Document:

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                                                                  EXECUTION COPY

                                                                   Exhibit 10.54

                          SELECT MEDICAL CORPORATION

                                 $175,000,000

                   9 1/2% Senior Subordinated Notes due 2009

                              PURCHASE AGREEMENT
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                                                                    June 6, 2001
J.P. MORGAN SECURITIES INC.
MERRILL LYNCH, PIERCE, FENNER & SMITH
            INCORPORATED
CREDIT SUISSE FIRST BOSTON CORPORATION
CIBC WORLD MARKETS CORP.
FIRST UNION SECURITIES, INC.
C/O J.P. MORGAN SECURITIES INC.
270 Park Avenue, 4th floor
New York, New York  10017

Ladies and Gentlemen:

          Select Medical Corporation, a Delaware corporation (the "Company"),
proposes to issue and sell $175,000,000 aggregate principal amount of its 9 1/2
% Senior Subordinated Notes due 2009 (the "Securities"). The Securities will be
issued pursuant to an Indenture to be dated as of June 11, 2001 (the
"Indenture") between the Company, each of the subsidiaries of the Company listed
on Schedule I hereto (each a "Guarantor" and together, the "Guarantors") and
State Street Bank and Trust Company, as trustee (the "Trustee"). The Securities
will be guaranteed on an unsecured senior subordinated basis by guarantees (the
"Guarantees", and each a "Guarantee") of the Guarantors. The Company hereby
confirms its agreement with J.P. Morgan Securities Inc. ("JPMorgan") and Merrill
Lynch, Pierce, Fenner & Smith Incorporated, Credit Suisse First Boston
Corporation, CIBC World Markets Corp. and First Union Securities, Inc.
(collectively, together with JPMorgan, the "Initial Purchasers") concerning the
purchase of the Securities from the Company by the several Initial Purchasers.

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          The Securities will be offered and sold to the Initial Purchasers
without being registered under the Securities Act of 1933, as amended (the
"Securities Act"), in reliance upon an exemption therefrom. The Company has
prepared a preliminary offering memorandum dated May 29, 2001 (the "Preliminary
Offering Memorandum") and will prepare an offering memorandum dated the date
hereof (the "Offering Memorandum") setting forth information concerning the
Company, the Guarantors and the Securities. Copies of the Preliminary Offering
Memorandum have been, and copies of the Offering Memorandum will be, delivered
by the Company to the Initial Purchasers pursuant to the terms of this
Agreement. Any references herein to the Preliminary Offering Memorandum and the
Offering Memorandum shall be deemed to include all amendments and supplements
thereto, unless otherwise noted. The Company hereby confirms that it has
authorized the use of the Preliminary Offering Memorandum and the Offering
Memorandum in connection with the offering and resale of the Securities by the
Initial Purchasers in accordance with Section 2.

          Holders of the Securities (including the Initial Purchasers and their
direct and indirect transferees) will, subject to the terms and conditions
thereof, be entitled to the benefits of an Exchange and Registration Rights
Agreement, substantially in the form attached hereto as Annex A (the
"Registration Rights Agreement"), pursuant to which the Company will agree to
file with the Securities and Exchange Commission (the "Commission") a
registration statement under the Securities Act (the "Exchange Offer
Registration Statement") registering an issue of senior subordinated notes of
the Company (the "Exchange Securities") and guarantees of each of the Guarantors
which are identical in all material respects to the Securities (except that the
Exchange Securities will not contain terms with respect to transfer restrictions
or additional interest) and the Guarantors and under certain circumstances, a
shelf registration statement pursuant to Rule 415 under the Securities Act (the
"Shelf Registration Statement").

          Prior to or on the Closing Date (i) the Company's Amended and Restated
Credit Agreement will be amended (the "Credit Agreement Amendment") and (ii) the
Company will repay all outstanding principal and interest on its 10% Senior
Subordinated Notes due 2009 (the "Senior Subordinated Note Repayment"). The
Credit Agreement Amendment and the Senior Subordinated Note Repayment are
collectively referred to herein as the "Related Transactions".

          Capitalized terms used but not defined herein shall have the meanings
given to such terms in the Offering Memorandum.

          1. Representations, Warranties and Agreements of the Company and the
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Guarantors. The Company and the Guarantors jointly and severally represent and
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warrant to, and agree with, the several Initial Purchasers on and as of the date
hereof and the Closing Date (as defined in Section 3) that:

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          (a) Each of the Preliminary Offering Memorandum and the Offering
     Memorandum, as of its respective date, did not, and on the Closing Date the
     Offering Memorandum will not, contain any untrue statement of a material
     fact or omit to state a material fact required to be stated therein or
     necessary in order to make the statements therein, in the light of the
     circumstances under which they were made, not misleading; provided that the
     Company and the Guarantors make no representation or warranty as to
     information contained in or omitted from the Preliminary Offering
     Memorandum or the Offering Memorandum in reliance upon and in conformity
     with written information relating to the Initial Purchasers furnished to
     the Company or the Guarantors by or on behalf of any Initial Purchaser
     specifically for use therein as specified in section 16 hereof (the
     "Initial Purchasers' Information").

          (b) Each of the Preliminary Offering Memorandum and the Offering
     Memorandum, as of its respective date, contains all of the information
     that, if requested by a prospective purchaser of the Securities, would be
     required to be provided to such prospective purchaser pursuant to Rule
     144A(d)(4) under the Securities Act.

          (c) Assuming the accuracy of the representations and warranties of the
     Initial Purchasers contained in Section 2, compliance with the agreements
     set forth herein, compliance by the Initial Purchasers with the offering
     and transfer procedures and restrictions described in the Transaction
     Documents, and the accuracy of the representations and warranties made in
     accordance with the Transaction Documents by purchasers to whom the Initial
     Purchasers initially resell the Securities, it is not necessary, in
     connection with the issuance and sale of the Securities to the Initial
     Purchasers and the offer, resale and delivery of the Securities by the
     Initial Purchasers in the manner contemplated by this Agreement and the
     Offering Memorandum, to register the Securities under the Securities Act or
     to qualify the Indenture under the Trust Indenture Act of 1939, as amended
     (the "Trust Indenture Act") (it being understood that no representation is
     made as to any resale subsequent to the initial resale of the Securities).

          (d) The Company has been duly organized and is validly existing as a
     corporation in good standing under the laws of the State of Delaware and
     has corporate power and authority to own, lease and operate its properties
     and to conduct its business as described in the Offering Memorandum; and
     the Company is duly qualified as a foreign corporation to transact business
     and is in good standing in each other jurisdiction in which such
     qualification is required, whether by reason of the ownership or leasing of
     property or the conduct of business, except where the failure so to qualify
     or to be in good standing would not result in any material adverse changes
     in the condition, financial or otherwise, or in the

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     earnings, business affairs or business prospects of the Company and its
     subsidiaries considered as one enterprise, whether or not arising in the
     ordinary course of business (a "Material Adverse Effect").

          (e) (1) Each subsidiary of the Company set forth on Schedule III
     hereto (which lists all (a) Guarantors and (b) other subsidiaries of the
     Company that are either operating entities or holding companies, each a
     "Subsidiary" and, collectively, the "Subsidiaries") has been duly organized
     and is validly existing as a corporation or other entity in good standing
     under the laws of the jurisdiction of its incorporation, has corporate or
     other power and authority to own, lease and operate its properties and to
     conduct its business as described in the Offering Memorandum and is duly
     qualified as a foreign corporation or other entity to transact business and
     is in good standing in each jurisdiction in which such qualification is
     required, whether by reason of the ownership or leasing of property or the
     conduct of business, except where the failure so to qualify or to be in
     good standing would not result in a Material Adverse Effect; except as set
     forth on Schedule IV hereto, (a) all of the issued and outstanding capital
     stock of each such Subsidiary that is a corporation has been duly
     authorized and validly issued, is fully paid and non-assessable and is
     owned, by the Company, directly or through subsidiaries, free and clear of
     any security interest, mortgage, pledge, lien, encumbrance, claim or
     equity, and (b) all of the ownership interests of each such Subsidiary that
     is not a corporation have been duly authorized and are owned, by the
     Company, directly or through subsidiaries, free and clear of any security
     interest, mortgage, pledge, lien, encumbrance, claim or equity; none of the
     outstanding shares of capital stock of any Subsidiary was issued in
     violation of the preemptive or similar rights of any securityholder of such
     Subsidiary. The only subsidiaries of the Company are the subsidiaries
     listed on Schedule I hereto and the subsidiaries listed on Schedule V
     hereto (which lists all subsidiaries of the Company that are not
     guaranteeing the Securities).

          (2)  Except to the extent disclosed in the Offering Memorandum under
     the caption "Selected Consolidated Financial and Other Data" and in the
     Company's consolidated financial statements included in the Offering
     Memorandum, each of the specialty acute care hospitals, outpatient
     rehabilitation clinics and occupational health centers (collectively, the
     "Facilities") described in the Offering Memorandum as owned by the Company
     is owned or leased and operated by a Subsidiary of which the Company
     directly or indirectly owns 100% of the outstanding ownership interests.
     Except as disclosed in the Offering Memorandum, there are no material
     encumbrances or restrictions on the ability of any Subsidiary (i) to pay
     any dividends or make any distributions on such Subsidiary's capital stock,
     (ii) to make any loans or advances to, or investments in,

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     the Company or any Subsidiary, or (iii) to transfer any of its property or
     assets to the Company or any Subsidiary.

          (f) The authorized, issued and outstanding capital stock of the
     Company is as set forth in the Offering Memorandum in the column entitled
     "Actual" under the caption "Capitalization" (except for subsequent
     issuances, if any, pursuant to reservations, agreements or employee benefit
     plans referred to in the Offering Memorandum or pursuant to the exercise of
     convertible securities or options referred to in the Offering Memorandum or
     repurchases of an immaterial number of shares of the Company's capital
     stock held by former employees). The shares of issued and outstanding
     capital stock of the Company have been duly authorized and validly issued
     and are fully paid and non-assessable; none of the outstanding shares of
     capital stock of the Company was issued in violation of the preemptive or
     other similar rights of any securityholder of the Company that were not
     subsequently waived. The shares of capital stock of the Company issued or
     to be issued in connection with the exercise of any put right held by any
     prior owner of a Facility that was subsequently acquired by the Company,
     have been issued in compliance, in all material respects, with all federal
     and state securities laws. Except as disclosed in the Offering Memorandum,
     there are no outstanding options or warrants to purchase, or any preemptive
     rights or other rights to subscribe for or to purchase, any securities or
     obligations convertible into, or any contracts or commitments to issue or
     sell, shares of the Company's or any of its subsidiaries' capital stock or
     other ownership interests.

          (g) (i) The Company and each of the Guarantors has full right, power
     and authority to execute and deliver this Agreement, the Indenture
     (including the Guarantee set forth therein), the Registration Rights
     Agreement, and the Securities and (ii) the Company has the full right,
     power and authority to execute and deliver the Credit Agreement Amendment
     ((i) and (ii) above are collectively referred to as, the "Transaction
     Documents") and to perform their respective obligations hereunder and
     thereunder; and all corporate action required to be taken for the due and
     proper authorization, execution and delivery of each of the Transaction
     Documents and the consummation of the transactions contemplated thereby
     have been duly and validly taken.

          (h) This Agreement has been duly authorized, executed and delivered by
     the Company and each of the Guarantors.

          (i) The Registration Rights Agreement has been duly authorized by the
     Company and each of the Guarantors and, when duly executed and delivered in
     accordance with its terms by each of the parties thereto, will constitute a
     valid and legally binding agreement of the Company and each of the
     Guarantors enforceable

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     against the Company and each of the Guarantors in accordance with its
     terms, except to the extent that such enforceability may be limited by
     applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
     moratorium and other similar laws affecting creditors' rights generally and
     by general equitable principles (whether considered in a proceeding in
     equity or at law) and an implied covenant of good faith and fair dealing.

          (j) The Indenture has been duly authorized by the Company and each of
     the Guarantors and, when duly executed and delivered in accordance with its
     terms by each of the parties thereto, will constitute a valid and legally
     binding agreement of the Company and each of the Guarantors enforceable
     against the Company and each of the Guarantors in accordance with its
     terms, except to the extent that such enforceability may be limited by
     applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
     moratorium and other similar laws affecting creditors' rights generally and
     by general equitable principles (whether considered in a proceeding in
     equity or at law) and an implied covenant of good faith and fair dealing.
     On the Closing Date, the Indenture will conform in all material respects to
     the requirements of the Trust Indenture Act and the rules and regulations
     of the Commission applicable to an indenture which is qualified thereunder.

          (k) The Securities have been duly authorized by the Company and each
     of the Guarantors and, when duly executed, authenticated, issued and
     delivered as provided in the Indenture and paid for as provided herein,
     will be duly and validly issued and outstanding and will constitute valid
     and legally binding obligations of the Company, as issuer and each of the
     Guarantors, as guarantors, entitled to the benefits of the Indenture and
     enforceable against the Company, as issuer, and each of the Guarantors, as
     guarantors, in accordance with their terms, except to the extent that such
     enforceability may be limited by applicable bankruptcy, insolvency,
     fraudulent conveyance, reorganization, moratorium and other similar laws
     affecting creditors' rights generally and by general equitable principles
     (whether considered in a proceeding in equity or at law) and an implied
     covenant of good faith and fair dealing; the Securities conform to all
     statements relating thereto contained in the Offering Memorandum and such
     description conforms to the rights set forth in the Transaction Documents.

          (l) The Guarantees have been duly authorized by each of the Guarantors
     and, when the Securities have been duly executed, authenticated, issued and
     delivered as provided in the Indenture and paid for as provided herein
     (assuming due authorization, execution and delivery of the Indenture by the
     Trustee and due authentication of the Securities by the Trustee), will
     constitute valid and legally binding obligations of the Guarantors
     enforceable against the Guarantors in accordance with their terms.

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          (m) The Exchange Securities have been duly authorized by the Company
     and the related guarantees have been duly authorized by each of the
     Guarantors and, when duly executed, authenticated, issued and delivered as
     provided in the Indenture and the Registration Rights Agreement (assuming
     the Indenture is the valid and legally binding obligation of the Trustee)
     will constitute a valid and legally binding agreement of the Company, as
     issuer and each of the Guarantors, as guarantors, enforceable against the
     Company, as issuer and each of the Guarantors, as guarantors, in accordance
     with its terms, except to the extent that such enforceability may be
     limited by applicable bankruptcy, insolvency, fraudulent conveyance,
     reorganization, moratorium and other similar laws affecting creditors'
     rights generally and by general equitable principles (whether considered in
     a proceeding in equity or at law) and an implied covenant of good faith and
     fair dealing.

          (n) Each of the Transaction Documents not referred to in the preceding
     clauses (h) through (l) has been duly authorized by the Company and, when
     duly executed and delivered in accordance with their terms by each of the
     parties thereto will constitute valid and legally binding obligations of
     the Company enforceable against the Company in accordance with their terms,
     subject to bankruptcy, insolvency, fraudulent conveyance, reorganization,
     moratorium and other similar laws affecting creditors' rights generally and
     to general equitable principles (whether considered in a proceeding in
     equity or at law) and an implied covenant of good faith and fair dealing.

          (o) Each Transaction Document conforms in all material respects to the
     description thereof contained in the Offering Memorandum.

          (p) The execution, delivery and performance by the Company and each of
     the Guarantors of each of the Transaction Documents to which it is a party,
     the issuance, authentication, sale and delivery of the Securities and
     compliance by the Company and each of the Guarantors with the terms thereof
     and the consummation of the transactions contemplated by the Transaction
     Documents will not conflict with or result in a breach or violation of any
     of the terms or provisions of, or constitute a default under, or result in
     the creation or imposition of any lien, charge or encumbrance upon any
     property or assets of the Company or any of its subsidiaries pursuant to,
     any indenture, mortgage, deed of trust, loan agreement or other agreement
     or instrument to which the Company or any of its subsidiaries is a party or
     by which the Company or any of its subsidiaries is bound or to which any of
     the property or assets of the Company or any of its subsidiaries is subject
     (except for such conflicts, breaches or defaults or liens, charges or
     encumbrances that would not result in a Material Adverse Effect), nor will
     such actions result in any violation of the provisions of the charter or
     by-laws of the

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     Company (or other comparable organizational documents) or any of its
     subsidiaries or any statute or any judgment, order, decree, rule or
     regulation of any court or arbitrator or governmental agency or body having
     jurisdiction over the Company or any of its subsidiaries or any of their
     properties or assets; and no consent, approval, authorization or order of,
     or filing or registration with, any such court or arbitrator or
     governmental agency or body under any such statute, judgment, order,
     decree, rule or regulation is required for the execution, delivery and
     performance by the Company and each of the Guarantors of the Transaction
     Documents to which each is a party, the issuance, authentication, sale and
     delivery of the Securities and compliance by the Company and each of the
     Guarantors with the terms thereof and the consummation of the transactions
     contemplated by the Transaction Documents, except for such consents,
     approvals, authorizations, filings, registrations or qualifications which
     shall have been obtained or made prior to the Closing Date and as may be
     required to be obtained or made under the Securities Act and applicable
     state securities laws as provided in the Registration Rights Agreement.

          (q) PricewaterhouseCoopers LLC are independent certified public
     accountants with respect to the Company within the applicable rules and
     regulations of the Commission. The consolidated financial statements
     included in the Offering Memorandum, together with the related notes,
     comply in all material respects with the requirements applicable to a
     registration statement on Form S-1 under the Securities Act (except that
     certain supporting schedules and exhibits are omitted), present fairly the
     financial position of the Company and its consolidated subsidiaries, and
     NovaCare Physical Rehabilitation and Occupational Health Group, Intensiva
     Healthcare Corporation and Subsidiaries, and American Transitional
     Hospitals, Inc. (collectively, the "Acquired Entities"), at the dates
     indicated and the statement of operations, stockholders' equity and cash
     flows of the Company, its consolidated subsidiaries and the Acquired
     Entities and for the periods specified; said financial statements have been
     prepared in conformity with generally accepted accounting principles
     ("GAAP") applied on a consistent basis throughout the periods involved. The
     selected consolidated financial data and the summary consolidated financial
     information of the Company included in the Offering Memorandum present
     fairly the information shown therein and have been compiled on a basis
     consistent with that of the audited financial statements included in the
     Offering Memorandum. The statement of operations data and balance sheet
     data of Sports Orthopedic Rehabilitation Services, PA ("SORS") for December
     31, 1996 and the year then ended and the period January 1, 1997 through
     February 6, 1997 included in the Offering Memorandum under the heading
     "Selected Consolidated Financial and Other Data" (the "SORS Financial
     Information") was derived from the compiled financial statements of SORS.
     The combined financial statements of SORS for the above referenced periods
     (i) fairly

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     present the financial position of SORS at the dates indicated and the
     statement of operations data for the periods specified and (ii) were
     prepared in conformity with GAAP, except for the absence of footnotes,
     statements of cash flows and the exclusion of certain per share
     information. There are no material adjustments that would be required to be
     made to the SORS Financial Information if the above referenced financial
     statements of SORS were reissued to be in conformity with GAAP. The pro
     forma financial information and the related notes thereto included in the
     Offering Memorandum present fairly the information shown therein and the
     assumptions used in the preparation thereof are reasonable and the
     adjustments used therein are appropriate to give effect to the transactions
     and circumstances referred to therein; the as adjusted financial
     information included in the Offering Memorandum has been properly compiled
     on the basis described therein, and the assumptions used in the preparation
     thereof are reasonable and the adjustments used therein are appropriate to
     give effect to the transactions and circumstances referred to therein.

          (r) There is no action, suit, proceeding, inquiry or investigation
     before or brought by any court or governmental agency or body, domestic or
     foreign, now pending (other than any sealed "qui tam" actions of which the
     Company has no knowledge), or, to the knowledge of the Company, threatened,
     against or affecting the Company or any subsidiary which might reasonably
     be expected to result in a Material Adverse Effect, or which might
     reasonably be expected to materially and adversely affect the properties or
     assets of the Company and its subsidiaries taken as a whole; the aggregate
     of all pending legal or governmental proceedings to which the Company or
     any subsidiary is a party or of which any of their respective property or
     assets is the subject which are not described in the Offering Memorandum,
     including ordinary routine litigation incidental to the business, could not
     reasonably be expected to result in a Material Adverse Effect.

          (s) No action has been taken and no statute, rule, regulation or order
     has been enacted, adopted or issued by any governmental agency or body
     which prevents the issuance of the Securities or suspends the sale of the
     Securities in any jurisdiction; no injunction, restraining order or order
     of any nature by any federal or state court of competent jurisdiction has
     been issued with respect to the Company or any of its subsidiaries which
     would prevent or suspend the issuance or sale of the Securities or the use
     of the Preliminary Offering Memorandum or the Offering Memorandum in any
     jurisdiction; no action, suit or proceeding is pending against or, to the
     best knowledge of the Company, threatened against or affecting the Company
     or any of its subsidiaries before any court or arbitrator or any
     governmental agency, body or official, domestic or foreign, which could
     reasonably be expected to interfere with or adversely affect the issuance
     of the Securities or in any manner draw into question the validity or
     enforceability of any

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     of the Transaction Documents or any action taken or to be taken pursuant
     thereto; and the Company has complied with any and all requests by any
     securities authority in any jurisdiction for additional information to be
     included in the Preliminary Offering Memorandum and the Offering
     Memorandum.

          (t) Neither the Company nor any of its subsidiaries is (i) in
     violation of its charter or by-laws (or other comparable organizational
     documents), (ii) in default, and no event has occurred which, with notice
     or lapse of time or both, would constitute a default, in the due
     performance or observance of any term, covenant or condition contained in
     any indenture, mortgage, deed of trust, loan agreement or other agreement
     or instrument to which it is a party or by which it is bound or to which
     any of its property or assets is subject (except for such defaults that
     would not result in a Material Adverse Effect) or (iii) in violation in any
     material respect of any law, ordinance, governmental rule, regulation or
     court decree to which it or its property or assets may be subject.

          (u) The Company and its subsidiaries possess all required permits,
     licenses, provider numbers, certificates, approvals (including without
     limitation, certificate of need approvals), consents, orders,
     certifications (including, without limitation, certification under the
     Medicare and Medicaid programs), accreditations (including, without
     limitation, accreditation by the Joint Commission on Accreditation of
     Healthcare Organizations) and other authorizations (collectively,
     "Governmental Licenses") issued by, and have made all required declarations
     and filings with, the appropriate federal, state, local or foreign
     regulatory agencies or bodies necessary to conduct the business now
     operated by them (including, without limitation, Government Licenses as are
     required (i) under such federal and state healthcare laws as are applicable
     to the Company and its subsidiaries and (ii) with respect to those
     facilities operated by the Company or any of its subsidiaries that
     participate in the Medicare and/or Medicaid programs, to receive
     reimbursement thereunder), except where the failure to possess such
     Government Licenses or to make such declarations would not reasonably be
     expected to result in a Material Adverse Effect; the Company and its
     subsidiaries are in compliance with the terms and conditions of all such
     Governmental Licenses, except where the failure so to comply would not,
     singly or in the aggregate, reasonably be expected to result in a Material
     Adverse Effect; all of the Governmental Licenses are valid and in full
     force and effect, except when the invalidity of such Governmental Licenses
     or the failure of such Governmental Licenses to be in full force and effect
     would not reasonably be expected to result in a Material Adverse Effect;
     and neither the Company nor any of its subsidiaries has received any notice
     of proceedings relating to the revocation or modification of any such
     Governmental Licenses which, singly or in the aggregate, if the subject of
     an unfavorable decision, ruling or finding, would reasonably be expected to
     result in a Material

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          Adverse Effect.  All of the long-term acute care hospitals operated by
          the Company and its subsidiaries and all of the Company's and its
          subsidiaries' outpatient clinics that operate as "rehabilitation
          agencies" are "providers of service" as defined in the Social Security
          Act and the regulations promulgated thereunder and are eligible to
          participate in the Medicare and (to the extent disclosed in the
          Offering Memorandum) Medicaid programs.

               (v)  The accounts receivable of the Company and its subsidiaries
          have been adjusted to reflect material changes in the reimbursement
          policies of third party payors such as Medicare, Medicaid, private
          insurance companies, health maintenance organizations, preferred
          provider organizations, managed care systems and other third party
          payors (including, without limitation, Blue Cross plans). The accounts
          receivable, after giving effect to the allowance for doubtful
          accounts, relating to such third party payors do not materially exceed
          amounts the Company and its subsidiaries are entitled to receive.

               (w)  Neither the Company nor, to the knowledge of the Company,
          any officers, directors or stockholders, employees or other agents of
          the Company or any of its subsidiaries or the hospitals operated by
          them, has engaged in any activities which are prohibited under Federal
          Medicare and Medicaid statutes including, but not limited to, 42
          U.S.C. (S)(S) 1320a-7 (Program Exclusion), (S) 1320a-7a (Civil
          Monetary Penalties), 1320a-7b (the Anti-kickback Statute), (S) 1395nn
          and 1396b (the "Stark" law, prohibiting certain self-referrals), or
          any other federal healthcare law, including, but not limited to, the
          federal TRICARE statute, 10 U.S.C. (S) 1071 et seq., the Federal Civil
          False Claims Act, 31 U.S.C. (S)(S) 3729-32, Federal Criminal False
          Claims Act, 18 U.S.C. (S) 287, False Statements Relating to Health
          Care Matters, 18 U.S.C. (S) 1035, Health Care Fraud, 18 U.S.C. (S)
          1347, or the federal Food, Drug & Cosmetics Act, 21 U.S.C. (S)
          360aaa, or any regulations promulgated pursuant to such statutes, or
          related state or local statutes or regulations or any rules of
          professional conduct, including but not limited to the following: (i)
          knowingly and willfully making or causing to be made a false statement
          or representation of a material fact in any applications for any
          benefit or payment under the Medicare or Medicaid program or from any
          third party (where applicable federal or state law prohibits such
          payments to third parties); (ii) knowingly and willfully making or
          causing to be made any false statement or representation of a material
          fact for use in determining rights to any benefit or payment under the
          Medicare or Medicaid program or from any third party (where applicable
          federal or state law prohibits such payments to third parties); (iii)
          failing to disclose knowledge by a claimant of the occurrence of any
          event affecting the initial or continued right to any benefit or
          payment under the Medicare or Medicaid program or from any third party
          (where applicable federal or state law prohibits such payments to
          third parties) on its own behalf or on behalf of another,

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          with intent to secure such benefit or payment fraudulently; (iv)
          knowingly and willfully offering, paying, soliciting or receiving any
          remuneration (including any kickback, bribe or rebate), directly or
          indirectly, overtly or covertly, in cash or in kind (a) in return for
          referring an individual to a person for the furnishing or arranging
          for the furnishing of any item or service for which payment may be
          made in whole or in part by Medicare or Medicaid or any third party
          (where applicable federal or state law prohibits such payments to
          third parties), or (b) in return for purchasing, leasing or ordering
          or arranging for or recommending the purchasing, leasing or ordering
          of any good, facility, service, or item for which payment may be made
          in whole or in part by Medicare or Medicaid or any third party (where
          applicable federal or state law prohibits such payments to third
          parties); (v) knowingly and willfully referring an individual to a
          person with which they have ownership or certain other financial
          arrangements (where applicable federal law prohibits such referrals);
          and (vi) knowingly and willfully violating any enforcement initiative
          instituted by any governmental agency (including, without limitation,
          the Office of the Inspector General and the Department of Justice),
          except for any such activities which are specifically described in the
          Offering Memorandum or which would not, singly or in the aggregate,
          reasonably be expected to result in a Material Adverse Effect.

               (x)  Neither of the Company or any of its subsidiaries or any of
          the Facilities operated by any of them has failed to file with
          applicable regulatory authorities any statement, report, information
          or form required by any applicable law, regulation or order, except
          where the failure to be so in compliance could not, individually or in
          the aggregate, have a Material Adverse Effect. Except as described in
          the Offering Memorandum, all such filings or submissions were in
          compliance with applicable laws when filed and no deficiencies have
          been asserted by any regulatory commission, agency or authority with
          respect to any such filings or submissions, except for any such
          failures to be in compliance or deficiencies which would not, singly
          or in the aggregate, reasonably be expected to have a Material Adverse
          Effect.

               (y)  The Company and its subsidiaries have timely filed all
          federal, state, local and foreign tax returns that are required to be
          filed or has duly requested extensions thereof and all such tax
          returns are true, correct and complete, except to the extent that any
          failure to file or request an extension, or any incorrectness would
          not reasonably be expected to result in a Material Adverse Effect. The
          Company and its subsidiaries have timely paid all taxes shown as due
          on such filed tax returns (including any related assessments, fines or
          penalties), except to the extent that any such taxes are being
          contested in good faith and by appropriate proceedings, or to the
          extent that any failure to pay would not reasonably be expected to
          result in a Material Adverse Effect; and adequate charges, accruals
          and

                                       12
<PAGE>

          reserves have been provided for in the financial statements referred
          to in Section 1(q) above in accordance with GAAP in respect of all
          Federal, state, local and foreign taxes for all periods as to which
          the tax liability of the Company and its subsidiaries has not been
          finally determined or remains open to examination by applicable taxing
          authorities except (A) for taxes incurred after the date of the
          financial statements referred to in Section 1(q) or (B) where the
          failure to provide for such charges, accruals and reserves would not
          reasonably be expected to result in a Material Adverse Effect. Neither
          the Company nor any of its subsidiaries is a "United States real
          property holding corporation" within the meaning of Section 897(c)(2)
          of the Internal Revenue Code of 1986, as amended (the "Code").

               (z)  Neither the Company nor any of its subsidiaries is (i) an
          "investment company" or a company "controlled by" an investment
          company within the meaning of the Investment Company Act of 1940, as
          amended (the "Investment Company Act"), and the rules and regulations
          of the Commission thereunder or (ii) a "holding company" or a
          "subsidiary company" of a holding company or an "affiliate" thereof
          within the meaning of the Public Utility Holding Company Act of 1935,
          as amended.

               (aa) The Company and each of its subsidiaries maintain a system
          of internal accounting controls sufficient to provide reasonable
          assurance that (i) transactions are executed in accordance with
          management's general or specific authorizations; (ii) transactions are
          recorded as necessary to permit preparation of financial statements in
          conformity with generally accepted accounting principles and to
          maintain asset accountability; (iii) access to assets is permitted
          only in accordance with management's general or specific
          authorization; and (iv) the recorded accountability for assets is
          compared with the existing assets at reasonable intervals and
          appropriate action is taken with respect to any differences.

               (bb) The Company and each of its subsidiaries and each of the
          Facilities owned, leased or operated by them are insured by insurers
          of recognized financial responsibility against such losses and risks
          and in such amounts as are prudent and customary in the healthcare
          industry; neither the Company nor any of its subsidiaries or any of
          the hospitals owned, leased or operated by them has been refused any
          material insurance coverage sought or applied for since January 1,
          1999; and the Company has no reason to believe that it or any of the
          Facilities owned, leased or operated by it or any of its subsidiaries,
          will not be able to renew its existing insurance coverage as and when
          such coverage expires or to obtain coverage consistent with such
          coverage in all material respects from insurers with comparable
          financial strength and claims paying ability ratings as may be
          necessary to continue its operations except where the failure to renew
          or maintain such coverage would not reasonably be expected to result
          in a Material Adverse Effect.

                                       13
<PAGE>

          The officers and directors of the Company are insured by insurers of
          recognized financial responsibility against such losses and risks and
          in such amounts as the Company believes are prudent and customary for
          officers' and directors' liability insurance of a public company and
          as the Company believes would cover claims which would reasonably be
          expected to be made in connection with the issuance of the Securities;
          and the Company has no reason to believe that it will not be able to
          renew its existing directors' and officers' liability insurance
          coverage as and when such coverage expires or to obtain coverage
          consistent with such coverage in all material respects from insurers
          with comparable financial strength and claims paying ability ratings
          as may be necessary to cover its officers and directors.

               (cc) The Company and its subsidiaries own or possess, or can
          acquire on reasonable terms, adequate patents, patent rights,
          licenses, inventions, copyrights, know-how (including trade secrets
          and other unpatented and/or unpatentable proprietary or confidential
          information, systems or procedures), trademarks, service marks, trade
          names or other intellectual property (collectively, "Intellectual
          Property") necessary to carry on the business now operated by them in
          all material respects, and neither the Company nor any of its
          subsidiaries has received any notice or is otherwise aware of any
          infringement of or conflict with asserted rights of others with
          respect to any Intellectual Property or of any facts or circumstances
          which would render any Intellectual Property invalid or inadequate to
          protect the interest of the Company or any of its subsidiaries
          therein, and which infringement or conflict (if the subject of any
          unfavorable decision, ruling or finding) or invalidity or inadequacy,
          singly or in the aggregate, would result in a Material Adverse Effect.

               (dd) The Company and its subsidiaries have good and marketable
          title to all real property owned by them and good title to all other
          properties owned by them, in each case, free and clear of all
          mortgages, pledges, liens, security interests, claims, restrictions or
          encumbrances of any kind except such as (a) are described in the
          Offering Memorandum or (b) do not, singly or in the aggregate, in a
          manner that would reasonably be expected to result in a Material
          Adverse Effect, affect the value of such property or interfere with
          the use made or proposed to be made of such property by the Company or
          any of its subsidiaries; and all of the leases and subleases of the
          Company and its subsidiaries, considered as one enterprise, and under
          which the Company or any of its subsidiaries holds properties
          described in the Offering Memorandum, are in full force and effect,
          and neither the Company or any of its subsidiaries has any notice of
          any claim of any sort that has been asserted by anyone adverse to the
          rights of the Company or any of its subsidiaries under any of the
          leases or subleases mentioned above, or affecting or questioning the
          rights of the Company or such subsidiary to the continued possession
          of the leased or subleased premises under any such lease or sublease,

                                       14
<PAGE>

          except where the failure to be in full force and effect or such claim
          would not reasonably be expected to have a Material Adverse Effect.

               (ee) No labor dispute with the employees of the Company or any
          subsidiary exists or, to the knowledge of the Company, is imminent,
          and the Company is not aware of any existing or imminent labor
          disturbance by the employees of any of its or any subsidiary's
          principal suppliers, manufacturers, customers or contractors, which,
          in either case, may reasonably be expected to result in a Material
          Adverse Effect.

               (ff) No "prohibited transaction" (as defined in Section 406 of
          the Employee Retirement Income Security Act of 1974, as amended,
          including the regulations and published interpretations thereunder
          ("ERISA"), or Section 4975 of the Internal Revenue Code of 1986, as
          amended from time to time (the "Code")) or "accumulated funding
          deficiency" (as defined in Section 302 of ERISA) or any of the events
          set forth in Section 4043(b) of ERISA (other than events with respect
          to which the 30-day notice requirement under Section 4043 of ERISA has
          been waived) has occurred with respect to any employee benefit plan of
          the Company or any of its subsidiaries which could reasonably be
          expected to have a Material Adverse Effect; each such employee benefit
          plan is in compliance in all material respects with applicable law,
          including ERISA and the Code; the Company and each of its subsidiaries
          have not incurred and do not expect to incur liability under Title IV
          of ERISA with respect to the termination of, or withdrawal from, any
          pension plan for which the Company or any of its subsidiaries would
          have any liability; and each such pension plan that is intended to be
          qualified under Section 401(a) of the Code is so qualified in all
          material respects and nothing has occurred, whether by action or by
          failure to act, which could reasonably be expected to cause the loss
          of such qualification.

               (gg) Except as described in the Offering Memorandum, (A) neither
          the Company nor any of its subsidiaries or any of the Facilities
          owned, leased or operated by them is in violation of any material
          federal, state, local or foreign statute, law, rule, regulation,
          standard, guide, ordinance, code, policy or rule of common law or any
          judicial or administrative interpretation thereof, including any
          judicial or administrative order, consent, decree or judgment,
          relating to pollution or protection of human health, the environment
          (including, without limitation, ambient air, surface water,
          groundwater, land surface or subsurface strata) or wildlife,
          including, without limitation, laws and regulations relating to the
          release or threatened release of chemicals, pollutants, contaminants,
          wastes, toxic substances, hazardous substances (including, without
          limitation, asbestos, polychlorinated biphenyls, urea formaldehyde
          insulation, petroleum or petroleum products) (collectively, "Hazardous
          Materials") or to the manufacture, processing,

                                       15
<PAGE>

          distribution, use, treatment, storage, disposal, transport or handling
          of Hazardous Materials (collectively, "Environmental Laws"), (B) the
          Company and its subsidiaries and each of the Facilities owned, leased
          or operated by them have all material permits, authorizations and
          approvals required under any applicable Environmental Laws and are
          each in compliance with their requirements, (C) there are no pending
          or threatened administrative, regulatory or judicial actions, suits,
          demands, demand letters, claims, liens, notices of noncompliance or
          violation, investigations or proceedings relating to any Environmental
          Law against the Company or any of its subsidiaries or any of the
          Facilities owned, leased or operated by them except as would not,
          singly or in the aggregate, result in a Material Adverse Effect and
          (D) there are no events or circumstances that might reasonably be
          expected to form the basis of an order for clean-up or remediation, or
          an action, suit or proceeding by any private party or governmental
          body or agency, against or affecting the Company or any of its
          subsidiaries or any of the Facilities owned, leased or operated by
          them relating to Hazardous Materials or any Environmental Laws except
          for such events or circumstances that would not, singly or in the
          aggregate, result in a Material Adverse Effect.

               (hh) Neither the Company nor any of its subsidiaries, nor to the
          best knowledge of the Company, any director, officer, agent, employee
          or other person associated with or acting on behalf of the Company or
          any of its subsidiaries has used any corporate funds for any unlawful
          contribution, gift, entertainment or other unlawful expense relating
          to political activity, made any direct or indirect unlawful payment to
          any foreign or domestic government official or employee from corporate
          funds, violated or is in violation of any provision of the Foreign
          Corrupt Practices Act of 1977, or made any bribe, rebate, payoff,
          influence payment, kickback or other unlawful payment.

               (ii) On and immediately after the Closing Date, the Company
          (after giving effect to the issuance of the Securities and to the
          other transactions related thereto as described in the Offering
          Memorandum) will be Solvent. As used in this paragraph, the term
          "Solvent" means, with respect to a particular date, that on such date
          the present fair market value (or present fair saleable value) of the
          assets of the Company is not less than the total amount required to
          pay the probable liabilities of the Company on its total existing
          debts and liabilities (including contingent liabilities) as they
          become absolute and matured, the Company is able to realize upon its
          assets and pay its debts and other liabilities, contingent obligations
          and commitments as they mature and become due in the normal course of
          business, assuming the sale of the Securities as contemplated by this
          Agreement and the Offering Memorandum, the Company is not incurring
          debts or liabilities beyond its ability to pay as such debts and
          liabilities mature and the Company is not engaged in any business or
          transaction, and is not about to engage in any business or

                                       16
<PAGE>

          transaction, for which its property would constitute unreasonably
          small capital after giving due consideration to the prevailing
          practice in the industry in which the Company is engaged. In computing
          the amount of such contingent liabilities at any time, it is intended
          that such liabilities will be computed at the amount that, in the
          light of all the facts and circumstances existing at such time,
          represents the amount that can reasonably be expected to become an
          actual or matured liability.

               (jj) Neither the Company nor any of its subsidiaries owns any
          "margin securities" as that term is defined in Regulations G and U of
          the Board of Governors of the Federal Reserve System (the "Federal
          Reserve Board"), and none of the proceeds of the sale of the
          Securities will be used, directly or indirectly, for the purpose of
          purchasing or carrying any margin security, for the purpose of
          reducing or retiring any indebtedness which was originally incurred to
          purchase or carry any margin security or for any other purpose which
          might cause any of the Securities to be considered a "purpose credit"
          within the meanings of Regulation T, U or X of the Federal Reserve
          Board.

               (kk) Other than as provided for or contemplated by this
          Agreement, neither the Company nor any of its subsidiaries is a party
          to any contract, agreement or understanding with any person that would
          give rise to a valid claim against the Company or the Initial
          Purchasers for a brokerage commission, finder's fee or like payment in
          connection with the offering and sale of the Securities.

               (ll) The Securities satisfy the eligibility requirements of Rule
          144A(d)(3) under the Securities Act.

               (mm) None of the Company, nor any of its affiliates or any person
          acting on its or their behalf has engaged or will engage in any
          directed selling efforts (as such term is defined in Regulation S
          under the Securities Act ("Regulation S")), and all such persons have
          complied and will comply with the offering restrictions requirement of
          Regulation S to the extent applicable.

               (nn) Neither the Company nor any of its affiliates has, directly
          or through any agent, sold, offered for sale, solicited offers to buy
          or otherwise negotiated in respect of, any security (as such term is
          defined in the Securities Act), which is or will be integrated with
          the sale of the Securities in a manner that would require registration
          of the Securities under the Securities Act.

               (oo) None of the Company or any of its affiliates or any other
          person acting on its or their behalf has engaged, in connection with
          the offering of the Securities, in any form of general solicitation or
          general advertising within the meaning of Rule 502(c) under the
          Securities Act.

                                       17
<PAGE>

               (pp) Neither the Company nor its subsidiaries or, to the best of
          the Company's knowledge, any of their respective directors, officers
          or affiliates has taken or will take, directly or indirectly, any
          action designed to, or that could be reasonably expected to, cause or
          result in stabilization or manipulation of the price of the Securities
          in violation of Regulation M under the Exchange Act.

               (qq) No forward-looking statement (within the meaning of Section
          27A of the Securities Act and Section 21E of the Exchange Act)
          contained in the Preliminary Offering Memorandum or the Offering
          Memorandum has been made or reaffirmed without a reasonable basis or
          has been disclosed other than in good faith.

               (rr) Except as disclosed in the Offering Memorandum, there are no
          outstanding loans, advances, or guarantees of indebtedness by the
          Company or any of its subsidiaries to or for the benefit of any of the
          executive officers or directors of the Company or any of the members
          of the families of any of them that would be required to be so
          disclosed under the Securities Act, the regulations thereunder of Form
          S-1 pursuant to the Securities Act.

               (ss) The statistical and market-related data included in the
          Offering Memorandum is derived from sources which the Company
          reasonably and in good faith believes to be accurate, reasonable and
          reliable in all material respects and the statistical and market-
          related data included in the Offering Memorandum agrees with the
          sources from which it was derived in all material respects.

               (tt) Since the respective dates as of which information is given
          in the Offering Memorandum, except as otherwise stated therein, (A)
          there has been no material adverse change or any development involving
          a prospective material adverse change in the condition, financial or
          otherwise, or in the earnings, business affairs, management or
          business prospects of the Company and its subsidiaries considered as
          one enterprise, whether or not arising in the ordinary course of
          business, (B) neither the Company nor any of its subsidiaries has
          incurred any liability or obligation, direct or contingent, other than
          those in the ordinary course of business, which are material with
          respect to the Company and its subsidiaries considered as one
          enterprise, (C) there have been no transactions entered into by the
          Company or any of its subsidiaries, other than those in the ordinary
          course of business, which are material with respect to the Company and
          its subsidiaries considered as one enterprise, and (D) there has not
          been any change in the capital stock (other than pursuant to issuances
          of common stock in connection with the exercise of options or put
          rights) or long-term debt of the Company or any dividend or
          distribution of any kind declared, paid or made by the Company on any
          class of its capital stock.

                                       18
<PAGE>

          2.   Purchase and Resale of the Securities.
               -------------------------------------

          (a)  On the basis of the representations, warranties and agreements
contained herein, and subject to the terms and conditions set forth herein, the
Company agrees to issue and sell to each of the Initial Purchasers, severally
and not jointly, and each of the Initial Purchasers, severally and not jointly,
agrees to purchase from the Company, the principal amount of Securities set
forth opposite the name of such Initial Purchaser on Schedule II hereto at a
purchase price equal to 97.50% of the principal amount thereof. The Company
shall not be obligated to deliver any of the Securities except upon payment for
all of the Securities to be purchased as provided herein.

          (b)  The Initial Purchasers have advised the Company that they propose
to offer the Securities for resale upon the terms and subject to the conditions
set forth herein and in the Offering Memorandum. Each Initial Purchaser,
severally and not jointly, represents, warrants and agrees that (i) it is an
accredited investor within the meaning of Regulation D under the Securities Act
and it is purchasing the Securities pursuant to a private sale exempt from
registration under the Securities Act, (ii) it has not solicited offers for, or
offered or sold, and will not solicit offers for, or offer or sell, the
Securities by means of any form of general solicitation or general advertising
within the meaning of Rule 502(c) of Regulation D under the Securities Act
("Regulation D") or in any manner involving a public offering within the meaning
of Section 4(2) of the Securities Act and (iii) it has solicited and will
solicit offers for the Securities only from, and has offered or sold and will
offer, sell or deliver the Securities, as part of their initial offering, only
(A) within the United States to persons whom it reasonably believes to be
qualified institutional buyers ("Qualified Institutional Buyers"), as defined in
Rule 144A under the Securities Act ("Rule 144A"), or if any such person is
buying for one or more institutional accounts for which such person is acting as
fiduciary or agent, only when such person has represented to it that each such
account is a Qualified Institutional Buyer to whom notice has been given that
such sale or delivery is being made in reliance on Rule 144A and in each case,
in transactions in accordance with Rule 144A and (B) outside the United States
to persons other than U.S. persons in reliance on Regulation S under the
Securities Act ("Regulation S").

          (c)  In connection with the offer and sale of Securities in reliance
on Regulation S, each Initial Purchaser, severally and not jointly, represents,
warrants and agrees that:

          (i)  the Securities have not been registered under the Securities Act
               and may not be offered or sold within the United States or to, or
               for the account or benefit of, U.S. persons except pursuant to an
               exemption from, or in transactions not subject to, the
               registration requirements of the Securities Act;

                                       19
<PAGE>

          (ii)   such Initial Purchaser has offered and sold the Securities, and
                 will offer and sell the Securities, (A) as part of their
                 distribution at any time and (B) otherwise until 40 days after
                 the later of the commencement of the offering of the Securities
                 and the Closing Date, only in accordance with Regulation S or
                 Rule 144A or any other available exemption from registration
                 under the Securities Act;

          (iii)  none of such Initial Purchaser or any of its affiliates or any
                 other person acting on its or their behalf has engaged or will
                 engage in any directed selling efforts (as such term is defined
                 in Regulation S) with respect to the Securities, and all such
                 persons have complied and will comply with the offering
                 restrictions requirement of Regulation S;

          (iv)   at or prior to the confirmation of sale of any Securities sold
                 in reliance on Regulation S, it will have sent to each
                 distributor, dealer or other person receiving a selling
                 concession, fee or other remuneration that purchases Securities
                 from it during the restricted period a confirmation or notice
                 to substantially the following effect:

                 "The Securities covered hereby have not been
                 registered under the U.S. Securities Act of
                 1933, as amended (the "Securities Act"), and
                 may not be offered or sold within the United
                 States or to, or for the account or benefit of,
                 U.S. persons (i) as part of their distribution
                 at any time or (ii) otherwise until 40 days
                 after the later of the commencement of the
                 offering of the Securities and the date of
                 original issuance of the Securities, except in
                 accordance with Regulation S or Rule 144A or
                 any other available exemption from registration
                 under the Securities Act. Terms used above have
                 the meanings given to them by Regulation S"; and

          (v)    it has not and will not enter into any contractual arrangement
                 with any distributor with respect to the distribution of the
                 Securities, except with its affiliates or with the prior
                 written consent of the Company.

Terms used in this Section 2(c) have the meanings given to them by Regulation S.

                                       20
<PAGE>

          (d)  Each Initial Purchaser, severally and not jointly, represents,
warrants and agrees that (i) it has not offered or sold and prior to the date
six months after the Closing Date will not offer or sell any Securities to
persons in the United Kingdom except to persons whose ordinary activities
involve them in acquiring, holding, managing or disposing of investments (as
principal or agent) for the purposes of their businesses or otherwise in
circumstances which have not resulted and will not result in an offer to the
public in the United Kingdom within the meaning of the Public Offers of
Securities Regulations 1995; (ii) it has complied and will comply with all
applicable provisions of the Financial Services Act 1986 and the Public Offers
of Securities Regulations 1995 with respect to anything done by it in relation
to the Securities in, from or otherwise involving the United Kingdom; and (iii)
it has only issued or passed on and will only issue or pass on in the United
Kingdom any document received by it in connection with the issue of the
Securities to a person who is of a kind described in Article 11(3) of the
Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996,
as amended, or is a person to whom such document may otherwise lawfully be
issued or passed on.

          (e)  Each Initial Purchaser, severally and not jointly, agrees that,
prior to or simultaneously with the confirmation of sale by such Initial
Purchaser to any purchaser of any of the Securities purchased by such Initial
Purchaser from the Company pursuant hereto, such Initial Purchaser shall furnish
to that purchaser a copy of the Offering Memorandum (and any amendment or
supplement thereto that the Company shall have furnished to such Initial
Purchaser prior to the date of such confirmation of sale). In addition to the
foregoing, each Initial Purchaser acknowledges and agrees that the Company and,
for purposes of the opinions to be delivered to the Initial Purchasers pursuant
to Section 5(d) and (e), counsel for the Company and for the Initial Purchasers,
respectively, may rely upon the accuracy of the representations and warranties
of the Initial Purchasers and their compliance with their agreements contained
in this Section 2, and each Initial Purchaser hereby consents to such reliance.

          (f)  The Company acknowledges and agrees that the Initial Purchasers
may sell Securities to any affiliate of an Initial Purchaser and that any such
affiliate may sell Securities purchased by it to an Initial Purchaser.

          3.   Delivery of and Payment for the Securities.
               ------------------------------------------

          (a)  Delivery of and payment for the Securities shall be made at the
offices of Debevoise and Plimpton, New York, New York, or at such other place as
shall be agreed upon by the Initial Purchasers and the Company, at 10:00 A.M.,
New York City time, on June 11, 2001, or at such other time or date, not later
than seven full business days thereafter, as shall be agreed upon by the Initial
Purchasers and the Company (such date and time of payment and delivery being
referred to herein as the "Closing Date").

                                       21
<PAGE>

          (b)  On the Closing Date, payment of the purchase price for the
Securities shall be made to the Company by wire or book-entry transfer of same-
day funds to such account or accounts as the Company shall specify prior to the
Closing Date or by such other means as the parties hereto shall agree prior to
the Closing Date against delivery to the Initial Purchasers of the certificates
evidencing the Securities. Time shall be of the essence, and delivery at the
time and place specified pursuant to this Agreement is a further condition of
the obligations of the Initial Purchasers hereunder. Upon delivery, the
Securities shall be in global form, registered in such names and in such
denominations as JPMorgan on behalf of the Initial Purchasers shall have
requested in writing not less than two full business days prior to the Closing
Date. The Company agrees to make one or more global certificates evidencing the
Securities available for inspection by JPMorgan on behalf of the Initial
Purchasers in New York, New York no later than 1 P.M. on the day prior to the
Closing Date.

          4.   Further Agreements of the Company. Each of the Company and the
               ---------------------------------
Guarantors agree with each of the Initial Purchasers:

          (a)  to advise the Initial Purchasers promptly and, if requested,
     confirm such advice in writing, of the happening of any event which makes
     any statement of a material fact made in the Offering Memorandum untrue or
     which requires the making of any additions to or changes in the Offering
     Memorandum (as amended or supplemented from time to time) in order to make
     the statements therein, in the light of the circumstances under which they
     were made, not misleading; to advise the Initial Purchasers promptly of any
     order preventing or suspending the use of the Preliminary Offering
     Memorandum or the Offering Memorandum, of any suspension of the
     qualification of the Securities for offering or sale in any jurisdiction
     and of the initiation or threatening of any proceeding for any such
     purpose; and to use its best efforts to prevent the issuance of any such
     order preventing or suspending the use of the Preliminary Offering
     Memorandum or the Offering Memorandum or suspending any such qualification
     and, if any such suspension is issued, to obtain the lifting thereof at the
     earliest possible time;

          (b)  to furnish promptly to each of the Initial Purchasers and counsel
     for the Initial Purchasers, without charge, as many copies of the
     Preliminary Offering Memorandum and the Offering Memorandum (and any
     amendments or supplements thereto) as may be reasonably requested;

          (c)  prior to making any amendment or supplement to the Offering
     Memorandum, to furnish a copy thereof to each of the Initial Purchasers and
     counsel for the Initial Purchasers and not to effect any such amendment or
     supplement to which the Initial Purchasers shall reasonably object by
     notice to the Company after a reasonable period to review;

                                       22
<PAGE>

          (d)  if, at any time prior to completion of the resale of the
     Securities by the Initial Purchasers, any event shall occur or condition
     exist as a result of which it is necessary, in the opinion of counsel for
     the Initial Purchasers or counsel for the Company, to amend or supplement
     the Offering Memorandum in order that the Offering Memorandum will not
     include an untrue statement of a material fact or omit to state a material
     fact necessary in order to make the statements therein, in the light of the
     circumstances existing at the time it is delivered to a purchaser, not
     misleading, or if it is necessary to amend or supplement the Offering
     Memorandum to comply with applicable law, to promptly prepare such
     amendment or supplement as may be necessary to correct such untrue
     statement or omission or so that the Offering Memorandum, as so amended or
     supplemented, will comply with applicable law;

          (e)  for so long as the Securities are outstanding and are "restricted
     securities" within the meaning of Rule 144(a)(3) under the Securities Act,
     to furnish to holders of the Securities and prospective purchasers of the
     Securities designated by such holders, upon request of such holders or such
     prospective purchasers, the information required to be delivered pursuant
     to Rule 144A(d)(4) under the Securities Act, unless the Company is then
     subject to and in compliance with Section13 or 15(d) of the Exchange Act
     (the foregoing agreement being for the benefit of the holders from time to
     time of the Securities and prospective purchasers of the Securities
     designated by such holders);

          (f)  for so long as the Securities are outstanding, to furnish to the
     Initial Purchasers copies of any annual reports, quarterly reports and
     current reports filed by the Company with the Commission on Forms 10-K, 10-
     Q and 8-K, or such other similar forms as may be designated by the
     Commission, and such other documents, reports and information as shall be
     furnished by the Company to the Trustee or to the holders of the Securities
     pursuant to the Indenture or the Exchange Act or any rule or regulation of
     the Commission thereunder;

          (g)  to promptly take from time to time such actions as the Initial
     Purchasers may reasonably request to qualify the Securities for offering
     and sale under the securities or Blue Sky laws of such jurisdictions as the
     Initial Purchasers may designate and to continue such qualifications in
     effect for so long as required for the resale of the Securities; and to
     arrange for the determination of the eligibility for investment of the
     Securities under the laws of such jurisdictions as the Initial Purchasers
     may reasonably request; provided that the Company and its subsidiaries
     shall not be obligated to qualify as foreign corporations in any
     jurisdiction in which they are not so qualified or to file a general
     consent to service of process in any jurisdiction;

                                       23
<PAGE>

          (h)  to assist the Initial Purchasers in arranging for the Securities
     to be designated Private Offerings, Resales and Trading through Automated
     Linkages ("PORTAL") Market securities in accordance with the rules and
     regulations adopted by the National Association of Securities Dealers, Inc.
     ("NASD") relating to trading in the PORTAL Market and for the Securities to
     be eligible for clearance and settlement through The Depository Trust
     Company ("DTC");

          (i)  not to, and to cause its affiliates not to, sell, offer for sale
     or solicit offers to buy or otherwise negotiate in respect of any security
     (as such term is defined in the Securities Act) which could be integrated
     with the sale of the Securities in a manner which would require
     registration of the Securities under the Securities Act;

          (j)  except following the effectiveness of the Exchange Offer
     Registration Statement or the Shelf Registration Statement, as the case may
     be, not to, and to cause its affiliates not to, and not to authorize or
     knowingly permit any person acting on their behalf to, solicit any offer to
     buy or offer to sell the Securities by means of any form of general
     solicitation or general advertising within the meaning of Regulation D or
     in any manner involving a public offering within the meaning of Section
     4(2) of the Securities Act; and not to offer, sell, contract to sell or
     otherwise dispose of, directly or indirectly, any securities under
     circumstances where such offer, sale, contract or disposition would cause
     the exemption afforded by Section 4(2) of the Securities Act to cease to be
     applicable to the offering and sale of the Securities as contemplated by
     this Agreement and the Offering Memorandum;

          (k)  for a period of 90 days from the date of the Offering Memorandum,
     not to offer for sale, sell, contract to sell or otherwise dispose of,
     directly or indirectly, or file a registration statement for, or announce
     any offer, sale, contract for sale of or other disposition of any debt
     securities issued or guaranteed by the Company or any of its subsidiaries
     (other than the Securities) without the prior written consent of JP Morgan,
     it being understood that the foregoing shall not prohibit the Company or
     any subsidiary from issuing seller notes to the seller in connection with
     any acquisition by the Company or any subsidiary as permitted under the
     Indenture or making borrowings under the Credit Agreement;

          (l)  during the period from the Closing Date until three years after
     the Closing Date or, if earlier, the completion of the Exchange Offer,
     without the prior written consent of the Initial Purchasers, not to, and
     not permit any of its affiliates (as defined in Rule144 under the
     Securities Act) to, resell any of the Securities that have been reacquired
     by them, except for Securities purchased by the Company or any of its
     affiliates and resold in a transaction registered under the Securities Act;

                                       24
<PAGE>

          (m)  not to, for so long as the Securities are outstanding or, if
     earlier, until such time as the Securities are not "restricted securities"
     (as defined in Rule 144 under the Securities Act), be or become, or be or
     become owned by, an open-end investment company, unit investment trust or
     face-amount certificate company that is or is required to be registered
     under Section 8 of the Investment Company Act, and not to be or become, or
     be or become owned by, a closed-end investment company required to be
     registered, but not registered thereunder;

          (n)  in connection with the offering of the Securities, until JPMorgan
     on behalf of the Initial Purchasers shall have notified the Company of the
     completion of the resale of the Securities, not to, and to cause its
     affiliated purchasers (as defined in Regulation M under the Exchange Act)
     not to, either alone or with one or more other persons, bid for or
     purchase, for any account in which it or any of its affiliated purchasers
     has a beneficial interest, any Securities, or attempt to induce any person
     to purchase any Securities; and not to, and to cause its affiliated
     purchasers not to, make bids or purchase for the purpose of creating
     actual, or apparent, active trading in or of raising the price of the
     Securities;

          (o)  in connection with the offering of the Securities, to make its
     officers, employees, independent accountants and legal counsel reasonably
     available upon request by the Initial Purchasers;

          (p)  to furnish to each of the Initial Purchasers on the date hereof a
     copy of the independent accountants' report included in the Offering
     Memorandum signed by the accountants rendering such report;

          (q)  to do and perform all things required to be done and performed by
     it under this Agreement that are within its control prior to or after the
     Closing Date, and to use its best efforts to satisfy all conditions
     precedent on its part to the delivery of the Securities;

          (r)  to not take any action prior to the execution and delivery of the
     Indenture which, if taken after such execution and delivery, would have
     violated any of the covenants contained in the Indenture;

          (s)  to not take any action prior to the Closing Date which would
     require the Offering Memorandum to be amended or supplemented pursuant to
     Section 4(d);

          (t)  prior to the Closing Date, not to issue any press release or
     other communication directly or indirectly or hold any press conference
     with respect to the Company, its condition, financial or otherwise, or
     earnings, business affairs or business prospects (except for routine oral
     marketing communications in the

                                       25
<PAGE>

     ordinary course of business and consistent with the past practices of the
     Company and of which the Initial Purchasers are notified), without the
     prior written consent of the Initial Purchasers, which consent shall not be
     unreasonably withheld or delayed, unless in the judgment of the Company and
     its counsel, and after notification to the Initial Purchasers, such press
     release or communication is required by law; and

          (u)  to apply the net proceeds from the sale of the Securities in all
     material respects as set forth in the Offering Memorandum under the heading
     "Use of Proceeds".

          5.   Conditions of Initial Purchasers' Obligations. The respective
               ---------------------------------------------
obligations of the several Initial Purchasers hereunder are subject to the
accuracy, on and as of the date hereof and the Closing Date, of the
representations and warranties of the Company and the Guarantors contained
herein, to the accuracy of the statements of the Company, the Guarantors and
their respective officers made in any certificates delivered pursuant hereto, to
the performance by the Company and each of the Guarantors of their obligations
hereunder, and to each of the following additional terms and conditions:

          (a)  The Offering Memorandum (and any amendments or supplements
     thereto) shall have been printed and copies distributed to the Initial
     Purchasers as promptly as practicable on or following the date of this
     Agreement or at such other date and time as to which the Initial Purchasers
     may agree; and no stop order suspending the sale of the Securities in any
     jurisdiction shall have been issued and no proceedings for that purpose
     shall have been commenced or shall be pending or threatened.

          (b)  None of the Initial Purchasers shall have discovered and
     disclosed to the Company on or prior to the Closing Date that the Offering
     Memorandum or any amendment or supplement thereto contains an untrue
     statement of a fact which, in the opinion of counsel for the Initial
     Purchasers, is material or omits to state any fact which, in the opinion of
     such counsel, is material and is required to be stated therein or is
     necessary to make the statements therein not misleading.

          (c)  All corporate proceedings and other legal matters incident to the
     authorization, form and validity of each of the Transaction Documents and
     the Offering Memorandum, and all other legal matters relating to the
     Transaction Documents and the transactions contemplated thereby, shall be
     satisfactory in all material respects to the Initial Purchasers, and the
     Company and the Guarantors shall have furnished to the Initial Purchasers
     all documents and information that they or their counsel may reasonably
     request to enable them to pass upon such matters.

                                       26
<PAGE>

          (d)  Dechert shall have furnished to the Initial Purchasers their
     written opinion, as counsel to the Company and the Guarantors, addressed to
     the Purchasers and dated the Closing Date, in form and substance reasonably
     satisfactory to the Initial Purchasers, substantially to the effect set
     forth in Annex B hereto.

          (e)  Michael E. Tarvin shall have furnished to the Initial Purchasers
     his written opinion, as general counsel to the Company, addressed to the
     Initial Purchasers and dated the Closing Date, in form and substance
     reasonably satisfactory to the Initial Purchasers substantially to the
     effect set forth in Annex C hereto.

          (f)  Reed Smith shall have furnished to the Initial Purchasers their
     written opinion, as special regulatory counsel to the Company and the
     Guarantors, addressed to the Initial Purchasers and dated the Closing Date,
     in form and substance reasonably satisfactory to the Initial Purchasers,
     substantially to the effect set forth in Annex D hereto.

          (g)  Tory's shall have furnished to the Initial Purchasers their
     written opinion, as special Canadian counsel to the Company and the
     Guarantors, addressed to the Initial Purchasers and dated the Closing Date,
     in form and substance reasonably satisfactory to the Initial Purchasers,
     substantially to the effect set forth in Annex E hereto.

          (h)  The Initial Purchasers shall have received from Debevoise &
     Plimpton, counsel for the Initial Purchasers, such opinion or opinions,
     dated the Closing Date, with respect to such matters as the Initial
     Purchasers may reasonably require, and the Company shall have furnished to
     such counsel such documents and information as they request for the purpose
     of enabling them to pass upon such matters.

          (i)  The Company shall have furnished to the Initial Purchasers a
     letter (the "Initial Letter") of PricewaterhouseCoopers LLP, addressed to
     the Initial Purchasers and dated the date hereof, in form and substance
     satisfactory to the Initial Purchasers, substantially to the effect set
     forth in Annex F hereto.

          (j)  The Company shall have furnished to the Initial Purchasers a
     letter (the "Bring-Down Letter") of PricewaterhouseCoopers LLP, addressed
     to the Initial Purchasers and dated the Closing Date (A) confirming that
     they are independent public accountants with respect to the Company within
     the applicable rules and regulations adopted by the Commission, (B)
     stating, as of the date of the Bring-Down Letter (or, with respect to
     matters involving changes or developments since

                                       27
<PAGE>

     the respective dates as of which specified financial information is given
     in the Offering Memorandum, as of a date not more than three business days
     prior to the date of the Bring-Down Letter), that the conclusions and
     findings of such accountants with respect to the financial information and
     other matters covered by the Initial Letter are accurate and (C) confirming
     in all material respects the conclusions and findings set forth in the
     Initial Letter.

          (k)  The Company shall have furnished to the Initial Purchasers a
     certificate, dated the Closing Date, of its chief executive officer, its
     chief operating officer and its chief financial officer stating that as of
     the Closing Date, the representations and warranties of the Company and the
     Guarantors in this Agreement are true and correct in all material respects
     (including without limitation Section 1(a)), the Company and the Guarantors
     have complied with all agreements and satisfied all conditions on its part
     to be performed or satisfied hereunder on or prior to the Closing Date, and
     subsequent to the date of the most recent financial statements contained in
     the Offering Memorandum, there has been no material adverse change in the
     financial position or results of operation of the Company or any of its
     subsidiaries, or any change, or any development including a prospective
     change, in or affecting the condition (financial or otherwise), results of
     operations, business or prospects of the Company and its subsidiaries taken
     as a whole, except as set forth in the Offering Memorandum.

          (l)  The Initial Purchasers shall have received a certificate of the
     Chief Financial Officer and the Controller of the Company concerning the
     financial information of SORS contained in the Offering Memorandum, dated
     the Closing Date, in form and substance reasonably satisfactory to the
     Initial Purchasers, substantially to the effect set forth in Annex G
     hereto.

          (m)  The Initial Purchasers shall have received a certificate of
     Michael E. Tarvin, Senior Vice President and General Counsel of the
     Company, dated the Closing Date, in form and substance reasonably
     satisfactory to the Initial Purchasers, substantially to the effect set
     forth in Annex H hereto.

          (n)  The Initial Purchasers shall have received a counterpart of the
     Registration Rights Agreement which shall have been executed and delivered
     by a duly authorized officer of the Company and each of the Guarantors.

          (o)  The Indenture shall have been duly executed and delivered by the
     Company, the Guarantors and the Trustee, and the Securities shall have been
     duly executed and delivered by the Company and duly authenticated by the
     Trustee.

                                       28
<PAGE>

          (p)  The Securities shall have been approved by the NASD for trading
     in the PORTAL Market.

          (q)  If any event shall have occurred that requires the Company under
     Section 4(d) to prepare an amendment or supplement to the Offering
     Memorandum, then such amendment or supplement shall have been prepared, the
     Initial Purchasers shall have been given a reasonable opportunity to
     comment thereon, and copies thereof shall have been delivered to the
     Initial Purchasers reasonably in advance of the Closing Date.

          (r)  There shall not have occurred any invalidation of Rule144A under
     the Securities Act by any court or any withdrawal or proposed withdrawal of
     any rule or regulation under the Securities Act or the Exchange Act by the
     Commission or any amendment or proposed amendment thereof by the Commission
     which in the judgment of the Initial Purchasers would materially impair the
     ability of the Initial Purchasers to purchase, hold or effect resales of
     the Securities as contemplated hereby.

          (s)  Subsequent to the execution and delivery of this Agreement or, if
     earlier, the dates as of which information is given in the Offering
     Memorandum (exclusive of any amendment or supplement thereto), there shall
     not have been any change in the capital stock (other than pursuant to
     issuances of common stock in connection with the exercise of options or put
     rights) or long-term debt or any change, or any development involving a
     prospective change, in or affecting the condition (financial or otherwise),
     results of operations, business or prospects of the Company and its
     subsidiaries taken as a whole, the effect of which, in any such case
     described above, is, in the judgment of the Initial Purchasers, so material
     and adverse as to make it impracticable or inadvisable to proceed with the
     sale or delivery of the Securities on the terms and in the manner
     contemplated by this Agreement and the Offering Memorandum (exclusive of
     any amendment or supplement thereto).

          (t)  No action shall have been taken and no statute, rule, regulation
     or order shall have been enacted, adopted or issued by any governmental
     agency or body which would, as of the Closing Date, prevent the issuance or
     sale of the Securities; and no injunction, restraining order or order of
     any other nature by any federal or state court of competent jurisdiction
     shall have been issued as of the Closing Date which would prevent the
     issuance or sale of the Securities.

          (u)  Subsequent to the execution and delivery of this Agreement (i) no
     downgrading shall have occurred in the rating accorded the Securities or
     any of the Company's other debt securities or preferred stock by a
     "nationally recognized

                                       29
<PAGE>

     statistical rating organization", as such term is defined by the Commission
     for purposes of Rule 436(g)(2) of the rules and regulations of the
     Commission under the Securities Act and (ii) no such organization shall
     have publicly announced that it has under surveillance or review (other
     than an announcement with positive implications of a possible upgrading),
     its rating of the Securities or any of the Company's other debt securities
     or preferred stock.

          (v)  Subsequent to the execution and delivery of this Agreement there
     shall not have occurred any of the following: (i) trading in securities
     generally on the New York Stock Exchange, the American Stock Exchange, the
     Nasdaq National Market or the over-the-counter market shall have been
     suspended or limited, or minimum prices shall have been established on any
     such exchange or market by the Commission, by any such exchange or by any
     other regulatory body or governmental authority having jurisdiction, or
     trading in any securities of the Company on any exchange (including without
     limitation, the Nasdaq National Market) or in the over-the-counter market
     shall have been suspended or (ii) any moratorium on commercial banking
     activities shall have been declared by Federal or New York state
     authorities or (iii) an outbreak or escalation of hostilities or a
     declaration by the United States of a national emergency or war or (iv) a
     material adverse change in general economic, political or financial
     conditions (or the effect of international conditions on the financial
     markets in the United States shall be such) the effect of which, in the
     case of this clause (iv), is, in the judgment of the Initial Purchasers, so
     material and adverse as to make it impracticable or inadvisable to proceed
     with the sale or the delivery of the Securities on the terms and in the
     manner contemplated by this Agreement and in the Offering Memorandum
     (exclusive of any amendment or supplement thereto).

          (w)  The Credit Agreement Amendment has been executed and delivered by
     all of the parties thereto.

          All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to Debevoise & Plimpton.

          6.   Termination. The obligations of the Initial Purchasers hereunder
               -----------
may be terminated by the Initial Purchasers, in their absolute discretion, by
notice given to and received by the Company prior to delivery of and payment for
the Securities if, (i) prior to that time, any of the events described in
Section 5(v) shall have occurred and be continuing or (ii) as of the Closing
Date, any of the terms and conditions set forth in Section 5 shall not have been
satisfied in all respects.

                                       30
<PAGE>

     7.   Defaulting Initial Purchasers.
          ------------------------------

     (a)  If, on the Closing Date, any Initial Purchaser defaults on its
obligation to purchase the Securities that it has agreed to purchase hereunder,
the non-defaulting Initial Purchasers may in their discretion arrange for the
purchase of such Securities by other persons satisfactory to the Company on the
terms contained in this Agreement. If, within 36 hours after any such default by
any Initial Purchaser, the non-defaulting Initial Purchasers do not arrange for
the purchase of such Securities, then the Company shall be entitled to a further
period of 36 hours within which to procure other persons satisfactory to the
non- defaulting Initial Purchasers to purchase such Securities on such terms. If
other persons become obligated or agree to purchase the Securities of a
defaulting Initial Purchaser, either the non-defaulting Initial Purchasers or
the Company may postpone the Closing Date for up to five full Business Days in
order to effect any changes that in the opinion of counsel for the Company or
counsel for the Initial Purchasers may be necessary in the Offering Memorandum
or in any other document or arrangement, and the Company agrees to promptly
prepare any amendment or supplement to the Offering Memorandum that effects any
such changes. As used in this Agreement, the term "Initial Purchaser" includes,
for all purposes of this Agreement unless the context otherwise requires, any
person not listed in Schedule II hereto that, pursuant to this Section 7,
purchases Securities that a defaulting Initial Purchaser agreed but failed to
purchase.

     (b)  If, after giving effect to any arrangements, if any, for the purchase
of the Securities of a defaulting Initial Purchaser or Initial Purchasers by the
non-defaulting Initial Purchasers and the Company as provided in paragraph (a)
above, the aggregate principal amount of such Securities that remains
unpurchased does not exceed one-tenth of the aggregate principal amount of all
the Securities, then the Company shall have the right to require each
non-defaulting Initial Purchaser to purchase the principal amount of Securities
that such Initial Purchaser agreed to purchase hereunder plus such Initial
Purchaser's pro rate share (based on the principal amount of Securities that
such Initial Purchaser agreed to purchase hereunder in relation to the principal
amount of Securities that all non-defaulting Initial Purchasers agreed to
purchase hereunder) of the Securities of such defaulting Initial Purchaser or
Initial Purchasers for which such arrangement have not been made.

     (c)  If, after giving effect to arrangements, if any, for the purchase of
the Securities of a defaulting Initial Purchaser or Initial Purchasers by the
non-defaulting Initial Purchasers and the Company as provided in paragraph (a)
above, the aggregate principal amount of such Securities that remains
unpurchased exceeds one-tenth of the aggregate principal amount of all the
Securities, or if the Company shall not exercise the right described in
paragraph (b) above, then this Agreement shall terminate without liability on
the part of the non-defaulting Initial Purchasers, the Company or the
Guarantors, except that the Company and each of the Guarantors will continue to
be liable

                                       31
<PAGE>

for the payment of expenses as set forth in Sections 8 and 12 hereof and except
that the provisions of Sections 9 or 10 hereof shall not terminate and shall
remain in effect.

     (d) Nothing contained herein shall relieve a defaulting Initial Purchaser
of any liability it may have to the Company, the Guarantors or any
non-defaulting Initial Purchaser for damages caused by its default.

     8. Reimbursement of Initial Purchasers' Expenses. If (a) this Agreement
        ---------------------------------------------
shall have been terminated pursuant to Section 6 or 7, (b) the Company shall
fail to tender the Securities for delivery to the Initial Purchasers for any
reason permitted under this Agreement or (c) the Initial Purchasers shall
decline to purchase the Securities for any reason permitted under this
Agreement, the Company and the Guarantors shall reimburse the Initial Purchasers
for such out-of-pocket expenses (including reasonable fees and disbursements of
counsel) as shall have been reasonably incurred by the Initial Purchasers in
connection with this Agreement and the proposed purchase and resale of the
Securities. If this Agreement is terminated pursuant to Section 7 by reason of
the default of one or more of the Initial Purchasers, neither the Company nor
the Guarantors shall be obligated to reimburse any defaulting Initial Purchaser
on account of such expenses.

          9. Indemnification.
             ---------------

          (a) The Company and each of the Guarantors shall jointly and
severally indemnify and hold harmless each Initial Purchaser, its affiliates,
their respective officers, directors, employees, representatives and agents, and
each person, if any, who controls any Initial Purchaser within the meaning of
the Securities Act or the Exchange Act (collectively referred to for purposes of
this Section 9(a) and Section 10 as an Initial Purchaser), from and against any
loss, claim, damage or liability, joint or several, or any action in respect
thereof (including, without limitation, any loss, claim, damage, liability or
action relating to purchases and sales of the Securities), to which that Initial
Purchaser may become subject, whether commenced or threatened, under the
Securities Act, the Exchange Act, any other federal or state statutory law or
regulation, at common law or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained in the Preliminary
Offering Memorandum or the Offering Memorandum or in any amendment or supplement
thereto or in any information provided by the Company or any Guarantor pursuant
to Section 4(e) or (ii) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, and shall reimburse each Initial Purchaser promptly upon
demand for any legal or other expenses reasonably incurred by that Initial
Purchaser in connection with investigating or defending or preparing to defend
against or appearing as a third party witness in connection with any such loss,
claim, damage, liability or action as such expenses are incurred; provided,

                                       32
<PAGE>

however, that the Company and the Guarantors shall not be liable in any such
case to the extent that any such loss, claim, damage, liability or action arises
out of, or is based upon, an untrue statement or alleged untrue statement in or
omission or alleged omission from any of such documents in reliance upon and in
conformity with any Initial Purchasers' Information; and provided, further, that
with respect to any such untrue statement in or omission from the Preliminary
Offering Memorandum, the indemnity agreement contained in this Section 9(a)
shall not inure to the benefit of any such Initial Purchaser to the extent that
the sale to the person asserting any such loss, claim, damage, liability or
action was an initial resale by such Initial Purchaser and any such loss, claim,
damage, liability or action of or with respect to such Initial Purchaser results
from the fact that both (A) to the extent required by applicable law, a copy of
the Offering Memorandum was not sent or given to such person at or prior to the
written confirmation of the sale of such Securities to such person and (B) the
untrue statement in or omission from the Preliminary Offering Memorandum was
corrected in the Offering Memorandum unless, in either case, such failure to
deliver the Offering Memorandum was a result of non-compliance by the Company
with Section 4(b).

          (b) Each Initial Purchaser, severally and not jointly, shall
indemnify and hold harmless the Company, each of the Guarantors and their
respective affiliates, their respective officers, directors, employees,
representatives and agents, and each person, if any, who controls the Company
within the meaning of the Securities Act or the Exchange Act (collectively
referred to for purposes of this Section 9(b) and Section 10 as the Company),
from and against any loss, claim, damage or liability, joint or several, or any
action in respect thereof, to which the Company may become subject, whether
commenced or threatened, under the Securities Act, the Exchange Act, any other
federal or state statutory law or regulation, at common law or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or is
based upon, (i) any untrue statement or alleged untrue statement of a material
fact contained in the Preliminary Offering Memorandum or the Offering Memorandum
or in any amendment or supplement thereto or (ii) the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, but in each case only
to the extent that the untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with any Initial
Purchasers' Information, and shall reimburse the Company for any legal or other
expenses reasonably incurred by the Company in connection with investigating or
defending or preparing to defend against or appearing as a third party witness
in connection with any such loss, claim, damage, liability or action as such
expenses are incurred.

          (c) Promptly after receipt by an indemnified party under this Section
9 of notice of any claim or the commencement of any action, the indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party pursuant to

                                       33
<PAGE>

Section 9(a) or 9(b), notify the indemnifying party in writing of the claim or
the commencement of that action; provided, however, that the failure to notify
the indemnifying party shall not relieve it from any liability which it may have
under this Section 9 except to the extent that it has been materially prejudiced
(through the forfeiture of substantive rights or defenses) by such failure; and,
provided, further, that the failure to notify the indemnifying party shall not
relieve it from any liability which it may have to an indemnified party
otherwise than under this Section 9. If any such claim or action shall be
brought against an indemnified party, and it shall notify the indemnifying party
thereof, the indemnifying party shall be entitled to participate therein and, to
the extent that it wishes, jointly with any other similarly notified
indemnifying party, to assume the defense thereof with counsel reasonably
satisfactory to the indemnified party. After notice from the indemnifying party
to the indemnified party of its election to assume the defense of such claim or
action, the indemnifying party shall not be liable to the indemnified party
under this Section 9 for any legal or other expenses subsequently incurred by
the indemnified party in connection with the defense thereof other than
reasonable costs of investigation; provided, however, that an indemnified party
shall have the right to employ its own counsel in any such action, but the fees,
expenses and other charges of such counsel for the indemnified party will be at
the expense of such indemnified party unless (1) the employment of counsel by
the indemnified party has been authorized in writing by the indemnifying party,
(2) the indemnified party has reasonably concluded (based upon advice of counsel
to the indemnified party) that there may be legal defenses available to it or
other indemnified parties that are different from or in addition to those
available to the indemnifying party, (3) a conflict or potential conflict exists
(based upon advice of counsel to the indemnified party) between the indemnified
party and the indemnifying party (in which case the indemnifying party will not
have the right to direct the defense of such action on behalf of the indemnified
party) or (4) the indemnifying party has not in fact employed counsel reasonably
satisfactory to the indemnified party to assume the defense of such action
within a reasonable time after receiving notice of the commencement of the
action, in each of which cases the reasonable fees, disbursements and other
charges of counsel will be at the expense of the indemnifying party or parties.
It is understood that the indemnifying party or parties shall not, in connection
with any proceeding or related proceedings in the same jurisdiction, be liable
for the reasonable fees, disbursements and other charges of more than one
separate firm of attorneys (in addition to any local counsel) at any one time
for all such indemnified party or parties. Each indemnified party, as a
condition of the indemnity agreements contained in Sections 9(a) and 9(b), shall
use all reasonable efforts to cooperate with the indemnifying party in the
defense of any such action or claim. No indemnifying party shall be liable for
any settlement of any such action effected without its written consent (which
consent shall not be unreasonably withheld), but if settled with its written
consent or if there be a final judgment for the plaintiff in any such action,
the indemnifying party agrees to indemnify and hold harmless any indemnified
party from and against any loss or liability by reason of such settlement or
judgment. No

                                       34
<PAGE>

indemnifying party shall, without the prior written consent of the indemnified
party (which consent shall not be unreasonably withheld), effect any settlement
of any pending or threatened proceeding in respect of which any indemnified
party is or could have been a party and indemnity could have been sought
hereunder by such indemnified party unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.

          The obligations of the Company, the Guarantors and the Initial
Purchasers in this Section 9 and in Section 10 are in addition to any other
liability that the Company, the Guarantors or the Initial Purchasers, as the
case may be, may otherwise have, including in respect of any breaches of
representations, warranties and agreements made herein by any such party.

          10. Contribution. If the indemnification provided for in Section 9 is
              ------------
unavailable or insufficient to hold harmless an indemnified party under Section
9(a) or 9(b), then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such indemnified
party as a result of such loss, claim, damage or liability, or action in respect
thereof, (i) in such proportion as shall be appropriate to reflect the relative
benefits received by the Company and the Guarantors on the one hand and the
Initial Purchasers on the other from the offering of the Securities or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company and
the Guarantors on the one hand and the Initial Purchasers on the other with
respect to the statements or omissions that resulted in such loss, claim, damage
or liability, or action in respect thereof, as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Guarantors on the one hand and the Initial Purchasers on the other with respect
to such offering shall be deemed to be in the same proportion as the total net
proceeds from the offering of the Securities purchased under this Agreement
(before deducting expenses) received by or on behalf of the Company and the
Guarantors, on the one hand, and the total discounts and commissions received by
the Initial Purchasers with respect to the Securities purchased under this
Agreement, on the other, bear to the total gross proceeds from the sale of the
Securities under this Agreement. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company and the Guarantors on the one
hand or to any Initial Purchasers' Information on the other, the intent of the
parties and their relative knowledge, access to information and opportunity to
correct or prevent such untrue statement or omissions. The Company, the
Guarantors and the Initial Purchasers agree that it would not be just and
equitable if contributions pursuant to this Section 10 were to be determined by
pro rata allocation (even if the Initial Purchasers were treated as one entity
for such purpose) or by any other method of allocation that does not take into

                                       35
<PAGE>

account the equitable considerations referred to herein. The amount paid or
payable by an indemnified party as a result of the loss, claim, damage or
liability, or action in respect thereof, referred to above in this Section 10
shall be deemed to include, for purposes of this Section 10, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending or preparing to defend any such action or claim.
Notwithstanding the provisions of this Section 10, no Initial Purchaser shall be
required to contribute any amount in excess of the amount by which the total
discounts and commissions received by such Initial Purchaser with respect to the
Securities purchased by it under this Agreement exceeds the amount of any
damages which such Initial Purchaser has otherwise paid or become liable to pay
by reason of any untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The Initial
Purchasers' obligations to contribute as provided in this Section 10 are several
in proportion to their respective purchase obligations and not joint.

          11. Persons Entitled to Benefit of Agreement. This Agreement shall
              ----------------------------------------
inure to the benefit of and be binding upon the Initial Purchasers, the Company,
the Guarantors and their respective successors. This Agreement and the terms and
provisions hereof are for the sole benefit of only those persons, except as
provided in Sections 9 and 10 with respect to affiliates, officers, directors,
employees, representatives, agents and controlling persons of the Company, the
Guarantors and the Initial Purchasers and in Section 4(e) with respect to
holders and prospective purchasers of the Securities. Nothing in this Agreement
is intended or shall be construed to give any person, other than the persons
referred to in this Section 11, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision contained herein.

          12. Expenses. The Company and each of the Guarantors agrees with the
              --------
Initial Purchasers to pay (a) the costs incident to the authorization, issuance,
sale, preparation and delivery of the Securities and any taxes payable in that
connection; (b) the costs incident to the preparation, printing and distribution
of the Preliminary Offering Memorandum, the Offering Memorandum and any
amendments or supplements thereto; (c) the costs of reproducing and distributing
each of the Transaction Documents; (d) the costs incident to the preparation,
printing and delivery of the certificates evidencing the Securities, including
stamp duties and transfer taxes, if any, payable upon issuance of the
Securities; (e) the fees and expenses of the Company's counsel and independent
accountants; (f) the fees and expenses of qualifying the Securities under the
securities laws of the several jurisdictions as provided in Section 4(g) and of
preparing, printing and distributing Blue Sky Memoranda (including related fees
and expenses of counsel for the Initial Purchasers); (g) any fees charged by
rating agencies for rating the Securities; (h) the fees and expenses of the
Trustee and any paying agent (including related fees and expenses of any counsel
to such parties); (i) all expenses and application fees incurred in connection

                                       36
<PAGE>

with the application for the inclusion of the Securities on the PORTAL Market
and the approval of the Securities for book-entry transfer by DTC; and (j) all
other costs and expenses incident to the performance of the obligations of the
Company under this Agreement which are not otherwise specifically provided for
in this Section 12; provided, however, that except as provided in this Section
12 and Section 8, the Initial Purchasers shall pay their own costs and expenses.

          13. Survival. The respective indemnities, rights of contribution,
              --------
representations, warranties and agreements of the Company, each of the
Guarantors and the Initial Purchasers contained in this Agreement or made by or
on behalf of the Company, each of the Guarantors or the Initial Purchasers
pursuant to this Agreement or any certificate delivered pursuant hereto shall
survive the delivery of and payment for the Securities and shall remain in full
force and effect, regardless of any termination or cancellation of this
Agreement or any investigation made by or on behalf of any of them or any of
their respective affiliates, officers, directors, employees, representatives,
agents or controlling persons.

          14. Notices, etc. All statements, requests, notices and agreements
              ------------
hereunder shall be in writing, and:

          (a) if to the Initial Purchasers, shall be delivered or sent by mail
     or telecopy transmission to J.P. Morgan Securities Inc., 270 Park Avenue,
     4th floor, New York, New York 10017, Attention: Steven A. Tulip (telecopier
     no.: (212) 270-0994) with a copy to Debevoise & Plimpton, 875 Third Avenue,
     New York, New York, attention of David A. Brittenham, facsimile (212)
     909-6836; or

          (b) if to the Company, shall be delivered or sent by mail or telecopy
     transmission to the address of the Company set forth in the Offering
     Memorandum, Attention: Michael E. Tarvin, Senior Vice President, Secretary
     and General Counsel (telecopier no.: (717) 975-9981) with a copy to
     Dechert, 4000 Bell Atlantic Tower, 1717 Arch Street, Philadelphia,
     Pennsylvania 19103, attention of Christopher G. Karras, Facsimile (215)
     994-2222;

provided that any notice to an Initial Purchaser pursuant to Section 9(c) shall
also be delivered or sent by mail to such Initial Purchaser at its address set
forth on the signature page hereof. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof. The Company shall
be entitled to act and rely upon any request, consent, notice or agreement given
or made on behalf of the Initial Purchasers by JPMorgan.

          15. Definition of Terms. For purposes of this Agreement, (a) the term
              -------------------
"business day" means any day on which the New York Stock Exchange, Inc. is open
for

                                       37
<PAGE>

trading, (b) the term "subsidiary" has the meaning set forth in Rule 405
under the Securities Act and (c) except where otherwise expressly provided, the
term "affiliate" has the meaning set forth in Rule405 under the Securities Act.

          16. Initial Purchasers' Information. The parties hereto acknowledge
              -------------------------------
and agree that, for all purposes of this Agreement, the Initial Purchasers'
Information consists solely of the following information in the Preliminary
Offering Memorandum and the Offering Memorandum: the statements concerning the
Initial Purchasers contained in the (i) the second sentence of the fourth
paragraph on the front cover page, and (ii) the third paragraph, the fourth,
fifth and sixth sentences of the eighth paragraph, the ninth paragraph and the
tenth paragraph under the heading "Plan of Distribution".

          17. Governing Law. This Agreement shall be governed by and construed
              -------------
in accordance with the laws of the State of New York.

          18. Counterparts. This Agreement may be executed in one or more
              ------------
counterparts (which may include counterparts delivered by telecopier) and, if
executed in more than one counterpart, the executed agreement counterparts shall
each be deemed to be an original, but all such counterparts shall together
constitute one and the same instrument.

          19. Amendments. No amendment or waiver of any provision of this
              ----------
Agreement, nor any consent or approval to any departure therefrom, shall in any
event be effective unless the same shall be in writing and signed by the parties
hereto.

          20. Headings. The headings herein are inserted for convenience of
              --------
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.

                                       38
<PAGE>

           If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us a counterpart hereof, whereupon this
instrument will become a binding agreement between the Company, the Guarantors
and the several Initial Purchasers in accordance with its terms.

                                          Very truly yours,

                                          SELECT MEDICAL CORPORATION

                                          By: Michael E. Tarvin
                                             ------------------------------
                                             Name:  Michael E. Tarvin
                                             Title: Senior Vice President

                                          SELECTMARK, INC.

                                             By: Andrew T. Panaccione
                                                ------------------------------
                                             Name:  Andrew T. Panaccione
                                             Title: Vice President

                                          SELECT HOSPITAL INVESTORS, INC.

                                          By: Andrew T. Panaccione
                                             ------------------------------
                                          Name:  Andrew T. Panaccione
                                          Title: Vice President

                                          SLMC FINANCE CORPORATION

                                          By: Andrew T. Panaccione
                                             ------------------------------
                                          Name:  Andrew T. Panaccione
                                          Title: Treasurer

                                          EACH OF THE GUARANTORS LISTED ON
                                          SCHEDULE I HERETO OTHER THAN
                                          SELECTMARK, INC., SELECT HOSPITAL
                                          INVESTORS, INC. AND SLMC FINANCE
                                          CORPORATION

                                          By Michael E. Tarvin
                                             ------------------------------
                                             Name:  Michael E. Tarvin
                                             Title: Vice President

                                       39
<PAGE>

Accepted:

J.P. MORGAN SECURITIES INC.

By   Steve Tulip
     ----------------------------
     Authorized Signatory

Address for notices pursuant to Section 9(c):
1 Chase Plaza, 25th floor
New York, New York 10081
Attention:  Legal Department

MERRILL LYNCH, PIERCE, FENNER & SMITH
                               INCORPORATED
CREDIT SUISSE FIRST BOSTON CORPORATION
CIBC WORLD MARKETS CORP.
FIRST UNION SECURITIES, INC.

By       Steve Tulip
         ----------------------------
         Authorized Signatory

Address for notices pursuant to Section 9(c):
Attention:

                                       40
<PAGE>

                                                                      SCHEDULE I

Abel Center for Rehabilitation Therapies, Inc.
Abel Healthcare Network, Inc.
Affiliated Physical Therapists, Ltd.
Allegany Hearing and Speech, Inc.
American Transitional Hospitals, Inc.
Athens Sports Medicine Clinic, Inc.
Ather Sports Injury Clinic, Inc.
Atlantic Health Group, Inc.
Atlantic Rehabilitation Services, Inc.
Avalon Rehabilitation & Healthcare, L.L.C.
Boca Rehab Agency, Inc.
Buendel Physical Therapy, Inc.
C.E.R. - West, Inc.
C.O.A.S.T. Institute Physical Therapy, Inc.
CCISUB, Inc.
CMC Center Corporation
Cenla Physical Therapy & Rehabilitation Agency, Inc.
Center for Evaluation & Rehabilitation, Inc.
Center for Physical Therapy & Sports Rehabilitation, Inc.
CenterTherapy, Inc.
Champion Physical Therapy, Inc.
Connecticut NovaCare Ventures, Inc.
Coplin Physical Therapy Associates, Inc.
Crowley Physical Therapy Clinic, Inc.
Douglas Avery & Associates, Ltd.
Douglas C. Claussen, R.P.T., Physical Therapy, Inc.
Elk County Physical Therapy, Inc.
<PAGE>

Fine, Bryant & Wah, Inc.
Francis Naselli, Jr. & Stewart Rich Physical Therapists, Inc.
Gallery Physical Therapy Center, Inc.
Georgia NovaCare Ventures, Inc.
Georgia Physical Therapy of West Georgia, Inc.
Georgia Physical Therapy, Inc.
GP Therapy, L.L.C.
Greater Sacramento Physical Therapy Associates, Inc.
Grove City Physical Therapy and Sports Medicine, Inc.
Gulf Breeze Physical Therapy, Inc.
Gulf Coast Hand Specialists, Inc.
Hand Therapy Associates, Inc.
Hand Therapy and Rehabilitation Associates, Inc.
Hangtown Physical Therapy, Inc.
Hawley Physical Therapy, Inc.
Human Performance and Fitness, Inc.
Indianapolis Physical Therapy and Sports Medicine, Inc.
Intensiva Healthcare Corporation
Intensiva Hospital of Greater St. Louis, Inc.
Joyner Sports Science Institute, Inc.
Joyner Sportmedicine Institute, Inc.
Kentucky Rehabilitation Services, Inc.
Kesinger Physical Therapy, Inc.
Lynn M. Carlson, Inc.
Mark Butler Physical Therapy Center, Inc.
Metro Rehabilitation Services, Inc.
Michigan Therapy Centre, Inc.
MidAtlantic Health Group, Inc.
Monmouth Rehabilitation, Inc.

                                       2
<PAGE>

New England Health Group, Inc.
New Mexico Physical Therapists, Inc.
Northside Physical Therapy, Inc.
NovaCare Health Group, L.L.C.
NovaCare Occupational Health Services, Inc.
NovaCare Outpatient Rehabilitation, Inc.
NovaCare Outpatient Rehabilitation East, Inc.
NovaCare Outpatient Rehabilitation West, Inc.
NovaCare Rehabilitation, Inc.
NW Rehabilitation Associates, L.P.
Ortho Rehab Associates, Inc.
Orthopedic and Sports Physical Therapy of Cupertino, Inc.
P.T. Services Company
P.T. Services, Inc.
P.T. Services Rehabilitation, Inc.
Peter Trailov R.P.T. Physical Therapy Clinic, Orthopaedic Rehabilitation &
Sports Medicine, Ltd.
Peters, Starkey & Todrank Physical Therapy Corporation
Physical Focus, Inc.
Physical Rehabilitation Partners, Inc.
Physical Therapy Enterprises, Inc.
Physical Therapy Institute, Inc.
Physical Therapy Services of the Jersey Cape, Inc.
Physio - Associates, Inc.
Pro Active Therapy, Inc.
Pro Active Therapy of Ahoskie, Inc.
Pro Active Therapy of Gaffney, Inc.
Pro Active Therapy of Greenville, Inc.
Pro Active Therapy of North Carolina, Inc.

                                       3
<PAGE>

Pro Active Therapy of South Carolina, Inc.
Pro Active Therapy of Virginia, Inc.
Pro Active Therapy of Rocky Mount, Inc.
Professional Therapeutic Services, Inc.
Quad City Management, Inc.
RCI (Colorado), Inc.
RCI (Exertec), Inc.
RCI (Michigan), Inc.
RCI (S.P.O.R.T.), Inc.
RCI (WRS), Inc.
RCI Nevada, Inc.
Rebound Oklahoma, Inc.
Redwood Pacific Therapies, Inc.
Rehab Advantage, Inc.
Rehab Managed Care of Arizona, Inc.
Rehab Provider Network - California, Inc.
Rehab Provider Network - Delaware, Inc.
Rehab Provider Network - Georgia, Inc.
Rehab Provider Network - Indiana, Inc.
Rehab Provider Network - Maryland, Inc.
Rehab Provider Network - Michigan, Inc.
Rehab Provider Network - New Jersey, Inc.
Rehab Provider Network - Ohio, Inc.
Rehab Provider Network - Oklahoma, Inc.
Rehab Provider Network - Pennsylvania, Inc.
Rehab Provider Network - Virginia, Inc.
Rehab Provider Network - Washington, D.C., Inc.
Rehab Provider Network of Colorado, Inc.
Rehab Provider Network of Florida, Inc.

                                       4
<PAGE>

Rehab Provider Network of Nevada, Inc.
Rehab Provider Network of New Mexico, Inc.
Rehab Provider Network of North Carolina, Inc.
Rehab Provider Network of Texas, Inc.
Rehab Provider Network of Wisconsin, Inc.
Rehab World, Inc.
Rehab/Work Hardening Management Associates, Ltd.
RehabClinics, Inc.
RehabClinics (COAST), Inc.
RehabClinics (GALAXY), Inc.
RehabClinics (New Jersey), Inc.
RehabClinics (PTA), Inc.
RehabClinics (SPT), Inc.
RehabClinics Abilene, Inc.
RehabClinics Dallas, Inc.
RehabClinics Pennsylvania, Inc.
Rehabilitation Network, Inc.
Robert M. Bacci, R.P.T. Physical Therapy, Inc.
S.T.A.R.T., Inc.
Select Air Corporation
Select Employment Services, Inc.
Select Hospital Investors, Inc.
SelectMark, Inc.
Select Medical of Kentucky, Inc.
Select Medical of Maryland, Inc.
Select Medical of New Jersey, Inc.
Select Medical of New York, Inc.
Select Medical of Ohio, Inc.
Select Medical of Pennsylvania, Inc.

                                       5
<PAGE>

Select Software Ventures, L.L.C.
Select Specialty Hospital - Akron, Inc.
Select Specialty Hospital - Akron II, Inc.
Select Specialty Hospital - Ann Arbor, Inc.
Select Specialty Hospital - Battle Creek, Inc.
Select Specialty Hospital - Beech Grove, Inc.
Select Specialty Hospital - Camp Hill, Inc.
Select Specialty Hospital - Camp Hill, L.P.
Select Specialty Hospital - Central Detroit, Inc.
Select Specialty Hospital - Charleston, Inc.
Select Specialty Hospital - Cincinnati, Inc.
Select Specialty Hospital - Columbus, Inc.
Select Specialty Hospital - Columbus/University, Inc.
Select Specialty Hospital - Dallas, Inc.
Select Specialty Hospital - Denver, Inc.
Select Specialty Hospital - Durham, Inc.
Select Specialty Hospital - Erie, Inc.
Select Specialty Hospital - Evansville, Inc.
Select Specialty Hospital - Flint, Inc.
Select Specialty Hospital - Fort Smith, Inc.
Select Specialty Hospital - Fort Wayne, Inc.
Select Specialty Hospital - Greensburg, Inc.
Select Specialty Hospital - Houston, Inc.
Select Specialty Hospital - Indianapolis, Inc.
Select Specialty Hospital - Jackson, Inc.
Select Specialty Hospital - Johnstown, Inc.
Select Specialty Hospital - Kansas City, Inc.
Select Specialty Hospital - Knoxville, Inc.
Select Specialty Hospital - Little Rock, Inc.

                                       6
<PAGE>

Select Specialty Hospital - Louisville, Inc.
Select Specialty Hospital - Macomb County, Inc.
Select Specialty Hospital - Memphis, Inc.
Select Specialty Hospital - Mesa, Inc.
Select Specialty Hospital - Miami, Inc.
Select Specialty Hospital - Milwaukee, Inc.
Select Specialty Hospital - Morgantown, Inc.
Select Specialty Hospital - Nashville, Inc.
Select Specialty Hospital - New Orleans, Inc.
Select Specialty Hospital - North Knoxville, Inc.
Select Specialty Hospital - Northwest Detroit, Inc.
Select Specialty Hospital - Northwest Indiana, Inc.
Select Specialty Hospital - Oklahoma City, Inc.
Select Specialty Hospital - Oklahoma City/East Campus, Inc.
Select Specialty Hospital - Omaha, Inc.
Select Specialty Hospital - Philadelphia/AEMC, Inc.
Select Specialty Hospital - Phoenix, Inc.
Select Specialty Hospital - Pittsburgh, Inc.
Select Specialty Hospital - Pontiac, Inc.
Select Specialty Hospital - Reno, Inc.
Select Specialty Hospital - San Antonio, Inc.
Select Specialty Hospital - Sioux Falls, Inc.
Select Specialty Hospital - Topeka, Inc.
Select Specialty Hospital - TriCities, Inc.
Select Specialty Hospital - Tulsa, Inc.
Select Specialty Hospital - West Columbus, Inc.
Select Specialty Hospital - Western Michigan, Inc.
Select Specialty Hospital - Wichita, Inc.
Select Specialty Hospital - Wilmington, Inc.

                                       7
<PAGE>

Select Specialty Hospital - Wyandotte, Inc.
Select Specialty Hospital - Youngstown, Inc.
Select Specialty Hospitals, Inc.
Select Synergos, Inc.
Select Unit Management, Inc.
SLMC Finance Corporation
SMC of Florida, Inc.
South Jersey Physical Therapy Associates, Inc.
South Jersey Rehabilitation and Sports Medicine Center, Inc.
Southpointe Fitness Center, Inc.
Southwest Emergency Associates, Inc.
Southwest Medical Supply Company, Inc.
Southwest Physical Therapy, Inc.
Southwest Therapists, Inc.
Sporthopedics Sports and Physical Therapy Centers, Inc.
Sports & Orthopedic Rehabilitation Services, Inc.
Sports Therapy and Arthritis Rehabilitation, Inc.
Star Physical Therapy, Inc.
Stephenson-Holtz, Inc.
The Center for Physical Therapy and Rehabilitation, Inc.
The Orthopedic Sports and Industrial Rehabilitation Network, Inc.
TJ Partnership I
Treister, Inc.
Union Square Center for Rehabilitation & Sports Medicine, Inc.
Valley Group Physical Therapists, Inc.
Vanguard Rehabilitation, Inc.
Wayzata Physical Therapy Center, Inc.
West Penn Rehabilitation Services, Inc.
West Side Physical Therapy, Inc.

                                       8
<PAGE>

West Suburban Health Partners, Inc.
Yuma Rehabilitation Center, Inc.

                                       9
<PAGE>

                                                                     SCHEDULE II

<TABLE>
<CAPTION>
                                                                  Principal
                                                                  Amount
Initial Purchasers                                                of Securities
------------------                                                -------------
<S>                                                               <C>
J.P. Morgan Securities Inc.                                       $   78,750,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated                    35,000,000
Credit Suisse First Boston Corporation                                26,250,000
CIBC World Markets Corp.                                              17,500,000
First Union Securities Inc.                                           17,500,000
          Total                                                   $  175,000,000
</TABLE>
<PAGE>

                                                                SCHEDULE III

Abel Center for Rehabilitation Therapies, Inc.

Abel Healthcare Network, Inc.

Affiliated Physical Therapists, Ltd.

Allegany Hearing and Speech, Inc.

American Transitional Hospitals, Inc.

Athens Sports Medicine Clinic, Inc.

Ather Sports Injury Clinic, Inc.

Atlantic Health Group, Inc.

Atlantic Rehabilitation Services, Inc.

Avalon Rehabilitation & Healthcare, L.L.C.

Boca Rehab Agency, Inc.

Buendel Physical Therapy, Inc.

Canadian Back Institute Limited*

CBI Brampton Limited Partnership*

CBI Calgary Limited Partnership*

CBI Fraser Valley Limited Partnership*

CBI Holdings Ltd.*

CBI Physiotherapists Corporation*

CBI Professional Services Inc.*

CBI South Calgary Limited Partnership*

CBI Vancouver Limited Partnership*

CBI Victoria Limited Partnership*

CBI Windsor Limited Partnership*

C.E.R. - West, Inc.

C.O.A.S.T. Institute Physical Therapy, Inc.

CCISUB, Inc.

CMC Center Corporation
<PAGE>

Cenla Physical Therapy & Rehabilitation Agency, Inc.

Center for Evaluation & Rehabilitation, Inc.

Center for Physical Therapy & Sports Rehabilitation, Inc.

CenterTherapy, Inc.

Champion Physical Therapy, Inc.

Connecticut NovaCare Ventures, Inc.

Coplin Physical Therapy Associates, Inc.

Crowley Physical Therapy Clinic, Inc.

Douglas Avery & Associates, Ltd.

Douglas C. Claussen, R.P.T., Physical Therapy, Inc.

Dynamic Rehabilitation Inc.*

Elk County Physical Therapy, Inc.

Fine, Bryant & Wah, Inc.

Francis Naselli, Jr. & Stewart Rich Physical Therapists, Inc.

Gallery Physical Therapy Center, Inc.

Georgia NovaCare Ventures, Inc.

Georgia Physical Therapy of West Georgia, Inc.

Georgia Physical Therapy, Inc.

GP Therapy, L.L.C.

Greater Sacramento Physical Therapy Associates, Inc.

Grove City Physical Therapy and Sports Medicine, Inc.

Gulf Breeze Physical Therapy, Inc.

Gulf Coast Hand Specialists, Inc.

Hand Therapy Associates, Inc.

Hand Therapy and Rehabilitation Associates, Inc.

Hangtown Physical Therapy, Inc.

Hawley Physical Therapy, Inc.

Human Performance and Fitness, Inc.

Indianapolis Physical Therapy and Sports Medicine, Inc.

                                       2
<PAGE>

Intensiva Healthcare Corporation

Intensiva Hospital of Greater St. Louis, Inc.

Joyner Sports Science Institute, Inc.

Joyner Sportmedicine Institute, Inc.

Kentucky Orthopedic Rehabilitation, LLC*

Kentucky Rehabilitation Services, Inc.

Kesinger Physical Therapy, Inc.

Lynn M. Carlson, Inc.

Mark Butler Physical Therapy Center, Inc.

Medical Information Management Systems, LLC*

Metro Rehabilitation Services, Inc.

Michigan Therapy Centre, Inc.

MidAtlantic Health Group, Inc.

Millenium Rehab Services, L.L.C.*

Monmouth Rehabilitation, Inc.

New England Health Group, Inc.

New Mexico Physical Therapists, Inc.

Northside Physical Therapy, Inc.

NovaCare Health Group, L.L.C.

NovaCare Occupational Health Services, Inc.

NovaCare Outpatient Rehabilitation, Inc.

NovaCare Outpatient Rehabilitation East, Inc.

NovaCare Outpatient Rehabilitation West, Inc.

NovaCare Rehabilitation, Inc.

NW Rehabilitation Associates, L.P.

1263568 Ontario Limited (London Group)*

Ortho Rehab Associates, Inc.

Orthopedic and Sports Physical Therapy of Cupertino, Inc.

P.T. Services Company

                                       3
<PAGE>

P.T. Services, Inc.

P.T. Services Rehabilitation, Inc.

Peter Trailov R.P.T. Physical Therapy Clinic, Orthopaedic Rehabilitation &

Sports Medicine, Ltd.

Peters, Starkey & Todrank Physical Therapy Corporation

Physical Focus, Inc.

Physical Rehabilitation Partners, Inc.

Physical Therapy Enterprises, Inc.

Physical Therapy Institute, Inc.

Physical Therapy Services of the Jersey Cape, Inc.

Physio - Associates, Inc.

Pro Active Therapy, Inc.

Pro Active Therapy of Ahoskie, Inc.

Pro Active Therapy of Gaffney, Inc.

Pro Active Therapy of Greenville, Inc.

Pro Active Therapy of North Carolina, Inc.

Pro Active Therapy of Rocky Mount, Inc.

Pro Active Therapy Services of South Carolina, Inc.

Pro Active Therapy Services of Virginia, Inc.

Professional Therapeutic Services, Inc.

Quad City Management, Inc.

RCI (Colorado), Inc.

RCI (Exertec), Inc.

RCI (Michigan), Inc.

RCI (S.P.O.R.T.), Inc.

RCI (WRS), Inc.

RCI Nevada, Inc.

Rebound Oklahoma, Inc.

Redwood Pacific Therapies, Inc.

                                       4
<PAGE>

Rehab Advantage, Inc.

Rehab Advantage Therapy Services, LLC*

Rehab Health, Inc.*

Rehab Managed Care of Arizona, Inc.

Rehab Provider Network - California, Inc.

Rehab Provider Network - Delaware, Inc.

Rehab Provider Network - Georgia, Inc.

Rehab Provider Network - Indiana, Inc.

Rehab Provider Network - Maryland, Inc.

Rehab Provider Network - Michigan, Inc.

Rehab Provider Network - New Jersey, Inc.

Rehab Provider Network - Ohio, Inc.

Rehab Provider Network - Oklahoma, Inc.

Rehab Provider Network - Pennsylvania, Inc.

Rehab Provider Network - Virginia, Inc.

Rehab Provider Network - Washington, D.C., Inc.

Rehab Provider Network of Colorado, Inc.

Rehab Provider Network of Florida, Inc.

Rehab Provider Network of Nevada, Inc.

Rehab Provider Network of New Mexico, Inc.

Rehab Provider Network of North Carolina, Inc.

Rehab Provider Network of Texas, Inc.

Rehab Provider Network of Wisconsin, Inc.

Rehab World, Inc.

Rehab/Work Hardening Management Associates, Ltd.

RehabClinics, Inc.

RehabClinics (COAST), Inc.

RehabClinics (GALAXY), Inc.

RehabClinics (New Jersey), Inc.

                                       5
<PAGE>

RehabClinics (PTA), Inc.

RehabClinics (SPT), Inc.

RehabClinics Abilene, Inc.

RehabClinics Dallas, Inc.

RehabClinics Pennsylvania, Inc.

Rehabilitation Network, Inc.

Robert M. Bacci, R.P.T. Physical Therapy, Inc.

S.T.A.R. Rehab, Inc.*

S.T.A.R.T., Inc.

Select Air Corporation

Select Employment Services, Inc.

Select Hospital Investors, Inc.

Select - Houston Partners, L.P.*

Select Management Services, LLC*

SelectMark, Inc.

Select Medical of Kentucky, Inc.

Select Medical of Maryland, Inc.

Select Medical of New Jersey, Inc.

Select Medical of New York, Inc.

Select Medical of Ohio, Inc.

Select Medical of Pennsylvania, Inc.

Select Software Ventures, L.L.C.

Select Specialty Hospital - Akron, Inc.

Select Specialty Hospital - Akron II, Inc.

Select Specialty Hospital - Ann Arbor, Inc.

Select Specialty Hospital - Battle Creek, Inc.

Select Specialty Hospital - Beech Grove, Inc.

Select Specialty Hospital - Biloxi, Inc.*

Select Specialty Hospital - Camp Hill, Inc.

                                       6
<PAGE>

Select Specialty Hospital - Camp Hill, L.P.

Select Specialty Hospital - Central Detroit, Inc.

Select Specialty Hospital - Charleston, Inc.

Select Specialty Hospital - Cincinnati, Inc.

Select Specialty Hospital - Columbus, Inc.

Select Specialty Hospital - Columbus/University, Inc.

Select Specialty Hospital - Dallas, Inc.

Select Specialty Hospital - Denver, Inc.

Select Specialty Hospital - Durham, Inc.

Select Specialty Hospital - Erie, Inc.

Select Specialty Hospital - Evansville, Inc.

Select Specialty Hospital - Flint, Inc.

Select Specialty Hospital - Fort Smith, Inc.

Select Specialty Hospital - Fort Wayne, Inc.

Select Specialty Hospital - Greensburg, Inc.

Select Specialty Hospital - Houston, Inc.

Select Specialty Hospital - Indianapolis, Inc.

Select Specialty Hospital - Jackson, Inc.

Select Specialty Hospital - Johnstown, Inc.

Select Specialty Hospital - Kansas City, Inc.

Select Specialty Hospital - Knoxville, Inc.

Select Specialty Hospital - Little Rock, Inc.

Select Specialty Hospital - Louisville, Inc.

Select Specialty Hospital - Macomb County, Inc.

Select Specialty Hospital - Memphis, Inc.

Select Specialty Hospital - Mesa, Inc.

Select Specialty Hospital - Miami, Inc.

Select Specialty Hospital - Milwaukee, Inc.

Select Specialty Hospital - Morgantown, Inc.

                                       7
<PAGE>

Select Specialty Hospital - Nashville, Inc.

Select Specialty Hospital - New Orleans, Inc.

Select Specialty Hospital - North Knoxville, Inc.

Select Specialty Hospital - Northwest Detroit, Inc.

Select Specialty Hospital - Northwest Indiana, Inc.

Select Specialty Hospital - Oklahoma City, Inc.

Select Specialty Hospital - Oklahoma City/East Campus, Inc.

Select Specialty Hospital - Omaha, Inc.

Select Specialty Hospital - Philadelphia/AEMC, Inc.

Select Specialty Hospital - Phoenix, Inc.

Select Specialty Hospital - Pittsburgh, Inc.

Select Specialty Hospital - Pontiac, Inc.

Select Specialty Hospital - Reno, Inc.

Select Specialty Hospital - San Antonio, Inc.

Select Specialty Hospital - Sioux Falls, Inc.

Select Specialty Hospital - Topeka, Inc.

Select Specialty Hospital - TriCities, Inc.

Select Specialty Hospital - Tulsa, Inc.

Select Specialty Hospital - West Columbus, Inc.

Select Specialty Hospital - Western Michigan, Inc.

Select Specialty Hospital - Wichita, Inc.

Select Specialty Hospital - Wilmington, Inc.

Select Specialty Hospital - Wyandotte, Inc.

Select Specialty Hospital - Youngstown, Inc.

Select Specialty Hospitals, Inc.

Select Synergos, Inc.

Select Unit Management, Inc.

SLMC Finance Corporation

SMC of Florida, Inc.

                                       8
<PAGE>

South Jersey Physical Therapy Associates, Inc.

South Jersey Rehabilitation and Sports Medicine Center, Inc.

Southpointe Fitness Center, Inc.

Southwest Emergency Associates, Inc.

Southwest Medical Supply Company, Inc.

Southwest Physical Therapy, Inc.

Southwest Therapists, Inc.

Sporthopedics Sports and Physical Therapy Centers, Inc.

Sports & Orthopedic Rehabilitation Services, Inc.

Sports Therapy and Arthritis Rehabilitation, Inc.

Star Physical Therapy, Inc.

Stephenson-Holtz, Inc.

The Center for Physical Therapy and Rehabilitation, Inc.

The Orthopedic Sports and Industrial Rehabilitation Network, Inc.

TJ Corporation I, L.L.C.*

TJ Partnership I

Treister, Inc.

Union Square Center for Rehabilitation & Sports Medicine, Inc.

Valley Group Physical Therapists, Inc.

Vanguard Rehabilitation, Inc.

Wayzata Physical Therapy Center, Inc.

West Penn Rehabilitation Services, Inc.

West Side Physical Therapy, Inc.

West Suburban Health Partners, Inc.

Yuma Rehabilitation Center, Inc.

*Non-Guarantor Subsidiary

                                       9
<PAGE>

                                                                     SCHEDULE IV

Abel Center for Rehabilitation Therapies, Inc.

Abel Healthcare Network, Inc.

Affiliated Physical Therapists, Ltd.

Allegany Hearing and Speech, Inc.

American Transitional Hospitals, Inc.

Athens Sports Medicine Clinic, Inc.

Ather Sports Injury Clinic, Inc.

Atlantic Health Group, Inc.

Atlantic Rehabilitation Services, Inc.

Avalon Rehabilitation & Healthcare, L.L.C.

Boca Rehab Agency, Inc.

Buendel Physical Therapy, Inc.

Canadian Back Institute Limited**

CBI Brampton Limited Partnership*

CBI Calgary Limited Partnership**

CBI Fraser Valley Limited Partnership*

CBI Holdings Ltd.*

CBI Physiotherapists Corporation*

CBI Professional Services Inc.*

CBI South Calgary Limited Partnership**

CBI Vancouver Limited Partnership*

CBI Victoria Limited Partnership**

CBI Windsor Limited Partnership*

C.E.R. - West, Inc.

C.O.A.S.T. Institute Physical Therapy, Inc.

CCISUB, Inc.

CMC Center Corporation
<PAGE>

Cenla Physical Therapy & Rehabilitation Agency, Inc.

Center for Evaluation & Rehabilitation, Inc.

Center for Physical Therapy & Sports Rehabilitation, Inc.

CenterTherapy, Inc.

Champion Physical Therapy, Inc.

Connecticut NovaCare Ventures, Inc.

Coplin Physical Therapy Associates, Inc.

Crowley Physical Therapy Clinic, Inc.

Douglas Avery & Associates, Ltd.

Douglas C. Claussen, R.P.T., Physical Therapy, Inc.

Dynamic Rehabilitation Inc.*

Elk County Physical Therapy, Inc.

Fine, Bryant & Wah, Inc.

Francis Naselli, Jr. & Stewart Rich Physical Therapists, Inc.

Gallery Physical Therapy Center, Inc.

Georgia NovaCare Ventures, Inc.

Georgia Physical Therapy of West Georgia, Inc.

Georgia Physical Therapy, Inc.

GP Therapy, L.L.C.

Greater Sacramento Physical Therapy Associates, Inc.

Grove City Physical Therapy and Sports Medicine, Inc.

Gulf Breeze Physical Therapy, Inc.

Gulf Coast Hand Specialists, Inc.

Hand Therapy Associates, Inc.

Hand Therapy and Rehabilitation Associates, Inc.

Hangtown Physical Therapy, Inc.

Hawley Physical Therapy, Inc.

Human Performance and Fitness, Inc.

Indianapolis Physical Therapy and Sports Medicine, Inc.

                                       2
<PAGE>

Intensiva Healthcare Corporation

Intensiva Hospital of Greater St. Louis, Inc.

Joyner Sports Science Institute, Inc.

Joyner Sportmedicine Institute, Inc.

Kentucky Orthopedic Rehabilitation, LLC*

Kentucky Rehabilitation Services, Inc.

Kesinger Physical Therapy, Inc.

Lynn M. Carlson, Inc.

Mark Butler Physical Therapy Center, Inc.

Medical Information Management Systems, LLC*

Metro Rehabilitation Services, Inc.

Michigan Therapy Centre, Inc.

MidAtlantic Health Group, Inc.

Millenium Rehab Services, L.L.C.*

Monmouth Rehabilitation, Inc.

New England Health Group, Inc.

New Mexico Physical Therapists, Inc.

Northside Physical Therapy, Inc.

NovaCare Health Group, L.L.C.

NovaCare Occupational Health Services, Inc.

NovaCare Outpatient Rehabilitation, Inc.

NovaCare Outpatient Rehabilitation East, Inc.

NovaCare Outpatient Rehabilitation West, Inc.

NovaCare Rehabilitation, Inc.

NW Rehabilitation Associates, L.P.

1263568 Ontario Limited (London Group)*

Ortho Rehab Associates, Inc.

Orthopedic and Sports Physical Therapy of Cupertino, Inc.

P.T. Services Company

                                       3
<PAGE>

P.T. Services, Inc.

P.T. Services Rehabilitation, Inc.

Peter Trailov R.P.T. Physical Therapy Clinic, Orthopaedic Rehabilitation &
Sports Medicine, Ltd.

Peters, Starkey & Todrank Physical Therapy Corporation

Physical Focus, Inc.

Physical Rehabilitation Partners, Inc.

Physical Therapy Enterprises, Inc.

Physical Therapy Institute, Inc.

Physical Therapy Services of the Jersey Cape, Inc.

Physio - Associates, Inc.

Pro Active Therapy, Inc.

Pro Active Therapy of Ahoskie, Inc.

Pro Active Therapy of Gaffney, Inc.

Pro Active Therapy of Greenville, Inc.

Pro Active Therapy of North Carolina, Inc.

Pro Active Therapy of Rocky Mount, Inc.

Pro Active Therapy Services of South Carolina, Inc.

Pro Active Therapy Services of Virginia, Inc.

Professional Therapeutic Services, Inc.

Quad City Management, Inc.

RCI (Colorado), Inc.

RCI (Exertec), Inc.

RCI (Michigan), Inc.

RCI (S.P.O.R.T.), Inc.

RCI (WRS), Inc.

RCI Nevada, Inc.

Rebound Oklahoma, Inc.

Redwood Pacific Therapies, Inc.

                                       4
<PAGE>

Rehab Advantage, Inc.

Rehab Advantage Therapy Services, LLC*

Rehab Health, Inc.**

Rehab Managed Care of Arizona, Inc.

Rehab Provider Network - California, Inc.

Rehab Provider Network - Delaware, Inc.

Rehab Provider Network - Georgia, Inc.

Rehab Provider Network - Indiana, Inc.

Rehab Provider Network - Maryland, Inc.

Rehab Provider Network - Michigan, Inc.

Rehab Provider Network - New Jersey, Inc.

Rehab Provider Network - Ohio, Inc.

Rehab Provider Network - Oklahoma, Inc.

Rehab Provider Network - Pennsylvania, Inc.

Rehab Provider Network - Virginia, Inc.

Rehab Provider Network - Washington, D.C., Inc.

Rehab Provider Network of Colorado, Inc.

Rehab Provider Network of Florida, Inc.

Rehab Provider Network of Nevada, Inc.

Rehab Provider Network of New Mexico, Inc.

Rehab Provider Network of North Carolina, Inc.

Rehab Provider Network of Texas, Inc.

Rehab Provider Network of Wisconsin, Inc.

Rehab World, Inc.

Rehab/Work Hardening Management Associates, Ltd.

RehabClinics, Inc.

RehabClinics (COAST), Inc.

RehabClinics (GALAXY), Inc.

RehabClinics (New Jersey), Inc.

                                       5
<PAGE>

RehabClinics (PTA), Inc.

RehabClinics (SPT), Inc.

RehabClinics Abilene, Inc.

RehabClinics Dallas, Inc.

RehabClinics Pennsylvania, Inc.

Rehabilitation Network, Inc.

Robert M. Bacci, R.P.T. Physical Therapy, Inc.

S.T.A.R. Rehab, Inc.*

S.T.A.R.T., Inc.

Select Air Corporation

Select Employment Services, Inc.

Select Hospital Investors, Inc.

Select - Houston Partners, L.P.*

Select Management Services, LLC*

SelectMark, Inc.

Select Medical of Kentucky, Inc.

Select Medical of Maryland, Inc.

Select Medical of New Jersey, Inc.

Select Medical of New York, Inc.

Select Medical of Ohio, Inc.

Select Medical of Pennsylvania, Inc.

Select Software Ventures, L.L.C.

Select Specialty Hospital - Akron, Inc.

Select Specialty Hospital - Akron II, Inc.

Select Specialty Hospital - Ann Arbor, Inc.

Select Specialty Hospital - Battle Creek, Inc.

Select Specialty Hospital - Beech Grove, Inc.

Select Specialty Hospital - Biloxi, Inc.*

Select Specialty Hospital - Camp Hill, Inc.

                                       6
<PAGE>

Select Specialty Hospital - Camp Hill, L.P.

Select Specialty Hospital - Central Detroit, Inc.

Select Specialty Hospital - Charleston, Inc.

Select Specialty Hospital - Cincinnati, Inc.

Select Specialty Hospital - Columbus, Inc.

Select Specialty Hospital - Columbus/University, Inc.

Select Specialty Hospital - Dallas, Inc.

Select Specialty Hospital - Denver, Inc.

Select Specialty Hospital - Durham, Inc.

Select Specialty Hospital - Erie, Inc.

Select Specialty Hospital - Evansville, Inc.

Select Specialty Hospital - Flint, Inc.

Select Specialty Hospital - Fort Smith, Inc.

Select Specialty Hospital - Fort Wayne, Inc.

Select Specialty Hospital - Greensburg, Inc.

Select Specialty Hospital - Houston, Inc.

Select Specialty Hospital - Indianapolis, Inc.

Select Specialty Hospital - Jackson, Inc.

Select Specialty Hospital - Johnstown, Inc.

Select Specialty Hospital - Kansas City, Inc.

Select Specialty Hospital - Knoxville, Inc.

Select Specialty Hospital - Little Rock, Inc.

Select Specialty Hospital - Louisville, Inc.

Select Specialty Hospital - Macomb County, Inc.

Select Specialty Hospital - Memphis, Inc.

Select Specialty Hospital - Mesa, Inc.

Select Specialty Hospital - Miami, Inc.

Select Specialty Hospital - Milwaukee, Inc.

Select Specialty Hospital - Morgantown, Inc.

                                       7
<PAGE>

Select Specialty Hospital - Nashville, Inc.

Select Specialty Hospital - New Orleans, Inc.

Select Specialty Hospital - North Knoxville, Inc.

Select Specialty Hospital - Northwest Detroit, Inc.

Select Specialty Hospital - Northwest Indiana, Inc.

Select Specialty Hospital - Oklahoma City, Inc.

Select Specialty Hospital - Oklahoma City/East Campus, Inc.

Select Specialty Hospital - Omaha, Inc.

Select Specialty Hospital - Philadelphia/AEMC, Inc.

Select Specialty Hospital - Phoenix, Inc.

Select Specialty Hospital - Pittsburgh, Inc.

Select Specialty Hospital - Pontiac, Inc.

Select Specialty Hospital - Reno, Inc.

Select Specialty Hospital - San Antonio, Inc.

Select Specialty Hospital - Sioux Falls, Inc.

Select Specialty Hospital - Topeka, Inc.

Select Specialty Hospital - TriCities, Inc.

Select Specialty Hospital - Tulsa, Inc.

Select Specialty Hospital - West Columbus, Inc.

Select Specialty Hospital - Western Michigan, Inc.

Select Specialty Hospital - Wichita, Inc.

Select Specialty Hospital - Wilmington, Inc.

Select Specialty Hospital - Wyandotte, Inc.

Select Specialty Hospital - Youngstown, Inc.

Select Specialty Hospitals, Inc.

Select Synergos, Inc.

Select Unit Management, Inc.

SLMC Finance Corporation

SMC of Florida, Inc.

                                       8
<PAGE>

South Jersey Physical Therapy Associates, Inc.

South Jersey Rehabilitation and Sports Medicine Center, Inc.

Southpointe Fitness Center, Inc.

Southwest Emergency Associates, Inc.

Southwest Medical Supply Company, Inc.

Southwest Physical Therapy, Inc.

Southwest Therapists, Inc.

Sporthopedics Sports and Physical Therapy Centers, Inc.

Sports & Orthopedic Rehabilitation Services, Inc.

Sports Therapy and Arthritis Rehabilitation, Inc.

Star Physical Therapy, Inc.

Stephenson-Holtz, Inc.

The Center for Physical Therapy and Rehabilitation, Inc.

The Orthopedic Sports and Industrial Rehabilitation Network, Inc.

TJ Corporation I, L.L.C.*

TJ Partnership I

Treister, Inc.

Union Square Center for Rehabilitation & Sports Medicine, Inc.

Valley Group Physical Therapists, Inc.

Vanguard Rehabilitation, Inc.

Wayzata Physical Therapy Center, Inc.

West Penn Rehabilitation Services, Inc.

West Side Physical Therapy, Inc.

West Suburban Health Partners, Inc.

Yuma Rehabilitation Center, Inc.

  All of the above-listed entities have pledged their capital stock or other
  ownership interest pursuant to the Company's Amended and Restated Credit
  Agreement, unless denoted with an *. The entities denoted with an * are not
  wholly-owned by the Company. Entities denoted with ** have pledged their
  capital stock or ownership interest pursuant

                                       9
<PAGE>

  to the Company's Amended and Restated Credit Agreement to the extent permitted
  by Canadian law

                                      10
<PAGE>

                                                                      SCHEDULE V

Canadian Back Institute Limited

CBI Brampton Limited Partnership

CBI Calgary Limited Partnership

CBI Fraser Valley Limited Partnership

CBI Holdings Ltd.

CBI Physiotherapists Corporation

CBI Professional Services Inc.

CBI South Calgary Limited Partnership

CBI Vancouver Limited Partnership

CBI Victoria Limited Partnership

CBI Windsor Limited Partnership

Dynamic Rehabilitation Inc.

Kentucky Orthopedic Rehabilitation, LLC

Medical Information Management Systems, LLC

Millenium Rehab Services, L.L.C.

1263568 Ontario Limited (London Group)

Rehab Advantage Therapy Services, LLC

Rehab Health, Inc.

S.T.A.R. Rehab, Inc.

Select - Houston Partners, L.P.

Select Management Services, LLC

Select Specialty Hospital - Biloxi, Inc.

TJ Corporation I, L.L.C.
<PAGE>

                                                                         ANNEX B

                         [Form of Opinion of Dechert]

                  Dechert shall have furnished to the Initial Purchasers their
written opinion, as counsel to the Company and the Guarantors, addressed to the
Initial Purchasers and dated the Closing Date, in form and substance reasonably
satisfactory to the Initial Purchasers, substantially to the effect set forth
below:

                  (i)   the Company has been duly incorporated and is validly
         existing as a corporation in good standing under the laws of the State
         of Delaware.

                  (ii)  the Company has corporate power and corporate authority
         to own, lease and operate its properties and to conduct its business as
         described in the Offering Memorandum and to enter into and perform its
         obligations under the Transaction Documents.

                  (iii) the Company is duly qualified as a foreign corporation
         to transact business and is in good standing in the jurisdictions
         listed on Exhibit A hereto.

                  (iv)  the authorized, issued and outstanding capital stock of
         the Company is as set forth in the Offering Memorandum (except for
         subsequent issuances pursuant to reservations, agreements or employee
         benefit plans referred to in the Offering Memorandum or pursuant to the
         exercise of convertible securities or options referred to in the
         Offering Memorandum or repurchases of an immaterial number of shares of
         the Company's capital stock held by former employees); the shares of
         issued and outstanding capital stock of the Company have been duly
         authorized and validly issued and are fully paid and non-assessable;
         none of the outstanding shares of capital stock of the Company was
         issued in violation of the preemptive or other similar rights (that
         were not subsequently waived) of any securityholder of the Company
         existing by virtue of the DGCL, the restated certificate of
         incorporation of the Company, the restated by-laws of the Company or
         any contract to which the Company is a party identified in a
         certificate of the General Counsel of the Company attached hereto as
         Exhibit B (which purports to identify all material contracts or group
         of similar contracts that are material in the aggregate to the Company
         and its subsidiaries taken as a whole and to which the Company or any
         of its subsidiaries is a party); and the shares of issued and
         outstanding capital stock of the Company have been issued in
         compliance, in all material respects, with all federal securities laws.

                  (v)   based solely on a certificate from the Secretary of
         State or similar government official of the respective jurisdiction of
         incorporation or organization

                                      B-1
<PAGE>

         of each subsidiary of the Company that is either an operating entity or
         holding company listed on Schedule 1 hereto (each a "Subsidiary" and
         collectively, the "Subsidiaries"), each Subsidiary (a) has been duly
         incorporated or organized and is validly existing as a corporation or
         other entity in good standing under the laws of the jurisdiction of its
         incorporation or organization, has corporate or other power and
         authority to own, lease and operate its properties and to conduct its
         business as described in the Offering Memorandum and (b) is duly
         qualified as a foreign corporation to transact business and is in good
         standing in each jurisdiction set forth on Schedule 1 hereto (which
         purports to identify all jurisdictions in which such qualification is
         required, whether by reason of the ownership or leasing of property or
         the conduct of business, except where the failure so to qualify or be
         in good standing would not result in a Material Adverse Effect). Except
         as otherwise disclosed on Schedule 2 hereto, (x)(i) all of the issued
         and outstanding capital stock of each such Subsidiary that is a
         corporation has been duly authorized and validly issued, is fully paid
         and non-assessable and (ii) to our knowledge, is owned by the Company,
         directly or through subsidiaries and (y)(i) all of the ownership
         interests of each such Subsidiary that is not a corporation have been
         duly authorized and (ii) to our knowledge, are owned, by the Company,
         directly or through subsidiaries.

                  (vi)   except as disclosed in the Offering Memorandum, there
         are no encumbrances or restrictions pursuant to any agreement
         identified on a schedule provided by the General Counsel of the Company
         attached hereto as Exhibit C (referencing agreements that impose
         encumbrances or restrictions), on the ability of any Subsidiary (a) to
         pay any dividends or make any distributions on such Subsidiary's
         capital stock, (b) to make any loans or advances to, or investments in,
         the Company or any such Subsidiary, or (c) to transfer any of its
         property or assets to the Company or any such Subsidiary.

                  (vii)  to our knowledge, (a) except as disclosed in the
         Offering Memorandum, there are no material legal or governmental
         proceedings or investigations pending or threatened against the Company
         or any of its subsidiaries, or to which the Company or any of its
         subsidiaries, or any of its properties is subject, and (b) there are no
         legal or governmental proceedings or investigations pending, or
         threatened in writing, that would materially affect the issuance, sale
         or delivery of the Securities to the Initial Purchasers under the
         Purchase Agreement or the performance by the Company of its obligations
         thereunder or question the validity or enforceability of any of the
         Transaction Documents.

                  (viii) the information in the Offering Memorandum under
         "Description of Notes", "Management-Employment Agreements",
         "Management - Select Medical

                                      B-2
<PAGE>

         Corporation 1997 Amended and Restated Stock Option Plan", "Related
         Party Transactions", and "Certain Federal Income Tax Consequences", to
         the extent that it constitutes matters of law, summaries of legal
         matters, summaries of the Company's restated certificate of
         incorporation and bylaws or legal conclusions and, to our knowledge,
         the information with respect to contracts and other documents to which
         the Company is a party (or provisions thereof) referred to in the
         Offering Memorandum, has been reviewed by us and is correct in all
         material respects.

                  (ix)   the Indenture conforms in all material respects with
         the requirements of the Trust Indenture Act and the rules and
         regulations of the Commission applicable to an indenture which is
         qualified thereunder;

                  (x)    each of the Company and each of the Guarantors has full
         right, power and authority to execute and deliver each of the
         Transaction Documents and to perform its obligations thereunder; and
         all corporate action required to be taken for the due and proper
         authorization, execution and delivery of each of the Transaction
         Documents and the consummation of the transactions contemplated thereby
         have been duly and validly taken;

                  (xi)   each of the Purchase Agreement and the Registration
         Rights Agreement has been duly authorized, executed and delivered by
         the Company and each of the Guarantors and, assuming the Registration
         Rights Agreement is the valid and legally binding obligation of the
         Initial Purchasers, the Registration Rights Agreement constitutes a
         valid and legally binding agreement of the Company and each of the
         Guarantors enforceable against the Company and each of the Guarantors
         in accordance with its terms, except to the extent that such
         enforceability may be limited by applicable bankruptcy, insolvency,
         fraudulent conveyance, reorganization, moratorium and other similar
         laws affecting creditors' rights generally and by general equitable
         principles (whether considered in a proceeding in equity or at law) and
         an implied covenant of good faith and fair dealing and except to the
         extent that the indemnification provisions thereof may be
         unenforceable;

                  (xii)  the Indenture has been duly authorized, executed and
         delivered by the Company and each of the Guarantors and, assuming that
         the Indenture is the valid and legally binding obligation of the
         Trustee, constitutes a valid and legally binding agreement of the
         Company and each of the Guarantors enforceable against the Company and
         each of the Guarantors in accordance with its terms, except to the
         extent that such enforceability may be limited by applicable
         bankruptcy, insolvency, fraudulent conveyance, reorganization,
         moratorium and other similar laws affecting creditors' rights
         generally, by general equitable principles (whether considered in a

                                      B-3
<PAGE>

         proceeding in equity or at law) and an implied covenant of good faith
         and fair dealing;

                  (xiii) the Guarantees have been duly authorized by each of the
         Guarantors and, when the Securities have been duly executed,
         authenticated, issued and delivered as provided in the Indenture and
         paid for as provided herein (assuming due authorization, execution and
         delivery of the Indenture by the Trustee and due authentication of the
         Securities by the Trustee), will constitute valid and legally binding
         obligations of the Guarantors enforceable against the Guarantors in
         accordance with their terms;

                  (xiv)  the Securities have been duly authorized and issued by
         the Company and each of the Guarantors and, when duly executed,
         authenticated, issued and delivered as provided in the Indenture and
         paid for as provided herein (assuming the Indenture is the valid and
         legally binding obligation of the Trustee and the due authentication of
         the Securities by the Trustee) and will be duly and validly issued and
         outstanding and will constitute valid and legally binding obligations
         of the Company, as issuer, and each of the Guarantors, as guarantors,
         entitled to the benefits of the Indenture and enforceable against the
         Company and each of the Guarantors in accordance with their terms,
         except to the extent that such enforceability may be limited by
         applicable bankruptcy, insolvency, fraudulent conveyance,
         reorganization, moratorium and other similar laws affecting creditors'
         rights generally, by general equitable principles (whether considered
         in a proceeding in equity or at law) and an implied covenant of good
         faith and fair dealing;

                  (xv)   the Exchange Securities have been duly authorized by
         the Company and each of the Guarantors and, when duly executed,
         authenticated, issued and delivered as provided in the Indenture and
         the Registration Rights Agreement (assuming the Indenture is the valid
         and legally binding obligation of the Trustee and the authentication of
         the Exchange Securities by the Trustee) will constitute a valid and
         legally binding obligation of the Company and each of the Guarantors
         enforceable against the Company and each of the Guarantors in
         accordance with its terms, except to the extent that such
         enforceability may be limited by applicable bankruptcy, insolvency,
         fraudulent conveyance, reorganization, moratorium and other similar
         laws affecting creditors' rights generally, by general equitable
         principles (whether considered in a proceeding in equity or at law) and
         an implied covenant of good faith and fair dealing;

                  (xvi)  the Credit Agreement Amendment has been duly
         authorized, executed and delivered by the Company and (assuming the
         Credit Agreement Amendment is the valid and legally binding obligation
         of the other parties thereto)

                                      B-4
<PAGE>

         constitutes a valid and legally binding obligation of the Company
         enforceable against the Company accordance with its terms, except to
         the extent that such enforceability may be limited by applicable
         bankruptcy, insolvency, fraudulent conveyance, reorganization,
         moratorium and other similar laws affecting creditors' rights
         generally, by general equitable principles (whether considered in a
         proceeding in equity or at law) and an implied covenant of good faith
         and fair dealing;

                  (xvii)  each Transaction Document conforms in all material
         respects to the description thereof contained in the Offering
         Memorandum and the Securities conform in all material respects to the
         description thereof contained in the Offering Memorandum;

                  (xviii) to our knowledge, the Company is not in violation of
         its restated certificate of incorporation or amended and restated by-
         laws, and to our knowledge, none of the U.S. Subsidiaries is in
         violation of its certificate of incorporation, by-laws or analogous
         organizational documents. To our knowledge, no default by the Company
         or any of its subsidiaries exists in the due performance or observance
         of any material obligation, agreement, covenant or condition contained
         in any contract, indenture, mortgage, loan agreement, note, lease or
         other agreement or instrument that is described or referred to in the
         Offering Memorandum.

                  (xix)   no filing with, or authorization, approval, consent,
         license, order, registration, qualification of or with any United
         States, New York, Pennsylvania or with respect to the DGCL, Delaware
         court or governmental authority or agency (other than as may be
         required under the securities or blue sky laws of the various states,
         as to which we express no opinion) is necessary or required in
         connection with the due authorization, execution and delivery and
         performance by the Company and each of the Guarantors of the
         Transaction Documents to which each is a party, the compliance by each
         Guarantor with the terms of the Securities, the issuance,
         authentication, sale and delivery of the Securities and compliance by
         the Company and the Guarantors with the terms thereof and the
         consummation of the transactions contemplated by the Transaction
         Documents, except for such consents, approvals, authorizations,
         filings, registrations, orders or qualifications (i) which shall have
         been obtained or made prior to the Closing Date and (ii) as may be
         required to be obtained or made under the Securities Act and applicable
         state securities laws as provided in the Registration Rights Agreement.

                  (xx)    the execution, delivery and performance by the Company
         and each of the Guarantors of each of the Transaction Documents, the
         issuance, authentication, sale and delivery of the Securities and
         compliance by the Company

                                      B-5
<PAGE>

         and each of the Guarantors with the terms thereof and the consummation
         of the transactions contemplated by the Transaction Documents do not
         and will not, whether with or without the giving of notice or lapse of
         time or both, conflict with or constitute a breach of, or default under
         or result in the creation or imposition of any lien, charge or
         encumbrance upon any property or assets of the Company or any of its
         subsidiaries pursuant to any contract, indenture, mortgage, deed of
         trust, loan or credit agreement, note, lease or any other agreement or
         instrument of the Company or any of its subsidiaries in the Certificate
         of the General Counsel of the Company attached hereto as Exhibit B, to
         which the Company or any of its subsidiaries is a party or by which it
         or any of them may be bound, or to which any of the property or assets
         of the Company or any of its subsidiaries is subject (except for such
         conflicts, breaches or defaults or liens, charges or encumbrances that
         could not reasonably be expected to have a Material Adverse Effect),
         nor will such action result in any violation of the provisions of the
         Certificate of Incorporation or by-laws or analogous organizational
         documents of the Company or any U.S. Subsidiary, or any applicable law,
         statute, rule, regulation, judgment, order, writ or decree, known to
         us, of any government, government instrumentality or court, domestic or
         foreign, having jurisdiction over the Company or any of its
         subsidiaries or any of their respective properties, assets or
         operations;

                  (xxi)   neither the Company nor any of its subsidiaries is
         upon the issuance and sale of the Securities as contemplated in the
         Purchase Agreement and the application of the net proceeds therefrom as
         described in the Offering Memorandum an "investment company" or a
         company "controlled by" an investment company as such terms are defined
         in the Investment Company Act;

                  (xxii)  neither the consummation of the transactions
         contemplated by this Agreement nor the sale, issuance, execution or
         delivery of the Securities will violate Regulation T, U or X of the
         Federal Reserve Board; and

                  (xxiii) assuming the accuracy of the representations and
         warranties and the performance of the agreements of the Company and
         each of the Guarantors and of the Initial Purchasers contained in the
         Purchase Agreement, compliance by the Initial Purchasers with the
         offering and transfer procedures and restrictions described in the
         Transaction Documents, and the accuracy of the representations and
         warranties made in accordance with the Transaction Documents by
         purchasers to whom the Initial Purchasers initially resell the
         Securities, no registration of the Securities under the Securities Act
         or qualification of the Indenture under the Trust Indenture Act is
         required in connection with the issuance and sale of the Securities by
         the Company and the offer, resale and delivery of the Securities by the
         Initial Purchasers in the manner contemplated by the Purchase Agreement
         and

                                      B-6
<PAGE>

         the Offering (it being understood that no opinion shall be expressed as
         to any resale subsequent to the initial resale of the Securities).

                  As for the purposes of paragraphs (v) and (x), with respect to
Subsidiaries or Guarantors not incorporated or organized in Pennsylvania, New
York, New Jersey, Massachusetts or Delaware, we will assume with your permission
that the corporate, limited liability company, partnership or limited
partnership law of the jurisdiction of corporation or organization for such
entities is identical to that of Delaware.

                  As for the purposes of paragraphs (xi), (xii), (xiii), (xiv)
and (xv), with respect to the due authorization of any of the Transaction
Documents or Exchange Securities by any Subsidiary or Guarantor not incorporated
or organized in Pennsylvania, New York, New Jersey, Massachusetts or Delaware,
we will assume with your permission that the corporate, limited liability
company, partnership or limited partnership law of the jurisdiction of
incorporation or organization for such entities is identical to that of
Delaware.

       [The following statement shall be set forth in a separate letter]

         We have participated in conferences with officers and other
representatives of the Company and representatives of the Initial Purchasers and
their counsel during which the contents of the Preliminary Offering Memorandum
and the Offering Memorandum and related matters were discussed and reviewed and,
although we do not pass upon and do not assume responsibility for the accuracy,
completeness or fairness of the statements contained in the Offering Memorandum
(except as expressly provided in our separate opinion to you dated today), on
the basis of the information that was developed in the course of the services
referred to above, considered in the light of our understanding of the
applicable law, that, nothing has come to our attention that would lead us to
believe that the Offering Memorandum or any amendment or supplement thereto,
(except for financial statements, footnotes and schedules, other financial data
and statistical information derived from the financial statements included
therein or omitted therefrom, as to which we need make no statement), as of the
date thereof and as of the Closing Date, included or includes an untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.

                                      B-7
<PAGE>

                                                                         ANNEX C

                    [Form of Opinion of Michael E. Tarvin]

     (i) To my knowledge, all of the issued and outstanding capital stock of
each of the subsidiaries of the Company set forth below is owned by the Company.

     Allegany Hearing and Speech, Inc.
     American Transitional Hospitals, Inc.
     Athens Sports Medicine Clinic, Inc.
     CCISUB, Inc.
     C.O.A.S.T. Institute Physical Therapy, Inc.
     Center for Evaluation and Rehabilitation, Inc.
     Center for Physical Therapy & Sports Rehabilitation, Inc.
     Center Therapy, Inc.
     CMC Center Corporation
     Coplin Physical Therapy Associates, Inc.
     Fine, Bryant & Wah, Inc.
     Georgia Novacare Ventures, Inc.
     Hand Therapy and Rehabilitation Associates, Inc.
     Hangtown Physical Therapy, Inc.
     Human Performance and Fitness, Inc.
     Indianapolis Physical Therapy and Sports Medicine, Inc.
     Joyner Sportsmedicine Institute, Inc.
     Kesinger Physical Therapy, Inc.
     New Mexico Physical Therapists, Inc.
     NovaCare Occupational Health Services, Inc.
     Ortho Rehab Associates, Inc.
     Orthopedic and Sports Physical Therapy of Cupertino, Inc.
     Pro Active Therapy, Inc.
     Professional Therapeutic Services, Inc.
     RCI (WRS), Inc.
     Rebound Oklahoma, Inc.
     Redcal Information Systems, LLC
     Redwood Pacific Therapies, Inc.
     Rehab Advantage Therapy Services, LLC
     RehabClinics, Inc.
     RehabClinics (GALAXY), Inc.
     RehabClinics (SPT), Inc.
     Robert M. Bacci, R. P. T. Physical Therapy Associates

                                      C-1
<PAGE>

     SelectMark, Inc.
     Select Specialty Hospital - Columbus, Inc.
     Select Specialty Hospital - Camp Hill, L.P.
     South Jersey Physical Therapy Associates, Inc.
     Southwest Emergency Associates, Inc.
     Southwest Medical Supply Company, Inc.
     Southwest Physical Therapy, Inc.
     Southwest Therapists, Inc.
     Valley Group Physical Therapists, Inc.
     Vanguard Rehabilitation, Inc.
     Wayzata Physical Therapy Centers, Inc.
     West Penn Rehabilitation Services, Inc.
     West Side Physical Therapy, Inc.
     West Suburban Health Partners, Inc.

                                      B-2
<PAGE>

                                                                         ANNEX D

                        [Form of Opinion of Reed Smith]

          (i)     The information in the Offering Memorandum under "Risk
Factors --If our hospitals fail to maintain their exemption from the Medicare
prospective payment system or fail to maintain their status as a "hospital
within a hospital," our profitability may decline", "Risk Factors --We conduct
business in a heavily regulated industry, and changes in regulations or
violations of regulations may result in increased costs or sanctions that reduce
our net operating revenues and profitability", "Risk Factors --If there are
changes in the rates or methods of government reimbursements for our services,
our services, our net operating revenues and income could decline", "Our
Business--Government Regulations", to the extent that it describes any Health
Care Laws, has been reviewed by me and fairly presents the information set forth
therein in all material respects.

          (ii)    Each of the 56 specialty acute care hospitals described in the
Offering Memorandum as owned or operated by the Company or its subsidiaries is
duly licensed as a hospital by the state in which it is located and is certified
to participate in the federal Medicare program. This opinion is based solely
upon our examination of originals or copies of such licenses and certifications
presented to us by the Company, and a Certificate of the General Counsel of the
Company attached hereto as Exhibit A to the effect that such licenses and
certifications are currently in effect.

          (iii)   We have reviewed the Certificate of the General Counsel of the
Company attached hereto as Exhibit A concerning the outpatient therapy clinics
owned, leased or operated by the Company or its subsidiaries. In the course of
our representation of the Company as special regulatory counsel, nothing has
come to our attention that would lead us to believe that the Certificate is not
accurate.

          (iv)    Except as disclosed in the Offering Memorandum, in the course
of our representation of the Company as special regulatory counsel, we have not
become aware of any pending or threatened action, suit, proceeding, inquiry or
investigation, relating to any Health Care Law, to which the Company or any of
its subsidiaries is a party, brought by any court or governmental agency or
body, which could reasonably be expected to result in a Material Adverse Effect.

          (v)     No filing with, or authorization, approval, consent, license,
order, registration, qualification (collectively, "Approvals") of or with any
(A) United States governmental authority or agency, is necessary or required
under any federal Health Care Law, or (B) any Pennsylvania governmental
authority or agency is necessary or required under any Pennsylvania Health Care
Law in connection with the due authorization, execution and delivery of the
Purchase Agreement or for the offering, issuance, sale or

                                      D-1
<PAGE>

delivery of the Securities. Without having investigated the laws of states other
than Pennsylvania for purposes of this opinion, based on our experience as
special regulatory counsel representing other issuers owning and operating other
health care businesses, and our ongoing representation of the Company as special
regulatory counsel, we are not aware of any Approvals under any Health Care Laws
required to be obtained or made in connection with the execution delivery and
performance of the Purchase Agreement, that, if not obtained or made, would
result in a Material Adverse Effect.

          In the course of our representation of the Company as special
regulatory counsel, nothing has come to our attention that would lead us to
believe that the information contained in the Offering Memorandum under "Risk
Factors --If our hospitals fail to maintain their exemption from the Medicare
prospective payment system or fail to maintain their status as a "hospital
within a hospital," our profitability may decline", "Risk Factors --We conduct
business in a heavily regulated industry, and changes in regulations or
violations of regulations may result in increased costs or sanctions that reduce
our net operating revenues and profitability", "Risk Factors --If there are
changes in the rates or methods of government reimbursements for our services,
our services, our net operating revenues and income could decline", "Our
Business-- Government Regulations" included or includes an untrue statement of a
material fact or omitted or omits to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.

          For purposes of this opinion, the term "Health Care Laws" shall mean
those statutes, rules and regulations, judicial decisions, decrees or orders
specifically regulating health care providers, as such, of the type owned and
operated by the Company and its subsidiaries as described under the headings
"Risk Factors --If our hospitals fail to maintain their exemption from the
Medicare prospective payment system or fail to maintain their status as a
"hospital within a hospital," our profitability may decline", "Risk Factors -We
conduct business in heavily regulated industry, and changes in regulations or
violations of regulations may result in increased costs or sanctions that reduce
our net operating revenues and profitability", "Risk Factors --If there are
changes in the rates or methods of government reimbursements for our services,
our net operating revenues and income could decline", "Our Business --Government
Regulations" in the Prospectus, including, without limitation, (a) health care
licensure, permit and certificate of need requirements, (b) Title XVIII, XIX and
XXI of the Social Security Act; (c) the Anti-Kickback Amendments (as defined in
the Offering Memorandum) and the regulations promulgated thereunder, (d) the
Stark Laws (as defined in the Offering Memorandum) and the regulations
promulgated thereunder, (e) the False Claims Act, (f) Title II of the Health
Insurance Portability and Accountability Act of 1996, (g) Title IV of the
Balanced Budget Act of 1997, (h) any initiatives under Operation Restore Trust
and (i) state statutes, rules and regulations concerning matters similar to (b)
through (h) above, but specifically

                                      D-2
<PAGE>

excluding statutes, ordinances, administrative decisions, rules and regulations
of counties, towns, municipalities or special political subdivisions.

                                      D-3
<PAGE>

                                                                         ANNEX E

                          [Form of Opinion of Tory's]

          (i)    Each of Canadian Back Institute ("CBI") and Rehab Health Inc.
("Rehab Health") is incorporated and existing under the Business Corporations
Act (Ontario).

          (ii)   Each of CBI Calgary Limited Partnership, CBI Etobicoke Limited
Partnership, CBI Scarborough Limited Partnership, CBI South Calgary Limited
Partnership, CBI Toronto Limited Partnership, CBI Victoria Limited Partnership,
(collectively, the "Limited Partnerships") has been formed and exists as a
limited partnership under the Limited Partnership Act (Ontario).

          (iii)  CBI has the corporate power and capacity to carry on its
business as presently conducted (including, in the case of the Limited
Partnerships, the business of the Limited Partnerships) and to own its
properties and assets.

          (iv)   Rehab Health has the corporate power and capacity to carry on
its business as presently conducted and to own its properties and assets.

                                      E-1<PAGE>

                                                                     EXHIBIT 4.1

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

                               VINTAGE PETROLEUM, INC.

                                         TO

                              THE CHASE MANHATTAN BANK

                                       Trustee

                                      INDENTURE

                              Dated as of May 30, 2001

                   7 7/8% SENIOR SUBORDINATED NOTES DUE 2011

================================================================================
<PAGE>

<TABLE>
<CAPTION>
                               TABLE OF CONTENTS
                                   _________
                                                                             PAGE
                                                                             ----
                                  ARTICLE ONE

            DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
<S>                                                                          <C>
SECTION 101. Definitions...............................................         1
                Act....................................................         2
                Additional Assets......................................         2
                Adjusted Consolidated Net Tangible Assets..............         2
                Affiliate..............................................         3
                Asset Sale.............................................         3
                Authenticating Agent...................................         4
                Average Life...........................................         4
                Bank Credit Facilities.................................         4
                Board of Directors.....................................         5
                Board Resolution.......................................         5
                Business Day...........................................         5
                Capital Lease Obligation...............................         5
                Capital Stock..........................................         5
                Change of Control......................................         5
                Change of Control Offer................................         6
                Change of Control Payment Date.........................         6
                Commission.............................................         6
                Company................................................         6
                Company Request or Company Order.......................         6
                Consolidated Interest Coverage Ratio...................         6
                Consolidated Interest Expense..........................         7
                Consolidated Net Income................................         8
                Consolidated Net Worth.................................         9
                Corporate Trust Office.................................         9
                Corporation............................................         9
                Covenant Defeasance....................................         9
                Covenant Suspension....................................         9
                CUSIP Number...........................................         9
                Default................................................         9
                Defaulted Interest.....................................         9
                Defeasance.............................................         9
                Depositary.............................................         9
                Designated Senior Indebtedness.........................        10
                Dollar-Denominated Production Payments.................        10
                EBITDA.................................................        10
                8-5/8% Indenture.......................................        10
                8-5/8% Notes...........................................        11
                Event of Default.......................................        11
                Excess Proceeds........................................        11
                Exchange Act...........................................        11
                Exchanged Properties...................................        11
                Exchange Rate Contract.................................        11
                Expiration Date........................................        11
                Expiry Date............................................        11
                Fair Market Value......................................        11
</TABLE>

                                      ii
<PAGE>

<TABLE>
                <S>                                                            <C>
                Foreign Subsidiary.....................................        11
                Global Security........................................        12
                Guarantee..............................................        12
                Hedging Agreements.....................................        12
                Holder.................................................        12
                Incur..................................................        12
                Indebtedness...........................................        13
                Indenture..............................................        13
                Interest Payment Date..................................        14
                Interest Rate Protection Agreement.....................        14
                Investment.............................................        14
                Investment Company Act.................................        14
                Investment Grade Rating................................        14
                Issue Date.............................................        14
                Legal Holiday..........................................        14
                Lien...................................................        14
                Liquid Securities......................................        14
                Maturity...............................................        15
                Material Change........................................        15
                Moody's................................................        15
                Net Available Cash.....................................        15
                Net Working Capital....................................        16
                9% Indenture...........................................        16
                9% Notes...............................................        16
                9 3/4% Indenture.......................................        16
                9 3/4% Notes...........................................        16
                Notice of Default......................................        16
                Officers' Certificate..................................        17
                OID....................................................        17
                Oil and Gas Business...................................        17
                Oil and Gas Liens......................................        17
                Oil and Gas Purchase and Sale Contract.................        18
                Opinion of Counsel.....................................        18
                Original Securities....................................        18
                Outstanding............................................        18
                paid in full or payment in full........................        19
                pari passu.............................................        19
                Pari Passu Indebtedness................................        19
                Participants...........................................        19
                pay the Securities.....................................        19
                Paying Agent...........................................        19
                Payment Blockage Notice................................        19
                Payment Blockage Period................................        19
                Permitted Business Investments.........................        19
                Permitted Designee.....................................        20
                Permitted Holders......................................        20
                Permitted Indebtedness.................................        20
                Permitted Investments..................................        22
                Permitted Liens........................................        22
                Permitted Short-Term Investments.......................        23
                Person.................................................        23
</TABLE>
                                      iii
<PAGE>

<TABLE>
                <S>                                                            <C>
                Predecessor Security...................................        23
                Preferred Stock........................................        24
                Prepayment Offer.......................................        24
                Prepayment Offer Notice................................        24
                primary obligor........................................        26
                Production Payments and Reserve Sales..................        26
                Property...............................................        26
                Public Equity Offering.................................        26
                Purchase Amount........................................        26
                Purchase Date..........................................        26
                Purchase Price.........................................        26
                Rating Agencies........................................        26
                Redeemable Stock.......................................        27
                Redemption Date........................................        27
                Redemption Price.......................................        27
                Registrar..............................................        27
                Regular Record Date....................................        27
                Remaining Excess Proceeds..............................        27
                Representative.........................................        27
                Restricted Payment.....................................        27
                Restricted Subsidiary..................................        28
                Sale and Leaseback Transaction.........................        28
                Securities.............................................        28
                Securities Act.........................................        28
                Security Register and Security Registrar...............        28
                Senior Indebtedness....................................        28
                Special Record Date....................................        29
                S&P....................................................        29
                Stated Maturity........................................        29
                Subsidiary.............................................        29
                Surviving Entity.......................................        29
                Suspended Covenants....................................        29
                Transaction Date.......................................        30
                Trust Indenture Act....................................        30
                Trust Officer..........................................        30
                Trustee................................................        30
                Unrestricted Subsidiary................................        30
                U.S. GAAP..............................................        30
                U.S. Government Obligation.............................        30
                Vice President.........................................        31
                Volumetric Production Payments.........................        31
                Voting Redeemable Stock................................        31
                Voting Stock...........................................        31
                Wholly Owned Subsidiary................................        31

SECTION 102.  Compliance Certificates and Opinions.....................        31
SECTION 103.  Form of Documents Delivered to Trustee...................        32
SECTION 104.  Acts of Holders; Record Dates............................        33
SECTION 105.  Notices, Etc., to Trustee and Company....................        35
SECTION 106.  Notice to Holders; Waiver................................        36
SECTION 107.  Conflict with Trust Indenture Act........................        36
</TABLE>

                                      iv
<PAGE>

<TABLE>
<S>                                                                            <C>
SECTION 108.  Effect of Headings, Table of Contents and
                       Cross-Reference Sheet...........................        37
SECTION 109.  Successors and Assigns...................................        37
SECTION 110.  Separability Clause......................................        37
SECTION 111.  Benefits of Indenture....................................        37
SECTION 112.  Governing Law............................................        37
SECTION 113.  Legal Holidays...........................................        38

                                  ARTICLE TWO

                                SECURITY FORMS

SECTION 201.  Form of Securities.......................................        38
SECTION 202.  Form of Face of Securities...............................        39
SECTION 203.  Form of Reverse of Securities............................        39
SECTION 204.  Form of Trustee's Certificate of
                       Authentication..................................        39

                                 ARTICLE THREE

                                THE SECURITIES

SECTION 301.  Amount of Securities; Issuable in Series.................        40
SECTION 302.  Denominations............................................        42
SECTION 303.  Execution, Authentication, Delivery and
                       Dating..........................................        42
SECTION 304.  Temporary Securities.....................................        43
SECTION 305.  Registration, Registration of Transfer
                       and Exchange....................................        43
SECTION 306.  Mutilated, Destroyed, Lost and Stolen
                       Securities......................................        46
SECTION 307.  Payment of Interest; Interest Rights
                       Preserved.......................................        47
SECTION 308.  Persons Deemed Owners....................................        49
SECTION 309.  Cancellation.............................................        49
SECTION 310.  Computation of Interest..................................        49
SECTION 311.  CUSIP Numbers............................................        49

                                 ARTICLE FOUR

                          SATISFACTION AND DISCHARGE

SECTION 401.  Satisfaction and Discharge of Indenture..................        50
SECTION 402.  Application of Trust Money...............................        51
</TABLE>

                                       v
<PAGE>

<TABLE>
                                 ARTICLE FIVE

                                   REMEDIES

<S>                                                                            <C>
SECTION 501.  Events of Default........................................        52
SECTION 502.  Acceleration of Maturity; Rescission and
                       Annulment.......................................        54
SECTION 503.  Collection of Indebtedness and Suits for
                       Enforcement by Trustee..........................        55
SECTION 504.  Trustee May File Proofs of Claim.........................        56
SECTION 505.  Trustee May Enforce Claims Without
                       Possession of Securities........................        56
SECTION 506.  Application of Money Collected...........................        57
SECTION 507.  Limitation on Suits......................................        57
SECTION 508.  Unconditional Right of Holders To Receive
                       Principal, Premium and Interest.................        58
SECTION 509.  Restoration of Rights and Remedies.......................        58
SECTION 510.  Rights and Remedies Cumulative...........................        58
SECTION 511.  Delay or Omission Not Waiver.............................        59
SECTION 512.  Control by Holders.......................................        59
SECTION 513.  Waiver of Past Defaults..................................        60
SECTION 514.  Undertaking for Costs....................................        60
SECTION 515.  Waiver of Usury, Stay or Extension Laws..................        60

                                  ARTICLE SIX

                                  THE TRUSTEE

SECTION 601.  Certain Duties and Responsibilities......................        60
SECTION 602.  Notice of Defaults.......................................        60
SECTION 603.  Certain Rights of Trustee................................        61
SECTION 604.  Trustee's Disclaimer.....................................        62
SECTION 605.  May Hold Securities......................................        62
SECTION 606.  Money Held in Trust......................................        63
SECTION 607.  Compensation and Reimbursement...........................        63
SECTION 608.  Conflicting Interests....................................        64
SECTION 609.  Corporate Trustee Required; Eligibility..................        64
SECTION 610.  Resignation and Removal; Appointment of
                       Successor.......................................        64
SECTION 611.  Acceptance of Appointment by Successor...................        66
SECTION 612.  Merger, Conversion, Consolidation or
                       Succession to Business..........................        67
SECTION 613.  Preferential Collection of Claims
                       Against Company.................................        67
SECTION 614.  Appointment of Authenticating Agent......................        67
</TABLE>

                                      vi
<PAGE>

<TABLE>
                                 ARTICLE SEVEN

                     HOLDERS' LISTS AND REPORTS BY TRUSTEE

<S>                                                                            <C>
SECTION 701.  Company To Furnish Trustee Names and
                       Addresses of Holders............................        70
SECTION 702.  Preservation of Information; Communications
                       to Holders......................................        70
SECTION 703.  Reports by Trustee.......................................        71

                                 ARTICLE EIGHT

             CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE

SECTION 801.  Company May Consolidate, Etc., Only on
                       Certain Terms...................................        71
SECTION 802.  Successor Substituted....................................        73

                                 ARTICLE NINE

                            SUPPLEMENTAL INDENTURES

SECTION 901.  Supplemental Indentures Without Consent
                       of Holders......................................        73
SECTION 902.  Supplemental Indentures with Consent
                       of Holders......................................        74
SECTION 903.  Execution of Supplemental Indentures.....................        76
SECTION 904.  Effect of Supplemental Indentures........................        76
SECTION 905.  Conformity with Trust Indenture Act......................        76
SECTION 906.  Reference in Securities to Supplemental
                       Indentures......................................        76
SECTION 907.  Payment for Consent......................................        76

                                  ARTICLE TEN

                                   COVENANTS

SECTION 1001.  Payment of Principal, Premium and
                        Interest.......................................        78
SECTION 1002.  Registrar and Paying Agent..............................        78
SECTION 1003.  Money for Securities Payments To Be Held
                        in Trust.......................................        78
SECTION 1004.  Statement by Officers as to Default.....................        80
SECTION 1005.  Existence...............................................        80
SECTION 1006.  Maintenance of Properties...............................        81
SECTION 1007.  Payment of Taxes and Other Claims.......................        81
SECTION 1008.  Limitation on Indebtedness..............................        81
SECTION 1009.  Limitation on Liens.....................................        81
</TABLE>

                                      vii
<PAGE>

<TABLE>
<S>                                                                           <C>
SECTION 1010.  Limitation on Restricted Payments.......................        83
SECTION 1011.  Limitation on Issuance and Sale of
                        Capital Stock of Restricted
                        Subsidiaries...................................        85
SECTION 1012.  Limitation on Asset Sales...............................        86
SECTION 1013.  Incurrence of Layered Indebtedness......................        88
SECTION 1014.  Transactions with Affiliates............................        89
SECTION 1015.  Limitation on Restrictions on
                        Distributions from Restricted
                        Subsidiaries...................................        90
SECTION 1016.  Restricted and Unrestricted Subsidiaries................        92
SECTION 1017.  Commission Reports......................................        93
SECTION 1018.  Waiver of Certain Covenants.............................        93
SECTION 1019.  Mandatory Repurchase Upon a Change of
                        Control........................................        94
SECTION 1020.  Further Instruments and Acts............................        95
SECTION 1021.  Covenant Suspension.....................................        96

                                ARTICLE ELEVEN

                           REDEMPTION OF SECURITIES

SECTION 1101.  Election To Redeem; Notice to Trustee...................        96
SECTION 1102.  Selection by Trustee of Securities To
                        Be Redeemed....................................        97
SECTION 1103.  Notice of Redemption....................................        98
SECTION 1104.  Deposit of Redemption Price.............................        98
SECTION 1105.  Securities Payable on Redemption Date...................        99
SECTION 1106.  Securities Redeemed in Part.............................        99
SECTION 1107.  Purchase of Securities..................................        99

                                ARTICLE TWELVE

                      DEFEASANCE AND COVENANT DEFEASANCE

SECTION 1201.  Defeasance and Discharge................................       100
SECTION 1202.  Covenant Defeasance.....................................       101
SECTION 1203.  Conditions to Defeasance or Covenant
                        Defeasance.....................................       101
SECTION 1204.  Deposited Money and U.S. Government
                        Obligations To Be Held in Trust;
                        Miscellaneous Provisions.......................       103
SECTION 1205.  Reinstatement...........................................       104
</TABLE>

                                     viii
<PAGE>

<TABLE>
                               ARTICLE THIRTEEN

                          SUBORDINATION OF SECURITIES

<S>                                                                           <C>
SECTION 1301.  Agreement to Subordinate................................       104
SECTION 1302.  Liquidation, Dissolution and Bankruptcy.................       105
SECTION 1303.  Default on Senior Indebtedness..........................       107
SECTION 1304.  Acceleration of Payment of Securities...................       107
SECTION 1305.  When Distribution Must Be Paid Over.....................       108
SECTION 1306.  Subrogation.............................................       108
SECTION 1307.  Relative Rights.........................................       108
SECTION 1308.  Subordination May Not Be Impaired by
                        Company........................................       109
SECTION 1309.  Rights of Trustee and Paying Agent......................       109
SECTION 1310.  Distribution or Notice to Representative................       109
SECTION 1311.  Trust Moneys Not Subordinated...........................       109
SECTION 1312.  Trustee Entitled To Rely................................       109
SECTION 1313.  Trustee To Effectuate Subordination.....................       110
SECTION 1314.  Trustee Not Fiduciary for Holders of
                        Senior Indebtedness............................       111
SECTION 1315.  Reliance by Holders of Senior
                        Indebtedness on Subordination
                        Provisions.....................................       111
SECTION 1316.  Proofs of Claim.........................................       111
SECTION 1317.  Rights of Trustee as Holder of Senior
                        Indebtedness; Preservation of
                        Trustee's Rights...............................       112
SECTION 1318.  Article Applicable to Paying Agents.....................       112
SECTION 1319.  Defeasance of this Article Thirteen.....................       112

                               ARTICLE FOURTEEN

                            CONCERNING THE HOLDERS

SECTION 1401.  Identification of Company-Owned
                        Securities.....................................       113
SECTION 1402.  Revocation of Consents..................................       113

                                ARTICLE FIFTEEN

                               HOLDERS' MEETINGS

SECTION 1501.  Purposes of Meetings....................................       113
SECTION 1502.  Call of Meetings by Trustee.............................       114
SECTION 1503.  Call of Meetings by Company or Holders..................       115
SECTION 1504.  Qualifications for Voting...............................       115
SECTION 1505.  Regulations.............................................       115
SECTION 1506.  Voting..................................................       116
SECTION 1507.  No Delay of Rights by Meeting...........................       117
</TABLE>

                                      ix
<PAGE>

<TABLE>
                                ARTICLE SIXTEEN

                           MISCELLANEOUS PROVISIONS

<S>                                                                      <C>
SECTION 1601.  Indenture and Securities Solely
                        Corporate Obligations..........................       117
SECTION 1602.  Execution in Counterparts...............................       119

TESTIMONIUM............................................................       119
SIGNATURE..............................................................       119
ACKNOWLEDGMENT.........................................................  120, 121
</TABLE>

APPENDIX A            Provisions Relating to Initial Securities
                             and Exchange Securities

EXHIBIT 1 TO
  APPENDIX A                 Form of Initial Security

EXHIBIT A                    Form of Exchange Security

                                       x
<PAGE>

     INDENTURE, dated as of May 30, 2001, between VINTAGE PETROLEUM, INC., a
Delaware corporation (herein called the "Company"), having its principal office
at 110 West Seventh Street, Tulsa, Oklahoma 74119, and THE CHASE MANHATTAN BANK,
a New York banking corporation, as Trustee (herein called the "Trustee").

     Each party agrees as follows for the benefit of the other party and for the
equal and ratable benefit of the Holders of the Company's 7 7/8% Senior
Subordinated Notes due 2011 to be issued, from time to time, in one or more
series as in this Indenture provided (the "Initial Securities") and, if and when
issued pursuant to a registered or private exchange for the Initial Securities,
the Company's 7 7/8% Senior Subordinated Notes due 2011 (the "Exchange
Securities" and, together with the Initial Securities, the "Securities").

                                  ARTICLE ONE

                       DEFINITIONS AND OTHER PROVISIONS
                            OF GENERAL APPLICATION

SECTION 101.  Definitions.

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

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

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

     (3)  all accounting terms not otherwise defined herein have the meanings
  assigned to them in accordance with U.S. GAAP; provided, however, that for the
  avoidance of any possible doubt, any act or condition in accordance herewith
  and permitted hereunder when taken, created or occurring shall not become a
  violation of any provision of this Indenture as a result of a subsequent
  change in U.S. GAAP;

     (4)  any reference to an "Article" or a "Section" refers to an Article or a
  Section, as the case may be, of this Indenture;

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

     (6)  all dollar amounts are expressed in United States dollars.

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

     "Additional Assets" means (i) any property (other than cash, cash
equivalents or securities) used in any business in which the Company or any
Restricted Subsidiary is engaged as of the date of the Indenture or any business
ancillary thereto, (ii) Investments in any other Person engaged in the Oil and
Gas Business or any business ancillary thereto (including the acquisition from
third parties of Capital Stock of such Person) as a result of which such other
Person becomes a Restricted Subsidiary in compliance with Section 1016), (iii)
the acquisition from third parties of Capital Stock of a Restricted Subsidiary,
(iv) the costs of acquiring, exploiting, developing and exploring in respect of
oil and gas properties or (v) Permitted Business Investments.

     "Adjusted Consolidated Net Tangible Assets" means (without duplication), as
of the date of determination, (a) the sum of (i) discounted future net revenues
from proved oil and gas reserves of the Company and its Restricted Subsidiaries
calculated in accordance with Commission guidelines before any state, federal or
foreign income taxes, as estimated by a nationally recognized firm of
independent petroleum engineers in a reserve report prepared as of the end of
the Company's most recently completed fiscal year for which financial statements
are available, as increased by, as of the date of determination, the estimated
discounted future net revenues from (A) estimated proved oil and gas reserves
acquired since the date of such year-end reserve report, and (B) estimated oil
and gas reserves attributable to upward revisions of estimates of proved oil and
gas reserves since the date of such year-end reserve report due to exploration,
development or exploitation activities, in each case calculated in accordance
with Commission guidelines (utilizing the prices utilized in such year-end
reserve report), and decreased by, as of the date of determination, the
estimated discounted future net revenues from (C) estimated proved oil and gas
reserves produced or disposed of since the date of such year-end reserve report
and (D) estimated oil and gas reserves attributable to downward revisions of
estimates of proved oil and gas reserves since the date of such year-end reserve
report due to changes in geological conditions or other factors which would, in
accordance with standard industry practice, cause such revisions, in each case
calculated in accordance with Commission guidelines (utilizing the prices
utilized in such year-end reserve report); provided that, in the case of each of
the determinations made pursuant to clauses (A) through (D), such increases and
decreases shall be as estimated by the Company's petroleum engineers, unless
there is a Material Change as a result of such acquisitions, dispositions or
revisions, in which event the discounted future net revenues utilized for
purposes of this clause (a)(i) shall be confirmed in writing by a nationally
recognized firm of independent petroleum engineers, (ii) the capitalized costs
that are attributable to oil and gas properties of the Company and its
Restricted Subsidiaries to which no proved
<PAGE>

                                                                               3

oil and gas reserves are attributable, based on the Company's books and records
as of a date no earlier than the date of the Company's latest annual or
quarterly financial statements, (iii) the Net Working Capital on a date no
earlier than the date of the Company's latest annual or quarterly financial
statements and (iv) the greater of (A) the net book value on a date no earlier
than the date of the Company's latest annual or quarterly financial statements
or (B) the appraised value, as estimated by independent appraisers, of other
tangible assets (including, without duplication, Investments in unconsolidated
Restricted Subsidiaries) of the Company and its Restricted Subsidiaries, as of
the date no earlier than the date of the Company's latest audited financial
statements, minus (b) the sum of (i) minority interests, (ii) any gas balancing
liabilities of the Company and its Restricted Subsidiaries reflected in the
Company's latest audited financial statements, (iii) to the extent included in
(a)(i) above, the discounted future net revenues, calculated in accordance with
Commission guidelines (utilizing the prices utilized in the Company's year-end
reserve report), attributable to reserves which are required to be delivered to
third parties to fully satisfy the obligations of the Company and its Restricted
Subsidiaries with respect to Volumetric Production Payments on the schedules
specified with respect thereto and (iv) the discounted future net revenues,
calculated in accordance with Commission guidelines, attributable to reserves
subject to Dollar-Denominated Production Payments which, based on the estimates
of production and price assumptions included in determining the discounted
future net revenues specified in (a)(i) above, would be necessary to fully
satisfy the payment obligations of the Company and its Restricted Subsidiaries
with respect to Dollar-Denominated Production Payments on the schedules
specified with respect thereto.

     "Affiliate" of any specified Person means any other Person (i) which
directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such specified Person or (ii)
which beneficially owns or holds directly or indirectly 10% or more of any class
of the Voting Stock of such specified Person or of any Subsidiary of such
specified Person. For the purposes of this definition, "control", when used with
respect to any specified Person, means the power to direct the management and
policies of such Person directly or indirectly, whether through the ownership of
Voting Stock, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.

     "Asset Sale" means, with respect to any Person, any transfer, conveyance,
sale, lease or other disposition (including, without limitation, dispositions
pursuant to any consolidation or merger) by such Person or any of its Restricted
Subsidiaries in any single transaction or series of transactions of (a) shares
of Capital Stock or other ownership interests of
<PAGE>

                                                                               4

another Person (including Capital Stock of Unrestricted Subsidiaries) or (b) any
other Property of such Person or any of its Restricted Subsidiaries; provided,
however, that the term "Asset Sale" shall not include: (i) the sale or transfer
of Permitted Short-Term Investments, inventory, accounts receivable or other
Property in the ordinary course of business; (ii) the liquidation of Property
received in settlement of debts owing to the Company or any Restricted
Subsidiary as a result of foreclosure, perfection or enforcement of any Lien or
debt, which debts were owing to the Company or any Restricted Subsidiary in the
ordinary course of business of the Company or such Restricted Subsidiary; (iii)
when used with respect to the Company, any asset disposition permitted pursuant
to Section 801 which constitutes a disposition of all or substantially all of
the Company's assets; (iv) the sale or transfer of any Property by the Company
or a Restricted Subsidiary to the Company or a Restricted Subsidiary; or (v) the
sale or transfer of any asset with a Fair Market Value of less than $1 million.

     "Authenticating Agent" means any Person authorized by the Trustee pursuant
to Section 614 to act on behalf of the Trustee to authenticate the Securities.

     "Average Life" means, as of the date of determination, with respect to any
Indebtedness or Preferred Stock, the quotient obtained by dividing (i) the sum
of the products of the numbers of years from the date of determination to the
dates of each successive scheduled principal or liquidation value payment of
such Indebtedness or Preferred Stock, respectively, and the amount of such
principal or liquidation value payment, by (ii) the sum of all such principal or
liquidation value payments, provided, however, that in the case of any
Indebtedness in respect of a revolving credit facility, the payment date shall
be deemed to be the later of (x) the date of expiration of such facility or, if
there is any interim reduction in the availability of credit thereunder, the
date of such reduction to the extent of such reduction and (y) the scheduled
repayment date in respect of such Indebtedness.

     "Bank Credit Facilities" means, with respect to any Person, one or more
debt facilities or commercial paper facilities with banks or other institutional
lenders (including, without limitation, the credit facility pursuant to the
Credit Agreement, dated September 11, 1998, as amended, among the Company and
certain banks) providing for revolving credit loans, term loans, receivables
financing (including through the sale of receivables to such lenders or to
special purpose entities formed to borrow from such lenders against such
receivables) or trade letters of credit. Notwithstanding the foregoing, for
purposes of determining whether Indebtedness under Bank Credit Facilities
constitutes Permitted Indebtedness and only for such purposes, Indebtedness
Incurred in reliance on clause (a) of Section 1008
<PAGE>

                                                                               5

shall not be deemed to constitute Indebtedness Incurred in reliance on the
exception provided by clause (b) or clause (l) of the definition of Permitted
Indebtedness. Notwithstanding anything to the contrary herein, the principal
amount outstanding on the Issue Date under Bank Credit Facilities, together with
accrued and unpaid interest thereon (if any) on the Issue Date, shall be Senior
Indebtedness for purposes of this Indenture.

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

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

     "Business Day" means each day that is not a Legal Holiday.

     "Capital Lease Obligation" of any Person means the obligation to pay rent
or other payment amounts under a lease of (or other arrangement conveying the
right to use) real or personal property of such Person which is required to be
classified and accounted for as a capital lease or a liability on the face of a
balance sheet of such Person in accordance with U.S. GAAP. For purposes of
Section 1009, a Capital Lease Obligation shall be deemed to be secured by a Lien
on the property being leased.

     "Capital Stock" in any Person means any and all shares, 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 subscribe for or to acquire an equity
interest in such Person; provided, however, that "Capital Stock" shall not
include Redeemable Stock.

     "Change of Control" means the occurrence of any of the following events:
(i) any "person" or "group" (within the meaning of Sections 13(d)(3) and
14(d)(2) of the Exchange Act or any successor provision to either of the
foregoing, including any group acting for the purpose of acquiring, holding or
disposing of securities within the meaning of Rule 13d-5(b)(1) under the
Exchange Act), other than any one or more of the Permitted Holders, becomes the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act)
of 50% or more of the total voting power of all classes of the Voting Stock of
the Company and/or warrants or options to acquire such Voting Stock, calculated
on a fully diluted basis; (ii) the sale, lease, conveyance or transfer of all or
substantially all of the assets of the Company (other than to any Wholly Owned
Subsidiary) shall have occurred; (iii) the stockholders of the Company shall
have approved any plan of liquidation or dissolution of the Company;
<PAGE>

                                                                               6

(iv) the Company consolidates with or merges into another Person or any Person
consolidates with or merges into the Company in any such event pursuant to a
transaction in which the outstanding Voting Stock of the Company is reclassified
into or exchanged for cash, securities or other property, other than any such
transaction where (a) the outstanding Voting Stock of the Company is
reclassified into or exchanged for Voting Stock of the surviving corporation
that is Capital Stock and (b) the holders of the Voting Stock of the Company
immediately prior to such transaction own, directly or indirectly, not less than
a majority of the Voting Stock of the surviving corporation immediately after
such transaction in substantially the same proportion as before the transaction;
or (v) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Company's Board of Directors (together
with any new directors whose election or appointment by such board or whose
nomination for election by the stockholders of the Company was approved by a
vote of a majority of the directors then still in office who were either
directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the Company's Board of Directors then in office.

     "Change of Control Offer" has the meaning specified in Section 1019.

     "Change of Control Payment Date" has the meaning specified in Section 1019.

     "Commission" means the Securities and Exchange Commission, 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 instrument until a successor Person shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor Person.

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

     "Consolidated 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"),
<PAGE>

                                                                               7

the ratio of (i) the aggregate amount of EBITDA of the Company and its
consolidated Restricted Subsidiaries for the four full fiscal quarters
immediately prior to the Transaction Date for which financial statements are
available to (ii) the aggregate Consolidated Interest Expense of the Company and
its Restricted 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, Indebtedness of the
Company and its Restricted 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 Restricted
Subsidiaries is a party to any Interest Rate Protection Agreement which would
have the effect of changing the interest rate on any Indebtedness of the Company
or any of its Restricted 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 with
respect to Indebtedness Incurred or retired by the Company or any of its
Restricted Subsidiaries during the fiscal quarter in which the Transaction Date
occurs shall be calculated as if such Indebtedness was so Incurred or retired on
the first day of the fiscal quarter in which the Transaction Date occurs. In
addition, if since the beginning of the four full fiscal quarter period
preceding the Transaction Date, (x) the Company or any of its Restricted
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) the Company or any of its
Restricted Subsidiaries shall have acquired any material assets, EBITDA shall be
calculated on a pro forma basis as if such asset acquisitions had occurred on
the first day of such four fiscal quarter period.

     "Consolidated Interest Expense" means, with respect to any Person for any
period, without duplication, (i) the sum of (a) the aggregate amount of cash and
non-cash interest expense (including capitalized interest) of such Person and
its Restricted Subsidiaries for such period as determined on a consolidated
basis in accordance with U.S. GAAP in respect of Indebtedness (including,
without limitation, (A) any amortization of debt discount, (B) net costs
associated with Interest Rate Protection Agreements (including any amortization
of discounts), (C) the interest portion of any deferred payment obligation, (D)
all accrued interest, and (E) all commissions, discounts,
<PAGE>

                                                                               8

commitment fees, origination fees and other fees and charges owed with respect
to Bank Credit Facilities and other Indebtedness) paid, accrued or scheduled to
be paid or accrued during such period; (b) Redeemable Stock dividends of such
Person (and of its Restricted Subsidiaries if paid to a Person other than such
Person or its Wholly Owned Subsidiaries) declared and payable other than in
kind; (c) the portion of any rental obligation of such Person or its Restricted
Subsidiaries in respect of any Capital Lease Obligation allocable to interest
expense in accordance with U.S. GAAP; (d) the portion of any rental obligation
of such Person or its Restricted Subsidiaries in respect of any Sale and
Leaseback Transaction allocable to interest expense (determined as if such
obligation were treated as a Capital Lease Obligation); and (e) to the extent
any Indebtedness of any other Person (other than Restricted Subsidiaries) is
Guaranteed by such Person or any of its Restricted 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 Indebtedness; less (ii)
to the extent included in (i) above, amortization or write-off of deferred
financing costs of such Person and its Restricted Subsidiaries during such
period; in the case of both (i) and (ii) above, after elimination of
intercompany accounts among such Person and its Restricted Subsidiaries and as
determined in accordance with U.S. GAAP.

     "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
Restricted Subsidiaries for such period on a consolidated basis, determined in
accordance with U.S. GAAP; provided that there shall be excluded therefrom,
without duplication, (i) items classified as extraordinary (other than the tax
benefit of the utilization of net operating loss carry-forwards and alternative
minimum tax credits); (ii) any gain or loss, net of taxes, on the sale or other
disposition of assets (including the Capital Stock of any other Person) in
excess of $5.0 million, from any sale or disposition, or series of related sales
or dispositions (but in no event shall this clause (ii) apply to the sale of oil
and gas inventories in the ordinary course of business); (iii) the net income of
any Subsidiary of such specified Person to the extent the transfer to that
Person of that income is restricted by contract or otherwise, except for any
cash dividends or cash distributions actually paid by such Subsidiary to such
Person during such period; (iv) the net income (or loss) of any other Person in
which such specified Person or any of its Restricted Subsidiaries has an
interest (which interest does not cause the net income of such other Person to
be consolidated with the net income of such specified Person in accordance with
U.S. GAAP or is an interest in a consolidated Unrestricted Subsidiary), except
to the extent of the amount of cash dividends or other cash distributions
actually paid to such Person or its Restricted Subsidiaries by
<PAGE>

                                                                               9

such other Person during such period; (v) the net income of any Person acquired
by such specified Person or any of its Restricted 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) any adjustments of a deferred tax liability or asset
pursuant to Statement of Financial Accounting Standards No. 109 which result
from changes in enacted tax laws or rates; (viii) the cumulative effect of a
change in accounting principles; and (ix) impairment losses on oil and gas
properties.

     "Consolidated Net Worth" of any Person means the stockholders' equity of
such Person and its Restricted Subsidiaries, as determined on a consolidated
basis in accordance with U.S. GAAP, less (to the extent included in
stockholders' equity) amounts attributable to Redeemable Stock of such Person or
its Restricted Subsidiaries.

     "Corporate Trust Office" means the office of the Trustee in The Borough of
Manhattan, The City of New York, at which at any particular time its corporate
trust business shall be principally administered and which at the date hereof is
located at 450 West 33rd Street, New York, NY 10001.

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

     "Covenant Defeasance" has the meaning specified in Section 1202.

     "Covenant Suspension" has the meaning specified in
Section 1021.

     "CUSIP Number" means, with respect to the Securities, an identification
number assigned to such security pursuant to the procedures of the Committee on
Uniform Security Identification Procedures and by the CUSIP Service Bureau.

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

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

     "Defeasance" has the meaning specified in Section 1201.

     "Depositary" means, with respect to Securities issuable in whole or in part
in the form of one or more Global Securities, a clearing agency registered under
the Exchange Act that is designated by the Company to act as Depositary for such
<PAGE>

                                                                              10

Securities.  Initially, the Depositary shall be The Depository Trust Company,
its nominees and their respective successors.

     "Designated Senior Indebtedness" means any Senior Indebtedness which has,
at the time of determination, an aggregate principal amount outstanding of at
least $10 million (including the amount of all undrawn commitments and matured
and contingent reimbursement obligations pursuant to letters of credit
thereunder) and is specifically designated in the instrument evidencing such
Senior Indebtedness and is designated in a notice delivered by the Company to
the holders or a Representative of the holders of such Senior Indebtedness and
the Trustee as "Designated Senior Indebtedness" of the Company.

     "Dollar-Denominated Production Payments" means production payment
obligations recorded as liabilities in accordance with U.S. GAAP, together with
all undertakings and obligations in connection therewith.

     "EBITDA" means, with respect to any Person for any period, the Consolidated
Net Income of such Person and its consolidated Restricted Subsidiaries for such
period, plus (a) the sum of, to the extent reflected in the consolidated income
statement of such Person and its Restricted Subsidiaries for such period from
which Consolidated Net Income is determined and deducted in the determination of
such Consolidated Net Income, without duplication, (i) income tax expense (but
excluding income tax expense relating to sales or other dispositions of assets
(including the Capital Stock of any other Person) the gains and losses from
which are included in the determination of such Consolidated Net Income), (ii)
Consolidated Interest Expense, (iii) depreciation and depletion expense, (iv)
amortization expense, (v) exploration expense, and (vi) any other non-cash
charges including, without limitation, unrealized foreign exchange losses (but
excluding losses on sales or other dispositions of assets which are included in
the determination of such Consolidated Net Income); less (b) the sum of, to the
extent reflected in the consolidated income statement of such Person and its
Restricted Subsidiaries for such period from which Consolidated Net Income is
determined and added in the determination of such Consolidated Net Income,
without duplication (i) income tax recovery (but excluding income tax recovery
relating to sales or other dispositions of assets (including the Capital Stock
of any other Person) the gains and losses from which are included in the
determination of such Consolidated Net Income) and (ii) unrealized foreign
exchange gains.

     "8 5/8% Indenture" means the indenture dated as of February 5, 1997,
between the Company and The Chase Manhattan Bank, as trustee, relating to the
issuance of the 8 5/8% Notes.
<PAGE>

                                                                              11

     "8 5/8% Notes" means the 8 5/8% Senior Subordinated Notes Due 2009 of the
Company, issued pursuant to the 8 5/8% Indenture.

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

     "Excess Proceeds" shall have the meaning specified in Section 1012.

     "Exchange Act" means the United States Securities Exchange Act of 1934 and
any statute successor thereto, in each case as amended from time to time.

     "Exchanged Properties" means oil and gas properties received by the Company
or a Restricted Subsidiary in trade or as a portion of the total consideration
for other such properties.

     "Exchange Rate Contract" means, with respect to any Person, any currency
swap agreements, forward exchange rate agreements, foreign currency futures or
options, exchange rate collar agreements, exchange rate insurance and other
agreements or arrangements, or any combination thereof, designed to provide
protection against fluctuations in currency exchange rates.

     "Expiration Date" has the meaning specified in Section 104.

     "Expiry Date" has the meaning specified in the definition of "Prepayment
Offer Notice" set forth in this Section 101.

     "Fair Market Value" means, with respect to any assets to be transferred
pursuant to any Asset Sale or Sale and Leaseback Transaction or any non-cash
consideration or property transferred or received by any Person, the fair market
value of such consideration or property as determined in good faith by (i) any
officer of the Company if such fair market value is less than $10 million and
(ii) the Board of Directors as evidenced by a Board Resolution if such fair
market value is equal to or in excess of $10 million; provided that if such
resolution indicates that such fair market value is equal to or in excess of $20
million and such transaction involves any Affiliate of the Company (other than a
Restricted Subsidiary), such resolution shall be accompanied by the written
opinion of an independent, nationally recognized investment banking firm or
appraisal firm, in either case specializing or having a specialty in the type
and subject matter of the transaction (or series of transactions) at issue, to
the effect that such consideration or property is fair, from a financial point
of view, to such Person.

     "Foreign Subsidiary" means a Restricted Subsidiary that is incorporated in
a jurisdiction other than the United States or a State thereof or the District
of Columbia and engages in the Oil and Gas Business exclusively outside the
United States of America.
<PAGE>

                                                                              12

     "Global Security" means a Security that evidences all or part of the
Securities and bears the Global Securities Legend set forth in Exhibit 1 to
Appendix A hereto or Exhibit A hereto.

     "Guarantee" by any Person means any obligation, contingent or otherwise, of
such Person guaranteeing or having the economic effect of guaranteeing any
Indebtedness of any other Person (the "primary obligor") in any manner, whether
directly or indirectly, and including, without limitation, any Lien on the
assets of such Person securing obligations of the primary obligor and any
obligation of such Person (i) to purchase or pay (or advance or supply funds for
the purchase or payment of) such Indebtedness or to purchase (or to advance or
supply funds for the purchase or payment of) any security for the payment of
such Indebtedness, (ii) to purchase Property, securities or services for the
purpose of assuring the holder of such Indebtedness of the payment of such
Indebtedness, or (iii) to maintain working capital, equity capital or other
financial statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such Indebtedness (and "Guaranteed",
"Guaranteeing" and "Guarantor" shall have meanings correlative to the
foregoing); provided, however, that a Guarantee by any Person shall not include
(i) endorsements by such Person for collection or deposit, in either case, in
the ordinary course of business or (ii) a contractual commitment by one Person
to invest in another Person for so long as such Investment is reasonably
expected to constitute a Permitted Investment under clause (b) of the definition
of Permitted Investments.

     "Hedging Agreements" means Interest Rate Protection Agreements, Exchange
Rate Contracts and Oil and Gas Purchase and Sale Contracts.

     "Holder" means a Person in whose name a Security is registered in the
Security Register.

     "Incur" means, with respect to any Indebtedness or other obligation of any
Person, to create, issue, incur (by conversion, exchange or otherwise), extend,
assume, Guarantee or become liable in respect of such Indebtedness or other
obligation or the recording, as required pursuant to U.S. 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, however, that a change in U.S. GAAP
that results in an obligation of such Person that exists at such time, and is
not theretofore classified as Indebtedness, becoming Indebtedness shall not be
deemed an Incurrence of such Indebtedness. For purposes of this definition,
Indebtedness of the Company or a Restricted Subsidiary held by a Wholly Owned
Subsidiary shall be deemed to be Incurred by the Company or such Restricted
<PAGE>

                                                                              13

Subsidiary in the event such Wholly Owned Subsidiary ceases to be a Wholly Owned
Subsidiary or in the event such Indebtedness is transferred to a Person other
than the Company or a Wholly Owned Subsidiary.

     "Indebtedness" means at any time (without duplication), with respect to any
Person, 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,
Guarantees or other similar instruments, including, without limitation, any such
obligations Incurred in connection with the acquisition of Property, assets or
businesses, (iii) any reimbursement obligation of such Person with respect to
letters of credit, bankers' acceptances or similar facilities issued for the
account of such Person, (iv) any obligation of such Person issued or assumed as
the deferred purchase price of Property or services, (v) any Capital Lease
Obligation of such Person, (vi) the maximum fixed redemption or repurchase price
of Redeemable Stock of such Person at the time of determination, (vii) any
payment obligation of such Person under Hedging Agreements at the time of
determination, (viii) any obligation to pay rent or other payment amounts of
such Person with respect to any Sale and Leaseback Transaction to which such
Person is a party, and (ix) any obligation of the type referred to in clauses
(i) through (viii) of this paragraph of another Person and all dividends of
another Person the payment of which, in either case, such Person has Guaranteed
or is responsible or liable, directly or indirectly, as obligor, Guarantor or
otherwise; provided that Indebtedness shall not include Production Payments and
Reserve Sales. For purposes of this definition, the maximum fixed repurchase
price of any Redeemable Stock that does not have a fixed repurchase price shall
be calculated in accordance with the terms of such Redeemable Stock as if such
Redeemable Stock were repurchased on any date on which Indebtedness shall be
required to be determined pursuant to this Indenture; provided, however, that if
such Redeemable Stock is not then permitted to be repurchased, the repurchase
price shall be the book value of such Redeemable 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 at such date in respect of any contingent obligations described above.

     "Indenture" means this instrument as originally executed and 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 instrument and any such supplemental indenture, the
provisions of the Trust Indenture Act that are deemed to be a part of and govern
this instrument and any such supplemental indenture, respectively.
<PAGE>

                                                                              14

     "Interest Payment Date", when used with respect to any Security, means the
Stated Maturity of an installment of interest on such Security.

     "Interest Rate Protection Agreement" means, with respect to any Person, any
interest rate swap agreement, forward rate agreement, interest rate cap or
collar agreement or other financial agreement or arrangement designed to protect
such Person or its Restricted Subsidiaries against fluctuations in interest
rates, as in effect from time to time.

     "Investment" means, with respect to any Person, (i) any amount paid by such
Person, directly or indirectly (such amount to be the fair market value of such
Capital Stock, securities or Property at the time of transfer), to any other
Person for Capital Stock or other Property of, or as a capital contribution to,
any other Person or (ii) any direct or indirect loan or advance to any other
Person (other than accounts receivable of such Person arising in the ordinary
course of business); provided, however, that Investments shall not include
extensions of trade credit on commercially reasonable terms in accordance with
normal trade practices and any increase in the equity ownership in any Person
resulting from retained earnings of such Person.

     "Investment Company Act" means the United States Investment Company Act of
1940 and any statute successor thereto, in each case as amended from time to
time.

     "Investment Grade Rating" means a rating equal to or higher than Baa3 (or
the equivalent) by Moody's or BBB-(or the equivalent) by S&P.

     "Issue Date" means the date upon which the Original Securities first were
issued and authenticated hereunder.

     "Legal Holiday" has the meaning specified in Section 113.

     "Lien" means, with respect to any Property, any mortgage or deed of trust,
pledge, hypothecation, assignment, deposit arrangement, security interest, lien
(statutory or other), charge, easement, encumbrance, preference, priority or
other security or similar agreement or preferential arrangement of any kind or
nature whatsoever on or with respect to such Property (including, without
limitation, any conditional sale or other title retention agreement having
substantially the same economic effect as any of the foregoing).  For purposes
of Section 1009, a Capital Lease Obligation shall be deemed to be secured by a
Lien on the property being leased.

     "Liquid Securities" means securities (i) of an issuer that is not an
Affiliate of the Company, (ii) that are publicly traded
<PAGE>

                                                                              15

on the New York Stock Exchange, the American Stock Exchange or the Nasdaq
National Market and (iii) as to which the Company is not subject to any
restrictions on sale or transfer (including any volume restrictions under Rule
144 under the Securities Act or any other restrictions imposed by the Securities
Act) or as to which a registration statement under the Securities Act covering
the resale thereof is in effect for as long as the securities are held;
provided, that securities meeting the requirements of clauses (i), (ii) and
(iii) above shall be treated as Liquid Securities from the date of receipt
thereof until and only until the earlier of (x) the date on which such
securities are sold or exchanged for cash or cash equivalents and (y) 180 days
following the date of receipt of such securities. In the event such securities
are not sold or exchanged for cash or cash equivalents within 180 days of
receipt thereof, for purposes of determining whether the transaction pursuant to
which the Company or a Restricted Subsidiary received the securities was in
compliance with Section 1012, such securities shall be deemed not to have been
Liquid Securities at any time.

     "Maturity" means the date on which the principal of the Securities or an
installment of principal becomes due and payable as therein or herein provided,
whether at the Stated Maturity or by declaration of acceleration, call for
redemption, pursuant to a Prepayment Offer or Change of Control Offer or
otherwise.

     "Material Change" means an increase or decrease (except to the extent
resulting from changes in prices) of more than 30% during a fiscal quarter in
the estimated discounted future net revenues from proved oil and gas reserves of
the Company and its Restricted Subsidiaries, calculated in accordance with
clause (a)(i) of the definition of Adjusted Consolidated Net Tangible Assets;
provided, however, that the following will be excluded from the calculation of
Material Change:  (i) any acquisitions during the quarter of oil and gas
reserves with respect to which the Company's estimate of the discounted future
net revenues from proved oil and gas reserves has been confirmed by independent
petroleum engineers and (ii) any dispositions of Properties during such quarter
that were disposed of in compliance with Section 1012.

     "Moody's" means Moody's Investors Service Inc., and any successor to its
business or operations.

     "Net Available Cash" from an Asset Sale means cash proceeds received
(including any cash proceeds received by way of deferred payment of principal
pursuant to a note or installment receivable or otherwise, but only as and when
received, and excluding any other consideration received in the form of
assumption by the acquiring person of Indebtedness or other obligations relating
to such properties or assets) therefrom, in each case net of (i) all legal,
title and recording expenses, commissions and other fees
<PAGE>

                                                                              16

and expenses incurred, and all Federal, state, foreign and local taxes required
to be paid or accrued as a liability under U.S. GAAP as a consequence of such
Asset Sale, (ii) all payments made on any Indebtedness which is secured by any
assets subject to such Asset Sale, in accordance with the terms of any Lien upon
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, (iii) all distributions and other payments required to be
made to minority interest holders in Subsidiaries or joint ventures as a result
of such Asset Sale, and (iv) the deduction of appropriate amounts to be provided
by the seller as a reserve, in accordance with U.S. GAAP, against any
liabilities associated with the assets disposed of in such Asset Sale and
retained by the Company or any Restricted Subsidiary after such Asset Sale;
provided, however, that in the event that any consideration for an Asset Sale
(which would otherwise constitute Net Available Cash) is required to be held in
escrow pending determination of whether a purchase price adjustment will be
made, such consideration (or any portion thereof) shall become Net Available
Cash only at such time as it is released to such Person or its Restricted
Subsidiaries from escrow; and provided further, however, that any non-cash
consideration received in connection with an Asset Sale which is subsequently
converted to cash shall be deemed to be Net Available Cash at such time and
shall thereafter be applied in accordance with Section 1012.

     "Net Working Capital" means (i) all current assets of the Company and its
Restricted Subsidiaries, less (ii) all current liabilities of the Company and
its Restricted Subsidiaries, except current liabilities included in
Indebtedness, in each case as set forth in financial statements of the Company
prepared in accordance with U.S. GAAP.

     "9% Indenture" means the indenture dated as of December 20, 1995, between
the Company and The Chase Manhattan Bank (formerly known as Chemical Bank), as
trustee, relating to the issuance of the 9% Notes.

     "9% Notes" means the 9% Senior Subordinated Notes Due 2005 of the Company,
issued pursuant to the 9% Indenture.

     "9 3/4% Indenture" means the indenture dated as of January 26, 1999,
between the Company and The Chase Manhattan Bank, as trustee, relating to the
issuance of the 9 3/4% Notes.

     "9 3/4% Notes" means the 9 3/4% Senior Subordinated Notes Due 2009 of the
Company, issued pursuant to the 9 3/4% Indenture.

     "Notice of Default" means a written notice of the kind specified in Section
501.
<PAGE>

                                                                              17

     "Officers' Certificate" means a certificate signed by the Chairman of the
Board, the Vice Chairman of the Board, the President or any Vice President,
together with any one of the Treasurer, any Assistant Treasurer, the Controller,
the Secretary or any Assistant Secretary, of the Company, and delivered to the
Trustee.  One of the officers signing an Officers' Certificate given pursuant to
Section 1004 shall be the principal executive, financial or accounting officer
of the Company.

     "OID" has the meaning specified in Section 301.

     "Oil and Gas Business" means the business of exploiting, exploring for,
developing, acquiring, producing, processing, gathering, marketing, storing and
transporting hydrocarbons and other related energy businesses.

     "Oil and Gas Liens" means (i) Liens on any specific property or any
interest therein, construction thereon or improvement thereto to secure all or
any part of the costs incurred for surveying, exploration, drilling, extraction,
development, operation, production, construction, alteration, repair or
improvement of, in, under or on such property and the plugging and abandonment
of wells located thereon (it being understood that, in the case of oil and gas
producing properties, or any interest therein, costs incurred for "development"
shall include costs incurred for all facilities relating to such properties or
to projects, ventures or other arrangements of which such properties form a part
or which relate to such properties or interests); (ii) Liens on an oil and/or
gas producing property to secure obligations Incurred or guarantees of
obligations Incurred in connection with or necessarily incidental to commitments
for the purchase or sale of, or the transportation or distribution of, the
products derived from such property; (iii) Liens arising under partnership
agreements, oil and gas leases, overriding royalty agreements, net profits
agreements, production payment agreements, royalty trust agreements, master
limited partnership agreements, farm-out agreements, division orders, contracts
for the sale, purchase, exchange, transportation, gathering or processing of
oil, gas or other hydrocarbons, unitizations and pooling designations,
declarations, orders and agreements, development agreements, operating
agreements, production sales contracts, area of mutual interest agreements, gas
balancing or deferred production agreements, injection, repressuring and
recycling agreements, salt water or other disposal agreements, seismic or
geophysical permits or agreements, and other agreements which are customary in
the Oil and Gas Business, provided in all instances that such Liens are limited
to the assets that are the subject of the relevant agreement; (iv) Liens arising
in connection with Production Payments and Reserve Sales; and (v) Liens on
pipelines or pipeline facilities that arise by operation of law.
<PAGE>

                                                                              18

     "Oil and Gas Purchase and Sale Contract" means, with respect to any Person,
any oil and gas agreements, and other agreements or arrangements, or any
combination thereof, designed to provide protection against oil and gas price
fluctuations.

     "Opinion of Counsel" means a written opinion of counsel, who may be
internal legal counsel for the Company, who shall be acceptable to the Trustee
and who may rely as to factual matters on Officers' Certificates.

     "Original Securities" shall have the meaning set forth in Section 301.

     "Outstanding" means, as of the date of determination, all Securities
theretofore authenticated and delivered under this Indenture, except:

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

     (2)  Securities for whose payment or redemption money in the necessary
  amount has been theretofore deposited with the Paying Agent (other than the
  Company or its Wholly Owned Subsidiaries) in trust for the Holders of such
  Securities and the Paying Agent is not prohibited from paying such money to
  the Holders of Securities on that date pursuant to the terms of this
  Indenture; provided that, if such Securities are to be redeemed, notice of
  such redemption has been duly given pursuant to this Indenture or provision
  therefor satisfactory to the Trustee has been made;

     (3)  Securities as to which Defeasance has been effected pursuant to
  Section 1201; and

     (4)  Securities which have been paid pursuant to Section 306 or in exchange
  for or in lieu of which other Securities have been authenticated and delivered
  pursuant to this Indenture, other than any such Securities in respect of which
  there shall have been presented to the Trustee proof satisfactory to it that
  such Securities are held by a bona fide purchaser in whose hands such
  Securities are valid obligations of the Company;

provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given, made or taken any
request, demand, authorization, direction, notice, consent, waiver or other
action hereunder as of any date, Securities owned by the Company or any other
obligor upon the Securities or any Affiliate of the Company or of such other
obligor shall be disregarded and deemed not to be Outstanding, except that, in
determining whether the Trustee shall be protected in relying upon any such
request, demand,
<PAGE>

                                                                              19

authorization, direction, notice, consent, waiver or other action, only
Securities which the Trustee actually knows to be so owned shall be so
disregarded. Securities so owned which have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Securities and that
the pledgee is not the Company or any other obligor upon the Securities or any
Affiliate of the Company or of such other obligor.

     "paid in full" or "payment in full" has the meaning specified in Section
1302.

     "pari passu", when used with respect to the ranking of any Indebtedness of
any Person in relation to other Indebtedness of such Person, means that each
such Indebtedness (a) either (i) is not subordinated in right of payment to any
other Indebtedness of such Person or (ii) is subordinate in right of payment to
the same Indebtedness of such person as is the other and is so subordinate to
the same extent and (b) is not subordinate in right of payment to the other or
to any Indebtedness of such Person as to which the other is not so subordinated.

     "Pari Passu Indebtedness" means any Indebtedness of the Company (including,
without limitation, the 9% Notes, the 9 3/4% Notes and the 8 5/8% Notes) that is
pari passu in right of payment to the Securities.

     "Participants" has the meaning specified in Section 305.

     "pay the Securities" has the meaning specified in Section 1303.

     "Paying Agent" has the meaning specified in Section 1002.

     "Payment Blockage Notice" has the meaning specified in Section 1303.

     "Payment Blockage Period" has the meaning specified in Section 1303.

     "Permitted Business Investments" means Investments and expenditures made in
the ordinary course of, and of a nature that is or shall have become customary
in, the Oil and Gas Business as means of actively exploiting, exploring for,
acquiring, developing, processing, gathering, marketing or transporting oil and
gas through agreements, transactions, interests or arrangements which permit one
to share risks or costs, comply with regulatory requirements regarding local
ownership or satisfy other objectives customarily achieved through the conduct
of Oil and Gas Business jointly with third parties, including, without
limitation, (i) ownership interests in oil and gas properties or
<PAGE>

                                                                              20

gathering, transportation, processing, storage or related systems and (ii)
Investments and expenditures in the form of or pursuant to operating agreements,
processing agreements, farm-in agreements, farm-out agreements, development
agreements, area of mutual interest agreements, unitization agreements, pooling
arrangements, joint bidding agreements, service contracts, joint venture
agreements, partnership agreements (whether general or limited), subscription
agreements, stock purchase agreements and other similar agreements with third
parties (including Unrestricted Subsidiaries).

     "Permitted Designee" means (i) a spouse or a child of a Permitted Holder,
(ii) trusts for the benefit of a Permitted Holder or a spouse or child of a
Permitted Holder, (iii) in the event of the death or incompetence of a Permitted
Holder, his estate, heirs, executor, administrator, committee or other personal
representative or (iv) any Person so long as a Permitted Holder owns at least
51% of the voting power of all classes of the Voting Stock of such Person.

     "Permitted Holders"  means Charles C. Stephenson, Jr., William L.
Abernathy, S. Craig George, William C. Barnes and their Permitted Designees.

     "Permitted Indebtedness" means any and all of the following: (a)
Indebtedness evidenced by the Original Securities; (b) Indebtedness under Bank
Credit Facilities, provided that the aggregate principal amount of all such
Indebtedness under Bank Credit Facilities, together with all Indebtedness
Incurred pursuant to clause (l) of this paragraph in respect of Indebtedness
previously Incurred pursuant to this clause (b), at any one time outstanding
does not exceed the greater of (i) $265 million and (ii) an amount equal to the
sum of (A) $100 million and (B) 15% of Adjusted Consolidated Net Tangible Assets
determined as of the date of the Incurrence of such Indebtedness; provided,
however, that the maximum amount available to be outstanding under Bank Credit
Facilities shall be permanently reduced by the amount of Net Available Cash from
Assets Sales used to permanently repay Indebtedness under Bank Credit
Facilities, and not subsequently reinvested in Additional Assets or used to
permanently reduce other Indebtedness to the extent permitted pursuant to
Section 1012; (c) Indebtedness to the Company or any of its Wholly Owned
Subsidiaries by any of its Restricted Subsidiaries or Indebtedness of the
Company to any of its Wholly Owned Subsidiaries (but only so long as such
Indebtedness is held by the Company or a Wholly Owned Subsidiary); (d)
Indebtedness in connection with one or more standby letters of credit,
Guarantees, performance bonds or other reimbursement obligations issued in the
ordinary course of business and not in connection with the borrowing of money or
the obtaining of advances or credit (other than advances or credit on
<PAGE>

                                                                              21

open account, includable in current liabilities, for goods and services in the
ordinary course of business and on terms and conditions which are customary in
the Oil and Gas Business and other than the extension of credit represented by
such letter of credit, Guarantee or performance bond itself); (e) Indebtedness
of any Person which shall merge or consolidate with or into the Company in
accordance with Section 801, which was outstanding prior to such merger or
consolidation; (f) Indebtedness under Interest Rate Protection Agreements
entered into for the purpose of limiting interest rate risks, provided that the
obligations under such agreements are related to payment obligations on
Indebtedness otherwise permitted by the terms of Section 1008; (g) Indebtedness
under Exchange Rate Contracts, provided that such Exchange Rate Contracts were
entered into for the purpose of limiting exchange rate risks in connection with
transactions entered into in the ordinary course of business; (h) Indebtedness
under Oil and Gas Purchase and Sale Contracts, provided that such contracts were
entered into in the ordinary course of business for the purpose of limiting
risks that arise in the ordinary course of business of the Company and its
Subsidiaries; (i) in-kind obligations relating to net oil or gas balancing
positions arising in the ordinary course of business that are customary in the
Oil and Gas Business; (j) Indebtedness outstanding on the Issue Date not
otherwise permitted in clauses (a) through (i) above; (k) Indebtedness not
otherwise permitted to be Incurred pursuant to this paragraph, provided that the
aggregate principal amount of all Indebtedness Incurred pursuant to this clause
(k), together with all Indebtedness Incurred pursuant to clause (l) of this
paragraph in respect of Indebtedness previously Incurred pursuant to this clause
(k), at any one time outstanding does not exceed $25 million; (l) Indebtedness
Incurred in exchange for, or the proceeds of which are used to refinance, (i)
Indebtedness referred to in clauses (a) through (k) of this paragraph (including
Indebtedness previously Incurred pursuant to this clause (l)) and (ii)
Indebtedness Incurred pursuant to clause (a) of Section 1008; provided, however,
that (i) such Indebtedness is in an aggregate principal amount not in excess of
the sum of (A) the aggregate principal amount then outstanding of the
Indebtedness being exchanged or refinanced and (B) an amount necessary to pay
any fees and expenses, including premiums, related to such exchange or
refinancing, (ii) such Indebtedness has a Stated Maturity no earlier than the
Stated Maturity of the Indebtedness being exchanged or refinanced, (iii) such
Indebtedness has an Average Life to Stated Maturity at the time such
Indebtedness is Incurred that is equal to or greater than the Average Life to
Stated Maturity of the Indebtedness being exchanged or refinanced, and (iv) such
Indebtedness is subordinated in right of payment to Senior Indebtedness or the
Securities to at least the same extent, if any, as the Indebtedness being
exchanged or refinanced; (m) Indebtedness consisting of obligations in respect
of purchase price adjustments, indemnities or Guarantees of the same or similar
<PAGE>

                                                                              22

matters in connection with the acquisition or disposition of assets; and (n)
accounts payable or other obligations of the Company or any Restricted
Subsidiary to trade creditors created or assumed by the Company or such
Restricted Subsidiary in the ordinary course of business in connection with the
obtaining of goods or services.

     "Permitted Investments" means any and all of the following: (a) Permitted
Short-Term Investments; (b) Investments in property, plant and equipment used in
the ordinary course of business and Permitted Business Investments; (c)
Investments by the Company or any Restricted Subsidiary in a Restricted
Subsidiary and Investments by a Restricted Subsidiary in the Company; (d)
Investments in any other Person, including the acquisition from third parties of
Capital Stock of a Restricted Subsidiary or any other Person, as a result of
which such other Person becomes a Restricted Subsidiary in compliance with
Section 1016 or is merged into or consolidated with or transfers or conveys all
or substantially all of its assets to the Company or a Restricted Subsidiary;
(e) negotiable instruments held for collection; lease, utility and other similar
deposits; or stock, obligations or securities received in settlement of debts
owing to the Company or any of its Restricted Subsidiaries as a result of
foreclosure, perfection or enforcement of any Lien or Indebtedness, in each of
the foregoing cases in the ordinary course of business of the Company or such
Restricted Subsidiary; (f) Investments in Persons in the Oil and Gas Business
(other than Restricted Subsidiaries) intended to promote the Company's strategic
business objectives in an amount not to exceed $20 million at any one time
outstanding; (g) loans made (i) to officers, directors and employees of the
Company or any Subsidiary approved by the Board of Directors (or by a duly
authorized officer), the proceeds of which are used solely to exercise stock
options received pursuant to an employee stock option plan or other incentive
plan, in a principal amount not to exceed the exercise price of such stock
options, and (ii) to refinance loans, together with accrued interest thereon,
made pursuant to this clause (g); (h) advances and loans to officers, directors
and employees of the Company or any Subsidiary in the ordinary course of
business, provided such loans and advances do not exceed $3.0 million at any one
time outstanding; (i) Investments in the form of securities received from Asset
Sales, provided that such Asset Sales are made in compliance with Section 1012;
and (j) Investments pursuant to any agreement or obligation of the Company or
any of its Restricted Subsidiaries as in effect on the Issue Date (other than
Investments described in clauses (a) through (i) above).

     "Permitted Liens" shall have the meaning specified in Section 1009.
<PAGE>

                                                                              23

     "Permitted Short-Term Investments" means (a) Investments in U.S. Government
Obligations maturing within one year of the date of acquisition thereof, (b)
Investments in demand accounts, time deposit accounts, certificates of deposit,
bankers acceptances and money market deposits maturing within one year of the
date of acquisition thereof issued by a bank or trust company which is organized
under the laws of the United States of America or any State thereof that is a
member of the Federal Reserve System having capital, surplus and undivided
profits aggregating in excess of $500 million and whose long-term indebtedness
is rated "A" (or higher) according to Moody's, (c) Investments in demand
accounts, time deposit accounts, certificates of deposit, bankers acceptances
and money market deposits maturing within one year of the date of acquisition
thereof issued by a Canadian bank to which the Bank Act (Canada) applies having
capital, surplus and undivided profits aggregating in excess of $500 million,
(d) Investments in deposits available for withdrawal on demand with any
commercial bank which is organized under the laws of any country in which the
Company or any Restricted Subsidiary maintains an office or is engaged in the
Oil and Gas Business, provided that (i) all such deposits have been made in such
accounts in the ordinary course of business and (ii) such deposits do not at any
one time exceed $20 million in the aggregate, (e) repurchase and reverse
repurchase obligations with a term of not more than seven days for underlying
securities of the types described in clause (a) entered into with a bank meeting
the qualifications described in either clause (b) or (c), (f) Investments in
commercial paper, maturing not more than one year after the date of acquisition,
issued by a corporation (other than an Affiliate of the Company) organized and
in existence under the laws of the United States of America or any State thereof
with a rating at the time as of which any Investment therein is made of "P-1"
(or higher) according to Moody's or "A-1" (or higher) according to S&P, and (g)
Investments in any money market mutual fund having assets in excess of $250
million substantially all of which consist of other obligations of the types
described in clauses (a), (b), (e) and (f) hereof.

     "Person" means any individual, corporation, partnership, joint venture,
trust, unincorporated organization or government or any agency or political
subdivision thereof.

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

                                                                              24

     "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 any other class of such Person; provided, however, that
"Preferred Stock" shall not include Redeemable Stock.

     "Prepayment Offer" has the meaning specified in Section 1012(c).

     "Prepayment Offer Notice" means a written notice of a Prepayment Offer sent
by the Company by first-class mail, postage prepaid, to each Holder at his
address appearing in the Security Register on the date of the Prepayment Offer
offering to purchase up to the principal amount of Securities specified in such
Prepayment Offer at the purchase price specified in such Prepayment Offer (as
determined pursuant to this Indenture). Unless otherwise required by applicable
law, the Prepayment Offer Notice shall specify an expiry date (the "Expiry
Date") of the Prepayment Offer which shall be, subject to any contrary
requirements of applicable law, and a settlement date (the "Purchase Date") for
purchase of the Securities which shall be, subject to any contrary requirements
of applicable law, not less than 30 days nor more than 60 days after the date
the Prepayment Offer Notice is mailed.  The Prepayment Offer Notice shall
contain information concerning the business of the Company and its Subsidiaries
which the Company in good faith believes will enable such Holders to make an
informed decision with respect to the Prepayment Offer, which at a minimum will
include (i) the Company's most recent annual and quarterly financial statements
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations" (which requirements may be satisfied by delivery of such documents
together with the Prepayment Offer), (ii) a description of material developments
in the Company's business subsequent to the date of the latest of such financial
statements referred to in clause (i), (iii) if applicable, appropriate pro forma
financial information concerning the Prepayment Offer, (iv) a description of the
events requiring the Company to make the Prepayment Offer, (v) a description of
the procedure which Holders must follow and any other information necessary to
enable such Holders to tender Securities pursuant to the Prepayment Offer, (vi)
a description of the procedure which Holders must follow and any other
information necessary to enable such Holders to withdraw an election to tender
Securities for payment, and (vi) any other information required by applicable
law to be included therein. The Prepayment Offer Notice shall also state:

     (1)  the Expiry Date and the Purchase Date;
<PAGE>

                                                                              25

     (2)  that any Securities (or any portion thereof) accepted for payment (and
  duly paid on the Purchase Date) pursuant to the Prepayment Offer shall cease
  to accrue interest after the Purchase Date;

     (3)  the aggregate principal amount of the Securities offered to be
  purchased by the Company pursuant to the Prepayment Offer (including, if less
  than 100%, the manner by which such has been determined pursuant to the
  Indenture) (the "Purchase Amount");

     (4)  the purchase price to be paid by the Company for each $1,000 aggregate
  principal amount of Securities accepted for payment (as specified pursuant to
  this Indenture) (the "Purchase Price");

     (5)  that the Holder may tender all or any portion of the Securities
  registered in the name of such Holder and that any portion of a Security
  tendered must be tendered in an integral multiple of $1,000 principal amount;

     (6)  the place or places where Securities are to be surrendered for tender
  pursuant to the Prepayment Offer;

     (7)  that each Holder electing to tender a Security pursuant to the
  Prepayment Offer will be required to surrender such Security at the place or
  places specified in the Prepayment Offer Notice prior to the close of business
  on the Expiry Date (such Security being, if the Company or the Trustee so
  requires, duly endorsed by, or accompanied by a written instrument of transfer
  in form satisfactory to the Company and the Trustee duly executed by, the
  Holder thereof or his attorney duly authorized in writing);

     (8)  that Holders will be entitled to withdraw all or any portion of the
  Securities tendered if the Company (or its Paying Agent) receives, not later
  than the close of business on the Expiry Date, a facsimile transmission or
  letter setting forth the name of the Holder, the principal amount of the
  Security the Holder tendered, the certificate number of the Security the
  Holder tendered and a statement that such Holder is withdrawing all or a
  portion of his tender;

     (9)  that if Securities in an aggregate principal amount less than or equal
  to the Purchase Amount are duly tendered and not withdrawn pursuant to the
  Prepayment Offer, the Company shall purchase all such Securities; and

     (10) that in case of any Holder whose Security is purchased only in part,
  the Company shall execute, and the Trustee shall authenticate and deliver to
  the Holder of such Security without service charge, a new Security or
  Securities, of any
<PAGE>

                                                                              26

  authorized denomination as requested by such Holder, in an aggregate principal
  amount equal to and in exchange for the unpurchased portion of the Security so
  tendered.

Any Prepayment Offer Notice shall be governed by and effected in accordance with
Section 1012.

     "primary obligor" has the meaning specified in the definition of
"Guarantee" set forth in this Section 101.

     "Production Payments and Reserve Sales" means the grant or transfer to any
Person of a royalty, overriding royalty, net profits interest, production
payment (whether volumetric or dollar denominated), master limited partnership
interest or other interest in oil and gas properties, reserves or the right to
receive all or a portion of the production or the proceeds from the sale of
production attributable to such properties where the holder of such interest has
recourse solely to such production or proceeds of production, subject to the
obligation of the grantor or transferor to operate and maintain, or cause the
subject interests to be operated and maintained, in a reasonably prudent manner
or other customary standard or subject to the obligation of the grantor or
transferor to indemnify for environmental matters.

     "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, including, without limitation, Capital Stock in any other Person
(but excluding Capital Stock or other securities issued by such first mentioned
Person).

     "Public Equity Offering" means an underwritten public offering of common
stock of the Company pursuant to an effective registration statement under the
Securities Act.

     "Purchase Amount" has the meaning specified in the definition of
"Prepayment Offer Notice" set forth in this Section 101.

     "Purchase Date" has the meaning specified in the definition of "Prepayment
Offer Notice" set forth in this Section 101.

     "Purchase Price" has the meaning specified in the definition of "Prepayment
Offer Notice" set forth in this Section 101.

     "Rating Agency" means each of S&P and Moody's, or if S&P or Moody's or both
shall not make a rating on the Securities publicly available, a nationally
recognized statistical rating agency or agencies, as the case may be, selected
by the Company (as evidenced by a Board Resolution) which shall be substituted
for S&P or Moody's or both, as the case may be.
<PAGE>

                                                                              27

     "Redeemable Stock" of any Person means any equity security of such Person
that by its terms (or by the terms of any security into which it is convertible
or for which it is exchangeable), or otherwise (including on the happening of an
event), is or could become required to be redeemed for cash or other Property or
is or could become redeemable for cash or other Property at the option of the
holder thereof, in whole or in part, on or prior to the first anniversary of the
Stated Maturity of the Securities; or is or could become exchangeable at the
option of the holder thereof for Indebtedness at any time, in whole or in part,
on or prior to the first anniversary of the Stated Maturity of the Securities;
provided, however, that Redeemable Stock shall not include any security by
virtue of the fact that it may be exchanged or converted at the option of the
holder for Capital Stock of the Company having no preference as to dividends or
liquidation over any other Capital Stock of the Company.

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

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

     "Registrar" has the meaning specified in Section 1002.

     "Regular Record Date" for the interest payable on any Interest Payment Date
on the Securities means the date specified for that purpose in the Securities.

     "Remaining Excess Proceeds" shall have the meaning specified in Section
1012.

     "Representative" means the trustee, agent or representative expressly
authorized to act in such capacity, if any, for an issue of Senior Indebtedness.

     "Restricted Payment" means (i) a dividend or other distribution declared or
paid on the Capital Stock or Redeemable Stock of the Company or to the Company's
stockholders (other than dividends, distributions or payments made solely in
Capital Stock of the Company), or declared and paid to any Person other than the
Company or any of its Restricted Subsidiaries on the Capital Stock or Redeemable
Stock of any Restricted Subsidiary, (ii) a payment made by the Company or any of
its Restricted Subsidiaries (other than to the Company or any Restricted
Subsidiary) to purchase, redeem, acquire or retire any Capital Stock or
Redeemable Stock of the Company or of a Restricted Subsidiary, (iii) a payment
made by the Company or any of its Restricted Subsidiaries to redeem, repurchase,
defease or otherwise acquire or retire for value (including pursuant to
mandatory repurchase
<PAGE>

                                                                              28

covenants), prior to any scheduled maturity, scheduled sinking fund or scheduled
mandatory redemption, Indebtedness of the Company which is subordinate (whether
pursuant to its terms or by operation of law) in right of payment to the
Securities, (iv) an Investment by the Company or a Restricted Subsidiary in any
Person other than the Company or a Restricted Subsidiary, or (v) the sale or
issuance of Capital Stock of a Restricted Subsidiary to a Person other than the
Company or another Restricted Subsidiary if the result thereof is that such
Restricted Subsidiary shall cease to be a Restricted Subsidiary, in which event
the amount of such "Restricted Payment" shall be the Fair Market Value of the
remaining interest in such former Restricted Subsidiary held by the Company and
its other Restricted Subsidiaries.

     "Restricted Subsidiary" means any Subsidiary of the Company that has not
been designated an Unrestricted Subsidiary in the manner provided in Section
1016.

     "Sale and Leaseback Transaction" means, with respect to any Person, any
direct or indirect arrangement (excluding, however, any such arrangement between
such Person and a  Wholly Owned Subsidiary of such Person or between one or more
Wholly Owned Subsidiaries of such Person) pursuant to which Property is sold or
transferred by such Person or a Restricted Subsidiary of such Person and is
thereafter leased back from the purchaser or transferee thereof by such Person
or one of its Restricted Subsidiaries.

     "Securities" has the meaning stated in the preamble of this Indenture, as
amended or supplemented from time to time in accordance with the terms hereof,
and more particularly means any Securities authenticated and delivered under
this Indenture.

     "Securities Act" means the United States Securities Act of 1933 and any
statute successor thereto, in each case as amended from time to time.

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

     "Senior Indebtedness" means (i) all obligations consisting of the principal
of and premium, if any, and accrued and unpaid interest in respect of (A)
Indebtedness of the Company for borrowed money and (B) Indebtedness evidenced by
notes, debentures, bonds or other similar instruments permitted under this
Indenture for the payment of which the Company is responsible or liable; (ii)
all Capital Lease Obligations of the Company; (iii) all obligations of the
Company (A) for the reimbursement of any obligor on any letter of credit,
bankers' acceptance or similar credit transaction, (B) under Hedging Agreements
or (C) issued or assumed as the deferred purchase
<PAGE>

                                                                              29

price of property and all conditional sale obligations of the Company and all
obligations under any title retention agreement permitted under this Indenture;
and (iv) all obligations of other persons of the type referred to in clauses (i)
and (ii) for the payment of which the Company is responsible or liable as
Guarantor; provided that Senior Indebtedness does not include (i) Pari Passu
Indebtedness or Indebtedness of the Company that is by its terms subordinate in
right of payment to the Securities; (ii) any Indebtedness Incurred in violation
of the provisions of this Indenture; (iii) accounts payable or any other
obligations of the Company to trade creditors created or assumed by the Company
in the ordinary course of business in connection with the obtaining of materials
or services; (iv) in-kind obligations relating to net oil and gas balancing
positions; or (v) any liability for Federal, state, local or other taxes owed or
owing by the Company.

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

     "S&P" means Standard & Poor's Ratings Group, Inc. and any successor to its
business or operations.

     "Stated Maturity", when used with respect to any security or any
installment of principal thereof or interest thereon, means the date specified
in such security as the fixed date on which the principal of such security or
such installment of principal or interest is due and payable, including pursuant
to any mandatory redemption provision (but excluding any provision providing for
the repurchase of such security at the option of the holder thereof upon the
happening of any contingency unless such contingency has occurred).

     "Subsidiary" of a Person means (a) another Person which is a corporation a
majority of whose Voting Stock is at the time, directly or indirectly, owned or
controlled by (i) the first Person, (ii) the first Person and one or more of its
Subsidiaries, or (iii) one or more of the first Person's Subsidiaries or (b)
another Person which is not a corporation (x) at least 50% of the ownership
interest of which and (y) the power to elect or direct the election of a
majority of the directors or other governing body of which are controlled by
Persons referred to in clauses (i), (ii) or (iii) above.

     "Surviving Entity" has the meaning specified in Section 801.

     "Suspended Covenants" has the meaning specified in Section 1021.
<PAGE>

                                                                              30

     "Transaction Date" has the meaning specified in the definition of
"Consolidated Interest Coverage Ratio" set forth in this Section 101.

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

     "Trust Officer" means any officer or assistant officer of the Trustee
assigned by the Trustee to administer its corporate trust matters.

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

     "Unrestricted Subsidiary" means (i) each Subsidiary of the Company that the
Company has designated pursuant to Section 1016 as an Unrestricted Subsidiary
and (ii) any Subsidiary of an Unrestricted Subsidiary.

     "U.S. GAAP" means United States generally accepted accounting principles as
in effect on the date of this Indenture, unless stated otherwise.

     "U.S. Government Obligation" means (x) any security which is (i) a direct
obligation of the United States of America for the payment of which the full
faith and credit of the United States of America is pledged or (ii) an
obligation 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 (i) or (ii), is not callable or
redeemable at the option of the issuer thereof, and (y) any depositary receipt
issued by a bank (as defined in Section 3(a)(2) of the Securities Act) as
custodian with respect to any U.S. Government Obligation which is specified in
clause (x) above and held by such bank for the account of the holder of such
depositary receipt, or with respect to any specific payment of principal of or
interest on any U.S. Government Obligation which is so specified and held,
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 depositary
receipt from any amount received by the custodian in respect of the U.S.
Government Obligation or the specific payment of principal or interest evidenced
by such depositary receipt.
<PAGE>

                                                                              31

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

     "Volumetric Production Payments" means production payment obligations
recorded as deferred revenue in accordance with U.S. GAAP, together with all
undertakings and obligations in connection therewith.

     "Voting Redeemable Stock" of any Person means Redeemable Stock of such
Person which ordinarily has voting power for the election of directors (or
persons performing similar functions) of such Person whether at all times or
only so long as no senior class of securities has such voting power by reason of
any contingency.

     "Voting Stock" of any Person means Capital Stock of such Person which
ordinarily has voting power for the election of directors (or persons performing
similar functions) of such Person whether at all times or only so long as no
senior class of securities has such voting power by reason of any contingency.

     "Wholly Owned Subsidiary" means, at any time, a Restricted Subsidiary all
of the Voting Stock of which (except directors' qualifying shares) is at the
time owned, directly or indirectly, by the Company and its other Wholly Owned
Subsidiaries.

SECTION 102.  Compliance Certificates and Opinions.

     Upon any application or request by the Company to the Trustee to take any
action under any provision of this Indenture, the Company shall furnish to the
Trustee such certificates and opinions as may be required under the Trust
Indenture Act.  Each such certificate or opinion shall be given in the form of
an Officers' Certificate, if to be given by an officer of the Company, or an
Opinion of Counsel, if to be given by counsel, and shall comply with the
requirements of the Trust Indenture Act and any other requirements set forth in
this Indenture.

     Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (except for certificates provided for in
Section 1004) 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;
<PAGE>

                                                                              32

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

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

SECTION 103.  Form of Documents Delivered to Trustee.

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

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

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

                                                                              33

SECTION 104.  Acts of Holders; Record Dates.

     Any request, demand, authorization, direction, notice, consent, waiver or
other action provided or permitted by this Indenture to be given, made or taken
by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent duly
appointed in writing or alternatively, may be embodied in and evidenced by the
record of Holders voting in favor thereof, either in person or by proxies duly
appointed in writing, at any meeting of Holders duly called and held in
accordance with the provisions of Article Fifteen, or a combination of such
instruments and any such record; and, except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
or record or both are delivered to the Trustee and, where it is hereby expressly
required, to the Company.  Such instrument or instruments and any such record
(and the action embodied therein and evidenced thereby) are herein sometimes
referred to as the "Act" of the Holders signing such instrument or instruments
or so voting at any such meeting. Proof of execution of any such instrument or
of a writing appointing any such agent shall be sufficient for any purpose of
this Indenture and (subject to Section 601) conclusive in favor of the Trustee
and the Company, if made in the manner provided in this Section.  The record of
any meeting of Holders shall be proved in the manner provided in Section 1506.

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

     The ownership of Securities shall be proved by the Security Register.

     Except as provided in Section 1402, 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.
<PAGE>

                                                                              34

     The Company may set any day as a record date for the purpose of determining
the Holders of Outstanding Securities entitled to give, make or take any
request, demand, authorization, direction, notice, consent, waiver or other
action provided or permitted by this Indenture to be given, made or taken by
Holders of Securities; provided that the Company may not set a record date for,
and the provisions of this paragraph shall not apply with respect to, the giving
or making of any notice, declaration, request or direction referred to in the
next paragraph.  If any record date is set pursuant to this paragraph, the
Holders of Outstanding Securities on such record date, and no other Holders,
shall be entitled to take or revoke the relevant action, whether or not such
Holders remain Holders after such record date; provided that no such action
shall be effective hereunder unless taken on or prior to the applicable
Expiration Date by Holders of the requisite principal amount of Outstanding
Securities on such record date.  Nothing in this paragraph shall be construed to
prevent the Company from setting a new record date for any action for which a
record date has previously been set pursuant to this paragraph (whereupon the
record date previously set shall automatically and with no action by any Person
be cancelled and of no effect), and nothing in this paragraph shall be construed
to render ineffective any action taken by Holders of the requisite principal
amount of Outstanding Securities on the date such action is taken.  Promptly
after any record date is set pursuant to this paragraph, the Company, at its own
expense, shall cause notice of such record date, the proposed action by Holders
and the applicable Expiration Date to be given to the Trustee in writing and to
each Holder of Securities in the manner set forth in Section 106.

     The Trustee may set any day as a record date for the purpose of determining
the Holders of Outstanding Securities entitled to join in the giving or making
of (i) any Notice of Default, (ii) any declaration of acceleration referred to
in Section 502, (iii) any request to institute proceedings referred to in
Section 507(2) or (iv) any direction referred to in Section 512, in each case
with respect to the Securities.  If any record date is set pursuant to this
paragraph, the Holders of Outstanding Securities on such record date, and no
other Holders, shall be entitled to join in such notice, declaration, request or
direction or to revoke the same, whether or not such Holders remain Holders
after such record date; provided that no such action shall be effective
hereunder unless taken on or prior to the applicable Expiration Date by Holders
of the requisite principal amount of Outstanding Securities on such record date.
Nothing in this paragraph shall be construed to prevent the Trustee from setting
a new record date for any action for which a record date has previously been set
pursuant to this paragraph (whereupon the record date previously set shall
automatically and with no action by any Person be cancelled and of no effect),
and
<PAGE>

                                                                              35

nothing in this paragraph shall be construed to render ineffective any action
taken by Holders of the requisite principal amount of Outstanding Securities on
the date such action is taken. Promptly after any record date is set pursuant to
this paragraph, the Trustee, at the Company's expense, shall cause notice of
such record date, the proposed action by Holders and the applicable Expiration
Date to be given to the Company in writing and to each Holder of Securities in
the manner set forth in Section 106.

     With respect to any record date set pursuant to this Section, the party
hereto which sets such record date may designate any day as the "Expiration
Date" and from time to time may change the Expiration Date to any earlier or
later day; provided that no such change shall be effective unless notice of the
proposed new Expiration Date is given to the other party hereto in writing, and
to each Holder of Securities in the manner set forth in Section 106, on or prior
to the existing Expiration Date; provided further, that the Expiration Date
shall be no later than 180 days following the record date relating to such
Expiration Date.  If an Expiration Date is not designated with respect to any
record date set pursuant to this Section, the party hereto which set such record
date shall be deemed to have designated the 180th day after such record date as
the Expiration Date with respect thereto, subject to its right to change the
Expiration Date to any earlier day as provided in this paragraph.

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

SECTION 105.  Notices, Etc., to Trustee and Company.

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

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

     (2)  the Company by the Trustee or by any Holder shall be sufficient for
  every purpose hereunder (unless otherwise herein expressly provided) if in
  writing and mailed, first-class postage prepaid, to the Company addressed to
  it at the
<PAGE>

                                                                              36

  address of its principal office specified in the first paragraph of this
  instrument, Attention: Chief Financial Officer or at any other address
  previously furnished in writing to the Trustee by the Company.

     In case by reason of the suspension of regular mail service or by reason of
any other cause it shall be impracticable to give such notice by mail, then such
notification shall constitute a sufficient notification for every purpose
hereunder if made, given, furnished or filed in writing by facsimile
transmission or otherwise to or with the Company at its principal office
specified in the first paragraph of this instrument or at any other address
previously furnished in writing to the Trustee by the Company.

SECTION 106.  Notice to Holders; Waiver.

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

     In case by reason of the suspension of regular mail service or by reason of
any other cause it shall be impracticable to give such notice by mail, then such
notification as shall be made with the approval of the Trustee shall constitute
a sufficient notification for every purpose hereunder.

SECTION 107.  Conflict with Trust Indenture Act.
<PAGE>

                                                                              37

     If any provision hereof limits, qualifies or conflicts with a provision of
the Trust Indenture Act which is required under the Trust Indenture Act to be a
part of and govern this Indenture, the latter provision shall control.  If any
provision of this Indenture modifies or excludes any provision of the Trust
Indenture Act which may be so modified or excluded, the latter provision shall
be deemed to apply to this Indenture as so modified or to be excluded, as the
case may be.

SECTION 108.  Effect of Headings, Table of Contents and Cross-Reference Sheet.

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

SECTION 109.  Successors and Assigns.

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

SECTION 110.  Separability Clause.

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

SECTION 111.  Benefits of Indenture.

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

SECTION 112.  Governing Law.

     This Indenture and the Securities shall be governed by and construed in
accordance with the internal laws of the State of New York without reference to
principles of conflicts of laws.
<PAGE>

                                                                              38

SECTION 113.  Legal Holidays.

     A "Legal Holiday" is a Saturday, a Sunday or a day on which banking
institutions are not required to be open in the State of New York.

     In any case where any Interest Payment Date, Redemption Date, Purchase
Date, Change of Control Payment Date or Stated Maturity of any Security shall be
a Legal Holiday, then (notwithstanding any other provision of this Indenture or
of the Securities other than a provision in the Securities which expressly
states that such provision shall apply in lieu of this Section) payment of
interest or principal (and premium, if any) need not be made on such date, but
may be made on the next succeeding day that is not a Legal Holiday with the same
force and effect as if made on the Interest Payment Date, Redemption Date,
Purchase Date, Change of Control Payment Date or at the Stated Maturity,
provided that no interest shall accrue from and after such Interest Payment
Date, Redemption Date, Purchase Date, Change of Control Payment Date or Stated
Maturity, as the case may be.  If a regular record date is a Legal Holiday, the
record date shall not be affected.

                                  ARTICLE TWO

                                SECURITY FORMS

SECTION 201.  Form of Securities.

     The Securities of each series shall be in substantially the applicable
forms set forth in Exhibit 1 to Appendix A hereto or Exhibit A hereto with such
appropriate insertions, omissions, substitutions and other variations as are
required or permitted by this Indenture.  The Securities of each series may have
such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange or Depositary therefor or as may, consistently herewith, be
determined by the officers executing such Securities, as evidenced by their
execution thereof.

     The Securities of each series shall be issued initially in the form of one
or more permanent Global Securities in definitive, fully registered form without
interest coupons in substantially the form set forth in Exhibit 1 to Appendix A
hereto or Exhibit A hereto, as applicable, which shall be deposited on behalf of
the purchasers of the Securities represented thereby with the Trustee, at its
New York office, as custodian for the Depositary, and registered in the name of
the Depositary or a nominee of the Depositary, duly executed by the Company and
authenticated by the Trustee as hereinafter provided.
<PAGE>

                                                                              39

The aggregate principal amount of the Global Securities may from time to time be
increased or decreased by adjustments made on the records of the Trustee and the
Depositary or its nominee in the limited circumstances hereinafter provided.

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

     Provisions relating to the Initial Securities of each series and the
Exchange Securities are set forth in Appendix A, which is hereby incorporated in
and expressly made part of this Indenture. The terms of the Securities of each
series set forth in Exhibit 1 to Appendix A and Exhibit A are part of the terms
of this Indenture.

SECTION 202.  Form of Face of Securities.

     The face of the Initial Securities of each series shall be substantially in
the form of Exhibit 1 to Appendix A, which is hereby incorporated in and
expressly made a part of this Indenture.  The face of the Exchange Securities
shall be substantially in the form of Exhibit A, which is hereby incorporated in
and expressly made a part of this Indenture.

SECTION 203.  Form of Reverse of Securities.

     The reverse of the Initial Securities of each series shall be substantially
in the form of Exhibit 1 to Appendix A, which is hereby incorporated in and
expressly made a part of this Indenture.  The reverse of the Exchange Securities
shall be substantially in the form of Exhibit A, which is hereby incorporated in
and expressly made a part of this Indenture.

SECTION 204.  Form of Trustee's Certificate of Authentication.

     The Trustee's certificate of authentication shall be in substantially the
following form:

     This is one of the Company's 7 7/8% Senior Subordinated Notes Due 2011
referred to in the within-mentioned Indenture.

Dated:

                                         The Chase Manhattan Bank,
                                         As Trustee

<PAGE>

                                                                              40

                                                  By............................
                                                         Authorized Officer

                                 ARTICLE THREE

                                THE SECURITIES

SECTION 301.  Amount of Securities; Issuable in Series.

     The aggregate principal amount of Securities which may be authenticated and
delivered under this Indenture is unlimited. All Securities shall be identical
in all respects other than issue price, issuance dates, title and original
interest accrual dates.  The Securities may be issued in one or more series;
provided, however, that any Securities issued with original issue discount
("OID") for Federal income tax purposes shall not be issued as part of the same
series as any Securities that are issued with a different amount of OID or are
not issued with OID. All Securities of any one series shall be substantially
identical except as to denomination.

     Subject to Section 303, the Trustee shall authenticate Securities for
original issue on the Issue Date in the aggregate principal amount of
$200,000,000 (the "Original Securities"). The Original Securities shall be
limited to $200,000,000 in aggregate principal amount (except for Securities
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, other Securities pursuant to Section 304, 305, 306, 906,
1012, 1019 or 1106 or Appendix A).  With respect to any Securities originally
issued after the Issue Date, there shall be established in or pursuant to a
resolution of the Board of Directors and set forth or determined in the manner
provided in an Officers' Certificate, or established in one or more indentures
supplemental hereto, prior to the issuance of such Securities:

          (1) whether such Securities shall be issued as part of a new or
     existing series of Securities and the title of such Securities (which shall
     distinguish the Securities of the series from Securities of any other
     series);

          (2) any limit on the aggregate principal amount of such Securities
     which may be authenticated and delivered under this Indenture (except for
     Securities authenticated and delivered upon registration of transfer of, or
     in exchange for, or in lieu of, other Securities of the same series
     pursuant to Section 304, 305, 306, 906, 1012, 1019 or 1106 or Appendix A
     and except for Securities which, pursuant to Section 303, are deemed never
     to have been authenticated and delivered hereunder);
<PAGE>

                                                                              41

          (3) the issue price and issuance date of such Securities, including
     the date from which interest on such Securities shall accrue;

          (4) if applicable, that such Securities shall be issuable in whole or
     in part in the form of one or more Global Securities and, in such case, the
     respective Depositaries for such Global Securities, the form of any legend
     or legends which shall be borne by any such Global Security in addition to
     or in lieu of that set forth in Exhibit 1 to Appendix A and any
     circumstances in addition to or in lieu of those set forth in Section 2.4
     of Appendix A in which any such Global Security may be exchanged in whole
     or in part for Securities registered, and any transfer of such Global
     Security in whole or in part may be registered, in the name or names of
     Persons other than the Depositary for such Global Security or a nominee
     thereof;

          (5) if applicable, that such Securities shall not be issued in the
     form of Initial Securities set forth in Appendix A, but shall be issued in
     the form of Exchange Securities as set forth in Exhibit A.

          If any of the terms of any series are established by action taken
     pursuant to a resolution of the Board of Directors, a copy of an
     appropriate record of such action shall be certified by the Secretary or
     any Assistant Secretary of the Company and delivered to the Trustee at or
     prior to the delivery of the Officers' Certificate or the indenture
     supplemental hereto setting forth the terms of the series.

     The Trustee shall not be required to authenticate any Securities in
addition to the Original Securities if the issue of such Securities pursuant to
this Indenture will affect the Trustee's own rights, duties or immunities under
the Securities and this Indenture or otherwise in a manner which is not
reasonably acceptable to the Trustee.

     In authenticating such Securities after the Issue Date, and accepting the
additional responsibilities under this Indenture in relation to such Securities,
the Trustee shall be entitled to receive, and (subject to Section 601) shall be
fully protected in relying upon, an Opinion of Counsel stating,

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

     (b) that the terms of such Securities have been established in conformity
     with the provisions of this Indenture; and
<PAGE>

                                                                              42

     (c) that such Securities, when authenticated and delivered by the Trustee
     and issued by the Company in the manner and subject to any conditions
     specified in such Opinion of Counsel, will constitute valid and legally
     binding obligations of the Company, enforceable in accordance with their
     terms, subject to applicable bankruptcy, reorganization, insolvency,
     fraudulent transfer, moratorium or other laws affecting creditors' rights
     generally from time to time in effect and to general principles of equity,
     regardless of whether such enforceability is considered in a proceeding in
     equity or at law.

SECTION 302. Denominations.

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

SECTION 303. Execution, Authentication, Delivery and Dating.

     The Securities shall be executed on behalf of the Company by its Chairman
of the Board, its Vice Chairman of the Board, its President or by any Vice
President, together with any one of the Treasurer, any Assistant Treasurer, the
Secretary or any Assistant Secretary of the Company.  The signature of any of
these officers on the Securities may be manual or facsimile.

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

     Each Security shall be dated the date of its authentication.

     No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature of an authorized officer, and such
certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered
hereunder.  Notwithstanding the foregoing, if any Security shall have been
authenticated and delivered hereunder but never issued and sold by the Company,
and the Company shall deliver such Security to the Trustee for cancellation as
provided in Section 309, for all purposes of this Indenture such Security shall
be deemed never to have been authenticated and delivered
<PAGE>

                                                                              43

hereunder and shall never be entitled to the benefits of this Indenture.

     The Trustee shall, subject to Section 301, authenticate and deliver
Securities for original issue upon Company Order.  Such Company Order shall
specify the date on which the original issue of Securities is to be
authenticated and shall further provide instructions concerning registration,
amounts for each Holder and delivery.

SECTION 304.  Temporary Securities.

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

     If temporary Securities are issued, the Company will cause definitive
Securities to be prepared without unreasonable delay. After the preparation of
definitive Securities, the temporary Securities shall be exchangeable for
definitive Securities upon surrender of the temporary Securities at the office
or agency of the Company maintained for that purpose, without charge to the
Holder.  Upon surrender for cancellation of any one or more temporary
Securities, the Company shall execute and the Trustee shall authenticate and
deliver in exchange therefor one or more definitive Securities, of any
authorized denominations and of like series, tenor and aggregate principal
amount.  Until so exchanged, the temporary Securities shall in all respects be
entitled to the same benefits under this Indenture as definitive Securities.

SECTION 305.  Registration, Registration of Transfer and Exchange.

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

                                                                              44

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

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

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

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

     No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 304, 906, 1012, 1019 or 1106 not involving any
transfer.

     If the Securities are to be redeemed in part, the Company shall not be
required (A) to issue, register the transfer of or exchange any Securities
during a period beginning at the opening of business 15 days before the day of
the mailing of a notice of redemption of any such Securities selected for
redemption under Section 1102 and ending at the close of business on the day of
such mailing, or (B) to register the transfer of or exchange any Security so
selected for redemption, in whole or in part, except the unredeemed portion of
any Security being redeemed in part.

     With respect to Global Securities:

     (1)  Each Global Security authenticated under this Indenture shall be
  registered in the name of the Depositary designated
<PAGE>

                                                                              45

  for such Global Security or a nominee thereof and deposited with such
  Depositary or a nominee thereof or custodian therefor, and each such Global
  Security shall constitute a single Security for all purposes of this
  Indenture.

     (2)  A Global Security may not be transferred except as a whole by the
  Depositary to a nominee of the Depositary or by a nominee of the Depositary to
  the Depositary.  A Global Security is exchangeable for certificated Securities
  only if (i) the Depositary notifies the Company that it is unwilling or unable
  to continue as a Depositary for such Global Security or if at any time the
  Depositary ceases to be a clearing agency registered under the Exchange Act
  and a successor Depositary is not appointed by the Company within 90 days of
  such notice or after it becomes aware of such cessation, (ii) the Company
  executes and delivers to the Trustee a notice that such Global Security shall
  be so transferable, registrable, and exchangeable, and such transfers shall be
  registrable or (iii) there shall have occurred and be continuing an Event of
  Default or an event which, with the giving of notice or lapse of time or both,
  would constitute an Event of Default with respect to the Securities
  represented by such Global Security.  Any Global Security that is exchangeable
  for certificated Securities pursuant to the preceding sentence will be
  transferred to, and registered and exchanged for, certificated Securities in
  authorized denominations, without legends applicable to a Global Security, and
  registered in such names as the Depositary holding such Global Security may
  direct.  Subject to the foregoing, a Global Security is not exchangeable,
  except for a Global Security of like denomination to be registered in the name
  of the Depositary or its nominee.  In the event that a Global Security becomes
  exchangeable for certificated Securities, (i) certificated Securities will be
  issued only in fully registered form in denominations of $1,000 or integral
  multiples thereof, (ii) payment of principal, any repurchase price, and
  interest on the certificated Securities will be payable, and the transfer of
  the certificated Securities will be registrable, at the office or agency of
  the Company maintained for such purposes, and (iii) no service charge will be
  made for any registration of transfer or exchange of the certificated
  Securities, although the Company may require payment of a sum sufficient to
  cover any tax or governmental charge imposed in connection therewith.

     (3)  Securities issued in exchange for a Global Security or any portion
  thereof shall have an aggregate principal amount equal to that of such Global
  Security or portion thereof to be so exchanged, shall be registered in such
  names and be in such authorized denominations as the Depositary shall
  designate and shall bear the applicable legends provided for herein.  Any
  Global Security to be exchanged in whole shall be surrendered
<PAGE>

                                                                              46

  by the Depositary to the Trustee. With respect to any Global Security to be
  exchanged in part, either such Global Security shall be so surrendered for
  exchange or, if the Trustee is acting as custodian for the Depositary or its
  nominee with respect to such Global Security, the principal amount thereof
  shall be reduced, by an amount equal to the portion thereof to be so
  exchanged, by means of an appropriate adjustment made on the records of the
  Trustee. Upon any such surrender or adjustment, the Trustee shall authenticate
  and deliver the Security issuable on such exchange to or upon the order of the
  Depositary or an authorized representative thereof.

     (4)  Every Security authenticated and delivered upon registration of
  transfer of, or in exchange for or in lieu of, a Global Security or any
  portion thereof, whether pursuant to this Section, Section 304, 306, 906 or
  1106 or otherwise, shall be authenticated and delivered in the form of, and
  shall be, a Global Security, unless such Security is registered in the name of
  a Person other than the Depositary for such Global Security or a nominee
  thereof.

     Members of, or participants in, the Depositary ("Participants") shall have
no rights under this Indenture with respect to any Global Security held on their
behalf by the Depositary or by the Trustee as the custodian of the Depositary or
under such Global Security, and the Depositary may be treated by the Company,
the Trustee and any agent of the Company or the Trustee as the absolute owner of
such Global Security for all purposes whatsoever.  Notwithstanding the
foregoing, nothing herein shall prevent the Company, the Trustee or any agent of
the Company or the Trustee from giving effect to any written certification,
proxy or other authorization furnished by the Depositary or impair, as between
the Depositary and its Participants, the operation of customary practices of
such Depositary governing the exercise of the rights of a holder of a beneficial
interest in any Global Security.

SECTION 306.  Mutilated, Destroyed, Lost and Stolen Securities.

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

     If there shall be delivered to the Company and the Trustee (i) evidence to
their satisfaction of the destruction, loss or theft of any Security and (ii)
such security or indemnity as may be required by them to save each of them and
any agent of either of them harmless, then, in the absence of notice to the
Company or the Trustee that such Security has been acquired by a
<PAGE>

                                                                              47

bona fide purchaser, the Company shall execute and the Trustee shall
authenticate and deliver, in lieu of any such destroyed, lost or stolen
Security, a new Security of like series, tenor and principal amount and bearing
a number not contemporaneously outstanding.

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

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

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

SECTION 307.  Payment of Interest; Interest Rights Preserved.

     Interest on any Security which is payable, and is punctually paid or duly
provided for, on any Interest Payment Date shall be paid to the Person in whose
name that Security (or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest.

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

       (1)   The Company may elect to make payment of any Defaulted Interest to
     the Persons in whose names the Securities (or their respective Predecessor
     Securities) are registered at the close of business on a Special Record
     Date for the payment of such Defaulted Interest, which shall be
<PAGE>

                                                                              48

     fixed in the following manner. The Company shall notify the Trustee in
     writing of the amount of Defaulted Interest proposed to be paid on each
     Security and the date of the proposed payment, and at the same time the
     Company shall deposit with the Trustee an amount of money equal to the
     aggregate amount proposed to be paid in respect of such Defaulted Interest
     or shall make arrangements satisfactory to the Trustee for such deposit
     prior to the date of the proposed payment, such money when deposited to be
     held in trust for the benefit of the Persons entitled to such Defaulted
     Interest as in this Clause provided. Thereupon the Trustee shall fix a
     Special Record Date for the payment of such Defaulted Interest which shall
     be not more than 15 days and not less than 10 days prior to the date of the
     proposed payment and not less than 10 days after the receipt by the Trustee
     of the notice of the proposed payment. The Trustee shall promptly notify
     the Company of such Special Record Date and, in the name and at the expense
     of the Company, shall cause notice of the proposed payment of such
     Defaulted Interest and the Special Record Date therefor to be given to each
     Holder of Securities in the manner set forth in Section 106, not less than
     10 days prior to such Special Record Date. Notice of the proposed payment
     of such Defaulted Interest and the Special Record Date therefor having been
     so mailed, such Defaulted Interest shall be paid to the Persons in whose
     names the Securities (or their respective Predecessor Securities) are
     registered at the close of business on such Special Record Date and shall
     no longer be payable pursuant to the following Clause (2).

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

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

                                                                              49

SECTION 308.  Persons Deemed Owners.

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

SECTION 309.  Cancellation.

     All Securities surrendered for payment, redemption or registration of
transfer or exchange shall, if surrendered to any Person other than the Trustee,
be delivered to the Trustee and shall be promptly cancelled by it.  The Company
may at any time deliver to the Trustee for cancellation any Securities
previously authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever, and may deliver to the Trustee (or to any
other Person for delivery to the Trustee) for cancellation any Securities
previously authenticated hereunder which the Company has not issued and sold,
and all Securities so delivered shall be promptly cancelled by the Trustee.  No
Securities shall be authenticated in lieu of or in exchange for any Securities
cancelled as provided in this Section, except as expressly permitted by this
Indenture.  All cancelled Securities held by the Trustee shall be disposed of as
directed by a Company Order; provided, however, that the Trustee shall not be
required to destroy such cancelled Securities.

SECTION 310.  Computation of Interest.

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

SECTION 311.  CUSIP Numbers.
<PAGE>

                                                                              50

     The Company in issuing the Securities may use CUSIP numbers, and, if so,
the Trustee shall use CUSIP numbers in notices of redemption, any Prepayment
Offer Notice or any notice of a Change of Control Offer as a convenience to
Holders; provided that any such notice may state that no representation is made
as to the correctness of such numbers either as printed on the Securities or as
contained in any notice of redemption, Prepayment Offer Notice or any notice of
a Change of Control Offer and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such redemption,
prepayment or offer shall not be affected by any defect in or omission of such
numbers.

                                 ARTICLE FOUR

                          SATISFACTION AND DISCHARGE

SECTION 401.  Satisfaction and Discharge of Indenture.

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

     (1)  either

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

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

           (i)  have become due and payable, or

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

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

                                                                              51

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

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

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

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

SECTION 402.  Application of Trust Money.

     Subject to the provisions of the last paragraph of Section 1003, all money
deposited with the Trustee pursuant to Section 401 shall be held in trust and
applied by it, in accor  dance 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 any
premium and interest for whose payment such money has been deposited with the
Trustee.  Money held by the Trustee pursuant to this Article shall not be
subject to the claims of the holders of Senior Indebtedness.
<PAGE>

                                                                              52

                                 ARTICLE FIVE

                                   REMEDIES

SECTION 501.  Events of Default.

     "Event of Default" means any one of the following events (whatever the
reason for such Event of Default and whether it shall be occasioned by the
provisions of Article Thirteen or 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):

     (1)  default in the payment of any interest upon any Security when it
  becomes due and payable, and continuance of such default for a period of 30
  days; or

     (2)  default in the payment of the principal of (or premium, if any, on)
  any Security at its Maturity; or

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

     (4)  a default under any Indebtedness for borrowed money by the Company or
  any Restricted Subsidiary, or under any mortgage, indenture or instrument
  (including this Indenture) under which there may be issued or by which there
  may be secured or evidenced any such Indebtedness, which default shall have
  resulted in an amount greater than $10 million ($40 million in the case of
  Indebtedness of a Foreign Subsidiary the recourse for which is limited to
  solely Foreign Subsidiaries) of such Indebtedness becoming or being declared
  due and payable prior to the date on which it would otherwise have become due
  and payable, or a failure to pay any Indebtedness in an amount greater than
  $10 million ($40 million in the case of Indebtedness of a Foreign Subsidiary
  the recourse for which is limited to solely Foreign Subsidiaries) at maturity,
  in each case without such Indebtedness having been discharged, or such
  acceleration having been rescinded or annulled, within a period of 10 days
  after there shall have been given, by registered or certified
<PAGE>

                                                                              53

  mail, to the Company by the Trustee or to the Company and the Trustee by the
  Holders of at least 25% in principal amount of the Outstanding Securities a
  written notice specifying such default and requiring the Company to cause such
  Indebtedness to be discharged or cause such acceleration to be rescinded or
  annulled, as the case may be, and stating that such notice is a "Notice of
  Default" hereunder; or

      (5)  a final judgment or order or final judgments or orders for the
  payment of money are entered against the Company or any Restricted Subsidiary
  in an uninsured or unindemnified aggregate amount in excess of $10 million by
  a court or courts of competent jurisdiction, which judgments or orders are not
  discharged, waived, stayed, satisfied or bonded within a period (during which
  execution shall not be effectively stayed) of 60 consecutive days after the
  right to appeal all such judgments or orders has expired; or

     (6) the Company or any Restricted Subsidiary pursuant to or within the
  meaning of any Bankruptcy Law:

     (A) commences a voluntary case;

     (B) consents to the entry of an order for relief against it in an
     involuntary case;

     (C) consents to the appointment of a Custodian of it or for any substantial
     part of its property; or

     (D) makes a general assignment for the benefit of its creditors;

  or takes any comparable action under any foreign laws relating to insolvency;
  or

     (7) a court of competent jurisdiction enters an order or decree under any
  Bankruptcy Law that:

     (A) is for relief against the Company or any Restricted Subsidiary in an
     involuntary case;

     (B) appoints a Custodian of the Company or any Restricted Subsidiary or for
     any substantial part of its property; or

     (C) orders the winding up or liquidation of the Company or any Restricted
     Subsidiary;

  or any similar relief is granted under any foreign laws and the order or
  decree remains unstayed and in effect for 60 days.
<PAGE>

                                                                              54

     The term "Bankruptcy Law" means Title 11, United States Code, or any
                                               ------------------
similar Federal or state law for the relief of debtors.  The term "Custodian"
means any receiver, trustee, assignee, liquidator, custodian or similar official
under any Bankruptcy Law.

SECTION 502.  Acceleration of Maturity; Rescission and Annulment.

     If an Event of Default (other than an Event of Default specified in Section
501(6) or 501(7)) shall occur and be continuing, then in every such case the
Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Securities may declare the principal amount of and accrued and
unpaid interest on all the Securities to be due and payable immediately, by a
notice in writing to the Company (and to the Trustee if given by Holders), and
upon any such declaration such principal amount and accrued and unpaid interest
shall become immediately due and payable.  If an Event of Default specified in
Section 501(6) or 501(7) occurs, the principal amount of and interest on all the
Securities shall automatically, and without any declaration or other action on
the part of the Trustee or any Holder, become immediately due and payable.

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

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

         (A)  all overdue interest on all Securities,

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

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

  and

     (2)  all Events of Default, other than the non-payment of the principal or
  interest of the Securities which has become due solely by such declaration of
  acceleration, have been cured or waived as provided in Section 513.
<PAGE>

                                                                              55

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

SECTION 503.  Collection of Indebtedness and Suits for Enforcement by Trustee.

     The Company covenants that if

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

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

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

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

                                                                              56

SECTION 504.  Trustee May File Proofs of Claim.

     In case of any judicial proceeding relative to the Company (or any other
obligor upon the Securities), its property or its creditors, the Trustee shall
be entitled and empowered, by intervention in such proceeding 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 authorized to collect and receive any moneys or
other property payable or deliverable on any such claims and to distribute the
same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator
or other similar official in any such judicial proceeding is hereby authorized
by each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to
pay to the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 607.

     No provision of this Indenture shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding; provided, however,
that the Trustee may, on behalf of the Holders, vote for the election of a
trustee in bankruptcy or similar official and be a member of a creditors' or
other similar committee.

SECTION 505.  Trustee May Enforce Claims Without Possession of Securities.

     All rights of action and claims under this Indenture or the Securities may
be prosecuted and enforced by the Trustee without the possession of any of the
Securities or the production thereof in any proceeding relating thereto, and any
such proceeding instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment shall, after provision
for the payment of the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, be for the ratable benefit of
the Holders of the Securities.
<PAGE>

                                                                              57

SECTION 506.  Application of Money Collected.

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

       FIRST:  to the payment of all amounts due the Trustee under Section 607;
  and

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

       THIRD:  to the Company.

SECTION 507.  Limitation on Suits.

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

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

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

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

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

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

                                                                              58

it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
such Holders, or to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all of such
Holders.

SECTION 508.  Unconditional Right of Holders To Receive Principal, Premium and
Interest.

     Notwithstanding any other provision in this Indenture, a Holder of the
Securities shall have the right, which is absolute and unconditional, to receive
payment of the principal of and any premium and (subject to Section 307)
interest on the Securities on the Stated Maturities expressed in the Securities
(or, in the case of redemption, prepayment or Change of Control, on the
Redemption Date, Purchase Date or Change of Control Payment Date, respectively)
and to institute suit for the enforcement of any such payment, and such rights
shall not be impaired without the consent of such Holder.

SECTION 509.  Restoration of Rights and Remedies.

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

SECTION 510.  Rights and Remedies Cumulative.

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

                                                                              59

SECTION 511.  Delay or Omission Not Waiver.

     No delay or omission of the Trustee or of any Holder of the Securities 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 or by law to
the Trustee or to the Holders may be exercised from time to time, and as often
as may be deemed expedient, by the Trustee or by the Holders, as the case may
be.

SECTION 512.  Control by Holders.

     The Holders of a majority in principal amount of the Outstanding Securities
shall have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or
power con  ferred on the Trustee with respect to the Securities; provided that

     (1)  such direction shall not be in conflict with any rule of law or with
  this Indenture and would not involve the Trustee in personal liability, and

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

SECTION 513.  Waiver of Past Defaults.

     The Holders of not less than a majority in principal amount of the
Outstanding Securities may by Act of such Holders on behalf of the Holders of
all the Securities waive any past or existing Default or Event of Default
hereunder and its consequences, except a Default

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

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

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

                                                                              60

SECTION 514.  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, suffered or
omitted by it as Trustee, a court may require any party litigant in such suit to
file an undertaking to pay the costs of such suit, and may assess costs against
any such party litigant, in the manner and to the extent provided in the Trust
Indenture Act; provided that neither this Section nor the Trust Indenture Act
shall be deemed to authorize any court to require such an undertaking or to make
such an assessment in any suit instituted by the Company or the Trustee.

SECTION 515.  Waiver of Usury, Stay or Extension Laws.

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

                                  ARTICLE SIX

                                  THE TRUSTEE

SECTION 601.  Certain Duties and Responsibilities.

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

SECTION 602.  Notice of Defaults.
<PAGE>

                                                                              61

     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
interest on any Security (including payments pursuant to the mandatory
redemption provisions of such Security, if any), the Trustee may withhold the
notice if and so long as a committee of its Trust Officers in good faith
determines that withholding the notice is in the interests of Holders.

SECTION 603.  Certain Rights of Trustee.

     Subject to the provisions of Section 601:

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

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

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

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

     (5)  the Trustee shall be under no obligation to exercise any of the rights
  or powers vested in it by this Indenture at the request or direction of any of
  the Holders pursuant to this Indenture, unless such Holders shall have offered
  to the Trustee reasonable security or indemnity against the costs, expenses
  and liabilities which might be incurred by it in compliance with such request
  or direction;

     (6)  the Trustee shall not be bound to make any investigation into the
  facts or matters stated in any
<PAGE>

                                                                              62

  resolution, certificate, statement, instrument, opinion, report, notice,
  request, direction, consent, order, bond, debenture, note, other evidence of
  indebtedness or other paper or document, but the Trustee, in its discretion,
  may make such further inquiry or investigation into such facts or matters as
  it may see fit, and, if the Trustee shall determine to make such further
  inquiry or investigation, it shall be entitled to examine the books, records
  and premises of the Company, personally or by agent or attorney; and

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

SECTION 604.  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.  The Trustee
shall not be charged with notice or knowledge of any Default or Event of Default
or of any changes in the ratings of the Securities by the Rating Agencies unless
(i) a Trust Officer shall have actual knowledge thereof or (ii) the Trustee
shall have received notice thereof in accordance with Section 105 from the
Company or any Holder.

SECTION 605.  May Hold Securities.

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

                                                                              63

SECTION 606.  Money Held in Trust.

     Money held by the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by law. The Trustee shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed in writing with the Company.  So long as no Event of Default shall have
occurred and be continuing, all interest allowed on any such money shall be paid
to the Company from time to time upon receipt by the Trustee of a Company Order
except as otherwise provided in this Indenture.

SECTION 607.  Compensation and Reimbursement.

     The Company agrees

     (1)  to pay to the Trustee from time to time such compensation as shall be
  agreed to in writing by the Company and the Trustee for all services rendered
  by it hereunder (which compensation shall not be limited by any provision of
  law in regard to the compensation of a trustee of an express trust);

     (2)  except as otherwise expressly provided herein, to reimburse the
  Trustee upon its request for all reasonable expenses, disbursements and
  advances incurred or made by the Trustee in accordance with any provision of
  this Indenture (including the reasonable compensation and the expenses and
  disbursements of its agents and counsel), except any such expense,
  disbursement or advance as may be attributable to its negligence or bad faith;
  and

     (3)  to indemnify each of the Trustee and any predecessor Trustee for, and
  to hold it harmless against, any and all loss, liability, damage, claim or
  expense incurred without negligence or bad faith on its part, arising out of
  or in connection with the acceptance or administration of the trust or trusts
  hereunder, including the costs and expenses of defending itself against any
  claim or liability in connection with the exercise or performance of any of
  its powers or duties hereunder.

     Without limiting any rights available to the Trustee under applicable law,
when the Trustee incurs expenses or renders services in connection with an Event
of Default specified in Section 501(6) or Section 501(7), the expenses
(including the reasonable fees and expenses of its counsel) and the compensation
for the services are intended to constitute expenses of administration under any
applicable Federal or State bankruptcy, insolvency or other similar law.
<PAGE>

                                                                              64

     To secure the Company's payment obligations under this Section, the Trustee
shall have a lien prior to the Securities on all money or property held or
collected by the Trustee as such, except money or property held in trust to pay
the principal of or interest on particular Securities.

     The provisions of this Section shall survive the termination of this
Indenture.

SECTION 608.  Conflicting Interests.

     If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture. To the extent
permitted by the Trust Indenture Act, the Trustee shall not be deemed to have a
conflicting interest by virtue of being trustee under the 9% Indenture, relating
to the 9% Notes, by virtue of being trustee under the 9 3/4% Indenture, relating
to the 9 3/4% Notes or by virtue of being trustee under the 8 5/8% Indenture,
relating to the 8 5/8% Notes.

SECTION 609.  Corporate Trustee Required; Eligibility.

     There shall at all times be one (and only one) Trustee hereunder. The
Trustee shall be a Person that is eligible pursuant to the Trust Indenture Act
to act as such and has a combined capital and surplus of at least $50,000,000.
If any such Person publishes reports of condition at least annually, pursuant to
law or to the requirements of its supervising or examining authority, then for
the purposes of this Section and to the extent permitted by the Trust Indenture
Act, the combined capital and surplus of such Person shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, it shall resign immediately in
the manner and with the effect hereinafter specified in this Article.

SECTION 610.  Resignation and Removal; Appointment of Successor.

     No resignation or removal of the Trustee and no appointment of a successor
Trustee pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee in accordance with the applicable
requirements of Section 611.
<PAGE>

                                                                              65

     The Trustee may resign at any time by giving written notice thereof to the
Company.

     The Trustee may be removed at any time by Act of the Holders of a majority
in principal amount of the Outstanding Securities, delivered to the Trustee and
to the Company.

     If at any time:

     (1)  the Trustee shall fail to comply with Section 608 after written
  request therefor by the Company or by any Holder who has been a bona fide
  Holder of a Security for at least six months, or

     (2)  the Trustee shall cease to be eligible under Section 609 and shall
  fail to resign after written request therefor by the Company or by any such
  Holder, or

     (3)  the Trustee shall become incapable of acting or shall be adjudged a
  bankrupt or insolvent or a receiver of the Trustee or of its property shall be
  appointed or any public officer shall take charge or control of the Trustee or
  of its property or affairs for the purpose of rehabilitation, conservation or
  liquidation,

then, in any such case, (A) the Company by a Board Resolution may remove the
Trustee, or (B) subject to Section 514, any Holder who has been a bona fide
Holder of a Security for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.

     If the instrument of acceptance by a successor Trustee required by Section
611 shall not have been delivered to the Trustee within 30 days after (i) the
giving of such notice of resignation or (ii) the removal of the Trustee by the
Company pursuant to a Board Resolution, the Trustee who has so resigned or been
removed may petition any court of competent jurisdiction for the appointment of
a successor Trustee.

     If the Trustee shall resign, be removed or become incapable of acting, or
if a vacancy shall occur in the office of Trustee for any reason, the Company,
by a Board Resolution, shall promptly appoint a successor Trustee (it being
understood that at any time there shall be only one Trustee) and shall comply
with the applicable requirements of Section 611. If, within one year after such
resignation, removal or incapability, or the occurrence of such vacancy, a
successor Trustee shall be appointed by Act of the Holders of a majority in
principal amount of the Outstanding Securities delivered to the Company and the
retiring Trustee, the successor Trustee so appointed shall, forthwith upon its
acceptance of such appointment in accordance
<PAGE>

                                                                              66

with the applicable requirements of Section 611, become the successor Trustee
and to that extent supersede the successor Trustee appointed by the Company. If
no successor Trustee shall have been so appointed by the Company or the Holders
and accepted appointment in the manner required by Section 611, any Holder who
has been a bona fide Holder of a Security for at least six months may, on behalf
of himself and all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor Trustee.

     The Company shall give notice of each resignation and each removal of the
Trustee and each appointment of a successor Trustee to all Holders of Securities
in the manner provided in Section 106.  Each notice shall include the name of
the successor Trustee and the address of its Corporate Trust Office.

SECTION 611.  Acceptance of Appointment by Successor.

     In case of the appointment hereunder of a successor Trustee, every such
successor Trustee so appointed shall execute, acknowledge and deliver to the
Company and to the retiring Trustee an instrument accepting such appointment,
and thereupon the resignation or removal of the retiring Trustee shall become
effective and such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and duties
of the retiring Trustee; provided that, on the request of the Company or the
successor Trustee, such retiring Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor Trustee all the
rights, powers and trusts of the retiring Trustee and shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder.

     Upon request of any such successor Trustee, the Company shall execute any
and all instruments for more fully and certainly vesting in and confirming to
such successor Trustee all such rights, powers and trusts referred to in the
preceding paragraph.

     No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be qualified and eligible under
this Article.
<PAGE>

                                                                              67

SECTION 612.  Merger, Conversion, Consolidation or Succession to Business.

     Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been authenticated,
but not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Securities so authenticated with the same effect
as if such successor Trustee had itself authenticated such Securities.

SECTION 613.  Preferential Collection of Claims Against Company.

     If and when the Trustee shall be or become a creditor of the Company (or
any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor).

SECTION 614.  Appointment of Authenticating Agent.
<PAGE>

                                                                              68

     The Trustee, with the prior written consent of the Company and after giving
notice of the appointment described in this Section 614 in the manner provided
in Section 106 to all Holders of Securities, may appoint an Authenticating Agent
or Agents which shall be authorized to act on behalf of the Trustee to
authenticate Securities issued upon exchange, registration of transfer or
partial redemption thereof or pursuant to Section 306, and the Securities so
authenticated shall be entitled to the benefits of this Indenture and shall be
valid and obligatory for all purposes as if authenticated by the Trustee
hereunder. Wherever reference is made in this Indenture to the authentication
and delivery of Securities by the Trustee or the Trustee's certificate of
authentication, such reference shall be deemed to include authentication and
delivery on behalf of the Trustee by an Authenticating Agent and a certificate
of authentication executed on behalf of the Trustee by an Authenticating Agent.
Each Authenticating Agent shall be acceptable to the Company and shall at all
times be a corporation organized and doing business under the laws of the United
States of America, any State thereof or the District of Columbia, authorized
under such laws to act as Authenticating Agent, having a combined capital and
surplus of not less than $50,000,000 and subject to supervision or examination
by Federal or State authority. If such Authenticating Agent publishes reports of
condition at least annually, pursuant to law or to the requirements of said
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such Authenticating Agent shall be deemed to be
its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time an Authenticating Agent shall cease to be
eligible in accordance with the provisions of this Section, such Authenticating
Agent shall resign immediately in the manner and with the effect specified in
this Section.

     Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to all or substantially all of
the corporate agency or corporate trust business of an Authenticating Agent,
shall continue to be an Authenticating Agent, provided such corporation shall be
otherwise eligible under this Section, without the execution or filing of any
paper or any further act on the part of the Trustee or the Authenticating Agent.

     An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company.  The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice thereof
to such Authenticating Agent and to the Company.  Upon receiving such a notice
of resignation or upon such a termination, or in case at any time
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                                                                              69

such Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall give notice of such
appointment in the manner provided in Section 106 to all Holders of Securities.
Any successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section.

     The Company agrees to pay to each Authenticating Agent from time to time
reasonable compensation for its services under this Section.

     If an appointment is made pursuant to this Section, the Securities may have
endorsed thereon, in addition to the Trustee's certificate of authentication, an
alternative

certificate of authentication in the following form:

     This is one of the Company's 7 7/8% Senior Subordinated Notes Due 2011
referred to in the within-mentioned Indenture.

                                   The Chase Manhattan Bank,
                                   As Trustee

                                   By.................................  ,
                                        As Authenticating Agent

                                   By.................................  ,
                                        Authorized Officer
<PAGE>

                                                                              70

                                 ARTICLE SEVEN

                     HOLDERS' LISTS AND REPORTS BY TRUSTEE

SECTION 701.  Company To Furnish Trustee Names and Addresses of Holders.

     The Company will furnish or cause to be furnished to the Trustee

          (1)  semiannually, not later than May 15 and November 15 in each year,
     a list, in such form as the Trustee may reasonably require, of the names
     and addresses of the Holders of Securities as of the preceding May 1 or
     November 1, as the case may be, and

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

excluding from any such list names and addresses received by the Trustee in its
capacity as Security Registrar.

SECTION 702.  Preservation of Information; Communications to Holders.

     The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 701 and the names and
addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 701 upon receipt of a new list so furnished.

     The rights of Holders to communicate with other Holders with respect to
their rights under this Indenture or under the Securities, and the corresponding
rights and privileges of the Trustee, shall be as provided by the Trust
Indenture Act.

     Every Holder of Securities, by receiving and holding the same, agrees with
the Company and the Trustee that neither the Company nor the Trustee nor any
agent of either of them shall be held accountable by reason of any disclosure of
information as to names and addresses of Holders made pursuant to the Trust
Indenture Act.
<PAGE>

                                                                              71

SECTION 703.  Reports by Trustee.

     The Trustee shall transmit to Holders such reports concerning the Trustee
and its actions under this Indenture as may be required pursuant to the Trust
Indenture Act at the times and in the manner provided pursuant thereto. If
required by Section 313(a) of the Trust Indenture Act, the Trustee shall, within
60 days after each May 15 following the date of this Indenture, deliver to
Holders a brief report, dated as of such May 15, which complies with the
provisions of such Section 313(a).

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

                                 ARTICLE EIGHT

             CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE

SECTION 801.  Company May Consolidate, Etc., Only on Certain Terms.

     The Company shall not merge or consolidate with or into any other entity
(other than a merger of a Restricted Subsidiary into the Company) or sell,
transfer, assign, lease, convey or otherwise dispose of all or substantially all
of its Property or assets in any one transaction or series of transactions
unless:

          (a) the entity formed by or surviving any such consolidation or merger
     (if the Company is not the surviving entity) or the Person to which such
     sale, assignment, transfer, lease or conveyance is made (the ''Surviving
     Entity'') shall be a corporation organized and existing under the laws of
     the United States of America or a State thereof or the District of Columbia
     and such corporation expressly assumes, by supplemental indenture in form
     satisfactory to the Trustee, executed and delivered to the Trustee by such
     corporation, the due and punctual payment of the principal of, premium, if
     any, and interest on all the Securities, according to their tenor, and the
     due and punctual performance and observance of all of the covenants and
     conditions of the Indenture to be performed by the Company;

          (b) in the case of a sale, transfer, assignment, lease, conveyance or
     other disposition of all or substantially all of the Company's Property or
     assets, such
<PAGE>

                                                                              72

     Property or assets shall have been transferred as an entirety or virtually
     as an entirety to one Person;

          (c) immediately before and after giving effect to such transaction or
     series of transactions, no Default or Event of Default shall have occurred
     and be continuing;

          (d) 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 such
     transaction or series of transactions), the Company or the Surviving
     Entity, as the case may be, would be able to Incur at least $1.00 of
     additional Indebtedness under clause (a) of Section 1008; provided,
     however, that this clause (d) shall be suspended during any period in which
     the Company and its Restricted Subsidiaries are not subject to the
     Suspended Covenants;

          (e) 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 such
     transaction or series of transactions), the Company or the Surviving Entity
     shall have a Consolidated Net Worth equal to or greater than the
     Consolidated Net Worth of the Company immediately prior to the transaction
     or series of transactions; and

          (f) the Company has delivered to the Trustee an Officers' Certificate
     and an Opinion of Counsel, each stating that such consolidation, merger,
     sale, assignment, conveyance, transfer or lease and, if a supplemental
     indenture is required in connection with such transaction, such
     supplemental indenture, comply with this Article and that all conditions
     precedent herein provided for relating to such transaction have been
     complied with.
<PAGE>

                                                                              73

SECTION 802.  Successor Substituted.

     Upon any consolidation of the Company with, or merger of the Company into,
any other Person or any sale, conveyance, transfer, assignment or lease of all
or substantially all of the Property or assets of the Company in accordance with
Section 801, the successor Person formed by such consolidation or into which the
Company is merged or to which such sale, conveyance, assignment, transfer or
lease is made shall succeed to, and be substituted for, and may exercise every
right and power of, the Company under this Indenture with the same effect as if
such successor Person had been named as the Company herein, and thereafter,
except in the case of a sale, conveyance, assignment, transfer or lease of the
Property or assets of the Company, the predecessor Person shall be relieved of
all obligations and covenants under this Indenture and the Securities.

                                 ARTICLE NINE

                            SUPPLEMENTAL INDENTURES

SECTION 901.  Supplemental Indentures Without Consent of Holders.

     Without the consent of any Holders, the Company, when authorized by a Board
Resolution, and the Trustee, at any time and from time to time, may enter into
one or more indentures supplemental hereto or otherwise amend this Indenture, in
form satisfactory to the Trustee, for any of the following purposes:

     (1)  to evidence the succession of another Person to the Company and the
  assumption by any such successor of the covenants of the Company herein and in
  the Securities; or

     (2)  to add to the covenants of the Company for the benefit of the Holders
  of the Securities or to surrender any right or power herein conferred upon the
  Company; or

     (3)  to add any additional Events of Default for the benefit of the Holders
  of the Securities;  or

     (4)  to add to or change any of the provisions of this Indenture to such
  extent as shall be necessary to permit or facilitate the issuance of
  Securities in bearer form, registrable or not registrable as to principal, and
  with or without interest coupons, or to permit or facilitate the issuance of
  Securities in uncertificated form; or

     (5)  to secure the Securities pursuant to the requirements of Section 1009
  or otherwise; or
<PAGE>

                                                                              74

     (6)  to evidence and provide for the acceptance of appointment hereunder by
  a successor Trustee pursuant to the requirements of Section 611; or

     (7)  to cure any ambiguity, to correct or supplement any provision herein
  which may be defective or inconsistent with any other provision herein, or to
  make any other provisions with respect to matters or questions arising under
  this Indenture, provided that such action pursuant to this Clause (7) shall
  not adversely affect the interests of the Holders of Securities in any
  material respect; or

     (8)  to comply with any requirements of the Commission in connection with
  the qualification of this Indenture under the Trust Indenture Act; or

     (9)  to make any other change that does not adversely affect the interests
  of any Holder of Securities in any material respect; or

     (10) to provide for the issuance of additional Securities in accordance
  with Section 301.

     After an amendment under this Section becomes effective, the Company shall
mail to Holders of Securities a notice briefly describing such amendment.  The
failure to give such notice to all Holders of Securities, or any defect therein,
shall not impair or affect the validity of an amendment under this Section.

SECTION 902.  Supplemental Indentures with Consent of Holders.

     With the consent of the Holders of not less than a majority in aggregate
principal amount of the Outstanding Securities, by Act of said Holders delivered
to the Company and the Trustee, the Company, when authorized by a Board
Resolution, and the Trustee may enter into an indenture or indentures
supplemental hereto, amendments to this Indenture or waivers for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of modifying in any manner the rights of the
Holders of the Securities under this Indenture; provided, however, that no such
supplemental indenture, amendment or waiver shall, without the consent of the
Holder of each Outstanding Security affected thereby,

     (1)  change the Stated Maturity of the principal of, or any installment of
  interest on, any Security, or reduce the principal amount thereof or the rate
  of interest thereon or any premium payable upon the redemption thereof, or
  reduce the amount of the principal of any Security which would be due and
  payable upon a declaration of acceleration of the Maturity thereof pursuant to
  Section 502 or alter the redemption or,
<PAGE>

                                                                              75

  except as provided in clause (5) below, repurchase provisions with respect
  thereto, or change 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,
  in the case of redemption, prepayment or Change of Control, on or after the
  Redemption Date, Purchase Date or Change of Control Payment Date,
  respectively);

     (2)  reduce the percentage in principal amount of the Outstanding
  Securities, the consent of whose Holders is required for any such supplemental
  indenture, or the consent of whose Holders is required for any waiver of
  compliance with certain provisions of this Indenture or certain defaults
  hereunder and their consequences provided for in this Indenture;

     (3)  modify any of the provisions of this Section, Section 513 or Section
  1018, except to increase any such percentage or to provide that certain other
  provisions of this Indenture cannot be modified or waived without the consent
  of the Holder of each Outstanding Security affected thereby;

     (4)  modify any of the provisions of this Indenture relating to the
  subordination of the Securities or reduce the relative ranking of any
  Securities in a manner adverse to Holders;

     (5)  following the mailing of a Prepayment Offer pursuant to Section 1012
  or a Change of Control Offer pursuant to Section 1019, modify the provisions
  of this Indenture with respect to such Prepayment Offer or Change of Control
  Offer in a manner adverse in any material respect to such Holder; or

     (6)  release any security that may have been granted in respect of the
  Securities.

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

     After an amendment under this Section becomes effective, the Company shall
mail to Holders of Securities a notice briefly describing such amendment.  The
failure to give such notice to all Holders of Securities, or any defect therein,
shall not impair or affect the validity of an amendment under this Section.
<PAGE>

                                                                              76

SECTION 903.  Execution of Supplemental Indentures.

     In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 601) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.

SECTION 904.  Effect of Supplemental Indentures.

     Upon the execution of any supplemental indenture under this Article, this
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby. No such supplemental indenture shall directly or
indirectly modify the provisions of Article Thirteen in any manner which might
terminate or impair the rights of the holders of Senior Indebtedness pursuant to
such subordination provisions without the consent of such holders.

SECTION 905.  Conformity with Trust Indenture Act.

     Every supplemental indenture or amendment executed pursuant to this Article
shall conform to the requirements of the Trust Indenture Act.

SECTION 906.  Reference in Securities to Supplemental Indentures.

     Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture.  If the Company shall so determine,
new Securities so modified as to conform, in the opinion of the Trustee and the
Company, to any such supplemental indenture may be prepared and executed by the
Company and authenticated and delivered by the Trustee in exchange for
Outstanding Securities.

SECTION 907.  Payment for Consent.

     Neither the Company nor any Affiliate of the Company shall, directly or
indirectly, pay or cause to be paid any
<PAGE>

                                                                              77

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.
<PAGE>

                                                                              78

                                  ARTICLE TEN

                                   COVENANTS

SECTION 1001.  Payment of Principal, Premium and Interest.

     The Company covenants and agrees for the benefit of the Securities that it
will duly and punctually pay the principal of and any premium and interest on
the Securities in accordance with the terms of the Securities and this
Indenture. Principal, premium, if any, and interest shall be considered paid on
the date due if on such date the Trustee or Paying Agent (other than the Company
or its Wholly Owned Subsidiaries) holds in accordance with this Indenture money
sufficient to pay all principal, premium, if any, and interest then due and the
Trustee or such Paying Agent, as the case may be, is not prohibited from paying
such money to the Holders of Securities on that date pursuant to the terms of
this Indenture.

SECTION 1002.  Registrar and Paying Agent.

     The Company shall maintain in The City of New York an office or agency
where Securities may be presented for registration of transfer or for exchange
(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 and of their transfer and exchange. The Company may have one or more
co-registrars and one or more additional paying agents. 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 Trust Indenture Act. Such 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 or act as Registrar or Paying Agent, the Trustee
shall act as such and shall be entitled to appropriate compensation therefor
pursuant to Section 607. The Company or any of its domestically incorporated
Wholly Owned Subsidiaries may act as Paying Agent, Registrar, co-registrar or
transfer agent.

     The Company initially appoints the Trustee as Registrar and Paying Agent in
connection with the Securities.

SECTION 1003.  Money for Securities Payments To Be Held in Trust.
<PAGE>

                                                                              79

     If the Company or any of its Wholly Owned Subsidiaries shall at any time
act as Paying Agent, it will, on or before each due date of the principal of or
any premium or interest on any of the Securities, segregate and hold in trust
for the benefit of the Persons entitled thereto a sum sufficient to pay the
principal and any premium and interest so becoming due until such sums shall be
paid to such Persons or otherwise disposed of as herein provided and will
promptly notify the Trustee of its action or failure so to act.

     Whenever the Company shall have one or more Paying Agents for the
Securities, it will, on or prior to each due date of the principal of or any
premium or interest on any Securities, deposit with a Paying Agent a sum
sufficient to pay such amount, such sum to be held as provided by the Trust
Indenture Act, and (unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of its action or failure so to act.

     The Company will cause each Paying Agent for the Securities other than the
Trustee to execute and deliver to the Trustee an instrument in which such Paying
Agent shall agree with the Trustee, subject to the provisions of this Section,
that such Paying Agent will (1) comply with the provisions of the Trust
Indenture Act applicable to it as a Paying Agent and (2) during the continuance
of any default by the Company (or any other obligor upon the Securities) in the
making of any payment in respect of the Securities, upon the written request of
the Trustee, forthwith pay to the Trustee all sums held in trust by such Paying
Agent for payment in respect of the Securities.

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

     The Trustee and the Paying Agent shall promptly pay to the Company upon
Company Request any money or securities held by them at any time in excess of
amounts required to pay principal of, premium, if any, or interest on the
Securities.

     Any money deposited with the Trustee or any other Paying Agent, or then
held by the Company, in trust for the payment of the principal of or any premium
or interest on any Security and remaining unclaimed for one year after such
principal, premium or interest has become due and payable may be paid to the
Company on Company Request, or (if then held by the Company) shall be discharged
from such trust; and the Holder of such Security shall
<PAGE>

                                                                              80

thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, shall at the
expense of the Company cause to be published once, in a newspaper published in
the English language, customarily published on each Business Day and of general
circulation in The City of New York, notice that such money remains unclaimed
and that, after a date specified therein, which shall not be less than 30 days
from the date of such publication, any unclaimed balance of such money then
remaining will be repaid to the Company.

SECTION 1004.  Statement by Officers as to Default.

     The Company will deliver to the Trustee, within 90 days after the end of
each fiscal year of the Company ending after the date hereof, an Officers'
Certificate, stating whether or not to the best knowledge of the signers thereof
the Company is in default in the performance and observance of any of the terms,
provisions and conditions of this Indenture (without regard to any period of
grace or requirement of notice provided hereunder) and, if the Company shall be
in default, specifying all such defaults and the nature and status thereof of
which they may have knowledge.

SECTION 1005.  Existence.

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

                                                                              81

SECTION 1006.  Maintenance of Properties.

     The Company will cause all properties used or useful in the conduct of its
business or the business of any Subsidiary to be maintained and kept in good
condition, repair and working order and supplied with all necessary equipment
and will 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, however, that
nothing in this Section shall prevent the Company from discontinuing the
operation or maintenance of any of such properties if such discontinuance is, in
the judgment of the Company, desirable in the conduct of its business or the
business of any Subsidiary and not disadvantageous in any material respect to
the Holders.

SECTION 1007.  Payment of Taxes and Other Claims.

     The Company will pay or discharge or cause to be paid or discharged, before
the same shall become delinquent, (1) all taxes, assessments and governmental
charges levied or imposed upon the Company or any Subsidiary or upon the
income, profits or property of the Company or any Subsidiary, and (2) all lawful
claims for labor, materials and supplies which, if unpaid, might by law become a
lien upon the property of the Company or any Subsidiary; provided, however, 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.

SECTION 1008.  Limitation on Indebtedness.

     The Company shall not, and it shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, Incur any Indebtedness unless, after
giving pro forma effect to the application of the proceeds thereof, no Default
or Event of Default would occur as a consequence of such Incurrence or be
continuing following such Incurrence and either (a) after giving pro forma
effect to the Incurrence of such Indebtedness and the receipt and application of
the proceeds thereof, the Consolidated Interest Coverage Ratio exceeds 2.5 to
1.0 or (b) such Indebtedness is Permitted Indebtedness.

SECTION 1009.  Limitation on Liens.

     The Company shall not, directly or indirectly, Incur any Lien on or with
respect to any Property of the Company, whether
<PAGE>

                                                                              82

owned on the Issue Date or acquired after the Issue Date, or any interest
therein or any income or profits therefrom, unless the Securities are secured
equally and ratably with (or prior to) any and all other obligations secured by
such Lien, except that the Company may without restriction Incur Liens securing
Senior Indebtedness and the following (each a "Permitted Lien"):

     (a) Liens existing as of the Issue Date;

     (b) any Lien existing on any Property of a Person at the time such Person
is merged or consolidated with or into the Company (and not Incurred in
anticipation of such transaction), provided that such Liens are not extended to
other Property of the Company;

     (c) any Lien existing on any Property at the time of the acquisition
thereof (and not Incurred in anticipation of such transaction), provided that
such Liens are not extended to other Property of the Company;

     (d) Liens securing the Securities and other obligations arising under this
Indenture;

     (e) Liens to secure any permitted extension, renewal, refinancing,
refunding or exchange (or successive extensions, renewals, refinancings,
refundings or exchanges), in whole or in part, of or for any Indebtedness
secured by Liens referred to in clauses (a) through (d) of this Section 1009;
provided, however, that (i) such new Lien shall be limited to all or part of the
same Property that secured the original Lien, plus improvements on such Property
and (ii) the Indebtedness secured by such Lien at such time is not increased to
any amount greater than the sum of (A) the outstanding principal amount or, if
greater, committed amount of the Indebtedness secured by Liens described under
clauses (a) through (d) of this Section 1009 at the time the original Lien
became a Lien permitted in accordance with the Indenture and (B) an amount
necessary to pay any fees and expenses, including premiums, related to such
refinancing, refunding, extension, renewal or replacement;

     (f) any Lien incidental to the normal conduct of the business of the
Company, the ownership of its property or the conduct in the ordinary course of
its business (including, without limitation, (i) easements, rights of way and
similar encumbrances, (ii) rights of lessees under leases, (iii) rights of
collecting banks having rights of setoff, revocation, refund or chargeback with
respect to money or instruments of the Company or on deposit with or in the
possession of such banks, (iv) Liens imposed by law, including, without
limitation, Liens under workers' compensation or similar legislation and
mechanics', carriers', warehousemen's, materialmen's, suppliers' and vendors'
Liens, (v) Oil and Gas Liens, and (vi) Liens Incurred to secure
<PAGE>

                                                                              83

performance of obligations with respect to statutory or regulatory requirements,
performance or return-of-money bonds, surety bonds or other obligations of a
like nature and Incurred in a manner consistent with industry practice) in each
case which are not Incurred in connection with the borrowing of money, the
obtaining of advances or credit or the payment of the deferred purchase price of
Property and which do not in the aggregate impair in any material respect the
use of Property in the operation of the business of the Company and its
Restricted Subsidiaries taken as a whole;

     (g) Liens for taxes not yet due or which are being contested in good faith
by appropriate proceedings, so long as reserves have been established to the
extent required by U.S. GAAP as in effect at such time;

     (h) Liens incurred to secure appeal bonds and judgment and attachment
Liens, in each case in connection with litigation or legal proceedings that are
being contested in good faith by appropriate proceedings, so long as reserves
have been established to the extent required by U.S. GAAP as in effect at such
time and so long as such Liens do not encumber assets by an amount in excess of
$20 million;

     (i) Liens securing Hedging Agreements, so long as such Hedging Agreements
are permitted under Section 1008;

     (j) Liens in connection with Sale and Leaseback Transactions permitted
pursuant to Section 1008;

     (k) Liens resulting from a pledge of Capital Stock of a Person that is not
a Restricted Subsidiary to secure obligations of such Person and any
refinancings thereof; and

     (l) Liens resulting from the deposit of funds or evidences of Indebtedness
in trust for the purpose of decreasing Indebtedness of the Company or any of its
Subsidiaries so long as such deposit of funds is permitted under Section 1010.

SECTION 1010.  Limitation on Restricted Payments.

     The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, make any Restricted Payment if, at the
time of and after giving effect to the proposed Restricted Payment:

     (a) any Default or Event of Default would have occurred and be continuing;

     (b) the Company could not Incur at least $1.00 of additional Indebtedness
pursuant to clause (a) of Section 1008; or
<PAGE>

                                                                              84

     (c) the aggregate amount expended or declared for all Restricted Payments
from December 20, 1995 would exceed the sum of (i) $25 million, (ii) 100% of the
aggregate net cash proceeds or the Fair Market Value of Property other than cash
received by the Company on or subsequent to December 20, 1995, from capital
contributions to the Company (other than from a Subsidiary of the Company) and
from the issuance or sale (other than to a Subsidiary of the Company) of Capital
Stock of the Company, including Capital Stock of the Company issued upon
conversion of convertible debt or convertible Redeemable Stock and upon the
exercise of options, warrants or rights to purchase Capital Stock of the
Company, (iii) 50% of the aggregate Consolidated Net Income of the Company (or,
if Consolidated Net Income shall be a deficit, less 100% of such deficit)
subsequent to September 30, 1995, and ending on the last day of the fiscal
quarter ending on or immediately preceding the date of such Restricted Payment,
and (iv) an amount equal to the net reduction in Investments made by the Company
and its Restricted Subsidiaries subsequent to December 20, 1995 in any Person
resulting from (A) payments of interest on debt, dividends, repayment of loans
or advances, or other transfers or distributions of Property (but only to the
extent the Company excludes such transfers or distributions from the calculation
of Consolidated Net Income for purposes of clause (iii) above), in each case to
the Company or any Restricted Subsidiary from any Person, or (B) the
redesignation of any Unrestricted Subsidiary as a Restricted Subsidiary, not to
exceed, in the case of (A) or (B), the amount of such Investments previously
made in such Person or such Unrestricted Subsidiary, as the case may be, which
were treated as Restricted Payments.

     Any payments made pursuant to clauses (a) through (i) of the definition of
Permitted Investments shall be excluded for purposes of any calculation of the
aggregate amount of Restricted Payments. Any payments made pursuant to clause
(j) of the definition of Permitted Investments shall be included for purposes of
any calculation of the aggregate amount of Restricted Payments.

     The foregoing limitations do not prevent the Company or any Restricted
Subsidiary from (a) paying a dividend on its Capital Stock within 60 days after
declaration thereof if, on the declaration date, such dividend could have been
paid in compliance with the Indenture, or (b) making Permitted Investments so
long as no Default or Event of Default shall have occurred and be continuing.
<PAGE>

                                                                              85

SECTION 1011.  Limitation on Issuance and Sale of Capital Stock of Restricted
Subsidiaries.

     The Company will not (a) permit any Restricted Subsidiary to issue any
Capital Stock other than to the Company or one of its Wholly Owned Subsidiaries
or (b) permit any Person other than the Company or a Restricted Subsidiary to
own any Capital Stock of any other Restricted Subsidiary (other than directors'
qualifying shares), except, in each case, for (i) a sale of the Capital Stock of
a Restricted Subsidiary owned by the Company or its Restricted Subsidiaries
effected in accordance with Section 1012, (ii) the issuance of Capital Stock by
a Restricted Subsidiary to a Person other than the Company or a Restricted
Subsidiary and (iii) the Capital Stock of a Restricted Subsidiary owned by a
Person at the time such Restricted Subsidiary became a Restricted Subsidiary or
acquired by such Person in connection with the formation of the Restricted
Subsidiary, or transfers thereof; provided, that any sale or issuance of Capital
Stock of a Restricted Subsidiary shall be deemed to be an Asset Sale to the
extent the percentage of the total outstanding Voting Stock of such Restricted
Subsidiary owned directly and indirectly by the Company is reduced as a result
of such sale or issuance; provided further, that if a Person whose Capital Stock
was issued or sold in a transaction described under this Section 1011 is, as a
result of such transaction, no longer a Restricted Subsidiary, then the Fair
Market Value of Capital Stock of such Person retained by the Company and the
other Restricted Subsidiaries shall be treated as an Investment for purposes of
Section 1010.
<PAGE>

                                                                              86

SECTION 1012.  Limitation on Asset Sales.

     (a) The Company shall not, and shall not permit any Restricted Subsidiary
to, consummate any Asset Sale after the Issue Date, unless (i) the Company or
such Restricted 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 shares
and assets subject to such Asset Sale and (ii) all of the consideration paid to
the Company or such Restricted Subsidiary in connection with such Asset Sale is
in the form of cash, cash equivalents, Liquid Securities, or the assumption by
the purchaser of liabilities of the Company (other than liabilities of the
Company that are by their terms subordinated to the Securities) or any
Restricted Subsidiary as a result of which the Company and its remaining
Restricted Subsidiaries are no longer liable; provided, however, that (x) the
Fair Market Value of Exchanged Properties shall be treated as cash for purposes
of this clause (ii) and (y) the Company and its Restricted Subsidiaries shall be
permitted to receive property and securities other than cash, cash equivalents,
Exchanged Properties or Liquid Securities, so long as the aggregate Fair Market
Value of all such property and securities received in Asset Sales held by the
Company or any Restricted Subsidiary at any one time shall not exceed 10% of
Adjusted Consolidated Net Tangible Assets.

     (b) The Net Available Cash from Asset Sales may be applied by the Company
or a Restricted Subsidiary, to the extent the Company or such Restricted
Subsidiary elects (or is required by the terms of any Senior Indebtedness), (A)
to prepay, repay or purchase Senior Indebtedness or Indebtedness of a Restricted
Subsidiary (in each case excluding Indebtedness owed to the Company or an
Affiliate of the Company); (B) to reinvest in Additional Assets (including by
means of an Investment in Additional Assets by a Restricted Subsidiary with Net
Available Cash received by the Company or another Restricted Subsidiary); or (C)
if there are no 9% Notes, 8 5/8% Notes or 9 3/4% Notes outstanding, to purchase
Securities (excluding Securities owned by the Company or an Affiliate of the
Company).

     (c) Any Net Available Cash from an Asset Sale not applied in accordance
with the preceding paragraph within 365 days from the date of such Asset Sale
shall constitute "Excess Proceeds." When the aggregate amount of Excess Proceeds
exceeds $10 million, the Company will be required to comply with the applicable
provisions of the 9% Indenture to make a prepayment offer to purchase, on a pro
rata basis, from all holders of the 9% Notes, an aggregate principal amount of
9% Notes equal to the Excess Proceeds, at a price in cash not in excess of 100%
of the outstanding principal amount thereof plus accrued interest, if any.  To
the extent that any portion of the amount of such Excess Proceeds remains after
compliance with the preceding sentence, such amount shall
<PAGE>

                                                                              87

constitute "Remaining Excess Proceeds" held for the benefit of the holders of
the Securities and any then outstanding Pari Passu Indebtedness (other than the
9% Notes) and the amount of Excess Proceeds will be reset to zero. When the
aggregate amount of Remaining Excess Proceeds exceeds $10 million, the Company
will be required to make an offer to purchase (the "Prepayment Offer"), on a pro
rata basis, the Securities and any then outstanding Pari Passu Indebtedness
(other than the 9% Notes), at a purchase price of at least 100% of their
principal amount plus accrued and unpaid interest thereon (if any) to the
Purchase Date. Such Prepayment Offer with respect to the Securities shall be
made in accordance with the procedures (including prorating in the event of
oversubscription) set forth herein. If the aggregate principal amount of
Securities surrendered for purchase by Holders thereof exceeds the pro rata
amount of Remaining Excess Proceeds allocated for the purchase thereof, then the
Trustee shall select the Securities to be purchased pro rata according to
principal amount with such adjustments as may be deemed appropriate by the
Company so that any Securities in denominations of $1,000, or integral multiples
thereof, shall be purchased. To the extent that any portion of the amount of
Remaining Excess Proceeds remains after compliance with the preceding sentence
and provided that all Holders of Securities have been given the opportunity to
tender their Securities for purchase as described in the following paragraph in
accordance with the Indenture, the Company or such Restricted Subsidiary may use
such remaining amount for general corporate purposes and the amount of Remaining
Excess Proceeds will be reset to zero.

     (d) Within five Business Days after the later of (i) 365 days from the date
of an Asset Sale and (ii) the completion of any offer for the 9% Notes required
by the 9% Indenture, the Company shall, if it is obligated to apply an amount
equal to any Remaining Excess Proceeds (or any portion thereof) to fund an offer
to purchase the Securities, send a Prepayment Offer Notice to the Holders of
Securities. The Company shall notify the Trustee at least 15 Business Days (or
such shorter period as is acceptable to the Trustee) prior to the mailing of the
Prepayment Offer Notice of the Company's obligation to make a Prepayment Offer,
and the Prepayment Offer Notice shall be mailed by the Company or, at the
Company's request, by the Trustee in the name and at the expense of the Company.

     The Company will comply, to the extent applicable, with the requirements of
Rules 13e-4 and 14e-1 under the Exchange Act and any other securities laws or
regulations thereunder to the extent such laws and regulations are applicable in
connection with the repurchase of Securities as described above. To the extent
that the provisions of any securities laws or regulations conflict with the
provisions relating to the Prepayment Offer, the Company will comply with the
applicable securities laws and regulations
<PAGE>

                                                                              88

and will not be deemed to have breached its obligations described above by
virtue thereof.

     Notwithstanding the foregoing provisions of this clause (d), if any
Security (or any portion thereof) accepted for payment shall not be so paid
pursuant to the provisions described in the preceding paragraph, then, from the
Purchase Date until the date on which the principal of and premium (if any) and
interest on such Security is paid, interest shall be paid on the unpaid
principal and premium (if any) and, to the extent permitted by law, on any
accrued but unpaid interest thereon, in each case, at the rate borne by such
Security.

SECTION 1013.  Incurrence of Layered Indebtedness.

     The Company shall not Incur any Indebtedness which is subordinate or junior
in right of payment to any Senior Indebtedness unless such Indebtedness
constitutes Indebtedness which is junior to, or pari passu with, the Securities
in right of payment.
<PAGE>

                                                                              89

SECTION 1014.  Transactions with Affiliates.

     The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, conduct any business or enter into any
transaction or series of transactions (including, but not limited to, the sale,
transfer, disposition, purchase, exchange or lease of Property, the making of
any Investment, the giving of any Guarantee or the rendering of any service)
with or for the benefit of any Affiliate of the Company, unless (a) such
transaction or series of transactions is in the best interest of the Company or
such Restricted Subsidiary, (b) such transaction or series of transactions is on
terms no less favorable to the Company or such Restricted Subsidiary than those
that could be obtained in a comparable arm's-length transaction with a Person
that is not an Affiliate of the Company or such Restricted Subsidiary, and (c)
with respect to a transaction or series of transactions involving aggregate
payments by or to the Company or such Restricted Subsidiary having a Fair Market
Value equal to or in excess of (i) $5.0  million but less than $20.0 million,
the Board of Directors (including a majority of the disinterested members of the
Board of Directors) approves such transaction or series of transactions and, in
its good faith judgment, believes that such transaction or series of
transactions complies with clauses (a) and (b) of this paragraph as evidenced by
a Board Resolution  or (ii) $20.0 million, (A) the Company receives from an
independent, nationally recognized investment banking firm or appraisal firm, in
either case specializing or having a specialty in the type and subject matter of
the transaction (or series of transactions) at issue, a written opinion that
such transaction (or series of transactions) is fair, from a financial point of
view, to the Company or such Restricted Subsidiary and (B) the Board of
Directors (including a majority of the disinterested members of the Board of
Directors) approves such transaction or series of transactions and, in its good
faith judgment, believes that such transaction or series of transactions
complies with clauses (a) and (b) of this paragraph, as evidenced by a Board
Resolution.

     The limitations of the preceding paragraph do not apply to (a) the payment
of reasonable and customary regular fees to directors of the Company or any of
its Restricted Subsidiaries who are not employees of the Company or any of its
Restricted Subsidiaries, (b) indemnities of officers and directors of the
Company or any  Subsidiary consistent with such Person's bylaws and applicable
statutory provisions, (c) any employment agreement entered into by the Company
or any of its Restricted Subsidiaries in the ordinary course of business and
consistent with the past practice of the Company or such Restricted Subsidiary,
(d) loans made (i) to officers and directors of the Company or any Subsidiary
approved by the Board of Directors (or by a duly authorized officer), the
proceeds of which are used solely to exercise stock options received pursuant to
an employee stock
<PAGE>

                                                                              90

option plan or other incentive plan, in a principal amount not to exceed the
exercise price of such stock options or (ii) to refinance loans, together with
accrued interest thereon, made pursuant to this clause (d), (e) advances and
loans to officers and directors of the Company or any Subsidiary in the ordinary
course of business, provided such loans and advances do not exceed $3.0 million
at any one time outstanding, or (f) transactions with Restricted Subsidiaries.

SECTION 1015.  Limitation on Restrictions on Distributions from Restricted
Subsidiaries.
<PAGE>

                                                                              91

     The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, assume or otherwise cause or
suffer to exist or become effective, or enter into any agreement with any Person
that would cause to become effective, any consensual encumbrance or restriction
on the legal right of any Restricted Subsidiary (other than a Foreign
Subsidiary) to (a) pay dividends, in cash or otherwise, or make any other
distributions on or in respect of its Capital Stock or Redeemable Stock held by
the Company or a Restricted Subsidiary, (b) pay any Indebtedness or other
obligation owed to the Company or any other Restricted Subsidiary, (c) make any
loans or advances to the Company or any other Restricted Subsidiary or (d)
transfer any of its property or assets to the Company or any other Restricted
Subsidiary. Such limitation will not apply (1) with respect to clauses (c) and
(d) only, to encumbrances and restrictions (i) in existence under or by reason
of any agreements in effect on the Issue Date, (ii) required by Bank Credit
Facilities that are not more restrictive than those in effect under the Bank
Credit Facility on the Issue Date, (iii) existing at such Restricted Subsidiary
at the time it became a Restricted Subsidiary if (A) such encumbrance or
restriction was not created in anticipation of such acquisition and (B)
immediately following such acquisition, on a pro forma basis, the Company could
incur at least $1.00 of additional Indebtedness pursuant to clause (a) of
Section 1008 or (iv) which result from the renewal, refinancing, extension or
amendment of an agreement referred to in the immediately preceding clauses (i),
(ii) and (iii) above, provided, such replacement or encumbrance or restriction
is no more restrictive to the Company or Restricted Subsidiary and is not
materially less favorable to the Holders of Securities than those under or
pursuant to the agreement evidencing the Indebtedness so extended, renewed,
refinanced or replaced, and (2) with respect to clause (d) only, to (i) any
restriction on the sale, transfer or other disposition of assets or Property
securing Indebtedness as a result of a Lien permitted under Section 1009, (ii)
any encumbrance or restriction in connection with an acquisition of Property, so
long as such encumbrance or restriction relates solely to the Property so
acquired and was not created in connection with or in anticipation of such
acquisition, (iii) customary provisions restricting subletting or assignment of
leases and customary provisions in other agreements that restrict assignment of
such agreements or rights thereunder, (iv) any encumbrance or restriction due to
applicable law, (v) customary restrictions contained in asset sale agreements
limiting the transfer of such assets pending the closing of such sale and (vi)
restrictions contained in purchase money obligations for Property acquired in
the ordinary course of business with respect to transfers of such Property.
<PAGE>

                                                                              92

SECTION 1016.  Restricted and Unrestricted Subsidiaries.

     Unless defined or designated as an Unrestricted Subsidiary, any Person that
becomes a Subsidiary of the Company or any of its Restricted Subsidiaries shall
be classified as a Restricted Subsidiary subject to the provisions of the next
paragraph. The Company may designate a Subsidiary (including a newly formed or
newly acquired Subsidiary) of the Company or any of its Restricted Subsidiaries
as an Unrestricted Subsidiary if (i) such Subsidiary does not own any Capital
Stock, Redeemable Stock or Indebtedness of, or own or hold any Lien on any
property of, the Company or any other Restricted Subsidiary, (ii) such
Subsidiary does not have any Indebtedness or other obligations which, if in
Default, would result (with the passage of time or notice or otherwise) in a
default on any Indebtedness of the Company or any Restricted Subsidiary and
(iii)(A) such designation is effective immediately upon such Subsidiary becoming
a Subsidiary of the Company or of a Restricted Subsidiary, (B) the Subsidiary to
be so designated has total assets of $1,000 or less or (C) if such Subsidiary
has assets greater than $1,000, then such redesignation as an Unrestricted
Subsidiary is deemed to constitute a Restricted Payment in an amount equal to
the Fair Market Value of the Company's direct and indirect ownership interest in
such Subsidiary, and such Restricted Payment would be permitted to be made at
the time of such designation under Section 1010. Except as provided in clauses
(iii)(B) and (C) of this paragraph, no Restricted Subsidiary may be redesignated
as an Unrestricted Subsidiary. The designation of an Unrestricted Subsidiary or
removal of such designation shall be made by the Board of Directors pursuant to
a Board Resolution and shall be effective as of the date specified in the
applicable certified resolution, which shall not be prior to the date such
certified resolution is delivered to the Trustee.

     The Company will not, and will not permit any of its Restricted
Subsidiaries to, take any action or enter into any transaction or series of
transactions that would result in a Person becoming a Restricted Subsidiary
(whether through an acquisition 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
clause (a) of Section 1008 and (ii) no Default or Event of Default would occur
or be continuing.
<PAGE>

                                                                              93

SECTION 1017.  Commission Reports.

     The Company shall file with the Trustee and provide Holders of Securities,
within 15 days after it files them with the Commission, copies of its annual
report and the information, documents and other reports which the Company is
required to file with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act, and, with respect to the annual consolidated financial statements
only, a report thereon by the Company's independent auditors.  Notwithstanding
that the Company may not be required to remain subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, the Company shall
continue to file with the Commission and provide the Trustee and Holders of
Securities with the annual reports and the information, documents and other
reports which are specified in Sections 13 and 15(d) of the Exchange Act, and,
with respect to the annual consolidated financial statements only, a report
thereon by the Company's independent auditors.  Delivery of such reports,
information and documents to the Trustee is for informational purposes only and
the Trustee's receipt of such shall not constitute constructive notice of any
information contained therein, including the Company's compliance with any of
its covenants hereunder (as to which the Trustee is entitled to rely exclusively
on Officers' Certificates).  The Company also shall comply with the other
provisions of (S) 314(a) of the Trust Indenture Act.

SECTION 1018.  Waiver of Certain Covenants.

     The Company may omit in any particular instance to comply with any term,
provision or condition set forth in any covenant provided pursuant to Sections
901(2) for the benefit of the Holders or in any of Sections 1008 through 1017
(second sentence only), inclusive, if before the time for such compliance the
Holders of at least a majority in principal amount of the Outstanding Securities
shall, by Act of such Holders and on behalf of the Holders of all Securities,
either waive such compliance in such instance or generally waive compliance with
such term, provision or condition, but no such waiver shall extend to or affect
such term, provision or condition except to the extent so expressly waived, and,
until such waiver shall become effective, the obligations of the Company and the
duties of the Trustee in respect of any such term, provision or condition shall
remain in full force and effect.
<PAGE>

                                                                              94

SECTION 1019.  Mandatory Repurchase Upon a Change of Control.

     (a) Upon the occurrence of a Change of Control, the Company will, in
accordance with Section 1019(b), notify each Holder, with a copy of such notice
to the Trustee, in writing of the occurrence of a Change of Control and
accompanying such notice will be an offer to purchase the Securities (a "Change
of Control Offer") at a purchase price equal to 101% of the principal amount
thereof, plus accrued and unpaid interest thereon to the date of purchase.

     (b) Within 30 days following any Change of Control, the Company shall mail
a notice to each Holder stating: (1) that a Change of Control has occurred and a
Change of Control Offer is being made pursuant to this Section and that all
Securities (or portions thereof) timely tendered will be accepted for payment;
(2) the purchase price and the purchase date, which shall be, subject to any
contrary requirements of applicable law, no earlier than 30 days nor later than
60 days from the date such notice is mailed (the "Change of Control Payment
Date"); (3) that any Security (or portion thereof) accepted for payment (and
duly paid on the Change of Control Payment Date) pursuant to the Change of
Control Offer shall cease to accrue interest after the Change of Control Payment
Date; (4) that any Securities (or portions thereof) not tendered will continue
to accrue interest; (5) a description of the transaction or transactions
constituting the Change of Control; (6) the procedures that Holders of
Securities must follow in order to tender their Securities (or portions thereof)
for payment and the procedures that Holders of Securities must follow in order
to withdraw an election to tender Securities (or portions thereof) for payment;
and (7) that in case of any Holder whose Security is purchased only in part, the
Company shall execute, and the Trustee shall authenticate and deliver to the
Holder of such Security without service charge, a new Security or Securities, of
any authorized denomination as requested by such Holder, in an aggregate
principal amount equal to and in exchange for the unpurchased portion of the
Security so tendered.

     (c) On or prior to the Change of Control Payment Date, the Company shall
irrevocably deposit with the Trustee or with a Paying Agent (or, if the Company
or any of its Wholly Owned Subsidiaries is acting as Paying Agent, segregate and
hold in trust) in cash an amount equal to the purchase price plus accrued and
unpaid interest, if any, payable to the Holders entitled thereto, to be held for
payment in accordance with the provisions of this Section.  Holders electing to
have a Security (or portion thereof) purchased will be required to surrender the
Security, with an appropriate form duly completed, to the Company at the address
specified in the notice at least five Business Days prior to the Change of
Control Payment Date.  Holders will be entitled to withdraw their election if
the Trustee or the Company receives
<PAGE>

                                                                              95

not later than three Business Days prior to the Change of Control Payment Date,
a telegram, telex, facsimile transmission or letter setting forth the name of
the Holder, the principal amount of the Security which was delivered for
purchase by the Holder and a statement that such Holder is withdrawing his
election to have such Security (or portion thereof) purchased.

     (d) On the Change of Control  Payment Date, the Company shall deliver to
the Trustee the Securities or portions thereof which have been properly tendered
to and are to be accepted by the Company for payment.  The Trustee shall, on the
Change of Control Payment Date, mail or deliver payment to each tendering Holder
of the purchase price.  In the event that the aggregate purchase price of the
Securities delivered by the Company to the Trustee is less than the amount
deposited with the Trustee, the Trustee shall deliver the excess to the Company
immediately after the Change of Control Payment Date.

     (e) The Company will comply, to the extent applicable, with the
requirements of Rules 13e-4 and 14e-1 under the Exchange Act, and any other
securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the purchase of Securities in
connection with a Change of Control. To the extent that the provisions of any
securities laws or regulations conflict with the provisions relating to the
Change of Control Offer, the Company will comply with the applicable securities
laws and regulations and will not be deemed to have breached its obligations
described above by virtue thereof.

     Notwithstanding the foregoing provisions of this Section, if any Security
(or any portion thereof) accepted for payment shall not be so paid pursuant to
the provisions described in paragraph (d), then, from the Change of Control
Payment Date until the date on which the principal of and premium (if any) and
interest on such Security is paid, interest shall be paid on the unpaid
principal and premium (if any) and, to the extent permitted by law, on any
accrued but unpaid interest thereon, in each case, at the rate borne by such
Security.

SECTION 1020.  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.
<PAGE>

                                                                              96

Section 1021.  Covenant Suspension.

     During any period of time that (a) the Securities have an Investment Grade
Rating from both Rating Agencies and (b) no Default or Event of Default has
occurred and is continuing under this Indenture, the Company and its Restricted
Subsidiaries will not be subject to the following provisions of the Indenture:
Sections 1008, 1010, 1011, 1012, 1013, 1014 and 1015 (collectively the
"Suspended Covenants" and the suspension of such covenants being herein called a
"Covenant Suspension").  In the event that the Company and its Restricted
Subsidiaries are not subject to the Suspended Covenants for any period of time
as a result of the preceding sentence and, subsequently, one or both of the
Rating Agencies withdraws its ratings or downgrades the ratings assigned to the
Securities below the required Investment Grade Ratings or a Default or an Event
of Default (other than as a result of any breach of the Suspended Covenants)
occurs and is continuing, then the Company and its Restricted Subsidiaries will
thereafter again be subject to the Suspended Covenants and compliance with the
Suspended Covenants with respect to Restricted Payments made after the time of
such withdrawal, downgrade, Default or Event of Default will be calculated in
accordance with the terms of Section 1010 as though, for purposes of determining
whether new Restricted Payments can be made after such time, such covenant had
been in effect during the entire period of time from the Issue Date.  The
Company shall provide prompt written notice to the Trustee of any changes in the
ratings of the Securities by the Ratings Agencies.  The Trustee shall not be
required to notify the Holders of any such changes.

     For the avoidance of doubt, such Covenant Suspension means that, with
respect to the Securities, the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
Suspended Covenant or in Section 501(3) (to the extent relating to any Suspended
Covenant), 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 provision herein or in any other document, but the remainder of this
Indenture and the Securities shall be unaffected thereby.

                                ARTICLE ELEVEN

                           REDEMPTION OF SECURITIES

SECTION 1101.  Election To Redeem; Notice to Trustee.
<PAGE>

                                                                              97

     The election of the Company to redeem any Securities shall be evidenced by
a Board Resolution. In case of any redemption at the election of the Company of
(i) less than all the Securities (including any such redemption affecting only a
single Security), the Company shall, at least 60 days prior to the Redemption
Date fixed by the Company or (ii) all the Securities, the Company shall, at
least 45 days prior to the Redemption Date fixed by the Company (in either case,
unless a shorter notice shall be satisfactory to the Trustee), notify the
Trustee of such Redemption Date and of the principal amount of Securities to be
redeemed. In connection with any redemption pursuant to the fourth paragraph of
the reverse of the Securities, such notice shall be accompanied by an Officers'
Certificate to the effect that all conditions precedent provided for herein to
the right of the Company to redeem the Securities pursuant to such paragraph
have been complied with.

SECTION 1102.  Selection by Trustee of Securities To Be Redeemed.

     If less than all the Securities are to be redeemed (unless such redemption
affects only a single security), the particular Securities to be redeemed shall
be selected not more than 60 days prior to the Redemption Date by the Trustee,
from the Outstanding Securities not previously called for redemption, by such
method as the Trustee shall deem fair and appropriate and which may provide for
the selection for redemption of a portion of the principal amount of any
Security, provided that the unredeemed portion of the principal amount of any
Security shall be in an authorized denomination (which shall not be less than
the minimum authorized denomination) for such Security.

     The Trustee shall promptly notify the Company in writing of the Securities
selected for redemption as aforesaid and, in case of any Securities selected for
partial redemption as aforesaid, the principal amount thereof to be redeemed.

     The provisions of the two preceding paragraphs shall not apply with respect
to any redemption affecting only a single Security, whether such Security is to
be redeemed in whole or in part.  In the case of any such redemption in part,
the unredeemed portion of the principal amount of the Security shall be in an
authorized denomination (which shall not be less than the minimum authorized
denomination) for such Security.

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

                                                                              98

SECTION 1103.  Notice of Redemption.

     Notice of redemption shall be given by first-class mail, postage prepaid,
mailed not less than 30 nor more than 60 days prior to the Redemption Date, to
each Holder of Securities to be redeemed, at his address appearing in the
Security Register.

     All notices of redemption shall identify the Securities to be redeemed
(including CUSIP number) and state:

          (1)  the Redemption Date,

          (2)  the Redemption Price,

          (3)  if less than all the Outstanding Securities consisting of more
     than a single Security are to be redeemed, the identification (and, in the
     case of partial redemption of any such Securities, the principal amounts)
     of the particular Securities to be redeemed and, if less than all the
     Outstanding Securities consisting of a single Security are to be redeemed,
     the principal amount of the particular Security to be redeemed,

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

          (5)  the place or places where each such Security is to be surrendered
     for payment of the Redemption Price.

     Notice of redemption of Securities to be redeemed at the election of the
Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company and shall be irrevocable.

SECTION 1104.  Deposit of Redemption Price.

     On or prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company or any of its Wholly Owned
Subsidiaries is acting as Paying Agent, segregate and hold in trust as provided
in Section 1003) an amount of money sufficient to pay the Redemption Price of,
and (except if the Redemption Date shall be an Interest Payment Date) accrued
interest on, all the Securities which are to be redeemed on that date.  Upon
Company Order, the Paying Agent shall promptly return to the Company any money
so deposited which is not required for such purpose.
<PAGE>

                                                                              99

SECTION 1105.  Securities Payable on Redemption Date.

     Notice of redemption having been given as aforesaid, the Securities so to
be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest or the Paying Agent is prohibited from making such payment pursuant to
the terms of this Indenture) such Securities shall cease to bear interest. Upon
surrender of any such Security for redemption in accordance with said notice,
such Security shall be paid by the Company at the Redemption Price, together
with accrued interest to the Redemption Date; provided, however, that
installments of interest whose Stated Maturity is on or prior to the Redemption
Date will be payable to the Holders of such Securities, or one or more
Predecessor Securities, registered as such at the close of business on the
relevant Record Dates according to their terms and the provisions of Section
307.

     If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal and any premium shall, until paid, bear
interest from the Redemption Date at the rate borne by the Security.

SECTION 1106.  Securities Redeemed in Part.

     Any Security which is to be redeemed only in part shall be surrendered
(with, if the Company or the Trustee so requires, due endorsement by, or a
written instrument of transfer in form satisfactory to the Company and the
Trustee duly executed by, the Holder thereof or his attorney duly authorized in
writing), and the Company shall execute, and the Trustee shall authenticate and
deliver to the Holder of such Security without service charge, a new Security or
Securities of the same series, of any authorized denomination as requested by
such Holder, in aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal of the Security so surrendered.

SECTION 1107.  Purchase of Securities.

     The Company shall have the right at any time and from time to time to
purchase Securities in the open market or otherwise at any price.
<PAGE>

                                                                             100

                                ARTICLE TWELVE

                      DEFEASANCE AND COVENANT DEFEASANCE

SECTION 1201.  Defeasance and Discharge.

     The Company shall be deemed to have been discharged from its obligations,
and the provisions of Article Thirteen shall cease to be effective, with respect
to the Securities as provided in this Section on and after the date the
conditions set forth in Section 1203 are satisfied (hereinafter called
"Defeasance"). For this purpose, such Defeasance means that the Company shall be
deemed to have paid and discharged the entire indebtedness represented by the
Securities and to have satisfied all its other obligations under the Securities
and this Indenture insofar as the Securities are concerned (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: (1) the rights of Holders of the Securities to receive,
solely from the trust fund described in Section 1203 and as more fully set forth
in such Section, payments in respect of the principal of and any premium and
interest on the Securities when payments are due, (2) the Company's obligations
with respect to the Securities under Sections 304, 305, 306, 1002 and 1003, (3)
the rights, powers, trusts, duties and immunities of the Trustee hereunder and
(4) this Article. Subject to compliance with this Article, the Company may
exercise its option (if any) to have this Section applied to any Securities
notwithstanding the prior exercise of its option (if any) to have Section 1202
applied to the Securities.
<PAGE>

                                                                             101

SECTION 1202.  Covenant Defeasance.

     (1)  The Company shall be released from its obligations under Sections 1007
through 1016, inclusive, and 1019, and Sections 801(d) and 801(e), and any
covenants provided pursuant to Section 901(2) for the benefit of the Holders of
the Securities, (2) the occurrence of any event specified in Sections 501(3)
(with respect to any of Sections 801(d) and 801(e), Sections 1007 through 1016,
inclusive, and 1019, and any such covenants provided pursuant to Section
901(2)), 501(4) and 501(5) shall be deemed not to be or result in an Event of
Default and (3) the provisions of Article Thirteen shall cease to be effective,
in each case with respect to the Securities as provided in this Section on and
after the date the conditions set forth in Section 1203 are satisfied
(hereinafter called "Covenant Defeasance"). For this purpose, such Covenant
Defeasance means that, with respect to the Securities, the Company 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 501(3)) or Article Thirteen, whether directly or
indirectly by reason of any reference elsewhere herein to any such Section or
Article or by reason of any reference in any such Section or Article to any
other provision herein or in any other document, but the remainder of this
Indenture and the Securities shall be unaffected thereby.

SECTION 1203.  Conditions to Defeasance or Covenant Defeasance.

     The following shall be the conditions to the application of Section 1201 or
Section 1202 to the Securities:

          (1)  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 the Securities, money
     in an amount, or U.S. Government Obligations, or a combination thereof,
     which through the payment of principal and interest in respect thereof in
     accordance with their terms will provide, not later than one day before the
     due date of any payment, money in an amount, in each case sufficient, in
     the opinion of a United States nationally recognized firm of independent
     public accountants expressed in a written certification thereof delivered
     to the Trustee, to pay and discharge, and which shall be applied by the
     Trustee to pay and discharge, the principal of and any premium and interest
     on the Securities at Stated Maturity or on earlier redemption in accordance
     with the terms of this Indenture and the Securities.
<PAGE>

                                                                             102

          (2)  With respect to Section 1201, the Company shall have delivered to
     the Trustee an Opinion of Counsel to the effect 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 Federal income tax law, in either case to the effect
     that, and based thereon such Opinion of Counsel shall confirm that, the
     Holders of the Securities will not recognize gain or loss for Federal
     income tax purposes as a result of the deposit, Defeasance and discharge to
     be effected with respect to the Securities and will be subject to Federal
     income tax on the same amount, in the same manner and at the same times as
     would have been the case if such deposit, Defeasance and discharge were not
     to occur.

          (3)  With respect to Section 1202, the Company shall have delivered to
     the Trustee an Opinion of Counsel to the effect that the Holders of the
     Securities will not recognize gain or loss for Federal income tax purposes
     as a result of the deposit and Covenant Defeasance to be effected with
     respect to the Securities and will be subject to Federal income tax on the
     same amount, in the same manner and at the same times as would be the case
     if such deposit and Covenant Defeasance were not to occur.

          (4)  The Company shall have delivered to the Trustee an Officers'
     Certificate to the effect that the Securities, if then listed on any
     securities exchange, will not be delisted as a result of such deposit.

          (5)  No Default shall have occurred and be continuing at the time of
     such deposit or, with regard to any such event specified in Sections 501(6)
     and 501(7), at any time on or prior to the 90th day after the date of such
     deposit (it being understood that this condition shall not be deemed
     satisfied until after such 90th day).

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

          (7)  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 is a party or by which it is bound.

          (8)  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
<PAGE>

                                                                             103

     Company Act unless such trust shall be registered under such Act or exempt
     from registration thereunder.

          (9)  At the time of such deposit, (A) no default in the payment of any
     principal of or premium or interest on any Senior Indebtedness shall have
     occurred and be continuing, (B) no event of default with respect to any
     Senior Indebtedness shall have resulted in such Senior Indebtedness
     becoming, and continuing to be, due and payable prior to the date on which
     it would otherwise have become due and payable (unless payment of such
     Senior Indebtedness has been made or duly provided for), (C) no other event
     of default with respect to any Senior Indebtedness shall have occurred and
     be continuing permitting (after notice or lapse of time or both) the
     holders of such Senior Indebtedness (or a trustee on behalf of such
     holders) to declare such Senior Indebtedness due and payable prior to the
     date on which it would otherwise have become due and payable and (D) the
     Company is not prohibited from making such deposit for such purpose
     pursuant to the terms of this Indenture.

          (10) If the Securities are to be redeemed prior to their Stated
     Maturity, notice of such redemption shall have been duly given pursuant to
     this Indenture or provision therefor satisfactory to the Trustee shall have
     been made.

          (11) 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 1204.  Deposited Money and U.S. Government Obligations To Be Held in
Trust; Miscellaneous Provisions.

     Subject to the provisions of the last paragraph of Section 1003, all money
and U.S. Government Obligations (including the proceeds thereof) deposited with
the Trustee pursuant to Section 1203 in respect of any Securities shall be held
in trust and applied by the Trustee, in accordance with the provisions of the
Securities and this Indenture, to the payment, either directly or through any
such Paying Agent as the Trustee may determine, to the Holders of the
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
from other funds except to the extent required by law.  Money and U.S.
Government Obligations so held in trust shall not be subject to the provisions
of Article Thirteen.

     The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 1203 or the
<PAGE>

                                                                             104

principal and interest received in 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 to the contrary notwithstanding, the Trustee shall
deliver or pay to the Company from time to time upon Company Request any money
or U.S. Government Obligations held by it as provided in Section 1203 with
respect to any Securities which, in the opinion of a United States nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee, are in excess of the amount
thereof which would then be required to be deposited to effect the Defeasance or
Covenant Defeasance, as the case may be, with respect to the Securities.

SECTION 1205.  Reinstatement.

     If the Trustee or the Paying Agent is unable to apply any money in
accordance with this Article with respect to any Securities 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 and the Securities from which the Company has been discharged or
released pursuant to Section 1201 or 1202 shall be revived and reinstated as
though no deposit had occurred pursuant to this Article with respect to the
Securities, until such time as the Trustee or Paying Agent is permitted to apply
all money held in trust pursuant to Section 1204 with respect to the Securities
in accordance with this Article; provided, however, that if the Company makes
any payment of principal of or any premium or interest on any Security following
such reinstatement of its obligations, the Company shall be subrogated to the
rights (if any) of the Holders of the Securities to receive such payment from
the money so held in trust.

                               ARTICLE THIRTEEN

                          SUBORDINATION OF SECURITIES

SECTION 1301.  Agreement to Subordinate.
<PAGE>

                                                                             105

     The Company covenants and agrees, and each Holder by accepting a Security
agrees, that the Indebtedness evidenced by the Securities is subordinated in
right of payment, to the extent and in the manner provided in this Article
Thirteen (subject to the provisions of Articles Four and Twelve), to the prior
payment of all Senior Indebtedness and that the subordination is for the benefit
of and enforceable by the holders of Senior Indebtedness. The Securities shall
in all respects rank pari passu with all other existing and future senior
subordinated Indebtedness of the Company (including, without limitation, the 9%
Notes, the 9 3/4% Notes and the 8 5/8% Notes) and only Indebtedness of the
Company which is Senior Indebtedness shall rank senior to the Securities in
accordance with the provisions set forth herein. All provisions of this Article
Thirteen shall be subject to Section 1312.

SECTION 1302.  Liquidation, Dissolution and Bankruptcy.

     Upon any payment or distribution of the assets of the Company to creditors
upon a total or partial liquidation, dissolution or winding up of the Company or
in a bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to the Company or its property (each such event, if any, herein
sometimes referred to as a "Proceeding"):

          (1)  holders of Senior Indebtedness shall be entitled to receive
     payment in full in cash of the Senior Indebtedness before Holders shall be
     entitled to receive any payment of principal of, or premium, if any, or
     interest on the Securities; and

          (2)  until the Senior Indebtedness is paid in full in cash, any
     distribution to which Holders would be entitled but for this Article
     Thirteen shall be made to holders of Senior Indebtedness as their interests
     may appear, except that Holders may receive and retain shares of stock and
     any debt securities that are subordinated to Senior Indebtedness to at
     least the same extent as the Securities.

For purposes of this Section "paid in full" or "payment in full", as used with
respect to Senior Indebtedness, means the receipt of cash in payment of the
principal amount of the Senior Indebtedness and premium, if any, and interest
thereon (including any interest thereon accruing after the commencement of any
Proceeding) to the date of such payment.

     The consolidation of the Company with, or the merger of the Company into,
another Person or the liquidation or dissolution of the Company following the
sale, conveyance, assignment, lease or transfer of all or substantially all of
its Property or assets to another Person upon the terms and conditions set forth
in
<PAGE>

                                                                             106

Article Eight shall not be deemed a Proceeding for the purposes of this Section
if the Person formed by such consolidation or into which the Company is merged
or the Person which acquires by sale, conveyance, assignment, lease or transfer
such Property or assets, as the case may be, shall, as a part of such
consolidation, merger, sale, conveyance, assignment, lease or transfer, comply
with the conditions set forth in Article Eight.
<PAGE>

                                                                             107

SECTION 1303.  Default on Senior Indebtedness.

     The Company may not pay the principal of, premium, if any, or interest on,
the Securities or make any deposit pursuant to Sections 1203 or 401 and may not
repurchase, redeem or otherwise retire any Securities (collectively, "pay the
Securities") if (a) any principal, premium or interest in respect of Senior
Indebtedness is not paid when due (after giving effect to any applicable grace
period), including at maturity, or (b) any other default on Senior Indebtedness
occurs and the maturity of such Senior Indebtedness is accelerated in accordance
with its terms unless, in either case, the default has been cured or waived and
any such acceleration has been rescinded or such Senior Indebtedness has been
paid in full; provided, however, that the Company may pay the Securities without
regard to the foregoing if the Company and the Trustee receive written notice
approving such payment from the Representative of each issue of Designated
Senior Indebtedness.  During the continuance of any default (other than a
default described in clause (a) or (b) of the preceding sentence) with respect
to any Designated Senior Indebtedness pursuant to which the maturity thereof may
be accelerated immediately without further notice (except such notice as may be
required to effect such acceleration), the Company may not pay the Securities
for a period (a "Payment Blockage Period") commencing upon the receipt by the
Company and the Trustee of written notice of such default from the
Representative of the holders of any Designated Senior Indebtedness specifying
an election to effect a Payment Blockage Period (a "Payment Blockage Notice")
and ending 179 days thereafter (or earlier if such Payment Blockage Period is
terminated (i) by written notice to the Trustee and the Company from the
Representative which gave such Payment Blockage Notice, (ii) because the default
specified in such Payment Blockage Notice is no longer continuing or (iii)
because such Designated Senior Indebtedness has been repaid in full).
Notwithstanding the provisions described in the immediately preceding sentence,
unless the holders of such Designated Senior Indebtedness or the Representative
of such holders shall have accelerated the maturity of such Designated Senior
Indebtedness and not rescinded such acceleration, the Company may resume payment
on the Securities after the end of such Payment Blockage Period (unless
otherwise prohibited pursuant to the first sentence of this Section).  Not more
than one Payment Blockage Notice may be given in any consecutive 360-day period,
irrespective of the number of defaults with respect to any number of issues of
Designated Senior Indebtedness during such period.

SECTION 1304.  Acceleration of Payment of Securities.
<PAGE>

                                                                             108

     If payment of the Securities is accelerated because of an Event of Default,
the Company or the Trustee shall promptly notify the Representative of each
issue of Designated Senior Indebtedness of the acceleration.  The Company may
not pay the Securities until five days after such notice is received and,
thereafter, may pay the Securities only if this Article Thirteen otherwise
permits the payment at that time.

SECTION 1305.  When Distribution Must Be Paid Over.

     If a distribution is made to Holders that because of this Article Thirteen
should not have been made to them, the Holders who receive the distribution
shall hold it in trust for holders of Senior Indebtedness and pay it over to
them as their interests may appear.

SECTION 1306.  Subrogation.

     After all Senior Indebtedness is paid in full and until the Securities are
paid in full, the Holders shall be subrogated to the rights of holders of Senior
Indebtedness to receive distributions applicable to Senior Indebtedness.  A
distribution made under this Article Thirteen to holders of Senior Indebtedness
which otherwise would have been made to Holders is not, as between the Company
and Holders, a payment by the Company on Senior Indebtedness.

SECTION 1307.  Relative Rights.

     This Article Thirteen defines the relative rights of Holders and holders of
Senior Indebtedness.  Nothing in this Indenture shall:

          (1)  impair, as between the Company and Holders, the obligation of the
     Company, which is absolute and unconditional, to pay principal of, premium,
     if any, and interest on the Securities in accordance with their terms; or

          (2)  except as set forth in Section 1304, prevent the Trustee or any
     Holder from exercising its available remedies upon a Default, subject to
     the rights of holders of Senior Indebtedness to receive distributions
     otherwise payable to Holders.
<PAGE>

                                                                             109

SECTION 1308.  Subordination May Not Be Impaired by Company.

     No right of any holder of Senior Indebtedness to enforce the subordination
of the Indebtedness evidenced by the Securities shall be impaired by any act or
failure to act by the Company or by its failure to comply with this Indenture.

SECTION 1309.  Rights of Trustee and Paying Agent.

     Notwithstanding Section 1303 (but subject to Section 1305), the Trustee or
Paying Agent may continue to make payments on the Securities and shall not be
charged with knowledge of the existence of facts that would prohibit the making
of any such payments unless, not less than two Business Days prior to the date
of such payment, a Trust Officer of the Trustee receives notice satisfactory to
it that payments may not be made under this Article Thirteen.  The Company, the
Security Registrar, the Paying Agent, a Representative or a holder of Senior
Indebtedness may give the notice; provided, however, that, if an issue of Senior
Indebtedness has a Representative, only the Representative may give the notice.

SECTION 1310.  Distribution or Notice to Representative.

     Whenever a distribution is to be made or a notice given to holders of
Senior Indebtedness, the distribution may be made and the notice given to their
Representative (if any).

SECTION 1311.  Trust Moneys Not Subordinated.

     Notwithstanding anything contained herein to the contrary, payments from
money or the proceeds of U.S. Government Obligations held in trust under Article
Four or Twelve by the Trustee for the payment of principal of and interest on
the Securities shall not be subordinated to the prior payment of any Senior
Indebtedness or subject to the restrictions set forth in this Article Thirteen,
and none of the Holders or the Trustee shall be obligated to pay over any such
amount to the Company or any holder of Senior Indebtedness of the Company or any
other creditor of the Company or any Representative.

SECTION 1312.  Trustee Entitled To Rely.
<PAGE>

                                                                             110

     Upon any payment or distribution pursuant to this Article Thirteen, the
Trustee and the Holders shall be entitled to rely (i) upon any order or decree
of a court of competent jurisdiction in which any proceedings of the nature
referred to in Section 1302 are pending, (ii) upon a certificate of the
liquidating trustee, receiver, trustee in bankruptcy or agent or other Person
making such payment or distribution to the Trustee or to the Holders or (iii)
upon the Representatives for the holders of Senior Indebtedness or such holders
if there is no Representative with respect to any Senior Indebtedness, for the
purpose of ascertaining the Persons entitled to participate in such payment or
distribution, the holders of the Senior Indebtedness and other Indebtedness of
the Company, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this Article
Thirteen.  In the event that the Trustee determines, in good faith, that
evidence is required with respect to the right of any Person as a holder of
Senior Indebtedness to participate in any payment or distribution pursuant to
this Article Thirteen, the Trustee may request such Person to furnish evidence
to the reasonable satisfaction of the Trustee as to the amount of Senior
Indebtedness held by such Person, the extent to which such Person is entitled to
participate in such payment or distribution and other facts pertinent to the
rights of such Person under this Article Thirteen, and, if such evidence is not
furnished, the Trustee may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment.  The
provisions of Sections 601 and 603 shall be applicable to all actions or
omissions of actions by the Trustee pursuant to this Article Thirteen.

SECTION 1313.  Trustee To Effectuate Subordination.

     Each Holder by accepting a Security authorizes and directs the Trustee on
his behalf to take such action as may be necessary or appropriate to acknowledge
or effectuate the subordination between the Holders and the holders of Senior
Indebtedness as provided in this Article Thirteen and appoints the Trustee as
attorney-in-fact for any and all such purposes.
<PAGE>

                                                                             111

SECTION 1314.  Trustee Not Fiduciary for Holders of Senior Indebtedness.

     The Trustee shall not be deemed to owe any fiduciary duty to the holders of
Senior Indebtedness and shall not be liable to any such holders if it shall
mistakenly pay over or distribute to Holders or the Company or any other Person,
money or assets to which any holders of Senior Indebtedness shall be entitled by
virtue of this Article Thirteen or otherwise.  With respect to the holders of
Senior Indebtedness, the Trustee undertakes to perform or to observe only such
of its covenants or obligations as are specifically set forth in this Article
Thirteen and no implied covenants or obligations with respect to holders of
Senior Indebtedness shall be read into this Indenture against the Trustee.

SECTION 1315.  Reliance by Holders of Senior Indebtedness on Subordination
Provisions.

     Each Holder by accepting a Security acknowledges and agrees that the
foregoing subordination provisions are, and are intended to be, an inducement
and a consideration to each holder of any Senior Indebtedness, whether such
Senior Indebtedness was created or acquired before or after the issuance of the
Securities, to acquire and continue to hold, or to continue to hold, such Senior
Indebtedness and such holder of Senior Indebtedness shall be deemed conclusively
to have relied on such subordination provisions in acquiring and continuing to
hold, or in continuing to hold, such Senior Indebtedness.

SECTION 1316.  Proofs of Claim.

     In the event that the Company is subject to any proceeding under any
bankruptcy, insolvency or analogous laws and the Holders and the Trustee fail to
file any proof of claim permitted to be filed in such proceeding with respect to
the Securities, then any Representative of Senior Indebtedness or any holder
thereof if there is no Representative therefor may file such proof of claim no
earlier than the later of (i) the expiration of 15 days after such
Representative notified the Trustee and the Company of its intention to do so
and (ii) 30 days preceding the last day it is permitted to file such claim.
<PAGE>

                                                                             112

SECTION 1317.  Rights of Trustee as Holder of Senior Indebtedness; Preservation
of Trustee's Rights.

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

     Nothing in this Article shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 607.

SECTION 1318.  Article Applicable to Paying Agents.

     In case at any time any Paying Agent other than the Trustee shall have been
appointed by the Company and be then acting hereunder, the term "Trustee" as
used in this Article shall in such case (unless the context otherwise requires)
be construed as extending to and including such Paying Agent within its meaning
as fully for all intents and purposes as if such Paying Agent were named in this
Article in addition to or in place of the Trustee; provided, however, that
neither Section 1309 nor Section 1312 shall apply to the Company or any Wholly
Owned Subsidiary if it or such Wholly Owned Subsidiary acts as Paying Agent.

SECTION 1319.  Defeasance of this Article Thirteen.

     The subordination of the Securities provided by this Article Thirteen is
expressly made subject to the provisions for Defeasance or Covenant Defeasance
in Article Twelve hereof and, anything herein to the contrary notwithstanding,
upon the effectiveness of any such Defeasance or Covenant Defeasance, the
Securities then outstanding shall thereupon cease to be subordinated pursuant to
this Article Thirteen.
<PAGE>

                                                                             113

                               ARTICLE FOURTEEN

                            CONCERNING THE HOLDERS

SECTION 1401.  Identification of Company-Owned Securities.

     Upon request of the Trustee, the Company shall furnish to the Trustee
promptly an Officers' Certificate listing and identifying all Securities, if
any, known by the Company to be owned or held by or for the account of the
Company or any other obligor on the Securities or by any Affiliate of the
Company or any other obligor on the Securities; and, subject to the provisions
of Section 601, the Trustee shall be entitled to accept such Officers'
Certificate as conclusive evidence of the facts therein set forth and of the
fact that all Securities not listed therein are Outstanding for the purpose of
any such determination.

SECTION 1402.  Revocation of Consents.

     At any time prior to (but not after) the evidencing to the Trustee, as
provided in Section 104, of the taking of any action by the Holders of the
percentage in aggregate principal amount of the Securities specified in this
Indenture in connection with such action, any Holder of a Security, except as
provided in Section 104 with respect to record dates, the serial number of which
is shown by the evidence to be included in the Securities the Holders of which
have consented to or are bound by consents to such action may, by filing written
notice with the Trustee at its Corporate Trust Office and upon proof of holding
as provided in Section 104, revoke such action so far as concerns such Security.

                                ARTICLE FIFTEEN

                               HOLDERS' MEETINGS

SECTION 1501.  Purposes of Meetings.

     A meeting of Holders of Securities may be called at any time and from time
to time pursuant to the provisions of this Article Fifteen for any of the
following purposes:

          (1)  to give any notice to the Company or to the Trustee, or to give
     any directions to the Trustee, or to consent to the waiving of any Default
     hereunder and its consequences, or to take any other action authorized to
     be taken by Holders of Securities pursuant to any of the provisions of
     Article Five;
<PAGE>

                                                                             114

          (2)  to remove the Trustee and nominate a successor trustee pursuant
     to the provisions of Article Six;

          (3)  to consent to the execution of an indenture or indentures
     supplemental hereto pursuant to the provisions of Section 902; or

          (4)  to take any other action authorized to be taken by or on behalf
     of the Holders of any specified aggregate principal amount of the
     Securities under any other provision of this Indenture or under applicable
     law.

SECTION 1502.  Call of Meetings by Trustee.

     The Trustee may at any time call a meeting of Holders of Securities to take
any action specified in Section 1501, to be held at such time and at such place
in the Borough of Manhattan, The City of New York, as the Trustee shall
determine.  Notice of every meeting of the Holders of Securities, setting forth
the time and the place of such meeting and in general terms the action proposed
to be taken at such meeting, shall be mailed to all Holders of Securities at
their addresses as they shall appear on the Security Register.  Such notice
shall be mailed not less than 20 nor more than 180 days prior to the date fixed
for the meeting (or, in the case of a meeting of Holders with respect to the
Securities all or part of which are represented by a Global Security, not less
than 20 nor more than 40 days).

     Upon the calling of a meeting of Holders with respect to the Securities all
or part of which are represented by a Global Security, a record date shall be
established for determining Holders of Outstanding Securities entitled to vote
at such meeting, which record date shall be the close of business on the day the
Trustee mails the notice of the Meeting of Holders.  The Holders on such record
date, and their designated proxies, and only such Persons, shall be entitled to
vote at such meeting of Holders.
<PAGE>

                                                                             115

SECTION 1503.  Call of Meetings by Company or Holders.

     In case at any time the Company, pursuant to a resolution of its Board of
Directors, or the Holders, or their designated proxies, of at least 25% in
aggregate principal amount of the Outstanding Securities, shall have requested
the Trustee to call a meeting of the Holders, by written request setting forth
in reasonable detail the action proposed to be taken at the meeting and the
Trustee shall not have mailed the notice of such meeting within 20 days after
receipt of such request, then the Company or such Holders may determine the time
and the place in said Borough of Manhattan for such meeting and may call such
meeting to take any action authorized in Section 1501, by mailing notice thereof
as provided in Section 1502.

SECTION 1504.  Qualifications for Voting.

     To be entitled to vote at any meeting of Holders a Person shall (a) be a
Holder of one or more Securities or (b) be a Person appointed by an instrument
in writing as proxy by a Holder of one or more Securities; provided, however,
that in the case of any meeting of Holders with respect to the Securities all or
part of which are represented by a Global Security, only Holders, or their
designated proxies, of record of Outstanding Securities on the record date
established pursuant to Section 1502 hereof shall be entitled to vote at such
meeting.  The only Persons who shall be entitled to be present or to speak at
any meeting of Holders shall be the Persons entitled to vote at such meeting and
their counsel and any representatives of the Trustee and its counsel and any
representatives of the Company and its counsel.

SECTION 1505.  Regulations.

     Notwithstanding any other provisions of this Indenture, the Trustee may
make such reasonable regulations as it may deem advisable for any meeting of
Holders, in regard to proof of the holding of Securities and of the appointment
of proxies, and in regard to the appointment and duties of inspectors of votes,
the submission and examination of proxies, certificates and other evidence of
the right to vote, and such other matters concerning the conduct of the meeting
as it shall think fit.  Except as otherwise permitted or required by any such
regulation, the holding of Securities shall be proved in the manner specified in
Section 104 and the appointment of any proxy shall be proved in the manner
specified in said Section 104 or by having the signature of the Person executing
the proxy witnessed or guaranteed.

     The Trustee shall, by an instrument in writing, appoint a temporary
chairman and a temporary secretary of the meeting,
<PAGE>

                                                                             116

unless the meeting shall have been called by the Company or by Holders as
provided in Section 1503, in which case the Company or the Holders calling the
meeting, as the case may be, shall in like manner appoint a temporary chairman
and a temporary secretary. A permanent chairman and a permanent secretary of the
meeting shall be elected by the Persons holding or representing a majority of
the Outstanding Securities represented at the meeting.

     Subject to the provisions of Section 1504, at any meeting each Holder or
proxy shall be entitled to one vote for each $1,000 principal amount of
Securities held or represented by him; provided, however, that no vote shall be
cast or counted at any meeting in respect of any Security challenged as not
Outstanding and ruled by the permanent chairman (or the temporary chairman, if
no permanent chairman shall have been elected pursuant to this Section) of the
meeting to be not Outstanding.  Neither the temporary chairman nor the permanent
chairman of the meeting shall have a right to vote other than by virtue of
Securities held by him or instruments in writing as aforesaid duly designating
him as the Person to vote on behalf of other Holders. Any meeting of Holders
duly called pursuant to the provisions of Section 1502 or 1503 may be adjourned
from time to time by the Persons holding or representing a majority of the
Securities represented at the meeting, whether or not constituting a quorum, and
the meeting may be held as so adjourned without further notice.

     At any meeting of the Holders of Securities a quorum shall consist of
Holders present in person or by proxy and representing at least 25% in principal
amount of the Outstanding Securities. If a quorum of the Holders of Securities
shall not be present within 30 minutes from the time fixed for holding any
meeting, the meeting, if summoned by the Holders or pursuant to a request of the
Holders, shall be dissolved; but in any other case the meeting shall be
adjourned to the same day in the next week (unless such day is a Legal Holiday
in which case it shall be adjourned to the next following day thereafter that is
not a Legal Holiday) at the same time and place and no notice shall be required
to be given in respect of such adjourned meeting.  At the adjourned meeting the
Holders of Securities present in person or by proxy shall form a quorum and may
transact the business for which the meeting was originally convened
notwithstanding that they may not represent 25% of the principal amount of the
Outstanding Securities.

SECTION 1506.  Voting.
<PAGE>

                                                                             117

     The vote upon any resolutions submitted to any meeting of Holders shall be
by written ballots on which shall be subscribed the signatures of the Holders of
Securities or of their representatives by proxy.  The permanent chairman (or the
temporary chairman, if no permanent chairman shall have been elected pursuant to
Section 1505) of the meeting shall appoint two inspectors of votes who shall
count all votes cast at the meeting for or against any resolution and who shall
make and file with the permanent secretary (or the temporary secretary, if no
permanent secretary shall have been elected pursuant to Section 1505) of the
meeting their verified written reports in duplicate of all votes cast at the
meeting.  A record in duplicate of the proceedings of each meeting of Holders
shall be prepared by the permanent secretary (or the temporary secretary, if no
permanent secretary shall have been elected pursuant to Section 1505) of the
meeting and there shall be attached to said record the original reports of the
inspectors of votes on any vote by ballot taken thereat and affidavits by one or
more persons having knowledge of the facts setting forth a copy of the notice of
the meeting and showing that said notice was mailed as provided in Section 1502.
The record shall be signed and verified by the affidavits of the permanent
chairman and the permanent secretary of the meeting (or if no permanent chairman
and/or permanent secretary shall have been elected pursuant to Section 1505,
then the temporary chairman and/or the temporary secretary, as the case may be,
shall take such action) and one of the duplicates shall be delivered to the
Company and the other to the Trustee to be preserved by the Trustee, the latter
to have attached thereto the ballots voted at the meeting.

     Any record so signed and verified shall be conclusive evidence of the
matters therein stated.

SECTION 1507.  No Delay of Rights by Meeting.

     Nothing in this Article Fifteen contained shall be deemed or construed to
authorize or permit, by reason of any call of a meeting of Holders or any rights
expressly or impliedly conferred hereunder to make such call, any hindrance or
delay in the exercise of any right or rights conferred upon or reserved to the
Trustee or to the Holders under any of the provisions of this Indenture or of
the Securities.

                                ARTICLE SIXTEEN

                           MISCELLANEOUS PROVISIONS

SECTION 1601.  Indenture and Securities Solely Corporate Obligations.
<PAGE>

                                                                             118

     No recourse under or upon any obligation, covenant or agreement of this
Indenture, any supplemental indenture, or of any Security, or for any claim
based thereon or otherwise in respect thereof, shall be had against any
incorporator, shareholder, officer or director, as such, past, present or
future, of the Company or of any successor corporation or Person, either
directly or through the Company, whether by virtue of any constitution, statute
or rule of law, or by the enforcement of any assessment or penalty or otherwise;
it being expressly understood that this Indenture and the obligations issued
hereunder are solely corporate obligations, and that no such personal liability
whatever shall attach to, or is or shall be incurred by, the incorporators,
shareholders, officers or directors, as such, of the Company or of any successor
corporation or Person, or any of them, because of the creation of the
indebtedness hereby authorized, or under or by reason of the obligations,
covenants or agreements contained in this Indenture or any of the Securities or
implied therefrom; and that any and all such personal liability, either at
common law or in equity or by constitution or statute, of, and any and all such
rights and claims against, every such incorporator, shareholder, officer or
director, as such, because of the creation of the indebtedness hereby
authorized, or under or by reason of the obligations, covenants or agreements
contained in this Indenture or in any of the Securities or implied therefrom,
are hereby expressly waived and released as a condition of, and as a
consideration for, the execution of this Indenture and the issue of such
Securities.
<PAGE>

                                                                             119

SECTION 1602.  Execution in Counterparts.

     This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.

          IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed and attested, all as of the day and year first above written.

                                               VINTAGE PETROLEUM, INC.,

                                               By  /s/ S. Craig George
                                                  ------------------------------

                                               By  /s/ William C. Barnes
                                                  ------------------------------

Attest:

 /s/ William C. Barnes
--------------------------------

                                               THE CHASE MANHATTAN BANK,
                                               as Trustee,

                                               By  /s/ James P. Freeman
                                                  ------------------------------

Attest:

 /s/ William G. Keenan
--------------------------------
<PAGE>

                                                                             120

STATE OF OKLAHOMA   )
                    ) SS.:
COUNTY OF TULSA   )

          Personally appeared before me, the undersigned authority in and for
the said county and state, on this 30th day of May 2001 within my jurisdiction,
the within named S. Craig George and William C. Barnes who acknowledged that
they are President and CEO and Executive Vice President, CFO and Secretary,
respectively, of Vintage Petroleum, Inc. and that for and on behalf of the said
corporation, and as its act and deed they executed the above and foregoing
instrument, after first having been duly authorized by said corporation so to
do.

                                               /s/ Pamela J. Thompson
                                        ----------------------------------------
                                                    NOTARY PUBLIC
<PAGE>

                                                                             121

STATE OF NEW YORK,  )
                    ) SS.:
COUNTY OF NEW YORK  )

          Personally appeared before me, the undersigned authority in and for
the said county and state, on this 30th day of May 2001, within my jurisdiction,
the within named James P. Freeman who acknowledged that he is a Vice President
of The Chase Manhattan Bank and that for and on behalf of the said corporation,
and as its act and deed he executed the above and foregoing instrument, after
first having been duly authorized by said corporation so to do.

                                                   /s/ Emily Fayan
                                             -----------------------------------
                                                    NOTARY PUBLIC
<PAGE>

                                                                      APPENDIX A

                FOR OFFERINGS TO QUALIFIED INSTITUTIONAL BUYERS
                PURSUANT TO RULE 144A AND TO CERTAIN PERSONS IN
              OFFSHORE TRANSACTIONS IN RELIANCE ON REGULATION S.

                   PROVISIONS RELATING TO INITIAL SECURITIES
                   -----------------------------------------
                            AND EXCHANGE SECURITIES
                            -----------------------

     1. Definitions
        -----------

     1.1  Definitions
          -----------

     For the purposes of this Appendix A the following terms shall have the
meanings indicated below:

          "Definitive Security" means a certificated Initial Security bearing,
if required, the restricted securities legend set forth in Section 2.3(d).

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

          "Exchange Securities" means the 7 7/8% Senior Subordinated Notes due
2011 to be issued pursuant to this Indenture in connection with a Registered
Exchange Offer or a Private Exchange pursuant to a Registration Rights
Agreement.

          "IAI" means an institutional "accredited investor" as described in
Rule 501(a)(1), (2), (3) or (7) under the Securities Act.

          "Initial Purchasers" means Lehman Brothers Inc. and BMO Nesbitt Burns
Corp.

          "Initial Securities" means the 7 7/8% Senior Subordinated Notes due
2011, to be issued from time to time, in one or more series as provided for in
this Indenture.

          "Private Exchange" means the offer by the Company, pursuant to Section
2(f) of the Registration Rights Agreement dated May 22, 2001, or pursuant to any
similar provision of any other Registration Rights Agreement, to issue and
deliver to certain purchasers, in exchange for the Initial Securities held by
such purchasers as part of their initial distribution, a like aggregate
principal amount of Private Exchange Securities.

          "Private Exchange Securities" means the 7 7/8% Senior Subordinated
Notes due 2011 to be issued pursuant to this Indenture in connection with a
Private Exchange pursuant to a Registration Rights Agreement.
<PAGE>

          "Purchase Agreement" means the Purchase Agreement dated May 22, 2001,
among the Company and the Initial Purchasers relating to the Original
Securities, or any similar agreement relating to any future sale of Initial
Securities by the Company.

          "QIB" means a "qualified institutional buyer" as defined in Rule 144A.

          "Registered Exchange Offer" means the offer by the Company, pursuant
to a Registration Rights Agreement, to certain Holders of Initial Securities, to
issue and deliver to such Holders, in exchange for the Initial Securities, a
like aggregate principal amount of Exchange Securities registered under the
Securities Act.

          "Registration Rights Agreement" means the Registration Rights
Agreement dated May 22, 2001, among the Company and the Initial Purchasers
relating to the Original Securities, or any similar agreement relating to any
additional Initial Securities.

          "Securities" means the Initial Securities and the Exchange Securities,
treated as a single class.

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

          "Securities Custodian" means the custodian with respect to a Global
Security (as appointed by the Depository), or any successor person thereto, who
shall initially be the Trustee.

          "Shelf Registration Statement" means a registration statement issued
by the Company in connection with the offer and sale of Initial Securities
pursuant to a Registration Rights Agreement.

          "Transfer Restricted Securities" means Definitive Securities and any
other Securities that bear or are required to bear the legend set forth in
Section 2.3(d) hereto.

     1.2  Other Definitions
          -----------------

                                                             Defined in
                                                             ----------
          Term                                                Section:
          ----                                                -------

"Agent Members".............................................   2.1(b)
"Global Security"...........................................   2.1(a)
"Regulation S"..............................................   2.1
"Rule 144A".................................................   2.1

     2.   The Securities
          --------------

     2.1  Form
          ----
<PAGE>

                                                                               4

          The Initial Securities will be offered and sold by the Company, from
time to time, pursuant to one or more Purchase Agreements.  The Initial
Securities will be resold initially only to QIBs in reliance on Rule 144A under
the Securities Act ("Rule 144A") or in reliance on Regulation S under the
Securities Act ("Regulation S").  Initial Securities may thereafter be
transferred to, among others, QIBs, IAIs and purchasers in reliance on
Regulation S.

          (a)  Global Securities.  Initial Securities shall be issued initially
               ------------------
in the form of one or more permanent global Securities in definitive, fully
registered form without interest coupons with the global securities legend and
restricted securities legend set forth in Exhibit 1 hereto (each, a "Global
Security"), which shall be deposited on behalf of the purchasers of the Initial
Securities represented thereby with the Securities Custodian, and registered in
the name of the Depository or a nominee of the Depository, duly executed by the
Company and authenticated by the Trustee as provided in this Indenture.  The
aggregate principal amount of the Global Securities may from time to time be
increased or decreased by adjustments made on the records of the Trustee and the
Depository or its nominee as hereinafter provided.  Beneficial interests in
Initial Securities that are sold to QIBs, that are sold pursuant to Regulation S
of the Securities Act or that are sold to IAIs will be represented by separate
Global Securities.

          (b)  Book-Entry Provisions.  This Section 2.1(b) shall apply only to a
               ----------------------
Global Security deposited with or on behalf of the Depository.

          The Company shall execute and the Trustee shall, in accordance with
this Section 2.1(b) and pursuant to a Company Order, authenticate and deliver
initially one or more Global Securities that (a) shall be registered in the name
of the Depository for such Global Security or Global Securities or the nominee
of such Depository and (b) shall be delivered by the Trustee to such Depository
or pursuant to such Depository's instructions or held by the Trustee as
Securities Custodian.
<PAGE>

                                                                               5

          Members of, or participants in, the Depository ("Agent Members") shall
have no rights under this Indenture with respect to any Global Security held on
their behalf by the Depository or by the Trustee as Securities Custodian or
under such Global Security, and the Depository may be treated by the Company,
the Trustee and any agent of the Company or the Trustee as the absolute owner of
such Global Security for all purposes whatsoever.  Notwithstanding the
foregoing, nothing herein shall prevent the Company, the Trustee or any agent of
the Company or the Trustee from giving effect to any written certification,
proxy or other authorization furnished by the Depository or impair, as between
the Depository and its Agent Members, the operation of customary practices of
such Depository governing the exercise of the rights of a holder of a beneficial
interest in any Global Security.

          (c)  Certificated Securities.  Except as provided in Section 2.3 or
               ------------------------
2.4, owners of beneficial interests in Global Securities will not be entitled to
receive physical delivery of certificated Securities.

     2.2  Authentication.  The Trustee shall authenticate and deliver:  (1)
          ---------------
Original Securities for original issue in an aggregate principal amount of
$200,000,000, (2) subject to the terms of this Indenture, additional Initial
Securities, if and when issued, in an unlimited aggregate principal amount and
(3) Exchange Securities for issue only in a Registered Exchange Offer or a
Private Exchange pursuant to a Registration Rights Agreement, for a like
principal amount of Initial Securities, upon receipt of a Company Order.  Such
order shall specify the amount of the Securities to be authenticated and the
date on which the original issue of Securities is to be authenticated and
whether the Securities are to be Initial Securities or Exchange Securities.

     2.3  (a)  Transfer and Exchange.  (a)  Transfer and Exchange of Definitive
               ----------------------       -----------------------------------
Securities.  When Definitive Securities are presented to the Registrar or a co-
-----------
registrar with a request:

          (x)  to register the transfer of such Definitive Securities; or

          (y)  to exchange such Definitive Securities for an equal principal
     amount of Definitive Securities of other authorized denominations,

the Registrar or co-registrar shall register the transfer or make the exchange
as requested if the requirements for such transaction set forth in Section 305
of this Indenture are met; provided, however, that the Definitive Securities
                           --------  -------
surrendered for transfer or exchange:
<PAGE>

                                                                               6

          (i)   shall be duly endorsed or accompanied by a written instrument of
     transfer in form reasonably satisfactory to the Company and the Registrar
     or co-registrar, duly executed and completed by the Holder thereof or his
     attorney duly authorized in writing; and

          (ii)  are being transferred or exchanged pursuant to an effective
     registration statement under the Securities Act, pursuant to Section 2.3(b)
     or pursuant to clause (ii)(A), (ii)(B) or (ii)(C) below, and are
     accompanied by the following additional information and documents, as
     applicable:

                (A)  if such Definitive Securities are being delivered to the
          Security Registrar by a Holder for registration in the name of such
          Holder, without transfer, a certification from such Holder to that
          effect; or

                (B)  if such Definitive Securities are being transferred to the
          Company, a certification to that effect (in the form set forth on the
          reverse of such Security); or

                (C)  if such Definitive Securities are being transferred
          pursuant to an exemption from registration in accordance with Rule 144
          under the Securities Act or in reliance on another exemption from the
          registration requirements of the Securities Act, (i) a certification
          to that effect (in the form set forth on the reverse of such Security)
          and (ii) if the Company requests, an opinion of counsel or other
          evidence reasonably satisfactory to it as to the compliance with the
          restrictions set forth in the legend set forth in Section 2.3(d)(i).
<PAGE>

                                                                               7

          (b)   Restrictions on Transfer of a Definitive Security for a
                -------------------------------------------------------
Beneficial Interest in a Global Security.  A Definitive Security may not be
-----------------------------------------
exchanged for a beneficial interest in a Global Security except upon
satisfaction of the requirements set forth below.  Upon receipt by the Trustee
of a Definitive Security, duly endorsed or accompanied by appropriate
instruments of transfer, in form reasonably satisfactory to the Company and the
Registrar or co-registrar, together with:

          (i)   certification, in the form set forth on the reverse of such
     Security, that such Definitive Security is being transferred (A) to a QIB
     in accordance with Rule 144A, (B) to an IAI that has furnished to the
     Trustee a signed letter containing certain representations and agreements
     (the form of which has been approved by the Company) or (C) outside the
     United States in an offshore transaction within the meaning of Regulation S
     and in compliance with Rule 904 under the Securities Act; and

          (ii)  written instructions directing the Trustee to make, or to direct
     the Securities Custodian to make, an adjustment on its books and records
     with respect to such Global Security to reflect an increase in the
     aggregate principal amount of the Securities represented by the Global
     Security, such instructions to contain information regarding the
     participant account of the Depository to be credited with such increase,

then the Trustee shall cancel such Definitive Security and cause, or direct the
Securities Custodian to cause, in accordance with the standing instructions and
procedures existing between the Depository and the Securities Custodian, the
aggregate principal amount of Securities represented by the related Global
Security to be increased by the aggregate principal amount of the Definitive
Security to be exchanged and shall credit or cause to be credited to the account
of the Person specified in such instructions a beneficial interest in such
Global Security equal to the principal amount of the Definitive Security so
cancelled. If the related Global Security is not then outstanding and such
Global Security has not been previously exchanged pursuant to Section 2.4, the
Company shall issue and the Trustee shall authenticate, upon written order of
the Company in the form of an Officers' Certificate, a new Global Security in
the appropriate principal amount.

          (c)   Transfer and Exchange of Global Securities. (i) The transfer and
                -------------------------------------------
exchange of Global Securities or beneficial interests therein shall be effected
through the Depository, in accordance with this Indenture (including applicable
restrictions on transfer set forth herein, if any) and the procedures of the
Depository therefor. A transferor of a beneficial interest in a Global Security
shall deliver a written order given in accordance
<PAGE>

                                                                               8

with the Depository's procedures containing information regarding the
participant account of the Depository to be credited with a beneficial interest
in the Global Security and such account shall be credited in accordance with
such instructions with a beneficial interest in the Global Security and the
account of the Person making the transfer shall be debited by an amount equal to
the beneficial interest in the Global Security being transferred. In the case of
a transfer of a beneficial interest in one Global Security to a beneficial
interest in another Global Security, the transferor and/or the transferee, as
applicable, must furnish a signed letter to the Trustee containing certain
representations and agreements as to compliance with the restrictions set forth
in the legend set forth in Section 2.3(d)(i) in connection with such transfer
(the form of which letter shall be obtained from the Company).

          (ii)  If the proposed transfer is a transfer of a beneficial interest
     in one Global Security to a beneficial interest in another Global Security,
     the Registrar shall reflect on its books and records the date of such
     transfer and an increase in the principal amount of the Global Security to
     which such interest is being transferred in an amount equal to the
     principal amount of the interest to be so transferred, and the Registrar
     shall reflect on its books and records the date and a corresponding
     decrease in the principal amount of the Global Security from which such
     interest is being transferred.

          (iii) Notwithstanding any other provisions of this Appendix A (other
     than the provisions set forth in Section 2.4), a Global Security may not be
     transferred as a whole except by the Depository to a nominee of the
     Depository or by a nominee of the Depository to the Depository or another
     nominee of the Depository or by the Depository or any such nominee to a
     successor Depository or a nominee of such successor Depository.

          (iv)  In the event that a Global Security is exchanged for Securities
     in definitive registered form pursuant to Section 2.4 prior to the
     consummation of a Registered Exchange Offer or the effectiveness of a Shelf
     Registration Statement with respect to such Securities, such Securities may
     be exchanged and subsequently transferred and exchanged only in accordance
     with such procedures as are substantially consistent with the provisions of
     this Section 2.3 (including the certification requirements set forth on the
     reverse of the Initial Securities intended to ensure that such transfers
     comply with Rule 144A, Regulation S or such other applicable exemption from
     registration under the Securities Act, as the case may be) and such other
     procedures as may from time to time be adopted by the Company.
<PAGE>

                                                                               9

          (d)  Legend.
               -------

          (i)  Except as permitted by the following para  graphs (ii), (iii),
     (iv) and (vi), each Security certificate evidencing Global Securities
     (which represent Initial Securities) and the Definitive Securities (and all
     Securities issued in exchange therefor or in substitution thereof) shall
     bear a legend in substantially the following form:

     "THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
     AMENDED (THE "SECURITIES ACT").  THE HOLDER HEREOF, BY PURCHASING THIS
     SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY NOT
     BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND
     ANNIVERSARY OF THE ISSUANCE HEREOF (OR A PREDECESSOR SECURITY HERETO) OR
     (Y) BY ANY HOLDER THAT WAS AN AFFILIATE OF THE COMPANY AT ANY TIME DURING
     THE THREE MONTHS PRECEDING THE DATE OF SUCH TRANSFER, IN EITHER CASE OTHER
     THAN (1) TO THE COMPANY, (2) SO LONG AS THIS SECURITY IS ELIGIBLE FOR
     RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A
     PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL
     BUYER WITHIN THE MEANING OF RULE 144A PURCHASING FOR ITS OWN ACCOUNT OR FOR
     THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT
     THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A
     (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF
     TRANSFER ON THE REVERSE OF THIS SECURITY), (3) IN AN OFFSHORE TRANSACTION
     IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT (AS INDICATED BY
     THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE
     REVERSE OF THIS SECURITY), (4) TO AN INSTITUTION THAT IS AN "ACCREDITED
     INVESTOR" AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE
     SECURITIES ACT (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE
     CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY) THAT IS ACQUIRING
     THIS SECURITY FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION, AND A
     LETTER WHICH MAY BE OBTAINED FROM THE COMPANY OR THE TRUSTEE IS DELIVERED
     BY THE TRANSFEREE TO THE COMPANY AND THE TRUSTEE, (5) PURSUANT TO AN
     EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
     (IF APPLICABLE) UNDER THE SECURITIES ACT, OR (6) PURSUANT TO AN EFFECTIVE
     REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE
     WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES.
     EACH HOLDER OF THIS SECURITY AGREES IT WILL FURNISH TO THE COMPANY AND THE
     TRUSTEE SUCH CERTIFICATES AND OTHER INFORMATION AS THEY MAY REASONABLY
     REQUIRE TO CONFIRM THAT ANY TRANSFER BY IT OF THIS SECURITY COMPLIES WITH
     THE FOREGOING RESTRICTIONS.  THE HOLDER HEREOF, BY PURCHASING THIS
     SECURITY, REPRESENTS
<PAGE>

                                                                              10

     AND AGREES FOR THE BENEFIT OF THE COMPANY THAT IT IS (1) A QUALIFIED
     INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A OR (2) AN INSTITUTION
     THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a)(1), (2), (3) OR
     (7) UNDER THE SECURITIES ACT AND THAT IT IS HOLDING THIS SECURITY FOR
     INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION OR (3) A NON-U.S. PERSON
     OUTSIDE THE UNITED STATES WITHIN THE MEANING OF (OR AN ACCOUNT SATISFYING
     THE REQUIREMENTS OF PARAGRAPH (k) OF RULE 902 UNDER) REGULATION S UNDER THE
     SECURITIES ACT."

          Each Definitive Security will also bear the following additional
legend:

          "IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE
          REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION
          AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE
          TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS."

          (ii)  Upon any sale or transfer of a Transfer Restricted Security
     (including any Transfer Restricted Security represented by a Global
     Security) pursuant to Rule 144 under the Securities Act:

                (A)  in the case of any Transfer Restricted Security that is a
          Definitive Security, the Registrar shall permit the Holder thereof to
          exchange such Transfer Restricted Security for a Definitive Security
          that does not bear the legends set forth above and rescind any
          restriction on the transfer of such Transfer Restricted Security; and

                (B)  in the case of any Transfer Restricted Security that is
          represented by a Global Security, the Registrar shall permit the
          Holder thereof to exchange such Transfer Restricted Security for a
          Definitive Security that does not bear the legends set forth above and
          rescind any restriction on the transfer of such Transfer Restricted
          Security,

in either case, if the Holder certifies in writing to the Registrar that its
request for such exchange was made in reliance on Rule 144 (such certification
to be in the form set forth on the reverse of the Initial Security).

          (iii) After a transfer of any Initial Securities during the period of
     the effectiveness of a Shelf Registration Statement with respect to such
     Initial Securities, all requirements pertaining to legends on such Initial
     Security will cease to apply and the requirements requiring that any such
     Initial Security be issued in global form will continue
<PAGE>

                                                                              11

     to apply. Upon the occurrence of any of the circumstances described in this
     paragraph, the Company will deliver an Officers' Certificate to the Trustee
     instructing the Trustee to issue Securities without legends.

          (iv)  Upon the consummation of a Registered Exchange Offer with
     respect to the Initial Securities pursuant to which certain Holders of such
     Initial Securities are offered Exchange Securities in exchange for their
     Initial Securities, all requirements pertaining to such Initial Securities
     that Initial Securities be issued in global form will continue to apply,
     and Exchange Securities in global form will be available to Holders that
     exchange such Initial Securities in such Registered Exchange Offer.  Upon
     the occurrence of any of the circumstances described in this paragraph, the
     Company will deliver an Officers' Certificate to the Trustee instructing
     the Trustee to issue Securities without legends.

          (v)   Upon the consummation of a Private Exchange with respect to the
     Initial Securities pursuant to which Holders of such Initial Securities are
     offered Private Exchange Securities in exchange for their Initial
     Securities, all requirements pertaining to such Initial Securities that
     Initial Securities issued to certain Holders be issued in global form will
     continue to apply, and Private Exchange Securities in global form with the
     restricted securities legend set forth in Exhibit 1 hereto will be
     available to Holders that exchange such Initial Securities in such Private
     Exchange.

          (vi)  Upon a sale or transfer of any Initial Security acquired
     pursuant to Regulation S, all requirements pertaining to legends on such
     Initial Security will cease to apply, the requirements requiring any such
     Initial Security be issued in global form will continue to apply, and an
     Initial Security in global form without the restricted security legend set
     forth in Exhibit 1 hereto will be available to the transferee of the Holder
     of such Initial Securities.
<PAGE>

                                                                              12

          (e)  Cancellation or Adjustment of Global Security. At such time as
               ---------------------------------------------
all beneficial interests in a Global Security have either been exchanged for
certificated or Definitive Securities, redeemed, repurchased or cancelled, such
Global Security shall be returned by the Depository to the Trustee for
cancellation or retained and cancelled by the Trustee.  At any time prior to
such cancellation, if any beneficial interest in a Global Security is exchanged
for certificated or Definitive Securities, redeemed, repurchased or cancelled,
the principal amount of Securities represented by such Global Security shall be
reduced and an adjustment shall be made on the books and records of the Trustee
(if it is then the Securities Custodian for such Global Security) with respect
to such Global Security, by the Trustee or the Securities Custodian, to reflect
such reduction.

          (f)  No Obligation of the Trustee.
               -----------------------------

          (i)  The Trustee shall have no responsibility or obligation to any
     beneficial owner of a Global Security, a member of, or a participant in the
     Depository or any other Person with respect to the accuracy of the records
     of the Depository or its nominee or of any participant or member thereof,
     with respect to any ownership interest in the Securities or with respect to
     the delivery to any participant, member, beneficial owner or other Person
     (other than the Depository) of any notice (including any notice of
     redemption or repurchase) or the payment of any amount, under or with
     respect to such Securities.  All notices and communications to be given to
     the Holders and all payments to be made to Holders under the Securities
     shall be given or made only to the registered Holders (which shall be the
     Depository or its nominee in the case of a Global Security). The rights of
     beneficial owners in any Global Security shall be exercised only through
     the Depository subject to the applicable rules and procedures of the
     Depository.  The Trustee may rely and shall be fully protected in relying
     upon information furnished by the Depository with respect to its members,
     participants and any beneficial owners.

          (ii) The Trustee shall have no obligation or duty to monitor,
     determine or inquire as to compliance with any restrictions on transfer
     imposed under this Indenture or under applicable law with respect to any
     transfer of any interest in any Security (including any transfers between
     or among Depository participants, members or beneficial owners in any
     Global Security) other than to require delivery of such certificates and
     other documentation or evidence as are expressly required by, and to do so
     if and when expressly required by, the terms of this Indenture, and to
     examine the same to determine substantial compliance as to form with the
     express requirements hereof.
<PAGE>

                                                                              13

     2.4  Certificated Securities
          -----------------------

          (a)  A Global Security deposited with the Depository or with the
Trustee as Securities Custodian pursuant to Section 2.1 shall be transferred to
the beneficial owners thereof in the form of certificated Securities in an
aggregate principal amount equal to the principal amount of such Global
Security, in exchange for such Global Security, only if such transfer complies
with Section 2.3 and (i) the Depository notifies the Company that it is
unwilling or unable to continue as a Depository for such Global Security or if
at any time the Depository ceases to be a "clearing agency" registered under the
Exchange Act, and a successor depositary is not appointed by the Company within
90 days of such notice or after it becomes aware of such ineligibility, or (ii)
an Event of Default has occurred and is continuing or (iii) the Company, in its
sole discretion, notifies the Trustee in writing that it elects to cause the
issuance of certificated Securities under this Indenture.

          (b)  Any Global Security that is transferable to the beneficial owners
thereof pursuant to this Section 2.4 shall be surrendered by the Depository to
the Trustee, to be so transferred, in whole or from time to time in part,
without charge, and the Trustee shall authenticate and deliver, upon such
transfer of each portion of such Global Security, an equal aggregate principal
amount of certificated Securities of authorized denominations.  Any portion of a
Global Security transferred pursuant to this Section shall be executed,
authenticated and delivered only in denominations of $1,000 and any integral
multiple thereof and registered in such names as the Depository shall direct.
Any certificated Initial Security delivered in exchange for an interest in the
Global Security shall, except as otherwise provided by Section 2.3(d), bear the
restricted securities legend set forth in Exhibit 1 hereto.

          (c)  Subject to the provisions of Section 2.4(b), the registered
Holder of a Global Security may grant proxies and otherwise authorize any
Person, including Agent Members and Persons that may hold interests through
Agent Members, to take any action which a Holder is entitled to take under this
Indenture or the Securities.

          (d)  In the event of the occurrence of either of the events specified
in Section 2.4(a)(i), (ii) or (iii), the Company will promptly make available to
the Trustee a reasonable supply of certificated Securities in definitive, fully
registered form without interest coupons.
<PAGE>

                                                                       EXHIBIT 1
                                                                   to APPENDIX A

                      [FORM OF FACE OF INITIAL SECURITY]

                          [Global Securities Legend]

          UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW
YORK, TO 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.

          THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF.  THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A
SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE
REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE
THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.

                        [Restricted Securities Legend]

          THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS
SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY NOT BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND ANNIVERSARY OF
THE ISSUANCE HEREOF (OR A PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER THAT
WAS AN AFFILIATE OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDING
THE DATE OF SUCH TRANSFER, IN EITHER CASE OTHER THAN (1) TO THE COMPANY, (2) SO
LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A"), TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS
A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A PURCHASING FOR
ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM
NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE
CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), (3) IN AN OFFSHORE
TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT (AS
INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON
THE REVERSE OF THIS SECURITY), (4) TO AN INSTITUTION THAT IS AN "ACCREDITED
INVESTOR" AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT
(AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF
TRANSFER ON THE REVERSE OF
<PAGE>

                                                                               2

 THIS SECURITY) THAT IS ACQUIRING THIS SECURITY FOR INVESTMENT PURPOSES AND NOT
FOR DISTRIBUTION, AND A LETTER WHICH MAY BE OBTAINED FROM THE COMPANY OR THE
TRUSTEE IS DELIVERED BY THE TRANSFEREE TO THE COMPANY AND THE TRUSTEE, (5)
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY
RULE 144 (IF APPLICABLE) UNDER THE SECURITIES ACT, OR (6) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES. EACH HOLDER OF THIS SECURITY AGREES IT WILL FURNISH TO THE COMPANY AND
THE TRUSTEE SUCH CERTIFICATES AND OTHER INFORMATION AS THEY MAY REASONABLY
REQUIRE TO CONFIRM THAT ANY TRANSFER BY IT OF THIS SECURITY COMPLIES WITH THE
FOREGOING RESTRICTIONS. THE HOLDER HEREOF, BY PURCHASING THIS SECURITY,
REPRESENTS AND AGREES FOR THE BENEFIT OF THE COMPANY THAT IT IS (1) A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A OR (2) AN INSTITUTION THAT
IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER
THE SECURITIES ACT AND THAT IT IS HOLDING THIS SECURITY FOR INVESTMENT PURPOSES
AND NOT FOR DISTRIBUTION OR (3) A NON-U.S. PERSON OUTSIDE THE UNITED STATES
WITHIN THE MEANING OF (OR AN ACCOUNT SATISFYING THE REQUIREMENTS OF PARAGRAPH
(k) OF RULE 902 UNDER) REGULATION S UNDER THE SECURITIES ACT.

                        [Definitive Securities Legend]

[IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND
TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT
MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING
RESTRICTIONS.]
<PAGE>

                            ......................

                   7 7/8% Senior Subordinated Note due 2011
                        ...............................

No. ......                                                      [up to]* $ .....
                                                       CUSIP No. [             ]

          VINTAGE PETROLEUM, INC., a Delaware corporation (herein called the
"Company", which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
 ................ or registered assigns, the principal sum [set forth in the
attached Schedule of Increases and Decreases in Global Security]* [of
$___________]** on May 15, 2011, and to pay interest thereon from May 30,
2001, or from the most recent Interest Payment Date to which interest has been
paid or duly provided for, semiannually in arrears on May 15 and November 15 in
each year, commencing November 15, 2001, at the rate of 7 7/8% per annum, both
before and after default, with interest upon overdue interest at the same rate
(to the extent legally permitted) until the principal hereof is paid or made
available for payment.  The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in such Indenture,
be paid to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest, which shall be the May 1 or November 1 (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date.
Any such interest not so punctually paid or duly provided for will forthwith
cease to be payable to the Holder on such Regular Record Date and may either be
paid to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest to be fixed by the Trustee, notice
whereof shall be given to Holders of Securities not less than 10 days prior to
such Special Record Date, or be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Securities may be listed, and upon such notice as may be required by such
exchange, all as more fully provided in said Indenture.

______________________________________
     *   Insert for Global Securities

     **  Insert for Certificated Securities
<PAGE>

                                                                               2

          Payment of the principal of (and premium, if any) and any such
interest on this Security will be made at the office or agency of the Company
maintained for that purpose in the Borough of Manhattan in The City of New York,
in such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts; provided,
however, that at the option of the Company payment of interest may be made by
check mailed to the address of the Person entitled thereto as such address shall
appear in the Security Register.

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

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

          IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.

                                             VINTAGE PETROLEUM, INC.

                                             By ..............................

                                             By ..............................

          This is one of the Company's 7 7/8% Senior Subordinated Notes Due 2011
referred to in the within-mentioned Indenture.

Dated:

                                             The Chase Manhattan Bank,
                                             As Trustee

                                             By ..............................
                                                     Authorized Officer
<PAGE>

                                                                               3

                     [FORM OF REVERSE OF INITIAL SECURITY]

          This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued under an Indenture, dated as of
May 30, 2001 (herein called the "Indenture", which term shall have the meaning
assigned to it in such instrument), between the Company and The Chase Manhattan
Bank, as Trustee (herein called the "Trustee", which term includes any successor
trustee under the Indenture), and reference is hereby made to the Indenture for
a statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Company, the Trustee, the holders of Senior
Indebtedness and the Holders of the Securities and of the terms upon which the
Securities are, and are to be, authenticated and delivered.

          [This Security is one of the Original Securities referred to in the
Indenture issued in an aggregate principal amount of $200,000,000.  The
Securities include the Original Securities, an unlimited aggregate principal
amount of additional Initial Securities that may be issued under the Indenture
and any Exchange Securities issued in exchange for Initial Securities. The
Original Securities, such additional Initial Securities and the Exchange
Securities are treated as a single class of securities under the Indenture.]
[This Security is one of the additional Initial Securities that may be issued
under the Indenture.  The Securities include such additional Securities, the
Original Securities in an aggregate principal amount of $200,000,000 previously
issued under the Indenture and any Exchange Securities issued in exchange for
Initial Securities. The additional Initial Securities, the Original Securities
and the Exchange Securities are treated as a single class of securities under
the Indenture.]

          The Securities are subject to redemption upon not less than 30 nor
more than 60 days' notice by mail, at any time on or after May 15, 2006, in
whole or in part, at the election of the Company, at the following Redemption
Prices (expressed as percentages of the principal amount):  If redeemed during
the 12-month period beginning May 15 of the years indicated:

                                       Redemption
               Year                      Price
               ----                 -----------------

               2006                     103.938%
               2007                     102.625%
               2008                     101.313%

and thereafter, beginning May 15, 2009, at a Redemption Price equal to 100% of
the principal amount, together, in the case of any such redemption, with accrued
and unpaid interest (if any) to the Redemption Date, but interest installments
whose Stated
<PAGE>

                                                                               4

Maturity is on or prior to such Redemption Date will be payable to the Holders
of the Securities, or one or more Predecessor Securities, of record at the close
of business on the relevant Record Dates referred to on the face hereof, all as
provided in the Indenture.

          Notwithstanding the foregoing, prior to May 15, 2004, the Company may
redeem, at any time or from time to time, up to 35% of the original aggregate
principal amount of Securities actually issued, at a Redemption Price of
107.875% of the principal amount thereof plus accrued and unpaid interest, if
any, to the Redemption Date (but interest installments whose Stated Maturity is
on or prior to such Redemption Date will be payable to the Holders of the
Securities, or one or more Predecessor Securities, of record at the close of
business on the relevant Record Dates referred to on the face hereof, all as
provided in the Indenture) with the net proceeds of one or more Public Equity
Offerings of the Company, provided that at least 65% of the original aggregate
                          --------
principal amount of the Securities actually issued remains outstanding after the
occurrence of such redemption and provided, further, that such redemption shall
                                  -----------------
occur not later than 75 days after the date of the closing of any such Public
Equity Offering and upon not less than 30 nor more than 60 days' prior notice.

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

          Upon a Change of Control, any Holder of Securities will have the right
to cause the Company to purchase all or any part of the Securities of such
Holder at a purchase price equal to 101% of the principal amount of the
Securities to be purchased plus accrued and unpaid interest thereon to the
Change of Control Payment Date as provided in, and subject to the terms of, the
Indenture.

          The indebtedness evidenced by this Security is, to the extent provided
in the Indenture, subordinate and subject in right of payment to the prior
payment in full of all Senior Indebtedness, and this Security is issued subject
to the provisions of the Indenture with respect thereto.  Each Holder of this
Security, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his behalf to take such
action as may be necessary or appropriate to effectuate the subordination so
provided, and (c) appoints the Trustee his attorney-in-fact for any and all such
purposes.

          The Indenture contains provisions for defeasance at any time of the
entire indebtedness of this Security or certain
<PAGE>

                                                                               5

restrictive covenants and Events of Default with respect to this Security, in
each case upon compliance with certain conditions set forth in the Indenture.

          If an Event of Default with respect to the Securities shall occur and
be continuing, the principal of and accrued and unpaid interest on the
Securities may be declared due and payable in the manner and with the effect
provided in the Indenture.

          The Indenture provides that modifications and amendments of the
Indenture may be made by the Company and the Trustee without the consent of any
Holders of Securities in certain limited circumstances. The Indenture permits,
with certain exceptions as therein provided, the amendment thereof and the
modification of the rights and obligations of the Company and the rights of the
Holders of the Securities under the Indenture at any time by the Company and the
Trustee with the consent of the Holders of a majority in aggregate principal
amount of the Securities at the time Outstanding.  The Indenture also contains
provisions permitting the Holders of specified percentages in principal amount
of the Securities at the time Outstanding, on behalf of the Holders of all
Securities, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Security shall be conclusive
and binding upon such Holder and upon all future Holders of this Security and of
any Security issued upon the registration of transfer hereof or in exchange
herefor or in lieu hereof, whether or not notation of such consent or waiver is
made upon this Security.

          As provided in and subject to the provisions of the Indenture, the
Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder, unless such Holder shall have previously given
the Trustee written notice of a continuing Event of Default with respect to the
Securities, the Holders of not less than 25% in principal amount of the
Securities at the time Outstanding shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default as Trustee
and offered the Trustee reasonable indemnity, and the Trustee shall not have
received from the Holders of a majority in principal amount of Securities at the
time Outstanding a direction inconsistent with such request, and shall have
failed to institute any such proceeding, for 60 days after receipt of such
notice, request and offer of indemnity.  The foregoing shall not apply to any
suit instituted by the Holder of this Security for the enforcement of any
payment of principal hereof or any premium or interest hereon on or after the
respective due dates expressed herein.
<PAGE>

                                                                               6

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

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

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

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

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

          Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security be overdue, and none of
the Company, the Trustee and any such agent shall be affected by notice to the
contrary.

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

          [The holder of this Security is entitled to the benefits of a
Registration Rights Agreement dated May 22, 2001 (the "Registration Rights
Agreement"), among the Company and the
<PAGE>

                                                                               7

Initial Purchasers named therein. Capitalized terms used in this paragraph but
not defined herein have the meanings assigned to them in the Registration Rights
Agreement. In the event that (i) neither the Exchange Offer Registration
Statement nor the Shelf Registration Statement has been filed with the
Commission on or prior to the 75th day following the date of original issuance
of the Securities, (ii) neither the Exchange Offer Registration Statement nor
the Shelf Registration Statement has been declared effective on or prior to the
150th day following the date of the original issuance of the Securities, (iii)
neither the Registered Exchange Offer has been consummated nor the Shelf
Registration Statement has been declared effective on or prior to the 45th day
following the date the Exchange Offer Registration Statement is declared
effective under the Securities Act, or (iv) after either the Exchange Offer
Registration Statement or the Shelf Registration Statement has been declared
effective, such Registration Statement thereafter ceases to be effective or
usable in connection with resales of the Securities at any time that the Company
is obligated to maintain the effectiveness thereof pursuant to the Registration
Rights Agreement (each such event referred to in clauses (i) through (iv) above
being referred to herein as a "Registration Default"), then, as liquidated
damages for such Registration Default, additional interest (the "Special
Interest") shall accrue (in addition to stated interest on the Securities) from
and including the date on which the first such Registration Default shall occur
to but excluding the date on which all Registration Defaults have been cured, in
an amount equal to $.05 per calendar week per $1,000 principal amount of the
Securities; provided, however, that such rate shall increase by an amount equal
            --------  -------
to $.05 per calendar week per $1,000 principal amount of the Securities from and
including the 91st day after the first such Registration Default (and each
successive 91st day thereafter) unless and until all Registration Defaults have
been cured; provided further, however, that in no event shall the Special
            ----------------  -------
Interest exceed $.30 per calendar week per $1,000 principal amount of the
Securities. The Special Interest will be payable in cash semiannually in arrears
each May 15 and November 15 in the same manner and to the same Persons as
regular interest.]
<PAGE>

                                                                               8

                                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 soc. sec. 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.

_______________________________________________________________________________

Date: ______________________ Your Signature: __________________________________

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

In connection with any transfer of any of the Securities evidenced by this
certificate occurring prior to the expiration of the period referred to in Rule
144(k) under the Securities Act after the later of the date of original issuance
of such Securities and the last date, if any, on which such Securities were
owned by the Company or any Affiliate of the Company, the undersigned confirms
that such Securities are being transferred in accordance with its terms:

CHECK ONE BOX BELOW

     (1)  [_]  to the Company; or

     (2)  [_]  pursuant to an effective registration statement under the
               Securities Act of 1933; or

     (3)  [_]  inside the United States to a "qualified institutional buyer" (as
               defined in Rule 144A under the Securities Act of 1933) that
               purchases for its own account or for the account of a qualified
               institutional buyer to whom notice is given that such transfer is
               being made in reliance on Rule 144A, in each case pursuant to and
               in compliance with Rule 144A under the Securities Act of 1933; or
<PAGE>

                                                                               9

     (4)  [_]  outside the United States in an offshore transaction within the
               meaning of Regulation S under the Securities Act in compliance
               with Rule 904 under the Securities Act of 1933; or

     (5)  [_]  to an institutional "accredited investor" (as defined in Rule
               501(a)(1), (2), (3) or (7) under the Securities Act of 1933) that
               has furnished to the Trustee a signed letter containing certain
               representations and agreements (the form of which letter to be
               obtained from the Company); or

     (6)  [_]  pursuant to another available exemption from registration
               provided by Rule 144 under the Securities Act of 1933.

     Unless one of the boxes is checked, the Trustee will refuse to register any
     of the Securities evidenced by this certificate in the name of any person
     other than the registered holder thereof; provided, however, that if box
                                               --------  -------
     (4), (5) or (6) is checked, the Trustee may require, prior to registering
     any such transfer of the Securities, such legal opinions, certifications
     and other information as the Company has reasonably requested to confirm
     that such transfer is being made pursuant to an exemption from, or in a
     transaction not subject to, the registration requirements of the Securities
     Act of 1933.

                                        ______________________________________
                                                    Your Signature

Signature Guarantee:

Date: _______________________________   ______________________________________
Signature must be guaranteed by a       Signature of Signature Guarantee
participant in a recognized signature
guaranty medallion program or other
signature guarantor acceptable to the
Trustee

_______________________________________________________________________________
<PAGE>

                                                                              10

             TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED.

          The undersigned represents and warrants that it is purchasing this
Security for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, and is aware that the sale to it is being made in reliance on Rule 144A
and acknowledges that it has received such information regarding the Company as
the undersigned has requested pursuant to Rule 144A or has determined not to
request such information and that it is aware that the transferor is relying
upon the undersigned's foregoing representations in order to claim the exemption
from registration provided by Rule 144A.

Dated: _____________________________    __________________________________
                                        NOTICE:  To be executed by an
                                                 executive officer
<PAGE>

                                                                              11

                     [TO BE ATTACHED TO GLOBAL SECURITIES]

             SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY

          The initial principal amount of this Global Security is $[         ].
  The following increases or decreases in this Global Security have been made:

<TABLE>
<S>         <C>                     <C>                   <C>                       <C>
Date of      Amount of decrease     Amount of increase    Principal amount of        Signature of
Exchange     in Principal  Amount   in Principal Amount   this Global Security       authorized signatory
             of this Global         of this Global        following such             of Trustee or
             Security               Security              decrease or increase       Securities Custodian
</TABLE>

<PAGE>

                                                                       EXHIBIT A
                          [FORM OF FACE OF SECURITY]

                          [Global Securities Legend]

          UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW
YORK, TO 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.

          THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF.  THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A
SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE
REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE
THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
<PAGE>

                           .........................

                   7 7/8% Senior Subordinated Note due 2011
                ...............................................

         No. ......                                  [up to]* $......
                                            CUSIP No. [             ]

          VINTAGE PETROLEUM, INC., a Delaware corporation (herein called the
"Company", which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
 ................ or registered assigns, the principal sum [set forth in the
attached Schedule of Increases and Decreases in Global Security]* [of
$___________]** on May 15, 2011, and to pay interest thereon from May 30, 2001,
or from the most recent Interest Payment Date to which interest has been paid or
duly provided for, semiannually in arrears on May 15 and November 15 in each
year, commencing November 15, 2001, at the rate of 7 7/8% per annum, both before
and after default, with interest upon overdue interest at the same rate (to the
extent legally permitted) until the principal hereof is paid or made available
for payment.  The interest so payable, and punctually paid or duly provided for,
on any Interest Payment Date will, as provided in such Indenture, be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, which shall be May 1 and November 1 (whether or not a Business Day),
as the case may be, next preceding such Interest Payment Date.  Any such
interest not so punctually paid or duly provided for will forthwith cease to be
payable to the Holder on such Regular Record Date and may either be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the Trustee, notice whereof shall be
given to Holders of Securities not less than 10 days prior to such Special
Record Date, or be paid at any time in any other lawful manner not inconsistent
with the requirements of any securities exchange on which the Securities may be
listed, and upon such notice as may be required by such exchange, all as more
fully provided in said Indenture.

______________________________
      *    Insert for Global Securities

      **   Insert for Certificated Securities
<PAGE>

                                                                               2

          Payment of the principal of (and premium, if any) and any such
interest on this Security will be made at the office or agency of the Company
maintained for that purpose in the Borough of Manhattan in The City of New York,
in such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts; provided,
however, that at the option of the Company payment of interest may be made by
check mailed to the address of the Person entitled thereto as such address shall
appear in the Security Register.

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

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

          IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.

                                             VINTAGE PETROLEUM, INC.

                                             By ............................

                                             By ............................

          This is one of the Company's 7 7/8% Senior Subordinated Notes Due 2011
referred to in the within-mentioned Indenture.

Dated:

                                             The Chase Manhattan Bank,
                                             As Trustee

                                             By ............................
                                                     Authorized Officer
<PAGE>

                                                                               3

                         [FORM OF REVERSE OF SECURITY]

          This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued under an Indenture, dated as of
May 30, 2001 (herein called the "Indenture", which term shall have the meaning
assigned to it in such instrument), between the Company and The Chase Manhattan
Bank, as Trustee (herein called the "Trustee", which term includes any successor
trustee under the Indenture), and reference is hereby made to the Indenture for
a statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Company, the Trustee, the holders of Senior
Indebtedness and the Holders of the Securities and of the terms upon which the
Securities are, and are to be, authenticated and delivered.

          This Security is one of the Exchange Securities referred to in the
Indenture issued in exchange for Initial Securities.  The Securities include the
Exchange Securities, the Original Securities in the aggregate principal amount
of $200,000,000 and an unlimited aggregate principal amount of additional
Initial Securities.  The Exchange Securities, the Original Securities and such
additional Initial Securities are treated as a single class of securities under
the Indenture.

          The Securities are subject to redemption upon not less than 30 nor
more than 60 days' notice by mail, at any time on or after May 15, 2006, in
whole or in part, at the election of the Company, at the following Redemption
Prices (expressed as percentages of the principal amount):  If redeemed during
the 12-month period beginning May 15 of the years indicated:

                                    Redemption
               Year                   Price
               ----                 ----------

               2006                  103.938%
               2007                  102.625%
               2008                  101.313%

and thereafter, beginning May 15, 2009, at a Redemption Price equal to 100% of
the principal amount, together, in the case of any such redemption, with accrued
and unpaid interest (if any) to the Redemption Date, but interest installments
whose Stated Maturity is on or prior to such Redemption Date will be payable to
the Holders of the Securities, or one or more Predecessor Securities, of record
at the close of business on the relevant Record Dates referred to on the face
hereof, all as provided in the Indenture.
<PAGE>

                                                                               4

          Notwithstanding the foregoing, prior to May 15, 2004, the Company may
redeem, at any time or from time to time, up to 35% of the original aggregate
principal amount of Securities actually issued, at a Redemption Price of
107.875% of the principal amount thereof plus accrued and unpaid interest, if
any, to the Redemption Date (but interest installments whose Stated Maturity is
on or prior to such Redemption Date will be payable to the Holders of the
Securities, or one or more Predecessor Securities, of record at the close of
business on the relevant Record Dates referred to on the face hereof, all as
provided in the Indenture) with the net proceeds of one or more Public Equity
Offerings of the Company, provided that at least 65% of the original aggregate
                          --------
principal amount of the Securities actually issued remains outstanding after the
occurrence of such redemption and provided further, that such redemption shall
                                  ----------------
occur not later than 75 days after the date of the closing of any such Public
Equity Offering and upon not less than 30 nor more than 60 days' prior notice.

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

          Upon a Change of Control, any Holder of Securities will have the right
to cause the Company to purchase all or any part of the Securities of such
Holder at a purchase price equal to 101% of the principal amount of the
Securities to be purchased plus accrued and unpaid interest thereon to the
Change of Control Payment Date as provided in, and subject to the terms of, the
Indenture.

          The indebtedness evidenced by this Security is, to the extent provided
in the Indenture, subordinate and subject in right of payment to the prior
payment in full of all Senior Indebtedness, and this Security is issued subject
to the provisions of the Indenture with respect thereto.  Each Holder of this
Security, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his behalf to take such
action as may be necessary or appropriate to effectuate the subordination so
provided, and (c) appoints the Trustee his attorney-in-fact for any and all such
purposes.

          The Indenture contains provisions for defeasance at any time of the
entire indebtedness of this Security or certain restrictive covenants and Events
of Default with respect to this Security, in each case upon compliance with
certain conditions set forth in the Indenture.

          If an Event of Default with respect to the Securities shall occur and
be continuing, the principal of and accrued
<PAGE>

                                                                               5

and unpaid interest on the Securities may be declared due and payable in the
manner and with the effect provided in the Indenture.

          The Indenture provides that modifications and amendments of the
Indenture may be made by the Company and the Trustee without the consent of any
Holders of Securities in certain limited circumstances. The Indenture permits,
with certain exceptions as therein provided, the amendment thereof and the
modification of the rights and obligations of the Company and the rights of the
Holders of the Securities under the Indenture at any time by the Company and the
Trustee with the consent of the Holders of a majority in aggregate principal
amount of the Securities at the time Outstanding.  The Indenture also contains
provisions permitting the Holders of specified percentages in principal amount
of the Securities at the time Outstanding, on behalf of the Holders of all
Securities, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Security shall be conclusive
and binding upon such Holder and upon all future Holders of this Security and of
any Security issued upon the registration of transfer hereof or in exchange
herefor or in lieu hereof, whether or not notation of such consent or waiver is
made upon this Security.

          As provided in and subject to the provisions of the Indenture, the
Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder, unless such Holder shall have previously given
the Trustee written notice of a continuing Event of Default with respect to the
Securities, the Holders of not less than 25% in principal amount of the
Securities at the time Outstanding shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default as Trustee
and offered the Trustee reasonable indemnity, and the Trustee shall not have
received from the Holders of a majority in principal amount of Securities at the
time Outstanding a direction inconsistent with such request, and shall have
failed to institute any such proceeding, for 60 days after receipt of such
notice, request and offer of indemnity.  The foregoing shall not apply to any
suit instituted by the Holder of this Security for the enforcement of any
payment of principal hereof or any premium or interest hereon on or after the
respective due dates expressed herein.

          No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of and any premium and
interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.
<PAGE>

                                                                               6

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

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

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

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

          Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security be overdue, and none of
the Company, the Trustee and any such agent shall be affected by notice to the
contrary.

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

                                                                               7

                                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 soc. sec. 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.

______________________________________________________________________________

Date: ________________________________  ______________________________________
                                                    Your Signature

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

Signature Guarantee:

Date: ________________________________  ______________________________________
Signature must be guaranteed by a       Signature of Signature Guarantee
participant in a recognized
signature guaranty medallion program
or other signature guarantor
acceptable to the Trustee

______________________________________________________________________________

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