FIRST AMENDMENT TO NOTE PURCHASE AGREEMENT

         THIS FIRST AMENDMENT,  dated as of July 14, 1999 (the "Amendment"),  to
the separate Note Purchase  Agreements,  dated as of February 12, 1999, is among
Seitel,  Inc. (the "Company") and each of the institutions  which is a signatory
to this Amendment (collectively, the "Noteholders").

                                    RECITALS:

         A. The Company and each of the Noteholders have heretofore entered into
separate Note Purchase  Agreements dated as of February 12, 1999  (collectively,
as  amended  and in  effect  immediately  prior  to the  effectiveness  of  this
Amendment,  the  "Existing  Note  Purchase  Agreement"),  pursuant  to which the
Company issued: (a) $20,000,000 aggregate principal amount of its 7.03% Series D
Senior  Notes due  February  15, 2004 (the  "Series D Notes"),  (b)  $75,000,000
aggregate  principal  amount of its 7.28% Series E Senior Notes due February 15,
2009 (the "Series E Notes"),  and (c)  $43,000,000  of its 7.43% Series F Senior
Notes due February 15, 2009 (the "Series F Notes",  and together with the Series
D Notes and the Series E Notes, the "Notes").

         B.  Capitalized  terms used herein shall have the  respective  meanings
ascribed  thereto in the Existing Note Purchase  Agreement unless herein defined
or the context shall otherwise require.

         C. The Company  and the  Noteholders  now desire to amend the  Existing
Note Purchase Agreement in the respects,  but only in the respects,  hereinafter
set forth.

         D. All  requirements of law have been fully complied with and all other
acts and things  necessary  to make this  Amendment  a legal,  valid and binding
instrument  according to its terms for the purposes  herein  expressed have been
done or performed.

         NOW,  THEREFORE,  for good and valuable  consideration  the receipt and
sufficiency of which are hereby acknowledged, the Company and the Noteholders do
hereby agree as follows:

SECTION 1. AMENDMENTS.

         1.1 Amendment to Section 10.7(a).  Section 10.7(a) of the Existing Note
Purchase Agreement is hereby amended and restated in its entirety as follows:

         "10.7    Restricted Payments and Restricted Investments.

                           (a)  Limitation.  The Company  will not, and will not
                  permit any of the  Restricted  Subsidiaries  to,  directly  or
                  indirectly,  declare,  make or incur any liability to make any
                  Restricted   Payment  or  make  or  authorize  any  Restricted
                  Investment  unless  immediately  after  giving  effect to such
                  action:

                                    (i) the sum of (x) the  aggregate  amount of
                           outstanding     Restricted     Investments    (valued
                           immediately   after  such   action),   plus  (y)  the
                           aggregate  amount  of  Restricted   Payments  of  the
                           Company and the Restricted  Subsidiaries  declared or
                           made  during the  period  commencing  on the  Closing
                           Date, and ending on the date such Restricted  Payment
                           or   Restricted   Investment  is  declared  or  made,
                           inclusive, would not exceed the sum of

                                            (A)  Thirty-Five   Million   Dollars
                                   ($35,000,000), plus

                                            (B)   fifty    percent    (50%)   of
                                    Consolidated   Net  Income  for  the  period
                                    commencing January 1, 1999 and ending on the
                                    date  such   Restricted   Payment   or  such
                                    Restricted  Investment  is  declared or made
                                    (or minus  100% of  Consolidated  Net Income
                                    for such period if  Consolidated  Net Income
                                    for such period is a loss), plus

                                            (C)  the  aggregate  amount  of  Net
                                    Proceeds of Common  Stock of the Company for
                                    such period, plus

                                            (D)  the  aggregate  amount  of  Net
                                    Proceeds  of  Qualified   Capital  for  such
                                    period; and

                           (ii) the  Company  could  incur,  pursuant to Section
                  10.3, at least One Dollar ($1) of  additional  Debt owing to a
                  Person other than a Restricted Subsidiary; and

                           (iii) no Default or Event of Default would exist."


<PAGE>

         1.2  Amendment to Schedule B.  Schedule B to the Existing Note Purchase
Agreement is hereby  amended to modify in their  entirety or add,  each in their
proper alphabetical order, the following defined terms:

                  "Consolidated  Debt -- means, as of any date of determination,
         the total of all Debt of the  Company and the  Restricted  Subsidiaries
         outstanding on such date, after  eliminating all offsetting  debits and
         credits  between the Company and the  Restricted  Subsidiaries  and all
         other items required to be eliminated in the course of the  preparation
         of consolidated  financial statements of the Company and the Restricted
         Subsidiaries in accordance with GAAP,  provided that  Consolidated Debt
         shall not include Qualified Capital Obligations."

                  "Consolidated  Net  Worth  --  means,  at any  time,  the sum,
         without duplication,  of (a) the total stockholders' equity which would
         be shown in  consolidated  financial  statements of the Company and the
         Restricted  Subsidiaries  prepared at such time in accordance with GAAP
         plus (b) Qualified Capital."

                  "Net Proceeds of Qualified  Capital -- means,  with respect to
         any period, cash proceeds (net of all costs and out-of-pocket  expenses
         incurred in connection  therewith  and in connection  with the issuance
         and sale of any related Trust Preferred Securities,  including, without
         limitation,  placement,  underwriting  and brokerage fees and expenses)
         received  by the  Company  during  such  period  from  the  sale of all
         Qualified Junior Subordinated Notes."

                  "Qualified  Capital  -- means the total  amount of  capital in
         respect of Qualified Junior  Subordinated Notes and the Trust Preferred
         Securities  related  thereto which would,  on a consolidated  basis, be
         shown in  consolidated  financial  statements  of the  Company  and the
         Subsidiaries  prepared at such time in accordance  with GAAP,  provided
         that in no event shall the aggregate amount of Qualified Capital at any
         time exceed One Hundred Twenty-Five Million Dollars ($125,000,000)."

                  "Qualified  Capital  Obligations  -- means  obligations of the
         Company in  respect  of any  Qualified  Junior  Subordinated  Notes and
         Qualified Junior Subordinated Guaranties."

                  "Qualified Junior  Subordinated  Guaranty -- means, in respect
         of any issue of Trust Preferred  Securities,  a Guaranty by the Company
         to the holders of such Trust Preferred Securities of (a) the payment of
         all preferred  cumulative cash dividends  accumulating  thereon and (b)
         the payments due on liquidation  or redemption of such Trust  Preferred
         Securities,  but only in each case to the  extent of funds  held by the
         Special  Purpose  Trust which  shall have  issued such Trust  Preferred
         Securities, and the obligations under which Guaranty shall be unsecured
         and rank  subordinate and junior in right of payment to all Senior Debt
         (including,  without  limitation,  all Debt of the  Company  under this
         Agreement,  the Other  Agreements and the Notes) to the same extent and
         on the same terms as the Qualified Junior  Subordinated Notes issued by
         the Company to such Special  Purpose Trust are  subordinated  to Senior
         Debt."

                  "Qualified Junior Subordinated Notes -- means any notes issued
         by the Company to a Special  Purpose Trust in a principal  amount equal
         to the  proceeds  received  by such  Special  Purpose  Trust  from  the
         issuance of Trust Preferred Securities and paid by such Special Purpose
         Trust to the Company in consideration for such notes, which notes shall
         (a)  not  mature,  or  otherwise  require  the  payment  of  any of the
         principal  thereof,  prior to June 1, 2029, (b) be subject to the right
         of the Company to defer the payment of interest  thereon at any time or
         from  time to time for a period  of at least  twenty  (20)  consecutive
         quarterly  periods,  during which deferral period the Company shall not
         pay any  dividends  with respect to any of its capital stock or pay any
         principal,  interest or other amounts owing in respect of any Qualified
         Capital  Obligations or other Subordinated Debt, (c) be unsecured,  (d)
         rank  subordinate  and junior in right of  payment  to all Senior  Debt
         (including,  without  limitation,  all Debt of the  Company  under this
         Agreement, the Other Agreements and the Notes) upon the terms set forth
         in Exhibit A to the First Amendment to Note Purchase  Agreement,  dated
         as of July 14, 1999, among the Company and certain holders of Notes and
         (e) when aggregated  with all other such notes,  not exceed One Hundred
         Twenty-Five  Million Dollars  ($125,000,000)  in aggregate  outstanding
         principal amount."

                  "Special  Purpose  Trust -- means a statutory  business  trust
         created under the laws of the State of Delaware  pursuant to the filing
         of a  certificate  of trust with the Secretary of State of the State of
         Delaware, (a) the existence of which shall be for the exclusive purpose
         of (i) issuing  Trust Common  Securities to the Company and issuing and
         selling  Trust  Preferred  Securities  to  investors,  (ii)  using  the
         proceeds  from such Trust  Preferred  Securities  to acquire  Qualified
         Junior  Subordinated  Notes  and (iii)  engaging  in only  those  other
         activities  necessary  or  incidental  to the  foregoing,  (b) the sole
         assets of which will be such Qualified  Junior  Subordinated  Notes and
         the  proceeds  thereof and (c) the sole source of revenue of which will
         be  payments   under  such   Qualified   Junior   Subordinated   Notes.
         Notwithstanding  anything else herein,  any Special Purpose Trust shall
         be deemed to be an Unrestricted Subsidiary."
<PAGE>

                  "Subordinated  Debt -- means any Debt or other  obligations of
         the  Company   (including,   without   limitation,   Qualified  Capital
         Obligations) other than Senior Debt."

                  "Trust  Common  Securities  -- means,  in respect of a Special
         Purpose  Trust,   securities  issued  by  such  Special  Purpose  Trust
         representing  common  undivided  beneficial  interests in the assets of
         such  Special  Purpose  Trust,  one  hundred  percent  (100%)  of which
         securities shall be legally and beneficially owned by the Company."

                  "Trust Preferred  Securities -- means, in respect of a Special
         Purpose Trust,  securities issued by such Special Purpose Trust, having
         a stated par value and  liquidation  value and  entitling  the  holders
         thereof to the payment (unless  deferred) of preferred  cumulative cash
         distributions at a fixed annual rate,  representing preferred undivided
         beneficial  interests  in the  assets of such  Special  Purpose  Trust,
         provided that at the time of the initial  issuance  thereof,  the Notes
         shall receive an investment  grade rating from, or an investment  grade
         rating of the Notes  shall be  confirmed  by, a  nationally  recognized
         rating agency."

SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

         To induce the Noteholders to execute and deliver this Amendment  (which
representations  shall  survive  such  execution  and  delivery),   the  Company
represents and warrants to the Noteholders that:

               (a) the Company is a corporation duly organized, validly existing
          and in good standing under the laws of the state of Delaware;

               (b)  this  Amendment  has  been  duly  authorized,  executed  and
          delivered by the Company and this Amendment constitutes a legal, valid
          and  binding  obligation,   contract  and  agreement  of  the  Company
          enforceable  against  it in  accordance  with  its  terms,  except  as
          enforcement may be limited by bankruptcy, insolvency,  reorganization,
          moratorium  or similar  laws or  equitable  principles  relating to or
          limiting creditors' rights generally;

               (c) the  Existing  Note  Purchase  Agreement,  as amended by this
          Amendment,  constitutes  the  legal,  valid  and  binding  obligation,
          contract  and  agreement  of the  Company  enforceable  against  it in
          accordance  with its terms,  except as  enforcement  may be limited by
          bankruptcy, insolvency, reorganization,  moratorium or similar laws or
          equitable   principles  relating  to  or  limiting  creditors'  rights
          generally;

               (d) the  execution,  delivery and  performance  by the Company of
          this Amendment (i) has been duly authorized by all requisite corporate
          action and, if required, shareholder action, (ii) does not require the
          consent or approval of any  governmental or regulatory body or agency,
          and (iii) will not (A) violate (1) any provision of law, statute, rule
          or regulation or its certificate of incorporation  or bylaws,  (2) any
          order  of any  court or any  rule,  regulation  or order of any  other
          agency or  government  binding  upon it, or (3) any  provision  of any
          material  indenture,  agreement or other  instrument  to which it is a
          party or by which its properties or assets are or may be bound, or (B)
          result in a breach of or constitute (alone or with due notice or lapse
          of time or both) a default  under any  indenture,  agreement  or other
          instrument  referred to in clause  (iii)(A)(3)  of this paragraph (d);
          and

               (e) as of the  date  hereof  and  after  giving  effect  to  this
          Amendment,  no  Default  or Event of  Default  has  occurred  which is
          continuing.

SECTION 3. MISCELLANEOUS.

     3.1 This Amendment shall be construed in connection with and as part of the
Existing Note Purchase  Agreement,  and except as modified and expressly amended
by this Amendment, all terms, conditions and covenants contained in the Existing
Note  Purchase  Agreement  and the Notes are  hereby  ratified  and shall be and
remain in full force and effect.

     3.2 This  Amendment  constitutes  a contract  between  the  Company and the
Noteholders for the uses and purposes hereinabove set forth, and may be executed
in any  number  of  counterparts,  each  executed  counterpart  constituting  an
original, but all together only one agreement.

     3.3 Whenever any of the parties hereto is referred to, such reference shall
be deemed to include  the  successors  and  assigns of such  party,  and all the
promises  and  agreements  contained  in this  Amendment  by or on behalf of the
Company  and  the  Noteholders  shall  bind  and  inure  to the  benefit  of the
respective successors and assigns of such parties, whether so expressed or not.

     3.4 This Amendment  constitutes the final written  expression of all of the
terms hereof and is a complete and exclusive statement of those terms.

     3.5 This  Amendment  shall be governed by and construed in accordance  with
the internal laws of the State of New York.

     3.6 This  Amendment  shall  become  effective  at such  time as it has been
executed by the Company and the Required Holders.

            [The remainder of this page is intentionally left blank.
                         Next page is signature page.]

<PAGE>


         IN WITNESS  WHEREOF,  the parties  hereto have caused the  execution of
this Amendment by duly authorized officers of each as of the date hereof.

                                         SEITEL, INC.



                                         By__________________________________
                                           Debra D. Valice,
                                           Executive Vice President - Finance


Accepted and Agreed to:

[NOTEHOLDER]



By____________________________________
Name:
Title:


<PAGE>


                                    EXHIBIT A

                               Subordination Terms

     Note:The term  "Securities"  refers to the instruments  evidencing the debt
          subordinated by the following provisions;  the term "Holder" refers to
          a holder of Securities.

          SECTION [1.01]. Securities Subordinate to Senior Indebtedness

         The Securities  shall be  subordinated  to Senior  Indebtedness  as set
forth in this Article [One]. The Company  covenants and agrees,  and each Holder
of a  Security  of any  series  by such  Holder's  acceptance  thereof  likewise
covenants  and agrees,  that,  to the extent and in the manner  hereinafter  set
forth in this Article [One], the  indebtedness  represented by the Securities of
such series and the payment of the principal amount, interest, premium (if any),
and such  other  amounts,  if any,  payable  in  respect  of each and all of the
Securities of such series are hereby  expressly made  subordinate and subject in
right of  payment  to the  prior  payment  in full of all  Senior  Indebtedness;
provided,  however,  that no provision of this Article  [One] shall  prevent the
occurrence of any default or Event of Default hereunder.

         "Senior Notes" means, collectively,  (i) (a) the Company's 7.17% Series
A Senior Notes due December 30, 2001 in the original aggregate  principal amount
of  $25,000,000,  (b) the Company's 7.17% Series B Senior Notes due December 30,
2002 in the original  aggregate  principal  amount of  $27,500,000,  and (c) the
Company's Series C Senior Notes due December 30, 2002 in the original  aggregate
principal amount of $22,500,000,  in each case, issued pursuant to separate Note
Purchase Agreements, dated as of December 28, 1995, as such notes and agreements
may be amended  from time to time,  and (ii) (a) the  Company's  7.03%  Series D
Senior Notes due February 15, 2004 in the original aggregate principal amount of
$20,000,000, (b) the Company's 7.28% Series E Senior Notes due February 15, 2009
in the original aggregate principal amount of $75,000,000, and (c) the Company's
Series F Senior Notes due February 15, 2009 in the original aggregate  principal
amount of $43,000,000,  in each case,  issued pursuant to separate Note Purchase
Agreements,  dated as of February 12, 1999, as such notes and  agreements may be
amended from time to time.

         "Senior Indebtedness" means the principal of (and premium or make-whole
amount, if any) and interest on (including interest,  if any, accruing after the
filing  of  a  petition  initiating  any  proceeding  pursuant  to  any  Federal
bankruptcy law or any other  applicable  Federal or State law) and other amounts
due on or in  connection  with the  Senior  Notes  and any  Indebtedness  of the
Company incurred,  assumed or guaranteed by the Company,  whether outstanding on
the date of the Indenture or thereafter incurred,  assumed or guaranteed and all
renewals,  extensions  and refundings of any such  Indebtedness  of the Company;
provided, however, that the following will not constitute Senior Indebtedness:



<PAGE>


                  (a)  any  Indebtedness  of the  Company  as to  which,  in the
         instrument  creating  the same or  evidencing  the same or  pursuant to
         which  the same is  outstanding,  it is  expressly  provided  that such
         Indebtedness of the Company shall be subordinated to or pari passu with
         the Securities;

                  (b)  Indebtedness of the Company in respect of the Securities;

                  (c)  any  Indebtedness  of  the  Company   constituting  trade
         accounts payable arising in the ordinary course of business;
                  (d) any  Indebtedness of the Company  initially  issued to any
         other [trust  which issues  preferred  securities  or other  securities
         similar to preferred securities]; and

                  (e) any  Indebtedness  of the Company to any Subsidiary of the
         Company, other than a trust referred to in the preceding clause (d).

         SECTION [1.02].  Payment Over of Proceeds upon Dissolution, Etc.

         Upon any distribution of assets of the Company in the event of

                  (a) any insolvency or bankruptcy  case or  proceeding,  or any
         receivership,  liquidation,  reorganization  or other  similar  case or
         proceeding in connection  therewith,  relative to the Company or to its
         creditors, as such, or to its assets, or

                  (b) any  liquidation,  dissolution  or other winding up of the
         Company,  whether voluntary or involuntary and whether or not involving
         insolvency or bankruptcy, or

                  (c) any  assignment for the benefit of creditors  or any other
          marshalling of assets and liabilities of the Company,

then and in such event:

                  (1) the  holders of Senior  Indebtedness  shall be entitled to
         receive  payment in full of all  amounts  due or to become due on or in
         respect of all Senior Indebtedness, or provision shall be made for such
         payment in cash, before the Holders of the Securities of any series are
         entitled  to receive any  payment on account of the  principal  amount,
         interest,  premium (if any), or such other  amounts,  if any, as may be
         provided for in respect of the Securities of such series; and
<PAGE>

                  (2) any  payment or  distribution  of assets of the Company of
         any kind or  character,  whether in cash,  property or  securities,  by
         set-off or  otherwise,  to which the  Holders or the  Trustee  would be
         entitled but for the  provisions of this Article  [One],  including any
         such payment or  distribution  which may be payable or  deliverable  by
         reason of the payment of any other  Indebtedness  of the Company  being
         subordinated to the payment of the Securities of such series,  shall be
         paid by the  liquidating  trustee or agent or other person  making such
         payment or distribution, whether a trustee in bankruptcy, a receiver or
         liquidating  trustee or  otherwise,  directly  to the holders of Senior
         Indebtedness  or  their  representative  or  representatives  or to the
         trustee or trustees  under any  indenture  under which any  instruments
         evidencing  any of such  Senior  Indebtedness  may  have  been  issued,
         ratably  according to the aggregate amounts remaining unpaid on account
         of the  principal  of, and premium or  make-whole  amount,  if any, and
         interest on the Senior Indebtedness held or represented by each, to the
         extent  necessary  to make  payment in full of all Senior  Indebtedness
         remaining  unpaid,  after giving  affect to any  concurrent  payment or
         distribution to the holders of such Senior Indebtedness.

         In the event that,  notwithstanding  the  foregoing  provisions of this
Section  [1.02],  the Trustee or the Holder of any  Security of any series shall
receive  any  payment or  distribution  of assets of the  Company of any kind or
character,  whether in cash, property or securities,  including any such payment
or distribution  which may be payable or deliverable by reason of the payment of
any other  Indebtedness of the Company being  subordinated to the payment of the
Securities  of such series,  before all Senior  Indebtedness  is paid in full or
payment  thereof  provided for, and if such fact shall then have been made known
to the  Trustee as  provided  in Section  [1.11],  or, as the case may be,  such
Holder,  then and in such event such payment or distribution  shall be paid over
or  delivered  forthwith  to the trustee in  bankruptcy,  receiver,  liquidating
trustee,   custodian,   assignee,  agent  or  other  person  making  payment  or
distribution  of assets of the  Company  for  application  to the payment of all
Senior Indebtedness  remaining unpaid, to the extent necessary to pay all Senior
Indebtedness  in  full,  after  giving  effect  to  any  concurrent  payment  or
distribution to or for the holders of Senior Indebtedness.

         For purposes of this Article [One] only,  the words "cash,  property or
securities," or any combination  thereof,  shall be deemed not to include shares
of capital stock of the Company as reorganized  or readjusted,  or securities of
the Company or any other corporation provided for by a plan of reorganization or
readjustment  the  payment  of which  is  subordinated,  at least to the  extent
provided in this Article [One] with respect to the Securities, to the payment of
all  Senior  Indebtedness  which  may  at the  time  be  outstanding  and to any
securities issued to the holders of Senior Indebtedness in respect of the Senior
Indebtedness under any such plan of reorganization or readjustment.

        SECTION [1.03].Prior Payment to Senior Indebtedness upon Acceleration of
Securities.

         In the event that any  Securities  of any series are  declared  due and
payable  before their [Stated  Maturity],  then and in such event the holders of
Senior  Indebtedness shall be entitled to receive payment in full of all amounts
due or to become due on or in respect of all Senior  Indebtedness  or  provision
shall be made for such payment in cash,  before the Holders of the Securities of
such series are entitled to receive any payment (including any payment which may
be payable by reason of the  payment of any other  indebtedness  of the  Company
being  subordinated  to the  payment of the  Securities  of such  series) by the
Company on account of the principal of (or premium or make-whole amount, if any)
or interest or other  amounts on  Securities of such series or on account of the
purchase or other acquisition of Securities of such series.

         In the event that,  notwithstanding  the  foregoing,  the Company shall
make any  payment to the Trustee or the Holder of any  Securities  of any series
prohibited by the foregoing provisions of this Section [1.03], and if such facts
then  shall  have been  known or  thereafter  shall  have been made known to the
Trustee (as provided in Section  [1.11]) or to such Holder,  as the case may be,
pursuant  to the terms of this  Indenture,  then and in such event such  payment
shall be paid over and delivered forthwith to the Company by or on behalf of the
person   holding  such  payment  for  the  benefit  of  the  holders  of  Senior
Indebtedness.

         The  provisions  of this Section  [1.03] shall not apply to any payment
with respect to which Section [1.02] would be applicable.

         SECTION [1.04].  Default in Senior Indebtedness.

         In the event and during the  continuation of any default by the Company
in the payment of principal,  premium, if any, interest or any other payment due
on any  Senior  Indebtedness  of the  Company,  as the case may be,  beyond  any
applicable grace period with respect thereto,  or in the event that the maturity
of any Senior  Indebtedness of the Company has been  accelerated  because of any
default,  then,  in any such case,  no payment shall be made by the Company with
respect to the principal (including  redemption payments, if any) of, premium or
make-whole  amount, if any, or interest or other amounts on the Securities until
such default is cured or waived or ceases to exist or any such  acceleration  or
demand for payment has been rescinded.

         In the event that,  notwithstanding  the  foregoing,  the Company shall
make any  payment to the Trustee or the Holder of any  Securities  of any series
prohibited by the foregoing provisions of this Section [1.04], and if such facts
then  shall  have been  known or  thereafter  shall  have been made known to the
Trustee (as provided in Section  [1.11]) or to such Holder,  as the case may be,
pursuant  to the terms of this  Indenture,  then and in such event such  payment
shall be paid over and delivered forthwith to the Company by or on behalf of the
person   holding  such  payment  for  the  benefit  of  the  holders  of  Senior
Indebtedness.

         The  provisions  of this Section  [1.04] shall not apply to any payment
with respect to which Section [1.02] would be applicable.

         SECTION [1.05].  Limitations on Acceleration and Enforcement.

         At any time when the  Company  may not make  payments in respect of the
Securities  as a result  of the  application  of  Section  [1.04],  no Holder of
Securities will:

                  (a) accelerate  or  cause  or  permit  the acceleration of the
         maturity of any of the Securities; or

                  (b) commence,  cause the  commencement  of,  participate in or
         support any action or proceeding  (whether at law or in equity) against
         the Company to recover all or any part of the indebtedness  represented
         by the Securities or any action to commence or prosecute any bankruptcy
         or similar  proceeding in respect of the Company  unless the holders of
         at least a majority in principal amount of the Senior Notes at the time
         outstanding (exclusive of Senior Notes then owned by the Company or any
         of its  subsidiaries  or  affiliates)  shall have  agreed in writing in
         advance to, and shall have joined in, such proceedings.

         SECTION [1.06].  Payment Permitted if No Default.

         Nothing  contained in this Article [One] or elsewhere in this Indenture
or in any of the  Securities  shall prevent (a) the Company,  at any time except
during the pendency of any case, proceeding,  dissolution,  liquidation or other
winding up,  assignment  for the benefit of  creditors or other  marshalling  of
assets and liabilities of the Company referred to in Section [1.02] or under the
conditions  described in Sections [1.03] or [1.04],  from making payments at any
time of the principal amount,  interest or such other amounts, if any, as may be
provided  for  in  this  Indenture,  as the  case  may  be,  in  respect  of the
Securities, or (b) the application by the Trustee or the retention by any Holder
of any money  deposited with it hereunder to the payment of or on account of the
principal amount, interest or such other amounts, if any, as may be provided for
in this  Indenture,  as the case may be, in  respect  of the  Securities  if the
Trustee did not have, at the time provided in the proviso to the first paragraph
of Section  [1.11],  notice that such payment would have been  prohibited by the
provisions of this Article [One].

         SECTION [1.07].  Subrogation Rights of Holders of Senior Indebtedness.

         Subject to the payment in full of all Senior Indebtedness,  the Holders
of the  Securities  of any  series  shall be  subrogated  to the  extent  of the
payments  or  distributions  made to the  holders  of such  Senior  Indebtedness
pursuant to the provisions of this Article [One] to the rights of the holders of
such Senior  Indebtedness to receive payments or distributions of cash, property
or securities  applicable to the Senior Indebtedness until the principal amount,
interest or such other amounts,  if any, as provided for in this  Indenture,  as
the case may be, in respect of the  Securities  of such series  shall be paid in
full.  For purposes of such  subrogation,  no payments or  distributions  to the
holders of the Senior  Indebtedness of any cash, property or securities to which
the Holders of the  Securities  of such series or the Trustee  would be entitled
except for the provisions of this Article [One], and no payments pursuant to the
provisions  of this  Article  [One] to the  Company or to the  holders of Senior
Indebtedness by Holders of the Securities of such series or the Trustee,  shall,
as between the Company,  its creditors other than holders of Senior Indebtedness
and the Holders of the  Securities of such series,  be deemed to be a payment or
distribution by the Company to or on account of the Senior Indebtedness.

         SECTION [1.08].  Provision Solely to Define Relative Rights.

         The  provisions of this Article  [One] are and are intended  solely for
the purpose of defining the relative  rights of the Holders of the Securities of
any series,  on one hand, and the holders of Senior  Indebtedness,  on the other
hand.  Nothing contained in this Article [One] or elsewhere in this Indenture or
in the Securities of any series is intended to or shall:

                  (a)  impair,  as between  the  Company  and the Holders of the
         Securities  of such series,  the  obligation  of the Company,  which is
         absolute and unconditional,  to pay to the Holders of the Securities of
         such series the principal  amount,  interest or such other amounts,  if
         any, as may be provided for in this  Indenture,  as the case may be, in
         respect  of the  Securities  of such  series as and when the same shall
         become due and payable in accordance  with the terms of the  Securities
         of such  series and this  Indenture  and  which,  subject to the rights
         under this  Article  [One] of the  holders of Senior  Indebtedness,  is
         intended to rank  equally  with all other  general  obligations  of the
         Company; or

                  (b) affect the  relative  rights  against  the  Company of the
         Holders of the  Securities  of such series and creditors of the Company
         other than holders of Senior Indebtedness; or

                  (c) prevent the Trustee or the Holder of any  Security of such
         series from exercising all remedies  otherwise  permitted by applicable
         law upon default under this Indenture,  subject to the rights,  if any,
         under  this  Article  [One] of the  holders of Senior  Indebtedness  to
         receive cash,  property or securities  otherwise payable or deliverable
         to the Trustee or such Holder.

         SECTION [1.09].  Trustee to Effectuate Subordination.

         Each  Holder  of  a  Security  by  such  Holder's   acceptance  thereof
authorizes  and directs the Trustee on such Holder's  behalf to take such action
as may be necessary or appropriate to effectuate the  subordination  provided in
this Article [One] and appoints the Trustee such Holder's  attorney-in-fact  for
any and all such purposes.

         SECTION [1.10].  No Waiver of Subordination Provision.

         No right of any present or future holder of any Senior  Indebtedness to
enforce  subordination  as  herein  provided  shall  at any  time  in any way be
prejudiced  or  impaired by any act or failure to act on the part of the Company
or by any act or failure to act, by any such holder,  or by any noncompliance by
the  Company  with  the  terms,  provisions  and  covenants  of this  Indenture,
regardless  of any  knowledge  thereof any such holder may have or be  otherwise
charged with.

         Without in any way limiting the generality of the foregoing  paragraph,
the  holders  of  Senior  Indebtedness  may,  at any time and from time to time,
without  the  consent  of, or notice  to,  the  Trustee  or the  Holders  of the
Securities of any series, without incurring responsibility to the Holders of the
Securities of such series and without  impairing or releasing the  subordination
provided in this Article  [One] or the  obligations  hereunder of the Holders of
the Securities of such series to the holders of Senior Indebtedness,  do any one
or more of the  following:  (i) change the manner,  place or terms of payment or
extend the time of payment  of, or renew or alter,  or  increase  the amount of,
Senior  Indebtedness,  or otherwise  amend or  supplement  in any manner  Senior
Indebtedness or any instrument  evidencing the same or any agreement under which
Senior Indebtedness is outstanding;  (ii) sell,  exchange,  release or otherwise
dispose of or deal with any property  pledged,  mortgaged or otherwise  securing
Senior  Indebtedness;  (iii)  release  any  person  liable in any manner for the
payment or  collection  of Senior  Indebtedness;  (iv)  exercise or refrain from
exercising any rights against the Company or any other person; and (v) apply any
sums paid in respect of Senior Indebtedness to Senior  Indebtedness,  regardless
of who made such payment or how such payment was realized.

         SECTION [1.11].  Notice to Trustee.

         The Company shall give prompt written notice to the Trustee of any fact
known to the Company which would prohibit the making of any payment to or by the
Trustee in respect of the Securities of any series.  Failure to give such notice
shall not affect the  subordination  of the  Securities of such series to Senior
Indebtedness.  Notwithstanding the provisions of this Article [One] or any other
provision of this Indenture,  the Trustee shall not be charged with knowledge of
the existence of any facts which would  prohibit the making of any payment to or
by the Trustee in respect of the Securities of such series, unless and until the
Trustee shall have received  written notice thereof in the manner  prescribed by
this Indenture from the Company or a holder of Senior  Indebtedness  or from any
trustee or agent therefor; and, prior to the receipt of any such written notice,
the Trustee,  subject to the  provisions  of Section  [regarding  the duties and
responsibilities  of the  Trustee],  shall be entitled in all respects to assume
that no such facts exist; provided,  however, that if the Trustee shall not have
received, at least three Business Days prior to the date upon which by the terms
hereof  any  money  may  become  payable  for any  purpose  (including,  without
limitation, the payment of the principal amount, interest, or such other amounts
as may be provided for in this Indenture in respect of any Security), the notice
with respect to such money provided for in this Section [1.11],  then,  anything
herein  contained to the contrary  notwithstanding,  the Trustee  shall have the
full  power and  authority  to  receive  such money and to apply the same to the
purpose  for which  such money was  received  and shall not be  affected  by any
notice to the contrary  which may be received by it within three  Business  Days
prior to such date.

         Subject  to  the  provisions  of  Section  [regarding  the  duties  and
responsibilities  of the Trustee],  the Trustee shall be entitled to rely on the
delivery  to it of a written  notice by a person  representing  himself  to be a
holder of Senior  Indebtedness  (or a trustee or agent on behalf of such holder)
to establish that such notice has been given by a holder of Senior  Indebtedness
(or a  trustee  or agent on behalf of any such  holder).  In the event  that the
Trustee  determines in good faith that further evidence is required with respect
to the right of any person as a holder of Senior  Indebtedness to participate in
any payment or  distribution  pursuant to this  Article  [One],  the Trustee may
request such person to furnish  evidence to the reasonable  satisfaction  of the
Trustee as to the amount of Senior  Indebtedness held by such person, the extent
to which such person is entitled to participate in such payment or  distribution
and any other facts  pertinent  to the rights of such person  under this Article
[One], and if such evidence is not furnished,  the Trustee may defer any payment
which it may be required to make for the benefit of such person  pursuant to the
terms of this Indenture  pending judicial  determination as to the right of such
person to receive such payment.

         SECTION [1.12].    Reliance    on  Judicial  Order  or  Certificate  of
Liquidating Agent.

         Upon any payment or distribution  of assets of the Company  referred to
in this  Article  [One],  the  Trustee,  subject  to the  provisions  of Section
[regarding the duties and  responsibilities of the Trustee],  and the Holders of
the  Securities of any series shall be entitled to rely upon any order or decree
entered  by any  court  of  competent  jurisdiction  in which  such  insolvency,
bankruptcy, receivership, liquidation,  reorganization,  dissolution, winding up
or similar case or  proceeding is pending,  or a  certificate  of the trustee in
bankruptcy,  liquidating trustee, custodian,  receiver, assignee for the benefit
of  creditors,  agent or other  person  making  such  payment  or  distribution,
delivered to the Trustee or to the Holders of Securities of such series, for the
purpose of ascertaining  the persons  entitled to participate in such payment or
distribution,  the holders of Senior  Indebtedness and other indebtedness of the
Company,  the amount thereof or payable  thereon,  the amount or amounts paid or
distributed  thereon and all other facts  pertinent  thereto or to this  Article
[One].

         SECTION [1.13].   Trustee   Not   Fiduciary   for   Holders  of  Senior
Indebtedness.

         The  Trustee  shall  be  deemed  not to owe any  fiduciary  duty to the
holders of Senior Indebtedness.  The Trustee shall not be charged with knowledge
of the existence of Senior  Indebtedness (other than the Senior Notes) or of any
facts that would  prohibit any payment  hereunder  unless the Trustee shall have
received notice thereof in the manner prescribed by this Indenture. With respect
to the holders of Senior  Indebtedness,  the Trustee undertakes to perform or to
observe only such of its covenants or obligation as are  specifically  set forth
in this Article [One] and no implied  covenants or  obligations  with respect to
holders of Senior  Indebtedness  shall be read into this  Indenture  against the
Trustee.

         SECTION [1.14].   Rights  of  Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights.

         The  Trustee in its  individual  capacity  shall be entitled to all the
rights set forth in this Article  [One] with respect to any Senior  Indebtedness
which may at any time be held by it, to the same  extent as any other  holder of
Senior Indebtedness,  and nothing in this Indenture shall deprive the Trustee of
any of its rights as such holder.

         Nothing in this Article [One] shall apply to claims of, or payments to,
the Trustee  under or pursuant to Section  [concerning  fees and expenses of the
Trustee].

         SECTION [1.15].  Article [One] Applicable to Paying Agents.

         The term  "Trustee"  as used in this  Article  [One] shall  (unless the
context  otherwise  requires) be construed  as  extending to and  including  the
Paying  Agent within its meaning as fully for all intents and purposes as if the
Paying Agent were named in this Article  [One] in addition to or in place of the
Trustee;  provided,  however, that Sections [1.11] and [1.13] shall not apply to
the  Company or any  Affiliate  of the Company if it or such  Affiliate  acts as
Paying Agent.