PIONEER NATURAL RESOURCES CO
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>2
<FILENAME>0002.txt
<TEXT>

                                  Exhibit 10.4

                                CREDIT AGREEMENT

                                      among

                       PIONEER NATURAL RESOURCES COMPANY,
                                    Borrower

                             BANK OF AMERICA, N.A.,
                              Administrative Agent

                           CREDIT SUISSE FIRST BOSTON,
                               Documentation Agent

                                       and

                            THE CHASE MANHATTAN BANK,
                                Syndication Agent

                               and certain LENDERS

                                  May 31, 2000

                                  $575,000,000


<PAGE>



                                TABLE OF CONTENTS

ARTICLE 1 - DEFINITIONS AND REFERENCES.....................................   1
       Section 1.1       Defined Terms.....................................   1
       Section 1.2       Exhibits and Schedules............................  15
       Section 1.3       Amendment of Defined Instruments..................  15
       Section 1.4       References and Titles.............................  15
       Section 1.5       Calculations and Determinations...................  15

ARTICLE 2 - ADVANCES AND LETTERS OF CREDIT.................................  16
       Section 2.1       Making and Repaying the Revolving Loan Advances...  16
       Section 2.2       Requests for Revolving Loan Advances..............  17
       Section 2.3       Rate Elections....................................  17
       Section 2.4       Swing Line Advances...............................  18
       Section 2.5       Procedure for Swing Line Advances.................  19
       Section 2.6       Special Provisions for Swing Line Advances........  20
       Section 2.7       Commitment Fee....................................  21
       Section 2.8       Agents' and Administrative Agent's Fees...........  21
       Section 2.9       Termination and Reduction of Commitments..........  21
       Section 2.10      Optional Prepayments..............................  22
       Section 2.11      Payments to Lenders...............................  22
       Section 2.12      Letters of Credit.................................  23
       Section 2.13      Requesting Letters of Credit......................  23
       Section 2.14      Reimbursement of Letters of Credit................  23
       Section 2.15      Letter of Credit Fees.............................  26
       Section 2.16      Capital Reimbursement.............................  26
       Section 2.17      Increased Cost of Eurodollar Portions.............  27
       Section 2.18      Availability......................................  27
       Section 2.19      Funding Losses....................................  28
       Section 2.20      Taxes.............................................  29
       Section 2.21      Make-Whole Qualifications.........................  30

ARTICLE 3 - CONDITIONS PRECEDENT TO LENDING................................  32
       Section 3.1       Initial Conditions Precedent......................  32
       Section 3.2       Additional Conditions Precedent...................  33

ARTICLE 4 - REPRESENTATIONS AND WARRANTIES.................................  34
       Section 4.1       Borrower's Representations and Warranties.........  34
       Section 4.2       Representation by Lenders.........................  37

ARTICLE 5 - COVENANTS OF BORROWER..........................................  37
       Section 5.1       Affirmative Covenants.............................  37
       Section 5.2       Negative Covenants................................  41
       Section 5.3       Financial Covenants...............................  43


                                       (i)


<PAGE>



ARTICLE 6 - EVENTS OF DEFAULT AND REMEDIES.................................  44
       Section 6.1       Events of Default.................................  44
       Section 6.2       Remedies..........................................  47
       Section 6.3       Annulment of Acceleration.........................  48
       Section 6.4       Indemnity.........................................  48

ARTICLE 7 - AGENTS.........................................................  49
       Section 7.1       Appointment and Authority.........................  49
       Section 7.2       Agents' Reliance..................................  50
       Section 7.3       Lenders' Credit Decisions.........................  51
       Section 7.4       Indemnification...................................  51
       Section 7.5       Rights as Lender..................................  51
       Section 7.6       Sharing of Set-Offs and Other Payments............  52
       Section 7.7       Investments.......................................  52
       Section 7.8       Benefit of Article 7..............................  52
       Section 7.9       Resignation and Removal...........................  53

ARTICLE 8 - MISCELLANEOUS..................................................  53
       Section 8.1       Waivers and Amendments............................  53
       Section 8.2       Survival of Agreements, Cumulative Nature.........  54
       Section 8.3       Notices...........................................  54
       Section 8.4       Parties in Interest...............................  55
       Section 8.5       Governing Law.....................................  55
       Section 8.6       Limitation on Interest............................  55
       Section 8.7       Termination: Limited Survival.....................  57
       Section 8.8       Assignments, Participations.......................  57
       Section 8.9       Confidentiality...................................  59
       Section 8.10      Severability......................................  59
       Section 8.11      Counterparts......................................  59
       Section 8.12      WAIVER OF JURY TRIAL, PUNITIVE DAMAGES............  59
       Section 8.13      Several Obligations...............................  60
       Section 8.14      Nonliability of Lenders...........................  60
       Section 8.15      Setoff............................................  60
       Section 8.16      Forum Selection and Consent to Jurisdiction.......  60
       Section 8.17      Release of Liens..................................  61
       Section 8.18      Entire Agreement..................................  61


                                      (ii)


<PAGE>



                                CREDIT AGREEMENT

          THIS CREDIT AGREEMENT is made as of May 31, 2000, by and among PIONEER
NATURAL RESOURCES COMPANY, a Delaware corporation (the "Borrower"),  the Lenders
from time to time parties hereto, BANK OF AMERICA, N.A., as Administrative Agent
for the Lenders,  CREDIT SUISSE FIRST  BOSTON,  as  Documentation  Agent for the
Lenders, and THE CHASE MANHATTAN BANK, as Syndication Agent for the Lenders.

          For good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the parties hereto agree as follows:

                                    ARTICLE 1

                           DEFINITIONS AND REFERENCES

          Section  1.1 Defined  Terms.  As used in this  Agreement,  each of the
following  terms has the meaning given it in this section or in the sections and
subsections referred to below:

          "Adjusted  Eurodollar  Rate" means,  with  respect to each  particular
Eurodollar  Portion and the associated  Eurodollar Rate and Reserve  Percentage,
the rate per annum determined  hereunder by Administrative Agent pursuant to the
following formula:

                          AER      =       ER    + EM
                                        --------
                                        1.00 - RP

                          AER      =    Adjusted Eurodollar Rate
                          ER       =    Eurodollar Rate
                          RP       =    Reserve Percentage
                          EM       =    Eurodollar Margin

          The Adjusted  Eurodollar  Rate shall change as and when the associated
Reserve Percentage and Eurodollar Margin change.

          "Administrative Agent" means Bank of America, N.A.,  as Administrative
Agent hereunder, and its successor in such capacity.

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

          "Affiliate"  means, as to any Person,  each other Person that directly
or indirectly  (through one or more  intermediaries or otherwise)  controls,  is
controlled by, or is under common control with,  such Person.  A Person shall be
deemed  to  "control"  another  Person if such  Person  possesses,  directly  or
indirectly,  power  to (a) vote 30% or more of the  securities  or other  equity
interests of such other Person having  ordinary voting power for the election of
directors or other  governing  body, or (b) direct or cause the direction of the
management or policies of such other Person whether by contract or otherwise.

          "Agent"  means  any  of   Administrative   Agent,   Collateral  Agent,
Syndication Agent or Documentation Agent hereunder,  solely in such capacity and
not in its capacity as a Lender.


<PAGE>



          "Agreement"  means  this  Credit  Agreement,  as it  may  be  amended,
modified or restated from time to time hereafter.

          "Applicable  Rating  Level"  means  the level  set  forth  below  that
corresponds to the higher of the ratings issued from time to time by Moody's and
S&P, as applicable  to Borrower's  senior  unsecured  long- term debt  provided,
however,  that if such  ratings  differ by more than one level,  the  Applicable
Rating Level shall be one level below the higher level:

                                       Moody's              S&P
                                       -------            -------
                 Level I                >Baa3               >BBB-
                                        -                   -
                 Level II                Ba1                 BB+
                 Level III               Ba2                 BB
                 Level IV               <Ba3                <BB-
                                        -                   -

          For  example,  if the Moody's  rating is Bal and the S&P rating is BB,
Level II shall  apply,  and if the Moody's  rating is Baa3 and the S&P rating is
BB, Level II shall apply.

          For purposes of the foregoing, (i) ">" means a rating equal to or more
favorable than and "<" means a rating equal to or less favorable  than;  (ii) if
ratings for Borrower's  senior  unsecured  long-term debt shall not be available
from  Moody's  or S&P,  Level IV shall be  deemed  applicable;  (iii) if  either
Moody's  or S&P shall  change  its  ratings  nomenclature  prior to the date all
Obligations  have been paid and the Commitments  canceled,  Borrower and Lenders
shall  negotiate in good faith to amend the  references  to specific  ratings in
this  definition  to reflect such  change,  and pending  such  amendment,  if an
appropriate Applicable Rating Level is otherwise not determinable based upon the
foregoing grid, the last  Applicable  Rating Level in effect at the time of such
change shall continue to apply.

          "Base Rate" means the fluctuating per annum rate of interest from time
to time in  effect  equal to the  higher  of (a) the rate of  interest  publicly
announced by Bank of America,  N.A. as its "Prime Rate" or (b) the Federal Funds
Rate plus  one-half  of one percent  (1/2 of 1%),  whether or not  Borrower  has
notice thereof.  Such "Prime Rate" is set by Bank of America,  N.A. as a general
rate of interest,  taking into account such factors as Bank of America, N.A. may
deem  appropriate,  it being  understood  that many of Bank of  America,  N.A.'s
commercial  or other loans are priced in  relation to such rate,  that it is not
necessarily  the lowest or best rate  actually  charged to any customer and that
Bank of America,  N.A.  may make various  commercial  or other loans at rates of
interest having no  relationship to such rate. If Bank of America,  N.A.'s Prime
Rate or the Federal  Funds Rate  changes  after the date  hereof,  the Base Rate
shall be automatically increased or decreased, as the case may be, without prior
notice to Borrower from time to time as of the effective  time of each change in
Bank of America,  N.A.'s  Prime Rate or the Federal  Funds Rate.  Administrative
Agent shall promptly thereafter notify Borrower of each change in the Base Rate.

          "Base Rate Margin" means,  on any date, with respect to each Base Rate
Portion of a Revolving Loan Advance, the remainder (if positive) of (a) the then
effective Eurodollar Margin minus (b) 125 basis points per annum.

          "Base Rate Portion" means that portion of the unpaid principal balance
of a Revolving Loan Advance which bears interest based on the Base Rate.

          "Borrower" is defined in the Preamble hereto.

                                        2


<PAGE>



          "Business  Day"  means a day on which  commercial  banks  are open for
business  with the  public in the State of Texas.  Any  Business  Day in any way
relating to a Eurodollar Portion (such as the day on which a Eurodollar Interest
Period  begins or ends)  must also be a day on which,  in the  reasonable,  good
faith judgment of Administrative Agent,  significant transactions in dollars are
carried out in the interbank eurocurrency market.

          "Cash Collateral" has the meaning given it in Section 2.14(d).

          "Code" means the Internal  Revenue Code of 1986,  as amended from time
to time.

          "Collateral Agent"  means Bank of America,  N.A.,  as collateral agent
under the Pledge Agreements and its successor in such capacity.

          "Commitment"  means, with respect to each Lender, the amount set forth
opposite the name of such Lender as its Commitment on Schedule 1 attached hereto
(or, if such Lender is an assignee,  the amount of its  Commitment  set forth in
the  assignment  pursuant  to which it became a Lender)  as such  amount  may be
reduced or increased from time to time pursuant to any assignment to which it is
a party or otherwise pursuant to the terms of this Agreement.

          "Commitment  Period" means the period from and including the Effective
Date until and including the Maturity Date (or, if earlier, the day on which the
Obligations  first  become  due  and  payable  in full  or the  Commitments  are
terminated upon notice by  Administrative  Agent to Borrower pursuant to Section
6.1).

          "Commitment Fee Rate" means,  for any date, the number of basis points
per annum set forth below based on the  Applicable  Rating  Level then in effect
and the Total Leverage Ratio as of the date of the last calculation thereof:

                                          Total Leverage Ratio
                               ----------------------------------------
     Applicable Rating Level    <3.25   3.25<x<3.5   3.5<x<3.75   >3.75
     -----------------------    -             -           -
              I                 25.0       25.0         37.5       37.5
              II                37.5       37.5         45.0       50.0
              III               50.0       50.0         50.0       50.0
              IV                50.0       50.0         50.0       50.0

Changes in the Commitment Fee Rate will occur automatically without prior notice
(x) upon the  effectiveness of any change of the Applicable Rating Level and (y)
three (3) days  following  the  earlier of (A) the date  Borrower  delivers  the
certificate in respect of the previous Fiscal Quarter  required  pursuant to the
second  sentence  of  Section  5.1(b)(1)  (provided  that for  purposes  of this
definition, Borrower shall be permitted to deliver a certificate sixty (60) days
following a Fiscal Year end  containing  the  information  to be included in the
certificate  to be  delivered  pursuant to Section  5.1(b)(1)  except based upon
unaudited  Financial  Statements for such Fiscal Year) or Section 5.1(b)(2),  as
the case may be,  and (B) sixty  (60) days  following  the end of such  previous
Fiscal  Quarter,  in  the  event  of a  change  in  the  Total  Leverage  Ratio.
Administrative  Agent will give notice  promptly to Borrower and Lenders of each
change in the Commitment Fee Rate.

          "Consolidated"   refers  to  the   consolidation  of  any  Person,  in
accordance with GAAP, with its properly  consolidated  Subsidiaries.  References
herein to a Person's  Consolidated  financial  statements,  financial  position,
financial  condition,   or  liabilities  refer  to  the  consolidated  financial

                                        3


<PAGE>


statements,  financial position, financial condition or liabilities, as the case
may be, of such Person and its properly consolidated Subsidiaries.

          "Consolidated  Interest  Expense"  means,  for any  period,  the total
interest expense, whether paid or accrued, of Borrower and its Subsidiaries on a
Consolidated basis, including without limitation, all commissions, discounts and
other fees and charges owed with respect to Letters of Credit.

          "Consolidated  Tangible  Net  Worth"  means,  at  any  date,  (i)  the
Consolidated  shareholders' equity of Borrower and its Subsidiaries  (determined
in accordance with GAAP), less (ii) the amount of Consolidated intangible assets
of  Borrower  and its  Subsidiaries,  plus  (iii)  the  aggregate  amount of any
non-cash write downs under Financial  Accounting Standards 19, 109 and 121, on a
Consolidated basis, by Borrower and its Subsidiaries after December 31, 1999.

          "Debt" of any Person means, without duplication:

          (a)      indebtedness of such Person for borrowed money;

          (b)      indebtedness of such Person constituting an obligation to pay
                   the deferred  purchase  price of property or services  (other
                   than customary  payment terms taken in the ordinary course of
                   such Person's business);

          (c)      indebtedness of such Person  evidenced by a bond,  debenture,
                   note or similar instrument;

          (d)      principal obligations under leases  capitalized in accordance
                   with GAAP under which such Person is the lessee;

          (e)      indebtedness,  contingent or  otherwise,  of such Person with
                   respect to bankers' acceptances or the face amount of letters
                   of  credit  or  applications  or   reimbursement   agreements
                   therefor;

          (f)      guaranties of such Person of  indebtedness  or obligations of
                   the type described in clauses (a), (b), (c), (d) or (e) above
                   of any other Person or  obligations to purchase or acquire or
                   to  otherwise  protect or insure a creditor  against  loss in
                   respect of  indebtedness or obligations of the type described
                   in  clauses  (a),  (b),  (c),  (d) or (e)  above of any other
                   Person, but excluding  endorsements in the ordinary course of
                   business  of   negotiable   instruments   in  the  course  of
                   collection;

          (g)      indebtedness  or obligations of the type described in clauses
                   (a), (b), (c), (d) or (e) above,  which are secured by a Lien
                   on any  property  owned by such  Person,  whether or not such
                   indebtedness or obligations  have been assumed by such Person
                   (limited  however  to the  lesser  of (1) the  amount  of its
                   liability or (2) the value of such property); and

          (h)      the undischarged balance of any Production Payment granted or
                   transferred  by such  Person or for the grant or  transfer of
                   which such Person received payment and the amount of deferred
                   revenue  attributable  to any forward sale of  production  of
                   Properties  for which  such  Person has  received  payment in
                   advance (other than on ordinary trade terms);

                                        4


<PAGE>



provided,  however,  Debt shall not include (1) accounts payable incurred in the
ordinary course of such Person's business,  or (2) any obligations in respect of
(i) exchange,  forward, future, swap, hedging or similar agreements and (ii) gas
or oil imbalances.

          "Default"  means  any  Event  of  Default  and any  default,  event or
condition which would,  with the giving of any requisite notices and the passage
of any requisite periods of time, constitute an Event of Default.

          "Default Rate" means, at the particular time in question,  two percent
(2%) per annum  plus the Base Rate plus the Base  Rate  Margin  then in  effect;
provided,  that,  with  respect  to any  Eurodollar  Portion  with a  Eurodollar
Interest Period which is still in effect, "Default Rate" shall mean, during such
Eurodollar  Interest  Period,  two  percent  (2%) per  annum  plus the  Adjusted
Eurodollar Rate applicable to such Eurodollar Portion.

          "Designated   Entity"  means  Borrower  and  each  of  the  Restricted
Subsidiaries.

          "Designated   Officer"  means  any  Executive  Officer  or  any  other
individual  duly  elected  to and  holding  one or more of the  offices  of vice
president,   managing  director,  executive  director,  secretary  or  assistant
secretary of a Designated  Entity,  or any other Person authorized in writing by
any Designated Entity to execute any Loan Document, in each case designated by a
Designated Entity and acceptable to Required Lenders.

          "Disclosure  Schedule"  means  (a)  Schedule  2  hereto  and  (b)  any
documents  listed  on  such  schedule  and  expressly  incorporated  therein  by
reference,  true and  correct  copies  of which  shall  have been  delivered  to
Administrative  Agent and each Lender prior to the date  hereof.  Insofar as any
representations  and  warranties  made herein are  incorporated  by reference or
otherwise remade in Loan Documents delivered as of a date after the date hereof,
the term "Disclosure  Schedule" shall in such  representations and warranties be
deemed to refer as well to all other matters and documents indicated by Borrower
in writing to be part of the Disclosure Schedule, which in the case of documents
Borrower has at the  particular  time in question  delivered  to  Administrative
Agent and each Lender,  and which have not been promptly  objected to in writing
by or on behalf of Required Lenders.

          "Documentation   Agent"  means  Credit   Suisse   First   Boston,   as
Documentation Agent hereunder, and its successor in such capacity.

          "EBITDAX" means, for any four Fiscal Quarter period ending on or after
March 31,  2000,  the sum of the  amounts for such  period of  Consolidated  net
income (excluding gains or losses on the sale of assets),  Consolidated Interest
Expense,  depreciation expense,  amortization expense,  federal and state income
taxes,  exploration  and  abandonment  expense  and other  non-cash  charges and
expenses,  all as  determined  on a  Consolidated  basis  for  Borrower  and its
Subsidiaries, with pro forma adjustments being made thereto for acquisitions and
dispositions of assets or Subsidiaries  (including by way of merger) made during
such four Fiscal  Quarter Period as if such  acquisitions  or  dispositions  had
occurred on the first day of such four Fiscal Quarter Period; provided, however,
that  EBITDAX for the four Fiscal  Quarter  period ended March 31, 2000 shall be
deemed to be EBITDAX  for the two Fiscal  Quarter  period  ended  March 31, 2000
times 2, and  EBITDAX  for the four Fiscal  Quarter  period  ended June 30, 2000
shall be deemed to be EBITDAX for the three Fiscal Quarter period ended June 30,
2000 times 4/3.

                                        5


<PAGE>



          "Effective Date" means the date the parties hereto shall have executed
and delivered  counterparts  hereof to  Administrative  Agent and the conditions
precedent to the initial  Revolving  Loan Advance shall have been  satisfied (or
waived in accordance with Section 8.1). The Administrative  Agent shall give the
parties hereto written notice of the occurrence of the Effective Date.

          "Engineering Report" means a report prepared as of December 31 of each
year by Borrower for Securities and Exchange  Commission  reporting purposes and
subject to reasonable  review by Agents  showing the net present value (using an
8.75% discount rate and with prices  adjusted to reflect a ten year future price
strip reasonably  determined by Borrower and reasonably acceptable to Agents) of
the  projected  future  net  revenues  attributable  to the  proved  oil and gas
reserves included in the Properties of Borrower and its Restricted Subsidiaries.

          "Environmental  Law" means any federal,  state,  or local statute,  or
rule or regulation promulgated thereunder,  any judicial or administrative order
or judgment to which Borrower or any of its Subsidiaries is a party or which are
applicable  to Borrower or any of its  Subsidiaries  or its or their  respective
properties  (whether or not by consent),  and any  provision or condition of any
permit,  license or other  governmental  operating  authorization,  relating  to
protection  of the  environment,  persons or the public  welfare  from actual or
potential  exposure  or the  effects  of  exposure  to any  actual or  potential
release, discharge, spill or emission (whether past or present) of, or regarding
the manufacture, processing, production, gathering, transportation, importation,
use, treatment,  storage or disposal of, any chemical, raw material,  pollutant,
contaminant or toxic or hazardous substance or waste.

          "ERISA" means the Employee  Retirement Income Security Act of 1974, as
amended from time to time,  together with all rules and regulations  promulgated
with respect thereto.

          "ERISA  Plan" means any pension  benefit  plan  subject to Title IV of
ERISA maintained by any Designated  Entity or any Affiliate thereof with respect
to which any Designated Entity has a fixed or contingent liability.

          "Eurodollar  Interest  Period" means,  with respect to each particular
Eurodollar  Portion,  a period of one (1), two (2), three (3) or six (6) months,
or,  subject to  Section  2.3, a period of nine (9) or twelve  (12)  months,  as
specified in the Rate Election  applicable  thereto,  beginning on and including
the date  specified in such Rate Election  (which must be a Business  Day),  and
ending on but not  including  the same day of the  relevant  month as the day on
which it began (e.g., a period beginning on the third day of one month shall end
on but not  include  the third day of  another  month),  or if such month has no
numerically  corresponding  day, on the last  Business  Day of such  month,  and
provided that each Eurodollar Interest Period which would otherwise end on a day
which is not a  Business  Day  shall  end on the next  succeeding  Business  Day
(unless  such  next  succeeding  Business  Day is the  first  Business  Day of a
calendar month,  in which case such Eurodollar  Interest Period shall end on the
immediately  preceding  Business  Day).  No  Eurodollar  Interest  Period may be
elected for any Eurodollar  Portion which would extend past the Maturity Date of
the Advance of which the Eurodollar Portion is a part.

          "Eurodollar   Margin"  means,  on  any  date,  with  respect  to  each
Eurodollar Portion of a Revolving Loan Advance, (a) prior to the day that is six
(6) months after the Effective Date,  162.5 basis points per annum, and (b) from
and after the day that is six (6) months after the Effective Date, the number of
basis points per annum set forth below based on the Applicable Rating Level then
in effect and the  applicable  Total  Leverage  Ratio as of the date of the last
calculation thereof:

                                        6


<PAGE>



                                               Total Leverage Ratio
                                    ------------------------------------------
    Applicable Rating Level         <3.25    3.25<x<3.5    3.5<x<3.75    >3.75
    -----------------------         -              -            -
            Level I                 100.0       100.0         125.0      125.0
            Level II                125.0       137.5         162.5      187.5
            Level III               150.0       162.5         187.5      200.0
            Level IV                200.0       200.0         200.0      200.0

Changes in the Eurodollar Margin will occur  automatically  without prior notice
(x) upon the  effectiveness of any change of the Applicable Rating Level and (y)
three (3) days  following  the  earlier of (A) the date  Borrower  delivers  the
certificate in respect of the previous Fiscal Quarter  required  pursuant to the
second  sentence  of  Section  5.1(b)(1)  (provided  that for  purposes  of this
definition, Borrower shall be permitted to deliver a certificate sixty (60) days
following a Fiscal Year end  containing  the  information  to be included in the
certificate  to be  delivered  pursuant to Section  5.1(b)(1)  except based upon
unaudited  Financial  Statements for such Fiscal Year) or Section 5.1(b)(2),  as
the case may be,  and (B) sixty  (60) days  following  the end of such  previous
Fiscal  Quarter,  in  the  event  of a  change  in  the  Total  Leverage  Ratio.
Administrative  Agent will give notice  promptly to Borrower and Lenders of each
change in the Eurodollar Margin.

         "Eurodollar  Portion" means the unpaid principal balance of a Revolving
Loan Advance which bears interest based on the Eurodollar Rate.

         "Eurodollar  Rate" means,  with respect to each  particular  Eurodollar
Portion and with respect to the related Eurodollar Interest Period

         (a) the rate per annum  (carried out to the fifth decimal  place) equal
to the rate  determined  by  Administrative  Agent to be the  offered  rate that
appears on the page of the  Telerate  Screen that  displays  an average  British
Bankers  Association  Interest  Settlement  Rate (such page currently being page
number  3750) for  deposits  in dollars  (for  delivery on the first day of such
Eurodollar  Interest Period) with a term equivalent to such Eurodollar  Interest
Period,  determined as of  approximately  11:00 a.m.  (London time) two Business
Days prior to the first day of such Eurodollar Interest Period, or

         (b) in the event the rate  referenced in the preceding  subsection  (a)
does not appear on such page or service or such page or service  shall  cease to
be available,  the rate per annum  (carried to the fifth decimal place) equal to
the rate determined by Administrative Agent to be the offered rate on such other
page or other  service  that  displays an average  British  Bankers  Association
Interest  Settlement Rate for deposits in dollars (for delivery on the first day
of such  Eurodollar  Interest  Period) with a term equivalent to such Eurodollar
Interest  Period,  determined as of  approximately  11:00 a.m. (London time) two
Business Days prior to the first day of such Eurodollar Interest Period, or

         (c) in the event the rates referenced in the preceding  subsections (a)
and (b) are not available, the rate per annum determined by Administrative Agent
as the rate of interest at which dollar  deposits (for delivery on the first day
of such Eurodollar  Interest Period) in same day funds in the approximate amount
of  the  applicable  Eurodollar  Portion  and  with a term  equivalent  to  such
Eurodollar  Interest  Period would be offered by  Administrative  Agent's London
Branch  to major  banks in the  offshore  dollar  market  at  their  request  at
approximately  11:00 a.m. (London time) two Business Days prior to the first day
of such Eurodollar Interest Period.

         "Eurodollars" is defined in Section 2.18.

                                        7


<PAGE>



         "Event of Default" has the meaning given it in Section 6.1.

         "Exchangeable  Shares"  means  the  capital  stock of  Pioneer  Natural
Resources  Canada  Inc.  that is  exchangeable  into  common  stock of  Borrower
pursuant to a Voting and  Exchange  Trust  Agreement  between  Borrower  and The
Montreal Trust Company of Canada.

         "Excluded  Restricted  Subsidiary"  means,  at the  particular  time in
question,  a Foreign  Restricted  Subsidiary or any other Restricted  Subsidiary
that is prohibited  from, or causes Borrower or any Restricted  Subsidiary to be
subject to adverse income tax consequences or substantial stamp or similar taxes
as a result of,  guaranteeing  the Obligations or pledging the capital stock of,
partnership  interests  in, or other  ownership  interests  in,  its  Restricted
Subsidiaries  to secure the  Obligations  (a) under  Section  956 of the Code or
applicable  stamp or  similar  tax  laws,  (b) by  contractual  restrictions  in
existence  prior  to the  Effective  Date,  in the  case of a  Person  that is a
Restricted  Subsidiary on the Effective Date, or by contractual  restrictions in
existence prior to the date such Person becomes a Restricted Subsidiary,  in the
case of a Person that becomes a Restricted  Subsidiary after the Effective Date,
or (c) as a matter of corporate, partnership or limited liability company law.

         "Executive  Officer" means any  individual  duly elected to and holding
one or more of the following  offices of Borrower:  President,  Chief  Executive
Officer,  Chief  Financial  Officer,  Executive  Vice  President  or Senior Vice
President.

         "Existing  Credit  Agreement"  means that  certain  Second  Amended and
Restated Credit Agreement dated as of March 19, 1999, by and among Borrower, the
lenders parties  thereto,  Bank of America,  N.A., as  Administrative  Agent and
Collateral  Agent,  and certain other Agents,  as amended,  modified or restated
prior to the Effective Date.

         "Facility Amount" means the aggregate amount of the Commitments  (which
amount shall initially be $575,000,000), as such amount may be reduced from time
to time pursuant to the terms of this Agreement.

         "Federal  Funds Rate" means,  for any day, the rate per annum  (rounded
upwards, if necessary, to the nearest 1/100 of 1%) 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 by
the Federal  Reserve Bank of New York on the Business Day next  succeeding  such
day, provided that (a) if such day is not a Business Day, the Federal Funds Rate
for  such day  shall be such  rate on such  transactions  on the next  preceding
Business Day, as so published on the next succeeding Business Day, and (b) if no
such rate is so  published  on such next  succeeding  Business  Day, the Federal
Funds Rate for such day shall be the average rate quoted to Administrative Agent
on such day on such transactions as determined by Administrative Agent.

         "Fiscal  Quarter"  means a three-month  period ending on March 31, June
30, September 30 or December 31 of each year.

         "Fiscal Year" means a twelve-month period ending on December 31 of each
year.

         "Foreign Restricted  Subsidiary" means any Restricted Subsidiary of the
Borrower  organized  under the laws of any  jurisdiction  other  than the United
States or any state thereof.

                                        8


<PAGE>



         "GAAP"  means  those  generally  accepted  accounting   principles  and
practices  which are  recognized as such by the Financial  Accounting  Standards
Board (or any generally recognized successor) and which, in the case of Borrower
and its  Consolidated  Subsidiaries,  are applied for all periods after the date
hereof in a manner  consistent  with the  manner in which  such  principles  and
practices were applied to the Updated Financial  Statements  (except for changes
concurred with by Borrower's  independent public accountants).  If any change in
any  accounting  principle or practice is required by the  Financial  Accounting
Standards  Board (or any such successor) in order for such principle or practice
to  continue as a generally  accepted  accounting  principle  or  practice,  all
reports and financial  statements required hereunder with respect to Borrower or
with respect to Borrower and its Consolidated  Subsidiaries  must be prepared in
accordance with such change.  In the event any changes in GAAP materially affect
the calculation of Borrower's compliance with the covenants set forth in Section
5.3,  Borrower and Lenders  agree to enter into good faith  negotiations  for an
agreement  to revise such  covenants  to take into account such changes in GAAP,
but until  Borrower  and Required  Lenders have entered into such an  agreement,
such financial  calculation shall continue to be made in accordance with GAAP as
in effect immediately preceding the date of such change.

         "Governmental Authority" means any national, state, county or municipal
government,  domestic or foreign, any agency, board, bureau, commission,  court,
department or other instrumentality of any such government, or any arbitrator in
any  case  which  has  jurisdiction  over  any  Lender,  Borrower  or any of its
Subsidiaries or any properties of Borrower or any of its Subsidiaries.

         "Guaranty"  means a  guaranty  substantially  in the form of Exhibit B,
with  appropriate  insertions  and  deletions,  executed  or to be executed by a
Restricted  Subsidiary (other than an Excluded Restricted  Subsidiary),  as from
time to time amended, modified, or restated.

         "Incumbent Directors" has the meaning given in Section 6.1(i).

         "Issuing Bank" means each of Bank of America, N.A. and any other Lender
that in its sole  discretion  agrees to be and is  designated  by  Borrower  and
accepted by  Administrative  Agent to issue one or more Letters of Credit in its
capacity  as an issuer of  Letters  of Credit  hereunder,  and their  respective
successors in such capacity.

         "LC Application" means any application for a Letter of Credit hereafter
made by Borrower to Issuing Bank.

         "LC Conditions" has the meaning given it in Section 2.12.

         "LC Obligations" means, at the particular time in question,  the sum of
the Matured LC Obligations plus the aggregate  amounts which Issuing Bank or any
Lender  might be called upon to advance  under all then  outstanding  Letters of
Credit.

         "Letter  of Credit"  means (i) any  letter of credit  issued by Issuing
Bank upon the  application  of Borrower and (ii) each letter of credit listed on
Schedule 5 hereto and outstanding on the Effective Date, which letters of credit
will be deemed to be issued  and  outstanding  under  this  Agreement  as of the
Effective  Date.  Each Letter of Credit shall be classified by Issuing Bank as a
"Commercial"  Letter of Credit or a "Standby"  Letter of Credit,  in  accordance
with the laws and  regulations  applicable to Issuing Bank from time to time and
in  accordance  with  Issuing  Bank's  customary  practices  at such  times  for
reporting to regulatory authorities.

                                        9


<PAGE>



         "Lender"  means each party hereto (other than Borrower) in its capacity
as a lender (including a swing line lender) hereunder.

         "Lien" means, any lien, mortgage,  security interest,  pledge, deposit,
Production Payment, encumbrance, rights of a vendor under any title retention or
conditional  sale  agreement  or  lease  or  other   arrangement   substantially
equivalent thereto.

         "Loan  Documents"  means  this  Credit  Agreement,  as the  same may be
amended,  modified or restated from time to time  hereafter,  any Notes,  the LC
Applications,  the Letters of Credit, the Swing Line Participation Certificates,
the Guaranties,  the Pledge Agreements,  the Disclosure Schedule, the agreements
with the Agents  referred to in Section 2.8, any  amendments,  modifications  or
restatements to any of the foregoing,  and all other  agreements,  certificates,
notices and  disclosures  at any time  executed  or  certified  by a  Designated
Officer of and on behalf of a Designated Entity and delivered by such Designated
Entity or such Designated Officer in connection herewith or therewith (exclusive
of term sheets, commitment letters, correspondence and similar documents used in
the negotiation hereof or thereof).

         "Margin  Regulations"  means, as applicable,  Regulations G, U and X of
the Board of Governors of the Federal  Reserve  System,  as from time to time in
effect.

         "Material  Adverse Effect" shall mean a material  adverse effect on (a)
the financial  condition of Borrower and its Subsidiaries  taken as a whole, (b)
the ability of Borrower and its  Subsidiaries  taken as a whole to operate their
respective businesses, (c) the ability of Borrower to meet its obligations under
the Loan  Documents  on a  timely  basis or (d) the  ability  of the  Designated
Entities taken as a whole to meet their  obligations under the Loan Documents on
a timely  basis;  provided,  however,  that a material  adverse  effect  that is
limited to an Unrestricted Subsidiary shall not (i) be a Material Adverse Effect
or (ii) be included in the  determination  of whether a Material  Adverse Effect
shall have occurred or shall be expected to occur.

         "Matured LC Obligations"  means all amounts paid by Issuing Bank or any
Lender on drafts or demands for payment drawn or made under any Letter of Credit
(or under or in connection with any LC  Application)  which have not been repaid
to Issuing Bank or such Lender (with the proceeds of a Revolving Loan Advance or
otherwise).

         "Maturity Date" means the earlier of (a) March 1, 2005 and (b) the date
on which the Commitment of each Lender is reduced to zero or terminated.

         "Maximum Lawful Rate" has the meaning given it in Section 8.6.

         "Moody's"  means  Moody's  Investors  Service,  Inc.  and any successor
thereto that is a nationally-recognized rating agency.

         "Note" means any Revolving Loan Note or Swing Line Note.

         "Notice Period" has the meaning given it in Section 6.4.

         "Obligations"  means  all Debt  from  time to time  owing by any of the
Designated  Entities to any Agent or any Lender  under or pursuant to any of the
Loan Documents, including, without limitation, all LC Obligations and Swing Line
Obligations. "Obligation" means any part of the Obligations.

                                       10


<PAGE>



         "Percentage  Share" means,  with respect to any Lender (a) prior to the
Maturity  Date  (or  after  the  Maturity  Date  if  no  Obligations   are  then
outstanding), the percentage set forth opposite such Lender's name on Schedule 1
to this Agreement,  or in documents of assignment  delivered pursuant to Section
8.8, as such  percentage  may be adjusted  from time to time by such  assignment
documents,  and (b) on and after the Maturity Date if any  Obligations  are then
outstanding,  the  percentage  equal to the  unpaid  principal  balance  of such
Lender's Revolving Loan Advances and participation in Swing Line Advances and LC
Obligations at the particular time in question  divided by the aggregate  unpaid
principal   balance  of  all   Revolving   Loan  Advances  of  all  Lenders  and
participations  of all Lenders in Swing Line Advances and LC Obligations at such
time.

         "Permitted  Liens"  means  (a) Liens for  taxes,  assessments  or other
governmental  charges or levies if the same shall not at the particular  time in
question be due and  delinquent  or (if  foreclosure,  distraint,  sale or other
similar  proceedings shall not have been commenced or, if commenced,  shall have
been stayed) are being  contested in good faith and by appropriate  proceedings,
and if the Borrower shall have set aside on its books such reserves  (segregated
to the extent required by sound accounting practices) as may be required by GAAP
or  otherwise  determined  by the Board of  Directors of Borrower to be adequate
with respect thereto; (b) Liens of carriers, warehousemen,  mechanics, laborers,
materialmen,  landlords, vendors, workmen, and operators arising in the ordinary
course of business or incident to the exploration,  development,  operations and
maintenance of oil, gas and other hydrocarbon  properties and related facilities
and  assets,  for sums  not yet due or  being  contested  in good  faith  and by
appropriate  proceedings,  if  Borrower  shall  have set aside on its books such
reserves  (segregated to the extent required by sound  accounting  practices) as
may be required by GAAP or  otherwise  determined  by the Board of  Directors of
Borrower to be adequate with respect thereto; (c) Liens incurred in the ordinary
course of the  Designated  Entities'  respective  businesses in connection  with
worker's   compensation,   unemployment  insurance  and  other  social  security
legislation  (other than ERISA);  (d) Liens  incurred in the ordinary  course of
Designated  Entities'  businesses to secure the  performance  of bids,  tenders,
trade contracts,  leases (statutory  only),  statutory  obligations,  surety and
appeal bonds,  performance and return-of-money  bonds and other obligations of a
like  nature;  (e) Liens,  easements,  rights-of-way  restrictions,  servitudes,
permits,  conditions,  covenants,  exceptions,  reservations  and other  similar
encumbrances  incurred in the ordinary course of Designated Entities' businesses
or existing on property and not in the aggregate materially interfering with the
ordinary conduct of the Designated Entities' businesses;  (f) legal or equitable
encumbrances  deemed to exist by reason of negative  pledges  such as in Section
5.2 of  this  Agreement  or the  existence  of any  litigation  or  other  legal
proceeding and any related lis pendens filing (excluding any attachment prior to
judgment,  judgment lien or attachment  lien in aid of execution on a judgment);
(g) rights of a common owner of any interest in property held by any  Designated
Entity as such common  owner;  (h)  farmout,  carried  working  interest,  joint
operating,   unitization,   royalty,   overriding  royalty,  sales  and  similar
agreements  relating to the exploration or development  of, or production  from,
oil and gas properties  incurred in the ordinary  course of business,  (i) Liens
arising pursuant to Section 9.319 of the Texas Uniform  Commercial Code or other
similar  statutory  provisions  of  other  states  with  respect  to  production
purchased from others;  (j) Liens  represented by capital leases permitted under
this  Agreement;  (k) any defects,  irregularities,  or deficiencies in title to
easements,  rights-of-way or other properties which do not in the aggregate have
a Material  Adverse  Effect;(l)  Liens  existing  in favor of Agents and Lenders
under the Loan  Documents;  (m) Liens on assets of a  Subsidiary  of Borrower in
favor of Borrower or another Restricted Subsidiary; (n) Liens on any property or
assets owned or leased by Borrower or any  Subsidiary  existing at the time such
property or asset was acquired (or at the time such Person became a Subsidiary);
provided that (1) in the case of the acquisition of a Subsidiary, such lien only
encumbers  property or assets of such Subsidiary  immediately prior to or at the
time of  acquisition  of such  Subsidiary  and (2)  Borrower  will  use its best
efforts to eliminate such Liens in a timely manner; (o) purchase money Liens, so

                                       11


<PAGE>


long as such Liens only encumber  property or assets (including any improvements
thereon,  accessions  thereto or proceeds thereof) acquired with the proceeds of
purchase money indebtedness  incurred in connection with such Lien and permitted
hereunder;  (p)  Liens on the  stock or other  ownership  interest  of or in any
Unrestricted  Subsidiary;  (q)  Liens  in  renewal  or  extension  of any of the
foregoing  permitted  Liens,  so long  as  limited  to the  property  or  assets
encumbered  and the amount of  indebtedness  secured  immediately  prior to such
renewal  or  extension;  (r) Liens  approved  in  writing by or on behalf of the
Required  Lenders;  and (s) Liens on cash or cash equivalents  pledged to secure
obligations in respect of exchange,  forward,  future,  swap, hedging or similar
agreements.

         "Person"  means  an  individual,   corporation,  company,  partnership,
association,  joint stock company, trust or trustee thereof,  estate or executor
thereof,  unincorporated  organization  or joint venture,  court or governmental
unit or any agency or  subdivision  thereof,  or any other legally  recognizable
entity.

         "Pledge  Agreement" means a Pledge Agreement  substantially in the form
of Exhibit L hereto,  or other form of pledge  agreement  in form and  substance
satisfactory to Agents and the subject Designated  Entity,  pledging an interest
in the capital shares or stock of, partnership  interests in, or other ownership
interests in, a Restricted Subsidiary, as from time to time amended, modified or
restated.

         "Pledge Release Date" has the meaning given such term in Section 8.17.

         "Production  Payment" means a royalty,  overriding royalty, net profits
interest, production payment (whether volumetric or dollar denominated) or other
similar interest in oil and gas Properties, reserves or the right to receive all
or a portion  of the  production  or the  proceeds  from the sale of  production
attributable to such oil and gas Properties,  if and to the extent accounted for
as indebtedness  or deferred  revenue on the balance sheet of Borrower or any of
its  Restricted  Subsidiaries  under  GAAP at the time of the grant or  transfer
thereof.

         "Properties" means, at the particular time in question, all oil and gas
properties,  interests  and reserves and  facilities  and related  assets (which
properties,  interests and reserves and  facilities  and related assets shall be
free of any Liens other than Permitted Liens) of the Borrower and its Restricted
Subsidiaries at such time.

         "Properties  NPV" means,  at the particular  time in question,  the net
present value  (determined  in  accordance  with the  definition of  Engineering
Report) of the projected future net revenues  attributable to the proved oil and
gas reserves included in the Properties,  as set forth in the Engineering Report
most recently provided by Borrower pursuant to Section 5.1(b)(3).

         "Rate Election" has the meaning given it in Section 2.3.

         "Regulation  D" means  Regulation  D of the Board of  Governors  of the
Federal Reserve System, as from time to time in effect.

         "Request for  Revolving  Loan  Advance"  means a written or  telephonic
request,  or  a  written   confirmation,   made  by  Borrower  which  meets  the
requirements of Section 2.2.

         "Request for Swing Line  Advance"  has the meaning  given it in Section
2.5(a).

         "Required  Lenders"  means Lenders whose  aggregate  Percentage  Shares
exceed 50%.

                                       12


<PAGE>



         "Reserve  Percentage" means, on any day with respect to each particular
Eurodollar  Portion,   the  maximum  reserve   requirement,   as  determined  by
Administrative  Agent  (including  without  limitation any basic,  supplemental,
marginal, emergency or similar reserves),  expressed as a percentage and rounded
to the nearest  1/100th of 1%,  which would then apply to Bank of America,  N.A.
under  Regulation  D or  successor  regulations  issued from time to time by the
Board of Governors of the Federal  Reserve System with respect to  "Eurocurrency
liabilities"  (as such term is defined in  Regulation D) equal in amount to Bank
of America,  N.A.'s part of such Eurodollar Portion,  were Bank of America, N.A.
to have any such  Eurocurrency  liabilities.  If such reserve  requirement shall
change  after the date hereof,  the Reserve  Percentage  shall be  automatically
increased  or  decreased,  as the  case  may  be,  from  time  to time as of the
effective time of each such change in such reserve requirement.

         "Restricted  Payment" means with respect to any Person (i) any dividend
or distribution (other than dividends or distributions  payable in capital stock
or to Borrower or any  Restricted  Subsidiary)  on, or purchase,  redemption  or
other  acquisition  for value of, any capital stock of such Person,  or (ii) any
investment,  contribution,  loan or  advance  of cash to a  Person  (other  than
Borrower or a Restricted Subsidiary) other than:

         (a)      prudent short-term investments;

         (b)      investments, contributions, loans or advances disclosed in the
                  Updated Financial  Statements or in the Disclosure Schedule or
                  in  disclosures   made  subsequent  to  the  date  hereof  and
                  consented  to in  writing  by or on  behalf  of  the  Required
                  Lenders;

         (c)      investments,  contributions,  loans  or  advances  made by any
                  Designated Entity in the ordinary course of its business; or

         (d)      contributions  made  by  Borrower  to any of its  Subsidiaries
                  arising  out of or in  respect  of  Letters  of Credit  issued
                  hereunder and used for the general corporate  purposes of such
                  Subsidiary (i) so long as no amounts have been drawn under any
                  such Letter of Credit or (ii) to the extent that  Borrower has
                  been reimbursed by such Subsidiary for amounts drawn under any
                  such Letter of Credit.

         "Restricted  Subsidiary" means each Subsidiary of Borrower that, at the
particular time in question, (i) owns directly or indirectly any material assets
or any interest in any other  Restricted  Subsidiary and (ii) either (a) has not
been designated as an Unrestricted  Subsidiary or (b) has been redesignated as a
Restricted Subsidiary. The Restricted Subsidiaries on the date hereof are listed
on Schedule 3 attached  hereto and each other  Subsidiary  of Borrower as of the
date hereof shall be an Unrestricted  Subsidiary.  A Restricted Subsidiary shall
remain such (even if it no longer owns  directly or  indirectly  any interest in
any of the material  assets)  until  designated  as an  Unrestricted  Subsidiary
pursuant  to  Section  5.2(i).  An  Unrestricted   Subsidiary  shall  remain  an
Unrestricted  Subsidiary unless redesignated as a Restricted Subsidiary pursuant
to the provisions of Section 5.2(i).

         "Revolving Loan Advance" has the meaning given it in Section 2.1(a).

         "Revolving Loan Note" has the meaning given it in Section 2.1(c).

                                       13


<PAGE>



         "S&P" means Standard & Poor's  Ratings Group and any successor  thereto
that is a nationally- recognized rating agency.

         "Subsidiary" means, with respect to any Person, any corporation,  which
is directly or indirectly (through one or more intermediaries)  controlled by or
with respect to which fifty  percent  (50%) or more of the stock or other equity
interests  having ordinary voting power to elect the board of directors or other
governing body is owned by such Person, or any association,  partnership,  joint
venture,  or other non- corporate  business  entity,  enterprise or organization
that is directly or indirectly (through one or more  intermediaries)  controlled
by,  or owned  one  hundred  percent  (100%)  by,  such  Person,  provided  that
associations,  joint ventures or other  relationships  (a) which are established
pursuant  to  an  operating   agreement  or  similar   agreement  or  which  are
partnerships  for purposes of federal  income  taxation  only, (b) which are not
partnerships (or subject to the Uniform  Partnership Act) under applicable state
law, and (c) whose  businesses are limited to the  exploration,  development and
operation of oil, gas or mineral  properties and interests owned directly by the
parties in such  associations,  joint  ventures or  relationships,  shall not be
deemed to be "Subsidiaries" of such Person.

         "Swing Line Advances" has the meaning given it in Section 2.4.

         "Swing Line Lender"  means Bank of  America,  N.A.,  in its capacity as
swing line lender hereunder, and its successor in such capacity.

         "Swing Line Note" has the meaning given it in Section 2.5(e).

         "Swing Line Obligations" means, at the particular time in question, the
sum of all outstanding Swing Line Advances.

         "Swing Line Participation Certificate" means a Swing Line Participation
Certificate substantially in the form of Exhibit F.

         "Swing Line Rate" has the meaning given it in Section 2.5(a).

         "Syndication  Agent" means The Chase  Manhattan  Bank,  as  Syndication
Agent hereunder, and its successor in such capacity.

         "Taxes" has the meaning given it in Section 2.20.

         "Termination  Event" means (a) the occurrence with respect to any ERISA
Plan of (1) a reportable event described in Sections  4043(b)(5) or (6) of ERISA
or (2) any other  reportable  event  described in Section 4043(b) of ERISA other
than a reportable  event not subject to the  provision  for 30-day notice to the
Pension Benefit  Guaranty  Corporation  pursuant to a waiver by such corporation
under Section 4043(a) of ERISA,  or (b) the withdrawal of any Designated  Entity
or of any  Affiliate of any  Designated  Entity from an ERISA Plan during a plan
year in which it was a "substantial  employer" as defined in Section  4001(a)(2)
of ERISA, or (c) the filing of a notice of intent to terminate any ERISA Plan or
the treatment of any ERISA Plan amendment as a termination under Section 4041 of
ERISA,  or (d) the institution of proceedings to terminate any ERISA Plan by the
Pension  Benefit  Guaranty  Corporation  under Section 4042 of ERISA, or (e) any
other event or condition  which might  constitute  grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
ERISA Plan.

                                       14


<PAGE>



         "Total  Funded Debt" means all Debt of the type  referred to in clauses
(a), (b), (c), (d), (g) (excluding Debt of the type referred to in clause (e) of
the definition of "Debt") and (h) of the definition of "Debt".

         "Total  Leverage Ratio" means, at any time, the ratio of (a) Borrower's
Consolidated  Total  Funded Debt to (b)  Borrower's  EBITDAX for the four Fiscal
Quarter period then ended.

         "Unrestricted  Subsidiary"  means each  Subsidiary of Borrower which is
not  designated as a Restricted  Subsidiary on Schedule 3 attached  hereto or is
designated by Borrower as an Unrestricted Subsidiary pursuant to Section 5.2(i).

         "Updated  Financial  Statements" means the audited annual  Consolidated
financial  statements of Borrower and its Consolidated  Subsidiaries dated as of
December 31, 1999.

         Section  1.2  Exhibits  and  Schedules.   All  Exhibits  and  Schedules
attached to this Agreement are a part hereof for all purposes.

         Section  1.3  Amendment  of Defined  Instruments.  Unless  the  context
otherwise  requires or unless otherwise  provided  herein,  the terms defined in
this  Agreement  which refer to a particular  agreement,  instrument or document
also refer to and include all renewals,  extensions,  modifications,  amendments
and  restatements  of such  agreement,  instrument  or document,  provided  that
nothing contained in this section shall be construed to authorize or require any
such renewal, extension, modification, amendment or restatement.

         Section 1.4 References and Titles.  All references in this Agreement to
Exhibits,  Schedules,  articles,  sections,  subsections and other  subdivisions
refer to the Exhibits,  Schedules,  articles,  sections,  subsections  and other
subdivisions  of this Agreement  unless  expressly  provided  otherwise.  Titles
appearing at the beginning of any  subdivisions  are for convenience only and do
not  constitute  any  part of such  subdivisions  and  shall be  disregarded  in
construing  the  language  contained  in  such  subdivisions.  The  words  "this
Agreement", "this instrument",  "herein",  "hereof",  "hereby",  "hereunder" and
words of  similar  import  refer  to this  Agreement  as a whole  and not to any
particular  subdivision unless expressly so limited.  The phrases "this section"
and  "this  subsection"  and  similar  phrases  refer  only to the  sections  or
subsections  hereof in which such phrases occur. The word "or" is not exclusive,
and the  word  "including"  (in its  various  forms)  means  "including  without
limitation".  Pronouns  in  masculine,  feminine  and  neuter  genders  shall be
construed to include any other  gender,  and words in the singular form shall be
construed  to include  the plural and vice versa,  unless the context  otherwise
requires.

         Section 1.5 Calculations and Determinations. All calculations under the
Loan Documents of interest and fees made under the Loan Documents  shall be made
on the basis of actual days elapsed  (including  the first day but excluding the
last)  and a year of 360  days;  provided,  however,  that all  calculations  of
interest  based on the "Prime  Rate"  shall be made on the basis of actual  days
elapsed  (including  the first day but  excluding the last) and a year of 365 or
366 days, as appropriate;  and provided, further, however that, all calculations
of interest shall be subject to the limitations set forth in Section 8.6 hereof.
Unless otherwise  expressly provided herein or unless Required Lenders otherwise
consent,  all financial statements and reports furnished to Administrative Agent
or any Lender  hereunder  shall be prepared and all financial  computations  and
determinations pursuant hereto shall be made in accordance with GAAP.

                                       15


<PAGE>



                                    ARTICLE 2

                         ADVANCES AND LETTERS OF CREDIT

         Section 2.1      Making and Repaying the Revolving Loan Advances.

         (a)   Subject to the terms and conditions hereof, each Lender severally
               agrees to make  advances on a revolving basis  (each a "Revolving
               Loan Advance") to  Borrower from time to time on any Business Day
               during the  Commitment Period,  equal to such Lender's Percentage
               Share  of  the   aggregate  amount  of  Revolving  Loan  Advances
               requested by  Borrower to  be  made on such day,  so  long as the
               aggregate amount  of (i) all  Lenders'  Revolving  Loan  Advances
               (including any  Revolving Loan  Advances to be  made but  not yet
               made  pursuant  to  a  Request  for   Revolving   Loan   Advance)
               outstanding  at any  time plus  (ii) the  LC  Obligations  of all
               Lenders  at such  time  plus (iii)  all  Swing  Line  Obligations
               outstanding at  such time  do not  exceed  the  Facility  Amount.
               Subject to the terms and conditions hereof,  Borrower may borrow,
               repay and reborrow Revolving Loan Advances.

         (b)   No Lender  shall be  permitted or  required to make any Revolving
               Loan  Advance under this  Agreement  unless the  aggregate of (1)
               such  Lender's  Revolving  Loan  Advances  under  this  Agreement
               (including  any Revolving  Loan Advances  to be made  but not yet
               made  pursuant   to  a  Request  for   Revolving  Loan   Advance)
               outstanding  at any  time  plus (2)  such  Lender's  share  of LC
               Obligations at  such  time plus  (3)  such Lender's participation
               pursuant to a  Swing Line  Participation Certificate in any Swing
               Line Advance  outstanding at such  time is less  than or equal to
               the least of  (i) such Lender's Commitment or  (ii) such Lender's
               Percentage Share of the Facility Amount.

         (c)   The aggregate amount of all  Revolving Loan Advances requested of
               all Lenders in any Request for Revolving  Loan Advance must be an
               integral   multiple   of  $1,000,00   which  equals   or  exceeds
               $10,000,000 or must equal the  least of the unadvanced portion of
               the  aggregate  Commitments of  all  Lenders  or  the  unadvanced
               portion  of the  Facility Amount.  The obligation of  Borrower to
               repay to each  Lender the  aggregate amount of all Revolving Loan
               Advances made by such Lender to Borrower,  together with interest
               accruing thereon, shall be evidenced by one or more loan accounts
               or records  maintained by such  Lender in the  ordinary course of
               business.   Upon  the   request  of   any  Lender   made  through
               Administrative Agent,  such Lender's Revolving  Loan Advances may
               be evidenced by a promissory note  (a "Revolving Loan Note") made
               by Borrower  payable to the order of such Lender in the amount of
               its Commitment,  substantially  in the form of  Exhibit A-1  with
               appropriate insertions.  Each such Lender may attach schedules to
               its  Revolving Loan  Note and endorse thereon the date and amount
               of, and interest rate applicable to,  each Revolving Loan Advance
               and  each  payment  thereon.  Such  loan  accounts,  records  and
               Revolving Loan  Note shall  be presumptive evidence of the amount
               of Revolving  Loan  Advances made  by  such  Lender and  payments
               thereon.  Any failure so to record or any error in doing so shall
               not,  however,  limit  or  otherwise  affect  the  obligation  of
               Borrower to pay any amount owing with respect to the Obligations.

         (d)   Borrower  promises to pay to each Lender,  on the  Maturity Date,
               the   balance  of  all  Revolving  Loans  made  by  such  Lender.
               Borrower  promises  to pay to  each  Lender  interest (a) on each
               Base Rate Portion,  at the  Base Rate  plus the Base Rate Margin,
               payable on the third Business

                                       16


<PAGE>



               Day of each Fiscal  Quarter and on the Maturity  Date, and (b) on
               each Eurodollar Portion, at the Adjusted Eurodollar Rate, payable
               on the  last day  of each  applicable  Eurodollar Interest Period
               (and  if  such  Eurodollar  Interest  Period  shall  exceed three
               months,  every  three  months  during  such  Eurodollar  Interest
               Period) and on the Maturity Date. Past due principal and interest
               (to  the extent allowed by law) shall bear interest at the lesser
               of  the  Default  Rate  or  the  Maximum Lawful Rate and shall be
               payable on demand.

         Section 2.2 Requests for Revolving Loan Advances. Borrower must give to
Administrative Agent not later than 11:00 a.m., Dallas, Texas time, for same day
funding, and not later than 1:00 p.m., Dallas, Texas time, for next Business Day
funding,  written notice, or telephonic notice promptly confirmed in writing, of
any requested Revolving Loan Advances,  after which  Administrative  Agent shall
give  each  Lender  prompt  notice   thereof.   Each  such  written  request  or
confirmation  must be made in the form  and  substance  of  Exhibit  C  attached
hereto,  duly completed  (herein called a "Request for Revolving Loan Advance").
Each  such  telephonic  request  shall  be  deemed a  representation,  warranty,
acknowledgment and agreement by Borrower as to the matters which are required to
be set out in  such  Request  for  Revolving  Loan  Advance.  If all  conditions
precedent to a Revolving  Loan  Advance  have been met,  each Lender will on the
date requested remit, not later than 1:00 p.m., Dallas, Texas time, for same day
funding,  and not later  than 1:00  p.m.,  Dallas,  Texas  time,  the  following
Business  Day  for  next  Business  Day  funding,  to  Administrative  Agent  at
Administrative  Agent's  office in Dallas,  Texas,  or to such  other  office as
Administrative  Agent may specify  from time to time by notice to  Lenders,  the
amount of such Lender's  Revolving Loan Advance in immediately  available funds,
and upon receipt of such funds,  unless to its actual  knowledge any  conditions
precedent to such  Revolving  Loan  Advances have been neither met nor waived as
provided  herein,  Administrative  Agent shall  promptly make the Revolving Loan
Advances available to Borrower. Each Request for Revolving Loan Advance shall be
irrevocable  and binding on  Borrower.  Unless  Administrative  Agent shall have
received prompt notice from a Lender that such Lender will not make available to
Administrative Agent such Lender's Revolving Loan Advance,  Administrative Agent
may in its  discretion  assume  that such  Lender has made such  Revolving  Loan
Advance  available to  Administrative  Agent in accordance with this section and
Administrative  Agent may if it chooses, in reliance upon such assumption,  make
such  Revolving  Loan Advance  available to Borrower.  If and to the extent such
Lender shall not so make its Revolving Loan Advance  available to Administrative
Agent,   such  Lender  and  Borrower   severally   agree  to  pay  or  repay  to
Administrative  Agent on  demand  the  amount  of such  Revolving  Loan  Advance
together with interest  thereon,  for each day from the date such amount is made
available  to  Borrower  until  the  date  such  amount  is  paid or  repaid  to
Administrative  Agent,  (i) if paid or repaid by Borrower at the  interest  rate
applicable at the time to the other Revolving Loan Advances made on such date of
such  Revolving  Loan Advance and (ii) if paid or repaid by such Lender,  at the
Federal Funds Rate. The failure of any Lender to make any Revolving Loan Advance
to be made by it hereunder  shall not relieve any other Lender of its obligation
hereunder,  if any, to make its Revolving  Loan Advance,  but no Lender shall be
responsible  for the  failure  of any other  Lender to make any  Revolving  Loan
Advance to be made by such other Lender.

         Section 2.3 Rate  Elections.  Borrower may from time to time  designate
all or any portions of the Revolving Loan Advances (including any yet to be made
Revolving Loan Advances which are to be made prior to or at the beginning of the
designated  Eurodollar  Interest  Period  but  excluding  any  portions  of  the
Revolving  Loan Advances which are required to be repaid prior to the end of the
designated Eurodollar Interest Period and excluding any Swing Line Advance) as a
Eurodollar Portion with each Lender  participating in such Eurodollar Portion in
accordance with its Percentage  Share.  Without the consent of Required Lenders,
Borrower may not make such election,  and Administrative Agent and Lenders shall
not be required to give effect to such  election,  during the  continuance  of a
Default and Borrower may make such

                                       17


<PAGE>



an election with respect to already  existing  Eurodollar  Portions only if such
election will take effect at or after the termination of the Eurodollar Interest
Period  applicable  thereto.  Each election by Borrower of a Eurodollar  Portion
shall:

         (a)      Be made in  writing in the  form and  substance  of  Exhibit D
                  attached   hereto,  duly  completed,  herein  called  a  "Rate
                  Election";

         (b)      Specify the aggregate  amount of the  Revolving  Loan Advances
                  which  Borrower   desires  to  designate  as  such  Eurodollar
                  Portion, the first day of the Eurodollar Interest Period which
                  is to  apply  thereto,  and  the  length  of  such  Eurodollar
                  Interest Period; and

         (c)      Be received by Administrative Agent not later than 10:00 a.m.,
                  Dallas,  Texas time,  on the third  Business Day preceding the
                  first day of the specified Eurodollar Interest Period.

         Promptly  after  receiving  any such  Rate  Election  which  meets  the
requirements  of this  section,  Administrative  Agent shall  notify each Lender
thereof. Each Rate Election shall be irrevocable. Borrower may not make any Rate
Election which does not specify an Eurodollar Interest Period complying with the
definition  of  "Eurodollar  Interest  Period" in Section 1.1, and the aggregate
amount  of  the  Eurodollar  Portion  elected  in  any  Rate  Election  must  be
$10,000,000 or a higher integral multiple of $1,000,000. Upon the termination of
each Eurodollar  Interest Period,  the Eurodollar Portion subject thereto shall,
unless the  subject of a new Rate  Election  then taking  effect,  automatically
become a Base Rate  Portion  and become  subject to all  provisions  of the Loan
Documents  governing  such Base Rate Portion.  Borrower  shall have no more than
fifteen (15) Eurodollar Portions in effect at any time.

         If requested to do so by Borrower through Administrative Agent at least
two (2) Business Days before the delivery  date of any proposed  Rate  Election,
each Lender will advise  Administrative  Agent before 10:00 a.m., Dallas,  Texas
time,  on the Business Day following  receipt of such request as to whether,  if
Borrower selects a specified  duration of nine (9) or twelve (12) months for the
Eurodollar  Interest  Period  applicable to such proposed  Rate  Election,  such
Lender  expects  that  deposits  in dollars  with a  corresponding  term will be
available  to it in the  relevant  market on the  first  day of such  Eurodollar
Interest Period in the amount  required to fund the Eurodollar  Portion to which
such Eurodollar Interest Period would apply. Unless each Lender responds by such
time to the effect  that it  expects  such  deposits  will be  available  to it,
Borrower  shall  not be  entitled  to select  such  proposed  duration  for such
Eurodollar Interest Period.

         Each Lender may, if it so elects,  fulfill its  obligation  to fund any
Eurodollar  Portion by causing one of its foreign  branches or Affiliates (or an
international  banking facility created by such Lender) to fund or continue such
Eurodollar  Portion;  provided,  however,  that such Eurodollar Portion shall be
deemed  to have  been  made  and held by such  Lender,  and the  obligations  of
Borrower to repay such Eurodollar  Portion shall  nevertheless be to such Lender
for the account of such branch or Affiliate (or international banking facility).
In addition,  Borrower  hereby  consents  and agrees  that,  for purposes of any
determination  to be made for purposes of Sections 2.17, 2.18, 2.19 and 2.20, it
shall be  conclusively  assumed that such Lender  elected to fund all Eurodollar
Portions by purchasing Dollar deposits in the interbank eurodollar market of its
designated office.

         Section 2.4 Swing Line Advances.  In addition to borrowings pursuant to
Section  2.1(a),  Borrower  may request  Swing Line  Lender to make  advances to
Borrower on any  Business  Day  (unless  Borrower  and Swing Line  Lender  agree
otherwise)  during the  Commitment  Period as provided  in Sections  2.5 and 2.6
(herein called "Swing Line Advances");  provided,  however,  that (a) each Swing
Line Advance

                                       18


<PAGE>



shall be in an  amount  not  less  than  $1,000,000,  (b) at no time  shall  the
outstanding  aggregate  principal  amount  of all  Swing  Line  Advances  exceed
$50,000,000,  and (c) at no time shall the sum of (1) the outstanding  aggregate
principal  amount of all Swing  Line  Advances,  (2) the  outstanding  aggregate
principal  amount of the  Revolving  Loans,  and (3) the  outstanding  aggregate
principal amount of LC Obligations exceed the Facility Amount.

         Section 2.5      Procedure for Swing Line Advances.

         (a)   No later than 11:00 a.m., Dallas,  Texas time, on a Business  Day
               on which  Borrower desires a  Swing Line Advance,  Borrower shall
               transmit  to Swing Line  Lender  and to  Administrative Agent  by
               telecopy a notice in substantially the form of Exhibit E attached
               hereto (herein called a "Request for Swing Line  Advance"). Swing
               Line Lender  will  specify  the rate of  interest per annum which
               will be the fixed  rate of interest to  be charged for such Swing
               Line Advance  until  maturity  (herein  called  the  "Swing  Line
               Rate").

         (b)   Swing   Line   Lender  shall  wire  the  Swing  Line  Advance  to
               Administrative Agent  in immediately  available funds by no later
               than  1:00  p.m.,  Dallas,  Texas time on the date of request for
               such Swing Line Advance,  and Administrative  Agent shall deposit
               such funds to an account designated by  Borrower by no later than
               1:15 p.m. on the same day.

         (c)   Borrower  promises to pay  each Swing  Line Advance at or  before
               1:00 p.m., Dallas, Texas time, on the first Business Day after it
               is made or at such other maturity (such date of maturity being no
               more  than  fourteen  (14) days  after the date of the Swing Line
               Advance and no  later than the Maturity Date)  as is agreed to by
               Borrower,  Administrative  Agent  and  Swing  Line  Lender.   The
               repayment shall  be paid  on such date by Borrower (which payment
               may be in  the form of a Swing  Line Advance advanced to Borrower
               on that day)  to Administrative  Agent in  immediately  available
               funds with  instructions to  Administrative Agent to forward such
               proceeds to Swing Line Lender.  Borrower promises to pay interest
               on each Swing Line Advance at the Swing Line Rate.  Such interest
               shall be paid by Borrower  (which payment may be in the form of a
               Swing  Line  Advance  advanced  to  Borrower  on  that  day)   to
               Administrative Agent in  immediately available funds on the first
               Business  Day  of   each  calendar  month  with  instructions  to
               Administrative  Agent  to  forward  such  proceeds  to Swing Line
               Lender.

         (d)   Interest on  the Swing Line  Advances  shall be  computed  on the
               basis of a year of  360 days and  actual days elapsed  (including
               the  first  day,  but  excluding  the last day)  occurring in the
               period  for which  payable and  shall not  exceed  Maximum Lawful
               Rate.  Past due principal and interest (to the extent  allowed by
               law) shall bear interest at the lesser of the Default Rate or the
               Maximum Lawful Rate and shall be payable on demand.

         (e)   The  Swing  Line  Advances  made by  Swing  Line  Lender shall be
               evidenced by  one or more  loan accounts or records maintained by
               Swing Line Lender  in the ordinary  course of business.  Upon the
               request of  Swing Line  Lender made through Administrative Agent,
               Swing  Line Advances may be  evidenced by a promissory note  (the
               "Swing Line Note") made by Borrower payable to the order of Swing
               Line Lender in the amount of $50,000,000 and in substantially the
               form of Exhibit A-2 attached hereto, with appropriate insertions.
               The date, amount, Swing Line Rate and maturity of each Swing Line
               Advance  made by Swing Line Lender to Borrower,  and each payment
               made on account thereof,  may be recorded by Swing Line Lender on

                                       19


<PAGE>



               its books and/or on the Swing Line Note (or a schedule  thereto).
               Such books and Swing Line Note shall be presumptive  evidence of
               the amount  of the  Swing  Line  Advances,  the  Swing  Line Rate
               applicable  thereto and  payments thereon.   Any failure of Swing
               Line  Lender so  to record or  any error  in doing so  shall not,
               however, limit or otherwise  affect the obligation of Borrower to
               pay any amount owing with respect to the Obligations.

         (f)   The  Swing  Line  Advances  will be  used by  Borrower to provide
               working   capital  for   the   operations  of  Borrower  and  its
               Subsidiaries  and for  general  business purposes.  No Swing Line
               Advances shall be used for  the purpose of purchasing or carrying
               any Margin Stock in violation of the Margin Regulations.

         (g)   The  obligation  of  Swing  Line  Lender to make  each Swing Line
               Advance is further subject to the conditions contained in Article
               3.

         Section 2.6      Special Provisions for Swing Line Advances.

         (a)      Lenders to Make Revolving Loan Advances.

                  (i) Swing Line  Lender,  at any time in its  discretion,  upon
         written request to Lenders through Administrative Agent (with a copy to
         Borrower), may require each Lender (including the Swing Line Lender) to
         make a Revolving Loan Advance, subject to the provisions of Section 2.1
         hereof (other than the  satisfaction  of the  conditions  precedent set
         forth in Article III),  in an amount equal to such Lender's  Percentage
         Share of the outstanding  Swing Line Advances.  Swing Line Lender shall
         deliver  such  request to  Administrative  Agent  prior to 11:00  a.m.,
         Dallas,  Texas time, on the Business Day next preceding the date (which
         shall be a Business Day) on which such  Revolving  Loan Advances are to
         be made.  Promptly  upon  receipt of any such  request,  Administrative
         Agent shall give  notice  thereof to  Lenders.  Each Lender  shall make
         available  its  Percentage  Share of such  Revolving  Loan  Advances to
         Administrative  Agent  by  11:00  a.m.,  Dallas,  Texas  time,  on  the
         requested date for such Revolving Loan Advances.  Administrative  Agent
         shall apply the proceeds of such  Revolving Loan Advances to prepay the
         Swing Line  Advances  of Swing Line  Lender;  provided,  however,  that
         Administrative  Agent shall be  obligated  to make the proceeds of such
         Revolving  Loan Advances  available  only to the extent  received by it
         from  Lenders.  All  Revolving  Loan  Advances  made  pursuant  to this
         subsection shall initially be Base Rate Portions.

                  (ii) In the event  Administrative  Agent advances  proceeds of
         any Revolving  Loan Advance to Swing Line Lender and one or more of the
         Lenders  (other than Swing Line Lender) fail to fund all or any portion
         of such Revolving Loan Advance as provided herein, then (I) such Lender
         shall pay directly to Administrative  Agent the amount thereof together
         with interest  thereon at the Federal Funds Rate,  and (II) if not paid
         by  such  Lender,   the  Swing  Line  Lender  will  repay  directly  to
         Administrative  Agent such  amount as will equal the amount  such other
         Lender(s)  failed to fund,  together with interest at the Federal Funds
         Rate.

         (b)      Participations in Swing Line Advances.

                  (i) If,  at any time  prior to the  making of  Revolving  Loan
         Advances  pursuant to subsection  2.6(a)  hereof,  any Event of Default
         described in Sections  6.1(h) hereof shall have occurred,  each Lender,
         on the date such  Revolving Loan Advances were to have been made or, if

                                       20


<PAGE>



         no  request for  Revolving  Loan  Advances  had been  made  pursuant to
         Section 2.6(a)(i) hereof,  promptly  upon request by  Swing Line Lender
         delivered   to  Administrative   Agent,  shall  purchase  an  undivided
         participation  interest in  all outstanding  Swing  Line Advances in an
         amount equal to its Percentage  Share times the  outstanding  amount of
         such Swing Line Advances.  Each Lender  (other than Swing Line  Lender)
         will transfer  immediately to  Administrative Agent for credit to Swing
         Line  Lender,  in  immediately  available  funds,  the  amount  of  its
         participation.  Upon receipt thereof, Swing Line Lender will deliver to
         such other Lender a Swing Line Advance Participation Certificate, dated
         the date  of receipt of  such funds and  in the amount of such Lender's
         participation.

                  (ii)  Whenever,  at any  time  after  Swing  Line  Lender  has
         received  from any  other  Lender  such  other  Lender's  participating
         interest  in a Swing Line  Advance,  Swing  Line  Lender  receives  any
         payment on account  thereof,  Administrative  Agent will  distribute to
         such  other   Lender  its   participating   interest   in  such  amount
         (appropriately  adjusted,  in the case of interest payments, to reflect
         the period of time during which such  Lender's  participating  interest
         was outstanding and funded); provided,  however, that in the event that
         any payment  received by Swing Line Lender is required to be  returned,
         such other Lender will return to Swing Line Lender any portion  thereof
         previously distributed to it.

         (c) Acknowledged Privity. Borrower expressly agrees that, in respect of
each Lender's  funded  participation  interest in any Swing Line  Advance,  such
Lender shall be deemed to be in privity of contract  with  Borrower and have the
same rights and remedies  against  Borrower  under the Loan Documents as if such
funded  participation  interest in such Swing Line Advance were a Revolving Loan
Advance.

         (d)  Unconditional   Obligation.   Each  Lender's  obligation  to  make
Revolving  Loan  Advances or to purchase  participation  interests in Swing Line
Advances as provided in this  section  shall be absolute and  unconditional  and
shall not be affected by any circumstance,  including,  without limitation,  (A)
any set-off, counterclaim,  recoupment, defense or other right which such Lender
may have against Swing Line Lender,  Borrower or any other Person for any reason
whatsoever,  (B) the  existence  of any Default or Event of Default at any time,
(C) the  occurrence of any event or existence of any condition that might have a
Material  Adverse  Effect,  or (D) any other  circumstance,  happening  or event
whatsoever, whether or not similar to any of the foregoing.

         Section  2.7  Commitment  Fee.  In   consideration   of  each  Lender's
commitment to make Revolving Loan Advances,  Borrower will pay to Administrative
Agent for the account of each Lender based on its Percentage  Share a commitment
fee equal to the  Commitment  Fee Rate times the daily average  unused amount of
the Facility Amount,  payable in arrears quarterly until the Maturity Date, with
the first payment thereof to be July 1, 2000,  subsequent  payments on the first
day following  each  successive  calendar  quarter  ending on each March,  June,
September and December,  and the final payment thereof on the Maturity Date. For
purposes of this section, outstanding Swing Line Advances shall not be deemed to
be usage of the Facility Amount.

         Section 2.8 Agents' and Administrative Agent's Fees. In addition to all
other  amounts due to Agents  under the Loan  Documents,  Borrower  will pay the
non-refundable  fees set forth in those certain separate Fee Letters dated March
22, 2000, between Borrower and each Agent.

         Section 2.9      Termination and Reduction of Commitments.

         (a)  Unless  previously terminated,  the Commitments shall terminate on
the Maturity Date.

                                       21


<PAGE>




         (b)  Borrower may at any time  terminate,  or from time to time reduce,
the Commitments; provided that (i) each reduction of the Commitments shall be in
an  amount  that  is an  integral  multiple  of  $1,000,000  and not  less  than
$5,000,000 and (ii) Borrower shall not terminate or reduce the  Commitments  if,
after giving effect to any  concurrent  prepayment of the Advances in accordance
with  Section  2.10,  the  sum of  (i)  all  Lenders'  Revolving  Loan  Advances
(including any Revolving Loan Advances to be made but not yet made pursuant to a
Request for Revolving  Loan Advance)  outstanding  at such time plus (ii) the LC
Obligations  of all Lenders  outstanding  at such time plus (iii) all Swing Line
Advances outstanding at such time would exceed the total Commitments.

         (c) Borrower shall notify the  Administrative  Agent of any election to
terminate or reduce the Commitments under paragraph (b) of this section at least
two Business Days prior to the effective date of such  termination or reduction,
specifying  such election and the effective  date  thereof.  Promptly  following
receipt of any notice, the Administrative  Agent shall advise the Lenders of the
contents  thereof.  Each notice  delivered by Borrower  pursuant to this section
shall be  irrevocable;  provided that a notice of termination of the Commitments
delivered  by  Borrower  may state  that such  notice  is  conditioned  upon the
effectiveness  of other  credit  facilities,  in which  case such  notice may be
revoked by Borrower  (by notice to the  Administrative  Agent on or prior to the
specified effective date) if such condition is not satisfied. Any termination or
reduction  of  the  Commitments  shall  be  permanent.  Each  reduction  of  the
Commitments  shall be made ratably  among the Lenders in  accordance  with their
respective Commitments.

         Section 2.10  Optional  Prepayments.  Borrower may, upon notice to each
Lender  identical to that required for related  borrowings under this Agreement,
from time to time and without premium or penalty,  prepay  Advances  (ratably if
such prepayment is of Revolving Loan Advances),  in whole or in part, so long as
the aggregate amounts of all partial prepayments of principal  concurrently paid
equals $5,000,000 or any higher integral multiple of $1,000,000 or the aggregate
outstanding balance of the Advances, and so long as Borrower does not prepay any
Revolving Loan Advance or Swing Line Advance except in accordance herewith.  Any
amounts  prepaid  pursuant to this  section  shall be in addition to, and not in
lieu of, all payments  otherwise required to be paid under the Loan Documents at
the time of such prepayment.

         Section  2.11  Payments to Lenders.  Except as  expressly  set forth in
Section 2.5(c) with respect to repayment of Swing Line  Advances,  Borrower will
make each payment which it owes under the Loan Documents to Administrative Agent
at its principal  banking  office in Dallas,  Texas,  or to such other office as
Administrative Agent may specify from time to time by notice to Borrower for the
account of each Lender to whom such payment is owed,  without the application of
any setoff,  deduction  or  counterclaim.  Each such payment must be received by
Administrative  Agent not later than 1:00 p.m., Dallas,  Texas time, on the date
such payment  becomes due and payable,  in lawful money of the United  States of
America  and  in  immediately   available   funds.   Any  payment   received  by
Administrative  Agent  after  such  time will be deemed to have been made on the
next Business Day. Should any such payment become due and payable on a day other
than a Business  Day, the maturity of such payment shall be extended to the next
succeeding Business Day (except,  with respect to any Eurodollar Portion, as may
be otherwise required by the definition of Eurodollar Interest Period),  and, in
the case of a payment of principal or past due interest,  interest  shall accrue
and be payable  thereon for the period of such extension as provided in the Loan
Document under which such payment is due.

         All payments applied to principal or interest shall be applied first to
any interest then due and payable,  then to principal then due and payable,  and
last to any  prepayment  of principal  and interest in  compliance  with Section
2.10. Unless otherwise expressly provided, all payments by any Designated Entity
pursuant  to this  Agreement  or any other Loan  Document  shall be made by such

                                       22


<PAGE>


Designated Entity to Administrative  Agent for the account of Agents and Lenders
pro rata among Obligations of the same type and, if applicable,  having the same
Eurodollar  Interest  Period or,  in the case of  Swing Line Advances,  the same
maturity date.

         Section  2.12  Letters of Credit.  Subject to the terms and  conditions
hereof,  Borrower  may  request  Issuing  Bank to issue one or more  Letters  of
Credit, provided that, after taking such Letter of Credit into account:

         (a)      the sum of (1) the  aggregate  principal  amount of  Revolving
                  Loan  Advances  outstanding  at such time,  (2) the  aggregate
                  principal  amount of LC  Obligations  outstanding at such time
                  and (3) the aggregate  principal amount of Swing Line Advances
                  outstanding  at such time does not exceed the least of (i) the
                  aggregate of all Lenders' Commitments at such time or (ii) the
                  Facility Amount;

         (b)      the  aggregate  amount of  LC Obligations  outstanding at such
                  time does not exceed $75,000,000;

         (c)      the expiration  date of such  Letter of Credit is prior to the
                  Maturity Date,  unless otherwise  agreed to by all Lenders and
                  Issuing Bank;

         (d)      such  Letter of  Credit  is to be  used for  general corporate
                  purposes of  Borrower or any of its  Subsidiaries,  subject to
                  paragraph (e) of this section;

         (e)      the terms of  such Letter of Credit are  acceptable to Issuing
                  Bank in the reasonable exercise of its discretion; and

         (f)      all other conditions in this Agreement to the issuance of such
                  Letter of Credit have been satisfied.

Issuing Bank will honor any such request if the foregoing conditions (a) through
(f) (herein called the "LC Conditions") have been met as of the date of issuance
of such Letter of Credit.

         Section 2.13 Requesting  Letters of Credit.  Borrower must make written
application  pursuant  to an LC  Application  for any  Letter of Credit at least
three (3)  Business  Days before the date on which  Issuing Bank is requested to
issue such Letter of Credit.  By making any such  written  application  Borrower
shall be deemed to have represented and warranted that the LC Conditions will be
met as of the  date  of  issuance  of  such  Letter  of  Credit.  Each  such  LC
Application  must be made in such form as may mutually be agreed upon by Issuing
Bank and  Borrower.  No more than two (2) Business  Days after the LC Conditions
have been met,  Issuing Bank will issue such Letter of Credit at Issuing  Bank's
office in Dallas, Texas or at such other office of which Issuing Bank shall give
Borrower  written  notice.  In the event of a  conflict  between  any  provision
contained in this Agreement and any provision  contained in any LC  Application,
the provision contained in this Agreement shall control.

         Section 2.14     Reimbursement of Letters of Credit.

         (a)      Reimbursement  by Borrower.  Each payment of a draft or demand
                  for payment  honored by Issuing  Bank under a Letter of Credit
                  shall  constitute  a  loan  to  and  obligation  of  Borrower.
                  Promptly  upon  receipt  of written  notice of Issuing  Bank's
                  honoring  of a Letter of Credit,  Borrower  promises to pay to
                  Issuing Bank,  or to Issuing  Bank's  order at  Issuing Bank's

                                       23


<PAGE>



                  office  in  Dallas,  Texas or at such  other  office  of which
                  Issuing Bank shall give Borrower written notice, on demand, in
                  legal  tender of the  United  States of  America,  any and all
                  amounts  paid by Issuing  Bank  under  such  Letter of Credit,
                  together  with  interest  on any  such  amounts  from the date
                  payment  is made by Issuing  Bank under such  Letter of Credit
                  until  but not  including  the date of the  repayment  of such
                  amounts to Issuing  Bank,  at the Base Rate plus the Base Rate
                  Margin;  provided  that if any such  payment or  reimbursement
                  shall be  reimbursed  to Issuing Bank on the date Issuing Bank
                  makes such payment or disbursement,  interest shall be payable
                  on the  reimbursable  amount at such rate for one (1) day.  In
                  the event that  Borrower  fails to pay when due any Matured LC
                  Obligation  owed by it to Issuing Bank,  Administrative  Agent
                  may,  at  its  option,  and  without  any  notice  or  further
                  authorization  from Borrower,  make, pro rata on behalf of the
                  Lenders,  a Revolving  Loan  Advance  under this  Agreement to
                  Borrower  in the amount of such unpaid  Matured LC  Obligation
                  (whether or not such amount is less than the minimum Revolving
                  Loan  Advance or would result in the  outstanding  Obligations
                  being greater than or equal to the Facility Amount), and apply
                  the proceeds of such  Revolving Loan Advance to the payment of
                  such Matured LC Obligation. Borrower hereby expressly requests
                  and irrevocably  authorizes  Administrative Agent to do all of
                  the  foregoing.  Revolving  Loan  Advances  used to  refinance
                  Matured LC  Obligations  shall  initially bear interest at the
                  Base Rate plus the Base Rate Margin.  Borrower hereby promises
                  to pay, when and as due, all present and future levies,  costs
                  and charges whatsoever imposed,  assessed, levied or collected
                  on, under or in respect of this  Agreement with respect to any
                  Letter of Credit and any  payments of  principal,  interest or
                  other amounts made on or in respect of any thereof (excluding,
                  however,  any such  levies,  costs and  charges  imposed on or
                  measured  by the net  income or  receipts  of  Issuing  Bank).
                  Borrower  promises to indemnify  Issuing Bank against,  and to
                  reimburse  Issuing  Bank on demand for,  any of the  foregoing
                  levies,  costs or charges  paid by Issuing  Bank and any loss,
                  liability, claim or expense, including interest, penalties and
                  legal  fees,  that  Issuing  Bank may incur  because  of or in
                  connection  with  the  failure  of  Borrower  to make any such
                  payment  of levies,  costs or  charges  when and as due or any
                  payment of Matured LC Obligations when and as due.

                  Borrower's  obligation  to  reimburse  Issuing Bank under this
                  paragraph  (a) of this section for payments and  disbursements
                  made by  Issuing  Bank  under  any  Letter  of  Credit  issued
                  pursuant to this section  shall be absolute and  unconditional
                  under  any  and  all  circumstances  and  irrespective  of any
                  setoff,  counterclaim or defense to payment which Borrower may
                  have or have had against Issuing Bank, the beneficiary of such
                  Letter of Credit, any Agent or any Lender, including,  without
                  limitation, any defense based on the failure of the demand for
                  payment under such Letter of Credit to conform to the terms of
                  such Letter of Credit or the legality, validity, regularity or
                  enforceability  of such Letter of Credit;  provided,  however,
                  that Borrower shall not be obligated to reimburse Issuing Bank
                  for any wrongful payment or disbursement  made by Issuing Bank
                  under any  Letter  of Credit as a result of acts or  omissions
                  constituting  gross  negligence  or willful  misconduct on the
                  part of  Issuing  Bank or any of its  officers,  employees  or
                  agents.

         (b)      Reimbursement by Lenders.  Issuing Bank irrevocably  agrees to
                  grant  and  hereby  grants  to each  Lender,  and each  Lender
                  irrevocably  agrees to accept and purchase and hereby  accepts
                  and purchases  from Issuing Bank, on the terms and  conditions
                  hereinafter  stated, for such Lender's own account and risk an
                  undivided   participation  interest  equal  to  such  Lender's
                  Percentage  Share of  Issuing  Bank's  obligations  and rights
                  under each Letter of Credit issued hereunder and the amount of

                                       24


<PAGE>



                  each draft paid by Issuing Bank thereunder.  In the event that
                  Borrower should fail to pay Issuing Bank on demand  the amount
                  of any draft or other request for payment drawn under a Letter
                  of Credit as provided in paragraph  (a) of this section,  each
                  Lender shall,  before 2:00 p.m.,  Dallas,  Texas time,  on the
                  Business  Day Issuing  Bank shall have given notice to Lenders
                  of Borrower's  failure to so pay Issuing Bank,  if such notice
                  is given by 10:00 a.m., Dallas, Texas time (or on the Business
                  Day immediately succeeding the day such notice is given  after
                  10:00  a.m.,  Dallas,  Texas  time),  pay to  Issuing  Bank at
                  Issuing  Bank's  offices in  Dallas,  Texas,  or at such other
                  office of which Issuing  Bank shall have given Lenders written
                  notice, in legal tender of the  United  States of  America, in
                  same day funds,  such Lender's  Percentage Share of the amount
                  of such draft or other  request for payment  plus  interest on
                  such amount from the date  Issuing  Bank  shall have paid such
                  draft or  request for  payment to the date of such  payment by
                  such  Lender  at  the  Federal  Funds  Rate.   Each   Lender's
                  obligation to reimburse Issuing  Bank pursuant to the terms of
                  this  section  is  irrevocable  and  unconditional;  provided,
                  however, that  Lenders shall  not be  obligated  to  reimburse
                  Issuing Bank for any wrongful payment or disbursement  made by
                  Issuing Bank under any Letter of Credit as a result of acts or
                  omissions constituting gross negligence or willful  misconduct
                  on the part of Issuing Bank or any of its officers, employees,
                  or agents.  Whenever, at any time  after Issuing Bank has made
                  payment  under any Letter of Credit and has received  from any
                  Lender its Percentage Share of such payment in accordance with
                  this subsection,  Issuing Bank receives any payment related to
                  such  Letter of Credit  (whether  directly  from  Borrower  or
                  otherwise, including proceeds of collateral applied thereto by
                  Issuing Bank), or any payment of interest on account  thereof,
                  Issuing  Bank will  distribute  to such Lender its  Percentage
                  Share thereof;  provided,  however, that in the event that any
                  such payment  received by Issuing Bank shall be required to be
                  returned by Issuing Bank,  such Lender shall return to Issuing
                  Bank the portion  thereof  previously  distributed  by Issuing
                  Bank to it. Each Lender shall  indemnify and hold Issuing Bank
                  harmless  from and  against  any and all  losses,  liabilities
                  (including,  without  limitation,  liabilities for penalties),
                  actions,  suits,  judgments,   demands,   damages,  costs  and
                  expenses (including,  without limitation,  attorneys' fees and
                  expenses)  resulting  from  any  failure  on the  part of such
                  Lender  to  provide,  or  from  any  delay  in  providing,  in
                  accordance  with this  paragraph to Issuing Bank such Lender's
                  Percentage  Share of the amount of any payment or disbursement
                  made by Issuing Bank to settle its obligations under any draft
                  drawn under any Letter of Credit.

         (c)      Cash Collateral Upon Event of Default.  Upon the occurrence of
                  any Default  or Event of  Default and the  acceleration of the
                  maturity of the Obligations,  an amount equal to the amount of
                  the aggregate contingent liability of Issuing Bank and Lenders
                  in connection  with each Letter of Credit then in effect shall
                  be deemed (as between Lenders and Borrower)  to have been paid
                  or disbursed by  Issuing Bank and Lenders under such Letter of
                  Credit  (notwithstanding that such amount may not in fact have
                  been so paid or disbursed),  and Borrower shall be immediately
                  obligated to  pay to  Administrative  Agent  for the  pro rata
                  benefit  of  Lenders  in  accordance  with  their   respective
                  Percentage Shares,  the amount so  deemed to have been so paid
                  or disbursed,  which payment  shall be made by depositing Cash
                  Collateral  with Administrative  Agent in  accordance with the
                  provisions of paragraph (d) of this section.

         (d)      Procedures for  Depositing and  Returning of  Cash Collateral.
                  Any cash  collateral amounts  received by Administrative Agent
                  pursuant to  the provisions of paragraph  (c) of this  section

                                       25


<PAGE>



                  (the  "Cash  Collateral")  shall be  deposited  in a  separate
                  interest  bearing cash  collateral  account  maintained at the
                  offices of  Administrative  Agent or another Lender designated
                  by Administrative Agent under the sole dominion and control of
                  Administrative  Agent and shall be retained by  Administrative
                  Agent  for the pro  rata  benefit  of  Lenders  as  collateral
                  security  for, and Borrower  hereby  grants to  Administrative
                  Agent for the  benefit of the  Lenders a security  interest in
                  such Cash Collateral  including all interest  accruing thereon
                  and the proceeds  thereof to secure,  first the payment of the
                  Obligations  of  Borrower  under  or in  connection  with  the
                  Letters of Credit,  and then the other Obligations of Borrower
                  under and in connection with this Agreement and the other Loan
                  Documents,  pro rata to each  Lender  in  accordance  with its
                  Advances and Percentage Share of all LC Obligations.  All Cash
                  Collateral delivered to Administrative Agent may be applied by
                  Administrative   Agent  from  time  to  time  against  any  of
                  Borrower's  reimbursement  Obligations  with  respect  to  any
                  Letter  of  Credit  as to which a draw is made.  If and to the
                  extent that the Default or Event of Default giving rise to the
                  requirement   for  Cash  Collateral  has  been  cured  to  the
                  reasonable   satisfaction   of   Required   Lenders   and  any
                  acceleration   of  the  Obligations  has  been  rescinded  and
                  annulled  pursuant  to Section 6.3 or (a) all  Obligations  of
                  Borrower have been fully paid and satisfied, (b) no Letters of
                  Credit remain  outstanding and (c) Lenders'  Commitments  have
                  terminated,  Administrative  Agent  shall  promptly  return to
                  Borrower,   upon  Borrower's  request  therefor,  all  amounts
                  previously paid to Administrative  Agent pursuant to paragraph
                  (c)  of  this   section  and  not   theretofore   returned  by
                  Administrative  Agent to Borrower or applied by Administrative
                  Agent to reduce  amounts  payable by Borrower to Lenders under
                  or with respect to the Letters of Credit or other  amounts due
                  to  Lenders  or  Agents  hereunder  or under  the  other  Loan
                  Documents.

         Section 2.15 Letter of Credit Fees. In  consideration of Issuing Bank's
issuance of each Letter of Credit and each other Lender's  agreement to purchase
a risk participation therein, Borrower agrees to pay to Administrative Agent:

         (a)      a letter of credit fronting fee for the account of the Issuing
                  Bank with  respect to each  Letter of Credit  (other  than the
                  Letters of Credit  listed on Schedule 5) upon issuance of such
                  Letter of Credit in an amount equal to the greater of (x) $500
                  or (y)  one-eighth  of one  percent  (1/8  of  1%)  per  annum
                  calculated on the face amount thereof; and

         (b)      a letter of  credit  fee for the  account  of  Lenders,  to be
                  distributed  to  Lenders  ratably  in  accordance  with  their
                  Percentage  Shares,  calculated  on the  face  amount  of each
                  Letter of Credit in the  amount of the  applicable  Eurodollar
                  Margin,  payable quarterly in arrears and at the expiration or
                  termination  of each  Letter of Credit.  For  purposes of this
                  Section  2.15(b),  each Letter of Credit  listed on Schedule 5
                  shall be deemed to have been issued on the Effective Date.

         Section 2.16 Capital  Reimbursement.  If either (a) the introduction or
implementation  of,  or  the  compliance  with,  or  any  change  in,  or in the
interpretation  of, any law,  rule or  regulation,  or (b) the  introduction  or
implementation  of or the  compliance  with any request,  directive or guideline
from any central bank or Governmental Authority (whether or not having the force
of law) affects or would affect the amount of capital  required to be maintained
by any Lender or any corporation  controlling  any Lender,  then, upon demand by
such Lender,  Borrower  will  immediately  pay to  Administrative  Agent for the
benefit of such Lender,  from time to time as  specified  by such  Lender,  such
additional  amount  which such  Lender  shall  determine  to be  appropriate  to
compensate such Lender or any corporation controlling such Lender in light

                                       26


<PAGE>



of such  circumstances,  to the extent  that such Lender  reasonably  determines
that,  because of the  existence of such  circumstances,  the amount of any such
capital  would be increased  or the rate of return on any such capital  would be
reduced,  in whole or in part, by or as a  consequence  of the existence of such
Lender's Commitment,  its Advances, its Percentage Share of LC Obligations,  its
participation  in any Swing Line Advances and its other  commitments  under this
Agreement to Borrower, subject to the provisions of Section 2.21.

         Section 2.17 Increased Cost of Eurodollar  Portions.  If any applicable
domestic or foreign law, treaty,  rule,  directive or regulation (whether now in
effect or hereinafter  enacted or  promulgated,  including  Regulation D) or any
interpretation or administration  thereof by any Governmental  Authority charged
with the  interpretation  or  administration  thereof (whether or not having the
force of law):

         (a)      shall  change the basis of  taxation of payments to any Lender
                  of any principal,  interest,  or other amounts attributable to
                  any Eurodollar  Portion of its Advances,  its Percentage Share
                  of  LC  Obligations,  its  participation  in  any  Swing  Line
                  Advances or otherwise  due under this  Agreement in respect of
                  any Eurodollar  Portion of its Advances,  its Percentage Share
                  of LC  Obligations  or its  participation  in any  Swing  Line
                  Advances  (other than taxes  imposed on the overall net income
                  of such  Lender or any  lending  office of such  Lender by any
                  jurisdiction  in which such Lender or any such lending  office
                  is located);

         (b)      shall change,  impose,  modify,  apply or deem  applicable any
                  reserve, special deposit or similar requirements in respect of
                  any  Eurodollar  Portion  of any Lender  (excluding  those for
                  which such Lender is fully compensated pursuant to adjustments
                  made in the definition of Adjusted Eurodollar Rate) or against
                  assets  of,  deposits  with or for the  account  of, or credit
                  extended by, such Lender; or

         (c)      shall impose on any Lender,  the certificate of deposit market
                  or  the  interbank  eurocurrency  deposit   market  any  other
                  condition affecting any Eurodollar Portion;

and the result of any of the  foregoing  (a) through (c) is to (1)  increase the
cost to any  Lender of  funding  or  maintaining  any  Eurodollar  Portion,  its
Percentage  Share of any L/C Obligations or its  participation in any Swing Line
Advances,  as the case may be, or (2) to reduce the amount of any sum receivable
by any Lender in respect of any Eurodollar Portion, L/C Obligation or Swing Line
Advance, as the case may be, by an amount reasonably deemed by such Lender to be
material;  then (i) such Lender shall promptly notify  Administrative  Agent and
Borrower  in  writing  of the  happening  of such  event,  (ii)  Borrower  shall
thereafter  upon  demand  pay to  Administrative  Agent for the  account of such
Lender such additional amount or amounts as will compensate such Lender for such
additional  cost or  reduction,  subject to the  provisions of Sections 2.21 and
2.19, and (iii) Borrower may elect, by giving to  Administrative  Agent and such
Lender not less than three (3) Business  Days'  notice,  to convert all (but not
less than all) of any such Eurodollar Portion into a Base Rate Portion.

         Section  2.18  Availability.  If (a) any  change  in  applicable  laws,
treaties,  rules  or  regulations  or in the  interpretation  or  administration
thereof in any  jurisdiction  whatsoever,  domestic  or  foreign,  shall make it
unlawful  or  impracticable  for  any  Lender  to fund  or  maintain  Eurodollar
Portions,  or shall materially  restrict the authority of any Lender to purchase
or take  offshore  deposits of dollars  ("Eurodollars"),  or to issue Letters of
Credit  or fund  its  Percentage  Share  of LC  Obligations,  or (b) any  Lender
determines that matching deposits appropriate to fund or maintain any Eurodollar
Portion are not available to it, or (c) any Lender  determines  that the formula
for calculating  the Eurodollar  Rate does not  fairly reflect the  cost to such

                                       27


<PAGE>



Lender of making or maintaining  loans based on such rate,  then, upon notice by
such Lender to Administrative  Agent and to Borrower,  Borrower's right to elect
Eurodollar  Portions or to apply for Letters of Credit shall be suspended to the
extent and for the duration of such illegality, impracticability, restriction or
condition,  and all  Eurodollar  Portions (or portions  thereof)  which are then
outstanding  or are then the  subject  of any Rate  Election  and  which  cannot
lawfully or  practicably  be  maintained or funded shall  immediately  become or
remain part of the Base Rate Portions of such Lender's Advances.  Subject to the
provisions   of  Sections   2.21  and  2.19,   Borrower   agrees  to   indemnify
Administrative  Agent and each  Lender  and hold  Administrative  Agent and each
Lender harmless against all costs, expenses, claims, penalties,  liabilities and
damages which may result from any such change in law, treaty, rule,  regulation,
interpretation or administration.

         Section  2.19  Funding  Losses.  In addition  to its other  obligations
hereunder,  subject to the provisions of Section 2.21,  Borrower shall indemnify
each Lender  against,  and  reimburse  each  Lender on demand  for,  any loss or
expense  incurred or sustained by such  Lender,  determined  as provided in this
section,  as a result of (a) any payment or  prepayment  (whether  authorized or
required  hereunder or otherwise) of all or a portion of a Eurodollar Portion on
a day other  than the day on which the  applicable  Eurodollar  Interest  Period
ends, (b) any payment or prepayment, whether required hereunder or otherwise, of
an Advance made after the  delivery,  but before the  effective  date, of a Rate
Election,  if such  payment  or  prepayment  prevents  such Rate  Election  from
becoming fully effective, (c) the failure of any Revolving Loan Advance or Swing
Line  Advance to be made to  Borrower  or of any Rate  Election  of  Borrower to
become  effective due to any condition  precedent to such Revolving Loan Advance
or  Swing  Line  Advance  not  being   satisfied,   due  to  the   inability  of
Administrative  Agent (acting reasonably and in accordance with Section 2.18) to
determine a Eurodollar Rate for a Eurodollar  Portion or due to any other action
or inaction of any Designated Entity, (d) any conversion  (whether authorized or
required hereunder or otherwise) of all or any portion of any Eurodollar Portion
into a Base Rate Portion or into a different  Eurodollar  Portion on a day other
than the day on which the applicable Eurodollar Interest Period ends, or (e) any
payment or prepayment of all or a portion of a Swing Line Advance on a day other
than the maturity date for such Swing Line Advance.

         Upon the occurrence of an event as described in subsections (a) through
(e) of the immediately preceding paragraph, the method to be used by each Lender
to  calculate  the loss or  expense  incurred  by reason of the  liquidation  or
reemployment  of  deposits  or other  funds  required  by such Lender to fund or
maintain  Eurodollar Portions of Revolving Loan Advances or Swing Line Advances,
as the case may be, is as follows:

         Funding Loss     =    P x (F-R) x D/360

        P  =   principal amount of payment, prepayment, conversion, nonborrowing
               or non-effective Rate Election

        F  =   Eurodollar Rate or Swing Line Rate,  as the case may be (adjusted
               for  Reserve  Percentage),  utilized  in the  calculations of the
               Eurodollar Rate  or Swing Line Rate,  as the case may be,  on the
               Revolving Loan Advance or Swing Line Advance which is being paid,
               prepaid, converted, not borrowed or not subject to effective Rate
               Election

        R  =   reinvestment rate (as hereinafter defined)


                                       28


<PAGE>



        D  =   number  of  days  from  the  date  of  the  payment,  prepayment,
               conversion,  non-borrowing or non-effectiveness  until the day on
               which the Eurodollar  Interest Period  of the Eurodollar  Portion
               ends or the Swing Line Advance matures

Reinvestment  rate as it is used  herein will be equal to the  Eurodollar  Rate,
adjusted for the Reserve  Percentage,  quoted to such Lender,  or the Swing Line
Rate that would be quoted by such Lender,  as the case may be, effective for the
date  on  which  the  payment,  prepayment,  conversion,  non-borrowing  or non-
effectiveness  occurs.  For purposes of determining  the  reinvestment  rate for
purposes of this section,  the Eurodollar  Rate will be the quote for either one
(1) month, two (2) months,  three (3) months, six (6) months, nine (9) months or
twelve  (12)  months,  and the Swing Line Rate will be the quote for a number of
days between one (1) and fourteen (14), whichever most closely approximates (but
which may  contain  more or fewer days than) the number of days from the date of
the payment,  prepayment,  conversion,  non-borrowing or non-effectiveness until
the  last  day of the  relevant  Eurodollar  Interest  Period  or the  scheduled
maturity,  as the case may be, of the Eurodollar Portion, or Swing Line Advance,
as the case may be, in respect  of which the  payment,  prepayment,  conversion,
non-borrowing or non-effectiveness  occurs; provided that if such number of days
in respect of a Eurodollar Rate is the midpoint  between two such periods,  such
rate will be the lower of the two rates for such periods.

         Section  2.20 Taxes.  All  payments by  Borrower of  principal  of, and
interest on, the Advances,  the LC  Obligations  and all other  amounts  payable
hereunder shall be made free and clear of and without  deduction for any present
or future  income,  excise,  stamp,  or franchise  taxes and other taxes,  fees,
duties,  withholdings or other charges of any nature  whatsoever  imposed by any
taxing authority, but excluding franchise taxes and taxes imposed on or measured
by any Lender's or Agent's net income or receipts (such non-excluded items being
called "Taxes"). In the event that any withholding or deduction from any payment
to be made by Borrower hereunder is required in respect of any Taxes pursuant to
any  applicable  law, rule or  regulation,  then,  subject to the  provisions of
Section 2.21, Borrower will:

         (a)      pay  directly  to  the  relevant  authority  the  full  amount
                  required to be so withheld or deducted;

         (b)      promptly forward  to Administrative  Agent an official receipt
                  or other  documentation satisfactory  to Administrative  Agent
                  evidencing such payment to such authority; and

         (c)      pay to Administrative  Agent for the account of the applicable
                  Lender or Agent such  additional  amount(s) as is necessary to
                  ensure that the net amount actually received by such Lender or
                  Agent will equal the full  amount  such  Lender or Agent would
                  have  received  had no  such  withholding  or  deduction  been
                  required  and  Borrower  hereby  acknowledges  that  it is not
                  entitled to and will not seek recovery or  restitution  of any
                  amount  due to any  Lender  or  Agent  and  paid  by  Borrower
                  pursuant to this clause (c) or pursuant to the next sentence.

If any Taxes are directly  asserted  against any Lender or Agent with respect to
any  payment  received by such Agent or such  Lender  hereunder,  such Lender or
Agent may pay such Taxes and, if paid in good faith,  Borrower will promptly pay
such additional  amounts to Administrative  Agent for the account of such Lender
or Agent  (including  any  penalties,  interest or  expenses) as is necessary in
order that the net amount  received  by such  person  after the  payment of such
Taxes  (including  any taxes on such  additional  amount) shall equal the amount
such person would have received had no such Taxes been asserted,  subject to the
provisions of Section 2.21.

                                       29


<PAGE>



         Borrower  shall pay all stamp,  transaction,  registration  and similar
taxes  (including  financial  institutions'  duties,  debit taxes or other taxes
payable  by  return  and  taxes  passed  on to any  Lender or Agent by a bank or
financial institution (collectively "Stamp Taxes") and, if Borrower fails to pay
any such charges or taxes after reasonable notice from any such Lender or Agent,
fines and  penalties)  which may be  payable  or  determined  to be  payable  in
relation  to  the  execution,  delivery,  performance  or  enforcement  of  this
Agreement or any Loan Document or any other transaction contemplated by any Loan
Document to which Borrower is a party.  Borrower hereby  indemnifies each Lender
and Agent  against any  liability  resulting  from delay or omission to pay such
charges or taxes except to the extent the liability  results from failure by the
relevant  Lender or Agent to pay any such tax after having been delivered  funds
to do so by Borrower or to the extent such  liability is for fines and penalties
resulting from such Lender's or Agent's failure to provide  reasonable notice to
Borrower as provided herein.

         If  Borrower  fails to pay any  Taxes or  Stamp  Taxes  when due to the
appropriate taxing authority or fails to remit to Administrative  Agent, for the
account  of the  respective  Lender or Agent,  the  required  receipts  or other
required documentary  evidence,  Borrower shall indemnify Lenders and Agents for
any Taxes,  interest or penalties that may become payable by any Lender or Agent
as a result of any such failure,  subject to the provisions of Section 2.21. For
purposes of this section, a distribution  hereunder by any Lender or Agent to or
for the  account of any Lender or Agent shall be deemed a payment by the subject
Borrower.

         Borrower waives any statutory right to recover from any Lender or Agent
any  amount  due to any such  Lender or Agent and paid by  Borrower  under  this
section.

         On or prior to the first  date on which  interest  or fees are  payable
hereunder for the account of any Lender, each Lender that is organized under the
laws of a jurisdiction other than the United States shall execute and deliver to
Administrative  Agent, three (3) or more (as Administrative Agent may reasonably
request) United States  Internal  Revenue Service Forms W-8BEN or W-8ECI or such
other  forms or  documents  (or  successor  forms or  documents),  appropriately
completed,  as may be  applicable  to establish  the extent,  if any, to which a
payment to such Lender is exempt from  withholding or deduction of United States
federal  income  taxes.  Each  Lender  which so delivers a Form W-8BEN or W-8ECI
further  undertakes  to deliver to  Administrative  Agent  three (3)  additional
copies of such form (or a  successor  form) on or before the date that such form
expires or becomes  obsolete or after the  occurrence  of any event  requiring a
change in the most recent form so delivered by it, and such  amendments  thereto
or   extensions  or  renewals   thereof  as  may  be  reasonably   requested  by
Administrative  Agent,  in each case  certifying that such Lender is entitled to
receive  payments from Borrower  under the Loan Documents  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  of  the  type  previously  delivered
inapplicable  or which  would  prevent  such  Lender  from duly  completing  and
delivering  such form with respect to it and such Lender advises  Administrative
Agent that it is not capable of receiving  such payments on the basis  reflected
in such previously delivered form without any deduction or withholding of United
States  federal income tax.  Administrative  Agent shall provide one (1) copy of
each of such forms or documents so provided to Borrower and Documentation Agent.

         Section  2.21  Make-Whole  Qualifications.  Each  Lender's  claims  for
reimbursements,  payments,  indemnities or otherwise under Sections 2.16,  2.17,
2.18,  2.19 and 2.20 and Borrower's  obligation with respect  thereto,  shall be
limited and qualified by and subject to the following:

                                       30


<PAGE>



         (a)      Borrower's  obligation to pay, satisfy or recognize such claim
                  shall be  limited to costs or losses  incurred  within one (1)
                  year immediately  prior to any demand or request therefor upon
                  Borrower;

         (b)      each Lender's demand for  reimbursement,  payment or indemnity
                  from Borrower must be limited to that which is being generally
                  applied at the time by such  Lender for  comparable  borrowers
                  and  credits  subject  to credit  agreements  similar  to this
                  Agreement,  but without  regard to provisions  similar to this
                  section;

         (c)      each Lender which  asserts its rights with respect  thereto or
                  which is seeking or imposing  such  reimbursement,  payment or
                  indemnity shall provide  evidence  regarding the basis of such
                  claim  and  the  calculation   and   application   thereof  in
                  reasonable detail and, in determining such amount, each Lender
                  may use reasonable methods of attribution and averaging;

         (d)      each Lender which is seeking payment or reimbursement pursuant
                  to Section  2.20  shall,  if so  requested  by  Borrower,  use
                  reasonable    efforts   (subject   to   the   overall   policy
                  considerations  of  such  Lender)  to  designate  a  different
                  lending office  hereunder if to do so will avoid the need for,
                  or reduce the amount  of, any such  payment or  reimbursement;
                  provided  that such Lender would,  in its sole but  reasonable
                  determination,   suffer  no   material   economic,   legal  or
                  regulatory disadvantage or burden;

         (e)      Borrower may, in its sole discretion, elect, unless and until
                  the applicable Lender notifies Borrower that the circumstances
                  giving rise thereto no longer apply to such Lender,  that,  to
                  the extent that  a Lender's  claims for  such  reimbursements,
                  payments or indemnities would be reduced thereby, that subject
                  to  Section 2.19,  (1)  all Advances to  Borrower  which would
                  otherwise be made by such  Lender as Eurodollar Portions shall
                  be made instead as  Base Rate Portions  (all of which interest
                  and principal shall be payable as provided herein with respect
                  to the related Eurodollar Portions of the other Lenders),  and
                  (2)  after  each  Eurodollar  Portion  has  been  repaid,  all
                  payments of principal,  which would otherwise would be applied
                  to repay such  Eurodollar Portions,  shall be applied to repay
                  Base Rate Portions instead; and

         (f)      Borrower may designate a replacement Lender (which may be one
                  (1) or more of the  then existing  Lenders hereunder and which
                  shall be reasonably  satisfactory to  Administrative Agent) to
                  purchase the  Advances and Percentage Share of  LC Obligations
                  and Swing Line Obligations, in each case without recourse, and
                  assume the  Commitment and all other  obligations hereunder of
                  any Lender that  has suspended the  availability of Eurodollar
                  Portions  pursuant  to  Section  2.18  or  that  has  demanded
                  reimbursement, payment or indemnity under Sections 2.16, 2.17,
                  2.18,  2.19 or 2.20,  and such  Lender  shall be  obligated to
                  sell, transfer  and deliver all of its Advances and Percentage
                  Share of  LC Obligations and  Swing Line  Obligations  to such
                  replacement  Lender for the  outstanding  principal  amount of
                  such  Advances,  plus  such  Lender's  Percentage  Share of LC
                  Obligations  and Swing  Line Obligations,  plus in  each case,
                  accrued interest thereon and such  Lender's portion of accrued
                  but unpaid fees through the date of such purchase,  and permit
                  such  replacement  lender to  assume its Commitment.  Borrower
                  shall be  obligated to pay  all additional  amounts due to the
                  Lender being replaced pursuant to Sections  2.16,  2.17, 2.18,
                  2.19  and  2.20  through   the  date  of  such   purchase  and
                  assumption;  provided, that if the replacement Lender fails to
                  purchase  all  such  rights  and  interests  and  assume  such
                  Commitment on the specified date

                                       31


<PAGE>



                  in  accordance   herewith,   Borrower  shall  continue  to  be
                  obligated to pay such amounts to such Lender which was to have
                  been replaced and provided further that Borrower shall pay any
                  Taxes or Stamp Taxes, if any, as a result of such transfer.

                                    ARTICLE 3

                         CONDITIONS PRECEDENT TO LENDING

         Section 3.1 Initial Conditions Precedent.  No Lender has any obligation
to make its first  Revolving Loan Advance or Swing Line Advance and Issuing Bank
has no obligation to issue the first Letter of Credit  (whether or not otherwise
agreed to by Issuing Bank) unless:

         (a)      Administrative  Agent shall have received all of the following
                  with copies for each Lender, at Administrative  Agent's office
                  in Dallas, Texas:

                  (1)     This  Agreement,  the Notes (to the Lenders  that have
                          requested Notes), the Guaranties and Pledge Agreements
                          listed on Schedule 4 hereto,  and any other  documents
                          required in  connection  herewith,  each duly executed
                          and  delivered   and  in  form,   substance  and  date
                          satisfactory to Administrative Agent.

                  (2)     The following certificates:

                          (i)     an "Omnibus  Certificate" of  the Secretary or
                                  an  Assistant  Secretary  and of a  Designated
                                  Officer,  which  shall contain  the  names and
                                  signatures  of   the   officers  of   Borrower
                                  authorized to execute Loan Documents and which
                                  shall  certify  to the truth,  correctness and
                                  completeness   of   the   following   exhibits
                                  attached thereto:  (A)  a  copy of resolutions
                                  duly  adopted  by the  Board  of  Directors of
                                  Borrower  and in  full force and effect on the
                                  Effective Date,  authorizing the  execution of
                                  this  Agreement and the  other Loan  Documents
                                  delivered  or to be  delivered  in  connection
                                  herewith   and   the   consummation   of   the
                                  transactions contemplated herein  and therein,
                                  (B)  a  copy  of  the   charter  documents  of
                                  Borrower and all amendments thereto, certified
                                  by  the  appropriate  official  of  Borrower's
                                  jurisdiction of  organization,  and (C) a copy
                                  of the  bylaws or  similar governing documents
                                  of Borrower; and

                          (ii)    a  "Compliance  Certificate"  of a  Designated
                                  Officer  of  Borrower,  of even date with such
                                  Revolving  Loan  Advance or Swing Line Advance
                                  or issuance of such Letter of Credit, in which
                                  such officer  certifies to the satisfaction of
                                  the  conditions  set out in Section 3.2(a) and
                                  (b) and that  all  conditions  hereunder  have
                                  been satisfied.

                  (3)     A certificate (or  certificates) of the due formation,
                          valid  existence  and good standing of Borrower in its
                          jurisdiction   of   organization,    issued   by   the
                          appropriate authorities of such jurisdiction.

                                       32


<PAGE>



                  (4)     The  favorable   opinions  of  the  counsel  for  each
                          Designated   Entity,    given   upon   their   express
                          instructions  substantially  in the form set  forth as
                          Exhibit G attached hereto.

                  (5)     Documents   similar  to  those  specified  in  Section
                          3.1(a)(2)(i)   and  3.1(a)(3)  with  respect  to  each
                          Restricted  Subsidiary  which is or will be party to a
                          Guaranty or Pledge Agreement on the date hereof.

                  (6)     A  certificate  of a  Designated  Officer of  Borrower
                          disclosing the insurance  coverages on material assets
                          of the Designated Entities.

                  (7)     A certificate  of a Designated  Officer of Borrower as
                          to the  aggregate  book  value  of the  assets  of the
                          Unrestricted  Subsidiaries  as of the Effective  Date,
                          which   aggregate   book   value   shall  not   exceed
                          $10,000,000.

         (b)      Except as disclosed to the Lenders in the Disclosure  Schedule
                  or otherwise in writing prior to the execution  hereof and not
                  objected to by Required Lenders,  there shall be no pending or
                  threatened  litigation,  action or proceeding against Borrower
                  or any of its  Subsidiaries  which,  if adversely  determined,
                  could  reasonably  be  expected  to  have a  Material  Adverse
                  Effect.

         (c)      No event or condition  shall have occurred  since December 31,
                  1999  which  could  reasonably  be  expected  to  result  in a
                  Material Adverse Effect.

         (d)      After giving effect to such  Revolving  Loan  Advances,  Swing
                  Line  Advances  and  Letters of Credit,  Borrower  and Lenders
                  shall be in compliance with the Margin Regulations.

         (e)      All commitments under the Existing Credit Agreement shall have
                  been terminated.

         Section  3.2  Additional  Conditions  Precedent.   No  Lender  has  any
obligation to make any Revolving  Loan Advance or Swing Line Advance  (including
the  first) and  Issuing  Bank has no  obligation  to issue any Letter of Credit
(including  the  first)  unless the  following  conditions  precedent  have been
satisfied:

         (a)      All  representations  and  warranties  made by any  Designated
                  Entity  in any  Loan  Document  shall be true on and as of the
                  date of such  Revolving  Loan Advance or Swing Line Advance or
                  issuance  of Letter of Credit as if such  representations  and
                  warranties had been made as of the date of such Revolving Loan
                  Advance or Swing Line  Advance or  issuance  of such Letter of
                  Credit  (unless stated to relate solely to an earlier date, in
                  which case such  representations  and warranties shall be true
                  and correct as of such earlier date).

         (b)      No  Default  shall  exist at the date of such  Revolving  Loan
                  Advance or Swing Line  Advance or issuance of Letter of Credit
                  or will  occur  as a result  of the  making  of the  requested
                  Revolving  Loan  Advance or Swing Line Advance or the issuance
                  of the requested Letter of Credit.

                                       33


<PAGE>



                                    ARTICLE 4

                         REPRESENTATIONS AND WARRANTIES

         Section 4.1 Borrower's  Representations and Warranties. To confirm each
Lender's  understanding  concerning Borrower and its businesses,  properties and
obligations,  and to induce Agents and each Lender to enter into this  Agreement
and to make the Advances to Borrower,  except as to matters  disclosed herein or
in the Disclosure Schedule,  Borrower represents and warrants to Agents and each
Lender that:

         (a)      No  Default.   No  Designated  Entity  is  in  default in  the
                  performance of  any of the covenants  and agreements contained
                  herein  or  under  any  other  Loan  Document.   No  event  or
                  circumstance has occurred and is  continuing which constitutes
                  a Default.

         (b)      Organization,  Existence  and  Good  Standing. Each Designated
                  Entity is duly organized or incorporated, validly existing and
                  in good  standing  under  the  laws  of  its  jurisdiction  of
                  organization  or  incorporation,   having   all  corporate  or
                  partnership powers  required to  enter into  and carry out the
                  transactions  contemplated  hereby.  Each Designated Entity is
                  duly  qualified,  in  good  standing,  and  authorized  to  do
                  business  in all other  jurisdictions wherein the character of
                  the  properties  owned or  held  by it or  the  nature of  the
                  business  transacted by it makes such qualification necessary,
                  except  for  any  lack  of  qualification,  good  standing  or
                  authorization that could  not reasonably be expected to have a
                  Material Adverse Effect.  Each Designated Entity has taken all
                  actions customarily  taken in order to enter,  for the purpose
                  of conducting  business or owning property,  each jurisdiction
                  outside  the  United  States  wherein  the  character  of  the
                  properties  owned or held  by it or the nature of the business
                  transacted by it makes such actions desirable,  except for any
                  failure or other matter that could not  reasonably be expected
                  to have a Material Adverse Effect.

         (c)      Authorization.  Each  Designated  Entity  has duly  taken  all
                  corporate or  partnership  action  necessary to authorize  the
                  execution and delivery by it of the Loan Documents to which it
                  is  a  party  and  to  authorize  the   consummation   of  the
                  transactions  contemplated  thereby and the performance of its
                  obligations thereunder.  Borrower is duly authorized to borrow
                  funds hereunder.

         (d)      No Conflicts or Consents.  The execution and  delivery by each
                  Designated  Entity  of  the  Loan  Documents to  which it is a
                  party,  the  performance  by  each  Designated  Entity  of its
                  obligations under such Loan Documents, and the consummation of
                  the transactions  contemplated by the  various Loan Documents,
                  do not and  will not  (1) conflict  with any  provision of the
                  articles  or certificate of  incorporation,  bylaws,  charter,
                  partnership  agreement  or  certificate   or  other  governing
                  document  of such  Designated  Entity,  or (2)  except  as  to
                  matters that  could  not  reasonably  be  expected  to  have a
                  Material  Adverse  Effect,  result in the  acceleration of any
                  Debt owed by such Designated Entity, or conflict with any law,
                  statute,  rule,  regulation, or material agreement,  judgment,
                  license,  order or  permit applicable to or  binding upon such
                  Designated   Entity,   or  require  the   consent,   approval,
                  authorization  or order of,  or notice to or filing with,  any
                  Governmental Authority or third party, or result in or require
                  the  creation  of  any  Lien   upon  any  material  assets  or
                  properties of such Designated Entity,  except  as permitted in
                  the Loan Documents.


                                       34


<PAGE>



         (e)      Enforceable Obligations. This Agreement is, and the other Loan
                  Documents  when duly  executed and  delivered  will be, legal,
                  valid and binding  obligations of each Designated Entity which
                  is a party hereto or thereto,  enforceable in accordance  with
                  their  terms  except as such  enforcement  may be  limited  by
                  bankruptcy,  insolvency or similar laws of general application
                  relating to the enforcement of creditors' rights generally and
                  by general principles of equity.

         (f)      Financial  Statements.  (i)  The Updated  Financial Statements
                  fairly present  Borrower's and its  Consolidated Subsidiaries'
                  financial  position at  the date  thereof and  the  results of
                  Borrower's  and its  Consolidated Subsidiaries' operations and
                  cash flows for  the period covered thereby.  From the  date of
                  the  Updated Financial  Statements to the  Effective Date,  no
                  change  has  occurred  in  Borrower's  and  its  Subsidiaries'
                  Consolidated  financial  condition  which could  reasonably be
                  expected  to result in a  Material Adverse  Effect,  except as
                  reflected in  the Disclosure Schedule.  The  Updated Financial
                  Statements were prepared in  accordance with GAAP as in effect
                  on the date thereof.

                          (ii) The unaudited  Consolidated  financial statements
                  of Borrower and the  Consolidated  Subsidiaries at and for the
                  Fiscal Quarter ended March 31, 2000,  heretofore  delivered to
                  Lenders,   fairly  present  Borrower's  and  its  Consolidated
                  Subsidiaries'  financial position at such date and the results
                  of Borrower's and its  Consolidated  Subsidiaries'  operations
                  and cash flows for the period covered thereby.  Such financial
                  statements  were prepared in accordance with GAAP as in effect
                  on the date thereof, subject to year-end audit adjustments.

         (g)      Other  Obligations.  Except  as  disclosed  in the  Disclosure
                  Schedule , as of the Effective Date,  neither Borrower nor any
                  of its  Consolidated  Subsidiaries  has any  outstanding  Debt
                  which is,  in the  aggregate,  material  to  Borrower  and its
                  Consolidated   Subsidiaries  and  not  shown  in  the  Updated
                  Financial Statements.

         (h)      Full   Disclosure.     No  certificate,   statement  or  other
                  information delivered herewith or heretofore by any Designated
                  Officer of any  Designated Entity  to any Agent or  any Lender
                  in connection  with the  negotiation of  this  Agreement or in
                  connection  with any  transaction contemplated hereby contains
                  any  untrue  statement of a  fact or  omits to  state any fact
                  known  to  Borrower or  any  Designated  Entity   (other  than
                  industry-wide  risks  normally  associated  with the  types of
                  businesses  conducted by  Borrower  or any  Designated Entity)
                  necessary to make  the statements contained  herein or therein
                  not misleading  as of the date  made or deemed made, except to
                  the extent that any  untrue  statement or  omission  could not
                  reasonably be expected to have a Material Adverse Effect.

         (i)      Litigation.  Except  as  disclosed  in the  Updated  Financial
                  Statements  or in the  Disclosure  Schedule : (1) there are no
                  actions,   suits   or   legal,   equitable,   arbitrative   or
                  administrative  proceedings  pending,  or, to the knowledge of
                  Borrower, threatened, against any Designated Entity before any
                  Governmental  Authority  that could  reasonably be expected to
                  have  a  Material  Adverse  Effect,   and  (2)  there  are  no
                  outstanding judgments,  injunctions,  writs, rulings or orders
                  by any such Governmental  Authority against Borrower or any of
                  its Subsidiaries  which could reasonably be expected to have a
                  Material Adverse Effect.

                                       35


<PAGE>



         (j)      Environmental  Matters.  The liabilities and costs of Borrower
                  and its  Subsidiaries  related to compliance  with  applicable
                  Environmental  Laws (as in  effect  on the date on which  this
                  representation is made or deemed made) could not reasonably be
                  expected to have a Material Adverse Effect.

         (k)      Title  to  Properties.  Each  Designated  Entity  has good and
                  defensible title to all of its material properties and assets,
                  except any failure,  defect or other matter that could not, in
                  the  aggregate,  reasonably  be  expected  to have a  Material
                  Adverse Effect.

         (l)      Investment  Company  Act.   Neither  Borrower  nor  any of its
                  Subsidiaries  is  an   "investment  company"  or  a   "company
                  controlled" by an  "investment company", within the meaning of
                  the Investment Company Act of 1940, as amended.

         (m)      Public Utility Holding Company Act.  Neither  Borrower nor any
                  of its Subsidiaries 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",  or a "public  utility"  within  the  meaning of the
                  Public Utility Holding Company Act of 1935, as amended.

         (n)      Principal  Business  Offices.  As of the Effective Date,  each
                  Designated  Entity's  principal  place  of  business and chief
                  executive  office  is  located at the  place described  in the
                  Disclosure Schedule .

         (o)      Solvency.  Each Designated Entity is solvent and will continue
                  to  be  solvent  after  the  making  and  guarantying  of  the
                  Obligations and the issuance of the Letters of Credit.

         (p)      Organization. As of the Effective Date, the organization chart
                  of  Borrower and  its  Subsidiaries  with  material assets set
                  forth  on  Exhibit H  is true  and  correct  in  all  material
                  respects.  Except for  the  Exchangeable  Shares,  as  of  the
                  Effective Date,  Borrower or a R estricted Subsidiary owns all
                  of the issued and outstanding capital stock of each Restricted
                  Subsidiary. As of the Effective Date, no Restricted Subsidiary
                  has issued any securities convertible into shares of its stock
                  or  any  options  (except  as  set  forth  in  the  Disclosure
                  Schedule),  warrants or other rights to acquire such shares or
                  securities  convertible into  such shares and  the outstanding
                  capital stock and  securities of each Restricted Subsidiary is
                  owned by Borrower or another  Restricted  Subsidiary  free and
                  clear of all Liens,  warrants,  options or rights of others of
                  any kind whatsoever, except for Permitted Liens.

         (q)      Use of Proceeds:  Margin Stock.  Borrower and its Subsidiaries
                  shall use  (i) the initial Revolving Loan Advance to discharge
                  all outstanding  obligations (other than in respect of Letters
                  of Credit  listed  on  Schedule 5  under the  Existing  Credit
                  Agreement),  and (ii) all  Revolving Loan Advances, Letters of
                  Credit  and Swing  Line Advances for its and  their respective
                  general corporate purposes.  In no event  shall the funds from
                  any Revolving  Loan Advance,  Swing Line Advance  or Letter of
                  Credit be  used  directly or  indirectly  by  any  Person  for
                  personal,  family,  household or  agricultural purposes or for
                  the purpose,  whether  immediate,  incidental or ultimate,  of
                  purchasing,  acquiring or carrying any  "margin stock"  or any
                  "margin securities"  (as such terms are defined  in the Margin
                  Regulations)  in violation  of the Margin Regulations,  or for
                  the  purpose of reducing  or retiring  any indebtedness  which
                  was originally incurred to purchase or carry "margin stock" or
                  "margin securities" in violation of the Margin Regulations, or

                                       36


<PAGE>



                  to  extend  credit to  others directly  or indirectly  for the
                  purpose of purchasing or carrying  any  such margin  stock  or
                  margin  securities  in violation  of the  Margin  Regulations.
                  Borrower is not  engaged principally,  or as one of Borrower's
                  important activities,  in the business of extending  credit to
                  others for the purpose of  purchasing or  carrying such margin
                  stock or margin securities. Neither any Designated  Entity nor
                  any Person acting on behalf of any Designated Entity has taken
                  or will take any action which might cause this Agreement,  any
                  Note, any Guaranty, any Loan Document or any Advance or Letter
                  of Credit to violate the  Margin  Regulations  or  to  violate
                  Section 7 of the Securities Exchange Act of 1934,  or any rule
                  or regulation thereunder,  in each case as now or hereafter in
                  effect.

         (r)      ERISA  Compliance.  Each  ERISA  Plan is in  compliance in all
                  material respects with the applicable provisions of ERISA, the
                  Code and other  applicable laws.  There are no pending or,  to
                  the best knowledge of Borrower, threatened claims,  actions or
                  lawsuits,  or  action  by  any  Governmental  Authority,  with
                  respect to any ERISA Plan that could reasonably be expected to
                  have a Material  Adverse Effect.  There has been no prohibited
                  transaction or violation of the fiduciary responsibility rules
                  with  respect  to  any  ERISA  Plan  that could  reasonably be
                  expected to have a  Material Adverse  Effect.  No  Termination
                  Event has  occurred which could reasonably be expected to have
                  a Material Adverse Effect.

         Section 4.2  Representation  by Lenders.  Each Lender hereby represents
that it will  acquire its Notes,  if any,  for its own  account in the  ordinary
course of its  commercial  lending  business;  however,  such Lender may sell or
otherwise  transfer  its Notes,  if any,  any  participation  interest  or other
interest in its Notes, if any, or any of its other rights and obligations  under
the Loan Documents as permitted by Section 8.8.

                                    ARTICLE 5

                              COVENANTS OF BORROWER

         Section  5.1  Affirmative  Covenants.  To  conform  with the  terms and
conditions  under  which each Lender is willing to have  credit  outstanding  to
Borrower,  and to induce Agents and each Lender to enter into this Agreement and
make the Advances to Borrower and to issue  Letters of Credit,  unless  Required
Lenders shall have previously agreed otherwise in writing,  Borrower,  severally
for itself and its Subsidiaries, covenants and agrees that:

         (a)      Payment  and  Performance.  Borrower  will pay all amounts due
                  from it under the Loan Documents in accordance  with the terms
                  thereof  and will  observe,  perform  and  comply  with  every
                  covenant,  term and condition expressed in the Loan Documents,
                  and will cause each Designated Entity which is a Subsidiary of
                  Borrower to perform and comply with every  covenant,  term and
                  condition  expressed in the Loan  Documents and  applicable to
                  such Designated Entity.

         (b)      Books, Financial Statements and Reports.  Borrower will at all
                  times maintain full and  materially  accurate books of account
                  and  records.  Borrower  will  maintain  and  will  cause  its
                  Subsidiaries  to maintain a standard  system of accounting and
                  will  cause  the  following   statements  and  reports  to  be
                  delivered  to Agents and each Lender  (Agents only in the case
                  of clause (3) below) at Borrower's expense:

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<PAGE>




                  (1)     As soon as available, and in any event within 120 days
                          after the end of each Fiscal  Year,  complete  audited
                          Consolidated  financial statements of Borrower and its
                          Subsidiaries  and  unaudited   consolidating   balance
                          sheets and  statements  of  operations of Borrower and
                          its  Subsidiaries,  prepared in  reasonable  detail in
                          accordance  with GAAP;  such audited  statements to be
                          accompanied  by an  opinion,  by Ernst & Young LLP, or
                          such other independent certified public accountants of
                          nationally  recognized  standing selected by Borrower,
                          stating that such  Consolidated  financial  statements
                          have been so prepared.  Borrower  will,  together with
                          each  set  of  such  financial   statements  delivered
                          pursuant to this section, furnish a certificate in the
                          form of  Exhibit I signed by a  Designated  Officer of
                          Borrower  stating that, to the best of his  knowledge,
                          (i)  such   financial   statements  are  accurate  and
                          complete,  and (ii) no  Default  or  Event of  Default
                          exists at the end of such  Fiscal  Year or at the time
                          of such  certificate  or  specifying  the  nature  and
                          period of  existence  of any such  Default or Event of
                          Default.  Such certificate shall contain  calculations
                          showing  compliance (or  noncompliance)  at the end of
                          such  Fiscal  Year with the  requirements  of Sections
                          5.2(e) and 5.3(a), (b), and (c).

                  (2)     As soon as available,  and in any event within 60 days
                          after the end of the first  three  Fiscal  Quarters in
                          each Fiscal  Year,  unaudited  Consolidated  financial
                          statements  of  Borrower  and  its   Subsidiaries  and
                          unaudited  consolidating  balance sheet and statements
                          of operations of Borrower and its  Subsidiaries  as of
                          the  end of such  Fiscal  Quarter,  all in  reasonable
                          detail and prepared in accordance  with GAAP,  subject
                          to  changes   resulting  from  year-end   adjustments.
                          Borrower   will,   together  with  each  set  of  such
                          financial   statements   delivered  pursuant  to  this
                          section,  furnish a certificate in the form of Exhibit
                          I signed by a Designated  Officer of Borrower  stating
                          that, to the best of his knowledge, (i) such financial
                          statements  are  accurate  and  complete,  and (ii) no
                          Default or Event of Default  exists at the end of such
                          Fiscal  Quarter or at the time of such  certificate or
                          specifying  the nature and period of  existence of any
                          such  Default or Event of  Default.  Such  certificate
                          shall  contain  calculations  showing  compliance  (or
                          noncompliance)  at the end of such Fiscal Quarter with
                          the  requirements  of  Sections  5.2(e) and 5.3(a) and
                          (b).

                  (3)     Within 120 days after the end of each Fiscal Year (but
                          only at such times as the  Applicable  Rating Level is
                          Level  II,  Level  III or Level  IV),  an  Engineering
                          Report.

                  (4)     Promptly after  transmittal  or filing,  copies of all
                          financial  statements,   reports,  notices  and  proxy
                          statements  sent by Borrower to its  stockholders  and
                          all  registration  statements,  periodic  reports  and
                          other  statements  and schedules  filed by Borrower or
                          any of its Subsidiaries with any securities  exchange,
                          the Securities and Exchange  Commission or any similar
                          Governmental Authority.

         (c)      Other  Information and  Inspections.  Borrower will furnish to
                  Agents and each Lender any  information  which  Administrative
                  Agent,  on  behalf  of any  Lender,  may  from  time  to  time
                  reasonably   request  in  writing   concerning  any  covenant,
                  provision or condition of the Loan  Documents or any matter in
                  connection  with Borrower's and its  Subsidiaries'  businesses
                  and  operations.  Borrower  will permit and will cause each of
                  its  Subsidiaries  to permit  representatives  of  Agents  and
                  Lenders   (including   independent   accountants,  agents  and

                                       38


<PAGE>



                  attorneys), at the expense and risk of the applicable Agent or
                  Lender, to visit and inspect, during normal business hours and
                  upon reasonable notice any of Borrower's or such Subsidiaries'
                  property,  including  its books of  account,  other  books and
                  records,  and any facilities or other business assets,  and to
                  make extra copies  therefrom and  photocopies  and photographs
                  thereof,  and to write down and record  any  information  such
                  representatives  obtain,  and  Borrower  shall permit and will
                  cause each of its Subsidiaries to permit Agents and Lenders or
                  their representatives,  to investigate and verify the accuracy
                  of  the  information  furnished  to any  Agent  or  Lender  in
                  connection  with the Loan  Documents  and to discuss  all such
                  matters  with its  officers,  employees  and  representatives;
                  provided,   however,   that   any  such   visit,   inspection,
                  investigation  or  verification  or discussion with respect to
                  Borrower  taking  place  at a  time  when  Borrower  has  been
                  notified in writing by  Administrative  Agent of the existence
                  of a Default or an Event of Default applicable to Borrower has
                  occurred and is continuing shall be at the cost and expense of
                  Borrower,   and  that  no  Agent  or  Lender  shall  have  any
                  obligation  to pay any costs or  expenses  of  Borrower or any
                  other Designated Entity or any of their officers, employees or
                  representatives   in  respect  thereof   irrespective  of  the
                  existence of any Default or Event of Default.

         (d)      Notice of  Material  Events.  Borrower will  promptly upon its
                  awareness thereof notify  Administrative Agent and each Lender
                  (1) of  the occurrence of any Default or any other event which
                  has or may  reasonably be expected  to have a Material Adverse
                  Effect,  (2) of the  acceleration of the  maturity of any Debt
                  owed by any Designated Entity or any default by any Designated
                  Entity under any  instrument evidencing or governing Debt,  if
                  such acceleration or default has or may reasonably be expected
                  to have a  Material Adverse Effect,  (3) of the  occurrence of
                  any Termination  Event which has or may reasonably be expected
                  to have a  Material Adverse Effect,  and (4) of  the filing of
                  any litigation or proceeding in which any Designated Entity is
                  a party or of any material developments in existing litigation
                  in which any Designated  Entity is a party in which an adverse
                  decision may reasonably be expected to have a Material Adverse
                  Effect.

         (e)      Maintenance  of  Existence and Qualifications.  Borrower will,
                  and  will cause each  Restricted  Subsidiary to,  maintain and
                  preserve its existence as a corporation or partnership, as the
                  case  may  be.  Borrower will,  and will cause each Restricted
                  Subsidiary to, maintain and preserve its good standing and its
                  rights and franchises in full force and effect and qualify to
                  do  business  as  a  foreign  corporation  in  all  states  or
                  jurisdictions where required by applicable law, except for any
                  failure  to  maintain,  preserve  and  qualify  that could not
                  reasonably be  expected to  have a  Material  Adverse  Effect.
                  Nothing  in  this  section  shall  prohibit  (i)  a  merger or
                  consolidation   permitted   by   Section   5.2(c)  or  (ii)  a
                  termination  of  such  existence,  good  standing,  rights  or
                  franchises of any Restricted Subsidiary if Borrower determines
                  in good faith that such termination is in the best interest of
                  Borrower  and  could  not  reasonably  be  expected to  have a
                  Material Adverse Effect.

         (f)      Payment of Taxes and Trade Debt. Borrower will, and will cause
                  each of its  Subsidiaries  to, except for any failure or other
                  matter  that  could  not  reasonably  be  expected  to  have a
                  Material  Adverse  Effect,  (1) timely file all  required  tax
                  returns,  (2)  timely pay all  taxes,  assessments,  and other
                  governmental  charges  or levies  imposed  upon it or upon its
                  income,  profits  or  property,  and (3)  timely pay all trade
                  debt.  Borrower and its respective  Subsidiaries may, however,
                  delay  paying  or  discharging  any such  taxes,  assessments,
                  charges,  debts or levies so long as the  validity  thereof is
                  contested  in  good  faith   by  appropriate  proceedings  and

                                       39


<PAGE>



                  adequate  reserves therefor in accordance  with GAAP have been
                  set  aside  and  reflected  among  the  books  and  records of
                  Borrower and its Subsidiaries.

         (g)      Insurance.   Borrower   will,  and  will  cause  each  of  its
                  Subsidiaries  to,  at all  times  maintain  insurance  in such
                  amounts  and  covering  such risks as are in  accordance  with
                  normal  industry  practice  for  companies  engaged in similar
                  businesses and owning  similar  properties in the same general
                  area in which Borrower and its Subsidiaries  conduct business,
                  which insurance (other than prudent  self-insurance  programs)
                  shall be by financially sound and reputable insurers.

         (h)      Payment  of  Expenses.   Whether  or   not  the   transactions
                  contemplated by this Agreement are consummated,  Borrower will
                  promptly  pay all  reasonable costs  and  expenses  (including
                  reasonable  attorneys' fees)  incurred by or on  behalf of (1)
                  the  Administrative Agent in connection  with the negotiation,
                  preparation, execution and delivery of  the Loan Documents and
                  any amendment,  modification or  restatement thereof,  and any
                  and all consents,  waivers or other  documents or instruments,
                  including commitment letters,  term sheets and  any memorandum
                  relating thereto, or in connection with the performance of its
                  duties as administrative agent under the Loan Documents other
                  than  in  the  normal  course  of  business,   (2)  Agents  in
                  connection  with  due  diligence,   syndication,   travel  and
                  advertising  related  to this  Agreement and the  transactions
                  contemplated  thereby,  and (3) each  Agent and each Lender in
                  connection  with  enforcement  of the  Loan  Documents  or the
                  defense of any Agent's or  any Lender's exercise of its rights
                  thereunder,   or  in  connection   with   any  refinancing  or
                  restructuring of any of the  Loan Documents in the nature of a
                  "workout"  (whether  or  not as a  part of  any  insolvency or
                  bankruptcy proceeding).  The selection of  Agents' counsel and
                  consultants  in  connection  with  the  matters  described  in
                  clauses (1) and (2) of the preceding sentence shall be subject
                  to the  approval of  Borrower,  which  approval  shall  not be
                  unreasonably withheld.  Attorneys' fees reimbursed by Borrower
                  for any  amendment,  modification or  restatement  of any Loan
                  Document shall be estimated and approved by  Borrower prior to
                  incurrence,  such  approval  not to be  unreasonably withheld.
                  Attorneys' fees reimbursed by  Borrower in connection with the
                  enforcement  of  the  Loan  Documents  or  the  defense of any
                  Agent's or any Lenders' exercise of its rights hereunder or in
                  connection with any refinancing or restructuring of any of the
                  Loan  Documents  in the  nature of a  "workout" shall be for a
                  single  law  firm  per  country  (unless  conflicts (including
                  conflicts  between  any Agent and  any Lender as determined in
                  the reasonable  discretion of the Required Lenders)  otherwise
                  prohibit the engagement of a single law firm).

         (i)      Compliance with  Agreements and Law.  Borrower will,  and will
                  cause each  of its  Subsidiaries to (1)  perform  all material
                  obligations it is required to  perform under the terms of each
                  material agreement, contract or other instrument or obligation
                  to which it is a  party or by which  it or any of its material
                  properties is bound,  except for any non-performance that will
                  not have or  reasonably be expected to have a Material Adverse
                  Effect;  and (2) conduct its  business and affairs in material
                  compliance with all laws,  regulations,  and orders applicable
                  thereto  (including  without  limitation  Environmental  Laws)
                  except for  any  non-compliance  that could  not reasonably be
                  expected to have a Material Adverse Effect.

         (j)      Maintenance of Business.  Borrower  will,  and will cause each
                  Restricted Subsidiary to, maintain as its primary business the
                  exploration,  production and  development of oil,  natural gas

                                       40


<PAGE>



                  and other liquid and gaseous  hydrocarbons and  the gathering,
                  processing,  transmission  and  marketing of  hydrocarbons and
                  activities related or ancillary thereto.

         (k)      Operations.  Borrower  will,  and will cause  each  Restricted
                  Subsidiary  to, cause all material  properties to be regularly
                  operated,  maintained and developed in a good and  workmanlike
                  manner, as would a prudent operator and in accordance with all
                  applicable   federal,   state  and  local   laws,   rules  and
                  regulations,  except for any failure to so  operate,  maintain
                  and develop  that could not  reasonably  be expected to have a
                  Material Adverse Effect.

         Section  5.2  Negative  Covenants.   To  conform  with  the  terms  and
conditions  under  which each Lender is willing to have  credit  outstanding  to
Borrower,  and to induce Administrative Agent and each Lender to enter into this
Agreement  and make the  Advances  to Borrower  and to issue  Letters of Credit,
unless  Required  Lenders  shall have  previously  agreed  otherwise in writing,
Borrower, severally for itself and its Subsidiaries, covenants and agrees that:

         (a)      Limitation on Debt. Borrower will not, and will not permit any
                  Restricted  Subsidiary to,  in any manner owe or be liable for
                  Debt except:

                  (1)     the Obligations;

                  (2)     unsecured Debt among Designated Entities;

                  (3)     Debt  arising under  capital  leases which does not in
                          the  aggregate  for   Borrower   and  all   Restricted
                          Subsidiaries  exceed  $20,000,000   at  any  one  time
                          outstanding;

                  (4)     Debt,  other than Debt otherwise  permitted by another
                          subparagraph  of this Section  5.2(a),  which,  at the
                          time  incurred,  is  at  prevailing  market  rates  of
                          interest and contains  covenants  and  conditions  and
                          events of  default no more  onerous to the  Designated
                          Entities than the terms of this  Agreement;  provided,
                          that no Default or Event of Default  will  result from
                          the incurrence of such Debt and be continuing;

                  (5)     guaranties of Debt  which is the primary obligation of
                          a Designated  Entity and permitted  under this Section
                          5.2(a);

                  (6)     Debt  arising  (whether  by contract or as a result of
                          statutory liability of a general partner) by virtue of
                          any  Designated  Entity  being a general  partner of a
                          general or limited partnership  pursuant to agreements
                          in  effect  on the date  hereof  not in  excess of the
                          aggregate amounts permitted to be incurred pursuant to
                          such  agreements  on the date hereof for all such Debt
                          and other such Debt  otherwise  permitted  pursuant to
                          the other subparagraphs of this Section 5.2(a); and

                  (7)     Debt existing on the Effective Date which is disclosed
                          (i) in the Updated Financial Statements or (ii) in the
                          Disclosure  Schedule and any  extensions,  renewals or
                          replacements  thereof  upon  terms no more  onerous to
                          Borrower than the terms of this Agreement or the terms
                          of the instruments evidencing such Debt as of the date
                          of this Agreement.

                                       41


<PAGE>



         (b)      Negative  Pledge.  Borrower will not,  and will not permit any
                  of its Restricted Subsidiaries to, create, assume or permit to
                  exist  any  Lien  upon  any   of  their  respective   material
                  properties, except Permitted Liens.

         (c)      Limitation on Mergers.  Except  as  expressly provided in this
                  subsection, Borrower will not,  and will not permit any of its
                  Restricted Subsidiaries to,  merge or consolidate with or into
                  any other business entity, except (1) Borrower may be party to
                  a merger or  consolidation so long as  the surviving entity is
                  Borrower and no Default will exist and the  Obligations do not
                  exceed the Facility Amount after giving effect thereto and (2)
                  any  Restricted  Subsidiary  may be a  party to any  merger or
                  consolidation so long as the surviving entity is Borrower or a
                  Restricted  Subsidiary  and any  Guaranty  of such  Restricted
                  Subsidiary continues  as to such surviving entity,  no Default
                  will exist,  and the Obligations do  not  exceed the  Facility
                  Amount, in each case after giving effect thereto.

         (d)      Limitation  on  Disposition  of  Capital  Stock of  Restricted
                  Subsidiaries.  Borrower  will  not,  and will not  permit  any
                  Restricted  Subsidiary to, sell, transfer or otherwise dispose
                  of capital  stock of any  Restricted  Subsidiary,  except that
                  Borrower  and  any  Restricted  Subsidiary  may  sell,  issue,
                  transfer  or  otherwise  dispose of the  capital  stock of any
                  Restricted  Subsidiary  to Borrower  or to another  Restricted
                  Subsidiary.

         (e)      Limitation on Restricted Payments.  Borrower will not and will
                  not  permit  any  of   its  Subsidiaries  to  pay  or  declare
                  Restricted Payments  (of the kind  described in clause  (i) of
                  the  definition   of  Restricted  Payment)   with  respect  to
                  Borrower's  or any  Restricted  Subsidiary's  capital stock in
                  excess of $50,000,000 in the aggregate for all such Restricted
                  Payments during any Fiscal Year.  Borrower will not,  and will
                  not permit any  Restricted Subsidiary to,  make any Restricted
                  Payments  (of  the  kind  described  in  clause  (ii)  of  the
                  definition of Restricted Payment)  in excess of $10,000,000 in
                  the aggregate  for all  such  Restricted  Payments  during any
                  Fiscal Year;  provided,  however,  that in the  event that any
                  Unrestricted  Subsidiary of  Borrower is redesignated  to be a
                  Restricted  Subsidiary   of  Borrower  for  purposes  of  this
                  Agreement,  then for purposes of redetermining compliance with
                  this  section,   such   Restricted  Payments   made  to   such
                  Unrestricted    Subsidiary   during   the   Fiscal   Year   of
                  redesignation  shall be  deducted  from the aggregate total of
                  such  Restricted  Payments  made  during  such  Fiscal   Year.
                  Borrower will not, and will not permit any of its Subsidiaries
                  to declare any  dividend or distribution,  make any Restricted
                  Payment   (other  than  dividends  or  distributions   not  in
                  violation  of  this  provision  at  the  time  declared),   or
                  purchase,  redeem,  or otherwise acquire or  retire for value,
                  prior  to  scheduled  maturity,  or  repay,  any  Debt that is
                  subordinated in right of payment to the Obligations (1) if the
                  Obligations  shall  exceed  the  Facility  Amount,  (2) if any
                  Default  or  Event of  Default  shall  have  occurred  and  be
                  continuing,  or  (3)  if as a  result thereof,  any Default or
                  Event of Default shall occur and be continuing.

         (f)      Transactions with Affiliates.  Borrower will not, and will not
                  permit any of its  Restricted  Subsidiaries  to, engage in any
                  material  transaction  with any of  Borrower's  Affiliates  on
                  terms  which are less  favorable  than those  which would have
                  been  obtainable  at the  time in  arm's-length  dealing  with
                  Persons  other than such  Affiliates,  provided,  however that
                  such  restriction  shall not apply to  transactions  (i) among
                  Borrower  and  its  Restricted  Subsidiaries  and  (ii)  among
                  Restricted Subsidiaries.

                                       42


<PAGE>



         (g)      Limitations  on  Restricted  Subsidiaries.  Borrower  will not
                  permit  any  Restricted   Subsidiary   to  become  subject  to
                  covenants which:

                  (1)     restrict dividends or dividend capacity;

                  (2)     restrict loans and advances to Borrower;

                  (3)     restrict  the  ability   to  make   tax   payments  or
                          management payments to Borrower; or

                  (4)     restrict   the   capitalization   structure   of   any
                          Restricted Subsidiary.

         (h)      Limitation on  Sale/Leasebacks.  Designated  Entities will not
                  enter into any arrangement,  directly or indirectly,  with any
                  Person  whereby any  Designated  Entity shall sell or transfer
                  any material  asset,  and whereby any Designated  Entity shall
                  then or  immediately  thereafter  rent or lease as lessee such
                  asset or any part thereof.

         (i)      Conversion  between  Restricted  Subsidiary  and  Unrestricted
                  Subsidiary.  Borrower may convert any Restricted Subsidiary to
                  an Unrestricted  Subsidiary  by giving Administrative Agent at
                  least five (5) Business Days' notice of such conversion in the
                  form of  Exhibit  J-1  attached  hereto;  provided that (1) no
                  Restricted  Subsidiary  may be  converted  to  an Unrestricted
                  Subsidiary  if,  after  giving  effect  thereto,  a Restricted
                  Subsidiary would be a Subsidiary of an Unrestricted Subsidiary
                  or the sum  of (A)  the  value of the assets of all Restricted
                  Subsidiaries  converted to  Unrestricted Subsidiaries during a
                  Fiscal Year (such  value to be  determined at the time of each
                  conversion),  plus (B) all  Restricted  Payments  (of the kind
                  described  in  clause  (ii)  of the  definition of  Restricted
                  Payment)  made  during  such  Fiscal  Year does not exceed the
                  limitation on  Restricted Payments  (of the kind  described in
                  clause (ii) of the definition of Restricted Payment) contained
                  in Section 5.2(e) hereof,  and (2) no such conversion shall be
                  made if  after giving  effect to such conversion,  any Default
                  would  exist.   Upon  any  such  conversion  of  a  Restricted
                  Subsidiary to an Unrestricted Subsidiary,  (A) such Subsidiary
                  shall be released from its obligations under its Guaranty, and
                  Administrative  Agent  shall  execute  and  deliver  a release
                  substantially in the form of Exhibit J-2 hereto,  and (B) if a
                  Pledge  Agreement has  theretofore been  executed covering the
                  capital stock of, partnership interests in, or other ownership
                  interests in,  such Subsidiary, Collateral Agent shall execute
                  and  deliver  a release  of such  Pledge  Agreement  and shall
                  return all stock  certificates or other evidences of ownership
                  interests  and any  blank  stock  powers  or  share  transfers
                  delivered in  connection with such Pledge Agreement.  Borrower
                  may  convert  any  Unrestricted  Subsidiary  to  a  Restricted
                  Subsidiary  by  giving  Administrative Agent at least five (5)
                  Business  Days'  notice  of  such  conversion  in the  form of
                  Exhibit J-1 attached hereto;  provided that no such conversion
                  may  be made  if after  giving effect to such conversion,  any
                  Default would exist.

         (j)      Margin  Securities.  Proceeds of the Advances will not be used
                  to purchase  or carry  Margin Stock  except in compliance with
                  the Margin Regulations.

         Section  5.3  Financial  Covenants.  To  conform  with  the  terms  and
conditions  under  which each Lender is willing to have  credit  outstanding  to
Borrower,  and to induce Administrative Agent and each Lender to enter into this
Agreement  and make the  Advances  to Borrower  and to issue  Letters of Credit,
unless

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<PAGE>



Required Lenders shall have previously  agreed  otherwise in writing,  Borrower,
severally for itself and its Subsidiaries, covenants and agrees that:

         (a)      Total Leverage Ratio.  Borrower's  Consolidated Total Leverage
                  Ratio  will not (i) as of the last day of any  Fiscal  Quarter
                  ending on or after March 31, 2000 and on or prior to September
                  30,  2002,  be greater  than 4.00 to 1.00,  and (ii) as of the
                  last day of any Fiscal Quarter ending on or after December 31,
                  2002, be greater than 3.75 to 1.00.

         (b)      Minimum  Consolidated  Tangible  Net Worth.  Borrower will not
                  permit its  Consolidated  Tangible Net  Worth as of the end of
                  any Fiscal Quarter,  commencing with the Fiscal Quarter ending
                  March 31, 2000,  to be less than (i) $658,000,000 plus (ii) an
                  amount  equal  to  50%  of  the  sum  of  Borrower's  and  its
                  Subsidiaries' Consolidated net income for each Fiscal Quarter,
                  beginning  with  the  Fiscal Quarter  ending  March 31,  2000,
                  during which  such Consolidated net income is greater than $0,
                  plus  (iii) an  amount equal to  50% of the  net cash proceeds
                  received  by  the  Borrower  and  its  Subsidiaries  from  the
                  issuance of any common stock,  preferred stock or other equity
                  during any Fiscal Quarter,  beginning with the  Fiscal Quarter
                  ending March 31, 2000.

         (c)      Properties  NPV to  Total  Debt  Ratio.  At such  times as the
                  Applicable  Rating  Level is Level II,  Level III or Level IV,
                  Borrower  will not, as of December 31 of any year,  permit the
                  ratio of the  Properties  NPV to Total  Funded Debt to be less
                  than 1.25 to 1.00.

                                    ARTICLE 6

                         EVENTS OF DEFAULT AND REMEDIES

         Section 6.1 Events of Default. Each of the following events constitutes
an "Event of Default" under this Agreement:

         (a)      Borrower  shall  default  on  the  payment  when  due  of  any
                  principal on  any of its  Advances or any amount in respect of
                  any LC Obligations;

         (b)      Borrower  fails  to  pay any  of its  Obligations  (other than
                  principal or any amount in respect of its LC Obligations) when
                  due and payable, whether interest in respect of any Advance or
                  any  fee or  any other  amounts payable  under any of the Loan
                  Documents and  such failure  shall  continue  unremedied for a
                  period of five (5) Business Days; provided,  however, that any
                  such  Default  shall not  constitute  an  Event of  Default if
                  subsequently  available  information  indicates that a payment
                  made when due  was insufficient  because of a good faith error
                  in calculation  so long as Borrower shall cure such deficiency
                  within five (5)  Business Days after Borrower becomes aware of
                  such deficiency;

         (c)      any Designated Entity fails to duly observe, perform or comply
                  with any covenant, agreement, condition or provision set forth
                  in Section 5.1(d), 5.2 or 5.3 of this Agreement;

         (d)      any  Designated  Entity  fails  (other  than as referred to in
                  subsections  (a), (b) and (c) above) to duly observe,  perform
                  or comply with any covenant, agreement, condition or provision
                  of any Loan Document  applicable to it (even if all or part of
                  such agreement or covenant is void or unenforceable), and such
                  failure is not remedied within thirty (30) Business Days after

                                       44


<PAGE>



                  written  notice  thereof  shall  have been sent to Borrower by
                  Administrative Agent or any Lender;

         (e)      any  representation  or  warranty  previously,   presently  or
                  hereafter  made in  writing or  deemed made by or on behalf of
                  any Designated  Entity in  connection with  any  Loan Document
                  shall have  been false or incorrect in any material respect on
                  any date  on or as of which  made and either  (1) an Executive
                  Officer   of   Borrower   had  actual   knowledge  that   such
                  representation  or  warranty  was  false  or  incorrect  in  a
                  material respect when made or (2)  if no Executive Officer had
                  such knowledge, such representation or warranty shall continue
                  to be  false or  incorrect in any material respect thirty (30)
                  Business Days  after the  earlier of an  Executive  Officer of
                  Borrower  obtaining actual knowledge thereof or written notice
                  thereof shall  have been  sent to  Borrower by  Administrative
                  Agent or any Lender;

         (f)      any Designated Entity (1) fails to pay when due Debt in excess
                  of $20,000,000 or (2) breaches or defaults in the  performance
                  of any  agreement  or  instrument  by which  any such  Debt in
                  excess of  $20,000,000  is  issued,  evidenced,  governed,  or
                  secured,  and any such  failure,  breach or default  continues
                  beyond any applicable period of grace provided therefor;

         (g)      either (1) any "accumulated funding deficiency" (as defined in
                  Section  412(a)  of the  Internal  Revenue  Code of  1986,  as
                  amended) in  excess of  $10,000,000 exists with respect to any
                  ERISA Plan,  whether or not  waived by  the  Secretary  of the
                  Treasury or his delegate,  or (2) any  Termination Event which
                  has a Material Adverse Effect occurs with respect to any ERISA
                  Plan and  the then  current value of such ERISA Plan's benefit
                  liabilities  exceeds  the  then  current  value  of such ERISA
                  Plan's  assets  available  for  the  payment  of  such benefit
                  liabilities  by more  than  $10,000,000  (or in  the case of a
                  Termination Event  involving the  withdrawal of a  substantial
                  employer,  the withdrawing  employer's  proportionate share of
                  such excess exceeds such amount);

         (h)      any Designated Entity:

                  (1)     suffers   the    commencement   of   any   involuntary
                          bankruptcy,  reorganization, debt arrangement, winding
                          up,     dissolution,     official     management    or
                          administration,  or other case or proceeding under any
                          bankruptcy or  insolvency  law or the entry against it
                          of a  judgment,  decree or order for relief by a court
                          of   competent   jurisdiction   in   such  a  case  or
                          proceeding,  which in either case remains  undismissed
                          for a period of sixty  (60) days;  provided  that each
                          Designated  Entity hereby  expressly  authorizes  each
                          Agent   and  each   Lender  to  appear  in  any  court
                          proceeding  during  such  sixty  (60)  day  period  to
                          preserve,  protect and defend  their  rights under the
                          Loan Documents;

                  (2)     commences  a  voluntary   case  under  any  applicable
                          bankruptcy, insolvency or similar law now or hereafter
                          in effect, including,  without limitation,  the United
                          States  Bankruptcy  Code  or the  Corporations  Law of
                          Australia,  as from time to time  amended;  or applies
                          for or consents or acquiesces to the entry of an order
                          for relief in an involuntary  case under any such law,
                          or becomes insolvent or makes a general assignment for
                          the benefit of  creditors,  or falls  generally to pay
                          (or admits in writing its  inability to pay) its debts
                          as such debts become due, or takes  corporate or other
                          action to authorize any of the foregoing;

                                       45


<PAGE>



                  (3)     suffers the  appointment of or taking  possession by a
                          receiver,  liquidator,  assignee,  custodian, trustee,
                          sequestrator, administrator or similar official of all
                          or a  substantial  part of its assets in a  proceeding
                          brought   against  or   initiated   by  it,  and  such
                          appointment is neither made ineffective nor discharged
                          within  sixty  (60)  days  after  such  event  or such
                          appointment  or  taking  possession  is  at  any  time
                          consented  to,  requested by, or acquiesced to by such
                          Designated Entity;

                  (4)     suffers the entry  against it of a final  judgment for
                          the  payment  of money in excess of  $20,000,000  (not
                          covered by insurance  satisfactory  to  Administrative
                          Agent  in  its   discretion),   unless   the  same  is
                          discharged  within  thirty (30) days after the date of
                          entry thereof or an appeal or  appropriate  proceeding
                          for review  thereof is taken  within such period and a
                          stay of execution  pending such appeal is obtained and
                          continues; or

                  (5)     suffers a writ or warrant of attachment or any similar
                          process to be issued by any court  against  all or any
                          substantial  part of its  property,  and such  writ or
                          warrant of  attachment  or any similar  process is not
                          stayed or released  within  thirty (30) days after the
                          entry or levy  thereof or after any stay is vacated or
                          set aside;

         (i)      (a) any person  (other than Borrower,  a Restricted Subsidiary
                  of Borrower or any employee benefit plan of Borrower or any of
                  its Restricted Subsidiaries) or group (as such term is used in
                  Section  13(d) or  14(d)(2) of  the Securities Exchange Act of
                  1934,  as  amended)  shall  acquire,  directly  or indirectly,
                  beneficial  ownership of an  aggregate of  35% or  more of the
                  issued and outstanding voting stock of Borrower; or (b) during
                  any period  of two  consecutive  years ending  on or after the
                  Effective Date,  as determined  as  of  the  last  day of each
                  calendar  quarter  after the  Effective Date,  the individuals
                  (the  "Incumbent  Directors")  who  at  the  beginning of such
                  period constituted  the Board of  Directors of Borrower (other
                  than additions thereto or removals therefrom from time to time
                  thereafter approved by a  vote of at least  two-thirds of such
                  Incumbent Directors)  shall cease for any reason to constitute
                  50% or more of the  Board of Directors of Borrower;  provided,
                  however,  that for  each  determination  period  ending  on or
                  before June 30,  2002,  each  determination  period  shall  be
                  deemed to be a period from the Effective Date through the date
                  of  such  calculation;  or  (c)  Borrower  shall  adopt a plan
                  relating to the liquidation or dissolution of Borrower; or (d)
                  Borrower shall  sell all or  substantially  all of its  assets
                  (determined on a Consolidated basis) to another Person (except
                  as permitted by Section 5.2(c));

         (j)      any of  the  Loan  Documents or  any  Lien created thereby are
                  determined to  be  invalid or  unenforceable in  any  material
                  respect;

         (k)      any Restricted  Subsidiary (other than an Excluded  Restricted
                  Subsidiary)  fails to execute  and  deliver to  Administrative
                  Agent a Guaranty  within 30 days after  becoming a  Restricted
                  Subsidiary,  or any Restricted Subsidiary that ceases to be an
                  Excluded Restricted Subsidiary fails to execute and deliver to
                  Administrative  Agent a  Guaranty  within  30 days  after  the
                  determination has been made that such Restricted Subsidiary is
                  no longer an Excluded Restricted Subsidiary; or

                                       46


<PAGE>



         (l)      Borrower or any Restricted Subsidiary fails (i) to execute and
                  deliver to  Collateral  Agent a  Pledge Agreement covering the
                  capital  stock,  partnership  interests,  or  other  ownership
                  interests  directly  owned  by  it in  each  Person  that is a
                  Restricted Subsidiary (other than a Restricted Subsidiary that
                  has  executed a  Guaranty)  within  30 days  after such Person
                  becomes  a  Restricted  Subsidiary  (limited  to  65%  of  the
                  outstanding  capital  stock,  partnership interests,  or other
                  ownership interests in such Person if such Person is a Foreign
                  Restricted  Subsidiary),  or  (ii)  to  promptly  execute  and
                  deliver or register,  file or record  such other documents and
                  instruments as  Collateral  Agent  may  reasonably  request to
                  grant, create, preserve, perfect and maintain, as first, prior
                  and  perfected  Liens,  the  Liens created,  or intended to be
                  created, by such Pledge Agreement, subject to Permitted Liens,
                  provided, however, the foregoing shall not apply to the extent
                  that any such Pledge Agreement is prohibited or would subject
                  Borrower or any  Restricted  Subsidiary to  adverse income tax
                  consequences  or substantial  stamp or similar taxes (A) under
                  Section 956 of the  Code or  applicable  stamp or  similar tax
                  laws,  (B) by  contractual  restrictions in existence prior to
                  the  Effective  Date,  in  the  case  of  a  Person  that is a
                  Restricted Subsidiary on the Effective Date, or by contractual
                  restrictions in existence  prior to the date such Person shall
                  become a  Restricted  Subsidiary, in the case of a Person that
                  becomes a  Restricted  Subsidiary after the  Effective Date or
                  (C) as a matter of corporate, partnership or limited liability
                  company law.

Upon the occurrence of an Event of Default described in Section  6.1(h)(1),  (2)
or (3) with respect to Borrower,  the Commitments shall automatically  terminate
and all of the  Obligations  shall  thereupon  be  immediately  due and payable,
without  demand,  presentment,  notice of demand or of dishonor and  nonpayment,
protest,  notice of protest,  notice of intention to accelerate,  declaration or
notice of  acceleration,  or any other notice or declaration of any kind, all of
which are hereby expressly waived by Borrower and each Designated  Entity who at
any time ratifies, approves or guarantees this Agreement. During the continuance
of any other Event of Default, Administrative Agent at any time and from time to
time  upon  written  instructions  from  Required  Lenders  shall,  by notice to
Borrower (but otherwise without notice to any other Designated Entity),  declare
the  Commitments to be terminated,  and/or declare any or all of the Obligations
immediately  due and  payable,  and all  such  Obligations  shall  thereupon  be
immediately due and payable, without demand, presentment, notice of demand or of
dishonor  and  nonpayment,  protest,  notice of protest,  notice of intention to
accelerate,  declaration  or notice  of  acceleration,  or any  other  notice or
declaration  of any kind, all of which are hereby  expressly  waived by Borrower
and each Designated Entity who at any time ratifies, approves or guarantees this
Agreement and/or require Borrower to deposit Cash Collateral with Administrative
Agent in an amount determined in accordance with paragraph (c) of Section 2.14.

         Section 6.2  Remedies.  If any Default  shall occur and be  continuing,
Required Lenders or Administrative  Agent, at the direction of Required Lenders,
may  proceed  (or direct  Collateral  Agent to  proceed)  to protect and enforce
Lenders'  and  Agents'  rights  under  the  Loan  Documents  by any  appropriate
proceedings, including, without limitation, proceedings for specific performance
of any  covenant  or  agreement  contained  in any Loan  Document.  All  rights,
remedies and powers conferred upon  Administrative  Agent,  Collateral Agent and
Lenders under the Loan  Documents are  cumulative and not exclusive of any other
rights,  remedies or powers  available  under the Loan Documents or at law or in
equity.

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<PAGE>



         Section 6.3 Annulment of Acceleration. If a declaration of acceleration
is made pursuant to this Article 6, then Required Lenders,  by written notice to
Borrower  and  Administrative  Agent,  may  collectively  rescind and annul such
declaration  in its entirety;  provided,  that at the time such  declaration  is
annulled  and  rescinded:  (a) no  judgment  or decree has been  entered for the
payment of any moneys due  pursuant  to any Loan  Document;  (b) all  arrears of
interest  and all other  sums  payable  under  the Loan  Documents  (other  than
principal  amounts  which  may have  become  due as a result  of  acceleration),
including  interest  upon overdue  interest,  to the extent  payment  thereof is
lawful, shall have been duly paid; and (c) each and every other Event of Default
which has theretofore occurred shall have been waived pursuant to Section 8.1 or
otherwise made good or cured.

         Section 6.4 Indemnity.  Borrower hereby indemnifies each Agent and each
Lender from and against any and all liabilities,  obligations,  claims,  losses,
damages, penalties,  actions, judgments, suits, costs, expenses or disbursements
(including reasonable fees of attorneys,  accountants,  experts and advisors) of
any kind or nature whatsoever (in this section  collectively called "liabilities
and  costs")  which to any  extent  (in  whole or in part)  may be  imposed  on,
incurred  by, or  asserted  against  such  Agent or such  Lender as a result of,
arising out of, relating to or in connection with:

         (a)      the  Loan  Documents to which  Borrower or  one or more of its
                  Subsidiaries  is  a  party  or  the  rights  provided  therein
                  (including the enforcement or defense thereof);

         (b)      the direct or indirect  application or proposed application of
                  the proceeds  of any  Advance  or  Letter of  Credit to or for
                  Borrower or any of its Subsidiaries;

         (c)      any  transaction  financed  or to be  financed in  whole or in
                  part, directly or indirectly, with the proceeds of any Advance
                  or  Letter  of  Credit  to  or  for  Borrower  or  any  of its
                  Subsidiaries;

         (d)      any  investigation,  litigation or  proceeding  related to any
                  environmental  cleanup,  audit,  compliance  or  other  matter
                  (including  enforcement)  relating to any Environmental Law or
                  the  condition  of any facility or property  owned,  leased or
                  operated by Borrower or any of its Subsidiaries; or

         (e)      the  presence on or under,  or the escape,  seepage,  leakage,
                  spillage, discharge,  emission,  discharging or releases from,
                  any  facility  owned or  operated  by  Borrower  or any of its
                  Subsidiaries  of any hazardous or toxic  substance  (including
                  any  liabilities  and  costs  under  any  Environmental  Law),
                  regardless  of whether  caused by, or within the  control  of,
                  Borrower or any of its Subsidiaries; or any misrepresentation,
                  inaccuracy  or any breach in or of  Section  4.1(j) or Section
                  5.1(i)  by  or  with   respect  to  Borrower  or  any  of  its
                  Subsidiaries.

The foregoing indemnification shall not apply to the extent such liabilities and
costs are  determined to have  resulted or been caused,  in whole or in part, by
the gross negligence or willful  misconduct on the part of such Agent or Lender.
THE FOREGOING  INDEMNIFICATION  SHALL APPLY WHETHER OR NOT SUCH  LIABILITIES AND
COSTS  ARE IN ANY WAY OR TO ANY  EXTENT  CAUSED,  IN WHOLE  OR IN  PART,  BY ANY
NEGLIGENT  ACT OR OMISSION  OF ANY KIND  EXCEPT AS  PROVIDED BY THE  IMMEDIATELY
PRECEDING  SENTENCE.  In the event that any claim or demand  for which  Borrower
would be  liable to any Agent or any  Lender  under  this  section  is  asserted
against or sought to be collected from any Agent or any Lender by a third party,
such  Agent or such  Lender  shall  promptly  notify  Borrower  of such claim or
demand.  Borrower  shall have the lesser of: (i) thirty (30)  Business Days from
receipt of  the above  notice;  or  (ii)  three  (3)  Business Days prior to the

                                       48


<PAGE>



expiration of any period after which a default  judgment may be entered  against
such Agent or Lender (the "Notice  Period") to notify such Agent  and/or  Lender
whether or not Borrower  desires,  at the sole cost and expense of Borrower,  to
defend such Agent and/or Lender against such claim or demand.  In the event that
Borrower  notifies such Agent and/or Lender  within the Notice  Period,  that it
desires  to defend  such  Agent  and/or  Lender  against  such  claim or demand,
Borrower  shall have the right to settle or  otherwise  dispose of such claim or
demand  (other  than  claims  alleging  criminal  violations)  on such  terms as
Borrower,  with the consent of the indemnified party (which consent shall not be
unreasonably withheld) shall deem appropriate; provided that

         (w)      counsel  designated by  Borrower is  reasonably  acceptable to
                  Administrative Agent and the affected Lender;

         (x)      Borrower will have  acknowledged in  writing that this section
                  will  cover any  liabilities and  costs in  any  such claim or
                  demand;

         (y)      in  the  sole  determination of  Administrative  Agent and the
                  affected Lender,  Borrower will have the financial  ability to
                  pay such liabilities and costs; and

         (z)      Borrower shall  thereafter  consult  with Administrative Agent
                  and the affected Lender with  respect to such claim or demand;
                  and

provided  further,  that each of  Administrative  Agent and the affected  Lender
shall have the right at all times to  participate  in any  proceeding,  at their
sole cost and expense,  subject,  however,  to  Borrower's  right to control the
defense of all proceedings concerning such claim or demand.

In the event that  Borrower  fails to give such Agent and/or Lender such notice,
such Agent  and/or  Lender may defend  against  such claim or demand;  provided,
however,  that Borrower's obligation to reimburse such Agent and/or Lender shall
be limited to a single law firm of such Agent  and/or  Lender  (unless  Borrower
otherwise consents, which consent shall not be unreasonably withheld);  provided
further,  that Borrower  shall have the right at all times to participate in any
such proceeding, at its sole cost and expense, subject, however, to the right of
such Agent and/or  Lender to control the defense of all  proceedings  concerning
such claim or demand. As used in this section, the terms "Administrative  Agent"
and "Lender"  shall refer not only to the Persons  designated as such in Section
1.1  but  also  to  each  director,   officer,  agent,  attorney,  employee  and
representative of such Person.

                                    ARTICLE 7

                                     AGENTS

         Section 7.1 Appointment and Authority.  Bank of America, N.A. is hereby
appointed  Administrative Agent hereunder and under each other Loan Document and
as Collateral Agent under the Pledge  Agreements.  Credit Suisse First Boston is
hereby  appointed  Documentation  Agent  hereunder  and under  each  other  Loan
Document.  The  Chase  Manhattan  Bank is  hereby  appointed  Syndication  Agent
hereunder and under each other Loan  Document.  Lenders hereby  authorizes  each
such  Agent to act as the agent of such  Lender  hereunder  and each  other Loan
Document to the extent  provided  herein or therein.  In  addition,  each Lender
hereby irrevocably  authorizes  Administrative  Agent, and Administrative  Agent
hereby undertakes, to receive payments of principal,  interest and other amounts
due hereunder as specified  herein.  In addition,  each Lender hereby authorizes
Administrative  Agent  and  Collateral  Agent,   and  Administrative  Agent  and

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<PAGE>



Collateral  Agent hereby  undertakes,  to take all other actions and to exercise
such powers under the Loan Documents as are specifically  delegated to it by the
terms hereof or thereof,  together with all other powers  reasonably  incidental
thereto.  Neither  Documentation  Agent nor Syndication  Agent has any duties or
responsibilities whatsoever under or in connection with this Agreement or any of
the other Loan Documents except as expressly set forth herein.  The relationship
of each Agent to Lenders is only that of one commercial bank acting as agent for
others,  and nothing in the Loan Documents  shall be construed to constitute any
Agent a trustee or other fiduciary for any holder of any of the Obligations, nor
to impose  on any Agent  duties  and  obligations  other  than  those  expressly
provided for in the Loan Documents. None of the Agents shall have implied duties
to  Lenders,  or any  obligations  to Lenders to take any action  under the Loan
Documents,  except  any  action by an Agent  specifically  required  by the Loan
Documents to be taken by such Agent.  With respect to any matters not  expressly
provided  for in the Loan  Documents  and any matters  which the Loan  Documents
place within the  discretion  of any Agent,  such Agent shall not be required to
exercise  any  discretion  or take any  action,  and each such Agent may request
instructions  from Lenders  with respect to any such matter,  in which case such
Agent  shall be  required  to act or to refrain  from acting (and shall be fully
protected and free from liability to any and all Lenders and Agents in so acting
or refraining from acting) upon the instructions of Required Lenders  (including
itself) or all Lenders (in the circumstances provided in Section 8.1); provided,
however,  that no Agent shall be required to take any action which exposes it to
a risk of personal liability that it considers unreasonable or which is contrary
to  the  Loan  Documents  or  to  applicable  law  unless   indemnified  to  its
satisfaction by Lenders or Borrower.  Upon receipt by Administrative  Agent from
Borrower of any communication  calling for action on the part of Lenders or upon
notice  from any  Lender  to  Administrative  Agent of any  Default  or Event of
Default, Administrative Agent shall promptly notify each Lender thereof.

         Section  7.2  Agents'  Reliance.  No  Agent  or any  of its  directors,
officers,  agents,  attorneys, or employees shall be liable for any action taken
or  omitted  to be taken by any of them  under  or in  connection  with the Loan
Documents,  including  their  negligence of any kind,  except that each shall be
liable for its own gross negligence or willful misconduct.  Without limiting the
generality of the foregoing, each Agent:

         (a)      may treat the payee of any Note as the  holder  thereof  until
                  Administrative Agent receives written notice of the assignment
                  or transfer thereof in accordance with this Agreement,  signed
                  by such  payee  and in  form  satisfactory  to  Administrative
                  Agent;

         (b)      may  consult  with  legal  counsel   (including   counsel  for
                  Borrower),  independent  public  accountants and other experts
                  selected  by such Agent and shall not be liable for any action
                  taken or omitted to be taken in good faith by it in accordance
                  with the advice of such counsel, accountants or experts;

         (c)      makes no warranty or representation to any Lender or any other
                  Agent and shall not be  responsible to any Lender or any other
                  Agent for any statements,  warranties or representations  made
                  in or in  connection  with the  Loan  Documents  by any  other
                  Person;

         (d)      shall not have any duty to  ascertain  or to inquire as to the
                  performance  or observance  of any of the terms,  covenants or
                  conditions of the Loan Documents on the part of any Designated
                  Entity or to inspect  the  property  (including  the books and
                  records) of any Designated Entity;

         (e)      shall not be  responsible to any Lender or any other Agent for
                  the  due  execution  (other  than its  own  due  execution and
                  delivery),  legality,  validity,  enforceability, genuineness,

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<PAGE>



                  existence,  sufficiency or  value of any  Loan Document or any
                  instrument or  document  furnished in  connection herewith, or
                  any collateral;

         (f)      may  rely  upon  the  representations  and  warranties  of any
                  Designated  Entity and the  Lenders in  exercising  its powers
                  hereunder;

         (g)      shall not be responsible for the satisfaction of any condition
                  specified in Article 3,  except receipt by such Agent of items
                  required to be delivered to such Agent; and

         (h)      shall  incur  no  liability  under or in  respect  of the Loan
                  Documents by acting upon any notice,  consent,  certificate or
                  other instrument or writing (including any telecopy, telegram,
                  cable or telex)  believed  by it to be  genuine  and signed or
                  sent by the proper Person or Persons.

         Section 7.3 Lenders' Credit Decisions. Each Lender acknowledges that it
has, independently and without reliance upon any Agent or any other Lender, made
its own analysis of the Designated  Entities and the  transactions  contemplated
hereby and its own  independent  decision to enter into this  Agreement  and the
other Loan Documents.  Each Lender also acknowledges that it will, independently
and  without  reliance  upon any  Agent 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 the Loan
Documents.

         Section 7.4 Indemnification. Each Lender agrees to indemnify each Agent
(to the extent not  reimbursed  by Borrower  within ten (10) days after  demand)
from and against  such  Lender's  Percentage  Share of any and all  liabilities,
obligations,  claims, losses, damages,  penalties,  actions,  judgments,  suits,
costs,  expenses  or  disbursements  (including  reasonable  fees of  attorneys,
accountants,  experts,  and advisors) of any kind or nature  whatsoever (in this
section  collectively  called  "liabilities  and costs") which to any extent (in
whole or in part) may be imposed on, incurred by, or asserted against such Agent
growing out of,  resulting from or in any other way  associated  with any of the
Loan Documents and the transactions and events (including, without rotation, the
enforcement thereof) at any time associated  therewith or contemplated  therein.
THE FOREGOING  INDEMNIFICATION  SHALL APPLY WHETHER OR NOT SUCH  LIABILITIES AND
COSTS  ARE IN ANY WAY OR TO ANY  EXTENT  CAUSED,  IN WHOLE  OR IN  PART,  BY ANY
NEGLIGENT ACT OR OMISSION OF ANY KIND BY ANY AGENT, PROVIDED ONLY THAT NO LENDER
SHALL BE OBLIGATED UNDER THIS SECTION TO INDEMNIFY AN AGENT FOR THAT PORTION, IF
ANY, OF ANY  LIABILITIES  AND COSTS WHICH IS THE SOLE RESULT OF SUCH AGENT'S OWN
INDIVIDUAL  GROSS  NEGLIGENCE  OR WILLFUL  MISCONDUCT,  AS DETERMINED IN A FINAL
JUDGMENT OF A COURT OF COMPETENT JURISDICTION. Cumulative of the foregoing, each
Lender  agrees to reimburse  each Agent  promptly  upon demand for such Lender's
Percentage Share of any costs and expenses  required to be paid to such Agent by
Borrower  under  Section  5.1(h) to the  extent  that such  Agent is not  timely
reimbursed  for such costs and expenses by Borrower as provided in such section.
As used in this section the term "Agents"  shall refer not only to the Person(s)
designated  as such in Section 1.1 but also to each  director,  officer,  agent,
attorney, employee and representative of such Person(s).

         Section 7.5 Rights as Lender. In their respective capacity as a Lender,
each Agent  shall have the same  rights  and  obligations  as any Lender and may
exercise  such  rights  as  though  it were not an  Agent.  Each  Agent  and its
Affiliates  may accept  deposits  from,  lend  money to,  act as  trustee  under
indentures  of,  and  generally  engage  in any  kind of  business  with  any of
Designated  Entities  or  their  Affiliates,  all as if it  were  not  an  Agent
hereunder and without any duty to account therefor to any other Lender.

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<PAGE>



         Section  7.6  Sharing of Set-Offs  and Other  Payments.  Each Agent and
Lender  agrees that if it shall,  whether  through the  exercise of rights under
security documents or rights of banker's lien,  setoff, or counterclaim  against
any Designated Entity or otherwise, obtain payment of a portion of the aggregate
Obligations owed to it (other than in respect of its Swing Line Advances) which,
taking into account all distributions made by Administrative Agent under Section
2.11,  causes such Agent or such Lender to have received more than it would have
received had such payment been received by Administrative  Agent and distributed
pursuant  to  Section  2.11  (or,  in the case of Swing  Line  Advances  paid as
provided  in  Section  2.5(c)),  then it shall be deemed to have  simultaneously
purchased  and shall be obligated to purchase  interests in the  Obligations  as
necessary to cause  Agents and all Lenders to share all payments  (other than in
respect of Swing Line  Advances) as provided for in Section 2.11, and such other
adjustments shall be made from time to time as shall be equitable to ensure that
all Agents and all  Lenders  share all  payments of  Obligations  (other than in
respect of Swing Line Advances) as provided in Section 2.11. If any Agent or any
Lender,  whether in connection  with setoff of amounts which might be subject to
setoff or otherwise, receives collateral or other protection for its Obligations
or such amounts which might be subject to setoff,  such Agent or Lender  agrees,
promptly upon demand,  to take such action  necessary so that all Agents and all
Lenders  share in the benefits of such  collateral  ratably in proportion to the
Obligations  owing to each of them.  Nothing herein  contained  shall in any way
affect  the right of any  Agent or any  Lender to  obtain  payment  (whether  by
exercise of rights of banker's lien,  set-off or  counterclaim  or otherwise) of
indebtedness  other than the  Obligations.  Borrower  expressly  consents to the
foregoing  arrangements and agrees that any holder of any such interest or other
participation  in the  Obligations,  whether  or not  acquired  pursuant  to the
foregoing arrangements,  may to the fullest extent permitted by law exercise any
and all rights of banker's lien,  set-off,  or  counterclaim as fully as if such
holder were a holder of the  Obligations in the amount of such interest or other
participation.  If all or any part of any  funds  transferred  pursuant  to this
section is  thereafter  recovered  from the  seller  under  this  section  which
received the same, the purchase  provided for in this section shall be deemed to
have been rescinded to the extent of such recovery,  together with interest,  if
any, if  interest  is required  pursuant to court order to be paid on account of
the possession of such funds prior to such recovery.

         Section 7.7 Investments.  Whenever  Administrative  Agent in good faith
determines  that it is uncertain  about how to  distribute  to Lenders any funds
which it has received, or whenever Administrative Agent in good faith determines
that  there is any  dispute  among  Lenders  about  how  such  funds  should  be
distributed,  Administrative Agent may choose to defer distribution of the funds
which are the subject of such uncertainty or dispute. If Administrative Agent in
good  faith  believes  that the  uncertainty  or  dispute  will not be  promptly
resolved,  or if  Administrative  Agent is  otherwise  required to invest  funds
pending  distribution  to  Lenders,  Administrative  Agent may invest such funds
pending  distribution  (at the  risk of  Borrower);  all  interest  on any  such
investment  shall be distributed upon the distribution of such investment and in
the same  proportion  and to the same  Persons  as such  investment.  All moneys
received by Administrative  Agent for distribution to Lenders (other than to the
Person who is  Administrative  Agent in its separate capacity as a Lender) shall
be  held  by   Administrative   Agent  pending  such   distribution   solely  as
Administrative  Agent for such Lenders,  and Administrative  Agent shall have no
equitable title to any portion thereof.

         Section 7.8 Benefit of Article 7. The provisions of this Article (other
than the  following  Section 7.9) are intended  solely for the benefit of Agents
and  Lenders,  and no  Designated  Entity  shall be entitled to rely on any such
provision or assert any such  provision in a claim or defense  against any Agent
or Lender.  Agents and Lenders may waive or amend such provisions as they desire
without any notice to or consent of any Designated Entity.

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<PAGE>



         Section 7.9 Resignation  and Removal.  Any Agent may resign at any time
by giving written notice thereof to Lenders and Borrower. Each such notice shall
set forth the date of such resignation.  Required Lenders or Borrower,  with the
consent (which shall not be  unreasonably  withheld) of Required  Lenders (other
than any Agent to be removed)  shall be  entitled to remove any Agent.  Upon any
such resignation or removal,  Borrower may, with the written  concurrence (which
shall not be unreasonably  withheld) of Required Lenders  (exclusive of any such
resigned or removed Agent), designate a successor Agent. If, within fifteen (15)
days  after the date of such  resignation  or  removal,  Borrower  makes no such
designation  or  such  written  concurrence  is  not  given,   Required  Lenders
(exclusive  of any such resigned or removed  Agent)  shall,  with the consent of
Borrower (which consent shall not be unreasonably withheld or delayed), have the
right to appoint a successor  Agent.  After any Agent's  resignation  or removal
hereunder,  the  provisions  of this  Article 7 shall  continue  to inure to its
benefit as to any actions  taken or omitted to be taken by it while it was Agent
under the Loan  Documents.  Any  out-going  Agent  shall  promptly  execute  all
assignments  and other  documents  necessary to  effectuate  the transfer of the
agency in connection with this Agreement and shall promptly deliver all original
documents and any collateral in its possession to the successor Agent.

                                    ARTICLE 8

                                  MISCELLANEOUS

         Section  8.1 Waivers and  Amendments.  No failure or delay  (whether by
course of conduct or  otherwise)  by any Agent or any Lender in  exercising  any
right,  power or remedy which any Agent or Lender may have under any of the Loan
Documents  shall  operate as a waiver  thereof or of any other  right,  power or
remedy,  nor shall any single or partial  exercise by any Agent or Lender of any
such right, power or remedy preclude any other or further exercise thereof or of
any  other  right,  power or  remedy.  No waiver  of any  provision  of any Loan
Document  and no  consent to any  departure  therefrom  shall ever be  effective
unless it is in writing and signed as provided  below in this section,  and then
such waiver or consent shall be effective only in the specific instances and for
the purposes for which given and to the extent  specified  in such  writing.  No
notice to or demand on any Designated Entity shall in any case of itself entitle
any  Designated  Entity to any other or  further  notice or demand in similar or
other  circumstances.  This Agreement and the other Loan Documents set forth the
entire understanding between the parties hereto with respect to the transactions
contemplated  herein  and  therein  and  supersede  all  prior  discussions  and
understandings  with respect to the subject  matter  hereof and thereof,  and no
waiver,  consent,  release,  modification  or amendment of or supplement to this
Agreement or the other Loan  Documents  shall be valid or effective  against any
party hereto  unless the same is in writing and signed by (a) if such party is a
Designated  Entity, by such Designated Entity, (b) if such party is an Agent, by
such  Agent  and (c) if such  party is a  Lender,  by  Required  Lenders,  or by
Administrative  Agent on behalf of  Lenders  with the prior  written  consent of
Required  Lenders (or without further consent than that already  provided herein
in the circumstances provided in Section 8.7).  Notwithstanding the foregoing or
anything  to the  contrary  herein or in any other  Loan  Document,  no  waiver,
consent,  release,  modification or amendment of or supplement to this Agreement
or any other Loan Document which would:

         (i)      increase the Commitment of any Lender or subject any Lender to
                  any additional obligations;

         (ii)     reduce or forgive any fees hereunder,  or the principal of, or
                  interest on,  any Lender's  Advances or participation in Swing
                  Line Advances or LC Obligations;


                                       53


<PAGE>



         (iii)    postpone any date fixed for any payment of any fees hereunder,
                  or  principal  of, or interest  on, any  Lender's  Advances or
                  participation in Swing Line Advances or LC Obligations;

         (iv)     amend  the  definitions   herein  of  "Required   Lenders"  or
                  otherwise  change the aggregate  amount of  Percentage  Shares
                  which is required for  Administrative  Agent, any other Agent,
                  Lenders or any of them to take any particular action under the
                  Loan Documents;

         (v)      release any Restricted  Subsidiary  from its Guaranty  (except
                  upon  the  Restricted   Subsidiary  becoming  an  Unrestricted
                  Subsidiary  as specified in this  Agreement) or release all or
                  substantially all of the collateral (except as contemplated by
                  this Agreement);

         (vi)     amend this Section 8.1;

         (vii)    extend the Commitment Period;

         (ix)     amend,  modify  or  waive  any  provision  applicable  to  the
                  indemnification of any Lender;

         (x)      consent to the assignment or transfer by any Designated Entity
                  of any of its rights  or obligations  under this  Agreement or
                  the other Loan Documents; or

         (xi)     amend,  modify or waive the rights and  obligations of Issuing
                  Bank or Agents; provided, that no obligation to any Designated
                  Entity  of any  Lender  or  Issuing  Bank or any  Agent may be
                  amended,  modified or waived  without the written  approval of
                  Borrower, which approval shall not be unreasonably withheld;

shall be valid or effective,  in each case, without the prior written consent of
each Lender affected thereby.

Notwithstanding the foregoing or anything to the contrary herein or in any other
Loan  Document,  no provision  hereof may be amended or waived which  impacts or
affects  Swing Line Lender  without its prior  written  consent and no provision
hereof may be amended or waived  which  impacts or affects  Issuing Bank without
its prior written consent.

         Section 8.2 Survival of Agreements,  Cumulative Nature. Each Designated
Entity's  various  representations,   warranties,   covenants,  indemnities  and
agreements  in the Loan  Documents  shall  survive the execution and delivery of
this  Agreement  and the other Loan  Documents  and the  performance  hereof and
thereof,  including  the making or  granting of the Loans,  the  issuance of the
Letters of Credit and the delivery of the Notes,  and the other Loan  Documents,
and  shall  further  survive  until all of the  Obligations  are paid in full to
Agents and Lenders,  all Letters of Credit have expired or been canceled and all
of Agents' and Lenders'  obligations to Borrower are terminated,  provided that,
notwithstanding  the  foregoing,   certain  Obligations  of  certain  Designated
Entities  under their  respective  Guaranties  shall survive or be reinstated as
provided in such Guaranties. The representations,  warranties,  indemnities, and
covenants made by any Designated  Entity in any Loan Documents,  and the rights,
powers, and privileges granted to Agents and Lenders in the Loan Documents,  are
cumulative.

         Section 8.3 Notices. All notices, requests, consents, demands and other
communications  required  or  permitted  under  any  Loan  Document  shall be in
writing,  unless otherwise specifically provided in such Loan Document (provided
that  Administrative Agent may give  telephonic notices to  the other Agents and

                                       54


<PAGE>



Lenders),  and shall be deemed  sufficiently  given or furnished if delivered by
personal delivery,  by telecopy (with telephonic  confirmation of transmission),
by delivery service with proof of delivery, or by registered or certified United
States mail,  postage prepaid,  to Borrower at the address of Borrower specified
on the  signature  pages  hereto  and to each  Agent  and each  Lender  at their
addresses  specified on the signature  pages hereto  (unless  changed by similar
notice  in  writing  given  by the  particular  Person  whose  address  is to be
changed). Any such notice or communication shall be deemed to have been given:

         (a)      in the  case of  personal delivery or  delivery service, as of
                  the date  of first  attempted  delivery during normal business
                  hours at the address provided herein;

         (b)      in the case of telecopy, upon receipt; or

         (c)      in the case of  registered  or certified  United  States mail,
                  three 3) days  after  deposit  in the mail,  postage  prepaid;
                  provided,  however, that no Request for Revolving Loan Advance
                  or  Rate  Election  shall  become   effective  until  actually
                  received  by  Administrative  Agent  and no  request  for  the
                  issuance of a Letter of Credit or Letter of Credit Application
                  shall  become  effective  until  actually  received by Issuing
                  Bank.

         Section 8.4 Parties in Interest.  All grants,  covenants and agreements
contained  in the Loan  Documents  shall  bind and inure to the  benefit  of the
parties thereto and their respective successors and assigns; provided,  however,
that no  Designated  Entity may assign or transfer any of its rights or delegate
any of its  duties or  obligations  under any Loan  Document  without  the prior
written consent of all Lenders.

         Section 8.5 Governing Law. THE LOAN DOCUMENTS SHALL BE DEEMED CONTRACTS
AND INSTRUMENTS MADE UNDER THE LAWS OF THE STATE OF TEXAS AND SHALL BE CONSTRUED
AND ENFORCED IN  ACCORDANCE  WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS
AND THE LAWS OF THE UNITED  STATES OF AMERICA,  WITHOUT  REGARD TO PRINCIPLES OF
CONFLICTS OF LAW. CHAPTER 346 OF THE TEXAS FINANCE CODE (WHICH REGULATES CERTAIN
REVOLVING CREDIT LOAN ACCOUNTS AND REVOLVING TRI- PARTY ACCOUNTS) DOES NOT APPLY
TO THIS AGREEMENT OR TO ANY NOTES.

         Section 8.6 Limitation on Interest.  It is the intention of the parties
hereto to conform strictly to applicable usury laws and,  anything herein or any
other  Loan  Document  to  the  contrary  notwithstanding,  the  obligations  of
Designated  Entities to a Lender or an Agent under this  Agreement  and the Loan
Documents shall be subject to the limitation that payments of interest shall not
be required to the extent that receipt  thereof  would be contrary to provisions
of law  applicable to such Lender or Agent  limiting rates of interest which may
be  charged  or  collected  by  such  Lender  or  Agent.  Accordingly,   if  the
transactions  contemplated  hereby would be usurious under laws  applicable to a
Lender or Agent  (including  the federal and state laws of the United  States of
America or of any other jurisdiction whose laws may be mandatorily applicable to
such Lender or Agent notwithstanding  anything to the contrary in this Agreement
or any other Loan Document) then, in that event, notwithstanding anything to the
contrary in this Agreement or any other Loan Document, it is agreed as follows:

         (a)      the provisions of this section shall govern and control;



                                       55


<PAGE>



         (b)      the aggregate of all consideration  which constitutes interest
                  under applicable law that is contracted for,  taken, reserved,
                  charged or received under this Agreement,  or under any of the
                  aforesaid  agreements or  otherwise  in  connection  with this
                  Agreement or any  other Loan  Document by such Lender or Agent
                  shall  under no  circumstances  exceed the  maximum  amount of
                  interest  allowed  by  applicable  law  (such  maximum  lawful
                  interest rate,  if any,  with respect to  each Lender and each
                  Agent herein called the "Maximum Lawful Rate"), and any excess
                  shall be canceled  automatically and if theretofore paid shall
                  be credited to the  relevant Designated  Entity by such Lender
                  or Agent  (or,  if such consideration  shall have been paid in
                  full, such excess refunded to the relevant Designated Entity);

         (c)      all sums paid,  or agreed to be paid,  to such Lender or Agent
                  for the use,  forbearance and detention of the indebtedness of
                  the  relevant  Designated  Entity  to  such  Lender  or  Agent
                  hereunder  or under  any other  Loan  Document  shall,  to the
                  extent  permitted by laws  applicable to such Lender or Agent,
                  as the case may be,  be  amortized,  prorated,  allocated  and
                  spread  throughout  the full term of such  indebtedness  until
                  payment in fall so that the actual rate of interest is uniform
                  throughout the full term thereof;

         (d)      if at any time the interest provided pursuant to any provision
                  of this  Agreement or  any other Loan Document,  together with
                  any other fees payable pursuant to this Agreement or any other
                  Loan  Document and  deemed  interest  under laws applicable to
                  such Lender  or Agent,  exceeds  the  amount  which would have
                  accrued at the Maximum Lawful Rate, the amount of interest and
                  any such  fees to  accrue to such  Lender or Agent pursuant to
                  this Agreement  or any other  Loan Document  shall be limited,
                  notwithstanding  anything to the contrary in this Agreement or
                  any other Loan  Document,  to that  amount  which  would  have
                  accrued  at  the  Maximum  Lawful  Rate,  but  any  subsequent
                  reductions,  as  applicable,  shall not reduce the interest to
                  accrue to such Lender or Agent  pursuant to this  Agreement or
                  any other  Loan Document  below the  Maximum Lawful Rate until
                  the   total  amount  of  interest  accrued  pursuant  to  this
                  Agreement or such other Loan Document, as the case may be, and
                  such fees deemed to be interest equals the  amount of interest
                  which would  have accrued to such Lender or Agent if a varying
                  rate of  interest  per  annum  equal to the  interest provided
                  pursuant to Section 2.3  or any other  relevant section hereof
                  (other than this section) and any Note, as applicable,  had at
                  all times been in effect,  plus the amount of fees which would
                  have been received but for the effect of this section; and

         (e)      if the  total  amount of  interest  paid  by or  accrued  with
                  respect  to the  Obligations of  Borrower,  together  with any
                  other  fees payable  pursuant to this  Agreement and the other
                  Loan  Documents and  deemed interest  under laws applicable to
                  such Lender or Agent  pursuant to this  Agreement or any other
                  Loan Document  under the  foregoing provisions of this section
                  is less  than the total amount  of interest  which  would have
                  accrued if a  varying rate  per annum  equal  to the  interest
                  provided pursuant to Section 2.3 or any other relevant section
                  hereof  (other than this section),  as applicable,  had at all
                  times been  in effect  and  all  fees  provided  for  in  this
                  Agreement and the  other Loan  Documents  had been paid,  then
                  Borrower severally  agrees to  pay to such  Lender or Agent an
                  amount equal to the difference between,  (i) the lesser of (x)
                  the amount  of interest  and fees  which would have accrued if
                  the Maximum  Lawful Rate had at all times been in effect,  and
                  (y) the amount of  interest and  fees which would have accrued
                  if a varying  rate per annum  equal to the  interest  provided
                  pursuant to Section 2.3 or such other relevant section of this
                  Agreement   (other  than  this  section)  and  any  Note,   as

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<PAGE>



                  applicable,  had at all times been in effect  and all fees had
                  been paid, and (ii) the amount of interest and fees accrued in
                  accordance  with  the  other provisions of  this Agreement and
                  other Loan Documents.

         For purposes of Chapter 303 of the Texas  Finance  Code,  to the extent
applicable  to any Lender or Agent,  Borrower and each other  Designated  Entity
agrees that the Maximum Lawful Rate shall be the "weekly  ceiling" as defined in
said Chapter, provided that such Lender or Agent, as applicable,  may also rely,
to the extent  permitted by applicable laws of the State of Texas and the United
States of America,  on  alternative  maximum  rates of interest  under the Texas
Finance Code or other laws  applicable to such Lender or Agent from time to time
if greater.

         Section 8.7  Termination:  Limited  Survival.  In its sole and absolute
discretion,  Borrower may, at any time that no  Obligations or other amounts are
owing  and no  Letters  of  Credit  are  outstanding,  elect to  terminate  this
Agreement in a written notice delivered to Administrative Agent. Upon receipt by
Administrative  Agent of such a notice,  if no  Obligations or other amounts are
then  owing and no Letters of Credit are  outstanding,  this  Agreement  and all
other Loan  Documents  shall  thereupon be  terminated  and the parties  thereto
released   from   all   prospective   obligations   hereunder   or   thereunder.
Notwithstanding the foregoing or anything herein to the contrary, any waivers or
admissions made by any Designated  Entity in any Loan Document,  any Obligations
under Sections 2.16 through 2.20, any  obligations  which any Designated  Entity
may have to indemnify or compensate  any Agent,  any Issuing Bank, or any Lender
in  connection  with matters  arising upon or prior to the  termination  of this
Agreement  and any  obligations  which  any  Lender  may  have to  indemnify  or
compensate any Agent or Issuing Bank in connection  with matters arising upon or
prior to the termination of this Agreement shall survive any termination of this
Agreement or any other Loan Document and the release of Designated Entities.  At
the request and expense of Borrower,  Administrative  Agent or Collateral Agent,
as  applicable,  shall prepare and execute all necessary  instruments to reflect
and effect such termination of the Loan Documents including, without limitation,
the Guaranties  and the Pledge  Agreements.  Administrative  Agent or Collateral
Agent, as applicable,  is hereby  authorized to execute all such  instruments on
behalf of all  Lenders,  without the joinder of or farther  action or consent by
any Lender.

         Section 8.8      Assignments, Participations.

         (a)      Each Lender shall have  the right to sell,  assign or transfer
                  all or any part of such Lender's  Notes, Advances, Commitment,
                  LC Obligations and  Swing Line Obligations hereunder to one or
                  more  Affiliates,  Lenders,  financial  institutions,  pension
                  plans,  investment funds,  or similar  Persons or to a Federal
                  Reserve Bank;  provided, that each such sale,  assignment,  or
                  transfer  (other  than to an  Affiliate, a Lender or a Federal
                  Reserve Bank) shall be with the consent of Borrower (unless an
                  Event of  Default  has  occurred  and  is  continuing),  which
                  consent will  not  be  unreasonably  withheld,  and  with  the
                  consent of  Administrative  Agent,  which  consent will not be
                  unreasonably  withheld,   and  the  assignee,   transferee  or
                  recipient shall have, to the extent of such sale,  assignment,
                  or transfer,  the same rights,  benefits and obligations as it
                  would  if it were  such Lender  and a  holder  of such  Notes,
                  Advances,   Commitment,   LC  Obligations   and   Swing   Line
                  Obligations, including, without limitation,  the right to vote
                  on decisions requiring  consent or  approval of all Lenders or
                  Required  Lenders and the  obligation to  fund  its  Advances;
                  provided further,  that  (1)  each Lender in  making each such
                  sale, assignment,  or transfer must sell, assign or transfer a
                  pro rata  portion of its  Commitment  and each Advance  (other
                  than a  Swing  Line  Advance),  LC Obligation  and  Swing Line
                  Obligation made or  held by such  Lender,  (2) each such sale,
                  assignment, or transfer (other than to an Affiliate,  a Lender

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                  or a Federal Reserve  Bank) shall be in an aggregate principal
                  amount  not  less  than  $10,000,000,  (3)  unless  such sale,
                  assignment or transfer results in a Lender's Commitment  being
                  reduced to  zero,  each Lender  shall at all times  maintain a
                  Commitment then outstanding  in an aggregate  principal amount
                  at least equal to $10,000,000; (4) no Lender may offer to sell
                  its Notes, Commitment, LC Obligations,  Swing Line Obligations
                  or  Advances  or  interests   therein  in  violation  of   any
                  securities laws; and (5) no such assignment  (other  than to a
                  Federal  Reserve  Bank)   shall  become   effective  until the
                  assigning Lender delivers to Administrative Agent and Borrower
                  copies  of  all  written   assignments   and  other  documents
                  evidencing any such assignment and an Agreement to be Bound in
                  the  form  of   Exhibit  K,   providing  for  the   assignee's
                  ratification  and  agreement to be  bound by the terms of this
                  Agreement and the other Loan Documents.  An assignment  fee in
                  the amount of $3,500 for each such assignment will be  payable
                  to  Administrative  Agent by the assignor or assignee.  Within
                  five (5) Business  Days after its  receipt of  copies  of  any
                  assignment and the other  documents  relating  thereto and any
                  Note of the  assignor,  Borrower  shall,  if  requested by the
                  assignor or  assignee,  execute and deliver to  Administrative
                  Agent  (for   delivery  to  the  assignor  or   assignee,   as
                  applicable)  new Notes  evidencing  such  assignee's  assigned
                  Advances  and  Commitment  and  if  the  assignor  Lender  has
                  retained a portion of its Advances and Commitment, replacement
                  Notes in the principal  amount of the Advances and  Commitment
                  retained by the assignor  Lender.  On and after the  effective
                  date of an assignment  hereunder,  the assignee  shall for all
                  purposes  be a Lender  party to this  Agreement  and any other
                  Loan  Document  executed  by  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  thereto,
                  and no further  consent or action by Borrower,  Lenders or any
                  Agent shall be required to release the transferor Lender, with
                  respect to the Commitment, the LC Obligations,  the Swing Line
                  Obligations and the Advances assigned to such assignee and the
                  transferor Lender shall henceforth be so released.

         (b)      Each Lender  shall have the right to grant  participations  in
                  all or  any  part  of  such  Lender's  Notes,  Commitment,  LC
                  Obligations,  Swing Line Obligations and Advances hereunder to
                  one  or  more  pension  plans,   investment  funds,  financial
                  institutions or other Persons; provided, that:

                  (1)     each Lender granting a participation  shall retain the
                          right to vote hereunder,  and no participant  shall be
                          entitled  to vote  hereunder  on  decisions  requiring
                          consent or  approval  of Lenders or  Required  Lenders
                          (except as set forth in (3) below);

                  (2)     in  the  event  any  Lender  grants  a   participation
                          hereunder,  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  holder  of any such  Notes for all
                          purposes  under the Loan  Documents,  and each  Agent,
                          each  Lender and  Borrower  shall be  entitled to deal
                          with the Lender granting a  participation  in the same
                          manner as if no participation had been granted; and

                  (3)     no participant  shall ever have any right by reason of
                          its  participation  to  exercise  any of the rights of
                          Lenders  hereunder  (other than Section 8.15  hereof),
                          except that any Lender may agree with any  participant
                          that such Lender will not, without the consent of such

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                          participant,   consent  to  any  amendment  or  waiver
                          described in Section 8.1 requiring approval of 100% of
                          the Lenders.

         (c)      It is  understood  and agreed  that any Lender may  provide to
                  assignees  and  participants  and  prospective  assignees  and
                  participants   financial  information  and  reports  and  data
                  concerning  Designated  Entities'  properties  and  operations
                  which was provided to such Lender  pursuant to this Agreement,
                  subject to Section 8.9.

         (d)      Upon the reasonable request of either  Administrative Agent or
                  Borrower,  each  Lender  will  identify  those  to whom it has
                  assigned   or   participated   any  part  of  its  Notes,   LC
                  Obligations,  Swing Line Obligations or Advances,  and provide
                  the amounts so assigned or participated.  Administrative Agent
                  shall maintain,  at its office, a register for the recordation
                  of the names and  addresses of Lenders and their  Commitments,
                  which  register  shall be available for inspection by Borrower
                  or any  Lender  at any  reasonable  time and from time to time
                  upon reasonable prior notice.

         Section 8.9 Confidentiality.  Each Agent and each Lender agrees that it
(a) will maintain the  confidentiality  of all non-public  information  from any
Designated  Entity or any Subsidiary of Borrower  obtained pursuant to the terms
of this  Agreement or any other Loan Document in accordance  with safe and sound
banking  practices,  and (b) will not use such confidential  information for any
purpose other than in connection with this Agreement;  provided,  however,  that
this restriction  shall not apply to information which (w) has at the particular
time in question  entered the public  domain,  or been  independently  developed
without the use or incorporation of any non-public  information provided to such
Agent or Lender by any  Designated  Entity or any Subsidiary of Borrower by such
Agent or such Lender other than through  disclosure by such Agent or such Lender
in violation of this  section,  (x) is required to be disclosed by law or by any
order, rule, regulation or legal process (whether valid or invalid) of any court
or  Governmental  Authority,  (y) is  furnished  to any  other  Lender or to any
purchaser or  prospective  purchaser  of  participations,  assignments  or other
interests  in any  Advance,  Note,  LC  Obligation,  Swing  Line  Obligation  or
Commitment  that has executed and delivered to Borrower an agreement  containing
terms  substantially  similar  to this  section  and  reasonably  acceptable  to
Borrower,  to keep such  information  confidential  or (z) is  disclosed to such
Lender's or Agent's examiners,  Affiliates,  outside auditors, counsel and other
professional  advisors who have a need for such  information in connection  with
this  Agreement  and  who  are  advised  of  the  confidential  nature  of  such
information. As used in this section, the terms "Agent" and "Lender" shall refer
not only to the  Persons  designated  as such in Section  1.1,  but also to each
director,  Affiliate,  officer, agent, attorney,  employee and representative of
such Person.  Notwithstanding any other provisions of this Agreement,  the terms
of this section shall survive the  termination of this Agreement for a period of
three (3) years.

         Section  8.10  Severability.  If any  term  or  provision  of any  Loan
Document shall be determined to be illegal or unenforceable in any jurisdiction,
such  term  or  provision  shall,  as  to  such  jurisdiction,   be  illegal  or
unenforceable,  without affecting the remaining  provisions in that jurisdiction
or the  legality  or  enforceability  of such terms or  conditions  in any other
jurisdiction.

         Section 8.11 Counterparts. This Agreement may be separately executed in
any  number  of  counterparts  and  by  different  parties  hereto  in  separate
counterparts,  each of which when so executed  shall be deemed to constitute one
and the same Agreement.

         Section 8.12     WAIVER OF JURY TRIAL,  PUNITIVE  DAMAGES.  EACH OF THE
BORROWER,  AGENTS AND  LENDERS HEREBY  (I)  IRREVOCABLY  WAIVES,  TO THE MAXIMUM

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EXTENT  NOT  PROHIBITED  BY LAW,  ANY  RIGHT  IT MAY  HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY  LITIGATION  DIRECTLY OR  INDIRECTLY  AT ANY TIME ARISING OUT OF,
UNDER OR IN CONNECTION WITH THE LOAN DOCUMENTS OR ANY  TRANSACTION  CONTEMPLATED
THEREBY OR ASSOCIATED  THEREWITH,  BEFORE OR AFTER  MATURITY;  (II)  IRREVOCABLY
WAIVES,  TO THE MAXIMUM  EXTENT NOT  PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO
CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY EXEMPLARY, PUNITIVE OR CONSEQUENTIAL
DAMAGES; (III) CERTIFIES THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR AGENT OR
COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED
THAT SUCH  PARTY  WOULD NOT,  IN THE EVENT OF  LITIGATION,  SEEK TO ENFORCE  THE
FOREGOING WAIVERS;  AND (IV) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO
THIS  AGREEMENT,  THE OTHER LOAN  DOCUMENTS  AND THE  TRANSACTIONS  CONTEMPLATED
HEREBY AND THEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS
CONTAINED IN THIS SECTION.

         Section 8.13 Several Obligations. The respective obligations of 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 an 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 is not  intended  to, and 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.

         Section 8.14 Nonliability of Lenders. The relationship between Borrower
on the one hand and Lenders and Agents on the other hand shall be solely that of
borrower and lender.  None of the Agents nor any Lender shall have any fiduciary
responsibilities to Borrower or any of its respective Subsidiaries.  None of the
Agents nor any Lender undertakes any  responsibility to Borrower or any of their
respective Subsidiaries to review or inform Borrower of any matter in connection
with any phase of Borrower's or such Subsidiary's business or operations.

         Section 8.15 Setoff. In addition to, and without any limitation of, any
rights of the Lenders  under  applicable  law, if  Borrower  becomes  insolvent,
however evidenced, or any Event of Default or Default occurs and the maturity of
the Obligations has been  accelerated,  any indebtedness  from any Lender or any
participant  under section 8.8(b) of this  Agreement to Borrower  (including all
account balances,  whether  provisional or final and whether or not collected or
available) 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 and payable.

         Section  8.16  Forum  Selection  and  Consent  to   Jurisdiction.   ANY
LITIGATION  BASED HEREON,  OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS
AGREEMENT  OR ANY OTHER  LOAN  DOCUMENT,  OR ANY  COURSE OF  CONDUCT,  COURSE OF
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF AGENTS, LENDERS OR
BORROWER SHALL BE BROUGHT AND MAINTAINED  EXCLUSIVELY IN THE COURTS OF THE STATE
OF TEXAS OR IN THE UNITED  STATES  DISTRICT  COURT FOR THE NORTHERN  DISTRICT OF
TEXAS.  BORROWER HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF
THE COURTS OF THE STATE OF TEXAS AND THE UNITED  STATES  DISTRICT  COURT FOR THE
NORTHERN  DISTRICT OF TEXAS FOR THE PURPOSE OF ANY SUCH  LITIGATION AS SET FORTH
ABOVE  AND IRREVOCABLY  AGREES TO BE BOUND BY ANY  JUDGMENT RENDERED  THEREBY IN

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CONNECTION WITH SUCH LITIGATION.  BORROWER FURTHER  IRREVOCABLY  CONSENTS TO THE
SERVICE OF PROCESS BY REGISTERED MAIL,  POSTAGE PREPAID,  OR BY PERSONAL SERVICE
WITHIN OR WITHOUT THE STATE OF TEXAS.  BORROWER HEREBY EXPRESSLY AND IRREVOCABLY
WAIVES,  TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE
OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH  LITIGATION  BROUGHT IN
ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN
BROUGHT IN AN  INCONVENIENT  FORUM. TO THE EXTENT THAT BORROWER HAS OR HEREAFTER
MAY  ACQUIRE  ANY  IMMUNITY  FROM  JURISDICTION  OF ANY  COURT OR FROM ANY LEGAL
PROCESS  (WHETHER  THROUGH  SERVICE OR  NOTICE,  ATTACHMENT  PRIOR TO  JUDGMENT,
ATTACHMENT  IN AID OF  EXECUTION  OR  OTHERWISE)  WITH  RESPECT TO ITSELF OR ITS
PROPERTY,  BORROWER  HEREBY  IRREVOCABLY  WAIVES SUCH IMMUNITY IN RESPECT OF ITS
OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.

         Section 8.17 Release of Liens.  Upon the date of execution and delivery
of a Guaranty by a Restricted  Subsidiary,  the capital stock or other ownership
interests of which has theretofore been subject to a Pledge Agreement (each such
date,  a  "Pledge  Release  Date"),  the  Collateral  Agent  shall  release  and
discharge,  at the cost or  expense of  Borrower,  such  capital  stock or other
ownership interests from the liens and security interests created by such Pledge
Agreement.

         Section 8.18     Entire Agreement. THIS WRITTEN AGREEMENT AND THE OTHER
LOAN DOCUMENTS  REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED  BY  EVIDENCE  OF  PRIOR,   CONTEMPORANEOUS,   OR  SUBSEQUENT  ORAL
AGREEMENTS OF THE PARTIES,

           THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES,

                    [SIGNATURES BEGIN ON THE FOLLOWING PAGE]



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