<PAGE>   1
                                                                     EXHIBIT 4.2
================================================================================




                             DI INDUSTRIES, INC.

                                     AND

                                 GUARANTORS


                                $175,000,000
                        8-7/8% Senior Notes due 2007




                          ________________________


                                  INDENTURE



                          Dated as of June 27, 1997



                          ________________________




                  TEXAS COMMERCE BANK NATIONAL ASSOCIATION

                                   Trustee



================================================================================


<PAGE>   2


                               CROSS-REFERENCE

Reconciliation and tie between The Trust Indenture Act as amended, and The
Indenture dated as of June 27,1997.

         TIA                                             Indenture
       Section                                            Section
       -------                                            -------
                                                   
       310(a)(1)    . . . . . . . . . . . . . . . .       7.10
          (a)(2)    . . . . . . . . . . . . . . . .       7.10
          (a)(3)    . . . . . . . . . . . . . . . .       N.A.
          (a)(4)    . . . . . . . . . . . . . . . .       N.A.
          (a)(5)    . . . . . . . . . . . . . . . .       7.10 
          (b)       . . . . . . . . . . . . . . . .       7.08; 7.10
          (c)       . . . . . . . . . . . . . . . .       N.A.
       311(a)       . . . . . . . . . . . . . . . .       7.11
          (b)       . . . . . . . . . . . . . . . .       7.11
          (c)       . . . . . . . . . . . . . . . .       N.A.
       312(a)       . . . . . . . . . . . . . . . .       2.07
          (b)       . . . . . . . . . . . . . . . .       12.06
          (c)       . . . . . . . . . . . . . . . .       12.06
       313(a)       . . . . . . . . . . . . . . . .       7.06
          (b)(1)    . . . . . . . . . . . . . . . .       N.A.
          (b)(2)    . . . . . . . . . . . . . . . .       7.06 
          (c)       . . . . . . . . . . . . . . . .       7.06, 12.05 
          (d)       . . . . . . . . . . . . . . . .       7.06
       314(a)       . . . . . . . . . . . . . . . .       4.02; 4.20; 
                                                          12.05
          (b)       . . . . . . . . . . . . . . . .       N.A.  
          (c)(1)    . . . . . . . . . . . . . . . .       12.01, 12.02 
          (c)(2)    . . . . . . . . . . . . . . . .       12.01; 12.02 
          (c)(3)    . . . . . . . . . . . . . . . .        N.A.  
          (d)       . . . . . . . . . . . . . . . .        N.A.
          (e)       . . . . . . . . . . . . . . . .        12.01; 12.02
          (f)       . . . . . . . . . . . . . . . .        N.A.
       315(a)       . . . . . . . . . . . . . . . .        7.01 
          (b)       . . . . . . . . . . . . . . . .        4.20; 7.05; 12.02 
          (c)       . . . . . . . . . . . . . . . .        7.01 
          (d)       . . . . . . . . . . . . . . . .        7.01 
          (e)       . . . . . . . . . . . . . . . .        6.11
       316(a)(last sentence)  . . . . . . . . . . .        2.09 
          (a)(1)(A) . . . . . . . . . . . . . . . .        6.05 
          (a)(1)(B) . . . . . . . . . . . . . . . .        6.04 
          (a)(2)    . . . . . . . . . . . . . . . .        N.A.  
          (b)       . . . . . . . . . . . . . . . .        6.07 
          (c)       . . . . . . . . . . . . . . . .        10.05
       317(a)(1)    . . . . . . . . . . . . . . . .        6.03; 6.08
          (a)(2)    . . . . . . . . . . . . . . . .        6.09
          (b)       . . . . . . . . . . . . . . . .        2.04
       318(a)       . . . . . . . . . . . . . . . .        12.04




                                      1
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                          N.A. Means Not Applicable.

--------------------------------           
Note:  This Cross-Reference Table shall not, for any purposes, be deemed to be 
part of this Indenture.







                                      2

<PAGE>   4

                               TABLE OF CONTENTS


                                                                            Page
                                                                            ----
                                                          

ARTICLE 1    Definitions and Incorporation by Reference . . . . . . . . . .   1
    SECTION 1.01.    Definitions  . . . . . . . . . . . . . . . . . . . . .   1
    SECTION 1.02.    Incorporation by Reference of Trust Indenture Act  . .  21
    SECTION 1.03     Rules of Construction  . . . . . . . . . . . . . . . .  21

ARTICLE 2    The Securities . . . . . . . . . . . . . . . . . . . . . . . .  22
    SECTION 2.01.    Form and Dating  . . . . . . . . . . . . . . . . . . .  22
    SECTION 2.02.    Execution and Authentication . . . . . . . . . . . . .  23 
    SECTION 2.03.    Registrar and Paying Agent . . . . . . . . . . . . . .  23 
    SECTION 2.04.    Paying Agent To Hold Money in Trust  . . . . . . . . .  24 
    SECTION 2.05.    Global Securities  . . . . . . . . . . . . . . . . . .  24 
    SECTION 2.06.    Transfer and Exchange  . . . . . . . . . . . . . . . .  24 
    SECTION 2.07.    Holder Lists . . . . . . . . . . . . . . . . . . . . .  24 
    SECTION 2.08.    Replacement Securities . . . . . . . . . . . . . . . .  24 
    SECTION 2.09.    Outstanding Securities . . . . . . . . . . . . . . . .  24 
    SECTION 2.10.    Temporary Securities . . . . . . . . . . . . . . . . .  24 
    SECTION 2.11.    Cancellation . . . . . . . . . . . . . . . . . . . . .  24 
    SECTION 2.12.    Payment of Interest: Interest Rights Preserved . . . .  24
    SECTION 2.13.    Authorized Denominations . . . . . . . . . . . . . . .  24 
    SECTION 2.14.    CUSIP Numbers  . . . . . . . . . . . . . . . . . . . .  24

ARTICLE 3  Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . .  27
    SECTION 3.01.    Notices to Trustee . . . . . . . . . . . . . . . . . .  24
    SECTION 3.02.    Selection of Securities To Be Redeemed . . . . . . . .  24
    SECTION 3.03.    Notice of Redemption . . . . . . . . . . . . . . . . .  24
    SECTION 3.04.    Effect of Notice of Redemption . . . . . . . . . . . .  24
    SECTION 3.05.    Deposit of Redemption Price  . . . . . . . . . . . . .  24
    SECTION 3.06.    Securities Redeemed in Part  . . . . . . . . . . . . .  24
    SECTION 3.07.    Optional Redemption  . . . . . . . . . . . . . . . . .  24


ARTICLE 4    Cpvenants  . . . . . . . . . . . . . . . . . . . . . . . . . .  24
    SECTION 4.01.    Payments of Securities . . . . . . . . . . . . . . . .  24
    SECTION 4.02.    Commission Reports . . . . . . . . . . . . . . . . . .  24
    SECTION 4.03.    Limitation on Indebtedness  . . . . . .. . . . . . . .  24
    SECTION 4.04.    Limitation on  Subsidiary Indebtedness and 
                       Preferred Stock  . . . . . . . . . . . . . . . . . .  24
    SECTION 4.05.    Limitation on Restricted Payments. . . . . . . . . . .  24
    SECTION 4.06.    Limitation on Dividends and  Other Payment
                       Restrictions Affecting Subsidiaries  . . . . . . . .  24


                                      i
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    SECTION 4.07.    Limitation on Asset Sales . . . . . . . . . . . . . . 24
    SECTION 4.08.    Limitation on Transactions with
                      Affiliates . . . . . . . . . . . . . . . . . . . . . 24
    SECTION 4.09.    Change of Control . . . . . . . . . . . . . . . . . . 24
    SECTION 4.10.    Limitation on Liens                                   24
    SECTION 4.11.    Limitation on Guarantees by Guarantors  . . . . . . . 24
    SECTION 4.12.    Unrestricted Subsidiaries . . . . . . . . . . . . . . 24
    SECTION 4.13.    Limitation on Sale and Lease-Back Transactions. . . . 24
    SECTION 4.14.    Limitation on Line of Business  . . . . . . . . . . . 24
    SECTION 4.15.    Maintenance of Office or Agency . . . . . . . . . . . 24
    SECTION 4.16.    Money for the Security Payments to be Held in Trust . 24
    SECTION 4.17.    Corporate Existence . . . . . . . . . . . . . . . . . 24
    SECTION 4.18.    Maintenance of Property . . . . . . . . . . . . . . . 24
    SECTION 4.19.    Payment of Taxes and Other Claims . . . . . . . . . . 24
    SECTION 4.20.    Compliance Certificate; Notice of Default
                      or Event of Default  . . . . . . . . . . . . . . . . 24
    SECTION 4.21.    Further Instruments and Acts  . . . . . . . . . . . . 24
    SECTION 4.22.    Prohibition on Company and Guarantors
                      Becoming Investment Companies  . . . . . . . . . . . 24
    SECTION 4.23.    Stay, Extension and Usury Laws  . . . . . . . . . . . 24

ARTICLE 5    Consolidation, Merger, Conveyance, Lease or Transfer  . . . . 24
    SECTION 5.01.    Consolidation, Merger, Conveyance, Lease
                       or Transfer . . . . . . . . . . . . . . . . . . . . 24
    SECTION 5.02.    Officers Certificate and Opinion of Counsel . . . . . 24
    SECTION 5.03.    Substitution of Surviving Entity  . . . . . . . . . . 24

ARTICLE 6  Defaults and Remedies . . . . . . . . . . . . . . . . . . . . . 24
    SECTION 6.01.    Events of Default . . . . . . . . . . . . . . . . . . 24
    SECTION 6.02.    Acceleration  . . . . . . . . . . . . . . . . . . . . 24
    SECTION 6.03.    Other Remedies  . . . . . . . . . . . . . . . . . . . 24
    SECTION 6.04.    Waiver of Past Defaults . . . . . . . . . . . . . . . 24
    SECTION 6.05.    Control by Majority . . . . . . . . . . . . . . . . . 24
    SECTION 6.06.    Limitation on Suits . . . . . . . . . . . . . . . . . 24
    SECTION 6.07.    Rights of Holders to Receive Payment  . . . . . . . . 24
    SECTION 6.08.    Collection Suit by Trustee  . . . . . . . . . . . . . 24
    SECTION 6.09.    Trustee May File Proofs of Claim  . . . . . . . . . . 24
    SECTION 6.10.    Priorities  . . . . . . . . . . . . . . . . . . . . . 24
    SECTION 6.11.    Undertaking for Costs . . . . . . . . . . . . . . . . 24
    SECTION 6.12.    Restoration of Rights and Remedies  . . . . . . . . . 24
    SECTION 6.13.    Rights and Remedies Cumulative  . . . . . . . . . . . 24
    SECTION 6.14.    Delay or Omission Not Waiver  . . . . . . . . . . . . 24

ARTICLE 7  Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
    SECTION 7.01.    Duties of Trustee . . . . . . . . . . . . . . . . . . 24
    SECTION 7.02.    Rights of Trustee . . . . . . . . . . . . . . . . . . 24
    SECTION 7.03.    Individual Rights of Trustee  . . . . . . . . . . . . 24




                                      ii
      

<PAGE>   6





    SECTION 7.04.    Trustee's Disclaimer  . . . . . . . . . . . . . . . . 24
    SECTION 7.05.    Notice of Defaults  . . . . . . . . . . . . . . . . . 24
    SECTION 7.06.    Reports by Trustee to Holders . . . . . . . . . . . . 24
    SECTION 7.07.    Compensation and Indemnity  . . . . . . . . . . . . . 24
    SECTION 7.08.    Replacement of Trustee  . . . . . . . . . . . . . . . 24
    SECTION 7.09.    Successor Trustee by Merger . . . . . . . . . . . . . 24
    SECTION 7.10.    Eligibility; Disqualification . . . . . . . . . . . . 24
    SECTION 7.11.    Preferential Collection of Claims . . . . . . . . . .
                     Against Company . . . . . . . . . . . . . . . . . . . 24

ARTICLE 8  Satisfaction and Discharge. . . . . . . . . . . . . . . . . . . 24
    SECTION 8.01.    Satisfaction and Discharge  . . . . . . . . . . . . . 24
    SECTION 8.02.    Application of Trust Money  . . . . . . . . . . . . . 24
    SECTION 8.03.    Repayment to the Company. . . . . . . . . . . . . . . 24
    SECTION 8.04.    Reinstatement . . . . . . . . . . . . . . . . . . . . 24
                                                                 
ARTICLE 9    Defeasance. . . . . . . . . . . . . . . . . . . . . . . . . . 24
    SECTION 9.01.    Company s Option to  Effect Defeasance or 
                      Covenant Defeasance  . . . . . . . . . . . . . . . . 24
    SECTION 9.02.    Defeasance and Discharge. . . . . . . . . . . . . . . 24
    SECTION 9.03.    Covenant Defeasance . . . . . . . . . . . . . . . . . 24
    SECTION 9.04.    Conditions to Defeasance or Covenant
                      Defeasance . . . . . . . . . . . . . . . . . . . . . 24
    SECTION 9.05.    Deposited Money and U.S. Government        
                      Obligations to be Held in Trust;          
                      Miscellaneous Provisions . . . . . . . . . . . . . . 24
    SECTION 9.06.    Repayment to Company. . . . . . . . . . . . . . . . . 24
    SECTION 9.07.    Reinstatement . . . . . . . . . . . . . . . . . . . . 24


ARTICLE 10    Amendments . . . . . . . . . . . . . . . . . . . . . . . . . 24
    SECTION 10.01.   Without Consent of Holders. . . . . . . . . . . . . . 24
    SECTION 10.02.   With Consent of Holders . . . . . . . . . . . . . . . 24
    SECTION 10.03.   Effect of Supplemental Indentures . . . . . . . . . . 24
    SECTION 10.04.   Compliance with Trust Indenture Act . . . . . . . . . 24
    SECTION 10.05.   Revocation and Effect of Consents and
                     Waivers . . . . . . . . . . . . . . . . . . . . . . . 24
    SECTION 10.06.   Notation on or Exchange of Securities . . . . . . . . 24
    SECTION 10.07.   Trustee To Execute Supplemental Indentures  . . . . . 24
    SECTION 10.08.   Payment for Consent . . . . . . . . . . . . . . . . . 24
                                                                
ARTICLE 11    Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . 24
    SECTION 11.01.   Guarantees  . . . . . . . . . . . . . . . . . . . . . 24
    SECTION 11.02.   Limitation on Liability . . . . . . . . . . . . . . . 24
    SECTION 11.03.   Execution and Delivery of Guarantees  . . . . . . . . 24
    SECTION 11.04.   When a Guarantor May Merge, etc.  . . . . . . . . . . 24
    SECTION 11.05.   No Waiver . . . . . . . . . . . . . . . . . . . . . . 24
    SECTION 11.06.   Modification  . . . . . . . . . . . . . . . . . . . . 24
    SECTION 11.07.   Release of Guarantor  . . . . . . . . . . . . . . . . 24




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<PAGE>   7
    SECTION 11.08     Execution of Supplemental Indenture for Future
                        Guarantors . . . . . . . . . . . . . . . . . . . . . 24 

ARTICLE 12    Miscellaneous  . . . . . . . . . . . . . . . . . . . . . . . . 24
    SECTION 12.01.    Compliance Certificates and Opinions . . . . . . . . . 24 
    SECTION 12.02.    Form of Documents Delivered to Trustee . . . . . . . . 24 
    SECTION 12.03.    Acts of Holders  . . . . . . . . . . . . . . . . . . . 24 
    SECTION 12.04.    Trust Indenture Act Controls . . . . . . . . . . . . . 24 
    SECTION 12.05.    Notices  . . . . . . . . . . . . . . . . . . . . . . . 24 
    SECTION 12.06.    Communication by Holders with Other Holders. . . . . . 24 
    SECTION 12.07.    Rules  by  Trustee,   Paying  Agent   and      
                      Registrar  . . . . . . . . . . . . . . . . . . . . . . 24 
    SECTION 12.08.    Payments on Business Days  . . . . . . . . . . . . . . 24 
    SECTION 12.09.    GOVERNING LAW  . . . . . . . . . . . . . . . . . . . . 24 
    SECTION 12.10.    No Recourse Against Others . . . . . . . . . . . . . . 24 
    SECTION 12.11.    Submission to Jurisdiction; Appointment of Agent 
                      for Service of Process; Waiver of Immunities . . . . . 24 
    SECTION 12.12.    Successors . . . . . . . . . . . . . . . . . . . . . . 24 
    SECTION 12.13.    Multiple Originals . . . . . . . . . . . . . . . . . . 24 
    SECTION 12.14.    Table of Contents; Headings  . . . . . . . . . . . . . 24 
  
EXHIBIT A    Form of Global Security
EXHIBIT B    Form of Certificated Security
EXHIBIT C    Form of Supplemental Indenture

Schedule 1.01(a)    Indebtedness Existing on the Issue Date
Schedule 1.01(b)    Investments Existing on the Issue Date
Schedule 1.01(c)    Liens Existing on the Issue Date
Schedule 4.04       Subsidiary Indebtedness and Preferred Stock Existing
                      on the Issue Date





                                      iv
<PAGE>   8

        INDENTURE dated as of June 27, 1997, among DI Industries, Inc., a
Texas corporation (the "Company"), certain of the Company's subsidiaries
signatory hereto (each, a "Guarantor", collectively, the "Guarantors") and
Texas Commerce Bank National Association, a national banking association, as
trustee (the "Trustee").

        The Company, each Guarantor, jointly and severally, and the Trustee
agree as follows for the benefit of the other parties and for the equal and 
ratable benefit of the Holders of the Company's 8-7/8% Senior Notes Due 2007
(the "Securities"):

                                   ARTICLE 1

                   Definitions and Incorporation by Reference

           SECTION 1.01.  Definitions.

        "Acquired Indebtedness" means, with respect to any specified Person,
Indebtedness of any other Person existing at the time such other Person merged
with or into or became a subsidiary of such specified Person, including 
Indebtedness incurred in connection with, or in contemplation of, such other
Person merging with or into or becoming a subsidiary of such specified
Person, but excluding Indebtedness which is extinguished, retired or repaid
in connection with such other Person merging with or into or becoming a
subsidiary of such specified Person.

        "Act", when used with respect to any Holder, has the meaning set forth
in Section 12.03.

        "Adjusted Net Assets" of a Guarantor at any date means the amount by 
which the fair value of the assets and Property of such Guarantor exceeds the
total amount of liabilities, including, without limitation, contingent
liabilities (after giving effect to all other fixed and contingent
liabilities incurred or assumed on such date), but excluding liabilities under
its Guarantee, of such Guarantor at such date.

        "Affiliate" of any specified Person means another Person directly
or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For purposes of this
definition, "control"  (including, with correlative meanings, the terms
"controlling", "controlled by" and "under common control with"), as used with 
respect to any Person, shall mean the possession, directly or indirectly, 
of the power to direct or cause the direction of the management or policies
of such Person, whether through the ownership  of voting securities, by 
agreement or  otherwise; provided, however,  that beneficial ownership of 10%
or more of the Voting Stock of a Person shall be deemed to be control.





                                       1
<PAGE>   9
            "Agent Member" has the meaning specified in Section 2.05(a).


            "Asset  Sale" means  any direct or  indirect sale,  conveyance,
  transfer,  lease or  other disposition (including,  without limitation,  by
  way  of merger  or consolidation  or by  means of  a Sale  and  Lease-Back
  Transaction)  by the Company or any  Subsidiary to any Person other  than the
  Company, a Guarantor or a Wholly Owned Subsidiary,  in one transaction, or  a
  series of related  transactions, of (i) any  Capital Stock of  any Subsidiary
  (except for  directors' qualifying  shares  or certain  minority interests
  sold to  other Persons solely  due to local law  requirements that there be
  more than one stockholder,  but which are not in excess of what is required
  for such purpose), or (ii) any  other Property or assets  of the Company or
  any Subsidiary, other than (A) sales  of drill-string components and obsolete
  or worn  out equipment in the ordinary course of business or other  assets
  that, in  the Company's  reasonable judgment, are  no longer used or  useful
  in  the conduct of  the business of  the Company and  its Subsidiaries), (B)
  any drilling contract,  charter or  other lease  of Property or other  assets
  entered into  by the Company  or any Subsidiary in the  ordinary course of
  business,  other  than  any Bargain  Purchase  Contract, (C)  a Restricted
  Payment  or  Restricted Investment permitted  under  the  provisions  of
  Section  4.05  of  this  Indenture,  (D)  a  Change  of Control,  (E)  a
  consolidation,  merger, continuance  or  the disposition  of all  or
  substantially  all of  the assets  of the Company and the  Subsidiaries,
  taken as a whole,  in compliance with  the provisions of  Section 5.01 of
  this Indenture, (F) any  trade or exchange by the Company or any Subsidiary
  of one or more  drilling rigs for one or more other drilling rigs  of like
  kind owned  or held by another  Person, provided that (x)  the Fair Value  of
  the rig or  rigs traded or exchanged by the Company or such Subsidiary
  (including  cash or cash equivalents to be delivered by the  Company or such
  Subsidiary) is  reasonably equivalent to the  Fair Value of the  drilling rig
  or rigs  (together with cash  or cash equivalents  to be received  by the
  Company or  such Subsidiary) or other assets as determined  by written
  appraisal by a nationally  (or industry) recognized investment  banking firm
  or appraisal firm  and (y) such exchange is approved by  a majority of the
  disinterested directors of the Company.  An Asset Sale  shall include the
  requisition of  title to, seizure of or  forfeiture of any Property or
  assets, or any actual or constructive total loss or  an agreed or compromised
  total loss of  any Property or assets.

            "Asset Sale Offer" has the meaning specified in Section 4.07(b).

            "Asset Sale Offer Purchase Date" has the meaning specified in 
Section 4.07(c).

            "Asset Sale Offer Purchase Price" has the meaning specified in 
Section 4.07(b).

            "Attributable Indebtedness" in respect of  a Sale  and Lease-Back
  Transaction  means, at any  date of determination, the  present value
  (discounted  at  the interest  rate  borne  by the  Securities,  compounded
  annually) of the total  obligations of the lessee for  rental payments during
  the remaining term of  the lease (or  to the  first date  on which the
  lessee is  permitted to terminate  such lease  without the payment  of a
  penalty) included in such Sale and Lease-Back Transaction  (including any
  period for which such  lease has been extended).

            "Average Life" means, as  of any date,  with respect to  any debt
  security,  the quotient obtained  by dividing (i) the sum of the products of
  (x) the number of years from such date to





                                       2
<PAGE>   10

  the date  of each  scheduled principal  payment (including  any sinking  fund
  or  mandatory redemption  payment requirements) of such  debt security
  multiplied  in each  case by (y) the  amount of such principal  payment by
  (ii) the sum of all such principal payments.

            "Bank Credit Facility" means the $50,000,000  Amended and
  Restated Senior  Secured Revolving Credit Agreement  dated December  31,
  1996,  as amended  and restated  as of  April 30, 1997,  among the  Company
  and Drillers,  Inc.,  as  co-borrowers, DI  International,  Inc.,  as
  guarantor,  the  lending institutions  party thereto, Bankers Trust Company,
  as agent and administrative  agent, and ING (US)  Capital Corporation, as co-
  agent and documentation agent, as from time to time amended.

            "Bargain Purchase Contract" means a drilling contract, charter or
  lease that provides for acquisition of Property  by the other party to such
  agreement during  or at the end of  the term thereof for less than Fair
  Market Value thereof at the time such right to acquire such Property is
  granted.

            "Board of Directors" means the Board of Directors of the Company or
  any Subsidiary, as applicable,  or any committee thereof duly authorized to
  act on behalf of such Board.

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

            "Business Day" means each Monday, Tuesday, Wednesday, Thursday  and
  Friday which is not a day on which banking  institutions are authorized or
  obligated by  law or executive order or regulation to close in The City of
  New York and Houston, Texas  and, with respect to any payment of  cash or
  delivery of  securities, the place of such payment or delivery.

            "Capital Lease Obligation" means, at any time as to any Person with
  respect to any Property leased by such  Person as lessee, the amount of the
  liability  with respect to such lease that would  be required at such time to
  be capitalized and accounted for as a capital lease on the balance sheet of
  such Person prepared in accordance with GAAP.

            "Capital Stock" in any Person  means  any  and  all  shares,
  interests,  partnership  interests, participations or other equivalents in
  the  equity interest (however designated) in such Person and any rights
  (other than debt  securities convertible into an  equity interest), warrants
  or options to acquire any equity interest in such Person.


            "Cash Proceeds" means,  with respect  to any Asset  Sale by  any
  Person,  the aggregate consideration received for such Asset  Sale by such
  Person in the form of cash or cash equivalents  (including any amounts of
  insurance or other proceeds  received in  connection with  an Asset  Sale of
  the  type described  in the  last sentence  of the  definition thereof),
  including payments  in  respect of  deferred payment  obligations when
  received in the form of  cash or cash equivalents (except to the extent that
  such obligations  are financed or sold with recourse to such Person or any
  subsidiary thereof).





                                       3
<PAGE>   11

            "Certificated Security" has the meaning specified in Section
  2.01(b).

            "Change of Control" means (i) a determination  by the Company that
  any Person or group (as  defined in Section 13(d)(3) or 14(d)(2)  of the
  Exchange  Act) has  become the direct or  beneficial owner (as defined  in
  Rule 13d-3  under the Exchange Act) of  more than 50% of the  Voting Stock of
  the Company other than Permitted Holders; (ii) the  Company is merged with or
  into or consolidated with  another corporation and,  immediately after
  giving effect  to  the merger  or consolidation,  less than  50% of  the
  outstanding  voting securities entitled  to vote  generally in  the  election
  of  directors or  persons  who serve  similar functions  of  the surviving or
  resulting entity  are then beneficially owned  (within the meaning  of Rule
  13d-3 of  the Exchange Act)  in  the  aggregate  by  (x) the  stockholders
  of  the  Company  immediately  prior  to  such  merger  or consolidation, or
  (y) if  the record date has been  set to determine the stockholders of the
  Company entitled to vote on  such merger or consolidation,  the stockholders
  of the Company as of such  a record date; (iii) the Company, either
  individually  or in conjunction  with one  or more Subsidiaries,  sells,
  conveys, transfers  or leases,  or the  Subsidiaries sell, convey, transfer
  or lease, all or  substantially all of the  assets of the Company or  the
  Company  and the Subsidiaries,  taken as  a whole  (either in one
  transaction or  a series of related transactions), including Capital Stock of
  the Subsidiaries, to any Person (other than a Wholly  Owned Subsidiary); (iv)
  the liquidation or dissolution of the  Company; or (v) the first day on
  which a majority of the individuals who constitute the Board of Directors of
  the Company are not Continuing Directors.

            "Change of Control Offer" has the meaning specified in 
Section 4.09(a).

            "Change of Control Payment Date" has the meaning specified in 
Section 4.09(b)(ii).

            "Change of Control Purchase Price" has the meaning specified in 
Section 4.09(a).

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

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

            "Consolidated Interest Coverage Ratio" means as  of the date  of the
  transaction  giving rise to  the need  to calculate the  Consolidated
  Interest Coverage Ratio  (the  "Transaction Date"),  the ratio  of (i) the
  aggregate amount  of EBITDA of the Company and  its consolidated Subsidiaries
  for  the four fiscal quarters for which financial  information in respect
  thereof is  available immediately prior to  the applicable Transaction
  Date (the  "Determination Period") to  (ii) the aggregate Consolidated
  Interest Expense  of the Company and its consolidated Subsidiaries  that is
  anticipated to accrue during a  period consisting of the  fiscal quarter in
  which the  Transaction Date occurs  and the three  fiscal quarters
  immediately  subsequent thereto (based  upon the pro forma amount and
  maturity of, and interest payments in respect of,





                                       4
<PAGE>   12

  Indebtedness of the Company   and its consolidated  Subsidiaries expected by
  the Company to be  outstanding on the Transaction  Date), assuming  for the
  purposes of  this measurement  the continuation  of market  interest rates
  prevailing  on the  Transaction  Date and  base  interest rates  in respect
  of floating  interest  rate obligations  equal to  the base  interest rates
  on such  obligations in  effect as  of the  Transaction  Date, provided that
  if  the Company  or any  of  its consolidated  Subsidiaries is  a party  to
  any  Interest  Swap Obligation that would  have the effect of changing the
  interest rate on any Indebtedness of the Company or any of its  consolidated
  Subsidiaries  for such  four-quarter period  (or a  portion thereof),  the
  resulting  rate shall  be used  for such  four-quarter  period  or portion
  thereof; provided,  further, that  any Consolidated Interest Expense of the
  Company with respect to Indebtedness  incurred or retired by the Company or
  any of its Subsidiaries during  the fiscal quarter in  which the Transaction
  Date occurs shall be  calculated as if  such debt was incurred  or retired on
  the first  day of the  fiscal quarter in which  the Transaction Date  occurs;
  provided,  further, that  if the transaction  giving rise to  the need to
  calculate  the Consolidated Interest Coverage Ratio would have the effect of
  increasing or decreasing EBITDA in the future and if such  increase or
  decrease is readily quantifiable and is  attributable to such transaction,
  EBITDA shall be calculated on a  pro forma basis as  if such transaction had
  occurred  on the first day of the four fiscal  quarters referred to in clause
  (i) of this  definition, and if,  during the same four  fiscal quarters, (x)
  the  Company or any of  its consolidated Subsidiaries shall  have engaged in
  any Asset Sale, EBITDA for such period shall  be reduced by an amount equal
  to the  EBITDA (if  positive), or  increased by  an  amount equal  to the
  EBITDA (if  negative), directly attributable to the assets which are the
  subject of such Asset Sale for such  period calculated on a pro forma basis
  as if such Asset Sale and  any related retirement of  Indebtedness had
  occurred on  the first day of  such period or  (y) after the Issue Date,  the
  Company or  any of its consolidated  Subsidiaries shall have  acquired any
  material assets  other than  in the ordinary  course of  business, EBITDA
  and Consolidated Interest  Expense shall be calculated  on a pro forma  basis
  as if such acquisition had  occurred on the first day of such period.

            "Consolidated Interest Expense" means, with respect to any Person
  for any period, without duplication (A) the sum of (i) the aggregate amount
  of cash and noncash interest expense  (including capitalized interest) of
  such Person and its subsidiaries for  such period as determined on a
  consolidated basis in accordance  with GAAP in  respect of Indebtedness
  (including, without limitation,  (v) any amortization  of debt discount,  (w)
  net costs  associated  with Interest  Swap  Obligations (including  any
  amortization  of discounts),  (x)  the interest portion of  any deferred
  payment obligation  calculated in  accordance with  the effective  interest
  method, (y)  all accrued  interest and (z)  all commissions,  discounts and
  other  fees and  charges owed  with respect to  letters of credit, bankers
  acceptances or  similar facilities) paid or  accrued, or scheduled to be paid
  or  accrued, during such  period; (ii) dividends  on Preferred Stock  or
  Redeemable Stock  of such  Person (and  Preferred Stock or Redeemable Stock
  of  its subsidiaries if paid  to a Person other  than such Person or its
  subsidiaries)  declared and payable in cash; (iii) the  portion of any rental
  obligation of such Person or its subsidiaries in respect of any  Capital
  Lease Obligation allocable to interest expense in accordance  with GAAP; (iv)
  the portion  of any rental obligation of such Person or its subsidiaries in
  respect  of any Sale and Lease-Back Transaction  allocable to interest
  expense (determined as if  such were treated as  a Capital Lease Obligation);
  and (v) to the extent any debt of any other Person is guaranteed by





                                       5
<PAGE>   13
  such  Person or any  of its subsidiaries,  the aggregate amount of interest
  paid, accrued or  scheduled to be paid or  accrued, by  such other Person
  during  such period  attributable to any  such debt,  less (B)  to the extent
  included in (A) above,  amortization or write-off  of deferred  financing
  costs of such  Person and its subsidiaries during  such period  and any
  charge  related or  any premium or  penalty paid  in connection  with
  redeeming or retiring any  Indebtedness of such Person  and its subsidiaries
  prior to its stated  maturity; in the case  of both (A)  and (B)  above,
  after  elimination of  intercompany accounts among  such Person and  its
  subsidiaries  and  as  determined  in accordance  with  GAAP.   For  purposes
  of  clause (ii) above,  dividend requirements attributable to any Preferred
  Stock  or Redeemable Stock shall be deemed to be an amount equal  to the
  amount  of dividend  requirements  on such  Preferred  Stock or  Redeemable
  Stock  times a  fraction,  the numerator of which is the amount of such
  dividend requirements, and  the denominator of which is one minus the
  applicable  combined federal, state,  local and foreign income  tax rate of
  the Company  and its Subsidiaries (expressed as a decimal),  on a
  consolidated basis, for the fiscal  year immediately preceding the date of
  the transaction giving rise to the need to calculate Consolidated Interest
  Expense.

            "Consolidated Net Income" of any Person means, for any period, the
  aggregate net income (or net  loss, as the case may be)  of such Person and
  its  subsidiaries for such period on  a consolidated basis, determined in
  accordance with  GAAP, provided that there  shall be excluded  therefrom,
  without duplication,  (i) any net income of  any Unrestricted  Subsidiary,
  except  that the  Company's or  any Subsidiary's  interest in the  net income
  of such Unrestricted  Subsidiary for such period  shall be included  in such
  Consolidated Net  Income up to the  aggregate amount  of cash  or cash
  equivalents actually  distributed by  such Unrestricted  Subsidiary during
  such period to the Company or a Subsidiary as a dividend or other
  distribution, (ii) gains and losses, net  of taxes,  from Asset Sales or
  reserves relating thereto, (iii) the  net income of any Person that is not a
  subsidiary or that  is accounted for by the equity method of  accounting
  which shall be included only to the extent of the  amount of dividends or
  distributions  paid to such Person or its subsidiaries,  (iv) items (but not
  loss  items) classified as extraordinary, unusual or  nonrecurring (other
  than the  tax benefit, if any, of the utilization of net  operating loss
  carryforwards or  alternative minimum tax credits),  (v) the net income (but
  not net loss) of any Person acquired by such  specified Person or any of
  its subsidiaries in a pooling-of-interests  transaction for any period prior
  to the date of such acquisition,  (vi) any gain or loss, net of taxes,
  realized  on the termination of  any employee pension  benefit plan,  (vii)
  the net income (but not net loss)  of any  subsidiary of  such specified
  Person to the extent that the transfer  to that  Person of that income is
  not  at  the  time  permitted,  directly  or  indirectly,  by any  means
  (including by dividend, distribution, advance or loan or  otherwise), by
  operation of the terms of its charter or any agreement with a Person  other
  than  with such  specified Person,  instrument  held  by a  Person other
  than by  such specified Person, judgment, decree,  order, statute, law, rule
  or  governmental regulations applicable to such subsidiary or its
  stockholders,  except for  any dividends  or distributions  actually paid  by
  such  subsidiary to  such Person, and (viii) with regard to a  non-Wholly
  Owned Subsidiary, any aggregate net income (or loss) in  excess of such
  Person's  or such subsidiary's  pro rata share of  such non-Wholly Owned
  Subsidiary's net income  (or loss).





                                       6
<PAGE>   14

            "Consolidated Net Worth" of any  Person means,  as of  any date,
  the  sum of the Capital Stock and additional  paid-in capital  plus
  retained earnings (or  minus accumulated  deficit)  of  such Person  and its
  subsidiaries on a consolidated basis at such date,  each item determined in
  accordance with GAAP, less amounts attributable to Redeemable Stock of such
  Person or any of its subsidiaries.

            "Continuing Director" means an individual who (i) is a  member
  of  the Board  of Directors  of the Company and (ii)  either (A) was a member
  of the Board of Directors  of the Company on  the Issue Date or (B) whose
  nomination for election or election to the  Board of Directors of the Company
  was approved by vote of at least  a majority of the directors then still in
  office who were either directors  on the Issue Date or whose election or
  nomination for election was previously so approved.

            "Corporate Trust Office" means the office of  the  Trustee at
  which  at any  particular  time its corporate trust business shall  be
  principally administered, which  office at the date of  execution of this
  Indenture is located at 600 Travis Street, Suite 1150, Houston, Texas 77002.

            "Covenant Defeasance" has the meaning specified in Section 9.03.

            "Currency Hedge Obligations" means, at any time as to any Person,
  the obligations of  such Person at such  time which were incurred in the
  ordinary course of business pursuant to any  foreign currency exchange
  agreement, option or future contract or  other similar agreement or
  arrangement designed to protect against or manage such Person's or any of its
  subsidiaries  exposure to fluctuations in foreign currency exchange rates.

            "Default" means any  event, act  or condition  the occurrence  of
  which is, or after notice  or the passage time or both would be, an Event
  of Default.

            "Defaulted Interest" has the meaning specified in Section 2.12.

            "Defeasance" has the meaning specified in Section 9.02.

            "Depositary" means The Depository Trust Company, its nominees and
  their respective successors.

            "Determination Period" has the meaning  specified under clause (i) 
  of the definition of Consolidated Interest Coverage Ratio.

            "EBITDA" means, with respect to any Person for any period, the
  Consolidated Net Income of such Person for  such period, plus  to the extent
  reflected in the income statement of such Person  for such period from which
  Consolidated Net Income is determined, without duplication, (i) Consolidated 
  Interest Expense, (ii) income tax  expense, (iii)  depreciation expense,  
  (iv) amortization  expense, (v) any charge related to any premium or penalty 
  paid in connection with redeeming or retiring any Indebtedness prior to its 
  stated maturity, (vi) any other non-cash charges  and (vii) to the extent 
  not otherwise covered by the adjustments contained in the proviso to this 
  definition, non-recurring charges of approximately $6.1 million





                                       7
<PAGE>   15

  incurred during  1996 in  employment severance  costs, exit  costs
  attributable  to its  exiting Argentina  and Mexico  and other  non-recurring
  charges,  all as  described in  the Company's  Form 10-K  for the  year
  ended December 31, 1996 and minus,  to the extent reflected in  such income
  statement, any noncash  credits that had the effect of  increasing
  Consolidated Net Income  of such Person for such  period; provided that for
  purposes of  determining EBITDA with respect  to the Company,  Consolidated
  Net  Income shall exclude any  net income or loss for the year ended December
  31, 1996 associated with the Company's Argentine or Mexican divisions.

            "Event of Default" has the meaning specified in Section 6.01.

            "Excess Proceeds" has the meaning specified in Section 4.07(a).

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

            "Fair Market Value" means,  with respect to consideration received
  or to be received pursuant  to any transaction  by any Person,  the fair
  market value of  such consideration as  determined in good  faith by the
  Board of Directors of the Company.

            "Fair Value" means, with respect to any asset or  Property, the
  price which could be negotiated in  an arm's-length free market transaction,
  for cash, between a  willing seller and a willing buyer,  neither of whom is
  under undue pressure or compulsion to complete the transaction.

            "GAAP" means,  at  any date,  United  States generally  accepted
  accounting principles,  consistently applied, as  set  forth in  the opinions
  of  the  Accounting Principles  Board of  the  American Institute  of
  Certified Public Accountants ("AICPA") and statements  of the Financial
  Accounting Standards  Board, or in such other  statements  by  such other
  entity  as may  be  designated by  the  AICPA, that  are  applicable to  the
  circumstances  as of the date of determination; provided, however, that  all
  calculations made for purposes of determining  compliance with the provisions
  set forth in  this Indenture  shall utilize GAAP in  effect at the Issue
  Date.

            "Global Security" has the meaning specified in Section 2.01(b).

            "Grey Wolf" means Grey Wolf Drilling Company, a Texas corporation.

            "Grey Wolf Acquisition" means the agreement  to merge Grey  Wolf
  into Drillers, Inc. pursuant to an Agreement and Plan of Merger dated March 7,
  1997,  by and among the Company, Drillers, Inc.  and Grey Wolf, as such may 
  be amended to the Issue Date.

             "Guarantee" means an unconditional guaranty  of the Securities
  given by any  Subsidiary pursuant to the provisions of Article 11 of this
  Indenture.

            "Guarantor" means Drillers, Inc., DI International Inc. and  DI
  Energy Inc., each a Texas corporation and a Subsidiary, and each other
  Subsidiary of the Company that is required





                                       8
<PAGE>   16

  to guarantee the Company's Obligations  under the Securities and this
  Indenture  pursuant to the provisions of Article 11 of  this Indenture and
  any  other Subsidiary of the Company  that executes a supplemental  indenture
  in  which  such Subsidiary  agrees  to  guarantee the  Company's  Obligations
  under the  Securities  and  this Indenture.

            "Holder" means the Person in whose name a Security is registered on
  the Registrar's books.

            "incur" means, with respect to any Indebtedness or  other obligation
  of any Person, to create,  issue, suffer to exist, incur  (by conversion,
  exchange or  otherwise), assume, guarantee or  otherwise become  liable in
  respect of  such Indebtedness  or  other obligation  or the  recording,  as
  required  pursuant to  GAAP  or otherwise, of  any such Indebtedness  or
  obligation  on the  balance sheet  of such  Person (and "incurrence,"
  "incurred,"  "incurrable" and "incurring" shall have meanings correlative to
  the foregoing); provided that  a change in GAAP  that results in an
  obligation of such Person  that exists at  such time  becoming Indebtedness
  shall not be  deemed an incurrence of  such Indebtedness.  Indebtedness
  otherwise  incurred by a Person  before it becomes a Subsidiary shall be
  deemed to have been incurred at the time at which it becomes a Subsidiary.

            "Indebtedness" as applied to any Person means,  at any time, without
  duplication, whether recourse  is to all or a portion  of the assets of such
  Person,  and whether or not contingent, (i) any obligation  of such Person
  for  borrowed money; (ii) any obligation of  such Person evidenced by  bonds,
  debentures, notes or other similar  instruments,  including,  without
  limitation,  any  such  obligations  incurred  in  connection  with
  acquisition of  Property, assets  or businesses,  excluding accounts  payable
  made  in the  ordinary course  of business which  are  not more  than 90
  days  overdue or  which  are  being contested  in  good faith  and  by
  appropriate proceedings;  (iii) any obligation  of such Person  for all or
  any part of  the purchase price of Property or for  the cost of Property
  constructed or of improvements thereto (including any  obligation under or in
  connection with any letter of credit  related thereto), other than  accounts
  payable incurred in respect of Property and services purchased  in the
  ordinary course of business which are no more than  90 days overdue or  which
  are being contested in good  faith and by appropriate proceedings; (iv) any
  obligation of such Person upon  which interest charges are customarily  paid
  (other than accounts payable incurred in the ordinary course of business);
  (v)  any obligation of such Person  under conditional sale or  other title
  retention  agreements relating to purchased Property; (vi) any  obligation of
  such Person issued or assumed as the deferred  purchase price of Property
  (other than accounts  payable incurred in the ordinary course of  business
  which are no more than 90 days overdue  or which are being  contested in good
  faith  and by appropriate  proceedings); (vii)  any Capital Lease Obligation
  or  Attributable Indebtedness pursuant to any  Sale and Lease-Back
  Transaction of such Person; (viii)  any obligation  of any  other  Person
  secured by  (or for  which the  obligee thereof  has  an existing right,
  contingent  or otherwise, to be secured by)  any Lien on Property owned or
  acquired, whether or not any  obligation secured thereby has  been assumed,
  by such  Person; (ix) any obligation  of such Person  in respect  of  any
  letter  of  credit supporting  any  obligation  of any  other  Person; (x)
  the  maximum fixed repurchase price  of any Redeemable  Stock of such Person
  (or  if such Person  is a subsidiary,  any Preferred Stock of such Person);
  (xi) the notional





                                       9
<PAGE>   17

  amount  of any  Interest  Swap  Obligation  or  Currency  Hedge  Obligation
  of  such Person  at  the  time  of determination; and  (xii)  any  obligation
  which  is  in  economic  effect  a  guarantee,  regardless  of  its
  characterization  (other  than an  endorsement  in  the ordinary  course  of
  business), with  respect  to  any Indebtedness of  another Person,  to the
  extent guaranteed.    For purposes  of the  preceding sentence,  the maximum
  fixed repurchase  price of any  Redeemable Stock  or subsidiary  Preferred
  Stock that  does not have  a fixed  repurchase  price shall  be  calculated
  in accordance  with  the  terms  of  such  Redeemable Stock  or subsidiary
  Preferred Stock as if  such Redeemable Stock or subsidiary Preferred  Stock
  were repurchased on any date on  which Indebtedness shall be required to be
  determined pursuant to the  Indenture; provided, however, that  if such
  Redeemable  Stock or  subsidiary Preferred  Stock is  not then  permitted to
  be  repurchased, the repurchase price  shall be the book value of such
  Redeemable Stock or  subsidiary Preferred Stock.  The amount of Indebtedness
  of any Person at any date shall be  the outstanding balance at such date of
  all unconditional obligations as  described above and the  maximum liability
  of  any guarantees at such  date; provided that  for purposes  of calculating
  the amount of any  non-interest bearing or other discount  security, such
  Indebtedness shall be deemed to be  the principal amount thereof  that would
  be  shown on the balance  sheet of the  issuer dated such date  prepared in
  accordance with GAAP but that such security shall be deemed to have been
  incurred only on the date of the original issuance thereof.

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

            "Indrillers"  means INDRILLERS, L.L.C., a Michigan limited liability
  company  of which the Company is a member.

            "Interest Payment Date"  means the Stated Maturity  of an
  installment  of interest on the  Securities, which date shall be January 1
  and July 1 of each year.

            "Interest Swap Obligation"  means,  with respect to any Person, the
  obligation  of such Person pursuant to any  interest rate swap agreement,
  interest rate  cap, collar or floor  agreement or other similar agreement or
  arrangement  designed to protect against  or manage such  Person's or any of
  its subsidiaries' exposure  to fluctuations in interest rates.

            "Investment"  means,  with respect  to any  Person, any  direct,
  indirect or  contingent investment  in another Person,  whether  by  means
  of a  share  purchase, capital  contribution,  loan, advance  (other  than
  advances to  employees for  moving  and travel  expenses,  drawing  accounts
  and  similar expenditures  in  the ordinary  course of business) or similar
  credit  extension constituting Indebtedness of such  other Person, and any
  guarantee  of Indebtedness of any other Person;  provided that the term
  Investment  shall not include any transaction  involving the purchase  or
  other acquisition (including by  way of merger) of Property (including
  Capital Stock) by the  Company or any Subsidiary  in exchange for  Capital
  Stock (other than  Redeemable Stock) of the Company.  The amount of  any
  Person's Investment shall be the original cost  of such Investment to such
  Person, plus the cost of all additions thereto





                                       10
<PAGE>   18
  paid  by such Person, and minus the amount of  any portion of such Investment
  repaid to such Person in cash as a repayment of principal  or a return of
  capital, as the case  may be, but without  any other adjustments  for
  increases or decreases in value, or write-ups, writedowns,  or write-offs
  with respect to such  Investment.  In determining the amount of  any
  Investment involving a transfer of any Property or assets other  than cash,
  such Property or assets  shall be valued at its Fair Value at the time of
  such transfer  as determined in good faith by  the board  of directors (or
  comparable body) of  the Person making  such transfer.  The  Company shall be
  deemed to  make an "Investment" in the amount of the Fair Value of the Assets
  of  a Subsidiary at the time such Subsidiary is designated an Unrestricted
  Subsidiary.

            "Issue Date" means the date on which the  Securities are first
  authenticated and delivered under  this Indenture.

            "Joint Venture" means any Person (other than a Guarantor) designated
  as such by a Board Resolution  of the Company  and as to which  (i) the
  Company,  any Guarantor or any  Joint Venture owns less than  50% of the
  Capital  Stock of such Person; (ii) no  more than 10 unaffiliated  Persons
  own of record  any Capital Stock of such Person; (iii) at all times,  each
  such Person owns  the same proportion of each class of Capital  Stock of such
  Person outstanding  at such time;  (iv) no  Indebtedness of  such Person is
  or becomes outstanding  other than  Non-Recourse Indebtedness; (v) there
  exist  no consensual encumbrances  or restrictions on the ability of such
  Person to  (x) pay, directly or indirectly, dividends or  make any other
  distributions in  respect of its Capital Stock to the holders of its Capital
  Stock or (y) pay any Indebtedness or  other obligation owed to the holders of
  its Capital Stock or  (z) make any  Investment in the holders  of its Capital
  Stock, in each case other  than the types of consensual encumbrances or
  restrictions that  would be permitted under the provisions of Section 4.06 of
  this Indenture if such Person were a Subsidiary;  and (vi) the business
  engaged in by  such Person is a Related Business.

            "Lien"   means   any  mortgage,  pledge,   hypothecation,  charge,
  assignment,   deposit  arrangement, encumbrance, security  interest, lien
  (statutory or  other), or  preference,  priority or  other security  or
  similar  agreement  or  preferential  arrangement  of  any  kind  or  nature
  whatsoever  (including,  without limitation,  any agreement to  give or grant
  a Lien or any lease,  conditional sale or  other title retention agreement
  having substantially the same economic effect as any of the foregoing).

            "Maturity"  means  the date on which  the principal of a  Security
  becomes due and  payable as provided therein or  in  this  Indenture, whether
  at the  Stated Maturity  or the  Change  of Control  Payment Date  or
  purchase date established  pursuant to the terms of  this Indenture for an
  Asset  Sale Offer or by declaration of acceleration, call for redemption or
  otherwise.

            "Moody's"  means  Moody's Investor Service,  Inc., or, if  Moody's
  Investors Service,  Inc. shall cease rating the  specified  debt  securities
  and  such ratings  business  with  respect  thereto  shall  have  been
  transferred to a successor  Person, such successor  person; provided that  if
  Moody's Investors  Service, Inc.  ceases rating the specified debt securities
  and its ratings business with respect thereto shall not have  been
  transferred  to any successor  Person or  such successor  Person is  S&P,
  then   Moody's  shall mean  any other nationally recognized rating




                                       11
<PAGE>   19

  agency  (other than S&P)  that rates  the specified  debt securities selected
  in  good faith  by the  Board of Directors of the Company in a Board
  Resolution.

            "Net Available" Proceeds means, (a) as  to any Asset Sale  (other
  than a  Bargain Purchase Contract), the Cash Proceeds  therefrom, net of  all
  legal  and title  expenses, commissions and  other fees and  expenses
  incurred, and all  Federal, state, foreign, recording  and local taxes
  payable as  a consequence of such  Asset Sale, net of all payments made to
  any Person other  than the Company or a Subsidiary on  any Indebtedness which
  is secured by such assets,  in accordance with the terms of  any Lien upon or
  with respect to such  assets, or which  must by its terms, or in order to
  obtain a necessary consent to such Asset Sale, or by applicable law, be
  repaid out of the  proceeds from such  Asset Sale  and, as for any  Asset
  Sale by a  Subsidiary, net of the equity interest  in such  Cash Proceeds of
  any holder  of Capital  Stock of such Subsidiary  (other than  the Company,
  any other  Subsidiary or any Affiliate of the Company  or any such other
  Subsidiary) and (b) as to any Bargain Purchase Contract, an amount equal to
  (i) that  portion of the rental or other payment  stream arising under a
  Bargain Purchase Contract that represents an amount  in excess of the Fair
  Market Value of the rental or other payments  with respect to the pertinent
  Property or other asset and  (ii) the Cash Proceeds from the sale of  such
  Property or other asset,  net of the amount  set forth in  clause (a) above,
  in  each case as and when received.

            "Non-Recourse Indebtedness" means Indebtedness  or that portion  of
  Indebtedness  of an  Unrestricted Subsidiary or a foreign Subsidiary not
  constituting a Guarantor as to  which (a) neither the Company  nor any other
  Subsidiary (other  than  an  Unrestricted Subsidiary  or a  Subsidiary of
  such foreign  Subsidiary) (i) provides  credit  support   including  any
  undertaking,  agreement   or  instrument  which  would   constitute
  Indebtedness or (ii) is  directly or indirectly liable  for such Indebtedness
  and (b) no default  with respect to  such Indebtedness  (including any
  rights which  the holders thereof  may have  to take  enforcement action
  against an Unrestricted  Subsidiary or such foreign Subsidiary)  would permit
  (upon notice,  lapse of time  or both) any holder  of any other Indebtedness
  of the Company or  its other Subsidiaries to declare  a default on such other
  Indebtedness  or cause  the payment  thereof  to  be accelerated  or payable
  prior  to its  stated maturity.

            "Obligations" means, with respect to any Indebtedness,  any
  obligation thereunder, including, without limitation,  principal, premium
  and interest  (including  post petition  interest thereon),  penalties,
  fees, costs, expenses, indemnifications, reimbursements, damages and other
  liabilities.

            "Obligors" means the Company  and the  Guarantors, collectively;
  "Obligor" means the  Company or any Guarantor.

            "Officers' Certificate"  means a  certificate signed by the Chairman
  of the Board, a Vice  Chairman of the Board, the  President, the Chief
  Executive  Officer, the Chief Operating Officer  or a Vice President,  and by
  the  Chief Financial  Officer, the  Chief Accounting  Officer, the
  Treasurer, an  Assistant Treasurer,  the Secretary or an Assistant Secretary
  of the Company or a Subsidiary and  delivered to the Trustee, which shall
  comply with this Indenture.


                                       12
<PAGE>   20

            "Opinion of Counsel" means a written  opinion from legal  counsel
  who is  acceptable to the  Trustee.  The counsel may be an employee of or
  counsel to the Company, a Guarantor or the Trustee.

            "Order" means a  written order signed in the  name of the Company
  by an officer and delivered  to the Trustee.

            "Paying Agent" has the meaning specified in Section 2.03.

            "Permitted Holders" means Norex Industries,  Inc., Somerset Capital
  Partners, Mike L. Mullen and Roy T. Oliver and their respective Affiliates.

            "Permitted Indebtedness" means (a) Indebtedness of the Company under
  the Securities; (b) Indebtedness (and any  guarantee thereof) under one or
  more credit  or revolving credit facilities with a bank or syndicate of banks
  or financial institutions or  other lenders, including, without limitation,
  the Bank Credit Facility, as such may be amended, modified, revised,
  extended, replaced, or refunded from time  to time, in an aggregate principal
  amount at any  one time outstanding not to exceed  $100,000,000, less any
  amounts derived from  Asset Sales  and applied  to the  required permanent
  reduction  of  Senior Debt  (and a  permanent reduction  of the related
  commitment to  lend or amount available to  be reborrowed in the case of a
  revolving credit facility) under  such  credit facilities  as  contemplated
  by  the  provisions of  Section 4.07  of this  Indenture; (c) Indebtedness
  of  the  Company or  any  Subsidiary under  Interest  Swap Obligations,
  provided  that (i)  such Interest Swap  Obligations are related  to payment
  obligations on  Indebtedness otherwise permitted  under the provisions  of
  Section 4.03  of this Indenture  and (ii) the  notional principal amount of
  such Interest Swap Obligations does not exceed the  principal amount of the
  Indebtedness to  which such Interest Swap Obligations relate; (d)
  Indebtedness of the Company  or any Subsidiary under Currency  Hedge
  Obligations, provided that (i) such Currency Hedge Obligations  are related
  to payment obligations  on Indebtedness otherwise permitted under the
  provisions of Section 4.03 of this  Indenture or to the foreign currency cash
  flows reasonably expected  to be  generated by the  Company and  the
  Subsidiaries  and (ii)  the notional  principal amount of  such Currency
  Hedge Obligations  does not  exceed the principal  amount of  the
  Indebtedness and  the amount  of the  foreign currency cash flows to  which
  such Currency Hedge  Obligations relate; (e)  Indebtedness of the Company  or
  any Subsidiary outstanding  on the Issue Date  and listed on Schedule 1.01(a)
  attached hereto; (f) the  Guarantees of  the Securities (and any assumption
  of the Obligations guaranteed thereby);  (g) Indebtedness of the Company or
  any Subsidiary in  respect of bid  performance bonds,  surety bonds, appeal
  bonds  and letters of credit  or similar arrangements issued  for the
  account of the Company  or any Subsidiary, in  each case in the  ordinary
  course of business and  other than for an obligation for money  borrowed; (h)
  Indebtedness of the Company to a Guarantor or other Wholly  Owned Subsidiary
  and Indebtedness  of a Guarantor or  other Wholly Owned Subsidiary to  the
  Company  or another  Guarantor or other  Wholly Owned  Subsidiary; provided
  that upon  any subsequent issuance or transfer of any  Capital Stock or any
  other  event which results in any  such Guarantor ceasing to be a Guarantor
  or such Wholly Owned Subsidiary ceasing  to be a Wholly Owned  Subsidiary, as
  the case may be, or any other  subsequent transfer of  any such  Indebtedness
  (except to  the Company  or a  Guarantor or  other Wholly Owned Subsidiary),
  such Indebtedness shall be deemed, in each case, to be incurred





                                       13
<PAGE>   21

  and  shall  be treated  as an  incurrence  for purposes  of Section 4.03  of
  this  Indenture at  the  time the Guarantor  in question ceased  to be a
  Guarantor  or the Wholly  Owned Subsidiary  in question ceased  to be a
  Wholly Owned Subsidiary; (i) Subordinated  Indebtedness of the Company to an
  Unrestricted Subsidiary for  money borrowed; (j)  Indebtedness of  the
  Company  in connection  with a  purchase of  the Securities  pursuant to  a
  Change of Control  Offer, provided that the aggregate  principal amount of
  such  Indebtedness does not  exceed 101% of the aggregate principal amount
  at Stated Maturity of the Securities purchased pursuant to such  Change of
  Control Offer; provided, further, that such  Indebtedness (A) has an Average
  Life equal  to or greater than the remaining Average  Life of the Securities
  and  (B) does not mature prior  to one year following the Stated Maturity of
  the  Securities; (k) Permitted  Refinancing Indebtedness;  (l) Permitted
  Subsidiary  Refinancing Indebtedness; and (m) additional Indebtedness in  an
  aggregate principal amount not in excess of $2,500,000  at any one time
  outstanding.  So  as to  avoid duplication  in determining the  amount of
  Permitted  Indebtedness under any  clause of this definition,  guarantees
  permitted to  be incurred pursuant to  this Indenture of,  or Obligations
  permitted to be  incurred pursuant to this  Indenture in respect of  letters
  of credit supporting, Indebtedness otherwise included in the determination of
  such amount shall not also be included.

            "Permitted  Investments"   means  (a) certificates  of  deposit,
  bankers  acceptances, time  deposits, Eurocurrency deposits  and similar
  types  of Investments routinely  offered by  a commercial bank  organized in
  the United States with  final maturities  of one  year or  less issued by
  commercial banks  organized in  the United  States having  capital  and
  surplus  in excess  of $300,000,000;  (b) commercial  paper issued  by any
  corporation, if such  commercial paper has credit  ratings of at least  "A-1"
  or  its equivalent by S&P  and at least  "P-I"  or its equivalent by Moody's;
  (c) U.S. Government Obligations with a maturity  of four years or less; (d)
  repurchase obligations for instruments  of the type  described in clause (c)
  with any bank  meeting the qualifications specified in  clause (a) above; (e)
  shares of money  market mutual or similar  funds having assets in excess of
  $100,000,000; (f)  payroll advances in the ordinary course of business; (g)
  other  advances and  loans to  officers and employees  of the  Company or
  any Subsidiary,  so long as  the aggregate principal amount of  such advances
  and loans  does not  exceed $500,000  at any  one time  outstanding; (h)
  Investments represented  by that portion  of the proceeds from  Asset Sales
  that  is not  required to be  Cash Proceeds by Section 4.07 of  this
  Indenture;  (i) Investments made  by the  Company in Guarantors  or in  its
  other  Wholly Owned Subsidiaries (or any Person  that will be a Wholly Owned
  Subsidiary as  a result of such Investment)  or by a Subsidiary in the
  Company or in one or more Guarantors  or other Wholly Owned Subsidiaries (or
  any  Person that  will be a Wholly Owned Subsidiary  as a result of such
  Investment); (j) Investments in stock, obligations or  securities received
  in  settlement of  debts  owing to  the  Company or  any  Subsidiary  as  a
  result  of bankruptcy  or insolvency proceedings or upon the foreclosure,
  perfection or  enforcement of any Lien in favor of the Company or any
  Subsidiary, in each case as to  debt owing to the Company or any Subsidiary
  that arose in  the ordinary  course of  business of  the  Company  or any
  such Subsidiary;  (k) certificates  of deposit, bankers acceptances, time
  deposits, Eurocurrency deposits and similar  types of Investments routinely
  offered by  a commercial bank  organized in  the United  States with  final
  maturities of  one year  or less and  in an aggregate amount not to exceed
  $5,000,000 at  any one time outstanding with a  commercial bank organized in
  the United States having capital and surplus





                                       14
<PAGE>   22

  in  excess  of  $75,000,000;  (l)  Venezuelan   and  other  foreign  bank
  deposits  and  cash  equivalents  in jurisdictions  where the Company or its
  Subsidiaries are then actively  conducting business; (m) Investments in Grey
  Wolf  pursuant to the Grey Wolf Acquisition  agreement; (n) Interest Swap
  Obligations with respect to any floating rate Indebtedness that  is permitted
  by the  terms of this Indenture  to be outstanding; (o) Currency Hedge
  Obligations,  provided that such  Currency Hedge Obligations constitute
  Permitted Indebtedness permitted by  clause (d) of the definition thereof;
  (p) Investments in prepaid  expenses, negotiable instruments held for
  collection and  lease, utility,  worker's  compensation and  performance  and
  other  similar  deposits in  the ordinary course of  business; and (q)
  Investments pursuant to  any agreement or obligation  of the Company  or any
  Subsidiary in effect on the Issue Date and listed on a Schedule 1.01(b)
  attached hereto.

            "Permitted Liens" means (a) Liens in  existence on the Issue Date;
  (b) Liens created for the  benefit of the  Securities and/or the Guarantees;
  (c)  Liens on Property of a Person existing at  the time such Person is
  merged or  consolidated with or into the  Company or a Subsidiary  (and not
  incurred as a result of,  or in anticipation of, such transaction), provided
  that  any such Lien relates solely to such Property; (d) Liens  on Property
  existing at the time of the  acquisition thereof (and not incurred as a
  result of, or in anticipation of such  transaction), provided  that any such
  Lien relates  solely to such  Property; (e)  Liens incurred  or pledges and
  deposits made in connection  with worker's compensation, unemployment
  insurance  and other social security  benefits, statutory obligations, bid,
  surety  or appeal bonds, performance bonds or other obligations of a  like
  nature incurred  in the  ordinary course  of business;  (f) Liens  imposed by
  law  or arising  by operation   of  law,   including  without   limitation,
  landlords',  mechanics',   carriers',  warehousemen's, materialmen's,
  suppliers'  and  vendors Liens  and  Liens for  master's  and  crew's  wages
  and  other  similar maritime Liens, and  incurred in the ordinary course of
  business for sums not delinquent or being contested in good faith, if such
  reserves  or other appropriate provisions, if any, as shall be required by
  GAAP shall have been  made  with respect  thereof;  (g)  zoning restrictions,
  easements,  licenses,  covenants,  reservations, restrictions  on the  use
  of real  property and  defects, irregularities  and deficiencies  in title
  to real property that do not, individually or in  the aggregate, materially
  affect the  ability of the Company or  any Subsidiary to  conduct  its
  business  presently  conducted;  (h)  Liens for  taxes  or  assessments  or
  other governmental  charges or levies not  yet due and payable, or the
  validity of which is  being contested by the Company  or  a  Subsidiary in
  good  faith  and  by  appropriate  proceedings upon  stay  of  execution or
  the enforcement  thereof and for  which adequate  reserves in accordance
  with GAAP or  other appropriate provision has been made;  (i) Liens to
  secure Indebtedness incurred for  the purpose of financing  all or a part  of
  the purchase price or construction  cost of Property acquired  or constructed
  after the  Issue Date, provided that (l) the principal amount  of
  Indebtedness secured by such Liens shall  not exceed 100% of the lesser of
  cost or Fair  Market  Value of  the  Property  so  acquired, upgraded  or
  constructed plus  transaction  costs related thereto, (2)  such Liens  shall
  not  encumber any other  assets or Property  of the  Company or any
  Subsidiary (other than the proceeds  thereof and accessions and upgrades
  thereto) and (3) such Liens shall  attach to such Property within  120 days
  of the date  of the completion of the construction or  acquisition of such
  Property; (j)  Liens  securing Capital  Lease  Obligations,  provided,
  further,  that  such Liens  secure Capital  Lease Obligations which, when
  combined with (l) the outstanding secured Indebtedness of the Company and its





                                       15
<PAGE>   23

  Subsidiaries (other than  Indebtedness secured by Liens  described under
  clauses  (b) and (i)  hereof) and (2) the aggregate  principal amount of all
  other Capital Lease  Obligations of the Company  and Subsidiaries, does not
  exceed  $5,000,000 at any one time outstanding; (k) Liens to secure any
  extension, renewal, refinancing or refunding  (or successive  extensions,
  renewals,  refinancings or  refundings), in  whole or  in part,  of any
  Indebtedness secured  by Liens referred to in the  foregoing clauses (a), (c)
  and (d), provided, further, that such Lien does not  extend to any other
  Property of the Company  or any Subsidiary and the principal amount  of the
  Indebtedness  secured by such Lien is not increased;  (l) any charter or
  lease; (m) leases or subleases of real property  to other  Persons; (n)
  Liens securing  Permitted Indebtedness  described in  clause (b) of  the
  definition thereof;  (o) judgment liens  not giving  rise to an  Event of
  Default so  long as  any appropriate legal proceedings which may  have been
  initiated for the review of  such judgment shall not have  been finally
  terminated or the period within which such proceeding  may be initiated shall
  not have expired;  (p) rights of off-set of banks and other Persons; and (q)
  liens in favor of the Company.

            "Permitted Refinancing  Indebtedness" means Indebtedness of the
  Company,  incurred in exchange for, or the  net  proceeds  of  which  are
  used  to  renew,  extend,  refinance,  refund  or  repurchase,  outstanding
  Indebtedness of the Company  which outstanding  Indebtedness was incurred in
  accordance with, or is  otherwise permitted by, the terms  of clauses (a) and
  (e)  of the definition of "Permitted Indebtedness," provided that (i) if the
  Indebtedness being renewed, extended, refinanced,  refunded or repurchased is
  pari passu with  or subordinated in  right of  payment (without  regard to
  its being  secured) to  the Securities,  then such  new Indebtedness is pari
  passu with or subordinated in right of payment  (without regard to its being
  secured)  to, as the  case may be, the Securities  at least to the same
  extent as the  Indebtedness being renewed, extended, refinanced, refunded  or
  repurchased,  (ii) such new  Indebtedness  is scheduled  to mature  later
  than  the Indebtedness being renewed, extended, refinanced,  refunded or
  repurchased, (iii) such new Indebtedness has  an Average  Life  at the  time
  such Indebtedness  is  incurred that  is  greater  than  the Average  Life
  of the Indebtedness being renewed, extended, refinanced,  refunded or
  repurchased, and (iv) such new Indebtedness  is in aggregate principal amount
  (or, if such  Indebtedness is issued at a  price less than the principal
  amount thereof, the aggregate amount of gross proceeds therefrom  is) not in
  excess of the  aggregate principal amount then outstanding of the
  Indebtedness  being renewed, extended, refinanced, refunded  or repurchased
  (or  if the Indebtedness  being renewed, extended, refinanced, refunded  or
  repurchased was issued at a price less than the principal amount  thereof,
  then  not in excess  of the  amount of liability  in respect  thereof
  determined  in accordance with  GAAP) plus  the amount  of reasonable  fees,
  expenses  and premium,  if any,  incurred by  the Company or such Subsidiary
  in connection therewith.

            "Permitted Subsidiary Refinancing Indebtedness" means
  Indebtedness of  any Subsidiary,  incurred in exchange  for, or  the net
  proceeds of  which  are  used to  renew, extend,  refinance, refund  or
  repurchase, outstanding  Indebtedness of such Subsidiary which  outstanding
  Indebtedness was incurred  in accordance with, or is otherwise permitted by,
  the terms of  clauses (e) and (f) of the definition  of  "Permitted
  Indebtedness," provided that  (i) if the Indebtedness  being renewed,
  extended, refinanced,  refunded or repurchased  is pari passu with or
  subordinated in right of payment (without regard to its being secured) to the
  Guarantee





                                       16
<PAGE>   24

  of such  Subsidiary,  then such  new Indebtedness  is  pari  passu with  or
  subordinated  in  right of  payment (without regard to its  being secured)
  to, as  the case may be,  the Guarantee of such  Subsidiary at least  to the
  same  extent as the  Indebtedness being renewed, extended,  refinanced
  refunded or  repurchased, (ii) such new Indebtedness  is scheduled  to mature
  later than  the Indebtedness  being renewed,  extended, refinanced, refunded
  or repurchased,  (iii) such new  Indebtedness has  an Average  Life at the
  time such Indebtedness  is incurred  that is  greater than  the Average  Life
  of  the Indebtedness  being  renewed,  extended, refinanced, refunded  or
  repurchased, and  (iv) such  new Indebtedness  is in  an aggregate  principal
  amount (or,  if such Indebtedness is  issued at  a price  less than  the
  principal  amount thereof,  the aggregate  amount of  gross proceeds
  therefrom is)  not in excess of  the aggregate principal amount then
  outstanding of  the Indebtedness being renewed, extended,  refinanced,
  refunded or repurchased (or  if the Indebtedness being renewed, extended,
  refinanced, refunded or repurchased  was issued at a price less  than the
  principal amount thereof, then not in excess of the  amount of liability in
  respect  thereof determined in accordance with  GAAP) plus the amount of
  reasonable fees, expenses  and premium,  if any,  incurred by  the Company
  or such  Subsidiary in  connection therewith.

            "Person" means   any   individual,  corporation,   partnership,
  joint  venture,   incorporated   or unincorporated  association, joint stock
  company, trust,  unincorporated organization  or government  or other agency
  or political subdivision thereof or other entity of any kind.

            "Preferred Stock" of  any Person means Capital Stock  of such Person
  of any class  or classes (however designated) that ranks prior, as  to the
  payment of dividends and/or as to the distribution of assets upon any
  voluntary or involuntary liquidation, dissolution or  winding up of such
  Person, to shares of Capital Stock  of at least one other class of such
  Person.

            "Proceeding" has the meaning specified in Section 12.11(a).

            "Process Agent" has the meaning specified in Section 12.11(a).

            "Property" means, with respect to any Person,  any interest of such
  Person in any kind of  property or asset, whether real,  personal or  mixed,
  or  tangible or  intangible, excluding  Capital Stock  in any  other Person.

            "Qualified Equity Offering"  means an offering of  Capital Stock
  (other than Redeemable  Stock) of the Company for  cash,  whether  pursuant
  to an  effective  registration statement  under  the Securities  Act  or
  pursuant to an available exemption from registration under the Securities
  Act.

            "Record Date" means, for  the interest payable  on any Interest
  Payment Date, the  date specified in Section 2.12.

            "Redeemable Stock"  means, with  respect to  any Person,  any
  equity  security that  by its  terms or otherwise is required to  be
  redeemed, or is redeemable at the option of the holder thereof,  at any time
  prior to  one year following  the Stated  Maturity of  the Securities  or is
  exchangeable into Indebtedness  of such Person or any of its subsidiaries.





                                       17
<PAGE>   25

            "Redemption Date" means, when  used with  respect to  any Security
  or part  thereof to  be redeemed hereunder, the date fixed for redemption of
  such Securities pursuant  to the terms of the Securities and  this Indenture.

            "Redemption Price" means,  when used  with respect  to any  Security
  or  part thereof  to be  redeemed hereunder, the price  fixed for redemption
  of such  Security pursuant to the terms  of the Securities and this
  Indenture, plus accrued and unpaid interest thereon, if any to the Redemption
  Date.

            "Registrar" has the meaning specified in Section 2.03.

            "Related Business" means the  land  drilling  business and
  activities  incidental  thereto and  any business related or ancillary
  thereto.

            "Replacement Asset" means a Property or  asset that, as determined
  by the Board of  Directors of the Company as evidenced by a Board Resolution,
  is used or is useful in a Related Business.

            "Responsible  Officer" means,  when used  with respect  to the
  Trustee, any  officer assigned to the Corporate Trust Office, including  any
  vice president,  assistant vice president,  assistant secretary or  any other
  officer of the Trustee to whom any corporate  trust matter is referred
  because  of his or her knowledge of and familiarity with the particular
  subject.

            "Restricted Investment" means any Investment in  any Person,
  including an  Unrestricted Subsidiary or the designation of a Subsidiary as
  an Unrestricted Subsidiary, other than a Permitted Investment.

            "Restricted Payment" means to (i) declare or pay any dividend on, or
  make any distribution in  respect of,  or purchase,  redeem, retire  or
  otherwise acquire for  value, any  Capital Stock  of the  Company or any
  Affiliate  of the  Company, or  warrants, rights  or  options  to acquire
  such Capital  Stock, other  than (x) dividends payable solely in the Capital
  Stock (other than Redeemable Stock) of the Company or such  Affiliate, as the
  case  may be, or  in warrants,  rights or  options to acquire  such Capital
  Stock  and (y) dividends  or distributions by a Subsidiary to the Company or
  to a Wholly Owned Subsidiary; (ii)  make any principal payment on, or
  redeem, repurchase, defease  (including an in-substance  or legal defeasance)
  or otherwise acquire  or retire for value  (including pursuant  to mandatory
  repurchase covenants), prior  to any  scheduled principal payment, scheduled
  sinking  fund  payment or  other  stated  maturity,  Indebtedness  of the
  Company  or  any Subsidiary which is subordinated (whether  pursuant to its
  terms or by operation  of law) in right of  payment to the Securities or the
  Guarantees, as applicable; or (iii) make any Restricted Investment in any
  Person.

            "Retired Indebtedness or Stock" has the meaning specified in 
  Section 4.04.

            "S&P" means Standard & Poor's Ratings Group, a division of
  McGraw-Hill, Inc., or if Standard & Poor 's Ratings Group shall cease rating
  the specified debt securities and such ratings ceases with respect thereto
  shall have been transferred to a successor Person, such





                                       18
<PAGE>   26

  successor  Person, provided  that  if  Standard &  Poor's  Ratings  Group
  ceases rating  the  specified  debt securities  and its ratings  business
  with respect thereto  shall not have  been transferred  to any successor
  Person or  such successor Person  is Moody's,  then "S&P" shall mean any
  other  nationally recognized  rating agency selected in good faith by the
  Board of Directors of the Company in a Board Resolution.

            "Sale  and  Lease-Back Transaction" means,  with  respect  to  any
  Person, any  direct  or  indirect arrangement pursuant to  which Property is
  sold or  transferred by such Person or a subsidiary  of such Person and  is
  thereafter  leased  back from  the  purchaser  or  transferee thereof  by
  such Person  or  one of  its subsidiaries.

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

            "Security Register" has the meaning specified in Section 2.03.

            "Securities Act" means the Securities Act of 1933, as amended.

            "Senior Debt" means any Indebtedness incurred  by the Company,
  unless the instrument under  which such Indebtedness is incurred  expressly
  provides that it is  subordinated in right of  payment to the  Securities,
  provided that Senior Debt will not include (a) any liability for federal,
  state, local or other taxes owed or owing, (b) any  Indebtedness owing  to any
  Subsidiaries of the Company,  (c) any  trade payables  or (d)  any
  Indebtedness that is incurred in violation of this Indenture.

            "Significant Subsidiary" means  a Subsidiary that is a "significant
  subsidiary" as defined in Rule 1-02(w) of Regulation S-X under the
  Securities Act and the Exchange Act.

            "Special Record Date" means a date  fixed by the Trustee pursuant
  to Section 2.12 for the payment  of Defaulted Interest.

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

            "Subordinated Indebtedness" means  any  Indebtedness  of  the
  Company  or  any  Guarantor  that  is subordinated in right of payment to 
  the Securities or the Guarantees, as the case may be, and does not mature
  prior to one year following the Stated Maturity of the Securities.

            "subsidiary" means, with respect to any Person, (i)  any corporation
  more than 50% of the  outstanding Voting Stock  of which is owned, directly
  or indirectly,  by such Person, or by one or more other subsidiaries or  such
  Person,  or by  such Person  and one  or more  other subsidiaries  of such
  Person, (ii)  any general partnership, joint  venture  or similar  entity,
  more than  50%  of  the  outstanding partnership  or  similar interest of
  which is owned, directly or  indirectly, by such Person, or  by one or more
  other  subsidiaries of such Person, or by such





                                       19
<PAGE>   27

  Person and one  or more  other subsidiaries of  such Person  and (iii)  any
  limited  partnership of which  such Person or any subsidiary of such Person
  is a general partner.

            "Subsidiary"  means a  subsidiary of the Company  other than an
  Unrestricted Subsidiary;  provided that Indrillers shall not be considered a
  Subsidiary for purposes of this Indenture.

            "Surviving Entity"  has the meaning specified in Section 5.01.

            "Transaction Date" has the meaning specified within the definition
  of  "Consolidated Interest Coverage Ratio."

            "Trust Indenture  Act" or  "TIA"   means the Trust Indenture Act of
  1939, as amended, as in force at the date as of which this Indenture was
  executed.

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

            "U.S. Government  Obligations" means securities that are  (i) direct
  obligations of  the United States of America  for the  payment of  which its
  full faith  and credit is pledged;  (ii) obligations  of a  Person controlled
  or supervised  by and acting as  an agency or instrumentality  of the United
  States  of America the payment  of which is unconditionally guaranteed as a
  full faith and credit obligation by the United States of America, which, in
  either  case under clauses (i) or (ii) above,  are not callable or redeemable
  at the option of  the issuers thereof;  or (iii)  depository receipts  issued
  by  a bank or  trust company as  custodian with respect to any such U.S.
  Government Obligations or a specific payment  of interest on or principal of
  any such U.S. Government  Obligation held  by such custodian  for the
  account of the  holder of  a Depository  receipt, provided that  (except as
  required  by law) such  custodian is not authorized to  make any deduction
  from the amount  payable to the holder of such Depository receipt from any
  amount received by the custodian in respect of the U.S. Government Obligation
  evidenced by such Depository receipt.

            "Uniform Commercial Code" means the New York Uniform Commercial Code
  as in effect from time to time.

            "Unrestricted Subsidiary" means any subsidiary  of the Company that
  the Company has classified as  an Unrestricted Subsidiary  and that  has not
  been  reclassified as  a Subsidiary pursuant  to the  terms of  this
  Indenture.

            "Voting Stock" means with  respect to any Person, securities of any
  class  or classes of Capital Stock in  such Person entitling the holder
  thereof (whether at  all times or at the times that  such class of Capital
  Stock has  voting power by reason of the happening of  any contingency) to
  vote in the  election of members of the board of directors or comparable body
  of such Person.





                                       20
<PAGE>   28

            "Wholly Owned Subsidiary" means any Subsidiary to the extent (i)
  all of the Capital  Stock or other ownership interests in such  Subsidiary,
  other than  any directors' qualifying shares mandated by  applicable law,
  is  owned  directly or  indirectly by  the Company  or (ii)  such  Subsidiary
  is  organized in  a foreign jurisdiction and  is required  by the  applicable
  laws  and  regulations of  such foreign jurisdiction to  be partially owned
  by  the government of such foreign  jurisdiction or individual or  corporate
  citizens of  such foreign jurisdiction in  order for such Subsidiary to
  transact business in such  foreign jurisdiction, provided that  the Company,
  directly or  indirectly, owns  the remaining Capital  Stock or  ownership
  interest  in such Subsidiary and, by contract or otherwise,  controls the
  management and business  of such Subsidiary and derives the economic
  benefits of ownership of such Subsidiary  to substantially the same  extent
  as if such Subsidiary were a wholly owned Subsidiary.

                   SECTION  1.02.  Incorporation by Reference of Trust
  Indenture Act.   This Indenture is subject to  the mandatory  provisions of
  the TIA  which are  incorporated by  reference in  and made  a part  of this
  Indenture.  The following TIA terms have the following meanings:

                    "indenture securities" means the Securities.

                    "indenture security holder" means a Holder.

                    "indenture to be qualified" means this Indenture.

                    "indenture trustee" or "institutional trustee" means the 
  Trustee.

                    "obligor" on the indenture securities means the  Company
  and  any other  obligor on  the indenture securities.

                   All other TIA terms  used in  this Indenture  that are
  defined by  the TIA,  defined by  TIA reference  to another  statute  or
  defined by  Commission rule  have  the meanings  assigned to  them  by such
  definitions.

                   SECTION 1.03.  Rules of Construction.  Unless the context
  otherwise requires:

                   (1)      a term has the meaning assigned to it;

                   (2)      an  accounting  term  not  otherwise  defined  has
           the  meaning  assigned  to it  in accordance with GAAP;

                   (3)      "or" is not exclusive;

                   (4)      "including" means including without limitation;

                   (5)      words  in the  singular  include the  plural  and
           words  in  the  plural include  the singular;





                                       21
<PAGE>   29

                   (6)      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;

                   (7)      provisions apply to successive events and
           transactions;

                   (8)      references  to agreements  and other  instruments
           include subsequent  amendments and waivers but only to the extent
           not prohibited by this Indenture; and

                   (9)      unless otherwise expressly  provided herein,  the
           principal amount  of any  Preferred Stock shall be  the greater of
           (i) the  maximum liquidation value of such Preferred  Stock or (ii)
           the maximum mandatory redemption or mandatory repurchase price with
           respect to such Preferred Stock.

                                   ARTICLE 2

                                 The Securities

                   SECTION 2.01.  Form and Dating.

           (a)     The  Securities,  with the  notation  of the  Guarantees
  endorsed  thereon and  the Trustee's certificate of  authentication thereon,
  shall be  substantially in  the forms of Exhibit A  and Exhibit B, each of
  which is hereby incorporated  in and expressly made a part of this Indenture.
  The Securities  may have such notations,  legends or endorsements  stamped,
  printed,  lithographed or engraved thereon  as required  by law, stock
  exchange  rule, agreements to  which the Company  is subject, if  any, or
  usage  (provided that any such notation, legend or  endorsement is in a  form
  acceptable to the  Company).  Each Security  shall be dated the date of its
  authentication.  The terms  of the Securities set forth in Exhibit A and
  Exhibit B are part of  the terms of this Indenture.

           (b)     The Securities shall  be issued initially in  the form of
  one or more permanent  global notes in definitive, fully  registered form,
  without coupons,  substantially in  the form  set forth  in Exhibit  A hereto
  (each a "Global Security"), each  such Security containing the legend
  relating to Global Securities set forth on the  face of the Security as set
  forth  on Exhibit A hereto.  Upon issuance, each such Global Security shall
  be duly executed by the  Company, with the endorsement of Guarantees therein
  executed by the  Guarantors, and authenticated  by the Trustee as hereinafter
  provided  and deposited with the  Trustee as custodian for the Depositary.
  Any Certificated  Security that may be  issued pursuant to Section 2.06(a)
  shall be issued  in the form of a note in definitive,  fully registered form,
  without coupons, substantially in  the form set forth in Exhibit B hereto
  (each a "Certificated  Security").  Upon  issuance, any such  Certificated
  Security shall  be duly executed  by the Company,  with the  endorsement of
  Guarantees thereon  executed by  the Guarantors,  and authenticated by the
  Trustee as hereinafter provided.





                                       22
<PAGE>   30

                   SECTION  2.02.   Execution and  Authentication.   The
  aggregate  principal  amount at  Stated Maturity of  Securities  outstanding
  at  any  time  shall  not  exceed  $175,000,000  except  as  provided  in
  Section 2.08  hereof.  Two  executive officers  of the  Company shall  sign
  the  Securities for the  Company by manual or facsimile  signature.  The
  Company's  seal shall be  impressed, affixed, imprinted  or reproduced on the
  Securities  and  may be  in facsimile  form.   The  Securities shall  have
  the notation relating  to  the Guarantees  executed  by each  Guarantor  in
  the manner  provided for  in  Section 11.03 hereof  and endorsed thereon.

                   If an executive officer of the Company whose  signature is
  on a Security no  longer holds that office at the time the Trustee
  authenticates the Security, the Security shall be valid nevertheless.

                   Notwithstanding any other provision hereof,  the Trustee
  shall authenticate  and deliver Notes only upon receipt by  the Trustee of an
  Officers' Certificate complying with  Sections 12.01 and 12.02 hereof an
  Opinion of Counsel with respect  to satisfaction of all conditions precedent
  contained in this Indenture  to authentication and delivery of such
  Securities.

                   Upon compliance  by the Company  with the provisions  of the
  previous  paragraph, the Trustee shall, upon receipt  of an Order requesting
  such action, authenticate Securities for original issuance  in an aggregate
  principal  amount at Stated Maturity not to  exceed $175,000,000 in the  form
  of the Global Security.  Such Order shall specify in the amount of Securities
  to be authenticated and  the date on which the Securities are  to be
  authenticated and  shall further provide  instructions concerning
  registration, amounts  for each Holder and delivery.

                   Upon  the occurrence of any  event specified in Section
  2.06(a) hereof  and compliance by the Company with the provisions  of the
  paragraph preceding the  immediately preceding paragraph, the Company shall
  execute and the Trustee shall authenticate  and deliver to each beneficial
  owner identified by the Depositary, in exchange  for such beneficial owner s
  interest in the Global Security, Certificated Securities representing
  Securities theretofore represented by the Global Security.

                   A  Security shall not  be valid until  an authorized
  signatory  of the  Trustee manually signs the certificate  of authentication
  on the Security.   The signature shall be  conclusive evidence, and the only
  evidence, that the Security has been authenticated under this Indenture.

                   The  Trustee may  appoint  an  authenticating agent
  reasonably acceptable  to the  Company to authenticate the Securities.
  Unless limited by the  terms of such appointment,  an authenticating agent
  may authenticate Securities whenever  the Trustee may do  so.  Each reference
  in this Indenture  to authentication by the Trustee includes  authentication
  by such agent.  An  authenticating agent has  the same rights  as any
  Registrar, Paying Agent or agent for service of notices and demands.

                   SECTION 2.03.  Registrar  and Paying Agent.   The Company
  shall maintain an office or agency where Securities may be presented for
  registration of transfer or for exchange





                                       23
<PAGE>   31

  (the "Registrar") and an office or agency where  Securities may be presented
  for payment  (the "Paying Agent").  The Registrar  shall keep a  register of
  the  Securities (the "Security Register") and of  their transfer  and
  exchange.   The Company may have one or  more co-registrars and one or more
  additional paying agents; provided, however, that so  long as Texas Commerce
  Bank National Association shall be  the Trustee, without the  consent of  the
  Trustee, there shall be no more  than one Registrar or  Paying Agent.  The
  term "Paying Agent" includes any additional paying agent.

                   The  Company shall  enter into  an appropriate  agency
  agreement  with any  Registrar,  Paying Agent or co-registrar not  a party
  to this Indenture,  which shall  incorporate the  terms of the  TIA.   The
  agreement shall  implement the  provisions of this  Indenture that  relate to
  such  agent.   The Company  shall notify the Trustee of the  name and address
  of any such  agent.  If the Company fails to maintain  a Registrar or Paying
  Agent, the Trustee  shall act as  such and shall  be entitled to  appropriate
  compensation  therefor pursuant to Section 7.07.

                   The Company initially appoints the  Trustee as Registrar and
  Paying  Agent in connection with the Securities.  The  Company may, upon
  written notice  to the Trustee, change the  designation of the Trustee as
  Registrar or  Paying Agent and appoint  another Person to act  as Registrar
  for  purposes of  this Indenture except that,  for the purposes  of Article
  3,  Article 8, Article 9  and Sections 4.07  and 4.09,  none of  the Company,
  any Guarantor, any  Restricted Subsidiary or any  Affiliate of the  Company
  or of any  Guarantor shall act  as Paying Agent.   If  any Person  other than
  the  Trustee acts as  Registrar, the Trustee  shall have the right at  any
  time,  upon reasonable  notice, to inspect  or examine  the Security
  Register and to make  such inquiries of the  Registrar as the Trustee  shall
  in its discretion deem  necessary or desirable in  performing its duties
  hereunder.

                   Upon surrender for  registration of transfer of  any
  Security at  an office or  agency of the Company designated  for such
  purpose,  the Company  shall  execute,  and the  Trustee shall  authenticate
  and deliver, in  the  name  of the  designated  transferee  or  transferees,
  one  or  more  new Securities  of  any authorized denomination  or
  denominations,  of like tenor and  aggregate principal amount, all  as
  requested by the transferor.

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

                   SECTION  2.04.   Paying  Agent  To  Hold  Money in  Trust.
  Prior  to  each due  date  of the principal, premium, if any, and  interest
  on any Security, the  Company shall deposit with the  Paying Agent a sum
  sufficient to pay such principal, premium, if any, and  interest when so
  becoming due.  The  Company shall require  each Paying Agent (other  than the
  Trustee) to agree in  writing that the Paying  Agent shall hold in trust for
  the benefit  of Holders  or the  Trustee all  money held  by the  Paying
  Agent  for  the payment  of principal, premium,  if any, of or interest  on
  the Securities and shall notify the Trustee  of any default by the Company in
  making any such





                                       24
<PAGE>   32

  payment.   If the Company or  a Subsidiary acts  as Paying Agent, it  shall
  segregate the money held  by it as Paying Agent and hold  it as a separate
  trust fund.  The Company at any time may require  a Paying Agent to pay all
  money  held by  it to  the Trustee  and to  account for  any funds  disbursed
  by the Paying  Agent.   Upon complying with  this Section, the Paying Agent
  shall have  no further liability for the money delivered to the Trustee.

                   SECTION 2.05  Global Securities.

           (a)     So long as  a Global Security  is registered  in the  name
  of the  Depositary or its  nominee, beneficial owners,  members of,  or
  participants in, the  Depositary ("Agent  Members") shall  have no  rights
  under this Indenture with respect to the Global Note held on their  behalf by
  the Depositary or the Trustee  as its  custodian, and the Depositary may be
  treated by the Company, the Guarantors, the Trustee and any agent of the
  Company or the Trustee as the absolute  owner of such Global Security  for
  all purposes.  Notwithstanding the foregoing, nothing herein  shall (i)
  prevent the Company, the Guarantors,  the Trustee or any agent of the Company
  or the Trustee  from  giving  effect to  any  written  certification, proxy
  or other  authorization furnished by the Depositary or (ii) impair,  as
  between the Depositary and its Agent Members, the operation  of customary
  practices governing the exercise of the rights of a Holder of Securities.

           (b)     The Holder  of  a Global  Security may  grant proxies  and
  otherwise authorize  any  Person, including Agent Members and Persons  that
  may hold interests in such  Global Securities through Agent Members, to take
  any action which a Holder of Notes is entitled to take under this Indenture
  or the Notes.

           (c)     Whenever, as a  result of an optional  redemption of
  Securities  by the Company,  a Change of Control Offer, an Asset Sale Offer,
  or an exchange pursuant to the second sentence of Section 2.06(a)  hereof, a
  Global Security is redeemed, repurchased or exchanged  in part, such Global
  Security shall  be surrendered by the Holder thereof to the Trustee who
  shall cause an adjustment to  be made to a Schedule A  attached thereto so
  that the principal amount  at Stated Maturity of such Global Security will
  be equal to the portion of such Global  Security not redeemed,  repurchased
  or exchanged  and shall thereafter  return such  Global Security to such
  Holder, provided  that each such  Global Security shall be in  a principal
  amount  at Stated Maturity  of $1,000 or an integral multiple thereof.

           SECTION 2.06  Transfer and Exchange.

           (a)     Any  Global  Security shall  be  exchanged  by  the Company
  for  one  or  more  Certificated Securities, if (x) the Depositary (i) has
  notified the Company  that it is unwilling or unable  to continue as, or
  ceases to be,  a "Clearing Agency" registered under Section 17A of the
  Exchange Act and  (ii) a successor to the  Depositary registered as  a
  "Clearing Agency" under Section 17A  of the  Exchange Act  is not  able to be
  appointed by the  Company within 90 days or (y) the Depositary is at any time
  unwilling or unable to continue as Depositary and  a successor to the
  Depositary is not  able to be appointed  by the Company within  90 days.  If
  an Event of Default  occurs and is  continuing, the Company  shall, at the
  request of  the Holder thereof, exchange all or part of any Global Security,
  for one or more Certificated Securities, as the case





                                       25
<PAGE>   33

  may be; provided  that the principal  amount at  Stated Maturity  of each
  such  Certificated Security shall  be $1,000 or an integral multiple thereof.
  Whenever a Global Security  is exchanged as a whole for one or  more
  Certificated  Securities, it  shall be  surrendered by  the Holder  thereof
  to  the Trustee  for  cancellation.  Whenever  a Global  Security  is
  exchanged in  part  for one  or  more  Certificated Securities  it  shall  be
  surrendered  by the Holder  thereof to  the Trustee  and the  Trustee shall
  make the appropriate  notations to Schedule A thereof pursuant to Section
  2.05(c)  hereof.  All Certificated Securities issued in exchange for  a
  Global  Security or any portion  thereof shall be  registered in  such names,
  and delivered,  as the Depositary shall instruct the Trustee.

           (b)     A Holder  may transfer a Security  only upon the surrender
  of such Security for  registration of  transfer.  No such transfer  shall be
  effected until, and the transferee shall  succeed to the rights of a Holder
  only  upon, final  acceptance  and  registration of  the  transfer  in  the
  Security  Register by  the Registrar.  When  Securities are presented to the
  Registrar with a request to register  the transfer of, or to exchange, such
  Securities,  the Registrar shall register the  transfer or make such
  exchange as requested  if its requirements for  such transactions and  any
  applicable  requirements hereunder are  satisfied.  To  permit registrations
  of transfers  and  exchanges, the  Company shall  execute and  the  Trustee
  shall  authenticate Certificated Securities at the Registrar's request.

           (c)     The Company shall not  be required to make  and the
  Registrar need  not register transfers or exchanges  of  (a) Certificated
  Securities  selected  for  redemption  (except, in  the  case  of
  Certificated Securities to  be redeemed in part, the portion thereof not to
  be  redeemed), or (b) any Certificated Security for a  period of 15  days
  before  a selection  of Certificated Securities  to be redeemed  or the
  mailing  of a notice  of a  Change of  Control Offer  pursuant  to Section
  4.09  hereof or  an Asset  Sale Offer  pursuant to Section 4.07 hereof and
  ending on the close of business on the day of such mailing.

           (d)     No service charge  shall be made for any  registration of
  transfer  or exchange of Securities, but the Company may require  payment of
  a sum  sufficient to cover any  tax or other governmental  charge that may
  be imposed  in connection  with any  registration of  transfer of  Securities
  (other  than in  respect  of exchanges or transfers pursuant to Sections
  2.10, 3.06, 407, 4.09 and 10.06).

           (e)     All Securities  issued upon any  registration of transfer,
  exchange or substitution  pursuant to the terms of  this Indenture will
  evidence  the same debt and  will be entitled  to the same benefits  under
  this Indenture as the Securities surrendered for such registration of
  transfer, exchange or substitution.

           (f)     Any Holder of a  Global Security  shall, by acceptance  of
  such  Global Security, agree  that transfers of  beneficial interests in such
  Global Security may  be effected only through  a book entry  system
  maintained by the Holder of such  Global Security (or its agent), and that
  ownership of a beneficial interest in the Securities  represented hereby
  shall be required to  be reflected in book  entry form.  Transfers  of a
  Global Security shall be  limited to transfers in  whole and not  in part,
  to the Depositary, its  successors, and their respective nominees.  Interests
  of





                                       26
<PAGE>   34
  beneficial owners in a  Global Security may be transferred in accordance with
  the rules  and procedures of the Depositary (or its successors).

                   SECTION  2.07.   Holder  Lists.   The  Trustee shall
  preserve  in as  current  a form  as  is reasonably  practicable the most
  recent  list available to it  of the names and addresses of  Holders.  If the
  Trustee  is not the  Registrar, the Company shall furnish  to the Trustee,
  in writing at  least five Business Days before  each Interest Payment Date
  and at such  other times as the  Trustee may request in writing, a list in
  such form and as of such date as the Trustee may reasonably require of the
  names and addresses of Holders.

                   SECTION 2.08.   Replacement  Securities.   If  a mutilated
  Security  is surrendered  to  the Registrar or  if the  Holder of  a Security
  claims that the  Security has been  lost, destroyed  or wrongfully taken, the
  Company shall issue and  the Trustee shall authenticate a replacement
  Security if the  requirements of Section  8-405  of the  Uniform Commercial
  Code  are  met and  the Holder  satisfies  any other  reasonable requirements
  of  the Trustee.   If  required by  the  Trustee  or the  Company, such
  Holder shall  furnish an indemnity  bond  sufficient in  the  judgment of
  the  Company  and the  Trustee  to protect  the  Company, the Guarantors,
  the Trustee, the Paying Agent, the  Registrar and any co-registrar from any
  loss which any of them may suffer  if a Security  is replaced.  In  case any
  such  mutilated, destroyed, lost  or stolen Security has become  or is about
  to  become due and  payable, the Company, in  its discretion may, instead  of
  issuing a new Security, pay such Security.

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

                   Every new  Security issued pursuant  to this Section 2.08 in
  lieu  of any destroyed,  lost or stolen Security shall  constitute an
  original additional contractual obligation of the Company,  whether or not
  the destroyed, lost or stolen Security shall  be at any time enforceable  by
  anyone, and shall be  entitled to all the  benefits of this Indenture equally
  and  proportionately with any and  all other Securities duly issued
  hereunder.

                   The provisions of this  Section 2.08 are exclusive and shall
  preclude (to the  extent lawful) all other rights  and remedies with  respect
  to  the replacement  or payment of  mutilated, destroyed, lost  or stolen
  Securities.

                   SECTION  2.09.    Outstanding  Securities.    Securities
  outstanding  at  any  time  are  all Securities authenticated  by  the
  Trustee  except  for  those  canceled  by it,  those  delivered  to  it  for
  cancellation  and those  described in  this Section  as  not outstanding.   A
  Security does  not  cease  to be outstanding because the Company or an
  Affiliate of the Company holds the Security.

                   If a  Security is replaced pursuant to Section 2.08,  it
  ceases to be  outstanding unless the Trustee and the Company receive proof
  satisfactory  to them that the replaced Security is held by a bona  fide
  purchaser, in which event the replacement Security shall cease to be





                                       27
<PAGE>   35

  outstanding, subject to the provisions  of Section 8-405 of the Uniform
  Commercial Code. A mutilated Security ceases to be outstanding upon surrender
  of such Security and replacement thereof pursuant to Section 2.08.

                   If the Paying Agent  (other than the Company, a Guarantor or
  an Affiliate of the  Company or a Guarantor) segregates and holds in trust,
  in accordance  with this Indenture, on a Redemption  Date or Maturity date
  money sufficient  to pay all principal, premium, if any,  interest and any
  other amounts  payable on that date with respect  to the Securities (or
  portions thereof) to  be redeemed or  maturing, as the case may  be, then on
  and after  that date such  Securities (or such  portions thereof)  shall
  cease to  be outstanding  and interest on them shall cease to accrue.

                   In  determining whether  the Holders  of  the required
  principal  amount of  Securities have concurred in  any  direction,  waiver
  or  consent  or any  amendment,  modification or  other change  to  this
  Indenture, Securities held or  beneficially owned by the  Company or
  Guarantor  or an Affiliate of  the Company or  a Guarantor of the Company or
  by agents  of any of the foregoing shall be disregarded, except that for the
  purposes  of determining whether the  Trustee shall be  protected in  relying
  on any such  direction, waiver or consent or  any  amendments,  modification
  or  other  change  to  this  Indenture,  only  Securities  which  a
  Responsible  Officer knows are so owned shall be  so disregarded.  Securities
  so owned which have been pledged in  good faith shall  not be disregarded  if
  the pledgee establishes to  the satisfaction of  the Trustee such pledgee s
  right so  to act with respect to the Securities and that the pledgee is  not
  the Company, a Guarantor or an Affiliate of the Company or of a Guarantor or
  any of their agents.

                   SECTION 2.10.   Temporary  Securities.   Until definitive
  Securities are ready  for delivery, the Company may prepare and  the Trustee
  shall authenticate temporary  Securities.  Temporary  Securities shall be
  substantially  in the form  of definitive  Securities but  may have
  variations that  the Company  considers appropriate for temporary Securities.
  Without unreasonable  delay, the Company shall prepare and  the Trustee shall
  authenticate definitive Securities and deliver them in exchange for temporary
  Securities.

                   SECTION 2.11.  Cancellation.   The Company at any time may
  deliver Securities to the Trustee for cancellation.  The Registrar and the
  Paying  Agent shall forward to the Trustee  any Securities surrendered to
  them for  registration of transfer,  exchange or payment.   The Trustee and
  no one  else shall cancel  and destroy (subject  to the  record retention
  requirements  of the  Exchange Act) all  Securities surrendered for
  registration of transfer, exchange,  payment or cancellation  and deliver a
  certificate of such  destruction to the  Company.   The  Company may  not
  issue  new Securities  to  replace Securities  it has  redeemed, paid  or
  delivered to the Trustee for cancellation.

           SECTION 2.12   Payment of  Interest:  Interest  Rights Preserved.
  Interest  on any Security  which is payable, and  is punctually paid or  duly
  provided for,  on any  Interest Payment Date,  shall be paid  to the Person
  in whose  name such  Security is  registered at  the close  of business  on
  the  Record Date  for such interest payment,  which shall be  the June  15 or
  December 15 (whether or  not a  Business Day)  immediately preceding such
  Interest Payment Date.





                                       28
<PAGE>   36

                   Any interest on any  Security which is payable,  but is not
  punctually  paid or duly provided for, on any Interest Payment Date  (herein
  called  "Defaulted Interest") shall forthwith cease to be payable  to the
  registered Holder  on the  relevant  Record Date,  and, except  as
  hereinafter provided,  such  Defaulted Interest and any  interest payable on
  such Defaulted Interest may be paid by the  Company, at its election, as
  provided in clause (a) or (b) below:

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

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

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

                   SECTION 2.13   Authorized Denominations.   The Securities
  shall be issuable  in denominations of $1,000 and any integral multiple
  thereof.

                   SECTION 2.14.  CUSIP Numbers.   The Company in issuing the
  Securities may use "CUSIP" numbers (if then generally in use) and, if so, the
  Trustee shall use "CUSIP"





                                       29
<PAGE>   37

  numbers in notices  of redemption as  a convenience  to Holders;  provided,
  however, 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 3

                                   Redemption

                   SECTION 3.01.   Notices to Trustee.   If the Company elects
  to redeem Securities  pursuant to Section 3.07  and paragraph 5  of the
  Securities, it  shall notify  the Trustee  in writing of  the Redemption
  Date,  the principal  amount of  Securities  to be  redeemed, the  Redemption
  Price and  the Section  of  this Indenture and the paragraph of the
  Securities pursuant to which the redemption will occur.

                   The Company shall give  each notice to the  Trustee provided
  for  in this Section at  least 60 days before  the Redemption  Date unless
  the Trustee  consents to  a  shorter period.   Such  notice shall  be
  accompanied by an  Officers  Certificate and an Opinion  of Counsel from the
  Company to the effect  that such redemption will comply with the conditions
  herein and in the Securities.

           SECTION 3.02.   Selection of  Securities To Be Redeemed.   If less
  than all the Securities  are to be redeemed at any time, the  Trustee shall
  select the Securities to  be redeemed on a pro rata basis, or  by any other
  method which  the Trustee  shall  determine to  be fair  and  appropriate and
  which complies  with  any securities exchange and other  applicable
  requirements, provided that the  Trustee may select for redemption in part
  only Securities in denominations larger  than $1,000.  In selecting
  Securities to be redeemed pursuant  to this Section 3.02, the Trustee  shall
  make such adjustments,  reallocations and eliminations as  it shall  deem
  proper so that  the principal amount at Stated Maturity of  each Security to
  be  redeemed shall be $1,000 or an integral multiple  thereof, by increasing,
  decreasing  or eliminating  any amount less than  $1,000 which would be
  allocable to  any Holder.   If  the Notes  to be  redeemed are  Certificated
  Securities,  the  Certificated Securities to be  redeemed shall be selected
  by the Trustee by prorating, as nearly as may  be, or by any other method
  which  the Trustee shall determine  to be fair  and appropriate and which
  complies with any  securities exchange and other  applicable requirements,
  the  principal amount of  Certificated Securities to  be redeemed among the
  Holders of  Certificated Securities  registered in  their  respective names.
  The  Trustee in  its discretion may determine the particular Securities (if
  there are more  than one) registered in the name  of any Holder which are to
  be redeemed, in  whole or in part.  Provisions of  this Indenture that apply
  to Securities called for redemption also  apply to portions of  Securities
  called for  redemption.  The Trustee  shall notify the Company promptly of
  the Securities or portions of Securities to be redeemed.





                                       30
<PAGE>   38

                   SECTION 3.03.   Notice of Redemption.   At least 30 days but
  not  more than 60 days  before a date for redemption of Securities, the
  Company shall mail a  notice of redemption by first-class mail to  each
  Holder of Securities to be redeemed.

                   The notice shall identify the Securities to be redeemed and
shall state:

                   (1)      the Redemption Date;

                   (2)      the Redemption Price;

                   (3)      the name and address of the Paying Agent;

                   (4)      that  Securities called  for redemption must  be
           surrendered  to the  Paying Agent to collect the redemption price;

                   (5)      if  any Global  Security is  being redeemed  in
           part, the  portion of  the principal amount of such Security to be
           redeemed and that, after the Redemption Date, the Global Security,
           with a notation on Schedule A  thereof adjusting the principal
           amount thereof to be equal to the unredeemed portion, will be
           returned to the Holder thereof;

                   (6)      if any Certificated Security is being redeemed in
           part, the portion of the  principal amount  of  such Security  to be
           redeemed and  that, after  the Redemption  Date, a  new Certificated
           Security  or Certificated  Securities  in principal  amount equal
           to the  unredeemed portion  will be issued;

                   (7)      if fewer than all  the outstanding Securities are
           to be  redeemed, the identification and principal amounts of the
           particular Securities to be redeemed;

                   (8)      that, unless  the Company defaults  in making such
           redemption payment or  the Paying Agent  is prohibited from  making
           such payment  pursuant to the  terms of this  Indenture, interest on
           Securities (or  portion thereof) called for  redemption ceases to
           accrue on and after  the redemption date;

                   (9)      that  no  representation is  made as  to  the
           correctness  or accuracy  of  the CUSIP number, if any, listed in
           such notice or printed on the Securities;

                   (10)     the paragraph  of the Securities and  the Section
           of the Indenture  pursuant to which the Securities are being called
           for redemption; and

                   (11)     any other  information necessary  to  enable
           Holders  to comply  with the  notice  of redemption.

                   At the  Company's request, the Trustee  shall give  the
  notice of redemption  in the Company's name and at the Company's expense.  In
  such event, the Company shall provide the





                                       31
<PAGE>   39

  Trustee with  the information required by this Section at least 45 days
  before  the redemption date unless the Trustee consents to a shorter period.

                   SECTION 3.04.    Effect  of  Notice of  Redemption.   Once
  notice  of redemption  is  mailed, Securities  called for redemption become
  due and payable  on the  Redemption Date and at  the Redemption Price stated
  in the  notice.  Upon surrender  to the Paying Agent, such Securities shall
  be paid at  the Redemption Price stated  in the notice, plus accrued and
  unpaid  interest to the Redemption Date.  Failure to give notice or any
  defect in the notice to any Holder shall not affect the validity of the
  notice to any other Holder.

                   SECTION  3.05.  Deposit of Redemption  Price.  Prior to the
  Redemption Date, the Company shall deposit with the  Paying Agent (or, if the
  Company  or a Subsidiary is  the Paying Agent, shall  segregate and hold  in
  trust) money sufficient to pay the Redemption Price of and  accrued and
  unpaid interest on all Securities to  be redeemed on that date other than
  Securities or portions of  Securities called for redemption which have been
  delivered by the Company to the Trustee for cancellation.

                   So long as  the Company  complies with the  preceding
  paragraph and the  other provisions  of this Article 3,  interest on the
  Securities  to be redeemed on  the applicable Redemption  Date shall  cease
  to accrue from and after such  date and such Securities or portions thereof
  shall be deemed not to be entitled to any  benefit under this Indenture
  except to receive  payment of  the Redemption Price on  the Redemption Date.
  If any Security  called  for redemption  shall  not be  so  paid upon
  surrender for redemption,  then,  from Redemption Date  until such principal
  is paid, interest  shall be  paid on the  unpaid principal  and, to  the
  extent permitted by law,  on any  accrued but unpaid  interest thereon,  in
  each  case at  the rate prescribed therefor by  this Indenture and such
  Securities.

                   SECTION  3.06    Securities  Redeemed  in  Part.    Upon
  surrender  and  cancellation  of  a Certificated Security that  is redeemed
  in part, the  Company shall issue and  the Trustee shall  authenticate and
  deliver to  the  surrendering Holder  (at the  Company's expense)  a new
  Certificated Security  equal in principal amount to the  unredeemed portion
  of  the Certificated Security  surrendered and canceled,  provided that  each
  such  Certificated Security  shall be  in a  principal amount  at Stated
  Maturity of  $1,000 or  an integral multiple thereof.

                   Upon surrender of a Global Security  that is redeemed in
  part, the Paying Agent shall forward such Global Security to  the Trustee
  who shall make  a notation on Schedule A thereof  to reduce the principal
  amount of such Global Security to an amount equal  to the unredeemed portion
  of such Global Note, as provided in Section 2.05 hereof.

                   SECTION 3.07  Optional Redemption.

                   (a)      Except as  set forth in subsection (b) of this
  Section 3.07, the Company  shall not have the option to redeem the
  Securities pursuant to  this Section 3.07 prior to July 1, 2002.  On or
  after such date, the Company shall have the option to redeem the
  Securities, in whole or in part  upon not less than 30 days' nor more than
  60 days' notice, at the Redemption





                                       32
<PAGE>   40

  Prices  (expressed as percentages of principal  amount at Stated Maturity),
  if redeemed during the twelve month period beginning July  1 of the  years
  indicated  below, in each case,  together with any interest  accrued and
  unpaid to the Redemption Date:

               Year                                                  Percentage
               ----                                                  ----------
               2002 . . . . . . . . . . . . . . . . . . . . . . . .   104.4375% 
               2003 . . . . . . . . . . . . . . . . . . . . . . . .   102.9580% 
               2004 . . . . . . . . . . . . . . . . . . . . . . . .   101.4792% 
               2005 and thereafter  . . . . . . . . . . . . . . . .   100.0000%

                   (b)      Notwithstanding  the foregoing,  at any  time
  during  the first  36 months  after the Issue Date,  the Company may, at its
  option, redeem up to a maximum of 30%  of the aggregate principal amount at
  Stated Maturity of the  Securities with the net cash proceeds of one or more
  Qualified  Equity Offerings at a  Redemption Price  equal  to 108.875%  of
  the  principal amount  thereof, plus  accrued and  unpaid interest thereon to
  the Redemption  Date; provided  that at  least $120,000,000  aggregate
  principal  amount at  Stated Maturity of the  Securities shall remain
  outstanding immediately after  the occurrence of any such  redemption; and
  provided, further, that  each such redemption shall occur within 90 days of
  the  closing of such Qualified Equity Offering.

                                   ARTICLE 4

                                   Covenants

                   SECTION 4.01.   Payment  of Securities.   The  Company shall
  promptly pay  the principal  of, premium, if any, on  and interest on the
  Securities on the dates  and in the manner provided in the  Securities and in
  this Indenture.   Principal, premium  and interest shall be considered  paid
  on the date  due if on  or before  10:00 a.m.,  Houston time, on  such date
  the  Trustee or a  Paying Agent, other  than the Company  or a Guarantor, or
  an Affiliate  of the  Company or  a Guarantor,  holds in  accordance with
  this Indenture  money sufficient to pay  all principal, premium and  interest
  then due and the Trustee  or the Paying Agent,  as the case may be,  is not
  prohibited from paying  such money to the  Holders on that date pursuant to
  the  terms of this Indenture.

                   The Company  shall pay  interest on overdue  principal at
  the  rate specified therefor  in the Securities plus 1%  per annum, and it
  shall pay interest on overdue  installments of interest (without  regard to
  any applicable grace period) at the same rate to the extent lawful.

                   SECTION  4.02.  Commission  Reports.   So long as  any
  Securities are  outstanding, whether or not the Company is subject to Section
  13(a) or 15(d) of the Exchange Act, or any successor  provision thereto, the
  Company shall  file with the Commission the  annual reports, quarterly
  reports  and other documents  which the Company would  have been required to
  file  with the Commission pursuant to  such Section 13(a) or 15(d) or any
  successor provision thereto if the





                                       33
<PAGE>   41

  Company were subject  thereto, such documents to  be filed with  the
  Commission  on or prior to  the respective dates (the "Required Filing Dates")
  by which the Company would  have been required to file them.   The Company
  shall also  (whether or  not it  is required to file  reports with  the
  Commission),  within 30  days of  each Required Filing Date, (i) transmit  by
  mail to all Holders of  Securities, as their names and addresses appear in the
  Security Register, without  cost to such Holders or Persons, and (ii) file
  with the  Trustee, copies of the annual reports,  quarterly reports and other
  documents (without exhibits) which the Company has  filed or would have filed
  with the  Commission pursuant to Section  13(a) or 15(d) of  the Exchange Act,
  any  successor provisions thereto or  this Section 4.02.  The Company shall
  not be required  to file any report, document or other information with the
  Commission if the Commission does not permit such filing.

                   SECTION 4.03.  Limitation on Indebtedness.  The  Company
  will not, and will not  permit any of its Subsidiaries to, directly or
  indirectly, incur any  Indebtedness (including Acquired Indebtedness)
  unless, after giving  pro forma  effect to  the incurrence  of such
  Indebtedness, the  Consolidated Interest  Coverage Ratio for the
  Determination Period would  be at least  2.0 to 1.0 if such  Indebtedness is
  incurred  prior to July  1, 1998  and at least 2.25  to 1.0  if such
  Indebtedness is  incurred thereafter.   Notwithstanding the foregoing,  the
  Company  or any  Subsidiary may  incur Permitted Indebtedness.   Any
  Indebtedness of  a Person existing at the time at which  such Person becomes
  a Subsidiary  (whether by merger, consolidation, acquisition or otherwise)
  shall be deemed incurred by such Subsidiary at the time at which it becomes a
  Subsidiary.

                   SECTION 4.04.  Limitation  on Subsidiary Indebtedness and
  Preferred  Stock . The Company will not  permit any  Subsidiary to, directly
  or indirectly, incur  any Indebtedness or issue  any Preferred Stock except:

           (i)  Indebtedness or Preferred Stock issued to  and held by the
  Company, a Guarantor or a Wholly Owned Subsidiary, so  long as  any transfer
  of such  Indebtedness or  Preferred Stock  to  a Person  other than  the
  Company,  Guarantor  or  a  Wholly Owned  Subsidiary  will  be  deemed  to
  constitute  an  incurrence of  such Indebtedness or Preferred Stock by the
  issuer thereof as of the date of such transfer;

           (ii)   Acquired Indebtedness or  Preferred Stock of  a Subsidiary
  issued and  outstanding prior to the date on  which such Subsidiary was
  acquired by  the Company (other than  Indebtedness or Preferred Stock issued
  in connection with or in anticipation of such acquisition);

           (iii)   Indebtedness or  Preferred Stock  outstanding on the  Issue
  Date  and listed  on Schedule 4.04 attached hereto;

           (iv)  Indebtedness described in clauses (b), (c),  (d), (e), (f),
   (g) and (h) under the definition of "Permitted Indebtedness";

           (v)  Permitted Subsidiary Refinancing Indebtedness of such
Subsidiary;





                                       34
<PAGE>   42

           (vi)  Indebtedness or  Preferred Stock issued in  exchange for, or
  the proceeds  of which are used  to refinance, repurchase  or redeem,
  Indebtedness or Preferred Stock described  in clauses (i) and  (iii) of this
  Section  (the  "Retired  Indebtedness or  Stock"), provided  that the
  Indebtedness or  the Preferred  Stock  so issued  has (A) a principal  amount
  or liquidation value,  as the case may  be, not in excess  of the principal
  amount  or liquidation value  of the Retired Indebtedness  or Stock plus
  related expenses  for redemption and issuance, (B) a  final redemption date
  later than the stated maturity or final redemption date (if any) of the
  Retired Indebtedness  or  Stock  and (C)  an Average  Life at  the time  of
  issuance of  such Indebtedness  or Preferred Stock that is greater than the
  Average Life of the Retired Indebtedness or Stock;

           (vii)    Indebtedness  of  a  Subsidiary  which  represents  the
  assumption  by  such  Subsidiary  of Indebtedness  of  another Subsidiary  in
  connection with  a  merger of  such  Subsidiaries,  provided  that no
  Subsidiary or any successor (by  way of merger) thereto existing on the
  Issue Date shall assume or  otherwise become responsible for any
  Indebtedness of an entity which  is not a Subsidiary on the Issue Date,
  except to the extent that a Subsidiary would be permitted to incur such
  Indebtedness under this Section; and


           (viii)  Non-Recourse Indebtedness incurred by a foreign Subsidiary
  not constituting a Guarantor.

                   SECTION 4.05.  Limitation on Restricted Payments.

                            (a)  The Company will not, and will  not permit any
  of its Subsidiaries to, make  any Restricted Payment, unless at the  time of
  and after giving effect to  the proposed Restricted Payment, (i) no Default
  shall  have occurred and  be continuing (or would  result therefrom), (ii)
  the Company  could incur at least $1.00  of additional  Indebtedness under
  the tests described  in the first  sentence of Section  4.03 of this
  Indenture and  (iii) the aggregate amount of  all Restricted Payments
  declared or made  on or after  the Issue  Date by the Company or any
  Subsidiary shall  not exceed the sum of (A) 50% (or if such Consolidated Net
  Income shall  be a  deficit, minus  100% of  such deficit)  of the  aggregate
  Consolidated  Net Income  accrued during the period beginning on the  first
  day of the fiscal  quarter in which the Issue Date falls and  ending on  the
  last  day of  the fiscal  quarter  ending immediately  prior to  the date  of
  such  proposed Restricted Payment, minus 100% of the  amount of any
  writedowns, write-offs and  other negative extraordinary charges not
  otherwise reflected in Consolidated Net Income  during such period, plus (B)
  an  amount equal to the  aggregate net cash proceeds  received by the
  Company, subsequent to  the Issue Date, from the  issuance or sale  (other
  than to  a Subsidiary) of shares of its Capital Stock (excluding Redeemable
  Stock, but including Capital Stock issued upon  the exercise  of options,
  warrants or  rights to  purchase Capital  Stock (other than  Redeemable
  Stock) of the  Company) and  the liability  (expressed as a  positive number)
  as expressed on the  face of  a balance  sheet  in  accordance with  GAAP  in
  respect  of any  Indebtedness  of  the  Company  or  any of  its
  Subsidiaries, or  the carrying  value of  Redeemable Stock,  which has  been
  converted  into, exchanged for  or satisfied by the issuance  of shares of
  Capital Stock (other  than Redeemable Stock) of the Company, subsequent to
  the Issue  Date, plus  (C) 100% of  the net reduction  in Restricted
  Investments, subsequent to  the Issue Date, in any Person, resulting from
  payments of interest on Indebtedness, dividends,





                                       35
<PAGE>   43

  repayments  of loans  or advances,  or other  transfers  of  Property (but
  only to  the extent  such interest, dividends,  repayments or other transfers
  of Property are not included  in the calculation of Consolidated Net Income),
  in each case  to the Company or  any Subsidiary from  any Person (including,
  without  limitation, from Unrestricted  Subsidiaries) or  from redesignations
  of Unrestricted  Subsidiaries as  Subsidiaries (valued  in each case as
  provided in the definition of "Investments"), not to exceed in the case  of
  any Person the amount of Restricted Investments previously  made by the
  Company or  any Subsidiary in such  Person and in each  such case which was
  treated as a Restricted Payment.

                            (b)  The  foregoing provisions will  not prevent
  (i) the  payment of any  dividend on Capital Stock of any  class within 60
  days  after the date  of its declaration if  at the date  of declaration such
  payment would be  permitted by  this Indenture;  (ii) any  repurchase or
  redemption of Capital  Stock or Subordinated Indebtedness  of the Company or
  a Subsidiary made  by exchange for Capital  Stock of the  Company (other than
  Redeemable Stock), or out of the  net cash proceeds from  the substantially
  concurrent issuance or sale (other  than to a  Subsidiary) of Capital  Stock
  of the  Company (other than  Redeemable Stock),  provided that the net  cash
  proceeds from such sale are  excluded from computations under Section
  4.05(a)(iii)(B) above to  the extent  that such  proceeds  are applied  to
  purchase  or  redeem such  Capital Stock  or  Subordinated Indebtedness;
  (iii) so  long as  no  Default shall  have  occurred  and be  continuing  or
  should  occur  as a consequence thereof, any  repurchase or redemption of
  Subordinated Indebtedness of the Company  or a Subsidiary solely  in exchange
  for, or  out of  the net  cash proceeds  from the  substantially concurrent
  sale  of, new Subordinated Indebtedness  of  the Company  or  a  Subsidiary,
  so  long as  such  Subordinated Indebtedness  is permitted  under Section
  4.03 of this Indenture and (1) is subordinated to the Securities at least to
  the same extent as the Subordinated Indebtedness so  exchanged, purchased or
  redeemed, (2) has a stated maturity  later than the  stated maturity of the
  Subordinated Indebtedness  so exchanged, purchased or  redeemed and (3) has
  an Average  Life at  the time  incurred  that is  greater than  the
  remaining Average  Life of  the  Subordinated Indebtedness  so  exchanged,
  purchased  or  redeemed;  (iv)  Investments   in  any  Joint  Ventures,
  foreign Subsidiaries not  constituting Guarantors and  Indrillers in an
  aggregate amount not  to exceed $10,000,000 and (v) redemptions  of the
  Company's  Series A Preferred  Stock issued and  outstanding on the  Issue
  Date for an aggregate redemption price of not  more than $1,000,000.
  Notwithstanding  the foregoing, the  amount available for Investments in
  Joint Ventures  and foreign Subsidiaries pursuant to clause  (iv) of the
  preceding sentence may  be increased by the aggregate amount received by the
  Company and its Subsidiaries from a Joint Venture or a foreign Subsidiary  on
  or before such  date resulting from payments of interest on  Indebtedness,
  dividends, repayments  of loans  or  advances or  other  transfers of
  Property  made to  such  Joint Venture  or  foreign Subsidiary (but only to
  the extent such interest  dividends, repayments or other transfers of
  Property are not included in  the calculation  of  Consolidated Net  Income).
  Restricted  Payments permitted  to be  made  as described in  the first
  sentence  of this  Section 4.05(b) will  be  excluded in  calculating  the
  amount  of Restricted Payments  thereafter, except  that any such  Restricted
  Payments  permitted to be  made pursuant to clause  (iv) will be included  in
  calculating the  amount of  Restricted Payments made pursuant  to such clause
  (iv) thereafter.





                                       36
<PAGE>   44

                   (c)  For purposes  of this Section 4.05,  if a particular
  Restricted  Payment involves a non- cash payment,  including a  distribution
  of  assets, then  such Restricted  Payment shall  be deemed  to be  an amount
  equal to the cash portion of  such Restricted Payment, if  any, plus an
  amount equal to the Fair  Market Value of the non-cash portion of such
  Restricted Payment.

                            SECTION  4.06.   Limitation  on Dividends  and
  Other Payment  Restrictions Affecting Subsidiaries.  The  Company will not,
  and  will not permit any Subsidiary,  directly or indirectly, to  create,
  enter into  any agreement  with any  Person or  otherwise cause  or suffer
  to  exist or  become effective  any consensual encumbrance or restriction  of
  any kind which by its  terms restricts the ability of any  Subsidiary to (a)
  pay dividends,  in cash or otherwise,  or make  any other distributions  on
  its  Capital Stock  to the Company  or any Subsidiary, (b) pay any
  Indebtedness owed to the Company  or any Subsidiary, (c) make loans or
  advances to the  Company or any Subsidiary or (d) transfer any of its
  Property or assets  to the Company or any Subsidiary except any encumbrance
  or restriction contained in any agreement or instrument:

           (i)  existing on the Issue Date;

           (ii)  relating  to any Property or assets acquired  after the Issue
  Date, so  long as such encumbrance or restriction  relates  only to  the
  Property or  assets  so acquired  and is  not and  was  not created  in
  anticipation of such acquisition;

           (iii)  relating  to any Acquired Indebtedness of  any Subsidiary at
  the date on  which such Subsidiary was  acquired by  the Company  or any
  Subsidiary  (other than  Indebtedness incurred  in anticipation  of such
  acquisition);

           (iv)  effecting  a refinancing of Indebtedness  incurred pursuant to
  an  agreement referred to in  the foregoing  clauses (i)  through (iii),  so
  long as  the encumbrances  and restrictions  contained in  any such
  refinancing agreement  are no  more restrictive  than  the encumbrances  and
  restrictions contained  in  such agreements;

           (v)   constituting  customary provisions  restricting subletting  or
  assignment  of any  lease of  the Company  or  any  Subsidiary or  provisions
  in license  agreements  or similar  agreements  that restrict  the assignment
  of such agreement or any rights thereunder;

           (vi)    constituting  restrictions  on  the  sale  or  other
  disposition  of  any  Property  securing Indebtedness as a result of a
  Permitted Lien on such Property; or

           (vii)  constituting any temporary encumbrance or restriction with
  respect to a Subsidiary pursuant to an agreement that has been entered into
  for the sale or disposition of all or substantially all of the

  Capital Stock of, or Property and assets of, such Subsidiary.

                   SECTION 4.07.  Limitation on Asset Sales.

                            The Company will not engage in, and will not permit
  any Subsidiary to engage  in, any Asset Sale  unless (a) except in  the case
  of  (i) an Asset Sale  resulting from the  requisition of title to, seizure
  or forfeiture of any Property or assets or any actual or constructive





                                       37
<PAGE>   45

  total  loss or an agreed or compromised  total loss or (ii)  a Bargain
  Purchase Contract,  the Company or such Subsidiary, as the case may be,
  receives consideration at the time  of such Asset Sale at least equal to  the
  Fair Market Value  of the Property; (b) at least 75% of  such consideration
  consists of Cash  Proceeds (or the assumption of  Indebtedness of the
  Company or such  Subsidiary relating to  the Capital Stock  or Property  or
  asset  that was the subject of such Asset Sale and the unconditional release
  of the Company or such Subsidiary from such Indebtedness); (c) after giving
  effect to such Asset Sale, the total non-cash consideration held  by the
  Company from  all  such Asset  Sales does  not exceed  $10,000,000; and  (d)
  the  Company delivers  to the Trustee an Officers' Certificate certifying
  that  such Asset Sale complies with clauses (a), (b) and (c).  The Company or
  such Subsidiary, as the case may be, may  apply the Net Available Proceeds
  from each  Asset Sale (x) to the  acquisition of one or  more Replacement
  Assets, or (y)  to repurchase  or repay  Senior Debt (with  a permanent
  reduction  of  availability  in  the  case  of revolving  credit
  borrowings);  provided  that such acquisition or  such repurchase  or
  repayment  shall be  made within  365 days  after the  consummation of  the
  relevant Asset Sale.  Any Net Available  Proceeds from  any Asset  Sale
  that  are not  used to  so  acquire Replacement Assets or  to repurchase or
  repay  Senior Debt within 365 days  after consummation of the  relevant Asset
  Sale constitute "Excess Proceeds".

                   (b)      When the  aggregate amount of Excess Proceeds
  exceeds $15,000,000, the Company shall within 30  days  thereafter, or  at
  any time  after  receipt  of  Excess Proceeds  but  prior to  there  being
  $15,000,000 of Excess Proceeds,  the Company may, at its option,  make a pro
  rata offer (an "Asset Sale Offer") to purchase from all holders  an aggregate
  principal amount of  Securities equal to the Excess  Proceeds, at a price in
  cash (the "Asset Sale Offer Purchase Price") equal to 100%  of the
  outstanding  principal amount  at Stated Maturity  thereof plus accrued
  interest,  if any, to  the Asset Sale Purchase  Date, in accordance  with the
  procedures set forth in Section 4.07(c).

            (c)             Within 30 days  of the date that  the amount of
  Excess  Proceeds exceeds $15,000,000, the Company, or  the Trustee at  the
  request and expense of  the Company, shall send  to each Holder  by first
  class mail, postage prepaid, a notice prepared by the Company stating:

                     (i)            that an  Asset Sale Offer  is being made
           pursuant  to this Section  4.07 and that all Securities properly
           tendered will be accepted for payment, subject to proration in the
           event that the amount of Excess Proceeds is less than the aggregate
           Asset Sale Offer  Purchase Price of all Securities properly tendered
           pursuant to the Asset Sale Offer;

                     (ii)           the Asset Sale Offer  Purchase Price, the
           amount  of Excess Proceeds that are available to be  applied to
           purchase tendered Securities, and the  date Securities are to be
           purchased pursuant to the Asset Sale Offer (the "Asset Sale Offer
           Purchase Date"), which date shall  be a date no earlier than 30 days
           and not later than 40 days subsequent to the date such notice is
           mailed;

                     (iii)          that  any Securities or  portions thereof
           not properly  tendered or accepted for payment will continue to
           accrue interest;





                                       38
<PAGE>   46

                     (iv)           that, unless  the Company  defaults in  the
           payment  of the Asset  Sale Offer Purchase Price with respect
           thereto, all Securities or portions  thereof accepted for payment
           pursuant to the Asset Sale Offer  shall cease to accrue interest
           from  and after the Asset Sale Offer  Purchase Date;

                     (v)            that  any  Holder  electing  to  have any
           Securities  or  portions  thereof purchased pursuant to  the Asset
           Sale Offer  will be required to  surrender such Securities, with
           the form  entitled "Option of Holder  to Elect Purchase" on the
           reverse of  such Securities completed, to the Paying Agent at the
           address specified  in the notice, prior to the close of business  on
           the third Business Day preceding the Asset Sale Offer Purchase Date;

                     (vi)           that any  Holder shall be  entitled to
           withdraw such election  if the Paying Agent receives, not later than
           the  close of business on the  second Business Day preceding the
           Asset Sale Offer Purchase Date, a telegram, telex, facsimile
           transmission  or letter, setting forth the name of the Holder, the
           principal amount of Securities delivered  for purchase, and a
           statement  that such Holder is withdrawing  such Holder's election
           to have such  Securities or portions  thereof purchased pursuant to
           the Asset Sale Offer;

                     (vii)          that  any Holder electing to have
           Securities purchased  pursuant to the Asset Sale Offer must  specify
           the principal amount at Stated Maturity  that is being tendered for
           purchase, which principal amount at Stated Maturity must be $1,000
           or an integral multiple thereof;

                     (viii)         if  Certificated Securities  have been
           issued pursuant  to Section 2.06(a), that any Holder of Certificated
           Securities whose Certificated Securities are being purchased  only
           in part will be issued  new Certificated Securities equal in
           principal amount at Stated Maturity  to the unpurchased portion of
           the Certificated Security  or Securities surrendered, which
           unpurchased portion will be equal in principal amount at Stated
           Maturity to $1,000 or an integral multiple thereof;

                     (ix)           that the Trustee  will return  to the
           Holder of  a Global  Security that  is being  purchased in  part,
           such Global  Security with a  notation on Schedule A  thereof
           adjusting the principal amount at  Stated Maturity thereof  to be
           equal  to the unpurchased  portion of such  Global Security; and

                     (x)            the instructions and any other  information
           necessary to enable any Holder to tender Securities and to have such
           Securities purchased, or to withdraw such tender, pursuant  to this
           Section 4.07.

            (d)             If the  aggregate Asset Sale  Offer Purchase Price
  of the Securities  surrendered by Holders exceeds the amount of Excess
  Proceeds as indicated in the notice required by Section 4.07(c)  hereof, the
  Trustee shall select the Securities to be purchased  on a pro rata basis
  based on  the principal amount of the Securities tendered, with such
  adjustments as





                                       39
<PAGE>   47

  may  be deemed appropriate  by the  Trustee and  to comply  with any
  securities exchange and  other applicable requirements,  so that  only
  Securities  in denominations  of $1,000  or  integral  multiples thereof
  shall be purchased.

            (e)             On or before  the Asset Sale  Offer Purchase Date,
  the Company shall (i) accept  for payment any Securities or portions thereof
  properly tendered and selected for purchase pursuant to the  Asset Sale  and
  Section 4.07(d) hereof; (ii) irrevocably deposit  with the Paying Agent, by
  10:00 a.m., New York City time, on such date, in immediately available
  funds, an amount equal to the Asset Sale Offer Purchase Price in respect  of
  all Securities or  portions thereof so  accepted; and  (iii) deliver, or
  cause to  be delivered, to the  Trustee the  Securities so  accepted together
  with an  Officers'  Certificate  listing the  Securities or portions thereof
  tendered to the Company and  accepted for payment.  The  Paying Agent shall
  promptly send  by first class mail, postage  prepaid, to each Holder of
  Securities  or portions thereof so accepted for  payment, payment in an
  amount equal  to the Asset Sale Offer Purchase Price for  such Securities or
  portions   thereof.  The  Company shall publicly announce  the results of the
  Asset Sale Offer on or as  soon as practicable after the Asset Sale  Offer
  Purchase Date.  For  purposes of this Section 4.07, the Trustee shall  act as
  the Paying Agent.

            (f)             Upon surrender  and cancellation  of a
  Certificated  Security that  is purchased  in part, the Company  shall
  promptly issue  and the  Trustee shall authenticate  and deliver to  the
  surrendering Holder of such Certificated Security a  new Certificated
  Security equal in  principal amount to the unpurchased portion of  such
  surrendered Certificated Security; provided  that each such new Certificated
  Security shall be in a principal amount at Stated Maturity of $1,000 or an
  integral multiple thereof.

            Upon surrender of a Global Security that  is purchased in part
  pursuant to an  Asset Sale Offer, the Paying  Agent shall  forward such
  Global Security  to  the  Trustee who  shall make  a notation  on Schedule A
  thereof to reduce the principal amount  of such Global Security to an amount
  equal to the  unpurchased portion of such Global Security, as provided in
  Section 2.05 hereof.

            (g)             Upon completion of  an Asset Sale  Offer (including
  payment  of the Asset  Sale Offer Purchase Price  for accepted Securities),
  any surplus Excess  Proceeds that were subject to  such offer shall cease to
  be  Excess Proceeds, the amount of Excess Proceeds shall be reset to zero and
  the Company may use any remaining amount for general corporate purposes.

                   (h)      The Company shall comply  with any applicable
  tender offer  rules (including, without limitation, any applicable
  requirements of Rule 14e-1 under  the Exchange Act) in the event  that an
  Asset Sale Offer is required under the circumstances described herein.

                   SECTION 4.08.   Limitation on  Transactions with Affiliates.
  (a)  Subsequent  to the  Issue Date,  the Company  will not,  and will not
  permit any Subsidiary  to, directly  or indirectly, enter  into or permit  to
  exist any  transaction  or series  of related  transaction  (including, but
  not  limited  to, the purchase, sale or  exchange of  Property, the making
  of any  Investment, the  giving of  any guarantee or  the rendering of any
  service with any Affiliate of





                                      40
<PAGE>   48

  the Company, other than  transactions among the Company  and any Guarantors
  or  any Wholly Owned Subsidiaries) unless (i) such transaction or series of
  related transactions is on terms no  less favorable to the Company or such
  Subsidiary than those that could be obtained  in a comparable arm's length
  transaction with a Person that is not such  an Affiliate and (ii)  (A) with
  respect to a transaction  or series of related  transactions that has a  Fair
  Market Value in excess  of $2,000,000 but less than $5,000,000, the  Company
  delivers an Officers' Certificate to the Trustee  certifying that such
  transaction  or series of related  transactions complies  with clause (i)
  above;  or (B) with  respect to a transaction or  series  of related
  transactions that has  a Fair Market  Value equal  to or  in excess  of
  $5,000,000,  the transaction  or series  of related  transactions  is
  approved  by a majority of  the Board of Directors  of the Company
  (including a  majority of the disinterested directors), which approval  is
  set forth in  a Board Resolution certifying that  such transaction or series
  of transactions complies with clause (i) above.

                   (b)      The foregoing  provisions shall  not be  applicable
  to  (i) reasonable and  customary compensation, indemnification  and other
  benefits paid  or made  available to an officer,  director or employee of the
  Company  or a Subsidiary  for services rendered  in such person's  capacity
  as an  officer, director or employee (including  reimbursement  or
  advancement  of reasonable  out-of-pocket  expenses and  provisions  of
  directors   and  officers   liability insurance)  or  (ii) the  making  of
  any  Restricted Payment  otherwise permitted by this Indenture.

                   SECTION 4.09.  Change of Control.

                   (a)      Upon  the occurrence  of a  Change of  Control,
  each  Holder will  have the  right to require the  Company to repurchase all
  of such Holder's Securities in whole or in  part (the "Change of Control
  Offer")  at a purchase price (the "Change of Control Purchase Price")  in
  cash equal to 101% of the aggregate principal amount at Stated  Maturity
  thereof, plus accrued and unpaid  interest thereon, if any, to the  Change of
  Control Payment Date on the terms described below.

                   (b)      Within 30 days following  any Change of Control,
  the  Company or the Trustee  (at the expense of the Company) will mail a
  notice to each Holder and to the Trustee stating,

                     (i)            that a Change of  Control has occurred and
           a Change of Control Offer is being made  pursuant to  this Section
           4.09,  and that,  although Holders  are not  required to  tender
           their Securities, all Securities that are timely tendered will be
           accepted for payment;

                     (ii)           the Change of Control Purchase Price and
           the  repurchase date, which will  be no earlier  than 30 days and no
           later than  60 days after the date such  notice is mailed (the
           "Change of Control Payment Date");

                     (iii)          that any Security  or portion thereof
           accepted for  payment pursuant to  the Change of  Control Offer (and
           duly paid  for on the  Change of  Control Payment  Date) will cease
           to accrue interest after the Change of Control Payment Date;





                                       41
<PAGE>   49

                     (iv)           that any Security or portion  thereof not
           properly tendered  will continue to accrue interest;

                     (v)            that  any  Holder  electing  to  have any
           Securities  or  portions  thereof purchased pursuant to a  Change of
           Control Offer will  be required to surrender such  Securities, with
           the form entitled  "Option  of Holder to Elect Purchase"   on the
           reverse of such  Securities completed, to the Paying Agent  at the
           address specified  in the notice,  prior to the close  of business
           on  the third Business day preceding the Change of Control Date;

                     (vi)           that  any Holder shall be entitled  to
           withdraw such election  if the Paying Agent receives, not later
           than the close of business on the second  Business Day preceding the
           Change of Control Payment Date, a  telegram, telex, facsimile
           transmission or letter, setting  forth the name of the Holder, the
           principal amount of Securities delivered  for purchase, and a
           statement  that such Holder is  withdrawing such Holder's election
           to have such  Securities or portions  thereof purchased pursuant to
           the Change of Control Offer;

                     (vii)          that any Holder electing  to have
           Securities purchased pursuant to the Change of Control Offer  must
           specify  the principal amount  at Stated  Maturity that is  being
           tendered  for purchase, which principal amount at Stated Maturity
           must be $1,000 or an integral multiple thereof;

                     (viii)         if  Certificated Securities  have been
           issued pursuant  to Section  2.06(a), that any Holder  of
           Certificated Securities whose Certificated Notes are  being
           purchased only in part will  be issued  new  Certificated Securities
           equal in  principal amount  at  Stated Maturity  to the unpurchased
           portion  of the Certificated Security or Securities surrendered,
           which unpurchased portion will be equal in principal amount at
           Stated Maturity to $1,000 or an integral multiple thereof;

                     (ix)           that  the Trustee  will return to  the
           Holder  of a Global Security  that is being purchased in part, such
           Security  with a notation on Schedule A thereof adjusting  the
           principal amount at Stated Maturity thereof to be equal to the
           unpurchased portion of such Global Security;

                     (x)            the instructions and any other information
           necessary to enable any Holder  to accept a Change of Control Offer
           or effect withdrawal of such acceptance; and

                     (xi)           the  instructions and any  other
           information necessary to  enable Holders to tender their Securities
           and have such Securities purchased pursuant to the Change of Control
           Offer.

            (c)             On or before the  Change of Control  Payment Date,
  the  Company shall (i) accept  for payment  any Securities  or  portions
  thereof  properly  tendered pursuant  to  the Change  of  Control  Offer;
  (ii) irrevocably deposit with the Paying Agent, by 10:00 a.m., New





                                       42
<PAGE>   50

  York City  time, on  such date,  in immediately  available funds,  an  amount
  equal  to the  Change of  Control Purchase  Price  in  respect  of all
  Securities  or  portions  thereof  so  accepted,  including interest,  if
  applicable; and (iii) deliver,  or cause to be  delivered, to the Trustee the
  Securities so  accepted together with an Officers' Certificate listing the
  Securities  or portions thereof tendered to the Company and accepted for
  payment.  The Paying  Agent shall promptly send  by first class mail, postage
  prepaid,  to each Holder of Securities or portions  thereof so accepted for
  payment, payment in  an amount equal to the  Change of Control Purchase Price
  for such  Securities or portions thereof.   The Company  shall publicly
  announce the  results of the Change  of Control  Offer on or  as soon  as
  practicable after  the Change  of Control Payment  Date.   For purposes of
  this Section 4.09, the Trustee shall act as the Paying Agent.

            (d)             Upon surrender and cancellation of a  Certificated
  Security that is purchased in part pursuant to the Change  of Control Offer,
  the Company shall  promptly issue and the Trustee shall  authenticate and
  deliver  to the  surrendering Holder  of such  Certificated  Security, a  new
  Certificated  Note equal  in principal  amount  at Stated  Maturity  to  the
  unpurchased  portion  of such  surrendered Certificated  Note; provided that
  each such new  Certificated Security shall be in a  principal amount of
  $1,000 at Stated Maturity or an integral multiple thereof.

            Upon surrender  of a  Global Security  that is  purchased in  part
  pursuant  to a  Change of  Control Offer, the  Paying Agent  shall forward
  such  Global Security  to the  Trustee who  shall make  a notation  on
  Schedule A thereof to reduce the  principal amount at Stated Maturity  of
  such Global Note to  an amount equal to the unpurchased portion of such
  Global Security, as provided in Section 2.05 hereof.

                            (e)     The Company  will not be required  to make
  a Change  of Control  Offer upon a Change  of Control  if a  third party
  makes the  Change of  Control Offer  in the  manner, at  the  times and
  otherwise in compliance with  the requirements set forth  in this Indenture
  applicable to a Change  of Control Offer made by the Company and  repurchases
  all Securities validly tendered and not withdrawn under such  Change of
  Control Offer.

                            (f)     The Company will  comply with any
  applicable tender offer  rules (including, without limitation, any
  applicable requirements of Rule  14e-1 under the Exchange Act)  in the event
  that  the Change of Control Offer is triggered under the circumstances
  described herein.

                   SECTION 4.10.    Limitation on  Liens.    The  Company  will
  not,  and will  not  permit  any Subsidiary to, directly  or indirectly,
  create, affirm, incur, assume or suffer to exist any  Liens of any kind other
  than Permitted Liens  on or with respect  to any Property or assets of the
  Company  or such Subsidiary or any  interest therein  or any  income or
  profits therefrom,  whether owned  at the  Issue Date  or  thereafter
  acquired, without effectively  providing that  the Securities shall  be
  secured equally and  ratably with  (or prior to) the Indebtedness so secured
  for so long as such obligations are so secured.





                                       43
<PAGE>   51
                   SECTION 4.11.   Limitation  on Guarantees  by Guarantors.
  The  Company will not  permit any Guarantor to  guarantee the  payment of
  any Subordinated  Indebtedness of  the Company  unless such  guarantee shall
  be  subordinated  to  such Guarantor s  Guarantee  at least  to  the same
  extent as  such  Subordinated Indebtedness is subordinated  to the
  Securities;  provided that  this covenant will  not be applicable  to any
  guarantee  of any  Guarantor that  (i) existed at  the time  at which such
  Person  became a  Subsidiary of the Company  and (ii)  was  not incurred  in
  connection with,  or  in contemplation  of,  such Person  becoming  a
  Subsidiary of the Company.

                   SECTION 4.12  Unrestricted Subsidiaries

                   (a)      The Company  may designate a subsidiary  (including
  a newly formed  or newly acquired subsidiary)  of  the  Company  or  any  of
  its  Subsidiaries as  an  Unrestricted  Subsidiary;  provided  that (i)
  immediately  after  giving effect  to  the  transaction,  the  Company  could
  incur $1.00  of  additional Indebtedness pursuant  to  the  first sentence
  of  Section 4.03  and (ii) such  designation  is  at  the  time permitted
  under  Section 4.05.    Notwithstanding any  provisions  of this  covenant
  all  subsidiaries  of  an Unrestricted Subsidiary will be Unrestricted
  Subsidiaries.

                   (b)      The  Company will  not, and  will not  permit any
  of its  Subsidiaries to,  take any action or enter  into any transaction or
  series of transactions that  would result in a  Person (other than a newly
  formed subsidiary  having no  outstanding Indebtedness  (other  than
  Indebtedness to  the Company  or a Subsidiary)  at  the date  of
  determination)  becoming  a Subsidiary  (whether  through  an  acquisition,
  the redesignation of  an  Unrestricted Subsidiary  or otherwise)  unless,
  after  giving effect  to  such  action, transaction or  series of
  transactions  on a pro  forma basis, (i) the  Company could incur at least
  $1.00 of additional Indebtedness  pursuant to  the first  sentence of
  Section 4.03  and (ii)  no Default  or Event  of Default would occur.

                   (c)      Subject to Sections 4.12(a) and  (b), an
  Unrestricted Subsidiary may  be redesignated as  a Subsidiary.   The
  designation  of a subsidiary  as an  Unrestricted Subsidiary  or the
  designation of an Unrestricted Subsidiary  as a Subsidiary  in compliance
  with this  Section 4.12 shall be  made by  the Board of Directors  pursuant
  to a Board  Resolution delivered  to the  Trustee and  shall be effective  as
  of  the date specified in such  Board Resolution, which shall not  be prior
  to the date  such Board Resolution is delivered to  the Trustee.   Any
  Unrestricted  Subsidiary shall become a  Subsidiary if it  incurs any
  Indebtedness other than Non-Recourse  Indebtedness.    If  at  any time
  Indebtedness  of  an Unrestricted  Subsidiary  which  was Non-Recourse
  Indebtedness no  longer so qualifies,  such Indebtedness shall be  deemed to
  have been incurred when such Non-Recourse Indebtedness becomes Indebtedness.

                   SECTION  4.13   Limitation on Sale  and Lease-Back
  Transactions.   The Company  will not, and will  not permit any Subsidiary
  to, directly or indirectly, enter  into, assume, guarantee or otherwise
  become liable with respect to  any Sale and Lease-Back Transaction unless (i)
  the proceeds from such Sale and Lease-Back Transaction  are at least equal
  to the Fair  Market Value of such Property being transferred and (ii) the
  Company or





                                       44
<PAGE>   52
  such Subsidiary would  have been permitted  to enter  into such transaction
  under the provisions  of Sections 4.03, 4.04 and 4.10.

                   SECTION  4.14    Limitation  on  Line  of  Business.   None
  of  the  Company  or any  of  its Subsidiaries will  directly or indirectly
  engage to any substantial  extent in any  line or  lines of business activity
  other than a Related Business.

                   SECTION 4.15.  Maintenance  of Office or  Agency.  The
  Company  shall maintain in The City  of New York, an office or agency  where
  Securities may be presented or  surrendered for payment, where  Securities
  may  be surrendered for  registration of  transfer or  exchange and  where
  notices and  demands to or  upon the Company  in respect of  the Securities
  and  this Indenture may  be served.  Unless otherwise  designated by the
  Company by written  notice to the Trustee  such office or agency  shall be
  the office  of the Trustee's agent, Texas  Commerce Trust Company  of New
  York, which is  located at  55 Water  Street, North  Building, Room 234,
  Windows 20 and 21, New York, New York   10041, Attention:  Vice President,
  Global  Trust Services.  The Company shall  give prompt written  notice to
  the Trustee  of the location,  and any  change in the  location, of such
  office or agency.   If at any time  the Company shall fail  to maintain any
  such required office or  agency or shall  fail  to  furnish the  Trustee with
  the address  thereof, such  presentations, surrenders,  notices and demands
  may  be made or served at  the Corporate Trust Office of the Trustee, and
  the Company hereby appoints the Trustee its agent to receive all
  presentations, surrenders, notices and demands.

                   The Company may  also from time to time  designate one or
  more  other offices or  agencies (in or outside of  The City of New York)
  where the Securities may  be presented or surrendered for any or  all of such
  purposes, and  may from  time to time  rescind such  designations; provided
  that no  such designation  or rescission  shall in any manner relieve the
  Company of  its obligation to maintain an  office or agency in The City of
  New  York, for such purposes.  The Company shall give prompt written notice
  to  the Trustee of any such designation and any change in the location of any
  such other office or agency.

                   SECTION 4.16.  Money  for the Security  Payments to be  Held
  in Trust.   If the  Company, any Subsidiary  of the Company or  any of their
  respective  Affiliates shall at any  time act as Paying Agent with respect to
  the Securities,  such Paying Agent  shall, on  or before  each due date  of
  the  principal of (and premium,  if any) or  interest on any of the
  Securities, segregate and hold  in trust for  the benefit of the Persons
  entitled thereto money  sufficient to pay the  principal (and premium, if
  any) or  interest so becoming due until such  money shall be paid to  such
  Persons or  otherwise disposed of as  herein provided, and  shall promptly
  notify the Trustee of its action or failure so to act.

                   Whenever the Company shall have one  or more Paying Agents
  with  respect to the Securities, it shall, prior to  or on  each due  date of
  the  principal of  (and premium, if  any) or interest  on any of  the
  Securities,  deposit with  a Paying  Agent a  sum sufficient  to pay  the
  principal  (and  premium, if  any) or interest so becoming  due, such  sum to
  be held  in trust  for the  benefit of  the Persons  entitled to  such
  principal, premium or interest, and (unless such Paying





                                       45
<PAGE>   53
  Agent  is the Trustee) the Paying  Agent shall promptly notify the Trustee of
  the Company's action or failure so to act.

                   SECTION  4.17.    Corporate  Existence.    The  Company
  will, and  will  cause  each  of  its Subsidiaries  to, preserve  and keep
  in full  force and  effect its  corporate existence  in  accordance with
  applicable  law, except  as  permitted in  Sections 5.01  and 5.02;
  provided, however,  that the  Company may terminate the corporate existence
  of any Subsidiary  if, in the good faith judgment of  the Board of Directors
  of  the Company,  such  termination is  desirable  in the  conduct  of the
  business  of the  Company  and  its Subsidiaries and is not disadvantageous
  in any material respect to the Holders of the Securities.

                   SECTION  4.18  Maintenance  of Property.  The  Company shall
  cause  all Property  used in the conduct of  its  business or  the business
  of any  of its  Subsidiaries to  be maintained  and  kept in  good condition,
  repair and  working order  (reasonable wear  and tear  excepted) and
  supplied  with  all necessary equipment  and shall  cause  to  be  made  all
  necessary  repairs, renewals,  replacements,  betterments  and improvements
  thereof, all as, in the judgment of  the Company, may be necessary  so that
  the business carried on in connection therewith  may be properly and
  advantageously conducted at all  times; provided that nothing in this Section
  4.18 shall prevent the Company from  discontinuing the operation or
  maintenance of  any of such Property if such discontinuance  is, in the
  judgment of the Company, desirable in the  conduct of its business or the
  business of any of its Subsidiaries  and not disadvantageous in any material
  respect  to the Holders of the Securities.

                   SECTION 4.19.   Payment of  Taxes and Other  Claims.  The
  Company shall pay  or discharge  or cause to  be paid or discharged, before
  the  same shall become delinquent,  (a) all material taxes, assessments and
  governmental charges  levied or  imposed upon the Company  or any of its
  Subsidiaries or upon the  income, profits  or property of the Company  or any
  of its Subsidiaries  and (b) all material lawful claims for labor, materials
  and  supplies which,  if unpaid,  might by  law become  a Lien  upon the
  Property or  assets of the Company or any of its  Subsidiaries; provided that
  the  Company shall not be  required to pay or  discharge or cause to  be paid
  or discharged  any such  tax, assessment,  charge or  claim whose  amount,
  applicability  or validity  is being  contested in  good faith by
  appropriate proceedings  and for  which adequate  reserves in accordance with
  GAAP or other appropriate provision has been made.

  SECTION 4.20  Compliance Certificate; Notice of Default or Event of Default.

                   (a)      The  Company shall  deliver to  the Trustee  within
  120  days after  the end  of each fiscal year of the Company  ending after
  the date hereof,  an Officers'  Certificate (which shall  be signed by
  officers satisfying  the requirements of Section  314 of the  Trust Indenture
  Act) stating  whether or not,  to the  best knowledge of such  officers, the
  Company  has complied  with all conditions and  covenants under this
  Indenture, and, if the  Company shall be  in Default,  specifying all such
  Defaults  and the nature thereof  of which such officer may have knowledge.

                   (b)      The year-end financial statements  delivered
  pursuant to Section 4.02 above  shall be accompanied by a written statement
  of the Company's independent public





                                       46
<PAGE>   54
  accountants (who  shall be a firm  of established  national reputation
  reasonably satisfactory  to the Trustee) that in  making the examination
  necessary for certification of  such financial statements nothing  has come
  to their attention which would lead them to believe that the Company or any
  of its  Subsidiaries has violated the provisions of Section 4.01, 4.03,
  4.04, 4.05, 4.07, 4.09 or 4.17 hereof or of Article 5 of  this Indenture or,
  if  any such  violation  has  occurred,  specifying  the  nature and  period
  of  existence thereof,  it  being understood  that such accountants shall not
  be liable directly or indirectly  to any person for any failure to obtain
  knowledge of  any such  violation, and  it  being  further understood  that
  such  statement may  not be provided to the extent contrary to the then
  current recommendations of the accountants  governing body.

                   (c)      The Company will,  so long as any  of the
  Securities are outstanding,  deliver to the Trustee, within 5 days of any
  Officer becoming aware of (i) any Default  or Event of Default or (ii) any
  event of  default under  any other mortgage,  indenture or instrument
  referred to in Section  6.01(e), an Officers' Certificate specifying such
  Default,  Event of Default or  other event of  default and what action  the
  Company or applicable Subsidiary is taking or proposes to take with respect
  thereto.

                   SECTION 4.21.  Further Instruments  and Acts.  Upon request
  of  the Trustee, the Company will execute and  deliver such  further
  instruments  and do  such further  acts as  may be  reasonably necessary  or
  proper to carry out more effectively the purpose of this Indenture.

                   SECTION  4.22.  Prohibition on Company  and Guarantors
  Becoming Investment Companies.  None of the Company or the  Guarantors shall
  become an   investment company  as  defined in the Investment  Company Act of
  1940, as amended.

                   SECTION 4.23.   Stay,  Extension and  Usury Laws.   The
  Company and each  of the  Guarantors covenant (to the extent  that it may
  lawfully do so) that it shall  not at any time insist upon,  plead, or in any
  manner whatsoever claim or  take the benefit of  advantage of, any  stay,
  extension  or usury law wherever enacted, now or at  any time hereafter  in
  force,  that may affect  the covenants or  the performance of  this
  Indenture; and  the Company and each  of the  Guarantors (to the  extent that
  it may  lawfully do so)  hereby expressly waive all benefit  or advantage of
  any such law,  and covenants that it shall  not, by resort to any such  law,
  hinder, delay or impede the execution of any power herein  granted to the
  Trustee, but shall suffer and permit the execution of every such power as
  though no such law has been enacted.


                                   ARTICLE 5

              Consolidation, Merger, Conveyance, Lease or Transfer

     SECTION 5.01.  Consolidation, Merger, Conveyance, Lease or Transfer.

                   (a)      The Company  will not, in any transaction or series
  of transactions, consolidate with or  merge into any other Person (other than
  a  merger of a Subsidiary into the Company in which the Company is the
  continuing corporation), or continue in any new





                                       47
<PAGE>   55
  jurisdiction, or sell,  convey, assign, transfer, lease  or otherwise dispose
  of all or  substantially all of the Property and assets of the Company and
  the Subsidiaries, taken as a whole, to any Person, unless

                            (i)     either (A)  the  Company  shall  be the
                   continuing  corporation or  (B)  the corporation (if  other
                   than  the Company)  formed by  such  consolidation or  into
                   which  the Company is merged,  or the Person which acquires,
                   by sale, assignment, conveyance,  transfer, lease  or
                   disposition, all or substantially all of the Property and
                   assets of the Company and the Subsidiaries,  taken as a
                   whole  (such corporation  or Person,  the  Surviving  Entity
                   ), shall be a corporation organized and  validly existing
                   under the laws  of the United States of America, any
                   political subdivision thereof  or any state thereof or the
                   District of  Columbia, and shall expressly  assume, by a
                   supplemental indenture, the due and punctual  payment of the
                   principal of (and premium, if any)  and interest on all the
                   Securities and the performance of the Company s covenants
                   and obligations under this Indenture;

                            (ii)    immediately  before and after giving effect
                   to such  transaction or series of transactions on a  pro
                   forma basis (including,  without limitation, any
                   Indebtedness  incurred or  anticipated to be incurred in
                   connection with or in respect  of such transaction or series
                   of transactions), no  Event of Default  or Default  shall
                   have occurred  and be continuing  or would result therefrom;

                            (iii)   immediately  after   giving  effect   to
                   such   transaction  or  series   of transactions on a pro
                   forma basis (including,  without limitation, any
                   Indebtedness  incurred or anticipated to be incurred in
                   connection with or in respect  of such transaction or series
                   of transactions),  the Company  (or the  Surviving Entity if
                   the Company  is not continuing) shall have a Consolidated
                   Net Worth equal to  or greater than the  Consolidated Net
                   Worth of the Company immediately prior to such transactions;
                   and

                            (iv)    immediately  after  giving  effect  to  any
                   such  transaction  or  series of transactions  on a  pro
                   forma  basis as  if such  transaction  or  series of
                   transactions had occurred on the  first day of the
                   Determination Period,  the Company (or the Surviving  Entity
                   if  the  Company  is  not continuing)  would  be  permitted
                   to  incur  $1.00  of  additional Indebtedness pursuant to
                   the provisions of the first sentence of Section 4.03.

                   (b)      The  provision  of  Section 5.01(a)(iv)  above
  shall not  apply  to  any  merger  or consolidation  into or with, or  any
  such transfer of all or  substantially all of the  Property and assets of the
  Company and the Subsidiaries taken as a whole into, the Company.

                   SECTION  5.02.    Officers'  Certificate and  Opinion  of
  Counsel   In  connection  with any consolidation, merger,  continuance,
  transfer  of assets or  other transactions  contemplated by  Section 5.01,
  the Company shall deliver, or cause to be delivered, to the





                                       48
<PAGE>   56
  Trustee, in  form  and substance  reasonably  satisfactory  to the  Trustee,
  an  Officers'   Certificate and  an Opinion of  Counsel, each stating that
  such consolidation, merger,  continuance, sale, assignment, conveyance or
  transfer  and the supplemental  indenture in respect  thereto comply with the
  provisions  of this Indenture and that all conditions precedent in this
  Indenture relating to such transactions have been complied with.

                   SECTION  5.03.   Substitution  of  Surviving  Entity
  Upon  any  transaction  or series  of transactions  that are of  the type
  described in,  and are  effected in  accordance with, this  Article 5, the
  Surviving Entity  shall succeed to,  and be substituted for, and  may
  exercise every  right and power  of, the Company  under this Indenture and
  the  Securities with the  same effect as  if such Surviving  Entity had been
  named as the  Company in this Indenture; and when a Surviving  Person duly
  assumes all of  the obligations and covenants of the  Company pursuant to
  this  Indenture and the Securities, except in  the case of a  lease, the
  predecessor Person shall be relieved of all such obligations.

                   If such Surviving  Entity shall have succeeded to and  been
  substituted for the Company,  such Surviving Entity may  cause to be signed,,
  and may issue either  in its own name or  in the name of the Company prior to
  such succession any  or all of the Securities  delivered to the Trustee; and,
  upon the order  of such Surviving Entity,  instead of the Company,  and
  subject to  all the terms, conditions  and limitations in  this Indenture
  prescribed, the Trustee shall authenticate and shall deliver  any Securities
  which previously shall have  been signed and  delivered by  the officers of
  the Company  to the  Trustee for  authentication, and any Securities which
  such Surviving  Entity thereafter shall cause  to be signed  and delivered to
  the  Trustee for that  purpose (in  each instance  with endorsements  of
  Guarantees  thereon by  the Guarantors).   All  of  the Securities  so issued
  and so  endorsed shall in all  respects have the same  legal rank and benefit
  under this Indenture  as the Securities  theretofore or thereafter issued
  and endorsed in  accordance with  the terms of this Indenture and the
  Guarantee as though  all of such Securities had been issued and endorsed at
  the date  of the execution hereof.

                   In case of any  such consolidation, merger, continuance,
  sale, transfer, conveyance  or other disposal, such  changes  in  phraseology
  and  form  (but  not  in substance)  may  be  made in  the  Securities
  thereafter to be issued or the Guarantees to be endorsed thereon as may be
  appropriate.

                   For  all purposes of this Indenture and the Securities,
  Subsidiaries of any Surviving Entity will, upon such  transaction or series
  of transactions, become  Subsidiaries or Unrestricted Subsidiaries  as
  provided  pursuant to  this Indenture  and  all Indebtedness,  and all  Liens
  on Property  or assets,  of  the Surviving Entity  and its Subsidiaries
  immediately  prior to such transaction  or series  of transactions shall be
  deemed to have been incurred upon such transaction or series of transactions.





                                       49
<PAGE>   57

                                   ARTICLE 6

                             Defaults and Remedies

                   SECTION 6.01.  Events of Default.   Whenever used herein, an
  "Event of Default" means any  one of  the following events (whatever the
  reason for such Event of  Default and whether it shall be voluntary or
  involuntary or be  effected by operation of law or  pursuant to any judgment,
  decree  or order of any court or any order, rule or regulation of any
  administrative or governmental body):

                   (a)      default in  the payment of interest  on any
           Security pursuant to  this Indenture when the same becomes due and
           payable, and the continuance of such Default for a period of 30
           days;

                   (b)      default  in the payment  of principal of (or
           premium, if any,  on) any Security when the  same  becomes due  and
           payable,  whether  upon  Maturity,  upon  optional  redemption,
           required repurchase (including pursuant  to a Change of Control
           Offer or an Asset Sale Offer)  or otherwise or the failure  to make
           an offer to purchase any such  Security as required pursuant to the
           provisions of the Securities and this Indenture;

                   (c)      the Company fails  to comply  with any of  its
           covenants or  agreements contained  in Sections 4.03, 4.04, 4.05,
           4.07, 4.09, 4.13 and 5.01 of this Indenture;

                   (d)      the  Company defaults  in the  performance,  or
           breach, of  any covenant  or warranty of  the Company  in this
           Indenture  (other than a  covenant or warranty  addressed in clause
           (a), (b) or (c)  above) and continuance of such  Default or breach
           for a period of  30 days after  written notice  thereof has  been
           given to  the Company by  the Trustee or  to the Company and  the
           Trustee  by Holders  of at  least 25%  of the  aggregate principal
           amount  at Stated Maturity of the outstanding Securities;

                   (e)      Indebtedness  of the Company or any  Subsidiary is
           not paid  when due within the applicable grace period, if any,  or
           is accelerated by the  holders thereof and, in either case, the
           principal amount of such unpaid or accelerated Indebtedness exceeds
           $10,000,000;

                   (f)      the  entry  by  a  court  of  competent
           jurisdiction  of  one  or  more final judgments against  the Company
           or any  Subsidiary in an  uninsured or unindemnified aggregate
           amount  in excess of $5,000,000 which is not discharged,  waived,
           appealed, stayed, bonded or satisfied for a period of 60 consecutive
           days;

                   (g)      the entry  by a court having jurisdiction  in the
           premises of (i) a decree or order for  relief in respect of  the
           Company  or any Significant Subsidiary  in an involuntary case  or
           proceeding under U.S. bankruptcy laws, as now or  hereafter
           constituted, or any other applicable Federal, state, or foreign
           bankruptcy, insolvency,  or other similar law or  (ii) a decree or
           order adjudging the Company or any Significant




                                       50
<PAGE>   58
           Subsidiary a  bankrupt  or  insolvent,  or approving  as  properly
           filed a  petition  seeking reorganization, arrangement,  adjustment
           or  composition of or  in respect of  the Company  or any
           Significant  Subsidiary under U.S.  bankruptcy laws, as now or
           hereafter constituted, or any other  applicable Federal,  state or
           foreign bankruptcy,  insolvency, or similar  law, or appointing  a
           custodian,  receiver,  liquidator,  assignee,  trustee, sequestrator
           or  other similar  official of the Company or any  Significant
           Subsidiary or of any  substantial part of the Property  or assets of
           the Company  or any Significant Subsidiary, or ordering the winding
           up  or liquidation  of the  affairs  of  the Company  or any
           Significant Subsidiary,  and the continuance of  any such  decree
           or order  for  relief or  any such  other decree  or  order unstayed
           and in effect for a period of 60 consecutive days;

                   (h)      (i)  the commencement  by  the Company  or any
           Significant  Subsidiary  of a voluntary case  or proceeding under
           U.S. bankruptcy  laws, as now or hereafter constituted, or any
           other applicable Federal, state or  foreign bankruptcy, insolvency
           or  other similar law or  of any other case  or proceeding to  be
           adjudicated  a bankrupt or insolvent;  or (ii) the consent by the
           Company or any Significant  Subsidiary to the entry of  a decree or
           order  for relief  in respect  of the Company  or any Significant
           Subsidiary  in an  involuntary case or proceeding  under  U.S.
           bankruptcy  laws,  as  now  or hereafter  constituted,  or  any
           other applicable  Federal, state, or foreign bankruptcy, insolvency
           or other  similar law or to the commencement of any bankruptcy  or
           insolvency case or  proceeding against the Company or  any
           Significant Subsidiary; or (iii) the filing  by the Company or any
           Significant Subsidiary of a petition or answer or consent seeking
           reorganization  or relief under U.S. bankruptcy  laws, as  now  or
           hereafter  constituted,  or  any  other  applicable  Federal,  state
           or  foreign bankruptcy,  insolvency or  other similar  law; or  (iv)
           the  consent by  the Company  or any Significant Subsidiary  to the
           filing  of such  petition or to  the appointment of or  taking
           possession by a  custodian, receiver, liquidator, assignee, trustee,
           sequestrator  or similar official of  the Company  or any
           Significant Subsidiary  or of  any substantial  part of  the
           Property or  assets of the Company  or any Significant Subsidiary
           or of  any substantial part of the Property or assets of the Company
           or any Significant Subsidiary, or the  making by the Company or any
           Significant  Subsidiary of an  assignment for the benefit of
           creditors;  or (v) the admission  by the Company  or any Significant
           Subsidiary in  writing of its  inability to pay its  debts generally
           as they  become due; or  (vi) the taking of  corporate action by
           the Company or any Significant Subsidiary in furtherance of any such
           action; or

                   (i)      any Guarantee  shall for  any reason  cease to  be,
           or  be asserted  by  the Company  or any  Guarantor,  as applicable,
           not  to  be,  in full  force  and effect  (except pursuant to  the
           release  of any  such Guarantee  in accordance  with the  provisions
           of  this Indenture).

                   SECTION 6.02.   Acceleration.    If an  Event of  Default
  (other than  an  Event of  Default described in clause (g)  or (h) of Section
  6.01)  occurs and shall be continuing, then in each  and every case the
  Trustee  or the  Holders of  not less than  25% of  the outstanding
  aggregate principal amount at  Stated Maturity of the Securities may declare
  the principal amount at Stated





                                       51
<PAGE>   59
  Maturity of  the Securities to be  due and payable  immediately by a notice
  in writing to the  Company (and to the Trustee if  given by Holders  of such
  Securities), and upon any  such declaration the principal  amount at Stated
  Maturity of, premium, if any, on, any accrued and unpaid interest on, and any
  other amounts payable in respect of, the  Securities then outstanding will
  become and be immediately due and payable.   If any Event of Default
  specified in clause  (g) or (h) of  Section 6.01 occurs,  the principal
  amount at Stated Maturity  of, premium,  if any,  and any accrued  and unpaid
  interest  on, and any  other amount payable in  respect of, the Securities
  then outstanding shall become  immediately due and payable without any
  declaration or other act on the part  of the Trustee  or any Holder  of such
  Securities.   In the  event of a  declaration of  acceleration because an
  Event  of  Default set  forth  in  Section  6.01(e) above  has  occurred  and
  is  continuing,  such declaration of acceleration  shall be automatically
  rescinded and annulled  if the event of default  triggering such Event of
  Default  pursuant to Section 6.01(e) shall be remedied  or cured or waived
  by the holders of the relevant Indebtedness within 30 days after  such event
  of default; provided that no judgment or decree for  the payment of the money
  due on the Securities has been obtained by the Trustee as provided in this
  Indenture.

                   After  any such acceleration,  but before  a judgment  or
  decree  based on  acceleration, the Holders  of a  majority  in aggregate
  principal  amount at  Stated  Maturity of  the  Securities at  the  time
  outstanding may rescind and annul such acceleration if

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

                            (i)     all money  paid  or  advanced by  the
                   Trustee  hereunder  and the  reasonable compensation,
                   expenses, disbursement and advances of the Trustee, its
                   agents and counsel,

                            (ii)    all overdue installments of  interest on
                   any other  amounts due in respect of all Securities;

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

                            (iv)    to  the  extent  that payment  of  such
                   interest is  lawful,  interest  upon Defaulted Interest  at
                   the  rate or  rates prescribed  therefor  in the  Securities
                   and  this Indenture;

                   (b)      all  Events of Default,  other than the  nonpayment
           of principal  of Securities which have become due solely  by such
           declaration of acceleration, have been cured  or waived as provided
           in Section 6.04;

                   (c)      the annulment of such  acceleration would not
           conflict with any judgment or decree of a court of competent
           jurisdiction; and





                                       52
<PAGE>   60
                   (d)      the Company has delivered  an Officers' Certificate
           to  the Trustee to the effect  of clauses (b) and (c) of this
           sentence.

           No such rescission shall affect any subsequent Default or impair any
right consequent thereto.

                   SECTION 6.03.  Other Remedies. If  an Event of Default
  occurs and is continuing, the  Trustee may pursue  any available remedy to
  collect the payment  of principal (and premium, if any) of or interest on,
  and any other  amounts then due in respect  of, the Securities or to  enforce
  the performance of any provision of the Securities or this Indenture.

                   The Trustee may maintain  a proceeding even if  it does not
  possess any of the  Securities or does  not produce  any of  them in  the
  proceeding.   A  delay or  omission by  the Trustee  or any  Holder in
  exercising any  right or remedy  accruing upon an  Event of Default shall
  not impair the  right or  remedy or constitute a waiver  of or acquiescence
  in  the Event of Default.  No remedy is  exclusive of any other remedy.  All
  available remedies are cumulative.

                   SECTION  6.04.  Waiver of  Past Defaults.   The Holders  of
  a majority in  principal amount at Stated Maturity of the Securities then
  outstanding by notice to  the Trustee may waive an existing  Default and its
  consequences except (i) a Default in the payment  of the principal of or
  interest on a Security or (ii) a Default in respect of  a provision  that
  under  Section 9.02  cannot be amended  without the  consent of  each Holder
  affected.   When a  Default is waived,  it is  deemed cured,  but no  such
  waiver  shall extend  to any subsequent or other Default or impair any
  consequent right.

                   SECTION 6.05.  Control by Majority.   The Holders of a
  majority in principal amount at  Stated Maturity  of  the  Securities then
  outstanding  may  direct the  time,  method  and place  of  conducting  any
  proceeding  for any  remedy available to  the Trustee  or of  exercising any
  trust or  power conferred  on the Trustee.  However, the  Trustee may refuse
  to follow any direction  that conflicts with law or  this Indenture or,
  subject to  Section 7.01,  that  the Trustee  determines is  unduly
  prejudicial to  the rights  of  other Holders, it being understood that the
  Trustee shall have no  duty to ascertain whether or not such  actions or
  forbearances  are unduly  prejudiced to  such Holders,  or would  involve
  the  Trustee in  personal liability; provided that the  Trustee may take  any
  other action deemed proper  by the Trustee  that is not  inconsistent with
  such direction.   Prior to taking any action hereunder,  the Trustee shall be
  entitled to  indemnification satisfactory to it  in its sole discretion
  against all losses and expenses caused by taking or not taking such action.

                   SECTION 6.06.   Limitation on  Suits.  No  Holder of any
  Securities shall have  any right  to institute any  proceeding, judicial or
  otherwise, with respect  to this Indenture, or  for the appointment of a
  receiver or a trustee, or for any other remedy hereunder, unless:

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





                                       53
<PAGE>   61
                   (ii)     the Holders of  at least 25% in aggregate principal
           amount  at Stated Maturity of the Securities then  outstanding  have
           made  written request,  and  such Holder  or  Holders have  offered
           reasonable indemnity, to the Trustee to institute such proceeding as
           trustee; and

                   (iii)    the Trustee  has failed to institute such
           proceeding, and has not  received from the Holders  of  a majority
           in  aggregate principal  amount at  Stated  Maturity of  the
           Securities then outstanding a direction inconsistent with such
           request, within 60  days after such notice, request and offer.

                   A Holder may not use this Indenture to  prejudice the rights
  of another Holder  or to obtain a preference or priority over another Holder.

                   SECTION 6.07.   Rights of Holders to Receive Payment.
  Notwithstanding any  other provision of this Indenture, the  right of any
  Holder to receive payment of  principal of and  interest on the  Securities
  held by such  Holder, on or after the  respective due dates expressed in the
  Securities, or  to bring 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  6.08.   Collection Suit  by Trustee.   If an  Event
  of  Default specified  in Section 6.01(a)  or (b) occurs and is continuing,
  the Trustee  may recover judgment in its own  name and as trustee of an
  express trust  against the Company for the whole amount then  due and owing
  (together with  interest on any unpaid interest to the extent lawful) and the
  amounts provided for in Section 7.07.

                   SECTION 6.09.    Trustee  May File  Proofs  of Claim.    The
  Trustee  shall be  entitled  and empowered, without  regard to whether the
  Trustee or any Holder  shall have made any  demand or performed  any other
  act pursuant  to the provisions  of this  Article and  without regard to
  whether  the principal  of the Securities shall then be due and payable as
  therein expressed or by declaration or  otherwise, by intervention in  any
  proceedings  relative  to  the Company  or any  Obligor upon  the Securities,
  or  to the  creditors or Property or  assets of  the Company, any Guarantor
  or any  other Obligor or  otherwise, to  take any  and all actions authorized
  under the  Trust Indenture Act  in order  to have  claims of the Holders  and
  the  Trustee allowed in  any  such  proceeding.   In  particular,  the
  Trustee shall  be  entitled  and empowered  in  such instances:

                   (a)      to file and prove a  claim or claims for the whole
  amount of  principal (and premium, if any), interest and  any other amounts
  owing and unpaid in  respect of the Securities, and to file such other papers
  or documents as may  be necessary or advisable  in order to have  the claims
  of the  Trustee (including all amounts owing  to the Trustee  and each
  predecessor Trustee  pursuant to Section 7.07  hereof) and of  the Holders
  allowed in any  judicial proceedings relative to the Company  or other
  obligor upon the Securities,  or to the creditors or property of the Company,
  any Guarantor, or any such other Obligor,





                                       54
<PAGE>   62





                   (b)      unless  prohibited  by applicable  law  and
  regulations,  to  vote on  behalf  of the Holders of the  Securities in any
  election  of a trustee or a  standby trustee in arrangement,  reorganization,
  liquidation  or  other  bankruptcy  or  insolvency  proceedings  or  Person
  performing  similar  functions  in comparable proceedings, and

                   (c)      to collect and  receive any moneys or other
  Property or assets payable or deliverable on any such claims,  and to
  distribute all amounts received with respect  to the claims of the Holders
  and of the Trustee on their behalf; and  any trustee, receiver, or
  liquidator, custodian or other similar official  is hereby authorized by
  each of the Holders to make payments  to the Trustee, and,  in the event that
  the Trustee shall  consent to the making  of payments directly to the
  Holders, to pay  to the Trustee such amounts as shall be  sufficient to cover
  all amounts  owing to  the Trustee  and each  predecessor Trustee pursuant
  to Section 7.07.

                   Nothing herein  contained shall be deemed to  authorize the
  Trustee to authorize or consent to or vote for  or accept or adopt on behalf
  of any Holder any plan of reorganization, arrangement, adjustment or
  composition  affecting the Securities or the rights  of any Holder thereof,
  or to authorize the Trustee to vote in respect of the  claim of any Holder in
  any such proceeding except, as aforesaid, to vote  for the election of a
  trustee in bankruptcy or similar person.

                   In  any  proceedings  brought  by  the  Trustee  (and  also
  any  proceedings  involving  the interpretation  of any provision of this
  Indenture to which the Trustee  shall be a party), the Trustee shall be  held
  to represent all the Holders of the  Securities, and it shall not be
  necessary to make any Holders of the Securities parties to any such
  proceedings.

                   SECTION 6.10.  Priorities.   If the Trustee  collects any
  money or  property pursuant to this Article 6, it shall pay out the money or
  property in the following order:

                   FIRST:  to the Trustee for amounts due under Section 7.07;

                   SECOND:   to Holders for amounts due and unpaid on the
           Securities for principal and interest, ratably, without preference
           or  priority of any kind, according to the amounts  due and payable
           on the Securities for principal (premium, if any) and interest,
           respectively; and

                   THIRD:   to the  Company or the  Guarantors or  to such
           other  party as  a court  of competent jurisdiction shall direct.

                   The  Trustee may fix a  record date and  payment date  for
  any payment to  Holders pursuant to this Section.   At  least 15 days before
  such  record date,  the Company  shall mail  to each  Holder and  the Trustee
  a notice that states  the record date, the payment date  and amount to be
  paid.  The Trustee  may mail such notice in the name and at the expense of
  the Company.

                   SECTION 6.11.   Undertaking  for Costs.   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





                                       55
<PAGE>   63





  omitted  by it as Trustee, a court in its  discretion may require the filing
  by any party litigant in the suit of  an undertaking to pay the costs of the
  suit, and the court in its discretion  may assess reasonable costs, including
  reasonable attorneys' fees, against any party litigant  in the suit, having
  due regard  to the merits and good faith of  the claims or  defenses made by
  the party litigant.   This Section does not apply  to a suit by  the Trustee,
  a suit  by a  Holder pursuant  to Section  6.07 or  a suit  by  Holders of
  more than  10% in principal amount at Stated Maturity of the Securities.

                   SECTION  6.12   Restoration  of  Rights  and  Remedies.   If
  the  Trustee  or any  Holder  of Securities has  instituted any  proceeding
  to enforce  any  right or  remedy under  this Indenture  and  such proceeding
  has been discontinued or abandoned  for any reason, or has been determined
  adversely to the  Trustee or to such  Holder, then and in every such case the
  Company, the Trustee and the  Holders shall, subject to any determination in
  such proceeding, be  restored severally and respectively to their former
  positions  hereunder, and  thereafter all  rights and  remedies of  the
  Trustee  and the  Holders shall  continue  as though  no such proceeding has
  been instituted.

                   SECTION 6.13  Rights and  Remedies Cumulative.  Except as
  otherwise provided in  Section 2.08 hereof, no  right or remedy conferred
  herein, upon or reserved to the Trustee or  to the Holders is intended to be
  exclusive of any other  right or remedy, and  every right and remedy shall,
  to the extent  permitted by law, be cumulative and in addition to every other
  right and remedy  given hereunder or now or hereafter existing at law  or in
  equity or otherwise.  The assertion  or employment of any right  or remedy
  hereunder, or otherwise, shall not prevent the concurrent assertion or
  employment of any other appropriate right or remedy.

                   SECTION 6.14   Delay or Omission Not  Waiver.  No delay or
  omission of the  Trustee or of any Holder of any  Security to exercise any
  right or remedy accruing  upon any Event of Default shall  impair any such
  right or  remedy or constitute a waiver of  any such Event of Default  or an
  acquiescence therein.  Every right and  remedy given by this  Article 6 or by
  law to the Trustee  or to the Holders may  be exercised from time to time,
  and as often as may be deemed expedient, by the Trustee or by the Holders, as
  the case may be.


                                   ARTICLE 7

                                    Trustee

                   SECTION 7.01.  Duties of Trustee.

                   (a)      If an  Event of Default  has occurred and is
  continuing, the Trustee  shall exercise the  rights and  powers vested in  it
  by this  Indenture and  use the same  degree of care and  skill in their
  exercise as a prudent  Person would exercise  or use  under the circumstances
  in  the conduct of such  Person's own affairs.

                   (b)      Except during the continuance of an Event of
  Default:





                                       56
<PAGE>   64
                   (1) the  Trustee undertakes to perform  such duties  and
           only such duties  as are specifically set forth in this Indenture
           and no implied  covenants or obligations shall be read into this
           Indenture against the Trustee; and

                   (2) in the absence  of bad faith on  its part, the  Trustee
           may  conclusively rely, as to  the truth  of the statements and  the
           correctness of the opinions  expressed therein, upon certificates or
           opinions furnished to the Trustee and conforming to the
           requirements of this Indenture.  However, the Trustee shall examine
           the  certificates and opinions to determine  whether or not they
           conform  to the requirements of this Indenture.

                   (c)      The Trustee may not be relieved from liability for
  its own  negligent action, its own negligent failure to act or its own
  willful misconduct, except that:

                   (1) this subsection does not limit the effect of subsection
                       (b) of this Section;

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

                   (3) the Trustee shall not be liable with  respect to any
           action it takes or  omits to take in good faith in accordance with a
           direction received by it pursuant to Section 6.05.

                   (d)      Every provision of  this Indenture that in any way
  relates  to the Trustee is subject to subsections (a), (b) and (c) of this
  Section.

                   (e)      The Trustee shall not  be liable for interest on
  any money received by it  except as the Trustee may agree in writing with the
  Company.

                   (f)      Money held in trust by the Trustee need not  be
  segregated from other funds except to the extent required by law.

                   (g)      No provision of  this Indenture shall require  the
  Trustee to expend or  risk its own funds or otherwise  incur financial
  liability in  the performance  of any of  its duties hereunder  or in  the
  exercise  of any of its  rights or powers,  if it shall  have reasonable
  grounds to believe  that repayment of such funds or adequate indemnity
  against such risk or liability is not reasonably assured to it.

                   (h)      Every provision  of this Indenture relating to the
  conduct or affecting the liability of or  affording protection to the
  Trustee shall  be subject to  the provisions  of this  Section and to  the
  provisions of the Trust Indenture Act.

                   SECTION 7.02.  Rights of Trustee.





                                       57
<PAGE>   65





                   (a)      Subject  to the  provisions of Section 7.01(a)
  hereof, the  Trustee may  rely on any document believed by  it to be genuine
  and to have been signed or presented by the  proper Person.  The Trustee need
  not investigate any fact or matter stated in the document.

                   (b)      Before  the Trustee  acts  or  refrains from
  acting,  it  may require  an  Officers' Certificate or an  Opinion of
  Counsel.  The  Trustee shall not be  liable for any action it takes or  omits
  to take in good faith in reliance on the Officers' Certificate or Opinion of
  Counsel.

                   (c)      The  Trustee may act through  agents and shall not
  be responsible for the misconduct or negligence of any agent appointed with
  due care.

                   (d)      The Trustee  shall not be  liable for any  action
  it takes or  omits to take  in good faith  which  it believes  to  be
  authorized  or  within  its rights  or  powers; provided,  however,  that the
  Trustee's conduct does not constitute willful misconduct or negligence.

                   (e)      The Trustee  may consult  with counsel,  and the
  advice  or opinion  of counsel  with respect  to  legal  matters  relating
  to this  Indenture  and  the  Securities shall  be  full  and  complete
  authorization and  protection from  liability  in respect  to  any action
  taken, omitted  or suffered  by  it hereunder in good faith and in accordance
  with the advice or opinion of such counsel.

                   (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,  Officer's  Certificate,  or  other
  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 to  do so
  by the Holders of not less  than a majority  in aggregate  principal amount
  of the  Securities  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
  examination shall  be paid by the  Company or, if advanced by the Trustee,
  shall  be repaid by the Company upon demand.

                   (g)      The Trustee shall  not be  required to  give any
  bond or  surety in  respect of  the performance of its powers and duties
  hereunder.

                   (h)      The Trustee  shall not be  bound to  ascertain or
  inquire as to  the performance  or observance of  any covenants, conditions,
  or  agreements on the  part of the Company,  except as otherwise  set forth
  herein, but the Trustee may require of the Company full information and
  advice as  to the performance of the  covenants, conditions  and agreements
  contained  herein and shall be  entitled in  connection herewith to examine
  the books, records and premises of the Company.





                                       58
<PAGE>   66
                   (i)      The permissive rights of the Trustee to do things
  enumerated in this Indenture shall not be construed as a duty.

                   (j)      Except for (i) a default under Section 6.01(a) or
  (b), or  (ii) any other event of which the Trustee has "actual knowledge"
  and which  event, with the giving of notice or the passage of time or both,
  would  constitute an Event of Default under this  Indenture, the Trustee
  shall not  be deemed to have notice of any Default or Event of Default
  unless specifically  notified in writing of such event by the Company or
  the  Holders of not less than 25% in aggregate principal amount at
  Stated Maturity of the Securities then outstanding; provided that the
  Trustee  shall comply with the "automatic stay" provisions contained in
  the  U.S. bankruptcy laws, if applicable; and as used herein, the term
  "actual knowledge" means the actual fact or statement of knowing by  a
  Responsible Officer, without any duty to  make any investigation with regard
  thereto.

                   SECTION  7.03.  Individual Rights of Trustee.  The Trustee
  in  its individual or any other capacity may become the owner or pledgee
  of  Securities and may otherwise deal with the Company or its Affiliates
  with the same rights it would have if it were not Trustee.  Any Paying
  Agent, Registrar,  co-registrar or co-paying agent may do the same with
  like rights.  However, the Trustee must comply with Sections 7.10 and
  7.11.

                   SECTION  7.04. Trustee's Disclaimer. The Trustee shall not
  be responsible for and makes no representation  as to the validity or
  adequacy  of this Indenture or the Securities, it shall not be
  accountable for the Company's  use of the proceeds from the Securities, and
  it shall not be responsible for any statement of the Company in this
  Indenture or in any document issued in connection with the sale of the
  Securities or in the Securities other than the Trustee's certificate of
  authentication.

                   SECTION 7.05.  Notice of Defaults.   If a Default occurs and
  is continuing and if it is known to the Trustee,  the Trustee shall mail to
  each  Holder notice of the Default within 90 days after it occurs. Except
  in the case of  a Default in payment of principal of (or premium, if any) or
  interest on  any Security (including payments pursuant to the mandatory
  repurchase provisions  of such Security, if any), the Trustee may withhold
  the notice if and so long as the Trustee in good faith determines that
  withholding the notice is in the interests of Holders.

                   SECTION  7.06.  Reports by Trustee to Holders.   As
  promptly as practicable after May 15 beginning with the May 15 following
  the date of this Indenture, and in any event prior to August 15 in each
  year, the Trustee shall mail to each Holder a brief report dated as of
  such date that complies with TIA Section 313(a) if and to  the extent
 required by TIA  Section 313(a). The Trustee also shall comply with TIA
  Sections 313(b) and 313(c).

                   A copy of each report at the time of its mailing to
  Holders shall be filed with the Commission and each stock exchange (if
  any) on which the Securities are listed. The Company agrees  to notify
 promptly the Trustee whenever the Securities become listed on any stock
  exchange and of any delisting thereof.





                                       59
<PAGE>   67
                   SECTION 7.07.   Compensation and Indemnity.   The  Company
  shall pay  to the Trustee  promptly upon request from time  to time the
  compensation for its services as agreed to by the  Trustee and the Company.
  The  Trustee's compensation shall not be limited by any law on compensation
  of a trustee of an express trust.  The  Company shall  reimburse the  Trustee
  promptly  upon  request for  all reasonable  out-of-pocket expenses incurred
  or made by  it, including  costs of  collection, in  addition to  the
  compensation for  its services.  Such  expenses shall  include  the
  reasonable  compensation and  expenses, disbursements  and advances  of the
  Trustee's agents, counsel, accountants and  experts.  The Company shall
  indemnify  the Trustee against any and all loss, liability or reasonable
  expense  (including reasonable attorneys' fees) incurred  by it in connection
  with  the acceptance  and administration  of this  trust  and  the
  performance  of its  duties hereunder.   The Trustee shall  notify the
  Company promptly  of any  claim for which  it may  seek indemnity.   Failure
  by  the Trustee  to so notify the Company  shall not relieve  the Company of
  its obligations hereunder.   The Company shall  defend the claim  and the
  Trustee may have separate  counsel and  the Company shall  pay the  fees and
  expenses  of  such counsel.    The Company  need  not  reimburse any  expense
  or indemnify  against  any loss, liability  or expense incurred by the
  Trustee through the Trustee's  own willful misconduct, negligence or bad
  faith.  The Company  need not pay for any  settlement made by the Trustee
  without the Company's  consent, such consent not to be unreasonably withheld.

                   To secure the Company's  payment obligations  in this
  Section, the  Trustee shall have a  Lien prior  to the  Securities on  all
  money  or property  held or  collected by  the Trustee  other than  money or
  property held in trust to pay principal of and interest on particular
  Securities.

                   The Company's  payment obligations  pursuant to  this
  Section  shall survive the  discharge of this  Indenture.  When  the Trustee
  incurs expenses  after the  occurrence of  a Default specified  in Section
  6.01(g)  or  (h)  with  respect  to  the  Company,  the  expenses  are
  intended  to  constitute  expenses  of administration under any applicable
  bankruptcy laws.

                   SECTION 7.08.  Replacement  of Trustee.  The  Trustee may
  resign  at any time by  so notifying the Company.  The Holders of a  majority
  in principal amount at  Stated Maturity of the Securities  may remove the
  Trustee by so notifying the Trustee and may appoint a successor Trustee.  If
  at any time:

                            (i)     the Trustee shall fail  to comply with
           Section 310(b) of the Trust  Indenture Act after written request
           thereof by the Company  or by any Holder who has been a bona  fide
           Holder of a Security for at least six  months, unless the Trustees
           duty to resign is  stayed in accordance with the provisions of TIA
           Section 310(b); or

                            (ii)    the  Trustee shall cease to  be eligible
           under Section 7.10  hereof and shall fail to resign after written
           request therefor by the Company or by any Holder; or

                            (iii)   the Trustee shall become incapable of
           acting or a decree or order for relief by a court having
           jurisdiction  in the premises shall have  been entered in respect of
           the  Trustee in an involuntary case  under the United States
           bankruptcy laws, as  now or hereafter constituted, or any other
           applicable federal or state bankruptcy, insolvency or





                                       60
<PAGE>   68
           similar law,  or a decree or order by  a court having jurisdiction
           in the premises shall have been entered for  the appointment  of a
           receiver, custodian,  liquidator, assignee,  trustee, sequestrator
           (or  other similar  official) of the  Trustee or  of its Property
           and assets or affairs, or  any public  officer  shall take  charge
           or  control  of the  Trustee  or of  its Property and  assets or
           affairs for the  purpose of rehabilitation,  conservation,
           winding-up or liquidation; or

                            (iv)    the  Trustee  shall  commence  a  voluntary
           case  under  the  United  States bankruptcy  laws,  as  now  or
           hereafter  constituted,  or  any  other  applicable  federal  or
           state bankruptcy, insolvency or similar law  or shall consent to the
           appointment of or  taking possession by a receiver, custodian,
           liquidator, assignee, trustee,  sequestrator (or other similar
           official) of the Trustee or  of its Property  and assets or
           affairs, or  shall make an  assignment for the  benefit of
           creditors,  or shall admit in writing its inability to  pay its
           debts generally as they become due, or shall take corporate action
           in furtherance of any such action,

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

                   If  the Trustee  resigns, is  removed  by the  Company or
  by  the Holders  of a  majority  in principal amount at Stated  Maturity of
  the Securities  and such Holders  do not reasonably promptly  appoint a
  successor  Trustee, or if a vacancy exists in  the office of Trustee  for any
  reason (the Trustee in such event being referred to herein as the retiring
  Trustee), the Company shall promptly appoint a successor Trustee.

                   A successor  Trustee shall deliver  a written acceptance  of
  its appointment to  the retiring Trustee  and to  the Company.   Thereupon
  the resignation  or removal  of the  retiring Trustee  shall  become
  effective, and the  successor Trustee shall have all  the rights, powers and
  duties  of the Trustee under this Indenture.   The successor  Trustee shall
  mail  a notice of  its succession to Holders.   The retiring Trustee shall
  promptly  transfer all  property held by  it as  Trustee to  the successor
  Trustee, subject to  the Lien provided for in Section 7.07.

                   If  a successor  Trustee  does not  take office  within  60
  days  after  the  retiring Trustee resigns or is  removed, the retiring
  Trustee or  the Holders of 10% in  principal amount at Stated Maturity of the
  Securities may petition any court of competent jurisdiction for the
  appointment of a successor Trustee.

                   If  the Trustee  fails to  comply with Section  7.10, any
  Holder may  petition any  court of competent jurisdiction for the removal of
  the Trustee and the appointment of a successor Trustee.





                                       61
<PAGE>   69
                   Notwithstanding  the replacement  of  the  Trustee  pursuant
  to  this  Section, the  Company's obligations under Section 7.07 shall
  continue for the benefit of the retiring Trustee.

                   SECTION 7.09.   Successor Trustee by  Merger.   If the
  Trustee  consolidates with,  merges or converts  into, or  transfers all  or
  substantially all  its corporate  trust business  or assets  to, another
  corporation or banking  association, the resulting,  surviving or  transferee
  corporation  without any  further act shall be the successor Trustee.

                   In case  at the time such  successor or successors by
  merger, conversion  or consolidation to the Trustee  shall succeed  to the
  trusts created by this  Indenture any  of the  Securities 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 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 to  the Trustee; and
  in all  such cases  such certificates  shall have  the full  force which it
  is  anywhere in  the Securities or in this Indenture provided that the
  certificate of the Trustee shall have.

                   SECTION 7.10.   Eligibility; Disqualification.   The Trustee
  shall  at all times  satisfy the requirements of  TIA Section  310(a).   The
  Trustee shall  have a  combined capital  and surplus  of at  least
  $100,000,000 as set forth in its  most recent published annual report of
  condition.   The Trustee shall comply with TIA  Section 310(b); provided,
  however, that there  shall be excluded from the  operation of TIA Section
  310(b)(1)  any  indenture  or  indentures  under  which  other  securities
  or  certificates  of  interest  or participation in  other securities of the
  Company are outstanding  if the requirements for  such exclusion set forth in
  TIA Section 310(b)(1) are met.

                   SECTION 7.11.   Preferential Collection of Claims Against
  Company.   The Trustee shall comply with TIA Section 311(a), excluding any
  creditor relationship  listed in TIA Section 311(b).   A Trustee who has
  resigned or been removed shall be subject to TIA Section 311(a) to the extent
  indicated therein.


                                   ARTICLE 8

                           Satisfaction and Discharge

                   SECTION 8.01   Satisfaction  and Discharge.   This
  Indenture shall  upon the  request of  the Company cease to be of further
  effect (except as to  surviving rights of registration of transfer or
  exchange of Securities  herein expressly provided for,  the Company's
  obligations under  Sections 7.07  and 8.04 hereof, and  the Company's,  the
  Trustee's  and the  Paying Agent s  obligations under  Section 8.03  hereof)
  and the Trustee, at  the expense  of the  Company, shall  execute proper
  instruments acknowledging  satisfaction  and discharge of this Indenture when

                   (a)      either





                                       62
<PAGE>   70
                            (i)     all  Securities  therefore  authenticated
           and  delivered  (other  than  (A) Securities which have been
           destroyed, lost or stolen  and which have been replaced or paid as
           provided in Section 2.08  and (B)  Securities for  whose payment
           money  has been  deposited in  trust with  the Trustee or  any
           Paying Agent and  thereafter paid to the  Company or discharged from
           such trust) have been delivered to the Trustee for cancellation; or

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

                             (A)    have become due and payable, or

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

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

           and the Company, in the case of  clause (A), (B) or (C) above, has
           irrevocably deposited  or caused to be deposited with  the Trustee
           as trust  funds in trust  for such  purpose money  or U.S.
           Government Obligations in an amount  sufficient (as certified by  an
           independent public accountant  designated by the  Company)  to  pay
           and  discharge  the  entire  indebtedness of  such  Securities  not
           theretofore delivered to the Trustee  for cancellation, for
           principal (and  premium, if any, on) and  interest, if any, to the
           date of such deposit (in  the case of Securities which have become
           due and payable) or the Stated Maturity or Redemption Date, as the
           case may be;

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

                   (c)      no Default or  Event of Default  with respect to
  the Securities shall  have occurred and be continuing on the date of such
  deposit and after giving effect to such deposit; and

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

                   Notwithstanding the satisfaction  and discharge of this
  Indenture, the  Company s obligations in Sections 2.03, 2.04,  2.06, 2.08,
  2.11, 7.07,  7.08, 8.02,  8.03 and 8.04,  and the  Trustee s and  Paying
  Agent s  obligations  in  Section  8.03  shall  survive  until  the
  Securities  are  no  longer  outstanding.  Thereafter, only  the Company s
  obligations in  Sections 7.07,  8.03 and  8.04 and the  Trustee s and  Paying
  Agent s obligations in Section 8.03 shall survive.





                                       63
<PAGE>   71
                   In  order to have money  available on a  payment date  to
  pay principal (and  premium, if any, on) or  interest on  the Securities, the
  U.S. Government  Obligations shall be  payable as  to principal  (and
  premium,  if any) or  interest at  least one Business Day  before such
  payment date in  such amounts  as will provide the necessary money.  U.S.
  Government Obligations shall not be callable at the issuer s option.

                   SECTION 8.02  Application of Trust  Money.  All money
  deposited with the Trustee pursuant  to Section 8.01  shall be  held in
  trust and,  at the  written direction  of the  Company, be invested prior  to
  maturity in U.S. Government  Obligations, and applied by the Trustee  in
  accordance with the provisions of  the Securities  and this Indenture, to the
  payment, either directly or through any  Paying Agent as the Trustee may
  determine, to  the Persons  entitled thereto,  of the  principal (and
  premium, if  any) and  interest for  the payment of which money has been
  deposited with the Trustee;  but such money need not be segregated  from
  other funds except to the extent required by law.

                   SECTION 8.03  Repayment to the Company.

                   The Trustee and the Paying  Agent shall promptly pay to the
  Company upon written request any excess money or securities held by them at
  any time.

                   The Trustee and  the Paying Agent  shall pay  to the Company
  upon written request  any money held by them  for the payment of principal
  or interest that  remains unclaimed for two  years after the  date upon
  which such payment shall have become due; provided  that the  Company shall
  have either caused notice of such payment  to  be mailed  to each
  Securityholder  entitled thereto  no less  than 30  days prior  to  such
  repayment  or within  such period  shall have published  such notice  in a
  financial newspaper  of widespread circulation published in The City of  New
  York, including, without limitation, The Wall Street Journal.   After payment
  to the  Company, Holders  entitled to  the money  must  look to  the Company
  for payment  as  general creditors  unless an  applicable abandoned property
  law designates another Person,  and all  liability of the Trustee and such
  Paying Agent with respect to such money shall cease.

                   SECTION 8.04  Reinstatement.

                   If the Trustee or  Paying Agent is unable  to apply any
  money  or U.S. Government Obligations in accordance with Section  8.01 by
  reason of  any legal proceeding or  by reason of  any order or judgment  of
  any court  of governmental  authority enjoining,  restraining or otherwise
  prohibiting  such application,  the Company s and  Guarantors   obligations
  under  this Indenture,  the Securities  and  the Guarantees  shall  be
  revived and reinstated  as though  no deposit has  occurred pursuant  to
  Section  8.01 until  such time as  the Trustee or  Paying Agent is  permitted
  to apply  all such money  or U.S. Government  Obligations in  accordance with
  Section  8.02; provided, however, that if the  Company or the Guarantors have
  made any payment of interest on or  principal of  any Securities because  of
  the  reinstatement of their  Obligations, the  Company or  such Guarantors
  shall be subrogated to the rights of the Holders of such Securities to
  receive





                                       64
<PAGE>   72
  such payment from the money or U.S. Government Obligations held by the
  Trustee or Paying Agent.


                                   ARTICLE 9

                                   Defeasance

                   SECTION 9.01  Company's Option to  Effect Defeasance or
  Covenant Defeasance.   The Company may elect, at its option,  at any time,
  to have Section 9.02  or Section 9.03  hereof applied to  the outstanding
  Securities (in whole and not in part) upon  compliance with the conditions
  set forth below  in this Article 9, such election to be evidenced by a Board
  Resolution delivered to the Trustee.

                   SECTION 9.02 Defeasance  and Discharge.   Upon the Company's
  exercise of its option to  have this Section  9.02 applied  to the
  outstanding  Securities (in  whole and  not in  part), the Company  shall be
  deemed to  have been  discharged from  its Obligations  with respect  to such
  Securities as  provided in  this Section 9.02 on  and after the date  on
  which the  conditions set forth  in Section 9.04 hereof are  satisfied
  (hereinafter called "Defeasance").   For this  purpose, Defeasance  means
  that the  Company shall be deemed  to have paid  and discharged  the entire
  indebtedness represented  by such  Securities and the  Company and  the
  Guarantors shall be  deemed to  have satisfied  all of  their other
  obligations under  such Securities,  this Indenture  and  the  Guarantees
  (and  the Trustee,  at  the expense  of  the  Company,  shall  execute proper
  instruments  acknowledging the same), subject to the following which  shall
  survive until otherwise terminated or discharged hereunder:

                   (a)      the  rights of  Holders of  such Securities  to
  receive, solely  from the  trust fund described in Section  9.04 hereof  and
  as more  fully set forth  in Section 9.04,  payments in respect of  the
  principal of and any premium and interest on such Securities when payments
  are due,

                   (b)      the Company's obligations with respect to such
  Securities under Sections  2.06, 2.08, 2.10, 4.15, 4.16 and 4.17 hereof,

                   (c)      the  rights,  powers,  trusts,  duties  and
  immunities  of  the  Trustee  under  this Indenture,

                   (d)      Article 3 hereof, and

                   (e)      this Article 9.

                   Subject  to compliance with this Article 9, the Company may
  exercise its option to have this Section 9.02 applied  to the outstanding
  Securities  notwithstanding the prior exercise of its option  to have Section
  9.03 hereof applied to such Securities.





                                       65
<PAGE>   73
                   SECTION 9.03  Covenant  Defeasance.  Upon the  Company's
  exercise of its  option to have this Section 9.03  applied to  the
  outstanding  Securities  (in whole  and not  in part),  (i) the  Company and
  the Guarantors shall  be released from  their respective obligations  under
  Sections 5.01  and 5.02, Sections  4.02 through 4.14, inclusive, Sections
  4.18, 4.19 and 4.21 and any  covenant added to this Indenture subsequent  to
  the Issue Date pursuant  to Section 10.01 hereof,  and (ii) the  occurrence
  of  any event specified in  Section 6.01(c)  or 6.01(d)  hereof,  with
  respect  to  any of  Section  5.01 and  5.02,  Sections 4.03  through  4.14,
  inclusive, Sections 4.18,  4.19 and 4.21,  and any  covenant added  to this
  Indenture  subsequent to the  Issue Date pursuant to  Section 10.01 hereof,
  shall be  deemed not to be  or result in an Event of Default,  in each case
  with  respect to such  Securities as provided  in this  Section 9.03  on and
  after  the date on  which the conditions set  forth in Section  9.04 hereof
  are  satisfied (hereinafter called  "Covenant Defeasance").   For this
  purpose, Covenant Defeasance means that,  with respect to such Securities,
  the Company and the Guarantors may omit  to comply with and shall have no
  liability in respect of any term, condition or limitation set forth in any
  such specified Section (to the extent so specified in the case of Section
  6.01(c) and  6.01(d) hereof), whether directly or indirectly by  reason of
  any reference elsewhere herein to  any such Section or by  reason of  any
  reference  in any  such Section  to any  other provisions  herein or  in any
  other document;  but the remainder of this Indenture, the Guarantees and such
  Securities shall be unaffected thereby.

                   SECTION 9.04  Conditions  to Defeasance  or Covenant
  Defeasance.   The following shall be  the conditions to the application of
  Section 9.03 or Section 9.04 hereof to the outstanding Securities:

                   (a)      The  Company shall  irrevocably have  deposited or
  caused to  be deposited  with the Trustee as  trust funds in  trust for the
  purpose of making  the following payments,  specifically pledged  as security
  for, and dedicated solely to the benefits of the Holders of such Securities,
  (i) money in an amount, or (ii) U.S. Government Obligations which  through
  the scheduled payment of principal and interest in  respect thereof  in
  accordance with their terms  will provide, not later than  one Business Day
  before the due date of any payment, money in an amount, or (iii) a
  combination thereof, in each case 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 and  discharge the
  principal of (premium,  if any on) and any  installment of interest  on such
  Securities on  the Stated Maturity  thereof, in  accordance with the terms
  of this Indenture and such Securities.

                   (b)      In the event  of an election  to have Section  9.02
  hereof  apply to the  outstanding Securities,  the Company  shall have
  delivered to  the  Trustee  an Opinion  of Counsel  stating that  (i) the
  Company  has received from,  or there has  been published  by, the Internal
  Revenue Service  a ruling  or (ii) since the date of  this Indenture, there
  has been a change  in the applicable United States federal income tax law, in
  either case (i) or  (ii) to the effect  that, and based thereon  such opinion
  shall  confirm that, the Holders of such Securities will not recognize gain
  or loss for  United States federal income tax purposes as a result of the
  deposit,  Defeasance and discharge to  be effected with respect  to such
  Securities  and will  be subject to United States federal  income tax in the
  same amount,  in the same manner and at the same  times as would be the case
  if such deposit, Defeasance and discharge were not to occur.





                                       66
<PAGE>   74
                   (c)      In the  event of an  election to have  Section 9.03
  hereof  apply to  the outstanding Securities,  the Company shall  have
  delivered  to the  Trustee an  Opinion of Counsel  to the effect  that the
  Holders of such Securities will not recognize gain or loss for United States
  federal income  tax purposes as a result of  the deposit and  Covenant
  Defeasance to  be effected  with respect to  such Securities  and will  be
  subject to United States federal  income tax in the same amount,  in the same
  manner and at the same  times as would be the case if such deposit, Covenant
  Defeasance and discharge were not to occur.

                   (d)      No Default or Event of Default with respect to the
  outstanding Securities shall  have occurred and be continuing at the time of
  such deposit  after giving effect thereto or and no  Default or Event of
  Default under  Section 6.01(g) or 6.01(h) shall have occurred at any time on
  or prior  to the 91st day after the date of  such deposit and be continuing
  on  such 91st day (it  being understood that this  condition shall not be
  deemed satisfied until after such 91st day).

                   (e)      Such  Defeasance or  Covenant  Defeasance  shall
  not  cause  the  Trustee to  have  a conflicting interest within the  meaning
  of the Trust  Indenture Act (assuming  for the purpose of  this clause (e)
  that all Securities are in default within the meaning of such Act).

                   (f)      Such Defeasance or Covenant Defeasance shall not
  result in a breach  or violation of, or constitute a default under, any other
  agreement or instrument to which  the Company or the Guarantor  is a party or
  by which it is bound.

                   (g)      Such Defeasance or  Covenant Defeasance shall  not
  result in  the trust arising  from such deposit  constituting an investment
  company within the  meaning of the Investment  Company Act of 1940, as
  amended, unless such trust shall be registered under such Act or exempt from
  registration thereunder.

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

                   SECTION  9.05    Deposited  Money and  U.S.  Government
  Obligations  to  be  Held  in Trust; Miscellaneous  Provisions.    Subject to
  Section  9.06 hereof,  all  money  and  U.S. Government  Obligations
  (including the proceeds thereof) deposited with  the Trustee pursuant to
  Section 9.04 hereof in respect of  the outstanding Securities shall be  held
  in trust and  applied by the  Trustee, in accordance with  the provisions of
  such Securities  and this Indenture, to  the payment, either directly  or
  through any  such Paying  Agent as the Trustee may determine,  to the Holders
  of such Securities, of  all sums due and  to become due thereon  in respect
  of principal and  any premium and  interest, but money so  held in trust
  need not be  segregated upon other  funds except to the extent required  by
  law.  The  Company shall pay and  indemnity the Trustee against any tax,  fee
  or other  charge imposed  on or  assessed  against the  U.S. Government
  Obligations  deposited pursuant to Section 9.04 hereof or the principal and
  interest received in





                                       67
<PAGE>   75
  respect thereof other  than any such  tax, fee  or other  charge which by
  law is for the account of  the Holders  of outstanding Securities.

                   Anything in this  Article 9 to the contrary notwithstanding,
  the Trustee shall  deliver or pay to  the Company from time  to time upon
  Company  Order any money  or U.S. Government Obligations  held by it as
  provided in Section  9.04 hereof which, in  the opinion of a nationally
  recognized firm of independent  public accountants expressed  in a  written
  certification  thereof delivered  to the  Trustee, are in  excess of  the
  amount thereof that  would then be required  to be deposited to effect  the
  Defeasance or Covenant  Defeasance, as the case may be, with respect to the
  outstanding Securities.

                   SECTION  9.06   Repayment to  Company.   Any money deposited
  with the  Trustee or  any Paying Agent,  or then  held  by the  Company, in
  trust for  the payment  of the  principal of,  premium, if  any, or interest,
  if any,  on any Security  and remaining  unclaimed for  two years after  such
  principal, premium,  if any, or interest, if any, have become due and payable
  shall be paid to the Company on  its request or (if then held by the Company)
  shall  be discharged from such trust;  and the Holder of such Security shall
  thereafter, as an unsecured  general creditor,  look only to  the Company
  for payment  thereof, and  all liability of  the Company as trustee  thereof,
  shall thereupon  cease; provided  that the Trustee  or such Paying  Agent,
  before being  required to make any such repayment, may at  the expense of the
  Company cause  to be published once, in the New York Times  and The Wall
  Street  Journal (national edition),  notice that such money  remains
  unclaimed and that,  after a  date specified  therein, which  shall not  be
  less  than 30  days from  the  date of  such notification or  publication,
  any unclaimed  balance of  such money  then  remaining will  be repaid  to
  the Company.

                   SECTION  9.07  Reinstatement.  If the Trustee or Paying
  Agent is  unable to apply any money in accordance with this Article 9  with
  respect to any Notes by  reason of any order or judgment of any  court or
  governmental authority enjoining, restraining  or otherwise prohibiting such
  application, then the obligations under this Indenture, the  Guarantees and
  such Securities  from which the  Company or the Guarantors  have been
  discharged or released pursuant  to Section 9.02 or 9.03  hereof shall be
  revived and reinstated as  though no deposit had occurred  pursuant to  this
  Article  9 with respect to  such Securities,  until such  time as  the
  Trustee  or Paying Agent is  permitted to apply all  money held in trust
  pursuant to  Section 9.05 hereof with respect to such Securities  in
  accordance with this Article  9; provided that if the  Company or any
  Guarantor makes  any payment  of  principal  of, premium,  if  any, or
  interest  on  any such  Security  following  such reinstatement  of its
  obligations, the Company  or such Guarantor, as the case may  be, shall be
  subrogated to the Holders of such Securities to receive such payment from the
  money so held in trust.





                                       68
<PAGE>   76
                                   ARTICLE 10

                                   Amendments

                   SECTION 10.01.  Without Consent of Holders.

                   (a)      The Company, the Guarantors  and the Trustee may at
  any time and from time  to time, without notice  to or consent of  any
  Holder, enter into  one or more indentures  supplemental hereto, in  form
  satisfactory to the Trustee, for any of the following purposes:

                        (i)         to  evidence  the  succession  of  another
                   Person to  the  Company  and  the Guarantors  and the
                   assumption by such  successor of the covenants  and
                   Obligations   of the Company under this Indenture and
                   contained in the Securities and  the Guarantors contained in
                   this Indenture and the Guarantees;

                        (ii)        to add to the covenants  of the Company,
                   for the  benefit of the  Holders, or to  surrender any
                   right  or power  conferred  upon the  Company  or the
                   Guarantors  by  this Indenture;

                       (iii)       to add any additional Events of Default;

                       (iv)        to provide  for  uncertificated  Securities
                   in  addition to  or  in place  of certificated Securities;

                       (v)         to  evidence  and  provide  for  the
                   acceptance  of  appointment  under this Indenture by the
                   successor Trustee;

                       (vi)         to secure the Securities and/or the 
                   Guarantees;

                       (vii)        to  cure any  ambiguity,  to correct  or
                   supplement  any  provision in  this Indenture which  may be
                   inconsistent with any  other provision  therein or to  add
                   any other provisions with respect  to matters or questions
                   arising  under this Indenture, provided  that such actions
                   will not adversely affect the interests  of the Holders in
                   any  material respect; or

                       (viii)       to add or release any Guarantor pursuant 
                   to the terms of this Indenture.





                                       69
<PAGE>   77
                   SECTION 10.02.   With Consent  of Holders.   With the
  consent of  the Holders  of at least  a majority  of the  principal amount
  at  Stated  Maturity of  the  outstanding  Securities (including  consents
  obtained  in connection with a tender offer or an exchange offer for  the
  Securities), by Act delivered to the Company, the Guarantors and  the
  Trustee, the Company,  the Guarantors and the  Trustee may enter  into one
  or more indentures supplemental  hereto for the purpose of  adding any
  provisions to  or changing or  eliminating any of the provisions  of this
  Indenture  or modifying  the rights of the  Holders of the Securities,
  provided that no such supplemental indenture,  without the consent of the
  Holder  of each outstanding Security affected thereby, will:

                   (a)      change  the Stated Maturity of the  principal of,
  or any  installment of interest on, any Security, or reduce the principal
  amount thereof  (or any premium, if any), or the  interest thereon, that
  would be  due and  payable upon  Maturity thereof, or  change the  place of
  payment  where, or  in the coin  or currency  in which,  any Security  or
  any premium  or interest  thereon is  payable,  or  impair the  right to
  institute suit for the enforcement of any such payment on or after the Stated
  Maturity thereof; or

                   (b)      reduce the percentage in principal amount at Stated
  Maturity of the outstanding Securities, the consent of whose Holders is
  required for any such supplemental indenture or required for any waiver of
  compliance with the provisions of this Indenture; or

                   (c)      modify any of the provisions of Section 6.04
  hereof, except to increase the percentage set forth therein or to provide
  that certain other provisions of this Indenture cannot be amended or waived
  without the consent of the Holder of each outstanding Security affected
  thereby; or

                   (d)      subordinate in right of payment, or otherwise
  subordinate, the Securities or the Guarantees to any other Indebtedness; or

                   (e)      modify any provision of  this Indenture relating to
  the obligations of the Company to make offers to purchase Securities upon a
  Change of Control or from the proceeds of an Asset Sale; or

                   (f)      modify any of the provisions of this  Section 10.02
  except to increase any percentage set forth herein or to  provide that
  certain other provisions of this  Indenture cannot be modified or  waived
  without the consent of the Holders of each outstanding Security affected
  thereby; or

                   (g)      amend, supplement or otherwise  modify the
  provisions  of this Indenture relating  to the Guarantees.

                   It shall not  be necessary for  any Act  of Holders  under
  this Section  10.02 to approve  the particular form of any  proposed
  supplemental indenture, but it shall  be sufficient if such Act shall
  approve the substance thereof.





                                       70
<PAGE>   78
                   SECTION 10.03   Effect of  Supplemental Indentures.   Upon
  the execution of  any supplemental indenture  under  this  Article  10, this
  Indenture  shall  be  modified  in  accordance  therewith, and  such
  supplemental indenture shall form  a part of this  Indenture for all
  purposes; and every Holder  of Securities theretofore or thereafter
  authenticated  and delivered hereunder shall be  bound thereby.  After a
  supplemental indenture becomes  effective, the Company  shall mail to
  Holders a  notice briefly describing  such amendment.  The  failure to  give
  such  notice to  all Holders,  or any  defect therein,  shall not  impair or
  affect the validity of an amendment under this Section.

                   SECTION 10.04.   Compliance with Trust  Indenture Act.
  Every  amendment to  this Indenture or the Securities shall comply with the
  Trust Indenture Act as then in effect.

         SECTION 10.05.  Revocation and Effect of Consents and Waivers.

                   (a)      A consent  to an  amendment or  a waiver  by a
  Holder  of a  Security shall  bind the Holder  and every subsequent Holder of
  that Security  or portion of the Security  that evidences the same debt as
  the consenting Holder's Security, even  if notation of the consent  or waiver
  is not made on the Security.  However, any such Holder or  subsequent Holder
  may revoke the  consent or waiver as to such Holder's  Security or portion of
  the Security if  the Trustee receives the notice of revocation  before the
  date the amendment or waiver becomes effective.   After an  amendment or
  waiver becomes effective, it  shall bind every Holder.   An amendment or
  waiver  becomes effective  upon  the  execution  of a  supplemental
  indenture  containing  such amendment or waiver by the Trustee.

                   (b)      The Company may, but shall not be obligated to, fix
  a record date for the purpose  of determining the Holders  entitled to give
  their  consent or take any other  action described above or  required or
  permitted to  be taken pursuant to  this Indenture.   If a record  date is
  fixed, then notwithstanding  the immediately  preceding  subsection, those
  Persons  who  were  Holders  at  such  record date  (or  their  duly
  designated proxies),  and only those Persons, shall be entitled to give such
  consent or to revoke any consent previously  given or to take any such
  action, whether or not  such Persons continue to  be Holders after such
  record date.  No such consent shall be valid or effective for more than 120
  days after such record date.

                   SECTION 10.06.  Notation on or Exchange of  Securities.  If
  an amendment changes  the terms of a Security, the  Trustee may require the
  Holder of the Security to deliver it to the  Trustee.  The Trustee may place
  an appropriate  notation on  the Security  regarding  the  changed terms  and
  return  it to  the Holder.  Alternatively, if  the Company or the  Trustee so
  determines,  the Company in exchange  for the Security  shall issue and the
  Trustee shall authenticate a  new Security that reflects the changed terms.
  Failure to make the appropriate notation or to issue a new Security shall not
  affect the validity of such amendment.

                   SECTION 10.07.   Trustee To Execute  Supplemental
  Indentures.  The  Trustee shall execute any supplemental  indenture
  authorized  pursuant  to this  Article 10  if  such  supplemental indenture
  does  not adversely  affect the rights, duties, liabilities or immunities of
  the Trustee.   If it does, the Trustee may, but shall not be required to,
  execute such supplemental





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<PAGE>   79
  indenture.   In  executing any  supplemental  indenture,  the Trustee  shall
  be  entitled to  receive indemnity reasonably satisfactory to  it and to
  receive,  and (subject to Section 7.01  hereof) shall be fully  protected in
  relying upon, an Officers'  Certificate (which need only cover  the matters
  set forth in  clause (a) below) and an Opinion of Counsel provided by the
  Company stating that:

                   (a)      such supplemental indenture  is authorized or
  permitted by this  Indenture and  that all conditions  precedent to the
  execution, delivery and performance of such  supplemental indenture have been
  satisfied:

                   (b)      the Company  and the Guarantors have  all necessary
  corporate power  and authority to execute  and deliver  the  supplemental
  indenture and  that the  execution, delivery  and performance  of such
  supplemental indenture  has been duly  authorized by  all necessary
  corporate action  of the  Company and  the Guarantors;

                   (c)      the execution,  delivery  and  performance  of  the
  supplemental  indenture  do  not conflict with,  or result in  the breach  of
  or  constitute a default  under any  of the terms, conditions  or provisions
  of (i) this Indenture, (ii) the charter  documents and by-laws of the Company
  or any Guarantor, or (iii) any material agreement or instrument to which the
  Company or any Guarantor is subject and of which such counsel is aware;

                   (d)      to  the knowledge of  legal counsel writing  such
  Opinion of  Counsel, the execution, delivery and  performance of the
  supplemental indenture  do not conflict with, or result in  the breach of any
  of  the terms,  conditions  or provisions  of (i)  any law  or regulation
  applicable  to the  company  or any Guarantor,  or  (ii)   any  material
  order,  writ,  injunction  or   decree  of  any  court  or   governmental
  instrumentality applicable to the Company or any Guarantor;

                   (e)      such supplemental indenture has been duly  and
  validly executed and delivered by  the Company and  the Guarantors, and  the
  Indenture together with such supplemental  indenture constitutes a legal,
  valid  and binding  obligations of  the Company and  the Guarantors
  enforceable against  the Company  and the Guarantors, as  applicable, in
  accordance  with its  terms, except  as such  enforceability may  be limited
  by applicable  bankruptcy, insolvency, or similar laws  affecting the
  enforcement of  creditors  rights generally and general equitable principles;
  and

                   (f)      the Indenture  together with  such amendment or
  supplement complies  with the  Trust Indenture Act.

                   SECTION 10.08.  Payment  for Consent.  Neither  the Company
  nor any  Affiliate of the Company shall, directly or indirectly, pay or cause
  to be paid  any consideration, whether by way of interest,  fee or otherwise,
  to any Holder for  or as an inducement to any  consent, waiver or amendment
  of any of the  terms or provisions of this Indenture or the Securities
  unless such consideration is offered to  be paid to all Holders that  so
  consent, waive or  agree to amend in  the time frame set forth in
  solicitation documents relating to such consent, waiver or agreement.





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                                   ARTICLE 11

                                   Guarantees

                   SECTION 11.01.  Guarantees.

                   (a)      For good and valuable consideration, the receipt
  and sufficiency of  which are hereby acknowledged, each  of the Guarantors,
  together with each Subsidiary  of the Company which  in accordance with
  Section 11.08 is required in the  future to guarantee the Obligations of the
  Company and the  Guarantors under the Securities, the  Guarantees and this
  Indenture upon execution  of a supplemental indenture, hereby  jointly and
  severally  and irrevocably and unconditionally guarantees to  the Trustee and
  to  each Holder of a Security authenticated and delivered by  the Trustee
  irrespective of  the validity  or enforceability of this  Indenture or the
  Securities or the Obligations  of the Company and  the Guarantors under  this
  Indenture,  that: (i) the principal  of,  premium,  if any,  and any
  interest,  on the  Securities (including,  without  limitation, any interest
  that accrues  after the filing of a proceeding of the type described in
  Sections 6.01(g) and (h)) and any fees, expenses and other  amounts owing
  under this Indenture will be duly and punctually paid in full when due,
  whether  at Stated Maturity, by acceleration, call  for redemption, upon a
  Change of Control Offer, Asset Sale Offer, purchase or otherwise, and
  interest on the overdue  principal and (to the extent permitted  by law)
  interest,  if any, on the Securities  and any other  amounts due in respect
  of the Securities,  and all other Obligations of the Company and  the
  Guarantors to the Holders  of the Securities under this  Indenture and the
  Securities,  whether now or hereafter  existing, will be  promptly paid  in
  full or performed,  all strictly in accordance with the terms hereof and of
  the Securities; and (ii)  in case of any extension of time of  payment or
  renewal of any Securities  or any of such  other Obligations, the same  will
  be promptly paid  in full when due or performed in accordance  with the terms
  of the extension  or renewal, whether  at Stated Maturity,  by acceleration,
  call for redemption, upon Change of Control  Offer, Asset Sale Offer,
  purchase or  otherwise.  If payment is not made when due of  any amount so
  guaranteed for whatever reason, each Guarantor shall be jointly and severally
  obligated to pay  the same individually whether or  not such failure to pay
  has become an Event of  Default which could cause acceleration  pursuant to
  Section  6.02.  Each  Guarantor agrees that  this is a guarantee  of payment
  and  not a guarantee of  collection.  An  Event of  Default under this
  Indenture or the Securities  shall constitute  an  Event of  Default under
  this Guarantee,  and shall  entitle the  Holders to accelerate the
  Obligations  of each  Guarantor hereunder  in the same manner  and to  the
  same  extent as  the Obligations of  the Company.  This Guarantee  is
  intended to be superior to or pari  passu in right of payment with all
  Indebtedness of the Guarantors and each Guarantor s Obligations are
  independent of any Obligation of the Company or any other Guarantor.

                   (b)      Each  Guarantor waives presentation  to, demand of,
  payment from and  protest to the Company of  any of  the Obligations under
  this  Indenture or the Securities  and also waives notice  of protest for
  nonpayment.  Each  Guarantor waives notice of  any default under the
  Securities or the  Obligations.   The Obligations of each Guarantor hereunder
  shall not be affected by (a) the failure of any  Holder or the Trustee to
  assert any  claim or demand or to enforce any right or remedy against the
  Company  or any other Person under this Indenture, the Securities or





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<PAGE>   81





  any  other agreement or otherwise;  (b) any extension  or renewal  of any
  thereof; (c)  any rescission, waiver, amendment or modification  of any of
  the terms  or provisions of this  Indenture, the Securities or  any other
  agreement; (d) the  release of any security  held by any  Holder or the
  Trustee  for the Obligations or  any of them; (e)  the failure  of  any
  Holder  or the  Trustee to  exercise any  right or  remedy against  any
  other guarantor of the Obligations; or (f) any change in the ownership of
  such Guarantor.

                   (c)      The Obligations  of each Guarantor hereunder  shall
  not be subject  to any reduction, limitation,  impairment or  termination for
  any reason, including  any claim  of waiver,  release, surrender, alteration
  or  compromise, and shall  not be  subject to  any defense  of setoff,
  counterclaim, recoupment  or termination whatsoever  or by reason of  the
  invalidity, illegality or  unenforceability of the Obligations  of the
  Company  or otherwise.    Without limiting  the generality  of  the
  foregoing,  the  Obligations  of each Guarantor herein  shall not be
  discharged  or impaired or otherwise  affected by the failure  of any Holder
  or the Trustee to  assert any claim or  demand or to enforce any remedy
  under this Indenture, the  Securities or any other agreement,  by any waiver
  or modification of any thereof, by any  default, failure or delay, willful or
  otherwise, in the performance of  the Obligations of the Company, or by  any
  other act or  thing or omission or delay to do any other act or thing which
  may or might in any manner  or to any extent vary the risk of  such Guarantor
  or would otherwise operate as a discharge of such Guarantor as a matter of
  law or equity.

                   (d)      Each  Guarantor  further  agrees  that  its
  Guarantee  herein  shall  continue  to be effective or be  reinstated, as the
  case may be, if at any time payment, or any  part thereof, of principal of,
  premium, if any,  on or interest on any Obligation of the  Company is
  rescinded or must  otherwise be restored by any Holder or the Trustee upon
  the bankruptcy or reorganization of the Company or otherwise.

                   (e)      In furtherance of  the foregoing and not  in
  limitation of any other  right which any Holder or the  Trustee has at law or
  in equity against any Guarantor by virtue hereof,  upon the failure of the
  Company to pay  the principal of, premium, if any, on or interest on any
  Obligation when  and as the same shall become  due, whether at maturity,  by
  acceleration, by  redemption or  otherwise, or to perform  or comply with any
  other  Obligation, each  Guarantor hereby  promises to  and will,  upon
  receipt  of written  demand by  the Trustee, forthwith pay,  or cause to be
  paid,  in cash, to the  Holders or the Trustee an amount equal  to the sum of
  (i) the  unpaid amount of such Obligations,  (ii) accrued and unpaid interest
  on such  Obligations (but only to  the extent not  prohibited by law)  and
  (iii) all other  monetary Obligations of  the Company  to the Holders and the
  Trustee.

                   (f)      Until  such  time  as  the  Securities  and  the
  other  Obligations  of the  Company guaranteed hereby have  been satisfied in
  full, each  Guarantor hereby irrevocably waives  any claim or  other rights
  that it may now  or hereafter acquire against  the Company or any  other
  Guarantor that arise  from the existence,  payment,  performance  or
  enforcement  of  such  Guarantor's  Obligations  under  this  Guarantee,
  including,  without  limitation,  any  right  of  subrogation,
  reimbursement,  exoneration,  contribution  or indemnification and any right
  to participate in any claim or remedy of the Holders or  the Trustee against
  the Company or any





                                       74
<PAGE>   82
  other Guarantor  or  any security,  whether or  not such  claim,  remedy  or
  right  arises in  equity or  under contract, statute or common law,
  including,  without limitation, the right to take or receive from the
  Company or  any other Guarantor,  directly or  indirectly, in cash or  other
  property  or by set-off  or in  any other manner, payment or security on
  account of such claim, remedy or  right.  If any amount shall be paid  to
  such Guarantor in violation of  the preceding sentence at  any time prior  to
  the later of  the payments in full  of the Securities and all  other amounts
  payable under this Indenture,  this Guarantee and the Stated Maturity  of the
  Notes, such  amount shall  be held  in trust  for the  benefit of  the
  Holders  and the  Trustee and shall forthwith be paid to  the Trustee to be
  credited and applied to  the Notes and all other amounts payable  under this
  Guarantee, whether  matured or unmatured, in accordance  with the terms of
  this Indenture, or  to be held as security for any Obligations or other
  amounts payable under this Guarantee thereafter arising.

                   (g)      Each Guarantor acknowledges that  it will receive
  direct and indirect benefits  from the financing arrangements contemplated by
  this Indenture and  that the waiver set forth in  this Section 11.01 is
  knowingly made in contemplation  of such benefits.  Each Guarantor further
  agrees that, as between it,  on the  one hand,  and the  Holders and  the
  Trustee,  on the  other hand,  (x)  subject to  this Article  11, the
  maturity  of the Obligations guaranteed hereby may  be accelerated as
  provided in Article 6 for the purposes of this Guarantee,  notwithstanding
  any  stay, injunction  or other  prohibition preventing  such acceleration in
  respect of  the Obligations guaranteed hereby,  and (y) in  the event of any
  acceleration of such  Obligations guaranteed hereby as provided  in Article
  6, such  Obligations (whether or  not due and payable)  shall further then
  become due and payable by the Guarantors for the purposes of this Guarantee.

                   (h)      A Guarantor that makes a  distribution or payment
  under a Guarantee shall be entitled to contribution  from each other
  Guarantor in a pro rata  amount based on the Adjusted Net Assets  of each
  such other  Guarantor  for all  payments,  damages  and expenses  incurred
  by  that Guarantor  in  discharging  the Company s obligations with respect
  to the Securities and  this Indenture or any  other Guarantor with respect to
  its Guarantee, so  long as the  exercise of such  right does not  impair the
  rights  of the  Holders of the Securities under the Guarantees.

                   (i)      Each  Guarantor  also  agrees to  pay  any  and
  all  costs and  expenses  (including reasonable attorneys' fees) incurred by
  the Trustee or any Holder in enforcing any rights under this Section.

                   SECTION 11.02.   Limitation on  Liability.   Any term or
  provision of this  Indenture to  the contrary  notwithstanding,  the  maximum
  aggregate  amount  of  the  Obligations  guaranteed  hereunder by  any
  Guarantor  shall not exceed the maximum  amount that can be hereby guaranteed
  without rendering this Indenture, as  it relates to such Guarantor, void,
  voidable or unenforceable  under applicable law relating to fraudulent
  conveyance  or fraudulent transfer or similar laws affecting the rights of
  creditors generally.  To effectuate the  foregoing intention, the Obligations
  of each Guarantor  shall be  limited to the maximum  amount as will, after
  giving effect  to all other contingent  and fixed liabilities of such
  Guarantor and after giving  effect to any collections from or payments  made
  by or on behalf of any  other Guarantor in respect of the Obligations of such
  other Guarantor under  its Guarantee or pursuant to its  contribution
  Obligations hereunder, result in the Obligations of such Guarantor under its





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<PAGE>   83
  Guarantee  not constituting  a fraudulent conveyance  or fraudulent  transfer
  under federal, state  or foreign law.    Each Guarantor  that  makes a
  payment or  distribution  under  a Guarantee  shall  be  entitled to  a
  contribution  from each  other Guarantor  in a  pro  rata amount  based  on
  the  Adjusted Net  Assets  of each Guarantor.

                   SECTION  11.03  Execution and Delivery of  Guarantees.  To
  further evidence  its Guarantee set forth in Section 11.01 hereof, each
  Guarantor hereby  agrees that notation of such Guarantee  shall be endorsed
  on  each Security  authenticated and  delivered by  the Trustee  and executed
  by either  manual  or facsimile signature  of an authorized officer  of such
  Guarantor.   Each  Guarantor hereby agrees that  its Guarantee set forth in
  Section 11.01 hereof shall remain in  full force and effect notwithstanding
  any  failure to endorse on each Note a  notation of such Guarantee.  If an
  officer of a Guarantor whose signature  is on this Indenture or a Security
  no longer holds  that office at the time  the Trustee authenticates  such
  Security or at  any time thereafter, such Guarantor's  Guarantee of such
  Security shall  be valid nevertheless.   The delivery  of any Security by the
  Trustee,  after the  authentication thereof hereunder,  shall constitute  due
  delivery of  any Guarantee set forth in this Indenture on behalf of the
  Guarantor.

                   SECTION 11.04   When  a Guarantor  May Merge,  etc.   No
  Guarantor  shall consolidate with  or merge with  or into (whether  or not
  such  Guarantor is the  surviving person) another  corporation, Person  or
  entity whether or not affiliated with such Guarantor  (but excluding any
  consolidation, amalgamation  or merger if the  surviving corporation is no
  longer a  Subsidiary) unless (i) subject to the provisions of Section 11.07
  hereof, the Person  formed by or  surviving any  such consolidation  or
  merger (if  other than such  Guarantor) assumes  all  the Obligations  of
  such  Guarantor  pursuant to  a  supplemental indenture  in  form reasonably
  satisfactory  to the Trustee under the Securities and this Indenture  and
  (ii) immediately after giving effect to such transaction, no Default  or
  Event of  Default exists.   In connection with  any such consolidation  or
  merger, the Trustee shall  be entitled to receive  an Officers' Certificate
  and an Opinion of  Counsel stating that such consolidation or merger is
  permitted by this Section 11.04.

                   SECTION 11.05.   No  Waiver.  Neither a failure  nor a delay
  on the part of either the Trustee or the Holders  in exercising any right,
  power or  privilege under this Article  11 shall operate as  a waiver
  thereof, nor shall a single or partial  exercise thereof preclude any other
  or further exercise of any  right, power  or privilege.   The  rights,
  remedies  and  benefits  of the  Trustee and  the Holders  herein expressly
  specified are  cumulative and not exclusive  of any other  rights, remedies
  or benefits  which either may  have under this Article 11 at law, in equity,
  by statute or otherwise.

                   SECTION 11.06.   Modification.  No modification,  amendment
  or waiver of any provision of this Article  11, nor the  consent to  any
  departure  by any  Guarantor therefrom, shall  in any event  be effective
  unless the same  shall be  in writing  and signed  by the Trustee,  and then
  such waiver or  consent shall  be effective only in the specific  instance
  and for the purpose for  which given.  No notice to or demand  on any
  Guarantor in any  case shall entitle  such Guarantor to any  other or further
  notice or  demand in the  same, similar or other circumstances.





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<PAGE>   84
                   SECTION 11.07.   Release of Guarantor.  Upon the  sale or
  other transfer of all of the Capital Stock of a  Guarantor to any Person that
  is not an Affiliate  of the Company in compliance with the  terms of this
  Indenture (including, without limitation, Section 4.07 hereof) and in a
  transaction that does not result in a Default  or an Event of  Default being
  in existence or  continuing immediately thereafter, such  Guarantor shall be
  deemed automatically and unconditionally  released and  discharged from  all
  obligations under  this Indenture without any  further action required on the
  part of the Trustee or any Holder; provided that the Net Available  Proceeds
  of such  sale or  other disposition  are applied  in accordance  with Section
  4.07  of this Indenture as if such  sale or disposition were an Asset Sale
  and in accordance with the applicable provisions of this  Indenture.  The
  Trustee shall  deliver at the  expense of  the Company  an appropriate
  instrument or instruments evidencing such  release upon  receipt of  a
  request of  the Company  accompanied by  an Officers' Certificate  and Opinion
  of  Counsel certifying  as to  the compliance  with this  Section 11.07 and
  the other applicable provisions of this Indenture.

                   SECTION 11.08.   Execution of  Supplemental  Indentures  for
  Future  Guarantors.   Any  Wholly Owned Subsidiary that is a domestic
  Subsidiary or  any other Subsidiary that guarantees any  Indebtedness of an
  Obligor  is required  to become  a Guarantor  and the  Company shall  cause
  each  such Subsidiary  to  promptly execute and deliver  to the Trustee a
  supplemental indenture in the form of Exhibit C hereto pursuant to which such
  Subsidiary  shall become a  Guarantor under this  Article 11 and  shall
  guarantee the  Obligations of  the Company under  the Securities  and this
  Indenture.   Concurrently  with the  execution and  delivery of  such
  supplemental indenture,  the Company shall  deliver to the  Trustee an
  Opinion  of Counsel to  the effect  that such supplemental indenture has
  been duly  authorized, executed and  delivered by  such Subsidiary and  that,
  subject to the  application of bankruptcy, insolvency, moratorium, fraudulent
  conveyance or  transfer and other similar laws relating to creditors' rights
  generally and  to the principles of equity, whether  considered in a
  proceeding at law or  in equity, the Guarantee of  such Guarantor is a legal,
  valid and binding  obligation of such Guarantor, enforceable  against such
  Guarantor  in accordance  with its  terms, and as  to any such  other matters
  as the Trustee may reasonably request.





                                       77
<PAGE>   85





                                   ARTICLE 12

                                 Miscellaneous

                   SECTION 12.01.   Compliance Certificates and  Opinions.
  Upon  any application or  request by the Company or  the Guarantors to the
  Trustee to take any  action under any provision of this  Indenture, the
  Company and the Guarantors, as  applicable, shall furnish to the Trustee, to
  the extent required by the TIA or this Indenture,  (i) an Officers'
  Certificate stating that all  conditions precedent, if any,  provided for in
  this  Indenture (including any covenant, compliance  with which constitutes a
  condition precedent) relating to the  proposed action have been complied
  with and (ii)  an Opinion of Counsel  stating that in  the opinion of such
  counsel all such conditions precedent, if any, have  been complied with,
  except that  in the case of any such application  or request  as to which
  the furnishing  of such documents  is specifically  required by  any
  provision  of this Indenture relating to such  particular application or
  request, no  additional certificate or opinion need be furnished.

                   Every  certificate  or  opinion  with  respect  to
  compliance  with  a  condition  or covenant provided for in this Indenture
  shall include:

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

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

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

           (4)     a statement  as to whether or not, in  the opinion of each
  such individual, such condition or covenant has been complied with.

                   SECTION 12.02.   Form of Documents Delivered to Trustee.
  In any case  where several matters are required to  be certified by, or
  covered by an opinion of, any specified Person,  it is not necessary that all
  such matters be  certified by, or  covered by the  opinion of, only  one such
  Person,  or that  they be so certified or covered by  only one document, but
  one such Person  may certify or give an opinion with respect to some  matters
  and one or more other such Persons  as to other matters, and any such Person
  may certify or give an opinion as to such matters in one or several
  documents.

           Any certificate or opinion  of an officer of the Company or any
  Guarantor  may be based, insofar as it relates to legal  matters, upon  a
  certificate  or opinion  of, or  representations by,  counsel, unless  such
  officer  knows,  or in  the  exercise of  reasonable  care  should know,
  that  the certificate  or  opinion or representations with respect to the
  matters upon which his certificate or





                                       78
<PAGE>   86
  opinion is based are erroneous.   Any such certificate or  opinion of counsel
  may be based, and may  state that it  is  so  based,  insofar  as  it
  relates  to  factual  matters,  upon  a  certificate  or  opinion  of,  or
  representations by, an officer or officers of the  Company or such Guarantor
  stating that  the information with respect to such factual  matters is in the
  possession of the Company  or such Guarantor,  unless such  counsel knows, or
  in the exercise of reasonable care  should know, that the  certificate of
  opinion or representations with respect to such matters are erroneous.

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

                   SECTION 12.03.  Acts of Holders.

           (a)     Any  request, demand,  authorization,  direction,  notice,
  consent,  waiver or  other  action provided by this  Indenture to be given or
  taken by a specified percentage of Holders may  be embodied in and evidenced
  by one  or more instruments of  substantially similar tenor  signed by such
  specified percentage of Holders in person or by agents duly appointed  in
  writing; and, except as herein  otherwise expressly provided, such action
  shall become effective when  such instrument or instruments are received by
  the Trustee and,  where it is hereby expressly required, to the Company and
  the  Guarantors.  Such instrument or instruments (and  the action embodied
  therein  and evidenced thereby) are  herein sometimes referred to as  the
  "Act" of the  Holders signing such instrument or  instruments.  Proof of
  execution of any such instrument or of  a writing appointing any such agent
  shall be sufficient for any purpose of this Indenture and (subject  to
  Sections 7.01 and 7.02) conclusive  in favor of the  Trustee, the Company and
  the Guarantors, if made in the  manner provided in this Section.

           (b)     The  fact and date of  the execution by any  Person of any
  such instrument  or writing may be proved by  the affidavit  of a  witness of
  such execution or  by a  certificate of  a notary  public or  other officer
  authorized  by  law to  take acknowledgments  of deeds,  certifying that  the
  individual  signing such instrument or writing acknowledged  to him the
  execution thereof.  Where  such execution is by a signer acting in a
  capacity  other than  his  individual capacity,  such  certificate  or
  affidavit shall  also  constitute sufficient proof  of authority.  The  fact
  and date of the execution of any  such instrument or writing, or the
  authority  of the Person executing  the same, may also  be proved in any
  other manner  which the Trustee deems sufficient, including the execution of
  such instrument or writing without more.

           (c)     The ownership,  principal amount and serial numbers  of
  Securities held by any Person, and the date of holding the same, shall be
  proved by the Security Register.

           (d)     If  the  Company  shall   solicit  from  the  Holders  of
  Securities  any  request,   demand, authorization, direction,  notice,
  consent,  waiver  or other  Act,  the Company  may, at  its option,  by  or
  pursuant  to Board Resolution, fix in advance a record date for  the
  determination of Holders entitled to give such request, demand,
  authorization,  direction, notice, consent, waiver  or other Act, but  the
  Company  shall have  no obligation to  do so.   Such record date  shall be
  the  record date specified  in or  pursuant to such Board Resolution, which
  shall be a date not earlier than the





                                       79
<PAGE>   87
  date 30 days  prior to the first solicitation  is completed.  If  such a
  record  date is fixed, such  request, demand, authorization,  direction,
  notice,  consent, waiver  or other  Act may  be given  before or after  such
  record date, but only the  Holders of record at the close  of business on
  such record date shall be  deemed to be Holders  for  the  purposes  of
  determining  whether  Holders of  the  requisite proportion  of  outstanding
  Securities have authorized or agreed or consented  to such request, demand,
  authorization,  direction, notice, consent, waiver or other  Act, and for
  that purpose  the outstanding Securities shall  be computed as of  such
  record date; provided  that no such  authorization, agreement  or consent  by
  the Holders  on such record  date shall be deemed  effective unless it shall
  become effective pursuant to the  provisions of this Indenture  not later
  than eleven months after the record date.

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

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

                   SECTION  12.04.  Trust  Indenture Act Controls.   If any
  provision of  this Indenture limits, qualifies  or  conflicts with  another
  provision  which is  required  to  be  included  in  this Indenture  by
  Sections 310 to 318,  inclusive, of the  Trust Indenture Act, the  required
  provision shall  control.  If  any provision  of this  Indenture  modifies or
  excludes any  provision  of the  TIA that  may be  so modified  or excluded,
  the latter provision shall be  deemed to apply to this Indenture as  so
  modified or excluded, as the case may be.

                   SECTION 12.05.   Notices.  Any notice  or communication
  shall be in writing and  delivered in person, or sent  by registered or
  certified mail,  by air  courier guaranteeing overnight  delivery or by  fax
  (promptly confirmed by telephone) and addressed as follows:

           if to the Company or any Guarantor:

                   DI Industries, Inc.
                   10370 Richmond Avenue
                   Suite 600
                   Houston, Texas  77042
                   Attn:  Chief Financial Officer
                   Phone: (281) 435-6100
                   Fax:   (281) 435-6171





                                       80
<PAGE>   88
           if to the Trustee:

                   Texas Commerce Bank National Association
                   600 Travis Street, Suite 1150
                   Houston, Texas  77002
                   Attention:  Corporate Trust Division
                   Phone: (713) 216-5811
                   Fax:   (713) 216-5476

           with a copy to the Trustees Dallas Payment Office:

                   Texas Commerce Bank National Association
                   1201 Main Street
                   Dallas, Texas  75202
                   Attn:  Corporate Trust Services

                   The Company, the  Guarantors or the Trustee by notice  to
  the others may designate  additional or different addresses for subsequent
  notices or communications.

                   Any notice  or communication mailed to  a Holder shall  be
  sent to the  Holder by first  class mail, postage prepaid,  at the Holder's
  address as it appears in  the Security Register and shall  be given if so
  sent within  the time prescribed.  Failure to mail a notice or communications
  to a  Holder or any default in it shall not affect its  sufficiency with
  respect to other Holders.  If a notice or communication  is mailed or faxed
  to the Company, the Guarantors, the Trustee  or a Holder in the manner
  provided  above, it is duly given, whether or not  the addressee receives it
  but shall not be  effective unless in the  case of the Company,  the
  Guarantors or the Trustee  actually received.  In case by reason  of the
  suspension of regular mail service or by  reason or  any other  cause  it
  shall  be impracticable  to  give notice  by  mail to  Holders,  then such
  notification as shall be made with  the approval of the Trustee shall
  constitute a sufficient notification  for every purpose hereunder.

                   SECTION 12.06.    Communication  by  Holders with  Other
  Holders.   Holders  may  communicate pursuant to  TIA Section 312(b)  with
  other  Holders with respect to  their rights under this  Indenture or the
  Securities.    The Company,  the  Guarantors,  the Trustee,  the  Registrar
  and  anyone  else  shall have  the protection of TIA Section 312(c).

                   SECTION  12.07.   Rules  by  Trustee,  Paying  Agent  and
  Registrar.    The  Trustee may  make reasonable  rules for  action by  or a
  meeting of  Holders.   The  Registrar and  the Paying  Agent  may make
  reasonable rules for their functions.

                   SECTION 12.08.   Payments on Business Days.   If a payment
  hereunder  is scheduled to be  made on  a date that is  not a Business Day,
  payment shall be  made on  the next succeeding day  that is a Business Day,
  and no interest  shall accrue with respect to  that payment during the
  intervening period.  If  a regular Record Date is not a Business Day, such
  Record Date shall not be affected.





                                       81
<PAGE>   89





                   SECTION 12.09.  GOVERNING LAW.   THIS INDENTURE AND THE
  SECURITIES  SHALL BE GOVERNED BY, AND CONSTRUED IN  ACCORDANCE WITH,  THE
  LAWS OF THE  STATE OF  NEW YORK  BUT WITHOUT  GIVING EFFECT TO  APPLICABLE
  PRINCIPLES OF CONFLICTS OF LAW  TO THE EXTENT THAT THE  APPLICATION OF THE
  LAWS OF  ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

                   SECTION 12.10.   No Recourse Against  Others.  A director,
  officer,  employee or stockholder, as such, of  the Company or any Guarantor
  shall not have any liability for any obligations  of the Company or a
  Guarantor under the Securities,  the Guarantees or this Indenture or for  any
  claim based on, in respect of or by reason  of such  obligations or  their
  creation.   By  accepting a  Security,  each Holder  shall waive  and release
  all such liability.   The waiver and release shall  be part of the
  consideration  for the issue of the Securities.

                   SECTION  12.11   Submission  to  Jurisdiction; Appointment
  of Agent  for Service  of Process; Waiver of Immunities.

                   (a)      The  Company and each Guarantor  hereby
  irrevocably, to the fullest  extent it may do so under applicable  law,
  submits to the  jurisdiction of any New  York State or federal  court sitting
  in the Borough  of Manhattan, The City  of New York  and to the courts  of
  its own corporate  domicile with respect to all actions brought against it as
  a defendant  in respect of any suit, action or  proceeding or arbitral award
  arising out  or relating to this Indenture, the Securities  or any
  transaction contemplated  hereby or thereby (a "Proceeding"),  and
  irrevocably  accepts  for  itself and  in  respect  of  its  property,
  generally  and unconditionally,  the  jurisdiction  of the  aforesaid
  courts,  to the  fullest  extent  it may  do  so  under applicable law.  The
  Company  and each Guarantor irrevocably waives, to the fullest extent it may
  do so under applicable law, trial  by jury and any objection which it may now
  or hereafter have to  the laying of the venue of any such  Proceeding brought
  in any such court  and any claim that any  such Proceeding brought in any
  such court has been brought in an inconvenient  forum.  The Company and each
  Guarantor acknowledges that it has, by separate written  instrument,
  irrevocably  appointed  CT Corporation  System  (the "Process Agent"),  with
  an office at  1633 Broadway, New York,  New York  10019, as  its authorized
  agent to  receive on  behalf of  the Company and  each Guarantor  and its
  property  service of copies  of the  summons and complaint  and any  other
  process  which may be served in any Proceeding, and that the Process  Agent
  has accepted such appointment.  If for any reason such Process  Agent shall
  cease to be such  agent for service of process,  the Company and each
  Guarantor  shall forthwith appoint a new agent of  recognized standing for
  service of  process in the State of New York, United States  and deliver to
  the Trustee  a copy of the new agent's acceptance of  that appointment within
  30  days.  Nothing  herein shall affect  the right of  the Trustee,  any
  Paying  Agent or any  Holder to serve  process in any  other manner
  permitted by  law or  to commence  legal proceedings or  otherwise proceed
  against the Company or the Guarantors in any other court of competent
  jurisdiction.

                   (b)      Service may be  made by delivering by hand  a copy
  of such process to  the Company or the Guarantors, as the case may be, in
  care of the Process Agent at the address





                                       82
<PAGE>   90
  specified above.  The Company and the Guarantors  hereby irrevocably
  authorize and direct the  Process Agent to accept  such service on  their
  behalf.   Failure of  the Process  Agent to give  notice to  the Company  or
  the Guarantors or failure of the Company or the Guarantors to receive notice
  of such service  of process shall not affect in any way  the validity of such
  service  on the Process Agent or the Company or  the Guarantors.  As an
  alternative method  of service, the Company and the  Guarantors also
  irrevocably consent  to the service of any and all process  in any such
  proceeding by  the delivery by hand  of copies of such process to the
  Company or the Guarantors, as  the case may be,  at the applicable  address
  specified in  Section 12.05 hereof or at  the address most recently furnished
  in writing by the Company or the  Guarantors to the Trustee.  The Company and
  the Guarantors covenant and agree that they shall  take any and all
  reasonable action,  including the execution and filing of any and all
  documents,  that may be necessary to  continue the designation of the
  Process Agent specified above in full force and effect during the term of
  the Securities, and to cause the Process  Agent to continue to act as such.

                   (c)      The Company and the  Guarantors irrevocably agree
  that,  in any Proceedings  anywhere (whether for an injunction, specific
  performance or otherwise), no immunity (to  the extent that it may at any
  time  exist,  whether on  the grounds  of  sovereignty or  otherwise)  from
  such Proceedings,  from attachment (whether in aid  of execution, before
  judgment or  otherwise) of  their assets or  from execution of  judgment
  shall be claimed  by them or on their behalf or with respect to their assets,
  except  to the extent required by applicable  law, any  such immunity being
  irrevocably waived, to the  fullest extent  permitted by applicable law.
  The Company  and the Guarantors  irrevocably agree  that, where permitted  by
  applicable  law, they  and their  assets are, and  shall be,  subject to
  such Proceedings,  attachment or  execution in respect  of their obligations
  under this Indenture or the Securities.

                   SECTION  12.12.   Successors.   All  agreements  of the
  Company  in this  Indenture  and  the Securities shall  bind  its successors.
  All  agreements  of  the Trustee  in this  Indenture  shall bind  its
  successors.

                   SECTION 12.13.   Multiple Originals.   The  parties may
  sign any  number of  copies of  this Indenture.   Each signed copy  shall be
  an  original, but all  of them together  represent the same agreement.  One
  signed  copy is  enough  to prove  this Indenture.   This  Indenture  may be
  executed in  any  number of counterparts, each of which shall  be deemed an
  original, but all  such counterparts shall together constitute but one and
  the same instrument.

                   SECTION 12.14.   Table of Contents; Headings.   The table of
  contents,  cross-reference sheet and headings of the  Articles and Sections
  of  this Indenture have  been inserted for convenience  of reference only,
  are not  intended to be considered a  part hereof and shall  not modify or
  restrict any of the  terms or provisions hereof.





                                       83
<PAGE>   91
                   IN WITNESS WHEREOF, the parties have caused this Indenture
  to be duly executed as of the date first above written.


                                        COMPANY:

                                        DI INDUSTRIES, INC.


                                        By:  /s/ T. Scott O'Keefe            
                                        Name:  T. Scott O'Keefe            
                                        Title: Senior Vice President, Chief 
                                               Financial Officer & Secretary 


                                        GUARANTORS:

                                        DRILLERS, INC.


                                        By:  /s/ T. Scott O'Keefe            
                                        Name:  T. Scott O'Keefe            
                                        Title: Senior Vice President, Chief 
                                               Financial Officer & Secretary


                                        DI INTERNATIONAL, INC.


                                        By:  /s/ T. Scott O'Keefe            
                                        Name:  T. Scott O'Keefe            
                                        Title: Senior Vice President, Chief 
                                               Financial Officer & Secretary


                                        DI ENERGY, INC.


                                        By:  /s/ T. Scott O'Keefe            
                                        Name:  T. Scott O'Keefe            
                                        Title: Senior Vice President, Chief 
                                               Financial Officer & Secretary




<PAGE>   92
                                        TRUSTEE:

                                        TEXAS COMMERCE BANK NATIONAL
                                               ASSOCIATION



                                        By:  /s/ Mauri J. Cowen 
                                        Name:  Mauri J. Cowen 
                                        Title: Vice President and Trust Officer


<PAGE>   93

                                                                       EXHIBIT A



                      [FORM OF FACE OF GLOBAL SECURITY]

                             DI INDUSTRIES, INC.

No. _______             8-7/8% SENIOR NOTE DUE 2007        CUSIP No. 232909 AA 9


     THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
REFERRED TO ON THE REVERSE HEREOF.

     UNLESS THIS GLOBAL SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC" OR THE
"DEPOSITARY"), NEW YORK, NEW YORK, TO DI INDUSTRIES, INC. (THE "COMPANY") OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE
TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

     TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE,
BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
SECTION 2.06 OF THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.

     THIS GLOBAL SECURITY IS EXCHANGEABLE FOR SECURITIES IN DEFINITIVE, FULLY
REGISTERED FORM, WITHOUT INTEREST COUPONS, IF (A) DTC NOTIFIES THE COMPANY THAT
IT IS UNWILLING OR UNABLE TO CONTINUE AS DEPOSITARY FOR THIS GLOBAL SECURITY OR
IF AT ANY TIME DTC CEASES TO BE A "CLEARING AGENCY" REGISTERED UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, AND A SUCCESSOR DEPOSITARY IS NOT
APPOINTED BY THE COMPANY WITHIN 90 DAYS OF SUCH NOTICE OR (B) AN EVENT OF
DEFAULT (AS HEREINAFTER DEFINED) HAS OCCURRED AND IS CONTINUING WITH RESPECT TO
THE SECURITIES.



                                      1


<PAGE>   94


     DI INDUSTRIES, INC., a Texas corporation, hereby promises to pay to CEDE &
CO., or registered assigns, the principal sum indicated on Schedule A hereof,
on July 1, 2007.

     Interest Payment Dates:  January 1 and July 1, commencing January 1, 1998.

     Record Dates:  June 15  and December 15.

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

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

     IN WITNESS WHEREOF, DI INDUSTRIES, INC. has caused this instrument to be
duly executed under its corporate seal.

Dated:

                                    DI INDUSTRIES, INC.



                                    By:
                                       -------------------------------------
                                         Name:
                                         Title:

[Corporate Seal]

                                    By:
                                       -------------------------------------
                                         Name:
                                         Title:

TRUSTEE'S CERTIFICATE OF AUTHENTICATION

TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
     as Trustee, certifies that this is one of
     the Securities referred to in the Indenture.



By:
   --------------------------------
     Authorized Signatory



                                      2


<PAGE>   95





                       [FORM OF REVERSE SIDE OF SECURITY]

                          8-7/8% SENIOR NOTE DUE 2007


1.   Interest

     DI Industries, Inc., a Texas corporation (such corporation, and its
successors and assigns under the Indenture hereinafter referred to, being
herein called the "Company"), promises to pay interest on the principal amount
of this Security at the rate per annum shown above.  The Company will pay
interest semiannually on January 1 and July 1 of each year (an "Interest
Payment Date") commencing on January 1, 1998, until the principal amount is
paid or made available for payment.  Interest on the Securities will accrue
from the most recent date to which interest has been paid or, if no interest
has been paid, from the Issue Date.  Interest will be computed on the basis of
a 360-day year of twelve 30-day months.


2.   Method of Payment

     The Company will pay interest on the Securities (except Defaulted
Interest) to the Persons who are registered Holders of Securities at the close
of business on the June 15 or December 15 immediately preceding the Interest
Payment Date even if Securities are canceled after the Record Date and on or
before the Interest Payment Date.  Holders must surrender Securities to a
Paying Agent to collect principal payments.  The Company will pay principal,
premium, if any, and interest in money of the United States that at the time of
payment is legal tender for payment of public and private debts.  Payments in
respect of the Securities represented by a Global Security (including
principal, premium, if any, and interest) will be made by wire transfer of
immediately available funds to the accounts specified by the Depositary, but,
at the option of the Company, interest may be paid by check mailed to the
registered Holders at their registered addresses.


3.   Paying Agent and Registrar

     Initially, Texas Commerce Bank National Association, a national banking
association (the "Trustee"), will act as Paying Agent and Registrar.  The
Company may appoint and change any Paying Agent, Registrar or co-registrar
without notice.  In certain situations, the Company or any of its Subsidiaries
may act as Paying Agent, Registrar or co-registrar.


4. Indenture

     The Company issued the Securities under an Indenture dated as of June 27,
1997 (as such 

                                      3


<PAGE>   96



may be amended from time to time, the "Indenture"), among the Company, the
corporations acting as guarantors and named therein (the "Guarantors") and
Texas Commerce Bank National Association, as trustee (the "Trustee," which term
includes any successor trustee under the Indenture), to which Indenture
reference is hereby made for a statement of the respective rights, duties and
immunities thereunder of the Company, the Guarantors, the Trustee and each
Holder of the Securities and the terms upon which the Securities are, and are
to be, authenticated and delivered.  The terms of the Securities include those
stated in the Indenture and those made part of the Indenture by reference to
the Trust Indenture Act of 1939 (15 U.S.C. Section Section  77aaa-77bbbb) as in
effect on the date of the Indenture (the "Act"). Terms defined in the Indenture
and not defined herein have the meanings ascribed thereto in the Indenture. 
The Securities are subject to all such terms, and Holders are referred to the
Indenture and the Act for a statement of those terms.

     The Securities are limited to $175,000,000 aggregate principal amount at
Stated Maturity at any one time outstanding (subject to Section 2.08 of the
Indenture).  This Security is one of the Securities referred to in the
Indenture.  The Indenture imposes certain limitations on the incurrence of
additional Indebtedness by the Company and its Subsidiaries; the payment of
dividends on, and redemption of, Capital Stock of the Company and its
Subsidiaries and the redemption of Subordinated Indebtedness of the Company and
its Subsidiaries; Investments; sales of assets and Subsidiary Capital Stock;
certain transactions with Affiliates of the Company and the right of the
Company and its Subsidiaries to engage in unrelated lines of business.


5.   Optional Redemption

     Except as provided in the next paragraph, the Securities are not
redeemable prior to July 1, 2002.  At any time on or after July 1, 2002, the
Securities are redeemable at the option of the Company, in whole or in part, on
not less than 30 nor more than 60 days' notice, at the following Redemption
Prices (expressed as percentages of principal amount at Stated Maturity), if
redeemed during the 12 months beginning July 1 of the years indicated below,
plus accrued and unpaid interest (if any) thereon to the Redemption Date:



<TABLE>
<CAPTION>
                                             Redemption
         Year                                  Price
     -----------                           -------------
         <S>                                 <C>
         2002   ..........................   104.4375%
         2003   ..........................   102.9580%
         2004   ..........................   101.4792%
         2005 and thereafter .............   100.0000%
</TABLE>

     Notwithstanding the foregoing, on and prior to July 1, 2000, the Company
may redeem up to 30% of the aggregate principal amount of the Securities
originally outstanding at a redemption price of 108.875% of the principal
amount at Stated Maturity thereof, plus accrued and unpaid interest (if any)
thereon to the Redemption Date, with the net proceeds of one or 




                                      4


<PAGE>   97


more Qualified Equity Offerings of the Company; provided that at least
$120,000,000 aggregate principal amount at Stated Maturity of the Securities
shall remain outstanding immediately after the occurrence of any such
redemption; and provided, further, that such redemption shall occur not later
than 90 days after the date of the closing of any such Qualified Equity
Offering. The redemption shall be made in accordance with procedures set forth
in the Indenture.


6.   Notice of Redemption

     Notice of redemption will be mailed by first-class mail, postage prepaid,
at least 30 days but not more than 60 days before the Redemption Date to each
Holder of Securities to be redeemed at his address as it appears in the
Security Register.  Securities in denominations larger than $1,000 may be
redeemed in part but only in whole multiples of $1,000.  If less than all of
the Securities are to be redeemed at any time, the Securities to be redeemed
will be chosen by the Trustee in accordance with the Indenture.  If any
Security is redeemed subsequent to a Record Date with respect to any Interest
Payment Date specified above and on or prior to such Interest Payment Date,
then any accrued interest will be paid on such Interest Payment Date to the
Holder of the Security at the close of business on such Record Date.  If money
sufficient to pay the Redemption Price of and accrued interest on all
Securities (or portions thereof) to be redeemed on the Redemption Date is
deposited with the Paying Agent on or before the Redemption Date and certain
other conditions are satisfied, on and after such date interest ceases to
accrue on such Securities (or such portions thereof) called for redemption.


7.   Change of Control

     Upon the occurrence of a Change of Control, each Holder of Securities
shall have the right to require the Company to purchase such Holder's
Securities, in whole or in part in a principal amount at Stated Maturity that
is an integral multiple of $1,000, pursuant to a Change of Control Offer, at a
purchase price in cash equal to 101% of the principal amount at Stated Maturity
thereof on any Change of Control Payment Date, plus accrued and unpaid
interest, if any, to the Change of Control Payment Date.

     Within 30 calendar days following any Change of Control, the Company shall
send, or cause to be sent, by first class mail, postage prepaid, a notice
regarding the Change of Control Offer to each Holder of Securities.  The Holder
of this Security may elect to have this Security or a portion hereof in an
authorized denomination purchased by completing the form entitled "Option of
Holder to Elect Purchase" appearing below and tendering this Security pursuant
to the Change of Control Offer.  Unless the Company defaults in the payment of
the Change of Control Purchase Price with respect thereto, all Securities or
portions thereof accepted for payment pursuant to the Change of Control Offer
will cease to accrue interest from and after the Change of Control Payment
Date.



                                      5


<PAGE>   98



8.   Repurchase at the Option of Holders upon Asset Sale

     Subject to the limitations set forth in the next following paragraph, if
at any time the Company or any Subsidiary engages in any Asset Sale, as a
result of which the aggregate amount of Excess Proceeds exceeds $15,000,000,
the Company shall, within 30 calendar days of the date the amount of Excess
Proceeds exceeds $15,000,000, or at any time after receipt of Excess Proceeds
but prior to there being $15,000,000 of Excess Proceeds, the Company may, at
its option, use the then-existing Excess Proceeds to make an offer to purchase
from all Holders, on a pro rata basis, Securities in an aggregate principal
amount at Stated Maturity equal to the maximum principal amount that may be
purchased out of the then-existing Excess Proceeds, at a purchase price in cash
equal to 100% of the principal amount at Stated Maturity thereof, plus accrued
and unpaid interest, if any, to the Asset Sale Offer Purchase Date.  Upon
completion of an Asset Sale Offer (including payment of the Asset Sale Offer
Purchase Price for accepted Securities), any surplus Excess Proceeds that were
the subject of such offer shall cease to be Excess Proceeds, and the Company
may then use such amounts for general corporate purposes.

     Within 30 calendar days of the date the amount of Excess Proceeds exceeds
$15,000,000, the Company shall send, or cause to be sent, by first class mail,
postage prepaid, a notice regarding the Asset Sale Offer to each Holder of
Securities.  The Holder of this Security may elect to have this Security or a
portion hereof in an authorized denomination purchased by completing the form
entitled "Option of Holder to Elect Purchase" appearing below and tendering
this Security pursuant to the Asset Sale Offer.  Unless the Company defaults in
the payment of the Asset Sale Offer Purchase Price with respect thereto, all
Securities or portions thereof selected for payment pursuant to the Asset Sale
Offer will cease to accrue interest from and after the Asset Sale Offer
Purchase Date.


9.   The Global Security

     So long as this Global Security is registered in the name of the
Depositary or its nominee, members of, or participants in, the Depositary
("Agent Members") shall have no rights under the Indenture with respect to this
Global Security held on their behalf by the Depositary or the Trustee as its
custodian, and the Depositary may be treated by the Company, the Guarantors,
the Trustee and any agent of the Company, the Guarantors or the Trustee as the
absolute owner of this Global Security for all purposes.  Notwithstanding the
foregoing, nothing herein shall (i) prevent the Company, the Guarantors, the
Trustee or any agent of the Company, the Guarantors or the Trustee from giving
effect to any written certification, proxy or other authorization furnished by
the Depositary or (ii) impair, as between the Depositary and its Agent Members,
the operation of customary practices governing the exercise of the rights of a
Holder of Securities.

     The Holder of this Global Security may grant proxies and otherwise
authorize any Person, including Agent Members and Persons that may hold
interests in this Global Note through Agent Members, to take any action which a
Holder of Securities is entitled to take under the Indenture or the Securities.

     Whenever, as a result of an optional redemption of Securities by the
Company, a 

                                      6


<PAGE>   99

Change of Control Offer, an Asset Sale Offer or an exchange for Certificated
Securities, this Global Security is redeemed, repurchased or exchanged or
substituted in part, this Global Security shall be surrendered by the Holder
thereof to the Trustee who shall cause an adjustment to be made to Schedule A
hereof so that the principal amount of this Global Security will be equal to
the portion not redeemed, repurchased or exchanged and shall thereafter return
this Global Security to such Holder; provided that this Global Security shall
be in a principal amount at Stated Maturity of $1,000 or an integral multiple
of $1,000.


10.  Transfer and Exchange

     The Holder of this Global Security shall, by its acceptance of this Global
Security, agree that transfers of beneficial interests in this Global Security
may be effected only through a book entry system maintained by such Holder (or
its agent), and that ownership of a beneficial interest in the Securities
represented thereby shall be required to be reflected in book entry form.

     Transfers of this Global Security shall be limited to transfers in whole,
and not in part, to the Depositary, its successors and their respective
nominees.  Interests of beneficial owners in this Global Security may be
transferred in accordance with the rules and procedures of the Depositary (or
its successors).

     This Global Security will be exchanged by the Company for one or more
Certificated Securities if (a) the Depositary (i) has notified the Company that
it is unwilling or unable to continue as, or ceases to be, a "Clearing Agency"
registered under Section 17A of the Exchange Act and (ii) a successor to the
Depositary registered as a "Clearing Agency" under Section 17A of the Exchange
Act is not appointed by the Company within 90 calendar days or (b) the
Depositary is at any time unwilling or unable to continue as Depositary and a
successor to the Depositary is not able to be appointed by the Company within
90 calendar days.  If an Event of Default occurs and is continuing, the Company
shall, at the request of the Holder hereof, exchange all or a part of this
Global Security for one or more Certificated Securities; provided that the
principal amount at Stated Maturity of each of such Certificated Securities and
this Global Security, after such exchange, shall be $1,000 or an integral
multiple thereof.  Whenever this Global Security is exchanged as a whole for
one or more Certificated Securities, it shall be surrendered by the Holder to
the Trustee for cancellation.  Whenever this Global Security is exchanged in
part for one or more Certificated Securities, it shall be surrendered by the
Holder to the Trustee and the Trustee shall make the appropriate notations
thereon pursuant to Section 2.05 of the Indenture. Interests in this Global
Security may not be exchanged for Certificated Securities other than as provided
in this paragraph.


                                      7


<PAGE>   100



11.  Persons Deemed Owners

     The registered Holder of this Security may be treated as the owner of it
for all purposes.

12. Unclaimed Money

     If money for the payment of principal or interest remains unclaimed for
two years, the Trustee or Paying Agent shall pay the money back to the Company
at its written request unless an abandoned property law designates another
Person.  After any such payment, Holders entitled to the money must look only
to the Company and not to the Trustee for payment.

13. Discharge and Defeasance

     Subject to certain conditions, the Company at any time may terminate some
or all of its Obligations and the Guarantors' Obligations under the Securities,
the Guarantees and the Indenture if the Company deposits with the Trustee money
or U.S. Government Obligations for the payment of principal, premium and
interest on the Securities to redemption or Maturity, as the case may be.


14. Amendment, Waiver

     Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in outstanding principal amount at Stated
Maturity of the Securities and (ii) any default or noncompliance with any
provision may be waived with the written consent of the Holders of a majority
in outstanding principal amount at Stated Maturity outstanding of the
Securities.  Subject to certain exceptions set forth in the Indenture, without
the consent of any Holder, the Company, the Guarantors and the Trustee may
amend the Indenture or the Securities (a) to evidence the succession of another
Person to the Company and the Guarantors and the assumption by such successor
of the covenants and Obligations of the Company under the Indenture and
contained in the Securities and of the Guarantors contained in the Indenture
and the Guarantees, (b) to add to the covenants of the Company, for the benefit
of the Holders, or to surrender any right or power conferred upon the Company
or the Guarantors by the Indenture, (c) to add any additional Events of
Default, (d) to provide for uncertificated Securities in addition to or in
place of Certificated Securities, (e) to evidence and provide for the
acceptance of appointment under the Indenture by the successor Trustee, (f) to
secure the Securities and/or the Guarantees, (g) to cure any ambiguity, to
correct or supplement any provision in the Indenture which may be inconsistent
with any other provision therein or to add any other provision with respect to
matters or questions arising under the Indenture, provided that such actions
will not adversely affect the interests of the Holders in any material respect
or (h) to add or release any Guarantor pursuant to the terms of the Indenture.
Certain provisions of the Securities and the Indenture may not be amended or
waived without the consent of each Holder affected thereby.

15.  Defaults and Remedies

     Under the Indenture, Events of Default include in summary form (i) default
in the payment 



                                      8

<PAGE>   101
of principal of (or premium, if any, on) the Securities when due; (iii) 
failure to comply with certain of the covenants in the Indenture, including the
Change of Control covenant, the Asset Sale covenant and the Restrictive Payments
covenant; (iv) failure to perform any other covenant of the Company or any
Guarantor in the Indenture, continued for 30 days after written notice as
provided in the Indenture; (v) Indebtedness of the Company or any Subsidiary is
not paid when due within the applicable grace period, or is accelerated and, in
either case, the principal amount of such unpaid Indebtedness exceeds
$10,000,000; (vi) one or more final judgments or orders by a court of competent
jurisdiction are entered against the Company or any Subsidiary in an uninsured
or unindemnified aggregate amount in excess of $5,000,000 and such judgments or
orders are not discharged, waived, appealed, stayed, satisfied or bonded for a
period of 60 consecutive days; (vii) certain events of bankruptcy, insolvency or
reorganization; or (viii) a Guarantee ceases to be in full force and effect
(other than in accordance with the terms of the Indenture and such Guarantee) or
a Guarantor denies or disaffirms its obligations under its Guarantee.

     Holders may not enforce the Indenture or the Securities except as provided
in the Indenture.  The Trustee may refuse to enforce the Indenture or the
Securities unless it receives reasonable indemnity or security.  Subject to
certain limitations, Holders of a majority in principal amount at Stated
Maturity of the Securities may direct the Trustee in its exercise of any trust
or power.  The Trustee may withhold from Holders notice of any continuing
Default (except a Default in payment of principal or interest) if it determines
that withholding notice is in the interest of the Holders.  The Holders of a
majority in principal amount at Stated Maturity of the outstanding Securities,
by written notice to the Company and the Trustee, may rescind any declaration
of acceleration and its consequences if the rescission would not conflict with
any judgment or decree, and if all Events of Default have been cured or waived
except nonpayment of principal and interest that has become due solely because
of the acceleration.


16. Trustee Dealings with the Company

     Subject to certain limitations imposed by the Trust Indenture Act,  the
Trustee under the Indenture, in its individual or any other capacity, may
become the owner or pledgee of Securities and may otherwise deal with and
collect obligations owed to it by the Company or its Affiliates and may
otherwise deal with the Company or its Affiliates with the same rights it would
have if it were not Trustee.


17. No Recourse Against Others

     A director, officer, employee or stockholder, as such, of the Company or
any Guarantor shall not have any liability for any obligations of the Company
or a Guarantor under the Securities, the Guarantees or the Indenture or for any
claim based on, in respect of or by reason of such obligations or their
creation.  By accepting a Security, each Holder waives and releases all such
liability.  The waiver and release are part of the consideration for the issue
of the Securities.




                                      9


<PAGE>   102

18.  Governing Law

     THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS
OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.


19.  Abbreviations

     Customary abbreviations may be used in the name of a Holder or an
assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).


20.  CUSIP Numbers

     Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures the Company has caused CUSIP numbers to be
printed on the Securities and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Holders.  No representation is made
as to the accuracy of such numbers either as printed on the Securities or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.

     The Company will furnish to any Holder upon written request and without
charge to the Holder a copy of the Indenture which has in it the text of this
Security.



                                     10


<PAGE>   103


                               SECURITY GUARANTEE

     Subject to the limitations set forth in the Indenture, the Guarantors (as
defined in the Indenture referred to in this Security and each hereinafter
referred to as a "Guarantor," which term includes any successor or additional
Guarantor under the Indenture) have jointly and severally, irrevocably and
unconditionally guaranteed (a) the due and punctual payment of the principal
(and premium, if any) of and interest on the Securities, whether at Stated
Maturity, by acceleration, call for redemption, upon a Change of Control Offer,
Asset Sale Offer, purchase or otherwise, (b) the due and punctual payment of
interest on the overdue principal of and interest on the Securities, if any, to
the extent lawful, (c) the due and punctual performance of all other
Obligations of the Company and the Guarantors to the Holders under the
Indenture and the Notes and (d) in case of any extension of time of payment or
renewal of any Securities or any of such other Obligations, the same will be
promptly paid in full when due or performed in accordance with the terms of the
extension or renewal, whether at Stated Maturity, by acceleration, call for
redemption, upon a Change of Control Offer, Asset Sale Offer, purchase or
otherwise.  Capitalized terms used herein shall have the same meanings assigned
to them in the Indenture unless otherwise indicated.

     Payment on each Security is guaranteed jointly and severally, by the
Guarantors pursuant to Article 11 of the Indenture and reference is made to
such Indenture for the precise terms of the Guarantees.

     The Obligations of each Guarantor are limited to the maximum amount as
will, after giving effect to such maximum amount and all other contingent and
fixed liabilities of such Guarantor, and after giving effect to any collections
from or payments made by or on behalf of any other Guarantor in respect of the
Obligations of such other Guarantor under its Guarantee or pursuant to its
contribution Obligations under the Indenture, result in the Obligations of such
Guarantor under its Guarantee not constituting a fraudulent conveyance or
fraudulent transfer under federal or state law or not otherwise being void,
voidable or unenforceable under any similar other bankruptcy, receivership,
insolvency, liquidation or other similar legislation or legal principles under
applicable foreign law.  Each Guarantor that makes a payment or distribution
under a Guarantee shall be entitled to a contribution from each other Company
in a pro rata amount based on the Adjusted Net Assets of each Guarantor.

     Certain of the Guarantors may be released from their Guarantees upon the
terms and subject to the conditions provided in the Indenture.



                                     11


<PAGE>   104



     The Guarantee shall be binding upon each Guarantor and its successors and
assigns and shall inure to the benefit of the Trustee and the Holders and, in
the event of any transfer or assignment of rights by any Holder or the Trustee,
the rights and privileges herein conferred upon that party shall automatically
extend to and be vested in such transferee or assignee, all subject to the
terms and conditions hereof and in the Indenture.

                              DRILLERS, INC.         
                                                     
                                                     
                                                     
                              By:                    
                                 --------------------------------------
                                                     

                              DI INTERNATIONAL, INC. 
                                                     
                                                     
                                                     
                              By:                    
                                 ---------------------------------------

                                                     
                              DI ENERGY, INC.        
                                                     
                                                     
                                                     
                              By:
                                 ---------------------------------------



                                     12


<PAGE>   105




                                ASSIGNMENT FORM

To assign this Security, fill in the form below:

I or we assign and transfer this Security to


--------------------------------------------------------------------------------
     (Print or type assignee's name, address and zip code)


--------------------------------------------------------------------------------
     (Insert assignee's social security or tax I.D. No.)


and irrevocably appoint _______________ agent to transfer this Security on the 
books of the Company.  The agent may substitute another to act for him.



Dated:                  Your Signature:
       ----------------                -----------------------------------------


--------------------------------------------------------------------------------
Sign exactly as your name appears on the other side of this Security.


Signature Guarantee:


-----------------------------
Signature must be guaranteed


--------------------------------------------------------------------------------
Notice: Signature(s) must be guaranteed by an institution which is a participant
in the Securities Transfer Agent Medallion Program ("STAMP") or similar program.



                                      1


<PAGE>   106




                       OPTION OF HOLDER TO ELECT PURCHASE

     If you want to elect to have this Security purchased by the Company
pursuant to Section 4.07 or Section 4.09 of the Indenture, check the
appropriate box:

                               Section 4.07  [  ]

                               Section 4.09  [  ]

     If you want to elect to have only part of this Security purchased by the
Company pursuant to Section 4.07 or Section 4.09 of the Indenture, state the
amount in principal amount (must be an integral of $1,000):  $_______________



Dated:                  Your Signature:
      -----------------                -----------------------------------------
                                       (Sign exactly as your name appears on
                                       the other side of this Security.)

Signature Guarantee:
                      --------------------------------
                      (Signature must be guaranteed)


--------------------------------------------------------------------------------
Notice: Signature(s) must be guaranteed by an institution which is a participant
in the Securities Transfer Agent Medallion Program ("STAMP") or similar program.




                                      2


<PAGE>   107




                                   SCHEDULE A

             SCHEDULE OF INCREASES OR DECREASES IN PRINCIPAL AMOUNT

     The initial principal amount at Maturity of this Global Security shall be
$175,000,000.  The following increases or decreases in this Global Security
have been made:


<TABLE>
<CAPTION>
                                                                                 Signature of
                                                           Total Principal       authorized
                                                           amount of this        signatory of
Date of        Amount of decrease    Amount of increase    Global Security       Trustee or
Increase/      in Principal          in Principal Amount   following such        Securities
Decrease       Amount at Maturity    at Maturity           Decrease/ Increase    Custodian
--------       --------------------  --------------------  --------------------  -------------
<S>            <C>                   <C>                   <C>                   <C>
_____________  _____________         _____________         _____________         _____________
_____________  _____________         _____________         _____________         _____________
_____________  _____________         _____________         _____________         _____________
_____________  _____________         _____________         _____________         _____________
_____________  _____________         _____________         _____________         _____________
_____________  _____________         _____________         _____________         _____________
_____________  _____________         _____________         _____________         _____________
_____________  _____________         _____________         _____________         _____________
_____________  _____________         _____________         _____________         _____________
_____________  _____________         _____________         _____________         _____________
_____________  _____________         _____________         _____________         _____________
_____________  _____________         _____________         _____________         _____________
_____________  _____________         _____________         _____________         _____________
_____________  _____________         _____________         _____________         _____________
_____________  _____________         _____________         _____________         _____________
_____________  _____________         _____________         _____________         _____________
_____________  _____________         _____________         _____________         _____________
_____________  _____________         _____________         _____________         _____________
_____________  _____________         _____________         _____________         _____________
_____________  _____________         _____________         _____________         _____________
_____________  _____________         _____________         _____________         _____________
_____________  _____________         _____________         _____________         _____________
_____________  _____________         _____________         _____________         _____________
</TABLE>




                                      3


<PAGE>   108

                                                                       EXHIBIT B



                   [FORM OF FACE OF CERTIFICATED SECURITY]

                             DI INDUSTRIES, INC.

No._______               8-7/8% SENIOR NOTE DUE 2007       CUSIP No. 232909 AA 9



     DI INDUSTRIES, INC., a Texas corporation, hereby promises to pay to
_________________, or registered assigns, the principal sum of _______________
on July 1, 2007.

     Interest Payment Dates:  January 1 and July 1, commencing January 1, 1998.

     Record Dates:  June 15 and December 15.

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

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

     IN WITNESS WHEREOF, DI INDUSTRIES, INC. has caused this instrument to be
duly executed under its corporate seal.

Dated:
      ----------------------
                                    DI INDUSTRIES, INC.



                                    By:
                                       --------------------------------
                                         Name:
                                         Title:

[Corporate Seal]

                                    By:
                                       --------------------------------
                                         Name:
                                         Title:

TRUSTEE'S CERTIFICATE OF AUTHENTICATION

TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
as Trustee, certifies that this is one of
     the Securities referred to in the Indenture.




By:
   ----------------------------------
     Authorized Signatory



                                      1


<PAGE>   109




                       [FORM OF REVERSE SIDE OF SECURITY]


                          8-7/8% Senior Note Due 2007



1.   Interest

     DI Industries, Inc., a Texas corporation (such corporation, and its
successors and assigns under the Indenture hereinafter referred to, being
herein called the "Company"), promises to pay interest on the principal
amount of this Security at the rate per annum shown above.  The Company will
pay interest semiannually on January 1 and July 1 of each year (an "Interest
Payment Date") commencing on January 1, 1998, until the principal amount is
paid or made available for payment.  Interest on the Securities will accrue
from the most recent date to which interest has been paid or, if no interest
has been paid, from the Issue Date.  Interest will be computed on the basis
of a 360-day year of twelve 30-day months.

2.   Method of Payment

     The Company will pay interest on the Securities (except Defaulted
Interest) to the Persons who are registered Holders of Securities at the
close of business on the June 15 or December 15 immediately preceding the
Interest Payment Date even if Securities are canceled after the Record Date
and on or before the Interest Payment Date.  Holders must surrender
Securities to a Paying Agent to collect principal payments.  The Company
will pay principal, premium, if any, and interest in money of the United
States that at the time of payment is legal tender for payment of public and
private debts.  Payments in respect of the Securities represented by a
Global Security (including principal, premium, if any, and interest) will be
made by wire transfer of immediately available funds to the accounts
specified by The Depository Trust Company, but, at the option of the
Company, interest may be paid by check mailed to the registered Holders at
their registered addresses.


3.   Paying Agent and Registrar

     Initially, Texas Commerce Bank National Association, a national banking
association (the "Trustee"), will act as Paying Agent and Registrar.  The
Company may appoint and change any Paying Agent, Registrar or co-registrar
without notice.  In certain circumstances, the Company or any of its
Subsidiaries may act as Paying Agent, Registrar or co-registrar.


4.   Indenture

     The Company issued the Securities under an Indenture dated as of June
27, 1997 (as such may be amended from time to time, the "Indenture"), among
the Company, the corporations acting as guarantors and named therein (the
"Guarantors") and the Texas Commerce Bank National Association, as trustee (the
"Trustee", which term includes any successor trustee under the Indenture), to
which 
                                        

                                      2


<PAGE>   110



Indenture reference is hereby made for a statement of the respective rights,
duties and immunities thereunder of the Company, the Guarantors, the Trustee and
each Holder of the Securities and the terms upon which the Securities are, and
are to be, authenticated and delivered.  The terms of the Securities include
those stated in the Indenture and those made part of the Indenture by reference
to the Trust Indenture Act of 1939 (15 U.S.C. Section Section  77aaa-77bbbb) as
in effect on the date of the Indenture (the "Act").  Terms defined in the
Indenture and not defined herein have the meanings ascribed thereto in the
Indenture.  The Securities are subject to all such terms, and Holders are
referred to the Indenture and the Act for a statement of those terms.

     The Securities are limited to $175,000,000 aggregate principal amount
at Stated Maturity at any one time outstanding (subject to Section 2.08 of
the Indenture).  This Security is one of the Securities referred to in the
Indenture.  The Indenture imposes certain limitations on the incurrence of
additional Indebtedness by the Company and its Subsidiaries; the payment of
dividends on, and redemption of, Capital Stock of the Company and its
Subsidiaries and the redemption of Subordinated Indebtedness of the Company
and its Subsidiaries; Investments; sales of assets and Subsidiary Capital
Stock; certain transactions with Affiliates of the Company and the right of
the Company and its Subsidiaries to engage in unrelated lines of business.


5.   Optional Redemption

     Except as provided in the next paragraph, the Securities are not
redeemable prior to July 1, 2002.  At any time on or after July 1, 2002, the
Securities are redeemable at the option of the Company, in whole or in part,
on not less than 30 nor more than 60 days' notice, at the following
Redemption Prices (expressed as percentages of principal amount at Stated
Maturity), if redeemed during the 12 months beginning July 1 of the years
indicated below, plus accrued and unpaid interest (if any) thereon to the
Redemption Date:


<TABLE>
<CAPTION>
                                               Redemption
              Year                               Price   
     ----------------------                    ----------
     <S>                                       <C>       
                                                         
     2002 ....................................  104.4375%
     2003 ....................................  102.9580%
     2004 ....................................  101.4792%
     2005 and thereafter .....................  100.0000%
</TABLE>



     Notwithstanding the foregoing, on and prior to July 1, 2000, the
Company may redeem up to 30% of the aggregate principal amount at Stated
Maturity of the Securities originally outstanding at a redemption price of
108.875% of the principal amount at Stated Maturity thereof, plus accrued
and unpaid interest (if any) thereon to the Redemption Date, with the net
proceeds of one or more Qualified Equity Offerings of the Company; provided
that at least $120,000,000 aggregate principal amount of the Securities shall
remain outstanding immediately after the occurrence of any such redemption; and
provided, further, that such redemption shall occur not later than 90 days
after the date of the closing of any such Qualified Equity Offering. The
redemption shall be made in accordance with procedures set forth in the
Indenture.



                                      3

<PAGE>   111





6.   Notice of Redemption

     Notice of redemption will be mailed by first-class mail, postage
prepaid, at least 30 days but not more than 60 days before the Redemption
Date to each Holder of Securities to be redeemed at his address as it
appears in the Security Register.  Securities in denominations larger than
$1,000 may be redeemed in part but only in whole multiples of $1,000.  If
less than all of the Securities are to be redeemed at any time, the
Securities to be redeemed will be chosen by the Trustee in accordance with
the Indenture.  If any Security is redeemed subsequent to a Record Date with
respect to any Interest Payment Date specified above and on or prior to such
Interest Payment Date, then any accrued interest will be paid on such
Interest Payment Date to the Holder of the Security at the close of business
on such Record Date.  If money sufficient to pay the Redemption Price of and
accrued interest on all Securities (or portions thereof) to be redeemed on
the Redemption Date is deposited with the Paying Agent on or before the
Redemption Date and certain other conditions are satisfied, on and after
such date interest ceases to accrue on such Securities (or such portions
thereof) called for redemption.


7.   Change of Control

     Upon the occurrence of a Change of Control, each Holder of Securities
shall have the right to require the Company to purchase such Holder's
Securities, in whole or in part in a principal amount at Stated Maturity
that is an integral multiple of $1,000, pursuant to a Change of Control
Offer, at a purchase price in cash equal to 101% of the principal amount at
Stated Maturity thereof on any Change of Control Payment Date, plus accrued
and unpaid interest, if any, to the Change of Control Payment Date.

     Within 30 calendar days following any Change of Control, the Company
shall send, or cause to be sent, by first class mail, postage prepaid, a
notice regarding the Change of Control Offer to each Holder of Securities.
The Holder of this Security may elect to have this Security or a portion
hereof in an authorized denomination purchased by completing the form
entitled "Option of Holder to Elect Purchase" appearing below and tendering
this Security pursuant to the Change of Control Offer.  Unless the Company
defaults in the payment of the Change of Control Purchase Price with respect
thereto, all Securities or portions thereof accepted for payment pursuant to
the Change of Control Offer will cease to accrue interest from and after the
Change of Control Payment Date.


8.   Repurchase at the Option of Holders upon Asset Sale.

     Subject to the limitations set forth in the next following paragraph,
if at any time the Company or any Subsidiary engages in any Asset Sale, as a
result of which the aggregate amount of Excess Proceeds exceeds $15,000,000,
the Company shall, within 30 calendar days of the date the amount of Excess
Proceeds exceeds $15,000,000, or at any time after receipt of Excess
Proceeds but prior to there being $15,000,000 of Excess Proceeds, the
Company may, at its option, use the then-existing Excess Proceeds to make an
offer to purchase from all Holders, on a pro rata basis, 


                                      4


<PAGE>   112




Securities in an aggregate principal amount equal to the maximum principal
amount that may be purchased out of the then-existing Excess Proceeds, at a
purchase price in cash equal to 100% of the principal amount at Stated Maturity
thereof, plus accrued and unpaid interest, if any, to the Asset Sale Offer
Purchase Date. Upon completion of an Asset Sale Offer (including payment of the
Asset Sale Offer Purchase Price for accepted Securities), any surplus Excess
Proceeds that were the subject of such offer shall cease to be Excess Proceeds,
and the Company may then use such amounts for general corporate purposes.

     Within 30 calendar days of the date the amount of Excess Proceeds
exceeds $15,000,000, the Company shall send, or cause to be sent, by first
class mail, postage prepaid, a notice regarding the Asset Sale Offer to each
Holder of Securities.  The Holder of this Security may elect to have this
Security or a portion hereof in an authorized denomination purchased by
completing the form entitled "Option of Holder to Elect Purchase" appearing
below and tendering this Security pursuant to the Asset Sale Offer.  Unless
the Company defaults in the payment of the Asset Sale Offer Purchase Price
with respect thereto, all Securities or portions thereof selected for
payment pursuant to the Asset Sale Offer will cease to accrue interest from
and after the Asset Sale Offer Purchase Date.


9.   Transfer and Exchange

     A Holder may transfer a Security only upon the surrender of such
Security for registration of transfer.  No such transfer shall be effected
until, and such transferee shall succeed to the rights of a Holder only
upon, final acceptance and registration of the transfer in the Security
Register by the Registrar.  When Securities are presented to the Registrar
with a request to register the transfer of, or to exchange, such Securities,
the Registrar shall register the transfer or make such exchange as requested
if its requirements for such transactions and any applicable requirements
hereunder are satisfied.

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

     
10.  Persons Deemed Owners

     The registered Holder of this Security may be treated as the owner of
it for all purposes.

11. Unclaimed Money

     If money for the payment of principal or interest remains unclaimed for
two years, the Trustee or Paying Agent shall pay the money back to the
Company at its written request unless an abandoned property law designates
another Person.  After any such payment, Holders entitled to the money must
look only to the Company and not to the Trustee for payment.






                                      5


<PAGE>   113




12.  Discharge and Defeasance

     Subject to certain conditions, the Company at any time may terminate
some or all of its Obligations and the Guarantors' Obligations under the
Securities, the Guarantees and the Indenture if the Company deposits with
the Trustee money or U.S. Government Obligations for the payment of
principal, premium and interest on the Securities to redemption or Maturity,
as the case may be.


13.  Amendment, Waiver

     Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in outstanding principal amount at Stated
Maturity of the Securities and (ii) any default or noncompliance with any
provision may be waived with the written consent of the Holders of a
majority in outstanding principal amount at Stated Maturity outstanding of
the Securities.  Subject to certain exceptions set forth in the Indenture,
without the consent of any Holder, the Company, the Guarantors and the
Trustee may amend the Indenture or the Securities (a) to evidence the
succession of another Person to the Company and the Guarantors and the
assumption by such successor of the covenants and Obligations of the Company
under the Indenture and contained in the Securities and of the Guarantors
contained in the Indenture and the Guarantees, (b) to add to the covenants
of the Company, for the benefit of the Holders, or to surrender any right or
power conferred upon the Company or the Guarantors by the Indenture, (c) to
add any additional Events of Default, (d) to provide for uncertificated
Securities in addition to or in place of certificated Securities, (e) to
evidence and provide for the acceptance of appointment under the Indenture
by the successor Trustee, (f) to secure the Securities and/or the
Guarantees, (g) to cure any ambiguity, to correct or supplement any
provision in the Indenture which may be inconsistent with any other
provision therein or to add any other provision with respect to matters or
questions arising under the Indenture, provided that such actions will not
adversely affect the interests of the Holders in any material respect or (h)
to add or release any Guarantor pursuant to the terms of the Indenture.
Certain provisions of the Securities and the Indenture may not be amended or
waived without the consent of each Holder affected thereby.




                                      6


<PAGE>   114





14.  Defaults and Remedies

     Under the Indenture, Events of Default include in summary form (i)
default in the payment of interest on the Securities when due, continued for
30 days; (ii) default in the payment of principal of (or premium, if any,
on) the Securities when due; (iii) failure to comply with certain of the
covenants in the Indenture, including the Change of Control covenant, the
Asset Sale covenant and the Restrictive Payments covenant; (iv) failure to
perform any other covenant of the Company or any Guarantor in the Indenture,
continued for 30 days after written notice as provided in the Indenture; (v)
Indebtedness of the Company or any Subsidiary is not paid when due within
the applicable grace period, or is accelerated and, in either case, the
principal amount of such unpaid Indebtedness exceeds $10,000,000; (vi) one
or more final judgments or orders by a court of competent jurisdiction are
entered against the Company or any Subsidiary in an uninsured or
unindemnified aggregate amount in excess of $5,000,000 and such judgments or
orders are not discharged, waived, appealed, stayed, satisfied or bonded for
a period of 60 consecutive days; (vii) certain events of bankruptcy,
insolvency or reorganization; or (viii) a Guarantee ceases to be in full
force and effect (other than in accordance with the terms of the Indenture
and such Guarantee) or a Guarantor denies or disaffirms its obligations
under its Guarantee.

     Holders may not enforce the Indenture or the Securities except as
provided in the Indenture.  The Trustee may refuse to enforce the Indenture
or the Securities unless it receives reasonable indemnity or security.
Subject to certain limitations, Holders of a majority in principal amount at
Stated Maturity of the Securities may direct the Trustee in its exercise of
any trust or power.  The Trustee may withhold from Holders notice of any
continuing Default (except a Default in payment of principal or interest) if
it determines that withholding notice is in the interest of the Holders.
The Holders of a majority in principal amount at Stated Maturity of the
outstanding Securities, by written notice to the Company and the Trustee,
may rescind any declaration of acceleration and its consequences if the
rescission would not conflict with any judgment or decree, and if all Events
of Default have been cured or waived except nonpayment of principal and
interest that has become due solely because of the acceleration.


15.  Trustee Dealings with the Company

     Subject to certain limitations imposed by the Trust Indenture Act,  the
Trustee under the Indenture, in its individual or any other capacity, may
become the owner or pledgee of Securities and may otherwise deal with and
collect obligations owed to it by the Company or its Affiliates and may
otherwise deal with the Company or its Affiliates with the same rights it
would have if it were not Trustee.




                                      7


<PAGE>   115





16.  No Recourse Against Others

     A director, officer, employee or stockholder, as such, of the Company
or any Guarantor shall not have any liability for any obligations of the
Company or a Guarantor under the Securities, the Guarantees or the Indenture
or for any claim based on, in respect of or by reason of such obligations or
their creation.  By accepting a Security, each Holder waives and releases
all such liability.  The waiver and release are part of the consideration
for the issue of the Securities.


17.  Governing Law

     THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE
LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.


18.  Abbreviations

     Customary abbreviations may be used in the name of a Holder or an
assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).


19.  CUSIP Numbers

     Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures the Company has caused CUSIP numbers to
be printed on the Securities and has directed the Trustee to use CUSIP
numbers in notices of redemption as a convenience to Holders.  No
representation is made as to the accuracy of such numbers either as printed
on the Securities or as contained in any notice of redemption and reliance
may be placed only on the other identification numbers placed thereon.


     The Company will furnish to any Holder upon written request and without
charge to the Holder a copy of the Indenture which has in it the text of
this Security.





                                      8


<PAGE>   116




                             SECURITY GUARANTEE

     Subject to the limitations set forth in the Indenture, the Guarantors
(as defined in the Indenture referred to in this Security and each
hereinafter referred to as a "Guarantor," which term includes any successor
or additional Guarantor under the Indenture) have jointly and severally,
irrevocably and unconditionally guaranteed (a) the due and punctual payment
of the principal (and premium, if any) of and interest on the Securities,
whether at Stated Maturity, by acceleration, call for redemption, upon a
Change of Control Offer, Asset Sale Offer, purchase or otherwise, (b) the
due and punctual payment of interest on the overdue principal of and
interest on the Securities, if any, to the extent lawful, (c) the due and
punctual performance of all other Obligations of the Company and the
Guarantors to the Holders under the Indenture and the Notes and (d) in case
of any extension of time of payment or renewal of any Securities or any of
such other Obligations, the same will be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal, whether
at Stated Maturity, by acceleration, call for redemption, upon a Change of
Control Offer, Asset Sale Offer, purchase or otherwise.  Capitalized terms
used herein shall have the same meanings assigned to them in the Indenture
unless otherwise indicated.

     Payment on each Security is guaranteed jointly and severally, by the
Guarantors pursuant to Article 11 of the Indenture and reference is made to
such Indenture for the precise terms of the Guarantees.

     The obligations of each Guarantor are limited to the maximum amount as
will, after giving effect to such maximum amount and all other contingent
and fixed liabilities of such Guarantor, and after giving effect to any
collections from or payments made by or on behalf of any other Guarantor in
respect of the Obligations of such other Guarantor under its Guarantee or
pursuant to its contribution Obligations under the Indenture, result in the
Obligations of such Guarantor under its Guarantee not constituting a
fraudulent conveyance or fraudulent conveyance or fraudulent transfer under
federal or state law or not otherwise being void, voidable or unenforceable
under any similar other bankruptcy, receivership, insolvency, liquidation or
other similar legislation or legal principles under applicable foreign law.
Each Guarantor that makes a payment or distribution under a Guarantee shall
be entitled to a contribution from each other Company in a pro rata amount
based on the Adjusted Net Assets of each Guarantor.

     Certain of the Guarantors may be released from their Guarantees upon
the terms and subject to the conditions provided in the Indenture.



                                      9


<PAGE>   117





     The Guarantee shall be binding upon each Guarantor and its successors
and assigns and shall inure to the benefit of the Trustee and the Holders
and, in the event of any transfer or assignment of rights by any Holder or
the Trustee, the rights and privileges herein conferred upon that party
shall automatically extend to and be vested in such transferee or assignee,
all subject to the terms and conditions hereof and in the Indenture.

                                DRILLERS, INC.          
                                                        
                                                        
                                                        
                                By:                     
                                   ----------------------------------
                                                        
                                DI INTERNATIONAL, INC.  
                                                        
                                                        
                                                        
                                By:                     
                                   ----------------------------------
                                                        
                                                        
                                DI ENERGY, INC.         
                                                        
                                                        
                                                        
                                By:                     
                                   ----------------------------------





                                     10


<PAGE>   118




                                ASSIGNMENT FORM



To assign this Security, fill in the form below:

I or we assign and transfer this Security to


--------------------------------------------------------------------------------
             (Print or type assignee's name, address and zip code)


--------------------------------------------------------------------------------
              (Insert assignee's social security or tax I.D. No.)


and irrevocably appoint _________ agent to transfer this Security on the books 
of the Company.  The agent may substitute another to act for him.



Dated:                  Your Signature:
       ----------------                -----------------------------------------


--------------------------------------------------------------------------------
Sign exactly as your name appears on the other side of this Security.


Signature Guarantee:


-------------------------------
Signature must be guaranteed


--------------------------------------------------------------------------------
Notice: Signature(s) must be guaranteed by an institution which is a participant
        in the Securities Transfer Agent Medallion Program ("STAMP") or similar
        program.



                                      11


<PAGE>   119




                       OPTION OF HOLDER TO ELECT PURCHASE

     If you want to elect to have this Security purchased by the Company
pursuant to Section 4.07 or Section 4.09 of the Indenture, check the
appropriate box:

                               Section 4.07  [  ]

                               Section 4.09  [  ]

     If you want to elect to have only part of this Security purchased by the
Company pursuant to Section 4.07 or Section 4.09 of the Indenture, state the
amount in principal amount (must be an integral of $1,000):  $_______________



Dated:                 Your Signature:
       ---------------                ------------------------------------------
                                          (Sign exactly as your name appears on
                                             the other side of this Security.)

Signature Guarantee:
                      ------------------------------
                      (Signature must be guaranteed)



--------------------------------------------------------------------------------
Notice: Signature(s) must be guaranteed by an institution which is a participant
        in the Securities Transfer Agent Medallion Program ("STAMP") or similar
        program.







                                      12


<PAGE>   120




                                                                       EXHIBIT C
                         FORM OF SUPPLEMENTAL INDENTURE


     SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of
_______________, among [GUARANTOR] (the "New Guarantor"), a subsidiary of DI
Industries, Inc. (or its successor), a Texas corporation (the "Company"), DI
INDUSTRIES, INC., the Guarantors (the "Existing Guarantors") under the
Indenture referred to below, and Texas Commerce Bank National Association, a
national banking association, as trustee under the Indenture referred to below
(the "Trustee").

                             W I T N E S S E T H :

     WHEREAS the Company has heretofore executed and delivered to the Trustee
an Indenture (as such may be amended from time to time, the "Indenture"), dated
as of June 27, 1997, providing for the issuance of an aggregate principal
amount of $175,000,000 of 8-7/8% Senior Notes due 2007 (the "Securities");

     WHEREAS Section 11.08 of the Indenture provides that the Company is
required to cause the New Guarantor to execute and deliver to the Trustee a
supplemental indenture pursuant to which the New Guarantor shall jointly and
severally and unconditionally and irrevocably guarantee all of the Company's
Obligations under the Securities and the Indenture pursuant to a Guarantee
contained in the Indenture on the terms and conditions set forth herein; and

     WHEREAS pursuant to Section 10.01 of the Indenture, the Trustee, the
Company and Existing Guarantors are authorized to execute and deliver this
Supplemental Indenture;

     NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the New
Guarantor, the Company, the Existing Guarantors and the Trustee mutually
covenant and agree for the equal and ratable benefit of the holders of the
Securities as follows:

     1. Definitions.  (a) Capitalized terms used herein without definition
shall have the meanings assigned to them in the Indenture.

     (b) For all purposes of this Supplemental Indenture, except as otherwise
herein expressly provided or unless the context otherwise requires:  (i) the
terms and expressions used herein shall have the same meanings as corresponding
terms and expressions used in the Indenture; and (ii) the words "herein,"
"hereof" and "hereby" and other words of similar import used in this
Supplemental Indenture refer to this Supplemental Indenture as a whole and not
to any particular section hereof.

     2. Agreement to Guarantee.  The New Guarantor hereby agrees, jointly and
severally and unconditionally and irrevocably, with all other Guarantors, to
guarantee the 


                                      1


<PAGE>   121




Company's Obligations under the Securities and the Indenture on the terms and
subject to the conditions set forth in Article 11 of the Indenture and to be
bound by all other applicable provisions of the Indenture. From and after the
date hereof, the New Guarantor shall be a Guarantor for all purposes under the
Indenture and the Securities.

     3. Ratification of Indenture; Supplemental Indentures Part of Indenture.
Except as expressly amended hereby, the Indenture is in all respects ratified
and confirmed and all the terms, conditions and provisions thereof shall remain
in full force and effect.  This Supplemental Indenture shall form a part of the
Indenture for all purposes, and every Holder of Securities heretofore or
hereafter authenticated and delivered shall be bound hereby.

     4. Governing Law.  THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT
GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT
THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

     5. Trustee Makes No Representation. The Trustee makes no representation as
to the validity or sufficiency of this Supplemental Indenture.

     6. Counterparts.  The parties may sign any number of copies of this
Supplemental Indenture.  Each signed copy shall be an original, but all of them
together represent the same agreement.

     7. Effect of Headings.  The Section headings herein are for convenience
only and shall not effect the construction thereof.

     IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed as of the date first above written.

                             [NEW GUARANTOR]              
                                                          
                                                          
                             By:  
                                -------------------------------------------
                             Name:                        
                             Title:                       
                                                          
                                                          
                                                          
                                                          
                                                          
                             DI INDUSTRIES, INC.          
                                                          
                                                          
                             By:                          
                                -------------------------------------------
                             Name:                        
                             Title:                       
                                                          
                             [ALL EXISTING GUARANTORS]    
                                                          
                                                          
                             By:                          
                                -------------------------------------------
                             Name:                        
                             Title:                       



                             TEXAS COMMERCE BANK NATIONAL ASSOCIATION
                             as Trustee                              
                                                                     
                                                                     
                             By:                                     
                                -------------------------------------------
                             Name:                                   
                             Title:                                  
                                                                     
                                                                     





                                      2