed Recorded Amount of
by banks that answered NO to item 1 above and on the Off-Balance
by banks with total assets of $1 billion or more. Balance Sheet Sheet Items(2)
- ----------------------------------------------------------------------- ------------------ ------------------
RCFD Bil Mil Thou RCFD Bil Mil Thou
---- ------------ ---- ------------
<S> <C> <C> <C>
1. Assets and credit equivalent amounts of off-balance sheet items ////////////////// //////////////////
assigned to the Zero percent risk category: ////////////////// //////////////////
a. Assets recorded on the balance sheet: ////////////////// //////////////////
(1) Securities issued by, other claims on, and claims ////////////////// //////////////////
unconditionally guaranteed by, the U.S. Government and its ////////////////// //////////////////
agencies and other OECD central governments................. 3794 2,235,631 ////////////////// 4.a.(1)
(2) All other................................................... 3795 411,780 ////////////////// 4.a.(2)
b. Credit equivalent amount of off-balance sheet items............. ////////////////// 3796 0 4.b.
</TABLE>
- ---------------
(1) Exclude mandatory convertible debt reported in Schedule RC-M, item 7.e,
"Total."
(2) Do not report in column B in the risk-weighted amount of assets reported
in column A.

31
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 12/31/93 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-22
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
-----------
</TABLE>

Schedule RC-R--Continued

<TABLE>
(Column A) (Column B)
Assets Credit Equivalent
Recorded Amount of
on the Off-Balance
Balance Sheet Sheet Items(1)
------------------ ------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou RCFD Bil Mil Thou
- -------------------------------------------------------------------- ---- ------------ ---- ------------
<S> <C> <C> <C>
5. Assets and credit equivalent amounts of off-balance sheet items ////////////////// //////////////////
assigned to the 20 percent risk category: ////////////////// //////////////////
a. Assets recorded on the balance sheet: ////////////////// //////////////////
(1) Claims conditionally guaranteed by the U.S. Government ////////////////// //////////////////
and its agencies and other OECD central governments..... 3798 16,799 ////////////////// 5.a.(1)
(2) Claims collateralized by securities issued by the U.S. ////////////////// //////////////////
Government and its agencies and other OECD central gov- ////////////////// //////////////////
ernments; by securities issued by U.S. Government-spon- ////////////////// //////////////////
sored agencies; and by cash on deposit................... 3799 0 ////////////////// 5.a.(2)
(3) All other................................................ 3800 2,347,474 ////////////////// 5.a.(3)
b. Credit equivalent amount of off-balance sheet items.......... ////////////////// 3801 127,972 5.b.
6. Assets and credit equivalent amounts of off-balance sheet items ////////////////// //////////////////
assigned to the 50 percent risk category: ////////////////// //////////////////
a. Assets recorded on the balance sheet......................... 3802 2,519,924 ////////////////// 6.a.
b. Credit equivalent amount of off-balance sheet items.......... ////////////////// 3803 42,524 6.b.
7. Assets and credit equivalent amounts of off-balance sheet items ////////////////// //////////////////
assigned to the 100 percent risk category: ////////////////// //////////////////
a. Assets recorded on the balance sheet......................... 3804 7,327,401 ////////////////// 7.a.
b. Credit equivalent amount of off-balance sheet items.......... ////////////////// 3805 1,815,364 7.b.
8. On-balance sheet values (or portions thereof) of interest rate, ////////////////// //////////////////
foreign exchange rate, and commodity contracts which have a ////////////////// //////////////////
capital assessment for their off-balance sheet exposure under the ////////////////// //////////////////
capital guidelines and those contracts (e.g., futures contracts) ////////////////// //////////////////
excluded from the calculation of the risk-based capital ratio ////////////////// //////////////////
(exclude margin accounts and accrued receivables from this item). 3806 0 ////////////////// 8.
9. Total assets recorded on the balance sheet (sum of items 4.a, ////////////////// //////////////////
5.a, 6.a, 7.a, and 8, column A) (must equal Schedule RC, item ////////////////// //////////////////
12 plus items 4.b and 4.c, plus Schedule RC-B, item 6.a.(3), ////////////////// //////////////////
column A)........................................................ 3807 14,859,009 ////////////////// 9.
</TABLE>

<TABLE>
<CAPTION>
(Column A) (Column B)
Notional Replacement
Principal Cost
Value (Market Value)
Memorandum ------------------- ------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou RCFD Bil Mil Thou
- --------------------------------------------------------------------- ----- ------------ ---- ------------
<S> <C> <C> <C>
1. Notional principal value and replacement cost of interest rate ////////////////// //////////////////
and foreign exchange rate contracts (in column B, report only ////////////////// //////////////////
those contracts with a positive replacement cost): ////////////////// //////////////////
a. Interest rate contracts (exclude futures contracts).......... ////////////////// 3808 3,262 M.1.a.
(1) With a remaining maturity of one year or less............ 3809 1,395,000 ////////////////// M.1.a.(1)
(2) With a remaining maturity of over one year............... 3810 2,393,250 ////////////////// M.1.a.(2)
b. Foreign exchange rate contracts (exclude contracts with an ////////////////// //////////////////
original maturity of 14 days or less and futures contracts).. ////////////////// 3811 82,113 M.1.b.
(1) With a remaining maturity of one year or less............ 3812 6,180,084 ////////////////// M.1.b.(1)
(2) With a remaining maturity of over one year............... 3813 6,806 ////////////////// M.1.b.(2)
- ---------------
</TABLE>

(1) Do not report in column B the risk-weighted amount of assets reported in
column A.

32
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Legal Title of Bank: SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Call Date: 12/31/93 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-23
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
-----------
</TABLE>

Optional Narrative Statement Concerning the Amounts
Reported in the Reports of Condition and Income
at close of business on September 30, 1993
<TABLE>
<CAPTION>
SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION Hartford , Connecticut
- ---------------------------------------------------------------- ------------------------------ ------------------------------
<S> <C> <C>
Legal Title of Bank City State
</TABLE>

The management of the reporting bank may, if it wishes, submit a brief narrative
statement on the amounts reported in the Reports of Condition and Income. This
optional statement will be made available to the public, along with the publicly
available data in the Reports of Condition and Income, in response to any
request for individual bank report data. However, the information reported in
column A and in all of Memorandum item 1 of Schedule RC-N is regarded as
confidential and will not be released to the public. BANKS CHOOSING TO SUBMIT
THE NARRATIVE STATEMENT SHOULD ENSURE THAT THE STATEMENT DOES NOT CONTAIN THE
NAMES OR OTHER IDENTIFICATIONS OF INDIVIDUAL BANK CUSTOMERS, REFERENCES TO THE
AMOUNTS REPORTED IN THE CONFIDENTIAL ITEMS IN SCHEDULE RC-N, OR ANY OTHER
INFORMATION THAT THEY ARE NOT WILLING TO HAVE MADE PUBLIC OR THAT WOULD
COMPROMISE THE PRIVACY OF THEIR CUSTOMERS. Banks choosing not to make a
statement may check the "No comment" box below and should make no entries of any
kind in the space provided for the narrative statement; i.e., DO NOT enter in
this space such phrases as "No statement," "Not applicable," "N/A," "No
comment," and "None."

The optional statement must be entered on this sheet. The statement should not
exceed 100 words. Further, regardless of the number of words, the statement must
not exceed 750 characters, including punctuation, indentation, and standard
spacing between words and sentences. If any submission should exceed 750
characters, as defined, it will be truncated at 750 characters with no notice to
the submitting bank and the truncated statement will appear as the bank's
statement both on agency computerized records and in computer-file releases to
the public.

All information furnished by the bank in the narrative statement must be
accurate and not misleading. Appropriate efforts shall be taken by the
submitting bank to ensure the statement's accuracy. The statement must be
signed, in the space provided below, by a senior officer of the bank who
thereby attests to its accuracy.

If, subsequent to the original submission, material changes are submitted for
the data reported in the Reports of Condition and Income, the existing narrative
statement will be deleted from the files, and from disclosure; the bank, at its
option, may replace it with a statement, under signature, appropriate to the
amended data.

The optional narrative statement will appear in agency records and in release to
the public exactly as submitted (or amended as described in the preceding
paragraph) by the management of the bank (except for the truncation of
statements exceeding the 750-character limit described above). THE STATEMENT
WILL NOT BE EDITED OR SCREENED IN ANY WAY BY THE SUPERVISORY AGENCIES FOR
ACCURACY OR RELEVANCE. DISCLOSURE OF THE STATEMENT SHALL NOT SIGNIFY THAT ANY
FEDERAL SUPERVISORY AGENCY HAS VERIFIED OR CONFIRMED THE ACCURACY OF THE
INFORMATION CONTAINED THEREIN. A STATEMENT TO THIS EFFECT WILL APPEAR ON ANY
PUBLIC RELEASE OF THE OPTIONAL STATEMENT SUBMITTED BY THE MANAGEMENT OF THE
REPORTING BANK.
- --------------------------------------------------------------------------------
No comment /X/ (RCON 6979) C471 C472 <-

BANK MANAGEMENT STATEMENT (please type or print clearly):
(TEXT 6980)

<TABLE>
<S> <C>
- ------------------------------------------------ ----------------------------------
Signature of Executive Officer of Bank Date of Signature
</TABLE>