Document:

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                               AGREEMENT AND PLAN
                                    OF MERGER

                                      AMONG

                                GREY WOLF, INC.,
                        GREY WOLF DRILLING COMPANY L.P.,
                           GREY WOLF HOLDINGS COMPANY,

                                       AND

                           NEW PATRIOT DRILLING CORP.

                            DATED AS OF MARCH 5, 2004

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                                TABLE OF CONTENTS

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                                                                                                                PAGE
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ARTICLE I DEFINITIONS.........................................................................                    1

ARTICLE II THE MERGER.........................................................................                    7

        2.1..........The Merger...............................................................                    7
        2.2..........Effective Time...........................................................                    7
        2.3..........Effects of the Merger....................................................                    7
        2.4..........Certificate of Limited Partnership; Directors of the General Partner.....                    7
        2.5..........Conversion of Securities and Merger Cash.................................                    8
        2.6..........Surrender of Certificates; Dividends; Transfer Taxes.....................                   10
        2.7..........No Fractional Securities.................................................                   11
        2.8..........Adjustment of Merger Shares..............................................                   11
        2.9..........No Further Ownership Rights in Company Securities........................                   11
        2.10.........Closing of Company Stock Transfer Books..................................                   11
        2.11.........Further Assurances.......................................................                   11
        2.12.........Closing..................................................................                   12

ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE DESIGNATED STOCKHOLDERS.....                   12

        3.1..........Organization; Authorization and Validity.................................                   12
        3.2..........Effect of Agreements.....................................................                   14
        3.3..........Capitalization...........................................................                   14
        3.4..........Investments..............................................................                   15
        3.5..........Financial Statements.....................................................                   15
        3.6..........Absence of Undisclosed Liabilities.......................................                   17
        3.7..........Absence of Certain Changes or Events.....................................                   17
        3.8..........Contracts................................................................                   17
        3.9..........Title to Property and Assets.............................................                   18
        3.10.........Litigation...............................................................                   18
        3.11.........Taxes....................................................................                   19
        3.12.........Proprietary Rights.......................................................                   19
        3.13.........Transactions with Affiliates.............................................                   20
        3.14.........Permits; Compliance with Laws............................................                   20
        3.15.........Environmental............................................................                   20
        3.16.........Fees.....................................................................                   21
        3.17.........ERISA....................................................................                   21
        3.18.........Warranties, Indemnification and Representations..........................                   22
        3.19.........Accounts Receivable......................................................                   23
        3.20.........Insurance................................................................                   23
        3.21.........Books and Records........................................................                   24
        3.22.........Additional Information...................................................                   24
        3.23.........Labor Matters............................................................                   24
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<S>                                                                                                              <C>
        3.24.........Investment Representations...............................................                   24

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT, SUB, AND GREY WOLF HOLDINGS..............                   26

        4.1..........Organization.............................................................                   26
        4.2..........Authorization, Validity, and Effect of Agreements........................                   26
        4.3..........Fees.....................................................................                   27
        4.4..........Litigation...............................................................                   27
        4.5..........Inspections; No Other Representations....................................                   27
        4.6..........SEC Reports..............................................................                   27

ARTICLE V CONDUCT OF BUSINESS PENDING THE MERGER..............................................                   27

        5.1..........Conduct of Business by the Company.......................................                   27

ARTICLE VI ADDITIONAL AGREEMENTS..............................................................                   29

        6.1..........Stockholder Approval.....................................................                   29
        6.2..........Registration Statement...................................................                   29
        6.3..........Filings; Other Action....................................................                   31
        6.4..........Expenses.................................................................                   32
        6.5..........Employee Benefit Matters.................................................                   32
        6.6..........Access to Information....................................................                   32
        6.7..........Indemnification..........................................................                   33
        6.8..........Resignation of Officers and Directors....................................                   33
        6.9..........Tax Matters..............................................................                   33
        6.10.........Non-Competition Agreements...............................................                   34
        6.11.........No Solicitation..........................................................                   36
        6.12.........Audited Financial Statements.............................................                   37

ARTICLE VII CONDITIONS........................................................................                   37

        7.1..........Conditions to Each Party's Obligation to Effect the Merger...............                   37
        7.2..........Conditions to Obligation of the Company to Effect the Merger.............                   38
        7.3..........Conditions to Obligation of each of the GW Parties to Effect the Merger..                   38

ARTICLE VIII TERMINATION......................................................................                   39

        8.1..........Termination by Mutual Consent............................................                   39
        8.2..........Termination by the Company...............................................                   39
        8.3..........Termination by Parent....................................................                   40
        8.4..........Effect of Termination and Abandonment....................................                   40
        8.5..........Extension; Waiver........................................................                   40

ARTICLE IX SURVIVAL AND INDEMNIFICATION.......................................................                   41

        9.1..........Survival Periods.........................................................                   41
        9.2..........Designated Stockholders' Agreement to Indemnify..........................                   41
        9.3..........Parent's Agreement to Indemnify..........................................                   42
        9.4..........Third-Party Indemnification..............................................                   43
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        9.5..........No Setoff................................................................                   44
        9.6..........Insurance................................................................                   44
        9.7..........No Duplication...........................................................                   44
        9.8..........Sole Remedy..............................................................                   44
        9.9..........No Special Damages.......................................................                   45

ARTICLE X GENERAL PROVISIONS..................................................................                   45

        10.1.........Notices..................................................................                   45
        10.2.........Assignment, Binding Effect...............................................                   46
        10.3.........Entire Agreement.........................................................                   46
        10.4.........Amendment................................................................                   46
        10.5.........Governing Law............................................................                   46
        10.6.........Counterparts.............................................................                   46
        10.7.........Headings.................................................................                   46
        10.8.........Interpretation...........................................................                   46
        10.9.........Waivers..................................................................                   46
        10.10........Severability.............................................................                   47
        10.11........Dispute Resolution.......................................................                   47
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                          AGREEMENT AND PLAN OF MERGER

         AGREEMENT AND PLAN OF MERGER ("Agreement"), dated as of March 5, 2004
among Grey Wolf, Inc., a Texas corporation ("Parent"), Grey Wolf Drilling
Company L.P., a Texas limited partnership and an indirect, wholly-owned entity
of Parent ("Sub"), Grey Wolf Holdings Company, a Nevada corporation which is a
wholly owned subsidiary of Parent and the sole General Partner of Sub ("Grey
Wolf Holdings"), New Patriot Drilling Corp., a Delaware Corporation (the
"Company"), and, only with respect to the agreements set forth in Article III,
Article VI, and Article IX, the Designated Stockholders (as defined in Article I
below).

                                    RECITALS

         A.       The respective Boards of Directors of Parent and the Company
and the Board of Directors of the general partner of the Sub have approved, and
declared fair to and advisable and in the best interests of their respective
stockholders, the merger of the Company with and into Sub (the "Merger"), upon
the terms and subject to the conditions set forth herein, whereby the issued and
outstanding Company Securities (as that term is defined in Article I below) of
the Company that are not owned directly or indirectly by Parent or the Company
will be converted into (i) shares of the $.10 par value common stock of Parent
("Parent Common Stock") and (ii) a cash payment by Parent.

         B.       It is intended that the Merger will qualify as a
reorganization under Sections 368(a)(1)(A) and 368(a)(2)(D) of the Internal
Revenue Code of 1986, as amended (the "Code"). Grey Wolf Holdings wholly owns
Grey Wolf LLC, a Louisiana limited liability company ("GW LLC"). Under Treasury
Regulation Section 301.7701-3, GW LLC is an entity disregarded from its owner,
Grey Wolf Holdings, for federal income tax purposes. Similarly, since Grey Wolf
Holdings owns all of the outstanding partnership interests in Sub directly and
through GW LLC, Sub is an entity disregarded from its owner, Grey Wolf Holdings,
for federal income tax purposes under Treasury Regulation Section 301.7701-3. As
such, the acquiring corporation in the Merger for federal income tax purposes
will be Grey Wolf Holdings.

         C.       Parent, Sub, Grey Wolf Holdings, the Company and the
Designated Stockholders desire to make certain representations, warranties and
agreements in connection with the Merger and also to prescribe various
conditions to the Merger.

         NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants, and agreements contained herein, the
parties hereto hereby agree as follows:

                                    ARTICLE I
                                   DEFINITIONS

         As used in this Agreement, the following terms shall have the meanings
set forth below:

         "AAA" is defined in Section 10.11.

         "Accounting Arbitrator" is defined in Section 2.5.

         "Accounts Receivable" is defined in Section 3.19.

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         "Acquisition Proposal" is defined in Section 6.11.

         "Act" is defined in Section 3.24.

         "Affected Employee" is defined in Section 6.5.

         "Affiliate" of a Person means another Person that directly, or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with, the specified Person.

         "Agreement" is defined in the preamble.

         "Basket" is defined in Section 9.2.

         "Business Day" means any day other than a Saturday, a Sunday, a United
States federal holiday, or a New York state banking holiday.

         "Certificates" is defined in Section 2.5(c).

         "Certificate of Merger" is defined in Section 2.2.

         "Claim" is defined in Section 9.4.

         "Closing" is defined in Section 2.12.

         "Closing Date" means the date on which the closing occurs.

         "Closing Escrow Agent" is defined in Section 2.5.

         "Closing Escrow Agreement" is defined in Section 2.5.

         "Code" is defined in Recital B.

         "Common Stock" means the common stock of the Company.

         "Company" is defined in the preamble.

         "Company Balance Sheet" is defined in Section 3.5.

         "Company Business" is defined in Section 6.10.

         "Company Disclosure Schedule" is defined in the initial paragraph of
Article III.

         "Company Material Adverse Effect" means a material adverse effect on
the financial condition, business, operations or assets of the Company; provided
that any change, effect, fact, event or condition that adversely affects the oil
and gas drilling industry or the oil and gas exploration and production industry
generally (and does not disproportionately affect the Company adversely) shall
not be considered in determining whether a Company Material Adverse Effect has
occurred.

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         "Company Security Holder" means a holder of Company Securities.

         "Company Security Holder's Representative" means Lime Rock Partners II,
L.P., the representative of the Company Security Holders under the Escrow
Agreement.

         "Company Securities" means all Common Stock, all Series A Preferred,
all Options and all Warrants.

         "Company Stockholder Meeting" is defined in Section 6.1.

         "Constituent Entities" is defined in Section 2.1.

         "Covered Area" is defined in Section 6.10.

         "DGCL" is defined in Section 2.1.

         "Designated Stockholders" means Lime Rock Partners II, L.P., the Dwayne
L. Howrish Revocable Trust Dated April 4, 1994, Kyle W. Swingle, Robert
Sanderson and Dwayne L. Howrish, individually with respect to the agreements
contained in Section 6.10 hereof only.

         "Designated Stockholders' Damages" is defined in Section 9.3.

         "Designated Stockholders Indemnitees" is defined in Section 9.3.

         "Designated Stockholders' Representatives" is defined in Section 6.11.

         "Determination Date" is defined in Section 2.5.

         "Dispute Period" is defined in Section 2.5.

         "Escrow Deficit" is defined in Section 2.5.

         "Effective Time" is defined in Section 2.2.

         "Environmental Laws" is defined in Section 3.15.

         "ERISA" is defined in Section 3.17.

         "ERISA Affiliate" is defined in Section 3.17.

         "Escrow" is defined in Section 2.5.

         "Final Schedule 2.5(c)" is defined in Section 7.3(j).

         "Financial Statements" is defined in Section 3.5.

         "GAAP" means United States generally accepted accounting principles.

         "General Partner" shall mean Grey Wolf Holdings, the general partner of
Sub.

                                       3

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         "Governmental Authority" means the United States of America and any
other country, including any state or political subdivision thereof, agency,
division, court, or any commission, board, bureau or other instrumentality.

         "Grey Wolf Holdings" is defined in the preamble.

         "GW LLC" is defined in Recital B.

         "GW Parties" and "GW Party" are defined in the initial paragraph of
Article IV.

         "Hazardous Substance" is defined in Section 3.15.

         "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, or any successor law, and regulations and rules issued
pursuant to such act or any successor law.

         "Indemnified Parties" is defined in Section 6.7.

         "Initial Escrow Funds" is defined in Section 2.5.

         "Knowledge" of an entity means the actual knowledge of an officer of
such entity and "knowledge" of an individual means the actual knowledge of such
individual.

         "LRP" is defined in Section 3.1.

         "Legal Claim" means any claim, action, suit, investigation or
proceeding before or by any Governmental Authority or non-governmental
department, commission, board, bureau, agency, court, or other instrumentality,
or arbitrator or by any private person or entity.

         "Liens" is defined in Section 3.9.

         "Lime Rock" is defined in Section 3.1.

         "Long Term Debt" means the sum of the following indebtedness (both
current and long term portions thereof together with any associated pre-payment
fees) of the Company as it exists immediately prior to the Closing: (a)
indebtedness to Merrill Lynch Capital, a division of Merrill Lynch Financial
Services, Inc., pursuant to the Term Loan And Security Agreement dated December
23, 2003, (b) indebtedness to the Dwayne L. Howrish Trust Dated April 4, 1994
pursuant to the Promissory Note dated March 12, 2003, (c) indebtedness to Kyle
W. Swingle pursuant to the Promissory Note dated March 12, 2003, (d)
indebtedness to GMAC Financial Services for seven 2003 Chevrolet vehicles, (e)
indebtedness to Wells Fargo Bank, Wyoming, National Association pursuant to the
Business Loan Agreement dated June 30, 2003 as amended by that certain Change in
Term Agreement dated November 20, 2003, and (f) any and all other indebtedness
which would properly be classified as long term indebtedness according to GAAP,
except for the indebtedness to Premium Financing Specialists Inc. pursuant to
the Promissory Note dated July 22, 2003.

         "Material Contracts" is defined in Section 3.8.

         "Merger" is defined in Recital A.

                                       4

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         "Merger Cash" is defined in Section 2.5.

         "Merger Consideration" means the Merger Cash plus the Merger Shares.

         "Merger Shares" is defined in Section 2.5.

         "Multiemployer Plan" is defined in Section 3.17.

         "Multiple Employer Plan" is defined in Section 3.17.

         "Net Long Term Debt" means the Long Term Debt of the Company less the
Company's cash on hand.

         "Net Working Capital" means as of the Closing Date: (1) the Company's
current assets excluding cash and any provision for federal income tax, less (2)
the Company's current liabilities excluding: (a) the current portion of the
Company's Long Term Debt and the current portion of the Company's indebtedness
to Wells Fargo Bank, Wyoming, National Association pursuant to the Business Loan
Agreement dated June 30, 2003 as amended by that certain Change in Term
Agreement dated November 20, 2003; (b) any provision for federal income tax; and
(c) Company's expenses, up to a maximum of $100,000, incurred in connection with
the Merger other than any finders' fees or investment banking fees, but
including any amount necessary to complete the refurbishment of Rig #6 and #41,
as agreed pursuant to Section 6.3.

         "Outstanding Insurance Claims" is defined in Section 3.20.

         "Options" means the Company's outstanding common stock options
entitling the holders to purchase up to 775,000 shares of Common Stock for $1.00
per share until April 24, 2013.

         "Outside Closing Date" is defined in Section 8.2.

         "Parent" is defined in the preamble.

         "Parent Common Stock" is defined in Recital A.

         "Parent Damages" is defined in Section 9.2.

         "Parent Indemnitees" is defined in Section 9.2.

         "Parent Material Adverse Effect" means a material adverse effect on the
financial condition, business, operations or assets of the Parent; provided that
any change, effect, fact, event or condition that adversely affects the oil and
gas drilling industry or the oil and gas exploration and production industry
generally (and does not disproportionately affect the Parent adversely) shall
not be considered in determining whether a Parent Material Adverse Effect has
occurred.

         "Pension Plan" means a pension plan (as defined in Section 3(2) of
ERISA) subject to Title IV of ERISA that a person sponsors, maintains, or to
which it makes, is making, or is obligated to make contributions, or in the case
of a Multiple Employer Plan has made contributions at any time during the
immediately preceding five (5) plan years.

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         "Plan" is defined in Section 3.17.

         "Permitted Liens" means with respect to the Company's property and
assets: (i) Liens for current taxes not yet due and payable, other statutory and
non-consensual Liens arising in the ordinary course of business for sums not
due, and, if the Company's rights to and interest in the Company's property and
assets would not be materially and adversely affected thereby, any such Liens
for taxes or other non-consensual Liens arising in the ordinary course of
business being contested in good faith by appropriate proceedings and so long as
adequate reserves are maintained with respect to such Liens and available to the
Company for the payment of such taxes or other non-consensual Liens; (ii) Liens
in favor of Merrill Lynch Capital; (iii) Liens existing as of the date hereof as
described on Schedule 1.1 hereto; (iv) deposits of cash or securities and other
Liens to secure the performance of bids, trade contracts, leases, statutory
obligations, surety and appeal bonds, performance bonds and other obligations of
a like nature incurred in the ordinary course of business; (v) pledges or
deposits of cash or securities under workers' compensation, unemployment
insurance or other social security legislation; and (vi) Liens in respect of
purchase money obligations, operating leases, capital leases and other similar
obligations incurred in the ordinary course of business which are described in
Schedule 1.1 hereto.

         "Person" means an individual, a partnership, a limited liability
company, a corporation, an association, a trust, a joint venture, or an
unincorporated organization.

         "Preliminary Statement" is defined in Section 2.5.

         "No Solicitation Period" is defined in Section 6.11.

         "Registration Statement" is defined in Section 6.2.

         "Representatives" is defined in Section 10.11.

         "Rigs" shall mean all of the Company's drilling rigs and related
equipment, all as described on Schedule 1.2 hereto.

         "Series A Preferred" means the Series A Preferred Stock of the Company.

         "Severally" is defined in Section 9.2

         "Statement" is defined in Section 2.5.

         "Stockholders' Agreement" means the Stockholders' Agreement dated March
12, 2003 among the Company and its stockholders.

         "Sub" is defined in the preamble.

         "Subsidiary" means, with respect to any entity, any corporation,
partnership, or other organization, whether incorporated or unincorporated, of
which such entity directly or indirectly owns or controls at least a majority of
the securities or other interests having by their terms ordinary voting power to
elect a majority of the board of directors or others performing similar
functions with

                                       6

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respect to such corporation or other organization, or any organization of which
such party is a general partner.

         "Survival Period" is defined in Section 9.1.

         "Survivor" is defined in Section 2.1.

         "TRLPA" is defined in Section 2.1.

         "Trust" means the Dwayne L. Howrish Revocable Trust dated April 4,
1994.

         "Warrants" means the Company's outstanding Series A Stock Purchase
Warrants entitling the holders to purchase up to 5,000,000 shares of Series A
Preferred for $1.50 per share until March 12, 2006.

                                   ARTICLE II
                                   THE MERGER

         2.1      The Merger. Upon the terms and subject to the conditions
hereof, and in accordance with the General Corporation Law of the State of
Delaware (the "DGCL"), and the Texas Revised Limited Partnership Act ("TRLPA"),
the Company shall be merged with and into the Sub at the Effective Time (as
hereinafter defined). At the election of Parent, any direct wholly owned
Subsidiary of Parent may be substituted for Sub as a constituent corporation in
the Merger. In such event, the parties agree to execute an appropriate amendment
to this Agreement in order to reflect the foregoing. Following the Merger, the
separate corporate existence of the Company shall cease and Sub shall continue
as the surviving entity (the "Survivor") and shall succeed to and assume all the
rights and obligations of the Company in accordance with the DGCL and the TRLPA.
The parties to the Merger shall be referred to as the "Constituent Entities."

         2.2      Effective Time. The Merger shall become effective when the
Certificate of Merger (the "Certificate of Merger"), executed in accordance with
the relevant provisions of the DGCL, is filed with the Secretary of State of the
States of Delaware and Texas, which filing shall be made on the Closing Date, or
the next Business Day thereafter. When used in this Agreement, the term
"Effective Time" shall mean the later of the date and time at which the
Certificate of Merger is accepted for record or such later time established by
the Certificate of Merger. The Closing Date shall occur as soon as practicable
after the satisfaction or waiver of the conditions to the Merger set forth
herein.

         2.3      Effects of the Merger. The Merger shall have the effects set
forth in Section 259 of the DGCL and Section 2.11 of the TRLPA.

         2.4      Certificate of Limited Partnership; Directors of the General
Partner. The Certificate of Limited Partnership of Sub, as in effect immediately
prior to the Effective Time, shall be the Certificate of Limited Partnership of
the Survivor until thereafter changed or amended as provided therein or by
applicable law. The directors of the General Partner of the Sub at the Effective
Time shall be the directors of the General Partner of the Survivor until their
respective successors have

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been duly elected or appointed in accordance with the Articles of Incorporation
and Bylaws of the General Partner of the Survivor by applicable law.

         2.5      Conversion of Securities and Merger Cash. As of the Effective
Time, by virtue of the Merger and without any action on the part of any
stockholder of the Company:

                  (a)      Merger Shares. The total number of shares of Parent
Common Stock issuable in the aggregate to the Company Security Holders pursuant
to the Merger shall be 4,610,480 shares (the "Merger Shares").

                  (b)      Merger Cash.

                           (i)      The aggregate cash merger consideration to
be received by the Company Security Holders pursuant to the Merger (the "Merger
Cash") shall be equal to the amount, if any, by which $30,000,000 exceeds the
Net Long Term Debt, provided that the amount of Merger Cash shall be subject to
adjustment pursuant to Section 2.5(d) and Section 2.7 below.

                           (ii)     Prior to the Closing Date, the Company shall
prepare statements of the estimated amount of the Company's Net Long Term Debt
as of the Closing Date (the "Preliminary Statement"). The Company shall deliver
the Preliminary Statement to Parent by or before the date which is five (5) days
prior to the Closing Date.

                           (iii)    At the Closing, the Parent shall pay to
Southwest Bank of Texas, N.A., as escrow agent (the "Closing Escrow Agent")
under an escrow agreement substantially in the form of Exhibit A attached hereto
(the "Closing Escrow Agreement") which Parent and the representative of the
Company Security Holders (the "Company Security Holders' Representative") shall
enter into on the date hereof, Three Million and No/100ths Dollars ($3,000,000)
out of the Merger Cash (the "Initial Escrow Funds") to be held and disposed of
by the Closing Escrow Agent in accordance with this Agreement and the Closing
Escrow Agreement. The escrow contemplated by the Closing Escrow Agreement shall
be referred to herein as the "Escrow".

                           (iv)     At the Closing, the Parent shall deliver to
the Company Security Holders, in accordance with Final Schedule 2.5(c), an
amount of Merger Cash equal to the amount, if any, by which $27,000,000 exceeds
the estimated amount of Net Long Term Debt as of the Closing Date as set forth
in the Preliminary Statement.

                  (c)      Allocation and Issuance of Merger Shares and
Allocation and Payment of Merger Cash. Schedule 2.5(c) attached hereto sets
forth the names and addresses of the holders of the shares of Series A
Preferred, the Common Stock, the Options and the Warrants together with the
number of the shares of the Series A Preferred or Common Stock owned by the
respective stockholder, and the number of shares of Series A Preferred or Common
Stock into which Options or Warrants may be converted. At Closing, upon delivery
to the Parent of the certificates and agreements which represent the Company
Securities (the "Certificates"), Parent shall deliver to the holders of Series A
Preferred and Common Stock, the Option holders and Warrant holders the number of
shares of Parent Common Stock set forth opposite their respective names in Final
Schedule 2.5(c) together with the percentage of Merger Cash (if any), excluding
the Initial Escrow Funds, set forth opposite their respective names in Final
Schedule 2.5(c). The Designated

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Stockholders acknowledge and agree that the preliminary allocation of the Merger
Consideration as set forth in Schedule 2.5(c) is, and the final allocation of
the Merger Consideration to be set forth in Final Schedule 2.5(c) will be, the
sole responsibility of the Company Security Holders, and no other party to this
Agreement has any responsibility or obligation with respect to such allocation.

                  (d)      Post Closing Merger Cash Adjustment and Escrow. The
Merger Cash shall be subject to adjustment as follows:

                           (i)      The Parent shall cause Survivor to complete
and deliver statements of the Company's Net Long Term Debt and Net Working
Capital with each determined as of the Closing Date (the "Statement"), to
Designated Stockholders within ninety (90) days after the Closing Date. Survivor
shall allow the Designated Stockholders complete access, during Survivor's
regular business hours, to the Survivor's books and records from the Closing
Date until the final resolution of any dispute concerning the Statement. In the
event that the Company Security Holder's Representative disagrees with the
Statement, such party shall have fifteen business days from the date of the
actual delivery date of the Statement to the Designated Stockholders (the
"Determination Date") to attempt to resolve the dispute (the "Dispute Period").

                           (ii)     If there is no dispute regarding the
Statement, then:

                                    a.       if the Net Long Term Debt as of the
Closing shown on the Statement is greater than the Net Long Term Debt shown on
the Preliminary Statement, then the Parent shall be deemed to be owed, from the
Escrow, the amount of that excess; and if the Net Long Term Debt as shown on the
Preliminary Statement is greater than the Net Long Term Debt as of the Closing
shown on the Statement, then the Parent shall be deemed to owe that amount to
the Escrow;

                                    b.       if Net Working Capital at the
Closing shown on the Statement is less than $1,200,000, then the Parent shall be
deemed to be owed, from the Escrow, the amount by which $1,200,000 exceeds Net
Working Capital (including the amount of any negative Net Working Capital) as of
the Closing shown on the Statement; and if Net Working Capital as of the Closing
set forth on the Statement is greater than $1,400,000, then the Parent shall be
deemed to owe the amount by which Net Working Capital as of Closing shown on the
Statement exceeds $1,400,000 to the Escrow;

                                    c.       if, after aggregating and/or
offsetting the amounts owed to and/or by Parent pursuant to subsections a. and
b. of this Section 2.5(d)(ii), the Parent is deemed to be owed more than
$3,000,000, then the Company Security Holders shall pay to the Closing Escrow
Agent the amount by which the amount owed to Parent exceeds $3,000,000 (the
"Escrow Deficit") no later than fifteen days after the Determination Date, and
the Closing Escrow Agent immediately thereafter shall pay the amount due Parent
in accordance with the Closing Escrow Agreement. The Company Security Holders
shall be liable for any Escrow Deficit on a pro rata basis in accordance with
the percentages set out in Final Schedule 2.5(c). If the Parent is owed an
amount that is less than $3,000,000, the Closing Escrow Agent shall pay that
amount to Parent, and shall pay the remainder of the escrow fund to the Company
Security Holders in accordance with the Closing Escrow Agreement;

                                       9

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                                    d.       if, after aggregating and/or
offsetting the amounts owed to and/or by the Parent pursuant to subsections a.
and b. of this Section 2.5(d)(ii), the Parent is deemed to owe an amount to the
Escrow, the Parent shall pay that amount to the Escrow Agent no later than
fifteen days after the Determination Date, and the Closing Escrow Agent
immediately thereafter shall pay that amount to the Company Security Holders in
accordance with the Closing Escrow Agreement.

                           (iii)    In the event that there is a dispute
regarding the Statement and the dispute cannot be resolved, either Parent or the
Company Security Holder's Representative can request, by the delivery of a
notice to the other specifying in reasonable detail the nature of the dispute,
within three days of the expiration of the Dispute Period, that the dispute be
resolved by an independent nationally-recognized accounting firm that has no
business relationship with either party (the "Accounting Arbitrator") selected
by the party delivering the notice and reasonably acceptable to the other party.
The Accounting Arbitrator shall review any disputed items (and solely the
disputed items) and resolve any such disputes within thirty days of the date the
Accounting Arbitrator is retained. The decision of the Accounting Arbitrator
shall be final and binding between the parties for the purpose of determining
any Merger Cash adjustment pursuant to this Section 2.5. The fees and expenses
of the Accounting Arbitrator shall be borne one-half by Parent and one-half by
the Designated Stockholders. No funds shall be disbursed by the Closing Escrow
Agent until the Accounting Arbitrator's decision has been made. Upon receipt of
the Accounting Arbitrator's decision, the Parties shall have ten business days
to make any appropriate payments to the Closing Escrow Agent and the Closing
Escrow Agent shall distribute the resulting funds to the Company Security
Holders or the Parent in accordance with the Closing Escrow Agreement.

         2.6      Surrender of Certificates; Dividends; Transfer Taxes.

                  (a)      Upon the Company's surrender to Parent of a Company
Security Holder's Certificate or Certificates for cancellation at the Closing,
the named owner of such Certificate shall be entitled to receive in exchange
therefor a certificate representing that number of Merger Shares and the amount
of Merger Cash which such named owner has the right to receive pursuant to this
Article II, and the Certificate so surrendered shall forthwith be cancelled.
Until surrendered as contemplated by this Section 2.6, each Certificate shall,
at and after the Effective Time, be deemed to represent only the right to
receive, upon surrender of such Certificate, the certificate representing the
appropriate number of Merger Shares, the appropriate amount of Merger Cash, cash
in lieu of fractional shares as contemplated by Section 2.7 and/or certain
dividends and other distributions as contemplated by Section 2.8.

                  (b)      No dividends or other distributions that are declared
on or after the Effective Time on Parent Common Stock or are payable to the
holders of record thereof on or after the Effective Time will be paid to persons
entitled by reason of the Merger to receive certificates representing Parent
Common Stock until such persons surrender their Certificates, as provided in
Section 2.6, and no Merger Cash or cash payment in lieu of fractional shares
shall be paid to any such holder pursuant to Section 2.5 or 2.7 until such
holder of such Certificate shall so surrender such Certificate. Subject to the
effect of applicable law, there shall be paid to the record holder of the
certificates representing such Parent Common Stock: (i) at the time of such
surrender or as promptly as practicable thereafter, the amount of any dividends
or other distributions theretofore

                                       10

<PAGE>

paid with respect to whole shares of such Parent Common Stock and having a
record date on or after the Effective Time and a payment date prior to such
surrender; and (ii) at the appropriate payment date or as promptly as
practicable thereafter, the amount of dividends or other distributions payable
with respect to whole shares of Parent Common Stock and having a record date on
or after the Effective Time but prior to surrender and a payment date subsequent
to surrender. In no event shall the person entitled to receive such dividends or
other distributions be entitled to receive interest on such dividends or other
distributions.

                  (c)      If any cash or certificate representing shares of
Parent Common Stock is to be paid to or issued in a name other than that in
which the Certificate surrendered in exchange therefor is registered, it shall
be a condition of such exchange that the Certificate so surrendered shall be
properly endorsed and otherwise in proper form for transfer and that the person
requesting such exchange shall pay to Parent any transfer or other taxes
required by reason of the issuance of certificates for such shares of Parent
Common Stock in a name other than that of the registered holder of the
Certificate surrendered, or shall establish to the satisfaction of the Parent
that such tax has been paid or is not applicable.

         2.7      No Fractional Securities. No certificates or scrip
representing fractional shares of Parent Common Stock shall be issued upon the
surrender for exchange of Certificates pursuant to this Article II, and no
Parent dividend or other distribution or stock split or combination shall relate
to any fractional security, and such fractional interests shall not entitle the
owner thereof to vote or to any rights of a security holder of Parent. In lieu
of any such fractional securities, each Company Security Holder who would
otherwise have been entitled to receive a fraction of a share of Parent Common
Stock (after taking into account all Company Securities then held of record by
such holder) shall receive cash (without interest) in an amount equal to the
product of such fractional part of a share of Parent Common Stock to which that
holder would otherwise be entitled multiplied by $4.2295.

         2.8      Adjustment of Merger Shares. In the event of any
reclassification, recapitalization, stock split, stock combination, stock
dividend or share exchange with respect to Parent Common Stock (or if a record
date with respect to any of the foregoing should occur) prior to the Effective
Time, appropriate and proportionate adjustments, if any, shall be made to the
Parent Common Stock to be issued hereunder.

         2.9      No Further Ownership Rights in Company Securities. All shares
of Parent Common Stock issued and the Merger Cash paid upon the surrender of
Certificates in accordance with the terms hereof (including any cash paid
pursuant to Sections 2.7) shall be deemed to have been issued and/or paid in
full satisfaction of all rights pertaining to the Company Securities.

         2.10     Closing of Company Stock Transfer Books. At the Effective
Time, the stock transfer books of the Company shall be closed and no transfer of
Company Securities shall thereafter be made. If, after the Effective Time,
Certificates are presented to the Survivor, they shall be cancelled and
exchanged as provided in this Article II.

         2.11     Further Assurances. If at any time after the Effective Time
the Survivor shall consider or be advised that any deeds, bills of sale,
assignments or assurances or any other acts or things are necessary, desirable
or proper (a) to vest, perfect or confirm, of record or otherwise, in the

                                       11

<PAGE>

Survivor, its right, title or interest in, to or under any of the rights,
privileges, powers, franchises, properties or assets of either of the
Constituent Entities, or (b) otherwise to carry out the purposes of this
Agreement, the Survivor and its proper officers and directors or their designees
shall be authorized to, and the Designated Stockholders shall, upon the
reasonable request of the Survivor, execute and deliver, in the name and on
behalf of either of the Constituent Entities in the Merger, all such deeds,
bills of sale, assignments and assurances and do, in the name and on behalf of
such Constituent Entities, all such other acts and things necessary, desirable
or proper to vest, perfect or confirm its right, title or interest in, to or
under any of the rights, privileges, powers, franchises, properties or assets of
such Constituent Entity and otherwise to carry out the purposes of this
Agreement.

         2.12     Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Gardere Wynne
Sewell L.L.P., Houston, Texas, at 10:00 a.m. local time, on the fifteenth
business day after the day on which the last of the conditions set forth in
Article VII hereof shall have been fulfilled or waived or at such other time and
place as Parent and the Company shall agree.

                                  ARTICLE III
        REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE DESIGNATED
                                  STOCKHOLDERS

         The Company and each of the Designated Stockholders, severally, but not
jointly, represent and warrant to Parent, Sub, Grey Wolf Holdings and GW LLC, as
of the date of this Agreement, those matters set forth in this Article III and
the accompanying disclosure schedule ("Company Disclosure Schedule") unless
otherwise stated as to the specific making of a particular representation or
warranty. As used in this Article III, the term "severally" means that each
Designated Stockholder is responsible for that portion of a representation
and/or warranty that is equal to such Designated Stockholder's percentage
interest of the total Merger Consideration as set forth on Final Schedule
2.5(c). To the extent that a representation is being made concerning the
Designated Stockholders or other stockholders or directors and/or officers of
the Company, then each Designated Stockholder shall be deemed to be making that
representation only with respect to itself or himself. Any disclosure set forth
with respect to a particular section shall be deemed to be disclosed in
reference to all other applicable sections of this Agreement if the disclosure
with respect to a particular section is sufficient on its face without
additional inquiry to inform Parent or Sub of the information required to be
disclosed in respect of the other sections to avoid a breach under the
representation and warranty or covenant corresponding to such other sections.
The fact that any item of information is contained in the Company Disclosure
Schedule shall not be construed to mean that such information is required to be
disclosed in this Agreement and such information shall not be used as a basis
for interpreting the term "material" or "materiality" in this Agreement. The
representations and warranties in Sections 3.5, 3.6, 3.13, 3.19, 3.20, 3.21,
3.22, 3.23 and 6.12 are being made by Lime Rock only to the extent of the
Knowledge of Lime Rock.

         3.1      Organization; Authorization and Validity.

                  (a)      The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
the corporate power to own its property and to carry on its business as now
being conducted. The Company is duly qualified and/or

                                       12

<PAGE>

licensed, as may be required, and in good standing in each of the jurisdictions
in which the nature of the business conducted by it or the character of the
property owned, leased or used by it makes such qualification and/or licensing
necessary, except in such jurisdictions where the failure to be so qualified
and/or licensed would not individually or in the aggregate reasonably be
expected to have a Company Material Adverse Effect. The Company has the
requisite corporate power and authority to execute and deliver this Agreement
and all agreements and documents contemplated hereby. Subject only to the
approval of this Agreement and the transactions contemplated hereby by the
stockholders of the Company as required by the DGCL, the consummation by the
Company of the transactions contemplated hereby has been duly authorized by all
requisite corporate action of the Company. This Agreement has been duly executed
and delivered by the Company and, assuming the due authorization, execution and
delivery by Parent, Sub and Grey Wolf Holdings, constitutes, and all agreements
and documents contemplated hereby (when executed and delivered pursuant hereto)
will constitute, valid and legally binding obligations of the Company,
enforceable against the Company in accordance with their respective terms.

                  (b)      Lime Rock Partners II, L.P. ("Lime Rock") is an
exempted limited partnership duly formed, validly existing and in good standing
under the laws of the Cayman Islands, and has all requisite power and authority
to carry on its business and to own its properties (including the Company
Securities owned by it). Lime Rock has full power and authority to enter into
this Agreement and to consummate the transactions contemplated hereby. Lime Rock
Partners GP II, L.P. ("LRP GP") is the sole general partner of Lime Rock. LRP GP
is an exempted limited partnership duly formed, validly existing and in good
standing under the laws of the Cayman Islands, and has all requisite power and
authority to carry on its business and to own its properties (including its
general partnership interests in Lime Rock). LRP GP II, Inc. ("LRP") is the sole
general partner of LRP GP. LRP is an exempted company duly organized, validly
existing and in good standing under the laws of the Cayman Islands and has all
corporate power and authority to serve as general partner of LRP GP and to own
its properties (including its general partnership interests in LRP GP);

                  (c)      The Trust is a trust duly formed, validly existing
and in good standing under the laws of the State of Wyoming and has all
requisite power and authority to carry on its business and to own its properties
(including the Company Securities).

                  (d)      The consummation by Lime Rock of the transactions
contemplated hereby has been duly authorized by all requisite action of Lime
Rock. This Agreement has been duly executed and delivered by Lime Rock and,
assuming the due authorization, execution and delivery by Parent, Sub and Grey
Wolf Holdings constitutes, and all agreements and documents contemplated hereby
(when executed and delivered pursuant hereto) will constitute, valid and legally
binding obligations of Lime Rock, enforceable against Lime Rock in accordance
with their respective terms.

                  (e)      The Trust has the requisite power and authority to
execute and deliver this Agreement and all agreements and documents contemplated
hereby. This Agreement has been duly executed and delivered by the Trust and,
assuming the due authorization, execution and delivery by Parent, Sub and Grey
Wolf Holdings constitutes, and all agreements and documents contemplated hereby
(when executed and delivered pursuant hereto) will constitute, valid and legally
binding obligations of the Trust, enforceable against the Trust in accordance
with its terms.

                                       13

<PAGE>

                  (f)      The Designated Stockholders who are individuals that
are executing this Agreement have full power and authority to enter into this
Agreement and all agreements and documents contemplated hereby. This Agreement
has been duly executed and delivered by the individual Designated Stockholders,
and, assuming the due authorization, execution and delivery by Parent, Sub and
Grey Wolf Holdings constitutes, and all agreements and documents contemplated
hereby (when executed and delivered pursuant hereto) will constitute, valid and
legally binding obligations of such individuals, enforceable against them in
accordance with their respective terms.

         3.2      Effect of Agreements.

                  (a)      Except as set forth in Schedule 3.2(a) of the Company
Disclosure Schedule, neither the execution and delivery of this Agreement by the
Company nor the consummation by the Company of the transactions contemplated
herein nor compliance by the Company with any of the provisions hereof will (i)
conflict with or result in any breach of the Certificate of Incorporation or
Bylaws of the Company; (ii) result in a violation or breach of any provisions
of, or constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or result in the termination,
cancellation of, or accelerate the performance required by, or result in a right
of termination or acceleration under, or result in the creation of any lien or
encumbrance upon any of the properties or assets of the Company, under any of
the terms, conditions or provisions of any note, bond, mortgage, indenture, deed
of trust, license, contract, lease, agreement or other instrument or obligation
of any kind to which the Company is a party or by which the Company, or any of
its properties or assets may be bound; or (iii) subject to compliance with the
statutes and regulations referred to in subsection (b) below, violate any
judgment, ruling, order, writ, injunction, decree, statute, rule or regulation
applicable to the Company or any of its properties or assets, other than any
such event described in items (ii) or (iii) which would not (x) prevent or delay
the consummation of the transactions contemplated hereby or (y) reasonably be
expected to have a Company Material Adverse Effect.

                  (b)      No consent, approval, or authorization of, or
declaration to or filing with, any Governmental Authority is required of the
Company for the valid execution and delivery by the Company of this Agreement or
any other agreement or instrument to be executed and delivered by the Company
hereunder and the consummation by the Company of the transactions provided for
herein or therein except where the failure to obtain or take such action would
not reasonably be expected to (x) prevent or delay the consummation of the
transactions contemplated hereby, or (y) have a Company Material Adverse Effect.

         3.3      Capitalization.

                  (a)      The authorized capital stock of the Company consists
of (i) 25,000,000 shares of Common Stock, par value $.001 per share, 3,200,000
of which are issued and outstanding and 775,000 are reserved for issuance upon
the exercise of the Options as of the date hereof and (ii) 20,000,000 shares of
preferred stock, par value $.001 per share, all of which shares have been
designated the Series A Preferred, 15,000,000 of which are issued and
outstanding and 5,000,000 of which are reserved for issuance upon the exercise
of the Warrants as of the date hereof. The Company does not have any outstanding
bonds, debentures, notes, or other obligations the holders of which have the
right to vote (or that are convertible into or exercisable for securities having
the right to vote) with the stockholders of the Company on any matter. All
issued and outstanding Company

                                       14

<PAGE>

Securities are duly authorized, validly issued, fully paid and non-assessable.
The Company (but not the Designated Stockholders except, for each Designated
Stockholder, only with respect to itself or himself) also represents and
warrants that each of the Company Security Holders is the lawful record and
beneficial owner of the Company Securities as set forth in Section 2.5(c) hereof
free and clear of all encumbrances, except as set forth in Schedule 3.3(a).

                  (b)      Except for the Series A Preferred, the Warrants, the
Options and as set forth on Schedule 3.3(b) of the Company Disclosure Schedule,
there are not, at the date of this Agreement, any authorized, issued, or
outstanding options, warrants, calls, subscriptions, convertible securities,
conversion privileges, preemptive rights, or other rights, agreements, or
commitments (whether or not presently exercisable) that obligate the Company to
issue, transfer, or sell any shares of capital stock or other securities
convertible into or evidencing the right to purchase or otherwise acquire any
capital stock of the Company. There are no outstanding or authorized stock
appreciation, phantom stock, profit participation, or similar plans, contracts,
or rights with respect to the Company that are effective as of the date hereof
or that have been executed or agreed to as of the date hereof with an effective
time after the date hereof. Other than the Stockholders' Agreement, there are no
stockholders' agreements, voting trusts, proxies, or other agreements or
understandings with respect to the voting of the Company Securities to which the
Company is a party that are presently effective or have been executed or agreed
to as of the date hereof or, to the Knowledge of the Company or the Designated
Stockholders, respectively, to which any stockholder, officer or director of the
Company, or any person owned or controlled by such stockholder, officer or
director is a party, except the terms hereof.

                  (c)      The Company does not have any Subsidiaries.

         3.4      Investments. Schedule 3.4 of the Company Disclosure Schedule
lists each investment of the Company (whether equity or debt) in any
corporation, limited liability company, partnership, joint venture, business
trust, or entity other than investments in short term investment securities.

         3.5      Financial Statements. The unaudited consolidated balance sheet
of the Company, dated as of December 31, 2003, and the unaudited consolidated
statement of earnings and statement of cash flow for the period ended December
31, 2003 are attached hereto as Schedule 3.5(i) (the "Financial Statements").
The unaudited balance sheet of the Company dated as of December 31, 2003 is
referred to in this Agreement as the "Company Balance Sheet." In accordance with
Section 6.12 hereof, the Company has agreed to deliver the Audited Financial
Statements to Parent. The Audited Financial Statements will (i) represent actual
bona fide transactions, (ii) be prepared from the books and records of the
Company in conformity with GAAP applied on a basis consistent with preceding
years throughout the periods involved, and (iii) accurately, completely and
fairly present the Company's financial position as of the respective date
thereof and its consolidated results of operations and cash flows for the period
then ended in all material respects. To the Knowledge of the Designated
Stockholders and the Company, as of December 31, 2003, the Company has no
liability or obligation that would materially and adversely affect the business,
assets, financial condition or results of operations of the Company, whether
accrued, absolute, contingent, or otherwise, except as will be set forth in the
Audited Financial Statements. Except as disclosed on Schedule 3.5, since the
date of the Audited Financial Statements, there has not been nor will there be
any change in the assets, liabilities, financial condition, or operations of the
Company from that

                                       15

<PAGE>

reflected in the Audited Financial Statements, other than changes in the
ordinary course of business, none of which individually or in the aggregate have
had or will have a Company Material Adverse Effect. Without limiting any of the
foregoing, since the date of the Audited Financial Statements and until the
Closing Date, except as disclosed on Schedule 3.5, the Company has not and will
not have:

                  (a)      incurred or become subject to, or agreed to incur or
become subject to, any obligation or liability, absolute or contingent, except
current liabilities incurred in the ordinary course of business;

                  (b)      mortgaged, pledged, or subjected to any Lien (or
agreed to do so with respect to) any of its assets, or discharged or satisfied
any Lien, or paid or satisfied any obligation or liability other than in the
ordinary course of business and consistent with past practice;

                  (c)      sold or transferred, or agreed to sell or transfer,
any of its assets, or canceled or agreed to cancel, any debts due it or claims
therefor, except, in each case, for full consideration and in the ordinary
course of business;

                  (d)      engaged in any transactions adversely affecting its
business or their assets or suffered any extraordinary losses or waived any
rights of substantial value not in the ordinary course of business;

                  (e)      purchased or agreed to purchase any securities,
bonds, or any other capital stock or assets of any other entity with cash or
liquid assets, or used cash or liquid assets to incur debts, for matters not
within the ordinary course of business or not for appropriate corporate
purposes;

                  (f)      increased any salaries or granted or agreed to grant,
or paid, or agreed to pay, any bonus, loan, incentive payment or other item of
value or made any other similar agreement, to or with any of its directors,
officers or agents except as compensation in the ordinary course of business for
appropriate services performed;

                  (g)      declared or paid any dividend or made any other
distribution to its stockholders;

                  (h)      made or authorized any capital expenditure of more
than $50,000 in the aggregate except in the ordinary course of business or
approved by Parent, and except for expenditures made in connection with the
refurbishment and development of the Company Rigs #6 and #41, which expenditures
are estimated to be approximately $1,750,000 in the aggregate;

                  (i)      made or agreed to make any changes in its Certificate
of Incorporation, bylaws, or capital structure;

                  (j)      entered into any representative, distributorship,
service, installation, support and maintenance, agency or other similar
agreement except in the ordinary course of business and approved by Parent;

                                       16

<PAGE>

                  (k)      incurred or suffered any damage, destruction, or
loss, whether or not covered by insurance, materially affecting its business or
any of their respective assets;

                  (l)      made or applied to make any change in accounting
methods or practices, including for tax purposes; or

                  (m)      entered into any agreement, commitment or
understanding, whether or not in writing, with respect to any of the foregoing.

         3.6      Absence of Undisclosed Liabilities. Except for liabilities set
forth in the Audited Financial Statements and Schedule 3.6 of the Company
Disclosure Schedule, and except for any liabilities incurred by the Company in
the ordinary course of business since the date of the Company Balance Sheet, the
Company has no liabilities, whether contingent, absolute, determined or
otherwise which would (i) be required to be recorded on a balance sheet or
disclosed in notes to financial statements prepared in accordance with GAAP
consistently applied, or (ii) cause or reasonably be expected to cause a Company
Material Adverse Effect.

         3.7      Absence of Certain Changes or Events. Except as set forth on
Schedule 3.7 of the Company Disclosure Schedule since the date of the Company
Balance Sheet, the Company has conducted its business only in the ordinary
course consistent with past practice.

         3.8      Contracts. Except as otherwise clearly identified elsewhere in
the Company Disclosure Schedule, Schedule 3.8 of the Company Disclosure Schedule
lists the following agreements, whether oral or written, to which the Company is
a party:

                           (i)      agreements or indentures relating to the
         borrowing of money or to mortgaging, pledging or otherwise placing a
         Lien on any of the properties or assets of the Company;

                           (ii)     guaranties of any obligation for borrowed
         money or otherwise;

                           (iii)    leases or agreements under which it is
         lessee of, or holds or operates any property, real or personal, owned
         by any other party, for which the annual rental exceeds $50,000.00;

                           (iv)     leases or agreements under which it is
         lessor of, or permits any third party to hold or operate, any property,
         real or personal, for which the annual rental exceeds $50,000.00;

                           (v)      contracts or groups of related contracts
         with the same party for the purchase of products or services under
         which the undelivered balance of such products or services is in excess
         of $50,000.00;

                           (vi)     contracts or commitments for capital
         expenditures in excess of $50,000.00 excluding expenditures made in
         connection with the refurbishment and development of the Company Rigs
         #6 and #41, which expenditures are estimated to be approximately
         $1,750,000 in the aggregate;

                                       17

<PAGE>

                           (vii)    agreements for the acquisition or sale of
         any capital asset with a value in excess of $50,000.00;

                           (viii)   agreements for the payment or receipt of
         drilling or other service fees, license fees, or commissions to or from
         any Person that are reasonably expected to exceed $100,000.00 per
         Person per month;

                           (ix)     contracts relating to the future disposition
         or acquisition of any assets or properties which individually or in the
         aggregate would be individually or in the aggregate in excess of
         $50,000.00;

                           (x)      employment and consulting agreements
         covering any employee of, or consultant to, the Company providing for
         annual salary or payments in excess of $50,000.00; and

                           (xi)     deferred compensation agreements, employee
         stock option plans, group life, hospitalization or disability
         insurance, severance policies and other plans and arrangements
         providing benefits for employees of the Company.

         True and correct copies of all documents, including all amendments
thereto, referred to above (collectively, the "Material Contracts") have been
made available to the GW Parties. There is no existing breach, default, or event
of default by the Company, or, to the respective Knowledge of the Company or the
Designated Stockholders, by any other party, under any Material Contract. Except
as set forth in Schedules 3.2(a) and (b) or Schedule 3.8 of the Company
Disclosure Schedule, no third party consents to the execution, delivery, and
consummation of this Agreement or the transactions contemplated herein are
required pursuant to the terms of any Material Contract.

         3.9      Title to Property and Assets. The Company has good and
defensible title to the Company's properties and assets, and all such properties
and assets are free and clear of all mortgages, pledges, security interests,
liens, charges, claims, restrictions, easements or other encumbrances of any
nature ("Liens") other than Permitted Liens and Liens that are set forth on
Schedule 3.9 of the Company Disclosure Schedule and which such scheduled Liens
and Permitted Liens do not, individually or in the aggregate, cause a Company
Material Adverse Effect. With respect to the property and assets it leases, the
Company is in compliance with such leases and holds a valid leasehold interest
free of any liens, claims, or encumbrances, except such liens and encumbrances
which are not material in nature or amount and do not materially impair the
Company's use of such leased property. All leases of real or personal property
to which the Company is a party are fully effective and afford the Company
peaceful and undisturbed possession of the property which is the subject matter
of the lease.

         3.10     Litigation. Except as set forth in Schedule 3.10 of the
Company Disclosure Schedule, there are no Legal Claims pending, or to the
respective Knowledge of the Company and the Designated Stockholders, threatened,
against the Company, or any of its properties or assets, except for any of the
foregoing that would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect. Except as set forth in
Schedule 3.10 of the Company Disclosure Schedule, there are no existing orders,
judgments, settlements, injunctions, or decrees of

                                       18

<PAGE>

any Governmental Authority to which the Company, or any of its assets,
properties, business, or operations are subject.

         3.11     Taxes.

                  (a)      The Company has timely filed all U.S. federal, state
and local tax returns and reports required to be filed, or appropriate
extensions related thereto, on or before the Closing Date by the Company under
applicable laws and all such tax returns and reports were true, complete and
correct to the best Knowledge of the Company. Based on tax elections expected to
be made by the Company, the Company has accrued for all U.S. federal, state and
local taxes (including any additions to taxes, penalties and interest related
thereto) for which the Company is or could be liable with respect to all taxable
periods (or portions thereof) ending on or before December 31, 2003. The Company
has withheld and paid over all U.S. federal, state and local taxes required to
have been withheld and paid over, and complied with all information reporting
and backup withholding requirements, including the maintenance of required
records with respect thereto, in connection with amounts paid or owing to any
employee, creditor, independent contractor or other third party, except for such
failure to withhold or pay over and such failure to comply as would not,
individually or in the aggregate, have a Company Material Adverse Effect. There
are no encumbrances on any of the assets, rights or properties of the Company
with respect to taxes, other than Permitted Liens.

                  (b)      No audit of the tax returns of the Company is pending
or, to the respective Knowledge of the Company and the Designated Stockholders,
threatened. No deficiencies have been asserted against the Company as a result
of examinations by any taxing authority and no issue has been raised by any
examination of the Company conducted by any taxing authority that, by
application of the same principles, might result in a proposed deficiency for
any other period not so examined. The Company is not subject to any private
letter ruling of the Internal Revenue Service or comparable rulings of other
U.S. federal, state or local tax authorities that will be binding on the Company
with respect to any period following the Closing Date.

                  (c)      Other than the extensions set forth in Schedule 3.11
of the Company Disclosure Schedule, there are no agreements, waivers of statutes
of limitations, or other arrangements providing for extensions of time in
respect of the assessment or collection of any unpaid taxes against the Company.

                  (d)      The Company is not a party to or bound by any tax
indemnity, tax sharing or tax allocation agreement or arrangement. The Company
has never been a member of an affiliated group of corporations within the
meaning of Section 1504 of the Code.

         3.12     Proprietary Rights. The Company does not own or license any
computer software (other than off-the-shelf products, which are subject to fully
paid licenses), patents, patent applications, trademarks, service marks, trade
names, copyrights or other intellectual property rights that are, individually
or in the aggregate, material to the business of the Company other than as
described in Schedule 3.12 of the Company Disclosure Schedule. The Company has
not received any notice of any infringement, misappropriation or violation by
the Company of any intellectual property rights of any third parties.

                                       19

<PAGE>

         3.13     Transactions with Affiliates. No stockholder, director or
officer of the Company and no associate of any such shareholder, director or
officer is currently, directly, or indirectly, a party to any transaction with
the Company, including any agreement, arrangement or understanding, written or
oral, providing for the employment of, furnishing of services by, rental of real
or personal property from, or otherwise requiring payment to, any such
stockholder, director, officer or associate, except as disclosed on Schedule
3.13 of the Company Disclosure Schedule. Except as disclosed on Schedule 3.13,
no stockholder, director or officer of the Company, and no associate of such
stockholder, director or officer currently owns, directly or indirectly, any
interest in any customer, supplier or competitor of the Company, except for
passive investments in entities in which these persons do not serve on the
boards of directors of such entities and do not beneficially own more than 5% of
the entities' issued and outstanding capital. With the exception of Lime Rock
and except as disclosed on Schedule 3.13, no stockholder, director or officer of
the Company, and no associate of such stockholder, director or officer currently
serves as a director, officer, or employee of, any customer, supplier or
competitor of the Company. For the purposes of this Section 3.13 only, an
"associate" of any stockholder, director or officer means a member of the
immediate family of such stockholder, director or officer or any corporation,
partnership, trust or other entity in which such shareholder, director, officer
or employee has a substantial ownership or beneficial interest or is a director,
officer, partner or trustee, or person holding a similar position.

         3.14     Permits; Compliance with Laws. Except as set forth in Schedule
3.14 of the Company Disclosure Schedule, the Company holds all permits,
licenses, consents, and authorizations that are necessary for the conduct of its
business, except for any failure to hold that would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect. The
Company has not received any written notice of any material violation of any
law, ordinance, regulation, or order applicable to the Company or the business
conducted by it. The conduct of the business of the Company complies with all
applicable laws, ordinances, regulations, and orders, including, but not limited
to, all laws, ordinances, regulations or orders relating to the exportation or
importation of products, except for any noncompliance that would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect. Notwithstanding the foregoing, no representation or
warranty in this Section 3.14 is made with respect to permits issued under or
matters relating to any Environmental Laws, which are covered exclusively by the
provisions set forth in Section 3.15.

         3.15     Environmental. Except for such matters that are not,
individually or in the aggregate, reasonably expected to have a Company Material
Adverse Effect and except for matters disclosed on the Phase One Report obtained
by Parent, which has not been reviewed by the Company, any of its officers or
directors, or any Company Security Holders.

                  (a)      There is no condition existing on any real property
or other asset owned or leased by the Company or resulting from operations
conducted thereon that would reasonably be expected to give rise to any
liability to the Company under Environmental Laws or constitute a violation of
any Environmental Laws, and the Company is otherwise in compliance with all
applicable Environmental Laws.

                                       20

<PAGE>

                  (b)      The Company is not subject to any pending or, to the
respective Knowledge of the Company and the Designated Stockholders, threatened,
action, suit, investigation, inquiry or proceeding relating to any Environmental
Laws by or before any Governmental Authority.

                  (c)      To the respective Knowledge of the Company and the
Designated Stockholders, all permits, notices and authorizations, if any, that
are necessary for the conduct of the business of the Company have been duly
obtained or filed.

                  (d)      To the respective Knowledge of the Company and the
Designated Stockholders, Hazardous Substances have not been released, disposed
of or arranged to be disposed of by the Company, in violation of, or in a manner
or to a location that would reasonably be expected to give rise to liability
under, any Environmental Laws.

                  (e)      The Company has not assumed, contractually or, to the
respective Knowledge of the Company and the Designated Stockholders, by
operation of law, any liabilities or obligations of third parties under any
Environmental Laws, except in connection with the acquisition of assets or
entities associated therewith.

                  (f)      "Environmental Laws" means any energy, public
utility, health, safety and environmental laws, regulations, orders, permits,
licenses, approvals, ordinances, rule of common law, and directives promulgated
by any Governmental Authority.

                  (g)      "Hazardous Substance" means (a) any "hazardous
substance," as defined by the Comprehensive Environmental Response, Compensation
and Liability Act, (b) any "hazardous waste," as defined by the Resource
Conservation and Recovery Act, or (c) any pollutant or contaminant or hazardous,
dangerous or toxic chemical or material or any other substance including, but
not limited to asbestos, buried contaminants, regulated chemicals, flammable
explosives, radioactive materials (including without limitation naturally
occurring radioactive materials), polychlorinated biphenyls, regulated by, or
that could result in the imposition of liability under, any Environmental Law or
other applicable law of any applicable governmental authority relating to or
imposing liability or standards of conduct concerning any hazardous, toxic, or
dangerous waste, substance or material, all as amended.

         3.16     Fees. There are no claims for investment bankers' fees,
finders' fees, or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement made by or
on behalf of the Company, for which the GW Parties or the Company will have any
liability, other than fees to Parks Paton Hoepfl & Brown payable by the Company.

         3.17     ERISA. Neither the Company nor any trade or business (whether
or not incorporated) under common control with the Company within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for
purposes of provisions relating to Section 412 of the Code) (an "ERISA
Affiliate") maintains or contributes to or is obligated to contribute to, and
has ever maintained or contributed to or been obligated to contribute to, (i)
any "multiemployer plan," within the meaning of Section 4001(a)(3) of the
Employee Retirement Income Security Act of 1974, as amended, and the regulations
promulgated and rulings issued thereunder ("ERISA"), to which any Person or any
ERISA Affiliate of such Person makes, is

                                       21

<PAGE>

making, or is obligated to make contributions or, during the preceding three
calendar years, has made, or been obligated to make, contributions (a
"Multiemployer Plan"), (ii) any single employer plan, as defined in Section
4001(a)(15) of ERISA, that (a) is maintained for employees of a Person or any
ERISA Affiliate of such Person and at least one person other than such Person
and any ERISA Affiliate of such Person or (b) was so maintained and in respect
of which such Person or an ERISA Affiliate of such Person could have liability
under Section 4064 of ERISA in the event such plan has been or were to be
terminated (a "Multiple Employer Plan") or (iii) except as set forth in Schedule
3.17 of the Company Disclosure Schedule, any employee benefit plan (as defined
in Section 3(3) of ERISA) sponsored or maintained by the Company or to which the
Company makes, is making, or is obligated to make contributions (a "Plan"),
including but not limited to a Pension Plan. With respect to the Plan(s)
disclosed in Schedule 3.17 of the Company Disclosure Schedule:

                  (a)      Each such Plan is in compliance in all material
respects with the applicable provisions of ERISA, the Code, and other federal or
state law. No such Plan is intended to qualify under Section 401(a) of the Code.

                  (b)      There are no pending Legal Claims (other than routine
claims for benefits) or, to the respective Knowledge of the Company or the
Designated Stockholders, threatened Legal Claims with respect to any such Plan,
and there has been no prohibited transaction or violation of the fiduciary
responsibility rules with respect to any such Plan.

                  (c)      The execution of, and the performance of the
transactions contemplated in, this Agreement will not (either alone or upon the
occurrence of any additional or subsequent events): (i) constitute an event
under any Plan that will or is reasonably expected to result in any payment to
any employee (whether of severance pay or otherwise); (ii) result in the
acceleration, forgiveness of indebtedness, vesting, distribution, increase in
benefits or obligation to fund benefits with respect to any employee; or (iii)
cause any existing Plan to constitute a Pension Plan.

                  (d)      (i) Neither the Company nor any ERISA Affiliate of
the Company has incurred, or reasonably expects to incur, any material liability
under Title IV of ERISA with respect to any Pension Plan; (ii) neither the
Company nor any ERISA Affiliate of the Company has incurred, or reasonably
expects to incur, any liability (and no event has occurred which, with the
giving of notice under Section 4219 of ERISA, would result in such liability)
under Section 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and
(iii) neither the Company nor any ERISA Affiliate of the Company has engaged in
a transaction that could be subject to Section 4069 or 4212(c) of ERISA.

         3.18     Warranties, Indemnification and Representations. THE COMPANY'S
PROPERTIES AND EQUIPMENT HAVE BEEN UTILIZED BY THE COMPANY FOR THE PURPOSE OF
DRILLING AND PERFORMING WORK-OVERS ON OIL AND GAS WELLS. THE COMPANY HAS MADE
AVAILABLE TO THE GW PARTIES PHYSICAL ACCESS TO THE COMPANY'S PROPERTIES AND
EQUIPMENT. EACH OF THE GW PARTIES ACKNOWLEDGES THAT SOME EQUIPMENT MAY CONTAIN
ASBESTOS AND/OR NATURALLY OCCURRING RADIOACTIVE MATERIAL (HEREINAFTER REFERRED
TO AS "NORM"). IN THIS REGARD, EACH OF THE GW PARTIES EXPRESSLY UNDERSTANDS THAT
NORM MAY AFFIX OR ATTACH ITSELF TO MATERIALS AND EQUIPMENT AS SCALE, OR IN OTHER
FORMS, AND THAT MATERIALS AND

                                       22

<PAGE>

EQUIPMENT INCLUDED IN THE COMPANY'S ASSETS MAY CONTAIN NORM. EACH OF THE GW
PARTIES ALSO EXPRESSLY UNDERSTANDS THAT SPECIAL PROCEDURES MAY BE REQUIRED FOR
THE REMOVAL AND DISPOSAL OF ASBESTOS AND/OR NORM FROM THE EQUIPMENT AND THE
COMPANY'S PROPERTIES WHERE IT MAY BE FOUND.

         NONE OF THE COMPANY OR THE DESIGNATED STOCKHOLDERS MAKES ANY
REPRESENTATION OR WARRANTY, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, WITH
RESPECT TO THE ACCURACY OR COMPLETENESS OF DATA, REPORTS, OR MATERIALS NOT
INCLUDED IN THIS AGREEMENT OR THE DISCLOSURE SCHEDULES ATTACHED HERETO, OR ANY
PROJECTIONS, ESTIMATES OR BUDGETS DELIVERED TO OR MADE AVAILABLE TO THE GW
PARTIES OF FUTURE REVENUES, FUTURE RESULTS OF OPERATIONS (OR ANY COMPONENT
THEREOF), FUTURE CASH FLOWS OR FUTURE FINANCIAL CONDITION (OR ANY COMPONENT
THEREOF) OF THE COMPANY OR THE FUTURE BUSINESS AND OPERATIONS OF THE COMPANY.

         3.19     Accounts Receivable. Except as provided on Schedule 3.19, of
the Company Disclosure Schedule all accounts receivable reflected on the
Financial Statements or on the accounting records of the Company as of the
Closing Date (collectively, the "Accounts Receivable") represent or will
represent valid obligations arising from sales actually made or services
actually performed in the ordinary course of business. Unless paid prior to the
Closing Date, the Accounts Receivable are or will be as of the Closing Date
current and collectible net of the respective reserve shown on the Balance Sheet
or on the accounting records of the Company as of the Closing Date (which
reserves are adequate and calculated consistently with past practice and, in the
case of the reserve as of the Closing Date, will not represent a greater
percentage of the Accounts Receivable as of the Closing Date than the reserve
reflected in the Balance Sheet represented of the Accounts Receivables reflected
therein and will not represent a material adverse change in the composition of
such Accounts Receivable in terms of aging). The work in progress reflected on
the Balance Sheet and the work performed by the Company after the date of the
Balance Sheet, except to the extent billed since such date in the ordinary
conduct of the business by the Company, in the case of such work in progress,
represent work completed in accordance with the requirements of any applicable
contract, and, have been reflected on the books of the Company in accordance
with GAAP.

         3.20     Insurance.

                  (a)      Schedule 3.20 of the Company Disclosure Schedule sets
forth a list and brief description of the insurance policies relating to the
insurable properties of the Company and the conduct of the business of the
Company. All premiums due and arising thereon have been paid and such policies
are in full force and effect.

                  (b)      The Company maintains, with financially sound and
reputable insurers, insurance policies covering such perils and in such amounts
as are usually maintained with respect to drilling rigs and equipment; and such
worker's compensation insurance as shall be required by applicable law,
including endorsements for borrowed servant, voluntary compensation and in rem
claims;

                                       23

<PAGE>

                  (c)      Schedule 3.20 of the Company Disclosure Schedule is a
complete and accurate list of all pending or outstanding insurance claims
("Outstanding Insurance Claims") of the Company against the Company's insurance
companies and the amount, if any, of each Outstanding Insurance Claim that is
reflected in the Financial Statements as an account receivable or other asset.

         3.21     Books and Records. All of the books and records of the Company
have been prepared and maintained in accordance with good business practices
and, to the best of Company's and Designated Stockholders' Knowledge, in
compliance with all Applicable Laws and other requirements.

         3.22     Additional Information. Schedule 3.22 of the Company
Disclosure Schedule contains accurate lists and summary descriptions of the
following:

                  (a)      The name and address of every bank and other
financial institution at which the Company maintains an account (whether
checking, savings or otherwise), lock box or safe deposit box for its business,
and the account numbers and names of persons having signing authority or other
access thereto;

                  (b)      The names and titles of and salaries for all
employees of the Company, together with the vacation and severance benefits to
which each such person is entitled; and

                  (c)      All names under which the Company has conducted any
business or otherwise used.

         3.23     Labor Matters. The Company has not suffered any strike,
slowdown, picketing or work stoppage by any union or other group of employees.
The Company is not a party to any collective bargaining agreement; no such
agreement determines the terms and conditions of employment of any employee of
the Company; no collective bargaining agent has been certified as a
representative of any of the employees of the Company; and no representation
campaign or election is now in progress with respect to any of the employees of
the Company. Neither the Designated Stockholders nor any officers of the Company
has any Knowledge that the Company has taken or failed to take any action that
would cause Parent or Sub to incur any liability in the event Sub chooses to
dismiss from its employment any of the Company's employees following the
Closing. The Company has complied in all material respects with all laws
relating to the employment of labor in the conduct of its Business, including
provisions thereof relating to wages, hours, equal opportunity and the payment
of pension contributions, social security and other taxes.

         3.24     Investment Representations.

                  (a)      Each Designated Stockholder is acquiring the Parent
Stock for his own account for investment and not with a view to, or for sale or
other disposition in connection with, any distribution of all or any part
thereof, except pursuant to an applicable exemption under the Securities Act. In
acquiring the Parent Stock, each Designated Stockholder is not offering or
selling, and will not offer or sell, for Parent in connection with any
distribution of the Parent Stock, and each Designated Stockholder does not have
a participation and will not participate in any such undertaking or in any
underwriting of such an undertaking except in compliance with applicable federal
and state securities laws.

                                       24

<PAGE>

                  (b)      Each Designated Stockholder represents that he has
had an opportunity to ask questions of and receive answers from Parent regarding
Sub and its business, assets, results of operations and financial condition and
the terms and conditions of the issuance of the Parent Stock. The foregoing,
however, shall not limit or modify the representations and warranties of Parent
in Article IV, shall not limit the rights of a Designated Stockholder prior to
and in anticipation of any issuance of the Parent Stock pursuant hereto, and
shall not limit the disclosure requirements of applicable federal and state
securities laws.

                  (c)      Each Designated Stockholder acknowledges that he is
able to fend for himself, can bear the economic risk of his investment in the
Parent Stock, and has such knowledge and experience in financial and business
matters that he is capable of evaluating the merits and risks of an investment
in the Parent Stock.

                  (d)      Each Designated Stockholder understands that the
Parent Stock, when issued to such Designated Stockholder, will not have been
registered pursuant to the Securities Act or any applicable state securities
laws, that the Parent Stock will be characterized as "restricted securities"
under federal securities laws, and that under such laws and applicable
regulations, the Parent Stock cannot be sold or otherwise disposed of without
registration under the Securities Act or an exemption therefrom. In this
connection, each Designated Stockholder represents that he or it is familiar
with Rule 144 promulgated under the Securities Act, as currently in effect, and
understands the resale limitations imposed thereby and by the Securities Act.
Stop transfer instructions may be issued accordingly to the transfer agent for
the Designated Stockholder.

                  (e)      It is agreed and understood by each Designated
Stockholder that the certificates representing the Parent Stock shall each
conspicuously set forth on the face or back thereof, in addition to any legends
required by Applicable Law or other agreement, a legend in substantially the
following form:

         THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
         THE SECURITIES ACT OF 1933, AS AMENDED ("ACT"), AND SAID SHARES MAY NOT
         BE SOLD OR OTHERWISE TRANSFERRED UNLESS THE SHARES ARE REGISTERED UNDER
         THE ACT OR THE CORPORATION SHALL HAVE RECEIVED A WRITTEN OPINION OF
         COUNSEL SATISFACTORY TO IT THAT SUCH SALE, ASSIGNMENT OR OTHER TRANSFER
         WILL NOT RESULT IN A VIOLATION OF ANY APPLICABLE LAW OR REGULATION,
         STATE OR FEDERAL. TRANSFER OF THE SHARES IS PROHIBITED OTHER THAN IN
         ACCORDANCE WITH REGULATIONS PROMULGATED UNDER THE ACT.

                  (f)      It is agreed and understood by the Company and the
Designated Stockholders that Parent and Sub are actively involved in the
evaluation of (i) possible asset and stock acquisitions in the land drilling
business, and (ii) restructuring of their indebtedness, as a result of which
Parent may issue its equity securities and make cash payments if such activities
result in a consummation of a transaction.

                                       25

<PAGE>

                                   ARTICLE IV
          REPRESENTATIONS AND WARRANTIES OF PARENT, SUB, AND GREY WOLF
                                    HOLDINGS

         Each of Parent, Sub and Grey Wolf Holdings represents and warrants to
the Company and each Designated Stockholder, as of the date of this Agreement,
those matters set forth in this Article IV. The term "GW Parties" refers to
Parent, Sub and Grey Wolf Holdings collectively, and the term "GW Party" refers
to each of them.

         4.1      Organization. Parent is a corporation duly incorporated,
validly existing, and in good standing under the laws of the State of Texas and
has the requisite power to own its property and carry on its business as now
being conducted. Sub is a limited partnership duly formed, validly existing and
in good standing in the State of Texas. Grey Wolf Holdings is a corporation,
duly formed, validly existing and in good standing in the State of Nevada. Each
GW Party is duly qualified and/or licensed, as may be required and is in good
standing in each of the jurisdictions in which the nature of the business
conducted by it or the character of the property owned, leased or used by it
makes such licensing or qualification and/or licensing necessary in each case
except as would not, individually or in the aggregate, reasonably be expected to
have a Parent Material Adverse Effect.

         4.2      Authorization, Validity, and Effect of Agreements.

                  (a)      Each of the GW Parties has the requisite power and
authority to execute and deliver this Agreement and all agreements and documents
contemplated hereby and thereby. The consummation by each of the GW Parties of
the transactions contemplated hereby has been duly authorized by all requisite
action of each of the GW Parties. This Agreement has been duly executed and
delivered by each of the GW Parties and, assuming the due authorization,
execution and delivery by the Company and each Designated Stockholder,
constitutes, and all agreements and documents contemplated hereby (when executed
and delivered pursuant hereto) will constitute, the valid and legally binding
obligations of each of the GW Parties, enforceable against each of the GW
Parties in accordance with their respective terms.

                  (b)      Neither the execution and delivery of this Agreement
by any of the GW Parties nor the consummation by any of the GW Parties of the
transactions contemplated herein nor compliance by any of the GW Parties with
any of the provisions hereof will (i) conflict with or result in any breach of
the Articles of Incorporation or Bylaws or the Limited Partnership Agreement of
any of the GW Parties respectively; (ii) result in a violation or breach of any
provisions of, or constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under, or result in the
termination, cancellation of, or accelerate the performance required by, or
result in a right of termination or acceleration under, or result in the
creation of any lien or encumbrance upon any of the properties or assets of any
of the GW Parties under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust, license, contract, lease, agreement or
other instrument or obligation of any kind to which any of the GW Parties is a
party or by which any of the GW Parties or any of their respective properties or
assets may be bound; or (iii) violate any judgment, ruling, order, writ,
injunction, decree, statute, rule or regulation applicable to any of the GW
Parties or any of their respective properties or assets, other than any

                                       26

<PAGE>

such event described in items (ii) or (iii) that would not reasonably be
expected to have a Parent Material Adverse Effect.

                  (c)      Except for the expiration or early termination of the
waiting period under the HSR Act, if applicable, no consent, approval, or
authorization of, or declaration to or filing with, any Governmental Authority
is required of any of the GW Parties for the valid execution and delivery by any
of the GW Parties of this Agreement or any other agreement or instrument to be
executed and delivered by any of the GW Parties hereunder and the consummation
of the transactions provided for herein or therein, except that would not
reasonably be expected to have a Parent Material Adverse Effect.

         4.3      Fees. There are no claims for investment bankers' fees,
finders' fees, or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement made by or
on behalf of any of the GW Parties for which the Company, or any of its
stockholders will have any liability.

         4.4      Litigation. There are no Legal Claims pending or, to any of
the GW Parties' respective Knowledge, threatened against any of the GW Parties
or any of their respective properties or assets that would reasonably be
expected to have a Parent Material Adverse Effect.

         4.5      Inspections; No Other Representations. Each of the GW Parties
is an informed and sophisticated purchaser, experienced in the evaluation and
purchase of companies such as the Company as contemplated hereunder. Each of the
GW Parties has undertaken such investigation and has been provided with and has
evaluated such documents and information as it has deemed necessary to enable it
to make an informed and intelligent decision with respect to the execution,
delivery and performance of this Agreement. Each of the GW Parties acknowledges
that the Company has given each of them access to the documents and facilities
of the Company. Each of the GW Parties acknowledges that the Company and
Designated Stockholders make no representation or warranty with respect to (i)
any projections, estimates or budgets delivered to or made available to any of
the GW Parties of future revenues, future results of operations (or any
component thereof), future cash flows or future financial condition (or any
component thereof) of the Company or the future business and operations of the
Company, or (ii) any other information or documents made available any of the GW
Parties or their counsel, accountants or advisors with respect to the Company or
its businesses or operations, except as expressly set forth in this Agreement.

         4.6      SEC Reports. Each of Parent's reports filed with the United
States Securities and Exchange Commission on or after January 1, 2003 pursuant
to the Securities Exchange Act of 1934 comply with the applicable regulations
and provide accurate disclosure concerning Parent and its business, as of the
filing dates thereof, except as modified by subsequent reports.

                                   ARTICLE V
                     CONDUCT OF BUSINESS PENDING THE MERGER

         5.1      Conduct of Business by the Company. The Company covenants and
agrees that, prior to the Closing, (i) unless Parent shall otherwise consent in
writing (which consent shall not unreasonably be withheld, conditioned or
delayed); (ii) except in connection with the transactions

                                       27

<PAGE>

contemplated by this Agreement; and (iii) except as set forth in Schedule 5.1 of
the Company Disclosure Schedule:

                  (a)      The business of the Company shall be conducted only
in the ordinary and usual course of business and consistent with past practices,
and the Company shall use all reasonable efforts to maintain and preserve intact
its business organization, to maintain significant beneficial business
relationships with suppliers, contractors, distributors, customers, licensors,
licensees and others having business relationships with it and keep available
the services of its current key officers and employees.

                  (b)      Without limiting the generality of the foregoing
Section 5.1(a), the Company shall not directly or indirectly do any of the
following:

                           (i)      acquire, sell, encumber, lease, transfer or
dispose of any assets, rights or securities that are material to the Company in
the aggregate or terminate, cancel, materially modify or enter into any material
commitment, transaction, line of business or other agreement, in each case out
of the ordinary course of business consistent with past practice, or acquire by
merging or consolidating with or by purchasing a substantial equity interest in
or a substantial portion of the assets of, or by any other manner, any business,
corporation, partnership, association or other business organization or division
thereof;

                           (ii)     amend or propose to amend its Certificate of
Incorporation or Bylaws;

                           (iii)    issue, sell, pledge, dispose of or encumber,
or authorize, propose or agree to the issuance, sale, pledge or disposition or
encumbrance by the Company of any shares of, or any options, warrants or rights
of any kind to acquire any shares of, or any securities convertible into or
exchangeable for any shares of, its capital stock of any class, or any other
securities in respect of, in lieu of, or in substitution for any class of its
capital stock outstanding on the date hereof;

                           (iv)     modify the terms of any existing
indebtedness for borrowed money or incur any indebtedness for borrowed money or
issue any debt securities, except indebtedness incurred in the ordinary course
of business consistent with past practice, but only if the amount of such
additional indebtedness does not exceed $50,000 in the aggregate and except
indebtedness incurred in connection with the refurbishment and development of
the Company's Rigs #6 and #41;

                           (v)      assume, guarantee, endorse or otherwise as
an accommodation become responsible for, the obligations of any other person, or
make any loans or advances, except for those not in excess of $25,000 in the
aggregate;

                           (vi)     take any action with respect to the grant of
or increase in any severance or termination pay;

                           (vii)    adopt or establish any new employee benefit
plan, amend in any material respect any employee benefit plan or, other than in
the ordinary course of business consistent with past practice, increase the
compensation or fringe benefits of any employee (except as required by any
existing employee benefit plans or employment agreements or applicable law) or
pay any material benefit not required by any existing employee benefit plan;

                                       28

<PAGE>

                           (viii)   make or commit to make capital expenditures
in excess of $50,000 except for expenditures incurred in connection with the
refurbishment and development of the Company's Rigs #6 and #41;

                           (ix)     make any material changes in tax accounting
methods except as required by applicable law;

                           (x)      write off any accounts or notes receivable;

                           (xi)     declare, set aside or pay any dividend or
other distribution in respect of capital stock of the Company; or

                           (xii)    enter into any agreement to do or engage in
any of the foregoing.

                                   ARTICLE VI
                              ADDITIONAL AGREEMENTS

         6.1      Stockholder Approval. The Company shall promptly call a
meeting of its stockholders, or obtain the written consent of stockholders in
accordance with the DGCL (the "Company Stockholder Meeting"), for the purpose of
voting upon the Merger and shall use its reasonable best efforts to obtain
stockholder approval of the Merger. The Company Stockholder Meeting shall occur
as soon as practicable following the date hereof, and the Company will, through
its Board of Directors (unless the Board of Directors shall conclude in good
faith, after consultation with and based upon the written advice of Patton Boggs
LLP, which advice need not constitute an opinion, that not recommending the
Merger, or withdrawing or modifying any such recommendation, is necessary in
order for the Board of Directors not to breach its fiduciary obligations under
applicable law), recommend to its stockholders the approval of the Merger and
not rescind its declaration that the Merger is fair to and advisable and in the
best interests of the Company and its stockholders.

         6.2      Registration Statement.

                  (a)      If the Merger occurs, then within three days after
Closing, Parent will, on that one occasion only, prepare and file with the
Commission under the Act, a registration statement on Form S-3 (the "Shelf
Registration Statement") for the purpose of registering the resale from time to
time of "Subject Securities" (as hereinafter defined) by Holders (as hereinafter
defined). As used herein, (i) "Subject Securities" means shares of Parent Common
Stock issued to Holders incident to the Merger and any common stock or other
security issued or issuable as a dividend or other distribution with respect to,
or in exchange for, or upon conversion or in replacement of, any of such Parent
Common Stock, and (ii) "Holders" means those Company Security Holders who are
entitled to Parent Common Stock in accordance with Schedule 2.5(c) of the
Company's Disclosure Schedule.

                  (b)      Parent will use its best efforts to have the Shelf
Registration Statement declared effective by the Commission as soon as
reasonably possible, and thereafter to maintain the effectiveness of the Shelf
Registration Statement and to maintain such Shelf Registration Statement
"current" (as hereinafter defined) at all times until the "Registration
Termination Date" (as

                                       29

<PAGE>

hereinafter defined). The "Registration Termination Date" means the second
anniversary of the date (the "Effective Registration Date") when the Shelf
Registration Statement is first declared effective by the Commission.

                  (c)      Except as imposed by applicable securities laws, the
Parent Common Stock registered pursuant to the Registration Statement shall not
be subject to any blackout, suspension or other trading restrictions. Parent
shall give notice to the Holders by email and/or facsimile of the Company's
request for acceleration and of the effectiveness of the Registration Statement
with the Commission, respectively, on the respective days that each of those
events occur.

                  (d)      The Shelf Registration Statement shall not be
considered to be "current" at any time when, by reason of occurrence of any
event or by reason of the passage of time, such Shelf Registration Statement
does not meet the requirements of Section 10, Section 12(2) or Section 17 of the
Act, or such Shelf Registration Statement contains an untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein not misleading. The Shelf
Registration Statement shall disclose that Holders may elect to resell Subject
Securities without registration of such sales under the Shelf Registration
Statement, by making such sales under and as permitted by Rules 144 or 145, as
applicable, of the Commission under the Act.

                  (e)      The Subject Securities shall be the only securities
included in, or otherwise covered by, the Shelf Registration Statement.

                  (f)      To the fullest extent permitted by law, Parent will
indemnify and hold harmless each Holder, each of such Holder's officers,
directors, employees, fiduciaries, partners, or members (and affiliates
thereof), as the case may be, and each person controlling such Holder
(collectively, the "Holder Indemnitees"), within the meaning of the Act, against
all claims, losses, damages, and liabilities, joint or several (or actions in
respect thereof), caused by any untrue statement (or alleged untrue statement)
of a material fact contained in any registration statement, prospectus, or
offering circular, or in any document incorporated by reference in any of the
foregoing, or arising out of or based upon any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, or any violation by Parent of any rule or
regulation promulgated under the Act applicable to Parent and relating to action
or inaction required of Parent in connection with any such registration or
qualification, and will reimburse on demand of each such Holder, each of such
Holder Indemnitees, for any legal and any other expenses reasonably incurred in
connection with investigating or defending any such claims, loss, damage,
liability or action; provided, however, that Parent will not be liable in any
such case to the extent that any such claim, loss, damage, liability or expense
is caused by any untrue statement or omission so made in conformity with written
information furnished to Parent by such Holder specifically for inclusion in any
such registration statement, prospectus or offering circular. The obligations of
Parent under the foregoing indemnity agreement shall survive the completion of
the offering of Subject Securities under any registration statement provided for
in this Section 6.2.

                  (g)      To the fullest extent permitted by law, each Holder
with respect to which registration or qualification of Subject Securities has
been effected pursuant to this Section 6.2 will indemnify and hold harmless
Parent, each of Parent's officers, directors, employees, fiduciaries (and
affiliates thereof), as the case may be, and each person controlling Parent
(collectively, the "Parent

                                       30
<PAGE>

Indemnitees"), against all claims, losses, damages, and liabilities, joint or
several (or actions in respect thereof), insofar as any such claim, loss, damage
or liability (or action in respect thereof) to which Parent or any Parent
Indemnitees becomes subject is caused by any untrue statement (or alleged untrue
statement) or omission or alleged omission made in conformity with information
furnished in writing by the Holder specifically for inclusion in any such
registration statement, prospectus, or offering circular, or in any document
incorporated by reference in any of the foregoing, and will promptly reimburse
Parent and each Parent Indemnitee for any legal and any other expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability or action. The obligations of Holders under this
indemnity agreement are several and not joint, and shall survive the completion
of the offering of Subject Securities under any registration statement provided
for in this Section 6.2. Notwithstanding any other provision of this Section
6.2, (i) each Holder shall be liable pursuant to this Section 6.2 only for the
percentage of any liability that is equal to the percentage that the Holder's
shares covered by the Shelf Registration Statement are of the total number of
Subject Securities, and (ii) no Holder shall be liable for more than the market
value, as of the Closing Date, of the Subject Securities owned by that Holder as
of the Closing Date.

                  (h)      All expenses incident to Parent's performance of or
compliance with this Section 6.2, including, without limitation, all
registration and filing fees, fees and expenses of compliance with securities or
blue sky laws (including fees and disbursements of counsel in connection with
blue sky qualifications of the Subject Securities), rating agency fees, printing
expenses, messenger and delivery expenses, internal expenses (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties), the fees and expenses incurred in connection with
the listing of the securities to be registered on the American Stock Exchange
and all securities exchanges on which similar securities issued by Parent are
then quoted or listed, the fees and disbursements of counsel for Parent and its
independent certified public accountants (including the expenses of any special
audit or comfort letters required by or incident to such performance), Act
liability insurance (if Parent elects to obtain such insurance), the fees and
expenses of any special experts retained by Parent in connection with such
registration, and fees and expenses of other persons retained by Parent, in
connection with each registration hereunder (but not including discounts,
commissions, fees or expenses payable to underwriters that are attributable to
the sale of Subject Securities or the fees and expenses of counsel for any
selling Holder) (collectively, the "Registration Expenses") will be borne by
Parent.

                  (i)      Parent will also take such action as may be required
to be taken under applicable blue sky laws in connection with issuance of the
Parent Common Stock pursuant to this Agreement and in connection with resale of
Subject Securities by Holders pursuant to the Shelf Registration Statement;
provided that Parent will not be required to become qualified as a foreign
corporation in any jurisdiction.

         6.3      Filings; Other Action. Subject to the terms and conditions
herein, each of the Company, Parent, and Sub shall and shall cause any
appropriate other party to: (a) use all reasonable efforts to cooperate with one
another in (i) determining which filings are required to be made prior to the
Closing with, and which consents, approvals, permits, or authorizations are
required to be obtained prior to the Closing from, any Governmental Authority,
in connection with the execution and delivery of this Agreement and the
consummation of the transactions

                                       31

<PAGE>

contemplated hereby, and (ii) timely making all such filings and timely seeking
all such consents, approvals, permits, or authorizations; and (b) use all
reasonable efforts to take, or cause to be taken, all other action and do, or
cause to be done, all other things necessary, proper, or appropriate to
consummate and make effective the transactions contemplated by this Agreement.
The Company shall use all commercially reasonable efforts to complete the
refurbishment of Rigs #6 and 41 prior to Closing. In the event that the
refurbishment of Rigs # 6 and 41 is not completed prior to Closing, the Parties
shall mutually agree prior to the Closing on the amounts to be accrued on the
Company Balance Sheet for the completion of the Rigs.

         6.4      Expenses. If the Merger is consummated, all costs and expenses
of the Company and the Designated Stockholders incurred in connection with this
Agreement and the transactions contemplated hereby, except costs and expenses
relating to finder's fees or investment banking fees, shall be paid by Parent;
provided, however, that Parent shall not be responsible for any costs and
expenses in excess of $100,000.

         6.5      Employee Benefit Matters.

                  (a)      From and after the Closing, Parent shall assume and
honor, or, at Parent's option, Parent shall cause the Survivor to honor, all
employee benefit plans of the Company in accordance with their terms as in
effect immediately before the consummation of the Merger, subject to any
amendment or termination thereof that may be permitted by such terms.

                  (b)      The Parent shall, or, at Parent's option, Parent
shall cause the Survivor to, continue to provide to each individual who is
employed by the Company as of the Closing Date and who remains employed
following the Closing Date (an "Affected Employee"), compensation and employee
benefits which, in the aggregate, are no less favorable than the compensation
and benefits provided by the Company to such employee immediately prior to
consummation of the Merger, unless otherwise agreed in writing by the Affected
Employee.

                  (c)      Parent, the Survivor or Sub, as applicable, shall
give Affected Employees full credit for their continuous service with the Sub
(including deemed service credited by such entities) for purposes of eligibility
to participate and vesting (but not benefit accrual) under all employee benefit
plans, programs, policies or arrangements that are maintained by Parent, the Sub
for such Affected Employees to the same extent recognized by the Company
immediately prior to the Closing Date under similar employee benefit plans.

                  (d)      Parent and Sub shall waive all limitations as to
preexisting conditions, exclusions and waiting periods with respect to
participation and coverage requirements applicable to the Affected Employees
under any welfare benefit plans that such employees may be eligible to
participate in after the Closing Date.

         6.6      Access to Information. Subject to the confidentiality
agreement dated January 20, 2004 previously entered into by the Company and
Parent, the Company shall afford the officers and directors of Parent and its
employees and agents complete access at all reasonable times from the date
hereof through the Closing to the Company's officers, properties, facilities,
books, records and contracts and shall furnish Parent all financial, operating
and other data and information regarding

                                       32

<PAGE>

the Company as Parent through its officers, employees or agents, may reasonably
request; provided there is no material cost to or effort required by the Company
to furnish such information.

         6.7      Indemnification.

                  (a)      After the Closing, each of Parent and Sub, jointly
and severally, shall, to the fullest extent permitted under applicable law,
release, indemnify and hold harmless, each present and former director, officer,
shareholder, employee, fiduciary and agent of the Company (collectively, the
"Indemnified Parties") against any costs or expenses (including attorneys'
fees), judgments, fines, losses, claims, damages, liabilities and amounts paid
in settlement in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, arising
out of or pertaining to any action or omission occurring prior to the Closing
Date within the scope of their duties to the Company. In the event of any such
claim, action, suit, proceeding or investigation (whether arising before or
after the Closing Date), (i) Parent and the Sub, jointly and severally, shall be
responsible for the reasonable fees and expenses of counsel selected by the
Indemnified Parties, which counsel shall be reasonably satisfactory to the
Company, promptly after statements therefor are received, and (ii) Parent and
the Sub will cooperate in the defense of any such matter.

                  (b)      This Section 6.7 shall survive the Merger and shall
be binding on all successors and assigns of the Parent and the Sub for a period
of six (6) years after Closing.

         6.8      Resignation of Officers and Directors. At or before the
Closing, the Company will cause each director and officer of the Company, other
than such persons designated in writing by Parent at or prior to Closing, to
submit his or her written resignation as a director or officer that will be
effective on the Closing Date.

         6.9      Tax Matters.

                  (a)      All transfer, documentary, sales, use, stamp,
registration and other such taxes and fees (including any penalties and
interest) incurred in connection with this Agreement (including any transfer tax
and any similar tax imposed in any state or political subdivision) shall be paid
by the Parent when due, and the Parent will file all necessary tax returns and
other documentation with respect to all such transfer, documentary, sales, use,
stamp, registration and other taxes and fees.

                  (b)      To the extent allowable under the Code and requested
by Parent in writing, the Company shall elect and apply straight-line
depreciation and/or no first-year bonus depreciation for the Rigs for U.S.
federal income tax purposes for all tax periods ending on or before the Closing
Date for which the Company has not previously filed a U.S. federal tax return.
To the extent the Parent requests that the Company make an election under the
immediately preceding sentence for a period ending on or before the Closing Date
and the Company makes such an election, the Parent shall assume responsibility
for and pay any U.S. federal, state and/or local income taxes arising from such
an election, regardless of whether the transactions contemplated by this
Agreement are consummated. Further, any tax liability of Company or any other
occurrence that is attributable to a tax election made at the request of Parent
shall not be considered in determining whether a breach of any representations
or warranties of the Company set forth herein has occurred, and shall in no way
affect the calculation of Net Working Capital. The Company shall not, without
the consent of the

                                       33

<PAGE>

Parent, (i) make, revoke or amend any tax election; (ii) execute any waiver of
restrictions on assessment or collection of any tax; or (iii) enter into or
amend any agreement or settlement with any tax authority.

                  (c)      Parent shall have the right and obligation to timely
prepare and file, or cause to be timely prepared and filed, when due (i) any tax
return that is required to include the operations, ownership, assets or
activities of the Company for tax periods ending after the date of this
Agreement; and (ii) all tax returns for transfer, documentary, sales, use, stamp
or other transfer taxes required for periods ending after the date of this
Agreement; provided, however, the Designated Stockholders shall have a
reasonable opportunity to review and consent to such returns filed for any
period ending prior to the Closing Date (which consent will not be unreasonably
withheld). In connection with any such review, the Designated Stockholders shall
have access to any records reasonably related to information concerning the
returns being prepared and filed.

         6.10     Non-Competition Agreements.

                  (a)      In order to allow the Parent to realize the full
benefit of its bargain in connection with the Merger; including, but not limited
to, the goodwill, confidential business information, trade secrets, trade name
and reputation, and customer relationships of the Company, the Designated
Stockholders will not at any time during the Prohibited Period (as hereinafter
defined), directly or indirectly, acting alone, through any family member, as an
employee, employer, consultant, agent, principal, partner, member, more than
five percent (5%) shareholder, officer, director, licensor, lender, lessor or in
any other individual or representative capacity:

                           (i)      engage in any business or activity that is
the same as or similar to the Company Business in the Covered Area (as both are
hereinafter defined);

                           (ii)     request or encourage any present or future
customer or supplier of the Company or any of its Affiliates or of the Parent or
any of its Affiliates to curtail or cancel its business with any such entity,
subject to any of the Designated Stockholders' fiduciary duties as board members
of any such customers or suppliers of the Company; and

                           (iii)    induce or attempt to influence any employee
of the Parent or the Sub or any of their Affiliates to terminate his or her
employment with the Parent, the Sub or any of their Affiliates.

                  (b)      For purposes of this Section 6.10, (i) the term
"Company Business" means the owning, managing and operating of onshore drilling
and workover rigs for its own account and others which rigs are contracted or
hired for the purpose of drilling and/or workover of oil or natural gas with
respect to properties in which the owner of the rigs has no economic interest;
(ii) the term "Covered Area" means the region of the United States of America
which includes the entirety of the states of Colorado, Montana, North Dakota,
Utah and Wyoming; and (iii) the term "Prohibited Period" means, in the case of
the Designated Stockholders other than Lime Rock, the period from the date of
this Agreement to the date which is three (3) years after the Closing Date and,
in the case of Lime Rock, the period from the date of this Agreement to the date
which is one (1) year after the Closing Date.

                                       34

<PAGE>

                  (c)      The Designated Stockholders acknowledge and agree
that the covenants contained in this Section 6.10 are deemed to consist of a
series of separate covenants independent from each other and from any other
provision of this Agreement. Each Designated Stockholder expressly agrees that
the character, duration and geographical scope of this Section 6.10 are
reasonable in light of the circumstances existing on the date of this Agreement.
However, in the event the scope of the covenants set forth in this Section 6.10
is deemed to be too broad in any court proceeding or arbitration proceeding
conducted pursuant to Section 10.11, the court or arbitrator, as the case may
be, may reduce such scope to that which it deems reasonable under the
circumstances. The parties hereto agree and acknowledge that the Parent would
not have any adequate remedy at law for the breach or threatened breach by any
of the Designated Stockholders or any of their Affiliates of the covenants and
agreements set forth in this Section 6.10, and, accordingly, the Designated
Stockholders agree that the Parent may, in addition to the other remedies which
may be available to it hereunder, file suit in equity to enjoin the Designated
Stockholders and any of their Affiliates from such breach or threatened breach
and consent to the issuance of injunctive relief hereunder without the necessity
of first resorting to the arbitration provisions of this Agreement. The
Designated Stockholders understand and agree that the act of the Parent in
entering into this Agreement, and the Parent's covenants and payments hereunder,
shall and do constitute sufficient consideration for the Designated Stockholders
to agree not to compete against the Parent as set out in this Section 6.10. In
addition, the Designated Stockholders further stipulate, acknowledge and agree,
that the Merger constitutes an indirect sale by the Designated Stockholders of
the business of the Company and all of the rights and privileges related thereto
are and for all purposes relating to their obligations under this Section 6.10,
the Designated Stockholders shall be considered a "seller" of the Company
Securities.

                  (d)      Lime Rock, a Designated Stockholder, agrees that for
a period of one (1) year following the Closing Date, Lime Rock and its
Affiliates shall not, directly or indirectly through any family member,
employee, officer, director, consultant, agent, principal, partner or member
acquire or own any equity or other interest in, become an employee, employer,
consultant, agent, principal, partner, member, shareholder, officer, director,
licensor, lender or lessor to any Person engaged in the Company Business which
has significant operations in the Covered Area. Notwithstanding the foregoing,
nothing in this Section 6.10 shall prohibit Lime Rock from acquiring an interest
in a company engaged in the Company Business as a result of a previously
existing investment in another Person. Neither Lime Rock nor any of its
Affiliates in which it owns a majority of the outstanding capital stock may
acquire, for a period of one (1) year following the Closing Date, a majority of
the capital stock of an entity engaged in the Company Business in the Covered
Area. The provisions of this paragraph shall not prohibit Lime Rock from having
the existing relationships with the Persons described in detail on Schedule
6.10.

                  (e)      The Designated Stockholders acknowledge that the
Parent has a legitimate and continuing proprietary interest in the protection of
the confidential information of the Company and that it has invested substantial
sums; including, but not limited to, the consideration paid to the Designated
Stockholders pursuant to this Agreement, and the Parent will continue to invest
substantial funds to develop, maintain and protect confidential information. For
purposes of this Section 6.10, "confidential information" shall include, without
limitation, information of a technical and business nature regarding the
Parent's and the Company's past, current and anticipated businesses that may
encompass financial information, financial figures, trade secrets, the identity
of

                                       35

<PAGE>

past, present and future customers, details of client or consultant contracts,
pricing policies, operational methods, marketing plans or strategies, product
development techniques or plans, business acquisition plans, employee
information, organizational charts, new personnel acquisition plans, technical
processes, designs and design projects, inventions and research projects, ideas,
discoveries, inventions, improvements, design specifications, writings and other
works of authorship. As an independent covenant, the Designated Stockholders
agree not to make any unauthorized use, publication, or disclosure of any such
confidential information of the Parent or the Company except to the extent that
disclosure of such confidential information is necessary to fulfill such
Designated Stockholder's responsibilities to the Parent. The Designated
Stockholders understand that confidential matters and trade secrets include
information not generally known by or available to the public about or belonging
to the Parent and the Company and their Affiliates, or belonging to other
companies to whom the Parent, its divisions, subsidiaries, and related
Affiliates may have an obligation to maintain information in confidence and that
authorization for public disclosure may only be obtained through the Parent's
written consent. Notwithstanding the foregoing, nothing in this Section 6.10
shall prohibit or limit the Designated Stockholders from disclosing such
information (a) as required by any law, rule, or regulation, (b) upon the order
of any court or administrative agency, (c) upon the request or demand of any
regulatory agency or authority, (d) that is or becomes available to the public
other than as a result of the disclosure by the Designated Stockholders; (e) in
connection with any litigation to which the Designated Stockholders or any of
their respective Affiliates may be a party, and (f) to the extent necessary in
connection with the exercise of any remedy under the Agreement. With respect to
subsections (a), (b), (c) and (e) above, the Designated Stockholders will
endeavor to notify Parent of such necessity to disclose confidential information
within a reasonable period of time prior to such disclosure, except where such
notification is prohibited by law, administrative rule or regulation, order of
court of competent jurisdiction or similar restriction. In addition,
notwithstanding the foregoing, nothing in this Section 6.10 shall prohibit or
limit Lime Rock's ability to disclose any information with respect to its
investment and involvement in the Company, including, but not limited to, the
Company's operating and financial history from inception through the Effective
Time for purposes of marketing its investment funds.

         6.11     No Solicitation. During the period of time between the
execution of this Agreement and the Closing, but in no event for a period of
time greater than the first to occur of April 25, 2004 or termination of this
Agreement under Article VIII after the execution of this Agreement (the "No
Solicitation Period"), the Designated Stockholders shall not, and shall not
authorize or permit any officer, director or employee of, or any investment
banker, attorney or other advisor, agent or representative of, the Company
("Designated Stockholders' Representatives") to, and on becoming aware of will
take all reasonable actions to stop such person from continuing to, directly or
indirectly, (i) solicit, initiate or encourage or otherwise intentionally
facilitate (including by way of furnishing information) the making of any
Acquisition Proposal (as defined below), (ii) enter into any agreement with
respect to any Acquisition Proposal, or (iii) participate in any discussions or
negotiations regarding, or furnish to any person any information with respect
to, or take any other action to facilitate any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead to, any
Acquisition Proposal. Without limiting the foregoing, it is understood that any
violation of the restrictions set forth in the preceding sentence by the
Designated Stockholders or any Designated Stockholders' Representatives, whether
or not such person is purporting to act on behalf of the Designated Stockholders
or otherwise, shall be deemed to be a material breach of this

                                       36

<PAGE>

Agreement by the Designated Stockholders. The Designated Stockholders
immediately shall cease and shall cause to be terminated any existing
solicitation, initiation, encouragement, activity, discussion or negotiation
with any parties conducted prior to the date hereof by the Designated
Stockholders or any Designated Stockholders' Representatives with respect to any
Acquisition Proposal existing on the date hereof. Also, during the No
Solicitation Period, the Designated Stockholders promptly will notify Buyer of
the pendency of any negotiations respecting, or the receipt of, any Acquisition
Proposal. For purposes of this Agreement, "Acquisition Proposal" means (i) any
proposal, other than a proposal by Parent or any of its affiliates, for a merger
or other business combination involving the Company, or (ii) any proposal or
offer, other than a proposal or offer by Parent or any of its affiliates, to
acquire from the Designated Stockholders or any of its affiliates in any manner,
directly or indirectly, an equity interest in the Company, any voting securities
of the Company or a material amount of the assets of the Company.

         6.12     Audited Financial Statements. On or before five (5) business
days prior to the Closing, the Company shall have delivered to Parent accurate
and complete copies of the Company's audited balance sheets dated as of December
31, 2003, and the related audited statements of income, stockholders' equity and
statement of cash flows for the year then ended, and the notes and schedules
thereto, prepared in conformity with GAAP, consistently applied, together with
the unqualified reports thereon of Porter, Muirhead, Cornia & Howard,
independent public accountants (the "Audited Financial Statements"). The Audited
Financial Statements shall present fairly the financial condition of the Company
as of December 31, 2003 and the results of operations of the Company for the
periods covered thereby.

                                   ARTICLE VII
                                   CONDITIONS

         7.1      Conditions to Each Party's Obligation to Effect the Merger.
The respective obligation of each party to effect the Merger shall be subject to
the fulfillment, or the express waiver of all parties, on or prior to the
Closing Date, of the following conditions:

                  (a)      This Agreement and the transactions contemplated
hereby shall have been approved, in the manner required by applicable law, by
the holders of the issued and outstanding shares of the Company Securities.

                  (b)      None of the parties hereto shall be subject to any
order or injunction of a court of competent jurisdiction that prohibits the
consummation of the transactions contemplated by this Agreement. In the event
any such order or injunction shall have been issued, each party agrees to use
its reasonable efforts to have any such injunction lifted or order reversed.

                  (c)      No action, suit, or proceeding shall be pending or
threatened by or before any Governmental Authority in which an unfavorable
judgment, order, or decree would prevent any of the transactions contemplated
hereby or cause any such transaction to be declared unlawful or rescinded or
that would reasonably be expected to cause a Company Material Adverse Effect or
a Parent Material Adverse Effect.

                  (d)      All documents and instruments to be delivered by the
parties in connection with the transactions contemplated hereby shall be in form
and substance reasonably satisfactory to

                                       37

<PAGE>

the parties and their respective counsel, and the parties shall have received
such other documents and instruments as they may reasonably request in
connection therewith.

         7.2      Conditions to Obligation of the Company to Effect the Merger.
The obligation of the Company to effect the Merger shall be subject to the
fulfillment, or the Company's express written waiver, on or prior to the Closing
Date, of the following conditions:

                  (a)      Each of the GW Parties shall have performed in all
material respects its agreements contained in this Agreement required to be
performed on or prior to the Closing Date, the representations and warranties of
each of the GW Parties contained in this Agreement and in any document delivered
in connection herewith shall be true and correct in all material respects
(except for such representations and warranties that are qualified by material,
materiality or similar words, which shall be true and correct) as if made on the
Closing Date (or to the extent that any such representation or warranty is
expressly made as of another specified date, the same shall be true and correct,
or true and correct in all material respects, as applicable, as of such
specified date), and the Company shall have received a certificate of the
President or a Vice President of each of the GW Parties, dated the Closing Date
certifying to such effect.

                  (b)      All material consents and approvals of any third
parties required of each of the GW Parties in connection with the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby shall have been obtained by each of the GW Parties, as the case may be,
and delivered to the Company.

                  (c)      All filings, if any, required to be made under the
HSR Act shall have been made, and any applicable waiting period thereunder shall
have expired or terminated.

                  (d)      There shall be no Parent Material Adverse Effect.

                  (e)      The Company shall have received an opinion of counsel
to Parent, in the form attached as Exhibit B, that the Merger Shares will be
legally issued and will constitute fully paid and non-assessable shares of
Parent.

                  (f)      The Company Security Holders shall have received, the
certificates representing the Merger Shares as set forth in Final Schedule
2.5(c).

                  (g)      The Parent shall have wire-transferred the Merger
Cash as set forth in Final Schedule 2.5(c) to the accounts designated by the
Company Security Holders and to the Closing Escrow Agent.

         7.3      Conditions to Obligation of each of the GW Parties to Effect
the Merger. The obligations of each of the GW Parties to effect the Merger shall
be subject to the fulfillment, or Parent's express written waiver at or prior to
the Closing Date, of the following conditions:

                  (a)      The Company and the Designated Stockholders shall
have performed in all material respects their agreements contained in this
Agreement required to be performed on or prior to the Closing Date, the
representations and warranties of the Company and the Designated Stockholders
contained in this Agreement and in any document delivered in connection herewith

                                       38

<PAGE>

shall be true and correct in all material respects (except for such
representations and warranties that are qualified by material, materiality or
similar words, which shall be true and correct) as of the Closing Date as if
made on the Closing Date (or to the extent that any such representation or
warranty is expressly made as of another specified date, the same shall be true
and correct, or true and correct in all material respects, as applicable, as of
such specified date), and Parent shall have received a certificate of the
President or a Vice President of the Company, dated the Closing Date, certifying
to such effect.

                  (b)      All material consents and approvals of any third
parties required of the Company in connection with the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby
shall have been obtained by the Company and delivered to Parent.

                  (c)      All filings required to be made under the HSR Act
shall have been made, and any applicable waiting period thereunder shall have
expired or terminated.

                  (d)      There shall be no Company Material Adverse Effect.

                  (e)      The Company shall have delivered the Certificates to
Parent.

                  (f)      The Stockholders Agreement shall have been
terminated.

                  (g)      The Company Rigs #6 and #41 shall be complete and
shall be fully functional rigs, available for contract.

                  (h)      The Parent shall have entered into an employment
agreement with Kyle Swingle, in the form attached as Exhibit C.

                  (i)      The Parent shall have received the Audited Financial
Statements which shall show no material differences from the Financial
Statements.

                  (j)      The Company shall have prepared and delivered to
Parent a final allocation schedule with the same information updated from the
preliminary schedule attached hereto as Schedule 2.5(c) ("Final Schedule
2.5(c)"), and Parent shall have received (i) an acknowledgement and agreement
from all Company Security Holders to the allocation provided in Final Schedule
2.5(c) in the form of an attachment thereto, and, as to any Company Security
Holders who are not Designated Stockholders, either (x) a written representation
in the form substantially similar to Section 3.24, or (y) evidence reasonably
satisfactory to Parent that such Company Security Holder has released any right
to receive Parent Common Stock in the Merger.

                                  ARTICLE VIII
                                   TERMINATION

         8.1      Termination by Mutual Consent. This Agreement may be
terminated at any time prior to the Closing Date, by the mutual consent of
Parent and the Company.

         8.2      Termination by the Company. This Agreement may be terminated
and the Merger may be abandoned at any time prior to the Closing Date by action
of the board of directors of the

                                       39

<PAGE>

Company if all conditions to Closing set forth in Sections 7.1 and 7.2 of this
Agreement shall not have been waived or satisfied by April 15, 2004 (the
"Outside Closing Date") as defined in Article I; provided that, in the case of a
termination due to the failure of a condition in Section 7.2, the Company shall
not be in breach in any material respect of its obligations under this
Agreement.

         8.3      Termination by Parent. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Closing Date, by action of
the board of directors of Parent, if all conditions to Closing set forth in
Section 7.1 and 7.3 hereof shall not have been waived or satisfied by the
Outside Closing Date; provided that, in the case of a termination due to the
failure of a condition in Section 7.3, Parent shall not be in breach in any
material respect of its obligations under this Agreement.

         8.4      Effect of Termination and Abandonment.

                  (a)      Subject to (b), (c), (d) and (e) of this section, if
this Agreement is terminated pursuant to this Article VIII, all obligations of
the parties hereto shall terminate.

                  (b)      If all of the conditions of Sections 7.1 and 7.3 have
been waived by Parent or satisfied, and Parent fails or refuses to consummate
the transactions contemplated by this Agreement, then the Company may elect as
Company's sole remedy to receive a break-up fee from Parent in the amount of
$1,000,000. The receipt of the break-up fee shall be the Company's sole remedy.

                  (c)      If all of the conditions of Section 7.1 and 7.2 have
been waived by the Company or satisfied, and the Company fails or refuses to
consummate the transactions contemplated by this Agreement, then Parent may
elect, as Parent's sole remedy, to receive a break-up fee from the Company in
the amount of $1,000,000. The receipt of the break-up fee shall be the Parent's
sole remedy.

                  (d)      (i) If the parties mutually agree to terminate this
Agreement pursuant to Section 8.1 or if (ii) Parent is not in breach in any
material respect of its obligations under this Agreement and (x) Parent elects
to terminate this Agreement pursuant to Section 8.3, or (y) the Company elects
to terminate this Agreement pursuant to Section 8.2, then each party shall be
responsible for its own costs and expenses (including attorneys' fees)
associated with this Agreement, and no party shall have any further obligations
with respect to this Agreement.

                  (e)      If this Agreement is terminated as permitted in
Section 8.2 or 8.3 and such termination results from the willful (i) failure to
perform a material covenant of this Agreement or (ii) breach by either party
hereto of any material representation or warranty contained in this Agreement,
then such party shall be fully liable for any and all damage, loss, liability
and expense (including, without limitation, reasonable attorneys' fees and
expenses) incurred or suffered by the other party as a result of such failure or
breach.

         8.5      Extension; Waiver. At any time prior to the Closing Date, any
party hereto, by action taken by its board of directors, may (a) extend the time
for the performance of any of the obligations or other acts of the other party
hereto, (b) waive any inaccuracies in the representations and warranties made to
such party contained herein or in any document delivered pursuant hereto, and

                                       40

<PAGE>

(c) waive compliance with any of the agreements or conditions for the benefit of
such party contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.

                                   ARTICLE IX
                          SURVIVAL AND INDEMNIFICATION

         9.1      Survival Periods. All representations and warranties of the
parties contained in this Agreement shall survive the Closing until the date
twelve (12) months after the Closing Date. Notwithstanding the immediately
preceding sentence, the representations and warranties in Section 3.3 of this
Agreement shall survive the Closing indefinitely, the representations and
warranties contained in Section 3.11 shall survive the Closing until the date
eighteen (18) months after the Closing Date, and the representations and
warranties contained in Section 3.15 shall survive the Closing for thirty (30)
days after the applicable statute of limitations period or any waiver thereof
(each such period being a "Survival Period"). Except as provided above, the
parties intend to shorten the statute of limitations and agree that no claims or
causes of action may be brought against the Designated Stockholders or the
Parent based upon, directly or indirectly, any of the representations,
warranties or agreements contained in Articles III and IV of this Agreement
after the Survival Period or any termination of this Agreement. This Section 9.1
shall not limit any covenant or agreement of the parties which contemplates
performance after the Closing, including, without limitation, the covenants and
agreements set forth in Article VI (except Section 6.10 thereof) of this
Agreement.

         9.2      Designated Stockholders' Agreement to Indemnify.

                  (a)      Subject to the terms and conditions set forth in this
Agreement, from and after the Closing, the Designated Stockholders shall
Severally, as that term is defined below, but not jointly, indemnify and hold
harmless the GW Parties and their directors, partners, officers, employees,
affiliates, controlling persons, agents and representatives and their successors
and assigns (collectively, the "Parent Indemnitees") from and against all
liability, demands, claims, actions or causes of action, assessments, losses,
damages, costs and expenses (including, without limitation, reasonable
attorneys' fees and expenses) (collectively, the "Parent Damages") asserted
against or incurred by any the Parent Indemnitee (i) as a result of or arising
out of a breach of any representation or warranty contained in Article III of
this Agreement when made or at and as of the Closing Date (or at and as of such
different date or period specified for such representation or warranty) as
though such representation and warranty were made at and as of the Closing Date
(or such different date or period) or (ii) as a result of or arising out of a
breach of Section 6.9 of this Agreement. As used in this Article IX, the term
"Severally" means that a Designated Stockholder would pay that percentage of the
total amount to be indemnified equaling the Designated Stockholder's percentage
interest of the total Merger Consideration, as described in Final Schedule
2.5(c).

                  (b)      The Designated Stockholders' obligation to indemnify
the Parent Indemnitees under Section 9.2(a) of this Agreement is subject to the
following limitations:

                           (i)      No indemnification shall be made by the
Designated Stockholders unless the aggregate amount of the Parent Damages
exceeds $300,000 and, in such event,

                                       41

<PAGE>

indemnification shall be made by Designated Stockholders only to the extent the
Parent Damages exceed $300,000 (the "Basket").

                           (ii)     In no event shall the Designated
Stockholders' aggregate obligation to indemnify the Parent Indemnitees exceed
$15,000,000;

                           (iii)    The amount of any Parent Damages shall be
reduced by (A) any insurance proceeds (net of retroactive premiums related to
such Parent Damages) received by the Parent Indemnitee with respect to such
Parent Damages under any insurance coverage or for any other party alleged to be
responsible for such Parent Damages and (B) the amount of any net tax benefit
available to the Parent Indemnitee relating to such the Parent Damages. The
Parent Indemnitees shall use commercially reasonable efforts to collect any
amounts available under such insurance coverage and from such other party
alleged to have responsibility, and the costs incurred by the Parent in such
efforts shall be considered in determining the amount of Parent Damages. If the
Parent Indemnitee receives an amount under insurance coverage or from such other
party with respect to the Parent Damages at any time subsequent to any
indemnification provided by the Designated Stockholders under this Section 9.2,
then such Parent Indemnitee shall promptly reimburse the Designated
Stockholders, as the case may be, for any payment made or expense incurred by
the Designated Stockholders in connection with providing such indemnification up
to the net amount received by the Parent Indemnitee; and

                           (iv)     The Designated Stockholders shall be
obligated to Severally indemnify the Parent Indemnitees of those claims giving
rise to the Parent Damages as to which the Parent Indemnitees have given the
Designated Stockholders written notice of prior to the end of the Survival
Period. Any written notice delivered by a Parent Indemnitee to the Designated
Stockholders with respect to the Parent Damages shall set forth with as much
specificity as is reasonably practicable the basis of the claim for the Parent
Damages and, to the extent reasonably practicable, a reasonable estimate of the
amount of such claim.

         9.3      Parent's Agreement to Indemnify.

                  (a)      Subject to the terms and conditions set forth in this
Agreement, from and after the Closing, the Parent shall indemnify and hold
harmless the Designated Stockholders and their affiliates and their directors,
partners, officers, employees, affiliates, including the other Sellers,
controlling persons, agents and representatives and their successors and assigns
(collectively, the "Designated Stockholders Indemnitees") from and against all
liability, demands, claims, actions or causes of action, assessments, losses,
damages, costs and expenses (including, without limitation, reasonable
attorneys' fees and expenses) (collectively, the "Designated Stockholders'
Damages") asserted against or incurred by any Designated Stockholders'
Indemnitee (i) as a result of or arising out of a breach of any representation
or warranty contained in Article IV of this Agreement when made or at and as of
the Closing Date (or at and as of such different date or period specified for
such representation or warranty) as though such representation and warranty were
made at and as of the Closing Date (or such different date or period) or (ii) as
a result of or arising out of a breach of Section 6.2 of this Agreement.

                  (b)      The Parent's obligation to indemnify the Designated
Stockholders Indemnitees under Section 8.3(a) of this Agreement is subject to
the following limitations:

                                       42

<PAGE>

                           (i)      No indemnification shall be made by the
Parent unless the aggregate amount of the Designated Stockholders' Damages
exceeds $300,000 and, in such event, indemnification shall be made by the Parent
only to the extent that the aggregate amount of the Designated Stockholders'
Damages exceeds $300,000;

                           (ii)     In no event shall the Parent's aggregate
obligation to indemnify the Designated Stockholders Indemnitees exceed
$15,000,000;

                           (iii)    The amount of any Designated Stockholder's
Damages shall be reduced by (A) any amount received by a Designated
Stockholder's Indemnitee with respect to such Designated Stockholder's Damages
under any insurance coverage or from any other party alleged to be responsible
for such Designated Stockholder's Damages and (B) the amount of any net tax
benefit available to the Designated Stockholder's Indemnitee relating to such
Designated Stockholder's Damages. The Designated Stockholders Indemnitees shall
use commercially reasonable efforts to collect any amounts available under such
insurance coverage and from such other party alleged to have responsibility, and
the costs incurred by the Parent in such efforts shall be considered Parent
Damages. If a Designated Stockholder's Indemnitee receives any amount under
insurance coverage or from such other party with respect to Designated
Stockholders' Damages at any time subsequent to any indemnification provided by
the Parent under this Section 9.3, then such Designated Stockholder's Indemnitee
shall promptly reimburse the Parent, as the case may be, for any payment made or
expense incurred by the Parent in connection with providing such indemnification
up to the net amount received by the Designated Stockholder's Indemnitee; and

                           (iv)     The Parent shall be obligated to indemnify
the Designated Stockholders Indemnitees only for those claims giving rise to
Designated Stockholders' Damages as to which the Designated Stockholders
Indemnitees have given the Parent written notice of prior to the end of the
Survival Period. Any written notice delivered by a Designated Stockholder's
Indemnitee to the Parent with respect to the Designated Stockholders' Damages
shall set forth with as much specificity as is reasonably practicable the basis
of the claim for the Designated Stockholders' Damages and, to the extent
reasonably practicable, a reasonable estimate of the amount of such claim.

         9.4      Third-Party Indemnification. The obligations of the Designated
Stockholders to indemnify the Parent Indemnitees under Section 9.2 of this
Agreement with respect to the Parent Damages and the obligations of the Parent
to indemnify the Designated Stockholders Indemnitees under Section 9.3 of this
Agreement with respect to the Designated Stockholders' Damages, in either case
resulting from the assertion of liability by third parties (each, as the case
may be, a "Claim"), will be subject to the following terms and conditions:

                  (a)      Any party against whom any Claim is asserted will
give the indemnifying party written notice of any such Claim promptly after
learning of such Claim, and the indemnifying party may, at its option, undertake
the defense of such Claim by representatives of its own choosing. Failure to
give prompt notice of a Claim under this Agreement shall not affect the
indemnifying party obligations under this Article IX, except to the extent the
indemnifying party is materially prejudiced by such failure to give prompt
notice. If the indemnifying party, within thirty (30) days after notice of any
such Claim, or such shorter period as is reasonably required, fails to assume
the defense of such Claim, the Parent Indemnitee or the Designated Stockholder's
Indemnitee, as the

                                       43

<PAGE>

case may be, against whom such Claim has been made will (upon further notice to
the indemnifying party) have the right to undertake the defense, compromise or
settlement of such Claim on behalf of and for the account and risk, and at the
expense, of the indemnifying party, subject to the right of the indemnifying
party to assume the defense of such Claim at any time prior to settlement,
compromise or final determination of such Claim.

                  (b)      Anything in this Section 9.4 to the contrary
notwithstanding, the indemnifying party shall not enter into any settlement or
compromise of any action, suit or proceeding or consent to the entry of any
judgment (i) which does not include as an unconditional term of the delivery by
the claimant or plaintiff to the Designated Stockholder's Indemnitee or the
Parent Indemnitee, as the case may be, of a written release from all liability
in respect of such action, suit or proceeding or (ii) for other than monetary
damages to be borne by the indemnifying party, without the prior written consent
of the Designated Stockholder's Indemnitee or the Parent Indemnitee, as the case
may be, which consent shall not be unreasonably withheld.

                  (c)      The Indemnifying Party and the Indemnified Party
shall cooperate fully in all aspects of any investigation, defense, pretrial
activities, trial, compromise, settlement or discharge of any claim in respect
of which indemnity is sought under this Article IX, including, but not limited
to, by providing the other party with reasonable access to employees and
officers (including as witnesses) and other information.

         9.5      No Setoff. Neither the Parent nor the Designated Stockholders
shall have any right to setoff any of the Parent Damages or the Designated
Stockholders' Damages, respectively, against any payments to be made by either
of them under this Agreement.

         9.6      Insurance. The Indemnifying Party shall be subrogated to the
rights of the Indemnified Party in respect of any insurance relating to Damages
to the extent of any indemnification payments made under this Agreement.

         9.7      No Duplication. Any liability for indemnification under this
Agreement shall be determined without duplication of recovery by reason of the
same facts giving rise to such liability constituting a breach of more than one
representation, warranty, covenant or agreement.

         9.8      Sole Remedy.

                  (a)      The parties agree that following the Closing, the
sole and exclusive remedy of any party to this Agreement or their respective
affiliates with respect to this Agreement or any other claims relating to the
business of Company, the events giving rise to this Agreement and the
transactions provided for in this Agreement or contemplated by this Agreement or
by any other such claims relating to the business of Company, events giving rise
to this Agreement and the transactions provided for in this Agreement shall be
limited to the indemnification provisions set forth in this Article IX and, in
furtherance of the foregoing, each of the parties, on behalf of itself and its
affiliates, waives and releases the other parties to this Agreement (and such
other parties' affiliates) from, to the fullest extent permitted under any
applicable law, any and all rights, claims and causes of action it or its
affiliates may have against the other party to this Agreement except as provided
by this Agreement.

                                       44

<PAGE>

                  (b)      The parties intend that, even though indemnification
and other obligations appear in various sections and articles of this Agreement,
the indemnification procedures and limitations contained in this Article IX
shall apply to all indemnity and other obligations of the parties under this
Agreement, except to the extent expressly excluded in this Article IX.

         9.9      No Special Damages. IN NO EVENT SHALL ANY PARTY BE LIABLE
UNDER THIS ARTICLE IX OR OTHERWISE IN RESPECT OF THIS AGREEMENT FOR EXEMPLARY,
SPECIAL, PUNITIVE, INDIRECT, REMOTE, SPECULATIVE OR CONSEQUENTIAL DAMAGES.

                                    ARTICLE X
                               GENERAL PROVISIONS

         10.1     Notices. Any notice required to be given hereunder shall be
sufficient if in writing, and sent by facsimile transmission or by same day or
overnight courier service (with proof of service), hand delivery or certified or
registered mail (return receipt requested and first-class postage prepaid),
addressed as follows:

         If to Parent:                           If to the Company:

         Grey Wolf, Inc.                         New Patriot Drilling Corp.
         10370 Richmond Ave.                     2136 N. Oil Drive
         Suite 600                               Casper, Wyoming  82604
         Houston, Texas 77042-4136               Attention:  Kyle W. Swingle
                                                 Facsimile:  (307) 266-9864
         Attention: Mr. Thomas P. Richards
         Facsimile: (713) 435-6171

         With copies to (which copies shall not  With copies to (which copies
         constitute notice):                     shall not constitute notice):

         Gardere Wynne Sewell LLP                Patton Boggs LLP
         1000 Louisiana, Suite 3400              1660 Lincoln Street, Suite 1900
         Houston, Texas 77002-5007               Denver, CO  80264
                                                 Attention: Alan L. Talesnick
         Attention:  Mr. Frank Putman            Facsimile: (303) 894-9239
         Facsimile:  (713) 276-6777

                                                 Lime Rock Partners II, L.P.
                                                 518 Riverside Ave.
                                                 Westport, CT  06880
                                                 Attention: Mark A. McCall
                                                 Facsimile: (203) 293-2760

or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
telecommunicated, personally delivered, or delivered by courier or on the third
day after the mailing thereof.

                                       45

<PAGE>

         10.2     Assignment, Binding Effect. Neither this Agreement nor any of
the rights, interests, or obligations, hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties. Subject to the preceding sentence, this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns. Nothing in this Agreement,
expressed or implied, is intended to confer on any person other than the parties
hereto and certain stockholders of the Company and other named beneficiaries of
covenants or agreements in the Agreement, or their respective heirs, successors,
executors, administrators, and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement.

         10.3     Entire Agreement. This Agreement, the Company Disclosure
Schedule, the confidentiality agreements between the parties hereto and any
schedules or agreements delivered in connection with this Agreement constitute
the entire agreement among the parties with respect to the subject matter hereof
and supersede all prior agreements and understandings among the parties with
respect thereto. No information previously provided, addition to or modification
of any provision of this Agreement shall be binding upon any party hereto unless
made in writing and signed by all parties hereto.

         10.4     Amendment. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.

         10.5     Governing Law. This Agreement shall be governed by and
construed in accordance with the law of the State of Delaware, without regard to
its rules of conflict of laws.

         10.6     Counterparts. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute one
and the same instrument. Each counterpart may consist of a number of copies
hereof each signed by less than all, but together signed by all of the parties
hereto. Executed counterparts transmitted by facsimile shall be effective as
originals; provided originals of the executed counterparts are promptly
delivered to the other party.

         10.7     Headings. Headings of the Articles and Sections of this
Agreement are for the convenience of the parties only, and shall be given no
substantive or interpretive effect whatsoever.

         10.8     Interpretation. In this Agreement, unless the context
otherwise requires, words describing the singular number shall include the
plural and vice versa, and words denoting any gender shall include all genders
and words denoting natural persons shall include corporations and partnerships
and vice versa.

         10.9     Waivers. Except as provided in this Agreement, no action taken
pursuant to this Agreement, including, without limitation, any investigation by
or on behalf of any party, shall be deemed to constitute a waiver by the party
taking such action of compliance with any representations, warranties, covenants
or agreements contained in this Agreement. The waiver by any party hereto of a
breach of any provision hereunder shall not operate or be construed as a waiver
of any prior or subsequent breach of the same or any other provision hereunder.

                                       46

<PAGE>

         10.10    Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction unless the same is
material to the terms of this Agreement, in the judgment of either party to this
Agreement, in which case the parties shall negotiate in good faith to revise the
same so as to be valid or enforceable. If any provision of this Agreement is so
broad as to be unenforceable, the provision shall be interpreted to be only so
broad as is enforceable.

         10.11    Dispute Resolution.

                  (a)      Negotiation; Mediation.

                           (i)      In the event of any dispute or disagreement
between the Company and/or any of the Designated Stockholders on the one hand
and the Parent on the other hand as to the interpretation of any provision of
this Agreement (or the performance of obligations under this Agreement), the
matter, on written request of either party), shall be referred to
representatives of the parties for decision, each party being represented by a
senior executive officer who has no direct operational responsibility for the
matters contemplated by this Agreement (the "Representatives"). The
Representatives shall promptly meet in a good faith effort to resolve the
dispute. If the Representatives do not agree upon a decision within thirty (30)
calendar days after reference of the matter to them, each of parties shall be
free to exercise the remedies available to it under Section 10.11.

                           (ii)     The Representatives may, if they desire,
agree to undertake mediation and may, if they choose, do so in accordance with
the commercial mediation rules of the American Arbitration Association ("AAA"),
either as written or as modified by mutual agreement. A written agreement to
undertake mediation may be made at any time. If arbitration proceedings have
been instituted, they shall be stayed until the mediation process is terminated.

                  (b)      Arbitration.

                           (i)      Any controversy, dispute or claim arising
out of or relating in any way to this Agreement or the other agreements
contemplated by this Agreement or the transactions arising hereunder or
thereunder that cannot be resolved by negotiation or mediation pursuant to
Section 10.11 (including the validity, interpretation or applicability of this
Section 10.11) shall be settled exclusively by final and binding arbitration in
Houston, Texas. Such arbitration will apply the laws of the State of Delaware
and the commercial arbitration rules of AAA to resolve the dispute, and will be
administered by the AAA.

                           (ii)     Written notice of arbitration must be given
within one year after the notifying party has Knowledge of accrual of the claim
on which the notice is based. If the claiming party fails to give notice of
arbitration within that time, the claim shall be deemed to be waived and shall
be barred from either arbitration or litigation.

                                       47

<PAGE>

                           (iii)    Such arbitration shall be conducted by one
independent and impartial arbitrator to be selected by mutual agreement of the
parties, if possible. If the parties fail to reach agreement regarding
appointment of an arbitrator within thirty (30) days following receipt by one
party of the other party's notice of arbitration, the arbitrator shall be
selected from a list or lists of proposed arbitrators submitted by AAA. Unless
the parties agree otherwise, the arbitrator shall be a licensed attorney with at
least ten (10) years of experience in the practice of law. The selection process
shall be that which is set forth in the AAA commercial arbitration rules then
prevailing, except that (A) the number of preemptory strikes shall not be
limited and (B), if the parties fail to select an arbitrator from one or more
lists, AAA shall not initially have the power to make an appointment but shall
continue to submit additional lists until an arbitrator has been selected, but
if no such arbitrator is selected within sixty (60) days after the receipt of
the first notice of arbitration, the AAA shall have the power to make an
appointment and shall promptly do so. Initially, however, promptly following its
receipt of a request to submit a list of proposed arbitrators, AAA shall convene
the parties in person or by telephone and attempt to facilitate their selection
of an arbitrator by agreement. If the arbitrator should die, withdraw or
otherwise become incapable of serving, a replacement shall be selected and
appointed in a like manner.

                           (iv)     The arbitrator shall render an opinion
setting forth findings of fact and conclusions of law with the reasons therefor
stated. A transcript of the evidence adduced at the hearing shall be made and
shall, upon request, be made available to either party. The fees and expenses of
the arbitrator shall be shared equally by the parties and advanced by them from
time to time as required; provided that at the conclusion of the arbitration,
the arbitrator may award costs and expenses (including the costs of the
arbitration previously advanced and the fees and expenses of attorneys,
accountants and other experts). No pre-arbitration discovery shall be permitted,
except that the arbitrator shall have the power in his or her sole discretion,
on application by either party, to order pre-arbitration examination of the
witnesses and documents that the other party intends to introduce in its
case-in-chief at the arbitration hearing. The arbitrator shall render his or her
award within ninety (90) days of the conclusion of the arbitration hearing. The
arbitrator shall not be empowered to award to either party any punitive damages
in connection with any dispute between them arising out of or relating in any
way to this Agreement or the other agreements contemplated hereby or the
transactions arising hereunder or thereunder, and each party hereby irrevocably
waives any right to recover such damages. The arbitration hearings and award
shall be maintained in confidence.

                           (v)      Notwithstanding anything to the contrary
provided in this Section 10.11(b) and without prejudice to the above procedures,
either party may apply to any court of competent jurisdiction for temporary
injunctive or other provisional judicial relief or to specifically enforce the
terms of this Agreement if such action is necessary to avoid irreparable damage
or to preserve the status quo until such time as the arbitrator is selected and
available to hear such party's request for temporary relief. The award rendered
by the arbitrator shall be final and not subject to judicial review and judgment
thereon may be entered in any court of competent jurisdiction.

                            [SIGNATURE PAGE FOLLOWS]

                                       48

<PAGE>

         IN WITNESS WHEREOF, the parties have executed this Agreement and caused
the same to be duly delivered on their behalf on the date first written above.

                                "PARENT"

                                GREY WOLF, INC.

                                By: ___________________________________________
                                     Name: David W. Wehlmann
                                     Title: Executive Vice President and CFO

                                "SUB"

                                GREY WOLF DRILLING COMPANY L.P.

                                By: ___________________________________________
                                     Name: David W. Wehlmann
                                     Title: Executive Vice President and CFO

                                "GREY WOLF HOLDINGS"

                                GREY WOLF HOLDINGS COMPANY

                                By: ___________________________________________
                                     Name: David W. Wehlmann
                                     Title: Executive Vice President and CFO

                                "THE COMPANY"

                                NEW PATRIOT DRILLING CORP.

                                By: ___________________________________________
                                     Name: Kyle W. Swingle
                                     Title: President

<PAGE>

                                "DESIGNATED STOCKHOLDERS"

                                LIME ROCK PARTNERS II, L.P.

                                By: Lime Rock Partners GP II, L.P, its General
                                    Partner

                                      By: LRP GP II, Inc., its General Partner

                                              By: _____________________________
                                                  John T. Reynolds, Director

                                DWAYNE L. HOWRISH REVOCABLE TRUST
                                DATED APRIL 4, 1994

                                By: ___________________________________________
                                     Name: Dwayne L. Howrish
                                     Title: Trustee

                                _______________________________________________
                                Kyle W. Swingle, individually

                                _______________________________________________
                                Robert Sanderson, individually

                                _______________________________________________
                                Dwayne L. Horwish, individually<PAGE>

                                                                   Exhibit 4.8.1

                        COUNTRYWIDE FINANCIAL CORPORATION
                                     Issuer

                          COUNTRYWIDE HOME LOANS, INC.
                                    Guarantor

                                       TO

                              THE BANK OF NEW YORK

                                     Trustee

                                    INDENTURE

                          Dated as of April [__], 2004

                                 Debt Securities

<PAGE>

                        COUNTRYWIDE FINANCIAL CORPORATION

           RECONCILIATION AND TIE BETWEEN TRUST INDENTURE ACT OF 1939
                   AND INDENTURE, DATED AS OF APRIL [__], 2004

<TABLE>
<CAPTION>
ACT SECTION                                                                             INDENTURE SECTION
<C>                                                                                     <C>
310(a)(1).............................................................................           708
     (a)(2)...........................................................................           708
310(a)(3).............................................................................          N.A.
     (a)(4)...........................................................................          N.A.
310(b)................................................................................           709
310(c)................................................................................          N.A.
311(a) and (b)........................................................................           705
311(c)................................................................................          N.A.
312(a)................................................................................   801, 802(a)
312(b) and (c)........................................................................           802
313(a)................................................................................           803
313(b)................................................................................           803
313(c)................................................................................           803
313(d)................................................................................           803
314(a)................................................................................           804
314(b)................................................................................          N.A.
314(c)(1) and (2).....................................................................           102
314(c)(3).............................................................................          N.A.
314(d)................................................................................          N.A.
314(e)................................................................................           102
314(f)................................................................................          N.A.
315(a), (c) and (d)...................................................................           701
315(b)................................................................................           604
315(e)................................................................................           614
316(a)(1).............................................................................           612
316(a)(2).............................................................................       Omitted
316(a) last sentence..................................................................           101
316(b)................................................................................           612
317(a)................................................................................           602
317(b)................................................................................          1103
318(a)................................................................................           107
</TABLE>

-------------------------
THIS RECONCILIATION AND TIE SHALL NOT, FOR ANY PURPOSE, BE DEEMED TO BE PART OF
THE INDENTURE.

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                         PAGE
<S>                                                                                      <C>
                                   ARTICLE ONE
             DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

SECTION 101.     Definitions...........................................................    2
SECTION 102.     Compliance Certificates and Opinions..................................    9
SECTION 103.     Form of Documents Delivered to Trustee................................    9
SECTION 104.     Acts of Holders.......................................................   10
SECTION 105.     Notices, etc., to Trustee, Company and Guarantor......................   11
SECTION 106.     Notice to Holders; Waiver.............................................   11
SECTION 107.     Conflict with Trust Indenture Act.....................................   12
SECTION 108.     Effect of Headings and Table of Contents..............................   12
SECTION 109.     Successors and Assigns................................................   12
SECTION 110.     Separability Clause...................................................   12
SECTION 111.     Benefits of Indenture.................................................   12
SECTION 112.     Governing Law.........................................................   12
SECTION 113.     Legal Holidays........................................................   12
SECTION 114.     Moneys of Different Currencies to be Segregated.......................   13
SECTION 115.     Payment to Be in Proper Currency......................................   13

                                   ARTICLE TWO
                     FORMS OF DEBT SECURITIES AND GUARANTEES

SECTION 201.     Forms Generally.......................................................   14
SECTION 202.     Forms of Debt Securities and Guarantees...............................   14
SECTION 203.     Form of Trustee's Certificate of Authentication.......................   14
SECTION 204.     CUSIP Numbers.........................................................   15

                                  ARTICLE THREE
                               THE DEBT SECURITIES

SECTION 301.     Amount Unlimited; Issuable in Series..................................   16
SECTION 302.     Denominations.........................................................   18
SECTION 303.     Execution, Authentication, Delivery and Dating........................   18
SECTION 304.     Temporary Debt Securities.............................................   20
SECTION 305.     Registration, Registration of Transfer and Exchange...................   21
SECTION 306.     Mutilated, Destroyed, Lost and Stolen Debt Securities.................   23
SECTION 307.     Payment of Interest; Interest Rights Preserved........................   23
SECTION 308.     Persons Deemed Owners.................................................   26
SECTION 309.     Cancellation..........................................................   26
SECTION 310.     Computation of Interest...............................................   26
SECTION 311.     Payment in Currencies.................................................   27

                                  ARTICLE FOUR
                          GUARANTEES OF DEBT SECURITIES

SECTION 401.     Unconditional Guarantee...............................................   31
SECTION 402.     Execution, Authentication and Delivery................................   31
</TABLE>

                                       -i-

<PAGE>

                                TABLE OF CONTENTS
                                   (CONTINUED)

<TABLE>
<CAPTION>
                                                                                         PAGE
<S>                                                                                      <C>

                                  ARTICLE FIVE
                           SATISFACTION AND DISCHARGE

SECTION 501.     Satisfaction and Discharge of Indenture...............................   33
SECTION 502.     Application of Trust Money............................................   34

                                   ARTICLE SIX
                                    REMEDIES

SECTION 601.     Events of Default.....................................................   35
SECTION 602.     Acceleration of Maturity; Rescission and Annulment....................   36
SECTION 603.     Collection of Indebtedness and Suits for Enforcement by Trustee.......   37
SECTION 604.     Trustee May File Proofs of Claim......................................   38
SECTION 605.     Trustee May Enforce Claims without Possession of Debt Securities......   38
SECTION 606.     Application of Money Collected........................................   39
SECTION 607.     Limitation on Suits...................................................   39
SECTION 608.     Unconditional Right of Holders to Receive Principal, Premium
                 (if any) and Interest.................................................   40
SECTION 609.     Restoration of Rights and Remedies....................................   40
SECTION 610.     Rights and Remedies Cumulative........................................   40
SECTION 611.     Delay or Omission Not Waiver..........................................   40
SECTION 612.     Control by Holders....................................................   41
SECTION 613.     Waiver of Past Defaults...............................................   41
SECTION 614.     Undertaking for Costs.................................................   41
SECTION 615.     Waiver of Stay or Extension Laws......................................   42

                                  ARTICLE SEVEN
                                   THE TRUSTEE

SECTION 701.     Certain Duties and Responsibilities...................................   43
SECTION 702.     Notice of Defaults....................................................   44
SECTION 703.     Certain Rights of Trustee.............................................   44
SECTION 704.     Not Responsible for Recitals or Issuance of Debt Securities...........   45
SECTION 705.     May Hold Debt Securities..............................................   46
SECTION 706.     Money Held in Trust...................................................   46
SECTION 707.     Compensation and Reimbursement........................................   46
SECTION 708.     Corporate Trustee Required; Eligibility...............................   47
SECTION 709.     Resignation and Removal; Appointment of Successor.....................   47
SECTION 710.     Acceptance of Appointment by Successor................................   49
SECTION 711.     Merger, Conversion, Consolidation or Succession to Business...........   50

                                  ARTICLE EIGHT
          HOLDERS' LISTS AND REPORTS BY TRUSTEE, COMPANY AND GUARANTOR

SECTION 801.     Company and Guarantor to Furnish Trustee Names and Addresses
                 of Holders............................................................   51
SECTION 802.     Preservation of Information; Communications to Holders................   51
SECTION 803.     Reports by Trustee....................................................   51
</TABLE>

                                      -ii-

<PAGE>

                                TABLE OF CONTENTS
                                   (CONTINUED)

<TABLE>
<CAPTION>
                                                                                         PAGE
<S>                                                                                      <C>
SECTION 804.     Reports by Company and Guarantor......................................   52

                                  ARTICLE NINE
                  CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER

SECTION 901.     Company May Consolidate, etc., Only on Certain Terms..................   53
SECTION 902.     Successor Corporation Substituted.....................................   53
SECTION 903.     Guarantor May Consolidate, etc., Only on Certain Terms................   53
SECTION 904.     Successor Corporation Substituted.....................................   54
SECTION 905.     Assumption by Guarantor...............................................   54

                                   ARTICLE TEN
                             SUPPLEMENTAL INDENTURES

SECTION 1001.    Supplemental Indentures without Consent of Holders....................   55
SECTION 1002.    Supplemental Indentures with Consent of Holders.......................   56
SECTION 1003.    Execution of Supplemental Indentures..................................   57
SECTION 1004.    Effect of Supplemental Indentures.....................................   57
SECTION 1005.    Notice to Holders.....................................................   57
SECTION 1006.    Conformity with Trust Indenture Act...................................   58
SECTION 1007.    Reference in Debt Securities to Supplemental Indentures...............   58

                                 ARTICLE ELEVEN
                                    COVENANTS

SECTION 1101.    Payment of Principal, Premium and Interest............................   59
SECTION 1102.    Maintenance of Office or Agency.......................................   59
SECTION 1103.    Money for Debt Securities Payments to Be Held in Trust................   59
SECTION 1104.    Investment Company Act................................................   61
SECTION 1105.    Officers' Certificate as to Default...................................   61

                                 ARTICLE TWELVE
                          REDEMPTION OF DEBT SECURITIES

SECTION 1201.    Applicability of Article..............................................   62
SECTION 1202.    Election to Redeem, Notice to Trustee.................................   62
SECTION 1203.    Selection by Trustee of Debt Securities to Be Redeemed................   62
SECTION 1204.    Notice of Redemption..................................................   62
SECTION 1205.    Deposit of Redemption Price...........................................   63
SECTION 1206.    Debt Securities Payable on Redemption Date............................   63
SECTION 1207.    Debt Securities Redeemed in Part......................................   64

                                ARTICLE THIRTEEN
                                  SINKING FUNDS

SECTION 1301.    Applicability of Article..............................................   65
SECTION 1302.    Satisfaction of Sinking Fund Payments with Debt Securities............   65
SECTION 1303.    Redemption of Debt Securities for Sinking Fund........................   65
</TABLE>

                                     -iii-

<PAGE>

                                TABLE OF CONTENTS
                                   (CONTINUED)

<TABLE>
<CAPTION>
                                                                                         PAGE
<S>                                                                                      <C>
                                ARTICLE FOURTEEN
                                   DEFEASANCE

SECTION 1401.    Applicability of Article..............................................   67
SECTION 1402.    Defeasance Upon Deposit of Moneys or U.S. Government Obligations......   67
SECTION 1403.    Deposited Moneys and U.S. Government Obligations To Be Held
                 in Trust..............................................................   69
SECTION 1404.    Repayment to Company..................................................   69

                                 ARTICLE FIFTEEN
                       REPAYMENT AT THE OPTION OF HOLDERS

SECTION 1501.    Applicability of Article..............................................   70
SECTION 1502.    Repayment of Debt Securities..........................................   70
SECTION 1503.    Exercise of Option....................................................   70
SECTION 1504.    When Debt Securities Surrendered for Repayment Become Due and
                 Payable...............................................................   71
SECTION 1505.    Debt Securities Repaid in Part........................................   71
</TABLE>

                                      -iv-

<PAGE>

         INDENTURE dated as of April [__], 2004, among COUNTRYWIDE FINANCIAL
CORPORATION, a Delaware corporation (hereinafter called the "Company"),
COUNTRYWIDE HOME LOANS, INC., a New York corporation (hereinafter called the
"Guarantor"), each having its principal office at 4500 Park Granada, Calabasas,
CA 91302 and THE BANK OF NEW YORK, a New York corporation (hereinafter called
the "Trustee"), having its Corporate Trust Office at 101 Barclay Street, New
York, New York 10286.

                             RECITALS OF THE COMPANY

         The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its debentures,
notes, bonds or other evidences of indebtedness (herein called the "Debt
Securities"), to be issued in one or more series as in this Indenture provided.

         All things necessary have been done to make this Indenture a valid
agreement of the Company, in accordance with its terms.

                            RECITALS OF THE GUARANTOR

         The Guarantor has duly authorized the execution and delivery of this
Indenture to provide for the issuance of the Guarantees provided herein and the
endorsement of such Guarantees on the Debt Securities. All things necessary to
make this Indenture a valid agreement of the Guarantor, in accordance with its
terms, have been done.

         This Indenture is subject to the provisions of the Trust Indenture Act
of 1939, as amended, and the rules and regulations of the Securities and
Exchange Commission promulgated thereunder that are required to be part of this
Indenture and, to the extent applicable, shall be governed by such provisions.

                   NOW, THEREFORE, THIS INDENTURE WITNESSETH:

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

<PAGE>

                                  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 generally
         accepted accounting principles, and, except as otherwise herein
         expressly provided, the term "generally accepted accounting principles"
         with respect to any computation required or permitted hereunder shall
         mean such principles as are generally accepted at the date of such
         computation; and

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

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

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

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

                  "Board of Directors" means either the board of directors of
the Company or the Guarantor, as the case may be, or the executive or any other
committee of that board duly authorized to act in respect hereof.

                  "Board Resolution" means a copy of a resolution certified by
the Secretary or an Assistant Secretary of the Company or the Guarantor, as the
case may be, 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", when with respect to any Place of Payment,
unless otherwise specified in a Board Resolution, and an Officers' Certificate,
or in a supplemental indenture,

                                       2
<PAGE>

means each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on
which banking institutions in an applicable Place of Payment or the city in
which the Trustee's Corporate Trust Office is located or in New York, New York
or Los Angeles, California are authorized or obligated by law, executive order
or regulation to remain closed.

                  For purposes of Section 311(b)(4) of the Trust Indenture Act,
the term "cash transaction" means any transaction in which full payment for
goods or securities sold is made within seven days after delivery of the goods
or securities in currency or in checks or other orders drawn upon the banks or
bankers and payable upon demand.

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

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

                  "Company Request", "Company Order", "Guarantor Request" and
"Guarantor Order" mean, respectively, a written request or order signed in the
name of the Company or the Guarantor, as the case may be, by the Chairman of the
Board, the President or a Vice President, and by the Treasurer, an Assistant
Treasurer, the Controller, an Assistant Controller, the Secretary or an
Assistant Secretary of the Company or the Guarantor, as the case may be, and
delivered to the Trustee.

                  "Components", with respect to a composite currency, means the
currency amounts that are components of such composite currency on the
Conversion Date with respect to such composite currency. If the official unit of
any component currency is altered by way of combination or subdivision, the
amount of such currency in the Component shall be proportionately divided or
multiplied. If two or more component currencies are consolidated into a single
currency, the amounts of those currencies as Components shall be replaced by an
amount in such single currency equal to the sum of the amounts of such
consolidated component currencies expressed in such single currency, and such
amount shall thereafter be a Component. If after such Conversion Date any
component currency shall be divided into two or more currencies, the amount of
such currency as a Component shall be replaced by amounts of such two or more
currencies, each of which shall be equal to the amount of such former component
currency divided by the number of currencies into which such component currency
was divided, and such amounts shall thereafter be Components.

                  "Conversion Date", with respect to a composite currency, has
the meaning specified in Section 311.

                  "Corporate Trust Office" means the corporate trust office of
the Trustee at which at any particular time its corporate trust business shall
be principally administered, which office at the date of execution of this
instrument is located at 101 Barclay Street, New York, New York 10286.

                                       3
<PAGE>

                  The term "corporation" includes corporations, associations,
companies and business trusts.

                  "Current Stated Principal Maturity" has the meaning specified
in Section 312.

                  "Debt Securities" has the meaning stated in the first recital
of this Indenture and more particularly means any Debt Securities authenticated
and delivered under this Indenture.

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

                  "Discharged" has the meaning specified in Section 1402.

                  "Dollar" or "$" means the coin or currency of the United
States of America as at the time of payment is legal tender for the payment of
public and private debts.

                  "Event of Default" has the meaning specified in Section 601.

                  "Exchange Rate" means, unless otherwise specified in
accordance with Section 301, (a) with respect to Dollars in which payment is to
be made on a series of Debt Securities denominated in a composite currency, the
exchange rate between Dollars and such composite currency reported by the agency
or organization, if any, designated pursuant to Section 301(11) on the
applicable Regular or Special Record Date with respect to an Interest Payment
Date or the fifteenth day immediately preceding the Maturity of an installment
of principal, or on such other date provided herein, as the case may be; (b)
with respect to Dollars in which payment is to be made on a series of Debt
Securities denominated in a Foreign Currency, the noon Dollar buying rate for
that currency for cable transfers quoted by the Exchange Rate Agent in The City
of New York on the Regular or Special Record Date with respect to an Interest
Payment Date or the fifteenth day immediately preceding the Maturity of an
installment of principal, or on such other date provided herein, as the case
maybe, as certified for customs purposes by the Federal Reserve Bank of New York
and (c) with respect to Foreign Currency in which payment is to be made on a
series of Debt Securities converted into Dollars pursuant to Section 311(d), the
noon Dollar selling rate for that currency for cable transfers quoted by the
Exchange Rate Agent in The City of New York on the second Business Day preceding
an Interest Payment Date or the second Business Day preceding the Maturity of an
installment of principal, or on such other date provided herein, as the case may
be, as certified for customs purposes by the Federal Reserve Bank of New York.
If for any reason such rates are not available with respect to one or more
currencies for which an Exchange Rate is required, the Company shall use such
quotation of the Federal Reserve Bank of New York as of the most recent
available date, or quotations from one or more commercial banks in The City of
New York or in the country of issue of the currency in question, or such other
quotations as the Company, in each case, shall deem appropriate. If there is
more than one market for dealing in any currency by reason of foreign exchange
regulations or otherwise, the market to be used in respect of such currency
shall be the largest market upon which a nonresident issuer of securities
designated in such currency would purchase such currency in order to make
payments in respect of such securities.

                  "Exchange Rate Agent" means the New York clearing house bank
designated pursuant to Section 301, or any successor thereto.

                                       4
<PAGE>

                  "Exchange Rate Officer's Certificate", with respect to any
date for the payment of principal of (and premium, if any) and interest on any
series of Debt Securities, means a certificate setting forth the applicable
Exchange Rate as of the Regular or Special Record Date with respect to an
Interest Payment Date or the fifteenth day immediately preceding the maturity of
an installment of principal, as the case may be, and the amounts payable in
Dollars in respect of the principal of (and premium, if any) and interest on
Debt Securities denominated in any Foreign Currency, and signed by the Chairman
of the Board, the President, any Vice President, any Assistant Vice President,
the Treasurer, any Assistant Treasurer, the Controller or any Assistant
Controller of the Company and delivered to the Trustee.

                  "Extension Notice" has the meaning specified in Section 312.

                  "Extension Period" has the meaning specified in Section 312.

                  "Final Maturity" has the meaning specified in Section 312.

                  "Foreign Currency" means any currency, currency unit or
composite currency issued by the government of one or more countries other than
the United States of America or by any recognized confederation or association
of such governments.

                  "Guarantee" means an unconditional guarantee of the payment of
the Debt Securities by the Guarantor, as more fully described in Article Four.

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

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

                  "Indenture" means this instrument as originally executed or as
it may from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof
and, unless the context otherwise requires, shall include the terms of a
particular series of Debt Securities established as contemplated by Section 301.

                  The term "interest", when used with respect to an Original
Issue Discount Security which by its terms bears interest only after Maturity,
means interest payable after Maturity.

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

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

                                       5
<PAGE>

                  "Officers' Certificate" means a certificate signed by the
Chairman of the Board, the President, any Managing Director, any Vice President,
the Treasurer, an Assistant Treasurer, the Controller, an Assistant Controller,
the Secretary or an Assistant Secretary of the Company or the Guarantor, as the
case may be, that complies with the requirements of Section 314(e) of the Trust
Indenture Act and is delivered to the Trustee.

                  "Opinion of Counsel" means a written opinion of counsel, who
may be an employee of, or counsel to, the Company or the Guarantor, as the case
may be, and who shall be reasonably satisfactory to the Trustee, which is
delivered to the Trustee.

                  "Optional Reset Date" has the meaning specified in Section
307(b).

                  "Original Issue Discount Security" means, except as otherwise
defined in a Debt Security, any Debt Security which is issued with original
issue discount within the meaning of Section 1273(a) of the Internal Revenue
Code of 1986, as amended, and the regulations thereunder.

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

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

                           (ii)     Debt Securities for whose payment,
         redemption or repayment money in the necessary amount has been
         theretofore deposited with the Trustee or any Paying Agent (other than
         the Company or the Guarantor) in trust or set aside and segregated in
         trust by the Company (if the Company shall act as its own, or authorize
         the Guarantor to act as, Paying Agent) for the Holders of such Debt
         Securities; provided, however, that if such Debt Securities are to be
         redeemed, notice of such redemption has been duly given pursuant to
         this Indenture and such Debt Securities or provision therefor
         satisfactory to the Trustee has been made; and

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

provided, however, that in determining whether the Holders of the requisite
principal amount of Debt Securities Outstanding have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Debt Securities
owned by the Company, the Guarantor or any other obligor upon the Debt
Securities or any Affiliate of the Company, the Guarantor 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 such request,
demand, authorization, direction, notice, consent or waiver, only Debt
Securities which the Trustee knows to be so

                                       6
<PAGE>

owned shall be so disregarded. Debt 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
Debt Securities and that the pledgee is not the Company, the Guarantor or any
other obligor upon the Debt Securities or any Affiliate of the Company, the
Guarantor or of such other obligor. The Trustee shall not be deemed to know that
any Debt Securities are so owned unless it has received written notice of such
fact at its Corporate Trust Office or unless one of its Responsible Officers has
actual knowledge thereof.

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

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

                  "Place of Payment", when used with respect to the Debt
Securities of any series, unless otherwise specified in a Board Resolution, and
an Officers' Certificate, or in a supplemental indenture, means the office or
agency of the Company in the Borough of Manhattan, The City and State of New
York, and such other place or places, if any, where the principal of (and
premium, if any) and interest on the Debt Securities of that series are payable
as specified as contemplated by Section 301.

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

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

                  "Regular Record Date" for the interest payable on any Interest
Payment Date on the Debt Securities of any series means the date specified for
that purpose as contemplated by Section 301.

                  "Repayment Date" means, when used with respect to any Debt
Security to be repaid at the option of the Holder, the date fixed for such
repayment by or pursuant to this Indenture.

                  "Repayment Price" means, when used with respect to any Debt
Security to be repaid at the option of the Holder, the price at which it is to
be repaid by or pursuant to this Indenture.

                  "Required Currency" means the currency in which the Debt
Securities of any series are payable, in accordance with their terms or pursuant
to an election made by one or more

                                       7
<PAGE>

Holders pursuant to Section 301 hereof. If, however, the Required Currency is
unavailable for the reasons stated in Section 311(d)(i) or (ii), the Required
Currency shall mean U.S. Dollars.

                  "Reset Notice" has the meaning specified in Section 307(b).

                   "Responsible Officer", when used with respect to the Trustee,
means any officer of the Trustee assigned to its corporate trust department or
similar group and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of his
knowledge of and familiarity with the particular subject.

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

                  For purposes of Section 311(b)(6) of the Trust Indenture Act,
the term "self-liquidating paper" means any draft, bill of exchanges, acceptance
or obligation which is made, drawn, negotiated or incurred by the Company or the
Guarantor or any other obligor upon the Debt Securities for the purpose of
financing the purchase, processing, manufacture, shipment, storage or sale of
goods, wares or merchandise and which is secured by documents evidencing title
to, possession of or a lien upon, the goods, wares or merchandise or the
receivables or proceeds arising from the sale of the goods, wares or merchandise
previously constituting the security, provided the security is received by the
Trustee simultaneously with the creation of the creditor relationship with such
Person arising from the making, drawing, negotiation or incurring of the draft,
bill of exchange, acceptance or obligation.

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

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

                  "Stated Principal Maturity" means the Stated Maturity for the
payment of principal, or any installment of principal, of any Debt Security.

                  "Subsidiary" means any corporation at least a majority of the
outstanding Voting Stock of which shall at the time directly or indirectly be
owned or controlled by the Company, or by one or more Subsidiaries, or by the
Guarantor or one or more Subsidiaries.

                  "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 each Person who is then a Trustee hereunder, and
if at any time there is more than one such Person, "Trustee" as used with
respect to the Debt Securities of any series shall mean the Trustee with respect
to Debt Securities of that series.

                  "Trust Indenture Act" means the Trust Indenture Act of 1939
and any reference herein to such Act or a particular provision thereof shall
mean such Act or provision, as the case

                                       8
<PAGE>

may be, as amended or replaced from time to time or as supplemented from time to
time by rules or regulations adopted by the Commission under or in furtherance
of the purposes of such Act or provision, as the case may be.

                  "U.S. Government Obligations" has the meaning specified in
Section 1402.

                  "Voting Stock", as applied to the stock of any corporation,
means stock of any class or classes, however designated, having ordinary voting
power for the election of a majority of the directors of such corporation, other
than stock having such power only by reason of the happening of a contingency.

                  SECTION  102. Compliance Certificates and Opinions.

                  Upon any application or request by the Company or the
Guarantor to the Trustee to take any action under any provision of this
Indenture, the Company or the Guarantor, as the case may be, shall furnish to
the Trustee an Officers' Certificate stating that all conditions precedent, if
any, provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied wish, except
that in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Indenture
relating to such particular application or request, no additional certificate or
opinion need be furnished.

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

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

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

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

                                       9
<PAGE>

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

                  SECTION  104. Acts of Holders.

                  (a)      Any request, demand, authorization, direction,
notice, consent, waiver or other action provided by this Indenture to be given
or taken by Holders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Holders in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company and
the Guarantor. Such instrument or instruments (and the action embodied therein
and evidenced thereby) are herein sometimes referred to as the "Act" of the
Holders signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Indenture and (subject to Section 315 of the Trust Indenture
Act) conclusive in favor of the Trustee, the Company and the Guarantor, if made
in the manner provided in this Section.

                  (b)      The fact and date of the execution by any Person of
any such instrument or writing may be proved in any manner which the Trustee
deems sufficient.

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

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

                  (e)      For purposes of determining the aggregate principal
amount of Outstanding Debt Securities of any series the Holders of which are
required, requested or permitted to give any request, demand, authorization,
direction, notice, consent, waiver or take

                                       10
<PAGE>

any other Act under this Indenture, each Debt Security denominated in a Foreign
Currency shall be deemed to have a principal amount determined by an Exchange
Rate Agent (as evidenced by a certificate of such Exchange Rate Agent) by
converting the principal amount of such Debt Security in the Foreign Currency in
which such Debt Security is denominated into Dollars at the Exchange Rate as of
9:00 A.M., New York time, on the date such Act is delivered to the Trustee and,
where it is hereby expressly required, to the Company (or, if there is no such
rate on such date for the reasons specified in Section 311(d)(i) of the
Indenture, such rate on the rate specified in such Section).

                 SECTION  105. Notices, etc., to Trustee, Company and Guarantor.

                 Except as provided in Sections 601(4) and (5), any request,
demand, authorization, direction, notice, consent, waiver or other 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 or the
         Guarantor 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, or

                 (2)      the Company or the Guarantor 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 or the Guarantor, as the case may
         be, addressed to it at the address of its principal office specified in
         the first paragraph of this instrument or at any other address
         previously furnished in writing to the Trustee by the Company or the
         Guarantor, as the case may be, Attention: Chairman of the Board of
         Directors, 4500 Park Granada, Calabasas, California 91302.

                 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 data and not earlier than the earliest date,
prescribed for the giving of such notice. In any case where notice to Holders is
given by mail, neither the failure to mail such notice, nor any defect in any
notice so mailed, to any particular Holder shall affect the sufficiency of such
notice with respect to other Holders. Where this Indenture provides for notice
in any matter, 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 the event of suspension of regular mail service or for any
other reason it shall be impracticable to give such notice by mail, then such a
notification as shall be made with the approval of the Trustee shall constitute
a sufficient notification for every purpose hereunder.

                                       11
<PAGE>

                  SECTION 107. Conflict with Trust Indenture Act.

                  If any provision hereof limits, qualifies or conflicts with
any duties under any required provision of the Trust Indenture Act imposed
hereon by Section 318(c) thereof, such required provision shall control.

                  SECTION 108. Effect of Headings and Table of Contents.

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

                  SECTION 109. Successors and Assigns.

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

                  SECTION 110. Separability Clause.

                  In case any provision in this Indenture or in the Debt
Securities or the Guarantees 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 Debt Securities or the
Guarantees, express or implied, shall give to any Person, other than the parties
hereto and their successors hereunder, any Paying Agent and the Holders, any
benefit or any legal or equitable right remedy or claim under this Indenture.

                  SECTION 112. Governing Law.

                  This Indenture, the Debt Securities and the Guarantees shall
be governed by and construed in accordance with the laws of the State of New
York applicable no agreements made and to be performed in said state.

                  SECTION 113. Legal Holidays.

                  Unless otherwise specifically provided for in the applicable
Debt Securities, in any case where any Interest Payment Date, Redemption Date,
Repayment Date, sinking fund payment date, Stated Maturity, Stated Principal
Maturity or Maturity of any Debt Security shall not be a Business Day at any
Place of Payment, then the required payment of principal, premium, if any,
and/or interest need not be made at such Place of Payment on such date, but may
be made on the next succeeding Business Day at such Place of Payment with the
same force and effect as if made on the Interest Payment Date, Redemption Date,
Repayment Date, sinking fund payment date, Stated Maturity, Stated Principal
Maturity or Maturity, and no interest shall accrue on such payment for the
period from and after such Interest Payment Date, Repayment Date, Redemption
Date, sinking fund payment date, Stated Maturity, Stated Principal Maturity or
Maturity, as the case may be, to the next succeeding Business Day.

                                       12
<PAGE>

                  SECTION 114. Moneys of Different Currencies to be Segregated.

                  The Trustee shall segregate all moneys, funds and accounts
held by the Trustee hereunder in one currency from any moneys, funds or accounts
in any other currencies, notwithstanding any provision herein which would
otherwise permit the Trustee to commingle such amounts.

                  SECTION 115. Payment to Be in Proper Currency.

                  Each reference in any Debt Security, or in the Board
Resolution relating thereto, to any currency shall be of the essence. The
obligation of the Company or the Guarantor, as the case may be, to make any
payment of principal of (and premium, if any) and interest on any Debt Security
shall not be discharged or satisfied by any tender by the Company or the
Guarantor, as the case may be, or recovery by the Trustee, in any currency other
than the Required Currency, except to the extent than such tender or recovery
shall result in the Trustee timely holding the full amount of the Required
Currency then due and payable. If any such tender or recovery is in a currency
other than the Required Currency, the Trustee may take such actions as it
considers appropriate to exchange such currency for the Required Currency. The
costs and risks of any such exchange, including without limitation the risks of
delay and exchange rate fluctuation, shall be borne by the Company or the
Guarantor, as the case may be, and the Company or the Guarantor, as the case may
be, shall remain fully liable for any shortfall or delinquency in the full
amount of Required Currency then due and payable, and in no circumstances shall
the Trustee be liable therefor. The Company and the Guarantor each hereby waives
any defense of payment based upon any such tender or recovery which is not in
the Required Currency, or which, when exchanged for the Required Currency by the
Trustee, is less than the full amount of Required Currency then due and payable.

                  Any costs incurred by or on behalf of the Company or the
Guarantor, as the case may be (other than costs incurred by the Trustee that are
passed on to the Company as provided above) in correction with the conversion of
any Foreign Currency to Dollars pursuant to an election made by a Holder in
accordance with Section 301 shall be borne by the Holder making such an election
through deduction from payments required to be made to such Holder pursuant to
the terms of this Indenture.

                                       13
<PAGE>

                                  ARTICLE TWO

                     FORMS OF DEBT SECURITIES AND GUARANTEES

                  SECTION 201. Forms Generally.

                  The Debt Securities and the Guarantees relating thereto shall
have such appropriate insertions, omissions, substitutions and other variations
as are required or permitted by this Indenture, and may have such letters,
numbers or other marks of identification or designation and such legends or
endorsements placed thereon, as the Company or the Guarantor, as the case may
be, may deem appropriate and as are not inconsistent with the provisions of this
Indenture, or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any
securities exchange on which any of the Debt Securities may be listed, or to
conform to usage, all as determined by the officers executing such Debt
Securities, as conclusively evidenced by their execution of such Debt
Securities.

                  The Trustee's certificate of authentication shall be in
substantially the form set forth in Section 203.

                  SECTION 202. Forms of Debt Securities and Guarantees.

                  Each Debt Security and the related Guarantee shall be in one
of the forms approved from time to time by or pursuant to a Board Resolution and
an Officers' Certificate or one or more indentures supplemental hereto which
shall set forth the information required by Section 301. If the form for a
series of Debt Securities or the related Guarantees is established by action
taken pursuant to a Board Resolution, a copy of an appropriate record of such
action shall be certified by the Secretary or an Assistant Secretary of the
Company or the Guarantor, as the case may be, and delivered to the Trustee at or
prior to the delivery of the Officers' Certificate setting forth the form for
such series.

                  SECTION 203. Form of Trustee's Certificate of Authentication.

                  The form of the Trustee's certificate of authentication to be
borne by the Debt Securities shall be substantially as follows:

                                       14
<PAGE>

                     TRUSTEE'S CERTIFICATE OF AUTHENTICATION

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

                                                 THE BANK OF NEW YORK,
                                                        as Trustee

                                                 By:____________________________
                                                        Authorized Signatory

                  SECTION 204. CUSIP Numbers.

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

                                       15
<PAGE>

                                 ARTICLE THREE

                               THE DEBT SECURITIES

                  SECTION 301. Amount Unlimited; Issuable in Series.

                  The aggregate principal amount of Debt Securities which may be
authenticated and delivered under this Indenture is unlimited.

                  The Debt Securities may be issued in one or more series. There
shall be established in or pursuant to a Board Resolution, and set forth in an
Officers' Certificate, or established in one or more indentures supplemental
hereto, with such notification to the Trustee in advance of the issuance of the
Debt Securities of any Series as may be agreed upon by the parties hereto:

                  (1)      the title of the Debt Securities of the series (which
         shall distinguish the Debt Securities of the series from all other Debt
         Securities);

                  (2)      the limit, if any, upon the aggregate principal
         amount of the Debt Securities of the series which may be authenticated
         and delivered under this Indenture (except for Debt Securities
         authenticated and delivered upon registration or, transfer of, or in
         exchange for, or in lieu of, other Debt Securities of the series
         pursuant to Section 304, 305, 306, 1007 or 1207);

                  (3)      the date or dates, or the method or methods, if any,
         by which such date or dates shall be determined or extended, on which
         the principal of the Debt Securities of the series is payable;

                  (4)      the rate or rates, if any, at which the Debt
         Securities of the series shall bear interest, if any, or the method or
         methods, if any, by which such rate or rates are to be determined or
         reset, the date or dates, if any, from which such interest shall
         accrue, or the method or methods, if any, by which such date or dates
         shall be determined or reset, the Interest Payment Dates, if any, on
         which such interest shall be payable and the Regular Record Dates, if
         any, for the interest payable on such Interest Payment Dates, and the
         basis upon which interest shall be calculated if other than that of a
         360-day year of twelve 30-day months;

                  (5)      the place or places, if any, in addition to or other
         than the office or agency of the Company in the Borough of Manhattan,
         The City of New York and State of New York, where the principal of (and
         premium, if any) and interest on Debt Securities of the series shall be
         payable, any Debt Securities may be surrendered for registration of
         transfer or exchange and notices or demands to or upon the Company or
         the Guarantor in respect of such Debt Securities and related Guarantees
         and this Indenture may be served;

                  (6)      the period or periods within which or the date or
         dates on which, if any, the price or prices at which and the terms and
         conditions upon which Debt Securities of the series may be redeemed, in
         whole or in part, at the option of the Company;

                                       16
<PAGE>

                  (7)      the obligation, if any, of the Company to redeem,
         repay or purchase Debt Securities of the series pursuant to any sinking
         fund or analogous provisions or at the option of the Holders thereof,
         and the period or periods within which, the price or prices at which
         and the other terms and conditions upon which Debt Securities of the
         series shall be redeemed, repaid or purchased, in whole or in part,
         pursuant to such obligation;

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

                  (9)      if other than the principal amount thereof, the
         portion of the principal amount of Debt Securities of the series which
         shall be payable upon declaration of acceleration of the Maturity
         thereof pursuant to Section 602;

                  (10)     provisions, if any, for the defeasance of Debt
         Securities of the series;

                  (11)     (A) the currency of denomination of the Debt
         Securities of any series, which may be in Dollars or any Foreign
         Currency, (B) if such Debt Securities are denominated in a Foreign
         Currency which is a composite currency, the agency or organization, if
         any, responsible for overseeing such composite currency and (C) if such
         Debt Securities are denominated in a Foreign Currency other than a
         composite currency, the capital city of the country of such Foreign
         Currency;

                  (12)     the designation of the currency or currencies in
         which payment of the principal of (and premium, if any) and interest on
         the Debt Securities of the series will be made, and, if such currency
         or currencies is a Foreign Currency, whether payment of the principal
         (and premium, if any) or the interest on such Debt Securities, at the
         election of a Holder thereof, may instead be payable in Dollars and the
         terms and conditions upon which such election may be made;

                  (13)     any additional Events of Default or restrictive
         covenants provided for with respect to Debt Securities of the series;

                  (14)     any other terms of the series (which terms shall not
         be inconsistent with the provisions of this Indenture), including any
         terms which may be required or advisable under United States laws or
         regulations or advisable in connection wish the marketing of Debt
         Securities of the series;

                  (15)     if the Debt Securities of such series are to be
         denominated or payable in a Foreign Currency, the designation of the
         initial Exchange Rate Agent and, if other than as set forth herein, the
         definition of the Exchange Rate;

                  (16)     the form of Debt Securities of such series and, if
         issuable in global form, the name of the depository with respect
         thereto and the terms upon which and the circumstances under which such
         Notes may be exchanged; and

                  (17)     the ability, if any, of the Holder of a Debt Security
         to renew all or any portion of a Debt Security.

                                       17
<PAGE>

                  All Debt Securities of any one series shall be substantially
identical except as to the currency of payments due thereunder, denomination,
the rate or rates of interest, if any, and Maturity and except as may otherwise
be provided in or pursuant to such Board Resolution and set forth in such
Officers' Certificate or in any such indenture supplemental hereto. In addition,
all Debt Securities of any one series need not be issued at the same time and,
unless otherwise so provided by the Company, a series may be reopened for
issuance of additional Debt Securities of such series or to establish additional
terms of such series of Debt Securities.

                  If any of the terms of a series of Debt Securities is
established by an action taken pursuant to a Board Resolution, a copy of an
appropriate record of such action shall be certified by the Secretary or an
Assistant Secretary of the Company and delivered to the Trustee at or prior to
the delivery of the Officers' Certificate setting forth the terms of such
series.

                  SECTION 302. Denominations.

                  Unless otherwise specified in a supplemental indenture, the
Debt Securities of each series shall be issuable in registered form without
coupons in such denominations as shall be specified in accordance with the
requirements of Section 301. In the absence of any such provisions with respect
to the Debt Securities of any series, the Debt Securities of such series shall
be issuable in denominations of $1,000 or any integral multiple thereto. Debt
Securities denominated in a Foreign Currency shall be issuable in such
denominations as are established with respect to such Debt Securities in or
pursuant to this Indenture.

                  SECTION 303. Execution, Authentication, Delivery and Dating.

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

                  Debt 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 Debt
Securities or did not hold such offices at the date of such Debt Securities.

                  (b)      At any time and from time to time after the execution
and delivery of this Indenture, the Company may deliver Debt Securities of any
series executed by the Company, with the related Guarantees endorsed thereon by
the Guarantor, to the Trustee for authentication, together with a Company Order
for the authentication and delivery of each such series of such Debt Securities,
and the Trustee in accordance with the Company Order shall authenticate and
deliver such Debt Securities. The Trustee shall be entitled to receive, prior to
the authentication and delivery of such Debt Securities, the supplemental
indenture or the Board Resolution by or pursuant to which the form and terms of
such Debt Securities have been approved (and, if such form or terms are
approved, pursuant to a Board Resolution, an Officers' Certificate approving
such terms and form), an Officers' Certificate as to the absence of any event
which is, or after

                                       18
<PAGE>

notice or lapse of time or both would become, an Event of Default, and an
Opinion of Counsel stating that:

                  (1)      all instruments furnished by the Company to the
         Trustee in connection with the authentication and delivery of such Debt
         Securities conform to the requirements of this Indenture and constitute
         sufficient authority hereunder for the Trustee to authenticate and
         deliver such Debt Securities;

                  (2)      the form and terms of such Debt Securities have been
         established in conformity with the provisions of this Indenture;

                  (3)      in the event that the form or terms of such Debt
         Securities have been established in a supplemental indenture the
         execution and delivery of such supplemental indenture have been duly
         authorized by all necessary corporate action of the Company, such
         supplemental indenture has been duly executed and delivered by the
         Company and, assuming due authorization, execution and delivery by the
         Trustee, will constitute a legal, valid and binding obligation
         enforceable against the Company in accordance with its terms, subject
         to applicable bankruptcy, insolvency and similar laws affecting
         creditors' rights generally and subject, as to enforceability, to
         general principles of equity (regardless of whether enforcement is
         sought in a proceeding in equity or at law);

                  (4)      the execution and delivery of such Debt Securities
         have been duly authorized by all necessary corporate action of the
         Company and such Debt Securities have been duly executed by the
         Company, and, assuming due authentication by the Trustee and delivery
         by the Company, will constitute the legal, valid and binding
         obligations of the Company enforceable against the Company in
         accordance with their terms, entitled to the benefit of the Indenture,
         subject to applicable bankruptcy, insolvency and similar laws affecting
         creditors' rights generally and subject, as to enforceability, to
         general principles of equity (regardless of whether enforcement is
         sought in a proceeding in equity or at law);

                  (5)      that all laws and requirements hereunder in respect
         of the execution and delivery by the Company of such Debt Securities
         have been complied with; and

                  (6)      such other matters as the Trustee may reasonably
         request.

                  (c)      If all the Debt Securities of any series are not to
be issued at one time, it shall not be necessary to deliver an Opinion of
Counsel and Officers' Certificates at the time of issuance of each Debt
Security, but such opinion and certificate, with appropriate modifications,
shall be delivered at or before the time of issuance of the first Debt Security
of such series. Any request by the Company that the Trustee authenticate Debt
Securities of such series will be deemed to be a certification by the Company
that (i) all conditions precedent provided for in this Indenture relating to the
authentication and delivery of such Debt Securities have been complied with and
(ii) there has not occurred an event which is, or after notice or lapse of time
or both, would become an Event of Default.

                  Notwithstanding the above, if the terms of Debt Securities are
to be established pursuant to a supplemental indenture, the Company shall
deliver to the Trustee, together with

                                       19
<PAGE>

such supplemental indenture, the Opinion of Counsel referred to in subsection
(b), above, and the Officers' Certificate, referred to in subsection (b), above,
regarding the absence of an Event of Default.

                  (d)      The Trustee shall not be required to authenticate
such Debt Securities if the issuance of such Debt Securities pursuant to this
Indenture will affect the Trustee's own rights, duties or immunities under the
Debt Securities and this Indenture or otherwise in a manner which is not
reasonably acceptable to the Trustee or if the Trustee determines that such
authentication may not lawfully be made or if the Trustee reasonably determines
that such authentication would be prejudicial to the Holders of Outstanding Debt
Securities.

                  (e)      Each Debt Security shall be dated the date of its
authentication.

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

                  SECTION 304. Temporary Debt Securities.

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

                  Except in the case of temporary Debt Securities in global
form, which shall be exchanged in accordance with the provisions thereof, if
temporary Debt Securities of any series are issued, the Company will cause
definitive Debt Securities of such series to be prepared without unreasonable
delay. After the preparation of definitive Debt Securities of such series, the
temporary Debt Securities of such series shall be exchangeable for definitive
Debt Securities of such series upon surrender of the temporary Debt Securities
of such series at the office or agency of the Company or the Guarantor in a
Place of Payment for such series, without charge to the Holder. Upon surrender
for cancellation of any one or more temporary Debt Securities of any series, the
Company shall execute and the Trustee shall authenticate and deliver in exchange
therefor a like principal amount of definitive Debt Securities (having the
Guarantees duly endorsed thereon) of the same series of authorized denominations
and of the same Stated Maturity. Unless otherwise specified as contemplated by
Section 301 with respect to temporary Debt Securities in global form until so
exchanged, the temporary Debt Securities of any series shall in all respects be
entitled to the same benefits under this Indenture as definitive Debt Securities
of such series.

                                       20
<PAGE>

               SECTION 305. Registration, Registration of Transfer and Exchange.

               The Company shall cause to be kept at one of its offices or
agencies maintained pursuant to Section 1102 a register (the register maintained
in such office 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 Debt Securities and of transfers of Debt
Securities. Said office or agency is hereby appointed "Security Registrar" for
the purpose of registering Debt Securities and transfers of Debt Securities as
herein provided.

               Upon surrender for registration of transfer of any Debt
Security of any series 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 Debt Securities (having the Guarantees duly endorsed thereon) of the same
series of any authorized denomination or denominations, of like tenor and
aggregate principal amount.

               Unless otherwise specified as contemplated by Section 301 with
respect to Debt Securities in global form at the option of the Holder, Debt
Securities of any series may be exchanged for other Debt Securities of the same
series containing identical terms and provisions of any authorized denomination
or denominations, of like aggregate principal amount, upon surrender of the Debt
Securities to be exchanged at such office or agency. Whenever any Debt
Securities are so surrendered for exchange, the Company shall execute, and the
Trustee shall authenticate and deliver, the Debt Securities (having the
Guarantees duly endorsed thereon) which the Holder making the exchange is
entitled to receive.

               Notwithstanding the foregoing, unless otherwise specified as
contemplated in Section 301, any global Debt Security shall be exchangeable for
definitive Debt Securities only if (i) the depository is at any time unwilling,
unable or ineligible to continue as Depository and a successor depository is not
appointed by the Company within 60 days of the date the Company is so informed
in writing, (ii) the Company executes and delivers to the Trustee a Company
Order to the effect that such global Debt Security shall be so exchangeable, or
(iii) an Event of Default has occurred and is continuing with respect to the
Debt Securities. If the beneficial owners of interests in a global Debt Security
are entitled to exchange such interests for definitive Debt Securities, then
without unnecessary delay but in any event not later than the earliest date on
which such interests may be so exchanged, the Company shall deliver to the
Trustee definitive Debt Securities in such form and denominations as are
required by or pursuant to this Indenture, and of the same series, containing
identical terms and in aggregate principal amount equal to the principal amount
of, such global Debt Security, executed by the Company. On or after the earliest
date on which such interests may be so exchanged, such global Debt Security
shall be surrendered from time to time by the depository specified in the
Company Order with respect thereto, and in accordance with instructions given to
the Trustee and such depository, as the case may be (which instructions shall be
in writing but need be contained in or accompanied by an Officers' Certificate
or be accompanied by an Opinion of Counsel), as shall be specified in the
Company Order with respect thereto to the Trustee, as the Company's agent for
such purpose, to be exchanged, in whole or in part, for definitive Debt
Securities as described above without charge. The Trustee shall authenticate and
make available for delivery, in exchange for each

                                       21
<PAGE>

portion of such surrendered global Debt Security, a like aggregate principal
amount of definitive Debt Securities of the same series of authorized
denominations and of like tenor as the portion of such global Debt Security to
be exchanged; provided, however, that no such exchanges may occur during a
period beginning at the opening of business 15 days before any selection of Debt
Securities of the same series and continuing identical terms to be redeemed and
ending on the relevant Redemption Date. Promptly following any such exchange in
part, such global Debt Security shall be returned by the Trustee to such
Depository. If a Debt Security is issued in exchange for any portion of a global
Debt Security after the close of business at the office or agency of the Company
for such Debt Security where such exchange occurs on or after (i) any Regular
Record Date for such Debt Security and before the opening of business at such
office or agency on the next Interest Payment Date, or (ii) any Special Record
Date for such Debt Security and before the opening of business at such office or
agency on the related proposed date for payment of interest or Defaulted
Interest, as the case may be, interest shall not be payable on such Interest
Payment Date or proposed date for payment, as the case may be, in respect of
such Debt Security, but shall be payable on such Interest Payment Date or
proposed date for payment, as the case may be, only to the Person to whom
interest in respect of such portion of such global Debt Security shall be
payable in accordance with the provisions of this Indenture.

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

                  Every Debt Security presented or surrendered for registration
of transfer or for exchange shall (if so required by the Company, the Security
Registrar or the Trustee) be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Company, the Security
Registrar and the Trustee 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 Debt 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 transfer, registration of transfer or exchange of
Debt Securities, other than exchanges pursuant to Section 304, 1007 or 1207 not
involving any transfer.

                  Except as otherwise provided in or pursuant to this Indenture
the Company shall not be required (i) to issue, register the transfer of or
exchange Debt Securities of any particular series during a period beginning at
the opening of business 15 days before the day of the mailing of a notice of
redemption of Debt Securities of such series selected for redemption under
Section 1203 and ending at the close of business on the day of such mailing,
(ii) to register the transfer of or exchange any Debt Security called for
redemption in whole or in part, except the unredeemed portion of any Debt
Security being redeemed in part, or (iii) to issue, register the transfer of or
exchange any Debt Security which has been surrendered for repayment at the
option of the Holder thereof, except the portion, if any, of such Debt Security
not to be so repaid.

                                       22
<PAGE>

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

                  If (i) any mutilated Debt Security is surrendered to the
Trustee, or (ii) the Company and the Trustee receive evidence to their
satisfaction of the destruction, loss or theft of any Debt Security, and there
is delivered to the Company, the Guarantor and the Trustee such security or
indemnity as may be required by them to save each of them harmless, then, in the
absence of notice to the Company or the Trustee that such Debt Security has been
acquired by a bona fide purchaser, the Company shall execute and upon its
written request the Trustee shall authenticate and deliver, in exchange for any
such mutilated Debt Security or in lieu of any such destroyed, lost or stolen
Debt Security, a new Debt Security (having a Guarantee duly endorsed thereon)
containing identical provisions and of like principal amount bearing a number
not contemporaneously outstanding.

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

                  Upon the issuance of any new Debt 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 Debt Security of any series issued pursuant to this
Section in lieu of any destroyed, lost or stolen Debt Security shall constitute
an original additional contractual obligation of the Company, whether or not the
destroyed, lost or stolen Debt 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 Debt Securities of that series and
related Guarantees 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 Debt
Securities.

                  SECTION 307. Payment of Interest; Interest Rights Preserved.

                  (a)      Unless otherwise specified as contemplated by Section
301, interest on any Debt 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 Debt Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, except that in the case of a Debt Security issued between a Regular
Record Date and the initial Interest Payment Date relating to such Regular
Record Date, interest for the period beginning on the date of issue and ending
on such initial Interest Payment Date shall be paid to the person to whom such
Debt Security shall have been originally issued. Unless otherwise specified as
contemplated by Section 301, at the option of the Company, payment of interest
on any Debt Security may be made by check mailed to the address of the Person
entitled thereto as such address shall appear in the Security Register.

                                       23
<PAGE>

                  Unless otherwise specified as contemplated by Section 301, any
interest on any Debt Security of any series which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the
registered Holder on the relevant Regular Record Date by virtue of his having
been such Holder, and such Defaulted Interest may be paid by the Company or the
Guarantor, at its election in each case, as provided in Clause (1) or (2) below:

                  (1)      The Company or the Guarantor may elect to make
         payment of any Defaulted Interest to the Persons in whose names the
         Debt Securities of such series (or their respective Predecessor
         Securities) are registered at the close of business on a Special Record
         Date for the payment of such Defaulted Interest, which shall be fixed
         in the following manner. The Company or the Guarantor shall notify the
         Trustee in writing of the amount of Defaulted Interest proposed to be
         paid on each Debt Security of such series and the date of the proposed
         payment, and at the same time the Company or the Guarantor, as the case
         may be, 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 or the
         Guarantor, as the case may be, of such Special Record Date and, in the
         name and at the expense of the Company or the Guarantor, as the case
         may be, shall cause notice of the proposed payment of such Defaulted
         Interest and the Special Record Date therefor to be mailed, first-class
         postage prepaid, to each Holder of Debt Securities of such series at
         his address as it appears in the Security Register, not less than 10
         days prior to such Special Record Date. Notice of the proposed payment
         of such Defaulted Interest and the Special Record Date therefor having
         been mailed as aforesaid, such Defaulted Interest shall be paid to the
         Persons in whose names the Debt Securities of such series (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 or the Guarantor may make payment of any
         Defaulted Interest on the Debt Securities of any series in any other
         lawful manner not inconsistent with the requirements of any securities
         exchange on which the Debt 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.

                  (b)      The provisions of this Section 307(b) may be made
applicable to any series of Debt Securities issued pursuant to Section 301 (with
such modifications, additions or substitutions as may be specified pursuant to
such Section 301). The interest rate (or the spread and/or spread multiplier
used to calculate such interest rate, if applicable) on any Debt Security of
such series may be reset by the Company at its option on the date or dates
specified in such Debt Security (each, an "Optional Reset Date"). The Company
may exercise such option with

                                       24
<PAGE>

respect to any such Debt Security by notifying the Trustee of such exercise at
least 45 but not more than 60 calendar days prior to an Optional Reset Date for
such Debt Security. If the Company so notifies the Trustee of such exercise, not
later than 40 calendar days prior to such Optional Reset Date the Trustee shall
transmit, in the manner provided for in Section 106, to the Holder of such Debt
Security a notice (the "Reset Notice") indicating (i) that the Company has
elected to reset the interest rate (or the spread and/or spread multiplier used
to calculate such interest rate, if applicable), (ii) such new interest rate (or
such new spread and/or spread multiplier, if applicable) and (iii) the
provisions, if any, for redemption by the Company during the period from such
Optional Reset Date to the next Optional Reset Date or, if there is no such next
Optional Reset Date, to the Stated Principal Maturity of such Debt Security
(each such period, a "Subsequent Interest Period"), including the date or dates
on which, or the period or periods during which, and the price or prices at
which such redemption may occur during such Subsequent Interest Period.

                  Notwithstanding the foregoing, not later than 20 calendar days
prior to the applicable Optional Reset Date for a Debt Security, the Company
may, at its option, revoke the interest rate (or the spread and/or spread
multiplier used to calculate such interest rate, if applicable) provided for in
the Reset Notice and establish an interest rate (or a spread and/or spread
multiplier used to calculate such interest rate, if applicable) that is higher
than the interest rate (or the spread and/or spread multiplier, if applicable)
provided for in the Reset Notice, for the Subsequent Interest Period by causing
the Trustee to transmit, in the manner provided for in Section 106, notice of
such higher interest rate (or such higher spread and/or spread multiplier, if
applicable) to the Holder of such Debt Security. Such notice shall be
irrevocable. All Debt Securities with respect to which the interest rate (or the
spread and/or spread multiplier used to calculate such interest rate, if
applicable) is reset on an Optional Reset Date, and with respect to which the
Holders of such Debt Securities have not surrendered such Debt Securities for
repayment (or have validly revoked any such surrender) pursuant to the next
succeeding paragraph, will bear such higher interest rate (or such higher spread
and/or spread multiplier, if applicable).

                  If the provisions of Section 307(b) are made applicable to any
Debt Security and the Company notifies the Trustee of the exercise of its option
to reset the interest rate (or the spread and/or spread multiplier used to
calculate such interest rate, if applicable) on such Debt Security on an
Optional Reset Date, the Holder of such Debt Security will have the option to
elect repayment by the Company of such Debt Security on such Optional Reset Date
at a price equal to the principal amount thereof plus any accrued interest to
such Optional Reset Date. In order to obtain repayment of such Debt Security on
such Optional Reset Date, the Holder must follow the procedures set forth in
Section 1503 for repayment at the option of Holders, except that (i) the period
for delivery of such Debt Security or notification to the Trustee shall be at
least 25 but not more than 35 calendar days prior to such Optional Reset Date
and (ii) if the Holder has surrendered such Debt Security for repayment
following receipt of the Reset Notice, the Holder may revoke such surrender for
repayment by written notice to the Trustee received prior to 5:00 P.M., New York
City time, on the tenth calendar day prior to such Optional Reset Date.

                  Subject to the foregoing provisions of this Section and
Section 305, each Debt Security delivered under this Indenture upon registration
of transfer of or in exchange for or in

                                       25
<PAGE>

lieu of any other Debt Security shall carry the rights to interest accrued and
unpaid, and to accrue, which were carried by such other Debt Security.

                  SECTION 308. Persons Deemed Owners.

                  Prior to due presentment of a Debt Security for registration
of transfer, the Company, the Guarantor, the Trustee and any agent of the
Company, the Guarantor or the Trustee may treat the Person in whose name such
Debt Security is registered as the owner of such Debt Security for the purpose
of receiving payment of principal of (and premium, if any) and (subject to
Sections 305 and 307) interest on such Debt Security and for all other purposes
whatsoever, whether or not such Debt Security be overdue, and neither the
Company, the Guarantor, the Trustee nor any agent of the Company, the Guarantor
or the Trustee shall be affected by notice to the contrary.

                  No holder of any beneficial interest in any global Debt
Security held on its behalf by a depository shall have any rights under this
Indenture with respect to such global Debt Security, and such depository may be
treated by the Company, the Guarantor, the Trustee, and any agent of the
Company, the Guarantor or the Trustee as the owner of such global Debt Security
for all purposes whatsoever. None of the Company, the Guarantor, the Trustee nor
any agent of the Company, the Guarantor or the Trustee will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests of a global Debt
Security or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.

                  SECTION 309. Cancellation.

                  Unless otherwise provided with respect to a series of Debt
Securities, all Debt Securities surrendered for payment, redemption, repayment,
registration of transfer or exchange or for credit against any sinking fund
payment shall, if surrendered to any Person other than the Trustee, be delivered
to the Trustee and shall be promptly cancelled by it. The Company or the
Guarantor may at any time deliver to the Trustee for cancellation any Debt
Securities previously authenticated and delivered hereunder which the Company or
the Guarantor may have acquired in any manner whatsoever, and all Debt
Securities so delivered shall be promptly cancelled by the Trustee. No Debt
Securities shall be authenticated in lieu of or in exchange for any Debt
Securities cancelled as provided in this Section, except as expressly permitted
by this Indenture. All cancelled Debt Securities held by the Trustee shall be
retained by the Trustee for such period as it may, in its sole discretion,
determine unless by a Company Order or a Guarantor Order the Company or the
Guarantor, as the case may be, shall direct that the cancelled Debt Securities
be returned to it.

                  SECTION 310. Computation of Interest.

                  Except as otherwise specified as contemplated by Section 301
for Debt Securities of any series, interest on the Debt Securities of each
series shall be computed on the basis of a year of twelve 30-day months.

                                       26
<PAGE>

                  SECTION 311. Payment in Currencies.

                  (a)      Payment of the principal of (and premium, if any) and
interest on the Debt Securities of any series shall be made in the currency or
currencies specified pursuant to Section 301; provided that in the case of Debt
Securities of a series denominated in one or more Foreign Currencies the Holder
of a Debt Security of such series may elect to receive such payment in Dollars
if authorized pursuant to Section 301(12).

                  A Holder may make such election by delivering to the Trustee a
written notice thereof, substantially in the form attached hereto as Exhibit A
or in such other form as may be acceptable to the Trustee, not later than the
close of business on the Regular or Special Record Date immediately preceding
the applicable Interest Payment Date or the fifteenth day immediately preceding
the Maturity of an installment of principal, as the case may be. Such election
shall remain in effect with respect to such Holder until such Holder delivers to
the Trustee a written notice rescinding such election, provided that any such
notice must be delivered to the Trustee not later than the close of business on
the Regular or Special Record Date immediately preceding the next Interest
Payment Date or the fifteenth day immediately preceding the Maturity of an
installment of principal, as the case may be, in order to be effective for the
payment to be made thereon; and provided, further, that no such rescission may
be made with respect to payments to be made on any Debt Security with respect to
which notice of redemption has been given by the Company pursuant to Article
Twelve or a notice of option to elect repayment has been sent by a Holder or
transferee pursuant to Article Fifteen.

                  (b)      If at least one Holder has made the election referred
to in subsection (a) above to receive payments in Dollars on a series of Debt
Securities denominated in one or more Foreign Currencies, then the Trustee shall
deliver to the Company, not later than the fourth Business Day after the Regular
or Special Record Date with respect to an Interest Payment Date or the tenth day
immediately preceding the Maturity of an installment of principal, as the case
may be, a written notice specifying the amount of principal of (and premium, if
any) and interest on such series of Debt Securities to be paid in Dollars on
such payment date.

                  (c)      Except as otherwise specified as contemplated by
Section 301 hereof, if at least one Holder has made the election referred to in
subsection (a) above to receive payments in Dollars on a series of Debt
Securities denominated in one or more Foreign Currencies, then the amount
receivable by Holders of a series of Debt Securities who have elected payment in
Dollars shall be determined by the Company on the basis of the applicable
Exchange Rate set forth in the applicable Exchange Rate Officer's Certificate.
The Company shall deliver, not later than the eighth day following each Regular
or Special Record Date or the sixth day immediately preceding the Maturity of an
installment of principal, as the case may be, to the Trustee an Exchange Rate
Officer's Certificate in respect of the payments to be made to such Holders on
such payment date.

                  (d)      (i) If the Foreign Currency in which a series of Debt
Securities is denominated is not available to the Company for making payment
thereof due to the imposition of exchange controls or other circumstances beyond
the control of the Company, then with respect to each date for the payment of
principal of (and premium, if any) and interest on such series of Debt
Securities occurring after the final date on which the Foreign Currency was so

                                       27
<PAGE>

used, all payments with respect to the Debt Securities of any such series shall
be made in Dollars. If payment is to be made in Dollars to the Holders of any
such series of Debt Securities pursuant to the provisions of the preceding
sentence, then the amount to be paid in Dollars on a payment date by the Company
to the Trustee and by the Trustee or any Paying Agent to Holders shall be
determined by an Exchange Rate Agent and shall be equal to the sum obtained by
converting the specified Foreign Currency into Dollars at the applicable
Exchange Rate, or if no rate is quoted for such Foreign Currency, the last date
such rate is quoted.

                  (ii) If any composite currency in which a Debt Security is
denominated or payable ceases to be used for the purposes for which it was
established or is not available due to circumstances beyond the control of the
Company, then with respect to each date for the payment of principal of (and
premium, if any) and interest on a series of Debt Securities denominated in such
composite currency (the "Conversion Date") occurring after the last date on
which the composite currency was so used, all payments with respect to the Debt
Securities of any such series shall be made in Dollars. If payment with respect
to Debt Securities of a series denominated in a composite currency is to be made
in Dollars pursuant to the provisions of the preceding sentence, then the amount
to be paid in Dollars on a payment date by the Company to the Trustee and by the
Trustee or any Paying Agent to Holders shall be determined by an Exchange Rate
Agent and shall be equal to the sum of the amounts obtained by converting each
Component of such composite currency into Dollars at its respective Exchange
Rate, multiplied by the number of units of the composite currency that would
have been so paid had the composite currency not ceased to be so used.

                  (e)      All decisions and determinations of an Exchange Rate
Agent regarding the Exchange Rate or conversion of Foreign Currency (other than
a composite currency) into Dollars pursuant to subsection (d) (i) above or the
conversion of a composite currency into Dollars pursuant to subsection (d) (ii)
shall, in the absence of manifest error, be conclusive for all purposes and
irrevocably binding upon the Company, the Trustee, any Paying Agent and all
Holders of the Debt Securities. If a Foreign Currency (other than a composite
currency) in which payment of a series of Debt Securities may be made, pursuant
to subsection (a) above, is not available to the Company for making payments
thereof due to the imposition of exchange controls or other circumstances beyond
the control of the Company, the Company, after learning thereof, will give
notice thereof to the Trustee immediately (and the Trustee promptly thereafter
will give notice to the Holders in the manner provided in Section 106)
specifying the last date on which the Foreign Currency was used for the payment
of principal of (and premium, if any) or interest on such series of Debt
Securities. In the event any composite currency in which a Debt Security is
denominated or payable ceases to be used for the purposes for which it was
established or is not available due to circumstances beyond the control of the
Company, the Company, after learning thereof, will give notice thereof to the
Trustee immediately (and the Trustee promptly thereafter will give notice to the
Holders in the manner provided in Section 106). In the event of any subsequent
change in any Component, the Company, after learning thereof, will give notice
to the Trustee similarly (and the Trustee promptly thereafter will give notice
to the Holders in the manner provided in Section 106). The Trustee shall be
fully justified and protected in relying and acting upon the information so
received by it from the Company and shall not otherwise have any duty or
obligation to determine such information independently.

                  SECTION 312. Optional Extension of Stated Principal Maturity.

                                       28
<PAGE>

                  The provisions of this Section 312 may be made applicable to
any series of Debt Securities issued pursuant to Section 301 (with such
modifications, additions or substitutions as may be specified pursuant to such
Section 301). The Stated Principal Maturity of any Debt Security of such series
may be extended by the Company at its option for the period or periods specified
in such Debt Security (each such period, an "Extension Period") up to but not
beyond the date (the "Final Maturity") specified in such Debt Security. The
Company may exercise such option with respect to any such Debt Security by
notifying the Trustee of such exercise at least 45 but not more than 60 calendar
days prior to the Stated Principal Maturity of such Debt Security then in effect
(the "Current Stated Principal Maturity"). If the Company so notifies the
Trustee of such exercise, not later than 40 calendar days prior to the Current
Stated Principal Maturity the Trustee shall transmit, in the manner provided for
in Section 106, to the Holder of such Debt Security a notice (the "Extension
Notice") indicating (i) that the Company has elected to extend the Current
Stated Principal Maturity, (ii) the new Stated Principal Maturity and the Final
Maturity, (iii) the interest rate (or the spread and/or spread multiplier used
to calculate such interest rate, if applicable) applicable to the Extension
Period and (iv) the provisions, if any, for redemption by the Company during
such Extension Period, including the date or dates on which, or the period or
periods during which, and the price or prices at which such redemption may occur
during such Extension Period. Upon the Trustee's transmittal of the Extension
Notice to the Holder of such Debt Security, the Current Stated Principal
Maturity of such Debt Security shall be extended automatically and, except as
modified by the Extension Notice and as described in the next two paragraphs,
such Debt Security will have the same terms as prior to the transmittal of such
Extension Notice.

                  Notwithstanding the foregoing, not later than 20 calendar days
prior to the Current Stated Principal Maturity of such Debt Security, the
Company may, at its option, revoke the interest rate (or the spread and/or
spread multiplier used to calculate such interest rate, if applicable) provided
for in the Extension Notice and establish an interest rate (or a spread and/or
spread multiplier used to calculate such interest rate, if applicable) that is
higher than the interest rate (or the spread and/or spread multiplier, if
applicable) provided for in the Extension Notice for the Extension Period by
causing the Trustee to transmit, in the manner provided for in Section 106,
notice of such higher interest rate (or such higher spread and/or spread
multiplier, if applicable) to the Holder of such Debt Security. Such notice
shall be irrevocable. All Debt Securities with respect to which the Current
Stated Principal Maturity is extended, and with respect to which the Holders of
such Debt Securities have not surrendered such Debt Securities for repayment (or
have validly revoked any such surrender), will bear such higher interest rate
(or such higher spread and/or spread multiplier, if applicable).

                  If the provisions of this Section 312 are made applicable to
any Debt Security and the Company notifies the Trustee of the exercise of its
option to extend the Current Stated Principal Maturity of such Debt Security,
the Holder of such Debt Security will have the option to elect repayment of such
Debt Security by the Company on the Current Stated Principal Maturity at a price
equal to the principal amount thereof plus any accrued interest to the Current
Stated Principal Maturity. In order to obtain repayment of such Debt Security on
the Current Stated Principal Maturity, the Holder must follow the procedures set
forth in Section 1503 for repayment at the option of Holders, except that (i)
the period for delivery of such Debt Security or notification to the Trustee
shall be at least 25 but not more than 35 calendar days prior to the Current
Stated Principal Maturity and (ii) if the Holder has surrendered such Debt
Security for

                                       29
<PAGE>

repayment following receipt of the Extension Notice, the Holder may
revoke such surrender for repayment prior to 5:00 P.M., New York City time, on
the tenth calendar day prior to the Current Stated Principal Maturity.

                                       30
<PAGE>

                                  ARTICLE FOUR

                          GUARANTEES OF DEBT SECURITIES

                  SECTION 401. Unconditional Guarantee.

                  The Guarantor hereby unconditionally guarantees to each Holder
of a Debt Security authenticated and delivered by the Trustee the due and
punctual payment of the principal of and premium, if any, and any interest on
such Debt Security and the due and punctual payment of the sinking fund
payments, if any, provided for pursuant to the terms of such Debt Security, when
and as the same shall become due and payable, whether at maturity, by
acceleration, redemption or otherwise, in accordance with the terms of such Debt
Security and of this Indenture. In case of the failure of the Company punctually
to pay any such principal, premium, interest or sinking fund payment, the
Guarantor hereby agrees to cause any such payment to be made punctually when and
as the same shall become due and payable, whether at maturity, upon
acceleration, redemption or otherwise, and as if such payment were made by the
Company.

                  The Guarantor hereby agrees that its obligations hereunder
shall be as principal and not merely as surety, and shall be absolute,
irrevocable and unconditional, irrespective of, and shall be unaffected by, any
invalidity, irregularity or unenforceability of such Debt Security or this
Indenture, any failure to enforce the provisions of any such Debt Security or
this Indenture, or any waiver, modification, consent or indulgence granted to
the Company with respect thereto by the Holder of such Debt Security or the
Trustee, the recovery of any judgment against the Company or any action to
enforce the same, or any other circumstances which may otherwise constitute a
legal or equitable discharge of a surety or guarantor. The Guarantor hereby
waives diligence, presentment, demand of payment, filing of claims with a court
in the event of merger, insolvency or bankruptcy of the Company, any right to
require a proceeding first against the Company, protest or notice with respect
to any such Debt Security or the indebtedness evidenced thereby and all demands
whatsoever, and covenants that the Guarantees will not be discharged except by
payment in full of the principal of and premium, if any, and interest on, and
any sinking fund payments required with respect to, the Debt Securities and the
complete performance of all other obligations contained in the Debt Securities.

                  The Guarantor shall be subrogated to all rights of the Holder
of any Debt Security against the Company in respect of any amounts paid to such
Holder by the Guarantor pursuant to the provisions of the Guarantees; provided,
however, that the Guarantor shall not be entitled to enforce, or to receive any
payments arising out of or based upon, such right of subrogation until the
principal of and premium, if any, and interest on, and any sinking fund payments
required with respect to, all Debt Securities of the same series shall have been
paid in full.

                  SECTION 402. Execution, Authentication and Delivery.

                  To evidence the Guarantees to the Holders specified in Section
401, the Guarantor hereby agrees to execute a Guarantee on each Debt Security
authenticated and delivered by the Trustee. The Guarantees shall be executed on
behalf of the Guarantor by its Chairman of the Board, one of its Vice Chairmen,
its President or one of its Vice Presidents, under its corporate

                                       31
<PAGE>

seal reproduced thereon, and attested by its Secretary or one of its Assistant
Secretaries. The signature of any of these officers on the Guarantees may be
manual or facsimile.

                  Guarantees bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Guarantor shall bind
the Guarantor notwithstanding that such individuals or any of them have ceased
to hold such offices prior to the authentication and delivery of such Guarantees
or did not hold such offices au the date of such Guarantees. The delivery by the
Trustee of a Debt Security with such a Guarantee endorsed thereon shall, after
the authentication of such Debt Security hereunder, constitute due delivery of
such Guarantee on behalf of the Guarantor.

                  No Guarantee endorsed on any Debt Security shall be entitled
to any benefit under this Indenture or be valid or obligatory for any purpose
unless there appears on the Debt Security on which such Guarantee is endorsed a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature.

                                       32
<PAGE>

                                  ARTICLE FIVE

                           SATISFACTION AND DISCHARGE

                  SECTION 501. Satisfaction and Discharge of Indenture.

                  This Indenture shall upon a Company Request or a Guarantor
Request cease to be of further effect with respect to any series of Debt
Securities specified therein (except as to any surviving rights of registration
of transfer or exchange of Debt Securities of such series herein expressly
provided for and rights to receive payments of principal, premium and interest
thereon) and the Trustee, at the expense of the Company and the Guarantor, shall
execute proper instruments acknowledging satisfaction and discharge of this
Indenture, when

                  (1)      either

                           (A)      all Debt Securities of such series
                  theretofore authenticated and delivered (other than (i) Debt
                  Securities of such series which have been destroyed, lost or
                  stolen and which have been replaced or paid as provided in
                  Section 306 and (ii) Debt Securities of such series for whose
                  payment money in the Required Currency 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 1103) have been
                  delivered to the Trustee for cancellation; or

                           (B)      all Debt Securities of such series 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 by the Trustee
                           in the name, and at the expense, of the Company,

                  and the Company or the Guarantor, in the case of (i), (ii) or
                  (iii) above, has irrevocably deposited or caused to be
                  deposited with the Trustee as trust funds in trust for the
                  purpose an amount in the Required Currency sufficient to pay
                  and discharge the entire indebtedness on such Debt Securities
                  for principal (and premium, if any) and interest to the date
                  of such deposit (in the case of Debt Securities which become
                  due and payable) or to the Stated Maturity or Redemption Date,
                  as the case may be;

                  (2)      the Company or the Guarantor has paid or caused to be
         paid all other sums payable hereunder by the Company and the Guarantor
         with respect to the Outstanding Debt Securities of such series; and

                                       33
<PAGE>

                  (3)      the Company and the Guarantor have each 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 as to such series have
         been complied with.

                  In the event that there are Debt Securities of two or more
series hereunder, the Trustee shall be required to execute an instrument
acknowledging satisfaction and discharge of the Indenture only if requested to
do so with respect to the Debt Securities of such series as to which it is
Trustee and if the other conditions thereto are met.

                  Notwithstanding the satisfaction and discharge of this
Indenture with respect to any series of Debt Securities, the obligations of the
Company and the Guarantor pursuant to Section 115, the obligations of the
Company and the Guarantor to the Trustee under Section 707 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 502 and the last
paragraph of Section 1103 shall survive.

                  SECTION 502. Application of Trust Money.

                  Subject to the provisions of the last paragraph of Section
1103, all money deposited with the Trustee pursuant to Section 501 shall be held
in trust and applied by it, in accordance with the provisions of the Debt
Securities and this Indenture, to the payment, either directly or through any
Paying Agent (including the Company acting as its own Paying Agent) as the
Trustee may determine, to the Persons entitled thereto, of the principal (and
premium, if any) and interest for whose payment such money has been deposited
with the Trustee.

                                       34
<PAGE>

                                  ARTICLE SIX

                                    REMEDIES

                  SECTION 601. Events of Default.

                  "Event of Default", wherever used herein with respect to Debt
Securities of any series, means any one of the following events (whatever the
reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law, 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 Debt
         Security of such series 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 Debt Security of such series at its Maturity;
         or

                  (3)      default in the deposit of any sinking fund payment
         when and as due by the terms of a Debt Security of such series; or

                  (4)      default in the performance, or breach, of any
         covenant or warranty of the Company or the Guarantor in this Indenture,
         the Debt Securities or the related Guarantees (other than a covenant or
         warranty a default in whose performance or whose breach is elsewhere in
         this Section specifically dealt with or which has expressly been
         included in this Indenture solely for the benefit of Debt Securities of
         a series other than such series), 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 and the Guarantor by the
         Trustee or to the Company, the Guarantor and the Trustee by the Holders
         of at least 25% in aggregate principal amount of the Outstanding Debt
         Securities of such series, a written notice specifying such default or
         breach and requiring it to be remedied and stating that such notice is
         a "Notice of Default" hereunder; or

                  (5)      if an event of default as defined in any mortgage,
         indenture or instrument under which there may be issued, or by which
         there may be secured or evidenced, any indebtedness for borrowed money
         of the Company, the Guarantor or any Subsidiary (including this
         Indenture), whether such indebtedness now exists or shall hereafter be
         created, shall happen and shall result in such indebtedness in an
         amount in excess of $100,000,000 becoming or being declared due and
         payable prior to the date on which it would otherwise become due and
         payable; and such acceleration shall not be rescinded or annulled for a
         period of 10 days after there has been given, by registered or
         certified mail, to the Company and the Guarantor by the Trustee or to
         the Company, the Guarantor and the Trustee by the Holders of at least
         25% in aggregate principal amount of the Outstanding Debt Securities of
         such series, a written notice specifying such event of default and
         requiring it to be remedied and stating that such notice is a "Notice
         of Default" hereunder; or

                                       35
<PAGE>

                  (6)      the entry of a decree or order for relief in respect
         of the Company or the Guarantor by a court having jurisdiction in the
         premises in an involuntary case under the Federal bankruptcy laws, as
         now or hereafter constituted, or any other Federal or State bankruptcy,
         insolvency or other similar law, or appointing a receiver, liquidator,
         assignee, custodian, trustee, sequestrator (or other similar official)
         of the Company or the Guarantor or of any substantial part of its
         property, or ordering the winding up or liquidation of its affairs, and
         the continuance of any such decree or order unstayed and in effect for
         a period of 90 consecutive days; or

                  (7)      the commencement by the Company or the Guarantor of a
         voluntary case under the Federal bankruptcy laws, as now or hereafter
         constituted, or any other applicable Federal or State bankruptcy,
         insolvency or other similar law, or the consent by it to the entry of
         an order for relief in an involuntary case under any such law or to the
         appointment of a receiver, liquidator, assignee, custodian, trustee,
         sequestrator (or other similar official) of the Company or the
         Guarantor or of any substantial part of its property, or the making by
         it of an assignment for the benefit of creditors, or the admission by
         it in writing of its inability to pay its debts generally as they
         become due, or the taking of any corporate action in furtherance of any
         of the foregoing; or

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

                  SECTION 602. Acceleration of Maturity; Rescission and
                               Annulment.

                  If an Event of Default with respect to Debt Securities of any
series at the time Outstanding occurs and is continuing, then and in every such
case the Trustee or the Holders of not less than 25% in aggregate principal
amount of Outstanding Debt Securities of such series may declare the principal
amount (or, if the Debt Securities of such series are Original Issue Discount
Securities, such portion of the principal amount as may be specified in the
terms of such series) of all the Debt Securities of such series to be due and
payable immediately, by a notice in writing to the Company and the Guarantor
(and to the Trustee if given by Holders), and upon any such declaration such
principal amount (or specified amount) shall become immediately due and payable.

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

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

                           (A)      all overdue installments of interest on all
                  Debt Securities of such series,

                                       36
<PAGE>

                           (B)      the principal of (and premium, if any, on)
                  any Debt Securities of such series which have become due
                  otherwise than by such declaration of acceleration and
                  interest thereon at the rate or rates prescribed therefor in
                  such Debt Securities,

                           (C)      to the extent that payment of such interest
                  is lawful, interest upon overdue installments of interest on
                  each Debt Security at the rate or rates prescribed therefor in
                  such Debt Securities, and

                           (D)      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 with respect to Debt Securities
         of such series, other than the non-payment of the principal of Debt
         Securities of such series which have become due solely by such
         declaration of acceleration, have been cured or waived as provided in
         Section 613.

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

                  SECTION 603. Collection of Indebtedness and Suits for
                               Enforcement by Trustee.

                  The Company and the Guarantor covenant that if:

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

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

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

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

                                       37
<PAGE>

                  If an Event of Default with respect to Debt Securities of any
series occurs and is continuing, the Trustee may in its discretion proceed to
protect and enforce its rights and the rights of the holders of Debt Securities
of such series 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.

                  SECTION 604. Trustee May File Proofs of Claim.

                  In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial proceedings, or any voluntary or involuntary case under the
Federal bankruptcy laws as now or hereafter constituted, relative to the Company
or any other obligor upon the Debt Securities of a particular series or the
property of the Company, the Guarantor or such other obligor or their creditors,
the Trustee (irrespective of whether the principal of such Debt Securities shall
then be due and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Trustee shall have made any demand on the Company or
the Guarantor for the payment of overdue principal or interest) shall be
entitled and empowered, by intervention in such proceeding or otherwise,

                  (i)      to file and prove a claim for the whole amount of
         principal (and premium, if any) and interest owing and unpaid in
         respect of the Debt Securities of such series and to file such other
         papers or documents as may be necessary or advisable in order to have
         the claims of the Trustee (including any claim for the reasonable
         compensation, expenses, disbursements and advances of the Trustee, its
         agents and counsel) and of the Holders allowed in such judicial
         proceeding, and

                  (ii)     to collect and receive any moneys or other property
         payable or deliverable on any such claims and to distribute the same;

and any receiver, assignee, trustee, custodian, liquidator, sequestrator (or
other similar official) in any such proceeding is hereby authorized by each
Holder (i) to make such payments to the Trustee, and (ii) 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 707.

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

                  SECTION 605. Trustee May Enforce Claims without Possession of
                               Debt Securities.

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

                                       38
<PAGE>

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 Debt Securities in respect of which such judgment has been recovered.

                  SECTION 606. 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
(and premium, if any) or interest, upon presentation of the Debt 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 707;

                  SECOND: To the payment of the amounts then due and unpaid for
         principal of (and premium, if any) and interest on the Debt 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 Debt Securities for
         principal (and premium, if any) and interest, respectively. The Holders
         of each series of Debt Securities denominated in a Foreign Currency
         shall be entitled to receive a ratable portion of the amount determined
         by an Exchange Rate Agent by converting the principal amount
         Outstanding of such series of Debt Securities in the currency in which
         such series of Debt Securities is denominated into Dollars at the
         Exchange Rate as of the date of declaration of acceleration of the
         Maturity of the Debt Securities (or, if there is no such rate on such
         date for the reasons specified in Section 311(d) of the Indenture, such
         rate on the date specified in such Section); and

                  THIRD: The balance, if any, to the Person or Persons entitled
                         thereto.

                  SECTION 607. Limitation on Suits.

                  No Holder of any Debt Security of any series 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 with respect to the Debt
         Securities of such series;

                  (2)      the Holders of not less than 25% in aggregate
         principal amount of the Outstanding Debt Securities of such series
         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;

                                       39
<PAGE>

                  (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 at maturity of the Outstanding Debt
         Securities of such series;

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 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 608. Unconditional Right of Holders to Receive
                               Principal, Premium (if any) and Interest.

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

                  SECTION 609. 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 the Company, the
Guarantor, the Trustee and the Holders shall, subject to any determination in
such proceeding, be restored severally and respectively to their former
positions hereunder, and thereafter all rights and remedies of the Trustee and
the Holders shall continue as though no such proceeding had been instituted.

                  SECTION 610. Rights and Remedies Cumulative.

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

                  SECTION 611. Delay or Omission Not Waiver.

                  No delay or omission of the Trustee or of any Holder of any
Debt Security to exercise any right or remedy accruing upon any Event of Default
shall impair any such right or

                                       40
<PAGE>

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 612. Control by Holders.

                  The Holders of a majority in aggregate principal amount of the
Outstanding Debt Securities of any series shall have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee or exercising any trust or power conferred on the Trustee with
respect to the Debt Securities of such series, provided, that the Trustee shall
have the right to decline to follow any such direction

                  (1)      if the Trustee being advised by counsel shall
         determine that the action so directed may not lawfully be taken, or if
         the Trustee in good faith shall, by a Responsible Officer or Officers
         of the Trustee, determine that the proceedings would be illegal or in
         conflict with this Indenture or involve it in personal liability; and

                  (2)      subject to the provisions of Section 701, if the
         Trustee in good faith shall, by a Responsible Officer or Responsible
         Officers of the Trustee, determine that the proceeding so directed
         would be unjustly prejudicial to the Holders of Debt Securities of such
         series not joining in any such direction, and the Trustee may take any
         other action deemed proper by the Trustee which is not inconsistent
         with such direction.

                  SECTION 613. Waiver of Past Defaults.

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

                  (a)      in the payment of the principal of (or premium, if
any) or interest on any Debt Security of such series, or

                  (b)      in respect of a covenant or provision hereof which
under Article Ten cannot be modified or amended without the consent of the
Holder of each Outstanding Debt Security of such series affected.

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

                  SECTION 614. Undertaking for Costs.

                  All parties to this Indenture agree, and each Holder of any
Debt Security by his acceptance thereof shall be deemed to have agreed, that any
court may in its discretion require, in any suit for the enforcement of any
right or remedy under this Indenture, or in any suit against the Trustee for any
action taken, suffered or omitted by it as Trustee, the filing by any party

                                       41
<PAGE>

litigant in such suit of an undertaking to pay the costs of such suit, and that
such court may in its discretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such suit, having due regard to
the merits and good faith of the claims or defenses made by such party litigant;
but the provisions of this Section shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Holder, or group of Holders, holding more
than 10% in aggregate principal amount of the Outstanding Debt Securities of any
series, or to any suit instituted by any Holder for the enforcement of the
payment of the principal of (or premium, if any) or interest on any Debt
Security on or after the respective Stated Maturity or Maturities expressed in
such Debt Security (or, in the case of redemption or repayment, on or after the
related Redemption Date or Repayment Date, as the case may be).

                  SECTION 615. Waiver of Stay or Extension Laws.

                  The Company and the Guarantor covenant (to the extent that
they may lawfully do so) that they will not at any time insist upon, or plead,
or in any manner whatsoever claim or take the benefit or advantage of, any stay
or extension law wherever enacted, now or at any time hereafter in force, which
may affect the covenants or the performance of this Indenture; and the Company
and the Guarantor (to the extent that they may lawfully do so) hereby expressly
waive all benefit or advantage of any such law, and covenant 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.

                                       42
<PAGE>

                                 ARTICLE SEVEN

                                  THE TRUSTEE

                  SECTION 701. Certain Duties and Responsibilities.

                  (a)      With respect to Debt Securities of any series, except
during the continuance of an Event of Default with respect to the Debt
Securities of such series,

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

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

                  (b)      In case an Event of Default with respect to Debt
Securities of any series has occurred and is continuing, the Trustee shall, with
respect to the Debt Securities of such series, exercise such of the rights and
powers vested in it by this Indenture, and use the same degree of care and skill
in their exercise, as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs.

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

                  (1)      this Subsection shall not be construed to limit the
         effect of Subsection (a) of this Section;

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

                  (3)      the Trustee shall not be liable with respect to any
         action taken, suffered or omitted to be taken by it with respect to
         Debt Securities of any series in good faith in accordance with the
         direction of the Holders of a majority in aggregate principal amount of
         the Outstanding Debt Securities of such series relating to the time,
         method and place of conducting any proceeding for any remedy available
         to the Trustee, or exercising any trust or power conferred upon the
         Trustee, under this Indenture.

                  (d)      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

                                       43
<PAGE>

believing that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured to it.

                  (e)      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 702. Notice of Defaults.

                  Within 90 days after the occurrence of any default hereunder
with respect to Debt Securities of any series, the Trustee shall transmit by
mail to all Holders of Debt Securities of such series, as their names and
addresses appear in the Security Register, notice of such default hereunder
known to the Trustee, unless such default shall have been cured or waived;
provided, however, that, except in the case of a default in the payment of the
principal of (or premium, if any) or interest on any Debt Security of such
series or in the payment of any sinking fund installment with respect to Debt
Securities of such series, the Trustee shall be protected in withholding such
notice if and so long as the board of directors, the executive committee or a
trust committee of directors and/or Responsible Officers of the Trustee in good
faith determine that the withholding of such notice is in the interest of the
Holders of Debt Securities of such series; and provided, further, that in the
case of any default of the character specified in Section 601(4) with respect to
Debt Securities of such series no such notice to Holders shall be given until at
least 30 days after the occurrence thereof. For the purpose of this Section, the
term "default" means any event which is, or after notice or lapse of time or
both would become, an Event of Default with respect to Debt Securities of such
series.

                  SECTION 703. Certain Rights of Trustee.

                  Subject to Sections 315(a) through (d) of the Trust Indenture
Act:

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

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

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

                  (d)      the Trustee may consult with counsel of its selection
         and the 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;

                                       44
<PAGE>

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

                  (f)      the Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit, and, if the Trustee
shall determine to make such further inquiry or investigation, it shall be
entitled to examine the books, records and premises of the Company or the
Guarantor relevant to the facts or matters that are the subject of its inquiry,
personally or by agent or attorney at the sole cost of the Company and shall
incur no liability or additional liability of any kind by reason of such inquiry
or investigation;

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

                  (h)      the Trustee shall not be charged with knowledge of
any Event of Default with respect to the Debt Securities of any series for which
it is acting as Trustee unless either (1) a Responsible Officer of the Trustee
shall have actual knowledge of the Event of Default or (2) written notice of
such Event of Default shall have been given to the Trustee by the Company or the
Guarantor or any other obligor on such Debt Securities or by any Holder of such
Debt Securities;

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

                  (j)      the rights, privileges, protections, immunities and
benefits given to the Trustee, including, without limitation, its right to be
indemnified, are extended to, and shall be enforceable by, the Trustee in each
of its capacities hereunder, and to each agent, custodian and other Person
employed by it to act hereunder.

                  SECTION 704. Not Responsible for Recitals or Issuance of Debt
                               Securities.

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

                                       45
<PAGE>

                  SECTION 705. May Hold Debt Securities.

                  The Trustee, any Paying Agent, the Security Registrar or any
other agent of the Company or the Guarantor, in its individual or any other
capacity, may become the owner or pledgee of Debt Securities, and, subject to
Sections 310(b) and 311 of the Trust Indenture Act, may otherwise deal with the
Company and the Guarantor with the same rights it would have if it were not
Trustee, Paying Agent, Security Registrar or such other agent.

                  SECTION 706. Money Held in Trust.

                  Money held by the Trustee in trust hereunder need not be
segregated from other funds except to the extent required by law. The Trustee
shall be under no liability for interest on any money received by it hereunder
except as otherwise agreed with the Company or the Guarantor.

                  SECTION 707. Compensation and Reimbursement.

                  The Company and the Guarantor agree

                  (1)      to pay to the Trustee from time to time such
         compensation as agreed 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)      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
         those incurred in connection with any application to the Commission for
         a stay pursuant to Section 310(b) of the Trust Indenture Act (whether
         or not granted) and the reasonable compensation and the reasonable
         expenses and disbursements of its agents and counsel), except any such
         expense, disbursement or advance as may be attributable to its
         negligence or bad faith; and

                  (3)      to indemnify the Trustee for, and to hold it harmless
         against, any loss, liability or expense (including attorneys' fees and
         expenses) incurred without negligence or bad faith on its part, arising
         out of or in connection with the acceptance or administration of this
         trust or performance of its duties hereunder, including the costs and
         expenses of defending itself against any claim (whether asserted by the
         Company, or any Holder or any other Person) or liability in connection
         with the exercise or performance of any of its powers or duties
         hereunder.

                  As security for the performance of the obligations of the
Company and the Guarantor under this Section the Trustee shall have a claim
prior to the Debt Securities upon all property and funds held or collected by
the Trustee as such, except funds held in trust for the payment of principal of
(and premium, if any) or interest on Debt Securities.

                                       46
<PAGE>

                  SECTION 708. Corporate Trustee Required; Eligibility.

                  There shall at all times be a Trustee hereunder that is a
corporation eligible to act as such pursuant to the terms of the Trust Indenture
Act and that has a combined capital and surplus of at least $50,000,000, subject
to supervision or examination by Federal or State authority. If such corporation
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purposes of this Section, the combined capital and surplus of such corporation
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. 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 709. Resignation and Removal; Appointment of
                               Successor.

                  (a)      No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article shall become
effective until the acceptance of appointment by the successor Trustee under
Section 710.

                  (b)      The Trustee may resign at any time with respect to
the Debt Securities of one or more series by giving written notice thereof to
the Company and the Guarantor. If an instrument of acceptance by a successor
Trustee shall not have been delivered to the Trustee within 30 days after the
giving of such notice of resignation (or notice of removal pursuant to the
following paragraph (c)), the resigning Trustee may, at the cost of the Company,
petition any court of competent jurisdiction for the appointment of a successor
Trustee with respect to the Debt Securities of such series.

                  (c)      The Trustee may be removed at any time with respect
to the Debt Securities of any series by Act of the Holders of a majority in
principal amount of the Outstanding Debt Securities of such series, delivered to
the Trustee and to the Company and the Guarantor.

                  (d)      If at any time:

                  (1)      the Trustee shall fail to comply with the obligations
         imposed upon it under Section 310(b) of the Trust Indenture Act with
         respect to the Debt Securities of any series after written request
         therefor by the Company or the Guarantor or by any Holder who has been
         a bona fide Holder of a Debt Security of such series for at least six
         months, or

                  (2)      the Trustee shall cease to be eligible under Section
         708 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 a
         decree or order for relief by a court having jurisdiction in the
         premises shall have been entered in respect of the Trustee in an
         involuntary case under the Federal bankruptcy laws, as now or hereafter
         constituted, or any other applicable Federal or State bankruptcy,
         insolvency or similar law; or a decree or order by a court having
         jurisdiction in the premises shall have been entered for the
         appointment of a receiver, custodian, liquidator, assignee, trustee,
         seques-trator (or other similar official) of the Trustee or of its
         property or affairs, or any public

                                       47
<PAGE>

         officer shall take charge or control of the Trustee or of its property
         or affairs for the purpose of rehabilitation, conservation, winding up
         or liquidation; or

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

then, in any such case, (i) the Company or the Guarantor, by a Board Resolution,
may remove the Trustee with respect to all Debt Securities or the Debt
Securities of such series, or (ii) subject to Section 315(e) of the Trust
Indenture Act, any Holder who has been a bona fide Holder of a Debt Security of
any series for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the removal
of the Trustee for the Debt Securities of such series and the appointment of a
successor Trustee.

                  (e)      If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of Trustee for
any cause, with respect to the Debt Securities of one or more series, the
Company or the Guarantor, by or pursuant to a Board Resolution, shall promptly
appoint a successor Trustee or Trustees with respect to the Debt Securities of
that or those series (it being understood that any such successor Trustee may be
appointed with respect to the Debt Securities of one or more or all of such
series and that at any time there shall be only one Trustee with respect to the
Debt Securities of any particular series) and shall comply with the applicable
requirements of Section 710. If, within one year after such resignation, removal
or incapability, or the occurrence of such vacancy, a successor Trustee with
respect to the Debt Securities of any series shall be appointed by Act of the
Holders of a majority in aggregate principal amount of the Outstanding Debt
Securities of such series delivered to the Company, the Guarantor and the
retiring Trustee, the successor Trustee so appointed shall, forthwith upon its
acceptance of such appointment, become the successor Trustee with respect to the
Debt Securities of such series and to that extent supersede the successor
Trustee appointed by the Company if no successor Trustee with respect to the
Debt Securities of any series shall have been so appointed by the Company or the
Guarantor or the Holders and accepted appointment in the manner hereinafter
provided, any Holder who has been a bona fide Holder of a Debt Security of such
series for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the Debt Securities of such
series.

                  (f)      The Company shall give notice of each resignation and
each removal of the Trustee with respect to the Debt Securities of any series
and each appointment of a successor Trustee with respect to the Debt Securities
of any series by mailing written notice of such event by first-class mail,
postage prepaid, to the Holders of Debt Securities of such series as their names
and addresses appear in the Security Register. Each notice shall include the
name of the successor Trustee with respect to the Debt Securities of such series
and the address of its Corporate Trust Office.

                                       48
<PAGE>

                  SECTION 710. Acceptance of Appointment by Successor.

                  (a)      In the case of an appointment hereunder of a
successor Trustee with respect to all Debt Securities, every such successor
Trustee so appointed shall execute, acknowledge and deliver to the Company, the
Guarantor and to the retiring Trustee an instrument accepting such appointment,
and thereupon the resignation or removal of the retiring Trustee shall become
effective and such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and duties
of the retiring Trustee; but, on request of the Company, the Guarantor 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, subject to its lien, if any, provided for in
Section 707.

                  (b)      In case of the appointment hereunder of a successor
Trustee with respect to the Debt Securities of one or more (but not all) series,
the Company, the Guarantor, the retiring Trustee and each successor Trustee with
respect to the Debt Securities of one or more series shall execute and deliver
an indenture supplemental hereto wherein each successor Trustee shall accept
such appointment and which (1) shall contain such provisions as shall be
necessary or desirable to transfer and confirm to, and to vest in, each
successor Trustee all the rights, powers, trusts and duties of the retiring
Trustee with respect to the Debt Securities of that or those series to which the
appointment of such successor Trustee relates, (2) if the retiring Trustee is
not retiring with respect to all Debt Securities, shall contain such provisions
as shall be deemed necessary or desirable to confirm that all the rights,
powers, trusts and duties of the retiring Trustee with respect to the Debt
Securities of that or those series as to which the retiring Trustee is not
retiring shall continue to be vested in the retiring Trustee, and (3) shall add
to or change any of the provisions of this Indenture as shall be necessary to
provide for or facilitate the administration of the trusts hereunder by more
than one Trustee, it being understood that nothing herein or in such
supplemental indenture shall constitute such Trustees co-trustees of the same
trust and that each such Trustee shall be trustee of a trust or trusts hereunder
separate and apart from any trust or trusts hereunder administered by any other
such Trustee; and upon the execution and delivery of such supplemental indenture
the resignation or removal of the retiring Trustee shall become effective to the
extent provided therein and each 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 with respect to the Debt Securities of that
or those series to which the appointment of such successor Trustee relates; but,
on request of the Company, the Guarantor or any successor Trustee, such retiring
Trustee shall duly assign, transfer and deliver to such successor Trustee all
property and money held by such retiring Trustee hereunder with respect to the
Debt Securities of that or those series to which the appointment of such
successor Trustee relates.

                  (c)      Upon request of any such successor Trustee, the
Company and the Guarantor 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 paragraph (a) or (b) of this Section,
as the case may be.

                                       49
<PAGE>

                  (d)      No successor Trustee shall accept its appointment
unless at the time of such acceptance such successor Trustee shall be qualified
and eligible under this Article.

                  SECTION 711. 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 of 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 Debt 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 Debt Securities so authenticated
with the same effect as if such successor Trustee had itself authenticated such
Debt Securities. In case any Debt Securities shall not have been authenticated
by such predecessor Trustee, any such successor Trustee, by merger, conversion
or consolidation, may authenticate and deliver such Debt Securities, in either
its own name or that of its predecessor Trustee, with the full force and effect
which this Indenture provides for the certificate of authentication of the
Trustee.

                                       50
<PAGE>

                                  ARTICLE EIGHT

          HOLDERS' LISTS AND REPORTS BY TRUSTEE, COMPANY AND GUARANTOR

                  SECTION 801. Company and Guarantor to Furnish Trustee Names
                               and Addresses of Holders.

                  In accordance with Section 312(a) of the Trust Indenture Act,
the Company and the Guarantor will furnish or cause to be furnished to the
Trustee with respect to Debt Securities of each series for which it acts as
Trustee:

                  (a)      semiannually, not more than 15 days after the Regular
Record Date in respect of the Debt Securities of such series or on June 30 and
December 31 of each year with respect to each series of Debt Securities for
which there are no Regular Record Dates, a list, in such form as the Trustee may
reasonably require, of the names and addresses of the Holders as of such Regular
Record Date or June 15 or December 15, as the case may be, and

                  (b)      at such other times as the Trustee may request in
writing, within 30 days after the receipt by the Company or the Guarantor 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;

provided, however, that if and so long as the Trustee shall be the Security
Registrar for Debt Securities of a series, no such list need be furnished with
respect to such series of Debt Securities.

                  SECTION 802. Preservation of Information; Communications to
                               Holders.

                  (a)      The Trustee shall comply with the obligations imposed
upon it pursuant to Section 312 of the Trust Indenture Act.

                  (b)      Every Holder of Debt Securities, by receiving and
holding the same, agrees with the Company, the Guarantor and the Trustee that
neither the Company, the Guarantor nor the Trustee shall be held accountable by
reason of the disclosure of any such information as to the names and addresses
of the Holders in accordance with Section 312 of the Trust Indenture Act,
regardless of the source from which such information was derived, and that the
Trustee shall not be held accountable by reason of mailing any material pursuant
to a request made under Section 312(b) of the Trust Indenture Act.

                  SECTION 803. Reports by Trustee.

                  (a)      Within 120 days after December 31 of each year
commencing with the first December 31 after the first issuance of Securities
pursuant to this Indenture the Trustee shall transmit to the Holders of
Securities, in the manner and to the extent provided in Section 313(c) of the
Trust Indenture Act, a brief report based as of such December 31, if required by
Section 313(a) of the Trust Indenture Act. The Trustee also shall comply with
Section 313(b) of the Trust Indenture Act and shall transmit to Holders such
other reports, if any, as may be required pursuant to the Trust Indenture Act.

                                       51
<PAGE>

                  (b)      Reports pursuant to this Section shall be transmitted
in the manner and to the Persons required by Sections 313(c) and 313(d) of the
Trust Indenture Act.

                  (c)      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 any Debt Securities of such series are listed, with the Commission and
also with the Company and the Guarantor. The Company or the Guarantor will
notify the Trustee when any series of Debt Securities are listed on any stock
exchange.

                  SECTION 804. Reports by Company and Guarantor.

                  The Company and the Guarantor, pursuant to Section 314(a) of
the Trust Indenture Act, will:

                  (1)      file with the Trustee, within 15 days after the
         Company or the Guarantor, as the case may be, is required to file the
         same with the Commission, copies of the annual reports and of the
         information, documents and other reports (or copies of such portions of
         any of the foregoing as the Commission may from time to time by rules
         and regulations prescribe) which the Company or the Guarantor may be
         required to file with the Commission pursuant to Section 13 or Section
         15(d) of the Securities Exchange Act of 1934; or, if the Company or the
         Guarantor is not required to file information, documents or reports
         pursuant to either of said Sections, then it will file with the Trustee
         and the Commission, in accordance with rules and regulations prescribed
         from time to time by the Commission, such of the supplementary and
         periodic information, documents and reports which may be required
         pursuant to Section 13 of the Securities Exchange Act of 1934 in
         respect of a security listed and registered on a national securities
         exchange as may be prescribed from time to time in such rules and
         regulations;

                  (2)      file with the Trustee and the Commission, in
         accordance with rules and regulations prescribed from time to time by
         the Commission, such additional information, documents and reports with
         respect to compliance by the Company and the Guarantor, as the case may
         be, with the conditions and covenants of this Indenture as may be
         required from time to time by such rules and regulations; and

                  (3)      transmit by mail to all Holders, as their names and
         addressees appear in the Security Register, within 30 days after the
         filing thereof with the Trustee, in the manner and to the extent
         provided in Section 313(c) of the Trust Indenture Act, such summaries
         of any information, documents and reports required to be filed by the
         Company or the Guarantor pursuant to paragraphs (1) and (2) of this
         Section as may be required by rules and regulations prescribed from
         time to time by the Commission.

                                       52
<PAGE>

                                  ARTICLE NINE

                 CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER

                  SECTION 901. Company May Consolidate, etc., Only on Certain
                               Terms.

                  The Company shall not consolidate with or merge into any other
corporation or convey or transfer its properties and assets substantially as an
entirety to any Person, unless:

                  (1)      the corporation formed by such consolidation or into
         which the Company is merged or the Person which acquires by conveyance
         or transfer the properties and assets of the Company substantially as
         an entirety shall be a corporation organized and existing under the
         laws of the United States of America, any political subdivision thereof
         or any State thereof and shall expressly assume, by an indenture
         supplemental hereto, executed and delivered to the Trustee, in form
         satisfactory to the Trustee, the due and punctual payment of the
         principal of (and premium, if any) and interest on all the Debt
         Securities and the performance of every covenant of this Indenture on
         the part of the Company to be performed or observed;

                  (2)      immediately after giving effect to such transaction,
         no Event of Default, and no event which, after notice or lapse of time,
         or both, would become an Event of Default, shall have happened and be
         continuing;

                  (3)      the Company has delivered to the Trustee an Officers'
         Certificate and an Opinion of Counsel each stating that such
         consolidation, merger, conveyance or transfer and such supplemental
         indenture comply with this Article and that all conditions precedent
         herein provided for relating to such transaction have been complied
         with; and

                  (4)      the Guarantor has delivered to the Trustee an
         Officer's Certificate and an Opinion of Counsel, each stating that the
         Guarantor's obligations hereunder shall remain in full force and effect
         thereafter.

                  SECTION 902. Successor Corporation Substituted.

                  Upon any consolidation with or merger into any other
corporation, or any conveyance or transfer of the properties and assets of the
Company substantially as an entirety in accordance with Section 901, the
successor corporation formed by such consolidation or into which the Company is
merged or the successor Person to which such conveyance or transfer 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
had been named as the Company herein, and thereafter the predecessor corporation
shall be relieved of all obligations and covenants under this Indenture and the
Debt Securities.

                  SECTION 903. Guarantor May Consolidate, etc., Only on Certain
                               Terms.

                  The Guarantor shall not consolidate with or merge into any
other corporation or convey or transfer its properties and assets substantially
as an entirety to any Person, unless:

                                       53
<PAGE>

                  (1)      the corporation formed by such consolidation or into
         which the Guarantor is merged or the Person which acquires by
         conveyance or transfer the properties and assets of the Guarantor
         substantially as an entirety shall be a corporation organized and
         existing under the laws of the United States of America, any political
         subdivision thereof or any State thereof and shall expressly assume, by
         an indenture supplemental hereto, executed and delivered to the
         Trustee, in form satisfactory to the Trustee, the Guarantees endorsed
         on the Debt Securities and the performance of every covenant of this
         Indenture on the part of the Guarantor to be performed or observed;

                  (2)      immediately after giving effect to such transaction,
         no Event of Default, and no event which, after notice or lapse of time,
         or both, would become an Event of Default, shall have happened and be
         continuing;

                  (3)      the Guarantor has delivered to the Trustee an
         Officers' Certificate and an Opinion of Counsel each stating that such
         consolidation, merger, conveyance or transfer and such supplemental
         indenture comply with this Article and that all conditions precedent
         herein provided for relating to such transaction have been complied
         with.

                  SECTION 904. Successor Corporation Substituted.

                  Upon any consolidation with or merger into any other
corporation, or any conveyance or transfer of the properties and assets of the
Guarantor substantially as an entirety in accordance with Section 903, the
successor corporation formed by such consolidation or into which the Guarantor
is merged or the successor Person to which such conveyance or transfer is made
shall succeed to, and be substituted for, and may exercise every right and power
of, the Guarantor under this Indenture with the same effect as if such successor
had been named as the Guarantor herein, and thereafter the predecessor
corporation shall be relieved of all obligations and covenants under this
Indenture and the Guarantees.

                  SECTION 905. Assumption by Guarantor.

                  The Guarantor, or a Subsidiary thereof, may directly assume,
by an indenture supplemental hereto, executed and delivered to the Trustee, in
form satisfactory to the Trustee, the due and punctual payment of the principal
of (and premium, if any) and interest on all the Debt Securities and the
performance of every covenant of this Indenture on the part of the Company to be
performed or observed. Upon any such assumption, the Guarantor or such
Subsidiary 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 the
Guarantor or such Subsidiary had been named as the Company herein and the
Company shall be released from its liability as obligor on the Debt Securities.
No such assumption shall be permitted unless the Guarantor has delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel, each stating that
such assumption and supplemental indenture comply with this Article, and that
all conditions precedent herein provided for relating to such transaction have
been complied with and that, in the event of assumption by a Subsidiary, the
Guarantees remain in full force and effect.

                                       54
<PAGE>

                                   ARTICLE TEN

                             SUPPLEMENTAL INDENTURES

                  SECTION 1001. Supplemental Indentures without Consent of
                                Holders.

                  Without the consent of any Holders, the Company and the
Guarantor, 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, in form satisfactory to the Trustee, for any of the following purposes:

                  (1)      to evidence the succession of another corporation to
         the Company or the Guarantor and the assumption by such successor of
         the obligations and covenants of the Company or the Guarantor herein
         and in the Debt Securities or the related Guarantees, as the case may
         be; or

                  (2)      to add to the covenants of the Company or the
         Guarantor, for the benefit of the Holders of all or any series of Debt
         Securities (and if such covenants are to be for the benefit of less
         than all series of Debt Securities, stating that such covenants are
         expressly being included solely for the benefit of such series), or to
         surrender any right or power herein conferred upon the Company or the
         Guarantor; or

                  (3)      to add any additional Events of Default (and if such
         Events of Default are to be applicable to less than all series of Debt
         Securities, stating that such Events of Default are expressly being
         included solely to be applicable to such series); or

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

                  (5)      to change or eliminate any of the provisions of this
         Indenture, provided that any such change or elimination shall either
         (i) become effective only when there is no Debt Security Outstanding of
         any series created prior to the execution of such supplemental
         indenture which is entitled to the benefit of such provision or (ii)
         shall neither (A) apply to any Debt Security of any series created
         prior to the execution of such supplemental indenture and entitled to
         the benefit of such provision nor (B) modify the rights of the Holder
         of any such Debt Security with respect to such provision; or

                  (6)      to establish the form or terms of Debt Securities of
         any series as permitted by Sections 202 and 301; or

                  (7)      to evidence and provide for the acceptance of
         appointment hereunder by a successor Trustee with respect to the Debt
         Securities of one or more series and to add to or change any of the
         provisions of this Indenture as shall be necessary to provide for or
         facilitate the administration of the trusts hereunder by more than one
         Trustee, pursuant to the requirements of Section 710; or

                  (8)      to secure the Debt Securities; or

                                       55
<PAGE>

                  (9)      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 which shall not be
         inconsistent with any provision of this Indenture, provided such other
         provisions shall not adversely affect the interests of the Holders of
         Debt Securities of any series in any material respect; or

                  (10)     to modify, eliminate or add to the provisions of this
         Indenture to such extent as shall be necessary to effect the
         qualification of this Indenture under the Trust Indenture Act or under
         any similar federal statute hereafter enacted and to add to this
         Indenture such other provisions as may be expressly required under the
         Trust Indenture Act; or

                  (11)     to effect the assumption by the Guarantor or a
         Subsidiary thereof pursuant to Section 905.

                  SECTION 1002. 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 Debt Securities of each series
affected by such supplemental indenture, by Act of said Holders delivered to the
Company, the Guarantor and the Trustee, the Company and the Guarantor, when
authorized by a Board Resolution, and the Trustee may enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Indenture or
of modifying in any manner the rights of the Holders under this Indenture of
such Debt Securities; provided, however, that no such supplemental indenture
shall, without the consent of the Holder of each Outstanding Debt Security
affected thereby,

                  (1)      change the Stated Principal Maturity (except as
         permitted pursuant to Section 312 hereof) of the principal of, or
         change the Stated Maturity of any installment of interest on, any Debt
         Security, or reduce the principal amount thereof or, except as
         permitted pursuant to Section 307(b) hereof, the interest thereon or
         any premium payable upon redemption or repayment thereof, or reduce the
         amount of the principal of an Original Issue Discount Security that
         would be due and payable upon a declaration of acceleration of the
         Maturity thereof pursuant to Section 602, or adversely affect any right
         of repayment at the option of a Holder of any Debt Security, or reduce
         the amount of, or postpone the date fixed for, any payment under any
         sinking fund or analogous provisions of any Debt Security, or change
         any Place of Payment, or the coin or currency or currency unit in which
         any Debt Security or the interest thereon is payable, or change or
         eliminate the rights of a Holder under Section 311, 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 or
         repayment, on or after the Redemption Date or the Repayment Date, as
         the case may be), or

                  (2)      reduce the percentage in aggregate principal amount
         of the Outstanding Debt Securities of any series, the consent of whose
         Holders is required for any such supplemental indenture, or the consent
         of whose Holders is required for any waiver (of

                                       56
<PAGE>

         compliance with certain provisions of this Indenture or certain
         defaults hereunder and their consequences) provided for in this
         Indenture, or

                  (3)      modify any of the provisions of this Section or
         Section 613, 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 Debt Security
         affected thereby, or

                  (4)      modify or effect in any manner adverse to the Holders
         the terms and conditions of the obligations of the Guarantor in respect
         of the due and punctual payments of principal of, or premium, if any,
         or interest on, or sinking fund requirements, if any, with respect to,
         the Debt Securities.

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

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

                  SECTION 1003. 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 315 of the Trust Indenture Act) 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 1004. 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 Debt Securities theretofore or thereafter authenticated and
delivered hereunder shall be bound thereby.

                  SECTION 1005. Notice to Holders.

                  Promptly after the execution by the Company and the Trustee of
any supplemental indenture under Section 1002 of this Article, the Company shall
transmit by mail a notice, setting forth in general terms the substance of such
supplemental indenture, to all Holders of Debt Securities, as the names and
addresses of such Holders appear on the Security Register for each series of
Debt Securities.

                                       57
<PAGE>

                  SECTION 1006. Conformity with Trust Indenture Act.

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

                  SECTION 1007. Reference in Debt Securities to Supplemental
                                Indentures.

                  Debt Securities of any series 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 or the Trustee shall so determine, new Debt Securities of any series 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 Debt
Securities of such series.

                                       58
<PAGE>

                                 ARTICLE ELEVEN

                                    COVENANTS

                  SECTION 1101. Payment of Principal, Premium and Interest.

                  The Company covenants and agrees for the benefit of each
series of Debt Securities that it will duly and punctually pay the principal of
(and premium, if any) and interest on the Debt Securities in accordance with the
terms of the Debt Securities and this Indenture.

                  SECTION 1102. Maintenance of Office or Agency.

                  The Company or the Guarantor will maintain in each Place of
Payment for any series of Debt Securities an office or agency where Debt
Securities may be presented or surrendered for payment, where Debt Securities
may be surrendered for registration of transfer or exchange and where notices
and demands to or upon the Company or the Guarantor in respect of the Debt
Securities and this Indenture may be served. The Company or the Guarantor will
give prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Company or the Guarantor
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee, and the Company and the Guarantor hereby appoint the Trustee as the
agent to receive all presentations, surrenders, notices and demands.

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

                  Unless otherwise set forth in, or pursuant to, a Board
Resolution or indenture supplemental hereto with respect to a series of Debt
Securities, the Company and the Guarantor hereby initially designate as the
Place of Payment for each series of Debt Securities, the Borough of Manhattan,
The City and State of New York, and initially appoint the Trustee at its
Corporate Trust Office as the Company's office or agency for each such purpose
in such city.

                  SECTION 1103. Money for Debt Securities Payments to Be Held in
                                Trust.

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

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<PAGE>

                  Whenever the Company shall have one or more Paying Agents with
respect to any series of Debt Securities, it will, prior to or on each due date
of the principal (and premium, if any) or interest on any Debt Securities of
such series, deposit with a Paying Agent a sum sufficient to pay the principal
(and premium, if any) or interest so becoming due, such sum to be held in trust
for the benefit of the Persons entitled to such principal, premium or interest,
and (unless such Paying 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 with respect to any
series of Debt 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)      hold all sums held by it for the payment of the
         principal of (and premium, if any) or interest on Debt Securities of
         such series in trust for the benefit of the Persons entitled thereto
         until such sums shall be paid to such Persons or otherwise disposed of
         as herein provided;

                  (2)      give the Trustee notice of any default by the Company
         or the Guarantor (or any other obligor upon the Debt Securities of such
         series) in the making of any payment of principal of (and premium, if
         any) or interest on the Debt Securities of such series; and

                  (3)      at any time during the continuance of any such
         default, upon the written request of the Trustee, forthwith pay to the
         Trustee all sums so held in trust by such Paying Agent.

                  The Company or the Guarantor 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 or Guarantor 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.

                  Unless otherwise specified as contemplated by Section 301, any
money deposited with the Trustee or any Paying Agent, or then held by the
Company, in trust for the payment of the principal of (and premium, if any) or
interest on any Debt Security of any series and remaining unclaimed for two
years after such principal (and premium, if any) or interest has become due and
payable shall be paid to the Company on Company Request (or if deposited by the
Guarantor, paid to the Guarantor or Guarantor Request), or (if then held by the
Company) shall be discharged from such trust; and the Holder of such Debt
Security shall thereafter, as an unsecured general creditor, look only to the
Company and the Guarantor 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,
may at the expense of the Company cause to be published once, in a newspaper
published in the English

                                       60
<PAGE>

language, customarily published on each Business Day and of general circulation
in the Borough of Manhattan, The City and State of New York, and each Place of
Payment with respect to Debt Securities of the series with respect to which such
moneys are so held or cause to be mailed to each such Holder, or both, 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 or
mailing, any unclaimed balance of such money then remaining will be repaid to
the Company or the Guarantor, as the case may be.

                  SECTION 1104. Investment Company Act.

                  The Company will not take any action if as a result thereof it
would be required to register as an investment company under the Investment
Company Act of 1940, as amended.

                  SECTION 1105. Officers' Certificate as to Default.

                  The Company and the Guarantor will each deliver to the
Trustee, on or before a date not more than four months after the end of their
fiscal year ending after the date hereof, an Officers' Certificate from their
principal executive officer, principal financial officer or principal accounting
officer, stating whether or not to the best knowledge of the signers thereof the
Company or the Guarantor, as the case may be, 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 or the Guarantor, as the case may be, shall be
in default, specifying all such defaults and the nature thereof of which they
may have knowledge.

                  The Company and the Guarantor will deliver written notice to
the Trustee five days after any officer thereof has knowledge of the occurrence
of any event which with the giving of notice or the lapse of time or both would
become an Event of Default under Subsection (5) of Section 601.

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<PAGE>

                                 ARTICLE TWELVE

                         REDEMPTION OF DEBT SECURITIES

                  SECTION 1201. Applicability of Article.

                  Debt Securities of any series which are redeemable before
their Stated Maturity shall be redeemable in accordance with their terms and
(except as otherwise specified as contemplated by Section 301 for Debt
Securities of any series) in accordance with this Article.

                  SECTION 1202. Election to Redeem, Notice to Trustee.

                  The election of the Company to redeem any Debt Securities
shall be evidenced by a Board Resolution. In case of any redemption at the
election of the Company of less than all of the Debt Securities of any series,
the Company shall, at least 60 days prior to the Redemption Date fixed by the
Company (unless a shorter notice shall be satisfactory to the Trustee), notify
the Trustee of such Redemption Date and of the principal amount of Debt
Securities of such series to be redeemed. In the case of any redemption of Debt
Securities prior to the expiration of any restriction on such redemption
provided in the terms of such Debt Securities or elsewhere in this Indenture,
the Company shall furnish the Trustee with an Officers' Certificate evidencing
compliance with such restriction.

                  SECTION 1203. Selection by Trustee of Debt Securities to Be
                                Redeemed.

                  If less than all the Debt Securities of any series are to be
redeemed, the particular Debt Securities to be redeemed shall be selected not
more than 60 days prior to the Redemption Date by the Trustee, from the
Outstanding Debt Securities of such series 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 portions (equal to the minimum
authorized denomination for Debt Securities of such series or any integral
multiple thereof) of the principal amount of Debt Securities of such series of a
denomination larger than the minimum authorized denomination for Debt Securities
of such series.

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

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

                  SECTION 1204. 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 Debt Securities to be redeemed, at his
address appearing in the Security Register.

                                       62
<PAGE>

                  All notices of redemption shall state:

                  (1)      the Redemption Date,

                  (2)      the Redemption Price,

                  (3)      if less than all Outstanding Debt Securities of any
         series are to be redeemed, the identification (and, in the case of
         partial redemption, the principal amount) of the particular Debt
         Securities to be redeemed,

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

                  (5)      the Place or Places of Payment where such Debt
         Securities are to be surrendered for payment of the Redemption Price,

                  (6)      that the redemption is in connection with a sinking
         fund, if such is the case, and

                  (7)      if applicable, the CUSIP number for such Debt
         Security.

                  Notice of redemption of Debt 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.

                  SECTION 1205. 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 is acting as its own
Paying Agent, segregate and hold in trust as provided in Section 1103) an amount
of money in the currency in which the Debt Securities of such series are payable
(except as otherwise specified pursuant to Section 301 for the Debt Securities
of such series and except, if applicable, as provided in Section 311) sufficient
to pay the Redemption Price of, and (unless otherwise specified pursuant to
Section 301 for the Debt Securities of such series and the Redemption Date is an
Interest Payment Date) accrued interest on, all the Debt Securities or portion
thereof, as the case may be, which are to be redeemed on that date.

                  SECTION 1206. Debt Securities Payable on Redemption Date.

                  Notice of redemption having been given as aforesaid, the Debt
Securities so to be redeemed shall become due and payable and shall be paid by
the Company on the Redemption Date and at the Redemption Price therein specified
and on and after such Redemption Date (unless the Company shall default in the
payment of the Redemption Price and any accrued interest in respect of such Debt
Securities on such Redemption Date) such Debt Securities shall, if the same were
interest bearing, cease to bear interest. Upon surrender of any such Debt
Security for redemption in accordance with said notice, the Redemption Price of
such Debt Security so to be repaid shall be paid by the Company, together with
accrued interest, if any, to

                                       63
<PAGE>

the Redemption Date; provided, however, that installments of interest, if any,
on an Interest Payment Date that is prior to the Redemption Date (or, if
specified pursuant to Section 301, that is on the Redemption Date) shall be
payable (but without interest thereon, unless the Company shall default in
payment thereof) to the Holder of such Debt Security, or one or more Predecessor
Securities, registered as such at 5:00 P.M., New York City time, on the relevant
Record Date according to its or their terms and the provisions of Section 307.

                  If any Debt Security called for redemption shall not be so
paid upon surrender thereof, the Redemption Price shall, until paid, bear
interest from the Redemption Date at the rate of interest (or the manner of
calculating the rate of interest) applicable to such Debt Security on the day
prior to the Redemption Date or, in the case of an Original Issue Discount
Security, at the yield to maturity of such Original Issue Discount Security.

                  SECTION 1207. Debt Securities Redeemed in Part.

                  Any Debt Security which is to be redeemed only in part shall
be surrendered at a Place of Payment therefor (with, if the Company, the
Security Registrar or the Trustee so requires, due endorsement by, or a written
instrument of transfer in form satisfactory to the Company, the Security
Registrar 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 Debt Security without
service charge, a new Debt Security or Debt Securities (having a Guarantee duly
endorsed thereon) of the same series and Stated Maturity, 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 Debt Security
so surrendered. If a Debt Security in global form is so surrendered, the Company
shall execute, and the Trustee shall authenticate and deliver to the depository
for such global Debt Security, without service charge, a new Debt Security in
global form in a denomination equal to and in exchange for the unredeemed
portion of the principal of the global Debt Security so surrendered.

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                                ARTICLE THIRTEEN

                                 SINKING FUNDS

                  SECTION 1301. Applicability of Article.

                  The provisions of this Article shall be applicable to any
sinking fund for the retirement of Debt Securities of a series except as
otherwise specified as contemplated by Section 301 for Debt Securities of such
series.

                  The minimum amount of any sinking fund payment provided for by
the terms of Debt Securities of any series is herein referred to as a "mandatory
sinking fund payment," and any payment in excess of such minimum amount provided
for by the terms of Debt Securities of any series is herein referred to as an
"optional sinking fund payment." If provided for by the terms of Debt Securities
of any series, the amount of any cash sinking fund payment may be subject to
reduction as provided in Section 1302. Each sinking fund payment shall be
applied to the redemption of Debt Securities of any series as provided for by
the terms of Debt Securities of such series.

                  SECTION 1302. Satisfaction of Sinking Fund Payments with Debt
                                Securities.

                  The Company (1) may deliver Outstanding Debt Securities of a
series (other than any previously called for redemption) and (2) may apply as a
credit Debt Securities of a series which have been redeemed either at the
election of the Company pursuant to the terms of such Debt Securities or through
the application of permitted optional sinking fund payments pursuant to the
terms of such Debt Securities, in each case in satisfaction of all or any part
of any sinking fund payment with respect to the Debt Securities of such series
required to be made pursuant to the terms of such Debt Securities as provided
for by the terms of such series; provided that such Debt Securities have not
been previously so credited. Such Debt Securities shall be received and credited
for such purpose by the Trustee at the Redemption Price specified in such Debt
Securities for redemption through operation of the sinking fund and the amount
of such sinking fund payment shall be reduced accordingly.

                  SECTION 1303. Redemption of Debt Securities for Sinking Fund.

                  Not less than 60 days prior to each sinking fund payment date
for any series of Debt Securities (unless a shorter period shall be satisfactory
to the Trustee), the Company will deliver to the Trustee an Officers'
Certificate specifying the amount of the next ensuing sinking fund payment for
that series pursuant to the terms of that series, the portion thereof, if any,
which is to be satisfied by payment of cash, the portion thereof, if any, which
is to be satisfied by crediting Debt Securities of than series pursuant to
Section 1302 and, prior to or concurrently with the delivery of such Officers'
Certificate, will also deliver to the Trustee any Debt Securities to be so
credited and not theretofore delivered to the Trustee. Not less than 45 days
(unless a shorter period shall be satisfactory to the Trustee) before each such
sinking fund payment date the Trustee shall select the Debt Securities to be
redeemed upon such sinking fund payment date in the manner specified in Section
1203 and cause notice of the redemption thereof to be given in the name of and
at the expense of the Company in the manner provided in Section

                                       65
<PAGE>

1204. Such notice having been duly given, the redemption of such Debt Securities
shall be made upon the terms and in the manner stated in Sections 1205, 1206 and
1207.

                                       66
<PAGE>

                                ARTICLE FOURTEEN

                                   DEFEASANCE

                  SECTION 1401. Applicability of Article.

                  If, pursuant to Section 301, provision is made for the
defeasance of Debt Securities of a series, then the provisions of this Article
shall be applicable except as otherwise specified as contemplated by Section 301
for Debt Securities of such series.

                  SECTION 1402. Defeasance Upon Deposit of Moneys or U.S.
                                Government Obligations.

                  At the Company's option, either (a) the Company shall be
deemed to have been Discharged (as defined below) from its obligations with
respect to Debt Securities of any series on the 91st day after the applicable
conditions set forth below have been satisfied or (b) the Company shall cease to
be under any obligation to comply with any term, provision or condition set
forth in Section 901, with respect to Debt Securities of any series at any time
after the applicable conditions set forth below have been satisfied:

                  (1)      the Company shall have deposited or caused to be
         deposited irrevocably with the Trustee as trust funds in trust,
         specifically pledged as security for, and dedicated solely to, the
         benefit of the Holders of the Debt Securities of such series (i) money
         in the Required Currency in an amount, or (ii) in the case of Debt
         Securities denominated in Dollars, U.S. Government Obligations (as
         defined below), which through the payment of interest and principal in
         respect thereof in accordance with their terms will provide (without
         any reinvestment of such interest or principal), not later than one day
         before the due date of any payment, money in an amount, or (iii) a
         combination of (i) and (ii) sufficient, in the opinion (with respect to
         (ii) and (iii) of a nationally recognized firm of independent public
         accountants expressed in a written certification thereof delivered to
         the Trustee at or prior to the time of such deposit, to pay and
         discharge each installment-of principal (including any mandatory
         sinking fund Payments) of, and premium, if any, and interest on, the
         Outstanding Debt Securities of such series on the dates such
         installments of interest, premium or principal are due;

                  (2)      the Company shall have delivered to the Trustee an
         Officers' Certificate certifying as to whether the Debt Securities of
         such series are then listed on the New York Stock Exchange;

                  (3)      if the Debt Securities of such series are then listed
         on the New York Stock Exchange, the Company shall have delivered to the
         Trustee an Opinion of Counsel to the effect that the Company's exercise
         of its option under this Section would not cause such Debt Securities
         to be delisted;

                  (4)      no Event of Default or event (including such deposit)
         which, with notice or lapse of time, or both, would become an Event of
         Default with respect to the Debt Securities of such series shall have
         occurred and be continuing on the date of such

                                       67
<PAGE>

         deposit as evidenced to the Trustee in an Officers' Certificate
         delivered to the Trustee concurrently with such deposit;

                  (5)      the Company shall have delivered to the Trustee an
         Opinion of Counsel to the effect that (and containing no assumption or
         qualification) (i) Holders of the Debt Securities of such series will
         not recognize income, gain or loss for Federal income tax purposes as a
         result of the Company's exercise of its option under this Section and
         will be subject to Federal income tax on the same amount and in the
         same manner and at the same time as would have been the case if such
         option had not been exercised, and, in the case of the Debt Securities
         of such series being Discharged, accompanied by a ruling to that effect
         received from or published by the Internal Revenue Service (it being
         understood that (A) such Opinion shall also state that such ruling is
         consistent with the conclusions reached in such Opinion and (B) the
         Trustee shall be under no obligation to investigate the basis or
         correctness of such ruling) and (ii) all conditions precedent to the
         Discharge pursuant to this Section have been complied with;

                  (6)      the Company shall have delivered to the Trustee an
         Opinion of Counsel to the effect that the Company's exercise of its
         option under this provision will not cause any violation of the
         Investment Company Act of 1940, as amended, on the part of the Company,
         the trust, the trust funds representing the Company's deposit or the
         Trustee; and

                  (b)      the Company shall have paid or duly provided for
         payment of all amounts then due to the Trustee pursuant to Section 707.

                  "Discharged" means that the Company shall be deemed to have
paid and discharged the entire indebtedness represented by, and obligations
under, the Debt Securities of such series and to have satisfied all the
obligations under this Indenture relating to the Debt Securities of such series
(and the Trustee, at the expense of the Company, shall execute proper
instruments acknowledging the same), except (A) the rights of Holders of Debt
Securities of such series to receive, from the trust fund described in clause
(1) above, payment of the principal of, and premium, if any, and the interest on
such Debt Securities when such payments are due, (B) the Company's obligations
with respect to the Debt Securities of such series under Sections 305, 306, 1102
and 1403 and (C) the rights, powers, trusts, duties and immunities of the
Trustee hereunder, including without limitation, the provisions of Section 707.

                  "U.S. Government Obligations" means securities that are (i)
direct obligations of the United States of America for the payment of which its
full faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case under
clauses (i) or (ii) are not callable or redeemable at the option of the issuer
thereof.

                                       68
<PAGE>

                  SECTION 1403. Deposited Moneys and U.S. Government Obligations
                                To Be Held in Trust.

                  All moneys and U.S. Government Obligations deposited with the
Trustee pursuant to Section 1402 in respect of Debt Securities of a series shall
be held in trust and applied by it, in accordance with the provisions of such
Debt Securities and this Indenture, to the payment, either directly or through
any Paying Agent (including the Company acting as it own Paying Agent) as the
Trustee may determine, to the Holders of such Debt Securities, of all sums due
and to become due thereon for principal, premium, if any, and interest, if any,
but such money need not be segregated from other funds except to the extent
required by law.

                  SECTION 1404. Repayment to Company.

                  The Trustee and any Paying Agent shall promptly pay or return
to the Company upon Company Request any money and U.S. Government Obligations
held by them at any time that are not required for the payment of the principal
of, and premium, if any, and interest on, the Debt Securities of any series for
which money or U.S. Government Obligations have been deposited pursuant to
Section 1402.

                  The provisions of the last paragraph of Section 1103 shall
apply to any money held by the Trustee or any Paying Agent under this Article
that remains unclaimed for two years after the Maturity of any Series of Debt
Securities for which money or U.S. Government Obligations have been deposited
pursuant to Section 1402.

                                       69
<PAGE>

                                ARTICLE FIFTEEN

                       REPAYMENT AT THE OPTION OF HOLDERS

                  SECTION 1501. Applicability of Article.

                  Repayment of Debt Securities of any series before their Stated
Maturity at the option of Holders thereof shall be made in accordance with the
terms of such Debt Securities and (except as otherwise specified by the terms of
such series established pursuant to Section 301) in accordance with this Article
Fifteen.

                  SECTION 1502. Repayment of Debt Securities.

                  Debt Securities of any series subject to repayment in whole or
in part at the option of the Holders thereof will, unless otherwise provided in
the terms of such Debt Securities, be repaid at the Repayment Price thereof,
together with interest, if any, thereon accrued to the Repayment Date specified
in or pursuant to the terms of such Debt Securities. On or prior to the
Repayment Date, the Company shall deposit with the Trustee or with a Paying
Agent (or, if the Company is acting as its own Paying Agent, segregate and hold
in trust as provided in Section 1103) an amount of money in the currency in
which the Debt Securities of such series are payable (except as otherwise
specified pursuant to Section 301 for the Debt Securities of such series and
except, if applicable, as provided in Section 311) sufficient to pay the
Repayment Price of and (unless otherwise specified pursuant to Section 301 for
the Debt Securities of such series and the Repayment Date is an Interest Payment
Date) accrued interest on, all the Debt Securities or portions thereof, as the
case may be, to be repaid on such date.

                  SECTION 1503. Exercise of Option.

                  Debt Securities of any series subject to repayment at the
option of the Holders thereof will contain an "Option to Elect Repayment" form.
In order to be repaid at the option of the Holder, any Debt Security so
providing for such repayment, together with the "Option to Elect Repayment" form
duly completed by the Holder (or by the Holder's attorney duly authorized in
writing), must be received by or on behalf of the Company at the Place of
Payment therefor specified in the terms of such Debt Security (or at such other
place or places of which the Company shall from time to time notify the Holders
of such Debt Securities) not more than 60 nor less than 30 calendar days prior
to the Repayment Date. If less than the entire principal amount of such Debt
Security is to be repaid in accordance with the terms of such Debt Security, the
portion of such Debt Security to be repaid, in increments of the minimum
denomination for Debt Securities of such series, and the denomination or
denominations of the Debt Security or Debt Securities to be issued to the Holder
for the portion of such Debt Security surrendered that is not to be repaid, must
be specified. Any Debt Security providing for repayment at the option of the
Holder thereof may not be repaid in part if, following such repayment, the
unpaid principal amount of such Debt Security would be less than the minimum
denomination of Debt Securities of the series of which such Debt Security to be
repaid is a part. Except as may be otherwise provided in any Debt Security
providing for repayment at the option of the Holder thereof, exercise of the
repayment option by the Holder shall be irrevocable unless waived by the
Company.

                                       70
<PAGE>

                  SECTION 1504. When Debt Securities Surrendered for Repayment
                                Become Due and Payable.

                  If Debt Securities of any series providing for repayment at
the option of the Holders thereof shall have been surrendered as provided in
this Article Fifteen and as provided by or pursuant to the terms of such Debt
Securities, such Debt Securities or the portions thereof, as the case may be, to
be repaid shall become due and payable and shall be paid by the Company on the
Repayment Date therein specified, and on and after such Repayment Date (unless
the Company shall default in the payment of the Repayment Price and any accrued
interest in respect of such Debt Securities on such Repayment Date) such Debt
Securities shall, if the same were interest bearing, cease to bear interest.
Upon surrender of any such Debt Security for repayment in accordance with such
provisions, the Repayment Price of such Debt Security so to be repaid shall be
paid by the Company, together with accrued interest, if any, to the Repayment
Date; provided, however, that installments of interest, if any, on an Interest
Payment Date that is prior to the Repayment Date (or, if specified pursuant to
Section 301, that is on the Repayment Date) shall be payable (but without
interest thereon, unless the Company shall default in the payment thereof) to
the Holder of such Debt Security, or one or more Predecessor Securities,
registered as such at 5:00 P.M., New York City time, on the relevant Regular
Record Date according to its or their terms and the provisions of Section 307.

                  If any Debt Security surrendered for repayment shall not be so
repaid upon surrender thereof, the Repayment Price shall, until paid, bear
interest from the Repayment Date at the rate of interest (or manner of
calculating the rate of interest) applicable to such Debt Security on the day
prior to the Repayment Date or, in the case of an Original Issue Discount
Security, at the yield to maturity of such Original Issue Discount Security.

                  SECTION 1505. Debt Securities Repaid in Part.

                  Upon surrender of any Debt Security which is to be repaid in
part only, the Company shall execute and the Trustee shall authenticate and
deliver to the Holder of such Debt Security, without service charge and at the
expense of the Company, a new Debt Security or Debt Securities of the same
series, of any authorized denomination specified by the Holder, in an aggregate
principal amount equal to and in exchange for the portion of the principal of
such Debt Security so surrendered which is not to be repaid.

                                   * * * * *

                                       71
<PAGE>

                  This instrument maybe 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 as of the day and year first above written.

                                         COUNTRYWIDE FINANCIAL CORPORATION

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

                                         COUNTRYWIDE HOME LOANS, INC.

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

                                         THE BANK OF NEW YORK, as Trustee

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

                                       72
<PAGE>

State of California      )
County of Los Angeles    )   SS.:

         On the ___ day of April, 2004, before me personally came , to me known,
who, being by me duly sworn, did depose and say that he is of Countrywide Home
Loans, Inc., one of the corporations described in and which executed the
foregoing instrument; that he knows the seal of said corporation; that the seal
affixed to said instrument is such corporate seal; that it was so affixed by
authority of the Board of Directors of said corporation, and that he signed his
name thereto by like authority.

                                                 -------------------------------
                                                 Notary Public

             Seal

                                       73
<PAGE>

State of California      )
County of Los Angeles    )   SS.:

         On the ___ day of April, 2004, before me personally came , to me known,
who, being by me duly sworn, did depose and say that he is of Countrywide
Financial Corporation, one of the corporations described in and which executed
the foregoing instrument; that he knows the seal of said corporation; that the
seal affixed to said instrument is such corporate seal; that it was so affixed
by authority of the Board of Directors of said corporation, and that he signed
his name thereto by like authority.

                                                 -------------------------------
                                                 Notary Public

             Seal

                                       74

<PAGE>

                         )
                         )   SS.:

         On the ___ day of April, 2004, before me personally came to me known,
who, being by me duly sworn, did depose and say that he is of The Bank of New
York, one of the corporations described in and which executed the foregoing
instrument; that he knows the seal of said corporation; that the seal affixed to
said instrument is such corporate seal; that it was so affixed by authority of
the Board of Directors of said corporation, and that he signed his name thereto
by like authority.

                                                 -------------------------------
                                                 Notary Public
                                                 No.
                                                 Qualified in __________ County
                                                 Commission Expires

[Seal]

                                       75
<PAGE>

                                                                       Exhibit A

                     Form of election to receive payments in
                    U.S. Dollars or to rescind such election

         The undersigned, registered owner of certificate number -
_______________ (the "Certificate"), representing [name of series of Debt
Securities] (the "Debt Securities") in an aggregate principal amount of
_______________, hereby

         [ ]      elects to receive all payments in respect of the Debt
                  Securities in U.S. Dollars. Subject to the terms and
                  conditions set forth in the indenture under which the Debt
                  Securities were issued (the "Indenture"), this election shall
                  take effect on the next Record Date (as defined in the
                  Indenture) after this election form is received by the Trustee
                  and shall remain in effect until it is rescinded by the
                  undersigned or until the Certificate is transferred or paid in
                  full at Maturity.

         [ ]      rescinds the election previously submitted by the
                  undersigned to receive all payments in respect of the Debt
                  Securities in U.S. Dollars represented by the Certificate.
                  Subject to the terms and conditions set forth in the
                  Indenture, this rescission shall take effect on the next
                  Record Date (as defined in such Indenture) after this election
                  form is received by the Trustee, or, in the case of Maturity
                  of an installment of principal, the fifteenth day immediately
                  preceding such Maturity.

         The undersigned acknowledges that, except as provided in the Indenture,
any costs incurred by or on behalf of the Company in connection with the
conversion of foreign currency into U.S. Dollars shall be borne by the
undersigned through deduction from payments required to be made to the
undersigned pursuant to the terms of the Indenture.

         All capitalized terms used herein, unless otherwise defined herein,
shall have the meanings assigned to them in the Indenture.

                                              ----------------------------------
                                              (Name of Owner)

                                              ----------------------------------
                                              (Signature of owner)

                                       76

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