10-Q

SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-Q

X	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
	ACT OF 1934
	For the quarterly period ended June 30, 2001
	OR
	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
	ACT OF 1934

SEITEL, INC.
(Exact name of registrant as specified in charter)
Delaware	76-0025431
(State or other jurisdiction of	(IRS Employer
incorporation or organization)	Identification Number)
50 Briar Hollow Lane, 7th Floor West	77027
Houston, Texas	(Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code:	(713) 881-8900

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes X No

As of August 10, 2001, there were 25,039,399 shares of the Company's common stock, par value $.01 per share outstanding.

Page 1 of 128

INDEX

			Page
PART I.	FINANCIAL INFORMATION
	Item 1.	Financial Statements
	Consolidated Balance Sheets as of
	June 30, 2001 (Unaudited) and December 31, 2000		3
	Consolidated Statements of Income (Unaudited)
	for the Three Months Ended June 30, 2001 and 2000		4
	Consolidated Statements of Income (Unaudited)
	for the Six Months Ended June 30, 2001 and 2000		5
	Consolidated Statements of Stockholders' Equity
	for the Six Months Ended June 30, 2001 (Unaudited)
	and for the year ended December 31, 2000		6
	Consolidated Statements of Cash Flows (Unaudited)
	for the Six Months Ended June 30, 2001 and 2000		7
	Notes to Consolidated Interim Financial Statements (Unaudited)		8
	Item 2.	Management's Discussion and Analysis of
		Financial Condition and Results of Operations	11
	Item 3.	Quantitative and Qualitative
		Disclosures About Market Risk	15
PART II.	OTHER INFORMATION		15

Page 2 of 128

PART I - FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

SEITEL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)

					(Unaudited)
					June 30,			December 31,
					2001			2000
ASSETS
	Cash and equivalents			$	6,723		$	10,216
	Receivables
			Trade, net of allowance		66,512			68,924
			Notes and other		1,474			816
	Net seismic data library				384,248			345,201
	Net oil and gas properties				135,182			141,658
	Net other property and equipment				4,927			3,997
	Investment in marketable securities				2,773			2,029
	Prepaid expenses, deferred charges and other assets				5,573			4,716
	TOTAL ASSETS			$	607,412		$	577,557
LIABILITIES AND STOCKHOLDERS' EQUITY
	Accounts payable and accrued liabilities			$	53,355		$	55,171
	Income taxes payable				2,207			6,075
	Debt
			Senior Notes		166,333			166,333
			Lines of credit		66,000			40,000
	Obligations under capital leases				218			265
	Deferred income taxes				28,758			30,412
	Deferred revenue				1,264			2,975
TOTAL LIABILITIES					318,135			301,231
CONTINGENCIES AND COMMITMENTS
STOCKHOLDERS' EQUITY
	Preferred stock, par value $.01 per share; authorized
			5,000,000 shares; none issued		-			-
	Common stock, par value $.01 per share; authorized
			50,000,000 shares; issued and outstanding
			25,773,983 and 25,306,517 at June 30, 2001
			and December 31,2000, respectively		258			253
	Additional paid-in capital				165,948			159,543
	Retained earnings				137,832			129,543
	Treasury stock, 735,918 and 635,918 shares at cost
		at June 30, 2001 and December 31, 2000, respectively			(9,072	)		(7,667	)
	Notes receivable from officers and employees				(4,127	)		(4,965	)
	Accumulated other comprehensive income (loss)				(1,562	)		(381	)
TOTAL STOCKHOLDERS' EQUITY					289,277			276,326
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY				$	607,412		$	577,557

The accompanying notes are an integral part of these consolidated financial statements.

Page 3 of 128

SEITEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In thousands, except per share amounts)

			Three Months Ended June 30,
			2001			2000
REVENUE		$	43,415		$	40,067
EXPENSES
	Depreciation, depletion and amortization		19,797			18,722
	Impairment of oil and gas properties		7,980			-
	Cost of sales		1,450			1,557
	Selling, general and administrative expenses		9,826			8,011
	Restructuring charge		-			4,394
			39,053			32,684
INCOME FROM OPERATIONS			4,362			7,383
Interest expense, net			(3,049	)		(3,143	)
Income before provision for income taxes			1,313			4,240
Provision for income taxes			541			2,374
NET INCOME		$	772		$	1,866
Net income per share:
	Basic	$	.03		$	.08
	Diluted	$	.03		$	.08
Weighted average number of common and
	common equivalent shares:
	Basic		25,060			23,661
	Diluted		26,340			23,751

The accompanying notes are an integral part of these consolidated financial statements.

Page 4 of 128

SEITEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In thousands, except per share amounts)

			Six Months Ended June 30,
			2001			2000
REVENUE		$	92,393		$	68,498
EXPENSES
	Depreciation, depletion and amortization		41,004			31,881
	Impairment of oil and gas properties		7,980			-
	Cost of sales		2,923			3,207
	Selling, general and administrative expenses		21,194			14,681
	Restructuring charge		-			4,394
			73,101			54,163
INCOME FROM OPERATIONS			19,292			14,335
Interest expense, net			(6,064	)		(6,241	)
Income before provision for income taxes			13,228			8,094
Provision for income taxes			4,939			3,723
NET INCOME		$	8,289		$	4,371
Net income per share:
	Basic	$	.33		$	.18
	Diluted	$	.32		$	.18
Weighted average number of common and
	common equivalent shares:
	Basic		24,921			23,643
	Diluted		26,311			23,747

The accompanying notes are an integral part of these consolidated financial statements.

Page 5 of 128

SEITEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands, except share amounts)
																				Notes
																				Receivable			Accumulated
										Additional										from			Other
			Comprehensive			Common Stock				Paid-In		Retained		Treasury Stock						Officers &			Comprehensive
				Income		Shares		Amount		Capital		Earnings		Shares			Amount			Employees			Income (Loss)
Balance, December 31, 1999						24,285,795	$	243	$	147,549	$	110,117		(680,518	)	$	(6,279	)	$	(6,915	)	$	(1,691	)
	Net proceeds from issuance
		of common stock				1,020,722		10		10,180		-		-			-			-			-
	Tax reduction from exercise
		of stock options				-		-		1,814		-		-			-			-			-
	Treasury stock purchased					-		-		-		-		(330,400	)		(4,849	)		-			-
	Issuance of common stock
		in connection with
		restructuring				-		-		-		(991	)	375,000			3,461			-			-
	Payments received on
		notes receivable from
		officers and employees				-		-		-		-		-			-			1,950			-
	Net income		$	20,417		-		-		-		20,417		-			-			-			-
	Foreign currency translation
		adjustments		647		-		-		-		-		-			-			-			647
	Unrealized gain on
		marketable securities,
		net of income tax
		expense of $333		663		-		-		-		-		-			-			-			663
	Comprehensive income		$	21,727
Balance, December 31, 2000						25,306,517		253		159,543		129,543		(635,918	)		(7,667	)		(4,965	)		(381	)
	Net proceeds from issuance
		of common stock				467,466		5		5,955		-		-			-			-			-
	Tax reduction from exercise
		of stock options				-		-		450		-		-			-			-			-
	Treasury stock purchased					-		-		-		-		(100,000	)		(1,405	)		-			-
	Payments received on
		notes receivable from
		officers and employees				-		-		-		-		-			-			838			-
	Net income		$	8,289		-		-		-		8,289		-			-			-			-
	Foreign currency translation
		adjustments		(853	)	-		-		-		-		-			-			-			(853	)
	Unrealized loss on
		marketable securities,
		net of income tax
		benefit of $256		(328	)	-		-		-		-		-			-			-			(328	)
	Comprehensive income		$	7,108
Balance, June 30, 2001
	(unaudited)					25,773,983	$	258	$	165,948	$	137,832		(735,918	)	$	(9,072	)	$	(4,127	)	$	(1,562	)

The accompanying notes are an integral part of these consolidated financial statements.

Page 6 of 128

SEITEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in thousands)				Six Months Ended June 30,
				2001			2000
Cash flows from operating activities:
Reconciliation of net income to net cash provided by operating activities:
	Net income		$	8,289		$	4,371
	Depreciation, depletion and amortization			41,028			31,888
	Impairment of oil and gas properties			7,980			-
	Restructuring charge			-			2,470
	Deferred income tax provision (benefit)			(1,368	)		1,450
	Non-cash sales			(9,496	)		-
	Decrease in receivables			321			8,891
	Increase in other assets			(545	)		(356	)
	Decrease in accounts payable and other liabilities			(12,546	)		(4,812	)
		Net cash provided by operating activities		33,663			43,902
Cash flows from investing activities:
	Cash invested in seismic data			(57,073	)		(38,503	)
	Cash invested in oil and gas properties			(8,945	)		(10,647	)
	Cash paid to acquire property and equipment			(1,785	)		(288	)
	Net proceeds from sale of oil and gas properties			340			-
	Deferred offering costs			-			(889	)
		Net cash used in investing activities		(67,463	)		(50,327	)
Cash flows from financing activities:
	Borrowings under line of credit agreement			82,060			26,697
	Principal payments under line of credit			(56,060	)		(24,699	)
	Principal payments on term loans			-			(33	)
	Principal payments on capital lease obligations			(47	)		(21	)
	Proceeds from issuance of common stock			5,967			158
	Costs of debt and equity transactions			(471	)		(2	)
	Repurchase of common stock			(1,405	)		-
	Payments on notes receivable from officers and employees			938			500
		Net cash provided by financing activities		30,982			2,600
Effect of exchange rate changes				(675	)		500
Net decrease in cash and equivalents				(3,493	)		(3,325	)
Cash and equivalents at beginning of period				10,216			5,188
Cash and equivalents at end of period			$	6,723		$	1,863
Supplemental disclosure of cash flow information:
	Cash paid during period for:
		Interest (net of amounts capitalized)	$	6,172		$	6,621
		Income taxes	$	9,727		$	720
Supplemental schedule of non-cash investing
	and financing activities:
	Additions to seismic data library		$	9,496		$	-
	Capital lease obligations incurred		$	-		$	22

The accompanying notes are an integral part of these consolidated financial statements.

Page 7 of 128

SEITEL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited)
June 30, 2001

NOTE A-BASIS OF PRESENTATION

          The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions of Regulation S-X. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Certain reclassifications have been made to the amounts in the prior year's financial statements to conform to the current year's presentation. Operating results for the six months ended June 30, 2001 are not necessarily indicative of the results that may be expected for the year ending December 31, 2001. For further information, refer to the financial statements and notes thereto for the year ended December 31, 2000 cont ained in the Company's Annual Report filed on Form 10-K with the Securities and Exchange Commission.

          The Company has changed its presentation of cash flows from operating activities from the direct method to the indirect method as allowed in Statement of Financial Accounting Standards ("SFAS") No. 95.

NOTE B-EARNINGS PER SHARE

          In accordance with SFAS No. 128, "Earnings per Share," basic earnings per share is computed based on the weighted average shares of common stock outstanding during the periods. Diluted earnings per share is computed based on the weighted average shares of common stock plus the assumed issuance of common stock for all potentially dilutive securities. The computations for basic and diluted net income per share for the three and six months ended June 30, 2001 and 2000 consist of the following (in thousands except per share amounts):

			Three Months Ended				Six Months Ended
			June 30,				June 30,
			2001		2000		2001		2000
Net income		$	772	$	1,866	$	8,289	$	4,371
Basic weighted average shares			25,060		23,661		24,921		23,643
Effect of dilutive securities: (1)
	Options and warrants		1,280		90		1,390		104
Diluted weighted average shares			26,340		23,751		26,311		23,747
Net income per share:
	Basic	$	.03	$	.08	$	.33	$	.18
	Diluted	$	.03	$	.08	$	.32	$	.18

(1) During the second quarter of 2001 and 2000 and the first six months of 2001 and 2000, a weighted average number of options and warrants to purchase 279,000, 6,169,000, 196,000 and 6,208,000 shares of common stock were outstanding, respectively, but were not included in the computation of diluted net income per share because their exercise prices were greater than the average market price of the common shares.

Page 8 of 128

NOTE C-SEISMIC DATA LIBRARY

          Costs incurred in the creation of proprietary seismic data, including the direct and incremental costs of Company personnel engaged in project management and design, are capitalized. Approximately 80% of the costs incurred to develop the Company's seismic data library have been for programs created by the Company. The Company uses the income forecast method to amortize the costs of seismic data programs it creates. Under the income forecast method, seismic data costs are amortized in the proportion that revenue for a period relates to management's estimate of ultimate revenues. If anticipated sales fall below expectations, amortization is accelerated. The Company also purchases existing seismic data programs from other companies. The costs of purchased seismic data programs are generally amortized on a straight-line basis over ten years; however, the costs of a significant purchase (greater than 5% of the net book value of the data bank), are amorti zed using the greater of the income forecast method or ten-year straight-line method. All of the surveys in the Company's seismic data library are expected to be substantially amortized within 10 years from when such data becomes available for resale.

          In certain transactions, the Company grants seismic licenses to third parties for data to be used in their operations (not for resale) in exchange for exclusive ownership of seismic data from the third party. The Company recognizes revenue for the licenses granted and records a data library asset for the seismic data acquired. These transactions are accounted for as non-monetary exchanges and are valued at the fair market value of such licenses based on values realized in cash transactions with other parties for similar seismic data, or at the estimated fair value of the seismic data libraries acquired.

NOTE D-OIL AND GAS PROPERTIES

          The Company accounts for its oil and gas exploration and production activities using the full-cost method of accounting. Under this method, all costs associated with acquisition, exploration and development of oil and gas reserves are capitalized, including salaries, benefits and other internal costs directly attributable to these activities. Costs associated with production and general corporate activities are expensed in the period incurred. For the six months ended June 30, 2001 and 2000, exploration and development related overhead costs of $1,213,000 and $946,000, respectively, have been capitalized to oil and gas properties. Interest costs related to unproved properties and certain properties under development are also capitalized to oil and gas properties. For the six months ended June 30, 2001 and 2000, interest costs of $1,104,000 and $1,484,000, respectively, have been capitalized to oil and gas properties.

          Capitalized costs of oil and gas properties, net of accumulated depreciation, depletion and amortization and deferred income taxes, are limited to the present value, discounted at 10 percent, of future net cash flows from estimated proved oil and gas reserves, based on current economic and operating conditions, plus the lower of cost or fair value of unproved properties, adjusted for the effects of related income taxes. If capitalized costs exceed this limit, the excess is charged to impairment of oil and gas properties. Based on the Company's June 30, 2001 estimated proved reserves, the Company recorded a non-cash impairment of oil and gas properties of $7,980,000 ($5,000,000 net of tax) in the second quarter of 2001.

NOTE E-DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

             The Company enters into foreign exchange contracts to hedge a portion of its foreign currency exchange risk related to its Canadian activities. On January 1, 2001, the Company adopted SFAS No. 133, as amended, "Accounting for Derivative Instruments and Hedging Activities." Effective with the adoption of SFAS No. 133, all derivatives are recognized on the balance sheet and measured at fair value. If the derivative does not qualify as a hedge or is not designated as a hedge, the gain or loss on the derivative is recognized currently in earnings. If the derivative qualifies for hedge accounting, the gain or loss on the derivative is either recognized in income along with an offsetting adjustment to the basis of the item being hedged or deferred in other comprehensive income to the extent the hedge is effective. The adoption of SFAS No. 133 did not have a material impact on the Company's financial position or results of operations.

Page 9 of 128

NOTE F-INDUSTRY SEGMENTS

          Segment information has been prepared in accordance with SFAS NO. 131, "Disclosures About Segments of an Enterprise and Related Information." Selected financial information as of and for the three and six months ended June 30, 2001 and 2000 is as follows (in thousands):

				Exploration
				and			Total
		Seismic		Production			Segments
Three months ended June 30, 2001
Revenue from external purchasers	$	37,627	$	5,788		$	43,415
Depreciation, depletion and amortization		16,592		2,745			19,337
Impairment of oil and gas properties		-		7,980			7,980
Cost of sales		472		978			1,450
Segment operating income (loss)	$	20,563	$	(5,915	)	$	14,648
Capital expenditures (a)	$	27,440	$	2,981		$	30,421
Assets		458,002		142,750			600,752
Three months ended June 30, 2000
Revenue from external purchasers	$	33,980	$	6,087		$	40,067
Depreciation, depletion and amortization		15,461		2,970			18,431
Cost of sales		403		1,154			1,557
Segment operating income	$	18,116	$	1,963		$	20,079
Capital expenditures (a)	$	18,318	$	4,433		$	22,751
Assets		392,132		159,740			551,872
Six months ended June 30, 2001
Revenue from external purchasers	$	78,528	$	13,865		$	92,393
Depreciation, depletion and amortization		34,747		5,385			40,132
Impairment of oil and gas properties		-		7,980			7,980
Cost of sales		643		2,280			2,923
Segment operating income (loss)	$	43,138	$	(1,780	)	$	41,358
Capital expenditures (a)	$	74,140	$	7,505		$	81,465
Assets		458,002		142,750			600,752
Six months ended June 30, 2000
Revenue from external purchasers	$	56,999	$	11,499		$	68,498
Depreciation, depletion and amortization		25,749		5,542			31,291
Cost of sales		480		2,727			3,207
Segment operating income	$	30,770	$	3,230		$	34,000
Capital expenditures (a)	$	38,076	$	8,242		$	46,318
Assets		392,132		159,740			551,872

(a) Includes other ancillary equipment.

Page 10 of 128

					Three Months Ended						Six Months Ended
					June 30,						June 30,
					2001			2000			2001			2000
Income from continuing operations
	before income taxes:
		Total reportable segment
			operating income	$	14,648		$	20,079		$	41,358		$	34,000
		Selling general and
			administrative expense		(9,826	)		(8,011	)		(21,194	)		(14,681	)
		Restructuring charge			-			(4,394	)		-			(4,394	)
		Interest expense, net			(3,049	)		(3,143	)		(6,064	)		(6,241	)
		Eliminations and other			(460	)		(291	)		(872	)		(590	)
		Income from continuing operations
			before income taxes	$	1,313		$	4,240		$	13,228		$	8,094

Item 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
	AND RESULTS OF OPERATIONS

OVERVIEW

          The Company's income before special items was $5,772,000 for the second quarter of 2001 and $13,289,000 for the six months ended June 30, 2001 as compared to $5,609,000 for the second quarter of 2000 and $8,114,000 for the six months ended June 30, 2000. In the second quarter and first six months of 2001, the Company recorded a non-cash impairment of oil and gas properties of $5,000,000, net of tax, bringing net income for the second quarter and first six months of 2001 to $772,000 and $8,289,000, respectively. Additionally, in the second quarter and first six months of 2000, the Company recorded a non-recurring restructuring charge of $3,743,000, net of tax, bringing net income for the second quarter and first six months of 2000 to $1,866,000 and $4,371,000, respectively.

RESULTS OF OPERATIONS

          Total revenue was $43,415,000 and $40,067,000 in the second quarters of 2001 and 2000, respectively, and $92,393,000 and $68,498,000 in the first six months of 2001 and 2000, respectively. Revenue primarily consists of revenue generated from the marketing of seismic data and oil and gas production.

          Revenue from the seismic division was $37,627,000 in the second quarter of 2001 compared to $33,980,000 in the second quarter of 2000 and was $78,528,000 in the first six months of 2001 compared to $56,999,000 in the first six months of 2000. This increase in revenue was primarily due to an increase in licensing of existing data from the Company's data library in the United States which more than offset the reduction in revenue from the Company's Canadian subsidiary.

          Net volume and price information for the Company's oil and gas production for the second quarters and first six months of 2001 and 2000 are summarized in the following table:

		Quarter Ended				Six Months Ended
		June 30,				June 30,
		2001		2000		2001		2000
Natural gas volumes (mmcf)		797		1,305		1,559		2,610
Average natural gas price ($/mcf)	$	5.22	$	3.01	$	6.58	$	2.88
Crude oil/condensate volumes (mbbl)		65		83		135		153
Average crude oil/condensate price ($/bbl)	$	24.53	$	25.24	$	26.04	$	25.25

Page 11 of 128

          Oil and gas revenue was $5,788,000 in the second quarter of 2001 compared to $6,087,000 in the second quarter of 2000. The decrease between periods was due to lower production volumes offset by higher gas prices in 2001. Oil and gas revenue was $13,865,000 in the first six months of 2001 compared to $11,499,000 in the first six months of 2000. The increase between periods was attributable to higher market prices in 2001 offset by lower production volumes. The decline in oil and gas production during 2001 was primarily due to normal production declines experienced on several of the Company's older wells as well as a decline related to a group of wells that was sold in August 2000. These declines were partially offset by production from newer wells.

          Oil and gas revenue includes losses from hedging activities of $851,000 in the second quarter of 2000 and $913,000 for the six months ended June 30, 2000.

          Depreciation, depletion and amortization consists primarily of seismic data library amortization and depletion of oil and gas properties. Seismic data library amortization was $16,592,000 during the second quarter of 2001 compared to $15,461,000 during the second quarter of 2000 and was $34,747,000 during the first six months of 2001 compared to $25,749,000 during the first six months of 2000. The amount of seismic data amortization fluctuates based on the level of seismic marketing revenue. As a percentage of revenue from licensing seismic data, seismic data library amortization was 45% and 46% for the second quarters of 2001 and 2000, respectively, and was 45% and 46% for the first six months of 2001 and 2000, respectively. See Note C for a discussion of the Company's seismic data amortization policy.

          Depletion of oil and gas properties was $2,745,000 for the second quarter of 2001 compared to $2,970,000 for the second quarter of 2000, which amounted to $2.31 and $1.65, respectively, per mcfe of gas produced during such periods. For the six months ended June 30, 2001 and 2000, depletion of oil and gas properties was $5,385,000 and $5,542,000, respectively, which amounted to $2.27 and $1.57, respectively, per mcfe of gas produced during such periods. The depletion rate per mcfe varies with the estimate of proved oil and gas reserves of the Company at each quarter end, as well as evaluated property costs. The increase in the rate between periods was primarily due to lower proved reserves at June 30, 2001 than at June 30, 2000.

          At June 30, 2001, the Company recorded a non-cash impairment of oil and gas properties totaling $7,980,000 ($5,000,000 net of taxes) based on its June 30, 2001 estimated proved reserves. The impairment was primarily due to lower commodity prices.

          Cost of sales primarily consists of expenses associated with oil and gas production and seismic resale support services. Oil and gas production costs amounted to $978,000, or $.82 per mcfe of gas produced in the second quarter of 2001 compared to $1,154,000 or $.64 per mcfe of gas produced in the second quarter of 2000. Oil and gas production costs amounted to $2,280,000 or $.96 per mcfe of gas produced in the first six months of 2001 compared to $2,727,000 or $.77 per mcfe of gas produced in the first six months of 2000. The increase in this rate between periods was primarily due to higher production taxes in 2001 due to higher oil and gas prices.

         The Company's selling, general and administrative expenses were $9,826,000 and $21,194,000 during the second quarter and first six months of 2001, respectively, compared to $8,011,000 and $14,681,000 during the second quarter and first six months of 2000, respectively. The increases primarily resulted from an increase in overhead costs due to the growth of the Company, including research and development costs associated with its wholly-owned subsidiary, Seitel Solutions, and international business development. As a percentage of total revenue, these expenses were 23% for the second quarter and first six months of 2001, and 20% and 21% for the second quarter and first six months of 2000, respectively.

          On June 23, 2000, the Company announced that its management incentive bonus compensation contracts had been restructured to reduce bonuses on pre-tax profits to 8.5% from 17.5%. In connection with the restructuring, the Company issued 375,000 restricted shares of its Common Stock to three members of management and made cash payments totaling $1,771,000. As a result, the Company recorded a restructuring charge in the second quarter of 2000 totaling $4,394,000 ($3,743,000 net of tax) to reflect the cost of the shares issued and the cash payments made. In addition, the Company will, subject to continued employment, make (i) four annual payments of $187,500, net of taxes, to Herbert Pearlman, Chairman of the Board of Directors, which began January 1, 2001; (ii) four annual payments of $125,000, net of taxes, to Paul Frame, President and Chief Executive Officer, which began January 1, 2001; and (iii) payments totaling $1.4 million, net of taxes, to David Lawi payable over four years which began January 1, 2001. The withholding taxes on these payments will total 35%. The Company will also make annual payments of $850,000 to Horace Calvert from July 1, 2000 through May 31, 2004, subject to continued employment. These payments will be charged to expense over the period earned.

Page 12 of 128

          The Company's effective income tax rate was 41% and 37% for the second quarter and first six months of 2001, respectively, compared to 56% and 46% for the second quarter and first six months of 2000, respectively. The decrease in the effective tax rate for 2001 is primarily due to the tax impact of the restructuring charge in 2000 causing an increase in the 2000 effective tax rate as well as the mix of earnings between U.S. and foreign locations. Income tax expense in the second quarter and the first six months of 2000, consisted of two items: (1) income tax expense on income before restructuring charge at the Company's estimated annual tax rate of 35% offset by (2) income tax benefit on the restructuring charge totaling $651,000, which represented 15% of the restructuring charge. The Company received a tax benefit on the restructuring charge of $651,000 due to limitations imposed by Section 162(m) of the Internal Revenue Code.

LIQUIDITY AND CAPITAL RESOURCES

          The Company's cash flow from operating activities was $33,663,000 and $43,902,000 for the six months ended June 30, 2001 and 2000, respectively. The decrease from 2000 to 2001 was primarily attributable to an increase in income taxes paid.

             On June 29, 2001, the Company replaced its existing $75 million line of credit with a new $75 million unsecured revolving line of credit facility that matures on June 29, 2004. The Company has the ability to increase the amount of the facility to $150 million. The facility bears interest at a rate determined by the ratio of the Company's debt to EBITDA (earnings before interest, taxes, depreciation, deletion and amortization). Pursuant to the interest rate pricing structure, funds can currently be borrowed at LIBOR plus 1.5%, the bank's prevailing prime rate, or the sum of the Federal Funds Effective Rate for such day plus 1/2%. The balance outstanding on this revolving line of credit as of August 10, 2001 was $66 million at an average interest rate of 5.54%.

             The Company's wholly-owned subsidiary, Olympic Seismic Ltd. ("Olympic"), has a revolving credit facility which allows it to borrow up to $5 million (Canadian dollars) by way of prime based loans, bankers' acceptances, or letters of credit. Prime based loans and bankers' acceptances bear interest at the rate of the bank's prime rate plus 0.35% per annum and 0.50% per annum, respectively. Letter of credit fees are based on scheduled rates in effect at the time of issuance. The facility is secured by Olympic's assets, but is not guaranteed by Seitel, Inc. or any of its other subsidiaries. Borrowings under the facility are limited to the higher of $2 million or 75% of trade receivables less than 90 days old. The facility is subject to repayment upon demand and is available from time to time at the Bank's sole discretion. As of August 10, 2001, no amounts were outstanding on this revolving line of credit. Olympic is not a party to any o f the debt issued by Seitel, Inc.

             On February 12, 1999, the Company completed a private placement of three series of unsecured Senior Notes totaling $138 million. The Series D Notes total $20 million, bear interest at a fixed rate of 7.03% and mature on February 15, 2004, with no principal payments due until maturity. The Series E Notes total $75 million, bear interest at a fixed rate of 7.28% and mature on February 15, 2009, with annual principal payments of $12.5 million beginning February 15, 2004. The Series F Notes total $43 million, bear interest at a fixed rate of 7.43% and mature on February 15, 2009, with no principal payments due until maturity. Interest on the Series D, E and F Notes is payable semi-annually on February 15 and August 15. As of August 10, 2001, the balance outstanding on the Series D, E and F Notes was $138 million.

             On December 28, 1995, the Company completed a private placement of three series of unsecured Senior Notes totaling $75 million. The Company contemporaneously issued its Series A Notes and Series B Notes, which total $52.5 million and bear interest at a fixed rate of 7.17%. On April 9, 1996, the Company issued its Series C Notes, which total $22.5 million and bear interest at a fixed rate of 7.48%. The Series A Notes mature on December 30, 2001, and require annual principal payments of $8.3 million which began on December 30, 1999. The Series B and Series C Notes mature on December 30, 2002, and require combined annual principal payments of $10 million, which began on December 30, 1998. Interest on the Series A, B and C Notes is payable semi-annually on June 30 and December 30. As of August 10, 2001, the balance outstanding on the Series A, B, and C Notes was $28,333,000.

Page 13 of 128

             The Company may offer from time to time in one or more series (i) unsecured debt securities, which may be senior or subordinated, (ii) preferred stock and (iii) common stock, or any combination of the foregoing, up to an aggregate of $41,041,600 pursuant to an effective "shelf" registration statement filed with the SEC. In addition, under another effective "shelf" registration statement filed with the SEC, the Company may offer up to an aggregate of $200,000,000 of the following securities, in any combination, from time to time in one or more series: (i) unsecured debt securities, which may be senior or subordinated; (ii) preferred stock; (iii) common stock, and (iv) trust preferred securities.

             From January 1, 2001, through August 10, 2001, the Company received $5,968,000 from the exercise of common stock purchase warrants and options. In connection with these exercises, the Company will also realize approximately $450,000 in tax savings.

             The Company's Board of Directors approved a stock repurchase program in 1997 of up to $25 million. As of August 10, 2001, the Company has repurchased a total of 1,110,100 shares of its common stock at a cost of $12,529,000 under this plan.

             During the first six months of 2001, capital expenditures for seismic data library, oil and gas property and other property and equipment amounted to $73,307,000, $7,258,000 and $1,785,000, respectively. These capital expenditures, as well as taxes, interest expenses, cost of sales and general and administrative expenses, were funded by operations, proceeds from the exercise of common stock purchase warrants and options, and borrowings under the Company's revolving line of credit.

             Currently, the Company anticipates capital expenditures for the remainder of 2001 to total approximately $58 million, of which approximately $42 million will be for seismic data bank additions, approximately $2 million will be for computer equipment purchases and approximately $14 million will be for oil and gas exploration and development efforts. The Company believes its current cash balances, revenues from operating sources, and proceeds from the exercise of common stock purchase warrants and options, combined with its available revolving line of credit, should be sufficient to fund the currently anticipated 2001 capital expenditures, along with expenditures for operating and general and administrative expenses and debt repayments. If these sources are not sufficient to cover the Company's anticipated expenditures or if the Company were to increase its planned capital expenditures for 2001, the Company could arrange for addition al debt or equity financing during 2001; however, there can be no assurance that the Company would be able to accomplish any such debt or equity financing on satisfactory terms. If such debt or equity financing is not available on satisfactory terms, the Company could reduce its current capital budget or any proposed increases to its capital budget, and fund expenditures with cash flow generated from operating sources.

Information Regarding Forward Looking Statements

             This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Although the Company believes that its expectations are based on reasonable assumptions, it can give no assurance that its goals will be achieved. Important factors that could cause actual results to differ materially from those in the forward looking statements herein include, but are not limited to, changes in the exploration budgets of the Company's seismic data and related services customers, actual customer demand for the Company's seismic data and related services, the extent of the Company's success in acquiring oil and gas properties and in discovering, developing and producing reserves, the timing and extent of changes in commodity prices for natural gas, crude oil and condensate and natural gas liquids and conditions in the capital ma rkets and equity markets during the periods covered by the forward looking statements. The foregoing and other risk factors are identified in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 2000.

Page 14 of 128

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

             The Company is exposed to market risk, including adverse changes in commodity prices, interest rates and foreign currency exchange rates. Refer to the Company's Form 10-K for the year ended December 31, 2000 for a detailed discussion of these risks. The following information discusses changes in the Company's market risk exposures since December 31, 2000.

Commodity Price Risk

             The Company may enter into various derivative instruments, principally natural gas swaps, to manage commodity price fluctuations. Currently, the Company has no open commodity price hedges.

Interest Rate Risk

             The Company may enter into various financial instruments, such as interest rate swaps, to manage the impact of changes in interest rates. Currently, the Company has no open interest rate swap or interest rate lock agreements. Therefore, the Company's exposure to changes in interest rates primarily results from its short-term and long-term debt with both fixed and floating interest rates.

Foreign Currency Exchange Rate Risk

             The Company conducts business in the Canadian dollar and pounds sterling and is therefore subject to foreign currency exchange rate risk on cash flows related to sales, expenses, financing and investing transactions. Currently, the Company has no open foreign exchange contracts.

PART II - OTHER INFORMATION

Items 1., 2., 3. and 5.  Not applicable.

Item 4.  Submission of Matters to a Vote of Security Holders.

             The Company's Annual Meeting of Stockholders was held on June 5, 2001. Matters voted upon at the Annual Meeting, and the results of those votes are as follows:

1.   The election of seven directors to serve until the 2002 Annual Meeting.

Name	No. of Votes For	No. of Votes Against
Herbert M. Pearlman	19,056,485	3,589,507
Paul A. Frame	19,058,857	3,587,135
Debra D. Valice	19,058,731	3,587,261
Walter M. Craig, Jr.	21,783,577	862,415
William Lerner	21,778,903	867,089
John E. Stieglitz	21,780,503	865,489
Fred S. Zeidman	21,783,077	862,915

Page 15 of 128

Item 6.  Exhibits and Report on Form 8-K
	(a)	Exhibits
		10.1	Credit Agreement dated as of June 29, 2001, among Seitel, Inc. and Bank One, NA as Agent and LC Issuer and Comerica Bank - Texas as Syndication Agent
		10.2	Ratable Note in the amount of $25,000,000 among Seitel, Inc. and Comerica Bank-Texas
		10.3	Ratable Note in the amount of $15,000,000 among Seitel, Inc. and Guaranty Bank
		10.4	Seitel, Inc. 2001 Inducement Stock Option Plan adopted January 1, 2001
		10.5	2001 Non-Officer Stock Option Plan adopted June 5, 2001
	(b)	Not applicable.

Page 16 of 128

SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned thereunto duly authorized.
			SEITEL, INC.
Dated: August	13,	2001	/s/	Paul A. Frame
				Paul A. Frame
				President
Dated: August	13,	2001	/s/	Debra D. Valice
				Debra D. Valice
				Chief Financial Officer
Dated: August	13,	2001	/s/	Marcia H. Kendrick
				Marcia H. Kendrick
				Chief Accounting Officer

Page 17 of 128

	EXHIBIT INDEX
		Page
Exhibit	Title	Number
10.1	Credit Agreement dated as of June 29, 2001, among Seitel, Inc. and Bank One, NA as Agent and LC Issuer and Comerica Bank - Texas as Syndication Agent	19
10.2	Ratable Note in the amount of $25,000,000 among Seitel, Inc. and Comerica Bank-Texas	90
10.3	Ratable Note in the amount of $15,000,000 among Seitel, Inc. and Guaranty Bank	92
10.4	Seitel, Inc. 2001 Inducement Stock Option Plan adopted January 1, 2001	94
10.5	Seitel, Inc. 2001 Non-Officer Stock Option Plan adopted June 5, 2001	112

Page 18 of 128

EX-10.1

EXHIBIT 10.1

CREDIT AGREEMENT

DATED AS OF JUNE 29, 2001

AMONG

SEITEL, INC.,

THE LENDERS,

BANK ONE, NA

AS AGENT AND LC ISSUER

AND

COMERICA BANK - TEXAS

AS SYNDICATION AGENT

BANC ONE CAPITAL MARKETS, INC.

AS LEAD ARRANGER AND SOLE BOOK RUNNER

TABLE OF CONTENTS

ARTICLE I	DEFINITIONS			1
ARTICLE II	THE CREDITS			17
	2.1.		Commitment	17
	2.2.		Required Payments; Termination	17
	2.3.		Ratable Loans	17
	2.4.		Types of Advances	17
	2.5.		Swing Line Loans	17
	2.6.		Commitment Fee; Reductions in Aggregate Commitment	19
	2.7.		Minimum Amount of Each Advance	19
	2.8.		Optional Principal Payments	19
	2.9.		Method of Selecting Types and Interest Periods for New Advances	20
	2.10.		Conversion and Continuation of Outstanding Advances	20
	2.11.		Changes in Interest Rate, etc.	21
	2.12.		Rates Applicable After Default	21
	2.13.		Method of Payment	21
	2.14.		Noteless Agreement; Evidence of Indebtedness	22
	2.15.		Telephonic Notices	22
	2.16.		Interest Payment Dates; Interest and Fee Basis	23
	2.17.		Notification of Advances, Interest Rates, Prepayments and Commitment Reductions	23
	2.18.		Lending Installations	23
	2.19.		Non-Receipt of Funds by the Agent	23
	2.20.		Facility LCs.	24
	2.21.		Optional Increase in the Aggregate Commitment	28
ARTICLE III	YIELD PROTECTION; TAXES			30
	3.1.		Yield Protection	30
	3.2.		Changes in Capital Adequacy Regulations	31
	3.3.		Availability of Types of Advances	32
	3.4.		Funding Indemnification	32
	3.5.		Taxes	32
	3.6.		Lender Statements; Survival of Indemnity	34
ARTICLE IV	CONDITIONS PRECEDENT			34
	4.1.		Initial Credit Extension	34
	4.2.		Each Credit Extension	36
ARTICLE V	REPRESENTATIONS AND WARRANTIES			37
	5.1.		Existence and Standing	37
	5.2.		Authorization and Validity	37
	5.3.		No Conflict; Government Consent	38
	5.4.		Financial Statements	38
	5.5.		Material Adverse Change	38
	5.6.		Taxes	38
	5.7.		Litigation and Contingent Obligations	39
	5.8.		Subsidiaries	39
	5.9.		ERISA	39
	5.10.		Accuracy of Information	39
	5.11.		Regulation U	39
	5.12.		Material Agreements	39
	5.13.		Compliance With Laws	39
	5.14.		Ownership of Properties	40
	5.15.		Plan Assets; Prohibited Transactions	40
	5.16.		Environmental Matters	40
	5.17.		Investment Company Act	40
	5.18.		Public Utility Holding Company Act	40
	5.19.		Insurance	40
ARTICLE VI	COVENANTS			41
	6.1.		Financial Reporting	41
	6.2.		Use of Proceeds	43
	6.3.		Notice of Default	43
	6.4.		Conduct of Business	43
	6.5.		Taxes	43
	6.6.		Insurance	43
	6.7.		Compliance with Laws	43
	6.8.		Maintenance of Properties	44
	6.9.		Inspection	44
	6.10.		Restricted Payments and Investments_Toc518291875	44
	6.11.		Indebtedness_Toc518291876	44
	6.12.		Merger and Consolidation_Toc518291877	45
	6.13.		Sale of Assets_Toc518291878	45
	6.14.		Liens_Toc518291879	46
	6.15.		Affiliates_Toc518291880	46
	6.16.		Financial Covenants_Toc518291881	47
	6.16.1		Interest Coverage Ratio_Toc518291882	47
	6.16.2		Leverage Ratio_Toc518291883	47
	6.16.3		Minimum Net Worth_Toc518291884	47
	6.17.		Qualified Capital_Toc518291885	47
	6..		Books and Records_Toc518291886	47
ARTICLE VII	DEFAULTS			47
ARTICLE VIII	ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES			50
	8.1.		Acceleration; Facility LC Collateral Account_Toc518291889	50
	8.2.		Amendments_Toc518291890	51
	8.3.		Preservation of Rights_Toc518291891	51
ARTICLE IX	GENERAL PROVISIONS			52
	9.1.		Survival of Representations_Toc518291893	52
	9.2.		Governmental Regulation_Toc518291894	52
	9.3.		Headings_Toc518291895	52
	9.4.		Entire Agreement_Toc518291896	52
	9.5.		Several Obligations; Benefits of this Agreement_Toc518291897	52
	9.6.		Expenses; Indemnification_Toc518291898	52
	9.7.		Numbers of Documents_Toc518291899	53
	9.8.		Accounting_Toc518291900	53
	9.9.		Severability of Provisions_Toc518291901	53
	9.10.		Nonliability of Lenders_Toc518291902	53
	9.11.		Confidentiality_Toc518291903	54
	9.12.		Nonreliance_Toc518291904	54
	9.13.		Disclosure_Toc518291905	54
ARTICLE X	THE AGENT			55
	10.1.		Appointment; Nature of Relationship_Toc518291908	55
	10.2.		Powers_Toc518291909	55
	10.3.		General Immunity_Toc518291910	55
	10.4.		No Responsibility for Loans, Recitals, etc._Toc518291911	55
	10.5.		Action on Instructions of Lenders_Toc518291912	56
	10.6.		Employment of Agents and Counsel_Toc518291913	56
	10.7.		Reliance on Documents; Counsel_Toc518291914	56
	10.8.		Agent's Reimbursement and Indemnification_Toc518291915	56
	10.9.		Notice of Default_Toc518291916	57
	10.10.		Rights as a Lender_Toc518291917	57
	10.11.		Lender Credit Decision_Toc518291918	57
	10.12.		Successor Agent_Toc518291919	57
	10.13.		Agent and Arranger Fees._Toc518291920	58
	10.14.		Delegation to Affiliates_Toc518291921	58
	10.15.		Syndication Agent_Toc518291922	58
ARTICLE XI	SETOFF; RATABLE PAYMENTS			59
	11.1.		Setoff_Toc518291924	59
	11.2.		Ratable Payments_Toc518291925	59
ARTICLE XII	BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS			59
	12.1		Successors and Assigns_Toc518291927	59
	12.2.		Participations_Toc518291928	60
	12.3.		Assignments_Toc518291929	61
	12.4.		Dissemination of Information_Toc518291930	61
	12.5.		Tax Treatment_Toc518291931	62
ARTICLE XIII	NOTICES_Toc518291932			62
	13.1.		Notices_Toc518291933	62
	13.2.		Change of Address_Toc518291934	62
ARTICLE XIV	COUNTERPARTS			62
ARTICLE XV	CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL			63
	15.1.		CHOICE OF LAW_Toc518291937	63
	15.2.		CONSENT TO JURISDICTION	63
	15.3.		WAIVER OF JURY TRIAL	63
PRICING SCHEDULE
EXHIBIT A.		COMPLIANCE CERTIFICATE
EXHIBIT B.		ASSIGNMENT AGREEMENT
EXHIBIT C.		LOAN/CREDIT RELATED MONEY TRANSFER INSTRUCTION
EXHIBIT D.		NOTE
EXHIBIT E.		SUBSIDIARY GUARANTY
EXHIBIT F.		LENDER ASSUMPTION AGREEMENT
SCHEDULE 1.		SUBSIDIARIES AND OTHER INVESTMENTS
SCHEDULE 2.		LIENS

CREDIT AGREEMENT

          This Agreement, dated as of June 29, 2001, is among Seitel, Inc., a Delaware corporation, the Lenders, Bank One, NA, a national banking association having its principal office in Chicago, Illinois, as LC Issuer and as Agent and Comerica Bank - Texas, as Syndication Agent. The parties hereto agree as follows:

ARTICLE I

DEFINITIONS

          As used in this Agreement:

          "Acceptable Bank" means any bank or trust company that (i) is organized under the laws of the United States of America or any State thereof and (ii) has capital, surplus and undivided profits aggregating at least Five Hundred Million Dollars ($500,000,000).

          "Acquisition" means any transaction, or any series of related transactions, consummated on or after the date of this Agreement, by which the Borrower or any of its Restricted Subsidiaries (i) acquires any going concern business or all or substantially all of the assets of any firm, corporation or limited liability company, or division thereof, whether through purchase of assets, merger or otherwise or (ii) directly or indirectly acquires (in one transaction or as the most recent transaction in a series of transactions) at least a majority (in number of votes) of the securities of a corporation which have ordinary voting power for the election of directors (other than securities having such power only by reason of the happening of a contingency) or a majority (by percentage or voting power) of the outstanding ownership interests of a partnership or limited liability company.

          "Advance" means a borrowing hereunder, (i) made by some or all of the Lenders on the same Borrowing Date, or (ii) converted or continued by the Lenders on the same date of conversion or continuation, consisting, in either case, of the aggregate amount of the several Loans of the same Type and, in the case of Eurodollar Loans, for the same Interest Period. The term "Advance" shall include Swing Line Loans unless otherwise expressly provided.

          "Affiliate" of any Person means any other Person directly or indirectly controlling, controlled by or under common control with such Person. A Person shall be deemed to control another Person if the controlling Person owns 10% or more of any class of voting securities (or other ownership interests) of the controlled Person or possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of the controlled Person, whether through ownership of stock, by contract or otherwise.

          "Agent" means Bank One in its capacity as contractual representative of the Lenders pursuant to Article X, and not in its individual capacity as a Lender, and any successor Agent appointed pursuant to Article X.

          "Aggregate Commitment" means the aggregate of the Commitments of all the Lenders, as reduced or increased from time to time pursuant to the terms hereof.

          "Aggregate Outstanding Credit Exposure" means, at any time, the aggregate of the Outstanding Credit Exposure of all the Lenders.

          "Agreement" means this credit agreement, as it may be amended or modified and in effect from time to time.

          "Agreement Accounting Principles" means generally accepted accounting principles as in effect from time to time, applied in a manner consistent with that used in preparing the financial statements referred to in Section 5.4.

          "Alternate Base Rate" means, for any day, a fluctuating rate of interest per annum equal to the higher of (i) the Prime Rate for such day and (ii) the sum of the Federal Funds Effective Rate for such day plus 1/2% per annum.

          "Applicable Fee Rate" means, at any time, the percentage rate per annum at which Commitment Fees are accruing on the unused portion of the Aggregate Commitment at such time as set forth in the Pricing Schedule.

          "Applicable Margin" means, with respect to Advances of any Type at any time, the percentage rate per annum which is applicable at such time with respect to Advances of such Type as set forth in the Pricing Schedule.

          "Arranger" means Banc One Capital Markets, Inc., a Delaware corporation, and its successors, in its capacity as Lead Arranger and Sole Book Runner.

          "Article" means an article of this Agreement unless another document is specifically referenced.

          "Authorized Officer" means any of the President, Executive Vice President, Chief Financial Officer or Chief Accounting Officer of the Borrower, acting singly.

          "Available Aggregate Commitment" means, at any time, the Aggregate Commitment then in effect minus the Aggregate Outstanding Credit Exposure at such time.

          "Bank One" means Bank One, NA, a national banking association having its principal office in Chicago, Illinois, in its individual capacity, and its successors.

          "Borrower" means Seitel, Inc., a Delaware corporation.

          "Borrowing Date" means a date on which an Advance is made hereunder.

          "Borrowing Notice" is defined in Section 2.9.

          "Business Day" means (i) with respect to any borrowing, payment or rate selection of Eurodollar Advances, a day (other than a Saturday or Sunday) on which banks generally are open in Chicago and New York for the conduct of substantially all of their commercial lending activities, interbank wire transfers can be made on the Fedwire system and dealings in United States dollars are carried on in the London interbank market and (ii) for all other purposes, a day (other than a Saturday or Sunday) on which banks generally are open in Chicago for the conduct of substantially all of their commercial lending activities and interbank wire transfers can be made on the Fedwire system.

          "Capitalized Lease" of a Person means any lease of Property by such Person as lessee which would be capitalized on a balance sheet of such Person prepared in accordance with Agreement Accounting Principles.

          "Capitalized Lease Obligations" of a Person means the amount of the obligations of such Person under Capitalized Leases which would be shown as a liability on a balance sheet of such Person prepared in accordance with Agreement Accounting Principles.

          "Change in Control" means the acquisition by any Person, or two or more Persons acting in concert, of beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934) of 30% or more of the outstanding shares of Voting Stock of the Borrower.

          "Closing Date" means June 29, 2001.

          "Code" means the Internal Revenue Code of 1986, as amended, reformed or otherwise modified from time to time.

          "Collateral Shortfall Amount" is defined in Section 8.1.

          "Commitment" means, for each Lender, the obligation of such Lender to make Revolving Loans to, and participate in Facility LCs issued upon the application of the Borrower, in an aggregate amount not exceeding the amount set forth opposite its signature below, as it may be modified as a result of any assignment that has become effective pursuant to Section 12.3.2, as such amount may be reduced or increased from time to time pursuant to the terms hereof.

          "Consolidated EBITDA" means Consolidated Net Income plus, to the extent deducted from revenues in determining Consolidated Net Income, (i) Consolidated Interest Expense, (ii) expense for taxes paid or accrued, (iii) depreciation and depletion, (iv) amortization and (v) extraordinary losses incurred other than in the ordinary course of business, minus, to the extent included in Consolidated Net Income, extraordinary gains realized other than in the ordinary course of business, all calculated for the Borrower and its Restricted Subsidiaries on a consolidated basis.

          "Consolidated Indebtedness" means at any time the Indebtedness of the Borrower and its Restricted Subsidiaries calculated on a consolidated basis as of such time; provided that Consolidated Indebtedness shall not include Qualified Capital Obligations.

          "Consolidated Interest Expense" means, with reference to any period, the interest expense of the Borrower and its Restricted Subsidiaries calculated on a consolidated basis for such period.

          "Consolidated Net Income" means, with reference to any period, the net income (or loss) of the Borrower and its Restricted Subsidiaries calculated on a consolidated basis for such period.

          "Consolidated Net Worth" means at any time the sum of (i) consolidated stockholders' equity of the Borrower and its Restricted Subsidiaries calculated on a consolidated basis as of such time and (ii) Qualified Capital. Notwithstanding the foregoing, "Consolidated Net Worth" shall be determined excluding the impact on retained earnings of any non-cash adjustments attributable to commodity or interest rate derivative instruments determined under the provisions of Financial Accounting Standards Board Statements ("FASB") 133 and 138, as the same may be further amended, modified or clarified by FASB.

          "Controlled Group" means all members of a controlled group of corporations or other business entities and all trades or businesses (whether or not incorporated) under common control which, together with the Borrower or any of its Subsidiaries, are treated as a single employer under Section 414 of the Code.

          "Conversion/Continuation Notice" is defined in Section 2.10.

          "Credit Extension" means the making of an Advance or the issuance of a Facility LC hereunder.

          "Credit Extension Date" means the Borrowing Date for an Advance or the issuance date for a Facility LC.

          "Default" means an event described in Article VII.

          "Disposition Value" means, at any time, with respect to any Transfer of Property, (i) in the case of Property that does not constitute Equity Interests in a Restricted Subsidiary, the book value thereof, valued at the amount taken into account (or which would be taken into account) in the consolidated balance sheet of the Borrower then most recently required to have been delivered to the Lenders pursuant to Section 6.1, and (ii) in the case of Property that constitutes Equity Interests in a Restricted Subsidiary, an amount equal to that percentage of the book value of the assets of the Restricted Subsidiary that issued such Equity Interests as is equal to the percentage that such Equity Interest represents of all of the outstanding Equity Interests of such Restricted Subsidiary (assuming, in making such calculations, that all Securities convertible into such Equity Interests are so converted and giving full effect to all transactions that would occu r or be required in connection with such conversion), determined as of the date of the balance sheet referred to in the foregoing clause (i).

          "Distribution" means, in respect of any corporation, association or other business entity: (i) dividends or other distributions or payments on Equity Interests of such corporation, association or other business entity (except distributions in such Equity Interest); and (ii) the redemption or acquisition of such Equity Interests or of warrants, rights or other options to purchase such Equity Interests (except when solely in exchange for such Equity Interests).

          "Environmental Laws" means any and all federal, state, local and foreign statutes, laws, judicial decisions, regulations, ordinances, rules, judgments, orders, decrees, plans, injunctions, permits, concessions, grants, franchises, licenses, agreements and other governmental restrictions relating to (i) the protection of the environment, (ii) the effect of the environment on human health, (iii) emissions, discharges or releases of pollutants, contaminants, hazardous substances or wastes into surface water, ground water or land, or (iv) the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, hazardous substances or wastes or the clean-up or other remediation thereof.

          "Equity Interest" means (i) the outstanding Voting Stock of a corporation or other business entity, (ii) the interest in the capital or profits of a corporation, limited liability company, partnership or joint venture, including, without limitation, any preferred stock or any option or warrant or other right to acquire Voting Stock or preferred stock or (iii) the beneficial interest in a trust or estate; provided that preferred stock that is subject to mandatory redemption on a date certain prior to the Facility Termination Date or any right to acquire such preferred stock shall not be considered an Equity Interest.

          "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any rule or regulation issued thereunder.

          "Eurodollar Advance" means an Advance which, except as otherwise provided in Section 2.12, bears interest at the applicable Eurodollar Rate.

          "Eurodollar Base Rate" means, with respect to a Eurodollar Advance for the relevant Interest Period, the applicable British Bankers' Association Interest Settlement Rate for deposits in U.S. dollars appearing on Reuters Screen FRBD as of 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period, and having a maturity equal to such Interest Period, provided that, (i) if Reuters Screen FRBD is not available to the Agent for any reason, the applicable Eurodollar Base Rate for the relevant Interest Period shall instead be the applicable British Bankers' Association Interest Settlement Rate for deposits in U.S. dollars as reported by any other generally recognized financial information service as of 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period, and having a maturity equal to such Interest Period, and (ii) if no such British Bankers' Association Interest Settlement Rate is available to the Agent, the applicable Eurodollar Base Rate for the relevant Interest Period shall instead be the rate determined by the Agent to be the rate at which Bank One or one of its Affiliate banks offers to place deposits in U.S. dollars with first-class banks in the London interbank market at approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period, in the approximate amount of Bank One's relevant Eurodollar Loan and having a maturity equal to such Interest Period.

          "Eurodollar Loan" means a Loan which, except as otherwise provided in Section 2.12, bears interest at the applicable Eurodollar Rate.

          "Eurodollar Rate" means, with respect to a Eurodollar Advance for the relevant Interest Period, the sum of (i) the quotient of (a) the Eurodollar Base Rate applicable to such Interest Period, divided by (b) one minus the Reserve Requirement (expressed as a decimal) applicable to such Interest Period, plus (ii) the Applicable Margin.

          "Excluded Taxes" means, in the case of each Lender or applicable Lending Installation and the Agent, taxes imposed on its overall net income, and franchise taxes imposed on it, by (i) the jurisdiction under the laws of which such Lender or the Agent is incorporated or organized or (ii) the jurisdiction in which the Agent's or such Lender's principal executive office or such Lender's applicable Lending Installation is located.

          "Exhibit" refers to an exhibit to this Agreement, unless another document is specifically referenced.

          "Existing Credit Agreement" means the Revolving Credit Agreement dated as of July 22, 1996, among the Borrower, the lenders party thereto, and Bank One, NA (as successor in interest to The First National Bank of Chicago), as agent, as amended by the First Amendment dated as of August 30, 1996, the Second Amendment dated as of May 1, 1997, the Third Amendment dated as of March 16, 1998 and the Fourth Amendment dated as of August 10, 1999, the Fifth Amendment dated as of March 16, 2001, and the Sixth Amendment dated as of May 11, 2001.

          "Facility LC" is defined in Section 2.20.1.

          "Facility LC Application" is defined in Section 2.20.3.

          "Facility LC Collateral Account" is defined in Section 2.20.11.

          "Facility Termination Date" means June 29, 2004 or any earlier date on which the Aggregate Commitment is reduced to zero or otherwise terminated pursuant to the terms hereof.

          "Fair Market Value" means, at any time and with respect to any Property of any Person, the sale value of such Property that would be realized in an arm's length sale at such time between an informed and willing buyer and an informed and willing seller (neither being under a compulsion to buy or sell, respectively), as determined in good faith by the board of directors (or equivalent governing body) of the Person.

          "Federal Funds Effective Rate" means, for any day, an interest rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published for such day (or, if such day is not a Business Day, for the immediately preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations at approximately 10:00 a.m. (Chicago time) on such

day on such transactions received by the Agent from three Federal funds brokers of recognized standing selected by the Agent in its sole discretion.

          "Floating Rate" means, for any day, a rate per annum equal to the Alternate Base Rate for such day plus (ii) the Applicable Margin, in each case changing when and as the Alternate Base Rate changes.

          "Floating Rate Advance" means an Advance which, except as otherwise provided in Section 2.12, bears interest at the Floating Rate.

          "Floating Rate Loan" means a Loan which, except as otherwise provided in Section 2.12, bears interest at the Floating Rate.

          "Guarantor" means each of the present and future Restricted Subsidiaries of the Borrower (other than any Restricted Subsidiaries of the Borrower that are also Special Purpose Trusts), and "Guarantors" means all such Guarantors collectively.

          "Indebtedness" of a Person means such Person's, without duplication, (i) obligations for borrowed money, (ii) obligations representing the deferred purchase price of Property or services (other than accounts payable arising in the ordinary course of such Person's business payable on terms customary in the trade), (iii) obligations, whether or not assumed, secured by Liens or payable out of the proceeds or production from Property now or hereafter owned or acquired by such Person, (iv) obligations which are evidenced by notes, acceptances, or other similar instruments, (v) obligations of such Person to purchase securities or other Property prior to the Facility Termination Date arising out of or in connection with the sale of the same or substantially similar securities or Property, (vi) Capitalized Lease Obligations, (vii) Off-Balance Sheet Liabilities, (viii) Rate Management Obligations, (ix) Sale and Leaseback Transactions and (x) any other obliga tion for borrowed money or other financial accommodation which in accordance with Agreement Accounting Principles would be shown as a liability on the consolidated balance sheet of such Person; provided, however, that with respect to the Borrower and any Restricted Subsidiary that is a Special Purpose Trust, "Indebtedness" shall not include Qualified Capital Obligations.

          "Interest Period" means, with respect to a Eurodollar Advance, a period of one, two, three or six months commencing on a Business Day selected by the Borrower pursuant to this Agreement. Such Interest Period shall end on the day which corresponds numerically to such date one, two, three or six months thereafter, provided, however, that if there is no such numerically corresponding day in such next, second, third or sixth succeeding month, such Interest Period shall end on the last Business Day of such next, second, third or sixth succeeding month. If an Interest Period would otherwise end on a day which is not a Business Day, such Interest Period shall end on the next succeeding Business Day, provided, however, that if said next succeeding Business Day falls in a new calendar month, such Interest Period shall end on the immediately preceding Business Day.

          "Intergroup Transfer" means a Transfer of Property (i) from a Restricted Subsidiary to the Borrower or a Wholly-Owned Restricted Subsidiary or (ii) from the Borrower to a Wholly-Owned Restricted Subsidiary.

          "Investment" of a Person means any loan, advance (other than commission, travel and similar advances to officers and employees made in the ordinary course of business), extension of credit (other than accounts receivable arising in the ordinary course of business on terms customary in the trade) or contribution of capital by such Person; stocks, bonds, mutual funds, partnership interests, notes, debentures or other securities owned by such Person; any deposit accounts and certificate of deposit owned by such Person; and structured notes, derivative financial instruments and other similar instruments or contracts owned by such Person.

          "LC Fee" is defined in Section 2.20.4.

          "LC Issuer" means Bank One (or any subsidiary or affiliate of Bank One designated by Bank One) in its capacity as issuer of Facility LCs hereunder, or any other Lender which agrees at the request of the Borrower to act as issuer of a Facility LCs hereunder.

          "LC Obligations" means, at any time, the sum, without duplication, of (i) the aggregate undrawn stated amount under all Facility LCs outstanding at such time plus (ii) the aggregate unpaid amount at such time of all Reimbursement Obligations.

          "LC Payment Date" is defined in Section 2.20.5.

          "Lenders" means the lending institutions listed on the signature pages of this Agreement and their respective successors and assigns. Unless otherwise specified, the term "Lenders" includes Bank One in its capacity as Swing Line Lender.

          "Lending Installation" means, with respect to a Lender or the Agent, the office, branch, subsidiary or affiliate of such Lender or the Agent listed on the signature pages hereof or on a Schedule or otherwise selected by such Lender or the Agent pursuant to Section 2..

          "Leverage Ratio" means, as of any date of calculation, the ratio of (i) Consolidated Indebtedness outstanding on such date to (ii) Consolidated EBITDA for the Borrower's then most-recently ended four fiscal quarters.

          "Lien" means any lien (statutory or other), mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, the interest of a vendor or lessor under any conditional sale, Capitalized Lease or other title retention agreement).

          "Loan" means a Revolving Loan or a Swing Line Loan.

          "Loan Documents" means this Agreement, the Facility LC Applications, any Notes issued pursuant to Section 2.14, and the Subsidiary Guaranty.

          "Material Adverse Effect" means a material adverse effect on (i) the business, affairs, assets, Property, financial condition, or results of operations of the Borrower and the Restricted Subsidiaries taken as a whole, (ii) the ability of the Borrower to perform its obligations under the Loan Documents to which it is a party, (iii) the ability of any Restricted Subsidiary to perform its obligations under the Loan Documents to which it is a party, or (iv) the validity or enforceability of any of the Loan Documents or the rights or remedies of the Agent, the LC Issuer or the Lenders thereunder.

          "Material Indebtedness" is defined in Section 7.5.

          "Modify" and "Modification" are defined in Section 2.20.1.

          "Moody's" means Moody's Investors Service, Inc.

          "Multiemployer Plan" means a Plan maintained pursuant to a collective bargaining agreement or any other arrangement to which the Borrower or any member of the Controlled Group is a party to which more than one employer is obligated to make contributions.

          "Net Asset Sales Proceeds Amount" means, with respect to any Transfer of any Property by any Person, an amount equal to the difference of: (i) the aggregate amount of the consideration (valued at the Fair Market Value of such consideration at the time of the consummation of such Transfer) received by such Person in respect of such Transfer, minus (ii) all ordinary and reasonable out-of-pocket costs and expenses actually incurred by such Person in connection with such Transfer.

          "Net Proceeds of Equity Interests" means, with respect to any period, cash proceeds (net of all costs and out-of-pocket expenses incurred in connection therewith, including, without limitation, placement, underwriting and brokerage fees and expenses) received by the Borrower and the Restricted Subsidiaries during such period from the sale of all Equity Interests and Qualified Capital of the Borrower, including, without limitation, in such net proceeds: (i) the net amount paid upon issuance and exercise during such period of any right to acquire any Equity Interest, or paid during such period to convert a convertible debt Security to an Equity Interest (but excluding any amount paid to the Borrower upon issuance of such convertible debt Security); and (ii) any amount paid to the Borrower upon issuance of any convertible debt Security that is converted to common stock during such period.

          "Non-U.S. Lender" is defined in Section 3.5(iv).

          "Note" is defined in Section 2.14.

          "Obligations" means all unpaid principal of and accrued and unpaid interest on the Loans, all Reimbursement Obligations, all accrued and unpaid fees and all expenses, reimbursements, indemnities and other obligations of the Borrower to the Lenders or to any Lender, the Agent, the LC Issuer or any indemnified party arising under the Loan Documents.

          "Off-Balance Sheet Liability" of a Person means (i) any repurchase obligation or liability of such Person with respect to accounts or notes receivable sold by such Person, (ii) any liability under any Sale and Leaseback Transaction which is not a Capitalized Lease, (iii) any liability under any so-called "synthetic lease" transaction entered into by such Person, or (iv) any obligation arising with respect to any other transaction which is the functional equivalent of borrowing but which does not constitute a liability on the balance sheets of such Person, provided, however, that Qualified Capital Obligations and obligations under Operating Leases shall not be deemed Off-Balance Sheet Liabilities.

          "Operating Lease" of a Person means any lease of Property (other than a Capitalized Lease) by such Person as lessee which has an original term (including any required renewals and any renewals effective at the option of the lessor) of one year or more.

          "Ordinary Course Transfer" means a Transfer of Property that constitutes either (i) inventory held for sale or (ii) equipment, fixtures, supplies or materials no longer required in the operation of the business of the Borrower or a Restricted Subsidiary or that is obsolete.

          "Other Taxes" is defined in Section 3.5(ii).

          "Outstanding Credit Exposure" means, as to any Lender at any time, the sum of (i) the aggregate principal amount of its Revolving Loans outstanding at such time, (ii) an amount equal to its Pro Rata Share of the LC Obligations at such time plus (iii) an amount equal to its Pro Rata Share of the aggregate principal amount of Swing Line Loans outstanding at such time.

          "Participants" is defined in Section 12.2.1.

          "Payment Date" means the last day of each calendar quarter.

          "PBGC" means the Pension Benefit Guaranty Corporation, or any successor thereto.

          "Permitted Liens" means

          (i)          Liens for taxes, assessments or governmental charges or levies on its Property if the same shall not at the time be delinquent or thereafter can be paid without penalty, or are being contested in good faith and by appropriate proceedings and for which adequate reserves in accordance with Agreement Accounting Principles shall have been set aside on its books.

          (ii)          Liens imposed by law, such as carriers', warehousemen's and mechanics' liens and other similar liens arising in the ordinary course of business which secure payment of obligations not more than 60 days past due or which are being contested in good faith by appropriate proceedings and for which adequate reserves shall have been set aside on its books.

          (iii)          Liens (a) arising out of pledges or deposits under worker's compensation laws, unemployment insurance, old age pensions, or other social security or retirement benefits, or similar legislation or (b) to secure (or to obtain letters of credit that secure) the performance of tenders, statutory obligations, surety bonds, appeal and supersedeas bonds (not in excess of Two Million Dollars ($2,000,000)), bids, leases (other than Capital Leases), performance bonds, purchase, construction or sales contracts and other similar obligations, in each case not incurred or made in connection with the borrowing of money, the obtaining of advances or credit or the payment of the deferred purchase price of Property.

          (iii)          Utility easements, building restrictions and such other encumbrances or charges against real property as are of a nature generally existing with respect to properties of a similar character and which do not in any material way affect the marketability of the same or interfere with the use thereof in the business of the Borrower or its Restricted Subsidiaries.

          (v)           Liens incidental to the conduct of the business referred to in Section 6.4 (including, without limitation, licenses, participation rights, rebate or revenue sharing obligations, or similar encumbrances), provided that such Liens have not arisen in connection with the incurrence of Indebtedness.

          "Person" means any natural person, corporation, firm, joint venture, partnership, limited liability company, association, enterprise, trust or other entity or organization, or any government or political subdivision or any agency, department or instrumentality thereof.

          "Plan" means an employee pension benefit plan which is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code as to which the Borrower or any member of the Controlled Group may have any liability.

          "Pricing Schedule" means the Schedule attached hereto identified as such.

          "Prime Rate" means a rate per annum equal to the prime rate of interest announced from time to time by Bank One or its parent (which is not necessarily the lowest rate charged to any customer), changing when and as said prime rate changes.

          "Property" of a Person means any and all property, whether real, personal, tangible, intangible, or mixed, of such Person, or other assets owned, leased or operated by such Person.

          "Pro Rata Share" means, with respect to a Lender, a portion equal to a fraction the numerator of which is such Lender's Commitment and the denominator of which is the Aggregate Commitment.

          "Purchasers" is defined in Section 12.3.1.

          "Qualified Capital" means the total amount of capital in respect of Qualified Junior Subordinated Notes and the Trust Preferred Securities related thereto which would, on a consolidated basis, be shown in consolidated financial statements of the Borrower and the Subsidiaries prepared at such time in accordance with Agreement Accounting Principles.

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

          "Qualified Junior Subordinated Guaranty" means, in respect of any issue of Trust Preferred Securities, a Guaranty by the Borrower to the holders of such Trust Preferred Securities of (a) the payment of all preferred cumulative cash dividends accumulating thereon and (b) the payments due on liquidation or redemption of such Trust Preferred Securities, but only in each case to the extent of funds held by the Special Purpose Trust which shall have issued such Trust Preferred Securities, and the obligations under which Guaranty shall be unsecured and rank subordinate and junior in right of payment to all Senior Debt to the same extent and on the same terms as the Qualified Junior Subordinated Notes issued by the Borrower to such Special Purpose Trust are subordinated to Senior Debt.

          "Qualified Junior Subordinated Notes" means any notes issued by the Borrower to a Special Purpose Trust in a principal amount equal to the proceeds received by such Special Purpose Trust from the issuance of Trust Preferred Securities and paid by such Special Purpose Trust to the Borrower in consideration for such notes, which notes shall (a) not mature, or otherwise require the payment of any of the principal thereof, prior to June 1, 2029, (b) be subject to the right of the Borrower to defer the payment of interest thereon at any time or from time to time for a period of at least 20 consecutive quarterly periods, during which deferral period the Borrower shall not pay any dividends with respect to any of its capital stock or pay any principal, interest or other amounts owing in respect of any Qualified Capital Obligations or other Subordinated Debt, (c) be unsecured, and (d) rank subordinate and junior in right of payment to all Senior D ebt upon the terms set forth in Exhibit H hereto.

          "Rate Management Obligations" of a Person means any and all obligations of such Person, whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor), under (i) any and all Rate Management Transactions, and (ii) any and all cancellations, buy backs, reversals, terminations or assignments of any Rate Management Transactions.

          "Rate Management Transaction" means any transaction (including an agreement with respect thereto) now existing or hereafter entered into between the Borrower and any Lender or Affiliate thereof which is a rate swap, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, forward transaction, currency swap transaction, cross-currency rate swap transaction, currency option or any other similar transaction (including any option with respect to any of these transactions) or any combination thereof, whether linked to one or more interest rates, foreign currencies, commodity prices, equity prices or other financial measures.

          "Regulation D" means Regulation D of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor thereto or other regulation or official interpretation of said Board of Governors relating to reserve requirements applicable to member banks of the Federal Reserve System.

          "Regulation U" means Regulation U of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor or other regulation or official interpretation of said Board of Governors relating to the extension of credit by banks for the purpose of purchasing or carrying margin stocks applicable to member banks of the Federal Reserve System.

          "Reimbursement Obligations" means, at any time, the aggregate of all obligations of the Borrower then outstanding under Section 2.20 to reimburse the LC Issuer for amounts paid by the LC Issuer in respect of any one or more drawings under Facility LCs.

          "Reportable Event" means a reportable event as defined in Section 4043 of ERISA and the regulations issued under such section, with respect to a Plan, excluding, however, such events as to which the PBGC has by regulation waived the requirement of Section 4043(a) of ERISA that it be notified within 30 days of the occurrence of such event, provided, however, that a failure to meet the minimum funding standard of Section 412 of the Code and of Section 302 of ERISA shall be a Reportable Event regardless of the issuance of any such waiver of the notice requirement in accordance with either Section 4043(a) of ERISA or Section 412(d) of the Code.

          "Reports" is defined in Section 9.6.

          "Required Lenders" means Lenders in the aggregate having at least 66-2/3% of the Aggregate Commitment or, if the Aggregate Commitment has been terminated, Lenders in the aggregate holding at least 66-2/3% of the Aggregate Outstanding Credit Exposure.

          "Reserve Requirement" means, with respect to an Interest Period, the maximum aggregate reserve requirement (including all basic, supplemental, marginal and other reserves) which is imposed under Regulation D on Eurocurrency liabilities.

          "Restricted Payment" means (i) any Distribution in respect of the Borrower or any Restricted Subsidiary (other than on account of Equity Interests of a Restricted Subsidiary owned legally and beneficially by the Borrower or another Restricted Subsidiary), including, without limitation, any Distribution resulting in the acquisition by the Borrower of Securities which would constitute treasury stock; and (ii) any payment, repayment, redemption, retirement, repurchase or other acquisition, direct or indirect, by the Borrower or any Restricted Subsidiary of, on account of, or in respect of, the principal of any Subordinated Debt (or any installment thereof) prior to the regularly scheduled maturity date hereof (as in effect on the date such Subordinated Debt was originally incurred). For purposes of this Agreement, the amount of any Restricted Payment made in Property shall be the greater of (x) the Fair Market Value of such Property and (y) the net boo k value thereof on the books of such Person, in each case determined as of the date on which such Restricted Payment is made.

          "Restricted Subsidiary" means and includes each and every Subsidiary of the Borrower other than any Subsidiary which, at the time of any determination hereunder, has been designated by the Board of Directors and by written notice of the Borrower to the Agent to be an Unrestricted Subsidiary; provided in any event, that each of the following shall at all times constitute a Restricted Subsidiary: (i) each Subsidiary identified as a Restricted Subsidiary on Schedule I (subject to subsequent designation as an Unrestricted Subsidiary in compliance with the terms of this Agreement); and (ii) each Subsidiary which owns, directly or indirectly, more than fifty percent (50%) of the Equity Interest of a Restricted Subsidiary; and provided, further, that the Borrower hereby notifies Agent as of the date hereof that each of the Subsidiaries identified as an Unrestricted Subsidiary on Schedule I has previously been designated by the Board of Directors of the Borrower as an Unrestricted Subsidiary.

          "Revolving Loan" means, with respect to a Lender, such Lender's loan made pursuant to its commitment to lend set forth in Section 2.1 (or any conversion or continuation thereof).

          "S&P" means Standard and Poor's Ratings Services, a division of The McGraw Hill Companies, Inc.

          "Sale and Leaseback Transaction" means any sale or other transfer of Property by any Person with the intent to lease such Property as lessee.

          "Schedule" refers to a specific schedule to this Agreement, unless another document is specifically referenced.

          "Section" means a numbered section of this Agreement, unless another document is specifically referenced.

          "Security" means "security" as defined in Section 2(1) of the Securities Act.

          "Senior Debt" means any Indebtedness of the Borrower that is not in any manner subordinated in right of payment or security in any respect to the Obligations or to any other Indebtedness of Borrower, including, without limitation, all Indebtedness of the Borrower under this Agreement, the Loan Documents and the Notes.

          "Senior Notes" means, collectively, the Borrower's 7.17% Series A Senior Notes due December 30, 2001, the Borrower's 7.17% Series B Senior Notes due December 30, 2002, the Borrower's 7.48% Series C Senior Notes due December 30, 2002, the Borrower's 7.03% Series D Senior Notes due 2004, the Borrower's 7.28% Series E Senior Notes due 2009, and the Borrower's 7.43% Series F Senior Notes due 2009.

          "Single Employer Plan" means a Plan maintained by the Borrower or any member of the Controlled Group for employees of the Borrower or any member of the Controlled Group.

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

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

          "Subsidiary" of a Person means (i) any corporation more than 50% of the outstanding securities having ordinary voting power of which shall at the time be owned or controlled, directly or indirectly, by such Person or by one or more of its Subsidiaries or by such Person and one or more of its Subsidiaries, or (ii) any partnership, limited liability company, association, joint venture or similar business organization more than 50% of the ownership interests having ordinary voting power of which shall at the time be so owned or controlled. Unless otherwise expressly provided, all references herein to a "Subsidiary" shall mean a Subsidiary of the Borrower.

          "Subsidiary Guaranty" means the Subsidiary Guaranty dated as of the Effective Date executed by each of the Guarantors in favor of the Agent, for the ratable benefit of the Lenders, in substantially the form of Exhibit E, as it may be amended or modified and in effect from time to time.

          "Substantial Portion" means, with respect to any Property of the Borrower and its Restricted Subsidiaries subject to a Transfer, if the Disposition Value of such Property, when added to the Disposition Value of all other Property of the Borrower and the Restricted Subsidiaries that has been the subject of a Transfer, exceeds more than 10% of the consolidated assets of the Borrower and its Restricted Subsidiaries as would be shown in the consolidated financial statements of the Borrower and its Restricted Subsidiaries as at the end of the fiscal year immediately prior to the date on which such determination is made.

          "Swing Line Borrowing Notice" is defined in Section 2.5.2.

          "Swing Line Commitment" means the obligation of the Swing Line Lender to make Swing Line Loans up to a maximum principal amount of $5,000,000 at any one time outstanding.

          "Swing Line Lender" means Bank One or such other Lender which may succeed to its rights and obligations as Swing Line Lender pursuant to the terms of this Agreement.

          "Swing Line Loan" means a Loan made available to the Borrower by the Swing Line Lender pursuant to Section 2.5.

          "Syndication Agent" means Comerica Bank - Texas.

          "Taxes" means any and all present or future taxes, duties, levies, imposts, deductions, charges or withholdings, and any and all liabilities with respect to the foregoing, but excluding Excluded Taxes and Other Taxes.

          "Transfer" means, with respect to any Person, any transaction in which such Person sells, conveys, transfers or leases (as lessor) any of its Property, including, without limitation, Equity Interests of any other Person.

          "Transferee" is defined in Section 12.4.

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

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

          "Type" means, with respect to any Advance, its nature as a Floating Rate Advance or a Eurodollar Advance.

          "Unfunded Liabilities" means the amount (if any) by which the present value of all vested and unvested accrued benefits under all Single Employer Plans exceeds the fair market value of all such Plan assets allocable to such benefits, all determined as of the then most recent valuation date for such Plans using PBGC actuarial assumptions for single employer plan terminations.

          "Unmatured Default" means an event which but for the lapse of time or the giving of notice, or both, would constitute a Default.

          "Unrestricted Subsidiary" means each Subsidiary of the Borrower other than a Restricted Subsidiary.

          "Voting Stock" means the capital stock or similar interest of any class or classes (however designated) of a corporation or other business entity, the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of the members of the board of directors (or Persons performing similar functions) of a corporation or other business entity.

          The foregoing definitions shall be equally applicable to both the singular and plural forms of the defined terms.

ARTICLE II

THE CREDITS

          2.1.          Commitment. From and including the date of this Agreement and prior to the Facility Termination Date, each Lender severally agrees, on the terms and conditions set forth in this Agreement, to (i) make Loans to the Borrower and (ii) participate in Facility LCs issued upon the request of the Borrower, provided that, after giving effect to the making of each such Loan and the issuance of each such Facility LC, such Lender's Outstanding Credit Exposure shall not exceed its Commitment. Subject to the terms of this Agreement, the Borrower may borrow, repay and reborrow at any time prior to the Facility Termination Date. The Commitments to extend credit hereunder shall expire on the Facility Termination Date. The LC Issuer will issue Facility LCs hereunder on the terms and conditions set forth in Section 2.20.

          2.2.          Required Payments; Termination. The Aggregate Outstanding Credit Exposure and all other unpaid Obligations shall be paid in full by the Borrower on the Facility Termination Date.

          2.3.          Ratable Loans. Each Advance hereunder (other than any Swing Line Loan) shall consist of Revolving Loans made from the several Lenders ratably according to their Pro Rata Shares.

          2.4.          Types of Advances. The Advances may be Floating Rate Advances or Eurodollar Advances, or a combination thereof, selected by the Borrower in accordance with Sections 2.8 and 2.9, or Swing Line Loans selected by the Borrower in accordance with Section 2.5.

          2.5.            Swing Line Loans.

          2.5.1.          Amount of Swing Line Loans. Upon the satisfaction of the conditions precedent set forth in Section 4.2 and, if such Swing Line Loan is to be made on the date of the initial Advance hereunder, the satisfaction of the conditions precedent set forth in Section 4.1 as well, from and including the date of this Agreement and prior to the Facility Termination Date, the Swing Line Lender agrees, on the terms and conditions set forth in this Agreement, to make Swing Line Loans to the Borrower from time to time in an aggregate principal amount not to exceed the Swing Line Commitment, provided that the Aggregate Outstanding Credit Exposure shall not at any time exceed the Aggregate Commitment, and provided further that at no time shall the sum of (i) the Swing Line Lender's Pro Rata Share of the Swing Line Loans, plus (ii) the outstanding Revolving Loans made b y the Swing Line Lender pursuant to Section 2.1 plus (iii) the Swing Line Lender's Pro Rata Share of the LC Obligations, exceed the Swing Line Lender's Commitment at such time. Subject to the terms of this Agreement, the Borrower may borrow, repay and reborrow Swing Line Loans at any time prior to the Facility Termination Date.

          2.5.2.          Borrowing Notice. The Borrower shall deliver to the Agent and the Swing Line Lender irrevocable notice (a "Swing Line Borrowing Notice") not later than noon (Chicago time) on the Borrowing Date of each Swing Line Loan, specifying (i) the applicable Borrowing Date (which date shall be a Business Day), and (ii) the aggregate amount of the requested Swing Line Loan which shall be an amount not less than $100,000. The Swing Line Loans shall bear interest at the Floating Rate.

          2.5.3.          Making of Swing Line Loans. Promptly after receipt of a Swing Line Borrowing Notice, the Agent shall notify each Lender by fax, or other similar form of transmission, of the requested Swing Line Loan. Not later than 2:00 p.m. (Chicago time) on the applicable Borrowing Date, the Swing Line Lender shall make available the Swing Line Loan, in funds immediately available in Chicago, to the Agent at its address specified pursuant to Article XIII. The Agent will promptly make the funds so received from the Swing Line Lender available to the Borrower on the Borrowing Date at the Agent's aforesaid address.

          2.5.4.          Repayment of Swing Line Loans. Each Swing Line Loan shall be paid in full by the Borrower on or before the seventh (7th) Business Day after the Borrowing Date for such Swing Line Loan. In addition, the Swing Line Lender (i) may at any time in its sole discretion with respect to any outstanding Swing Line Loan, or (ii) shall on the seventh (7th) Business Day after the Borrowing Date of any Swing Line Loan, require each Lender (including the Swing Line Lender) to make a Revolving Loan in the amount of such Lender's Pro Rata Share of such Swing Line Loan (including, without limitation, any interest accrued and unpaid thereon), for the purpose of repaying such Swing Line Loan. Not later than noon (Chicago time) on the date of any notice received pursuant to this Section 2.5.4, each Lender shall make available its required Revolving Loan, in funds immediately available in Chicago to the Agent at its address specified pursuant to Article XIII. Revolving Loans made pursuant to this Section 2.5.4 shall initially be Floating Rate Loans and thereafter may be continued as Floating Rate Loans or converted into Eurodollar Loans in the manner provided in Section 2.10 and subject to the other conditions and limitations set forth in this Article II. Unless a Lender shall have notified the Swing Line Lender, prior to its making any Swing Line Loan, that any applicable condition precedent set forth in Sections 4.1 or 4.2 had not then been satisfied, such Lender's obligation to make Revolving Loans pursuant to this Section 2.5.4 to repay Swing Line Loans shall be unconditional, continuing, irrevocable and absolute and shall not be affected by any circumstances, including, without limitation, (a) any set-off, counterclaim, recoupment, defense or other right which such Lender may have against the Agent, the Swing Line Lender or any other Person, (b) the occurrence or continuance of a Default or Unmatu red Default, (c) any adverse change in the condition (financial or otherwise) of the Borrower, or (d) any other circumstances, happening or event whatsoever. In the event that any Lender fails to make payment to the Agent of any amount due under this Section 2.5.4, the Agent shall be entitled to receive, retain and apply against such obligation the principal and interest otherwise payable to such Lender hereunder until the Agent receives such payment from such Lender or such obligation is otherwise fully satisfied. In addition to the foregoing, if for any reason any Lender fails to make payment to the Agent of any amount due under this Section 2.5.4, such Lender shall be deemed, at the option of the Agent, to have unconditionally and irrevocably purchased from the Swing Line Lender, without recourse or warranty, an undivided interest and participation in the applicable Swing Line Loan in the amount of such Revolving Loan, and such interest and participation may be recovered from such Lender together with int erest thereon at the Federal Funds Effective Rate for each day during the period commencing on the date of demand and ending on the date such amount is received. On the Facility Termination Date, the Borrower shall repay in full the outstanding principal balance of the Swing Line Loans.

          2.6.          Commitment Fee; Reductions in Aggregate Commitment.

          2.6.1.          Commitment Fees. The Borrower agrees to pay to the Agent for the account of each Lender according to its Pro Rata Share a commitment fee at a per annum rate equal to the Applicable Fee Rate on the average daily Available Aggregate Commitment from the date hereof to and including the Facility Termination Date, payable on each Payment Date hereafter and on the Facility Termination Date. Swing Line Loans shall not count as usage of any Lender's Commitment for the purpose of calculating the commitment fee due hereunder.

          2.6.2.          Voluntary Reductions. The Borrower may permanently reduce the Aggregate Commitment in whole, or in part ratably among the Lenders in integral multiples of $5,000,000, upon at least five Business Days' written notice to the Agent, which notice shall specify the amount of any such reduction, provided, however, that the amount of the Aggregate Commitment may not be reduced below the Aggregate Outstanding Credit Exposure. Any reduction or termination of the Aggregate Commitment pursuant to this Section 2.6.2 shall be permanent, with no obligation of the Lenders to reinstate such Commitments and the commitment fees provided for in Section 2.6.1 shall thereafter be computed on the basis of the Aggregate Commitment as so reduced.

          2.7.          Minimum Amount of Each Advance. Each Eurodollar Advance shall be in the minimum amount of $1,000,000 (and in multiples of $500,000 if in excess thereof), and each Floating Rate Advance (other than an Advance to repay Swing Line Loans) shall be in the minimum amount of $250,000 (and in multiples of $100,000 if in excess thereof), provided, however, that any Floating Rate Advance may be in the amount of the Available Aggregate Commitment.

          2.8.          Principal Payments. The Borrower may from time to time pay, without penalty or premium, all outstanding Floating Rate Advances (other than Swing Line Loans), or, in a minimum aggregate amount of $250,000 or any integral multiple of $100,000 in excess thereof, any portion of the outstanding Floating Rate Advances (other than Swing Line Loans), upon two Business Days' prior notice to the Agent.. The Borrower may at any time pay, without penalty or premium, all outstanding Swing Line Loans, or, in a minimum amount of $100,000 and increments of $50,000 in excess thereof, any portion of the outstanding Swing Line Loans, with notice to the Agent and the Swing Line Lender by 11:00 a.m. on the date of repayment. The Borrower may from time to time pay, subject to the payment of any funding indemnification amounts required by Section 3.4 but without penalty or premium, all outstanding Euro dollar Advances, or, in a minimum aggregate amount of $1,000,000 or any integral multiple of $500,000 in excess thereof, any portion of the outstanding Eurodollar Advances upon three Business Days' prior notice to the Agent.

          2.9.          Method of Selecting Types and Interest Periods for New Advances. The Borrower shall select the Type of Advance and, in the case of each Eurodollar Advance, the Interest Period applicable thereto from time to time. The Borrower shall give the Agent irrevocable notice (a "Borrowing Notice") not later than 11:30 a.m. (Chicago time) on the Borrowing Date of each Floating Rate Advance (other than a Swing Line Loan) and three Business Days before the Borrowing Date for each Eurodollar Advance, specifying:

          (i)          the Borrowing Date, which shall be a Business Day, of such Advance,

          (ii)          the aggregate amount of such Advance,

          (iii)          the Type of Advance selected, and

          (iv)          in the case of each Eurodollar Advance, the Interest Period applicable thereto.

Not later than 2:00 p.m. (Chicago time) on each Borrowing Date, each Lender shall make available its Revolving Loan or Revolving Loans in funds immediately available in Chicago to the Agent at its address specified pursuant to Article XIII. The Agent will make the funds so received from the Lenders available to the Borrower at the Agent's aforesaid address.

          2.10.          Conversion and Continuation of Outstanding Advances. Floating Rate Advances (other than Swing Line Loans) shall continue as Floating Rate Advances unless and until such Floating Rate Advances are converted into Eurodollar Advances pursuant to this Section 2.10 or are repaid in accordance with Section 2.8. Each Eurodollar Advance shall continue as a Eurodollar Advance until the end of the then applicable Interest Period therefor, at which time such Eurodollar Advance shall be automatically converted into a Floating Rate Advance unless (x) such Eurodollar Advance is or was repaid in accordance with Section 2.8 or (y) the Borrower shall have given the Agent a Conversion/Continuation Notice (as defined below) requesting that, at the end of such Interest Period, such Eurodollar Advance continue as a Eurodollar Advance for the same or another Interest Period. Subject to the terms of S ection 2.7, the Borrower may elect from time to time to convert all or any part of a Floating Rate Advance (other than a Swing Line Loan) into a Eurodollar Advance. The Borrower shall give the Agent irrevocable notice (a "Conversion/Continuation Notice") of each conversion of a Floating Rate Advance into a Eurodollar Advance or continuation of a Eurodollar Advance not later than 10:00 a.m. (Chicago time) at least three Business Days prior to the date of the requested conversion or continuation, specifying:

          (i)          the requested date, which shall be a Business Day, of such conversion or continuation,

          (ii)          the aggregate amount and Type of the Advance which is to be converted or continued, and

          (iii)          the amount of such Advance which is to be converted into or continued as a Eurodollar Advance and the duration of the Interest Period applicable thereto.

          2.11.          Changes in Interest Rate, etc. Each Floating Rate Advance (other than a Swing Line Loan) shall bear interest on the outstanding principal amount thereof, for each day from and including the date such Advance is made or is automatically converted from a Eurodollar Advance into a Floating Rate Advance pursuant to Section 2.10, to but excluding the date it is paid or is converted into a Eurodollar Advance pursuant to Section 2.10 hereof, at a rate per annum equal to the Floating Rate for such day. Each Swing Line Loan shall bear interest on the outstanding principal amount thereof, for each day from and including the day such Swing Line Loan is made to but excluding the date it is paid, at a rate per annum equal to the Floating Rate for such day. Changes in the rate of interest on that portion of any Advance maintained as a Floating Rate Advance will take effect simultaneously with each change in the Alternate Base Rate. Each Eurodollar Advance shall bear interest on the outstanding principal amount thereof from and including the first day of the Interest Period applicable thereto to (but not including) the last day of such Interest Period at the interest rate determined by the Agent as applicable to such Eurodollar Advance based upon the Borrower's selections under Sections 2.9 and 2.10 and otherwise in accordance with the terms hereof. No Interest Period may end after the Facility Termination Date.

          2.12.          Rates Applicable After Default. Notwithstanding anything to the contrary contained in Section 2.9 or 2.10, during the continuance of a Default or Unmatured Default the Required Lenders may, at their option, by notice to the Borrower, declare that no Advance may be made as, converted into or continued as a Eurodollar Advance. During the continuance of a Default the Required Lenders may, at their option, by notice to the Borrower, declare that (i) each Advance shall bear interest at a rate per annum equal to the Floating Rate in effect from time to time plus 2% per annum and (ii) the LC Fee shall be increased by 2% per annum, provided that, during the continuance of a Default under Section 7.6 or 7.7, the interest rate set forth in clause (i) above and the increase in the LC Fee set forth in clause (ii) above shall be applicable to all Credit Extensions without any election or action on the part of the Agent or any Lender.

          2.13.          Method of Payment. All payments of the Obligations hereunder shall be made, without setoff, deduction, or counterclaim, in immediately available funds to the Agent at the Agent's address specified pursuant to Article XIII, or at any other Lending Installation of the Agent specified in writing by the Agent to the Borrower, by noon (local time) on the date when due and shall (except in the case of (i) Reimbursement Obligations for which the LC Issuer has not been fully indemnified by the Lenders, (ii) repayments of Swing Loan Loans or (iii) as otherwise specifically required hereunder) be applied ratably by the Agent among the Lenders. Each payment delivered to the Agent for the account of any Lender shall be delivered promptly by the Agent to such Lender in the same type of funds that the Agent received at its address specified pursuant to Article XIII or at any Lending Installat ion specified in a notice received by the Agent from such Lender. The Agent is hereby authorized to charge the account of the Borrower maintained with Bank One for each payment of principal, interest, Reimbursement Obligations and fees as it becomes due hereunder. Each reference to the Agent in this Section 2.13 shall also be deemed to refer, and shall apply equally, to the LC Issuer, in the case of payments required to be made by the Borrower to the LC Issuer pursuant to Section 2.20.6.

          2.14.          Noteless Agreement; Evidence of Indebtedness. (i) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.

          (ii)          The Agent shall also maintain accounts in which it will record (a) the amount of each Loan made hereunder, the Type thereof and the Interest Period with respect thereto, (b) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder, (c) the original stated amount of each Facility LC and the amount of LC Obligations outstanding at any time, and (d) the amount of any sum received by the Agent hereunder from the Borrower and each Lender's share thereof.

          (iii)          The entries maintained in the accounts maintained pursuant to paragraphs (i) and (ii) above shall be prima facie evidence of the existence and amounts of the Obligations therein recorded; provided, however, that the failure of the Agent or any Lender to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrower to repay the Obligations in accordance with their terms.

          (iv)          Any Lender may request that its Loans be evidenced by a promissory note (a "Note"). In such event, the Borrower shall prepare, execute and deliver to such Lender a Note payable to the order of such Lender in a form supplied by the Agent. Thereafter, the Loans evidenced by such Note and interest thereon shall at all times (including after any assignment pursuant to Section 12.3) be represented by one or more Notes payable to the order of the payee named therein or any assignee pursuant to Section 12.3, except to the extent that any such Lender or assignee subsequently returns any such Note for cancellation and requests that such Loans once again be evidenced as described in paragraphs (i) and (ii) above.

          2.15.          Telephonic Notices. The Borrower hereby authorizes the Lenders and the Agent to extend, convert or continue Advances, effect selections of Types of Advances and to transfer funds based on telephonic notices made by any person or persons the Agent or any Lender in good faith believes to be an Authorized Officer or other employee of Borrower previously designated in writing to the Agent as authorized under this Section 2.15, it being understood that the foregoing authorization is specifically intended to allow Borrowing Notices and Conversion/Continuation Notices to be given telephonically. The Borrower agrees to deliver promptly to the Agent a written confirmation, if such confirmation is requested by the Agent or any Lender, of each telephonic notice signed by an Authorized Officer or other employee of Borrower previously designated in writing to the Agent as authorized under th is Section 2.15. If the written confirmation differs in any material respect from the action taken by the Agent and the Lenders, the records of the Agent and the Lenders shall govern absent manifest error.

          2.16.          Interest Payment Dates; Interest and Fee Basis. Interest accrued on each Floating Rate Advance shall be payable on each Payment Date, commencing with the first such date to occur after the date hereof, on any date on which the Floating Rate Advance is prepaid, whether due to acceleration or otherwise, and at maturity. Interest accrued on that portion of the outstanding principal amount of any Floating Rate Advance converted into a Eurodollar Advance on a day other than a Payment Date shall be payable on the date of conversion. Interest accrued on each Eurodollar Advance shall be payable on the last day of its applicable Interest Period, on any date on which the Eurodollar Advance is prepaid, whether by acceleration or otherwise, and at maturity. Interest accrued on each Eurodollar Advance having an Interest Period longer than three months shall also be payable on the last day of each three-month interval during such Interest Period. Interest, commitment fees and LC Fees shall be calculated for actual days elapsed on the basis of a 360-day year. Interest shall be payable for the day an Advance is made but not for the day of any payment on the amount paid if payment is received prior to noon (local time) at the place of payment. If any payment of principal of or interest on an Advance shall become due on a day which is not a Business Day, such payment shall be made on the next succeeding Business Day and, in the case of a principal payment, such extension of time shall be included in computing interest in connection with such payment.

          2.17.          Notification of Advances, Interest Rates, Prepayments and Commitment Reductions. Promptly after receipt thereof, the Agent will notify each Lender of the contents of each Aggregate Commitment reduction notice, Borrowing Notice, Swing Line Borrowing Notice, Conversion/Continuation Notice, and repayment notice received by it hereunder. Promptly after notice from the LC Issuer, the Agent will notify each Lender of the contents of each request for issuance of a Facility LC hereunder. The Agent will notify each Lender of the interest rate applicable to each Eurodollar Advance promptly upon determination of such interest rate and will give each Lender prompt notice of each change in the Alternate Base Rate.

          2.          Lending Installations. Each Lender may book its Loans and its participation in any LC Obligations and the LC Issuer may book the Facility LCs at any Lending Installation selected by such Lender or the LC Issuer, as the case may be, and may change its Lending Installation from time to time. All terms of this Agreement shall apply to any such Lending Installation and the Loans, Facility LCs, participations in LC Obligations and any Notes issued hereunder shall be deemed held by each Lender or the LC Issuer, as the case may be, for the benefit of any such Lending Installation. Each Lender and the LC Issuer may, by written notice to the Agent and the Borrower in accordance with Article XIII, designate replacement or additional Lending Installations through which Loans will be made by it or Facility LCs will be issued by it and for whose account Loan payments or payments with respect to Facility LCs are to be made.

          2.19.          Non-Receipt of Funds by the Agent. Unless the Borrower or a Lender, as the case may be, notifies the Agent prior to the date on which it is scheduled to make payment to the Agent of (i) in the case of a Lender, the proceeds of a Loan or (ii) in the case of the Borrower, a payment of principal, interest or fees to the Agent for the account of the Lenders, that it does not intend to make such payment, the Agent may assume that such payment has been made. The Agent may, but shall not be obligated to, make the amount of such payment available to the intended recipient in reliance upon such assumption. If such Lender or the Borrower, as the case may be, has not in fact made such payment to the Agent, the recipient of such payment shall, on demand by the Agent, repay to the Agent the amount so made available together with interest thereon in respect of each day duri ng the period commencing on the date such amount was so made available by the Agent until the date the Agent recovers such amount at a rate per annum equal to (x) in the case of payment by a Lender, the Federal Funds Effective Rate for such day for the first three days and, thereafter, the interest rate applicable to the relevant Loan or (y) in the case of payment by the Borrower, the interest rate applicable to the relevant Loan.

          2.20.          Facility LCs.

          2.20.1. Issuance. The LC Issuer hereby agrees, on the terms and conditions set forth in this Agreement, to issue standby and commercial letters of credit (each, a "Facility LC") and to renew, extend, increase, decrease or otherwise modify each Facility LC ("Modify," and each such action a "Modification"), from time to time from and including the date of this Agreement and prior to the Facility Termination Date upon the request of the Borrower; provided that immediately after each such Facility LC is issued or Modified, (i) the aggregate amount of the outstanding LC Obligations shall not exceed $50,000,000 and (ii) the Aggregate Outstanding Credit Exposure shall not exceed the Aggregate Commitment. No Facility LC shall have an expiry date later than the earlier of (x) the fifth Business Day prior to the Facility Termination Date and (y) one year after its issuance.

          2.20.2. Participations. Upon the issuance or Modification by the LC Issuer of a Facility LC in accordance with this Section 2.20, the LC Issuer shall be deemed, without further action by any party hereto, to have unconditionally and irrevocably sold to each Lender, and each Lender shall be deemed, without further action by any party hereto, to have unconditionally and irrevocably purchased from the LC Issuer, a participation in such Facility LC (and each Modification thereof) and the related LC Obligations in proportion to its Pro Rata Share.

          2.20.3. Notice. Subject to Section 2.20.1, the Borrower shall give the LC Issuer notice prior to 10:00 a.m. (Chicago time) at least five Business Days prior to the proposed date of issuance or Modification of each Facility LC, specifying the beneficiary, the proposed date of issuance (or Modification) and the expiry date of such Facility LC, and describing the proposed terms of such Facility LC and the nature of the transactions proposed to be supported thereby. Upon receipt of such notice, the LC Issuer shall promptly notify the Agent, and the Agent shall promptly notify each Lender, of the contents thereof and of the amount of such Lender's participation in such proposed Facility LC. The issuance or Modification by the LC Issuer of any Facility LC shall, in addition to the conditions precedent set forth in Article IV (the satisfaction of which the LC Issuer shall have no duty to ascertain), be subject to the conditions pr ecedent that such Facility LC shall be satisfactory to the LC Issuer and that the Borrower shall have executed and delivered such application agreement and/or such other instruments and agreements relating to such Facility LC as the LC Issuer shall have reasonably requested (each, a "Facility LC Application"). In the event of any conflict between the terms of this Agreement and the terms of any Facility LC Application, the terms of this Agreement shall control.

          2.20.4. LC Fees. The Borrower shall pay to the Agent, for the account of the Lenders ratably in accordance with their respective Pro Rata Shares, (i) with respect to each standby Facility LC, a letter of credit fee at a per annum rate equal to the Applicable Margin for Eurodollar Loans in effect from time to time on the average daily undrawn stated amount under such standby Facility LC, such fee to be payable in arrears on each Payment Date, and (ii) with respect to each commercial Facility LC, a one-time letter of credit fee in an amount equal to 60% of the Applicable Margin for Eurodollar Loans as in effect at such time of the initial stated amount (or, with respect to a Modification of any such commercial Facility LC which increases the stated amount thereof, such increase in the stated amount) thereof, such fee to be payable on the date of such issuance or increase (each such fee described in this sentence an "LC Fee"). The Borrower shall also pay to the LC Issuer for its own account (x) at the time of issuance of each Facility LC, a fronting fee in an amount to be agreed upon between the LC Issuer and the Borrower, and (y) documentary and processing charges in connection with the issuance or Modification of and draws under Facility LCs in accordance with the LC Issuer's standard schedule for such charges as in effect from time to time.

          2.20.5. Administration; Reimbursement by Lenders. Upon receipt from the beneficiary of any Facility LC of any demand for payment under such Facility LC, the LC Issuer shall notify the Agent and the Agent shall promptly notify the Borrower and each other Lender as to the amount to be paid by the LC Issuer as a result of such demand and the proposed payment date (the "LC Payment Date"). The responsibility of the LC Issuer to the Borrower and each Lender shall be only to determine that the documents (including each demand for payment) delivered under each Facility LC in connection with such presentment shall be in conformity in all material respects with such Facility LC. The LC Issuer shall endeavor to exercise the same care in the issuance and administration of the Facility LCs as it does with respect to letters of credit in which no participations are granted, it being understood that in the absence of any gross negligence or willful misconduct by the LC Issuer, each Lender shall be unconditionally and irrevocably liable without regard to the occurrence of any Default or any condition precedent whatsoever, to reimburse the LC Issuer on demand for (i) such Lender's Pro Rata Share of the amount of each payment made by the LC Issuer under each Facility LC to the extent such amount is not reimbursed by the Borrower pursuant to Section 2.20.6 below, plus (ii) interest on the foregoing amount to be reimbursed by such Lender, for each day from the date of the LC Issuer's demand for such reimbursement (or, if such demand is made after 11:00 a.m. (Chicago time) on such date, from the next succeeding Business Day) to the date on which such Lender pays the amount to be reimbursed by it, at a rate of interest per annum equal to the Federal Funds Effective Rate for the first three days and, thereafter, at a rate of interest equal to the rate applicable to Floating Rate Advances.

          2.20.6. Reimbursement by Borrower. The Borrower shall be irrevocably and unconditionally obligated to reimburse the LC Issuer on or before the applicable LC Payment Date for any amounts to be paid by the LC Issuer upon any drawing under any Facility LC, without presentment, demand, protest or other formalities of any kind; provided that neither the Borrower nor any Lender shall hereby be precluded from asserting any claim for direct (but not consequential) damages suffered by the Borrower or such Lender to the extent, but only to the extent, caused by (i) the willful misconduct or gross negligence of the LC Issuer in determining whether a request presented under any Facility LC issued by it complied with the terms of such Facility LC or (ii) the LC Issuer's failure to pay under any Facility LC issued by it after the presentation to it of a request strictly complying with the terms and conditions of such Facility LC. All such amounts pa id by the LC Issuer and remaining unpaid by the Borrower shall bear interest, payable on demand, for each day until paid at a rate per annum equal to (x) the rate applicable to Floating Rate Advances for such day if such day falls on or before the applicable LC Payment Date and (y) the sum of 2% plus the rate applicable to Floating Rate Advances for such day if such day falls after such LC Payment Date. The LC Issuer will pay to each Lender ratably in accordance with its Pro Rata Share all amounts received by it from the Borrower for application in payment, in whole or in part, of the Reimbursement Obligation in respect of any Facility LC issued by the LC Issuer, but only to the extent such Lender has made payment to the LC Issuer in respect of such Facility LC pursuant to Section 2.20.5. Subject to the terms and conditions of this Agreement (including without limitation the submission of a Borrowing Notice in compliance with Section 2.9 and the satisfaction of the applicable conditions precedent set forth i n Article IV), the Borrower may request an Advance hereunder for the purpose of satisfying any Reimbursement Obligation.

          2.20.7. Obligations Absolute. The Borrower's obligations under this Section 2.20 shall be absolute and unconditional under any and all circumstances and irrespective of any setoff, counterclaim or defense to payment which the Borrower may have or have had against the LC Issuer, any Lender or any beneficiary of a Facility LC. The Borrower further agrees with the LC Issuer and the Lenders that the LC Issuer and the Lenders shall not be responsible for, and the Borrower's Reimbursement Obligation in respect of any Facility LC shall not be affected by, among other things, the validity or genuineness of documents or of any endorsements thereon, even if such documents should in fact prove to be in any or all respects invalid, fraudulent or forged, or any dispute between or among the Borrower, any of its Affiliates, the beneficiary of any Facility LC or any financing institution or other party to whom any Facility LC may be transferred or any claims or defenses whatsoever of the Borrower or of any of its Affiliates against the beneficiary of any Facility LC or any such transferee. The LC Issuer shall not be liable for any error, omission, interruption or delay in transmission, dispatch or delivery of any message or advice, however transmitted, in connection with any Facility LC. The Borrower agrees that any action taken or omitted by the LC Issuer or any Lender under or in connection with each Facility LC and the related drafts and documents, if done without gross negligence or willful misconduct, shall be binding upon the Borrower and shall not put the LC Issuer or any Lender under any liability to the Borrower. Nothing in this Section 2.20.7 is intended to limit the right of the Borrower to make a claim against the LC Issuer for damages as contemplated by the proviso to the first sentence of Section 2.20.6.

          2.20.8. Actions of LC Issuer. The LC Issuer shall be entitled to rely, and shall be fully protected in relying, upon any Facility LC, draft, writing, resolution, notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype message, statement, order or other document believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons, and upon advice and statements of legal counsel, independent accountants and other experts selected by the LC Issuer. The LC Issuer shall be fully justified in failing or refusing to take any action under this Agreement unless it shall first have received such advice or concurrence of the Required Lenders as it reasonably deems appropriate or it shall first be indemnified to its reasonable satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any suc h action. Notwithstanding any other provision of this Section 2.20, the LC Issuer shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement in accordance with a request of the Required Lenders, and such request and any action taken or failure to act pursuant thereto shall be binding upon the Lenders and any future holders of a participation in any Facility LC.

          2.20.9. Indemnification. The Borrower hereby agrees to indemnify and hold harmless each Lender, the LC Issuer and the Agent, and their respective directors, officers, agents and employees from and against any and all claims and damages, losses, liabilities, costs or expenses which such Lender, the LC Issuer or the Agent may incur (or which may be claimed against such Lender, the LC Issuer or the Agent by any Person whatsoever) by reason of or in connection with the issuance, execution and delivery or transfer of or payment or failure to pay under any Facility LC or any actual or proposed use of any Facility LC, including, without limitation, any claims, damages, losses, liabilities, costs or expenses which the LC Issuer may incur by reason of or in connection with (i) the failure of any other Lender to fulfill or comply with its obligations to the LC Issuer hereunder (but nothing herein contained shall affect any rights the Borrower may have against any defaulting Lender) or (ii) by reason of or on account of the LC Issuer issuing any Facility LC which specifies that the term "Beneficiary" included therein includes any successor by operation of law of the named Beneficiary, but which Facility LC does not require that any drawing by any such successor Beneficiary be accompanied by a copy of a legal document, satisfactory to the LC Issuer, evidencing the appointment of such successor Beneficiary; provided that the Borrower shall not be required to indemnify any Lender, the LC Issuer or the Agent for any claims, damages, losses, liabilities, costs or expenses to the extent, but only to the extent, caused by (x) the willful misconduct or gross negligence of the LC Issuer in determining whether a request presented under any Facility LC complied with the terms of such Facility LC or (y) the LC Issuer's failure to pay under any Facility LC after the presentation to it of a request strictly complying with the terms and conditions of suc h Facility LC. Nothing in this Section 2.20.9 is intended to limit the obligations of the Borrower under any other provision of this Agreement.

          2.20.10. Lenders' Indemnification. Each Lender shall, ratably in accordance with its Pro Rata Share, indemnify the LC Issuer, its affiliates and their respective directors, officers, agents and employees (to the extent not reimbursed by the Borrower) against any cost, expense (including reasonable counsel fees and disbursements), claim, demand, action, loss or liability (except such as result from such indemnitees' gross negligence or willful misconduct or the LC Issuer's failure to pay under any Facility LC after the presentation to it of a request strictly complying with the terms and conditions of the Facility LC) that such indemnitees may suffer or incur in connection with this Section 2.20 or any action taken or omitted by such indemnitees hereunder.

          2.20.11. Facility LC Collateral Account. The Borrower agrees that it will, upon the request of the Agent or the Required Lenders and until the final expiration date of any Facility LC and thereafter as long as any amount is payable to the LC Issuer or the Lenders in respect of any Facility LC, maintain a special collateral account pursuant to arrangements satisfactory to the Agent (the "Facility LC Collateral Account") at the Agent's office at the address specified pursuant to Article XIII, in the name of such Borrower but under the sole dominion and control of the Agent, for the benefit of the Lenders and in which such Borrower shall have no interest other than as set forth in Section 8.1. The Borrower hereby pledges, assigns and grants to the Agent, on behalf of and for the ratable benefit of the Lenders and the LC Issuer, a security interest in all of the Borrower's right, title and interest in and to all funds which may from time to time be on deposit in the Facility LC Collateral Account to secure the prompt and complete payment and performance of the Obligations. The Agent will invest any funds on deposit from time to time in the Facility LC Collateral Account in certificates of deposit of Bank One having a maturity not exceeding 30 days. Nothing in this Section 2.20.11 shall obligate the Borrower to deposit any funds in the Facility LC Collateral Account, obligate the Agent to require the Borrower to deposit any funds in the Facility LC Collateral Account, or limit the right of the Agent to release any funds held in the Facility LC Collateral Account, in each case other than as required by Section 8.1.

          2.20.12. Rights as a Lender. In its capacity as a Lender, the LC Issuer shall have the same rights and obligations as any other Lender.

          2.21 Optional Increase in the Aggregate Commitment. (a) The Borrower may at any time, by notice to the Agent, propose that the Aggregate Commitment be increased (the amount of such increase being a "Commitment Increase"), effective as of a date prior to the Facility Termination Date (an "Increase Date") as to which agreement is to be reached by an earlier date specified in such notice (a "Commitment Date"); provided, however, that (i) the Borrower may not propose more than two Commitment Increases in any calendar year, (ii) the minimum proposed Commitment Increase per notice shall be $5,000,000, (iii) in no event shall the Aggregate Commitment at any time exceed $150,000,000, and (iv) no Default or Unmatured Default shall have occurred and be continuing on such Increase Date. The Agent shall notify the Lenders thereof promptly upon its receipt of any such notice. The Agent agrees that it will cooperate with the Borrower in discu ssions with the Lenders and other lending institutions with a view to arranging the proposed Commitment Increase through the increase of the Commitments of, first, one or more of the Lenders (each such Lender that is willing to increase its Commitment hereunder being an "Increasing Lender") and, if the existing Lenders are not willing, in the aggregate, to increase their Commitments by the amount of the requested Commitment Increase, then by the addition of one or more other lending institutions (each an "Assuming Lender") as Lenders and as parties to this Agreement; provided, however, that it shall be in each Lender's sole discretion whether to increase its Commitment hereunder in connection with the proposed Commitment Increase; and provided further that the minimum Commitment of each Assuming Lender that becomes a party to this Agreement pursuant to this Section 2.21 shall be at least equal to $5,000,000. If the Increasing Lenders agree to increase their respective Commitments by an aggregate amount in excess of the proposed Commitment Increase, the proposed Commitment Increase shall be allocated among such Increasing Lenders in proportion to their respective Commitments immediately prior to the Increase Date. If agreement is reached on or prior to the applicable Commitment Date with any Increasing Lenders and Assuming Lenders as to a Commitment Increase (which may be less than but not greater than specified in the applicable notice from the Borrower), such agreement to be evidenced by a notice in reasonable detail from the Borrower to the Agent on or prior to the applicable Commitment Date, such Assuming Lenders, if any, shall become Lenders hereunder as of the applicable Increase Date and the Commitments of such Increasing Lenders and such Assuming Lenders shall become or be, as the case may be, as of the Increase Date, the amounts specified in such notice; provided that:

          (A)          the Agent shall have received (with copies for each Lender, including each such Assuming Lender) by no later than 10:00 A.M. (Chicago time) on the applicable Increase Date a certificate of an Authorized Officer, attaching and certifying resolutions adopted by the Board of Directors of the Borrower on or prior to the Increase Date authorizing the Borrower to borrow money pursuant to this Agreement from time to time in an aggregate principal amount at any one time outstanding not in excess of the Aggregate Commitment as increased by the Commitment Increase, and certifying that such resolutions remain in full force and effect and have not been modified or rescinded or attaching and certifying, if applicable, any amendments to such resolutions;

          (B)          each such Assuming Lender shall have delivered to the Agent, by no later than 10:00 A.M. (Chicago time) on such Increase Date, an appropriate Lender Assumption Agreement in substantially the form of Exhibit F hereto, duly executed by such Assuming Lender and the Borrower; and

          C)          each such Increasing Lender shall have delivered to the Agent, by no later than 10:00 A.M. (Chicago time) on such Increase Date, (x) its existing Note, if any, and (y) confirmation in writing satisfactory to the Agent as to its increased Commitment.

          (b)          In the event that the Agent shall have received notice from the Borrower as to its agreement to a Commitment Increase on or prior to the applicable Commitment Date and each of the actions provided for in clauses (A) through (C) above shall have occurred prior to 10:00 A.M. (Chicago time) on the applicable Increase Date to the satisfaction of the Agent, the Agent shall promptly notify the Lenders (including any Assuming Lenders) and the Borrower of the occurrence of such Commitment Increase and shall record in its records the relevant information with respect to each Increasing Lender and Assuming Lender. Each Increasing Lender and each Assuming Lender shall, before 2:00 P.M. (Chicago time) on the applicable Increase Date, make available to the Agent in accordance with the provisions of this Agreement, in same day funds, in the case of such Assuming Lender, an amount equal to such Assumin g Lender's ratable portion of the Advances then outstanding (calculated based on its Commitment as a percentage of the Aggregate Commitment after giving effect to the relevant Commitment Increase) and, in the case of such Increasing Lender, an amount equal to the excess of (i) such Increasing Lender's ratable portion of the Advances then outstanding after giving effect to the relevant Commitment Increase over (ii) such Increasing Lender's ratable portion of the Advances then outstanding before giving effect to the relevant Commitment Increase. After the Agent's receipt of such funds from each such Increasing Lender and each such Assuming Lender, the Agent will, if necessary, promptly thereafter cause to be distributed like funds to the other Lenders for the account of their respective applicable Lending Installations in an amount to each other Lender such that the aggregate amount of the outstanding Advances owing to each Lender after giving effect to such distribution equals such Lender's ratable portion of the Advances then outstanding after giving effect to the relevant Commitment Increase. After the Borrower receives notice from the Agent, if requested by any Assuming Lender or Increasing Lender pursuant to Section 2.14(iv), the Borrower, at its own expense, shall execute and deliver to the Agent Notes payable to the order of each Assuming Lender, if any, and a Note payable to the order of each Increasing Lender, dated as of the applicable Increase Date, in a principal amount equal to such Lender's Commitment after giving effect to the relevant Commitment Increase. The Agent, upon receipt of such Notes, shall promptly deliver such Notes to the respective Assuming Lenders and Increasing Lenders.

          (c)          In the event that the Agent shall not have received notice from the Borrower as to such agreement on or prior to the applicable Commitment Date or the Borrower shall, by notice to the Agent prior to the applicable Increase Date, withdraw its proposal for a Commitment Increase or any of the actions provided for above in clauses (A) through (C) shall not have occurred by 10:00 A.M. (Chicago time) on the such Increase Date, such proposal by the Borrower shall be deemed not to have been made. In such event, any actions theretofore taken under clauses (A) through (C) above shall be deemed to be of no effect and all the rights and obligations of the parties shall continue as if no such proposal had been made.

ARTICLE III

YIELD PROTECTION; TAXES

          3.1.          Yield Protection. If, on or after the date of this Agreement, the adoption of any law or any governmental or quasi-governmental rule, regulation, policy, guideline or directive (whether or not having the force of law), or any change in the interpretation or administration thereof by any governmental or quasi-governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Lender or applicable Lending Installation or the LC Issuer with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency:

          (i)          subjects any Lender or any applicable Lending Installation or the LC Issuer to any Taxes, or changes the basis of taxation of payments (other than with respect to Excluded Taxes) to any Lender or the LC Issuer in respect of its Eurodollar Loans, Facility LCs or participations therein, or

           (ii)          imposes or increases or deems applicable any reserve, assessment, insurance charge, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender or any applicable Lending Installation or the LC Issuer (other than reserves and assessments taken into account in determining the interest rate applicable to Eurodollar Advances), or

           (iii)          imposes any other condition the result of which is to increase the cost to any Lender or any applicable Lending Installation or the LC Issuer of making, funding or maintaining its Eurodollar Loans, or of issuing or participating in Facility LCs, or reduces any amount receivable by any Lender or any applicable Lending Installation or the LC Issuer in connection with its Eurodollar Loans, Facility LCs or participations therein, or requires any Lender or any applicable Lending Installation or the LC Issuer to make any payment calculated by reference to the amount of Eurodollar Loans, Facility LCs or participations therein held or interest or LC Fees received by it, by an amount deemed material by such Lender or the LC Issuer as the case may be, and the result of any of the foregoing is to increase the cost to such Lender or applicable Lending Installation or the LC Issuer, as the case ma y be, of making or maintaining its Eurodollar Loans or Commitment or of issuing or participating in Facility LCs or to reduce the return received by such Lender or applicable Lending Installation or the LC Issuer, as the case may be, in connection with such Eurodollar Loans, Commitment, Facility LCs or participations therein, then, within 15 days of demand by such Lender or the LC Issuer, as the case may be, the Borrower shall pay such Lender or the LC Issuer, as the case may be, such additional amount or amounts as will compensate such Lender for such increased cost or reduction in amount received.

          3.2.          Changes in Capital Adequacy Regulations. If a Lender or the LC Issuer determines the amount of capital required or expected to be maintained by such Lender or the LC Issuer, any Lending Installation of such Lender or the LC Issuer or any corporation controlling such Lender or the LC Issuer is increased as a result of a Change, then, within 15 days of demand by such Lender or the LC Issuer, the Borrower shall pay such Lender or the LC Issuer the amount necessary to compensate for any shortfall in the rate of return on the portion of such increased capital which such Lender or the LC Issuer determines is attributable to this Agreement, its Outstanding Credit Exposure or its Commitment to make Loans and issue or participate in Facility LCs, as the case may be, hereunder (after taking into account such Lender's or the LC Issuer's policies as to capital adequacy). "Change" means ( i) any change after the date of this Agreement in the Risk-Based Capital Guidelines or (ii) any adoption of or change in any other law, governmental or quasi-governmental rule, regulation, policy, guideline, interpretation, or directive (whether or not having the force of law) after the date of this Agreement which affects the amount of capital required or expected to be maintained by any Lender or the LC Issuer or any Lending Installation or any corporation controlling any Lender or the LC Issuer. "Risk-Based Capital Guidelines" means (i) the risk-based capital guidelines in effect in the United States on the date of this Agreement, including transition rules, and (ii) the corresponding capital regulations promulgated by regulatory authorities outside the United States implementing the July 1988 report of the Basle Committee on Banking Regulation and Supervisory Practices Entitled "International Convergence of Capital Measurements and Capital Standards," including transition rules, and any amendments to suc h regulations adopted prior to the date of this Agreement.

          3.3.          Availability of Types of Advances. If any Lender determines that maintenance of its Eurodollar Loans at a suitable Lending Installation would violate any applicable law, rule, regulation, or directive, whether or not having the force of law, or if the Required Lenders determine that (i) deposits of a type and maturity appropriate to match fund Eurodollar Advances are not available or (ii) the interest rate applicable to Eurodollar Advances does not accurately reflect the cost of making or maintaining Eurodollar Advances, then the Agent shall suspend the availability of Eurodollar Advances and require any affected Eurodollar Advances to be repaid or converted to Floating Rate Advances, subject to the payment of any funding indemnification amounts required by Section 3.4.

          3.4.          Funding Indemnification. If any payment of a Eurodollar Advance occurs on a date which is not the last day of the applicable Interest Period, whether because of acceleration, prepayment or otherwise, or a Eurodollar Advance is not made on the date specified by the Borrower for any reason other than default by the Lenders, the Borrower will indemnify each Lender for any loss or cost incurred by it resulting therefrom, including, without limitation, any loss or cost in liquidating or employing deposits acquired to fund or maintain such Eurodollar Advance.

          3.5.          Taxes. (i) All payments by the Borrower to or for the account of any Lender, the LC Issuer or the Agent hereunder or under any Note or Facility LC Application shall be made free and clear of and without deduction for any and all Taxes. If the Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder to any Lender, the LC Issuer or the Agent, (a) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 3.5) such Lender, the LC Issuer or the Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (b) the Borrower shall make such deductions, (c) the Borrower shall pay the full amount deducted to the relevant authority in accordance with applicable law and (d) the Borrower shall furnish to the Agent the original copy of a receipt evidencing payment thereof within 30 days after such payment is made.

           (ii)          In addition, the Borrower hereby agrees to pay any present or future stamp or documentary taxes and any other excise or property taxes, charges or similar levies which arise from any payment made hereunder or under any Note or Facility LC Application or from the execution or delivery of, or otherwise with respect to, this Agreement or any Note or Facility LC Application ("Other Taxes").

           (iii)          The Borrower hereby agrees to indemnify the Agent, the LC Issuer and each Lender for the full amount of Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes imposed on amounts payable under this Section 3.5) paid by the Agent, the LC Issuer or such Lender and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto. Payments due under this indemnification shall be made within 30 days of the date the Agent, the LC Issuer or such Lender makes demand therefor pursuant to Section 3.6.

           (iv)          Each Lender that is not incorporated under the laws of the United States of America or a state thereof (each a "Non-U.S. Lender") agrees that it will, not more than ten Business Days after the date of this Agreement, (i) deliver to each of the Borrower and the Agent two duly completed copies of United States Internal Revenue Service Form W-8BEN or W-8ECI, certifying in either case that such Lender is entitled to receive payments under this Agreement without deduction or withholding of any United States federal income taxes, and (ii) deliver to each of the Borrower and the Agent a United States Internal Revenue Form W-8 or W-9, as the case may be, and certify that it is entitled to an exemption from United States backup withholding tax. Each Non-U.S. Lender further undertakes to deliver to each of the Borrower and the Agent (x) renewals or additional copies of such form (or any successo r form) on or before the date that such form expires or becomes obsolete, and (y) after the occurrence of any event requiring a change in the most recent forms so delivered by it, such additional forms or amendments thereto as may be reasonably requested by the Borrower or the Agent. All forms or amendments described in the preceding sentence shall certify that such Lender is entitled to receive payments under this Agreement without deduction or withholding of any United States federal income taxes, unless an event (including without limitation any change in treaty, law or regulation) has occurred prior to the date on which any such delivery would otherwise be required which renders all such forms inapplicable or which would prevent such Lender from duly completing and delivering any such form or amendment with respect to it and such Lender advises the Borrower and the Agent that it is not capable of receiving payments without any deduction or withholding of United States federal income tax.

           (v)          For any period during which a Non-U.S. Lender has failed to provide the Borrower with an appropriate form pursuant to clause (iv), above (unless such failure is due to a change in treaty, law or regulation, or any change in the interpretation or administration thereof by any governmental authority, occurring subsequent to the date on which a form originally was required to be provided), such Non-U.S. Lender shall not be entitled to indemnification under this Section 3.5 with respect to Taxes imposed by the United States; provided that, should a Non-U.S. Lender which is otherwise exempt from or subject to a reduced rate of withholding tax become subject to Taxes because of its failure to deliver a form required under clause (iv), above, the Borrower shall take such steps as such Non-U.S. Lender shall reasonably request to assist such Non-U.S. Lender to recover such Taxes.

           (vi)          Any Lender that is entitled to an exemption from or reduction of withholding tax with respect to payments under this Agreement or any Note pursuant to the law of any relevant jurisdiction or any treaty shall deliver to the Borrower (with a copy to the Agent), at the time or times prescribed by applicable law, such properly completed and executed documentation prescribed by applicable law as will permit such payments to be made without withholding or at a reduced rate.

          (vii)          If the U.S. Internal Revenue Service or any other governmental authority of the United States or any other country or any political subdivision thereof asserts a claim that the Agent did not properly withhold tax from amounts paid to or for the account of any Lender (because the appropriate form was not delivered or properly completed, because such Lender failed to notify the Agent of a change in circumstances which rendered its exemption from withholding ineffective, or for any other reason), such Lender shall indemnify the Agent fully for all amounts paid, directly or indirectly, by the Agent as tax, withholding therefor, or otherwise, including penalties and interest, and including taxes imposed by any jurisdiction on amounts payable to the Agent under this subsection, together with all costs and expenses related thereto (including attorneys fees and time charges of attorneys for th e Agent, which attorneys may be employees of the Agent). The obligations of the Lenders under this Section 3.5(vii) shall survive the payment of the Obligations and termination of this Agreement.

          3.6.          Lender Statements; Survival of Indemnity. To the extent reasonably possible, each Lender shall designate an alternate Lending Installation with respect to its Loans to reduce any liability of the Borrower to such Lender under Sections 3.1, 3.2 and 3.5 or to avoid the unavailability of Advances under Section 3.3, so long as such designation is not, in the judgment of such Lender, disadvantageous to such Lender. Each Lender shall deliver a written statement of such Lender to the Borrower (with a copy to the Agent) as to the amount due, if any, under Section 3.1, 3.2, 3.4 or 3.5. Such written statement shall set forth in reasonable detail the calculations upon which such Lender determined such amount and shall be final, conclusive and binding on the Borrower in the absence of manifest error. Determination of amounts payable under such Sections in connection with a Eurodollar Loan sh all be calculated as though each Lender funded its Eurodollar Loan through the purchase of a deposit of the type and maturity corresponding to the deposit used as a reference in determining the Eurodollar Rate applicable to such Loan, whether in fact that is the case or not. Unless otherwise provided herein, the amount specified in the written statement of any Lender shall be payable on demand after receipt by the Borrower of such written statement. The obligations of the Borrower under Sections 3.1, 3.2, 3.4 and 3.5 shall survive payment of the Obligations and termination of this Agreement.

ARTICLE IV

CONDITIONS PRECEDENT

          4.1.          Initial Credit Extension. The Lenders shall not be required to make the initial Credit Extension hereunder unless, prior to or concurrently with the making of the initial Credit Extension, the following conditions precedent have been satisfied:

          (a)          Closing Documents. The Agent shall have received on or before the Closing Date the following, each dated such date (unless otherwise specified) and duly executed by the respective party or parties thereto, in form and substance satisfactory to the Agent and the Lenders, and (except for the Notes) with sufficient copies for the Agent and each Lender:

          (i)          Copies of the articles or certificate of incorporation of the Borrower and of each Restricted Subsidiary which is a corporation, together with all amendments, and a certificate of good standing for each such entity, each certified by the appropriate governmental officer in its jurisdiction of incorporation, and copies of the governing documents of each Restricted Subsidiary which is a partnership or limited liability company, each certified by the Secretary or an Assistant Secretary of each such partnership or limited liability company.

          (ii)          Copies, (x) certified by the Secretary or Assistant Secretary of the Borrower and of each Restricted Subsidiary which is a corporation, of its by-laws and of its Board of Directors' resolutions and of resolutions or actions of any other body authorizing the execution of the Loan Documents to which the Borrower or such Restricted Subsidiary is a party and (y) certified by the Secretary or Assistant Secretary of each Restricted Subsidiary which is a partnership or limited liability company, of any partnership actions or actions of any other body authorizing the execution of the Loan Documents to which such Restricted Subsidiary is a party.

          (iii)          Incumbency certificates, executed by the Secretary or Assistant Secretary of the Borrower and of each Restricted Subsidiary, which shall identify by name and title and bear the signatures of the Authorized Officers and any other officers of such entity authorized to sign the Loan Documents to which the Borrower or such Restricted Subsidiary is a party, upon which certificates the Agent and the Lenders shall be entitled to rely until informed of any change in writing by the Borrower or by such Restricted Subsidiary, as the case may be.

          (iv)          A certificate of the Borrower (the statements made in which certificate shall be true and correct on and as of the Closing Date), (A) certifying that the representations and warranties of the Borrower and each Restricted Subsidiary in this Agreement and each other Loan Document to which it is a party are true and correct in all material respects on and as of the Closing Date, before and after giving effect to the transactions contemplated by this Agreement, as though made on and as of such date, (B) certifying that no Default or Unmatured Default has occurred and is continuing and (C) demonstrating compliance, on and as of the initial Credit Extension Date, with the provisions of Sections 6.16.

          (v)          A written opinion of counsel to the Borrower and the Subsidiary Guarantors in substantially the form attached hereto as Exhibit G.

          (vi)          Any Notes requested by a Lender pursuant to Section 2.13 payable to the order of each such requesting Lender.

          (vii)          Written money transfer instructions, in substantially the form of Exhibit C, addressed to the Agent and signed by an Authorized Officer, together with such other related money transfer authorizations as the Agent may have reasonably requested.

          (viii)          The Subsidiary Guaranty.

The insurance certificate described in Section 5.19.

          (x)          A copy of the most recent reserve report of the type described in Section 6.1(ix).

          (xi)          If the initial Credit Extension will be the issuance of a Facility LC, a properly completed Facility LC Application.

          (xi)          Such other documents as any Lender or its counsel may have reasonably requested.

          (b)          Termination of Existing Credit Agreement. The Agent shall have received sufficient evidence indicating that contemporaneously with the making of the initial Advances, the obligations of the Borrower under the Existing Credit Agreement will be repaid with the proceeds of such Advances and thereafter all obligations of the Borrower and the lenders under the Existing Credit Agreement shall be terminated (including, without limitation, any obligations of any Restricted Subsidiary of the Borrower in respect of guaranties executed in connection with such Existing Credit Agreement but excluding any obligations which expressly survive the repayment of the amounts owing under the Existing Credit Agreement).

          4.2.          Each Credit Extension. The Lenders shall not (except as otherwise set forth in Section 2.5.4 with respect to Revolving Loans for the purpose of repaying Swing Line Loans) be required to make any Credit Extension unless on the applicable Credit Extension Date:

          (i)          There exists no Default or Unmatured Default.

          (ii)          The representations and warranties contained in Article V are true and correct as of such Credit Extension Date except to the extent any such representation or warranty is stated to relate solely to an earlier date, in which case such representation or warranty shall have been true and correct on and as of such earlier date.

          (iii)          All legal matters incident to the making of such Credit Extension shall be satisfactory to the Lenders and their counsel.

          Each Borrowing Notice, Swing Line Borrowing Notice or request for issuance of a Facility LC with respect to each such Credit Extension shall constitute a representation and warranty by the Borrower that the conditions contained in Sections 4.2(i) and (ii) have been satisfied. Any Lender may require a duly completed compliance certificate in substantially the form of Exhibit A as a condition to making a Credit Extension.

ARTICLE V

REPRESENTATIONS AND WARRANTIES

          The Borrower represents and warrants to the Lenders that:

          5.1.          Existence and Standing. (a) The Borrower (i) is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware; (ii) is duly qualified as a foreign corporation and is in good standing in each jurisdiction in which such qualification is required by law, other than those jurisdictions as to which the failure to be so qualified or in good standing could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; and (iii) has the corporate power and authority to own or hold under lease the properties it purports to own or hold under lease, to transact the business it transacts and proposes to transact, to execute and deliver this Agreement and the Notes and to perform its obligations hereunder and thereunder.

          (b)          Each Restricted Subsidiary (i) is a corporation, partnership, limited liability company or trust duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or organization; (ii) is duly qualified as a foreign corporation, partnership, limited liability company or trust and is in good standing in each jurisdiction in which such qualification is required by law, other than those jurisdictions as to which the failure to be so qualified or in good standing could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; and (iii) has the corporate, partnership or trust power and authority to own or hold under lease the properties it purports to own or hold under lease, to transact the business it transacts and proposes to transact, to execute and deliver the Subsidiary Guaranty (to the extent required hereun der to be a party hereto) and to perform the provisions hereof and thereof.

          5.2.          Authorization and Validity. (a) The execution and delivery of this Agreement and the Notes and the performance by the Borrower of its obligations hereunder and thereunder have been duly authorized by all necessary corporate action on the part of the Borrower, and this Agreement constitutes, and upon execution and delivery thereof each Note will constitute, a legal, valid and binding obligation of the Borrower enforceable against the Borrower in accordance with its terms, except as such enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

          (b)          The execution and delivery of the Subsidiary Guaranty and the performance by each Restricted Subsidiary of its obligations thereunder has been duly authorized by all necessary corporate or partnership action on the part of each Restricted Subsidiary that is required hereunder to be a party thereto and the Subsidiary Guaranty constitutes a legal, valid and binding obligation of each such Restricted Subsidiary enforceable against such Restricted Subsidiary in accordance with its terms, except as such enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

          5.3.          No Conflict; Government Consent. Neither the execution and delivery by the Borrower and any Restricted Subsidiary of the Loan Documents to which it is a party, nor the consummation of the transactions therein contemplated, nor compliance with the provisions thereof will violate (i) any law, rule, regulation, order, writ, judgment, injunction, decree or award binding on the Borrower or any of the Restricted Subsidiaries or (ii) the Borrower's or any Restricted Subsidiary's articles or certificate of incorporation, partnership agreement, certificate of partnership, articles or certificate of organization, by-laws, or operating or other management agreement, as the case may be, or (iii) the provisions of any indenture, instrument or agreement to which the Borrower or any of its Restricted Subsidiaries is a party or is subject, or by which it, or its Property, is bound, or conflict w ith or constitute a default thereunder, or result in, or require, the creation or imposition of any Lien in, of or on the Property of the Borrower or any Restricted Subsidiary pursuant to the terms of any such indenture, instrument or agreement. No order, consent, adjudication, approval, license, authorization, or validation of, or filing, recording or registration with, or exemption by, or other action in respect of any governmental or public body or authority, or any subdivision thereof, which has not been obtained by the Borrower or any of its Restricted Subsidiaries, is required to be obtained by the Borrower or any of its Restricted Subsidiaries in connection with the execution and delivery of the Loan Documents, the borrowings under this Agreement, the payment and performance by the Borrower or any Restricted Subsidiary of the Obligations or the legality, validity, binding effect or enforceability of any of the Loan Documents.

          5.4.          Financial Statements. The March 31, 2001 consolidated financial statements of the Borrower and its Subsidiaries heretofore delivered to the Lenders were prepared in accordance with generally accepted accounting principles in effect on the date such statements were prepared and fairly present the consolidated financial condition and operations of the Borrower and its Subsidiaries at such date and the consolidated results of their operations for the period then ended (subject to normal year-end adjustments).

          5.5.          Material Adverse Change. Since December 31, 2000 there has been no change in the business, affairs, assets, Property, financial condition, or results of operations of the Borrower and its Restricted Subsidiaries which could reasonably be expected to have a Material Adverse Effect.

          5.6.          Taxes. The Borrower and its Subsidiaries have filed all United States federal tax returns and all other tax returns which are required to be filed and have paid all taxes due pursuant to said returns or pursuant to any assessment received by the Borrower or any of its Restricted Subsidiaries, except such taxes, if any, (i) the amount of which is not individually or in the aggregate material, or (ii) as are being contested in good faith and as to which adequate reserves have been provided in accordance with Agreement Accounting Principles. The United States income tax returns of the Borrower and its Subsidiaries have been audited by the Internal Revenue Service through the fiscal year ended December 31, 1996. No tax liens have been filed and no claims are being asserted with respect to any such taxes. The charges, accruals and reserves on the books of the Borrower and its Subsidia ries in respect of any taxes or other governmental charges are adequate in all material respects.

          5.7.          Litigation. There is no litigation, arbitration, governmental investigation, proceeding or inquiry pending or, to the knowledge of any of their officers, threatened against or affecting the Borrower or any of its Subsidiaries which could reasonably be expected to have a Material Adverse Effect or which seeks to prevent, enjoin or delay the making of any Credit Extensions.

          5.8.          Subsidiaries. Schedule 1 contains an accurate list of all Restricted Subsidiaries and Unrestricted Subsidiaries of the Borrower as of the date of this Agreement, setting forth their respective jurisdictions of organization and the percentage of their respective capital stock or other ownership interests owned by the Borrower or other Subsidiaries. All of the issued and outstanding shares of capital stock or other ownership interests of such Subsidiaries have been (to the extent such concepts are relevant with respect to such ownership interests) duly authorized and issued and are fully paid and non-assessable.

          5.9.          ERISA. The Unfunded Liabilities of all Single Employer Plans do not in the aggregate exceed $5,000,000. Neither the Borrower nor any other member of the Controlled Group has incurred, or is reasonably expected to incur, any withdrawal liability to Multiemployer Plans in excess of $5,000,000 in the aggregate. Each Plan complies in all material respects with all applicable requirements of law and regulations, no Reportable Event has occurred with respect to any Plan, neither the Borrower nor any other member of the Controlled Group has withdrawn from any Plan or initiated steps to do so, and no steps have been taken to reorganize or terminate any Plan.

          5.10.          Accuracy of Information. No information, exhibit or report furnished by the Borrower or any of its Subsidiaries to the Agent or to any Lender in connection with the negotiation of, or compliance with, the Loan Documents contained any material misstatement of fact or omitted to state a material fact or any fact necessary to make the statements contained therein not misleading.

          5.11.          Regulation U. Margin stock (as defined in Regulation U) constitutes less than 25% of the value of those assets of the Borrower and its Subsidiaries which are subject to any limitation on sale, pledge, or other restriction hereunder.

          5.12.          Material Agreements. Neither the Borrower nor any Subsidiary is a party to any agreement or instrument or subject to any charter or other corporate restriction which could reasonably be expected to have a Material Adverse Effect. Neither the Borrower nor any Subsidiary is in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any agreement to which it is a party, which default could reasonably be expected to have a Material Adverse Effect.

          5.13.          Compliance With Laws. The Borrower and its Restricted Subsidiaries have complied with all applicable statutes, rules, regulations, orders and restrictions of any domestic or foreign government or any instrumentality or agency thereof having jurisdiction over the conduct of their respective businesses or the ownership of their respective Property.

          5.14.          Ownership of Properties. The Borrower and its Restricted Subsidiaries will have good title, free of all Liens other than those permitted by Section 6.15, to all of the Property and assets reflected in the Borrower's most recent consolidated financial statements provided to the Agent as owned by the Borrower and its Restricted Subsidiaries.

          5.15.          Plan Assets; Prohibited Transactions. The Borrower is not an entity deemed to hold "plan assets" within the meaning of 29 C.F.R. Section 2510.3-101 of an employee benefit plan (as defined in Section 3(3) of ERISA) which is subject to Title I of ERISA or any plan (within the meaning of Section 4975 of the Code), and neither the execution of this Agreement nor the making of Credit Extensions hereunder gives rise to a prohibited transaction within the meaning of Section 406 of ERISA or Section 4975 of the Code.

          5.16.          Environmental Matters. In the ordinary course of its business, the officers of the Borrower consider the effect of Environmental Laws on the business of the Borrower and its Subsidiaries, in the course of which they identify and evaluate potential risks and liabilities accruing to the Borrower due to Environmental Laws.

On the basis of this consideration, the Borrower has concluded that Environmental Laws cannot reasonably be expected to have a Material Adverse Effect. Neither the Borrower nor any Subsidiary has received any notice to the effect that its operations are not in material compliance with any of the requirements of applicable Environmental Laws or are the subject of any federal or state investigation evaluating whether any remedial action is needed to respond to a release of any toxic or hazardous waste or substance into the environment, which non-compliance or remedial action could reasonably be expected to have a Material Adverse Effect.

          5.17.          Investment Company Act. Neither the Borrower nor any Subsidiary is an "investment company" or a company "controlled" by an "investment company", within the meaning of the Investment Company Act of 1940, as amended.

          5..          Public Utility Holding Company Act. Neither the Borrower nor any Subsidiary is a "holding company" or a "subsidiary company" of a "holding company", or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company", within the meaning of the Public Utility Holding Company Act of 1935, as amended.

          5.19.          Insurance. The certificate signed by the President or Chief Financial Officer of the Borrower, that attests to the existence and adequacy of, and summarizes, the property and casualty insurance program carried by the Borrower with respect to itself and its Restricted Subsidiaries and that has been furnished by the Borrower to the Agent and the Lenders, is complete and accurate as of the date hereof. This summary includes the insurer's or insurers' name(s), policy number(s), expiration date(s), amount(s) of coverage, type(s) of coverage, exclusion(s), and deductibles. This summary also includes similar information, and describes any reserves, relating to any self-insurance program that is in effect.

ARTICLE VI

COVENANTS

          During the term of this Agreement, unless the Required Lenders shall otherwise consent in writing:

          6.1.          Financial Reporting. The Borrower will maintain, for itself and each Subsidiary, a system of accounting established and administered in accordance with generally accepted accounting principles, and furnish to the Lenders:

          (i)          Within 90 days after the close of each of its fiscal years, an unqualified (except for qualifications relating to changes in accounting principles or practices reflecting changes in generally accepted accounting principles and required or approved by the Borrower's independent certified public accountants) audit report certified by independent certified public accountants of recognized national standing, prepared in accordance with Agreement Accounting Principles on a consolidated basis for the Borrower and its Subsidiaries and on an unaudited basis for the Borrower and its Restricted Subsidiaries, including balance sheets as of the end of such period, related profit and loss and reconciliation of surplus statements, and a statement of cash flows, accompanied by (A) any management letter prepared by said accountants if available at the time such financial statements are delivered, and (B ) a certificate of said accountants that, in the course of their examination necessary for their certification of the foregoing, they have obtained no knowledge of any Default or Unmatured Default, or if, in the opinion of such accountants, any Default or Unmatured Default shall exist, stating the nature and status thereof.

          (ii)          Within 45 days after the close of the first three quarterly periods of each of its fiscal years, for the Borrower and its Subsidiaries and the Borrower and its Restricted Subsidiaries, consolidated unaudited balance sheets as at the close of each such period and consolidated profit and loss and reconciliation of surplus statements and a statement of cash flows for the period from the beginning of such fiscal year to the end of such quarter, all certified by an Authorized Officer.

          (iii)          Together with the financial statements required under Sections 6.1(i) and (ii), a compliance certificate in substantially the form of Exhibit B signed by an Authorized Officer showing the calculations necessary to determine compliance with this Agreement and stating that no Default or Unmatured Default exists, or if any Default or Unmatured Default exists, stating the nature and status thereof.

          (iv)          Within 270 days after the close of each fiscal year, a statement of the Unfunded Liabilities of each Single Employer Plan, if any, certified as correct by an actuary enrolled under ERISA.

          (v)          As soon as possible and in any event within 10 days after the Borrower knows that any Reportable Event has occurred with respect to any Plan, a statement, signed by the chief financial officer of the Borrower, describing said Reportable Event and the action which the Borrower proposes to take with respect thereto.

          (vi)          As soon as possible and in any event within 10 days after receipt by the Borrower, a copy of (a) any notice or claim to the effect that the Borrower or any of its Subsidiaries is or may be liable to any Person as a result of the release by the Borrower, any of its Subsidiaries, or any other Person of any toxic or hazardous waste or substance into the environment, and (b) any notice alleging any violation of any federal, state or local environmental, health or safety law or regulation by the Borrower or any of its Subsidiaries, which, in either case, could reasonably be expected to have a Material Adverse Effect.

          (vii)          Promptly upon the furnishing thereof to the shareholders of the Borrower, copies of all financial statements, reports and proxy statements so furnished.

Promptly upon the filing thereof, copies of all registration statements and annual, quarterly, monthly or other regular reports which the Borrower or any of its Restricted Subsidiaries files with the Securities and Exchange Commission.

          Promptly, and in any event no later than April 1 in each year, engineering reports in form and substance reasonably satisfactory to the Required Lenders, certified by Garb Grubbs Harris & Associates, Inc. (or any other nationally or regionally recognized independent consulting petroleum engineers) as fairly and accurately setting forth:

          (A)          the proven and producing, shut-in, behind-pipe, and undeveloped oil and gas reserves (separately classified as such) of the Borrower and its Restricted Subsidiaries as of January 1 of the year for which such reserve reports are furnished,

          (B)          the aggregate present value of the future net income with respect to such reserves discounted at a stated per annum annual discount rate,

          (C)          projections of the annual rate of production, gross income, and net income with respect to such proven and producing reserves, and

          (D)          information with respect to the "take-or-pay," "prepayment," and gas-balancing liabilities of the Borrower and its Restricted Subsidiaries.

          Any management letters prepared in connection with the financial statements required under Section 6.1(i) if not otherwise available at the time such financial statements are delivered.

          Such other information (including non-financial information) as the Agent or any Lender may from time to time reasonably request.

          6.2.          Use of Proceeds. The Borrower will, and will cause each Subsidiary to, use the proceeds of the Credit Extensions for general corporate purposes and to make Acquisitions. The Borrower will not, nor will it permit any Subsidiary to, use any of the proceeds of the Advances to purchase or carry any "margin stock" (as defined in Regulation U).

          6.3.          Notice of Default. The Borrower will, and will cause each Subsidiary to, give prompt notice in writing to the Lenders of the occurrence of any Default or Unmatured Default and of any other development, financial or otherwise, which could reasonably be expected to have a Material Adverse Effect.

          6.4.          Conduct of Business. The Borrower will not, and will not permit any Restricted Subsidiary to, engage in any business if, as a result, the Borrower and its Restricted Subsidiaries, taken as a whole, would not be engaged primarily in the provision of (i) seismic data services, (ii) exploration for and development and ownership of gas and oil reserves, and (iii) businesses related to the foregoing businesses. Except as otherwise permitted herein, Borrower will, and will cause each Restricted Subsidiary to, except as otherwise permitted herein, do all things necessary to remain duly incorporated or organized, validly existing and (to the extent such concept applies to such entity) in good standing as a domestic corporation, partnership or limited liability company in its jurisdiction of incorporation or organization, as the case may be, and maintain all requisite authority to conduct its business in each jurisdiction in which its business is conducted.

          6.5.          Taxes. The Borrower will, and will cause each Subsidiary to, timely file complete and correct United States federal and applicable foreign, state and local tax returns required by law and pay when due all taxes, assessments and governmental charges and levies upon it or its income, profits or Property, except those which are being contested in good faith by appropriate proceedings and with respect to which adequate reserves have been set aside in accordance with Agreement Accounting Principles.

          6.6.          Insurance. The Borrower will, and will cause (i) each Restricted Subsidiary to, maintain with financially sound and reputable insurance companies insurance on all their Property in such amounts and covering such risks as is consistent with sound business practice, and the Borrower will furnish to any Lender upon request full information as to the insurance carried and (ii) each Unrestricted Subsidiary to, maintain with financially sound and reputable insurance companies insurance on all their Property in such amounts and covering such risks as is consistent with sound business practice, other than failures to maintain such insurance which could not reasonably be expected to have a Material Adverse Effect.

          6.7.          Compliance with Laws. The Borrower will, and will cause (i) each Restricted Subsidiary to, comply in all material respects with all laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject including, without limitation, all Environmental Laws and (ii) each Unrestricted Subsidiary to, comply in all material respects with all laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject including, without limitation, all Environmental Laws, except where the failure to do so, either individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

          6.8.          Maintenance of Properties. The Borrower will, and will cause (i) each Restricted Subsidiary to, do all things necessary to maintain, preserve, protect and keep its Property in good repair, working order and condition (subject to normal wear and tear), and make all necessary and proper repairs, renewals and replacements so that its business carried on in connection therewith may be properly conducted at all times and (ii) each Unrestricted Subsidiary to, do all things necessary to maintain, preserve, protect and keep its Property in good repair, working order and condition (subject to normal wear and tear), and make all necessary and proper repairs, renewals and replacements so that its business carried on in connection therewith may be properly conducted at all times, except where the failure to do so, either individually or in the aggregate, could not reasonably be expected to r esult in a Material Adverse Effect.

          6.9.          Inspection. The Borrower shall permit the Agent, each Lender and their respective duly authorized representatives, upon reasonable prior notice to the Borrower, to visit the principal executive office of the Borrower, to discuss the affairs, finances and accounts of the Borrower and the Subsidiaries with the Borrower's officers, and its independent public accountants and its independent petroleum engineers, and to visit the other offices and properties of the Borrower and each Subsidiary, all at such reasonable times as may be reasonably requested in writing, provided that if no Default or Unmatured Default then exists, any Lender or the Agent shall be permitted to make only two inspections per calendar year, each at the expense of the Agent or such Lender.

          6.10.          Restricted Payments and Investments. The Borrower will not, and will not permit any of the Restricted Subsidiaries to, directly or indirectly, declare, make or incur any liability to make any Restricted Payment or make or authorize any Investment; except that prior to the occurrence and continuance of a Default or Unmatured Default and so long as no Default or Unmatured Default would occur as a result of such Restricted Payment or Investment (i) any Restricted Subsidiary may make Restricted Payments to the Borrower or to any other Restricted Subsidiary, (ii) the Borrower may make Restricted Payments, and (iii) the Borrower or any Restricted Subsidiary may make any Investment, provided that the aggregate amount of Investments by the Borrower and its Restricted Subsidiaries in Unrestricted Subsidiaries since the Closing Date shall not exceed 10% of Consolidated Net Worth. I nvestments in any Person that ceases to be a Restricted Subsidiary after the date of this Agreement (but in which the Borrower or another Restricted Subsidiary continues to maintain an Investment) will be deemed to have been made on the date on which such Person ceases to be a Restricted Subsidiary.

          6.11.          Indebtedness. The Borrower will not, nor will it permit any Restricted Subsidiary to, create, incur or suffer to exist any Indebtedness, except:

          (i)          The Loans and the Reimbursement Obligations.

          (ii)          Any other Indebtedness; provided that the Borrower is in compliance with Section 6.16.

          6.12.          Merger and Consolidation. The Borrower will not, and will not permit any of the Restricted Subsidiaries to, consolidate with or merge with any other corporation or other entity or Transfer substantially all of its assets in a single transaction or series of transactions to any Person, except that (i) any Restricted Subsidiary may consolidate or merge with or Transfer substantially all of its assets to any other Restricted Subsidiary or the Borrower; (ii) any Restricted Subsidiary may Transfer all of its assets in compliance with the provisions of Section 6.13; and (iii) the Borrower may consolidate or merge with any Person so long as (A) the Borrower is the surviving corporation in any such consolidation or merger; and (B) immediately prior to, and immediately after giving effect to, such transaction, no Default or Unmatured Default would exist.

          6.13.          Sale of Assets. (i) The Borrower will not, nor will it permit any Restricted Subsidiary to Transfer any of its Property to any other Person, except (A) Ordinary Course Transfers; (B) Intergroup Transfers; and (C) any other Transfer that is not an Ordinary Course Transfer or an Intergroup Transfer if (x) such Transfer does not involve a Substantial Portion of the Property of the Borrower and its Restricted Subsidiaries, (y) such Transfer is in exchange for consideration with a Fair Market Value at least equal to that of the Property exchanged and is in the best interests of the Borrower (as determined in good faith by the Board of Directors of the Borrower or the Board of Directors of such Restricted Subsidiary, as applicable) and (z) immediately prior to and immediately after giving effect to such transaction no Default or Unmatured Default would exist.

          (ii)          Notwithstanding the provisions of Section 6.13(i), the determination of whether a Transfer involves a Substantial Portion of the Property of the Borrower and the Restricted Subsidiaries shall be made without taking into account the same proportion of the book value attributable to the Property subject to such Transfer as shall be equal to the proportion of the Net Asset Sale Proceeds Amount (the "Designated Portion") to be applied either (x) to a prepayment of the Senior Notes pursuant to the terms thereof (a "Prepayment Transfer") or (y) within one hundred eighty (0) days of the consummation of such Transfer, to any acquisition of assets similar to the assets which were the subject of such Transfer (a "Reinvested Transfer"), as specified in an Officer's Certificate delivered to the Agent and each Lender prior to, or contemporaneously with, the consummation of such Transfer. If, notwith standing the certificate referred to in the preceding sentence, the Borrower shall fail to apply the entire amount of the Designated Portion as specified in such certificate within the required period, the computation of whether such Transfer involved a Substantial Portion of the Property of the Borrower and the Restricted Subsidiaries shall be recomputed, as of the date of such Transfer, without taking into account the same proportion of the book value attributable to the Property subject to such Transfer as shall be equal to the proportion of the Net Asset Sale Proceeds Amount actually applied to either a Prepayment Transfer or a Reinvested Transfer within such period. If, upon the recomputation provided for in the preceding sentence, such Transfer involved a Substantial Portion of the Property of the Borrower and the Restricted Subsidiaries, an Unmatured Default shall be deemed to have existed as of the expiration of such period.

          6.14.          Liens. The Borrower will not, nor will it permit any Restricted Subsidiary to, create, incur, or suffer to exist any Lien in, of or on the Property of the Borrower or any of its Restricted Subsidiaries, except:

Permitted Liens.

          (ii)          Liens existing on the date hereof and described in Schedule 2.

          (ii)          Liens on Property of the Borrower or any of the Restricted Subsidiaries securing Indebtedness owing to the Borrower or to a Wholly-Owned Restricted Subsidiary.

          (iii)          Liens on Property acquired or constructed by the Borrower or any Restricted Subsidiary after the date of this Agreement to secure Indebtedness of the Borrower or such Restricted Subsidiary incurred in connection with or related to such acquisition or construction, and Liens existing on such Property at the time of acquisition thereof, provided that (A) no such Lien shall extend to or cover any Property other than the Property being acquired or constructed (including contractual and other rights related thereto and proceeds thereof); (B) the amount of Indebtedness secured by any such Lien shall not exceed an amount equal to the lesser of the total purchase or construction price or Fair Market Value of the Property being acquired or constructed, determined at the time of such acquisition or at the time of substantial completion of such construction; (C) such Lien shall be created concurrently with or within twelve months after such acquisition or substantial completion of such construction; (D) no Default or Unmatured Default shall exist at the time of creation, incurrence or assumption of such Lien and (E) the aggregate amount of Indebtedness secured by Liens permitted by this paragraph (iii) shall not exceed $10,000,000.

          (iv)          Liens existing on Property of a corporation or other entity at the time it becomes a Restricted Subsidiary or is merged or consolidated with the Borrower or a Restricted Subsidiary as permitted by Section 6.12, provided that (A) no such Lien shall extend to or cover any Property other than the Property subject to such Lien at the time of any such transaction; (B) the amount of Indebtedness secured by any such Lien shall not exceed the Fair Market Value of the Property subject thereto, determined at the time of such transaction; (C) such Lien was not created in contemplation of any such transaction; and (D) no Default or Unmatured Default shall exist at the time of any such transaction.

          6.15. Affiliates. The Borrower will not, and will not permit any Restricted Subsidiary to, enter into any transaction (other than transactions with Unrestricted Subsidiaries that are not material) (including, without limitation, the purchase or sale of any Property or service) with, or make any payment or transfer to, any Affiliate except in the ordinary course of business and pursuant to the reasonable requirements of the Borrower's or such Restricted Subsidiary's business and upon fair and reasonable terms no less favorable to the Borrower or such Restricted Subsidiary than the Borrower or such Restricted Subsidiary would obtain in a comparable arm's length transaction.

          6.16. Financial Covenants.

          6.16.1. Interest Coverage Ratio. The Borrower will not permit the ratio, determined as of the end of each of its fiscal quarters for the then most-recently ended four fiscal quarters, of (i) Consolidated EBITDA to (ii) Consolidated Interest Expense to be less than 5.0 to 1.0.

          6.16.2. Leverage Ratio. The Borrower will not permit the Leverage Ratio, determined as of the end of each of its fiscal quarters, to be greater than 2.5 to 1.0.

          6.16.3. Minimum Net Worth. The Borrower will at all times maintain Consolidated Net Worth of not less than the sum of (i) 85% of Consolidated Net Worth as of March 31, 2001 plus (ii) 50% of Consolidated Net Income earned in each fiscal quarter beginning with the quarter ending June 30, 2001 (without deduction for losses) plus (iii) 75% of Net Proceeds of Equity Interests of the Borrower for such period.

6.17. Qualified Capital. The Borrower will not permit the aggregate amount of Qualified Capital to exceed $125,000,000 at any time.

          6.. Books and Records. The Borrower shall keep books of record and account in which full, true and correct entries will be made of all dealings or transactions in relation to its business and activities in all material respects.

ARTICLE VII

DEFAULTS

          The occurrence of any one or more of the following events shall constitute a Default:

           7.1.          Any representation or warranty made or deemed made by or on behalf of the Borrower or any of its Subsidiaries to the Lenders or the Agent under or in connection with this Agreement, any Credit Extension, or any certificate or information delivered in connection with this Agreement or any other Loan Document shall be materially false on the date as of which made.

           7.2.          Nonpayment of principal of any Loan when due, nonpayment of any Reimbursement Obligation within one Business Day after the same becomes due, or nonpayment of interest upon any Loan or of any commitment fee, LC Fee or other obligations under any of the Loan Documents within five days after the same becomes due.

           7.3.          The breach by the Borrower of any of the terms or provisions of Sections 6.3 or 6.10 through 6.16 inclusive, except for breaches of Section 6.14 with respect to Liens which secure Indebtedness in an aggregate principal amount of less than $2,500,000.

           7.4.          The breach by the Borrower (other than a breach which constitutes a Default under another Section of this Article VII) of any of the terms or provisions of this Agreement which is not remedied within thirty days after the earlier of (i) an Authorized Officer obtaining actual knowledge of such default or (ii) the Borrower receiving written notice of such default from the Agent or any Lender.

           7.5.          Failure of the Borrower or any of its Restricted Subsidiaries to pay when due any Indebtedness aggregating in excess of $10,000,000 ("Material Indebtedness"); or the default by the Borrower or any of its Restricted Subsidiaries in the performance of any term, provision or condition contained in any agreement under which any such Material Indebtedness was created or is governed, or any other event shall occur or condition exist, the effect of which default or event is to cause, or to permit the holder or holders of such Material Indebtedness to cause, such Material Indebtedness to become due prior to its stated maturity; or any Material Indebtedness of the Borrower or any of its Restricted Subsidiaries shall be declared to be due and payable or required to be prepaid or repurchased (other than by a regularly scheduled payment) prior to the stated maturity thereof; or the Borrower or any of its Restricted Subsidiaries shall not pay, or admit in writing its inability to pay, its debts generally as they become due.

           7.6.          The Borrower or any of its Restricted Subsidiaries shall (i) have an order for relief entered with respect to it under the Federal bankruptcy laws as now or hereafter in effect, (ii) make an assignment for the benefit of creditors, (iii) apply for, seek, consent to, or acquiesce in, the appointment of a receiver, custodian, trustee, examiner, liquidator or similar official for it or any Substantial Portion of its Property, (iv) institute any proceeding seeking an order for relief under the Federal bankruptcy laws as now or hereafter in effect or seeking to adjudicate it a bankrupt or insolvent, or seeking dissolution, winding up, liquidation, reorganization, arrangement, adjustment or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors or fail to file an answer or other pleading denying the material allegations of any s uch proceeding filed against it, (v) take any corporate or partnership action to authorize or effect any of the foregoing actions set forth in this Section 7.6 or (vi) fail to contest in good faith any appointment or proceeding described in Section 7.7.

           7.7.          Without the application, approval or consent of the Borrower or any of its Restricted Subsidiaries, a receiver, trustee, examiner, liquidator or similar official shall be appointed for the Borrower or any of its Restricted Subsidiaries or any Substantial Portion of its Property, or a proceeding described in Section 7.6(iv) shall be instituted against the Borrower or any of its Restricted Subsidiaries and such appointment continues undischarged or such proceeding continues undismissed or unstayed for a period of 60 consecutive days.

           7.8.          Any court, government or governmental agency shall condemn, seize or otherwise appropriate, or take custody or control of, all or any portion of the Property of the Borrower and its Restricted Subsidiaries which, when taken together with all other Property of the Borrower and its Restricted Subsidiaries so condemned, seized, appropriated, or taken custody or control of, during the twelve-month period ending with the month in which any such action occurs, constitutes a Substantial Portion.

           7.9.          The Borrower or any of its Restricted Subsidiaries shall fail within 45 days to pay, bond or otherwise discharge one or more (i) judgments or orders for the payment of money in excess of $1,000,000 (or the equivalent thereof in currencies other than U.S. Dollars) in the aggregate, or (ii) nonmonetary judgments or orders which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect, which judgment(s), in any such case, is/are not stayed on appeal or otherwise being appropriately contested in good faith.

          7.10.          The Unfunded Liabilities of all Single Employer Plans shall exceed in the aggregate $5,000,000 or any Reportable Event shall occur in connection with any Plan.

          7.11. The Borrower or any other member of the Controlled Group shall have been notified by the sponsor of a Multiemployer Plan that it has incurred withdrawal liability to such Multiemployer Plan in an amount which, when aggregated with all other amounts required to be paid to Multiemployer Plans by the Borrower or any other member of the Controlled Group as withdrawal liability (determined as of the date of such notification), exceeds $5,000,000 or requires payments exceeding $2,000,000 per annum.

          7.12. The Borrower or any other member of the Controlled Group shall have been notified by the sponsor of a Multiemployer Plan that such Multiemployer Plan is in reorganization or is being terminated, within the meaning of Title IV of ERISA, if as a result of such reorganization or termination the aggregate annual contributions of the Borrower and the other members of the Controlled Group (taken as a whole) to all Multiemployer Plans which are then in reorganization or being terminated have been or will be increased over the amounts contributed to such Multiemployer Plans for the respective plan years of each such Multiemployer Plan immediately preceding the plan year in which the reorganization or termination occurs by an amount exceeding $2,000,000.

          7.13. Any Change in Control shall occur.

          7.14. The occurrence of any "default", as defined in any Loan Document (other than this Agreement) or the breach of any of the terms or provisions of any Loan Document (other than this Agreement), which default or breach continues beyond any period of grace therein provided.

          7.15.          Except as otherwise permitted by any Loan Document or which otherwise constitutes a Default under another Section of this Article VII, any Loan Document shall fail to remain in full force or effect or any action shall be taken to discontinue or to assert the invalidity or unenforceability of any Loan Document, or the Borrower or any Guarantor shall fail to comply with any of the terms or provisions of any Loan Document to which it is a party, or the Borrower or any Guarantor shall deny that it has any further liability under any Loan Document to which it is a party, or shall give notice to such effect.

          7.16. The representations and warranties set forth in Section 5.15 ("Plan Assets; Prohibited Transactions") shall at any time not be true and correct.

ARTICLE VIII

ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES

          8.1.          Acceleration; Facility LC Collateral Account. (i) If any Default described in Section 7.6 or 7.7 occurs with respect to the Borrower, the obligations of the Lenders to make Loans hereunder and the obligation and power of the LC Issuer to issue Facility LCs shall automatically terminate and the Obligations shall immediately become due and payable without any election or action on the part of the Agent, the LC Issuer or any Lender and the Borrower will be and become thereby unconditionally obligated, without any further notice, act or demand, to pay to the Agent an amount in immediately available funds, which funds shall be held in the Facility LC Collateral Account, equal to the difference of (x) the amount of LC Obligations at such time, less (y) the amount on deposit in the Facility LC Collateral Account at such time which is free and clear of all rights and claims of third parties and has not been applied against the Obligations (such difference, the "Collateral Shortfall Amount"). If any other Default occurs, the Required Lenders (or the Agent with the consent of the Required Lenders) may (a) terminate or suspend the obligations of the Lenders to make Loans hereunder and the obligation and power of the LC Issuer to issue Facility LCs, or declare the Obligations to be due and payable, or both, whereupon the Obligations shall become immediately due and payable, without presentment, demand, protest or notice of any kind, all of which the Borrower hereby expressly waives, and (b) upon notice to the Borrower and in addition to the continuing right to demand payment of all amounts payable under this Agreement, make demand on the Borrower to pay, and the Borrower will, forthwith upon such demand and without any further notice or act, pay to the Agent the Collateral Shortfall Amount, which funds shall be deposited in the Facility LC Collateral Account.

          (ii)          If at any time while any Default is continuing, the Agent determines that the Collateral Shortfall Amount at such time is greater than zero, the Agent may make demand on the Borrower to pay, and the Borrower will, forthwith upon such demand and without any further notice or act, pay to the Agent the Collateral Shortfall Amount, which funds shall be deposited in the Facility LC Collateral Account.

          (iii)           The Agent may at any time or from time to time after funds are deposited in the Facility LC Collateral Account, apply such funds to the payment of the Obligations and any other amounts as shall from time to time have become due and payable by the Borrower to the Lenders or the LC Issuer under the Loan Documents.

          (iv)          At any time while any Default is continuing, neither the Borrower nor any Person claiming on behalf of or through the Borrower shall have any right to withdraw any of the funds held in the Facility LC Collateral Account. After all of the Obligations have been indefeasibly paid in full and the Aggregate Commitment has been terminated, any funds remaining in the Facility LC Collateral Account shall be returned by the Agent to the Borrower or paid to whomever may be legally entitled thereto at such time.

          (iv)          If, within 60 days after acceleration of the maturity of the Obligations or termination of the obligations of the Lenders to make Loans and the obligation and power of the LC Issuer to issue Facility LCs hereunder as a result of any Default (other than any Default as described in Section 7.6 or 7.7 with respect to the Borrower) and before any judgment or decree for the payment of the Obligations due shall have been obtained or entered, the Required Lenders (in their sole discretion) shall so direct, the Agent shall, by notice to the Borrower, rescind and annul such acceleration and/or termination.

          8.2.          Amendments. Subject to the provisions of this Article VIII, the Required Lenders (or the Agent with the consent in writing of the Required Lenders) and the Borrower may enter into agreements supplemental hereto for the purpose of adding or modifying any provisions to the Loan Documents or changing in any manner the rights of the Lenders or the Borrower hereunder or waiving any Default hereunder; provided, however, that no such supplemental agreement shall, without the consent of each of the Lenders affected thereby:

          (i)          Extend the final maturity of any Loan, or extend the expiry date of any Facility LC to a date after the Facility Termination Date or forgive all or any portion of the principal amount thereof or any Reimbursement Obligation related thereto, or reduce the rate or extend the time of payment of interest or fees thereon or Reimbursement Obligations related thereto.

          (ii)          Reduce the percentage specified in the definition of Required Lenders.

          (iii)          Extend the Facility Termination Date, or reduce the amount or extend the payment date for, the mandatory payments required under Section 2.2, or increase the Commitment of any Lender hereunder or the commitment to issue Facility LCs or permit the Borrower to assign its rights under this Agreement.

          (iv)          Amend this Section 8.2.

          (v)          Release any guarantor of any Advance.

No amendment of any provision of this Agreement relating to the Agent shall be effective without the written consent of the Agent, and no amendment of any provision relating to the LC Issuer shall be effective without the written consent of the LC Issuer. No amendment of any provision of this Agreement relating to the Swing Line Lender or any Swing Line Loans shall be effective without the written consent of the Swing Line Lender. The Agent may waive payment of the fee required under Section 12.3.2 without obtaining the consent of any other party to this Agreement.

          8.3.          Preservation of Rights. No delay or omission of the Lenders, the LC Issuer or the Agent to exercise any right under the Loan Documents shall impair such right or be construed to be a waiver of any Default or an acquiescence therein, and the making of a Credit Extension notwithstanding the existence of a Default or the inability of the Borrower to satisfy the conditions precedent to such Credit Extension shall not constitute any waiver or acquiescence. Any single or partial exercise of any such right shall not preclude other or further exercise thereof or the exercise of any other right, and no waiver, amendment or other variation of the terms, conditions or provisions of the Loan Documents whatsoever shall be valid unless in writing signed by the Lenders required pursuant to Section 8.2, and then only to the extent in such writing specifically set forth. All remedies contained in the Loan Documents or by law afforded shall be cumulative and all shall be available to the Agent, the LC Issuer and the Lenders until the Obligations have been paid in full.

ARTICLE IX

GENERAL PROVISIONS

          9.1.          Survival of Representations. All representations and warranties of the Borrower contained in this Agreement shall survive the making of the Credit Extensions herein contemplated.

          9.2.          Governmental Regulation. Anything contained in this Agreement to the contrary notwithstanding, neither the LC Issuer nor any Lender shall be obligated to extend credit to the Borrower in violation of any limitation or prohibition provided by any applicable statute or regulation.

          9.3.          Headings. Section headings in the Loan Documents are for convenience of reference only, and shall not govern the interpretation of any of the provisions of the Loan Documents.

          9.4.          Entire Agreement. The Loan Documents embody the entire agreement and understanding among the Borrower, the Agent, the LC Issuer, and the Lenders and supersede all prior agreements and understandings among the Borrower, the Agent, the LC Issuer and the Lenders relating to the subject matter thereof other than the fee letter described in Section 10.13.

          9.5.          Several Obligations; Benefits of this Agreement. The respective obligations of the Lenders hereunder are several and not joint and no Lender shall be the partner or agent of any other (except to the extent to which the Agent is authorized to act as such). The failure of any Lender to perform any of its obligations hereunder shall not relieve any other Lender from any of its obligations hereunder. This Agreement shall not be construed so as to confer any right or benefit upon any Person other than the parties to this Agreement and their respective successors and assigns, provided, however, that the parties hereto expressly agree that the Arranger shall enjoy the benefits of the provisions of Sections 9.6, 9.10 and 10.11 to the extent specifically set forth therein and shall have the right to enforce such provisions on its own behalf and in its own name to the same ex tent as if it were a party to this Agreement.

          9.6.          Expenses; Indemnification. (i) The Borrower shall reimburse the Agent and the Arranger for any costs, internal charges and out-of-pocket expenses (including attorneys' fees and time charges of attorneys for the Agent, which attorneys may be employees of the Agent) paid or incurred by the Agent or the Arranger in connection with the preparation, negotiation, execution, delivery, syndication, distribution (including, without limitation, via the internet), review, amendment, modification, and administration of the Loan Documents. The Borrower also agrees to reimburse the Agent, the Arranger, the LC Issuer and the Lenders for any costs, internal charges and out-of-pocket expenses (including attorneys' fees and time charges of attorneys for the Agent, the Arranger the LC Issuer and the Lenders, which attorneys may be employees of the Agent, the Arranger the LC Issuer or the Lenders) p aid or incurred by the Agent, the Arranger, the LC Issuer or any Lender in connection with the collection and enforcement of the Loan Documents. Expenses being reimbursed by the Borrower under this Section include, without limitation, costs and expenses incurred in connection with the Reports described in the following sentence. The Borrower acknowledges that from time to time Bank One may prepare and may distribute to the Lenders (but shall have no obligation or duty to prepare or to distribute to the Lenders) certain audit reports (the "Reports") pertaining to the Borrower's assets for internal use by Bank One from information furnished to it by or on behalf of the Borrower, after Bank One has exercised its rights of inspection pursuant to this Agreement.

          (ii) The Borrower hereby further agrees to indemnify the Agent, the Arranger, the LC Issuer, each Lender, their respective affiliates, and each of their directors, officers and employees against all losses, claims, damages, penalties, judgments, liabilities and expenses (including, without limitation, all expenses of litigation or preparation therefor whether or not the Agent, the Arranger, the LC Issuer, any Lender or any affiliate is a party thereto) which any of them may pay or incur arising out of or relating to this Agreement, the other Loan Documents, the transactions contemplated hereby or the direct or indirect application or proposed application of the proceeds of any Credit Extension hereunder except to the extent that they are determined in a final non-appealable judgment by a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of the party seeking indemnification. The obligations of the Borrow er under this Section 9.6 shall survive the termination of this Agreement.

          9.7.          Numbers of Documents. All statements, notices, closing documents, and requests hereunder shall be furnished to the Agent with sufficient counterparts so that the Agent may furnish one to each of the Lenders.

          9.8.          Accounting. Except as provided to the contrary herein, all accounting terms used herein shall be interpreted and all accounting determinations hereunder shall be made in accordance with Agreement Accounting Principles.

          9.9.          Severability of Provisions. Any provision in any Loan Document that is held to be inoperative, unenforceable, or invalid in any jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable, or invalid without affecting the remaining provisions in that jurisdiction or the operation, enforceability, or validity of that provision in any other jurisdiction, and to this end the provisions of all Loan Documents are declared to be severable.

          9.10.          Nonliability of Lenders. The relationship between the Borrower on the one hand and the Lenders, the Agent and the Syndication Agent on the other hand shall be solely that of borrower and lender. Neither the Agent, the Arranger, the LC Issuer, the Syndication Agent nor any Lender shall have any fiduciary responsibilities to the Borrower. Neither the Agent, the Arranger, the LC Issuer, the Syndication Agent nor any Lender undertakes any responsibility to the Borrower to review or inform the Borrower of any matter in connection with any phase of the Borrower's business or operations. The Borrower agrees that neither the Agent, the Arranger, the LC Issuer, the Syndication Agent nor any Lender shall have liability to the Borrower (whether sounding in tort, contract or otherwise) for losses suffered by the Borrower in connection with, arising out of, or in any way related to, the tran sactions contemplated and the relationship established by the Loan Documents, or any act, omission or event occurring in connection therewith, unless it is determined in a final non-appealable judgment by a court of competent jurisdiction that such losses resulted from the gross negligence or willful misconduct of the party from which recovery is sought. Neither the Agent, the Arranger, the LC Issuer, the Syndication Agent nor any Lender shall have any liability with respect to, and the Borrower hereby waives, releases and agrees not to sue for, any special, indirect, consequential or punitive damages suffered by the Borrower in connection with, arising out of, or in any way related to the Loan Documents or the transactions contemplated thereby.

          9.11.          Confidentiality. Each Lender agrees to hold any confidential information which it may receive from the Borrower pursuant to this Agreement in confidence, except for disclosure (i) to its Affiliates and to other Lenders and their respective Affiliates, (ii) to legal counsel, accountants, and other professional advisors to such Lender or to a Transferee, (iii) to regulatory officials, (iv) to any Person as required by law, regulation, or legal process, (v) to such Lender's direct or indirect contractual counterparties in swap agreements or to legal counsel, accountants and other professional advisors to such counterparties, and (vi) permitted by Section 12.4.

          9.12.          Nonreliance. Each Lender hereby represents that it is not relying on or looking to any margin stock (as defined in Regulation U of the Board of Governors of the Federal Reserve System) for the repayment of the Credit Extensions provided for herein.

          9.13.          Disclosure. The Borrower and each Lender hereby acknowledge and agree that Bank One and/or its Affiliates from time to time may hold investments in, make other loans to or have other relationships with the Borrower and its Affiliates.

          9.14.          Maximum Rate. It is the intention of the parties hereto to comply with all applicable usury laws; accordingly, it is agreed that notwithstanding any provision to the contrary herein or in the Notes, or in any of the documents securing payment thereof or otherwise relating hereto, no such provision shall require the payment or permit the collection of interest in excess of the highest rate allowed by applicable law (the "Maximum Rate"). If any excess of interest in such respect is provided for, or shall be adjudicated to be so provided for, herein or in the Notes or in any of the documents securing payment thereof or otherwise relating hereto, then in such event: (a) the provisions of this Section 9.14 shall govern and control, (b) neither the Borrower, the Restricted Subsidiaries, nor their heirs, legal representatives, successors or assigns nor any other party liable for the pa yment on the Loans, shall be obligated to pay the amount of such interest to the extent that it is in excess of the Maximum Rate, (c) any such excess with respect to any such Loan which may have been collected shall, at the election of each Lender, be either applied as a credit against the then unpaid principal amount on such Lender's Loans or refunded to the Borrower, and (d) the provisions hereof and of the Notes and any documents securing payment thereof shall be automatically reformed so that the effective rate of interest shall be reduced to the Maximum Rate. For the purpose of determining the Maximum Rate, all interest payments with respect hereto shall be amortized, prorated and spread throughout the full term of this Agreement so that the effective rate of interest charged hereunder is uniform throughout the term hereof.

ARTICLE X

THE AGENT

          10.1.          Appointment; Nature of Relationship. Bank One, NA is hereby appointed by each of the Lenders as its contractual representative (herein referred to as the "Agent") hereunder and under each other Loan Document, and each of the Lenders irrevocably authorizes the Agent to act as the contractual representative of such Lender with the rights and duties expressly set forth herein and in the other Loan Documents. The Agent agrees to act as such contractual representative upon the express conditions contained in this Article X. Notwithstanding the use of the defined term "Agent," it is expressly understood and agreed that the Agent shall not have any fiduciary responsibilities to any Lender by reason of this Agreement or any other Loan Document and that the Agent is merely acting as the contractual representative of the Lenders with only those duties as are expressly set forth in thi s Agreement and the other Loan Documents. In its capacity as the Lenders' contractual representative, the Agent (i) does not hereby assume any fiduciary duties to any of the Lenders, (ii) is a "representative" of the Lenders within the meaning of Section 9-105 of the Uniform Commercial Code and (iii) is acting as an independent contractor, the rights and duties of which are limited to those expressly set forth in this Agreement and the other Loan Documents. Each of the Lenders hereby agrees to assert no claim against the Agent on any agency theory or any other theory of liability for breach of fiduciary duty, all of which claims each Lender hereby waives.

          10.2.          Powers. The Agent shall have and may exercise such powers under the Loan Documents as are specifically delegated to the Agent by the terms of each thereof, together with such powers as are reasonably incidental thereto. The Agent shall have no implied duties to the Lenders, or any obligation to the Lenders to take any action thereunder except any action specifically provided by the Loan Documents to be taken by the Agent.

          10.3.          General Immunity. Neither the Agent nor any of its directors, officers, agents or employees shall be liable to the Borrower, the Lenders or any Lender for any action taken or omitted to be taken by it or them hereunder or under any other Loan Document or in connection herewith or therewith except to the extent such action or inaction is determined in a final non-appealable judgment by a court of competent jurisdiction to have arisen from the gross negligence or willful misconduct of such Person.

          10.4.          No Responsibility for Loans, Recitals, etc Neither the Agent nor any of its directors, officers, agents or employees shall be responsible for or have any duty to ascertain, inquire into, or verify (a) any statement, warranty or representation made in connection with any Loan Document or any borrowing hereunder; (b) the performance or observance of any of the covenants or agreements of any obligor under any Loan Document, including, without limitation, any agreement by an obligor to furnish information directly to each Lender; (c) the satisfaction of any condition specified in Article IV, except receipt of items required to be delivered solely to the Agent; (d) the existence or possible existence of any Default or Unmatured Default; (e) the validity, enforceability, effectiveness, sufficiency or genuineness of any Loan Document or any other instrument or writing furnished in conn ection therewith; (f) the value, sufficiency, creation, perfection or priority of any Lien in any collateral security; or (g) the financial condition of the Borrower or any guarantor of any of the Obligations or of any of the Borrower's or any such guarantor's respective Subsidiaries. The Agent shall have no duty to disclose to the Lenders information that is not required to be furnished by the Borrower to the Agent at such time, but is voluntarily furnished by the Borrower to the Agent (either in its capacity as Agent or in its individual capacity).

          10.5.          Action on Instructions of Lenders. The Agent shall in all cases be fully protected in acting, or in refraining from acting, hereunder and under any other Loan Document in accordance with written instructions signed by the Required Lenders, and such instructions and any action taken or failure to act pursuant thereto shall be binding on all of the Lenders. The Lenders hereby acknowledge that the Agent shall be under no duty to take any discretionary action permitted to be taken by it pursuant to the provisions of this Agreement or any other Loan Document unless it shall be requested in writing to do so by the Required Lenders. The Agent shall be fully justified in failing or refusing to take any action hereunder and under any other Loan Document unless it shall first be indemnified to its satisfaction by the Lenders pro rata against any and all liability, cost and expense that it may incur by reason of taking or continuing to take any such action.

          10.6.          Employment of Agents and Counsel. The Agent may execute any of its duties as Agent hereunder and under any other Loan Document by or through employees, agents, and attorneys-in-fact and shall not be answerable to the Lenders, except as to money or securities received by it or its authorized agents, for the default or misconduct of any such agents or attorneys-in-fact selected by it with reasonable care. The Agent shall be entitled to advice of counsel concerning the contractual arrangement between the Agent and the Lenders and all matters pertaining to the Agent's duties hereunder and under any other Loan Document.

          10.7.          Reliance on Documents; Counsel. The Agent shall be entitled to rely upon any Note, notice, consent, certificate, affidavit, letter, telegram, statement, paper or document believed by it to be genuine and correct and to have been signed or sent by the proper person or persons, and, in respect to legal matters, upon the opinion of counsel selected by the Agent, which counsel may be employees of the Agent.

          10.8.          Agent's Reimbursement and Indemnification. The Lenders agree to reimburse and indemnify the Agent ratably in proportion to their respective Commitments (or, if the Commitments have been terminated, in proportion to their Commitments immediately prior to such termination) (i) for any amounts not reimbursed by the Borrower for which the Agent is entitled to reimbursement by the Borrower under the Loan Documents, (ii) for any other expenses incurred by the Agent on behalf of the Lenders, in connection with the preparation, execution, delivery, administration and enforcement of the Loan Documents (including, without limitation, for any expenses incurred by the Agent in connection with any dispute between the Agent and any Lender or between two or more of the Lenders) and (iii) for any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind and nature whatsoever which may be imposed on, incurred by or asserted against the Agent in any way relating to or arising out of the Loan Documents or any other document delivered in connection therewith or the transactions contemplated thereby (including, without limitation, for any such amounts incurred by or asserted against the Agent in connection with any dispute between the Agent and any Lender or between two or more of the Lenders), or the enforcement of any of the terms of the Loan Documents or of any such other documents, provided that (i) no Lender shall be liable for any of the foregoing to the extent any of the foregoing is found in a final non-appealable judgment by a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of the Agent and (ii) any indemnification required pursuant to Section 3.5(vii) shall, notwithstanding the provisions of this Section 10.8, be paid by the relevant Lender in accordance with the provisi ons thereof. The obligations of the Lenders under this Section 10.8 shall survive payment of the Obligations and termination of this Agreement.

          10.9.          Notice of Default. The Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Unmatured Default hereunder unless the Agent has received written notice from a Lender or the Borrower referring to this Agreement describing such Default or Unmatured Default and stating that such notice is a "notice of default". In the event that the Agent receives such a notice, the Agent shall give prompt notice thereof to the Lenders.

          10.10.          Rights as a Lender. In the event the Agent is a Lender, the Agent shall have the same rights and powers hereunder and under any other Loan Document with respect to its Commitment and its Loans as any Lender and may exercise the same as though it were not the Agent, and the term "Lender" or "Lenders" shall, at any time when the Agent is a Lender, unless the context otherwise indicates, include the Agent in its individual capacity. The Agent and its Affiliates may accept deposits from, lend money to, and generally engage in any kind of trust, debt, equity or other transaction, in addition to those contemplated by this Agreement or any other Loan Document, with the Borrower or any of its Subsidiaries in which the Borrower or such Subsidiary is not restricted hereby from engaging with any other Person. The Agent, in its individual capacity, is not obligated to remain a Lender.

          10.11.          Lender Credit Decision. Each Lender acknowledges that it has, independently and without reliance upon the Agent, the Arranger or any other Lender and based on the financial statements prepared by the Borrower and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement and the other Loan Documents. Each Lender also acknowledges that it will, independently and without reliance upon the Agent, the Arranger or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement and the other Loan Documents.

          10.12.          Successor Agent. The Agent may resign at any time by giving written notice thereof to the Lenders and the Borrower, such resignation to be effective upon the appointment of a successor Agent or, if no successor Agent has been appointed, forty-five days after the retiring Agent gives notice of its intention to resign. The Agent may be removed at any time with or without cause by written notice received by the Agent from the Required Lenders, such removal to be effective on the date specified by the Required Lenders. Upon any such resignation or removal, the Required Lenders shall have the right to appoint, on behalf of the Borrower and the Lenders, a successor Agent. If no successor Agent shall have been so appointed by the Required Lenders within thirty days after the resigning Agent's giving notice of its intention to resign, then the resigning Agent may appoint, on behalf of the Borrower and the Lenders, a successor Agent. Notwithstanding the previous sentence, the Agent may at any time without the consent of the Borrower or any Lender, appoint any of its Affiliates which is a commercial bank as a successor Agent hereunder. If the Agent has resigned or been removed and no successor Agent has been appointed, the Lenders may perform all the duties of the Agent hereunder and the Borrower shall make all payments in respect of the Obligations to the applicable Lender and for all other purposes shall deal directly with the Lenders. No successor Agent shall be deemed to be appointed hereunder until such successor Agent has accepted the appointment. Any such successor Agent shall be a commercial bank having capital and retained earnings of at least $100,000,000. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the resigning or removed Age nt. Upon the effectiveness of the resignation or removal of the Agent, the resigning or removed Agent shall be discharged from its duties and obligations hereunder and under the Loan Documents. After the effectiveness of the resignation or removal of an Agent, the provisions of this Article X shall continue in effect for the benefit of such Agent in respect of any actions taken or omitted to be taken by it while it was acting as the Agent hereunder and under the other Loan Documents. In the event that there is a successor to the Agent by merger, or the Agent assigns its duties and obligations to an Affiliate pursuant to this Section 10.12, then the term "Prime Rate" as used in this Agreement shall mean the prime rate, base rate or other analogous rate of the new Agent.

          10.13.          Agent and Arranger Fees The Borrower agrees to pay to the Agent and the Arranger, for their respective accounts, the fees agreed to by the Borrower, the Agent and the Arranger pursuant to that certain letter agreement dated May 16, 2001, or as otherwise agreed from time to time.

          10.14.          Delegation to Affiliates. The Borrower and the Lenders agree that the Agent may delegate any of its duties under this Agreement to any of its Affiliates. Any such Affiliate (and such Affiliate's directors, officers, agents and employees) which performs duties in connection with this Agreement shall be entitled to the same benefits of the indemnification, waiver and other protective provisions to which the Agent is entitled under Articles IX and X.

          10.15.          Syndication Agent. The Syndication Agent shall not have any duties or responsibilities hereunder in its capacity as such.

ARTICLE XI

SETOFF; RATABLE PAYMENTS

          11.1.          Setoff. In addition to, and without limitation of, any rights of the Lenders under applicable law, if the Borrower becomes insolvent, however evidenced, or any Default occurs, any and all deposits (including all account balances, whether provisional or final and whether or not collected or available) and any other Indebtedness at any time held or owing by any Lender or any Affiliate of any Lender to or for the credit or account of the Borrower may be offset and applied toward the payment of the Obligations owing to such Lender, whether or not the Obligations, or any part thereof, shall then be due.

          11.2.          Ratable Payments. If any Lender, whether by setoff or otherwise, has payment made to it upon its Outstanding Credit Exposure (other than payments received pursuant to Section 3.1, 3.2, 3.4 or 3.5) in a greater proportion than that received by any other Lender, such Lender agrees, promptly upon demand, to purchase a portion of the Aggregate Outstanding Credit Exposure held by the other Lenders so that after such purchase each Lender will hold its Pro Rata Share of the Aggregate Outstanding Credit Exposure. If any Lender, whether in connection with setoff or amounts which might be subject to setoff or otherwise, receives collateral or other protection for its Obligations or such amounts which may be subject to setoff, such Lender agrees, promptly upon demand, to take such action necessary such that all Lenders share in the benefits of such collateral ratably in proportion to their respective Pro Rata Shares of the Aggregate Outstanding Credit Exposure. In case any such payment is disturbed by legal process, or otherwise, appropriate further adjustments shall be made. If an amount to be setoff is to be applied to Indebtedness of the Borrower to a Lender other than Indebtedness comprised of Outstanding Credit Exposure made by such Lender, such amount shall be applied ratably to such other Indebtedness and to the Indebtedness comprised of such Outstanding Credit Exposure.

ARTICLE XII

BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS

          12.1.          Successors and Assigns. The terms and provisions of the Loan Documents shall be binding upon and inure to the benefit of the Borrower and the Lenders and their respective successors and assigns, except that (i) the Borrower shall not have the right to assign its rights or obligations under the Loan Documents and (ii) any assignment by any Lender must be made in compliance with Section 12.3. The parties to this Agreement acknowledge that clause (ii) of this Section 12.1 relates only to absolute assignments and does not prohibit assignments creating security interests, including, without limitation, (x) any pledge or assignment by any Lender of all or any portion of its rights under this Agreement and any Note to a Federal Reserve Bank or (y) in the case of a Lender which is a fund, any pledge or assignment of all or any portion of its rights under this Agreement and any Note to its trustee in support of its obligations to its trustee; provided, however, that no such pledge or assignment creating a security interest shall release the transferor Lender from its obligations hereunder unless and until the parties thereto have complied with the provisions of Section 12.3. The Agent may treat the Person which made any Loan or which holds any Note as the owner thereof for all purposes hereof unless and until such Person complies with Section 12.3; provided, however, that the Agent may in its discretion (but shall not be required to) follow instructions from the Person which made any Loan or which holds any Note to direct payments relating to such Loan or Note to another Person. Any assignee of the rights to any Loan or any Note agrees by acceptance of such assignment to be bound by all the terms and provisions of the Loan Documents. Any request, authority or consent of any Person, who at the time of making such request or giving such authority or consent is the owner of the rights to any Loan (whether or not a Note has been issued in evidence thereof), shall be conclusive and binding on any subsequent holder or assignee of the rights to such Loan.

          12.2.          Participations.

          12.2.1. Permitted Participants; Effect. Any Lender may, in the ordinary course of its business and in accordance with applicable law, at any time sell to one or more banks or other entities ("Participants") participating interests in any Outstanding Credit Exposure of such Lender, any Note held by such Lender, any Commitment of such Lender or any other interest of such Lender under the Loan Documents. In the event of any such sale by a Lender of participating interests to a Participant, such Lender's obligations under the Loan Documents shall remain unchanged, such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, such Lender shall remain the owner of its Outstanding Credit Exposure and the holder of any Note issued to it in evidence thereof for all purposes under the Loan Documents, all amounts payable by the Borrower under this Agreement shall be determined as if such Lender had not sold such participating interests, and the Borrower and the Agent shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under the Loan Documents.

          12.2.2. Voting Rights. Each Lender shall retain the sole right to approve, without the consent of any Participant, any amendment, modification or waiver of any provision of the Loan Documents other than any amendment, modification or waiver with respect to any Credit Extension or Commitment in which such Participant has an interest which would require consent of such Lender pursuant to the terms of Section 8.2 or of any other Loan Document.

          12.2.3. Benefit of Setoff. The Borrower agrees that each Participant shall be deemed to have the right of setoff provided in Section 11.1 in respect of its participating interest in amounts owing under the Loan Documents to the same extent as if the amount of its participating interest were owing directly to it as a Lender under the Loan Documents, provided that each Lender shall retain the right of setoff provided in Section 11.1 with respect to the amount of participating interests sold to each Participant. The Lenders agree to share with each Participant, and each Participant, by exercising the right of setoff provided in Section 11.1, agrees to share with each Lender, any amount received pursuant to the exercise of its right of setoff, such amounts to be shared in accordance with Section 11.2 as if each Participant were a Lender.

          12.3.          Assignments.

          12.3.1. Permitted Assignments. Any Lender may, in the ordinary course of its business and in accordance with applicable law, at any time assign to one or more banks or other entities ("Purchasers") all or any part of its rights and obligations under the Loan Documents. Such assignment shall be substantially in the form of Exhibit C or in such other form as may be agreed to by the parties thereto. The consent of the Borrower, the Agent and the LC Issuer shall be required prior to an assignment becoming effective with respect to a Purchaser which is not a Lender or an Affiliate thereof; provided, however, that if a Default has occurred and is continuing, the consent of the Borrower shall not be required. Such consent shall not be unreasonably withheld or delayed. Each such assignment with respect to a Purchaser which is not a Lender or an Affiliate thereof shall (unless each of the Borrower and the Agent otherwise consents) be in an amount not less than the lesser of (i) $5,000,000 or (ii) the remaining amount of the assigning Lender's Commitment (calculated as at the date of such assignment) or outstanding Loans (if the applicable Commitment has been terminated).

          12.3.2. Effect; Effective Date. Upon (i) delivery to the Agent of an assignment, together with any consents required by Section 12.3.1, and (ii) payment of a $4,000 fee to the Agent for processing such assignment (unless such fee is waived by the Agent), such assignment shall become effective on the effective date specified in such assignment. On and after the effective date of such assignment, such Purchaser shall for all purposes be a Lender party to this Agreement and any other Loan Document executed by or on behalf of the Lenders and shall have all the rights and obligations of a Lender under the Loan Documents, to the same extent as if it were an original party hereto, and no further consent or action by the Borrower, the Lenders or the Agent shall be required to release the transferor Lender with respect to the percentage of the Aggregate Commitment and Outstanding Credit Exposure assigned to such Purchaser. Upon the consummation of any assignment to a Purchaser pursuant to this Section 12.3.2, the transferor Lender, the Agent and the Borrower shall, if the transferor Lender or the Purchaser desires that its Loans be evidenced by Notes, make appropriate arrangements so that new Notes or, as appropriate, replacement Notes are issued to such transferor Lender and new Notes or, as appropriate, replacement Notes, are issued to such Purchaser, in each case in principal amounts reflecting their respective Commitments, as adjusted pursuant to such assignment.

          12.4.          Dissemination of Information. The Borrower authorizes each Lender to disclose to any Participant or Purchaser or any other Person acquiring an interest in the Loan Documents by operation of law (each a "Transferee") and any prospective Transferee any and all information in such Lender's possession concerning the creditworthiness of the Borrower and its Subsidiaries, including without limitation any information contained in any Reports; provided that each Transferee and prospective Transferee agrees to be bound by Section 9.11 of this Agreement.

          12.5.          Tax Treatment. If any interest in any Loan Document is transferred to any Transferee which is organized under the laws of any jurisdiction other than the United States or any State thereof, the transferor Lender shall cause such Transferee, concurrently with the effectiveness of such transfer, to comply with the provisions of Section 3.5(iv).

ARTICLE XIII

NOTICES

          13.1.          Notices. Except as otherwise permitted by Section 2.14 with respect to borrowing notices, all notices, requests and other communications to any party hereunder shall be in writing (including electronic transmission, facsimile transmission or similar writing) and shall be given to such party: (x) in the case of the Borrower or the Agent, at its address or facsimile number set forth on the signature pages hereof, (y) in the case of any Lender, at its address or facsimile number set forth in its administrative questionnaire or (z) in the case of any party, at such other address or facsimile number as such party may hereafter specify for the purpose by notice to the Agent and the Borrower in accordance with the provisions of this Section 13.1. Each such notice, request or other communication shall be effective (i) if given by facsimile transmission, when transmitted to the facsi mile number specified in this Section and confirmation of receipt is received, (ii) if given by mail, 72 hours after such communication is deposited in the mails with first class postage prepaid, addressed as aforesaid, or (iii) if given by any other means, when delivered (or, in the case of electronic transmission, received) at the address specified in this Section; provided that notices to the Agent under Article II shall not be effective until received.

          13.2.          Change of Address. The Borrower, the Agent and any Lender may each change the address for service of notice upon it by a notice in writing to the other parties hereto.

ARTICLE XIV

COUNTERPARTS

          This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one agreement, and any of the parties hereto may execute this Agreement by signing any such counterpart. This Agreement shall be effective when it has been executed by the Borrower, the Agent, the LC Issuer and the Lenders and each party has notified the Agent by facsimile transmission or telephone that it has taken such action.

ARTICLE XV

CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL

          15.1.          CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.

          15.2.          CONSENT TO JURISDICTION. THE BORROWER HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR ILLINOIS STATE COURT SITTING IN CHICAGO, ILLINOIS IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS AND THE BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE AGENT, THE LC ISSUER OR ANY LENDER TO BRING PROCEEDINGS AGAINST THE BORROWER IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY THE BORROWER AGAINST THE AGENT, THE LC ISSUER OR ANY LENDER OR ANY AFFILIATE OF THE AGENT, THE LC ISSUER OR A NY LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN CHICAGO, ILLINOIS.

          15.3.          WAIVER OF JURY TRIAL. THE BORROWER, THE AGENT, THE LC ISSUER AND EACH LENDER HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER.

          IN WITNESS WHEREOF, the Borrower, the Lenders, the LC Issuer and the Agent have executed this Agreement as of the date first above written.

SEITEL, INC.
By:	/s/ Debra D. Valice
Name:	Debra D. Valice
Title:	Executive Vice President of Finance, Chief Financial Officer, Treasurer and Secretary Telephone:  (713) 881-8900 FAX:  (713) 881-8901
	50 Briar Hollow Lane W., 7th Floor Houston, Texas 77027 Attn: Debra D. Valice

Commitments

$35,000,000	BANK ONE, NA,
		Individually, as Agent and as LC Issuer
	By:	/s/ Janet Beadle
	Name:	Janet Beadle
	Title:	AD
		1 Bank One Plaza Chicago, Illinois 60670 Attention:  Janet Beadle Telephone:  (312)732-1336 FAX:  (312)732-2117

$25,000,000	COMERICA BANK - TEXAS,
		Individually and as Syndication Agent
	By:	/s/ Eric Lundquist
	Name:	Eric Lundquist
	Title:	Vice President
		910 Louisiana, Suite 410 Houston, Texas 77002 Attention:  Will Rogers Telephone:  (713)220-5662 FAX:  (713)220-5650

$15,000,000	GUARANTY BANK
	By:	/s/ Jim Hamilton
	Name:	Jim Hamilton
	Title:	Senior Vice President
		1100 NE Loop 410 San Antonio, Texas 78209 Attention: Jim Hamilton Telephone: (210)930-2926 FAX: (210)930-1783

$75,000,000.00

PRICING SCHEDULE

Applicable Margin	Level I Status	Level II Status	Level III Status	Level IV Status
Eurodollar Rate	1.00%	1.25%	1.50%	1.75%
Floating Rate	0.00%	0.25%	0.50%	0.75%

Applicable Fee Rate	Level I Status	Level II Status	Level III Status	Level IV Status
Commitment Fee	0.225%	0.225%	0.25%	0.375%

          For the purposes of this Schedule, the following terms have the following meanings, subject to the final paragraph of this Schedule:

          "Financials" means the annual or quarterly financial statements of the Borrower delivered pursuant to Section 6.1(i) or (ii).

          "Level I Status" exists at any date if, as of the last day of the fiscal quarter of the Borrower referred to in the most recent Financials, the Leverage Ratio is less than 1.00 to 1.00.

          "Level II Status" exists at any date if, as of the last day of the fiscal quarter of the Borrower referred to in the most recent Financials, (i) the Borrower has not qualified for Level I Status and (ii) the Leverage Ratio is less than 1.50 to 1.00.

          "Level III Status" exists at any date if, as of the last day of the fiscal quarter of the Borrower referred to in the most recent Financials, (i) the Borrower has not qualified for Level I Status or Level II Status and (ii) the Leverage Ratio is less than 2.0 to 1.00.

          "Level IV Status" exists at any date if the Borrower has not qualified for Level I Status, Level II Status or Level III Status.

          "Status" means either Level I Status, Level II Status, Level III Status or Level IV Status.

          The Applicable Margin and Applicable Fee Rate shall be determined in accordance with the foregoing table based on the Borrower's Status as reflected in the then most recent Financials. Adjustments, if any, to the Applicable Margin or Applicable Fee Rate shall be effective five Business Days after the Agent has received the applicable Financials. If the Borrower fails to deliver the Financials to the Agent at the time required pursuant to Section 6.1, then the Applicable Margin and Applicable Fee Rate shall be the highest Applicable Margin and Applicable Fee Rate set forth in the foregoing table until five Business Days after such Financials are so delivered. Notwithstanding the foregoing, the Borrower's Status shall be deemed to be Level III Status until delivery of its Financials and corresponding Compliance Certificate for the fiscal year ending December 31, 2001.

EX-10.2

EXHIBIT 10.2

NOTE

$25,000,000.00 June 29, 2001

          Seitel, Inc., a Delaware corporation (the "Borrower"), promises to pay to the order of Comerica Bank - Texas (the "Lender") the principal amount of Twenty-Five Million and No/100 Dollars ($25,000,000.00) or, if less, the aggregate unpaid principal amount of all Loans made by the Lender to the Borrower pursuant to Article II of the Agreement (as hereinafter defined), in immediately available funds at the main office of Bank One, NA in Chicago, Illinois, as Agent, together with interest on the unpaid principal amount hereof at the rates and on the dates set forth in the Agreement. The Borrower shall pay the principal of and accrued and unpaid interest on the Loans in full on the Facility Termination Date.

          The Lender shall, and is hereby authorized to, record on the schedule attached hereto, or to otherwise record in accordance with its usual practice, the date and amount of each Loan and the date and amount of each principal payment hereunder.

          This Note is one of the Notes issued pursuant to, and is entitled to the benefits of, the Credit Agreement dated as of June 29, 2001 (which, as it may be amended or modified and in effect from time to time, is herein called the "Agreement"), among the Borrower, the lenders party thereto, including the Lender, and Bank One, NA, as Agent and as the LC Issuer, to which Agreement reference is hereby made for a statement of the terms and conditions governing this Note, including the terms and conditions under which this Note may be prepaid or its maturity date accelerated. This Note is guaranteed pursuant to the Subsidiary Guaranty, all as more specifically described in the Agreement, and reference is made thereto for a statement of the terms and provisions thereof. Capitalized terms used herein and not otherwise defined herein are used with the meanings attributed to them in the Agreement.

SEITEL, INC.
By:	/s/ Debra D. Valice
Name:	Debra D. Valice
Title:	Chief Financial Officer

EX-10.3

EXHIBIT 10.3

NOTE

$15,000,000.00 June 29, 2001

          Seitel, Inc., a Delaware corporation (the "Borrower"), promises to pay to the order of Guaranty Bank - Texas (the "Lender") the principal amount of Fifteen Million and No/100 Dollars ($15,000,000.00) or, if less, the aggregate unpaid principal amount of all Loans made by the Lender to the Borrower pursuant to Article II of the Agreement (as hereinafter defined), in immediately available funds at the main office of Bank One, NA in Chicago, Illinois, as Agent, together with interest on the unpaid principal amount hereof at the rates and on the dates set forth in the Agreement. The Borrower shall pay the principal of and accrued and unpaid interest on the Loans in full on the Facility Termination Date.

          The Lender shall, and is hereby authorized to, record on the schedule attached hereto, or to otherwise record in accordance with its usual practice, the date and amount of each Loan and the date and amount of each principal payment hereunder.

          This Note is one of the Notes issued pursuant to, and is entitled to the benefits of, the Credit Agreement dated as of June 29, 2001 (which, as it may be amended or modified and in effect from time to time, is herein called the "Agreement"), among the Borrower, the lenders party thereto, including the Lender, and Bank One, NA, as Agent and as the LC Issuer, to which Agreement reference is hereby made for a statement of the terms and conditions governing this Note, including the terms and conditions under which this Note may be prepaid or its maturity date accelerated. This Note is guaranteed pursuant to the Subsidiary Guaranty, all as more specifically described in the Agreement, and reference is made thereto for a statement of the terms and provisions thereof. Capitalized terms used herein and not otherwise defined herein are used with the meanings attributed to them in the Agreement.

SEITEL, INC.
By:	/s/ Debra D. Valice
Name:	Debra D. Valice
Title:	Chief Financial Officer

EX-10.4

EXHIBIT 10.4

SEITEL, INC.

2001 INDUCEMENT STOCK OPTION PLAN

Adopted January 1, 2001

1.          Purpose. The Plan is established as an inducement plan to attract new employees whose services are considered unusually valuable to the Company.

2.          Definitions. As used herein, unless the context requires otherwise, the following terms shall have the meanings indicated below:

          (a)          "Affiliate" means (i) any corporation, partnership or other entity which owns, directly or indirectly, a majority of the voting equity securities of the Company, (ii) any corporation, partnership or other entity of which a majority of the voting equity securities or equity interest is owned, directly or indirectly, by the Company, and (iii) any other entity that is consolidated in the Company's financial statements.

          (b)          "Board" means the Board of Directors of the Company.

          (c)          "Code" means the Internal Revenue Code of 1986, as amended. Reference in the Plan to any section of the Code shall be deemed to include any amendments or successor provisions to such section and any regulations under such section.

          (d)          "Common Stock" means the Common Stock, $.0l par value per share, of the Company or the common stock that the Company may in the future be authorized to issue (as long as the common stock varies from that currently authorized, if at all, only in amount of par value).

          (e)          "Company" means Seitel, Inc., a Delaware corporation.

          (f)          "Continuous Service" means that the provision of services to the Company or an Affiliate in the capacity of Employee is not interrupted or terminated. Except as otherwise provided in the Option Agreement, service shall not be considered interrupted or terminated for this purpose in the case of (i) any approved leave of absence, (ii) transfers among the Company, any Affiliate, or any successor, in the capacity of Employee, or (iii) any change in status as long as the individual remains in the service of the Company or an Affiliate in any capacity of Employee. An approved leave of absence shall include sick leave, military leave, or any other authorized personal leave.

          (g)          "Director" means a voting member of the Board or the board of directors of an Affiliate.

          (h)          "Disability" means the permanent and total disability of a person within the meaning of Section 22(e)(3) of the Code.

          (i)          "Employee" means any person, including an Officer or Director, who is an employee, whether full-time or part-time, of the Company or an Affiliate. The Company's or an Affiliate's providing compensation to a Director solely with respect to rendering services in the capacity of a Director, however, shall not be sufficient to constitute "employment" by the Company.

          (j)          "Exchange Act" means the Securities Exchange Act of 1934, as amended. Reference in the Plan to any section of the Exchange Act shall be deemed to include any amendments or successor provisions to such section and any rules and regulations relating to such section.

          (k)          "Fair Market Value" means, as of any date, the value of the Common Stock determined as follows:

                    (i)          If the Common Stock is listed on any established stock exchange or traded on the Nasdaq National Market or the Nasdaq SmallCap Market, the Fair Market Value of a share of Common Stock shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or market (or the exchange or market with the greatest volume of trading in the Common Stock) on the day of determination, as reported in The Wall Street Journal or such other source as the Board deems reliable.

                    (ii)          In the absence of any such established markets for the Common Stock, the Fair Market Value shall be determined in good faith by the Board.

          (l)          "Non-Qualified Stock Option" means an Option not intended to meet the requirements of Section 422 of the Code.

          (m)          "Officer" means a person who is an "officer" of the Company within the meaning of Section 16 of the Exchange Act (whether or not the Company is subject to the requirements of the Exchange Act).

          (n)          "Option" means a Non-Qualified Stock Option granted pursuant to the Plan to purchase a specified number of shares of Common Stock.

          (o)          "Option Agreement" means the written agreement evidencing the grant of an Option executed by the Company and the Optionee, including any amendments thereto.

          (p)          "Optionee" means an individual to whom an Option has been granted under the Plan.

          (q)          "Plan" means this Seitel, Inc. 2001 Inducement Stock Option Plan, as set forth herein and as it may be amended from time to time.

          (r)          "Rule 16b-3" means Rule 16b-3 promulgated under the Exchange Act, as it may be amended from time to time, and any successor to Rule 16b-3.

          (s)          "Section" means a Section of the Plan unless otherwise stated or the context otherwise requires.

          (t)          "Securities Act" means the Securities Act of 1933, as amended. Reference in the Plan to any section of the Securities Act shall be deemed to include any amendments or successor provisions to such section and any rules and regulations relating to such section.

3.          Types of Options and Shares. Options granted under this Plan shall be Non-Qualified Stock Options. The shares of stock that may be purchased upon exercise of Options granted under this Plan are shares of Common Stock.

4.          Shares Subject to Plan. The aggregate number of shares that may be issued pursuant to Options granted under this Plan is 750,000 shares. If any Option expires or is terminated without being exercised in whole or in part, the unexercised or released shares of Common Stock from such Options will be available for future grant and purchase under this Plan. At all times during the term of this Plan, the Company will reserve and keep available such number of shares of Common Stock as will be required to satisfy the requirements of outstanding Options under this Plan.

5.          Inducement Plan; Eligibility. The Plan will be administered by the Board only in connection with and as an inducement to employment by the Company or one of its Affiliates. As such, no person is eligible to receive a grant of an Option under this Plan if such person has been, at the time such grant is authorized, an Employee for more than 30 days, or was, at any time prior to the authorization of such grant, an Employee in a substantially similar position to the position such person holds as an Employee. Subject to the requirements of the preceding sentence, the Board in its sole discretion will select the recipients of Options. An Optionee may not be granted more than one Option under this Plan.

6.          Terms and Conditions of Options. The Board will determine the provisions, terms and conditions of each Option including, but not limited to, the vesting schedule, the number of shares of Common Stock subject to the Option, the exercise price of the Option, the period during which the Option may be exercised, repurchase provisions, rights of first refusal, forfeiture provisions, methods of payment, and all other terms and conditions of the Option, subject to the following:

          (a)          Form of Option Grant. Each Option granted under the Plan will be evidenced by a written Option Agreement in such form (which need not be the same for each Optionee) as the Board from time to time approves.

          (b)          Date of Grant. The date of grant of an Option will be the date on which the Board authorizes such Option unless otherwise specified by the Board. The Option Agreement evidencing the Option will be delivered to the Optionee with a copy of the Plan and other relevant Option documents, within a reasonable time after the date of grant.

          (c)          Subject to Employment. All Options shall be subject to the Optionee being an Employee on the date the grant is authorized.

          (d)          Exercise Price. The exercise price of an Option will be not less than 100% of the Fair Market Value of the shares of Common Stock on the date of grant of the Option.

          (e)          Exercise Period. Options will be exercisable within the time or times or upon the event or events determined by the Board and set forth in the Option Agreement; provided, however, that no Option will be exercisable before one year from the date of grant or after the expiration of ten (10) years from the date of grant of the Option.

          (f)          Transferability of Options. Options granted under the Plan, and any interest therein, will not be transferable or assignable by the Optionee, and may not be made subject to execution, attachment or similar process, otherwise than by will or by the laws of descent and distribution, and will be exercisable during the lifetime of the Optionee only by the Optionee, or by the Optionee's guardian or legal representative if the Optionee is legally incompetent; provided, that the Optionee may, however, designate persons who or which may exercise the Optionee's Options following the Optionee's death. Notwithstanding the preceding sentence, Options held by an Optionee may be transferred to such family members, family trusts and family partnerships as the Board, in its sole discretion, may approve at the time of the grant of such Option and as provided for in the Optionee's Option Agreement.

          (g)          Acquisitions and Other Transactions. The Board may, from time to time, assume outstanding options granted by another company, whether in connection with an acquisition of such other company or otherwise, by either (i) granting an Option under the Plan in replacement of the option assumed by the Company, or (ii) treating the assumed option as if it had been granted under the Plan if the terms of such assumed option could be applied to an Option granted under the Plan. Such assumption will be permissible if the holder of the assumed option would have been eligible to be granted an Option hereunder if the other company had applied the rules of this Plan to such grant. Notwithstanding the foregoing provisions of Section 6(d), in the case of an Option issued or assumed pursuant to this Section 6(g), the exercise price for the Option shall be determined in accordance with the principles of section 424(a) of the Code.

7.          Exercise of Options.

          (a)          Notice. Options may be exercised only by delivery to the Company of a written exercise agreement approved by the Board (which need not be the same for each Optionee), stating the number of shares of Common Stock being purchased, the restrictions imposed on the shares of Common Stock, if any, and such representations and agreements regarding the Optionee's investment intent and access to information and other matters, if any, as may be required by the Company to comply with applicable securities laws, or as may be deemed appropriate by the Company in connection with the issuance of shares of Common Stock upon exercise of the Option, together with payment in full of the exercise price for the number of shares of Common Stock being purchased.

          (b)          Payment. Payment for the shares of Common Stock to be exercised under an Option may be made in cash (by check) or, where approved by the Board in its sole discretion at the time of grant and where permitted by law: (i) if a public market for the Common Stock exists, through a "same day sale" commitment from the Optionee and a broker-dealer that is a member of the National Association of Securities Dealers, Inc. (an "NASD Dealer") whereby the Optionee irrevocably elects to exercise the Option and to sell a portion of the shares of Common Stock so purchased to pay for the exercise price and whereby the NASD Dealer irrevocably commits upon receipt of such shares of Common Stock to forward the exercise price directly to the Company; (ii) if a public market for the Common Stock exists, through a "margin" commitment from the Optionee and an NASD Dealer whereby the Optionee irrevocably e lects to exercise the Option and to pledge the shares of Common Stock so purchased to the NASD Dealer in a margin account as security for a loan from the NASD Dealer in the amount of the exercise price, and whereby the NASD Dealer irrevocably commits upon receipt of such shares of Common Stock to forward the exercise price directly to the Company; or (iii) by any combination of the foregoing.

          (c)          Withholding Taxes. Prior to issuance of the shares of Common Stock upon exercise of an Option, the Optionee will pay or make adequate provision acceptable to the Board for the satisfaction of the statutory minimum prescribed amount of any federal or state income or other tax withholding obligations of the Company, if applicable. Upon exercise of an Option, the Company shall withhold or collect from the Optionee an amount sufficient to satisfy such tax withholding obligations.

          (d)          Expiration. An Option may not be exercised after the expiration date set forth in the Option Agreement.

          (e)          Exercise of Option Following Termination of Continuous Service.

                    (i)          An Option may be exercised following the termination of an Optionee's Continuous Service only to the extent provided in the Option Agreement.

                    (ii)          Where the Option Agreement permits an Optionee to exercise an Option following the termination of the Optionee's Continuous Service for a specified period, the Option shall terminate to the extent not exercised on the last day of the specified period or the last day of the original term of the Option, whichever occurs first.

                    (iii)          The Board will have discretion to determine whether the Continuous Service of an Optionee has terminated and the effective date on which such Continuous Service terminated and whether the Optionee's Continuous Service terminated as a result of the Disability of the Optionee.

          (f)          Limitations on Exercise.

                    (i)          The Board may specify a reasonable minimum number of shares of Common Stock or a percentage of the shares subject to an Option that may be purchased on any exercise of an Option; provided, that such minimum number will not prevent Optionee from exercising the full number of shares of Common Stock as to which the Option is then exercisable.

                    (ii)          The obligation of the Company to issue any shares of Common Stock pursuant to the exercise of any Option will be subject to the condition that such exercise and the issuance and delivery of such shares pursuant thereto comply with the Securities Act, all applicable state securities laws and the requirements of any stock exchange or national market system upon which the shares of Common Stock may then be listed or quoted, as in effect on the date of exercise. The Company will be under no obligation to register any resale of shares of Common Stock with the Securities and Exchange Commission or to effect compliance with the registration, qualification or listing requirements of any state securities laws or stock exchange or national market system with respect to any such resale of the shares of Common Stock, and the Company will h ave no liability for any inability or failure to do so.

8.          Modification, Extension And Renewal of Options. The Board will have the power to modify, extend or renew outstanding Options and to authorize the grant of new Options in substitution therefor, provided that any such action may not, without the written consent of any Optionee, impair any rights under any Option previously granted to such Optionee.

9.          Privileges of Stock Ownership. No Optionee will have any of the rights of a stockholder with respect to any shares of Common Stock subject to an Option until such Option is properly exercised and the shares are issued and delivered to the Optionee, as evidenced by an appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company. No adjustment will be made for dividends or distributions or other rights for which the record date is prior to such date of issuance and delivery, except as provided in the Plan.

10.          Adjustment Upon Changes in Capitalization and Corporate Events.

          (a)          Capital Adjustments. The number of shares of Common Stock covered by each outstanding Option granted under the Plan and the Option price may be adjusted to reflect, as deemed appropriate by the Board, any increase or decrease in the number of shares of Common Stock resulting from a stock dividend, stock split, reverse stock split, combination, reclassification or similar change in the capital structure of the Company without receipt of consideration, subject to any required action by the Board or the stockholders of the Company and compliance with applicable securities laws; provided, however, that a fractional share will not be issued upon exercise of any Option, and either any fraction of a share of Common Stock that would have resulted will be cashed out at Fair Market Value or the number of shares of Common Stock issuable under the Option will be rounded up to the nearest whol e number, as determined by the Board.

          (b)          Dissolution or Liquidation. The Board shall notify the Optionee at least twenty (20) days prior to any proposed dissolution or liquidation of the Company. Unless provided otherwise in an individual Option Agreement, to the extent that an Option has not been previously exercised, such Option shall terminate immediately prior to consummation of such dissolution or liquidation.

          (c)          Merger, Asset Sale and Change in Control. If, during the effectiveness of the Plan (i) the Company consummates a merger, consolidation, share exchange, or reorganization with another corporation or other legal entity and, as a result of such merger, consolidation, share exchange, or reorganization, less than a majority of the combined voting power of the outstanding securities of the surviving entity (whether the Company or another entity) immediately after such transaction is held in the aggregate by the holders of securities of the Company that were entitled to vote generally in the election of directors of the Company (or its successor) ("Voting Stock") immediately before such transaction, or (ii) when pursuant to a tender offer or exchange offer for securities of the Company, or in any other manner, any person or group within the meaning of the Exchange Act, as amended (exclud ing any employee benefit plan, or related trust, sponsored or maintained by the Company or any of its Affiliates), acquires beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more than 50% of the Voting Stock (the surviving corporation or purchaser described in this Section 10(c), the "Purchaser", and any such event described in this Section 10(c) a "Change in Control"), the Purchaser shall either assume the obligations of the Company under the outstanding Options or convert the outstanding Options into options of at least equal value as to stock of the Purchaser.

          In the event such Purchaser refuses to assume or substitute Options, as provided above, pursuant to a Change in Control event, each Option which is at the time outstanding under the Plan shall, (i) except as provided otherwise in an individual Option Agreement, automatically become fully vested and exercisable immediately prior to the specified effective date of such Change in Control, for all of the shares of Common Stock at the time represented by such Option, and (ii) notwithstanding any contrary terms in the Option Agreement, expire on a date at least twenty (20) days after the Board gives written notice to Optionees specifying the terms and conditions of such termination.

11.          Administration. This Plan shall be administered by the Board. As such, grants of Options hereunder are intended to qualify for exemption from Section 16 of the Securities Act pursuant to Rule 16b-3. The Board shall interpret the Plan and any Options granted pursuant to the Plan and shall prescribe such rules and regulations in connection with the operation of the Plan as it determines to be advisable for the administration of the Plan. The Board may rescind and amend its rules and regulations from time to time. The interpretation by the Board of any of the provisions of this Plan or any Option granted under this Plan will be final and binding upon the Company and all persons having an interest in any Option or any shares of Common Stock purchased pursuant to an Option.

12.          Effect of Plan. Neither the adoption of the Plan nor any action of the Board shall be deemed to give any person any right to be granted an Option to purchase Common Stock or any other rights except as may be evidenced by the Option Agreement, or any amendment thereto, duly authorized by the Board and executed on behalf of the Company, and then only to the extent and on the terms and conditions expressly set forth therein. The existence of the Plan and the Options granted hereunder shall not affect in any way the right of the Board or the stockholders of the Company to make or authorize any adjustment, recapitalization, reorganization or other change in the Company's capital structure or its business, any merger or consolidation of the Company, any issue of bonds, debentures, or shares of preferred stock ahead of or affecting the Common Stock or the rights thereof, the dissolution or liquidation of the Company or any sale or transfer of all or any part of the Company's assets or business, or any other corporate act or proceeding by or for the Company. Nothing contained in the Plan or in any Option Agreement or in other Option-related documents shall confer upon any Employee any right with respect to such person's Continuous Service or interfere or affect in any way with the right of the Company or an Affiliate to terminate such person's Continuous Service at any time, with or without cause.

13.          No Effect on Retirement and Other Benefit Plans. Except as specifically provided in a retirement or other benefit plan of the Company or an Affiliate, Options shall not be deemed compensation for purposes of computing benefits or contributions under any retirement plan of the Company or an Affiliate, and shall not affect any benefits under any other benefit plan of any kind or any benefit plan subsequently instituted under which the availability or amount of benefits is related to level of compensation. The Plan is not a "Retirement Plan" or "Welfare Plan" under the Employee Retirement Income Security Act of 1974, as amended.

14.          Amendment or Termination of Plan. The Board in its discretion may at any time terminate or amend the Plan in any respect, including amendment of any form of Option Agreement, exercise agreement or instrument to be executed pursuant to the Plan. No Option may be granted after termination of the Plan. Any amendment or termination of the Plan shall not affect Options previously granted, and such Options shall remain in full force and effect as if the Plan had not been amended or terminated, unless mutually agreed otherwise in a writing signed by the Optionee and the Company.

15.          Effective Date and Term of Plan. The Plan shall become effective upon its adoption by the Board. It shall continue in effect for a term of ten (10) years from its adoption date, unless sooner terminated by action of the Board. Subject to the terms and conditions of this Plan and applicable laws, Options may be granted under the Plan upon its becoming effective.

16.          Severability and Reformation. The Company intends all provisions of the Plan to be enforced to the fullest extent permitted by law. Accordingly, should a court of competent jurisdiction determine that the scope of any provision of the Plan is too broad to be enforced as written, the court should reform the provision to such narrower scope as it determines to be enforceable. If, however, any provision of the Plan is held to be wholly illegal, invalid, or unenforceable under present or future law, such provision shall be fully severable and severed, and the Plan shall be construed and enforced as if such illegal, invalid, or unenforceable provision were never a part hereof, and the remaining provisions of the Plan shall remain in full force and effect and shall not be affected by the illegal, invalid, or unenforceable provision or by its severance.

17.          Governing Law. The Plan shall be construed and interpreted in accordance with the laws of the State of Delaware.

18.          Interpretive Matters. Whenever required by the context, pronouns and any variation thereof shall be deemed to refer to the masculine, feminine, or neuter, and the singular shall include the plural and visa versa. The term "including" does not denote or imply any limitation. The captions and headings used in the Plan are inserted for convenience and shall not be deemed a part of the Plan for construction or interpretation.

Award Number:

SEITEL, INC. 2001 INDUCEMENT STOCK OPTION PLAN

STOCK OPTION AGREEMENT

Optionee:
Address:
Total Shares Subject to Option
Exercise Price Per Share:
Date of Grant
Post-Termination Exercise Period:	[90 Days or other applicable period]
Expiration Date:

1.          Grant of Option. Seitel, Inc., a Delaware corporation (the "Company"), hereby grants to the Optionee named above an option (the "Option") to purchase the total number of shares of Common Stock set forth above (the "Shares") at the exercise price per share set forth above (the "Exercise Price"), in accordance with this Option Agreement and subject to the terms and conditions of the Seitel, Inc. 2001 Inducement Stock Option Plan, as amended from time to time (the "Plan"), which are incorporated herein by reference. The Option is not intended to qualify as an "incentive stock option" within the meaning of Section 422 of the Code. Unless otherwise defined herein, capitalized terms used herein shall have the meanings ascribed to them in the Plan.

2.          Vesting. Subject to the terms and conditions of the Plan and this Option Agreement, and the Optionee being an Employee on the Date of Grant set forth above, the Option shall vest and become exercisable in the following cumulative installments, as follows:

           [(a) One-third (1/3) of the Shares shall become exercisable at any time on or after the first anniversary of the date of grant set forth above (the "Date of Grant");

           (b) An additional one-third (1/3) of the Shares shall become exercisable at any time on or after the second anniversary of the Date of Grant; and

           (c) The remaining Shares shall become exercisable at any time on or after the third anniversary of the Date of Grant.]

If an installment covers a fractional Share, such installment will be rounded to the next highest Share, except the final installment, which will be for the balance of the total Shares; provided, that the Optionee shall in no event be entitled under the Option to purchase a number of shares of the Common Stock greater than the "Total Shares Subject to Option" indicated above.

3.          Exercise of Option.

           (a)          Right to Exercise. The Option shall be exercisable in accordance with the vesting provisions contained in Section 2 of this Option Agreement and with the other applicable provisions of the Plan and this Option Agreement. The Option shall be subject to the provisions of Section 10 of the Plan relating to the exercisability or termination of the Option in the event of a Change in Control or in the event of a dissolution or liquidation of the Company.

           (b)          Method of Exercise. The Option shall be exercisable only by delivery to the Company of an executed Stock Option Exercise Agreement (the "Exercise Agreement") in the form attached hereto as Exhibit A, or in such other form approved by the Board, which shall state the Optionee's election to exercise the Option, the whole number of Shares in respect of which the Option is being exercised, and such other provisions as may be required by the Board. The Exercise Agreement shall be signed by the Optionee and shall be delivered to the Company in person or by courier, by certified mail, or by such other method as may be permitted by the Board, accompanied (in any case) by payment of the Exercise Price for each Share covered by the Exercise Agreement, as described in Section 4 of this Option Agreement. The Option shall be deemed to be exercised upon receipt by the Company of such written E xercise Agreement accompanied by the Exercise Price.

           (c)          Issuance of Shares. If the Exercise Agreement and payment are in form and substance satisfactory to counsel for the Company and Optionee or any other person permitted to exercise the Option has complied with Section 5 of this Option Agreement, the Company shall issue or cause the issuance of, in the name of the Optionee or Optionee's legal representative, the Shares purchased by such exercise of the Option.

4.          Method of Payment. The Optionee's delivery of the signed Exercise Agreement to exercise the Option (in whole or in part) shall be accompanied by full payment of the Exercise Price for the Shares being purchased. Payment for the Shares may be made in cash (by check) or, at the election of the Optionee and where permitted by law: (i) if a public market for the Company's stock exists, through a "same day sale" commitment from the Optionee and a broker-dealer that is a member of the National Association of Securities Dealers (an "NASD Dealer") whereby the Optionee irrevocably elects to exercise the Option and to sell a portion of the Shares so purchased to pay for the exercise price and whereby the NASD Dealer irrevocably commits upon receipt of such Shares to forward the exercise price directly to the Company; (ii) if a public market for the Company's stock exists, through a "margin" commitment from the Optionee and an NASD Dealer whereby the Optionee irrevocably elects to exercise the Option and to pledge the Shares so purchased to the NASD Dealer in a margin account as security for a loan from the NASD Dealer in the amount of the exercise price, and whereby the NASD Dealer irrevocably commits upon receipt of such Shares to forward the exercise price directly to the Company; or (iii) by any combination of the foregoing.

5.          Tax Withholding Obligations. No Shares will be delivered to the Optionee or any other person permitted to exercise the Option pursuant to the exercise of the Option until the Optionee or such other person has made arrangements acceptable to the Board for the satisfaction of the minimum prescribed applicable income tax, employment tax, and social security tax withholding obligations, including obligations incident to the receipt of Shares. Upon exercise of the Option, the Company or the Optionee's employer may offset or withhold (from any amount owed by the Company or the Optionee's employer to the Optionee) or collect from the Optionee or such other person an amount sufficient to satisfy such tax obligations and/or the employer's withholding obligations.

6.          Expiration. Except as otherwise determined by the Board, the Option may be exercised no later than the Expiration Date set forth above or such earlier date as otherwise provided in this Option Agreement. If no earlier date within which the Option must exercised applies, the Option shall expire on the Expiration date

7.          Termination of Continuous Service. Except as set forth in paragraphs (a), (b), and (c) below, if an Optionee=s Continuous Service terminates, the Optionee may exercise the Option to the extent he or she was otherwise entitled to exercise the Option on the date of termination of Continuous Service (the ATermination Date@) only during the Post-Termination Exercise Period set forth above.

           (a)          Termination for Cause. Unless the Board otherwise determines, if the Optionee's Continuous Service is terminated either (i) by the Company or an Affiliate for Cause, or (ii) by the Optionee without compliance with, or without having any right to do so under, the terms of any then effective written employment agreement between the Optionee and the Company or such Affiliate, then the Optionee's right to exercise the Option shall immediately terminate on the Termination Date. For purposes of this Option Agreement, the term "Cause" for termination by the Company or an Affiliate of the Optionee's Continuous Service shall have the meaning set forth in a then-effective written employment agreement between the Optionee and the Company or such Affiliate or, in the absence of such a definition in a then-effective written employment agreement (in the determination of the Board), shall mean the Optionee's (i) willful and continued failure to substantially perform his or her duties (other than as a result of a total or partial incapacity due to physical or mental illness); (ii) proven dishonesty in the performance of his or her duties; (iii) conviction or a plea of guilty or nolo contendere to a felony or crime of moral turpitude; or (iv) alcohol or drug abuse. The Board shall have discretion for the purposes of this Option Agreement to determine whether any termination of Continuous Service by the Optionee is in compliance with, or is in accordance with any right to terminate, under the terms of a then-effective written employment agreement.

           (b)          Disability of Optionee. If the Optionee's Continuous Service terminates as a result of his or her Disability, the Optionee may exercise the Option to the extent he or she was otherwise entitled to exercise it on the Termination Date for a period of twenty-four (24) months after the Termination Date (but in no event later than the Expiration Date).

           (c)          Death of Optionee. In the event of the termination of the Optionee's Continuous Service as a result of his or her death, or in the event of the Optionee's death during the Post-Termination Exercise Period or during the twenty-four (24)-month period following the Optionee's termination of Continuous Service as a result of his or her Disability, the Optionee's estate, or a person who acquired the right to exercise the Option by bequest or inheritance, may exercise the Option, but only to the extent the Optionee could exercise the Option at the date of his or her death, within twenty-four (24) months from the date of death (but in no event later than the Expiration Date).

If the Optionee is terminated for Cause, or if the Optionee does not exercise the Option during the Post-Termination Exercise Period, or if the Optionee does not exercise the option within the times specified in paragraphs (b) and (c) above, the Option shall terminate, respectively, on the Termination Date, or on the last day of the Post-Termination Exercise Period, or on the last day of the periods specified in paragraph (b) and (c) above, even though those dates are before the Expiration Date. The provisions of this Section 7 shall in no event extend the Expiration Date.

8.          Nontransferability of Option. The Option may not be transferred in any manner other than by will or by the law of descent and distribution and may be exercised during the lifetime of the Optionee only by the Optionee, or by the Optionee's guardian or legal representative if the Optionee is legally incompetent; provided, that the Optionee may, however, designate persons who or which may exercise the Option following the Optionee's death. In addition, the Optionee may transfer the Option without consideration to a member or members of the Optionee's immediate family and/or to a trust or partnership established for the benefit of an immediate family member or members. For this purpose, the term "immediate family member" means the Optionee's spouse, parents, children, stepchildren and grandchildren.

9.          Tax Consequences. Set forth below is a brief summary, as of the date of the Option Agreement, of some of the federal tax consequences of exercise of the Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THE OPTION OR DISPOSING OF THE SHARES.

           (a)          Exercise of Non-Qualified Stock Option. There may be a regular federal income tax liability upon the exercise of the Option. The Optionee will be treated as having received compensation income (taxable at ordinary income tax rates) equal to the excess, if any, of the Fair Market Value of the Shares on the date of exercise over the Exercise Price. If the Optionee is an Employee or former Employee, the Company will be required to withhold from the Optionee's compensation or collect from the Optionee and pay to the applicable taxing authorities an amount equal to a percentage of this compensation income at the time of exercise.

           (b)          Disposition of Shares. In the case of a Non-Qualified Stock Option, if the Shares are held for at least one year before disposition, any gain in excess of the Fair Market Value of the Shares on the date of exercise will be treated as long-term capital gain for federal income tax purposes.

10.           Entire Agreement, Governing Law. The Plan and the Option Agreement (with the exercise Agreement, if the Option is exercised) constitute the entire agreement of the Company and the Optionee (collectively the "Parties") with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Parties with respect to the subject matter hereof, and may not be modified adversely to the Optionee's interest except by means of a writing signed by the Parties. Nothing in the Plan and the Option Agreement (except as expressly provided therein or herein) is intended to confer any rights or remedies on any person other than the Parties. The Plan and the Option Agreement are to be construed in accordance with and governed by the internal laws of the State of Delaware without giving effect to any choice of law rule that would cause the application of the laws of any jurisdiction other than the internal laws of the State of Delaware, to the rights and duties of the Parties. Should any provision of the Plan or the Option Agreement be determined by a court of law to be illegal or unenforceable, such provision shall be enforced to the fullest extent allowed by law and the other provisions shall nevertheless remain effective and shall remain enforceable.

11.          Interpretive Matters. Whenever required by the context, pronouns and any variation thereof shall be deemed to refer to the masculine, feminine, or neuter, and the singular shall include the plural, and vice versa. The term "include" or "including" does not denote or imply any limitation. The term "business day" means any Monday through Friday other than such a day on which banks are authorized to be closed in the State of Texas. The captions and headings used in this Option Agreement are inserted for convenience and shall not be deemed a part of the Option or this Option Agreement for construction or interpretation.

12.          Dispute Resolution. The provisions of this Section 12 shall be the exclusive means of resolving disputes of the Parties (including any other persons claiming any rights or having any obligations through the Company or the Optionee) arising out of or relating to the Plan and this Option Agreement (including the Exercise Agreement, if the Option is exercised). The Parties shall attempt in good faith to resolve any disputes arising out of or relating to the Plan and this Option Agreement (including the Exercise Agreement, if the Option is exercised) by negotiation between individuals who have authority to settle the controversy. Negotiations shall be commenced by either Party by a written statement of the Party's position and the name and title of the individual who will represent the Party. Within thirty (30) days of the written notification, the Parties shall meet at a mutually acceptable time and place, and thereafter as often as they reas onably deem necessary, to resolve the dispute. If the dispute has not been resolved by negotiation, the Parties agree that any suit, action, or proceeding arising out of or relating to the Plan or this Option Agreement shall be brought in the United States District Court for the Southern District of Texas located in Houston, Texas (or should such court lack jurisdiction to hear such action, suit or proceeding, in a Texas state court in Harris County, Texas) and that the Parties shall submit to the jurisdiction of such court. The Parties irrevocably waive, to the fullest extent permitted by law, any objection a Party may have to the laying of venue for any such suit, action or proceeding brought in such court. THE PARTIES ALSO EXPRESSLY WAIVE ANY RIGHT THEY HAVE OR MAY HAVE TO A JURY TRIAL OF ANY SUCH SUIT, ACTION OR PROCEEDING. If any one or more provisions of this Section 12 shall for any reason be held invalid or unenforceable, it is the specific intent of the Parties that such provisions shall be modified to the minimum extent necessary to make it or its application valid and enforceable.

13.          Notice. Any notice or other communication required or permitted hereunder shall be given in writing and shall be deemed given, effective, and received upon prepaid delivery in person or by courier or upon the earliest of delivery or the third business day after deposit in the United States mail if sent by certified mail, with postage and fees prepaid, addressed to the other Party at its address as shown beneath its signature in this Option Agreement, or to such other address as such Party may designate in writing from time to time by notice to the other Party in accordance with this Section 13.

SEITEL, INC.

By:

Title:

Address:

THE OPTIONEE ACKNOWLEDGES AND AGREES THAT THE SHARES SUBJECT TO THE OPTION SHALL VEST, IF AT ALL, ONLY DURING THE PERIOD OF THE OPTIONEE'S CONTINUOUS SERVICE (NOT THROUGH THE ACT OF BEING HIRED OR BEING GRANTED THE OPTION OR ACQUIRING SHARES HEREUNDER). THE OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS OPTION AGREEMENT OR THE PLAN SHALL CONFER UPON THE OPTIONEE ANY RIGHT WITH RESPECT TO FUTURE AWARDS OR CONTINUATION OF THE OPTIONEE'S CONTINUOUS SERVICE, NOR SHALL IT INTERFERE IN ANY WAY WITH THE OPTIONEE'S RIGHT OR THE COMPANY=S RIGHT TO TERMINATE OPTIONEE'S CONTINUOUS SERVICE, WITH OR WITHOUT CAUSE, AND WITH OR WITHOUT NOTICE. THE OPTIONEE ACKNOWLEDGES THAT UNLESS THE OPTIONEE HAS A WRITTEN EMPLOYMENT AGREEMENT WITH THE COMPANY TO THE CONTRARY, THE OPTIONEE'S STATUS IS AT WILL.

The Optionee acknowledges receipt of a copy of the Plan, and represents that he or she is familiar with the terms and provisions thereof, and hereby accepts this Option subject to all of the terms and provisions hereof and thereof. The Optionee has reviewed this Option Agreement, the Plan, and the Exercise Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Option Agreement, and fully understands all provisions of this Option Agreement, the Plan and the Exercise Agreement. The Optionee hereby agrees that all disputes arising out of or relating to this Option Agreement, the Plan and the Exercise Agreement shall be resolved in accordance with Section 12 of this Option Agreement. The Optionee further agrees to notify the Company upon any change in the residence address indicated in the Option Agreement. If the Optionee is married, the Optionee understands that his or her spouse must execute a consent in the form attached hereto as Exhibit B.

Dated:	Signed:
		Optionee
	Address

EXHIBIT A

SEITEL, INC.

2001 INDUCEMENT STOCK OPTION PLAN

STOCK OPTION EXERCISE AGREEMENT

This Exercise Agreement is made this _____ day of __________, 20_____ between Seitel, Inc. (the "Company"), and the optionee named below ("Optionee") pursuant to the Seitel, Inc. 2001 Inducement Stock Option Plan (the "Plan"). Unless otherwise defined herein, the capitalized terms used in this Exercise Agreement shall have the meanings ascribed to them in the Plan and in the Option Agreement to which this Exercise Agreement relates.

Award Number:

Optionee:

Social Security Number:

Address:

Number of Shares Purchased:

Price Per Share:

Aggregate Purchase Price:

Date of Grant:

          Optionee hereby delivers to the Company the Aggregate Purchase Price set forth above, to the extent permitted in the Option Agreement, as follows (as applicable, check and complete):

in cash in the amount of $__________ receipt of which is acknowledged by the Company;

through a "same-day-sale" commitment, delivered herewith, from Optionee and the NASD

Dealer named therein in the amount of $__________;

through a "margin" commitment, delivered herewith, from Optionee and the NASD Dealer

named therein in the amount of $__________.

The Company and Optionee hereby agree as follows:

1.          Purchase of Shares. On this date and subject to the terms and conditions of this Exercise Agreement, Optionee hereby exercises the Option granted in the Option Agreement between the Company and Optionee dated as of the Date of Grant set forth above, with respect to the Number of Shares Purchased set forth above of the Common Stock (the "Shares") at the Aggregate Purchase Price set forth above (the "Aggregate Purchase Price") equal to the Price Per Share set forth above (the "Purchase Price Per Share") multiplied by the Number of Shares Purchased set forth above. The term "Shares" refers to the Shares purchased under this Agreement and includes all securities received (a) in replacement of the Shares, and (b) as a result of stock dividends or stock splits in respect of the Shares.

2.          Representations of the Optionee. Optionee represents and warrants to the Company that Optionee has received, read and understood the Plan, the Option Agreement and this Exercise Agreement and agrees to abide by and be bound by their terms and conditions.

3.          Federal Restrictions on Transfer. Optionee understands that the Company is under no obligation to register any resale of the Shares and that an exemption may not be available or may not permit Optionee to resell or transfer any of the Shares in the amounts or at the times proposed by Optionee.

4.          Rights as Stockholder. Until the stock certificate evidencing the Shares is issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the Shares, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such stock certificate promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the stock certificate is issued.

5.           Tax Withholding Obligations. The Optionee agrees to satisfy all applicable federal, state and local income, employment and other tax withholding obligations and herewith delivers to the Company the amount necessary, or has made arrangements acceptable to the Company, to satisfy such obligations as provided in the Plan and the Option Agreement.

6.          Tax Consequences. Optionee understands that optionee may suffer adverse tax consequences as a result of Optionee's purchase or disposition of the shares. Optionee represents that Optionee has consulted with any tax consultant(s) he or she deems advisable in connection with the purchase or disposition of the shares and that Optionee is not relying on the Company for any tax advice.

7.          Successors and Assigns. The Company may assign any of its rights under this Exercise Agreement, and this Exercise Agreement shall inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer herein set forth, this Exercise Agreement shall be binding upon the Optionee and his or her heirs, executors, administrators, successors and permitted assigns.

8.          Interpretive Matters. Whenever required by the context, pronouns and any variation thereof shall be deemed to refer to the masculine, feminine, or neuter, and the singular shall include the plural, and vice versa. The term "include" or "including" does not denote or imply any limitation. The captions and headings used in this Exercise Agreement are inserted for convenience and shall not be deemed a part of this Exercise Agreement for construction or interpretation.

9.          Dispute Resolution. The provisions of Section 12 of the Option Agreement shall be the exclusive means of resolving disputes arising out of or relating to this Exercise Agreement.

10.          Entire Agreement, Governing Law. This Exercise Agreement, with the Plan and the Option Agreement, constitute the entire agreement of the Parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Parties with respect to the subject matter hereof, and may not be modified adversely to the Optionee's interest except by means of a writing signed by the Parties. Nothing in this Exercise Agreement or in the Plan or the Option Agreement (except as expressly provided herein or therein) is intended to confer any rights or remedies on any person other than the Parties. This Exercise Agreement (like the Plan and the Option Agreement) is to be construed in accordance with and governed by the internal laws of the State of Delaware, without giving effect to any choice-of-law rule that would cause the application of the laws of any jurisdiction other than the internal laws of the State o f Delaware to the rights and duties of the Parties. Should any provision of the Plan, the Option Agreement, or this Exercise Agreement be determined by a court of law to be illegal or unenforceable, such provision shall be enforced to the fullest extent allowed by law, and the other provisions shall nevertheless remain effective and shall remain enforceable.

11.          Notice. Any notice or other communication required or permitted hereunder shall be given in writing and shall be deemed given, effective, and received upon prepaid delivery in person or by courier or upon the earlier of delivery or the third business day after deposit in the United States mail if sent by certified mail, with postage and fees prepaid, addressed to the other Party at its address as shown beneath its signature in the Option Agreement, or to such other address as such Party may designate in writing from time to time by notice to the other Party in accordance with this Section 11.

12.          Further Instruments. Each Party agrees to execute such further instruments and to take such further action as may be necessary or reasonably appropriate to carry out the purposes and intent of this Exercise Agreement.

Submitted by:		Accepted by:
OPTIONEE:		SEITEL, INC.
	Signature	By:
	Print Name	Title:
Dated:		Dated:

EXHIBIT B

SEITEL, INC.

2001 INDUCEMENT STOCK OPTION PLAN

CONSENT OF SPOUSE

I, ______________________________, spouse of ______________________________, have read and approve the foregoing Stock Option Agreement (the "Agreement"). In consideration of the Company's grant to my spouse of the right to purchase shares of Seitel, Inc. as set forth in the Agreement, I hereby appoint my spouse as my attorney-in-fact in respect to the exercise of any rights under the Agreement and agree to be bound by the provisions of the Agreement insofar as I may have any rights in said Agreement or any shares issued pursuant thereto under the applicable community property laws or similar laws relating to marital property in effect as of the date of the signing of the foregoing Agreement.

Dated:
	Signature of Spouse
	(Please print name)

EX-10.5

EXHIBIT 10.5

SEITEL, INC.

2001 NON-OFFICER STOCK OPTION PLAN

Adopted June 5, 2001

1.          Purpose. The Plan is established as a compensatory plan to attract, retain and provide equity incentives to certain key employees whose employment is vital to the success of the Company.

2.          Definitions. As used herein, unless the context requires otherwise, the following terms shall have the meanings indicated below:

           (a)          Affiliate means (i) any corporation, partnership or other entity which owns, directly or indirectly, a majority of the voting equity securities of the Company, (ii) any corporation, partnership or other entity of which a majority of the voting equity securities or equity interest is owned, directly or indirectly, by the Company, and (iii) any other entity that is consolidated in the Company's financial statements.

           (b)          Board means the Board of Directors of the Company.

           (c)          Code means the Internal Revenue Code of 1986, as amended. Reference in the Plan to any section of the Code shall be deemed to include any amendments or successor provisions to such section and any regulations under such section.

           (d)          Common Stock means the Common Stock, $.0l par value per share, of the Company or the common stock that the Company may in the future be authorized to issue (as long as the common stock varies from that currently authorized, if at all, only in amount of par value).

           (e)          Company means Seitel, Inc., a Delaware corporation.

           (f)          Continuous Service means that the provision of services to the Company or an Affiliate in the capacity of Employee is not interrupted or terminated. Except as otherwise provided in the Option Agreement, service shall not be considered interrupted or terminated for this purpose in the case of (i) any approved leave of absence, (ii) transfers among the Company, any Affiliate, or any successor, in the capacity of Employee, or (iii) any change in status as long as the individual remains in the service of the Company or an Affiliate in any capacity of Employee. An approved leave of absence shall include sick leave, military leave, or any other authorized personal leave.

           (g)          Director means a voting member of the Board.

           (h)          Disability means the permanent and total disability of a person within the meaning of Section 22(e)(3) of the Code.

           (i)          Employee means any person, including an Officer or Director, who is an employee, whether full-time or part-time, of the Company or an Affiliate. The Company's or an Affiliate's providing compensation to a Director solely with respect to rendering services in the capacity of a Director, however, shall not be sufficient to constitute "employment" by the Company.

           (j)          Exchange Act means the Securities Exchange Act of 1934, as amended. Reference in the Plan to any section of the Exchange Act shall be deemed to include any amendments or successor provisions to such section and any rules and regulations relating to such section.

           (k)          Fair Market Value means, as of any date, the value of the Common Stock determined as follows:

                    (i)          If the Common Stock is listed on any established stock exchange or traded on the Nasdaq National Market or the Nasdaq SmallCap Market, the Fair Market Value of a share of Common Stock shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or market (or the exchange or market with the greatest volume of trading in the Common Stock) on the day of determination, as reported in The Wall Street Journal or such other source as the Board deems reliable.

                    (ii)          In the absence of any such established markets for the Common Stock, the Fair Market Value shall be determined in good faith by the Board.

           (l)          Non-Qualified Stock Option means an Option not intended to meet the requirements of Section 422 of the Code.

           (m)          Officer means a person who is an "officer" of the Company within the meaning of Rule 16a-1(f) promulgated under Section 16 of the Exchange Act (whether or not the Company is subject to the requirements of the Exchange Act) as it may be amended from time to time, and any successor to Rule 16a-1(f).

           (n)          Option means a Non-Qualified Stock Option granted pursuant to the Plan to purchase a specified number of shares of Common Stock.

           (o)          Option Agreement means the written agreement evidencing the grant of an Option executed by the Company and the Optionee, including any amendments thereto.

           (p)          Optionee means an individual to whom an Option has been granted under the Plan.

           (q)          Plan means this Seitel, Inc. 2001 Non-officer Stock Option Plan, as set forth herein and as it may be amended from time to time.

           (r)          Rule 16b-3" means Rule 16b-3 promulgated under the Exchange Act, as it may be amended from time to time, and any successor to Rule 16b-3.

           (s)          Section means a Section of the Plan unless otherwise stated or the context otherwise requires.

           (t)          Securities Act means the Securities Act of 1933, as amended. Reference in the Plan to any section of the Securities Act shall be deemed to include any amendments or successor provisions to such section and any rules and regulations relating to such section.

3.          Types of Options and Shares. Options granted under this Plan shall be Non-Qualified Stock Options. The shares of stock that may be purchased upon exercise of Options granted under this Plan are shares of Common Stock.

4.          Shares Subject to Plan. The aggregate number of shares that may be issued pursuant to Options granted under this Plan is 1,250,000 shares. If any Option expires or is terminated without being exercised in whole or in part, the unexercised or released shares of Common Stock from such Options will be available for future grant and purchase under this Plan. At all times during the term of this Plan, the Company will reserve and keep available such number of shares of Common Stock as will be required to satisfy the requirements of outstanding Options under this Plan.

5.          Eligibility. No person is eligible to receive a grant of an Option under this Plan unless such person is an Employee, and is not an Officer or Director of the Company or the beneficial owners of more than 5% of the outstanding Common Stock. Subject to the foregoing requirements, and the other provisions of the Plan, the Board may select the recipients of Options in the exercise of its sole discretion. Options granted to any eligible Employee shall continue to be valid notwithstanding that such Employee subsequently becomes an Officer or Director or the beneficial owner of more than 5% of the outstanding Common Stock. An Optionee may be granted more than one Option under this Plan.

6.          Terms and Conditions of Options. The Board will determine the provisions, terms and conditions of each Option including, but not limited to, the vesting schedule, the number of shares of Common Stock subject to the Option, the exercise price of the Option, the period during which the Option may be exercised, repurchase provisions, rights of first refusal, forfeiture provisions, methods of payment, and all other terms and conditions of the Option, subject to the following:

           (a)          Form of Option Grant. Each Option granted under the Plan will be evidenced by a written Option Agreement in such form (which need not be the same for each Optionee) as the Board from time to time approves.

           (b)          Date of Grant. The date of grant of an Option will be the date on which the Board authorizes such Option unless otherwise specified by the Board. The Option Agreement evidencing the Option will be delivered to the Optionee with a copy of the Plan and other relevant Option documents, within a reasonable time after the date of grant.

           (c)          Exercise Price. The exercise price of an Option will be not less than 100% of the Fair Market Value of the shares of Common Stock on the date of grant of the Option.

           (d)          Exercise Period. Options will be exercisable within the time or times or upon the event or events determined by the Board and set forth in the Option Agreement; provided, however, that no Option will be exercisable before one year from the date of grant or after the expiration of ten (10) years from the date of grant of the Option.

           (e)          Transferability of Options. Options granted under the Plan, and any interest therein, will not be transferable or assignable by the Optionee, and may not be made subject to execution, attachment or similar process, otherwise than by will or by the laws of descent and distribution, and will be exercisable during the lifetime of the Optionee only by the Optionee, or by the Optionee's guardian or legal representative if the Optionee is legally incompetent; provided, that the Optionee may, however, designate persons who or which may exercise the Optionee's Options following the Optionee's death. Notwithstanding the preceding sentence, Options held by an Optionee may be transferred to such family members, family trusts and family partnerships as the Board, in its sole discretion, may approve at the time of the grant of such Option and as provided for in the Optionee's Option Agreement .

           (f)          cquisitions and Other Transactions. The Board may, from time to time, assume outstanding options granted by another company, whether in connection with an acquisition of such other company or otherwise, by either (i) granting an Option under the Plan in replacement of the option assumed by the Company, or (ii) treating the assumed option as if it had been granted under the Plan if the terms of such assumed option could be applied to an Option granted under the Plan. Such assumption will be permissible if the holder of the assumed option would have been eligible to be granted an Option hereunder if the other company had applied the rules of this Plan to such grant. Notwithstanding the foregoing provisions of Section 6(c), in the case of an Option issued or assumed pursuant to this Section 6(f), the exercise price for the Option shall be determined in accordance with the principles of section 424(a) of the Code.

7.          Exercise of Options.

           (a)          Notice. Options may be exercised only by delivery to the Company of a written exercise agreement approved by the Board (which need not be the same for each Optionee), stating the number of shares of Common Stock being purchased, the restrictions imposed on the shares of Common Stock, if any, and such representations and agreements regarding the Optionee's investment intent and access to information and other matters, if any, as may be required by the Company to comply with applicable securities laws, or as may be deemed appropriate by the Company in connection with the issuance of shares of Common Stock upon exercise of the Option, together with payment in full of the exercise price for the number of shares of Common Stock being purchased.

           (b)          Payment. Payment for the shares of Common Stock to be exercised under an Option may be made in cash (by check) or, where approved by the Board in its sole discretion at the time of grant and where permitted by law: (i) if a public market for the Common Stock exists, through a "same day sale" commitment from the Optionee and a broker-dealer that is a member of the National Association of Securities Dealers, Inc. (an "NASD Dealer") whereby the Optionee irrevocably elects to exercise the Option and to sell a portion of the shares of Common Stock so purchased to pay for the exercise price and whereby the NASD Dealer irrevocably commits upon receipt of such shares of Common Stock to forward the exercise price directly to the Company; (ii) if a public market for the Common Stock exists, through a "margin" commitment from the Optionee and an NASD Dealer whereby the Optionee irrevocably elects to exercise the Option and to pledge the shares of Common Stock so purchased to the NASD Dealer in a margin account as security for a loan from the NASD Dealer in the amount of the exercise price, and whereby the NASD Dealer irrevocably commits upon receipt of such shares of Common Stock to forward the exercise price directly to the Company; or (iii) by any combination of the foregoing.

           (c)          Withholding Taxes. Prior to issuance of the shares of Common Stock upon exercise of an Option, the Optionee will pay or make adequate provision acceptable to the Board for the satisfaction of the statutory minimum prescribed amount of any federal or state income or other tax withholding obligations of the Company, if applicable. Upon exercise of an Option, the Company shall withhold or collect from the Optionee an amount sufficient to satisfy such tax withholding obligations.

           (d)          Expiration. An Option may not be exercised after the expiration date set forth in the Option Agreement.

           (e)          Exercise of Option Following Termination of Continuous Service.

                    (i)          n Option may be exercised following the termination of an Optionee's Continuous Service only to the extent provided in the Option Agreement.

                    (ii)          Where the Option Agreement permits an Optionee to exercise an Option following the termination of the Optionee's Continuous Service for a specified period, the Option shall terminate to the extent not exercised on the last day of the specified period or the last day of the original term of the Option, whichever occurs first.

                    (iii)          The Board will have discretion to determine whether the Continuous Service of an Optionee has terminated and the effective date on which such Continuous Service terminated and whether the Optionee's Continuous Service terminated as a result of the Disability of the Optionee.

           (f)          Limitations on Exercise.

                    (i)          The Board may specify a reasonable minimum number of shares of Common Stock or a percentage of the shares subject to an Option that may be purchased on any exercise of an Option; provided, that such minimum number will not prevent Optionee from exercising the full number of shares of Common Stock as to which the Option is then exercisable.

                    (ii)          The obligation of the Company to issue any shares of Common Stock pursuant to the exercise of any Option will be subject to the condition that such exercise and the issuance and delivery of such shares pursuant thereto comply with the Securities Act, all applicable state securities laws and the requirements of any stock exchange or national market system upon which the shares of Common Stock may then be listed or quoted, as in effect on the date of exercise. The Company will be under no obligation to register any resale of shares of Common Stock with the Securities and Exchange Commission or to effect compliance with the registration, qualification or listing requirements of any state securities laws or stock exchange or national market system with respect to any such resale of the shares of Common Stock, and the Company will h ave no liability for any inability or failure to do so.

8.          Modification, Extension And Renewal of Options. The Board will have the power to modify, extend or renew outstanding Options and to authorize the grant of new Options in substitution therefor, provided that any such action may not, without the written consent of any Optionee, impair any rights under any Option previously granted to such Optionee.

9.          Privileges of Stock Ownership. No Optionee will have any of the rights of a stockholder with respect to any shares of Common Stock subject to an Option until such Option is properly exercised and the shares are issued and delivered to the Optionee, as evidenced by an appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company. No adjustment will be made for dividends or distributions or other rights for which the record date is prior to such date of issuance and delivery, except as provided in the Plan.

10.          djustment Upon Changes in Capitalization and Corporate Events.

           (a)          Capital Adjustments. The number of shares of Common Stock covered by each outstanding Option granted under the Plan and the Option price may be adjusted to reflect, as deemed appropriate by the Board, any increase or decrease in the number of shares of Common Stock resulting from a stock dividend, stock split, reverse stock split, combination, reclassification or similar change in the capital structure of the Company without receipt of consideration, subject to any required action by the Board or the stockholders of the Company and compliance with applicable securities laws; provided, however, that a fractional share will not be issued upon exercise of any Option, and either any fraction of a share of Common Stock that would have resulted will be cashed out at Fair Market Value or the number of shares of Common Stock issuable under the Option will be rounded up to the nearest who le number, as determined by the Board.

           (b)          Dissolution or Liquidation. The Board shall notify the Optionee at least twenty (20) days prior to any proposed dissolution or liquidation of the Company. Unless provided otherwise in an individual Option Agreement, to the extent that an Option has not been previously exercised, such Option shall terminate immediately prior to consummation of such dissolution or liquidation.

           (c)          Merger, Asset Sale and Change in Control. If, during the effectiveness of the Plan (i) the Company consummates a merger, consolidation, share exchange, or reorganization with another corporation or other legal entity and, as a result of such merger, consolidation, share exchange, or reorganization, less than a majority of the combined voting power of the outstanding securities of the surviving entity (whether the Company or another entity) immediately after such transaction is held in the aggregate by the holders of securities of the Company that were entitled to vote generally in the election of directors of the Company (or its successor) ("Voting Stock") immediately before such transaction, or (ii) when pursuant to a tender offer or exchange offer for securities of the Company, or in any other manner, any person or group within the meaning of the Exchange Act, as amended (exclu ding any employee benefit plan, or related trust, sponsored or maintained by the Company or any of its Affiliates), acquires beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more than 50% of the Voting Stock (the surviving corporation or purchaser described in this Section 10(c), the "Purchaser", and any such event described in this Section 10(c) a "Change in Control"), the Purchaser shall either assume the obligations of the Company under the outstanding Options or convert the outstanding Options into options of at least equal value as to stock of the Purchaser.

In the event such Purchaser refuses to assume or substitute Options, as provided above, pursuant to a Change in Control event, each Option which is at the time outstanding under the Plan shall, (i) except as provided otherwise in an individual Option Agreement, automatically become fully vested and exercisable immediately prior to the specified effective date of such Change in Control, for all of the shares of Common Stock at the time represented by such Option, and (ii) notwithstanding any contrary terms in the Option Agreement, expire on a date at least twenty (20) days after the Board gives written notice to Optionees specifying the terms and conditions of such termination.

11.          Administration. This Plan shall be administered by the Board. As such, grants of Options hereunder are intended to qualify for exemption from Section 16 of the Securities Act pursuant to Rule 16b-3. The Board shall interpret the Plan and any Options granted pursuant to the Plan and shall prescribe such rules and regulations in connection with the operation of the Plan as it determines to be advisable for the administration of the Plan. The Board may rescind and amend its rules and regulations from time to time. The interpretation by the Board of any of the provisions of this Plan or any Option granted under this Plan will be final and binding upon the Company and all persons having an interest in any Option or any shares of Common Stock purchased pursuant to an Option.

12.          Effect of Plan. Neither the adoption of the Plan nor any action of the Board shall be deemed to give any person any right to be granted an Option to purchase Common Stock or any other rights except as may be evidenced by the Option Agreement, or any amendment thereto, duly authorized by the Board and executed on behalf of the Company, and then only to the extent and on the terms and conditions expressly set forth therein. The existence of the Plan and the Options granted hereunder shall not affect in any way the right of the Board or the stockholders of the Company to make or authorize any adjustment, recapitalization, reorganization or other change in the Company's capital structure or its business, any merger or consolidation of the Company, any issue of bonds, debentures, or shares of preferred stock ahead of or affecting the Common Stock or the rights thereof, the dissolution or liquidation of the Company or any sale or transfer of all or any part of the Company's assets or business, or any other corporate act or proceeding by or for the Company. Nothing contained in the Plan or in any Option Agreement or in other Option-related documents shall confer upon any Employee any right with respect to such person's Continuous Service or interfere or affect in any way with the right of the Company or an Affiliate to terminate such person's Continuous Service at any time, with or without cause.

13.          No Effect on Retirement and Other Benefit Plans. Except as specifically provided in a retirement or other benefit plan of the Company or an Affiliate, Options shall not be deemed compensation for purposes of computing benefits or contributions under any retirement plan of the Company or an Affiliate, and shall not affect any benefits under any other benefit plan of any kind or any benefit plan subsequently instituted under which the availability or amount of benefits is related to level of compensation. The Plan is not a "Retirement Plan" or "Welfare Plan" under the Employee Retirement Income Security Act of 1974, as amended.

14.          mendment or Termination of Plan. The Board in its discretion may at any time terminate or amend the Plan in any respect, including amendment of any form of Option Agreement, exercise agreement or instrument to be executed pursuant to the Plan. No Option may be granted after termination of the Plan. Any amendment or termination of the Plan shall not affect Options previously granted, and such Options shall remain in full force and effect as if the Plan had not been amended or terminated, unless mutually agreed otherwise in a writing signed by the Optionee and the Company.

15.          Effective Date and Term of Plan. The Plan shall become effective upon its adoption by the Board. It shall continue in effect for a term of ten (10) years from its adoption date, unless sooner terminated by action of the Board. Subject to the terms and conditions of this Plan and applicable laws, Options may be granted under the Plan upon its becoming effective.

16.          Severability and Reformation. The Company intends all provisions of the Plan to be enforced to the fullest extent permitted by law. Accordingly, should a court of competent jurisdiction determine that the scope of any provision of the Plan is too broad to be enforced as written, the court should reform the provision to such narrower scope as it determines to be enforceable. If, however, any provision of the Plan is held to be wholly illegal, invalid, or unenforceable under present or future law, such provision shall be fully severable and severed, and the Plan shall be construed and enforced as if such illegal, invalid, or unenforceable provision were never a part hereof, and the remaining provisions of the Plan shall remain in full force and effect and shall not be affected by the illegal, invalid, or unenforceable provision or by its severance.

17.          Governing Law. The Plan shall be construed and interpreted in accordance with the laws of the State of Delaware.

18.          Interpretive Matters. Whenever required by the context, pronouns and any variation thereof shall be deemed to refer to the masculine, feminine, or neuter, and the singular shall include the plural and visa versa. The term "including" does not denote or imply any limitation. The captions and headings used in the Plan are inserted for convenience and shall not be deemed a part of the Plan for construction or interpretation.

Award Number:

SEITEL, INC.

2001 NON-OFFICER STOCK OPTION PLAN

STOCK OPTION AGREEMENT

Optionee:
Address:
Total Shares Subject to Option
Exercise Price Per Share:
Date of Grant
Post-Termination Exercise Period:	[90 Days or other applicable period]
Expiration Date:

1.          Grant of Option. Seitel, Inc., a Delaware corporation (the "Company"), hereby grants to the Optionee named above an option (the "Option") to purchase the total number of shares of Common Stock set forth above (the "Shares") at the exercise price per share set forth above (the "Exercise Price"), in accordance with this Option Agreement and subject to the terms and conditions of the Seitel, Inc. 2001 Non-officer Stock Option Plan, as amended from time to time (the "Plan"), which are incorporated herein by reference. The Option is not intended to qualify as an "incentive stock option" within the meaning of Section 422 of the Code. Unless otherwise defined herein, capitalized terms used herein shall have the meanings ascribed to them in the Plan.

2.          Vesting. Subject to the terms and conditions of the Plan and this Option Agreement the Option shall vest and become exercisable in the following cumulative installments, as follows:

          [(a) One-third (1/3) of the Shares shall become exercisable at any time on or after the first anniversary of the date of grant set forth above (the "Date of Grant");

          (b) An additional one-third (1/3) of the Shares shall become exercisable at any time on or after the second anniversary of the Date of Grant; and

          (c) The remaining Shares shall become exercisable at any time on or after the third anniversary of the Date of Grant.]

If an installment covers a fractional Share, such installment will be rounded to the next highest Share, except the final installment, which will be for the balance of the total Shares; provided, that the Optionee shall in no event be entitled under the Option to purchase a number of shares of the Common Stock greater than the "Total Shares Subject to Option" indicated above.

3.          Exercise of Option.

          (a)          Right to Exercise. The Option shall be exercisable in accordance with the vesting provisions contained in Section 2 of this Option Agreement and with the other applicable provisions of the Plan and this Option Agreement. The Option shall be subject to the provisions of Section 10 of the Plan relating to the exercisability or termination of the Option in the event of a Change in Control or in the event of a dissolution or liquidation of the Company.

          (b)          Method of Exercise. The Option shall be exercisable only by delivery to the Company of an executed Stock Option Exercise Agreement (the "Exercise Agreement") in the form attached hereto as Exhibit A, or in such other form approved by the Board, which shall state the Optionee's election to exercise the Option, the whole number of Shares in respect of which the Option is being exercised, and such other provisions as may be required by the Board. The Exercise Agreement shall be signed by the Optionee and shall be delivered to the Company in person or by courier, by certified mail, or by such other method as may be permitted by the Board, accompanied (in any case) by payment of the Exercise Price for each Share covered by the Exercise Agreement, as described in Section 4 of this Option Agreement. The Option shall be deemed to be exercised upon receipt by the Company of such written Exercise Agreement accompanied by the Exercise Price.

          (c)          Issuance of Shares. If the Exercise Agreement and payment are in form and substance satisfactory to counsel for the Company and Optionee or any other person permitted to exercise the Option has complied with Section 5 of this Option Agreement, the Company shall issue or cause the issuance of, in the name of the Optionee or Optionee's legal representative, the Shares purchased by such exercise of the Option.

4.          Method of Payment. The Optionee's delivery of the signed Exercise Agreement to exercise the Option (in whole or in part) shall be accompanied by full payment of the Exercise Price for the Shares being purchased. Payment for the Shares may be made in cash (by check) or, at the election of the Optionee and where permitted by law: (i) if a public market for the Company's stock exists, through a "same day sale" commitment from the Optionee and a broker-dealer that is a member of the National Association of Securities Dealers (an "NASD Dealer") whereby the Optionee irrevocably elects to exercise the Option and to sell a portion of the Shares so purchased to pay for the exercise price and whereby the NASD Dealer irrevocably commits upon receipt of such Shares to forward the exercise price directly to the Company; (ii) if a public market for the Company's stock exists, through a "margin" commitment from the Optionee and an NASD Dealer whereby the Optionee irrevocably elects to exercise the Option and to pledge the Shares so purchased to the NASD Dealer in a margin account as security for a loan from the NASD Dealer in the amount of the exercise price, and whereby the NASD Dealer irrevocably commits upon receipt of such Shares to forward the exercise price directly to the Company; or (iii) by any combination of the foregoing.

5.          Tax Withholding Obligations. No Shares will be delivered to the Optionee or any other person permitted to exercise the Option pursuant to the exercise of the Option until the Optionee or such other person has made arrangements acceptable to the Board for the satisfaction of the minimum prescribed applicable income tax, employment tax, and social security tax withholding obligations, including obligations incident to the receipt of Shares. Upon exercise of the Option, the Company or the Optionee's employer may offset or withhold (from any amount owed by the Company or the Optionee's employer to the Optionee) or collect from the Optionee or such other person an amount sufficient to satisfy such tax obligations and/or the employer's withholding obligations.

6.          Expiration. Except as otherwise determined by the Board, the Option may be exercised no later than the Expiration Date set forth above or such earlier date as otherwise provided in this Option Agreement. If no earlier date within which the Option must exercised applies, the Option shall expire on the Expiration date

7.          Termination of Continuous Service. Except as set forth in paragraphs (a), (b), and (c) below, if an Optionee's Continuous Service terminates, the Optionee may exercise the Option to the extent he or she was otherwise entitled to exercise the Option on the date of termination of Continuous Service (the "Termination Date") only during the Post-Termination Exercise Period set forth above.

          (a)          Termination for Cause. Unless the Board otherwise determines, if the Optionee's Continuous Service is terminated either (i) by the Company or an Affiliate for Cause, or (ii) by the Optionee without compliance with, or without having any right to do so under, the terms of any then effective written employment agreement between the Optionee and the Company or such Affiliate, then the Optionee's right to exercise the Option shall immediately terminate on the Termination Date. For purposes of this Option Agreement, the term "Cause" for termination by the Company or an Affiliate of the Optionee's Continuous Service shall have the meaning set forth in a then-effective written employment agreement between the Optionee and the Company or such Affiliate or, in the absence of such a definition in a then-effective written employment agreement (in the determination of the Board), shall mean t he Optionee's (i) willful and continued failure to substantially perform his or her duties (other than as a result of a total or partial incapacity due to physical or mental illness); (ii) proven dishonesty in the performance of his or her duties; (iii) conviction or a plea of guilty or nolo contendere to a felony or crime of moral turpitude; or (iv) alcohol or drug abuse. The Board shall have discretion for the purposes of this Option Agreement to determine whether any termination of Continuous Service by the Optionee is in compliance with, or is in accordance with any right to terminate, under the terms of a then-effective written employment agreement.

          (b)          Disability of Optionee. If the Optionee's Continuous Service terminates as a result of his or her Disability, the Optionee may exercise the Option to the extent he or she was otherwise entitled to exercise it on the Termination Date for a period of twenty-four (24) months after the Termination Date (but in no event later than the Expiration Date).

          (c)          Death of Optionee. In the event of the termination of the Optionee's Continuous Service as a result of his or her death, or in the event of the Optionee's death during the Post-Termination Exercise Period or during the twenty-four (24)-month period following the Optionee's termination of Continuous Service as a result of his or her Disability, the Optionee's estate, or a person who acquired the right to exercise the Option by bequest or inheritance, may exercise the Option, but only to the extent the Optionee could exercise the Option at the date of his or her death, within twenty-four (24) months from the date of death (but in no event later than the Expiration Date).

If the Optionee is terminated for Cause, or if the Optionee does not exercise the Option during the Post-Termination Exercise Period, or if the Optionee does not exercise the option within the times specified in paragraphs (b) and (c) above, the Option shall terminate, respectively, on the Termination Date, or on the last day of the Post-Termination Exercise Period, or on the last day of the periods specified in paragraph (b) and (c) above, even though those dates are before the Expiration Date. The provisions of this Section 7 shall in no event extend the Expiration Date.

8.          Nontransferability of Option. The Option may not be transferred in any manner other than by will or by the law of descent and distribution and may be exercised during the lifetime of the Optionee only by the Optionee, or by the Optionee's guardian or legal representative if the Optionee is legally incompetent; provided, that the Optionee may, however, designate persons who or which may exercise the Option following the Optionee's death. In addition, the Optionee may transfer the Option without consideration to a member or members of the Optionee's immediate family and/or to a trust or partnership established for the benefit of an immediate family member or members. For this purpose, the term "immediate family member" means the Optionee's spouse, parents, children, stepchildren and grandchildren.

9.          Tax Consequences. Set forth below is a brief summary, as of the date of the Option Agreement, of some of the federal tax consequences of exercise of the Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THE OPTION OR DISPOSING OF THE SHARES.

          (a)          Exercise of Non-Qualified Stock Option. There may be a regular federal income tax liability upon the exercise of the Option. The Optionee will be treated as having received compensation income (taxable at ordinary income tax rates) equal to the excess, if any, of the Fair Market Value of the Shares on the date of exercise over the Exercise Price. If the Optionee is an Employee or former Employee, the Company will be required to withhold from the Optionee's compensation or collect from the Optionee and pay to the applicable taxing authorities an amount equal to a percentage of this compensation income at the time of exercise.

          (b)          Disposition of Shares. In the case of a Non-Qualified Stock Option, if the Shares are held for at least one year before disposition, any gain in excess of the Fair Market Value of the Shares on the date of exercise will be treated as long-term capital gain for federal income tax purposes.

10.           Entire Agreement, Governing Law. The Plan and the Option Agreement (with the exercise Agreement, if the Option is exercised) constitute the entire agreement of the Company and the Optionee (collectively the "Parties") with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Parties with respect to the subject matter hereof, and may not be modified adversely to the Optionee's interest except by means of a writing signed by the Parties. Nothing in the Plan and the Option Agreement (except as expressly provided therein or herein) is intended to confer any rights or remedies on any person other than the Parties. The Plan and the Option Agreement are to be construed in accordance with and governed by the internal laws of the State of Delaware without giving effect to any choice of law rule that would cause the application of the laws of any jurisdiction other than the internal laws of the State of Delaware, to the rights and duties of the Parties. Should any provision of the Plan or the Option Agreement be determined by a court of law to be illegal or unenforceable, such provision shall be enforced to the fullest extent allowed by law and the other provisions shall nevertheless remain effective and shall remain enforceable.

11.          Interpretive Matters. Whenever required by the context, pronouns and any variation thereof shall be deemed to refer to the masculine, feminine, or neuter, and the singular shall include the plural, and vice versa. The term "include" or "including" does not denote or imply any limitation. The term "business day" means any Monday through Friday other than such a day on which banks are authorized to be closed in the State of Texas. The captions and headings used in this Option Agreement are inserted for convenience and shall not be deemed a part of the Option or this Option Agreement for construction or interpretation.

12.          Dispute Resolution. The provisions of this Section 12 shall be the exclusive means of resolving disputes of the Parties (including any other persons claiming any rights or having any obligations through the Company or the Optionee) arising out of or relating to the Plan and this Option Agreement (including the Exercise Agreement, if the Option is exercised). The Parties shall attempt in good faith to resolve any disputes arising out of or relating to the Plan and this Option Agreement (including the Exercise Agreement, if the Option is exercised) by negotiation between individuals who have authority to settle the controversy. Negotiations shall be commenced by either Party by a written statement of the Party's position and the name and title of the individual who will represent the Party. Within thirty (30) days of the written notification, the Parties shall meet at a mutually acceptable time and place, and thereafter as often as they reas onably deem necessary, to resolve the dispute. If the dispute has not been resolved by negotiation, the Parties agree that any suit, action, or proceeding arising out of or relating to the Plan or this Option Agreement shall be brought in the United States District Court for the Southern District of Texas located in Houston, Texas (or should such court lack jurisdiction to hear such action, suit or proceeding, in a Texas state court in Harris County, Texas) and that the Parties shall submit to the jurisdiction of such court. The Parties irrevocably waive, to the fullest extent permitted by law, any objection a Party may have to the laying of venue for any such suit, action or proceeding brought in such court. THE PARTIES ALSO EXPRESSLY WAIVE ANY RIGHT THEY HAVE OR MAY HAVE TO A JURY TRIAL OF ANY SUCH SUIT, ACTION OR PROCEEDING. If any one or more provisions of this Section 12 shall for any reason be held invalid or unenforceable, it is the specific intent of the Parties that such provisions shall be modified to the minimum extent necessary to make it or its application valid and enforceable.

13.          Notice. Any notice or other communication required or permitted hereunder shall be given in writing and shall be deemed given, effective, and received upon prepaid delivery in person or by courier or upon the earliest of delivery or the third business day after deposit in the United States mail if sent by certified mail, with postage and fees prepaid, addressed to the other Party at its address as shown beneath its signature in this Option Agreement, or to such other address as such Party may designate in writing from time to time by notice to the other Party in accordance with this Section 13.

SEITEL, INC.

By:

Title:

Address:

THE OPTIONEE ACKNOWLEDGES AND AGREES THAT THE SHARES SUBJECT TO THE OPTION SHALL VEST, IF AT ALL, ONLY DURING THE PERIOD OF THE OPTIONEE'S CONTINUOUS SERVICE (NOT THROUGH THE ACT OF BEING HIRED OR BEING GRANTED THE OPTION OR ACQUIRING SHARES HEREUNDER). THE OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS OPTION AGREEMENT OR THE PLAN SHALL CONFER UPON THE OPTIONEE ANY RIGHT WITH RESPECT TO FUTURE AWARDS OR CONTINUATION OF THE OPTIONEE'S CONTINUOUS SERVICE, NOR SHALL IT INTERFERE IN ANY WAY WITH THE OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO TERMINATE OPTIONEE'S CONTINUOUS SERVICE, WITH OR WITHOUT CAUSE, AND WITH OR WITHOUT NOTICE. THE OPTIONEE ACKNOWLEDGES THAT UNLESS THE OPTIONEE HAS A WRITTEN EMPLOYMENT AGREEMENT WITH THE COMPANY TO THE CONTRARY, THE OPTIONEE'S STATUS IS AT WILL.

The Optionee acknowledges receipt of a copy of the Plan, and represents that he or she is familiar with the terms and provisions thereof, and hereby accepts this Option subject to all of the terms and provisions hereof and thereof. The Optionee has reviewed this Option Agreement, the Plan, and the Exercise Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Option Agreement, and fully understands all provisions of this Option Agreement, the Plan and the Exercise Agreement. The Optionee hereby agrees that all disputes arising out of or relating to this Option Agreement, the Plan and the Exercise Agreement shall be resolved in accordance with Section 12 of this Option Agreement. The Optionee further agrees to notify the Company upon any change in the residence address indicated in the Option Agreement. If the Optionee is married, the Optionee understands that his or her spouse must execute a consent in the form attached hereto as Exhibit B.

Dated:	Signed:
		Optionee
	Address

EXHIBIT A

SEITEL, INC.

2001 NON-OFFICER STOCK OPTION PLAN

STOCK OPTION EXERCISE AGREEMENT

This Exercise Agreement is made this _____ day of __________, 20_____ between Seitel, Inc. (the "Company"), and the optionee named below ("Optionee") pursuant to the Seitel, Inc. 2001 Non-officer Stock Option Plan (the "Plan"). Unless otherwise defined herein, the capitalized terms used in this Exercise Agreement shall have the meanings ascribed to them in the Plan and in the Option Agreement to which this Exercise Agreement relates.

Award Number:

Optionee:

Social Security Number:

Address:

Number of Shares Purchased:

Price Per Share:

Aggregate Purchase Price:

Date of Grant:

          Optionee hereby delivers to the Company the Aggregate Purchase Price set forth above, tothe extent permitted in the Option Agreement, as follows (as applicable, check and complete):

in cash in the amount of $__________ receipt of which is acknowledged by the Company;

through a "same-day-sale" commitment, delivered herewith, from Optionee and the NASD

Dealer named therein in the amount of $__________;

through a "margin" commitment, delivered herewith, from Optionee and the NASD Dealer

named therein in the amount of $__________.

The Company and Optionee hereby agree as follows:

1.          Purchase of Shares. On this date and subject to the terms and conditions of this Exercise Agreement, Optionee hereby exercises the Option granted in the Option Agreement between the Company and Optionee dated as of the Date of Grant set forth above, with respect to the Number of Shares Purchased set forth above of the Common Stock (the "Shares") at the Aggregate Purchase Price set forth above (the "Aggregate Purchase Price") equal to the Price Per Share set forth above (the "Purchase Price Per Share") multiplied by the Number of Shares Purchased set forth above. The term "Shares" refers to the Shares purchased under this Agreement and includes all securities received (a) in replacement of the Shares, and (b) as a result of stock dividends or stock splits in respect of the Shares.

2.          Representations of the Optionee. Optionee represents and warrants to the Company that Optionee has received, read and understood the Plan, the Option Agreement and this Exercise Agreement and agrees to abide by and be bound by their terms and conditions.

3.          Federal Restrictions on Transfer. Optionee understands that the Company is under no obligation to register any resale of the Shares and that an exemption may not be available or may not permit Optionee to resell or transfer any of the Shares in the amounts or at the times proposed by Optionee.

4.          Rights as Stockholder. Until the stock certificate evidencing the Shares is issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the Shares, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such stock certificate promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the stock certificate is issued.

5.           Tax Withholding Obligations. The Optionee agrees to satisfy all applicable federal, state and local income, employment and other tax withholding obligations and herewith delivers to the Company the amount necessary, or has made arrangements acceptable to the Company, to satisfy such obligations as provided in the Plan and the Option Agreement.

6.          Tax Consequences. Optionee understands that optionee may suffer adverse tax consequences as a result of Optionee's purchase or disposition of the shares. Optionee represents that Optionee has consulted with any tax consultant(s) he or she deems advisable in connection with the purchase or disposition of the shares and that Optionee is not relying on the Company for any tax advice.

7.          Successors and Assigns. The Company may assign any of its rights under this Exercise Agreement, and this Exercise Agreement shall inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer herein set forth, this Exercise Agreement shall be binding upon the Optionee and his or her heirs, executors, administrators, successors and permitted assigns.

8.          Interpretive Matters. Whenever required by the context, pronouns and any variation thereof shall be deemed to refer to the masculine, feminine, or neuter, and the singular shall include the plural, and vice versa. The term "include" or "including" does not denote or imply any limitation. The captions and headings used in this Exercise Agreement are inserted for convenience and shall not be deemed a part of this Exercise Agreement for construction or interpretation.

9.          Dispute Resolution. The provisions of Section 12 of the Option Agreement shall be the exclusive means of resolving disputes arising out of or relating to this Exercise Agreement.

10.          Entire Agreement, Governing Law. This Exercise Agreement, with the Plan and the Option Agreement, constitute the entire agreement of the Parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Parties with respect to the subject matter hereof, and may not be modified adversely to the Optionee's interest except by means of a writing signed by the Parties. Nothing in this Exercise Agreement or in the Plan or the Option Agreement (except as expressly provided herein or therein) is intended to confer any rights or remedies on any person other than the Parties. This Exercise Agreement (like the Plan and the Option Agreement) is to be construed in accordance with and governed by the internal laws of the State of Delaware, without giving effect to any choice-of-law rule that would cause the application of the laws of any jurisdiction other than the internal laws of the State o f Delaware to the rights and duties of the Parties. Should any provision of the Plan, the Option Agreement, or this Exercise Agreement be determined by a court of law to be illegal or unenforceable, such provision shall be enforced to the fullest extent allowed by law, and the other provisions shall nevertheless remain effective and shall remain enforceable.

11.          Notice. Any notice or other communication required or permitted hereunder shall be given in writing and shall be deemed given, effective, and received upon prepaid delivery in person or by courier or upon the earlier of delivery or the third business day after deposit in the United States mail if sent by certified mail, with postage and fees prepaid, addressed to the other Party at its address as shown beneath its signature in the Option Agreement, or to such other address as such Party may designate in writing from time to time by notice to the other Party in accordance with this Section 11.

12.          Further Instruments. Each Party agrees to execute such further instruments and to take such further action as may be necessary or reasonably appropriate to carry out the purposes and intent of this Exercise Agreement.

Submitted by:		Accepted by:
OPTIONEE:		SEITEL, INC.
	Signature	By:
	Print Name	Title:
Dated:		Dated:

EXHIBIT B

SEITEL, INC.

2001 NON-OFFICER STOCK OPTION PLAN

CONSENT OF SPOUSE

I, ______________________________, spouse of ______________________________, have read and approve the foregoing Stock Option Agreement (the "Agreement"). In consideration of the Company's grant to my spouse of the right to purchase shares of Seitel, Inc. as set forth in the Agreement, I hereby appoint my spouse as my attorney-in-fact in respect to the exercise of any rights under the Agreement and agree to be bound by the provisions of the Agreement insofar as I may have any rights in said Agreement or any shares issued pursuant thereto under the applicable community property laws or similar laws relating to marital property in effect as of the date of the signing of the foregoing Agreement.

Dated:
	Signature of Spouse
	(Please print name)