SEAGULL ENERGY CORPORATION

                                       AND

                              THE BANK OF NEW YORK






                          Senior Subordinated Indenture

                            Dated as of July 15, 1993



















<PAGE>



                             CROSS REFERENCE SHEET*


     Provisions  of Trust  Indenture Act of 1939 and Indenture to be dated as of
July 15,  1993  between  SEAGULL  ENERGY  CORPORATION  and The Bank of New York,
Trustee:

<TABLE>
<CAPTION>

Section of the Act                                                                             Section of Indenture
<S>                                                                                          <C>

310(a)(1), (2) and (5)...............................................................        6.9
310(a)(3) and (4)....................................................................        Inapplicable
310(b)...............................................................................        6.8 and 6.10(a), (b)
                                                                                             and (d)
310(c)...............................................................................        Inapplicable
311(a)...............................................................................        6.13(a) and (c)
311(b)...............................................................................        6.13(b) and (c)
311(c)...............................................................................        Inapplicable
312(a)...............................................................................        4.1 and 4.2(a)
312(b)...............................................................................        4.2(a) and (b)(i)
                                                                                             and (ii)
312(c)...............................................................................        4.2(c)
313(a)...............................................................................        4.4(a)(i), (ii),
                                                                                             (iii), (iv), (v),
                                                                                             (vi) and (vii)
313(a)(5)............................................................................        Inapplicable
313(b)(1)............................................................................        Inapplicable
313(b)(2)............................................................................        4.4(b)
313(c)...............................................................................        4.4(c)
313(d)...............................................................................        4.4(d)
314(a)...............................................................................        4.3
314(b)...............................................................................        Inapplicable
314(c)(1) and (2)....................................................................        11.5
314(c)(3)............................................................................        Inapplicable
314(d)...............................................................................        Inapplicable
314(e)...............................................................................        11.5
314(f)...............................................................................        Inapplicable
315(a), (c) and (d)..................................................................        6.1
315(b)...............................................................................        5.8
315(e)...............................................................................        5.9
316(a)(1)............................................................................        5.7
316(a)(2)............................................................................        Not required
316(a) (last sentence)...............................................................        7.4
316(b)...............................................................................        5.4
317(a)...............................................................................        5.2
317(b)...............................................................................        3.5(a)
318(a)...............................................................................        11.7

</TABLE>




<PAGE>




<TABLE>
<CAPTION>


                                                      ARTICLE ONE
                                                      DEFINITIONS
<S>                                                                                                               <C>

Affiliate.......................................................................................................  1
Asset Sale......................................................................................................  2
Authenticating Agent............................................................................................  2
Bankruptcy Code.................................................................................................  2
Board of Directors..............................................................................................  2
Board Resolution................................................................................................  2
Business Day....................................................................................................  2
Commission......................................................................................................  2
Consolidated Net Tangible Assets................................................................................  2
Corporate Trust Office..........................................................................................  2
Depositary......................................................................................................  2
EBITDA..........................................................................................................  3
EBITDA/Interest Ratio...........................................................................................  3
ENSTAR Alaska...................................................................................................  3
Event of Default................................................................................................  3
Global Security.................................................................................................  3
Holder..........................................................................................................  3
Holder of Securities............................................................................................  3
Securityholder..................................................................................................  3
Indebtedness....................................................................................................  3
Indenture.......................................................................................................  4
interest........................................................................................................  4
Issuer..........................................................................................................  4
Issuer Order....................................................................................................  4
Officers' Certificate...........................................................................................  4
Opinion of Counsel..............................................................................................  4
original issue date.............................................................................................  4
original issue discount.........................................................................................  4
Original Issue Discount Security................................................................................  5
Outstanding.....................................................................................................  5
Periodic Offering...............................................................................................  5
Person..........................................................................................................  5
Place of Payment................................................................................................  5
principal.......................................................................................................  5
principal amount................................................................................................  6
Principal Property..............................................................................................  6
record date.....................................................................................................  6
Responsible Officer.............................................................................................  6
Restricted Subsidiary...........................................................................................  6
Sale and Leaseback Transaction..................................................................................  6
Secured Debt....................................................................................................  6
Security........................................................................................................  6
Securities......................................................................................................  6
Senior Indebtedness.............................................................................................  6
Senior Subordinated Indebtedness................................................................................  6
Subordinated Indebtedness.......................................................................................  7
Subsidiary......................................................................................................  7
Trust Indenture Act of 1939.....................................................................................  7
Trustee.........................................................................................................  7
Unrestricted Subsidiary.........................................................................................  7
U.S. Government Obligations.....................................................................................  7
vice president..................................................................................................  7
Yield to Maturity...............................................................................................  7
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
                                                     ARTICLE TWO
                                                     SECURITIES

<S>               <C>                                                                                            <C>

SECTION 2.1       Forms Generally...............................................................................  8
SECTION 2.2       Form of Trustee's Certificate of Authentication...............................................  8
SECTION 2.3       Amount Unlimited, Issuable in Series..........................................................  8
SECTION 2.4       Authentication and Delivery of Securities..................................................... 10
SECTION 2.5       Execution of Securities....................................................................... 12
SECTION 2.6       Certificate of Authentication................................................................. 13
SECTION 2.7       Denomination and Date of Securities; Payments of Interest..................................... 13
SECTION 2.8       Registration Transfer and Exchange............................................................ 13
SECTION 2.9       Mutilated, Defaced, Destroyed, Lost and Stolen Securities..................................... 15
SECTION 2.10      Cancellation of Securities; Disposition Thereof............................................... 16
SECTION 2.11      Temporary Securities.......................................................................... 16
SECTION 2.12      CUSIP Numbers................................................................................. 16

                                                  ARTICLE THREE
                                             COVENANTS OF THE ISSUER

SECTION 3.1       Payment of Principal and Interest............................................................. 17
SECTION 3.2       Offices for Notices and Payments, etc......................................................... 17
SECTION 3.3       No Interest Extension......................................................................... 17
SECTION 3.4       Appointments to Fill Vacancies in Trustee's Office............................................ 17
SECTION 3.5       Provision as to Paying Agent.................................................................. 17
SECTION 3.6       Restriction on Creation of Secured Debt....................................................... 18
SECTION 3.7       Restriction on Sale and Leaseback Transactions................................................ 19
SECTION 3.8       Restriction on Transfer of Principal Property to Unrestricted Subsidiary...................... 20
SECTION 3.9       Restriction on Incurrence of Indebtedness by Restricted Subsidiaries.......................... 20
SECTION 3.10      Limitation on Incurrence of Additional Indebtedness........................................... 21
SECTION 3.11      Limitation on Issuance of Certain Other Subordinated Indebtedness............................. 21

                                                   ARTICLE FOUR
                                      SECURITYHOLDERS LISTS AND REPORTS BY THE
                                               ISSUER AND THE TRUSTEE

SECTION 4.1       Issuer to Furnish Trustee Information as to Names and Addresses of Securityholders...........  22
SECTION 4.2       Preservation and Disclosure of Securityholders Lists.......................................... 22
SECTION 4.3       Reports by the Issuer......................................................................... 23
SECTION 4.4       Reports by the Trustee........................................................................ 23

                                                   ARTICLE FIVE
                                    REMEDIES OF THE TRUSTEE AND SECURITY HOLDERS
                                                ON EVENT OF DEFAULT

SECTION 5.1       Events of Default............................................................................. 25
SECTION 5.2       Payment of Securities on Default; Suit Therefor............................................... 27
SECTION 5.3       Application of Moneys Collected by Trustee.................................................... 28
SECTION 5.4       Proceedings by Securityholders................................................................ 28
SECTION 5.5       Proceedings by Trustee........................................................................ 29
SECTION 5.6       Remedies Cumulative and Continuing............................................................ 29
SECTION 5.7       Direction of Proceedings; Waiver of Defaults by Majority of Securityholders................... 29
SECTION 5.8       Notice of Defaults............................................................................ 30
SECTION 5.9       Undertaking to Pay Costs...................................................................... 30
</TABLE>


<PAGE>

<TABLE>
<CAPTION>
                                                     ARTICLE SIX
                                               CONCERNING THE TRUSTEE
<S>               <C>                                                                                            <C>
SECTION 6.1       Duties and Responsibilities of the Trustee; During Default; Prior to Default.................. 30
SECTION 6.2       Certain Rights of the Trustee................................................................. 31
SECTION 6.3       Trustee Not Responsible for Recitals, Disposition of Securities or Application
                    of Proceeds Thereof......................................................................... 32
SECTION 6.4       Trustee and Agents May Hold Securities; Collections, etc...................................... 32
SECTION 6.5       Moneys Held by Trustee........................................................................ 32
SECTION 6.6       Compensation and Indemnification of Trustee and Its Prior Claim............................... 32
SECTION 6.7       Right of Trustee to Rely on Officers' Certificate, etc........................................ 33
SECTION 6.8       Qualification of Trustee; Conflicting Interests............................................... 33
SECTION 6.9       Persons Eligible for Appointment as Trustee................................................... 37
SECTION 6.10      Resignation and Removal; Appointment of Successor Trustee..................................... 38
SECTION 6.11      Acceptance of Appointment by Successor Trustee................................................ 39
SECTION 6.12      Merger, Conversion, Consolidation or Succession to Business of Trustee........................ 39
SECTION 6.13      Preferential Collection of Claims Against the Issuer.......................................... 40
SECTION 6.14      Appointment of Authenticating Agent........................................................... 42

                                                   ARTICLE SEVEN
                                           CONCERNING THE SECURITYHOLDERS

SECTION 7.1       Evidence of Action Taken by Securityholders................................................... 43
SECTION 7.2       Proof of Execution of Instruments and of Holding of Securities................................ 43
SECTION 7.3       Holders to be Treated as Owners............................................................... 44
SECTION 7.4       Securities Owned by Issuer Deemed Not Outstanding............................................. 44
SECTION 7.5       Right of Revocation of Action Taken........................................................... 44
SECTION 7.6       Record Date for Consents and Waivers.......................................................... 45

                                                  ARTICLE EIGHT
                                             SUPPLEMENTAL INDENTURES

SECTION 8.1       Supplemental Indentures Without Consent of Securityholders.................................... 45
SECTION 8.2       Supplemental Indentures with Consent of Securityholders....................................... 46
SECTION 8.3       Effect of Supplemental Indenture.............................................................. 47
SECTION 8.4       Documents to Be Given to Trustee.............................................................. 47
SECTION 8.5       Notation on Securities in Respect of Supplemental Indentures.................................. 47
SECTION 8.6       Subordination Unimpaired...................................................................... 47

                                                   ARTICLE NINE
                          CONSOLIDATION, MERGER, SALE, LEASE, EXCHANGE OR OTHER DISPOSITION

SECTION 9.1       Issuer May Consolidate, etc., on Certain Terms................................................ 48
SECTION 9.2       Securities to be Secured in Certain Events.................................................... 48
SECTION 9.3       Successor Corporation to be Substituted....................................................... 48
SECTION 9.4       Opinion of Counsel to be Given Trustee........................................................ 49

                                                  ARTICLE TEN
                            SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS

SECTION 10.1      Satisfaction and Discharge of Indenture....................................................... 49
SECTION 10.2      Application by Trustee of Funds Deposited for Payment of Securities........................... 51
SECTION 10.3      Repayment of Moneys Held by Paying Agent...................................................... 51
SECTION 10.4      Return of Moneys Held by Trustee and Paying Agent Unclaimed for Two Years..................... 51
SECTION 10.5      Indemnity for U.S. Government Obligations..................................................... 51
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
                                                  ARTICLE ELEVEN
                                              MISCELLANEOUS PROVISIONS
<S>               <C>                                                                                            <C>
SECTION 11.1      Partners, Incorporators, Stockholders, Officers and Directors of Issuer Exempt
                   from Individual Liability.................................................................... 52
SECTION 11.2      Provisions of Indenture for the Sole Benefit of Parties and Holders of Securities............. 52
SECTION 11.3      Successors and Assigns of Issuer Bound by Indenture........................................... 52
SECTION 11.4      Notices and Demands on Issuer, Trustee and Holders of Securities.............................. 52
SECTION 11.5      Officers' Certificates and Opinions of Counsel; Statements to Be Contained Therein............ 52
SECTION 11.6      Payments Due on Saturdays, Sundays and Holidays............................................... 53
SECTION 11.7      Conflict of Any Provision of Indenture with Trust Indenture Act of 1939....................... 53
SECTION 11.8      GOVERNING LAW................................................................................. 53
SECTION 11.9      Counterparts.................................................................................. 54
SECTION 11.10     Effect of Headings............................................................................ 54

                                                    ARTICLE TWELVE
                                     REDEMPTION OF SECURITIES AND SINKING FUNDS

SECTION 12.1      Applicability of Article...................................................................... 54
SECTION 12.2      Notice of Redemption; Partial Redemptions..................................................... 54
SECTION 12.3      Payment of Securities Called for Redemption................................................... 55
SECTION 12.4      Exclusion of Certain Securities from Eligibility for Selection for Redemption................. 55
SECTION 12.5      Mandatory and Optional Sinking Funds.......................................................... 55

                                                  ARTICLE THIRTEEN
                                                    SUBORDINATION

SECTION 13.1      Securities Subordinated to Senior Indebtedness................................................ 57
SECTION 13.2      Reliance on Certificate of Liquidating Agent; Further Evidence as to Ownership of
                    Senior Indebtedness ........................................................................ 59
SECTION 13.3      Payment Permitted If No Default............................................................... 60
SECTION 13.4      Disputes with Holders of Certain Senior Indebtedness.......................................... 60
SECTION 13.5      Trustee Not Charged with Knowledge of Prohibition............................................. 60
SECTION 13.6      Trustee to Effectuate Subordination........................................................... 61
SECTION 13.7      Rights of Trustee as Holder of Senior Indebtedness............................................ 61
SECTION 13.8      Article Applicable to Paying Agents........................................................... 61
SECTION 13.9      Subordination Rights Not Impaired by Acts or Omissions of the Issuer or Holders
                    of Senior Indebtedness...................................................................... 61
SECTION 13.10     Trustee Not Fiduciary for Holders of Senior Indebtedness...................................... 61

</TABLE>


<PAGE>

     THIS  SENIOR  SUBORDINATED  INDENTURE,  dated as of July 15,  1993  between
SEAGULL ENERGY CORPORATION,  a Texas corporation (the "Issuer"), and The Bank of
New York, a New York banking corporation as trustee (the "Trustee"),

                              W I T N E S S E T H:

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

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

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

     NOW, THEREFORE:

     In consideration of the premises and the purchases of the Securities by the
Holders (as hereinafter  defined)  thereof,  the Issuer and the Trustee mutually
covenant  and agree for the equal and  proportionate  benefit of the  respective
Holders from time to time of the Securities as follows:


                                   ARTICLE ONE
                                   DEFINITIONS

     SECTION  1.1  For  all  purposes  of this  Indenture  and of any  indenture
supplemental  hereto the  following  terms  shall have the  respective  meanings
specified in this Section 1.1 (except as otherwise  expressly provided or unless
the context otherwise clearly requires).  All other terms used in this Indenture
that are defined in the Trust  Indenture  Act of 1939,  including  terms defined
therein by reference to the Securities  Act of 1933, as amended,  shall have the
meanings  assigned  to  such  terms  in  said  Trust  Indenture  Act and in said
Securities  Act as in force  at the date of this  Indenture  (except  as  herein
otherwise expressly provided or unless the context otherwise clearly requires).

     All accounting  terms used herein and not expressly  defined shall have the
meanings assigned to such terms in accordance with generally accepted accounting
principles,  and the term "generally accepted accounting  principles" means such
accounting principles as are generally accepted at the time of any computation.

     The words  "herein",  "hereof" and  "hereunder"  and other words of similar
import  refer to this  Indenture as a whole and not to any  particular  Article,
Section or other  subdivision.  The expressions "date of this Indenture",  "date
hereof",  "date as of which this  Indenture is dated" and "date of execution and
delivery of this Indenture" and other expressions of similar import refer to the
effective date of the original execution and delivery of this Indenture, viz.
July 15, 1993.

     The terms  defined in this Article  have the  meanings  assigned to them in
this Article and include the plural as well as the singular.

     "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.

     "Asset Sale" for any Person shall mean the sale, lease, conveyance or other
disposition  (including  without  limitation  by  merger or  consolidation,  and
whether  by  operation  of law or  otherwise)  of any of  that  Person's  assets
(including  without limitation the sale or other disposition of capital stock of
any Subsidiary of such Person, whether by such Person or by such Subsidiary),

<PAGE>

whether owned on the date of this  Indenture or  subsequently  acquired,  in one
transaction or a series of related transactions, in which such Person and/or its
Subsidiaries   receive  cash  and/or  other  consideration   (including  without
limitation the  unconditional  assumption of  Indebtedness of such Person and/or
its Subsidiaries) having an aggregate fair market value of $5 million or more as
to such  transaction  or series of  transactions;  provided,  however,  that the
following  shall not  constitute  Asset Sales:  (i) sales of  inventories in the
ordinary course of business or pledges of inventories and of accounts receivable
by the Issuer or its Subsidiaries;  (ii) transactions between the Issuer and any
of its wholly owned  Subsidiaries or among such wholly owned  Subsidiaries;  and
(iii)  the  incurrence  of any  mortgage,  security  interest,  pledge,  lien or
encumbrance that secures Secured Debt as permitted by Section 3.6.

     "Authenticating Agent" shall have the meaning set forth in Section 6.14.

     "Bankruptcy Code" means the United States Bankruptcy Code, 11 United States
Code ss.ss. 101 et seq., or any successor statute thereto.

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

     "Board  Resolutions"  means  one  or  more  resolutions,  certified  by the
secretary or an  assistant  secretary of the Issuer to have been duly adopted or
consented to by the Board of Directors and to be in full force and effect.

     "Business Day" means,  with respect to any Security,  a day that (a) in the
Place of Payment (or in any of the Places of Payment, if more than one) in which
amounts are payable,  as specified in the form of such Security,  and (b) in the
city in which  the  Corporate  Trust  Office is  located,  is not a day on which
banking institutions are authorized or required by law or regulation to close.

     "Commission" means the Securities and Exchange Commission,  as from time to
time constituted, created under the Securities Exchange Act of 1934, as amended,
or, if at any time after the  execution  and  delivery  of this  Indenture  such
Commission  is not existing and  performing  the duties now assigned to it under
the Trust  Indenture Act of 1939,  then the body  performing such duties on such
date.

     "Consolidated  Net Tangible  Assets" means the  aggregate  amount of assets
included on the most  recent  consolidated  balance  sheet of the Issuer and its
Restricted Subsidiaries,  less applicable reserves and other properly deductible
items and after  deducting  therefrom  (a) all current  liabilities  and (b) all
goodwill,  trade  names,  trademarks,  patents,  unamortized  debt  discount and
expense and other like  intangibles,  all in accordance with generally  accepted
accounting principles consistently applied.

     "Corporate  Trust  Office"  means the  office of the  Trustee  at which the
corporate  trust  business of the Trustee  shall,  at any  particular  time,  be
principally  administered,  which  office  is,  at the  date  as of  which  this
Indenture is dated, located in New York, New York.

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

     "EBITDA" shall mean net earnings  (excluding  gains and losses on sales and
retirement of assets, non-cash write downs and charges resulting from accounting
convention  changes)  before  deduction  for federal and state  taxes,  interest
expense or depreciation,  depletion and amortization  expense, all determined in
accordance with generally accepted accounting principles.

     "EBITDA/Interest Ratio", on any date, shall mean the ratio of (a) EBITDA of
the  Issuer  and its  Restricted  Subsidiaries  on a  consolidated  basis to (b)
interest   expense  on  all  Indebtedness  of  the  Issuer  and  its  Restricted
Subsidiaries on a consolidated  basis for any twelve-month  period ending on the
last day of the most recent calendar  quarter;  provided,  however,  that if any
calculation  of the  Issuer's  EBITDA/Interest  Ratio  requires  the  use of any
quarter prior to the date of the Indenture, such calculation shall be made on a

<PAGE>

pro forma basis,  giving effect to the issuance of the Securities and the use of
the net proceeds therefrom,  as if the same had occurred at the beginning of the
twelve-month period used to make such calculation;  and provided further that if
any such calculation  requires the use of any quarter prior to the date that any
Asset Sale was  consummated,  any  Indebtedness  described  in clause (a) of the
definition of  Indebtedness  was  incurred,  any capital stock of the Issuer was
issued in a financing  transaction or any acquisition other than in the ordinary
course of business was  consummated by the Issuer or any Restricted  Subsidiary,
such calculation shall be made on a pro forma basis,  giving effect to each such
Asset  Sale,   incurrence  of   Indebtedness,   issuance  of  capital  stock  or
acquisition,  as the case may be, and the use of any proceeds  therefrom,  as if
the same had occurred at the beginning of the  twelve-month  period used to make
such calculation.

     "ENSTAR  Alaksa"  means (i) the division of the Issuer known on the date of
this  Indenture as ENSTAR  Natural Gas  Company,  which owns on the date of this
Indenture the gas distribution  system in south-central  Alaska, and (ii) Alaska
Pipeline Company,  an Alaska corporation and a Subsidiary of the Issuer, in each
case together with successors and assigns.

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

     "Global Security" means a Security  evidencing all or a part of a series of
Securities  issued to the Depositary for such series in accordance  with Section
2.3 and bearing the legend prescribed in Section 2.4.

     "Holder",  "Holder of  Securities" or other similar terms mean, in the case
of any  Security,  the person in whose name such  Security is  registered in the
security  register  kept by the Issuer for that purpose in  accordance  with the
terms hereof.

     "Indebtedness" means, with respect to any Person,

     (a) (i) the  principal of and premium,  if any,  and  interest,  if any, on
indebtedness  for money  borrowed of such  Person,  indebtedness  of such Person
evidenced by bonds, notes,  debentures or similar obligations,  and any guaranty
by such Person of any indebtedness for money borrowed or indebtedness  evidenced
by bonds, notes,  debentures or similar obligations of any other Person, whether
any such  indebtedness  or guaranty is outstanding on the date of this Indenture
or is  thereafter  created,  assumed  or  incurred,  (ii) the  principal  of and
premium,  if any, and  interest,  if any, on  indebtedness  for money  borrowed,
incurred,   assumed  or  guaranteed  by  such  Person  in  connection  with  the
acquisition by it or any of its subsidiaries of any other businesses, properties
or other assets and (iii) lease  obligations  which such Person  capitalizes  in
accordance with Statement of Financial  Accounting  Standards No. 13 promulgated
by the Financial  Accounting  Standards Board or such other  generally  accepted
accounting principles as may be from time to time in effect;

     (b) any other  indebtedness  of such  Person,  including  any  indebtedness
representing  the  balance  deferred  and  unpaid of the  purchase  price of any
property or interest therein, and any guaranty,  endorsement or other contingent
obligation  of such  Person in respect of any  indebtedness  of another  that is
outstanding on the date of this Indenture or is thereafter  created,  assumed or
incurred by such Person;

     (c)  obligations of such Person under interest rate,  commodity or currency
swaps, caps, collars, options and similar arrangements;

     (d) obligations of such Person for the  reimbursement of any obligor on any
letter of credit, banker's acceptance or similar credit transaction; and

     (e) any amendments,  modifications,  refundings,  renewals or extensions of
any indebtedness or obligation  described as Indebtedness in clauses (a) through
(d) above.

     "Indenture" means this instrument as originally  executed and delivered or,
if amended or supplemented as herein provided,  as so amended or supplemented or
both,  including,  for all purposes of this instrument and any such  supplement,
the  provisions of the Trust  Indenture Act of 1939 that are deemed to be a part
of and govern this instrument and any such supplement,  respectively,  and shall
include the forms and terms of particular  series of Securities  established  as
contemplated hereunder.

     The term "interest" means,  when used with respect to non-interest  bearing
Securities (including,  without limitation, any Original Issue Discount Security
that by its terms bears interest only after maturity or upon default in any

<PAGE>

other payment due on such Security), interest payable after maturity (whether at
stated  maturity,  upon  acceleration  or  redemption or otherwise) or after the
date,  if any,  on which the Issuer  becomes  obligated  to acquire a  Security,
whether upon conversion, by purchase or otherwise.

     "Issuer" means (except as otherwise provided in Section 6.8) Seagull Energy
Corporation,  a Texas corporation,  and, subject to Article Nine, its successors
and assigns.

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

     "Officers'  Certificate",  when used with  respect to the  Issuer,  means a
certificate signed by the chairman of the Board of Directors,  the president, or
any  vice  president  and  by  the  treasurer,   any  assistant  treasurer,  the
controller,  any assistant controller,  the secretary or any assistant secretary
of the Issuer.  Each such certificate shall include the statements  provided for
in Section 11.5 if and to the extent  required by the provisions of such Section
11.5.  One of the officers  signing an Officers'  Certificate  given pursuant to
Section 4.3 shall be the principal executive, financial or accounting officer of
the Issuer.

     "Opinion  of  Counsel"  means an  opinion  in  writing  signed by the chief
counsel of the Issuer or by such other  legal  counsel who may be an employee of
or counsel to the Issuer and who shall be satisfactory to the Trustee. Each such
opinion shall include the statements provided for in Section 11.5, if and to the
extent required by the provisions of such Section 11.5.

     The term "original  issue date" of any Security (or portion  thereof) means
the earlier of (a) the date of such Security or (b) the date of any Security (or
portion  thereof) for which such Security was issued (directly or indirectly) on
registration of transfer, exchange or substitution.

     The term  "original  issue  discount" of any debt  security,  including any
Original Issue  Discount  Security,  means the difference  between the principal
amount of such debt  security and the initial  issue price of such debt security
(as set forth in the case of an Original Issue Discount  Security on the face of
such Security).

     "Original Issue Discount  Security" means any Security that provides for an
amount  less than the  principal  amount  thereof to be due and  payable  upon a
declaration of acceleration of the maturity thereof pursuant to Section 5.1.

     "Outstanding" (except as otherwise provided in Section 6.8), when used with
reference to Securities,  shall, subject to the provisions of Section 7.4, mean,
as of any particular  time, all  Securities  authenticated  and delivered by the
Trustee under this Indenture, except:

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

     (b)  Securities  (other  than  Securities  of any  series  as to which  the
provisions of Article Ten hereof shall not be applicable),  or portions thereof,
for the payment or redemption of which moneys or U.S. Government Obligations (as
provided for in Section 10.1) in the necessary  amount shall have been deposited
in trust with the  Trustee or with any paying  agent  (other than the Issuer) or
shall  have been set aside,  segregated  and held in trust by the Issuer for the
Holders of such  Securities  (if the Issuer shall act as its own paying  agent),
provided that, if such Securities, or portions thereof, are to be redeemed prior
to the  maturity  thereof,  notice of such  redemption  shall have been given as
herein provided,  or provision  satisfactory to the Trustee shall have been made
for giving such notice; and

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

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

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

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

     "Place of Payment", when used with respect to the Securities of any series,
means the place or places where the  principal of and  interest,  if any, on the
Securities of such series are payable as  determined in accordance  with Section
2.3.

     The term "principal" of a debt security,  including any Security, means the
amount (including,  without  limitation,  if and to the extent  applicable,  any
premium and, in the case of an Original  Issue  Discount  Security,  any accrued
original issue discount, but excluding interest) that is payable with respect to
such  debt  security  as of any date  and for any  purpose  (including,  without
limitation,  in  connection  with any sinking fund,  upon any  redemption at the
option of the Issuer,  upon any purchase or exchange at the option of the Issuer
or the holder of such debt security and upon any acceleration of the maturity of
such debt security).

     The term  "principal  amount" of a debt  security,  including any Security,
means the principal amount as set forth on the face of such debt security.

     "Principal   Property"  means  any  real  property,   manufacturing  plant,
processing  plant,  pipeline,  office  building,  warehouse  or  other  physical
facility, or any other like depreciable or depletable asset of the Issuer or any
Restricted  Subsidiary  whether  owned at July 1,  1993 or  thereafter  acquired
(other than any  facility  thereafter  acquired  for the control or abatement of
atmospheric pollutants or contaminants or water, noise, odor or other pollution)
which in the opinion of the Board of Directors is of material  importance to the
total  business  conducted by the Issuer and its Restricted  Subsidiaries,  as a
whole; provided, however, that any such property shall not be deemed a Principal
Property  if such  property  does not have a fair  value in  excess of 3% of the
total  assets  included on a  consolidated  balance  sheet of the Issuer and its
Restricted   Subsidiaries   prepared  in  accordance  with  generally   accepted
accounting principles consistently applied.

     The term "record date" shall have the meaning set forth in Section 2.7.

     "Responsible  Officer",  when used with respect to the  Trustee,  means any
officer assigned by the Trustee to administer its corporate trust matters.

     "Restricted Subsidiary" means (a) any Subsidiary other than an Unrestricted
Subsidiary,  and (b) any  Subsidiary  which was an  Unrestricted  Subsidiary but
which,  subsequent to the date hereof, is designated by the Issuer (by certified
resolution  of  the  Board  of  Directors  delivered  to  the  Trustee)  to be a
Restricted Subsidiary;  provided, however, that the Issuer may not designate any
such Subsidiary to be a Restricted Subsidiary if the Issuer would thereby breach
any  covenant  or  agreement  herein  contained  (on the  assumptions  that  any
outstanding  Indebtedness  of such  Subsidiary  was incurred at the time of such
designation and that any Sale and Leaseback Transaction to which such Subsidiary
is then a party was entered into at the time of such designation).

     " Sale and Leaseback" shall have the meaning set forth in Section 3.7.

     "Secured  Debt" means  indebtedness  for money  borrowed by the Issuer or a
Restricted  Subsidiary and any other  indebtedness of the Issuer or a Restricted
Subsidiary on which interest is paid or payable (other than indebtedness owed by
a Restricted  Subsidiary  to the Issuer,  by a Restricted  Subsidiary to another
Restricted Subsidiary or by the Issuer to a Restricted Subsidiary),  that in any
such case is secured by (a) a mortgage or other lien on any  Principal  Property
of the  Issuer  or a  Restricted  Subsidiary,  or (b) a  pledge,  lien or  other
security  interest  on any  shares  of stock  or  indebtedness  of a  Restricted
Subsidiary,  or (c) in the  case  of any  such  indebtedness  of the  Issuer,  a
guaranty by any  Restricted  Subsidiary.  The amount of Secured Debt at any time
outstanding shall be the amount then owing thereon by the Issuer or a Restricted
Subsidiary.

     "Secrity" or "Securities" (except as otherwise provided in Section 6.8) has
the meaning  stated in the first  recital of this  Indenture or, as the case may
be,  Securities  that have been  authenticated  and  delivered  pursuant to this
Indenture.

     "Senior  Indebtedness"  means Indebtedness of the Issuer outstanding at any

<PAGE>

time except (a) any  Indebtedness  as to which,  by the terms of the  instrument
creating or evidencing  the same, it is provided that such  Indebtedness  is not
senior  in right of  payment  to the  Securities,  (b) the  Securities,  (c) any
Indebtedness  of the Issuer to a  wholly-owned  subsidiary  of the  Issuer,  (d)
interest  accruing  after the filing of a  petition  initiating  any  proceeding
referred to in  Sections  5.1(e) and 5.1(f)  unless such  interest is an allowed
claim  enforceable  against the Issuer in a  proceeding  under  federal or state
bankruptcy laws and (e) trade payables.

     "Senior  Subordinated  Indebtedness"  means  the  Securities  and any other
Indebtedness  of the Issuer  that ranks  pari  passu  with the  Securities.  Any
Indebtedness  of the Issuer that is  subordinate or junior by its terms in right
of  payment to any other  Indebtedness  of the Issuer  shall be  subordinate  to
Senior  Subordinated  Indebtedness  unless the instrument creating or evidencing
the same or pursuant to which the same is outstanding specifically provides that
such  Indebtedness  (i) is to rank pari  passu with  other  Senior  Subordinated
Indebtedness  and (ii) is not  subordinated by its terms to any  Indebtedness of
the Issuer which is not Senior Indebtedness.

     "Subordinated   Indebtedness"  means  the  Securities,   any  other  Senior
Subordinated  Indebtedness  and any other  Indebtedness  that is  subordinate or
junior in right of payment to Senior Indebtedness.

     "Subsidiary"  means any corporation of which the Issuer,  or the Issuer and
one  or  more  Subsidiaries,  or any  one  or  more  Subsidiaries,  directly  or
indirectly own voting securities entitling any one or more of the Issuer and its
Subsidiaries  to elect a majority of the  directors,  either at all times or, so
long as there is no default or  contingency  which  permits  the  holders of any
other  class or classes of  securities  to vote for the  election of one or more
directors.

     "Trust Indenture Act of 1939" (except as otherwise provided in Sections 8.1
and 8.2)  means  the  Trust  Indenture  Act of 1939,  as  amended  by the  Trust
Indenture Reform Act of 1990, as in force at the date as of which this Indenture
is originally executed.

     "Trustee"  means the Person  identified as "Trustee" in the first paragraph
hereof and,  subject to the  provisions  of Article Six,  shall also include any
successor trustee.  "Trustee" shall also mean or include each Person who is then
a trustee  hereunder  and,  if at any time  there is more than one such  Person,
"Trustee"  as used with respect to the  Securities  of any series shall mean the
trustee with respect to the Securities of such series.

     "Inrestricted  Subsidiary"  means (a) any Subsidiary  acquired or organized
after the date hereof,  provided,  however,  that such Subsidiary shall not be a
successor,  directly or indirectly,  to any Restricted  Subsidiary,  and (b) any
Subsidiary  whose  principal  business and assets are located outside the United
States of America,  its territories and possessions and Canada or are located in
Puerto Rico, and (c) any Subsidiary the principal  business of which consists of
financing or assisting in financing the  acquisition  or disposition of products
of the Issuer or a Subsidiary by dealers,  distributors or other customers,  and
(d) any Subsidiary the principal business of which is owning,  leasing,  dealing
in or developing  real property,  and (e) any Subsidiary  substantially  all the
assets  of  which  consist  of  stock or other  securities  of a  Subsidiary  or
Subsidiaries  of the  character  described  in clauses  (a)  through (d) of this
paragraph,  unless and until such Subsidiary  shall have been designated to be a
Restricted  Subsidiary  pursuant to clause (b) of the  definition of "Restricted
Subsidiary".

     "U.S.  Government  Obligations" shall have the meaning set forth in Section
10.1(B).

     The term  "vice  president,"  when used with  respect  to the Issuer or the
Trustee, means any vice president,  regardless of whether designated by a number
or a word or words added before or after the title "vice president."

     "Yield to Maturity"  means the yield to maturity on a series of Securities,
calculated  at the time of issuance of such series,  or, if  applicable,  at the
most recent  redetermination  of  interest on such  series,  and  calculated  in
accordance with generally  accepted  financial practice or as otherwise provided
in the terms of such series of Securities. <PAGE>


                                   ARTICLE TWO
                                   SECURITIES

     SECTION  2.1  Forms  Generally.  The  Securities  of each  series  shall be
substantially  in such form (not  inconsistent  with this Indenture) as shall be
established by or pursuant to one or more Board  Resolutions  (as set forth in a
Board Resolution or, to the extent established pursuant to rather than set forth
in a Board Resolution, an Officers' Certificate detailing such establishment) or
in  one  or  more  indentures  supplemental  hereto,  in  each  case  with  such
appropriate  insertions,  omissions,  substitutions  and other variations as are
required or permitted  by this  Indenture,  and may have  imprinted or otherwise
reproduced thereon such legend or legends or endorsements, not inconsistent with
the provisions of this  Indenture,  as may be required to comply with any law or
with any  rules  or  regulations  pursuant  thereto,  or with  any  rules of any
securities  exchange or to conform to general usage, all as may be determined by
the officers executing such Securities,  as evidenced by their execution of such
Securities.

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

     SECTION 2.2 Form of Trustee's Certificate of Authentication.  The Trustee's
certificate  of  authentication  on all  Securities  shall be  substantially  as
follows:

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

                                       The Bank of New York, as Trustee

                                       By_______________________________

                                           Authorized Signatory


     If at any  time  there  shall be an  Authenticating  Agent  appointed  with
respect to any series of  Securities,  then the  Securities of such series shall
bear, in addition to the Trustee's  certificate of authentication,  an alternate
Certificate of Authentication which shall be substantially as follows:

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

                                       The Bank of New York, as Trustee

                                       By _________________________________
                                            as Authenticating Agent


                                       By__________________________________

                                           Authorized Signatory

     SECTION 2.3 Amount Unlimited,  Issuable in Series. The aggregate  principal
amount of  Securities  which  may be  authenticated  and  delivered  under  this
Indenture is unlimited.

     The  Securities  may be issued in one or more series and the  Securities of
each such series shall rank equally and pari passu with the  Securities  of each
other series,  but all Securities  issued  hereunder  shall be  subordinate  and
junior in right of payment, to the extent and in the manner set forth in Article
Thirteen, to all Senior Indebtedness.  There shall be established in or pursuant
to one or more Board  Resolutions  (and, to the extent  established  pursuant to
rather  than  set  forth  in a Board  Resolution,  in an  Officers'  Certificate
detailing  such   establishment)  or  established  in  one  or  more  indentures
supplemental hereto, prior to the initial issuance of Securities of any series:

     (1)  the  designation  of  the  Securities  of  the  series,   which  shall

<PAGE>

distinguish  the  Securities  of such  series from the  Securities  of all other
series;

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

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

     (4) the rate or rates at which the  Securities  of the  series  shall  bear
interest,  if any, the date or dates from which any such interest  shall accrue,
on which any such interest shall be payable and on which a record shall be taken
for the  determination  of Holders to whom any such  interest  is payable or the
method by which such rate or rates or date or dates shall be determined or both;

     (5) the place or places where and the manner in which the  principal of and
interest, if any, on Securities of the series shall be payable (if other than as
provided  in Section  3.2) and the office or agency  for the  Securities  of the
series maintained by the Issuer pursuant to Section 3.2;

     (6) the  right,  if  any,  of the  Issuer  to  redeem,  purchase  or  repay
Securities  of the series,  in whole or in part, at its option and the period or
periods within which,  the price or prices (or the method by which such price or
prices  shall be  determined  or both) at which,  the form or method of  payment
therefor if other than in cash and any terms and  conditions  upon which and the
manner in which (if different from the provisions of Article Twelve)  Securities
of the  series may be so  redeemed,  purchased  or repaid,  in whole or in part,
pursuant to any sinking fund or otherwise;

     (7) the  obligation,  if any,  of the Issuer to redeem,  purchase  or repay
Securities  of the  series  in  whole  or in  part  pursuant  to  any  mandatory
redemption,  sinking fund or analogous  provisions  or at the option of a Holder
thereof  and the  period or  periods  within  which the price or prices  (or the
method by which such price or prices shall be determined or both) at which,  the
form or  method  of  payment  therefor  if other  than in cash and any terms and
conditions  upon which and the manner in which (if different from the provisions
of Article  Twelve)  Securities  of the series shall be  redeemed,  purchased or
repaid, in whole or in part, pursuant to such obligation;

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

     (9) if  other  than  the  principal  amount  thereof,  the  portion  of the
principal  amount of  Securities  of the  series  which  shall be  payable  upon
acceleration of the maturity thereof;

     (10)  whether   Securities  of  the  series  will  be  issuable  as  Global
Securities;

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

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

     (13) any deleted,  modified or additional  events of default or remedies or
any additional covenants with respect to the Securities of such series;

     (14)  whether the  provisions  of Section  10.1(C)  will be  applicable  to
Securities of such series;

     (15) any provision relating to the issuance of Securities of such series at
an original  issue  discount  (including,  without  limitation,  the issue price
thereof,  the rate or rates at which such original  issue discount shall accrue,
if any, and the date or dates from or to which or period or periods during which
such original issue discount shall accrue at such rate or rates); <PAGE>

     (16) if the  amounts  of  payments  of  principal  of and  interest  on the
Securities of such series are to be determined  with reference to an index,  the
manner in which such amounts shall be determined; and

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

     All Securities of any one series shall be substantially  identical,  except
as to denomination and except as may otherwise be provided by or pursuant to the
Board Resolution or Officers'  Certificate  referred to above or as set forth in
any such indenture  supplemental  hereto.  All Securities of any one series need
not be issued at the same time and may be issued  from time to time,  consistent
with the terms of this  Indenture,  if so  provided by or pursuant to such Board
Resolution,  such Officers'  Certificate  or in any such indenture  supplemental
hereto.

     Any such Board Resolution or Officers'  Certificate  referred to above with
respect  to  Securities  of any series  filed with the  Trustee on or before the
initial  issuance of the Securities of such series shall bc incorporated  herein
by reference  with respect to Securities of such series and shall  thereafter be
deemed to be a part of the Indenture for all purposes  relating to Securities of
such series as fully as if such Board  Resolution or Officers'  Certificate were
set forth herein in full.

     SECTION  2.4  Authentication  and  Delivery of  Securities.  The Issuer may
deliver  Securities  of any series  executed  by the Issuer to the  Trustee  for
authentication  together with the applicable documents referred to below in this
Section  2.4,  and the Trustee  shall  thereupon  authenticate  and deliver such
Securities  to, or upon the order of, the Issuer  (contained in the Issuer Order
referred to below in this Section 2.4) or pursuant to such procedures acceptable
to the Trustee and to such  recipients as may be specified  from time to time by
an Issuer Order. The maturity date,  original issue date, interest rate, if any,
and any other terms of the  Securities  of such series shall be determined by or
pursuant to such Issuer Order and procedures. If provided for in such procedures
and agreed to by the Trustee, such Issuer Order may authorize authentication and
delivery  pursuant to oral  instructions  from the Issuer or its duly authorized
agent,  which   instructions   shall  be  promptly  confirmed  in  writing.   In
authenticating  the  Securities  of such  series and  accepting  the  additional
responsibilities  under this  Indenture  in  relation  to such  Securities,  the
Trustee shall be entitled to receive (in the case of subparagraphs  (2), (3) and
(4) below only at or before  the time of the first  request of the Issuer to the
Trustee to authenticate  Securities of such series) and (subject to Section 6.1)
shall be fully  protected in relying upon,  unless and until such documents have
been superseded or revoked:

          (1) an Issuer Order requesting such  authentication  and setting forth
     delivery  instructions  if the  Securities  of  such  series  are not to be
     delivered to the Issuer,  provided  that,  with respect to  Securities of a
     series  subject  to a  Periodic  Offering,  (a) such  Issuer  Order  may be
     delivered by the Issuer to the Trustee prior to the delivery to the Trustee
     of such Securities for authentication  and delivery,  (b) the Trustee shall
     authenticate and deliver  Securities of such series for original issue from
     time to time, in an aggregate  principal amount not exceeding the aggregate
     principal amount  established for such series,  pursuant to an Issuer Order
     or pursuant to  procedures  acceptable  to the Trustee as may be  specified
     from  time to time by an  Issuer  Order,  (c) the  maturity  date or dates,
     original issue date or dates, interest rate or rates, if any, and any other
     terms of  Securities  of such series shall be determined by an Issuer Order
     or pursuant to such  procedures,  (d) if provided  for in such  procedures,
     such Issuer Order may  authorize  authentication  and delivery  pursuant to
     oral or  electronic  instructions  from the  Issuer or its duly  authorized
     agent or agents,  which oral  instructions  shall be promptly  confirmed in
     writing and (e) after the original  issuance of the first  Security of such
     series to be issued,  any  separate  request by the Issuer that the Trustee
     authenticate Securities of such series for original issuance will be deemed
     to be a  certification  by the  Issuer  that it is in  compliance  with all
     conditions  precedent  provided  for  in  this  Indenture  relating  to the
     authentication and delivery of such Securities;

          (2)  the  Board   Resolution,   Officers'   Certificate   or  executed
     supplemental  indenture  referred to in Sections 2.1 and 2.3 by or pursuant
     to  which  the  forms  and  terms of the  Securities  of such  series  were
     established;

          (3) an Officers' Certificate setting forth the form or forms and terms
     of the  Securities  stating  that  the  form  or  forms  and  terms  of the
     Securities  have been  established  pursuant  to  Sections  2.1 and 2.3 and
     comply with this  Indenture  and covering such other matters as the Trustee
     may reasonably request; and
<PAGE>

          (4) at the option of the Issuer,  either an Opinion of  Counsel,  or a
     letter from legal counsel addressed to the Trustee permitting it to rely on
     an Opinion of Counsel, substantially to the effect that:

               (a) the form or forms of the  Securities of such series have been
          duly  authorized and  established in conformity with the provisions of
          this Indenture;

               (b) in the case of an  underwritten  offering,  the  terms of the
          Securities of such series have been duly authorized and established in
          conformity with the provisions of this Indenture,  and, in the case of
          an offering that is not underwritten,  certain terms of the Securities
          of such series have been established  pursuant to a Board  Resolution,
          an Officers'  Certificate  or a  supplemental  indenture in accordance
          with  this  Indenture,  and  when  such  other  terms  as  are  to  be
          established  pursuant to procedures set forth in an Issuer Order shall
          have been  established,  all such terms will have been duly authorized
          by the Issuer and will have been  established  in conformity  with the
          provisions of this Indenture;

               (c) when the  Securities of such series have been executed by the
          Issuer  and  authenticated  by the  Trustee  in  accordance  with  the
          provisions of this Indenture and delivered to and duly paid for by the
          purchasers  thereof,  they  will  have been  duly  issued  under  this
          Indenture  and will be valid and legally  binding  obligations  of the
          Issuer,  enforceable in accordance with their  respective  terms,  and
          will be entitled to the benefits of this Indenture; and

               (d)  the  execution  and  delivery  by the  Issuer  of,  and  the
          performance by the Issuer of its obligations  under, the Securities of
          such series will not contravene any provision of applicable law or the
          articles of  incorporation or bylaws of the Issuer or any agreement or
          other  instrument  binding upon the Issuer or any of its  Subsidiaries
          that is material to the Issuer and its Subsidiaries, considered as one
          enterprise,   or,  to  such  counsel's  knowledge  after  the  inquiry
          indicated therein,  any judgment,  order or decree of any governmental
          agency  or any  court  having  jurisdiction  over  the  Issuer  or any
          Subsidiary,   and  no  consent,   approval  or  authorization  of  any
          governmental  body or agency is required  for the  performance  by the
          Issuer of its  obligations  under the  Securities,  except such as are
          specified  and have been  obtained  and such as may be required by the
          securities or blue sky laws of the various  states in connection  with
          the offer and sale of the Securities.

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

     The Trustee shall have the right to decline to authenticate and deliver any
Securities of any series under this Section 2.4 if the Trustee, being advised by
counsel,  determines that such action may not lawfully be taken by the Issuer or
if the  Trustee in good faith by its board of  directors  or board of  trustees,
executive committee or a trust committee of directors or trustees or Responsible
Officers  shall  determine that such action would expose the Trustee to personal
liability  to  existing  Holders or would  adversely  affect the  Trustee's  own
rights, duties or immunities under the Securities, this Indenture or otherwise.

     If the Issuer shall  establish  pursuant to Section 2.3 that the Securities
of a series are to be issued in the form of one or more Global Securities,  then
the Issuer shall execute and the Trustee shall,  in accordance with this Section
2.4 and the Issuer Order with respect to such series,  authenticate  and deliver
one or more Global  Securities that (i) shall represent and shall be denominated
in an amount equal to the aggregate principal amount of all of the Securities of
such series to be issued in the form of Global Securities and not yet cancelled,
(ii) shall be registered in the name of the Depositary for such Global  Security
or Securities or the nominee of such Depositary, (iii) shall be delivered by the
Trustee to such Depositary or pursuant to such  Depositary's  instructions,  and
(iv) shall bear a legend  substantially  to the  following  effect:  "Unless and
until  it is  exchanged  in  whole  or in  part  for  Securities  in  definitive
registered  form, this Security may not be transferred  except as a whole by the
Depositary to the nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another  nominee of the Depositary or by the Depositary or any
such  nominee  to  a  successor  Depositary  or  a  nominee  of  such  successor
Depositary."


<PAGE>

     Each Depositary designated pursuant to Section 2.3 must, at the time of its
designation and at all times while it serves as Depositary, be a clearing agency
registered under the Securities Exchange Act of 1934, as amended,  and any other
applicable statute or regulation.

     SECTION 2.5  Execution of  Securities.  The  Securities  shall be signed on
behalf of the Issuer by the chairman of the Board of Directors,  the  president,
any vice  president or the  treasurer of the Issuer,  under its  corporate  seal
which may, but need not, be attested by its  secretary  or one of its  assistant
secretaries.  Such  signatures may be the manual or facsimile  signatures of the
present or any future such  officers.  The seal of the Issuer may be in the form
of a facsimile  thereof and may be  impressed,  affixed,  imprinted or otherwise
reproduced on the Securities. Typographical and other minor errors or defects in
any such  reproduction  of the seal or any such  signature  shall not affect the
validity or enforceability of any Security that has been duly  authenticated and
delivered by the Trustee.

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

     SECTION 2.6  Certificate of  Authentication.  Only such Securities as shall
bear  thereon  a  certificate  of  authentication   substantially  in  the  form
hereinbefore recited,  executed by the Trustee by the manual signature of one of
its authorized  signatories,  or its Authenticating  Agent, shall be entitled to
the benefits of this  Indenture or be valid or obligatory  for any purpose.  The
execution of such  certificate by the Trustee or its  Authenticating  Agent upon
any  Security  executed  by the Issuer  shall be  conclusive  evidence  that the
Security so authenticated has been duly  authenticated  and delivered  hereunder
and  that the  Holder  is  entitled  to the  benefits  of this  Indenture.  Each
reference  in  this  Indenture  to   authentication   by  the  Trustee  includes
authentication by an agent appointed pursuant to Section 6.14.

     SECTION 2.7 Denomination and Date of Securities;  Payments of Interest. The
Securities of each series shall be issuable in registered form in  denominations
established as contemplated by Section 2.3 or, with respect to the Securities of
any series,  if not so established,  in denominations of $1,000 and any integral
multiple thereof.  The Securities of each series shall be numbered,  lettered or
otherwise  distinguished  in such manner or in accordance  with such plan as the
officers of the Issuer executing the same may determine with the approval of the
Trustee, as evidenced by the execution and authentication thereof.

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

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

     SECTION 2.8  Registration  Transfer and  Exchange.  The Issuer will keep at
each office or agency to be maintained for the purpose as provided in Section

<PAGE>

3.2 for each series of  Securities a register or registers in which,  subject to
such  reasonable  regulations  as it may  prescribe,  it  will  provide  for the
registration  of Securities of each series and the  registration  of transfer of
Securities of such series.  Each such  register  shall be in written form in the
English  language or in any other form capable of being converted into such form
within a reasonable  time.  At all  reasonable  times such register or registers
shall be open for inspection and available for copying by the Trustee.

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

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

     At the option of the Holder thereof, Securities of any series (other than a
Global  Security,  except as set forth below) may be exchanged for a Security or
Securities of such series having authorized denominations and an equal aggregate
principal  amount,  upon  surrender  of such  Securities  to be exchanged at the
agency of the Issuer that shall be  maintained  for such  purpose in  accordance
with  Section  3.2.  All  Securities  surrendered  upon any exchange or transfer
provided for in this Indenture  shall be promptly  cancelled and returned to the
Issuer.

     The Issuer 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 of Securities.  No service charge shall be made for any
such transaction or for any exchange of Securities of any series as contemplated
by the immediately preceding paragraph.

     The Issuer  shall not be required to exchange or register a transfer of (a)
any  Securities  of any series for a period of 15 days next  preceding the first
mailing or  publication  of notice of redemption of Securities of such series to
be redeemed, (b) any Securities selected, called or being called for redemption,
in whole or in part, except, in the case of any Security to be redeemed in part,
the portion  thereof  not so to be  redeemed  or (c) any  Security if the Holder
thereof has  exercised  his right,  if any, to require the Issuer to  repurchase
such  Security  in whole or in part,  except the  portion of such  Security  not
required to be repurchased.

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

     If at any time the Depositary for any Securities of a series represented by
one or more Global Securities notifies the Issuer that it is unwilling or unable
to continue as Depositary  for such  Securities or if at any time the Depositary
for such  Securities  shall no longer be eligible  under Section 2.4, the Issuer
shall  appoint a successor  Depositary  with  respect to such  Securities.  If a
successor  Depositary for such  Securities is not appointed by the Issuer within
90 days  after  the  Issuer  receives  such  notice  or  becomes  aware  of such
ineligibility,   the  Issuer's  election  pursuant  to  Section  2.3  that  such
Securities be  represented by one or more Global  Securities  shall no longer be
effective  and the Issuer shall  execute,  and the  Trustee,  upon receipt of an
Issuer Order for the  authentication  and delivery of  definitive  Securities of
such  series,  will  authenticate  and  deliver  Securities  of such  series  in
definitive  registered  form, in any authorized  denominations,  in an aggregate
principal  amount  equal to the  principal  amount  of the  Global  Security  or
Securities  representing such Securities in exchange for such Global Security or
Securities.

     The Issuer may at any time and in its sole  discretion  determine  that the
Securities  of any series  issued in the form of one or more  Global  Securities
shall no longer be represented by a Global Security or Securities. In such event
the Issuer shall execute,  and the Trustee,  upon receipt of an Issuer Order for
the authentication and delivery of definitive  Securities of such series,  shall
authenticate  and deliver,  Securities of such series in  definitive  registered
form, in any authorized denominations, in an aggregate principal amount equal to
the  principal  amount of the Global  Security or Securities  representing  such
Securities, in exchange for such Global Security or Securities.
<PAGE>

     If  specified  by the  Issuer  pursuant  to  Section  2.3 with  respect  to
Securities  represented  by a Global  Security,  the  Depositary for such Global
Security may surrender such Global  Security in exchange in whole or in part for
Securities of the same series in definitive registered form on such terms as are
acceptable  to the  Issuer and such  Depositary.  Thereupon,  the  Issuer  shall
execute, and the Trustee shall authenticate and deliver, without service charge,

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

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

     Upon the  exchange  of a  Global  Security  for  Securities  in  definitive
registered  form in  authorized  denominations,  such Global  Security  shall be
cancelled by the Trustee or an agent of the Issuer or the Trustee. Securities in
definitive  registered form issued in exchange for a Global Security pursuant to
this  Section  2.8 shall be  registered  in such  names  and in such  authorized
denominations  as  the  Depositary  for  such  Global   Security,   pursuant  to
instructions  from its  direct or  indirect  participants  or  otherwise,  shall
instruct the Trustee or an agent of the Trustee or the Issuer or an agent of the
Issuer. The Trustee or such agent shall deliver at its office such Securities to
or as directed by the Persons in whose names such Securities are so registered.

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

     SECTION 2.9 Mutilated,  Defaced,  Destroyed, Lost and Stolen Securities. In
case any temporary or definitive Security shall become mutilated,  defaced or be
destroyed,  lost or stolen,  the Issuer in its discretion may execute,  and upon
the written request of any officer of the Issuer, the Trustee shall authenticate
and deliver a new Security of the same series,  maturity date, interest rate, if
any, and original issue date,  bearing a number or other  distinguishing  symbol
not  contemporaneously   outstanding,  in  exchange  and  substitution  for  the
mutilated  or  defaced  Security,  or in  lieu  of and in  substitution  for the
Security  so  destroyed,  lost or  stolen.  In every  case the  applicant  for a
substitute Security shall furnish to the Issuer and to the Trustee and any agent
of the Issuer or the Trustee  such  security or  indemnity as may be required by
the  Trustee  or the  Issuer to  indemnify  and  defend  and to save each of the
Trustee  and the Issuer  harmless  and,  in every case of  destruction,  loss or
theft, evidence to their satisfaction of the destruction,  loss or theft of such
Security  and  of  the  ownership  thereof  and in the  case  of  mutilation  or
defacement, shall surrender the Security to the Trustee or such agent.

     Upon the issuance of any  substitute  Security,  the Issuer may require the
payment of a sum sufficient to cover any tax or other  governmental  charge that
may be imposed in relation  thereto and any other  expenses  (including the fees
and  expenses  of the  Trustee or its agent)  connected  therewith.  In case any
Security  which  has  matured  or is about to  mature  or has  been  called  for
redemption in full shall become  mutilated or defaced or be  destroyed,  lost or
stolen,  the  Issuer  may  instead  of  issuing a  substitute  Security,  pay or
authorize the payment of the same (without  surrender thereof except in the case
of a mutilated or defaced  Security),  if the  applicant  for such payment shall
furnish  to the  Issuer  and to the  Trustee  and any agent of the Issuer or the
Trustee  such  security or  indemnity as any of them may require to hold each of
them harmless,  and, in every case of destruction,  loss or theft, the applicant
shall also  furnish to the Issuer and the Trustee and any agent of the Issuer or
the Trustee evidence to the Trustee's  satisfaction of the destruction,  loss or
theft of such Security and of the ownership thereof.

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


<PAGE>

     SECTION  2.10  Cancellation  of  Securities;   Disposition   Thereof.   All
Securities  surrendered  for payment,  redemption,  registration  of transfer or
exchange, or for credit against any payment in respect of a sinking or analogous
fund, if  surrendered to the Issuer or any agent of the Issuer or the Trustee or
any agent of the  Trustee,  shall be  delivered  to the Trustee or its agent for
cancellation or, if surrendered to the Trustee, shall be cancelled by it; and no
Securities shall be issued in lieu thereof except as expressly  permitted by any
of the  provisions  of this  Indenture.  The Trustee or its agent  shall  return
cancelled Securities to the Issuer. If the Issuer or its agent shall acquire any
of the  Securities,  such  acquisition  shall not  operate  as a  redemption  or
satisfaction of the indebtedness represented by such Securities unless and until
the same are delivered to the Trustee or its agent for cancellation.

     SECTION 2.11 Temporary  Securities.  Pending the  preparation of definitive
Securities  for any  series,  the  Issuer  may  execute  and the  Trustee  shall
authenticate  and  deliver  temporary   Securities  for  such  series  (printed,
lithographed,  typewritten  or  otherwise  reproduced,  in  each  case  in  form
satisfactory  to the  Trustee).  Temporary  Securities  of any  series  shall be
issuable in any authorized  denomination,  and  substantially in the form of the
definitive  Securities of such series but with such  omissions,  insertions  and
variations  as  may  be  appropriate  for  temporary  Securities,  all as may be
determined by the Issuer with the concurrence of the Trustee as evidenced by the
execution and  authentication  thereof.  Temporary  Securities  may contain such
references to any  provisions  of this  Indenture as may be  appropriate.  Every
temporary  Security shall be executed by the Issuer and be  authenticated by the
Trustee upon the same conditions and in substantially the same manner,  and with
like effect, as the definitive Securities. Without unreasonable delay the Issuer
shall  execute  and shall  furnish  definitive  Securities  of such  series  and
thereupon  temporary  Securities of such series may be  surrendered  in exchange
therefor  without charge at each office or agency to be maintained by the Issuer
for that purpose pursuant to Section 3.2 and the Trustee shall  authenticate and
deliver  in  exchange  for such  temporary  Securities  of such  series an equal
aggregate  principal  amount of definitive  Securities of the same series having
authorized  denominations.  Until so exchanged,  the temporary Securities of any
series shall be entitled to the same benefits under this Indenture as definitive
Securities of such series, unless otherwise established pursuant to Section 2.3.

     SECTION 2.12 CUSIP  Numbers.  The Issuer in issuing the  Securities may use
"CUSIP"  numbers (if then  generally in use),  and, if so, the Trustee shall use
"CUSIP"  numbers in notices of redemption as a convenience to Holders;  provided
that  any  such  notice  may  state  that  no  representation  is made as to the
correctness  of such numbers either as printed on the Securities or as contained
in any notice of a redemption  and that reliance may be placed only on the other
identification numbers printed on the Securities,  and any such redemption shall
not be affected by any defect in or omission of such numbers.


                                  ARTICLE THREE
                             COVENANTS OF THE ISSUER

     SECTION 3.1 Payment of Principal  and  Interest.  The Issuer  covenants and
agrees that it will duly and punctually pay or cause to be paid the principal of
and interest,  if any, on each of the Securities at the place, at the respective
times and in the manner provided in the Securities.

     SECTION 3.2 Offices  for Notices and  Payments,  etc. So long as any of the
Securities are  Outstanding,  the Issuer will maintain in each Place of Payment,
an office or agency where the Securities may be presented for payment, an office
or agency where the Securities may be presented for registration of transfer and
for  exchange  as in this  Indenture  provided,  and an office  or agency  where
notices  and  demands to or upon the Issuer in respect of the  Securities  or of
this  Indenture  may be  served.  In case the  Issuer  shall at any time fail to
maintain any such office or agency,  or shall fail to give notice to the Trustee
of any change in the location  thereof,  presentation may be made and notice and
demand may be served in respect of the  Securities  or of this  Indenture at the
Corporate  Trust Office.  The Issuer hereby  initially  designates the Corporate
Trust Office for each such  purpose and  appoints  the Trustee as registrar  and
paying  agent and as the agent upon whom  notices and demands may be served with
respect to the Securities.

     SECTION 3.3. No Interest Extension. In order to prevent any accumulation of
claims for  interest  after  maturity  thereof,  the Issuer will not directly or
indirectly extend or consent to the extension of the time for the payment of any
claim for interest on any of the  Securities and will not directly or indirectly
be a party to or approve any such arrangement by the purchase or funding of said
claims or in any other manner;  provided,  however,  that this Section 3.3 shall
not  apply  in any case  where an  extension  shall be made  pursuant  to a plan
proposed  by the Issuer to the  Holders  of all  Securities  of any series  then
Outstanding.
<PAGE>

     SECTION 3.4 Appointments to Fill Vacancies in Trustee's Office. The Issuer,
whenever necessary to avoid or fill a vacancy in the office of the Trustee, will
appoint,  in the manner provided in Section 6.10, a Trustee, so that there shall
at all times be a Trustee hereunder.

     SECTION 3.5 Provision as to Paying Agent. (a) If the Issuer shall appoint a
paying agent other than the Trustee,  it will cause such paying agent to execute
and  deliver to the Trustee an  instrument  in which such agent shall agree with
the Trustee, subject to the provisions of this Section 3.5,

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

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

          (3)  that it will,  at any time  during  the  continuance  of any such
     failure,  upon the written  request of the  Trustee,  forthwith  pay to the
     Trustee all sums so held in trust by such paying agent.

     (b) If the Issuer shall act as its own paying agent,  it will, on or before
each due date of the principal of or interest,  if any, on the  Securities,  set
aside,  segregate  and hold in  trust  for the  benefit  of the  Holders  of the
Securities  a sum  sufficient  to pay such  principal  or  interest,  if any, so
becoming  due and will notify the Trustee of any failure to take such action and
of any failure by the Issuer (or by any other obligor under the  Securities)  to
make any payment of the principal of or interest, if any, on the Securities when
the same shall become due and payable.

     (c)  Anything in this  Section  3.5 to the  contrary  notwithstanding,  the
Issuer  may,  at any time,  for the  purpose of  obtaining  a  satisfaction  and
discharge of this Indenture, or for any other reason, pay or cause to be paid to
the  Trustee  all sums held in trust by it, or any paying  agent  hereunder,  as
required  by this  Section  3.5,  such sums to be held by the  Trustee  upon the
trusts herein contained.

     (d)  Anything in this  Section  3.5 to the  contrary  notwithstanding,  any
agreement  of the Trustee or any paying  agent to hold sums in trust as provided
in this Section 3.5 is subject to Sections 10.3 and 10.4.

     (e) Whenever the Issuer shall have one or more paying  agents,  it will, on
or  before  each  due  date of the  principal  of or  interest,  if any,  on any
Securities, deposit with a paying agent a sum sufficient to pay the principal or
interest,  if any, so becoming due, such sum to be held in trust for the benefit
of the Persons entitled to such principal or interest,  if any, and (unless such
paying agent is the Trustee) the Issuer will promptly  notify the Trustee of its
action or failure so to act.

     SECTION 3.6  Restriction on Creation of Secured Debt. So long as any of the
Securities  are  outstanding,  the Issuer shall not at any time  create,  incur,
assume  or  guarantee,  and  shall not  cause,  suffer  or  permit a  Restricted
Subsidiary  to create,  incur,  assume or  guarantee,  any Secured  Debt that is
expressly  by its  terms  Subordinated  Indebtedness  without  making  effective
provision  (and the Issuer  covenants that in such case it will make or cause to
be made such effective  provision)  whereby the Securities then  Outstanding and
any  other  indebtedness  of or  guaranteed  by the  Issuer  or such  Restricted
Subsidiary then entitled thereto,  subject to applicable  priorities of payment,
shall  be  secured  by  such  mortgage,   security  interest,  pledge,  lien  or
encumbrance  equally  and  ratably  with  any  and  all  other  obligations  and
indebtedness  thereby  secured,  so  long  as any  such  other  obligations  and
indebtedness shall be so secured; provided, that if any such mortgage,  security
interest,  pledge, lien or encumbrance  securing such Subordinated  Indebtedness
ceases to exist,  such equal and ratable security for the benefit of the Holders
of Securities  shall  automatically  cease to exist without any further  action;
provided   further  that  if  such   Subordinated   Indebtedness   is  expressly
subordinated to the Securities, the mortgage, security interest, pledge, lien or
encumbrance  securing such  Subordinated  Indebtedness  shall be subordinate and
junior to the mortgage,  security interest, pledge, lien or encumbrance securing
the Securities with the same relative priority as such Subordinated Indebtedness
shall have with respect to the Securities;  provided, further that the foregoing
covenants shall not be applicable to the following:

     (a)(i) Any mortgage,  security interest, pledge, lien or encumbrance on any
property   hereafter   acquired   (including   acquisition   through  merger  or
consolidation) or constructed by the Issuer or a Restricted Subsidiary and

<PAGE>

created  contemporaneously with, or within twelve months after, such acquisition
or the completion of construction to secure or provide for the payment of all or
any part of the  purchase  price of such  property  or the cost of  construction
thereof,  as the case may be; or (ii) any  mortgage on property  (including  any
unimproved portion of partially improved property) of the Issuer or a Restricted
Subsidiary  created within twelve months of completion of  construction of a new
plant or  plants  on such  property  to  secure  all or part of the cost of such
construction if, in the opinion of the Board of Directors, such property or such
portion thereof was prior to such construction  substantially unimproved for the
use intended by the Issuer;  or (iii) the acquisition of property subject to any
mortgage,  security  interest,  pledge,  lien or encumbrance  upon such property
existing  at the time of  acquisition  thereof,  whether  or not  assumed by the
Issuer or such Restricted Subsidiary;  or (iv) any mortgage,  security interest,
pledge,  lien or  encumbrance  existing on the  property  or on the  outstanding
shares  or  indebtedness  of a  corporation  or other  entity  at the time  such
corporation  or other entity shall  become a Restricted  Subsidiary;  or (v) any
mortgage,  security  interest,  pledge,  lien or  encumbrance  on  property of a
corporation  or other  entity  existing  at the time such  corporation  or other
entity is merged into or consolidated with the Issuer or a Restricted Subsidiary
or at the time of a sale,  lease or other  disposition  of the  properties  of a
corporation  or other entity as an entirety or  substantially  as an entirety to
the Issuer or a Restricted Subsidiary; or

     (b) Mortgages on property of the Issuer or a Restricted Subsidiary in favor
of the United States of America or any State thereof or any foreign  government,
or any department,  agency or  instrumentality  or political  subdivision of any
thereof, to secure partial,  progress, advance or other payments pursuant to any
contract or statute or to secure any  indebtedness  incurred  for the purpose of
financing all or any part of the purchase price or the cost of  construction  of
the property subject to such mortgages; or

     (c) Any mortgage,  security interest,  pledge, lien or encumbrance existing
on property owned by the Issuer or any of its  Subsidiaries  on the date of this
Indenture; or

     (d) Any mortgage,  security interest,  pledge,  lien or encumbrance created
pursuant to the  creation  of trusts or other  arrangements  funded  solely with
cash, cash equivalents or other marketable investments or securities of the type
customarily  subject to such arrangements in customary  financial  practice with
respect to long-term or medium-term  Indebtedness  for money borrowed,  the sole
purpose of which is to make provision for the retirement or defeasance,  without
prepayment, of Indebtedness; or

     (e) Any mortgage,  security  interest,  pledge,  lien or encumbrance on the
assets or properties of ENSTAR Alaska; or

     (f) Any  extension,  renewal  or  replacement  (or  successive  extensions,
renewals  or  replacements)  in  whole  or in  part  of any  mortgage,  security
interest, pledge, lien or encumbrance referred to in the foregoing subparagraphs
(a) through (e);  provided,  however,  that the principal amount of Secured Debt
secured thereby shall not exceed the principal amount outstanding at the time of
such  extension,  renewal or replacement,  and that such  extension,  renewal or
replacement  shall be  limited  to the  property  which  secured  the  mortgage,
security interest,  pledge, lien or encumbrance so extended, renewed or replaced
and additions to such property.

     Notwithstanding  the  foregoing  provisions of this Section 3.6, the Issuer
and any  one or more  Restricted  Subsidiaries  may  create,  incur,  assume  or
guarantee  Secured  Debt which  would  otherwise  be  subject  to the  foregoing
restrictions in an aggregate amount that, without duplication, together with all
other  Secured Debt of the Issuer and its  Restricted  Subsidiaries  which would
otherwise be subject to the foregoing  restrictions  (not including Secured Debt
permitted  to be secured  under  subparagraphs  (a)  through  (f) above) and the
aggregate  value of the Sale and Leaseback  Transactions  (as defined in Section
3.7) in existence at such time (not  including  Sale and Leaseback  Transactions
the proceeds of which have been or will be applied in accordance with clause (b)
of  Section  3.7)  and  all   Indebtedness  for  money  borrowed  of  Restricted
Subsidiaries in existence at such time (not including  Indebtedness permitted to
be incurred under subparagraphs (a) through (e) of Section 3.9), does not at the
time exceed 10% of Consolidated Net Tangible Assets  (excluding  ENSTAR Alaska).
Solely for purposes of subparagraphs  (a) through (f) above, the term "mortgage"
shall  include any  arrangements  in  connection  with a  production  payment or
similar financing arrangement.

     SECTION 3.7 Restriction on Sale and Leaseback Transactions. The Issuer will
not, and will not permit any Restricted  Subsidiary to, sell or transfer (except
to the Issuer or to one or more Restricted Subsidiaries,  or both) any Principal
Property owned by it and which has been in full operation for more than 120 days
prior to such sale or transfer  with the intention (i) of taking back a lease on
such property (other than a lease for a period not exceeding 36 months) and (ii)

<PAGE>

that the use by the Issuer or such  Restricted  Subsidiary of such property will
be  discontinued on or before the expiration of the term of such lease (any such
transaction  being herein  referred to as a "Sale and  Leaseback  Transaction"),
unless (a) the Issuer or such Restricted Subsidiary would be entitled,  pursuant
to the  provisions  of Section 3.6, to incur Secured Debt equal in amount to the
amount  realized  or to be  realized  upon such sale or  transfer  secured  by a
mortgage on the property to be leased without  equally and ratably  securing the
Securities,  or (b) the Issuer or a Restricted  Subsidiary shall apply an amount
equal to the value of the property so leased to the  retirement  (other than any
mandatory  retirement),  within  120  days of the  effective  date  of any  such
arrangement,  of indebtedness for money borrowed by the Issuer or any Restricted
Subsidiary (other than such  indebtedness  owned by the Issuer or any Restricted
Subsidiary) which was recorded as funded debt as of the date of its creation and
which, in the case of such  indebtedness  of the Issuer,  is not subordinate and
junior in right of payment to the prior  payment  of the  Securities;  provided,
however, that the amount to be so applied to the retirement of such indebtedness
shall  be  reduced  by (i) the  aggregate  principal  amount  of any  Securities
delivered  within 120 days of the effective date of any such  arrangement to the
Trustee for retirement and cancellation, and (ii) the aggregate principal amount
of such  indebtedness  (other  than the  Securities)  retired by the Issuer or a
Restricted  Subsidiary  within  120  days  of the  effective  date  of any  such
arrangement.

     The  term  "value"  shall  mean,  with  respect  to a  Sale  and  Leaseback
Transaction,  as of any particular  time, the amount equal to the greater of (i)
the net  proceeds of the sale of the property  leased  pursuant to such Sale and
Leaseback  Transaction,  or (ii) the fair value of such  property at the time of
entering into such Sale and Leaseback Transaction, as determined by the Board of
Directors,  in either case divided first by the number of full years of the term
of the  lease  and then  multiplied  by the  number  of full  years of such term
remaining  at the  time of  determination,  without  regard  to any  renewal  or
extension options contained in the lease.

     SECTION 3.8  Restriction on Transfer of Principal  Property to Unrestricted
Subsidiary.  The Issuer  will not  itself,  and will not  permit any  Restricted
Subsidiary  to,  transfer  (whether by merger,  consolidation  or otherwise) any
Principal  Property  to any  Unrestricted  Subsidiary,  except for fair value as
determined by the Board of  Directors,  unless it shall apply an amount equal to
the fair value of such property at the time of such transfer,  as so determined,
to the retirement (other than any mandatory  retirement),  within 10 days of the
effective  date of such  transfer,  of  indebtedness  for money  borrowed by the
Issuer or any Restricted  Subsidiary (other than such indebtedness  owned by the
Issuer or any Restricted Subsidiary) which was recorded as funded debt as of the
date of its creation and which, in case of such  indebtedness of the Issuer,  is
not  subordinate  and  junior in right of  payment  to the prior  payment of the
Securities;  provided,  however,  that  the  amount  to be  so  applied  to  the
retirement of such indebtedness shall be reduced by (i) the aggregate  principal
amount of any Securities  delivered  within 10 days of the effective date of any
such  arrangement to the Trustee for retirement and  cancellation,  and (ii) the
aggregate  principal amount of such indebtedness (other than Securities) retired
by the Issuer or a Restricted Subsidiary within 10 days of the effective date of
any such arrangement.

     SECTION  3.9  Restriction  on  Incurrence  of  Indebtedness  by  Restricted
Subsidiaries. So long as any of the Securities are outstanding, the Issuer shall
not at any time permit any  Restricted  Subsidiary to create,  incur,  assume or
guarantee  any  Indebtedness  for money  borrowed;  provided  that the foregoing
covenant shall not be applicable to the following:

          (a) any Indebtedness of ENSTAR Alaska;

          (b) any  Secured  Debt  that is  permitted  to be  created,  incurred,
     assumed or guaranteed  pursuant to subparagraphs (a) through (f) of Section
     3.6;

          (c) any Indebtedness of a Restricted  Subsidiary  existing at the time
     such Restricted  Subsidiary was acquired by the Issuer  (including  without
     limitation   Indebtedness   incurred  by  such  Restricted   Subsidiary  in
     connection with its acquisition by the Issuer);

          (d)  intercompany  Indebtedness  owed to the Issuer by any  Restricted
     Subsidiary  and  intercompany   Indebtedness   owed  to  any  wholly  owned
     Subsidiary of the Issuer by any Restricted Subsidiary; or

          (e) any extension,  renewal or replacement (or successive  extensions,
     renewals or replacements) in whole or in part of any Indebtedness  referred
     to in the foregoing subparagraphs (a) through (d); provided,  however, that
     the principal amount of Indebtedness so extended, renewed or replaced shall
     not exceed the principal amount  outstanding at the time of such extension,
     renewal or replacement.


<PAGE>

     Notwithstanding  the  foregoing  provisions of this Section 3.9, any one or
more Restricted Subsidiaries may create, incur, assume or guarantee Indebtedness
that would  otherwise be subject to the foregoing  restrictions  in an aggregate
amount that, without  duplication,  together with all Indebtedness of Restricted
Subsidiaries  in existence at such time (not  including  Indebtedness  permitted
under  subparagraphs (a) through (e) above),  all Secured Debt of the Issuer and
its Restricted  Subsidiaries  in existence at such time (not  including  Secured
Debt permitted to be secured under subparagraphs (a) through (f) of Section 3.6)
and the  aggregate  value of Sale and  Leaseback  Transactions  (as  defined  in
Section  3.7) in  existence  at such  time  (not  including  Sale and  Leaseback
Transactions  the  proceeds of which have been or will be applied in  accordance
with clause (b) of Section 3.7) does not at the time exceed 10% of  Consolidated
Net Tangible  Assets of the Issuer and its  Restricted  Subsidiaries  (excluding
ENSTAR Alaska).

     SECTION 3.10 Limitation on Incurrence of Additional  Indebtedness.  So long
as any of the  Securities are  outstanding,  the Issuer shall not, and shall not
permit any  Restricted  Subsidiary  to,  create,  incur,  assume,  guarantee  or
otherwise become obligated with respect to any Indebtedness  described in clause
(a) of the definition of Indebtedness,  unless, after giving effect thereto, the
Issuer's EBITDA/Interest Ratio on the date thereof would be at least 2.5 to 1.0,
determined  on a pro  forma  basis  as if  the  incurrence  of  such  additional
Indebtedness  and the application of the net proceeds  therefrom had occurred at
the  beginning  of the  twelve-month  period  used  to  calculate  the  Issuer's
EBITDA/Interest  Ratio;  provided  that  the  foregoing  covenant  shall  not be
applicable to the following:

          (a)  (i)  Indebtedness  of the  Issuer  or any  Restricted  Subsidiary
     outstanding  on the  date of this  Indenture  or (ii)  Indebtedness  of the
     Issuer or any Restricted  Subsidiary  under a revolving  credit facility to
     the extent that the aggregate  commitment  thereunder  does not exceed $475
     million, the maximum aggregate commitment for the Issuer's revolving credit
     facility on the date of this Indenture;

          (b)  intercompany  Indebtedness  owed to the Issuer by any  Restricted
     Subsidiary  and  intercompany   Indebtedness   owed  to  any  wholly  owned
     Subsidiary of the Issuer by any Restricted Subsidiary; or

          (c) any extension,  renewal or replacement (or successive  extensions,
     renewals or replacements) in whole or in part of any Indebtedness  referred
     to in the foregoing subparagraphs (a) through (b); provided,  however, that
     the principal amount of Indebtedness so extended, renewed or replaced shall
     not exceed the principal amount  outstanding at the time of such extension,
     renewal or replacement.

     SECTION  3.11   Limitation  on  Issuance  of  Certain  Other   Subordinated
Indebtedness.  The Issuer shall not issue, guarantee,  assume or incur, directly
or indirectly,  any  Indebtedness  which by its terms is both (a) subordinate or
junior in right of  payment  to Senior  Indebtedness  and (b) senior in right of
payment to the Securities.


                                  ARTICLE FOUR
                    SECURITYHOLDERS LISTS AND REPORTS BY THE
                             ISSUER AND THE TRUSTEE

     SECTION 4.1 Issuer to Furnish Trustee Information as to Names and Addresses
of Securityholders.  The Issuer and any other obligor on the Securities covenant
and agree that they will  furnish or cause to be furnished to the Trustee a list
in such form as the Trustee may reasonably require of the names and addresses of
the Holders of the Securities of each series:

          (a)  semiannually  and not more than 15 days  after  each  March 1 and
     September 1, and

          (b) at such other times as the Trustee may request in writing,  within
     30 days after  receipt by the Issuer of any such  request,provided  that if
     and so long as the Trustee  shall be the  registrar  for such series,  such
     list shall not be required to be furnished.
<PAGE>

     SECTION 4.2 Preservation and Disclosure of  Securityholders  Lists. (a) The
Trustee shall preserve, in as current a form as is reasonably  practicable,  all
information  as to the names and  addresses  of the  Holders  of each  series of
Securities  (i) contained in the most recent list furnished to it as provided in
Section  4.1,  and (ii)  received by it in the  capacity of  registrar or paying
agent for such series, if so acting.  The Trustee may destroy any list furnished
to it as provided in Section 4.1 upon receipt of a new list so furnished.

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

          (i) afford to such applicants  access to the information  preserved at
     the time by the Trustee in accordance with the provisions of subsection (a)
     of this Section 4.2, or

          (ii) inform such applicants as to the approximate number of Holders of
     Securities of such series or of all  Securities,  as the case may be, whose
     names and addresses appear in the information  preserved at the time by the
     Trustee,  in  accordance  with the  provisions  of  subsection  (a) of this
     Section  4.2,  and  as  to  the   approximate   cost  of  mailing  to  such
     Securityholders the form of proxy or other communication, if any, specified
     in such application.

     If the Trustee shall elect not to afford to such applicants  access to such
information,  the Trustee shall,  upon the written  request of such  applicants,
mail to each Securityholder of such series or all Holders of Securities,  as the
case may be, whose name and address appears in the information  preserved at the
time by the Trustee in accordance  with the provisions of subsection (a) of this
Section  4.2 a copy  of the  form of  proxy  or  other  communication  which  is
specified in such  request,  with  reasonable  promptness  after a tender to the
Trustee  of the  material  to be mailed and of  payment,  or  provision  for the
payment,  of the reasonable  expenses of mailing,  unless within five days after
such  tender,  the  Trustee  shall  mail to such  applicants  and file  with the
Commission,  together  with a copy  of the  material  to be  mailed,  a  written
statement to the effect that, in the opinion of the Trustee,  such mailing would
be contrary to the best interests of the Holders of Securities of such series or
of all  Securities,  as the case may be, or would be in violation of  applicable
law. Such written  statement  shall  specify the basis of such  opinion.  If the
Commission, after opportunity for a hearing upon the objections specified in the
written statement so filed, shall enter an order refusing to sustain any of such
objections  or if,  after the entry of an order  sustaining  one or more of such
objections, the Commission shall find, after notice and opportunity for hearing,
that all the  objections so sustained have been met, and shall enter an order so
declaring,  the  Trustee  shall  mail  copies  of  such  material  to  all  such
Securityholders with reasonable promptness after the entry of such order and the
renewal  of  such  tender;  otherwise  the  Trustee  shall  be  relieved  of any
obligation or duty to such applicants respecting their application.

     (c) Each and every Holder of Securities, by receiving and holding the same,
agrees with the Issuer and the Trustee  that  neither the Issuer nor the Trustee
nor any agent of the Issuer or the Trustee shall be held  accountable  by reason
of the  disclosure of any such  information as to the names and addresses of the
Holders of  Securities in accordance  with the  provisions of subsection  (b) of
this  Section  4.2,  regardless  of the source from which such  information  was
derived, and that the Trustee shall not be held accountable by reason of mailing
any material pursuant to a request made under such subsection (b).

     SECTION 4.3 Reports by the Issuer. The Issuer covenants:

     (a) to file with the  Trustee,  within 15 days after the Issuer is required
to file the same with the  Commission,  copies of the annual  reports and of the
information,  documents  and other reports (or copies of such portions of any of
the foregoing as the Commission  may from time to time by rules and  regulations
prescribe) which the Issuer may be required to file with the Commission pursuant
to  Section 13 or  Section  15(d) of the  Securities  Exchange  Act of 1934,  as
amended;  or, if the Issuer is not  required to file  information,  documents or
reports  pursuant to either of such Sections,  then to file with the Trustee and
the Commission, in accordance with rules and regulations prescribed from time to
time by the  Commission,  such of the  supplementary  and periodic  information,
docVE  LaserJet  Series  IIVEHP11.PRSational   securities  exchange  as  may  be
prescribed from time to time in such rules and regulations; <PAGE>

     (b) to file with the Trustee and the  Commission,  in accordance with rules
and regulations prescribed from time to time by the Commission,  such additional
information, documents and reports with respect to compliance by the Issuer with
the conditions  and covenants  provided for in this Indenture as may be required
from time to time by such rules and regulations;

     (c) to transmit by mail to the Holders of  Securities  within 30 days after
the filing thereof with the Trustee, in the manner and to the extent provided in
Section  4.4(c),  such  summaries  of any  information,  documents  and  reports
required to be filed by the Issuer  pursuant to subsections  (a) and (b) of this
Section 4.3 as may be required to be  transmitted  to such  Holders by rules and
regulations prescribed from time to time by the Commission; and

     (d) furnish to the Trustee,  not less than  annually,  a brief  certificate
from the principal  executive officer,  principal financial officer or principal
accounting  officer as to his  knowledge  of the  Issuer's  compliance  with all
conditions and covenants under this  Indenture.  For purposes of this subsection
(d), such compliance  shall be determined  without regard to any period of grace
or requirement of notice provided under this Indenture.

     SECTION 4.4 Reports by the Trustee.  (a) Within 60 days after  January 1 of
each year  commencing  with the year 1994, the Trustee shall transmit by mail to
the Holders of  Securities,  as provided in subsection  (c) of this  Section,  a
brief report  dated as of such  January 1 with  respect to any of the  following
events which may have  occurred  within the last 12 months (but if no such event
has occurred within such period, no report need be transmitted):

          (i)  any  change  to  its  eligibility   under  Section  6.9  and  its
     qualification under Section 6.8;

          (ii) the  creation  of,  or any  material  change  to, a  relationship
     specified in paragraph (i) through (x) of Section 6.8 (c);

          (iii) the  character  and amount of any  advances  (and if the Trustee
     elects so to state, the circumstances  surrounding the making thereof) made
     by the Trustee (as such) which remain unpaid on the date of such report and
     for the  reimbursement  of which it claims  or may claim a lien or  charge,
     prior to that of the  Securities  of any series,  on any  property or funds
     held or  collected by it as Trustee,  except that the Trustee  shall not be
     required  (but may  elect) to report  such  advances  if such  advances  so
     remaining  unpaid aggregate not more than 1/2 of 1% of the principal amount
     of all Securities Outstanding on the date of such report;

          (iv) the amount, interest rate, if any, and maturity date of all other
     indebtedness  owing  by  the  Issuer  (or  by  any  other  obligor  on  the
     Securities) to the Trustee in its  individual  capacity on the date of such
     report,  with a  brief  description  of any  property  held  as  collateral
     security   therefor,   except  any  indebtedness   based  upon  a  creditor
     relationship  arising in any manner  described in Section 6.13(b) (2), (3),
     (4) or (6);

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

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

          (vii) any action taken by the Trustee in the performance of its duties
     under this Indenture which it has not previously  reported and which in its
     opinion  materially  affects the Securities,  except action in respect of a
     default,  notice of which has been or is to be withheld by it in accordance
     with the provisions of Section 5.8.

     (b) The Trustee shall transmit to the  Securityholders  of each series,  as
provided in  subsection  (c) of this Section 4.4, a brief report with respect to
the character and amount of any advances (and if the Trustee elects so to state,
the circumstances  surrounding the making thereof) made by the Trustee, as such,
since the date of the last  report  transmitted  pursuant to the  provisions  of
subsection  (a) of  this  Section  4.4  (or if no such  report  has yet  been so
transmitted, since the date of this Indenture) for the reimbursement of which it
claims  or may claim a lien or charge  prior to that of the  Securities  of such
series on property or funds held or  collected by it as Trustee and which it has
not previously reported pursuant to this subsection (b), except that the Trustee
shall not be required  (but may elect) to report such  advances if such advances
remaining  unpaid at any time  aggregate 10% or less of the principal  amount of
all Securities Outstanding at such time, such report to be transmitted within 90
days after such time.


<PAGE>

     (c) Reports pursuant to this Section shall be transmitted by mail:

          (i) to all Holders of  Securities,  as the names and addresses of such
     Holders appear upon the registry books of the Issuer; and

          (ii) to all other  Persons to whom such  reports  are  required  to be
     transmitted pursuant to Section 313(c) of the Trust Indenture Act of 1939.

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


                                  ARTICLE FIVE
                  REMEDIES OF THE TRUSTEE AND SECURITY HOLDERS
                               ON EVENT OF DEFAULT

     SECTION 5.1 Events of Default.  "Event of  Default",  wherever  used herein
with respect to Securities of any series, means any one or more of the following
events  (whatever  the reason for such Event of Default  and whether it shall be
occasioned by the  provisions of Article  Thirteen or  otherwise),  unless it is
either  inapplicable  to a particular  series or it is  specifically  deleted or
modified  in or  pursuant  to the Board  Resolution  or  supplemental  indenture
establishing  such series of  Securities  or in the form of  Security,  for such
series:

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

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

     (c) default in the  payment or  satisfaction  of any sinking  fund or other
purchase  obligation with respect to Securities of such series, as and when such
obligation shall become due and payable as in this Indenture expressed; or

     (d)  failure on the part of the Issuer duly to observe or perform any other
of the covenants or  agreements  on the part of the Issuer in the  Securities of
such  series or in this  Indenture  continued  for a period of 60 days after the
date on which written notice of such failure, requiring the same to be remedied,
shall have been given to the Issuer by the Trustee by  certified  or  registered
mail,  or to the  Issuer  and the  Trustee  by the  Holders  of at least  25% in
aggregate principal amount of the Securities of such series then Outstanding; or

     (e)  without the consent of the Issuer a court  having  jurisdiction  shall
enter an order for relief with respect to the Issuer under the  Bankruptcy  Code
or without the consent of the Issuer a court having  jurisdiction  shall enter a
judgment, order or decree adjudging the Issuer a bankrupt or insolvent, or enter
an order for relief for reorganization,  arrangement,  adjustment or composition
of or in respect of the Issuer under the  Bankruptcy  Code or  applicable  state
insolvency  law and the  continuance  of any such  judgment,  order or decree is
unstayed and in effect for a period of 90 consecutive days; or

     (f) the Issuer shall institute proceedings for entry of an order for relief
with respect to the Issuer under the Bankruptcy  Code or for an  adjudication of
insolvency,  or shall  consent to the  institution  of  bankruptcy or insolvency
proceedings  against it, or shall file a petition seeking, or seek or consent to
reorganization,  arrangement, composition or relief under the Bankruptcy Code or
any applicable  state law, or shall consent to the filing of such petition or to
the  appointment  of  a  receiver,  custodian,  liquidator,  assignee,  trustee,
sequestrator or similar  official of the Issuer or of  substantially  all of its
property,  or the Issuer  shall  make a general  assignment  for the  benefit of
creditors as recognized under the Bankruptcy Code; or

     (g)  default  under  any  bond,  debenture,   note  or  other  evidence  of
Indebtedness  for money borrowed by the Issuer or under any mortgage,  indenture
or  instrument  under which there may be issued or by which there may be secured
or evidenced any Indebtedness for money borrowed by the Issuer, whether such

<PAGE>

Indebtedness  exists on the date hereof or shall  hereafter  be  created,  which
default shall have resulted in such Indebtedness  becoming or being declared due
and payable  prior to the date on which it would  otherwise  have become due and
payable, or any default in payment of such Indebtedness (after the expiration of
any applicable  grace periods and the presentation of any debt  instruments,  if
required),  if the aggregate  amount of all such  Indebtedness  that has been so
accelerated  and with  respect to which there has been such a default in payment
shall exceed $25,000,000, without each such default and acceleration having been
rescinded  or  annulled  within a period of ten days after there shall have been
given to the Issuer by the Trustee by certified or  registered  mail,  or to the
Issuer and the  Trustee by the  Holders of at least 25% in  aggregate  principal
amount of the  Securities  of such series  then  Outstanding,  a written  notice
specifying each such default and requiring the Issuer to cause each such default
and  acceleration  to be rescinded or annulled and stating that such notice is a
"Notice of Default" hereunder; or

     (h) any other Event of Default  provided with respect to the  Securities of
such series.

     If an Event of Default  with  respect  to  Securities  of any  series  then
Outstanding  occurs  and is  continuing,  then and in each and every  such case,
unless the principal of all of the  Securities of such series shall have already
become due and  payable,  either the Trustee or the Holders of not less than 25%
in aggregate principal amount of the Securities of such series then Outstanding,
by  notice  in  writing  to  the  Issuer   (and  to  the  Trustee  if  given  by
Securityholders),  may declare the  principal  (or,  if the  Securities  of such
series are Original  Issue  Discount  Securities,  such portion of the principal
amount as may be specified in the terms of such series) of all the Securities of
such  series and the  interest,  if any,  accrued  thereon to be due and payable
immediately,  and upon any such  declaration  the same shall become and shall be
immediately due and payable,  notwithstanding anything to the contrary contained
in this Indenture or in the Securities of such series. This provision,  however,
is  subject to the  condition  that,  if at any time after the unpaid  principal
amount (or such  specified  amount) of the  Securities of such series shall have
been so  declared  due and  payable  and before any  judgment  or decree for the
payment of the moneys due shall  have been  obtained  or entered as  hereinafter
provided,  the  Issuer  shall  pay or  shall  deposit  with  the  Trustee  a sum
sufficient to pay all matured installments of interest,  if any, upon all of the
Securities  of such series and the  principal of any and all  Securities of such
series which shall have become due otherwise than by acceleration (with interest
on overdue installments of interest,  if any, to the extent that payment of such
interest is enforceable  under  applicable law and on such principal at the rate
borne by the  Securities  of such series to the date of such payment or deposit)
and the  reasonable  compensation,  disbursements,  expenses and advances of the
Trustee,  and any  and  all  defaults  under  this  Indenture,  other  than  the
nonpayment of such portion of the principal amount of and accrued  interest,  if
any, on Securities  of such series which shall have become due by  acceleration,
shall have been cured or shall have been waived in  accordance  with Section 5.7
or provision deemed by the Trustee to be adequate shall have been made therefor,
then and in every such case the  Holders of a majority  in  aggregate  principal
amount of the Securities of such series then  Outstanding,  by written notice to
the Issuer and to the Trustee,  may rescind and annul such  declaration  and its
consequences;  but no such  rescission  and  annulment  shall extend to or shall
affect any subsequent  default, or shall impair any right consequent thereon. If
any Event of Default with respect to the Issuer  specified in Section  5.1(e) or
5.1(f) occurs,  all unpaid principal amount (or, if the Securities of any series
then  Outstanding  are Original Issue Discount  Securities,  such portion of the
principal  amount as may be  specified  in the terms of each  such  series)  and
accrued  interest on all Securities of each series then  Outstanding  shall ipso
facto become and be immediately due and payable without any declaration or other
act by the Trustee or any Securityholder.

     If the  Trustee  shall  have  proceeded  to  enforce  any right  under this
Indenture and such proceedings shall have been discontinued or abandoned because
of such  rescission  or  annulment  or for any other  reason or shall  have been
determined adversely to the Trustee, then and in every such case the Issuer, the
Trustee and the Securityholders  shall be restored respectively to their several
positions  and rights  hereunder,  and all  rights,  remedies  and powers of the
Issuer,  the Trustee and the  Securityholders  shall  continue as though no such
proceeding had been taken.

     Except with respect to an Event of Default pursuant to Section 5.1 (a), (b)
or (c), the Trustee shall not be charged with  knowledge of any Event of Default
unless written notice thereof shall have been given to a Responsible  Officer by
the Issuer, a paying agent or any Securityholder.

     SECTION 5.2 Payment of Securities  on Default;  Suit  Therefor.  The Issuer
covenants that (a) if default shall be made in the payment of any installment of
interest upon any of the  Securities of any series then  Outstanding as and when
the same shall become due and payable, and such default shall have continued for
a period  of 30 days,  or (b) if  default  shall be made in the  payment  of the
principal  of any of the  Securities  of such  series as and when the same shall
have  become due and  payable,  whether at maturity  of the  Securities  of such
series or upon redemption or by declaration or otherwise, then, upon demand of

<PAGE>

the Trustee,  the Issuer will pay to the Trustee, for the benefit of the Holders
of the Securities,  the whole amount that then shall have become due and payable
on all such  Securities  of such series for  principal or  interest,  if any, or
both, as the case may be, with  interest upon the overdue  principal and (to the
extent that payment of such interest is enforceable  under  applicable law) upon
the  overdue  installments  of  interest,  if  any,  at the  rate  borne  by the
Securities  of such series;  and, in addition  thereto,  such further  amount as
shall be sufficient to cover the costs and expenses of  collection,  including a
reasonable  compensation to the Trustee, its agents,  attorneys and counsel, and
any expenses or liabilities incurred by the Trustee hereunder other than through
its negligence or bad faith.

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

     If  there  shall  be  pending  proceedings  for the  bankruptcy  or for the
reorganization  of the  Issuer or any other  obligor  on the  Securities  of any
series then  Outstanding  under any bankruptcy,  insolvency or other similar law
now or  hereafter  in effect,  or if a receiver  or trustee or similar  official
shall have been  appointed for the property of the Issuer or such other obligor,
or in the case of any other similar judicial  proceedings relative to the Issuer
or other  obligor upon the  Securities  of such series,  or to the  creditors or
property  of the Issuer or such other  obligor,  the  Trustee,  irrespective  of
whether the  principal  of the  Securities  of such series shall then be due and
payable as therein  expressed or by declaration or otherwise and irrespective of
whether the Trustee  shall have made any demand  pursuant to the  provisions  of
this  Section  5.2,  shall be entitled and  empowered  by  intervention  in such
proceedings  or  otherwise  to file and  prove a claim or  claims  for the whole
amount of principal  and  interest,  if any,  owing and unpaid in respect of the
Securities  of such series,  and, in case of any judicial  proceedings,  to file
such  proofs of claim  and other  papers or  documents  as may be  necessary  or
advisable in order to have the claims of the Trustee and of the  Securityholders
allowed in such judicial proceedings relative to the Issuer or any other obligor
on the  Securities  of such  series,  its or  their  creditors,  or its or their
property,  and to collect and receive  any moneys or other  property  payable or
deliverable  on any such claims,  and to distribute the same after the deduction
of its charges and expenses,  and any  receiver,  assignee or trustee or similar
official in bankruptcy  or  reorganization  is hereby  authorized by each of the
Securityholders to make such payments to the Trustee,  and, if the Trustee shall
consent to the making of such payments directly to the  Securityholders,  to pay
to the  Trustee  any  amount due it for  compensation  and  expenses,  including
counsel fees and expenses incurred by it up to the date of such distribution. To
the extent that such payment of  reasonable  compensation,  expenses and counsel
fees and expenses out of the estate in any such proceedings  shall be denied for
any reason, payment of the same shall be secured by a lien on, and shall be paid
out of,  any and all  distributions,  dividends,  moneys,  securities  and other
property  which the Holders of the  Securities of such series may be entitled to
receive  in such  proceedings,  whether  in  liquidation  or  under  any plan of
reorganization or arrangement or otherwise.

     All rights of action and of asserting claims under this Indenture, or under
any of the Securities,  may be enforced by the Trustee without the possession of
any  of the  Securities,  or the  production  thereof  at  any  trial  or  other
proceeding relative thereto,  and any such suit or proceeding  instituted by the
Trustee shall be brought in its own name as trustee of an express trust, and any
recovery  of  judgment  shall be for the  ratable  benefit of the Holders of the
Securities of the series in respect of which such judgment has been recovered.

     SECTION  5.3  Application  of  Moneys  Collected  by  Trustee.  Any  moneys
collected by the Trustee  pursuant to Section 5.2 with respect to  Securities of
any series then Outstanding shall be applied in the order following, at the date
or  dates  fixed  by the  Trustee  for the  distribution  of such  moneys,  upon
presentation of the several  Securities of such series, and stamping thereon the
payment, if only partially paid, and upon surrender thereof, if fully paid:

          FIRST:  To the  payment  of  costs  and  expenses  of  collection  and
     reasonable compensation to the Trustee, its agents,  attorneys and counsel,
     and of all other expenses and liabilities incurred,  and all advances made,
     by the Trustee pursuant to Section 6.6 except as a result of its negligence
     or bad faith;

          SECOND: If the principal of the Outstanding  Securities of such series
     shall not have  become due and be unpaid,  to the payment of  interest,  if
     any, on the Securities of such series,  in the order of the maturity of the
     installments  of such  interest,  if any, with interest (to the extent that
     such  interest  has  been  collected  by  the  Trustee)  upon  the  overdue
     installments  of interest,  if any, at the rate borne by the  Securities of
     such  series,  such  payment  to be made  ratably to the  Persons  entitled
     thereto;
<PAGE>

          THIRD: If the principal of the  Outstanding  Securities of such series
     shall have become due, by declaration  or otherwise,  to the payment of the
     whole amount then owing and unpaid upon the  Securities  of such series for
     principal and interest,  if any, with interest on the overdue principal and
     (to the extent that such  interest has been  collected by the Trustee) upon
     overdue  installments  of  interest,  if  any,  at the  rate  borne  by the
     Securities of such series; and in case such moneys shall be insufficient to
     pay in full the whole amounts so due and unpaid upon the Securities of such
     series, then to the payment of such principal and interest, if any, without
     preference  or  priority of  principal  over  interest or of interest  over
     principal,  or of any installment of interest over any other installment of
     interest,  or of any  Security  over any  other  Security,  ratably  to the
     aggregate of such principal and accrued and unpaid interest; and

          FOURTH:  To the payment of any surplus  then  remaining to the Issuer,
     its  successors or assigns,  or to whomsoever  may be lawfully  entitled to
     receive the same.

     No claim for interest  which in any manner at or after  maturity shall have
been  transferred  or pledged  separate or apart from the Securities to which it
relates,  or which in any manner shall have been kept alive after maturity by an
extension  (otherwise  than  pursuant to an  extension  made  pursuant to a plan
proposed  by the Issuer to the  Holders  of all  Securities  of any series  then
Outstanding), purchase, funding or otherwise by or on behalf or with the consent
or approval of the Issuer shall be entitled, in case of a default hereunder,  to
any  benefit  of this  Indenture,  except  after  prior  payment  in full of the
principal of all Securities of any series then Outstanding and of all claims for
interest not so transferred, pledged, kept alive, extended, purchased or funded.

     SECTION 5.4 Proceedings by Securityholders.  No Holder of any Securities of
any series then Outstanding  shall have any right by virtue of or by availing of
any provision of this  Indenture to institute any suit,  action or proceeding in
equity  or at law upon or under or with  respect  to this  Indenture  or for the
appointment  of a receiver  or trustee  or  similar  official,  or for any other
remedy hereunder,  unless such Holder previously shall have given to the Trustee
written  notice of  default  and of the  continuance  thereof,  as  hereinbefore
provided,  and unless the  Holders of not less than 25% in  aggregate  principal
amount of the Securities of such series then Outstanding shall have made written
request to the Trustee to institute  such action,  suit or proceeding in its own
name as Trustee  hereunder and shall have offered to the Trustee such reasonable
indemnity as it may require  against the costs,  expenses and  liabilities to be
incurred  therein or  thereby,  and the Trustee for 60 days after its receipt of
such notice, request and offer of indemnity,  shall have neglected or refused to
institute any such action, suit or proceeding, it being understood and intended,
and being  expressly  covenanted by the Holder of every  Security of such series
with every other taker and Holder and the  Trustee,  that no one or more Holders
of  Securities  of such  series  shall have any right in any manner  whatever by
virtue of or by availing of any provision of this Indenture or of the Securities
to  affect,  disturb  or  prejudice  the  rights  of any  other  Holder  of such
Securities  of such  series,  or to obtain or seek to  obtain  priority  over or
preference  as to any other  such  Holder,  or to enforce  any right  under this
Indenture or the  Securities,  except in the manner herein  provided and for the
equal, ratable and common benefit of all Holders of Securities of such series.

     Notwithstanding  any other  provisions  in this  Indenture,  but subject to
Article Thirteen,  the right of any Holder of any Security to receive payment of
the  principal  of and  interest,  if any,  on such  Security,  on or after  the
respective due dates  expressed in such  Security,  or to institute suit for the
enforcement of any such payment on or after such  respective  dates shall not be
impaired or affected without the consent of such Holder.

     SECTION  5.5  Proceedings  by  Trustee.  In case  of an  Event  of  Default
hereunder,  the Trustee may in its discretion proceed to protect and enforce the
rights vested in it by this Indenture by such appropriate  judicial  proceedings
as the  Trustee  shall deem most  effectual  to protect  and enforce any of such
rights,  either  by suit in equity  or by  action  at law or by  proceedings  in
bankruptcy or otherwise, whether for the specific enforcement of any covenant or
agreement  contained  in this  Indenture  or in aid of the exercise of any power
granted in this  Indenture,  or to enforce  any other legal or  equitable  right
vested in the Trustee by this Indenture or by law.

     SECTION 5.6 Remedies  Cumulative  and  Continuing.  All powers and remedies
given by this Article Five to the Trustee or to the  Securityholders  shall,  to
the extent  permitted  by law, be deemed  cumulative  and not  exclusive  of any
thereof or of any other  powers and  remedies  available  to the  Trustee or the
Securityholders,   by  judicial   proceedings  or  otherwise,   to  enforce  the
performance  or observance of the  covenants  and  agreements  contained in this
Indenture,  and no delay or omission of the Trustee or of any  Securityholder to
exercise any right or power  accruing upon any default  occurring and continuing
as aforesaid shall impair any such right or power, or shall be construed to be a
waiver of any such  default  or an  acquiescence  therein;  and,  subject to the
provisions of Section 5.4,  every power and remedy given by this Article Five or
by law to the Trustee or to the  Securityholders  may be exercised  from time to
time,  and as often  as shall be  deemed  expedient,  by the  Trustee  or by the
Securityholders. <PAGE>

     SECTION 5.7  Direction  of  Proceedings;  Waiver of Defaults by Majority of
Securityholders.  The Holders of a majority in aggregate principal amount of the
Securities  of any series  then  Outstanding  shall have the right to direct the
time, method, and place of conducting any proceeding for any remedy available to
the  Trustee,  or  exercising  any trust or power  conferred on the Trustee with
respect to Securities of such series;  provided,  however,  that (subject to the
provisions of Section 6.1) the Trustee shall have the right to decline to follow
any such  direction if the Trustee shall  determine  upon advice of counsel that
the action or proceeding so directed may not lawfully be taken or if the Trustee
in good faith by its board of  directors,  its executive  committee,  or a trust
committee of directors or Responsible  Officers or both shall determine that the
action  or  proceeding  so  directed  would  involve  the  Trustee  in  personal
liability.  The  Holders  of a majority  in  aggregate  principal  amount of the
Securities of any series then Outstanding may on behalf of the Holders of all of
the  Securities  of such  series  waive  any past  default  or Event of  Default
hereunder and its consequences  except a default in the payment of interest,  if
any, on, or the  principal  of, the  Securities  of such  series.  Upon any such
waiver the Issuer,  the Trustee and the Holders of the Securities of such series
shall be restored to their former positions and rights hereunder,  respectively;
but no such waiver shall extend to any  subsequent  or other default or Event of
Default or impair any right consequent thereon. Whenever any default or Event of
Default  hereunder shall have been waived as permitted by this Section 5.7, said
default or Event of Default  shall for all purposes of the  Securities  and this
Indenture be deemed to have been cured and to be not continuing.

     SECTION 5.8 Notice of Defaults. The Trustee shall, within 90 days after the
occurrence  of a  default,  with  respect  to  Securities  of  any  series  then
Outstanding,  mail to all Holders of Securities of such series, as the names and
the addresses of such Holders appear upon the Securities register, notice of all
defaults known to the Trustee with respect to such series,  unless such defaults
shall have been cured before the giving of such notice (the term  "defaults" for
the purpose of this Section 5.8 being hereby defined to be the events  specified
in clauses  (a),  (b),  (c),  (d),  (e),  (f),  (g) and (h) of Section  5.1, not
including periods of grace, if any, provided for therein and irrespective of the
giving of the written notice specified in said clause (d) or (g) but in the case
of any  default of the  character  specified  in said  clause (d) or (g) no such
notice to Securityholders shall be given until at least 60 days after the giving
of written notice  thereof to the Issuer  pursuant to said clause (d) or (g), as
the case may be); provided,  however, that, except in the case of default in the
payment of the principal of or interest, if any, on any of the Securities, or in
the payment or  satisfaction  of any sinking fund or other purchase  obligation,
the Trustee shall be protected in withholding  such notice if and so long as the
board of directors,  the executive committee,  or a trust committee of directors
or Responsible Officers or both of the Trustee in good faith determines that the
withholding of such notice is in the best interests of the Securityholders.

     SECTION 5.9 Undertaking to Pay 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 or omitted by it as Trustee,  the filing by any
party  litigant in such suit of an undertaking to pay the cost of such suit, and
that  such  court  may in its  discretion  assess  reasonable  costs,  including
reasonable  attorney's  fees and  expenses,  against any party  litigant in such
suit,  having due regard to the merits and good faith of the claims or  defenses
made by such party  litigant;  but the  provisions of this Section 5.9 shall not
apply to any suit  instituted  by the  Trustee,  to any suit  instituted  by any
Securityholder, or group of Securityholders,  holding in the aggregate more than
10% in principal amount of the Securities of any series then Outstanding,  or to
any suit instituted by any Securityholders for the enforcement of the payment of
the principal of or interest,  if any, on any Security  against the Issuer on or
after the due date expressed in such Security.


                                   ARTICLE SIX
                             CONCERNING THE TRUSTEE

     SECTION 6.1 Duties and  Responsibilities  of the Trustee;  During  Default;
Prior to Default. With respect to the Holders of any series of Securities issued
hereunder,  the  Trustee,  prior to the  occurrence  of an Event of Default with
respect to the Securities of a particular series and after the curing or waiving
of all Events of Default  which may have  occurred  with respect to such series,
undertakes to perform such duties and only such duties as are  specifically  set
forth in this  Indenture.  In case an  Event  of  Default  with  respect  to the
Securities  of a series has  occurred  (which has not been cured or waived)  the
Trustee shall  exercise  with respect to such series of  Securities  such of the
rights and powers  vested in it by this  Indenture,  and use the same  degree of
care and skill in their  exercise as a prudent  man would  exercise or use under
the circumstances in the conduct of his own affairs.

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

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

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

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

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

     (c) the  Trustee  shall not be liable with  respect to any action  taken or
omitted to be taken by it in good faith in accordance  with the direction of the
Holders  pursuant  to  Section  5.7  relating  to the time,  method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred upon the Trustee, under this Indenture.

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

     SECTION 6.2 Certain Rights of the Trustee. Subject to Section 6.1:

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

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

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

     (d) the Trustee  shall be under no obligation to exercise any of the trusts
or powers vested in it by this  Indenture at the request,  order or direction of
any  of the  Securityholders  pursuant  to  the  provisions  of  this  Indenture
(including,   without   limitation,   pursuant  to  Section  5.1),  unless  such
Securityholders  shall  have  offered  to the  Trustee  reasonable  security  or
indemnity  against the costs,  expenses and liabilities  which might be incurred
therein or thereby;

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

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

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

     SECTION 6.3 Trustee Not Responsible for Recitals, Disposition of Securities
or Application of Proceeds Trustee Not Responsible for Recitals,  Disposition of
Securities or Application of Proceeds Thereof. The recitals contained herein and
in the Securities, except the Trustee's certificates of authentication, shall be
taken as the statements of the Issuer, and the Trustee assumes no responsibility
for the correctness of the same. The Trustee makes no  representation  as to the
validity  or  sufficiency  of  this  Indenture,  of  the  Securities  or of  any
prospectus used to sell the Securities. The Trustee shall not be accountable for
the use or application by the Issuer of any of the Securities or of the proceeds
thereof.

     SECTION 6.4 Trustee and Agents May Hold Securities;  Collections,  etc. The
Trustee  or any agent of the Issuer or the  Trustee,  in its  individual  or any
other  capacity,  may become the owner or  pledgee of  Securities  with the same
rights it would have if it were not the  Trustee  or such agent and,  subject to
Sections 6.8 and 6.13, may otherwise deal with the Issuer and receive,  collect,
hold and retain  collections  from the Issuer with the same rights it would have
if it were not the Trustee or such agent.

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

     SECTION  6.6  Compensation  and  Indemnification  of Trustee  and Its Prior
Claim.  The Issuer covenants and agrees to pay to the Trustee from time to time,
and the Trustee shall be entitled to, such compensation as shall be agreed to in
writing  between the Issuer and the Trustee  (which  shall not be limited by any
provision of law in regard to the compensation of a trustee of an express trust)
and the Issuer  covenants  and agrees to pay or  reimburse  the Trustee and each
predecessor Trustee upon its request for all reasonable expenses,  disbursements
and advances  incurred or made by or on behalf of it in  accordance  with any of
the provisions of this Indenture (including the reasonable  compensation and the
expenses and  disbursements  of its counsel and of all agents and other  persons
not regularly in its employ) except any such expense, disbursement or advance as
may arise  from its  negligence  or bad  faith.  The Issuer  also  covenants  to
indemnify the Trustee and each predecessor  Trustee for, and to hold it harmless
against, any and all loss, liability,  damage, claim or expense, including taxes
(other  than  taxes  based  on the  income  of the  Trustee),  incurred  without
negligence or bad faith on its part,  arising out of or in  connection  with the
acceptance or  administration  of this Indenture or the trusts hereunder and its
duties  hereunder,  including the costs and expenses of defending itself against
or investigating any claim or liability in the premises.  The obligations of the
Issuer under this Section 6.6 to  compensate  and indemnify the Trustee and each
predecessor  Trustee and to pay or  reimburse  the Trustee and each  predecessor
Trustee for expenses,  disbursements  and advances shall  constitute  additional
indebtedness  hereunder and shall survive the satisfaction and discharge of this
Indenture  or the  resignation  or  removal  of the  Trustee  and  shall  not be
subordinate to the payment of Senior Indebtedness  pursuant to Article Thirteen.
Such additional  indebtedness  shall be a senior claim to that of the Securities
upon all property  and funds held or  collected  by the Trustee as such,  except
funds held in trust for the benefit of the Holders of particular Securities, and
the Securities are hereby  subordinated  to such senior claim.  When the Trustee
incurs  expenses  or renders  services  in  connection  with an Event of Default
specified in Section 5.1 or in connection with Article Five hereof, the expenses
(including the reasonable fees and expenses of its counsel) and the compensation
for the service in connection  therewith are intended to constitute  expenses of
administration under any bankruptcy law.

     SECTION 6.7 Right of Trustee to Rely on Officers' Certificate, etc. Subject
to Sections 6.1 and 6.2,  whenever in the  administration  of the trusts of this
Indenture  the Trustee  shall deem it necessary  or  desirable  that a matter be
proved or  established  prior to taking or  suffering  or  omitting  any  action
hereunder,  such matter  (unless  other  evidence  in respect  thereof be herein
specifically  prescribed)  may, in the absence of negligence or bad faith on the
part of the Trustee,  be deemed to be conclusively  proved and established by an
Officers'  Certificate  delivered to the Trustee,  and such certificate,  in the
absence of  negligence  or bad faith on the part of the  Trustee,  shall be full
warrant to the Trustee for any action taken, suffered or omitted by it under the
provisions of this Indenture upon the faith thereof.

     SECTION 6.8  Qualification of Trustee;  Conflicting  Interests.  (a) If the
Trustee has or shall acquire any conflicting  interest (as defined in subsection
(c)),  then  within  90 days  after  ascertaining  that it has such  conflicting
interest,  and if the  default  (as  defined  in  subsection  (c)) to which such
conflicting  interest  relates  has not been cured or duly  waived or  otherwise
eliminated  before the end of such  90-day  period,  the  Trustee  shall  either
eliminate  such  conflicting  interest or, except as otherwise  provided  below,
resign, and the Issuer shall take prompt steps to have a successor  appointed in
the manner provided in Section 6.10.

     (b) If the Trustee  shall fail to comply with the  provisions of subsection
(a),  the  Trustee  shall,  within 10 days after the  expiration  of such 90-day
period, transmit notice of such failure to the Securityholders in the manner and
to the extent provided in Section 4.4 and,  subject to the provisions of Section
5.9,  unless  the  Trustee's  duty to resign is stayed as  provided  below,  any
Securityholder  who has been a bona fide Holder of  Securities  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,  if the Trustee fails, after written request thereof
by such Securityholder, to comply with the provisions of subsection (a).

     Except in the case of a  default  in the  payment  of the  principal  of or
interest on any  Security,  or in the  payment of any  sinking or purchase  fund
installment,  the  Trustee  shall not be  required to resign as provided by this
Section  6.8 if the  Trustee  shall have  sustained  the burden of  proving,  on
application to the Commission and after opportunity for hearing thereon, that

          (i) the default  under the  Indenture  may be cured or waived during a
     reasonable  period and under the procedures  described in such application,
     and

          (ii) a stay of the Trustee's  duty to resign will not be  inconsistent
     with the interests of Holders of the Securities.

     The filing of such an application shall  automatically stay the performance
of the duty to resign until the Commission orders otherwise.  Any resignation of
the Trustee  shall become  effective  only upon the  appointment  of a successor
trustee in accordance  with the provisions of Section 6.10 and such  successor's
acceptance of such an appointment.

     (c) For the purposes of this  Section  6.8, the Trustee  shall be deemed to
have a  conflicting  interest  with respect to  Securities  of any series if the
Securities of such series are in default (as  determined in accordance  with the
provisions of Section 5.1, but  exclusive of any period of grace or  requirement
of notice) and

          (i) the Trustee is trustee  under this  Indenture  with respect to the
     Outstanding  securities  of any other series or is a trustee  under another
     indenture under which any other securities,  or certificates of interest or
     participation  in any other  securities,  of the  Issuer  are  outstanding,
     unless such other indenture is a collateral trust indenture under which the
     only  collateral  consists  of  Securities  issued  under  this  Indenture;
     provided that there shall be excluded from the operation of this  paragraph
     (i), this  Indenture with respect to the Securities of any other series and
     there shall also be so excluded  any other  indenture or  indentures  under
     which other  securities,  or certificates of interest or  participation  in
     other  securities,  of the Issuer are  outstanding if (x) this Indenture is
     and, if applicable,  this Indenture and any series issued  pursuant to this
     Indenture and such other  indenture or indentures are wholly  unsecured and
     rank equally and such other indenture or indentures are hereafter qualified
     under the Trust  Indenture Act of 1939,  unless the  Commission  shall have
     found and declared by order pursuant to Section 305(b) or Section 307(c) of
     the  Trust  Indenture  Act of  1939  that  differences  exist  between  the
     provisions of this  Indenture with respect to Securities of such series and
     one or more other  series,  or the  provisions  of this  Indenture  and the
     provisions  of such other  indenture or  indentures  which are so likely to
     involve a material  conflict  of interest  as to make it  necessary  in the
     public  interest or for the  protection  of  investors  to  disqualify  the
     Trustee from acting as such under this Indenture with respect to Securities

<PAGE>

     of such series and such other series, or under this Indenture or such other
     indenture or indentures,  or (y) the Issuer shall have sustained the burden
     of proving,  on application to the  Commission  and after  opportunity  for
     hearing  thereon,  that  trusteeship  under this  Indenture with respect to
     Securities  of such series and such other series,  or under this  Indenture
     and such  other  indenture  or  indentures  is not so likely  to  involve a
     material  conflict  of  interest  as to make  it  necessary  in the  public
     interest or for the  protection of investors to disqualify the Trustee from
     acting as such under this  Indenture  with  respect to  Securities  of such
     series  and such  other  series,  or under  this  Indenture  and such other
     indentures;

          (ii) the Trustee or any of its  directors or executive  officers is an
     underwriter for the Issuer;

          (iii) the Trustee  directly or  indirectly  controls or is directly or
     indirectly controlled by or is under direct or indirect common control with
     an underwriter for the Issuer;

          (iv) the Trustee or any of its  directors or  executive  officers is a
     director,  officer, partner, employee,  appointee, or representative of the
     Issuer, or of an underwriter (other than the Trustee itself) for the Issuer
     who is currently  engaged in the business of underwriting,  except that (x)
     one individual may be a director or an executive  officer,  or both, of the
     Trustee and a director or an executive officer, or both, of the Issuer, but
     may not be at the same time an  executive  officer of both the  Trustee and
     the Issuer; (y) if and so long as the number of directors of the Trustee in
     office is more than nine, one additional individual may be a director or an
     executive  officer,  or both,  of the Trustee and a director of the Issuer;
     and (z) the Trustee may be designated  by the Issuer or by any  underwriter
     for  the  Issuer  to act in the  capacity  of  transfer  agent,  registrar,
     custodian,  paying agent, fiscal agent, escrow agent, or depositary,  or in
     any other similar capacity, or, subject to the provisions of subsection (c)
     (i) of this  Section,  to act as trustee,  whether  under an  indenture  or
     otherwise;

          (v)  10%  or  more  of  the  voting   securities  of  the  Trustee  is
     beneficially  owned  either by the  Issuer or by any  director,  partner or
     executive  officer  thereof,  or 20% or more of such voting  securities  is
     beneficially  owned,  collectively,  by any two or more of such persons; or
     10% or more of the voting  securities of the Trustee is beneficially  owned
     either by an  underwriter  for the Issuer or by any director,  partner,  or
     executive officer thereof, or is beneficially owned,  collectively,  by any
     two or more such persons;

          (vi) the Trustee is the  beneficial  owner of, or holds as  collateral
     security  for an  obligation  which  is in  default,  (x) 5% or more of the
     voting  securities  or 10% or more of any other  class of  security  of the
     Issuer,  not  including  the  Securities  issued under this  Indenture  and
     securities issued under any other indenture under which the Trustee is also
     trustee,  or (y) 10% or more of any class of security of an underwriter for
     the Issuer;

          (vii) the Trustee is the  beneficial  owner of, or holds as collateral
     security for an  obligation  which is in default,  5% or more of the voting
     securities of any person who, to the knowledge of the Trustee,  owns 10% or
     more of the voting  securities of, or controls directly or indirectly or is
     under direct or indirect common control with, the Issuer;

          (viii) the Trustee is the beneficial  owner of, or holds as collateral
     security for an  obligation  which is in default,  10% or more of any class
     security of any person who, to the  knowledge of the  Trustee,  owns 50% or
     more of the voting securities of the Issuer;

          (ix)  the  Trustee  owns on the  date of  default  (as  determined  in
     accordance  with the provisions of Section 5.1, but exclusive of any period
     of grace or  requirement  of notice) or on any  anniversary of such default
     while such  default  remains  outstanding,  in the  capacity  of  executor,
     administrator,  testamentary or inter vivos trustee, guardian, committee or
     conservator,  or in any other similar capacity, an aggregate of 25% or more
     of the voting securities,  or of any class of security,  of any Person, the
     beneficial  ownership  of  a  specified  percentage  of  which  would  have
     constituted a conflicting  interest under  paragraphs (vi), (vii) or (viii)
     of this subsection. As to any such securities of which the Trustee acquired
     ownership through becoming executor, administrator, or testamentary trustee
     of an estate which included them, the provisions of the preceding  sentence
     shall  not  apply,  for a  period  of two  years  from  the  date  of  such
     acquisition,  to the extent that such securities included in such estate do
     not  exceed  25% of such  voting  securities  or 25% of any  such  class of
     security. Promptly after the dates of any such default and annually in each
     succeeding  year that the Securities  remain in default,  the Trustee shall
     make a check of its holdings of such securities in any of the

<PAGE>

     above-mentioned  capacities  as of such dates.  If the Issuer fails to make
     payment in full of principal of or interest on any of the  Securities  when
     and as the same becomes due and payable,  and such failure continues for 30
     days  thereafter,  the Trustee shall make a prompt check of its holdings of
     such Securities in any of the above-mentioned  capacities as of the date of
     the expiration of such 30-day period, and after such date,  notwithstanding
     the foregoing provisions of this paragraph,  all such Securities so held by
     the Trustee,  with sole or joint control over such Securities vested in it,
     shall,  but only so long as such failure shall  continue,  be considered as
     though  beneficially  owned by the Trustee for the  purposes of  paragraphs
     (vi), (vii) and (viii) of this subsection; or

          (x) except under the  circumstances  described in paragraphs (1), (3),
     (4), (5) or (6) of Section 6.13(b),  the Trustee shall be or shall become a
     creditor of the Issuer.

     For purposes of  subsection  (c) (i), the term  "series of  securities"  or
"series"  means a  series,  class  or  group  of  securities  issuable  under an
indenture  pursuant to the terms of which holders of one such series may vote to
direct the Trustee, or otherwise take action pursuant to a vote of such holders,
separately  from  holders of  another  such  series;  provided  that  "series of
securities"  or "series"  shall not include  any series of  securities  issuable
under an indenture if all such series rank equally and are wholly unsecured.

     The  specification  of percentages in subsections (c) (v) to (ix) inclusive
of this Section 6.8 shall not be construed as  indicating  that the ownership of
such  percentages  of the  securities  of a  person  is or is not  necessary  or
sufficient  to  constitute  direct  or  indirect  control  for the  purposes  of
subsections (c) (iii) or (vii) of this Section.

     For the purposes of subsections (c) (vi),  (vii),  (viii) and (ix), of this
Section 6.8, only,

          (A) the terms  "security"  and  "securities"  shall  include only such
     securities as are generally  known as corporate  securities,  but shall not
     include any note or other  evidence of  indebtedness  issued to evidence an
     obligation  to repay  moneys lent to a person by one or more  banks,  trust
     companies,   or  banking   firms,   or  any   certificate  of  interest  or
     participation in any such note or evidence of indebtedness;

          (B) an  obligation  shall be deemed to be in default when a default in
     payment of principal shall have continued for 30 days or more and shall not
     have been cured; and

          (C) the  Trustee  shall not be deemed to be the owner or holder of (x)
     any  security  which  it  holds  as  collateral  security,  as  trustee  or
     otherwise,  for an obligation  which is not in default as defined in clause
     (B) above, or (y) any security which it holds as collateral  security under
     this Indenture,  irrespective of any default hereunder, or (z) any security
     which it holds as agent for collection,  or as custodian,  escrow agent, or
     depositary, or in any similar representative capacity.

     Except as provided  above,  the word  "security" or "securities" as used in
this Section 6.8 shall mean any note, stock,  treasury stock,  bond,  debenture,
evidence  of  indebtedness,  certificate  of interest  or  participation  in any
profit-sharing   agreement,   collateral  trust   certificate,   preorganization
certificate or subscription,  transferable share,  investment  contract,  voting
trust certificate,  certificate of deposit for a security,  fractional undivided
interest in oil, gas or other mineral  rights,  or, in general,  any interest or
instrument  commonly  known as a "security",  or any  certificate of interest or
participation in, temporary or interim  certificate for, receipt for,  guarantee
of, or warrant or right to subscribe to or purchase, any of the foregoing.

     (d) For purposes of this Section 6.8:

          (i) the term  "underwriter"  when used with  reference  to the  Issuer
     shall mean every person who,  within a one year period prior to the time as
     of which the  determination  is made, was an underwriter of any security of
     the Issuer outstanding at the time of the determination;

          (ii) the term  "director"  shall mean any director of a corporation or
     any   individual   performing   similar   functions  with  respect  to  any
     organization whether incorporated or unincorporated;

          (iii) the term "person"  shall mean an individual,  a  corporation,  a
     partnership,   an  association,   a  joint-stock   company,   a  trust,  an
     unincorporated  organization,  or a  government  or  political  subdivision
     thereof;  as used in this paragraph,  the term "trust" shall include only a
     trust where the interest or interests of the  beneficiary or  beneficiaries
     are evidenced by a security;


<PAGE>

          (iv) the term  "voting  security"  shall mean any  security  presently
     entitling  the  owner  or  holder  thereof  to  vote  in the  direction  or
     management  of the affairs of a person,  or any  security  issued  under or
     pursuant  to any  trust,  agreement  or  arrangement  whereby a trustee  or
     trustees  or agent or agents for the owner or holder of such  security  are
     presently entitled to vote in the direction or management of the affairs of
     a person;

          (v) the term "Issuer" shall mean any obligor upon the Securities; and

          (vi) the term "executive officer" shall mean the president, every vice
     president,  every  trust  officer,  the  cashier,  the  secretary,  and the
     treasurer  of a  corporation,  and any  individual  customarily  performing
     similar functions with respect to any organization  whether incorporated or
     unincorporated,  but  shall  not  include  the  chairman  of the  board  of
     directors.

     (e) The percentages of voting securities and other securities  specified in
this  Section  6.8  shall  be  calculated  in  accordance   with  the  following
provisions:

          (i) a specified  percentage  of the voting  securities of the Trustee,
     the Issuer or any other person referred to in this Section (each of whom is
     referred  to as a "person"  in this  paragraph)  means  such  amount of the
     outstanding  voting  securities  of such person as  entitles  the holder or
     holders  thereof to cast such specified  percentage of the aggregate  votes
     which the holders of all the outstanding  voting  securities of such person
     are entitled to cast in the  direction or management of the affairs of such
     person;

          (ii) a specified percentage of a class of securities of a person means
     such  percentage  of the  aggregate  amount  of  securities  of  the  class
     outstanding;

          (iii) the term "amount", when used in regard to securities,  means the
     principal  amount if relating to evidences of  indebtedness,  the number of
     shares if relating to capital  shares,  and the number of units if relating
     to any other kind of security;

          (iv) the term  "outstanding"  means  issued and not held by or for the
     account  of the  issuer;  the  following  securities  shall  not be  deemed
     outstanding within the meaning of this definition:

          (A)  securities  of an  issuer  held in a  sinking  fund  relating  to
     securities of the issuer of the same class;

          (B) securities of an issuer held in a sinking fund relating to another
     class of  securities  of the issuer,  if the  obligation  evidenced by such
     other class of  securities is not in default as to principal or interest or
     otherwise;

          (C)  securities  pledged by the  issuer  thereof  as  security  for an
     obligation  of the issuer not in default as to  principal  or  interest  or
     otherwise; and

          (D)  securities  held in escrow  if  placed  in  escrow by the  issuer
     thereof;  provided,that  any voting securities of an issuer shall be deemed
     outstanding if any person other than the issuer is entitled to exercise the
     voting rights thereof; and

          (v) a  security  shall be  deemed to be of the same  class as  another
     security  if both  securities  confer  upon the holder or  holders  thereof
     substantially the same rights and privileges;  provided,  that, in the case
     of secured  evidences  of  indebtedness,  all of which are  issued  under a
     single  indenture,  differences  in the interest rates or maturity dates of
     various  series thereof shall not be deemed  sufficient to constitute  such
     series  different  classes  and  provided,  further,  that,  in the case of
     unsecured  evidences of indebtedness,  differences in the interest rates or
     maturity  dates thereof shall not be deemed  sufficient to constitute  them
     securities  of  different  classes,  whether or not they are issued under a
     single indenture.

     SECTION 6.9 Persons  Eligible for  Appointment as Trustee.  The Trustee for
each  series  of  Securities  hereunder  shall  at all  times  be a  corporation

<PAGE>

organized and doing  business  under the laws of the United States of America or
of any state or the District of Columbia  having a combined  capital and surplus
of at least  $50,000,000,  and which is  authorized  under such laws to exercise
corporate  trust powers and is subject to supervision or examination by federal,
state or  District of  Columbia  authority,  or a  corporation  or other  Person
permitted to act as trustee by the  Commission.  If such  corporation  publishes
reports of condition at least annually,  pursuant to law or to the  requirements
of the aforesaid  supervising or examining  authority,  then for the purposes of
this  Section,  the combined  capital and surplus of such  corporation  shall be
deemed to be its  combined  capital  and surplus as set forth in its most recent
report  of  condition  so  published.  No  obligor  upon the  Securities  or any
Affiliate of such obligor shall serve as trustee upon the Securities. In case at
any  time  the  Trustee  shall  cease  to be  eligible  in  accordance  with the
provisions  of this  Section 6.9, the Trustee  shall resign  immediately  in the
manner and with the effect specified in Section 6.10.

     SECTION 6.10 Resignation and Removal; Appointment of Successor Trustee. (a)
The Trustee,  or any trustee or trustees  hereafter  appointed,  may at any time
resign with respect to one or more or all series of Securities by giving written
notice of resignation to the Issuer.  Upon receiving such notice of resignation,
the Issuer shall promptly  appoint a successor  trustee or trustees with respect
to the  applicable  series by  written  instrument  in  duplicate,  executed  by
authority  of the  Board of  Directors,  one copy of which  instrument  shall be
delivered  to the  resigning  Trustee and one copy to the  successor  trustee or
trustees.  If no successor  trustee shall have been so appointed with respect to
any series and have  accepted  appointment  within 30 days after the  mailing of
such notice of  resignation,  the  resigning  trustee may  petition any court of
competent  jurisdiction  for the  appointment  of a  successor  trustee,  or any
Securityholder  who has been a bona fide Holder of a Security or  Securities  of
the applicable  series for at least six months may, subject to the provisions of
Section 5.9, on behalf of himself and all others  similarly  situated,  petition
any such  court for the  appointment  of a  successor  trustee.  Such  court may
thereupon,  after such  notice,  if any,  as it may deem  proper and  prescribe,
appoint a successor trustee.

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

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

          (ii) the Trustee  shall cease to be  eligible in  accordance  with the
     provisions  of Section 6.9 and shall fail to resign after  written  request
     therefor by the Issuer or by any such Securityholder; or

          (iii) the Trustee shall become incapable of acting with respect to any
     series of  Securities,  or shall be adjudged a bankrupt or insolvent,  or a
     receiver  or  liquidator  of  the  Trustee  or of  its  property  shall  be
     appointed,  or any  public  officer  shall  take  charge or  control of the
     Trustee or of its  property or affairs  for the purpose of  rehabilitation,
     conservation or liquidation;

then,  in any such case,  the Issuer may remove the Trustee  with respect to the
applicable  series of Securities and appoint a successor trustee for such series
by written instrument, in duplicate, executed by order of the Board of Directors
one copy of which  instrument  shall be  delivered to the Trustee so removed and
one copy to the successor trustee, or, subject to the provisions of Section 5.9,
any  Securityholder  who has been a bona fide Holder of a Security or Securities
of such  series for at least six months may on behalf of himself  and all others
similarly situated, petition any court of competent jurisdiction for the removal
of the Trustee and the  appointment of a successor  trustee with respect to such
series.  Such court may  thereupon,  after such  notice,  if any, as it may deem
proper and prescribe, remove the Trustee and appoint a successor trustee.

     (c)  The  Holders  of a  majority  in  aggregate  principal  amount  of the
Securities  of each series then  Outstanding  may at any time remove the Trustee
with respect to Securities  of such series and appoint a successor  trustee with
respect  to the  Securities  of such  series by  delivering  to the  Trustee  so
removed,  to the  successor  trustee so appointed and to the Issuer the evidence
provided  for  in  Section  7.1  of the  action  in  that  regard  taken  by the
Securityholders.  If no  successor  trustee  shall have been so  appointed  with
respect  to any series and have  accepted  appointment  within 30 days after the
delivery  of such  evidence of removal,  the Trustee may  petition  any court of
competent  jurisdiction  for the  appointment  of a  successor  trustee,  or any
Securityholder  who has been a bona fide Holder of a Security or  Securities  of
the applicable  series for at least six months may, subject to the provisions of
Section 5.9, on behalf of himself and all others  similarly  situated,  petition
any such  court for the  appointment  of a  successor  trustee.  Such  court may
thereupon,  after such  notice,  if any,  as it may deem  proper and  prescribe,
appoint a successor trustee.

     (d) Any resignation or removal of the Trustee with respect to any series

<PAGE>

and any appointment of a successor  trustee with respect to such series pursuant
to any of the  provisions  of this  Section  6.10 shall  become  effective  upon
acceptance of appointment by the successor trustee as provided in Section 6.11.

     SECTION 6.11 Acceptance of Appointment by Successor Trustee.  Any successor
trustee  appointed as provided in Section 6.10 shall  execute and deliver to the
Issuer and to its predecessor  trustee an instrument  accepting such appointment
hereunder,  and thereupon the resignation or removal of the predecessor  trustee
with respect to all or any  applicable  series shall become  effective  and such
successor  trustee,  without any further act, deed or  conveyance,  shall become
vested with all rights,  powers,  duties and  obligations  with  respect to such
series of its predecessor hereunder,  with like effect as if originally named as
trustee for such series hereunder; but, nevertheless,  on the written request of
the Issuer or of the successor trustee, upon payment of its charges then unpaid,
the  trustee  ceasing to act shall,  subject  to Section  10.4,  pay over to the
successor  trustee all moneys at the time held by it hereunder and shall execute
and  deliver an  instrument  transferring  to such  successor  trustee  all such
rights,  powers,  duties and  obligations.  Upon  request of any such  successor
trustee,  the Issuer shall execute any and all  instruments  in writing for more
fully and certainly vesting in and confirming to such successor trustee all such
rights and powers.  Any  trustee  ceasing to act shall,  nevertheless,  retain a
prior claim upon all  property  or funds held or  collected  by such  trustee to
secure any amounts then due it pursuant to the provisions of Section 6.6.

     If a successor  trustee is appointed  with respect to the Securities of one
or more (but not all)  series,  the  Issuer,  the  predecessor  Trustee and each
successor  trustee with respect to the Securities of any applicable series shall
execute and deliver an indenture  supplemental  hereto which shall  contain such
provisions  as shall be deemed  necessary  or  desirable to confirm that all the
rights, powers, trusts and duties of the predecessor Trustee with respect to the
Securities  of any series as to which the  predecessor  Trustee is not  retiring
shall  continue  to be vested in the  predecessor  Trustee,  and shall add to or
change any of the  provisions of this Indenture as shall be necessary to provide
for or facilitate the  administration  of the trusts  hereunder by more than one
trustee,  it  being  understood  that  nothing  herein  or in such  supplemental
indenture shall constitute such trustees  co-trustees of the same trust and that
each  such  trustee  shall  be  trustee  of a trust  or  trusts  under  separate
indentures.

     No successor  trustee with respect to any series of Securities shall accept
appointment  as  provided  in  this  Section  6.11  unless  at the  time of such
acceptance  such  successor  trustee shall be qualified  under the provisions of
Section 6.8 and eligible under the provisions of Section 6.9.

     Upon acceptance of appointment by any successor trustee as provided in this
Section 6.11,  the Issuer shall give notice thereof to the Holders of Securities
of each  series  affected,  by  mailing  such  notice to such  Holders  at their
addresses  as they shall appear on the  registry  books.  If the Issuer fails to
give  such  notice  within  ten days  after  acceptance  of  appointment  by the
successor trustee,  the successor trustee shall cause such notice to be given at
the expense of the Issuer.

     SECTION 6.12 Merger, Conversion, Consolidation or Succession to Business of
Trustee.  Any  corporation  into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion  or  consolidation  to which  the  Trustee  shall be a party,  or any
corporation  succeeding to the corporate trust business of the Trustee, shall be
the successor of the Trustee hereunder,  provided that such corporation shall be
qualified  under the provisions of Section 6.8 and eligible under the provisions
of Section 6.9,  without the execution or filing of any paper or any further act
on the  part of any of the  parties  hereto,  anything  herein  to the  contrary
notwithstanding.

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

     SECTION 6.13  Preferential  Collection  of Claims  Against the Issuer.  (a)
Subject to the  provisions  of this  Section,  if the Trustee  shall be or shall
become a creditor,  directly or indirectly,  secured or unsecured, of the Issuer
within  three months prior to a default,  as defined in  subsection  (c) of this
Section  6.13,  or  subsequent  to such a default,  then,  unless and until such
default  shall be  cured,  the  Trustee  shall  set  apart and hold in a special
account  for  the  benefit  of the  Trustee  individually,  the  Holders  of the
Securities  and the holders of other  indenture  securities  (as defined in this
Section 6.13):

          (1) an amount  equal to any and all  reductions  in the amount due and
     owing upon any claim as such  creditor in respect of principal or interest,
     effected  after the  beginning  of such  three  month  period  and valid as
     against  the Issuer  and its other  creditors,  except  any such  reduction
     resulting  from the receipt or  disposition  of any  property  described in
     subsection  (a) (2) of this  section,  or from the exercise of any right of
     set-off which the Trustee could have  exercised if a petition in bankruptcy
     had been filed by or against the Issuer upon the date of such default; and

          (2) all  property  received  by the Trustee in respect of any claim as
     such  creditor,   either  as  security  therefor,  or  in  satisfaction  or
     composition thereof, or otherwise,  after the beginning of such three month
     period,  or an  amount  equal  to the  proceeds  of any such  property,  if
     disposed of, subject, however, to the rights, if any, of the Issuer and its
     other creditors in such property or such proceeds.

     Nothing herein contained, however, shall affect the right of the Trustee:

          (A) to retain for its own account (i) payments  made on account of any
     such claim by any Person  (other than the  Issuer)  who is liable  thereon,
     (ii) the proceeds of the bona fide sale of any such claim by the Trustee to
     a third Person, and (iii)  distributions made in cash,  securities or other
     property in respect of claims  filed  against the Issuer in  bankruptcy  or
     receivership  or  in  proceedings  for   reorganization   pursuant  to  the
     Bankruptcy Code or applicable state law;

          (B) to realize,  for its own account,  upon any property held by it as
     security  for any such  claim,  if such  property  was so held prior to the
     beginning of such three month period;

          (C) to  realize,  for its own  account,  but only to the extent of the
     claim hereinafter  mentioned,  upon any property held by it as security for
     any such claim, if such claim was created after the beginning of such three
     month  period  and  such   property  was  received  as  security   therefor
     simultaneously with the creation thereof,  and if the Trustee shall sustain
     the burden of proving  that at the time such  property  was so received the
     Trustee  had no  reasonable  cause to believe  that a default as defined in
     subsection (c) of this Section would occur within three months; or

          (D) to receive  payment on any claim  referred to in paragraph  (B) or
     (C), against the release of any property held as security for such claim as
     provided in such paragraph (B) or (C), as the case may be, to the extent of
     the fair value of such property.

     For the purposes of paragraphs (B), (C) and (D), property substituted after
the  beginning of such three month  period for property  held as security at the
time of such substitution shall, to the extent of the fair value of the property
released, have the same status as the property released, and, to the extent that
any claim  referred to in any of such  paragraphs is created in renewal of or in
substitution  for or for the purpose of repaying or  refunding  any  preexisting
claim of the Trustee as such creditor,  such claim shall have the same status as
such pre-existing claim.

     If the Trustee shall be required to account, the funds and property held in
such special account and the proceeds  thereof shall be apportioned  between the
Trustee,  the Securityholders  and the holders of other indenture  securities in
such  manner that the  Trustee,  such  Securityholders  and the holders of other
indenture  securities realize, as a result of payments from such special account
and payments of dividends on claims filed  against the Issuer in  bankruptcy  or
receivership  or in proceedings  for  reorganization  pursuant to the Bankruptcy
Code or applicable  state law, the same percentage of their  respective  claims,
figured before  crediting to the claim of the Trustee anything on account of the
receipt by it from the Issuer of the funds and property in such special account,
and  before   crediting  to  the   respective   claims  of  the  Trustee,   such
Securityholders  and the holders of other  indenture  securities,  dividends  on
claims filed against the Issuer in bankruptcy or  receivership or in proceedings
for reorganization  pursuant to the Bankruptcy Code or applicable state law, but
after crediting  thereon receipts on account of the indebtedness  represented by
their respective claims from all sources other than from such dividends and from
the  funds  and  property  so  held  in such  special  account.  As used in this
paragraph,  with respect to any claim,  the term  "dividends"  shall include any
distribution  with respect to such claim,  in bankruptcy or  receivership  or in
proceedings  for  reorganization  pursuant to the Bankruptcy  Code or applicable
state  law,  whether  such  distribution  is made in cash,  securities  or other
property,  but shall not  include  any such  distribution  with  respect  to the
secured  portion,  if any,  of such claim.  The court in which such  bankruptcy,
receivership or proceeding for reorganization is pending shall have jurisdiction
(i) to apportion between the Trustee, such Securityholders and the holders of

<PAGE>

other indenture securities, in accordance with the provisions of this paragraph,
the funds and property held in such special account and the proceeds thereof, or
(ii)  in lieu  of  such  apportionment,  in  whole  or in  part,  to give to the
provisions of this paragraph due  consideration  in determining  the fairness of
the  distributions  to be  made to the  Trustee,  such  Securityholders  and the
holders of other indenture  securities with respect to their respective  claims,
in which event it shall not be  necessary  to liquidate or to appraise the value
of any securities or other property held in such special  account or as security
for any such claim, or to make a specific  allocation of such  distributions  as
between the secured and unsecured portions of such claims, or otherwise to apply
the provisions of this paragraph as a mathematical formula.

     Any Trustee who has  resigned or been removed  after the  beginning of such
three month period shall be subject to the provisions of this  subsection (a) as
though such resignation or removal had not occurred. If any Trustee has resigned
or been removed prior to the  beginning of such three month period,  it shall be
subject to the  provisions of this  subsection  (a) if and only if the following
conditions exist:

          (i) the  receipt of property  or  reduction  of claim which would have
     given rise to the  obligation to account,  if such Trustee had continued as
     trustee, occurred after the beginning of such three month period; and

          (ii) such receipt of property or reduction  of claim  occurred  within
     three months after such resignation or removal.

     (b) There shall be  excluded  from the  operation  of this  Section  6.13 a
creditor relationship arising from:

          (1) the  ownership  or  acquisition  of  securities  issued  under any
     indenture  or any security or  securities  having a maturity of one year or
     more at the time of acquisition by the Trustee;

          (2) advances  authorized  by a  receivership  or  bankruptcy  court of
     competent  jurisdiction  or by this Indenture for the purpose of preserving
     any  property  which  shall  at any  time be  subject  to the  lien of this
     Indenture or of discharging  tax liens or other prior liens or encumbrances
     thereon, if notice of such advance and of the circumstances surrounding the
     making  thereof  is  given  to the  Securityholders  at the time and in the
     manner provided in this Indenture;

          (3)  disbursements  made in the  ordinary  course of  business  in the
     capacity  of  trustee  under  an  indenture,   transfer  agent,  registrar,
     custodian,  paying  agent,  fiscal agent or  depositary,  or other  similar
     capacity;

          (4) an  indebtedness  created  as a result  of  services  rendered  or
     premises  rented  or an  indebtedness  created  as a  result  of  goods  or
     securities  sold in a cash  transaction as defined in subsection  (c)(2) of
     this Section;

          (5) the  ownership of stock or of other  securities  of a  corporation
     organized under the provisions of Section 25(a) of the Federal Reserve Act,
     as amended, which is directly or indirectly a creditor of the Issuer; or

          (6) the  acquisition,  ownership,  acceptance  or  negotiation  of any
     drafts, bills of exchange, acceptances or obligations which fall within the
     classification of  self-liquidating  paper as defined in subsection (c) (3)
     of this Section.

     (c) As used in this Section 6.13:

          (1) the term "default"  shall mean any failure to make payment in full
     of the principal of or interest on any of the  Securities  when and as such
     principal or interest becomes due and payable;

          (2) the term "cash  transaction"  shall mean any  transaction in which
     full payment for goods or  securities  sold is made within seven days after
     delivery  of the  goods or  securities  in  currency  or in checks or other
     orders drawn upon banks or bankers and payable upon demand;

          (3) the term  "self-liquidating  paper" shall mean any draft,  bill of
     exchange,  acceptance or  obligation  which is made,  drawn,  negotiated or
     incurred  by  the  Issuer  for  the  purpose  of  financing  the  purchase,
     processing, manufacture, shipment, storage or sale of goods, wares or

<PAGE>

     merchandise  and  which  is  secured  by  documents  evidencing  title  to,
     possession  of,  or a lien  upon the  goods,  wares or  merchandise  or the
     receivables  or  proceeds  arising  from  the sale of the  goods,  wares or
     merchandise previously constituting the security,  provided the security is
     received by the Trustee  simultaneously  with the  creation of the creditor
     relationship with the Issuer arising from the making, drawing,  negotiating
     or incurring of the draft, bill of exchange, acceptance or obligation; and

          (4) the term "Issuer" shall mean any obligor upon the Securities.

     SECTION 6.14 Appointment of Authenticating Agent. As long as any Securities
of a series  remain  Outstanding,  the Trustee may, by an instrument in writing,
appoint  with  the  approval  of  the  Issuer  an   authenticating   agent  (the
"Authenticating  Agent")  which  shall be  authorized  to act on  behalf  of the
Trustee to authenticate  Securities,  including Securities issued upon exchange,
registration  of  transfer,  partial  redemption  or  pursuant  to Section  2.9.
Securities of each such series  authenticated by such Authenticating Agent shall
be entitled to the benefits of this  Indenture and shall be valid and obligatory
for all purposes as if authenticated by the Trustee.  Whenever reference is made
in this Indenture to the authentication and delivery of Securities of any series
by the Trustee or to the Trustee's Certificate of Authentication, such reference
shall be deemed to include  authentication and delivery on behalf of the Trustee
by an  Authenticating  Agent for such series and a Certificate of Authentication
executed  on  behalf  of  the  Trustee  by  such   Authenticating   Agent.  Such
Authenticating  Agent shall at all times be a  corporation  organized  and doing
business  under the laws of the United  States of America or of any state or the
District of Columbia,  authorized  under such laws to exercise  corporate  trust
powers,   having  a  combined  capital  and  surplus  of  at  least  $50,000,000
(determined  as provided in Section 6.9 with respect to the Trustee) and subject
to supervision or examination by federal or state authority.

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

     Upon receiving such a notice of resignation or upon such a termination,  or
in case at any time any  Authenticating  Agent  shall  cease to be  eligible  in
accordance  with the provisions of this Section 6.14 with respect to one or more
series of Securities,  the Trustee may appoint a successor  Authenticating Agent
which shall be acceptable  to the Issuer and the Issuer shall provide  notice of
such  appointment  to all Holders of Securities of such series in the manner and
to the extent provided in Section 11.4. Any successor  Authenticating Agent upon
acceptance  of its  appointment  hereunder  shall become vested with all rights,
powers,  duties and  responsibilities  of its predecessor  hereunder,  with like
effect as if originally named as Authenticating  Agent. The Issuer agrees to pay
to the  Authenticating  Agent  for  such  series  from  time to time  reasonable
compensation.  The  Authenticating  Agent for the Securities of any series shall
have no  responsibility  or liability  for any action taken by it as such at the
direction of the Trustee.

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


                                  ARTICLE SEVEN
                         CONCERNING THE SECURITYHOLDERS

     SECTION  7.1  Evidence of Action  Taken by  Securityholders.  Any  request,
demand,  authorization,  direction,  notice,  consent,  waiver  or other  action
provided by this  Indenture  to be given or taken by a specified  percentage  in
principal amount of the  Securityholders of any or all series may be embodied in
and evidenced by one or more instruments of  substantially  similar tenor signed
by such  specified  percentage  of  Securityholders  in person or by agent  duly
appointed in writing;  and, except as herein otherwise expressly provided,  such
action shall become  effective when such instrument or instruments are delivered
to the Trustee.  Proof of execution of any instrument or of a writing appointing
any such  agent  shall be  sufficient  for any  purpose  of this  Indenture  and
(subject to  Sections  6.1 and 6.2)  conclusive  in favor of the Trustee and the
Issuer, if made in the manner provided in this Article Seven.
<PAGE>

     SECTION 7.2 Proof of Execution of Instruments and of Holding of Securities.
Subject  to  Sections  6.1  and  6.2,  the  execution  of  any  instrument  by a
Securityholder or his agent or proxy may be proved in the following manner:

     (a) The fact and date of the execution by any Holder of any  instrument may
be proved by the  certificate  of any  notary  public  or other  officer  of any
jurisdiction  authorized to take  acknowledgments  of deeds or administer  oaths
that the person  executing such  instruments  acknowledged  to him the execution
thereof,  or by an affidavit of a witness to such execution  sworn to before any
such notary or other such  officer.  Where such  execution is by or on behalf of
any legal entity other than an individual,  such  certificate or affidavit shall
also constitute  sufficient  proof of the authority of the person  executing the
same.

     (b) The ownership of Securities shall be proved by the Security register or
by a certificate of the Security registrar.

     SECTION  7.3 Holders to be Treated as Owners.  The Issuer,  the Trustee and
any agent of the  Issuer or the  Trustee  may deem and treat the Person in whose
name any Security shall be registered upon the Security register for such series
as the absolute  owner of such Security  (whether or not such Security  shall be
overdue and  notwithstanding any notation of ownership or other writing thereon)
for the purpose of receiving  payment of or on account of the  principal of and,
subject to the provisions of this Indenture,  interest, if any, on such Security
and for all other purposes; and neither the Issuer nor the Trustee nor any agent
of the Issuer or the Trustee shall be affected by any notice to the contrary.

     SECTION  7.4  Securities  Owned  by  Issuer  Deemed  Not  Outstanding.   In
determining  whether the Holders of the requisite  aggregate principal amount of
Outstanding  Securities  of any or all series have  concurred in any  direction,
consent or waiver under this Indenture, Securities which are owned by the Issuer
or any other obligor on the Securities with respect to which such  determination
is being  made or by any  Affiliate  of the  Issuer or any other  obligor on the
Securities  with  respect  to which  such  determination  is being made shall be
disregarded  and  deemed  not to be  Outstanding  for the  purpose  of any  such
determination,  except that for the purpose of  determining  whether the Trustee
shall be  protected  in relying on any such  direction,  consent or waiver  only
securities  which  the  Trustee  knows  are so owned  shall  be so  disregarded.
Securities  so owned  which have been  pledged in good faith may be  regarded as
Outstanding if the pledgee  establishes to the  satisfaction  of the Trustee the
pledgee's  right so to act with respect to such  Securities and that the pledgee
is not the Issuer or any other  obligor upon the  Securities or any Affiliate of
the Issuer or any other  obligor on the  Securities.  In case of a dispute as to
such right,  the advice of counsel  shall be full  protection  in respect of any
decision made by the Trustee in accordance with such advice. Upon request of the
Trustee,  the  Issuer  shall  furnish  to  the  Trustee  promptly  an  Officers'
Certificate listing and identifying all Securities,  if any, known by the Issuer
to be owned or held by or for the account of any of the above-described Persons;
and,  subject to Sections 6.1 and 6.2,  the Trustee  shall be entitled to accept
such Officers' Certificate as conclusive evidence of the facts therein set forth
and of the fact that all Securities not listed therein are  Outstanding  for the
purpose of any such determination.

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

     SECTION 7.6 Record Date for Consents and Waivers. The Issuer may, but shall
not be  obligated  to,  direct the  Trustee to  establish  a record date for the
purpose of determining  the Persons  entitled to (i) waive any past default with
respect to the  Securities of such series in accordance  with Section 5.7 of the
Indenture, (ii) consent to any supplemental indenture in accordance with Section
8.2 of the  Indenture  or (iii) waive  compliance  with any term,  condition  or
provision of any covenant hereunder. If a record date is fixed, the Holders on

<PAGE>

such record date, or their duly designated proxies, and any such Persons,  shall
be entitled  to waive any such past  default,  consent to any such  supplemental
indenture  or waive  compliance  with any such  term,  condition  or  provision,
whether or not such Holder  remains a Holder after such record  date;  provided,
however,  that unless such waiver or consent is obtained  from the  Holders,  or
duly  designated  proxies,  of the  requisite  principal  amount of  Outstanding
Securities  of such  series  prior to the date which is the 180th day after such
record date, any such waiver or consent previously given shall automatically and
without further action by any Holder be cancelled and of no further effect.


                                  ARTICLE EIGHT
                             SUPPLEMENTAL INDENTURES

     SECTION 8.1 Supplemental Indentures Without Consent of Securityholders. The
Issuer,  when  authorized  by a  resolution  of its  Board of  Directors  (which
resolution  may  provide  general  terms or  parameters  for such action and may
provide that the specific  terms of such action may be  determined in accordance
with or pursuant to an Issuer Order),  and the Trustee may from time to time and
at any time enter into an indenture or  indentures  supplemental  hereto  (which
shall conform to the  provisions of the Trust  Indenture Act of 1939 as in force
at the date of the execution thereof) for one or more of the following purposes:

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

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

     (c)  to add  to  the  covenants  of  the  Issuer  such  further  covenants,
restrictions,  conditions  or  provisions  as the Issuer and the  Trustee  shall
consider  to be for  the  protection  of the  Holders  of all or any  series  of
Securities, (and if such covenants,  restrictions,  conditions or provisions are
to be for the protection of less than all series of Securities, stating that the
same are expressly  being included solely for the protection of such series) and
to make the occurrence,  or the occurrence and continuance,  of a default in any
such additional  covenants,  restrictions,  conditions or provisions an Event of
Default  permitting  the  enforcement  of all or  any  of the  several  remedies
provided  in this  Indenture  as herein set forth;  provided,  however,  that in
respect of any such  additional  covenant,  restriction,  condition or provision
such  supplemental  indenture may provide for a particular period of grace after
default  (which period may be shorter or longer than that allowed in the case of
other defaults) or may provide for an immediate  enforcement  upon such an Event
of Default or may limit the remedies available to the Trustee upon such an Event
of Default or may limit the right of the  Holders  of a  majority  in  aggregate
principal  amount of the  Securities  of such  series to waive  such an Event of
Default;

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

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

     (f) to evidence and provide for the acceptance of appointment  hereunder by
a successor  trustee with respect to the Securities of one or more series and to
add to or change any of the  provisions of this  Indenture as shall be necessary
to provide for or facilitate the  administration of the trusts hereunder by more
than one trustee, pursuant to the requirements of Section 6.11.

     The Trustee is hereby  authorized  to join with the Issuer in the execution
of any such supplemental  indenture,  to make any further appropriate agreements
and  stipulations  which may be therein  contained and to accept the conveyance,
transfer,  assignment,  mortgage or pledge of any property  thereunder,  but the
Trustee  shall not be  obligated to enter into any such  supplemental  indenture
which  affects  the  Trustee's  own  rights,  duties or  immunities  under  this
Indenture or otherwise.

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

     SECTION 8.2 Supplemental  Indentures with Consent of Securityholders.  With
the consent  (evidenced as provided in Article Seven) of the Holders of not less

<PAGE>

than a majority in aggregate principal amount of the Securities then Outstanding
of any  series  affected  by  such  supplemental  indenture,  the  Issuer,  when
authorized  by a resolution  of its Board of  Directors  (which  resolution  may
provide  general  terms or  parameters  for such action and may provide that the
specific  terms of such action may be determined in accordance  with or pursuant
to an Issuer  Order),  and the Trustee  may,  from time to time and at any time,
enter into an indenture or indentures  supplemental  hereto (which shall conform
to the provisions of the Trust  Indenture Act of 1939 as in force at the date of
execution  thereof) for the purpose of adding any  provisions  to or changing in
any manner or  eliminating  any of the  provisions  of this  Indenture or of any
supplemental  indenture  or of modifying in any manner the rights of the Holders
of the Securities of such series;  provided, that no such supplemental indenture
shall (a) extend the stated final maturity of the principal of any Security,  or
reduce the principal  amount  thereof,  or reduce the rate or extend the time of
payment of  interest,  if any,  thereon  (or, in the case of an  Original  Issue
Discount  Security,  reduce  the rate of  accrual  of  original  issue  discount
thereon),  or reduce or alter the method of computation of any amount payable on
redemption,  repayment  or purchase by the Issuer  thereof (or the time at which
any such  redemption,  repayment or purchase may be made), or make the principal
thereof  (including  any amount in  respect  of  original  issue  discount),  or
interest,  if any,  thereon  payable  in any coin or  currency  other  than that
provided in the Securities or in accordance with the terms of the Securities, or
reduce the amount of the principal of an Original Issue  Discount  Security that
would be due and payable upon an acceleration of the maturity  thereof  pursuant
to Section 5.1 or the amount thereof provable in bankruptcy  pursuant to Section
5.2, or impair or affect the right of any  Securityholder  to institute suit for
the  payment  thereof  or,  if the  Securities  provide  therefor,  any right of
repayment or purchase at the option of the Securityholder,  in each case without
the  consent  of the  Holder of each  Security  so  affected,  or (b) reduce the
aforesaid  percentage of Securities of any series, the consent of the Holders of
which is required for any such  supplemental  indenture,  without the consent of
the  Holders  of each  Security  so  affected.  No  consent of any Holder of any
Security shall be necessary under this Section 8.2 to permit the Trustee and the
Issuer to execute supplemental indentures pursuant to Sections 8.1 and 9.2.

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

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

     It shall not be necessary for the consent of the Securityholders under this
Section  8.2  to  approve  the  particular  form  of any  proposed  supplemental
indenture,  but it  shall  be  sufficient  if such  consent  shall  approve  the
substance thereof.

     Promptly  after  the  execution  by  the  Issuer  and  the  Trustee  of any
supplemental  indenture  pursuant to the  provisions  of this  Section  8.2, the
Trustee shall give notice thereof to the Holders of then Outstanding  Securities
of each series affected thereby, as provided in Section 11.4. Any failure of the
Issuer to give such notice, or any defect therein,  shall not,  however,  in any
way impair or affect the validity of any such supplemental indenture.

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

     SECTION 8.4 Documents to Be Given to Trustee.  The Trustee,  subject to the
provisions  of Sections  6.1 and 6.2,  shall be entitled to receive an Officers'
Certificate  and  an  Opinion  of  Counsel  as  conclusive   evidence  that  any
supplemental indenture executed pursuant to this Article Eight complies with the
applicable provisions of this Indenture.

     SECTION 8.5 Notation on Securities in Respect of Supplemental Indentures.

<PAGE>

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

     SECTION 8.6 Subordination Unimpaired.  This Indenture may not be amended to
alter the  subordination  of any  Outstanding  Securities  without  the  written
consent of each holder of Senior  Indebtedness  then  outstanding  that would be
adversely affected thereby.


                                  ARTICLE NINE
        CONSOLIDATION, MERGER, SALE, LEASE, EXCHANGE OR OTHER DISPOSITION

     SECTION 9.1 Issuer May Consolidate,  etc., on Certain Terms. Subject to the
provisions of Section 9.3, nothing  contained in this Indenture or in any of the
Securities shall prevent any  consolidation or merger of the Issuer with or into
any other  corporation  or  corporations  (whether  or not  affiliated  with the
Issuer),  or  successive  consolidations  or  mergers in which the Issuer or its
successor or successors shall be a party or parties,  or shall prevent any sale,
lease,  exchange or other  disposition of all or substantially  all the property
and assets of the Issuer to any other  corporation  (whether  or not  affiliated
with the Issuer) authorized to acquire and operate the same; provided,  however,
and the Issuer hereby covenants and agrees, that any such consolidation, merger,
sale, lease, exchange or other disposition shall be upon the conditions that (a)
immediately after such  consolidation,  merger,  sale, lease,  exchange or other
disposition of the  corporation  (whether the Issuer or such other  corporation)
formed by or surviving any such  consolidation or merger, or to which such sale,
lease,  exchange  or other  disposition  shall have been  made,  shall not be in
default in the  performance  or  observance  of any of the terms,  covenants and
conditions  of this  Indenture to be kept or  performed  by the Issuer;  (b) the
corporation  (if  other  than  the  Issuer)  formed  by or  surviving  any  such
consolidation  or  merger,  or to which  such  sale,  lease,  exchange  or other
disposition  shall have been made,  shall be a corporation  organized  under the
laws of the United  States of  America,  any state  thereof or the  District  of
Columbia; and (c) the due and punctual payment of the principal of and interest,
if  any,  on all the  Securities,  according  to  their  tenor,  and the due and
punctual  performance  and  observance of all of the covenants and conditions of
this  Indenture to be performed by the Issuer,  shall be expressly  assumed,  by
supplemental  indenture  satisfactory  in  form  to  the  Trustee  executed  and
delivered to the Trustee,  by the  corporation (if other than the Issuer) formed
by such  consolidation,  or into which the Issuer shall have been merged,  or by
the corporation which shall have acquired or leased such property.

     SECTION 9.2 Securities to be Secured in Certain  Events.  If, upon any such
consolidation,  merger,  or  upon  any  such  sale,  lease,  exchange  or  other
disposition  or upon any  acquisition  by the Issuer by purchase or otherwise of
all or any  part of the  properties  of any  other  corporation,  any  Principal
Property  owned by the  Issuer  or a  Restricted  Subsidiary  immediately  prior
thereto  would  thereupon  become  subject to any mortgage,  security  interest,
pledge,  lien or encumbrance,  not permitted by Section 3.6 hereof,  the Issuer,
prior to such consolidation,  merger, sale, lease, exchange or other disposition
or  acquisition,  will  by  indenture  supplemental  hereto  secure  the due and
punctual  payment of the  principal of and interest,  if any, on the  Securities
then  outstanding  (equally and ratably,  or with such other  relative  priority
specified in Section 3.6,  with any other  indebtedness  of or guaranteed by the
Issuer then entitled  thereto,  but only to the extent that such indebtedness is
Subordinated Indebtedness) by a direct lien on such Principal Property, together
with any other  properties  and assets of the  Issuer or of any such  Restricted
Subsidiary,  whichever shall be the owner of any such Principal Property,  which
would thereupon become subject to any such mortgage,  security interest, pledge,
lien or  encumbrance,  prior to all liens  other than any  theretofore  existing
thereon and other than liens on Senior Indebtedness.

     SECTION 9.3 Successor  Corporation to be  Substituted.  In case of any such
consolidation or merger or any sale, conveyance or lease of all or substantially
all of the  property  of the Issuer  and upon the  assumption  by the  successor
corporation,  by supplemental  indenture,  executed and delivered to the Trustee
and satisfactory in form to the Trustee,  of the due and punctual payment of the
principal  of and  interest,  if any, on all of the  Securities  and the due and
punctual performance of all of the covenants and conditions of this Indenture to
be performed by the Issuer,  such successor  corporation shall succeed to and be
substituted for the Issuer,  with the same effect as if it had been named herein
as the  party of the first  part,  and the  Issuer  (including  any  intervening
successor to the Issuer which shall have become the obligor  hereunder) shall be
relieved of any further  obligation  under this  Indenture  and the  Securities;
provided,  however,  that in the  case  of a  sale,  lease,  exchange  or  other
disposition  of the  property  and  assets  of the  Issuer  (including  any such
intervening  successor),  the Issuer (including any such intervening  successor)
shall  continue to be liable on its  obligations  under this  Indenture  and the
Securities to the extent, but only to the extent, of liability to pay the

<PAGE>

principal of and interest,  if any, on the  Securities  at the time,  places and
rate prescribed in this Indenture and the Securities. Such successor corporation
thereupon may cause to be signed, and may issue either in its own name or in the
name  of the  Issuer,  any or all of the  Securities  issuable  hereunder  which
theretofore  shall  not have been  signed by the  Issuer  and  delivered  to the
Trustee; and, upon the order of such successor corporation instead of the Issuer
and  subject to all the terms,  conditions  and  limitations  in this  Indenture
prescribed,  the Trustee shall  authenticate  and shall  deliver any  Securities
which  previously  shall have been signed and  delivered  by the officers of the
Issuer  to the  Trustee  for  authentication,  and  any  Securities  which  such
successor  corporation  thereafter shall cause to be signed and delivered to the
Trustee for that  purpose.  All the  Securities  so issued shall in all respects
have the same legal rank and  benefit  under this  Indenture  as the  Securities
theretofore or thereafter  issued in accordance with the terms of this Indenture
as though all of such  Securities  had been issued at the date of the  execution
hereof.

     In case of any such consolidation or merger or any sale, lease, exchange or
other  disposition of all or substantially all of the property and assets of the
Issuer,  such changes in phraseology and form (but not in substance) may be made
in the Securities, thereafter to be issued, as may be appropriate.

     SECTION 9.4 Opinion of Counsel to be Given Trustee. The Trustee, subject to
Sections  6.1 and 6.2,  may  receive an  Officers'  Certificate  and  Opinion of
Counsel as conclusive evidence that any such consolidation, merger, sale, lease,
exchange  or  other  disposition  and any  such  assumption  complies  with  the
provisions of this Article Nine.


                                   ARTICLE TEN
            SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS

     SECTION 10.1  Satisfaction  and Discharge of Indenture.  (A) If at any time
(a) the  Issuer  shall  have  paid or  caused  to be paid the  principal  of and
interest, if any, on all the Securities Outstanding (other than Securities which
have been  destroyed,  lost or stolen  and which have been  replaced  or paid as
provided in Section 2.9) as and when the same shall have become due and payable,
or (b) the Issuer  shall have  delivered  to the  Trustee for  cancellation  all
Securities  theretofore  authenticated  (other than  Securities  which have been
destroyed,  lost or stolen and which have been  replaced  or paid as provided in
Section 2.9); and if, in any such case, the Issuer shall also pay or cause to be
paid all other sums payable  hereunder by the Issuer,  then this Indenture shall
cease  to be of  further  effect,  and the  Trustee,  on  demand  of the  Issuer
accompanied by an Officers'  Certificate and an Opinion of Counsel, each stating
that  all  conditions  precedent  relating  to the  satisfaction  and  discharge
contemplated  by this  provision  have been complied  with,  and at the cost and
expense of the Issuer,  shall  execute  proper  instruments  acknowledging  such
satisfaction and discharging this Indenture.  The Issuer agrees to reimburse the
Trustee for any costs or expenses  thereafter  reasonably and properly incurred,
and to  compensate  the  Trustee  for any  services  thereafter  reasonably  and
properly  rendered,  by the Trustee in  connection  with this  Indenture  or the
Securities.

     (B) If at any time (a) the Issuer  shall have paid or caused to be paid the
principal of,  premium,  if any, and interest,  if any, on all the Securities of
any series  Outstanding  (other than  Securities  of such series which have been
destroyed,  lost or stolen and which have been  replaced  or paid as provided in
Section 2.9) as and when the same shall have become due and payable,  or (b) the
Issuer shall have  delivered to the Trustee for  cancellation  all Securities of
any series theretofore  authenticated  (other than any Securities of such series
which have been  destroyed,  lost or stolen and which have been replaced or paid
as provided in Section 2.9), or (c) in the case of any series of Securities with
respect  to which  the  exact  amount  described  in  clause  (ii)  below can be
determined  at the time of making the deposit  referred to in such clause  (ii),
(i) all the Securities of such series not  theretofore  delivered to the Trustee
for  cancellation  shall have become due and  payable,  or are by their terms to
become due and payable within one year or are to be called for redemption within
one year under arrangements satisfactory to the Trustee for the giving of notice
of redemption, and (ii) the Issuer shall have irrevocably deposited or caused to
be  deposited  with the  Trustee  as funds in  trust,  specifically  pledged  as
security for, and dedicated  solely to, the benefit of the Holders of Securities
of such series,  cash in an amount  (other than moneys  repaid by the Trustee or
any  paying  agent to the  Issuer in  accordance  with  Section  10.4) or direct
obligations of the United States of America, backed by its full faith and credit
("U.S. Government Obligations"),  maturing as to principal and interest, if any,
at such times and in such amounts as will insure the  availability of cash, or a
combination thereof,  sufficient in the opinion of a nationally  recognized firm
of independent public accountants  expressed in a written  certification thereof
delivered to the Trustee,  to pay (A) the  principal  of,  premium,  if any, and
interest,  if any,  on all  Securities  of such  series  on each  date that such
principal of, premium, if any, or interest,  if any, is due and payable, and (B)
any mandatory  sinking fund payments on the dates on which such payments are due
and payable in accordance  with the terms of the Indenture and the Securities of
such  series;  then the Issuer shall be deemed to have paid and  discharged  the
entire  indebtedness  on all the  Securities  of such  series on the date of the
deposit  referred to in clause (ii) above and the  provisions of this  Indenture
with respect to the Securities of such series shall no longer be in effect

<PAGE>

(except,  in the case of clause (c) of this Section 10.1(B), as to (i) rights of
registration of transfer and exchange of Securities of such series,  (ii) rights
of substitution of mutilated,  defaced,  destroyed, lost or stolen Securities of
such  series,  (iii) rights of Holders of  Securities  of such series to receive
payments of principal thereof and premium, if any, and interest, if any, thereon
upon the original  stated due dates  therefor (but not upon  acceleration),  and
remaining  rights  of the  Holders  of  Securities  of such  series  to  receive
mandatory  sinking fund  payments  thereon,  if any,  when due, (iv) the rights,
obligations,  duties and immunities of the Trustee hereunder,  (v) the rights of
the Holders of Securities of such series as beneficiaries hereof with respect to
the  property so  deposited  with the Trustee  payable to all or any of them and
(vi) the  obligations of the Issuer under Section 3.2 with respect to Securities
of such  series)  and the  Trustee,  on demand of the Issuer  accompanied  by an
Officers'  Certificate  and  an  Opinion  of  Counsel,  each  stating  that  all
conditions precedent contemplated by this provision have been complied with, and
at the  cost  and  expense  of the  Issuer,  shall  execute  proper  instruments
acknowledging the same.

     (C) The following  provisions  shall apply to the Securities of each series
unless  specifically  otherwise  provided  in  a  Board  Resolution,   Officers'
Certificate or indenture  supplemental  hereto provided pursuant to Section 2.3.
In  addition  to  discharge  of the  Indenture  pursuant  to the next  preceding
paragraph,  in the case of any series of  Securities  with  respect to which the
exact amount  described in subparagraph  (a) below can be determined at the time
of making the deposit referred to in such  subparagraph (a), the Issuer shall be
deemed to have paid and discharged the entire indebtedness on all the Securities
of such a series on the 91st day after the date of the  deposit  referred  to in
subparagraph (a) below, and the provisions of this Indenture with respect to the
Securities of such series shall no longer be in effect  (except as to (i) rights
of  registration  of transfer and exchange of  Securities  of such series,  (ii)
substitution of mutilated, defaced, destroyed, lost or stolen Securities of such
series, (iii) rights of Holders of Securities of such series to receive payments
of principal thereof,  premium,  if any, and interest,  if any, thereon upon the
original  stated due dates therefor (but not upon  acceleration),  and remaining
rights of the Holders of Securities of such series to receive  mandatory sinking
fund payments,  if any, (iv) the rights,  obligations,  duties and immunities of
the  Trustee  hereunder,  (v) the rights of the  Holders of  Securities  of such
series as  beneficiaries  hereof with respect to the property so deposited  with
the Trustee payable to all or any of them and (vi) the obligations of the Issuer
under Section 3.2 with respect to Securities of such series) and the Trustee, on
demand of the Issuer  accompanied by an Officers'  Certificate and an Opinion of
Counsel,  each  stating  that  all  conditions  precedent  contemplated  by this
provision  have been complied  with,  and at the cost and expense of the Issuer,
shall execute proper instruments acknowledging the same, if

          (a) with  reference  to this  provision  the  Issuer  has  irrevocably
     deposited or caused to be  irrevocably  deposited with the Trustee as funds
     in trust,  specifically  pledged as security for, and dedicated  solely to,
     the  benefit of the  Holders of  Securities  of such  series (i) cash in an
     amount, or (ii) U.S. Government  Obligations,  maturing as to principal and
     interest,  if any,  at such times and in such  amounts  as will  insure the
     availability of cash, or (iii) a combination  thereof,  sufficient,  in the
     opinion of a nationally  recognized firm of independent  public accountants
     expressed in a written  certification  thereof delivered to the Trustee, to
     pay (A) the principal  of,  premium,  if any, and interest,  if any, on all
     Securities of such series on each date that such principal or interest,  if
     any, is due and payable, and (B) any mandatory sinking fund payments on the
     dates on which such  payments  are due and payable in  accordance  with the
     terms of the Indenture and the Securities of such series;

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

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

     SECTION  10.2  Application  by Trustee of Funds  Deposited  for  Payment of
Securities.  Subject to Section 10.4, all moneys and U.S. Government Obligations
deposited with the Trustee  pursuant to Section 10.1 shall be held in trust, and
such  moneys  and all  moneys  from such U.S.  Government  Obligations  shall be
applied  by it to the  payment,  either  directly  or through  any paying  agent
(including the Issuer acting as its own paying agent), to the Holders of the

<PAGE>

particular Securities of such series for the payment or redemption of which such
moneys and U.S. Government  Obligations have been deposited with the Trustee, of
all sums due and to become due thereon for principal  and interest,  if any, but
such moneys and U.S.  Government  Obligations  need not be segregated from other
funds except to the extent required by law.

     SECTION 10.3 Repayment of Moneys Held by Paying Agent.  In connection  with
the  satisfaction  and discharge of this Indenture with respect to Securities of
any series,  all moneys then held by any paying  agent under the  provisions  of
this Indenture with respect to such series of Securities  shall,  upon demand of
the Issuer,  be repaid to it or paid to the Trustee  and  thereupon  such paying
agent shall be released from all further liability with respect to such moneys.

     SECTION  10.4 Return of Moneys Held by Trustee and Paying  Agent  Unclaimed
for Two Years.  Any moneys  deposited  with or paid to the Trustee or any paying
agent for the payment of the  principal of or interest,  if any, on any Security
of any series and not applied but  remaining  unclaimed  for two years after the
date upon which such  principal or interest,  if any,  shall have become due and
payable,  shall,  upon the  written  request of the Issuer and unless  otherwise
required by mandatory provisions of applicable escheat or abandoned or unclaimed
property  law,  be repaid to the Issuer by the  Trustee  for such series or such
paying agent,  and the Holder of the  Securities  of such series  shall,  unless
otherwise required by mandatory provisions of applicable escheat or abandoned or
unclaimed  property  laws,  thereafter  look only to the Issuer for any  payment
which such Holder may be entitled to collect,  and all  liability of the Trustee
or any paying agent with respect to such moneys shall thereupon cease.

     SECTION 10.5 Indemnity for U.S.  Government  Obligations.  The Issuer shall
pay and indemnify the Trustee against any tax, fee or other charge imposed on or
assessed against the U.S. Government  Obligations  deposited pursuant to Section
10.1 or the principal or interest received in respect of such obligations.


                                 ARTICLE ELEVEN
                            MISCELLANEOUS PROVISIONS

     SECTION 11.1 Partners, Incorporators,  Stockholders, Officers and Directors
of Issuer Exempt from IndividuaPartners,  Incorporators,  Stockholders, Officers
and Directors of Issuer Exempt from Individual  Liability.  No recourse under or
upon any obligation,  covenant or agreement  contained in this Indenture,  or in
any Security,  or because of any indebtedness  evidenced  thereby,  shall be had
against  any  incorporator,  as such or  against  any  past,  present  or future
stockholder,  officer or director, as such, of the Issuer, or any partner of the
Issuer  or of any  successor,  either  directly  or  through  the  Issuer or any
successor,  under any rule of law, statute or constitutional provision or by the
enforcement  of any  assessment  or by any  legal  or  equitable  proceeding  or
otherwise,  all such  liability  being  expressly  waived  and  released  by the
acceptance  of the  Securities  by  the  Holders  thereof  and  as  part  of the
consideration for the issue of the Securities.

     SECTION 11.2  Provisions  of Indenture  for the Sole Benefit of Parties and
Holders of Securities. Nothing in this Indenture or in the Securities, expressed
or implied,  shall give or be  construed  to give to any Person,  other than the
parties hereto and their  successors and the Holders of the Senior  Indebtedness
and the Holders of the Securities, any legal or equitable right, remedy or claim
under this Indenture or under any covenant or provision  herein  contained,  all
such covenants and  provisions  being for the sole benefit of the parties hereto
and their successors and of the Holders of the Securities.

     SECTION 11.3  Successors and Assigns of Issuer Bound by Indenture.  All the
covenants, stipulations,  promises and agreements in this Indenture contained by
or on behalf of the Issuer shall bind its  successors  and  assigns,  whether so
expressed or not.

     SECTION  11.4  Notices  and  Demands  on  Issuer,  Trustee  and  Holders of
Securities.  Any notice or demand which by any  provision  of this  Indenture is
required or  permitted to be given or served by the Trustee or by the Holders of
Securities to or on the Issuer,  or as required  pursuant to the Trust Indenture
Act of  1939,  may be given  or  served  by  being  deposited  postage  prepaid,
first-class mail (except as otherwise  specifically  provided herein)  addressed
(until another address of the Issuer is filed by the Issuer with the Trustee) to
Seagull  Energy  Corporation,  1001 Fannin,  Suite 1700,  Houston,  Texas 77002,
Attention:  Chairman of the Board. Any notice,  direction,  request or demand by
the Issuer or any Holder of Securities to or upon the Trustee shall be deemed to
have  been  sufficiently  given or served by being  deposited  postage  prepaid,
first-class mail (except as otherwise  specifically  provided herein)  addressed
(until  another  address of the Trustee is filed by the Trustee with the Issuer)
to The Bank of New York, 101 Barclay  Street,  Floor 21 West, New York, New York
10286, Attention: Corporate Trust Trustee Administration.


<PAGE>

     Where this  Indenture  provides for notice to Holders of  Securities,  such
notice shall be sufficiently given (unless otherwise herein expressly  provided)
if in writing and mailed,  first-class  postage prepaid, to each Holder entitled
thereto, at his last address as it appears in the Security register.  Where this
Indenture  provides  for  notice in any  manner,  such  notice  may be waived in
writing by the Person  entitled to receive such notice,  either  before or after
the event,  and such waiver shall be the  equivalent of such notice.  Waivers of
notice by Holders shall be filed with the Trustee,  but such filing shall not be
a condition  precedent to the validity of any action taken in reliance upon such
waiver.

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

     SECTION 11.5 Officers' Certificates and Opinions of Counsel;  Statements to
Be Contained Therein. Upon any herein application or demand by the Issuer to the
Trustee to take any action under any of the provisions of this Indenture,  or as
required  pursuant to the Trust  Indenture Act of 1939, the Issuer shall furnish
to the Trustee an Officers'  Certificate  stating that all conditions  precedent
provided  for in this  Indenture  relating  to the  proposed  action  have  been
complied  with and an  Opinion of Counsel  stating  that in the  opinion of such
counsel all such  conditions  precedent have been complied with,  except that in
the case of any such  application  or demand as to which the  furnishing of such
documents is specifically  required by any provision of this Indenture  relating
to such particular  application or demand, no additional  certificate or opinion
need be furnished.

     Each  certificate or opinion  provided for in this Indenture  (other than a
certificate  provided  pursuant to Section  4.3(d)) and delivered to the Trustee
with respect to  compliance  with a condition  or covenant  provided for in this
Indenture shall include (a) a statement that the person making such  certificate
or opinion has read such covenant or condition,  (b) a brief statement as to the
nature and scope of the examination or  investigation  upon which the statements
or opinions  contained in such certificate or opinion are based, (c) a statement
that,  in  the  opinion  of  such  person,  he  has  made  such  examination  or
investigation  as is necessary to enable him to express an opinion as to whether
or not such covenant or condition has been complied with, and (d) a statement as
to whether or not, in the opinion of such person, such condition or covenant has
been complied with.

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

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

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

     SECTION 11.6 Payments Due on Saturdays,  Sundays and Holidays.  If the date
of maturity of principal of or interest, if any, on the Securities of any series
or the date fixed for  redemption,  purchase or repayment  of any such  Security
shall not be a Business Day, then payment of interest, if any, or principal need
not be made on such date,  but may be made on the next  succeeding  Business Day
with the same  force and effect as if made on the date of  maturity  or the date
fixed for  redemption,  purchase or repayment,  and, in the case of payment,  no
interest shall accrue for the period after such date.

     SECTION 11.7  Conflict of Any Provision of Indenture  with Trust  Indenture
Act of 1939. If and to the extent that any provision of this  Indenture  limits,
qualifies or conflicts with another  provision  included in this Indenture which
is required to be included herein by any of Sections 310 to 317,  inclusive,  or
is deemed applicable to this Indenture by virtue of the provisions, of the Trust
Indenture Act of 1939, such required provision shall control.
<PAGE>

     SECTION 11.8  GOVERNING  LAW. THIS  INDENTURE  AND EACH  SECURITY  SHALL BE
DEEMED  TO BE A  CONTRACT  UNDER  THE LAWS OF THE  STATE OF NEW YORK AND FOR ALL
PURPOSES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE  WITH THE LAWS OF SUCH
STATE.

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

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


                                 ARTICLE TWELVE
                   REDEMPTION OF SECURITIES AND SINKING FUNDS

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

     SECTION  12.2  Notice  of  Redemption;   Partial  Redemptions.   Notice  of
redemption  to the Holders of Securities of any series to be redeemed as a whole
or in part at the option of the Issuer shall be given by mailing  notice of such
redemption by first class mail,  postage prepaid,  at least 30 days and not more
than 60 days  prior  to the  date  fixed  for  redemption  to  such  Holders  of
Securities  of such series at their last  addresses  as they shall appear in the
Security  register.  Any notice  which is mailed in the manner  herein  provided
shall be  conclusively  presumed  to have been duly  given,  whether  or not the
Holder receives the notice. Failure to give notice by mail, or any defect in the
notice to the Holder of any Security of a series  designated for redemption as a
whole or in part  shall not  affect  the  validity  of the  proceedings  for the
redemption of any other Security of such series.

     The notice of  redemption  to each such Holder shall  specify the principal
amount of each  Security of such series held by such Holder to be redeemed,  the
date fixed for redemption, the redemption price, the place or places of payment,
the CUSIP  number  relating to such  Securities,  that payment will be made upon
presentation and surrender of such Securities,  that such redemption is pursuant
to the mandatory or optional  sinking  fund, or both, if such be the case,  that
interest,  if any,  (or,  in the case of  Original  Issue  Discount  Securities,
original issue  discount)  accrued to the date fixed for redemption will be paid
as  specified in such notice and that on and after said date  interest,  if any,
(or, in the case of Original Issue Discount Securities, original issue discount)
thereon or on the portions thereof to be redeemed will cease to accrue.  In case
any  Security  of a  series  is to be  redeemed  in part  only,  the  notice  of
redemption  shall  state the  portion  of the  principal  amount  thereof  to be
redeemed and shall state that on and after the date fixed for  redemption,  upon
surrender  of such  Security,  a new  Security or  Securities  of such series in
principal amount equal to the unredeemed portion thereof will be issued.

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

     On or before the  redemption  date  specified  in the notice of  redemption
given as provided in this Section 12.2, the Issuer will deposit with the Trustee
or with one or more paying agents (or, if the Issuer is acting as its own paying
agent,  set aside,  segregate  and hold in trust as provided in Section  3.5) an
amount of money  sufficient to redeem on the redemption  date all the Securities
of such series so called for  redemption at the  appropriate  redemption  price,
together with accrued  interest,  if any, to the date fixed for redemption.  The
Issuer will  deliver to the Trustee at least 45 days prior to the date fixed for
redemption (unless a shorter notice period shall be satisfactory to the Trustee)
an Officers' Certificate stating the aggregate principal amount of Securities to
be redeemed.  In case of a redemption at the election of the Issuer prior to the
expiration of any  restriction on such  redemption,  the Issuer shall deliver to
the Trustee, prior to the giving of any notice of redemption to Holders pursuant
to this Section, an Officers' Certificate stating that such restriction has been
complied with.

     If less than all the Securities of a series are to be redeemed, the Trustee
shall select,  in such manner as it shall deem appropriate and fair,  Securities
of such series to be redeemed.  Securities  may be redeemed in part in multiples
equal to the minimum authorized denomination for Securities of such series or

<PAGE>

any multiple thereof. The Trustee shall promptly notify the Issuer in writing of
the Securities of such series  selected for  redemption  and, in the case of any
Securities of such series selected for partial redemption,  the principal amount
thereof to be redeemed.  For all purposes of this Indenture,  unless the context
otherwise  requires,  all provisions relating to the redemption of Securities of
any series shall relate,  in the case of any Security redeemed or to be redeemed
only in part, to the portion of the principal  amount of such Security which has
been or is to be redeemed.

     SECTION  12.3 Payment of  Securities  Called for  Redemption.  If notice of
redemption  has been given as above  provided,  the  Securities  or  portions of
Securities specified in such notice shall become due and payable on the date and
at the place or places stated in such notice at the applicable redemption price,
together with interest, if any, accrued to the date fixed for redemption, and on
and after said date  (unless  the Issuer  shall  default in the  payment of such
Securities at the redemption price,  together with interest,  if any, accrued to
said date)  interest  (or, in the case of Original  Issue  Discount  Securities,
original  issue  discount) on the Securities or portions of Securities so called
for redemption  shall cease to accrue,  and such Securities shall cease from and
after the date fixed for  redemption  (unless an earlier date shall be specified
in a Board Resolution,  Officers' Certificate or executed supplemental indenture
referred to in  Sections  2.1 and 2.3 by or pursuant to which the form and terms
of the  Securities  of such  series  were  established)  except as  provided  in
Sections  6.5 and 10.4,  to be entitled  to any  benefit or security  under this
Indenture,  and the  Holders  thereof  shall  have no right in  respect  of such
Securities  except the right to receive the redemption  price thereof and unpaid
interest to the date fixed for redemption. On presentation and surrender of such
Securities at a place of payment  specified in said notice,  said  Securities or
the specified  portions  thereof shall be paid and redeemed by the Issuer at the
applicable  redemption price, together with interest, if any, accrued thereon to
the date  fixed for  redemption;  provided  that  payment of  interest,  if any,
becoming  due on or prior to the date fixed for  redemption  shall be payable to
the Holders of Securities registered as such on the relevant record date subject
to the terms and provisions of Sections 2.3 and 2.7 hereof.

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

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

     SECTION 12.4 Exclusion of Certain Securities from Eligibility for Selection
for Redemption.  Securities shall be excluded from eligibility for selection for
redemption if they are identified by registration  and certificate  number in an
Officers'  Certificate  delivered  to the  Trustee at least 45 days prior to the
last date on which  notice of  redemption  may be given as being owned of record
and  beneficially  by, and not pledged or hypothecated by either (a) the Issuer,
or  (b) a  Person  specifically  identified  in  such  written  statement  as an
Affiliate of the Issuer.

     SECTION 12.5 Mandatory and Optional  Sinking  Funds.  The minimum amount of
any sinking fund  payment  provided  for by the terms of the  Securities  of any
series is herein  referred to as a  "mandatory  sinking fund  payment",  and any
payment  in  excess  of such  minimum  amount  provided  for by the terms of the
Securities  of any series is herein  referred to as an  "optional  sinking  fund
payment".  The date on which a  sinking  fund  payment  is to be made is  herein
referred to as the "sinking fund payment date".

     In lieu of making all or any part of any  mandatory  sinking  fund  payment
with respect to any series of Securities  in cash,  the Issuer may at its option
(a) deliver to the Trustee  Securities of such series  theretofore  purchased or
otherwise  acquired  (except upon redemption  pursuant to the mandatory  sinking
fund) by the  Issuer or  receive  credit  for  Securities  of such  series  (not
previously so credited)  theretofore  purchased or otherwise acquired (except as
aforesaid) by the Issuer and delivered to the Trustee for cancellation  pursuant
to Section  2.10,  (b) receive  credit for optional  sinking fund  payments (not
previously  so  credited)  made  pursuant to this Section  12.5,  or (c) receive
credit for  Securities of such series (not  previously so credited)  redeemed by
the Issuer through any optional  redemption  provision contained in the terms of
such series.  Securities so delivered or credited  shall be received or credited
by  the  Trustee  at  the  sinking  fund  redemption  price  specified  in  such
Securities.

     On or before the 60th day next preceding each sinking fund payment date for
any series, the Issuer will deliver to the Trustee an Officers' Certificate (a)

<PAGE>

specifying the portion of the mandatory  sinking fund payment to be satisfied by
payment of cash and the portion to be satisfied by credit of  Securities of such
series and the basis for such credit, (b) stating that none of the Securities of
such series to be so credited has theretofore been so credited, (c) stating that
no defaults in the payment of interest or Events of Default with respect to such
series have occurred (which have not been waived or cured or otherwise ceased to
exist) and are continuing,  and (d) stating whether or not the Issuer intends to
exercise its right to make an optional sinking fund payment with respect to such
series and, if so,  specifying the amount of such optional  sinking fund payment
which the Issuer  intends to pay on or before the next  succeeding  sinking fund
payment  date.  Any  Securities of such series to be credited and required to be
delivered  to the  Trustee  in order  for the  Issuer to be  entitled  to credit
therefor as aforesaid which have not  theretofore  been delivered to the Trustee
shall be delivered for cancellation pursuant to Section 2.10 to the Trustee with
such Officers'  Certificate (or reasonably  promptly thereafter if acceptable to
the Trustee).  Such  Officers'  Certificate  shall be  irrevocable  and upon its
receipt by the Trustee the Issuer shall become unconditionally obligated to make
all the cash payments or payments  therein referred to, if any, on or before the
next succeeding  sinking fund payment date.  Failure of the Issuer, on or before
any such 60th day, to deliver such Officers' Certificate and Securities (subject
to the parenthetical  clause in the second preceding sentence) specified in this
paragraph,  if any, shall not constitute a default but shall constitute,  on and
as of such date, the  irrevocable  election of the Issuer (i) that the mandatory
sinking  fund  payment for such series due on the next  succeeding  sinking fund
payment  date shall be paid  entirely  in cash  without the option to deliver or
credit  Securities of such series in respect  thereof,  and (ii) that the Issuer
will make no  optional  sinking  fund  payment  with  respect to such  series as
provided in this Section 12.5.

     If the sinking fund payment or payments  (mandatory or optional or both) to
be made in cash on the next succeeding sinking fund payment date plus any unused
balance  of any  preceding  sinking  fund  payments  made in cash  shall  exceed
$50,000,  or a lesser sum if the Issuer  shall so  request  with  respect to the
Securities  of any  particular  series,  such cash  shall be applied on the next
succeeding  sinking fund payment date to the  redemption  of  Securities of such
series at the sinking fund redemption price together with accrued  interest,  if
any, to the date fixed for  redemption.  If such amount shall be $50,000 or less
and the Issuer makes no such request,  then it shall be carried over until a sum
in excess of $50,000 is  available.  The  Trustee  shall  select,  in the manner
provided in Section  12.2,  for  redemption  on such sinking fund payment date a
sufficient principal amount of Securities of such series to absorb said cash, as
nearly as may be, and shall (if  requested in writing by the Issuer)  inform the
Issuer of the  serial  numbers of the  Securities  of such  series (or  portions
thereof) so selected.  The Trustee, in the name and at the expense of the Issuer
(or the  Issuer,  if it shall so request  the  Trustee in  writing)  shall cause
notice  of  redemption  of  the  Securities  of  such  series  to  be  given  in
substantially  the manner provided in Section 12.2 (and with the effect provided
in Section 12.3) for the  redemption of Securities of such series in part at the
option of the Issuer.  The amount of any sinking fund payments not so applied or
allocated to the  redemption  of Securities of such series shall be added to the
next cash sinking fund payment for such series and,  together with such payment,
shall be applied in accordance with the provisions of this Section 12.5. Any and
all sinking fund moneys held on the stated  maturity  date of the  Securities of
any particular series (or earlier,  if such maturity is accelerated),  which are
not held for the payment or redemption  of particular  Securities of such series
shall be applied,  together with other moneys, if necessary,  sufficient for the
purpose,  to the payment of the  principal  of, and  interest,  if any,  on, the
Securities of such series at maturity.

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

     The Trustee  shall not redeem or cause to be redeemed any  Securities  of a
series with sinking fund moneys or give any notice of  redemption  of Securities
for such series by  operation of the sinking  fund during the  continuance  of a
default in payment of  interest  on such  Securities  or of any Event of Default
with  respect  to such  series  except  that,  where  the  giving  of  notice of
redemption of any Securities shall theretofore have been made, the Trustee shall
redeem or cause to be  redeemed  such  Securities,  provided  that it shall have
received  from  the  Issuer a sum  sufficient  for such  redemption.  Except  as
aforesaid,  and subject to Article Thirteen,  any moneys in the sinking fund for
such series at the time when any such  default or Event of Default  shall occur,
and any  moneys  thereafter  paid  into the  sinking  fund,  shall,  during  the
continuance  of such  default  or Event  of  Default,  be  deemed  to have  been
collected under Article Five and held for the payment of all such Securities. In
case such Event of Default  shall have been waived as provided in Section 5.7 or
the default  cured on or before the 60th day  preceding the sinking fund payment
date in any year, such moneys shall thereafter be applied on the next succeeding
sinking fund payment date in accordance  with this Section to the  redemption of
such Securities.


                                ARTICLE THIRTEEN
                                  SUBORDINATION

     SECTION 13.1 Securities Subordinated to Senior Indebtedness. (a) The Issuer
covenants  and agrees,  and each Holder of  Securities  of each  series,  by his
acceptance  thereof,  likewise  covenants  and  agrees,  that  anything  in this
Indenture or the Securities of any series to the contrary  notwithstanding,  the
indebtedness  evidenced  by the  Securities  of each series is  subordinate  and
junior  in right of  payment,  to the  extent  provided  herein,  to all  Senior
Indebtedness,  whether outstanding on the date of execution of this Indenture or
thereafter created,  incurred or assumed,  and that the subordination is for the
benefit of the holders of Senior  Indebtedness,  but the Securities shall in all
respects rank pari passu with all other Senior Subordinated  Indebtedness of the
Issuer. The Securities shall rank senior to all existing and future Indebtedness
of the  Issuer  that is neither  Senior  Indebtedness  nor  Senior  Subordinated
Indebtedness  and only  Indebtedness  of the Issuer that is Senior  Indebtedness
shall rank senior to the Securities in accordance  with the provisions set forth
herein.

     (b) Subject to Section 13.4, if (i) the Issuer shall default in the payment
of any  principal  of,  premium,  if any,  or  interest,  if any,  on any Senior
Indebtedness when the same becomes due and payable,  whether at maturity or at a
date fixed for  prepayment or by declaration of  acceleration  or otherwise,  or
(ii) any other default shall occur with respect to Senior  Indebtedness  and the
maturity of such Senior Indebtedness has been accelerated in accordance with its
terms, then, upon written notice of such default to the Issuer by the holders of
Senior  Indebtedness or any trustee therefor,  unless and until, in either case,
the  default  has been  cured or  waived,  and any  such  acceleration  has been
rescinded  or such  Senior  Indebtedness  has been  paid in full,  no  direct or
indirect payment (in cash, property,  securities, by set-off or otherwise) shall
be made or agreed to be made on account of the principal of, premium, if any, or
interest,  if any, on any of the  Securities,  or in respect of any  redemption,
retirement,  purchase or other  acquisition of any of the Securities  other than
those made in capital stock of the Issuer (or cash in lieu of fractional  shares
thereof).

     (c) If any default (other than a default  described in paragraph (b)) shall
occur under the Senior Indebtedness,  pursuant to which the maturity thereof may
be accelerated  immediately without further notice (except such notice as may be
required to effect such  acceleration) or the expiration of any applicable grace
periods occurs (a "Senior Nonmonetary  Default"),  then, upon the receipt by the
Issuer and the Trustee of written notice thereof (a "Payment Notice") from or on
behalf of holders of such Senior Indebtedness specifying an election to prohibit
such payment and other  action by the Issuer in  accordance  with the  following
provisions  of this  paragraph,  the Issuer may not make any payment or take any
other action that would be  prohibited  by paragraph (b) above during the period
(the  "Payment  Blockage  Period")  commencing  on the date of  receipt  of such
Payment  Notice and ending on the earlier of (i) the date,  if any, on which the
holders of such Senior Indebtedness or their  representative  notify the Trustee
that such  Senior  Nonmonetary  Default is cured or waived or ceases to exist or
the Senior  Indebtedness  to which such Senior  Nonmonetary  Default  relates is
discharged  or (ii) the  179th day after  the date of  receipt  of such  Payment
Notice.  Notwithstanding the provisions  described in the immediately  preceding
sentence,  the Issuer may resume  payments on the Securities  after such Payment
Blockage Period.

     (d) If (i) (A) without the consent of the Issuer, a receiver,  conservator,
liquidator  or trustee of the Issuer or of any of its  property is  appointed by
the order or decree of any  court or  agency  or  supervisory  authority  having
jurisdiction,  and such decree or order  remains in effect for more than 60 days
or (B)  the  Issuer  is  adjudicated  bankrupt  or  insolvent  or (C) any of its
property is sequestered by court order and such order remains in effect for more
than 60 days or (D) a petition is filed  against  the Issuer  under any state or
federal bankruptcy,  reorganization,  arrangement,  insolvency,  readjustment of
debt,  dissolution,  liquidation or receivership law of any jurisdiction whether
now or hereafter in effect (including  without  limitation the Bankruptcy Code),
and is not  dismissed  within 60 days after such filing;  or (ii) the Issuer (A)
commences   a  voluntary   case  or  other   proceeding   seeking   liquidation,
reorganization,  arrangement,  insolvency,  readjustment  of debt,  dissolution,
liquidation  or  other  relief  with  respect  to  itself  or its  debt or other
liabilities  under  any  bankruptcy,  insolvency  or  other  similar  law now or
hereafter  in effect  (including  without  limitation  the  Bankruptcy  Code) or
seeking the appointment of a trustee, receiver,  liquidator,  custodian or other
similar official of it or any substantial part of its property,  or (B) consents
to any such relief or to the  appointment  of or taking  possession  by any such
official in an involuntary case or other proceeding commenced against it, or (C)
fails generally to, or cannot, pay its debts generally as they become due or (D)
takes any corporate action to authorize or effect any of the foregoing; or (iii)
any  Subsidiary  of the  Issuer  takes,  suffers  or permits to exist any of the
events or conditions  referred to in the foregoing  clause (i) or (ii), then all
Senior   Indebtedness   (including  any  interest  thereon  accruing  after  the
commencement  of any such  proceedings)  shall  first be paid in full before any
payment or distribution, whether in cash, securities or other property, shall be
made to any  Holder  of any  Securities  on  account  thereof.  Any  payment  or
distribution,  whether  in  cash,  securities  or  other  property  (other  than
securities  of the  Issuer or any other  corporation  provided  for by a plan of
reorganization or readjustment the payment of which is subordinate,  at least to
the  extent  provided  in these  subordination  provisions  with  respect to the
indebtedness evidenced by the Securities, to the payment of all Senior

<PAGE>

Indebtedness  then  outstanding and to any securities  issued in respect thereof
under any such plan of  reorganization  or  readjustment)  which would otherwise
(but for these subordination provisions) be payable or deliverable in respect of
the Securities of any series shall be paid or delivered  directly to the holders
of Senior  Indebtedness  in accordance  with the priorities  then existing among
such holders  until all Senior  Indebtedness  (including  any  interest  thereon
accruing after the commencement of any such proceedings) shall have been paid in
full.  In the event of any such  proceeding,  after  payment in full of all sums
owing  with  respect to Senior  Indebtedness,  the  Holders  of the  Securities,
together with the holders of any  obligations  of the Issuer ranking on a parity
with the Securities,  shall be entitled to be paid from the remaining  assets of
the Issuer the amounts at the time due and owing on account of unpaid  principal
of and interest, if any, on the Securities and such other obligations before any
payment or other distribution,  whether in cash, property or otherwise, shall be
made on account of any capital stock or any  obligations  of the Issuer  ranking
junior to the Securities and such other obligations.

     (e) If,  notwithstanding the foregoing,  any payment or distribution of any
character,  whether in cash, securities or other property (other than securities
of the Issuer or any other corporation  provided for by a plan of reorganization
or  readjustment  the  payment of which is  subordinate,  at least to the extent
provided  in the  subordination  provisions  with  respect  to the  indebtedness
evidenced  by the  Securities,  to the payment of all Senior  Indebtedness  then
outstanding and to any securities  issued in respect thereof under any such plan
of  reorganization  or  readjustment),  shall be  received by the Trustee or any
Holder in contravention of any of the terms hereof, such payment or distribution
of  securities  shall be  received in trust for the benefit of and shall be paid
over or delivered and transferred to the holders of the Senior Indebtedness then
outstanding in accordance  with the priorities  then existing among such holders
for application to the payment of all Senior  Indebtedness  remaining unpaid, to
the extent  necessary to pay all such Senior  Indebtedness in full. In the event
of the  failure  of the  Trustee  or any  Holder to  endorse  or assign any such
payment,  distribution or security, each holder of Senior Indebtedness is hereby
irrevocably authorized to endorse or assign the same.

     (f) No  present  or  future  holder  of any  Senior  Indebtedness  shall be
prejudiced in the right to enforce  subordination of the indebtedness  evidenced
by the  Securities by any act or failure to act on the part of the Issuer or any
Holder of  Securities.  Nothing  contained  herein shall impair,  as between the
Issuer and the Holders of  Securities  of each  series,  the  obligation  of the
Issuer to pay to such  Holders the  principal of and  interest,  if any, on such
Securities  or prevent  the Trustee or the Holder  from  exercising  all rights,
powers and remedies  otherwise  permitted by applicable  law or hereunder upon a
default or Event of Default hereunder,  all subject to the rights of the holders
of the  Senior  Indebtedness  to  receive  cash,  securities  or other  property
otherwise payable or deliverable to the Holders.

     (g)  Senior  Indebtedness  shall  not be  deemed  to have been paid in full
unless  the  holders  thereof  shall have  received  cash,  securities  or other
property equal to the amount of such Senior Indebtedness then outstanding.  Upon
the payment in full of all Senior  Indebtedness,  the Holders of  Securities  of
each  series  shall  be  subrogated  to all  rights  of any  holders  of  Senior
Indebtedness to receive any further payment or  distributions  applicable to the
Senior  Indebtedness until the indebtedness  evidenced by the Securities of such
series shall have been paid in full and such payments or distributions  received
by such Holders,  by reason of such  subrogation,  of cash,  securities or other
property which  otherwise  would be paid or distributed to the holders of Senior
Indebtedness,  shall,  as between  the Issuer and its  creditors  other than the
holders of Senior Indebtedness,  on the one hand, and such Holders, on the other
hand, be deemed to be a payment by the Issuer on account of Senior Indebtedness,
and not on account of the Securities of such series.

     (h) The  provisions  of this  Section  13.1 shall not  impair  any  rights,
interests,  remedies or powers of any secured  creditor of the Issuer in respect
of any  security  interest  the  creation  of  which  is not  prohibited  by the
provisions of this Indenture.

     (i) The securing of any obligations of the Issuer,  otherwise  ranking on a
parity with the  Securities or ranking  junior to the  Securities,  shall not be
deemed to prevent such obligations from constituting,  respectively, obligations
ranking on a parity with the Securities or ranking junior to the Securities.

     SECTION 13.2 Reliance on Certificate of Liquidating Agent; Further Evidence
as to  Ownership of Senior  InReliance  on  Certificate  of  Liquidating  Agent;
Further  Evidence as to  Ownership of Senior  Indebtedness.  Upon any payment or
distribution  of assets of the Issuer,  the  Trustee  and the  Holders  shall be
entitled to rely upon an order or decree issued by any court of competent

<PAGE>

jurisdiction  in  which  such  dissolution  or  winding  up  or  liquidation  or
reorganization  or arrangement  proceedings are pending or upon a certificate of
the trustee in  bankruptcy,  receiver,  assignee for the benefit of creditors or
other Person making such payment or distribution, delivered to the Trustee or to
the Holders, for the purpose of ascertaining the Persons entitled to participate
in  such  distribution,  the  holders  of  the  Senior  Indebtedness  and  other
indebtedness of the Issuer, the amount thereof or payable thereon, the amount or
amounts paid or distributed  thereon and all other facts pertinent thereto or to
this Article Thirteen. In the absence of any such bankruptcy trustee,  receiver,
assignee or other  Person,  the Trustee  shall be entitled to rely upon  written
notice by a Person  representing  himself to be a holder of Senior  Indebtedness
(or a trustee or  representative on behalf of such holder) as evidence that such
Person  is  a  holder  of  Senior   Indebtedness   (or  is  such  a  trustee  or
representative). If 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  distributions  pursuant to this
Article Thirteen, the Trustee may request such Person to furnish evidence to the
reasonable  satisfaction of the Trustee as to the amount of Senior  Indebtedness
held by such  Person,  as to the  extent to which  such  Person is  entitled  to
participate in such payment or distribution,  and as to other facts pertinent to
the rights of such Person under this Article  Thirteen,  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 13.3 Payment  Permitted  If No Default.  Nothing  contained in this
Article  Thirteen or elsewhere in this  Indenture,  or in any of the Securities,
shall  prevent  (a) the Issuer at any time,  except  during the  pendency of any
default with  respect to Senior  Indebtedness  described  in Section  13.1(b) or
Section  13.1(c) or of any of the events  described  in  Section  13.1(d),  from
making payments of the principal of or interest,  if any, on the Securities,  or
(b) the  application by the Trustee or any paying agent of any moneys  deposited
with it  hereunder to payments of the  principal of or interest,  if any, on the
Securities,  if, at the time of such deposit,  the Trustee or such paying agent,
as the case may be, did not have the written notice provided for in Section 13.5
of any event prohibiting the making of such deposit,  or if, at the time of such
deposit (whether or not in trust) by the Issuer with the Trustee or paying agent
(other than the  Issuer)  such  payment  would not have been  prohibited  by the
provisions of this Article  Thirteen,  and the Trustee or any paying agent shall
not be  affected by any notice to the  contrary  received by it on or after such
date.

     SECTION 13.4  Disputes  with Holders of Certain  Senior  Indebtedness.  Any
failure by the Issuer to make any  payment on or under any Senior  Indebtedness,
other than any Senior  Indebtedness  as to which the  provisions of this Section
13.4 shall have been waived by the Issuer in the  instrument or  instruments  by
which the Issuer incurred,  assumed, guaranteed or otherwise created such Senior
Indebtedness, shall not be deemed a default under Section 13.1 if (i) the Issuer
shall  be  disputing  its  obligation  to make  such  payment  or  perform  such
obligation, and (ii) either (A) no final judgment relating to such dispute shall
have been issued against the Issuer which is in full force and effect and is not
subject to further review,  including a judgment that has become final by reason
of the  expiration  of the time within which a party may seek further  appeal or
review,  or (B) if a judgment  that is  subject to further  review or appeal has
been issued,  the Issuer shall in good faith be  prosecuting  an appeal or other
proceeding for review,  and a stay of execution shall have been obtained pending
such appeal or review.

     SECTION 13.5 Trustee Not Charged with Knowledge of Prohibition. Anything in
this Article  Thirteen or elsewhere in this Indenture  contained to the contrary
notwithstanding,  the Trustee shall not at any time be charged with knowledge of
the  existence  of any facts which would  prohibit  the making of any payment of
moneys to or by the Trustee and shall be entitled to assume conclusively that no
such facts exists and that no event  specified in clauses (a) and (b) of Section
13.1 has happened  unless and until the Trustee shall have received an Officers'
Certificate  to the effect or notice in writing to that  effect  signed by or on
behalf of the holder or holders, or the representatives,  of Senior Indebtedness
who shall have been  certified  by the Issuer or  otherwise  established  to the
reasonable  satisfaction  of  the  Trustee  to be  such  holder  or  holders  or
representatives  or from any trustee under any indenture  pursuant to which such
Senior  Indebtedness  shall be  outstanding;  provided,  however,  that,  if the
Trustee shall not have received the Officers' Certificate or notice provided for
in this Section 13.5 at least three  Business Days preceding the date upon which
by the terms  hereof any  moneys  become  payable  for any  purpose  (including,
without limitation,  the payment of either the principal of or interest, if any,
on  any   Security),   then,   anything   herein   contained   to  the  contrary
notwithstanding, the Trustee shall have full power and authority to receive such
moneys and apply the same to the purpose for which they were  received and shall
not be affected by any notice to the contrary  that may be received by it within
three  Business Days  preceding  such date. The Issuer shall give prompt written
notice to the Trustee and to each paying agent of any facts that would  prohibit
any payment of moneys to or by the Trustee or any paying agent,  and the Trustee
shall  not be  charged  with  knowledge  of the  curing  of any  default  or the
elimination  of  any  other  fact  or  condition   preventing  such  payment  or
distribution  unless and until the  Trustee  shall have  received  an  Officers'
Certificate to such effect.

     SECTION 13.6 Trustee to Effectuate Subordination. Each Holder of Securities
by his  acceptance  thereof  authorizes and directs the Trustee on his behalf to

<PAGE>

take  such  action  as  may  be  necessary  or  appropriate  to  effectuate  the
subordination  as between  such  Holder and  holders of Senior  Indebtedness  as
provided in this Article Thirteen and appoints the Trustee its  attorney-in-fact
for any and all such purposes.

     SECTION  13.7  Rights of  Trustee  as Holder  of Senior  Indebtedness.  The
Trustee  shall be entitled to all the rights set forth in this Article  Thirteen
with respect to any Senior  Indebtedness which may at the 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  Thirteen  shall apply to claims of, or payments to, the Trustee
under or pursuant to Section 6.6.

     SECTION 13.8 Article  Applicable to Paying Agents.  In case at any time any
paying agent other than the Trustee shall have been  appointed by the Issuer and
be then acting  hereunder,  the term "Trustee" as used in this Article  Thirteen
shall in such case (unless the context shall otherwise  require) be construed as
extending to and including such paying agent within its meaning as fully for all
intents and purposes as if the paying agent were named in this Article  Thirteen
in addition to or in place of the Trustee; provided, however, that Sections 13.5
and 13.7 shall not apply to the Issuer if it acts as paying agent.

     SECTION 13.9 Subordination  Rights Not Impaired by Acts or Omissions of the
Issuer or  Holders of Senior  InSubordination  Rights  Not  Impaired  by Acts or
Omissions  of the  Issuer or  Holders  of Senior  Indebtedness.  No right of any
present or future holders 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 Issuer or by any act or failure to act,
in good faith, by any such holder,  or by any  noncompliance  by the Issuer with
the  terms,  provisions  and  covenants  of this  Indenture,  regardless  of any
knowledge  thereof which any such holder may have or be otherwise  charged with.
The holders of Senior Indebtedness,  may at any time or from time to time and in
their absolute direction,  change the manner, place or terms of payment,  change
or  extend  the  time of  payment  of,  or  renew  or  alter,  any  such  Senior
indebtedness,  or amend or supplement any instrument  pursuant to which any such
Senior  Indebtedness  is issued or by which it may be  secured,  or release  any
security  therefor,  or exercise or refrain from  exercising  any other of their
rights under the Senior Indebtedness,  including, without limitation, the waiver
of default  thereunder,  all without notice to or assent from the Holders of the
Securities or the Trustee and without  affecting the  obligations of the Issuer,
the Trustee or the Holders of Securities under this Article Thirteen.

     SECTION 13.10 Trustee Not Fiduciary for Holders of Senior Indebtedness. The
Trustee  shall not be deemed to owe any  fiduciary  duty to the  holders  of the
Senior  Indebtedness,  and shall not be liable to any such  holders  if it shall
mistakenly  pay over or  distribute  money or assets to  Securityholders  or the
Issuer.  With  respect  to the  holders  of  Senior  Indebtedness,  the  Trustee
undertakes to perform or to observe only such of its covenants or obligations as
are specifically set forth in this Article Thirteen and no implied  covenants or
obligations  with respect to holders of Senior  Indebtedness  shall be read into
this Indenture against the Trustee.


<PAGE>



     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Indenture to be
duly executed, effective as of July 15, 1993.

                                     SEAGULL ENERGY CORPORATION



                                     By:
                                     Title:


Attest:

By:
Title:

                                     THE BANK OF NEW YORK,
                                       as Trustee


                                     By:
                                     Title:

Attest:

By:
Title:

<PAGE>
SEAGULL ENERGY CORPORATION
8-5/8% Senior Subordinated Note due 2005

SEAGULL ENERGY CORPORATION,  a corporation duly organized and existing under the
laws of Texas (herein called the  "Company",  which term indicates any successor
corporation  under the indenture  hereinafter  referred to), FOR VALUE RECEIVED,
HEREBY PROMISES TO PAY TO

, or registered  assigns the principal sum of Dollars on August 1, 2005, in such
coin or currency of the United States of America as at the time of payment shall
be legal  tender  for the  payment  of  public  and  private  debts,  and to pay
interest,  semi-annually  on  February  1 and  August  1 of each  year,  on said
principal sum, in like coin or currency,  at the rate per annum specified in the
title of this  Security,  to the  registered  holder  hereof  as of the close of
business on the January 15 or July 15 next preceding such interest payment date,
except as otherwise provided in the indenture referred to on the reverse hereof,
all at the  office or agency of the  Company  in the City of  Houston,  State of
Texas,  from the February 1 or August 1, as the case may be, next  preceding the
date of this Security to which interest has been paid (unless the date hereof is
a February 1 or August 1 to which interest has been paid, in which case from the
date  hereof,  or unless the date hereof is prior to the payment of any interest
on the  Securities,  in which case from July 29, 1993, or unless the date hereof
is between the January 15 or July 15, as the case may be, and the next following
February 1 or August 1 to which  interest  has been paid or, if no interest  has
been paid on the Securities, from July 29, 1993) until payment of said principal
sum has been made or duly  provided  for;  provided,  however,  that  payment of
interest  may be made at the option of the Company by check  mailed on or before
the payment date to the address of the person  entitled  thereto as such address
shall appear in the Security  register.  Interest shall be computed on the basis
of a 360-day year consisting of twelve 30-day months.

This Security shall not be valid or become  obligatory for any purpose until the
certificate of authentication hereon shall have been signed by the Trustee or an
Authenticating Agent under the Indenture referred to on the reverse hereof.

REFERENCE IS MADE TO THE FURTHER  PROVISIONS  OF THIS  SECURITY SET FORTH ON THE
REVERSE HEREOF.  SHUCH FURTHER  PROVISIONS  SHALL FOR ALL PURPOSES HAVE THE SAME
EFFECT AS THOUGH FULLY SET FORTH AT THIS PLACE.

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

Dated:

TRUSTEES'S AUTHENTICATION CERTIFICATE

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

THE BANK OF NEW YOURK,
         as Trustee



By:
         Authorized Signatory

SEAGULL ENERGY CORPORATION

/s/ Sylvia Sanchez                  /s/ Barry J. Galt
Secretary                           Chairman of the Board


<PAGE>

                           SEAGULL ENERGY CORPORATION
                    8-5/8% SENIOR SUBORDINATED NOTE DUE 2005

1.    Designation
         This Security is one of a duly  authorized  series of Securities of the
Company,  designated  as its 8-5/8% Senior  Subordinated  Notes Due 2005 (herein
called  the  "Securities"),   limited  to  the  aggregate  principal  amount  of
$150,000,000,  all  issued  or to be  issued  under  and  pursuant  to a  senior
subordinated   indenture   dated  as  of  July  15,  1993  (herein   called  the
"Indenture"),  duly  executed  and  delivered by the Company and The Bank of New
York, as trustee,  to which  Indenture and all indentures  supplemental  thereto
reference is hereby made for a description of the rights,  limitation of rights,
obligations,  duties and immunities  thereunder of the Trustee,  the Company and
the Holders of the Securities. Capitalized terms used but not defined herein are
defined in the  Indenture and are used herein with the same meanings as ascribed
to them therein.

2.  Paying Agent and Registrar
         Initially,  the Trustee will act as paying agent,  registrar and as the
agent  where  notices  and  demands  to or upon the  Company  in  respect of the
Securities  may be served.  The Company may appoint and change any paying agent,
registrar or agent for notices without notice, other than notice to the Trustee.
The Company or any of its  Subsidiaries  or any of their  Affiliates  may act as
paying agent, registrar or agent of notices.

3.  Denominations; Transfers; Exchange
         The   Securities  are  in  registered   form,   without   coupons,   in
denominations  of $1,000 in principal  amount and integral  multiples of $1,000.
Upon due  presentation  for  registration  of transfer  of this  Security at the
corporate trust office of the Trustee in the City of New York, State of New York
or any other such designated office or agency of the Company,  a new Security or
Securities of authorized  denominations for an equal aggregate  principal amount
will be issued to the transferee in exchange herefor, subject to the limitations
imposed  by  the  Indenture,  without  charges  except  for  any  tax  or  other
governmental charge imposed in connection  therewith,  and the Security may in a
like manner be exchanged  for one or more new  Securities  for other  authorized
denominations but of the same aggregate principal amount.

4.  Persons Deemed Owners
         The Company,  the Trustee,  any paying agent and any registrar may deem
and treat the  registered  Holder hereof as the absolute  owner of this Security
(whether or not this Security shall be overdue and  notwithstanding any notation
of ownership or other writing hereon) for purposes of receiving  payment hereof,
or on account hereof, and for all other purposes,  and neither the Company,  the
Trustee,  any paying agent not any registrar  shall be affected by any notice to
the contrary.  All payments made to or upon the order of such registered  Holder
shall,  to the  extent of the sum or sums so paid,  satisfy  and  discharge  the
liability for moneys payable on this Security.

5.  Defaults; Amendment; Waiver
         In case an Event of Default shall have occurred and be continuing,  the
principal hereof and the interest accrued thereon may be declared, and upon such
declaration shall become,  due and payable,  in the manner,  with the effect and
subject to the conditions provided in the Indenture.
         The  Indenture  contains  provisions  permitting  the  Company  and the
Trustee with the consent of the Holders of not less than a majority in aggregate
principal  amount  of each  series  of  Securities  then  Outstanding  under the
Indenture and affected thereby, evidenced as provided in the Indenture, to

<PAGE>

execute  supplemental  indentures  adding any  provisions  to or changing in any
manner  or  eliminating  any  of  the  provisions  of  the  Indenture  or of any
supplemental  indenture  or modifying in manner the rights of the Holders of the
Securities  of  such  series;  provided,  however,  that  no  such  supplemental
indenture shall (i) extend the stated final maturity of any Security,  or reduce
the principal amount hereof, or reduce the rate or extend the time of payment of
interest  hereon,  or reduce or alter the  method of  computation  of any amount
payable on redemption,  repayment or purchase by the Company, or change the coin
or currency in which  payments are to be made,  or impair or affect her right of
any Holder to  institute  suit for  enforcement  of any  payment  hereof or (ii)
reduce the aforesaid  percentage of any series of such  Securities,  without the
consent of the Holders of each  Security of any series so  affected.  It is also
provided in the Indenture that the Holders of a majority in aggregate  principal
amount of the  Securities  of any series then  Outstanding  may on behalf of the
Holders of all of the  Securities of such series waive any past default or Event
of Default  under the  Indenture  and its  consequences  except a default in the
payment of the principal of or interest on any of the Securities of such Series.
Any such  consent or waiver by the Holder of this  Security  (unless  revoked as
provided in the Indenture)  shall be conclusive and binding upon such Holder and
upon all future Holders and owners of this Security and any Securities which may
be issued in exchange or substitution hereof, irrespective of whether or not any
notation thereof is made upon this Security or such other Securities.

6.  Subordination
         The indebtedness  evidenced by the Securities is subordinate and junior
in right  payment , to the  extent  provided  in the  Indenture,  to all  Senior
Indebtedness,  whether outstanding on the day e of execution of the Indenture or
thereafter  created,  incurred  or  assumed,  and the  subordination  is for the
benefit of the holders of Senior  Indebtedness,  but the Securities shall in all
respects rank pari passu with all other Senior Subordinated  Indebtedness of the
Company.  The Securities rank senior to all existing and future  indebtedness of
the  Company  that  is  neither  Senior   Indebtedness  or  Senior  Subordinated
Indebtedness  and only  Indebtedness of the Company that is Senior  Indebtedness
ranks senior to the  Securities in accordance  with the  provisions set forth in
the Indenture.

7.  Change of Control
         If a Change of Control shall occur at any time,  than each Holder shall
have the right to require that the Company  repurchase such Holder's  Securities
in whole or in part in integral multiples of $1,000, at a purchase price in cash
in an amount equal to 101% of the  principal  amount  thereof,  plus accrued and
unpaid interest, if any to the date of purchase.  The Company shall be obligated
to give the holders of  securities  and the Trustee  within 30 days  following a
Change of Control notice  specifying  (i) the purchase  date,  (ii) the place at
which the Securities shall be presented and surrendered for purchase, (iii) that
interest  accrued to the purchase date will be paid upon such  presentation  and
surrender and (iv) that interest shall cease to accrue on Securities surrendered
for purchase as of such purchase date.

8.  Redemption
         On or after  August 1, 2000,  the Senior  Subordinated  Notes  shall be
redeemable  at any time at the option of the  Company,  in whole or from time to
time  in  part,  at the  redemption  prices  set  forth  below  (expressed  as a
percentage of principal amount), plus accrued interest to the redemption date:


<PAGE>

<TABLE>
<S>                                                                    <C>
         If redeemed during the 12-month                               Redemption
            period beginning August 1,                                    Price
         ----------------------------------------                      ----------
         2000..................................                          102.59%
         2001..................................                          101.73%
         2002..................................                          100.86%
         2003 and thereafter...................                          100.00%
</TABLE>

         Notice of  redemption  shall be mailed to each  holder at least 30 days
but not more  than 60 days  prior  to the  redemption  date.  On and  after  the
redemption date,  interest shall cease to accrue on Senior Subordinated Notes or
portions thereof called for redemption.

9.  No Recourse Against Others
         No  recourse  under  or upon  any  obligation,  covenant  or  agreement
contained in the Indenture,  or in any Security,  or because of any indebtedness
evidenced thereby or hereby,  shall be had against any incorporator,  as such or
against any past, present or future stockholder, officer or director, as such of
the Company, or any partner of the Company or of any successor,  wither directly
or though  the  Company  or any  successor,  under any rule of law,  statute  or
constitutional provision or by the enforcement of any assessment or by any legal
or equitable proceeding or otherwise,  all such liability being expressly waived
and released by the acceptance of this Security by the Holder hereof and as part
of the consideration of the issue of the Securities.

10.  GOVERNING LAW
         THE INDENYURE AND THIS SECURITY  SHALL BE DEEMED TO BE A CONTRACT UNDER
THE LAWS OF THE STATE OF NEW YORK AND FOR ALL PURPOSES  SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF SUCH STATE.


<PAGE>

                                  ABBREVIATIONS
         The following  abbreviations,  when used in the inscription on the face
of this  instrument,  shall be construed as though they were written out in full
according to applicable laws or regulations:

    TEN COM - as tenants in common TEN ENT - as tenants by the entireties JT TEN
    - as joint tenants with rights
              of survivorship and not as
              tenants in common

UNIF GIFT MIN ACT  ______________  Custodian ________________
                      (Cust)                    (Minor)
                  Under Uniform Gifts to Minors
                  Act _____________________
                             (State)

                Additional   abbreviations  may also be used  though  not in the
                             above list.
-------------------------------------------------------------------------------
          FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
                              and transfer(s) unto


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

-------------------------------------------------------------------------------
Please print or typewrite name and address including postal zip code of assignee

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

the within Security and all rights thereunder, hereby irrevocably constituting
and appointing

-------------------------------------------------------------------------------
attorney to transfer said Security on the books of the Company,  with full power
of substitution in the premises.

Dated:_______________________               ____________________________________

               Notice: The signature to this assignment must correspond with the
               name as written upon the face of the within  instrument  in every
               particular,  without  alteration  or  enlargement  or any  change
               whatever.
<PAGE>
                           SEAGULL ENERGY CORPORATION

                           RESOLUTIONS ADOPTED BY THE
                       CHAIRMAN OF THE BOARD OF DIRECTORS
                             EFFECTIVE JULY 22, 1993

         WHEREAS,  on June 23,  1993,  the  Board of  Directors  of the  Company
approved the issuance by the Company,  publicly or privately  from time to time,
of up to $350,000,000  aggregate  initial offering prices of bonds,  debentures,
notes and/or other debt obligations (collectively, "Securities");

         WHEREAS,  the Board of Directors has authorized the Executive Committee
of the  Company or the  Chairman of the Board of the  Company to  determine  the
terms and conditions of the Securities;

         NOW,  THEREFORE,  in furtherance of the foregoing,  the Chairman of the
Board of the Company hereby adopts the following resolutions:

         RESOLVED,  that Seagull Energy  Corporation  (the "Company")  issue and
sell  $100,000,000  aggregate  principal  amount of 7-7/8% Senior Notes Due 2003
(the "Senior  Notes") on  substantially  the terms and  conditions  set forth in
Exhibit A hereto;

         RESOLVED,  that  the  Company  issue  and sell  $150,000,000  aggregate
principal  amount  of  8-5/8%  Senior   Subordinated  Notes  Due  2005  ("Senior
Subordinated  Notes") on  substantially  the terms and  conditions  set forth in
Exhibit B hereto;

         RESOLVED,  that the Senior  Notes and Senior  Subordinated  Notes shall
have the terms set forth in the Company's  Prospectus  Supplement dated July 22,
1993 to its Prospectus dated July 22, 1993;

         RESOLVED,  that the form,  terms  and  provisions  of the  Underwriting
Agreement  dated July 22, 1993 (the  "Underwriting  Agreement") by and among the
Company and Dillon,  Read & Co. Inc.,  Donaldson,  Lufkin & Jenrette  Securities
Corporation,  J.P. Morgan  Securities Inc. and Merrill Lynch,  Pierce,  Fenner &
Smith Incorporated (the  "Underwriters"),  as well as the execution and delivery
of the  Underwriting  Agreement  by the  President,  and Vice  President  or the
Treasurer  of the Company on behalf of the Company  and the  performance  of the
transactions contemplated by the Underwriting Agreement on behalf of the Company
by the  appropriate  officers of the Company,  be and they hereby are,  adopted,
ratified and approved;

         RESOLVED,  that the public  offering price for the Senior Notes and for
the Senior Subordinated Notes set forth in the Prospectus  Supplement dated July
22, 1993 be, and it hereby is, adopted, ratified and approved;

         RESOLVED, that the discounts and commissions for the sale of the Senior
Notes and the Senior Subordinated Notes, payable tot he Underwriters pursuant to
the  Underwriting  Agreement  be, and they  hereby  are,  ratified,  adopted and
approved;

         RESOLVED, that the Senior Notes and the Senior Subordinated Notes shall
be in the form approved by the Chairman of the Board,  the President or any Vice
President of the Company,  such officer's approval to be conclusively  evidenced
by his delivery of the Senior Notes and the Senior Subordinated Notes for and on
behalf of the Company at the closing under Underwriting Agreement to be executed
among  the  Company,  Dillon,  Read & Co.  Inc.,  Donaldson,  Lufkin &  Jenrette
Securities Corporation, J.P. Morgan Securities Inc.
and Merrill Lynch, Pierce, Fenner & Smith Incorporated; and

         RESOLVED,  that the  Chairman of the Board,  the  President or any Vice
President  of the  Company  be,  and  each of them  hereby  is,  authorized  and
empowered,  for and on behalf of the  Company  and in its name,  to execute  and
deliver all agreements,  powers of attorney,  certificates and other instruments
and  documents  as he may  deem  necessary  or  appropriate  to  carry  out  the
transactions approved by the preceding resolutions.

         EXECUTED to be effective as of July 22, 1993.



                                                     /s/ Barry J. Galt
                                                     Barry J. Galt
                                                     Chairman of the Board


<PAGE>



                                                                       EXHIBIT A
                            TERMS OF THE SENIOR NOTES

         Title:   7-7/8% Senior Notes due 2003.

         Principal Amount: $100,000,000.

         Interest: 7-7/8% per annum, from July 29, 1993, payable semiannually on
each  February 1 and August 1,  commencing  on February  1, 1994,  to holders of
record on the preceding January 15 or July 15, as the case may be.

         Interest  on the Senior  Notes  shall be  calculated  on the basis of a
360-day year of twelve 30-day months.

         Maturity:         August 1, 2003.

         Mandatory Redemption: If a "Change of Control" shall occur at any time,
than each holder  shall have the right to require  that the  Company  repurchase
such holder's Senior Notes in whole or in part in integral  multiples of $1,000,
at a purchase  price in cash in an amount equal to 101% of the principal  amount
thereof, plus accrued and unpaid interest, if any to the date of purchase.

         The Company  shall be obligated to give holders of Senior Notes and the
Trustee within 30 days  following a Change of Control notice  specifying (i) the
purchase date (which date shall be no earlier than 30 days nor more than 60 days
from the date the Company  notifies the holders of the occurrence of a Change of
Control),  (ii) the place at which Notes shall be presented and  surrendered for
purchase,  (iii) that  interest  accrued to the purchase date shall be paid upon
such  presentation and surrender and (iv) that interest shall cease to accrue on
Senior Notes  surrendered for purchase as of such purchase date. Any tender by a
holder of Senior Notes shall be irrevocable.


                                       A-1


<PAGE>



         For purposes of the Senior  Notes,  a "Change of Control:  shall mean a
change  resulting  when any  Unrelated  Person or any Unrelated  Persons  acting
together which would  constitute a Group together with any Affiliates or Related
Persons thereof (in each case also constituting  Unrelated Persons) shall at any
time either (i)  Beneficially Own more than 50% of the aggregate voting power of
all classes of Voting Stock of the Company or (ii) succeed in having  sufficient
of its or their  nominees  elected to the Board of Directors of the Company such
that such nominees,  when added to any existing director  remaining on the Board
of Directors of the Company  after such  election who is an Affiliate or Related
Person of such  person or Group,  shall  constitute  a majority  of the Board of
Directors of the Company.

         As used  herein  (a)  "Beneficially  Own" means  "beneficially  own" as
defined in Rule 13d-3 of the  Securities  Exchange Act of 1934,  as amended (the
"exchange Act"), or any successor provision thereto;  provided,  however,  that,
for purposes of this  definition,  a person shall not be deemed to  Beneficially
Own  securities  tendered  pursuant to a tender or exchange  offer made by or on
behalf of such person or any of such  person's  Affiliates  until such  tendered
securities are accepted for purchase or exchange;  (b) "Group" means "group" for
purposes of Section 13(d) of the Exchange Act; (c)  "Unrelated  Person" means at
any time any person other than the Company or any  subsidiary of the Company and
other  than any  trust  for any  employee  benefit  plan of the  Company  or any
subsidiary  of the Company;  (d)  "related  Person" of any person shall mean any
other  person  owning  (1) 5% or more of the  outstanding  common  stock of such
person or (2) 5% or more of the Voting Stock of such person;  (e) "Voting Stock"
of any such person shall mean capital stock of such person that  ordinarily  has
voting  power for the  election  of  directors  (or persons  performing  similar
functions)  of such  person,  whether  at all times or only so long as no senior
class of securities has such voting power by reason of any contingency;  and (f)
"Affiliate"  of any  persons  shall  mean any  other  person  that  directly  or
indirectly  control,  or in under common control with, or is controlled by, such
person.

         Sinking Fund:     None.

         Offices for Notices and  Payments,  Etc.:  Principal of and interest on
the Senior Notes shall be payable,  and the Senior  Notes shall be  exchangeable
and transfers thereof shall be registrable, at the corporate trust office of the
Trustee  in New York,  New York;  provided  however,  that at the  option of the
Company,  payment of interest  may be made by check mailed to the address of the
person entitled thereto at such person's registered address.

                                       A-2


<PAGE>



         Global Securities:  The Senior Notes shall not be issuable as Global
Securities.

         Trustee:  The Bank of New York shall serve as the trustee,  depositary,
authenticating or paying agent, transfer agent and registrar with respect to the
Senior Notes.

         Names and Addresses of Underwriters:

                  Dillon, Read & Co. Inc.
                  Donaldson, Lufkin & Jenrette Securities Corporation
                  J.P. Morgan Securities Inc.
                  Merrill Lynch, Pierce, Fenner & Smith Incorporated
                  c/o      Dillon, Read & Co. Inc.
                           535 Madison Avenue
                           New York, New York 10022

                                       A-3


<PAGE>



                                                                       EXHIBIT B
                     TERMS OF THE SENIOR SUBORDINATED NOTES

         Title:   8-5/8% Senior Subordinated Notes due 2005.

         Principal Amount: $150,000,000.

         Interest: 8-5/8% per annum, from July 29, 1993, payable semiannually on
each  February 1 and August 1,  commencing  on February  1, 1994,  to holders of
record on the preceding January 15 or July 15, as the case may be.

         Interest on the Senior  Subordinated  Notes shall be  calculated on the
basis of a 360-day year of twelve 30-day months.

         Maturity:         August 1, 2005.

         Optional   Redemption:   On  or  after  August  1,  2000,   the  Senior
Subordinated Notes shall be redeemable at any time at the option of the Company,
in whole or from time to time in part, at the redemption  prices set forth below
(expressed as a percentage of principal  amount),  plus accrued  interest to the
redemption date:

<TABLE>
<CAPTION>
         If redeemed during the 12-month                               Redemption
            period beginning August 1,                                     Price
         ----------------------------------------                    ---------------
<S>      <C>                                                         <C>
         2000..................................                          102.59%
         2001..................................                          101.73%
         2002..................................                          100.86%
         2003 and thereafter...................                          100.00%
</TABLE>

         Notice of  redemption  shall be mailed to each  holder at least 30 days
but not more  than 60 days  prior  to the  redemption  date.  On and  after  the
redemption date,  interest shall cease to accrue on Senior Subordinated Notes or
portions thereof called for redemption.


                                       B-1

<PAGE>





         Mandatory Redemption: If a "Change of Control" shall occur at any time,
than each holder  shall have the right to require  that the  Company  repurchase
such  holder's  Senior  Subordinated  Notes  in  whole  or in part  in  integral
multiples of $1,000,  at a purchase  price in cash in an amount equal to 101% of
the principal amount thereof,  plus accrued and unpaid  interest,  if any to the
date of purchase.

         The Company  shall be obligated to give holders of Senior  Subordinated
Notes and the  Trustee  within 30 days  following  a Change  of  Control  notice
specifying  (i) the  purchase  date (which date shall be no earlier than 30 days
nor more than 60 days from the date the  Company  notifies  the  holders  of the
occurrence  of a Change  of  Control),  (ii) the place at which  Notes  shall be
presented  and  surrendered  for purchase,  (iii) that  interest  accrued to the
purchase date shall be paid upon such  presentation  and surrender and (iv) that
interest  shall cease to accrue on Senior  Subordinated  Notes  surrendered  for
purchase as of such purchase date. Any tender by a holder of Senior Subordinated
Notes shall be irrevocable.

         For purposes of the Senior  Subordinated  Notes,  a "Change of Control:
shall mean a change resulting when any Unrelated Person or any Unrelated Persons
acting  together which would  constitute a Group together with any Affiliates or
Related Persons thereof (in each case also constituting Unrelated Persons) shall
at any time either (i)  Beneficially  Own more than 50% of the aggregate  voting
power of all classes of Voting  Stock of the  Company or (ii)  succeed in having
sufficient  of its or their  nominees  elected to the Board of  Directors of the
Company such that such nominees,  when added to any existing director  remaining
on the Board of Directors of the Company after such election who is an Affiliate
or Related  Person of such person or Group,  shall  constitute a majority of the
Board of Directors of the Company.

         As used  herein  (a)  "Beneficially  Own" means  "beneficially  own" as
defined in Rule 13d-3 of the  Securities  Exchange Act of 1934,  as amended (the
"exchange Act"), or any successor provision thereto;  provided,  however,  that,
for purposes of this  definition,  a person shall not be deemed to  Beneficially
Own  securities  tendered  pursuant to a tender or exchange  offer made by or on
behalf of such person or any of such  person's  Affiliates  until such  tendered
securities are accepted for purchase or exchange;  (b) "Group" means "group" for
purposes of Section 13(d) of the Exchange Act; (c)  "Unrelated  Person" means at
any time any person other than the Company or any  subsidiary of the Company and
other  than any  trust  for any  employee  benefit  plan of the  Company  or any
subsidiary  of the Company;  (d)  "related  Person" of any person shall mean any
other  person  owning  (1) 5% or more of the  outstanding  common  stock of such
person or (2) 5% or more of the Voting Stock of such person;  (e) "Voting Stock"
of any such person shall mean capital stock of such person that  ordinarily  has
voting power for the election of directors (or persons


                                       B-2

<PAGE>





performing  similar  functions) of such person,  whether at all times or only so
long as no senior  class of  securities  has such voting  power by reason of any
contingency; and (f) "Affiliate" of any persons shall mean any other person that
directly  or  indirectly  control,  or  in  under  common  control  with,  or is
controlled by, such person.

         Sinking Fund:     None.

         Offices for Notices and  Payments,  Etc.:  Principal of and interest on
the Senior  Subordinated  Notes  shall be payable,  and the Senior  Subordinated
Notes shall be exchangeable and transfers  thereof shall be registrable,  at the
corporate trust office of the Trustee in New York, New York;  provided  however,
that at the  option of the  Company,  payment of  interest  may be made by check
mailed to the address of the person entitled thereto at such person's registered
address.

         Global Securities:  The Senior Subordinated Notes shall not be issuable
as Global Securities.

         Trustee:  The Bank of New York shall serve as the trustee,  depositary,
authenticating or paying agent, transfer agent and registrar with respect to the
Senior Notes.

         Names and Addresses of Underwriters:

                  Dillon, Read & Co. Inc.
                  Donaldson, Lufkin & Jenrette Securities Corporation
                  J.P. Morgan Securities Inc.
                  Merrill Lynch, Pierce, Fenner & Smith Incorporated
                  c/o      Dillon, Read & Co. Inc.
                           535 Madison Avenue
                           New York, New York 10022

                                       B-3