EXHIBIT 10.5

                               CREDIT AGREEMENT


                                     among


                        WHITING PETROLEUM CORPORATION,
                                 as Borrower,


           The Financial Institutions Listed on Schedule 1.1 Hereto,
                                   as Banks,


                                 BANK ONE, NA,
                            as Administrative Agent


                                      and

                     WACHOVIA BANK, NATIONAL ASSOCIATION,
                             as Syndication Agent


                                 $350,000,000


                                  dated as of

                               December 20, 2002

                        BANC ONE CAPITAL MARKETS, INC.,
                     as Sole Lead Arranger and Bookrunner

<PAGE>

                                                 TABLE OF CONTENTS
                                                 -----------------

<TABLE>
<CAPTION>
                                                                                                                 Page No.
                                                                                                                 --------
<S>                                                                                                                 <C>
Article I TERMS DEFINED...............................................................................................1
     Section 1.1      Definitions.....................................................................................1
     Section 1.2      Accounting Terms and Determinations............................................................16
     Section 1.3      Petroleum Terms................................................................................16
     Section 1.4      Money..........................................................................................17

Article II THE CREDIT................................................................................................17
     Section 2.1      Commitments....................................................................................17
     Section 2.2      Method of Borrowing............................................................................19
     Section 2.3      Method of Requesting Letters of Credit.........................................................20
     Section 2.4      Notes..........................................................................................20
     Section 2.5      Interest Rates; Payments.......................................................................20
     Section 2.6      Mandatory Prepayments..........................................................................22
     Section 2.7      Voluntary Prepayments..........................................................................22
     Section 2.8      Voluntary Reduction of Commitments.............................................................22
     Section 2.9      Termination of Commitments; Final Maturity of Revolving Loan...................................22
     Section 2.10     Application of Payments........................................................................22
     Section 2.11     Commitment Fee.................................................................................22
     Section 2.12     Agency and other Fees..........................................................................22

Article III GENERAL PROVISIONS.......................................................................................22
     Section 3.1      Delivery and Endorsement of Notes..............................................................22
     Section 3.2      General Provisions as to Payments..............................................................23

Article IV BORROWING BASE............................................................................................23
     Section 4.1      Reserve Report; Proposed Borrowing Base........................................................23
     Section 4.2      Scheduled Redeterminations of the Borrowing Base; Procedures and Standards.....................23
     Section 4.3      Special Redetermination........................................................................24
     Section 4.4      Borrowing Base Deficiency......................................................................24
     Section 4.5      Initial Borrowing Base.........................................................................25

Article V COLLATERAL AND GUARANTEES..................................................................................25
     Section 5.1      Security.......................................................................................25
     Section 5.2      Guarantees.....................................................................................26

Article VI CONDITIONS PRECEDENT......................................................................................26
     Section 6.1      Conditions to Initial Borrowing and Participation in Letter of Credit Exposure.................26
     Section 6.2      Conditions to Each Borrowing and each Letter of Credit.........................................28
     Section 6.3      Post-Closing Deliveries and Actions............................................................28
     Section 6.4      Materiality of Conditions......................................................................29

Article VII REPRESENTATIONS AND WARRANTIES...........................................................................29
     Section 7.1      Corporate Existence and Power..................................................................29
     Section 7.2      Credit Party and Governmental Authorization; Contravention.....................................29
     Section 7.3      Binding Effect.................................................................................29
     Section 7.4      Financial Information..........................................................................29
     Section 7.5      Litigation.....................................................................................30
     Section 7.6      ERISA..........................................................................................30
     Section 7.7      Taxes and Filing of Tax Returns................................................................40
     Section 7.8      Ownership of Properties Generally..............................................................40
     Section 7.9      Mineral Interests..............................................................................40
     Section 7.10     Licenses, Permits, Etc.........................................................................40
     Section 7.11     Compliance with Law............................................................................41
     Section 7.12     Full Disclosure................................................................................41

<PAGE>

     Section 7.13     Organizational Structure; Nature of Business...................................................41
     Section 7.14     Environmental Matters..........................................................................41
     Section 7.15     Burdensome Obligations.........................................................................42
     Section 7.16     Fiscal Year....................................................................................42
     Section 7.17     No Default.....................................................................................42
     Section 7.18     Government Regulation..........................................................................42
     Section 7.19     Insider........................................................................................42
     Section 7.20     Gas Balancing Agreements and Advance Payment Contracts.........................................43
     Section 7.21     Subordinate Loan Documents.....................................................................43

Article VIII AFFIRMATIVE COVENANTS...................................................................................43
     Section 8.1      Information....................................................................................43
     Section 8.2      Business of Credit Parties.....................................................................45
     Section 8.3      Maintenance of Existence.......................................................................45
     Section 8.4      Title Data.....................................................................................45
     Section 8.5      Right of Inspection............................................................................45
     Section 8.6      Maintenance of Insurance.......................................................................45
     Section 8.7      Payment of Taxes and Claims....................................................................46
     Section 8.8      Compliance with Laws and Documents.............................................................46
     Section 8.9      Operation of Properties and Equipment..........................................................46
     Section 8.10     Environmental Law Compliance...................................................................47
     Section 8.11     ERISA Reporting Requirements...................................................................47
     Section 8.12     Additional Documents...........................................................................48
     Section 8.13     Environmental Review...........................................................................48
     Section 8.14     Cash Management................................................................................48
     Section 8.15     Permitted Exchange.............................................................................48

Article IX NEGATIVE COVENANTS........................................................................................50
     Section 9.1      Incurrence of Debt.............................................................................50
     Section 9.2      Restricted Payments............................................................................50
     Section 9.3      Negative Pledge................................................................................50
     Section 9.4      Consolidations and Mergers.....................................................................50
     Section 9.5      Asset Dispositions.............................................................................51
     Section 9.6      Amendments to Organizational Documents; Other Material Agreements..............................51
     Section 9.7      Use of  Proceeds...............................................................................51
     Section 9.8      Investments....................................................................................52
     Section 9.9      Transactions with Affiliates...................................................................52
     Section 9.10     ERISA..........................................................................................52
     Section 9.11     Hedge Transactions.............................................................................52
     Section 9.12     Fiscal Year....................................................................................52
     Section 9.13     Change in Business.............................................................................52
     Section 9.14     Subordinate Debt...............................................................................52
     Section 9.15     Obligations of Unrestricted Subsidiaries.......................................................52

Article X FINANCIAL COVENANTS........................................................................................52
     Section 10.1     Current Ratio of Borrower......................................................................53
     Section 10.2     Consolidated Total Debt to Annualized Consolidated EBITDAX.....................................53
     Section 10.3     Consolidated Senior Debt to Annualized Consolidated EBITDAX....................................53

Article XI DEFAULTS..................................................................................................53
     Section 11.1     Events of Default..............................................................................53

Article XII AGENTS...................................................................................................55
     Section 12.1     Appointment; Nature of Relationship............................................................55
     Section 12.2     Powers.........................................................................................55
     Section 12.3     General Immunity...............................................................................56
     Section 12.4     No Responsibility for Loans, Recitals, etc.....................................................56
     Section 12.5     Action on Instructions of Banks................................................................56

<PAGE>

     Section 12.6     Employment of Agents and Counsel...............................................................56
     Section 12.7     Reliance on Documents; Counsel.................................................................57
     Section 12.8     Administrative Agent's Reimbursement and Indemnification.......................................57
     Section 12.9     Notice of Default..............................................................................57
     Section 12.10    Rights as a Bank...............................................................................57
     Section 12.11    Bank Credit Decision...........................................................................58
     Section 12.12    Successor Administrative Agent.................................................................58
     Section 12.13    Delegation to Affiliates.......................................................................59
     Section 12.14    Execution of Collateral Documents..............................................................59
     Section 12.15    Collateral Releases............................................................................59
     Section 12.16    Agents.........................................................................................59

Article XIII CHANGE IN CIRCUMSTANCES.................................................................................59
     Section 13.1     Increased Cost and Reduced Return..............................................................59
     Section 13.2     Limitation on Type of Loans....................................................................59
     Section 13.3     Illegality.....................................................................................59
     Section 13.4     Treatment of Affected Loans....................................................................59
     Section 13.5     Compensation...................................................................................59
     Section 13.6     Taxes..........................................................................................59
     Section 13.7     Discretion of Banks as to Manner of Funding....................................................59

Article XIV MISCELLANEOUS............................................................................................59
     Section 14.1     Notices........................................................................................59
     Section 14.2     No Waivers.....................................................................................59
     Section 14.3     Expenses; Indemnification......................................................................59
     Section 14.4     Right of Set-off; Adjustments..................................................................59
     Section 14.5     Amendments and Waivers.........................................................................59
     Section 14.6     Survival.......................................................................................59
     Section 14.7     Limitation on Interest.........................................................................59
     Section 14.8     Invalid Provisions.............................................................................59
     Section 14.9     Waiver of Consumer Credit Laws.................................................................59
     Section 14.10    Assignments and Participations.................................................................59
     Section 14.11    TEXAS LAW......................................................................................59
     Section 14.12    Consent to Jurisdiction; Waiver of Immunities..................................................59
     Section 14.13    Counterparts; Effectiveness....................................................................59
     Section 14.14    No Third Party Beneficiaries...................................................................59
     Section 14.15    COMPLETE AGREEMENT.............................................................................59
     Section 14.16    WAIVER OF JURY TRIAL...........................................................................59
     Section 14.17    Confidentiality................................................................................59

</TABLE>

<PAGE>
                                   EXHIBITS
                                   --------

EXHIBIT A  FORM OF FACILITY GUARANTY
EXHIBIT B  FORM OF PROMISSORY NOTE
EXHIBIT C  FORM OF BORROWER PLEDGE AGREEMENT
EXHIBIT D  FORM OF SUBSIDIARY PLEDGE AGREEMENT
EXHIBIT E  FORM OF REQUEST FOR BORROWING
EXHIBIT F  FORM OF REQUEST FOR LETTER OF CREDIT
EXHIBIT G  FORM OF NOTICE OF CONTINUATION OR CONVERSION
EXHIBIT H  FORM OF CERTIFICATE OF OWNERSHIP INTERESTS
EXHIBIT I  FORM OF CERTIFICATE OF PRINCIPAL EXECUTIVE AND FINANCIAL OFFICER
EXHIBIT J  FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
EXHIBIT K  FORM OF SUBORDINATE NOTE

                                   SCHEDULES
                                   ---------

SCHEDULE 1.1    FINANCIAL INSTITUTIONS
SCHEDULE 6.3    POST-CLOSING DELIVERIES
SCHEDULE 7.5    LITIGATION
SCHEDULE 7.6    ERISA MATTERS
SCHEDULE 7.10   LICENSES, PERMITS, ETC.
SCHEDULE 7.13   ORGANIZATIONAL STRUCTURE
SCHEDULE 7.14   ENVIRONMENTAL DISCLOSURE
SCHEDULE 9.8    PERMITTED INVESTMENTS
SCHEDULE 9.15   OBLIGATIONS TO UNRESTRICTED SUBSIDIARIES



<PAGE>

                               CREDIT AGREEMENT
                               ----------------

      THIS CREDIT  AGREEMENT (this  "Agreement") is entered into as of the 20th
day  of  December,  2002,  among  WHITING  PETROLEUM  CORPORATION,  a  Delaware
corporation  ("Borrower"),  BANK ONE,  NA,  with its main  office  in  Chicago,
Illinois,  as Administrative  Agent  ("Administrative  Agent"),  WACHOVIA BANK,
NATIONAL  ASSOCIATION  as  Syndication  Agent  ("Syndication  Agent"),  and the
financial  institutions  listed on Schedule 1.1 hereto as Banks (individually a
"Bank" and collectively "Banks").

                             W I T N E S S E T H:
                             --------------------

      WHEREAS,  Borrower  has  requested  that Banks  provide  Borrower  with a
revolving  credit  facility,  and Banks are willing to provide such facility on
the terms and subject to the conditions hereafter set forth; and

      WHEREAS,  pursuant to of this Agreement,  Bank One, NA has been appointed
Administrative Agent for Banks hereunder; and

      WHEREAS,  pursuant to certain  separate  agreements  among Bank One,  NA,
Banc One Capital Markets,  Inc. ("BOCM") and Borrower,  BOCM has been appointed
Sole Lead Arranger and Bookrunner for the credit facility provided herein.

      NOW, THEREFORE,  in consideration of the premises,  the  representations,
warranties,  covenants  and  agreements  contained  herein,  and other good and
valuable   consideration,   the  receipt  and  adequacy  of  which  are  hereby
acknowledged,  Borrower,  Administrative  Agent,  Syndication  Agent  and Banks
agree as follows:

                                   Article I
                                 TERMS DEFINED
                                 -------------

Section 1.1.....Definitions.  The  following  terms,  as used herein,  have the
following meanings:

      "Adjusted  Eurodollar  Rate"  means,  for  any  Eurodollar  Loan  for any
Interest Period therefor,  the rate per annum (rounded  upwards,  if necessary,
to the nearest 1/100 of 1%) determined by  Administrative  Agent to be equal to
the quotient  obtained by dividing (a) the  Eurodollar Rate for such Eurodollar
Loan for such Interest  Period by (b) 1 minus the Reserve  Requirement for such
Eurodollar Loan for such Interest Period.

      "Administrative   Agent"   means  Bank  One,   NA,  in  its  capacity  as
Administrative Agent for Banks hereunder or any successor thereto.

      "Advance  Payment  Contract" means any contract  whereby any Credit Party
either  (a) receives  or  becomes  entitled  to  receive  (either  directly  or
indirectly)  any payment (an "Advance  Payment") to be applied  toward  payment
of the purchase price of  Hydrocarbons  produced or to be produced from Mineral
Interests  owned by any Credit  Party and which  Advance  Payment  is, or is to
be,  paid in  advance  of  actual  delivery  of such  production  to or for the
account of the  purchaser  regardless  of such  production,  or  (b) grants  an
option  or  right  of  refusal  to the  purchaser  to  take  delivery  of  such
production in lieu of payment,  and, in either of the foregoing instances,  the
Advance  Payment  is,  or is to  be,  applied  as  payment  in  full  for  such
production  when sold and delivered or is, or is to be,  applied as payment for
a portion only of the  purchase  price  thereof or of a percentage  or share of
such  production;  provided  that  inclusion  of the  standard  "take  or  pay"
provision in any gas sales or purchase  contract or any other similar  contract
shall not, in and of itself,  constitute  such  contract as an Advance  Payment
Contract for the purposes hereof.

      "AER" means Alliant Energy Resources, Inc., a Wisconsin corporation.

      "Affiliate"  means, as to any Person,  any Subsidiary of such Person,  or
any other Person which,  directly or  indirectly,  controls,  is controlled by,
or is under common  control  with,  such Person and, with respect to any Credit
Party,  means, any director,  executive officer,  general partner or manager of
such  Credit  Party and any Person who holds ten  percent  (10%) or more of the
voting stock,  partnership  interests,  membership interests or other ownership

<PAGE>

interests  of  such  Credit  Party.   For  the  purposes  of  this  definition,
"control" (including,  with correlative meanings, the terms "controlled by" and
"under common control  with"),  as used with respect to any Person,  shall mean
the  possession,  directly or  indirectly,  of the power to direct or cause the
direction of the  management and policies of such Person,  whether  through the
ownership  of  voting   securities,   membership   interests   or   partnership
interests, or by contract or otherwise.

      "Agent"  means  Administrative   Agent,   Syndication  Agent,  Sole  Lead
Arranger,  Bookrunner,  or any other  agent  appointed  hereunder  from time to
time, and "Agents" means  Administrative  Agent,  Syndication  Agent, Sole Lead
Arranger,  Bookrunner,  and any other agent  appointed  hereunder  from time to
time, collectively.

      "Agreement"  means this Credit  Agreement  as the same may  hereafter  be
modified, amended or supplemented from time to time.

      "Alliant" means Alliant Energy Corporation, a Wisconsin corporation.

      "Annualized  Consolidated EBITDAX" means, for purposes of calculating the
financial  ratios set forth in  Section 10.2  and  Section 10.3  for any Fiscal
Quarter,  Borrower's actual  Consolidated  EBITDAX for the two (2)  consecutive
Fiscal Quarters ending on the calculation date multiplied by 2.

      "Applicable  Environmental  Law" means any  federal,  state or local law,
common  law,  ordinance,  regulation  or  policy,  as  well as  order,  decree,
permit,  judgment  or  injunction  issued,  promulgated,  approved,  or entered
thereunder,  relating  to the  environment,  health and  safety,  or  Hazardous
Substances (including,  without limitation, the use, handling,  transportation,
production,  disposal,  discharge or storage thereof) or to industrial  hygiene
or the  environmental  conditions on, under,  or about any real property owned,
leased  or  operated  at any time by any  Credit  Party  or any  real  property
owned,  leased or operated by any other party  including,  without  limitation,
soil, groundwater, and indoor and ambient air conditions.

      "Applicable  Lending  Office"  means,  for each Bank and for each Type of
Revolving  Loan, the "Lending  Office" of such Bank (or of an affiliate of such
Bank)  designated  for  such  Type of  Revolving  Loan on the  signature  pages
hereof or such  other  office of such Bank (or an  affiliate  of such  Bank) as
such Bank may from time to time  specify to  Administrative  Agent and Borrower
by written  notice in  accordance  with the terms hereof as the office by which
Revolving Loans of such Type are to be made and maintained.

      "Applicable  Margin"  means,  on any date,  with  respect to each Type of
Revolving  Loan, an amount  determined by reference to the ratio of Outstanding
Credit to the Borrowing Base on such date in accordance with the table below:

<TABLE>
<CAPTION>

          ==================================== ============================ ==============================
            Ratio of Outstanding Credit to        Applicable Margin for         Applicable Margin for
                    Borrowing Base                  Eurodollar Loans               Base Rate Loans
          ------------------------------------ ---------------------------- ------------------------------
                         <S>                              <C>                           <C>
                      > .90 to 1                         2.250%                        1.000%
                      -
          ------------------------------------ ---------------------------- ------------------------------
                > .75 to 1 and < .90 to 1                2.000%                        0.750%
                -
          ------------------------------------ ---------------------------- ------------------------------
                > .50 to 1 and < .75 to 1                1.750%                        0.500%
                -
          ------------------------------------ ---------------------------- ------------------------------
                      < .50 to 1                         1.500%                        0.250%
          ==================================== ============================ ==============================

</TABLE>

      "Approved  Fund" means any Fund that is  administered or managed by (a) a
Bank,  (b) an  Affiliate  of a Bank,  or (c) an  entity or an  Affiliate  of an
entity that administers or manages a Bank.

      "Approved  Petroleum  Engineer"  means any reputable  firm of independent
petroleum   engineers  as  shall  be  selected  by  Borrower  and  approved  by
Administrative Agent, such approval not to be unreasonably withheld.

      "Asset  Disposition"  means  the  sale,   assignment,   lease,   license,
transfer,  exchange  (including the Permitted Exchange) or other disposition by
any Credit Party of all or substantially  all of its right,  title and interest
in any Borrowing Base Property.

<PAGE>

      "Assignment and Acceptance  Agreement" has the meaning given such term in
Section 14.10(c)(i).

      "Authorized  Officer"  means,  as to  any  Person,  its  Chief  Executive
Officer,  its President,  its Chief  Financial  Officer,  its Chief  Accounting
Officer, any of its Vice Presidents, its Treasurer or its corporate Secretary.

      "Availability"  means, as of any date, the remainder of (a) the Borrowing
Base in effect on such date, minus (b) the Outstanding Credit on such date.

      "Bank" means any financial  institution  reflected on Schedule 1.1 hereto
as  having  a  Commitment  and its  successors  and  permitted  Assignees,  and
"Banks" shall mean all Banks.

      "Bank One" means Bank One, NA, a national banking  association,  with its
main office in Chicago, Illinois, in its capacity as a Bank.

      "Base Rate"  means,  for any day,  the rate per annum equal to the higher
of (a) the  Federal  Funds Rate for such day plus one-half of one percent (.5%)
and  (b) the  Prime  Rate for such  day.  Any  change in the Base Rate due to a
change  in the  Prime  Rate  or the  Federal  Funds  Rate  shall  be  effective
automatically  and  without  notice to  Borrower  or any Bank on the  effective
date of such change in the Prime Rate or Federal Funds Rate.

      "Base Rate Loan"  means the  portion of the  principal  of the  Revolving
Loan bearing interest with reference to the Base Rate.

      "BOCM" means Banc One Capital Markets, Inc.

      "Bookrunner"  means BOCM,  in its capacity as  bookrunner  for the credit
facility hereunder or any successor thereto.

      "Borrower" means Whiting Petroleum Corporation, a Delaware corporation.

      "Borrower Pledge  Agreement"  means a Pledge  Agreement  substantially in
the form of Exhibit C attached hereto (with applicable  conforming  changes) to
be  executed  by  Borrower   pursuant  to  which   Borrower   shall  pledge  to
Administrative  Agent,  for the ratable benefit of Banks, all of the issued and
outstanding  Equity owned by Borrower of each Restricted  Subsidiary  described
therein to secure the Obligations.

      "Borrowing"  means any  disbursement to Borrower under, or to satisfy the
obligations  of any Credit Party under,  any of the Loan Papers.  Any Borrowing
which will  constitute  a part of the Base Rate Loan is referred to herein as a
"Base Rate  Borrowing,"  and any Borrowing  which will  constitute a Eurodollar
Loan, is referred to herein as a "Eurodollar Borrowing."

      "Borrowing Base" has the meaning set forth in Section 4.1 hereof.

      "Borrowing Base  Deficiency"  means, as of any date, the amount,  if any,
by which the  Outstanding  Credit on such date  exceeds the  Borrowing  Base in
effect  on  such  date;  provided,   that,  for  purposes  of  determining  the
existence  and  amount  of any  Borrowing  Base  Deficiency,  Letter  of Credit
Exposure  will not be deemed to be  outstanding  to the extent it is secured by
cash in the manner contemplated by Section 2.1(b).

      "Borrowing  Base  Properties"  means all Mineral  Interests  evaluated by
Banks for purposes of establishing the Borrowing Base.

      "Borrowing  Date"  means  the  Eurodollar  Business  Day or the  Domestic
Business  Day,  as the case may be, upon which the  proceeds  of any  Borrowing
are made  available  to  Borrower or to satisfy  any  obligation  of any Credit
Party.

<PAGE>

      "Certificate  of Ownership  Interests"  means a Certificate  of Ownership
Interests  in  the  form  of  Exhibit H  attached  hereto  to be  executed  and
delivered  by  an  Authorized   Officer  of  Borrower   pursuant  to  Section
6.1(a)(xiii) hereof.

      "Change of Control" means that,  for any reason,  Borrower shall cease to
be a wholly owned direct or indirect Subsidiary of Alliant.

      "Closing Date" means the date upon which all of the conditions  precedent
set forth in  Section 6.1  have been  satisfied;  provided,  that,  in no event
shall such date be later than December 20, 2002.

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

      "Commitment"  means,  with respect to any Bank,  the  commitment  of such
Bank to lend its  Commitment  Percentage  of the Total  Commitment  to Borrower
pursuant  to  Section 2.1  hereof,  as such  Commitment  may be  terminated  or
reduced from time to time in  accordance  with the  provisions  hereof.  On the
Closing  Date,  the amount of each  Bank's  Commitment  is the amount set forth
opposite such Bank's name on Schedule 1.1 hereto;  provided,  that after giving
effect to any  Assignment  and  Acceptance  Agreement,  the  Commitment of each
Bank   shall  be  the  amount  set  forth  in  the   Register   maintained   by
Administrative Agent pursuant to Section 14.10(c)(iv) hereof.

      "Commitment   Fee   Percentage"   means,  on  any  date,  the  percentage
determined  by reference to the ratio of  Outstanding  Credit to the  Borrowing
Base on such date in accordance with the table below:

<TABLE>
<CAPTION>
                      ===================================== =======================================
                         Ratio of Outstanding Credit to                 Commitment Fee
                                 Borrowing Base                           Percentage
                       ------------------------------------- ---------------------------------------
                                       <S>                                   <C>
                                    > .90 to 1                              0.500%
                                    -
                       ------------------------------------- ---------------------------------------
                             > .75 to 1 and < .90 to 1                      0.500%
                             -
                      ------------------------------------- ---------------------------------------
                             > .50 to 1 and < .75 to 1                      0.375%
                             -
                      ------------------------------------- ---------------------------------------
                                   < .50 to 1                               0.375%
                      ===================================== =======================================

</TABLE>

      "Commitment  Percentage" means, with respect to each Bank, the Commitment
Percentage  for such  Bank set forth on  Schedule 1.1  hereto;  provided,  that
after  giving  effect  to  any  Assignment  and   Acceptance   Agreement,   the
Commitment  Percentage  of each  Bank  shall  be the  amount  set  forth in the
Register  maintained by Administrative  Agent pursuant to  Section 14.10(c)(iv)
hereof.

      "Consolidated  Current  Assets"  means,  for any Person at any time,  the
current assets of such Person and its  Consolidated  Subsidiaries at such time,
plus,  in the case of Borrower,  the  Availability  at such time.  For purposes
of this  definition,  any non-cash gains on any Hedge Agreement  resulting from
the  requirements  of  SFAS 133  for  any  period  of  determination  shall  be
excluded  from the  determination  of  current  assets of such  Person  and its
Consolidated Subsidiaries.

      "Consolidated  Current  Liabilities"  means,  for any Person at any time,
the current  liabilities of such Person and its  Consolidated  Subsidiaries  at
such time,  but, in the case of  Borrower,  excluding  the current  portion (if
any)  of  the  outstanding   principal  balance  of  the  Revolving  Loan.  For
purposes  of this  definition,  any  non-cash  losses or  charges  on any Hedge
Agreement  resulting  from the  requirements  of  SFAS 133  for any  period  of
determination  shall be excluded from the determination of current  liabilities
of such Person and its Consolidated Subsidiaries.

      "Consolidated   EBITDAX"   means,   for  any  Person   for  any   period:
(a) Consolidated  Net  Income of such  Person  for such  period;  plus,  to the
extent deducted in the calculation of Consolidated  Net Income,  (b) the sum of
(i) income or franchise Taxes paid or accrued;  (ii) Consolidated  Net Interest
Expense;  (iii) amortization,  depletion  and  depreciation  expense;  (iv) any
non-cash  losses  or  charges  on  any  Hedge  Agreement   resulting  from  the
requirements  of  SFAS  133  for  that  period;   (v) other   non-cash  charges
(excluding   accruals  for  cash  expenses  made  in  the  ordinary  course  of
business);  and (vi) costs and expenses  associated  with, and attributable to,

<PAGE>

oil and gas capital  expenditures  that are expensed  rather than  capitalized;
less, to the extent  included in the  calculation of  Consolidated  Net Income,
(c) the  sum  of  (i) the  income  of  any  Person  (other  than   wholly-owned
Subsidiaries  of such Person)  unless such income is received by such Person in
a cash  distribution;  (ii) gains or losses from sales or other dispositions of
assets  (other than  Hydrocarbons  produced in the normal  course of business);
(iii) any   non-cash   gains  on  any  Hedge   Agreement   resulting  from  the
requirements of SFAS 133 for that period;  (iv) extraordinary  or non-recurring
gains,  but  not net of  extraordinary  or  non-recurring  "cash"  losses;  and
(v) costs  and  expenses  associated  with,  and  attributable  to, oil and gas
capital    expenditures    that   are   expensed   rather   than   capitalized.
Notwithstanding  anything to the contrary  contained  herein,  all calculations
of  Consolidated  EBITDAX  shall be (A) in  all  respects,  acceptable  to, and
approved  by,  Administrative  Agent,  and  (B) for  any  applicable  period of
determination   during  which  Borrower  has   consummated  an  acquisition  or
disposition  (to the  extent  permitted  hereunder)  of  properties  or assets,
calculated  and  determined  on a pro  forma  basis as if such  acquisition  or
disposition was consummated on the first day of such applicable period.

      "Consolidated  Net Income" means, for any Person for any period,  the net
income (or loss) of such  Person  and its  Consolidated  Subsidiaries  for such
period.

      "Consolidated  Net  Interest  Expense"  means,  for  any  Person  for any
period,  the remainder of the  following  for such Person and its  Consolidated
Subsidiaries for such period: (a) interest expense, minus (b) interest income.

      "Consolidated  Senior  Debt"  means,  for any Person for any period,  all
Debt  of  such  Person  and  its  Consolidated  Subsidiaries  determined  on  a
consolidated basis for such period, other than the Subordinate Debt.

      "Consolidated  Subsidiary" or "Consolidated  Subsidiaries" means, for any
Person,  any  Subsidiary  or  other  entity  the  accounts  of  which  would be
consolidated   with  those  of  such  Person  in  its  consolidated   financial
statements.

      "Consolidated  Total Debt" means, for any Person for any period, all Debt
of such Person and its Consolidated  Subsidiaries  determined on a consolidated
basis for such period.

      "Continue,"   "Continuation"   and   "Continued"   shall   refer  to  the
continuation  pursuant to Section 2.5  hereof and/or  Article XIII  hereof of a
Eurodollar Loan from one Interest Period to the next Interest Period.

      "Convert,"  "Conversion"  and  "Converted"  shall  refer to a  conversion
pursuant to  Section 2.5  and/or Article XIII hereof of all or a portion of one
Type of Revolving Loan into another Type of Revolving Loan.

      "Credit  Parties"  means,  collectively,  Borrower  and  each  Restricted
Subsidiary, and "Credit Party" means any one of the foregoing.

      "Debt" means, for any Person at any time,  without  duplication,  (a) all
obligations  of such Person for borrowed  money,  (b) all  obligations  of such
Person  evidenced by bonds,  debentures,  notes or other  similar  instruments,
(c) all other  indebtedness  (including  capitalized lease  obligations,  other
than usual and customary  oil and gas leases) of such Person on which  interest
charges are  customarily  paid or accrued,  (d) all  Guarantees by such Person,
(e) the unfunded or  unreimbursed  portion of all letters of credit  issued for
the account of such  Person,  (f) any amount  owed by such Person  representing
the  deferred  purchase  price of  property  or  services  other than  accounts
payable  incurred in the  ordinary  course of business and in  accordance  with
customary  trade  terms and which are not more than (90) days past the  invoice
date,  and  (g)  all  liability  of  such  Person  as a  general  partner  of a
partnership  for  obligations of such  partnership  of the nature  described in
(a) through (f) preceding.

      "Default"  means any  condition  or event which  constitutes  an Event of
Default  or which  with the  giving  of  notice,  lapse of time or both  would,
unless cured or waived, become an Event of Default.

      "Default  Rate" means,  in respect of any principal of the Revolving Loan
or any other  amount  payable by  Borrower  under any Loan  Paper  which is not
paid when due (whether at stated maturity,  by acceleration,  or otherwise),  a
rate per annum during the period  commencing  on the due date until such amount

<PAGE>

is paid in  full  equal  to the sum of (i) two  percent  (2%),  plus  (ii)  the
Applicable  Margin for Base Rate  Loans,  plus (iii) the Base Rate as in effect
from time to time  (provided,  that if such amount in default is principal of a
Eurodollar  Borrowing  and the due date is a day other  than the last day of an
Interest Period  therefor,  the "Default Rate" for such principal shall be, for
the period from and  including  the due date and to but  excluding the last day
of the Interest  period  therefor,  the sum of (a) two percent  (2%),  plus (b)
the Applicable  Margin for Eurodollar  Loans,  plus (c) the Eurodollar Rate for
such  Borrowing for such  Interest  Period as provided in  Section 2.5  hereof,
and thereafter, the rate provided for above in this definition).

      "Distribution" by any Person,  means (a) with respect to any stock issued
by such Person or any partnership,  joint venture,  limited liability  company,
membership  or other  interest  of such  Person,  the  retirement,  redemption,
purchase,  or other  acquisition  for value of any such  stock or  partnership,
joint venture,  limited liability  company,  membership or other interest,  (b)
the  declaration  or payment of any dividend or other  distribution  on or with
respect to any stock,  partnership,  joint venture,  limited liability company,
membership  or other  interest  of such  Person,  and (c) any other  payment by
such Person with respect to such stock,  partnership,  joint  venture,  limited
liability company, membership or other interest of such Person.

      "Domestic Business Day" means any day except a Saturday,  Sunday or other
day on which national banks in Dallas, Texas, are authorized by Law to close.

      "Domestic  Lending Office" means, as to each Bank, (a) its office located
at its  address  identified  on  Schedule 1.1  hereto as its  Domestic  Lending
Office,  (b) its office  located at its address  identified  on the Register as
its  Domestic  Lending  Office,  or (c)  such  other  office  as such  Bank may
hereafter  designate as its Domestic  Lending  Office by notice to Borrower and
Administrative Agent.

      "Environmental  Complaint"  means  any  complaint,   summons,   citation,
notice,  directive,  order,  claim,  litigation,   investigation,   proceeding,
judgment,  letter or other  communication from any federal,  state or municipal
authority  or  any  other  party  against  any  Credit  Party  involving  (a) a
Hazardous  Discharge  from,  onto or about any real property  owned,  leased or
operated at any time by any Credit  Party,  (b) a Hazardous  Discharge  caused,
in whole or in part,  by any Credit Party or by any Person  acting on behalf of
or at the  instruction  of  any  Credit  Party,  or (c)  any  violation  of any
Applicable Environmental Law by any Credit Party.

      "Equity"  means  shares  of  capital  stock  or a  partnership,  profits,
capital,  member or other equity  interest,  or options,  warrants or any other
rights  to  substitute  for  or  otherwise  acquire  the  capital  stock  or  a
partnership, profits, capital, member or other equity interest of any Person.

      "ERISA"  means the Employee  Retirement  Income  Security Act of 1974, as
amended.

      "ERISA  Affiliate"  means  any  corporation  or trade or  business  under
common  control with any Credit Party as determined  under section  4001(a)(14)
of ERISA.

      "Eurodollar  Business  Day"  means  any  Domestic  Business  Day on which
commercial banks are open for  international  business  (including  dealings in
dollar deposits) in the applicable Eurodollar interbank market.

      "Eurodollar  Lending  Office"  means,  as to each Bank,  (a) its  office,
branch or affiliate  located at its address  identified on Schedule 1.1  hereto
as its Eurodollar Lending Office,  (b) its office,  branch or affiliate located
at its address  identified on the Register as its  Eurodollar  Lending  Office,
or  (c)  such  other  office,  branch  or  affiliate  of  such  Bank  as it may
hereafter  designate  as its  Eurodollar  Lending  Office by notice to Borrower
and Administrative Agent.

      "Eurodollar  Loans"  means  Revolving  Loans that bear  interest at rates
based upon the Adjusted Eurodollar Rate.

      "Eurodollar  Rate" means, for any Eurodollar Loan for any Interest Period
therefor,  the applicable British Bankers'  Association LIBOR rate for deposits
in  Dollars as  reported  by any  generally  recognized  financial  information
service as of 11:00 a.m.  (London time) two (2) Eurodollar  Business Days prior

<PAGE>

to the first day of such Interest  Period,  and having a maturity equal to such
Interest  Period;  provided,  that,  if no such  British  Bankers'  Association
LIBOR rate is available to  Administrative  Agent,  the  applicable  Eurodollar
Rate for the relevant  Interest  Period shall instead be the rate determined by
Administrative  Agent to be the rate at which Bank One or one of its  Affiliate
banks  offers  to place  deposits  in  Dollars  with  first-class  banks in the
London  interbank  market at  approximately  11:00 a.m.  (London  time) two (2)
Eurodollar  Business  Days prior to the first day of such Interest  Period,  in
the  appropriate  amount of Bank One's  relevant  Eurodollar  Loan and having a
maturity equal to such Interest Period.

      "Events of Default" has the meaning set forth in Section 11.1.

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

      "Exchange  Agreement"  means  any  exchange  agreement  executed  by  and
between  Borrower and Qualified  Intermediary  in accordance with Section 8.15,
and  pursuant  to which  certain  of the terms and  provisions  of a  Permitted
Exchange shall be set forth.

      "Exhibit"   refers  to  an  exhibit   attached  to  this   Agreement  and
incorporated herein by reference, unless specifically provided otherwise.

      "Existing  Alliant Credit  Agreement"  means that certain  364-Day Credit
Agreement,  dated as of October 11, 2002,  by and among  Alliant,  Bank One, in
its  capacity  as   administrative   agent   thereunder,   and  the   financial
institutions a party thereto.

      "Existing  Reserve Report" means an engineering and economic  analysis of
the Borrowing Base  Properties  prepared  effective as of October 1,  2002, and
dated November 7, 2002, by Borrower's in-house staff.

      "Facility  Guaranty"  means  a  Guaranty  substantially  in the  form  of
Exhibit A  attached  hereto to be executed  by each  Restricted  Subsidiary  of
Borrower in favor of Banks,  pursuant to which such  Restricted  Subsidiary  of
Borrower guarantees payment and performance in full of the Obligations.

      "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  Domestic  Business
Day next  succeeding  such day;  provided  that (a) if the day for  which  such
rate is to be  determined  is not a Domestic  Business  Day, the Federal  Funds
Rate  for  such  day  shall  be  such  rate on such  transactions  on the  next
preceding  Domestic  Business  Day  as so  published  on  the  next  succeeding
Domestic  Business  Day,  and (b) if such rate is not so published on such next
succeeding  Domestic  Business Day, the Federal Funds Rate for any day shall be
the  average  rate  charged  to  Administrative  Agent  on  such  day  on  such
transactions as determined by Administrative Agent.

      "Financial  Officer"  of any Person  means its Chief  Financial  Officer;
provided,  that if no  Person  serves  in such  capacity,  "Financial  Officer"
shall  mean  the  highest  ranking   executive  officer  of  such  Person  with
responsibility  for  accounting,   financial  reporting,  cash  management  and
similar functions.

      "Fiscal  Quarter"  means the three (3) month periods  ending on March 31,
June 30, September 30 and December 31 of each Fiscal Year.

      "Fiscal Year" means a twelve (12) month period ending December 31.

      "Fund"  means any Person  (other than a natural  person) that is (or will
be)  engaged  in  making,   purchasing,   holding  or  otherwise  investing  in
commercial  loans and similar  extensions  of credit in the ordinary  course of
its business.

      "GAAP"  means  those  generally   accepted   accounting   principles  and
practices  which  are  recognized  as  such  by  the  Securities  and  Exchange
Commission,  the  American  Institute of Certified  Public  Accountants  acting

<PAGE>

through  its  Accounting  Principles  Board  or  by  the  Financial  Accounting
Standards Board or through other appropriate  boards or committees  thereof and
which are  consistently  applied for all periods  after the Closing  Date so as
to properly  reflect the  financial  condition,  and the results of  operations
and  changes  in  financial   position,   of  Borrower  and  its   Consolidated
Subsidiaries,  except that any accounting  principle or practice required to be
changed by the said Securities and Exchange Commission,  Accounting  Principles
Board or Financial  Accounting  Standards Board (or other  appropriate board or
committee  thereof) in order to continue  as a  generally  accepted  accounting
principle or practice may be so changed.

      "Gas Balancing  Agreement" means any agreement or arrangement whereby any
Credit Party,  or any other party having an interest in any  Hydrocarbons to be
produced  from  Mineral  Interests  in which any Credit Party owns an interest,
has a right to take more than its proportionate share of production therefrom.

      "Governmental  Authority"  means  any court or  governmental  department,
commission,  board, bureau,  agency, or instrumentality of any nation or of any
province, state, commonwealth,  nation, territory,  possession, county, parish,
or municipality, whether now or hereafter constituted or existing.

      "Guarantee" by any Person means any obligation,  contingent or otherwise,
of such  Person  directly  or  indirectly  guaranteeing  any Debt of any  other
Person and, without  limiting the generality of the foregoing,  any obligation,
direct or indirect,  contingent  or  otherwise,  of such Person (a) to purchase
or pay (or  advance or supply  funds for the  purchase or payment of) such Debt
(whether  arising  by virtue  of  partnership  arrangements,  by  agreement  to
keep-well,  to purchase assets, goods,  securities or services, to take-or-pay,
or to maintain  financial  statement  conditions,  by "comfort letter" or other
similar  undertaking  of  support or  otherwise)  or  (b) entered  into for the
purpose  of  assuring  in any  other  manner  the  obligee  of such Debt of the
payment  thereof or to protect  such obligee  against  loss in respect  thereof
(in whole or in part),  provided,  that the term "Guarantee"  shall not include
endorsements for collection or deposit in the ordinary course of business.

      "Hazardous Discharge" means any releasing,  spilling,  leaking,  pumping,
pouring,  emitting,  emptying,  discharging,   injecting,  escaping,  leaching,
disposing  or  dumping  of any  Hazardous  Substance  from  or  onto  any  real
property  owned,  leased or  operated  at any time by any  Credit  Party or any
real property owned, leased or operated by any other party.

      "Hazardous  Substance" means any pollutant,  toxic  substance,  hazardous
waste,  compound,  element or  chemical  that is defined as  hazardous,  toxic,
noxious,  dangerous or infectious pursuant to any Applicable  Environmental Law
or which is  otherwise  regulated  by any  Applicable  Environmental  Law or is
required  to  be  investigated   and/or   remediated  by  or  pursuant  to  any
Applicable Environmental Law.

      "Hedge  Agreements"  means,  collectively,  any  agreement,   instrument,
arrangement   or  schedule  or   supplement   thereto   evidencing   any  Hedge
Transaction.

      "Hedge  Transaction"  means any financial  derivative  transaction  under
SFAS 133  pursuant to which a Person hedges risks related to commodity  prices,
interest  rates,  currency  exchange  rates,  securities  prices  or  financial
market  conditions.  Hedge  Transactions  expressly  includes Oil and Gas Hedge
Transactions.

      "Hydrocarbons"  means oil, gas,  casinghead gas, drip gasolines,  natural
gasoline,   condensate,   distillate,   and  all  other   liquid  and   gaseous
hydrocarbons  produced  or to be  produced in  conjunction  therewith,  and all
products,  by-products  and  all  other  substances  derived  therefrom  or the
processing thereof, and all other minerals and substances,  including,  but not
limited to, sulphur,  lignite, coal, uranium,  thorium, iron, geothermal steam,
water,  carbon  dioxide,  helium,  and any and all  other  minerals,  ores,  or
substances  of value,  and the  products  and  proceeds  therefrom,  including,
without  limitation,  all gas resulting from the in-situ  combustion of coal or
lignite.

      "Immaterial  Title  Deficiencies"  means,  with respect to Borrowing Base
Properties,  defects or clouds on title,  discrepancies in reported net revenue
and  working  interest   ownership   percentages  and  other  Liens,   defects,
discrepancies  and  similar  matters  which  do  not,  individually  or in  the
aggregate,  affect  Borrowing Base Properties  with a Recognized  Value greater
than five percent (5%) of the  Recognized  Value of all of such  Borrowing Base
Properties.

<PAGE>

      "Indirect  Subsidiary"  has the meaning given such term in the definition
of "Subsidiary Pledge Agreement."

      "Initial  Borrowing  Base"  means  a  Borrowing  Base  in the  amount  of
$200,000,000,  which  shall be in effect  during the period  commencing  on the
Closing Date and continuing until the first  Redetermination  after the Closing
Date.

      "Interest  Period" means,  with respect to each Eurodollar  Borrowing and
each  Continuation  of Eurodollar  Loans and each  Conversion of all or part of
the Base Rate Loan to Eurodollar  Loans,  the period  commencing on the date of
such  Borrowing,  Continuation or Conversion and ending one (1), two (2), three
(3) or six (6)  months  thereafter,  as  Borrower  may elect in the  applicable
Request for Borrowing or Notice of Continuation or Conversion; provided, that:

           (a)  any Interest  Period which would  otherwise  end on a day which
           is not a  Eurodollar  Business  Day  shall be  extended  to the next
           succeeding  Eurodollar  Business Day unless such Eurodollar Business
           Day falls in another  calendar  month,  in which case such  Interest
           Period shall end on the next preceding Eurodollar Business Day;

           (b)  any  Interest  Period  which  begins  on  the  last  Eurodollar
           Business Day of a calendar  month (or on a day for which there is no
           numerically  corresponding  day in the calendar  month at the end of
           such Interest  Period) shall,  subject to clause (c)  below,  end on
           the last Eurodollar Business Day of a calendar month;

           (c)  if any Interest  Period includes a date on which any payment of
           principal  of the  Eurodollar  Loans  which are the  subject of such
           Borrowing,  Continuation  or  Conversion  is  required  to  be  made
           hereunder,  but does not end on such  date,  then (i) the  principal
           amount of such  Eurodollar  Loans required to be repaid on such date
           shall have an  Interest  Period  ending on such  date,  and (ii) the
           remainder  of each such  Eurodollar  Loans  shall  have an  Interest
           Period determined as set forth above; and

           (d)  no Interest Period shall extend past the Termination Date.

      "Investment"  means,  with  respect  to any  Person,  any loan,  advance,
extension of credit,  capital  contribution  to,  investment  in or purchase of
the  stock  or  other  securities  of,  or  interests  in,  any  other  Person;
provided,  that,  "Investment"  shall not include  current  customer  and trade
accounts which are payable in accordance with customary trade terms.

      "Laws" means all  applicable  statutes,  laws,  ordinances,  regulations,
orders,  writs,  injunctions,  or decrees of any state,  commonwealth,  nation,
territory,  possession,  county, township, parish, municipality or Governmental
Authority.

      "Lending  Office" means,  as to any Bank, its Domestic  Lending Office or
its Eurodollar Lending Office, as the context may require.

      "Letter  of Credit  Exposure"  of any Bank means  such  Bank's  aggregate
participation in the unfunded  portion and the funded but unreimbursed  portion
of Letters of Credit outstanding at any time.

      "Letter  of Credit  Fee"  means,  with  respect  to any  Letter of Credit
issued  hereunder,  a fee in an amount equal to the greater of (a) $500, or (b)
a percentage  of the stated  amount of such Letter of Credit  (calculated  on a
per annum basis  based on the stated term of such Letter of Credit)  determined
by reference to the ratio of the  Outstanding  Credit to the Borrowing  Base in
effect on the date such  Letter  of  Credit  is issued in  accordance  with the
table below:

<PAGE>

<TABLE>
<CAPTION>

                      ===================================== =======================================
                         Ratio of Outstanding Credit to         Per Annum Letter of Credit Fee
                                 Borrowing Base                           Percentage
                      ------------------------------------- ---------------------------------------
                                      <S>                                    <C>
                                   > .90 to 1                               2.250%
                                   -
                      ------------------------------------- ---------------------------------------
                            > .75 to 1 and < .90 to 1                       2.000%
                            -
                      ------------------------------------- ---------------------------------------
                            > .50 to 1 and < .75 to 1                       1.750%
                            -
                       ------------------------------------- ---------------------------------------
                                   < .50 to 1                               1.500%
                      ===================================== =======================================

</TABLE>

      "Letter of Credit  Fronting  Fee"  means,  with  respect to any Letter of
Credit issued  hereunder,  a fee equal to one eighth of one percent (.125%) per
annum of the stated amount of such Letter of Credit.

      "Letter of Credit Issuer" has the meaning set forth in Section 2.1(b).

      "Letters  of Credit"  means  letters of credit  issued for the account of
Borrower pursuant to Section 2.1(b).

      "Lien"  means,  with respect to any asset,  any mortgage,  lien,  pledge,
charge,  security interest,  financing  statement or encumbrance of any kind in
respect  of  such  asset.  For  the  purposes  of this  Agreement,  the  Credit
Parties  shall be deemed to own  subject to a Lien any asset  which is acquired
or held  subject to the  interest of a vendor or lessor  under any  conditional
sale agreement,  capital lease or other title retention  agreement  relating to
such asset.

      "Loan Papers" means this  Agreement,  the Notes,  each Facility  Guaranty
which may now or hereafter be executed,  each Borrower  Pledge  Agreement which
may now or hereafter be executed,  each Subsidiary  Pledge  Agreement which may
now or  hereafter  be  executed,  all  Mortgages  now or at any time  hereafter
delivered  pursuant  to  Section 5.1,  all  Letters  of  Credit,  and all other
certificates,  documents  or  instruments  delivered  in  connection  with this
Agreement, as the foregoing may be amended from time to time.

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

      "Margin Stock" means "margin stock" as defined in Regulation U.

      "Material  Adverse  Change" means any  circumstance  or event that has or
would reasonably be expected to have a Material Adverse Effect.

      "Material  Adverse  Effect"  means a material  adverse  effect on (a) the
assets,  liabilities,  financial condition,  results of operations or prospects
of Borrower,  individually,  or the Credit Parties,  taken as a whole,  (b) the
right or ability of any Credit Party to fully,  completely  and timely  perform
its obligations  under the Loan Papers,  (c) the validity or  enforceability of
any Loan Paper  against any Credit Party which is a party  thereto,  or (d) the
validity,  perfection  or priority of any material  Lien intended to be created
under or pursuant to any Loan Paper to secure the Obligations.

      "Material  Agreement"  means  any  material  written  or oral  agreement,
contract,  commitment,  or understanding to which a Person is a party, by which
such  Person is directly or  indirectly  bound,  or to which any assets of such
Person may be subject,  which is not  cancelable  by such Person upon notice of
thirty  (30) days or less  without  liability  for further  payment  other than
nominal penalty.

      "Material  Gas  Imbalance"  means,  with  respect  to all  Gas  Balancing
Agreements  to which  any  Credit  Party is a party  or by  which  any  Mineral
Interest  owned by any Credit Party is bound,  a net gas  imbalance to all such
Credit Parties in excess of $5,000,000 in the aggregate.

      "Maximum Lawful Rate" means,  for each Bank, the maximum rate (or, if the
context  so  permits  or  requires,  an  amount  calculated  at such  rate)  of
interest  which,  at the time in question would not cause the interest  charged
on the portion of the  Revolving  Loan owed to such Bank at such time to exceed

<PAGE>

the maximum  amount which such Bank would be allowed to contract  for,  charge,
take,  reserve,  or receive under applicable Laws after taking into account, to
the extent  required  by  applicable  Laws,  any and all  relevant  payments or
charges  under the Loan  Papers.  To the  extent the Laws of the State of Texas
are  applicable  for purposes of  determining  the "Maximum  Lawful Rate," such
term  shall  mean the  "indicated  rate  ceiling"  from  time to time in effect
under Chapter 303 of the Texas Finance  Code,  as amended,  substituted  for or
restated,  or, if permitted by applicable  Law and effective upon the giving of
the notices  required by such  Chapter  303 (or  effective  upon any other date
otherwise   specified  by  applicable   Law),   the   "quarterly   ceiling"  or
"annualized  ceiling"  from  time to time in effect  under  such  Chapter  303,
whichever  Administrative  Agent (with the  approval of Required  Banks)  shall
elect to substitute  for the  "indicated  rate  ceiling," and vice versa,  each
such  substitution  to have  the  effect  provided  in such  Chapter  303,  and
Administrative  Agent (with the  approval of Required  Banks) shall be entitled
to make such  election  from time to time and one or more  times  and,  without
notice  to  Borrower,   to  leave  any  such  substitute  rate  in  effect  for
subsequent periods in accordance with such Chapter 303.

      "Mineral Interests" means rights,  estates,  titles, and interests in and
to oil and gas leases and any oil and gas  interests,  royalty  and  overriding
royalty interest,  production payment,  net profits interests,  oil and gas fee
interests,  and  other  rights  therein,  including,  without  limitation,  any
reversionary  or carried  interests  relating to the  foregoing,  together with
rights,  titles,  and  interests  created by or arising  under the terms of any
unitization,  communization,  and pooling  agreements or arrangements,  and all
properties,   rights  and  interests   covered  thereby,   whether  arising  by
contract,  by order,  or by operation of Laws,  which now or hereafter  include
all or any part of the foregoing.

      "Money  Pool  Agreement"  means  that  certain   Non-Utility  Money  Pool
Agreement,  dated as of January 31,  1999, by and among Alliant, Alliant Energy
Corporate  Services,  Inc., AER and certain  subsidiaries of Alliant including,
prior to the date hereof, Borrower.

      "Mortgages"   means  all  mortgages,   deeds  of  trust,   amendments  to
mortgages,  security agreements,  assignments of production, pledge agreements,
collateral  mortgages,  collateral chattel mortgages,  collateral  assignments,
financing   statements  and  other   documents,   instruments   and  agreements
evidencing,  creating,  perfecting or otherwise establishing the Liens required
by  Section 5.1   hereof.   All  Mortgages  shall  be  in  form  and  substance
satisfactory to Administrative Agent in its sole discretion.

      "Note"  means a  promissory  note of  Borrower  payable to the order of a
Bank,  in  substantially  the form of  Exhibit B hereto,  in the amount of such
Bank's  Commitment,  evidencing  the  obligation  of  Borrower to repay to such
Bank  its  Commitment  Percentage  of the  Revolving  Loan,  together  with all
modifications,  extensions,  renewals, and rearrangements  thereof, and "Notes"
means all of such Notes collectively.

      "Notice of  Continuation  or  Conversion"  has the  meaning  set forth in
Section 2.5(c).

      "Obligations" means all present and future indebtedness,  obligations and
liabilities,  and all renewals and extensions  thereof, or any part thereof, of
each Credit Party to  Administrative  Agent or to any Bank or any  Affiliate of
any  Bank  arising  pursuant  to the  Loan  Papers  or  pursuant  to any  Hedge
Agreement or Hedge  Transaction  entered into with any Bank or any Affiliate of
any  Bank,  and  all  interest  accrued  thereon  and  costs,   expenses,   and
attorneys' fees incurred in the enforcement or collection  thereof,  regardless
of  whether  such   indebtedness,   obligations  and  liabilities  are  direct,
indirect,  fixed,  contingent,  liquidated,  unliquidated,  joint,  several  or
joint and several.

      "Oil & Gas  Hedge  Transaction"  means a Hedge  Transaction  pursuant  to
which any Person  hedges the price to be received  by it for future  production
of Hydrocarbons.

      "Outstanding  Credit"  means,  on any date,  the sum of (a) the aggregate
outstanding  Letter of Credit  Exposure  on such date  including  the Letter of
Credit  Exposure  attributable  to Letters of Credit to be issued on such date,
plus (b) the aggregate  outstanding  principal balance of the Revolving Loan on
such date, including the amount of any Borrowing to be made on such date.

      "Parent" means Alliant Energy Investments, Inc., an Iowa corporation.

<PAGE>

      "Participant" has the meaning given such term in Section 14.10(b).

      "PBGC"  means the  Pension  Benefit  Guaranty  Corporation  or any entity
succeeding to any or all of its functions under ERISA.

      "Permitted AER  Distribution"  means a one-time  payment in an amount not
greater  than  $170,000,000  to be  paid  by  Borrower  to  AER  on  or  before
December 31,  2002,  the  proceeds  of which shall be used and applied to repay
Debt owing by Borrower to AER under the Money Pool Agreement.

      "Permitted Encumbrances" means with respect to any asset:

           (a)  Liens securing the Obligations;

           (b)  minor  defects  in title  which do not  secure  the  payment of
           money and otherwise have no material  adverse effect on the value or
           the operation of the subject property,  and for the purposes of this
           Agreement,  a  minor  defect  in  title  shall  include,  but not be
           limited to, easements,  rights-of-way,  servitudes, permits, surface
           leases and other  similar  rights in respect of surface  operations,
           and easements for pipelines,  streets, alleys,  highways,  telephone
           lines, power lines,  railways and other easements and rights-of-way,
           on, over or in respect of any of the  properties of any Credit Party
           that are customarily granted in the oil and gas industry;

           (c)  inchoate  statutory or operators'  Liens  securing  obligations
           for labor,  services,  materials  and supplies  furnished to Mineral
           Interests  which  are not  more  than  sixty  (60)  days  delinquent
           (except to the extent permitted by Section 8.7);

           (d)  mechanic's,  materialmen's,  warehouseman's,  journeyman's  and
           carrier's  Liens and other similar Liens arising by operation of Law
           in the  ordinary  course of  business  which are not more than sixty
           (60)  days   delinquent   (except   to  the  extent   permitted   by
           Section 8.7);

           (e)  Liens  for  Taxes  or  assessments  not  yet  due  or  not  yet
           delinquent,  or, if  delinquent,  that are being  contested  in good
           faith in the normal  course of business by  appropriate  action,  as
           permitted by Section 8.7;

           (f)  the terms of the oil and gas leases and lease  burdens  payable
           to  third  parties  which  are  deducted  in  the   calculation   of
           discounted  present value in the Reserve Report  including,  without
           limitation,  any royalty,  overriding royalty, net profits interest,
           production  payment,   carried  interest  or  reversionary   working
           interest;

           (g)  Liens,  charges and encumbrances upon Borrower's assets,  which
           in the aggregate, do not have a value in excess of $5,000,000;

           (h)  gas imbalances that are not Material Gas Imbalances; and

           (i)  operating   agreements,   unit   agreements,   unit   operating
           agreements,  pooling  and  communitization  agreements  and  pooling
           designations,   division   orders,   sales   contracts,   processing
           contracts,    transportation   agreements,   farm-in   and   farmout
           agreements  and all other  agreements  entered  into in the ordinary
           course of  Borrower's  business and affecting  Borrower's  assets to
           the extent,  and only to the extent,  a  reasonable  and prudent oil
           and gas industry owner or operator would find acceptable.

      "Permitted Exchange" means any exchange of any Relinquished  Property for
any  Replacement  Property in a transaction  qualifying for  nonrecognition  of
gain or loss  under the  provisions  of  Section  1031 of the  Code,  and which
otherwise  satisfies the terms and conditions set forth in Section 8.15  hereof
and in any applicable Exchange Agreement.

<PAGE>

      "Permitted  Investments" means (a) readily  marketable direct obligations
of the United  States of America  (or  investments  in mutual  funds or similar
funds which invest solely in such  obligations),  (b) fully  insured  demand or
time deposits and  certificates  of deposit with maturities of one year or less
of any  commercial  bank  operating  in the United  States  having  capital and
surplus in excess of  $500,000,000,  (c) commercial  paper of a domestic issuer
if at the time of  purchase  such  paper  is  rated  in one of the two  highest
ratings  categories  of Standard and Poor's  Corporation  or Moody's  Investors
Service,  (d) Investments  by any Credit Party in a Subsidiary of Borrower that
has  provided a Facility  Guaranty  and the Equity of which has been pledged to
Administrative  Agent pursuant to a Borrower  Pledge  Agreement or a Subsidiary
Pledge  Agreement,  (e) prepayments  on drilling  contracts,  deposits made for
property  acquisitions and advance payments made on undeveloped  leases and for
configuration  of gathering  systems,  all in the ordinary course of Borrower's
business,  (f) Investments  existing  on  the  date  hereof  and  described  on
Schedule 9.8 attached hereto, and (g) other  Investments;  provided,  that, the
aggregate  amount of all other  Investments  made  pursuant to this  clause (g)
outstanding  at any time  shall  not  exceed  $10,000,000  (measured  on a cost
basis).

      "Permitted  Tax  Distributions"  means,  for any  applicable  tax year of
Borrower,  quarterly  tax  distributions  to Parent  in an amount  equal to the
aggregate  federal  and  state  income  tax  liability  incurred  by  Parent in
respect of the Consolidated Net Income of Borrower for such tax year.

      "Person"  means  an  individual,   a  corporation,   a  partnership,   an
association,  a  trust  or  any  other  entity  or  organization,  including  a
Government Authority.

      "Plan" means  (i) with  respect to a Credit  Party,  an employee  benefit
plan within the meaning of section 3(3) of ERISA,  and any other  similar plan,
policy or  arrangement,  including an employment  contract,  whether  formal or
informal and whether  legally  binding or not, under which any Credit Party has
any current or future  obligation  or  liability  or under which any present or
former  employee  of any Credit  Party,  or such  present or former  employee's
dependents  or  beneficiaries,  has any  current  or future  right to  benefits
resulting from the present or former  employee's  employment  relationship with
any  Credit  Party,  and  (ii) with  respect  to an  ERISA  Affiliate,  a  plan
described  in  clause (i)  preceding  if, and only if,  such plan is subject to
Title IV of ERISA.

      "Prime Rate" means the per annum rate of interest  established  from time
to time by Bank One or its  parent as its  prime  rate,  which  rate may not be
the lowest rate of interest charged by Administrative Agent to its customers.

      "Proved Mineral Interests" means, collectively,  Proved Producing Mineral
Interests,  Proved  Nonproducing  Mineral  Interests,  and  Proved  Undeveloped
Mineral Interests.

      "Proved  Nonproducing  Mineral  Interests"  means all  Mineral  Interests
which constitute proved developed nonproducing reserves.

      "Proved  Producing  Mineral  Interests" means all Mineral Interests which
constitute proved developed producing reserves.

      "Proved  Undeveloped Mineral Interests" means all Mineral Interests which
constitute proved undeveloped reserves.

      "Purchasers" has the meaning given such term in Section 14.10(c).

      "Qualified  Intermediary"  means Bank One in its capacity as a "qualified
intermediary"  for purposes of Section  1.1031(k)-1(g)(4)  of the  Regulations,
and not in its capacity as Administrative Agent or a Bank hereunder.

      "Quarterly  Date" means the last day of each March,  June,  September and
December.

      "Recognized  Value" means, with respect to all Proved Mineral  Interests,
the  portion of the  Borrowing  Base which Bank One  attributes  to such Proved
Mineral  Interests  for  purposes  of the most  recent  redetermination  of the
Borrowing  Base  pursuant to Article IV hereof (or for purposes of  determining

<PAGE>

the  initial  Borrowing  Base  in  the  event  no  such   redetermination   has
occurred),  based upon the  discounted  present value of the estimated net cash
flow to be realized from the  production of  Hydrocarbons  from all such Proved
Mineral Interests.

      "Redetermination"   means  any  Scheduled   Redetermination   or  Special
Redetermination.

      "Redetermination   Date"  means   (a) with   respect  to  any   Scheduled
Redetermination,  each  November 1  and  May 1,  commencing  May 1,  2003,  and
(b) with  respect to any  Special  Redetermination,  the first day of the first
month which is not less than twenty (20) Domestic  Business Days  following the
date of a request for a Special Redetermination.

      "Register" has the meaning given such term in Section 14.10(c)(iv).

      "Regulation  A"  means  Regulation A  of the  Board of  Governors  of the
Federal Reserve System, 12 C.F.R. Part 221, as in effect from time to time.

      "Regulation  D"  means  Regulation D  of the  Board of  Governors  of the
Federal Reserve System, 12 C.F.R. Part 221, as in effect from time to time.

      "Regulation  U"  means  Regulation  U of the  Board of  Governors  of the
Federal Reserve System, 12 C.F.R. Part 221, as in effect from time to time.

      "Regulations" means the regulations promulgated under the Code.

      "Relinquished Property" has the meaning set forth in Section 8.15.

      "Replacement Property " has the meaning set forth in Section 8.15.

      "Request for Borrowing" has the meaning set forth in Section 2.2(a).

      "Request   for  Letter  of  Credit"   has  the   meaning   set  forth  in
Section 2.3(a).

      "Required  Banks" means Banks holding at least  sixty-six and  two-thirds
percent (66 2/3%) of the Total Commitment.

      "Required  Reserve  Value" means  Proved  Mineral  Interests  that have a
Recognized  Value of not  less  than  eighty  percent  (80%) of the  Recognized
Value of all Proved  Mineral  Interests  held by Borrower and its  Subsidiaries
and included in the Borrowing Base.

      "Reserve  Report"  means  an  unsuperseded  engineering  analysis  of the
Mineral  Interests  owned  by  Borrower,   in  form  and  substance  reasonably
acceptable to Administrative  Agent,  prepared in accordance with customary and
prudent  practices  in  the  petroleum   engineering   industry  and  Financial
Accounting  Standards  Board  Statement 69. Each Reserve Report  required to be
delivered  by April 1 of each year  pursuant to  Section 4.1  shall be prepared
by the  Approved  Petroleum  Engineer.  Each  other  Reserve  Report  shall  be
prepared by either (i) the  Approved  Petroleum  Engineer,  or (ii)  Borrower's
in-house  staff.   Notwithstanding  the  foregoing,   in  connection  with  any
Special  Redetermination  requested by Borrower, the Reserve Report shall be in
form and scope  mutually  acceptable  to  Borrower  and  Administrative  Agent.
Until  superseded,  the Existing Reserve Report shall be considered the Reserve
Report.

      "Reserve  Requirement"  means,  at any time,  the  maximum  rate at which
reserves (including,  without limitation, any marginal, special,  supplemental,
or emergency  reserves) are required to be maintained under regulations  issued
from time to time by the Board of Governors of the Federal  Reserve  System (or
any  successor) by member banks of the Federal  Reserve  System  against in the
case of Eurodollar Loans,  "Eurocurrency  liabilities" (as such term is used in
Regulation  D).  Without  limiting  the effect of the  foregoing,  the  Reserve
Requirement  shall  reflect any other  reserves  required to be  maintained  by
such  member  banks with  respect  to (i) any  category  of  liabilities  which
includes  deposits by reference to which the Adjusted  Eurodollar Rate is to be

<PAGE>

determined,  or (ii) any  category  of  extensions  of credit  or other  assets
which  include  Eurodollar  Loans.  The  Adjusted   Eurodollar  Rate  shall  be
adjusted  automatically  on and as of the  effective  date of any change in the
Reserve Requirement.

      "Restricted   Payment"  means,  with  respect  to  any  Person,   (a) any
Distribution by such Person,  (b) any capital contribution,  loan or advance by
any  Credit  Party  to  any  Unrestricted  Subsidiary,  (c) the  issuance  of a
Guarantee by any Credit Party with respect to any Debt or other  obligation  of
Parent,  Alliant,  AER  or any  Unrestricted  Subsidiary,  (d) the  retirement,
redemption,  defeasance,  repurchase or prepayment prior to scheduled  maturity
by such Person or any  Affiliate of such Person of any Debt of such Person,  or
(e) the  retirement,  redemption  or payment by  Borrower or any  Affiliate  of
Borrower  of any  part of the  principal  of the  Subordinate  Debt at any time
prior to the  termination of all  Commitments  and the payment and  performance
in full of the Obligations.

      "Restricted  Subsidiary"  means any Subsidiary of Borrower which Borrower
hereafter  designates  as  a  "Restricted   Subsidiary;"  provided,   that,  no
Subsidiary of Borrower will be a Restricted  Subsidiary  unless (a) one hundred
percent  (100%) of its  issued  and  outstanding  Equity  has been  pledged  to
Administrative  Agent to secure the  Obligations  pursuant to a Borrower Pledge
Agreement  or  a  Subsidiary  Pledge  Agreement,  and  (b) it  has  executed  a
Facility   Guaranty.   As  of  the  date  hereof,   there  are  no   Restricted
Subsidiaries.

      "Revolving   Loan"  means  the   revolving   credit  loan  in  an  amount
outstanding  at any time not to exceed  the lesser of  (i) the  Borrowing  Base
then in  effect,  and  (ii) the  amount of  (a) the  Total  Commitment  then in
effect less (b) the  amount of the Letter Credit  Exposure then  outstanding to
be made by Banks  to  Borrower  in  accordance  with  Section 2.1  hereof.  The
Revolving  Loan  may be  comprised  of the  Base  Rate  Loan  and  one or  more
Eurodollar  Loans as  Borrower  may  select in a  Request  for  Borrowing  or a
Notice of Continuation or Conversion.

      "Schedule"   means  a   "schedule"   attached  to  this   Agreement   and
incorporated herein by reference, unless specifically indicated otherwise.

      "Scheduled  Redetermination"  means any  Redetermination of the Borrowing
Base pursuant to Section 4.2.

      "Section"  refers to a "section" or "subsection" of this Agreement unless
specifically indicated otherwise.

      "Sole Lead  Arranger"  means BOCM,  in its capacity as sole lead arranger
for the credit facility hereunder or any successor thereto.

      "Special  Redetermination"  means any  Redetermination  of the  Borrowing
Base pursuant to Section 4.3.

      "Subordinate  Debt"  means any and all Debt of  Borrower  owing under the
Subordinate  Loan Documents and evidenced by the  Subordinate  Note,  including
all  renewals  and  extensions  thereof  to  the  extent  permitted  hereunder;
provided,  that,  such Debt (i) does not exceed,  in principal  amount,  at any
time, $88,000,000,  (ii) is unsecured,  (iii) has a stated maturity of not less
than one (1) year after the  Termination  Date,  (iv) does  not  provide  for a
rate of interest  greater than four and one-half  percent (4.5%) per annum, and
(v) is  fully  subordinated  to the  Obligations  pursuant  to the terms of the
Subordinate Note.

      "Subordinate Loan Documents" means,  collectively,  the Subordinate Note,
and all  other  promissory  notes,  Guarantees  or other  instruments  given in
connection with the foregoing.

      "Subordinate  Note" means a Subordinated  Promissory  Note in the form of
Exhibit K  attached  hereto to be executed by Borrower and payable to the order
of Parent, in an original principal amount not to exceed $88,000,000.

      "Subsidiary"  means,  for any Person,  any corporation or other entity of
which  securities or other ownership  interests having ordinary voting power to
elect a  majority  of the  board  of  directors  or  other  persons  performing
similar  functions  (including  that  of a  general  partner)  are at the  time
directly  or   indirectly   owned,   collectively,   by  such  Person  and  any
Subsidiaries   of  such   Person.   The   term   "Subsidiary"   shall   include
Subsidiaries of Subsidiaries (and so on).

<PAGE>

      "Subsidiary  Pledge Agreement" means a Pledge Agreement  substantially in
the form of Exhibit D attached hereto (with applicable  conforming  changes) to
be executed by each existing  and/or future  Restricted  Subsidiary of Borrower
to the extent such Restricted  Subsidiary  owns any  outstanding  Equity of any
other  Restricted  Subsidiary of Borrower (for purposes of this  definition and
Section 5.1(d)  hereof,  such  Restricted  Subsidiary is referred to herein and
therein  as an  "Indirect  Restricted  Subsidiary"),  pursuant  to  which  such
Indirect  Restricted  Subsidiary shall pledge to Administrative  Agent, for the
ratable  benefit of Banks,  all of the issued and  outstanding  Equity owned by
such  Indirect  Restricted  Subsidiary  of each  Restricted  Subsidiary of such
Indirect Restricted Subsidiary described therein to secure the Obligations.

      "Syndication  Agent" means Wachovia Bank,  National  Association,  in its
capacity as Syndication Agent for Banks hereunder or any successors thereto.

      "Taxes"  means all  taxes,  assessments,  filing or other  fees,  levies,
imposts,  duties,  deductions,  withholdings,  stamp taxes, capital transaction
taxes,  foreign  exchange  taxes or other  charges,  or  other  charges  of any
nature  whatsoever,  from  time to time or at any  time  imposed  by Law or any
Governmental Authority.  "Tax" means any one of the foregoing.

      "Termination Date" means December 20, 2005.

      "Total  Commitment"  means the  Commitments  of all  Banks in an  initial
aggregate  amount of  $350,000,000 as such amount shall be reduced from time to
time pursuant to Section 2.8 and Section 2.9.

      "Transferee" has the meaning given such term in Section 14.10(d).

      "Type" means,  with reference to a Revolving  Loan, the  characterization
of such  Revolving  Loan as the Base Rate Loan or a  Eurodollar  Loan  based on
the  method  by  which  the  accrual  of  interest  on such  Revolving  Loan is
calculated.

      "Unrestricted  Subsidiary"  means any Subsidiary of Borrower which is not
a Restricted Subsidiary.

      "Whiting-Golden  Gas" means  Whiting-Golden  Gas Production  Company,  an
Oklahoma corporation.

      "Whiting   Institutional"   means   Whiting   Institutional   Oil &   Gas
Partnership 1985, Ltd., a Texas limited partnership.

      "Whiting Programs" means Whiting Programs, Inc., a Delaware corporation.

      "WOK" means WOK Acquisition Company, a Delaware corporation.

Section 1.2.....Accounting   Terms   and   Determinations.   Unless   otherwise
specified  herein,  all accounting terms used herein shall be interpreted,  all
accounting   determinations   hereunder   shall  be  made,  and  all  financial
statements  required  to be  delivered  hereunder  shall be  expressed  in U.S.
dollars  and shall be  prepared  in  accordance  with GAAP,  applied on a basis
consistent with the most recent audited  consolidated  financial  statements of
Borrower  and its  Consolidated  Subsidiaries  delivered  to Banks  except  for
changes  concurred in by Borrower's  independent  certified public  accountants
and  which  are  disclosed  to  Administrative  Agent on the next date on which
financial  statements  are  required  to be  delivered  to  Banks  pursuant  to
Section 8.1(a) or Section 8.1(b);  provided,  that, unless Required Banks shall
otherwise  agree in writing,  no such change  shall modify or affect the manner
in which  compliance  with the  covenants  contained in Article X  are computed
such  that  all  such  computations  shall  be  conducted  utilizing  financial
information presented consistently with prior periods.

Section 1.3.....Petroleum Terms. As used herein,  the terms "proved  reserves,"
"proved developed  reserves,"  "proved developed  producing  reserves," "proved
developed  nonproducing  reserves," and "proved undeveloped  reserves" have the
meaning  given such terms from time to time and at the time in  question by the
Society of Petroleum Engineers of the American Institute of Mining Engineers.

<PAGE>

Section 1.4.....Money. Unless expressly  stipulated  otherwise,  all references
herein to "dollars,"  "money,"  "funds,"  "payments,"  "prepayments" or similar
financial or monetary  terms,  are  references to currency of the United States
of America.

                                  Article II
                                  THE CREDIT
                                  ----------

Section 2.1.....Commitments.

(a)   Each Bank severally agrees,  subject to  Section 2.1(c),  Section 6.1 and
Section 6.2  and the other terms and  conditions  set forth in this  Agreement,
to lend to Borrower  from time to time prior to the  Termination  Date  amounts
requested  by  Borrower  not  to  exceed  in the  aggregate  at  any  one  time
outstanding,  the amount of such Bank's  Commitment  reduced by an amount equal
to such  Bank's  Letter  of  Credit  Exposure.  Each  Borrowing  shall be in an
aggregate  principal  amount of $1,000,000 or any larger  integral  multiple of
$100,000  (except  that any Base Rate  Borrowing  may be in an amount  equal to
the  Availability at such time),  and (ii) shall be made from the Banks ratably
in accordance  with their  respective  Commitment  Percentages.  Subject to the
foregoing  limitations  and the other  provisions of this  Agreement,  prior to
the  Termination  Date  Borrower  may borrow under this  Section 2.1(a),  repay
amounts   borrowed   and  request  new   Borrowings   to  be  made  under  this
Section 2.1(a).

(b)   Administrative  Agent,  or such Bank designated by  Administrative  Agent
which  (without  obligation  to do so) consents to the same ("Letter of Credit
Issuer")  will,  from time to time prior to the date which is five (5) Domestic
Business Days prior to the Termination  Date,  upon request by Borrower,  issue
Letters of Credit for the  account of  Borrower  or any  Restricted  Subsidiary
designated  by  Borrower,  so long as (i) the sum of (A) the  total  Letter  of
Credit  Exposure then existing,  and (B) the amount of the requested  Letter of
Credit does not exceed  $10,000,000,  and (ii) Borrower  would be entitled to a
Borrowing  under  Section 2.1(a)  and  Section 2.1(c)  in  the  amount  of  the
requested  Letter of Credit.  Not less than three (3)  Domestic  Business  Days
prior  to the  requested  date  of  issuance  of any  such  Letter  of  Credit,
Borrower  (and any  Restricted  Subsidiary  for whose  account  such  Letter of
Credit is being issued)  shall execute and deliver to Letter of Credit  Issuer,
Letter  of  Credit  Issuer's  customary  letter  of  credit  application.  Each
Letter of Credit  shall be in the  minimum  amount of  $10,000  and shall be in
form and  substance  acceptable  to  Letter  of  Credit  Issuer.  No  Letter of
Credit  shall  have an  expiration  date  later  than the  earlier  of  (i) the
Termination  Date, or  (ii) fifteen  (15) months from the date of issuance (or,
in the case of any renewal or  extension  thereof,  fifteen  (15) months  after
such  renewal or  extension).  Upon the date of issuance of a Letter of Credit,
Letter of Credit  Issuer  shall be deemed to have sold to each other Bank,  and
each  other  Bank  shall be  deemed  to have  unconditionally  and  irrevocably
purchased from Letter of Credit  Issuer,  a non recourse  participation  in the
related  Letter of Credit and Letter of Credit  Exposure  equal to such  Bank's
Commitment   Percentage   of  such  Letter  of  Credit  and  Letter  of  Credit
Exposure.  Upon  request  of any  Bank,  but not  less  often  than  quarterly,
Administrative   Agent  shall  provide   notice  to  each  Bank  by  telephone,
teletransmission  or telex  setting  forth  each  Letter of Credit  issued  and
outstanding  pursuant to the terms hereof and  specifying the  beneficiary  and
expiration date of each such Letter of Credit,  each Bank's  percentage of each
such   Letter  of  Credit  and  the  actual   dollar   amount  of  each  Bank's
participation  held by Letter of Credit Issuer  thereof for such Bank's account
and risk.  At the time of  issuance of each  Letter of Credit,  Borrower  shall
pay to  Administrative  Agent in  respect  of such  Letter  of  Credit  (a) the
applicable  Letter of  Credit  Fee,  and  (b) the  applicable  Letter of Credit
Fronting Fee.  Administrative  Agent shall  distribute the Letter of Credit Fee
payable  upon the  issuance  of each  Letter of  Credit to Banks in  accordance
with their respective  Commitment  Percentages,  and Administrative Agent shall
distribute  the Letter of Credit  Fronting  Fee to Letter of Credit  Issuer for
its own account.  Any (y) material  amendment or  modification,  or (z) renewal
or  extension  of any Letter of Credit  shall be deemed to be the issuance of a
new  Letter of Credit  for  purposes  of this  Section 2.1(b).  Notwithstanding
anything   to  the   contrary   contained   herein,   Borrower   shall  pay  to
Administrative  Agent in connection  with the issuance of each Letter of Credit
and/or any amendment or  modification  of any nature to any existing  Letter of
Credit,  Administrative  Agent's usual and customary  fees for the issuance of,
amendments or modifications to, and processing of, Letters of Credit.

      Immediately   upon  the  occurrence  of  an  Event  of  Default  and  the
acceleration of the Obligations  hereunder,  and also on the date which is five
(5)  Domestic  Business  Days prior to the  Termination  Date,  Borrower  shall
deposit  with  Administrative  Agent  cash in such  amounts  as  Administrative
Agent may  request,  up to a maximum  amount  equal to the  aggregate  existing
Letter of Credit Exposure of all Banks;  provided,  that, in the case of any of
the Events of Default  specified  in  Section 11.1(g)  or  Section 11.1(h),  an

<PAGE>

amount equal to the aggregate  existing  Letter of Credit Exposure of all Banks
shall be due and  payable  without  any notice to  Borrower or any other act by
Administrative  Agent or any Bank.  Any amounts so  deposited  shall be held by
Administrative  Agent for the ratable  benefit of all Banks as security for the
outstanding Letter of Credit Exposure and the other  Obligations,  and Borrower
will, in  connection  therewith,  execute and deliver such security  agreements
in  form   and   substance   satisfactory   to   Administrative   Agent   which
Administrative  Agent may,  in its  discretion,  require.  As drafts or demands
for  payment are  presented  under any Letter of Credit,  Administrative  Agent
shall apply such cash to satisfy  such  drafts or demands.  When all Letters of
Credit have expired and the  Obligations  have been repaid in full (and no Bank
has any  obligation  to lend or issue  Letters  of  Credit  hereunder)  or such
Event  of  Default  has been  cured  to the  satisfaction  of  Required  Banks,
Administrative  Agent shall  release to Borrower any remaining  cash  deposited
under this  Section 2.1(b).  Whenever  Borrower is  required  to make  deposits
under this  Section 2.1(b)  and fails to do so on the day such  deposit is due,
Administrative  Agent or any Bank may,  without  notice to Borrower,  make such
deposit  (whether  by  application  of  proceeds  of  any  collateral  for  the
Obligations,  by  transfers  from other  accounts  maintained  with any Bank or
otherwise)  using any funds then  available  to any Bank of any  Credit  Party,
any guarantor or any other party liable for repayment of the Obligations.

      Notwithstanding  anything  to the  contrary  contained  herein,  Borrower
hereby  agrees to  reimburse  each  Letter of Credit  Issuer  immediately  upon
demand by such Letter of Credit  Issuer,  and in immediately  available  funds,
for any  payment or  disbursement  made by such Letter of Credit  Issuer  under
any  Letter of Credit  issued by it.  Payment  shall be made by  Borrower  with
interest  on the amount so paid or  disbursed  by Letter of Credit  Issuer from
and  including  the date  payment  is made  under  any  Letter of Credit to and
including  the date of payment,  at the lesser of (i) the Maximum  Lawful Rate,
or (ii) the Default Rate.  The  obligations  of Borrower  under this  paragraph
will  continue  until all Letters of Credit have expired and all  reimbursement
obligations  with respect  thereto have been paid in full by Borrower and until
all other Obligations shall have been paid in full.

      Borrower  shall be obligated to  reimburse  Letter of Credit  Issuer upon
demand  for all  amounts  paid  under  Letters  of  Credit  as set forth in the
immediately  preceding  paragraph hereof;  provided,  however,  if Borrower for
any reason  fails to  reimburse  Letter of Credit  Issuer in full upon  demand,
Banks shall  reimburse  Letter of Credit Issuer in accordance  with each Banks'
Commitment  Percentage  for amounts  due and unpaid from  Borrower as set forth
hereinbelow;  provided,  however,  that no  such  reimbursement  made by  Banks
shall discharge  Borrower's  obligations to reimburse  Letter of Credit Issuer.
All reimbursement  amounts payable by any Bank under this Section 2.1(b)  shall
include  interest  thereon  at the  Federal  Funds  Rate,  from the date of the
payment  of  such   amounts  by  Letter  of  Credit   Issuer  to  the  date  of
reimbursement  by such Bank.  No Bank shall be liable  for the  performance  or
nonperformance  of the  obligations  of any other Bank  under  this  paragraph.
The  reimbursement  obligations  of Banks under this  paragraph  shall continue
after the  Termination  Date and shall survive  termination  of this  Agreement
and the other Loan Papers.

      Borrower shall indemnify and hold Administrative  Agent, Letter of Credit
Issuer   and   each   Bank,   and   their   respective   officers,   directors,
representatives  and  employees  harmless  from loss for any  claim,  demand or
liability  which  may be  asserted  against  any or such  indemnified  party in
connection  with  actions  taken  under  Letters  of  Credit  or in  connection
therewith  (including  losses  resulting  from  the  negligence  of any or such
indemnified  party),  and shall pay each indemnified  party for reasonable fees
of  attorneys  and legal costs paid or incurred  by each  indemnified  party in
connection  with any matter  related  to  Letters of Credit,  except for losses
and  liabilities  incurred  as a  direct  result  of the  gross  negligence  or
willful  misconduct of such indemnified  party, IT BEING THE EXPRESS  INTENTION
OF THE  PARTIES  THAT  EACH  INDEMNIFIED  PARTY  SHALL BE  INDEMNIFIED  FOR THE
CONSEQUENCES  OF ITS OWN  ORDINARY  NEGLIGENCE.  If  Borrower  for  any  reason
fails to indemnify or pay such  indemnified  party as set forth herein in full,
Banks  shall  indemnify  and  pay  such  indemnified   party  upon  demand,  in
accordance  with each  Bank's  Commitment  Percentage  of such  amounts due and
unpaid from Borrower;  provided,  however,  that, no such payment made by Banks
shall  discharge  Borrower's  obligation  to indemnify or pay such  indemnified
party in accordance  with the terms hereof.  The  provisions of this  paragraph
shall survive the termination of this Agreement.

      Neither  Administrative Agent nor any other Letter of Credit Issuer makes
any  representation or warranty,  nor assumes any  responsibility  with respect
to the  validity,  legality,  sufficiency  or  enforceability  of any letter of
credit  application  executed and  delivered in  connection  with any Letter of
Credit  issued   hereunder  or  any  document   relative   thereto  or  to  the
collectibility  thereunder.  Neither  Administrative Agent nor any other Letter
of Credit Issuer  assumes any  responsibility  for the  financial  condition of
Borrower   or  for   the   performance   of   any   obligation   of   Borrower.

<PAGE>

Administrative  Agent  and each  other  Letter  of  Credit  Issuer  may use its
discretion  with  respect to  exercising  or  refraining  from  exercising  any
rights,  or taking or refraining  from taking any action which may be vested in
it or which it may be  entitled  to take or assert  with  respect to any Letter
of Credit  or any  letter of  credit  application.  FURTHERMORE,  EXCEPT AS SET
FORTH  HEREIN,  NEITHER  ADMINISTRATIVE  AGENT NOR ANY  OTHER  LETTER OF CREDIT
ISSUER  SHALL BE UNDER ANY  LIABILITY  TO ANY BANK,  WITH  RESPECT TO  ANYTHING
ADMINISTRATIVE  AGENT OR ANY SUCH  LETTER OF CREDIT  ISSUER  MAY DO OR  REFRAIN
FROM  DOING  IN  THE  EXERCISE  OF  ITS  JUDGMENT,   THE  SOLE   LIABILITY  AND
RESPONSIBILITY OF  ADMINISTRATIVE  AGENT AND SUCH LETTER OF CREDIT ISSUER BEING
TO HANDLE EACH BANK'S  SHARE ON AS  FAVORABLE A BASIS AS  ADMINISTRATIVE  AGENT
OR  SUCH   LETTER  OF   CREDIT   ISSUER   HANDLES   ITS  OWN   SHARE.   NEITHER
ADMINISTRATIVE  AGENT NOR ANY OTHER  LETTER OF  CREDIT  ISSUER  SHALL  HAVE ANY
DUTIES OR  RESPONSIBILITIES  EXCEPT THOSE  EXPRESSLY SET FORTH HEREIN AND THOSE
DUTIES AND LIABILITIES  SHALL BE SUBJECT TO THE LIMITATIONS AND  QUALIFICATIONS
SET FORTH HEREIN.  FURTHERMORE,  NEITHER  ADMINISTRATIVE  AGENT,  ANY LETTER OF
CREDIT ISSUER,  NOR ANY OF THEIR  DIRECTORS,  OFFICERS,  OR EMPLOYEES  SHALL BE
LIABLE FOR ANY ACTION  TAKEN OR OMITTED  (WHETHER OR NOT SUCH  ACTION  TAKEN OR
OMITTED IS  EXPRESSLY  SET FORTH  HEREIN)  UNDER OR IN  CONNECTION  HEREWITH OR
UNDER ANY OTHER  INSTRUMENT  OR DOCUMENT  IN  CONNECTION  HEREWITH,  EXCEPT FOR
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.  Neither  Administrative  Agent nor any
other  Letter  of  Credit  Issuer  shall  incur  any  liability  to  any  Bank,
Borrower,  or any  Affiliate  of any  Bank or  Borrower,  in  acting  upon  any
notice,  document,  order,  consent,  certificate,  warrant or other instrument
reasonably  believed by  Administrative  Agent or such Letter of Credit  Issuer
to be genuine or authentic and to be signed by the proper party.

(c)   No Bank will be obligated  to lend to Borrower  hereunder or incur Letter
of Credit  Exposure,  and Borrower shall not be entitled to borrow hereunder or
obtain  Letters  of  Credit  hereunder,  in an  amount  which  would  cause the
Outstanding  Credit to  exceed  the  Borrowing  Base  then in  effect.  No Bank
shall be  obligated to fund  Borrowings  hereunder  and  Borrower  shall not be
entitled to  Borrowings  hereunder  during the  existence  of a Borrowing  Base
Deficiency.  Nothing  in this  Section 2.1(c)  shall be  deemed  to  limit  any
Bank's  obligation to reimburse any Letter of Credit Issuer with respect to its
participation  in  Letters  of  Credit  as a result  of the  drawing  under any
Letter of Credit pursuant to Section 2.1(b).

Section 2.2.....Method of Borrowing.

(a)   In order to request any Borrowing under Section 2.1,  Borrower shall hand
deliver,  telex or telecopy to  Administrative  Agent a duly completed  Request
for  Borrowing  (herein so called) prior to  11:00 a.m.  (Dallas,  Texas time),
(i) on the Borrowing  Date  specified for a proposed Base Rate  Borrowing,  and
(ii) at least three (3)  Eurodollar  Business Days before the Borrowing Date of
a proposed  Eurodollar  Borrowing.  Each such  Request for  Borrowing  shall be
substantially in the form of Exhibit E attached hereto, and shall specify:

          (i) the Borrowing  Date of such  Borrowing,  which shall be a Domestic
     Business Day in the case of a Base Rate Borrowing or a Eurodollar  Business
     Day in the case of a Eurodollar Borrowing;

          (ii) the aggregate amount of such Borrowing;

          (iii)  whether  such  Borrowing  is to be a Base Rate  Borrowing  or a
     Eurodollar Borrowing; and

          (iv) in the  case  of a  Eurodollar  Borrowing,  the  duration  of the
     Interest  Period  applicable  thereto,  subject  to the  provisions  of the
     definition of Interest Period.

(b)   Upon  receipt of a Request  for  Borrowing,  Administrative  Agent  shall
promptly  notify  each  Bank of the  contents  thereof  and the  amount  of the
Borrowing  to be loaned by such Bank  pursuant  thereto,  and such  Request for
Borrowing shall not thereafter be revocable by Borrower.

<PAGE>

(c)   Not  later  than  12:00  noon  (Dallas,  Texas  time) on the date of each
Borrowing,  each Bank shall make  available its  Commitment  Percentage of such
Borrowing,  in Federal or other funds  immediately  available in Dallas,  Texas
to  Administrative  Agent at its  address  set forth on  Schedule  2.1  hereto.
Unless   Administrative   Agent   determines  that  any  applicable   condition
specified in  Section 6.2  has not been  satisfied,  Administrative  Agent will
make the funds so received from Banks  available to Borrower at  Administrative
Agent's aforesaid address.

Section 2.3.....Method of Requesting Letters of Credit.

(a)   In order to request any Letter of Credit  hereunder,  Borrower shall hand
deliver,  telex or telecopy to  Administrative  Agent a duly completed  Request
for  Letter of Credit  (herein so called)  prior to 12:00 noon  (Dallas,  Texas
time) at least three (3) Domestic  Business Days before the date  specified for
issuance of such  Letter of Credit.  Each  Request  for Letter of Credit  shall
be  substantially  in  the  form  of  Exhibit F   attached  hereto,   shall  be
accompanied  by the  applicable  Letter of Credit  Issuer's duly  completed and
executed letter of credit application and agreement and shall specify:

          (i) the requested date for issuance of such Letter of Credit;

          (ii) the terms of such requested Letter of Credit,  including the name
     and address of the beneficiary,  the stated amount, the expiration date and
     the  conditions  under which  drafts  under such Letter of Credit are to be
     available; and

          (iii) the purpose of such Letter of Credit.

(b)   Upon  receipt of a Request  for Letter of  Credit,  Administrative  Agent
shall  promptly  notify each Bank and the proposed  Letter of Credit  Issuer of
the contents  thereof,  including the amount of the requested Letter of Credit,
and such  Request for Letter of Credit  shall not  thereafter  be  revocable by
Borrower.

(c)   No later than 12:00 noon (Dallas,  Texas time) on the date each Letter of
Credit is requested,  unless  Administrative  Agent or the applicable Letter of
Credit Issuer determines that any applicable  condition  precedent set forth in
Section 6.2 hereof has not been satisfied,  Administrative  Agent or such other
applicable  Letter of Credit  Issuer  will  issue and  deliver  such  Letter of
Credit pursuant to the instructions of Borrower.

Section 2.4.....Notes.  Each  Bank's  Commitment  Percentage  of the  Revolving
Loan shall be  evidenced  by a single Note payable to the order of such Bank in
an amount equal to such Bank's Commitment.

Section 2.5.....Interest Rates; Payments.

(a)   The principal  amount of the Base Rate Loan  outstanding  from day to day
shall  bear  interest  at a  rate  per  annum  equal  to the  sum  of  (i)  the
Applicable  Margin  plus (ii) the  applicable  Base Rate in effect  from day to
day;  provided  that in no event shall the rate charged  hereunder or under the
Notes  exceed the  Maximum  Lawful  Rate.  Interest on the Base Rate Loan shall
be payable as it accrues on each Quarterly Date, and on the Termination Date.

(b)   The principal  amount of each Eurodollar Loan outstanding from day to day
shall bear interest for the Interest  Period  applicable  thereto at a rate per
annum equal to the sum of (i) the  Applicable  Margin plus (ii) the  applicable
Adjusted  Eurodollar  Rate;  provided  that in no event shall the rate  charged
hereunder  or under the Notes exceed the Maximum  Lawful Rate.  Interest on any
portion  of the  principal  of each  Eurodollar  Loan  subject  to an  Interest
Period of one (1),  two (2) or three (3)  months  shall be  payable on the last
day of the  Interest  Period  applicable  thereto.  Interest  on any portion of
the  principal of each  Eurodollar  Loan  subject to an Interest  Period of six
(6) months shall be payable on the last day of the Interest  Period  applicable
thereto and on each Quarterly Date.

(c)   So long as no Default or Event of Default  shall be  continuing,  subject
to the  provisions  of this  Section 2.5,  Borrower  shall  have the  option of
having all or any  portion of the  principal  outstanding  under the  Revolving

<PAGE>

Loan be a Base  Rate  Loan or one (1) or more  Eurodollar  Loans,  which  shall
bear  interest  at rates  determined  by  reference  to the  Base  Rate and the
Adjusted  Eurodollar Rate,  respectively;  provided,  that each Eurodollar Loan
shall be in a minimum  amount of $2,000,000  and shall be in an amount which is
an integral  multiple of $500,000.  Prior to the  termination  of each Interest
Period  with  respect to each  Eurodollar  Loan,  Borrower  shall give  written
notice (a "Notice of  Continuation  or  Conversion")  in the form of  Exhibit G
attached  hereto to  Administrative  Agent of the Type of Loan  which  shall be
applicable  to the  principal of such  Eurodollar  Loan upon the  expiration of
such  Interest  Period.  Such Notice of  Continuation  or  Conversion  shall be
given to  Administrative  Agent at least one (1) Domestic  Business Day, in the
case of a Base Rate Loan selection and three (3)  Eurodollar  Business Days, in
the  case of a  Eurodollar  Loan  selection,  prior to the  termination  of the
Interest  Period then expiring.  If Borrower  shall specify a Eurodollar  Loan,
such Notice of  Continuation  or  Conversion  shall also  specify the length of
the  succeeding  Interest  Period  (subject to the provisions of the definition
of  such  term)  selected  by  Borrower.   Each  Notice  of   Continuation   or
Conversion  shall be  irrevocable  and effective upon  notification  thereof to
Administrative  Agent.  If the required  Notice of  Continuation  or Conversion
shall not have been timely  received by  Administrative  Agent,  Borrower shall
be deemed to have elected that the  principal  of the  Eurodollar  Loan subject
to the  Interest  Period then  expiring be Converted to the Base Rate Loan upon
the  expiration  of such  Interest  Period and Borrower  will be deemed to have
given   Administrative   Agent  notice  of  such   election.   Subject  to  the
limitations  set  forth in this  Section 2.5(c)  on the  amount  and  number of
Eurodollar  Loans,  Borrower shall have the right to Convert all or any part of
the Base  Rate  Loan to a  Eurodollar  Loan by  giving  Administrative  Agent a
Notice of  Continuation  or  Conversion  of such  election  at least  three (3)
Eurodollar  Business  Days prior to the date on which  Borrower  elects to make
such  Conversion  (a  "Conversion  Date").  The  Conversion  Date  selected  by
Borrower  shall be a  Eurodollar  Business  Day.  Notwithstanding  anything  in
this  Section 2.5  to the  contrary,  no portion of the  principal  of the Base
Rate Loan may be Converted to a Eurodollar  Loan and no Eurodollar  Loan may be
Continued  as such when any  Default or Event of Default  has  occurred  and is
continuing,  but each such Eurodollar Loan shall be automatically  Converted to
the  Base  Rate  Loan on the  last  day of  each  applicable  Interest  Period.
Borrower  shall not be  permitted to have more than five (5)  Eurodollar  Loans
in effect at any time.

(d)   Notwithstanding  anything to the contrary set forth in  Section 2.5(a) or
Section 2.5(b)  above,  after the  occurrence of an Event of Default,  interest
shall accrue on the  outstanding  principal  balance of the Revolving Loan, and
to the extent  permitted  by Law,  on the past due but unpaid  interest  on the
Revolving  Loan and all other past due  Obligations  from the  period  from and
including  the  occurrence  of such Event of Default to but  excluding the date
the  same is  remedied  at a rate per  annum  equal  to the  lesser  of (a) the
Default Rate, and (b) the Maximum Lawful Rate.

(e)   Administrative  Agent shall  determine  each interest rate  applicable to
the Revolving Loan in accordance  with the terms hereof.  Administrative  Agent
shall promptly  notify  Borrower and Banks by telex,  telecopy or cable of each
rate  of  interest  so  determined,  and its  determination  thereof  shall  be
conclusive in the absence of manifest error.

(f)   Notwithstanding  the  foregoing,  if at any  time  the  rate of  interest
calculated  with  reference to the Base Rate or the  Eurodollar  Rate hereunder
(the  "contract  rate") is limited to the Maximum  Lawful Rate,  any subsequent
reductions  in the  contract  rate shall not reduce the rate of interest on the
Revolving  Loan  below the  Maximum  Lawful  Rate  until  the  total  amount of
interest  accrued  equals the amount of interest  which  would have  accrued if
the  contract  rate had at all  times  been in  effect.  In the  event  that at
maturity  (stated or by  acceleration),  or at final  payment of any Note,  the
total  amount of interest  paid or accrued on such Note is less than the amount
of interest  which  would have  accrued if the  contract  rate had at all times
been  in  effect  with  respect  thereto,  then  at such  time,  to the  extent
permitted  by law,  Borrower  shall  pay to the  holder  of such Note an amount
equal to the  difference  between  (i) the  lesser of the  amount  of  interest
which would have accrued if the  contract  rate had at all times been in effect
and the amount of  interest  which  would have  accrued if the  Maximum  Lawful
Rate  had at all  times  been in  effect,  and  (ii)  the  amount  of  interest
actually paid on such Note.

(g)   Interest  payable  hereunder  on each  Eurodollar  Loan shall be computed
based on the number of actual days elapsed  assuming  that each  calendar  year
consisted  of 360  days.  Interest  payable  hereunder  on the Base  Rate  Loan
shall be computed  based on the actual  number of days  elapsed  assuming  that
each calendar year consisted of 365 days (or 366 days in a leap year).

<PAGE>

Section 2.6.....Mandatory  Prepayments.  Upon the  occurrence  of any Borrowing
Base Deficiency,  including,  without limitation,  in connection with any Asset
Disposition,  Borrower  shall make the mandatory  prepayments  of the Revolving
Loan required by Section 4.4 and Section 8.15 hereof.

Section 2.7.....Voluntary  Prepayments.  Borrower may,  subject to Section 13.5
and the  other  provisions  of this  Agreement,  prepay  the  principal  of the
Revolving  Loan in whole  or in  part.  Any  partial  prepayment  shall be in a
minimum amount of $500,000 and shall be in an integral multiple of $100,000.

Section 2.8.....Voluntary  Reduction of  Commitments.  Borrower  may, by notice
to  Administrative  Agent  three  (3)  Domestic  Business  Days  prior  to  the
effective  date  of any  such  reduction,  reduce  the  Total  Commitment  (and
thereby  reduce the  Commitment  of each Bank ratably) in amounts not less than
$10,000,000  and in an amount  which is an integral  multiple  of  $10,000,000.
On the effective  date of any such  reduction,  Borrower  shall,  to the extent
required  as a  result  of such  reduction,  make a  principal  payment  on the
Revolving  Loan in an amount  sufficient to cause the principal  balance of the
Revolving  Loan  then  outstanding  to be  equal  to or  less  than  the  Total
Commitment as thereby reduced.  Notwithstanding  the foregoing,  Borrower shall
not be permitted to voluntarily  reduce the Total  Commitment to an amount less
than the aggregate Letter of Credit Exposure of all Banks.

Section 2.9.....Termination of  Commitments;  Final Maturity of Revolving Loan.
The Total  Commitment  (and the Commitment of each Bank) shall  terminate,  and
the entire  outstanding  principal  balance of the Revolving Loan, all interest
accrued  thereon,   all  accrued  but  unpaid  fees  hereunder  and  all  other
outstanding  Obligations  shall be due and  payable in full on the  Termination
Date.

Section 2.10....Application   of   Payments.   Each   repayment   pursuant   to
Section 2.6,    Section 2.7,   Section 2.8,   Section 2.9,   Section 4.4,   and
Section 8.15  shall be made together with accrued interest on the amount repaid
to the date of payment,  and shall be applied in  accordance  with  Section 3.2
and the other provisions of this Agreement.

Section 2.11....Commitment  Fee. On the  Termination  Date,  on each  Quarterly
Date prior to the  Termination  Date,  and,  in the event the  Commitments  are
terminated  in their  entirety  prior to the  Termination  Date, on the date of
such termination,  Borrower shall pay to Administrative  Agent, for the ratable
benefit of each Bank based on each Bank's Commitment  Percentage,  a commitment
fee equal to the  Commitment  Fee Percentage in effect from day to day (applied
on a per annum basis and  computed  on the basis of actual days  elapsed and as
if each  calendar  year  consisted of 365 days (or 366 days in a leap year)) of
the average  daily  Availability  for the Fiscal  Quarter (or portion  thereof)
ending on the date such payment is due.

Section 2.12....Agency and other  Fees.  Borrower  shall pay to  Administrative
Agent and its  Affiliates  such other fees and  amounts  as  Borrower  shall be
required to pay to  Administrative  Agent and its Affiliates  from time to time
pursuant to any separate  agreement between Borrower and  Administrative  Agent
or  such  Affiliates.  Such  fees  and  other  amounts  shall  be  retained  by
Administrative  Agent and its  Affiliates,  and no Bank  (other  than Bank One)
shall have any  interest  therein.  Administrative  Agent may disburse any fees
paid to Administrative  Agent and its Affiliates  pursuant to this Section 2.12
in any manner Administrative Agent desires in its sole discretion.

                                 Article III
                              GENERAL PROVISIONS
                              ------------------

Section 3.1.....Delivery  and  Endorsement  of  Notes.  On  the  Closing  Date,
Administrative  Agent  shall  deliver  to each  Bank the Note  payable  to such
Bank.  Each Bank may  endorse  (and  prior to any  transfer  of its Note  shall
endorse)  on the  schedules  attached  and forming a part  thereof  appropriate
notations  to  evidence  the date and amount of its  Commitment  Percentage  of
each  Borrowing,  the  Interest  Period  applicable  thereto,  and the date and
amount of each payment of  principal  made by Borrower  with  respect  thereto;
provided  that the  failure by any Bank to so endorse its Note shall not affect
the  liability of Borrower for the repayment of all amounts  outstanding  under
such Note  together  with  interest  thereon.  Each Bank is hereby  irrevocably
authorized  by  Borrower  to endorse  its Note and to attach to and make a part
of any such Note a continuation of any such schedule as required.

<PAGE>

Section 3.2.....General Provisions as to Payments.

(a)   Borrower  shall make each payment of  principal  of, and interest on, the
Revolving  Loan, and all fees payable  hereunder  shall be paid, not later than
12:00  noon  (Dallas,  Texas  time) on the date when due,  in  Federal or other
funds immediately  available in Dallas,  Texas, to Administrative  Agent at its
address set forth on Schedule 2.1 hereto, without defense,  set-off,  deduction
or  counterclaim.  Administrative  Agent will  promptly (and if such payment is
received  by  Administrative  Agent by 10:00 a.m.  (Dallas,  Texas  time),  and
otherwise  if  reasonably   possible,   on  the  same  Domestic  Business  Day)
distribute  to  each  Bank  its  Commitment  Percentage  of each  such  payment
received  by  Administrative  Agent  for the  account  of Banks.  Whenever  any
payment of  principal  of, or interest  on, the Base Rate Loan or of fees shall
be due on a day which is not a  Domestic  Business  Day,  the date for  payment
thereof  shall  be  extended  to the next  succeeding  Domestic  Business  Day.
Whenever  any  payment of  principal  of, or  interest  on, any  portion of any
Eurodollar  Loan shall be due on a day which is not a Eurodollar  Business Day,
the  date  for  payment  thereof  shall  be  extended  to the  next  succeeding
Eurodollar  Business  Day  (subject  to the  provisions  of the  definition  of
Interest  Period).  If the date for any  payment of  principal  is  extended by
operation  of Law or  otherwise,  interest  thereon  shall be payable  for such
extended  time.  Borrower  hereby  authorizes  Administrative  Agent to  charge
from time to time against  Borrower's  accounts with  Administrative  Agent any
amount then due.

(b)   Prior to the  occurrence of an Event of Default,  all principal  payments
received by Banks with  respect to the  Revolving  Loan shall be applied  first
to Eurodollar  Loans  outstanding  with Interest  Periods ending on the date of
such payment,  then to the Base Rate Loan,  and then to  Eurodollar  Loans next
maturing until such principal payment is fully applied.

(c)   After the  occurrence  of an Event of Default,  all amounts  collected or
received  by  Administrative  Agent or any Bank shall be  applied  first to the
payment of all proper  costs  incurred by  Administrative  Agent in  connection
with the collection  thereof (including  reasonable  expenses and disbursements
of  Administrative  Agent),  second to the payment of all proper costs incurred
by Banks  in  connection  with the  collection  thereof  (including  reasonable
expenses  and  disbursements  of  Banks),  third  to the  reimbursement  of any
advances made by Banks to effect  performance of any  unperformed  covenants of
any Credit  Party  under any of the Loan  Papers,  fourth to the payment of any
unpaid  fees  required  pursuant to  Section 2.12,  fifth to the payment of any
unpaid fees required  pursuant to Section 2.1(b)  and  Section 2.11,  sixth, to
the  payment of all  accrued but unpaid  interest,  seventh,  to the payment to
each Bank of its  Commitment  Percentage  of the  outstanding  principal of the
Revolving Loan and to satisfy all obligations  and  liabilities  then due under
Hedge  Agreements,  such  payments  to be made pro rata to each  Bank owed such
Obligations  in  proportion  to all such  payments owed to all Banks in respect
of  such  Obligations,  and  eighth  to  establish  the  deposits  required  in
Section 2.1(b).  All  payments  received by a Bank after the  occurrence  of an
Event of Default for  application  to the principal of the Revolving Loan shall
be applied by such Bank in the manner provided in Section 3.2(b).

                                  Article IV
                                BORROWING BASE
                                --------------

Section 4.1.....Reserve Report;  Proposed  Borrowing Base. The aggregate amount
of credit  available  to Borrower  under this  Agreement  shall be limited by a
Borrowing  Base (herein so called)  which shall be  determined  by Banks at the
times and in accordance  with the standards  and  procedures  set forth in this
Article IV.  As soon as available  and in any event by April 1 and  September 1
of  each  year   commencing   April 1,   2003,   Borrower   shall   deliver  to
Administrative  Agent  and  each  Bank  a  Reserve  Report  prepared  as of the
immediately  preceding January 1 and July 1  respectively.  Simultaneously with
the  delivery to  Administrative  Agent and each Bank of each  Reserve  Report,
Borrower shall notify  Administrative  Agent and each Bank of the amount of the
Borrowing  Base  which  Borrower   requests   become   effective  on  the  next
Redetermination  Date (or such date  promptly  following  such  Redetermination
Date as Required Banks shall elect).

Section 4.2.....Scheduled  Redeterminations of the Borrowing Base;  Procedures
and  Standards.  Based in part on the Reserve  Reports made  available to Banks
pursuant to  Section 4.1,  Banks shall  redetermine  the  Borrowing  Base on or
prior to the next  Redetermination  Date (or such date  promptly  thereafter as
reasonably  possible based on the engineering and other  information  available
to Banks).  Any  Borrowing  Base  which  becomes  effective  as a result of any
Redetermination  of the  Borrowing  Base  shall  be  subject  to the  following

<PAGE>

restrictions:  (a) such  Borrowing  Base shall not exceed  the  Borrowing  Base
requested by Borrower  pursuant to Section 4.1 or Section 4.3 (as  applicable),
(b) such Borrowing Base shall not exceed the Total  Commitment  then in effect,
(c) to  the  extent  such  Borrowing  Base  represents  an  increase  from  the
Borrowing  Base in effect prior to such  Redetermination,  such  Borrowing Base
shall be  approved  by all Banks,  and (d) to the extent  such  Borrowing  Base
represents  a  decrease  in  the  Borrowing   Base  in  effect  prior  to  such
Redetermination,  or  a  reaffirmation  of  such  prior  Borrowing  Base,  such
Borrowing  Base shall be  approved  by  Required  Banks.  Each  Redetermination
shall  be made by  Banks  in  their  sole  discretion.  Without  limiting  such
discretion,  Borrower  acknowledges  and  agrees  that  Banks (i) may make such
assumptions   regarding   appropriate   existing  and  projected   pricing  for
Hydrocarbons as they deem appropriate in their sole  discretion,  (ii) may make
such   assumptions   regarding   projected   rates  and  quantities  of  future
production  of  Hydrocarbons  from the Mineral  Interests  owned by Borrower as
they  deem  appropriate  in their  sole  discretion,  (iii)  may  consider  the
projected cash  requirements  of the Credit  Parties,  (iv) are not required to
consider  any asset  other than  Proved  Mineral  Interests  owned by  Borrower
which are  subject to first and prior  Liens in favor of  Administrative  Agent
for the  ratable  benefit  of  Banks  to the  extent  required  by  Section 5.1
hereof,   and  (v)  may  make  such  other   assumptions,   considerations  and
exclusions   as  Banks  deem   appropriate   in  the  exercise  of  their  sole
discretion.   It  is  further  acknowledged  and  agreed  that  each  Bank  may
consider such other credit  factors as it deems  appropriate in the exercise of
its sole  discretion  and  shall  have no  obligation  in  connection  with any
Redetermination  to approve  any  increase  from the  Borrowing  Base in effect
prior to such  Redetermination.  Promptly following any  Redetermination of the
Borrowing  Base,  Administrative  Agent shall notify  Borrower of the amount of
the Borrowing  Base as  redetermined,  which  Borrowing Base shall be effective
as of the date  specified  in such  notice,  and shall remain in effect for all
purposes of this Agreement until the next Redetermination.

Section 4.3.....Special Redetermination.

(a)   In addition to Scheduled  Redeterminations,  Borrower and Required  Banks
shall each be permitted to request a Special  Redetermination  of the Borrowing
Base once in each  Fiscal  Year.  Any  request by  Required  Banks  pursuant to
this  Section 4.3(a)  shall be submitted to Administrative  Agent and Borrower.
Any request by Borrower pursuant to this  Section 4.3(a)  shall be submitted to
Administrative  Agent  and each Bank and at the time of such  request  Borrower
shall (i) deliver to Administrative  Agent and each Bank a Reserve Report,  and
(ii) also  notify  Administrative  Agent  and each Bank of the  Borrowing  Base
requested by Borrower in connection with such Special Redetermination.

(b)   Any Special  Redetermination  shall be made by Banks in  accordance  with
the  procedures  and standards  set forth in  Section 4.2;  provided,  that, no
Reserve  Report will be required to be  delivered to  Administrative  Agent and
Banks in  connection  with any Special  Redetermination  requested  by Required
Banks pursuant to Section 4.3(a) above.

Section 4.4.....Borrowing  Base  Deficiency.  To the  extent a  Borrowing  Base
Deficiency exists after giving effect to any  Redetermination  (other than as a
result  of an Asset  Disposition),  Borrower  shall,  within  thirty  (30) days
following  notice thereof from  Administrative  Agent,  provide  written notice
(the  "Election  Notice") to  Administrative  Agent  stating  the action  which
Borrower  proposes  to take to  remedy  such  Borrowing  Base  Deficiency,  and
Borrower shall  thereafter,  at its option,  within  ninety (90) days following
the  delivery  of  the  Election  Notice,  either  (a)  make  a  prepayment  or
prepayments  of  principal on the  Revolving  Loan in an amount  sufficient  to
eliminate  such  Borrowing  Base   Deficiency,   and  if  such  Borrowing  Base
Deficiency  cannot be eliminated  pursuant to this Section 4.4 by prepayment of
the  Revolving  Loan in full (as a  result  of  outstanding  Letter  of  Credit
Exposure),  Borrower shall also at such time deposit with Administrative  Agent
sufficient  cash to be held  by  Administrative  Agent  to  secure  outstanding
Letter of Credit  Exposure  in the manner  contemplated  by  Section 2.1(b)  as
necessary to eliminate such Borrowing Base  Deficiency,  (b) submit  additional
oil  and  gas   properties   owned  by  Borrower  and  its   Subsidiaries   for
consideration  in  connection  with the  determination  of the  Borrowing  Base
which  Administrative  Agent and Banks deem sufficient in their sole discretion
to eliminate such Borrowing  Base  Deficiency,  or (c) eliminate such Borrowing
Base  Deficiency  through a combination  of  prepayments  on the Revolving Loan
and  submission  of  additional  oil and gas  properties  for  inclusion in the
Borrowing Base as set forth in  subclauses (a)  and (b) above.  Notwithstanding
the foregoing,  upon the consummation of any Asset Disposition  (other than the
sale of any  Relinquished  Property,  but  including  the  consummation  of any
Permitted  Exchange and as otherwise  provided in  Section 8.15)  which results
in a Borrowing  Base  Deficiency  (or  increase in an existing  Borrowing  Base

<PAGE>

Deficiency),  Borrower  shall  promptly,  but  in all  events  within  two  (2)
Domestic  Business  Days after such  Borrowing  Base  Deficiency  first occurs,
make a mandatory  prepayment  of principal on the  Revolving  Loan in an amount
sufficient  to eliminate  such  Borrowing  Base  Deficiency.  Furthermore,  and
notwithstanding  anything to the  contrary  contained  herein,  Borrower  shall
promptly  make all  mandatory  prepayments  of the  Revolving  Loan required by
Section 8.15.

Section 4.5.....Initial  Borrowing  Base.   Notwithstanding   anything  to  the
contrary  contained  herein,  the  Borrowing  Base in effect  during the period
commencing  on the Closing Date and ending on the  effective  date of the first
Redetermination after the Closing Date shall be the Initial Borrowing Base.

                                   Article V
                           COLLATERAL AND GUARANTEES
                           -------------------------

Section 5.1.....Security.

(a)   The  Obligations  shall be secured by first and prior Liens (subject only
to Permitted  Encumbrances)  covering and encumbering  (i) the Required Reserve
Value of all Borrowing  Base  Properties,  together with all related assets and
interests,  including,  without limitation, all operating equipment,  accounts,
inventory,  contract  rights and all  products,  proceeds  and other  interests
relating to the ownership,  operation and/or  production of such Borrowing Base
Properties,   to the extent  permitted by applicable law and  regulations,  the
Exchange Funds (as defined in  Section 8.15),  and  prior to any  Distributions
being permitted to be made to any Restricted  Subsidiary  pursuant to the terms
of  Section 9.2(b)  and/or the  definition of "Permitted  Investments,"  all of
the  issued  and  outstanding  Equity  owned by  Borrower  and each  Restricted
Subsidiary  of  each  Restricted  Subsidiary.  On the  Closing  Date,  Borrower
shall  deliver to  Administrative  Agent for the ratable  benefit of each Bank,
the Mortgages in form and  substance  acceptable  to  Administrative  Agent and
duly executed by Borrower,  together with such other assignments,  conveyances,
amendments,  agreements  and other  writings,  including,  without  limitation,
UCC-1 financing  statements (each duly authorized and executed,  as applicable)
as  Administrative   Agent  shall  deem  necessary  or  appropriate  to  grant,
evidence and perfect  first and prior Liens in all  Borrowing  Base  Properties
and other  interests  of  Borrower  required by this  Section 5.1(a).  Borrower
hereby  authorizes   Administrative  Agent,  and  its  agents,  successors  and
assigns, to file any and all necessary  financing  statements under the Uniform
Commercial  Code,  assignments  or  continuation  statements as necessary  from
time to time (in  Administrative  Agent's  discretion)  to perfect (or continue
perfection of) the Liens granted pursuant to the Loan Papers.

(b)   On or before  each  Redetermination  Date after the  Closing  Date and at
such other  times as  Administrative  Agent or  Required  Banks  shall  request
(including,  without limitation,  upon consummation of the Permitted Exchange),
Borrower  and  its  Restricted   Subsidiaries  shall  execute  and  deliver  to
Administrative  Agent, for the ratable benefit of each Bank,  Mortgages in form
and  substance   acceptable  to  Administrative  Agent  and  duly  executed  by
Borrower and any such  Restricted  Subsidiary  (as  applicable)  together  with
such  other  assignments,   conveyances,   amendments,   agreements  and  other
writings,  including,  without  limitation,  UCC-1 financing  statements  (each
duly authorized and executed) as  Administrative  Agent shall deem necessary or
appropriate   to  grant,   evidence   and   perfect   the  Liens   required  by
Section 5.1(a)  preceding with respect to Borrowing Base Properties acquired by
Borrower and its Restricted  Subsidiaries  subsequent to the last date on which
Borrower  or any  such  Restricted  Subsidiary  was  required  to  execute  and
deliver  Mortgages  pursuant to this  Section 5.1(b),  or which,  for any other
reason are not the  subject of valid,  enforceable,  perfected  first  priority
Liens  (subject  only to  Permitted  Encumbrances)  in favor of  Administrative
Agent for the ratable benefit of Banks.

(c)   At any time  Borrower or any of its  Subsidiaries  is required to execute
and deliver  Mortgages to  Administrative  Agent pursuant to this  Section 5.1,
Borrower  shall also deliver to  Administrative  Agent such opinions of counsel
(including,  if so requested,  title  opinions  within  sixty (60)  days of the
date of any such request,  and in each case addressed to Administrative  Agent)
and other  evidence of title as  Administrative  Agent shall deem  necessary or
appropriate  to  verify  (i)  Borrower's  or  such  Subsidiary's  title  to the
Required  Reserve Value of the Proved  Mineral  Interests  which are subject to
such  Mortgages,  and (ii) the validity and  perfection of the Liens created by
such   Mortgages  and  such  other   matters   regarding   such   Mortgages  as
Administrative Agent shall reasonably request.

<PAGE>

(d)   To   the   extent    required   or   contemplated   by   the   terms   of
Section 5.1(a)(ii),  Section 9.2 and the definition of "Permitted Investments,"
Borrower or any Indirect  Restricted  Subsidiary (as applicable)  shall execute
and  deliver  to  Administrative   Agent  a  Borrower  Pledge  Agreement  or  a
Subsidiary   Pledge   Agreement   (as   applicable)   together   with   (i) all
certificates   (or  other   evidence   acceptable  to   Administrative   Agent)
evidencing  the  issued  and   outstanding   Equity  of  any  such   Restricted
Subsidiary  of  every  class  owned by  Borrower  or such  Indirect  Restricted
Subsidiary  (as  applicable)  which shall be duly  endorsed or  accompanied  by
stock powers executed in blank (as  applicable),  and (ii) such UCC-1 financing
statements  as  Administrative  Agent shall deem  necessary or  appropriate  to
grant,  evidence  and perfect the Liens  required  by  Section 5.1(a)(iii)  and
Section 9.2  in the  issued  and  outstanding  Equity of each  such  Restricted
Subsidiary.

Section 5.2.....Guarantees.  Prior to any  Distributions  being permitted to be
made  to  any  Restricted  Subsidiary  pursuant  to  terms  of  Section 9.2(b),
payment and  performance of the Obligations  shall be fully  guaranteed by each
Restricted  Subsidiary  pursuant to a Facility  Guaranty,  and  Borrower  shall
cause any such  applicable  Restricted  Subsidiary  to execute  and  deliver to
Administrative Agent such Facility Guaranty.

                                  Article VI
                             CONDITIONS PRECEDENT
                             --------------------

Section 6.1.....Conditions to Initial Borrowing and Participation in Letter of
Credit   Exposure.   The  obligation  of  each  Bank  to  loan  its  Commitment
Percentage  of  the  initial   Borrowing   hereunder  and  the   obligation  of
Administrative  Agent to issue (or cause  another  Bank to issue) any Letter of
Credit  issued  hereunder  is  subject  to  the  satisfaction  of  each  of the
following conditions:

(a)   Closing  Deliveries.  Administrative  Agent shall have  received  each of
the following  documents,  instruments and  agreements,  each of which shall be
in  form  and  substance  and  executed  in  such   counterparts  as  shall  be
acceptable  to  Administrative  Agent  and each  Bank and each of which  shall,
unless otherwise indicated, be dated the Closing Date:

          (i) a Note  payable to the order of each  Bank,  each in the amount of
     such Bank's Commitment, duly executed by Borrower;

          (ii) the  Mortgages  to be executed on the  Closing  Date  pursuant to
     Section 5.1(a), duly executed and delivered by Borrower, together with such
     other assignments,  conveyances, amendments, agreements and other writings,
     including,  without  limitation,  UCC-1 financing  statements,  in form and
     substance  satisfactory to Administrative  Agent,  creating first and prior
     Liens in all Borrowing Base Properties;

          (iii) such financing statements  (including,  without limitation,  the
     financing  statements  referenced  in  subclause (ii)  above)  in form  and
     substance  acceptable to  Administrative  Agent and executed by each Credit
     Party (as  applicable)  as  Administrative  Agent  shall  specify  to fully
     evidence  and  perfect  all Liens  contemplated  by the Loan Papers (to the
     extent such Liens may be perfected by filing a financing statement), all of
     which  shall be filed of record  in such  jurisdictions  as  Administrative
     Agent shall require in its sole discretion;

          (iv) a copy of the Subordinate Note duly executed by Borrower;

          (v)  a  copy  of  the  articles  or  certificate   of   incorporation,
     certificate  of  organization,  or comparable  charter  documents,  and all
     amendments  thereto, of each Credit Party accompanied by a certificate that
     such copy is true, correct and complete,  and dated within ten (10) days of
     the  Closing   Date  (or  within  such  other  period  as   acceptable   to
     Administrative Agent), issued by the appropriate  Governmental Authority of
     the   jurisdiction  of   incorporation  of  each  such  Credit  Party,  and
     accompanied  by a certificate  of the  Secretary or  comparable  Authorized
     Officer  of each such  Credit  Party  that such copy is true,  correct  and
     complete on the Closing Date;

<PAGE>

          (vi)  a  copy  of  the  bylaws,   regulations  or  comparable  charter
     documents,  and all amendments thereto, of each Credit Party accompanied by
     a certificate  of the Secretary or  comparable  Authorized  Officer of each
     such  Credit  Party  that such copy is true,  correct  and  complete  as of
     Closing Date;

          (vii)  certain   certificates   and  other  documents  issued  by  the
     appropriate    Governmental    Authorities   of   such   jurisdictions   as
     Administrative Agent has requested relating to the existence of each Credit
     Party and to the effect  that each such  Credit  Party is in good  standing
     with  respect to the payment of  franchise  and  similar  Taxes and is duly
     qualified to transact business in such jurisdictions;

          (viii) a  certificate  of  incumbency  of all  officers of each Credit
     Party who will be authorized to execute or attest to any Loan Paper,  dated
     the  Closing  Date,  executed by the  Secretary  or  comparable  Authorized
     Officer of each such Credit Party;

          (ix) copies of resolutions or comparable  authorizations approving the
     Loan Papers and authorizing the transactions contemplated by this Agreement
     and the other  Loan  Papers,  duly  adopted by the Board of  Directors  (or
     comparable  authority) of each Credit Party  accompanied by certificates of
     the  Secretary  or  comparable  officer of each such Credit Party that such
     copies are true and correct copies of resolutions duly adopted at a meeting
     of or (if permitted by applicable  Law and, if required by such Law, by the
     bylaws or  comparable  charter  documents  of each such  Credit  Party,  as
     applicable) by the unanimous  written consent of the Board of Directors (or
     comparable  authority) of each such Credit Party,  as applicable,  and that
     such  resolutions  constitute all the  resolutions  adopted with respect to
     such  transactions,  have not been  amended,  modified,  or  revoked in any
     respect, and are in full force and effect as of the Closing Date;

          (x) an opinion of (a) Foley & Lardner,  special counsel for the Credit
     Parties,  and (b) with  respect to Texas law issues,  an opinion of Welborn
     Sullivan Meck & Tooley,  special counsel for the Credit Parties, each dated
     the Closing Date, favorably opining as to the enforceability of each of the
     Loan  Papers  and   otherwise  in  form  and  substance   satisfactory   to
     Administrative Agent and Banks;

          (xi) an opinion of special counsel for Administrative Agent in each of
     Arkansas,  Colorado,  Louisiana,  Michigan, Montana, North Dakota, Oklahoma
     and  Wyoming,  each dated the  Closing  Date,  favorably  opining as to the
     enforceability  of the applicable  Mortgages in each  applicable  State and
     otherwise in form and substance  satisfactory to  Administrative  Agent and
     Banks;

          (xii) a  certificate  signed  by an  Authorized  Officer  of  Borrower
     stating  that (a) the  representations  and  warranties  contained  in this
     Agreement  and the other Loan Papers are true and correct in all  respects,
     and (b) no Default or Event of Default has occurred and is continuing;

          (xiii) a Certificate  of Ownership  Interests  signed by an Authorized
     Officer of Borrower in the form of Exhibit H attached hereto;

          (xiv)  copies  of  all  reports  in  Borrower's  files  (or  otherwise
     reasonably   available  to  Borrower)   pertaining  to  Borrower's  Mineral
     Interests and  operations,  which report(s) shall not reflect the existence
     of facts or circumstances  which would  constitute a material  violation of
     any  Applicable  Environmental  Law or which  are  likely  to  result  in a
     material liability to any Credit Party; and

          (xv) certificates  from Borrower's  insurance broker setting forth the
     insurance maintained by Borrower and stating that such insurance is in full
     force and effect, and which certificates shall evidence that such insurance
     complies with the requirements of Section 8.6.

(b)   Title Review.  Administrative  Agent or its counsel shall have  completed
a  review  of  title  to the  Required  Reserve  Value  of all  Borrowing  Base
Properties   and  such  review  shall  not  have   revealed  any  condition  or
circumstance  which  would  reflect  that the  representations  and  warranties
contained in Section 7.8 and Section 7.9 hereof are inaccurate in any respect.

<PAGE>

(c)   Repayment  of  Existing  Debt.  Subject  only  to  the  disbursement  and
application of the initial  Borrowing,  Borrower shall have repaid in full with
proceeds of a Borrowing  under this  Agreement,  all Debt accrued,  outstanding
and  owing  by  Borrower  under  the  letter  loan   agreement,   dated  as  of
October 16, 2002, between Borrower and Bank One, NA.

(d)   Evidence of Withdrawal  from Money Pool Agreement.  Administrative  Agent
shall have received  written  evidence (in form and substance  satisfactory  to
Administrative  Agent) that Borrower has  effectively  withdrawn from the Money
Pool  Agreement,  and  pursuant  to such  withdrawal,  Borrower  has no further
rights, duties or obligations thereunder in any respect.

(e)   No  Material  Adverse  Change.  No  Material  Adverse  Change  shall have
occurred.

(f)   No Legal  Prohibition.  The  transactions  contemplated by this Agreement
shall be permitted by applicable  Law and  regulation and shall not subject any
Agent or any Bank to any material  adverse  change in its assets,  liabilities,
financial  condition,  operations or prospects or subject any Credit Party to a
Material Adverse Change.

(g)   No Litigation.  No litigation,  arbitration or similar  proceeding  shall
be  pending  or   threatened   which  calls  into   question  the  validity  or
enforceability  of this  Agreement,  the other Loan Papers or the  transactions
contemplated hereby or thereby.

(h)   Closing Fees.  Borrower shall have paid to  Administrative  Agent for the
ratable benefit of each Bank, and shall have paid to  Administrative  Agent and
its Affiliates  (for its own account),  the fees to be paid on the Closing Date
pursuant to Section 2.12.

(i)   Other  Matters.  All matters  related to this  Agreement,  the other Loan
Papers  and the Credit  Parties  shall be  acceptable  to each Bank in its sole
discretion,  and each  Credit  Party  shall have  delivered  to  Administrative
Agent and each Bank such  evidence as they shall  request to  substantiate  any
matters  related to this Agreement and the other Loan Papers as  Administrative
Agent or any Bank shall request.

Section 6.2.....Conditions  to Each  Borrowing  and each Letter of Credit.  The
obligation of each Bank to loan its  Commitment  Percentage  of each  Borrowing
and the  obligation of any Letter of Credit Issuer to issue,  extend,  amend or
renew any  Letter of Credit on the date such  Letter of Credit is to be issued,
extended,  amended or renewed is  subject to the  further  satisfaction  of the
following conditions:

(a)   timely  receipt by  Administrative  Agent of a Request for Borrowing or a
Request for Letter of Credit (as applicable);

(b)   immediately  before and after giving effect to such Borrowing or issuance
of such Letter of Credit,  no Default or Event of Default  shall have  occurred
and be  continuing  and the funding of such  Borrowing  or the  issuance of the
requested  Letter of Credit (as applicable)  shall not cause a Default or Event
of Default;

(c)   the  representations  and  warranties  of each Credit Party  contained in
this  Agreement  and the other Loan Papers  shall be true and correct on and as
of the  date of such  Borrowing  or  issuance  of such  Letter  of  Credit  (as
applicable);

(d)   the amount of the  requested  Borrowing  or the  amount of the  requested
Letter of Credit (as applicable) shall not exceed the Availability;

(e)   no Material Adverse Change shall have occurred; and

(f)   the funding of such  Borrowing  or the  issuance of such Letter of Credit
(as applicable) shall be permitted by applicable Law.

<PAGE>

      The funding of each  Borrowing  and the issuance of each Letter of Credit
hereunder  shall be deemed to be a  representation  and warranty by Borrower on
the date of such  Borrowing  and the date of  issuance of each Letter of Credit
as to the facts specified in Section 6.2(b) through Section 6.2(e).

Section 6.3.....Post-Closing  Deliveries  and  Actions.  Borrower  shall  on or
prior  to  January 15,  2003,  establish  separate  and  independent  operating
accounts with Bank One,  on or prior to  January 20,  2003,  deliver,  or cause
to be  delivered,  opinions  of title or  other  evidence  of title in form and
substance  acceptable to  Administrative  Agent and its counsel  regarding that
portion of the Borrowing  Base  Properties  which is not less than the Required
Reserve Value, and  (c) deliver,  or cause to be delivered,  to  Administrative
Agent each document,  instrument or agreement,  and take each action,  or cause
to be taken each action,  specified in Schedule 6.3  hereto, in each case on or
before the date specified in such Schedule 6.3.

Section 6.4.....Materiality of Conditions.  Each condition  precedent herein is
material to the transactions  contemplated  herein,  and time is of the essence
in respect of each thereof.

                                Article VII
                        REPRESENTATIONS AND WARRANTIES
                        ------------------------------

      Borrower  represents and warrants to  Administrative  Agent and each Bank
that each of the  following  statements is true and correct on the date hereof,
and  will be true  and  correct  on the  occasion  of  each  Borrowing  and the
issuance of each Letter of Credit:

Section 7.1.....Corporate  Existence  and  Power.  Each  Credit  Party (a) is a
corporation,  partnership or limited  liability  company duly  incorporated  or
organized (as  applicable),  validly  existing and in good  standing  under the
Laws  of its  jurisdiction  of  incorporation  or  organization,  (b)  has  all
corporate,  partnership or limited  liability company power (as applicable) and
all material  governmental  licenses,  authorizations,  consents and  approvals
required  to carry on its  businesses  as now  conducted  and as proposed to be
conducted,  and  (c) is  duly  qualified  to  transact  business  as a  foreign
corporation,  partnership or limited  liability company (as applicable) in each
jurisdiction  where a failure to be so qualified  could  reasonably be expected
to have a Material Adverse Effect.

Section 7.2.....Credit  Party and  Governmental  Authorization;  Contravention.
The  execution,  delivery and  performance of this Agreement and the other Loan
Papers by each  Credit  Party (to the extent  each  Credit  Party is a party to
this   Agreement  and  such  Loan  Papers)  are  within  such  Credit   Party's
corporate,  partnership or limited  liability  company powers (as  applicable),
when executed will be duly authorized by all necessary  corporate,  partnership
or limited  liability  company action (as applicable),  require no action by or
in respect of, or filing with, any Governmental  Authority  (except for filings
and  recordings to perfect  Liens granted  pursuant to such Loan Papers) and do
not  contravene,  or  constitute a default  under,  any provision of applicable
Law  (including,   without  limitation,  the  Margin  Regulations)  or  of  the
articles or  certificate of  incorporation,  bylaws,  regulations,  partnership
agreement  or  comparable  charter  documents  of any  Credit  Party  or of any
agreement,  judgment,  injunction,  order,  decree or other instrument  binding
upon any Credit  Party or result in the creation or  imposition  of any Lien on
any asset of any Credit Party other than the Liens securing the Obligations.

Section 7.3.....Binding  Effect.   This  Agreement   constitutes  a  valid  and
binding  agreement  of  Borrower;  the other  Loan  Papers  when  executed  and
delivered  in  accordance  with  this  Agreement,  will  constitute  valid  and
binding  obligations  of each Credit Party  executing  the same;  and each Loan
Paper is, or when executed and  delivered,  will be,  enforceable  against each
Credit  Party which  executes the same in  accordance  with its terms except as
(i) the  enforceability  thereof may be limited by  bankruptcy,  insolvency  or
similar Laws affecting  creditors rights  generally,  and (ii) the availability
of  equitable  remedies  may be  limited  by  equitable  principles  of general
applicability.

Section 7.4.....Financial Information.

(a)   The most recent  annual  audited  consolidated  balance sheet of Borrower
and the related  consolidated  statements of operations  and cash flows for the
Fiscal  Year then  ended,  copies of which  have been  delivered  to each Bank,

<PAGE>

fairly present,  in conformity with GAAP, the consolidated  financial  position
of Borrower as of the end of such Fiscal Year and its  consolidated  results of
operations and cash flows for such Fiscal Year.

(b)   The  most  recent  quarterly  unaudited  consolidated  balance  sheet  of
Borrower   delivered  to  Banks,   and  the  related   unaudited   consolidated
statements  of operations  and cash flows for the portion of Borrower's  Fiscal
Year then ended,  fairly  present,  in conformity  with GAAP applied on a basis
consistent with the financial  statements  referred to in  Section 7.4(a),  the
consolidated   financial   position  of  Borrower  as  of  such  date  and  its
consolidated  results  of  operations  and  cash  flows  for  such  portion  of
Borrower's Fiscal Year.

(c)   Since  the  date  of   Borrower's   most  recent   annual  and  quarterly
consolidated  balance sheet and consolidated  statements of operations and cash
flow  delivered  to Banks,  there has been no  material  adverse  change in the
assets,  liabilities,  financial  position,  results of operations or prospects
of Borrower, individually, or the Credit Parties, taken as a whole.

Section 7.5.....Litigation.   Except  for  matters  disclosed  on  Schedule 7.5
attached hereto,  there is no action,  suit or proceeding  pending against,  or
to the  knowledge of any Credit  Party,  threatened  against or  affecting  any
Credit Party before any  Governmental  Authority in which there is a reasonable
possibility of an adverse  decision which could  reasonably be expected to have
a Material  Adverse  Effect or which could in any manner draw into question the
validity of the Loan Papers.

Section 7.6.....ERISA.  No Credit  Party  maintains or has ever  maintained  or
been  obligated  to  contribute  to any  Plan  covered  by Title IV of ERISA or
subject to the funding  requirements  of section 412 of the Code or section 302
of ERISA.  Each Plan  maintained by any Credit Party or any ERISA  Affiliate of
any  Credit  Party  is  in  compliance  in  all  material   respects  with  all
applicable  Laws.  Except in such instances  where an omission or failure would
not have a Material  Adverse  Effect,  (a) all  returns,  reports  and  notices
required to be filed with any  regulatory  agency with respect to any Plan have
been  filed  timely,  and (b) no Credit  Party nor any ERISA  Affiliate  of any
Credit  Party has  failed to make any  contribution  or pay any  amount  due or
owing as  required  by the terms of any Plan.  There are no pending  or, to the
best of Borrower's knowledge,  threatened claims,  lawsuits,  investigations or
actions  (other  than  routine  claims for  benefits  in the  ordinary  course)
asserted or  instituted  against,  and no Credit Party nor any ERISA  Affiliate
of any  Credit  Party has  knowledge  of any  threatened  litigation  or claims
against,  the assets of any Plan or its related  trust or against any fiduciary
of a Plan  with  respect  to the  operation  of such  Plan  that are  likely to
result in  liability  of any Credit  Party  having a Material  Adverse  Effect.
Except  in such  instances  where  an  omission  or  failure  would  not have a
Material  Adverse Effect,  each Plan that is intended to be "qualified"  within
the  meaning of section  401(a) of the Code is, and has been  during the period
from its adoption to date,  so  qualified,  both as to form and  operation  and
all necessary governmental  approvals,  including a favorable  determination as
to the  qualification  under the Code of such Plan and each amendment  thereto,
have  been  or  will  be  timely  obtained.  No  Credit  Party  nor  any  ERISA
Affiliate  of any  Credit  Party has  engaged in any  prohibited  transactions,
within  the  meaning of section  406 of ERISA or section  4975 of the Code,  in
connection  with any Plan which would  result in  liability of any Credit Party
having  a  Material  Adverse  Effect.  Except  as  set  forth  on  Schedule 7.6
attached  hereto,  no Credit Party  maintains or  contributes  to any Plan that
provides  a  post-employment  health  benefit,  other  than a benefit  required
under  section  601 of  ERISA,  or  maintains  or  contributes  to a Plan  that
provides  health  benefits that is not fully funded except where the failure to
fully  fund such Plan  could not  reasonably  be  expected  to have a  Material
Adverse  Effect.  No  Credit  Party  maintains,  has  established  or has  ever
participated  in a multiple  employer  welfare benefit  arrangement  within the
meaning of section 3(40)(A) of ERISA.

Section 7.7.....Taxes and Filing of Tax  Returns.  Each Credit  Party has filed
all tax  returns  required  to have been filed and has paid all Taxes  shown to
be due and payable on such returns,  including interest and penalties,  and all
other  Taxes  which are  payable  by such  party,  to the  extent the same have
become due and  payable,  other  than Taxes with  respect to which a failure to
pay would not have a Material  Adverse  Effect.  No Credit  Party  knows of any
proposed  material Tax  assessment  against it and all Tax  liabilities of each
Credit Party are  adequately  provided  for. No income tax  liability in excess
of  $50,000 of any  Credit  Party has been  asserted  by the  Internal  Revenue
Service or other  Governmental  Authority  for Taxes in excess of those already
paid.

Section 7.8.....Ownership  of  Properties  Generally.   Except  for  Inmaterial
Title  Deficiencies,  each Credit  Party has good and  defensible  title to all
material  properties  and  assets  purported  to be  owned  by  it,  including,
without  limitation,  all assets reflected in the balance sheets referred to in
Section 7.4(a)  and  Section 7.4(b) and all assets which are used by the Credit
Parties  in the  operation  of their  respective  businesses,  and none of such
properties or assets is subject to any Lien other than Permitted Encumbrances.

<PAGE>

Section 7.9.....Mineral  Interests.  Borrower has good and defensible  title to
all Mineral  Interests  described  in the Reserve  Report,  including,  without
limitation,  all Borrowing Base Properties,  free and clear of all Liens except
Permitted  Encumbrances and Immaterial Title  Deficiencies.  With the exception
of  Immaterial  Title  Deficiencies,  all such  Mineral  Interests  are  valid,
subsisting,  and in full force and  effect,  and all  rentals,  royalties,  and
other  amounts  due and  payable  in  respect  thereof  have  been  duly  paid.
Without  regard  to  any  consent  or  non-consent   provisions  of  any  joint
operating  agreement covering any of Borrower's Proved Mineral  Interests,  and
with the exception of Immaterial  Title  Deficiencies,  Borrower's share of (a)
the costs for each Proved Mineral  Interest  described in the Reserve Report is
not greater than the decimal  fraction set forth in the Reserve Report,  before
and after payout,  as the case may be, and described  therein by the respective
designations  "working  interests,"  "WI," "gross working  interest," "GWI," or
similar  terms,  and (b) production  from,  allocated to, or attributed to each
such Proved  Mineral  Interest is not less than the decimal  fraction set forth
in the  Reserve  Report,  before  and  after  payout,  as the case may be,  and
described  therein  by the  designations  "net  revenue  interest,"  "NRI,"  or
similar terms.  Each well drilled in respect of each Proved  Producing  Mineral
Interest  described in the Reserve  Report (y) is capable of, and is presently,
producing Hydrocarbons in commercially  profitable quantities,  and Borrower is
currently  receiving  payments  for its share of  production,  with no funds in
respect of any thereof being  presently  held in suspense,  other than any such
funds being held in suspense pending  delivery of appropriate  division orders,
and (z) has been  drilled,  bottomed,  completed,  and  operated in  compliance
with  all  applicable  Laws  and no such  well  which  is  currently  producing
Hydrocarbons  is subject to any  penalty in  production  by reason of such well
having produced in excess of its allowable production.

Section 7.10....Licenses,  Permits,  Etc. Except as disclosed on  Schedule 7.10
attached   hereto,   each  Credit  Party   possesses  such  valid   franchises,
certificates  of  convenience  and  necessity,   operating  rights,   licenses,
permits,  consents,  authorizations,  exemptions  and  orders  of  Governmental
Authorities,  as are  necessary to carry on its business as now  conducted  and
as  proposed  to be  conducted,  except to the  extent a failure  to obtain any
such item would not have a Material Adverse Effect.

Section 7.11....Compliance  with  Law.  The  business  and  operations  of each
Credit  Party  have  been  and are  being  conducted  in  accordance  with  all
applicable   Laws  other  than   violations   of  Laws  which  do  not  (either
individually or collectively) have a Material Adverse Effect.

Section 7.12....Full Disclosure.  All information  heretofore furnished by each
Credit  Party  to  Administrative  Agent  or any  Bank  for  purposes  of or in
connection   with  this   Agreement,   any  Loan   Paper  or  any   transaction
contemplated  hereby  or  thereby  is,  and  all  such  information   hereafter
furnished  by or on behalf of any Credit Party to  Administrative  Agent or any
Bank will be,  true,  complete  and  accurate in every  material  respect.  The
Credit  Parties  have  disclosed  or have  caused to be  disclosed  to Banks in
writing  any and all facts which  might  reasonably  be expected to result in a
Material Adverse Change.

Section 7.13....Organizational  Structure;  Nature of Business. Parent owns one
hundred  percent  (100%)  of  the  issued  and  outstanding   common  stock  in
Borrower.  As of  the  Closing  Date,  Borrower  has  no  direct,  wholly-owned
Subsidiaries,   other  than  Whiting-Golden  Gas,  WOK  and  Whiting  Programs.
Whiting  Programs is the general partner of various  partnerships  that own oil
and gas  properties  that are not  Borrowing  Base  Properties.  Borrower  also
owns, directly and partially  indirectly through Whiting Programs,  one hundred
percent  (100%) of the  Equity in  Whiting  Institutional,  which has assets of
not  greater  than  $2,000,000,  and  which  assets  are  not  included  in the
Borrowing  Base.  Borrower  is  engaged  only  in the  business  of  acquiring,
exploring,  developing  and operating  Mineral  Interests  and the  production,
processing  and  marketing of  Hydrocarbons  therefrom.  Schedule 7.13 attached
hereto   accurately   reflects  (i)  the   jurisdiction  of   incorporation  or
organization  of each  Credit  Party,  (ii) each  jurisdiction  in  which  each
Credit  Party is  qualified  to  transact  business  as a foreign  corporation,
foreign   partnership  or  foreign  limited   liability   company,   (iii)  the
authorized,  issued and outstanding  Equity of each Credit Party,  and (iv) all
outstanding warrants,  options,  subscription rights, convertible securities or
other rights to purchase Equity of each Credit Party.

<PAGE>

Section 7.14....Environmental   Matters.   Except  for  matters   disclosed  on
Schedule 7.14  attached hereto, no operation  conducted by any Credit Party and
no real or personal  property now or  previously  owned or leased by any Credit
Party (including,  without  limitation,  any Credit Party's Mineral  Interests)
and no operations conducted thereon,  and to any Credit Parties' knowledge,  no
operations of any prior owner,  lessee or operator of any such  properties,  is
or has  been in  violation  of any  Applicable  Environmental  Law  other  than
violations  which  neither  individually  nor  in  the  aggregate  will  have a
Material  Adverse  Effect.   Except  for  matters  disclosed  on  Schedule 7.14
attached  hereto,  no Credit Party,  nor any such property nor operation is the
subject  of any  existing,  pending  or,  to  any  Credit  Parties'  knowledge,
threatened  Environmental  Complaint  which  could,   individually  or  in  the
aggregate,  have a Material  Adverse Effect.  All notices,  permits,  licenses,
and similar  authorizations,  required  to be  obtained or filed in  connection
with the  ownership of each tract of real  property or operations of any Credit
Party thereon and each item of personal  property owned,  leased or operated by
any Credit Party, including,  without limitation,  notices,  licenses,  permits
and  authorizations  required in connection with any past or present treatment,
storage,  disposal,  or release of Hazardous  Substances into the  environment,
have been duly  obtained  or filed  except to the extent the  failure to obtain
or file such notices,  licenses,  permits and  authorizations  would not have a
Material  Adverse  Effect.  All Hazardous  Substances,  generated at each tract
of real  property  and by each  item of  personal  property  owned,  leased  or
operated by any Credit Party have been  transported,  treated,  and disposed of
only by  carriers  or  facilities  maintaining  valid  permits  under  RCRA (as
hereinafter  defined)  and all  other  Applicable  Environmental  Laws  for the
conduct of such  activities  except in such cases  where the  failure to obtain
such  permits  would not,  individually  or in the  aggregate,  have a Material
Adverse  Effect.  Except  for  matters  disclosed  on  Schedule 7.14   attached
hereto,  there have been no Hazardous  Discharges  which were not in compliance
with  Applicable  Environmental  Laws other  than  Hazardous  Discharges  which
would not,  individually or in the aggregate,  have a Material  Adverse Effect.
Except for  matters  disclosed  on  Schedule 7.14  attached  hereto,  no Credit
Party has any contingent  liability in connection with any Hazardous  Discharge
which  could  reasonably  be  expected to have a Material  Adverse  Effect.  As
used  in  this   Section 7.14,   the  term  "RCRA"   shall  mean  the  Resource
Conservation  and  Recovery Act of 1976,  as amended by the Used Oil  Recycling
Act of 1980,  the Solid  Waste  Recovery  Act of 1976,  as amended by the Solid
Waste  Disposal Act of 1980,  and the Hazardous  and Solid Waste  Amendments of
1984, as the same may be further amended and in effect from time to time.

Section 7.15....Burdensome  Obligations.  No  Credit  Party,  nor  any  of  the
properties  of any  Credit  Party,  is  subject  to any Law or any  pending  or
threatened  change of Law or subject to any restriction  under its articles (or
certificate) of incorporation,  bylaws,  regulations,  partnership agreement or
comparable  charter  documents or under any  agreement or  instrument  to which
any Credit  Party or by which any Credit Party or any of their  properties  may
be subject or bound,  which is so unusual or  burdensome as to be likely in the
foreseeable  future to have a Material  Adverse  Effect.  Without  limiting the
foregoing,  no  Credit  Party is a party to or  bound by any  agreement  (other
than the Loan  Papers) or subject  to any order of any  Governmental  Authority
which  prohibits  or restricts in any way the right of such Credit Party or any
Restricted Subsidiary to make Distributions.

Section 7.16....Fiscal  Year.  Borrower's  Fiscal  Year is  January  1  through
December 31.

Section 7.17....No  Default.  Neither a  Default  nor an Event of  Default  has
occurred or will exist after  giving  effect to the  transactions  contemplated
by this Agreement or the other Loan Papers.

Section 7.18....Government   Regulation.   No  Credit   Party  is   subject  to
regulation  under the Public Utility  Holding  Company Act of 1935, the Federal
Power Act,  the  Interstate  Commerce  Act (as any of the  preceding  acts have
been  amended),  the  Investment  Company  Act of 1940 or any  other  Law which
regulates  the  incurring  by such  Credit  Party of Debt,  including,  but not
limited  to  Laws  relating  to  common  contract   carriers  or  the  sale  of
electricity, gas, steam, water or other public utility services.

Section 7.19....Insider.  No Credit  Party is, and no Person  having  "control"
(as  that  term  is  defined  in  12  U.S.C.   section  375(b)  or  regulations
promulgated  thereunder)  of  any  Credit  Party  is  an  "executive  officer,"
"director" or  "shareholder"  of any Bank or any bank holding  company of which
any Bank is a Subsidiary or of any Subsidiary of such bank holding company.

Section 7.20....Gas Balancing  Agreements  and Advance  Payment  Contracts.  On
the date of this  Agreement,  (a) there is no Material Gas  Imbalance,  and (b)
the  aggregate  amount of all Advance  Payments  received  by any Credit  Party
under Advance  Payment  Contracts  which have not been satisfied by delivery of
production does not exceed $2,000,000.

<PAGE>

Section 7.21....Subordinate    Loan    Documents.    Borrower    has   provided
Administrative  Agent with a true and correct  copy of each of the  Subordinate
Loan  Documents   including  all  amendments  and  modifications   thereto.  No
material  rights or  obligations of any party to any of such  Subordinate  Loan
Documents  have been (or will be on the  Closing  Date)  waived,  and no Credit
Party nor any other  party to any of such  Subordinate  Loan  Documents  is (or
will be on the Closing  Date) in default of its  obligations  thereunder.  Each
of  the  Subordinate  Loan  Documents  is  a  valid,  binding  and  enforceable
obligation  of the  parties  thereto in  accordance  with its terms  (except as
(i) the  enforceability  thereof may be limited by  bankruptcy,  insolvency  or
similar Laws affecting creditors' rights generally,  and (ii) the  availability
of  equitable  remedies  may be  limited  by  equitable  principles  of general
applicability) and is in full force and effect.

                                 Article VIII
                             AFFIRMATIVE COVENANTS
                             ---------------------

      Borrower  covenants  and  agrees  that,  so  long  as any  Bank  has  any
commitment to lend or  participate  in Letter of Credit  Exposure  hereunder or
any  amount  payable  under any Note  remains  unpaid  or any  Letter of Credit
remains outstanding:

Section 8.1.....Information.  Borrower will deliver,  or cause to be delivered,
to each Bank:

(a)   as soon as  available  and in any event within (i) ninety (90) days after
the end of each  Fiscal  Year,  consolidated  balance  sheets of Borrower as of
the end of such Fiscal Year and the related  consolidated  statements of income
and  statements  of cash flow for such Fiscal Year,  setting forth in each case
in comparative  form the figures for the previous  Fiscal Year, all reported by
Borrower in accordance  with GAAP and audited by a firm of  independent  public
accountants   of   nationally    recognized    standing   and   acceptable   to
Administrative Agent;

(b)   as soon as available and in any event within  forty-five  (45) days after
the end of each of the first three (3) Fiscal  Quarters  of each  Fiscal  Year,
consolidated  balance  sheets of Borrower as of the end of such Fiscal  Quarter
and the related  consolidated  statements of income and statements of cash flow
for such  quarter  and for the portion of  Borrower's  Fiscal Year ended at the
end of such Fiscal  Quarter,  setting  forth in each case in  comparative  form
the figures for the  corresponding  quarter  and the  corresponding  portion of
Borrower's  previous Fiscal Year; all financial  statements  delivered pursuant
to this  Section 8.1(b)  shall be  certified  as to fairness  of  presentation,
GAAP  (except for the  absence of  footnotes  and normal year end  adjustments)
and consistency by a Financial Officer of Borrower;

(c)   simultaneously  with the  delivery  of each set of  financial  statements
referred  to  in  Section 8.1(a)   and  Section 8.1(b)  a  certificate  of  the
principal  executive and Financial  Officer of Borrower in the form of Exhibit
I attached  hereto,  (i) setting  forth in reasonable  detail the  calculations
required  to   establish   whether   Borrower  was  in   compliance   with  the
requirements   of  Article  X  on  the  date  of  such  financial   statements,
(ii) stating  whether there exists on the date of such  certificate any Default
and, if any Default  then  exists,  setting  forth the details  thereof and the
action  which  Borrower  is taking or proposes  to take with  respect  thereto,
(iii) stating  whether or not such financial  statements  fairly reflect in all
material  respects  the  results  of  operations  and  financial  condition  of
Borrower as of the date of the delivery of such  financial  statements  and for
the period  covered  thereby,  (iv) setting  forth  (A) whether as of such date
there is a Material Gas Imbalance  and, if so,  setting forth the amount of net
gas imbalances  under Gas Balancing  Agreements to which Borrower is a party or
by which  any  Mineral  Interests  owned by  Borrower  is  bound,  and  (B) the
aggregate  amount  of all  Advance  Payments  received  under  Advance  Payment
Contracts  to  which  Borrower  is a party or by which  any  Mineral  Interests
owned by  Borrower  is bound  which  have not been  satisfied  by  delivery  of
production,  if any,  (v) setting forth a summary of the Hedge  Transactions to
which  Borrower  is a party on such  date,  and  (vi) setting  forth  the other
information described in Exhibit I attached hereto;

(d)   promptly  upon the  filing  thereof,  copies  of all  final  registration
statements,   post  effective  amendments  thereto  and  annual,  quarterly  or
special  reports  which any Credit  Party shall have filed with the  Securities
and Exchange Commission;

(e)   promptly upon receipt of same, any notice or other  information  received
by  any  Credit  Party  indicating   (i) any   potential,   actual  or  alleged
non-compliance  with  or  violation  of  the  requirements  of  any  Applicable

<PAGE>

Environmental  Law which  could  result in  liability  to any Credit  Party for
fines,  clean up or any other  remediation  obligations or any other  liability
in  excess  of  $1,000,000  in the  aggregate;  (ii) any  threatened  Hazardous
Discharge  which  Hazardous  Discharge  would impose on any Credit Party a duty
to  report  to a  Governmental  Authority  or to pay  cleanup  costs or to take
remedial  action under any Applicable  Environmental  Law which could result in
liability  to any  Credit  Party  for  fines,  clean up and  other  remediation
obligations  or any other  liability in excess of $1,000,000 in the  aggregate;
or (iii) the  existence of any Lien arising under any Applicable  Environmental
Law securing any obligation to pay fines,  clean up or other  remediation costs
or any other  liability  in  excess of  $1,000,000  in the  aggregate.  Without
limiting  the  foregoing,  each Credit  Party shall  provide to Banks  promptly
upon  receipt  of  same  by  any  Credit  Party  copies  of  all  environmental
consultants  or  engineers  reports  received  by any Credit  Party which would
render the  representation  and warranty  contained in  Section 7.14  untrue or
inaccurate in any respect;

(f)   In the event any  notification is provided to any Bank or  Administrative
Agent pursuant to  Section 8.1(e)  hereof or  Administrative  Agent or any Bank
otherwise  learns of any event or  condition  under which any such notice would
be  required,  then,  upon  request of Required  Banks,  Borrower  shall within
thirty  (30) days of such  request,  cause to be  furnished  to  Administrative
Agent and each Bank a report by an  environmental  consulting  firm  acceptable
to  Administrative  Agent and  Required  Banks,  stating  that a review of such
event,  condition  or  circumstance  has been  undertaken  (the  scope of which
shall be acceptable to  Administrative  Agent and Required Banks) and detailing
the findings,  conclusions and  recommendations  of such  consultant.  Borrower
shall bear all  expenses  and costs  associated  with such  review and  updates
thereof;

(g)   immediately  upon any  Authorized  Officer of any Credit  Party  becoming
aware  of the  occurrence  of  any  Default,  a  certificate  of an  Authorized
Officer of  Borrower  setting  forth the details  thereof and the action  which
Borrower is taking or proposes to take with respect thereto;

(h)   no later than April 1 and September 1 of each year,  commencing  April 1,
2003, reports of production volumes,  revenue,  expenses and product prices for
all oil and gas  properties  owned  by  Borrower  with a  Recognized  Value  of
$500,000  or more  for the  periods  of six (6)  months  ending  the  preceding
December 31 and June 30,  respectively.  Such  reports  shall be prepared on an
accrual basis and (i) with respect to Proved Producing  Mineral  Interests that
have a Recognized  Value of greater than fifty percent (50%) of the  Recognized
Value of all Proved  Producing  Mineral  Interests owned by Borrower,  shall be
reported on a field by field  basis,  and  (ii) with  respect to all other such
oil and gas properties, shall be reported on a state by state basis;

(i)   promptly notify Banks of any Material Adverse Change;

(j)   promptly  notify Banks of any material  litigation  involving  any Credit
Party; and

(k)   from time to time such  additional  information  regarding  the financial
position  or  business  of any Credit  Party as  Administrative  Agent,  at the
request of any Bank, may reasonably request.

Section 8.2.....Business  of Credit  Parties.  The sole  business of the Credit
Parties  will be  (and  will  continue  to be)  the  acquisition,  exploration,
development and operation of Mineral  Interests and the production,  processing
and marketing of Hydrocarbons therefrom.

Section 8.3.....Maintenance of Existence.  Borrower shall, and shall cause each
other Credit Party to, at all times  (a) maintain  its  corporate,  partnership
or  limited  liability  company  existence  in its  state of  incorporation  or
organization,   and  (b) maintain  its  good  standing  and   qualification  to
transact  business in all  jurisdictions  where the  failure to  maintain  good
standing or  qualification  to transact  business could have a Material Adverse
Effect.

Section 8.4.....Title Data.  In addition to the title  information  required by
Section 5.1(c) and Section 6.1(b)  hereof,  Borrower shall, upon the request of
Required  Banks,  cause to be  delivered  to  Administrative  Agent  such title
opinions and other  information  regarding title to Mineral  Interests owned by
Borrower as are appropriate to determine the status thereof.

<PAGE>

Section 8.5.....Right of Inspection.  Borrower will permit, and will cause each
other   Credit   Party  to  permit,   any   officer,   employee   or  agent  of
Administrative  Agent to visit and  inspect  any of the  assets  of any  Credit
Party,  examine each Credit  Party's books of record and accounts,  take copies
and  extracts  therefrom,  and discuss the  affairs,  finances  and accounts of
each  Credit  Party  with  such  Credit  Party's   officers,   accountants  and
auditors,  all at such reasonable  times and as often as  Administrative  Agent
may desire, all at the expense of Borrower.

Section 8.6.....Maintenance  of Insurance.  Borrower  will, and will cause each
other  Credit  Party  to,  at all  times  maintain  or cause  to be  maintained
insurance  covering  such  risks  as  are  customarily  carried  by  businesses
similarly   situated,    including,    without   limitation,   the   following:
(a) workmen's  compensation insurance;  (b) employer's liability insurance; (c)
comprehensive   general  public   liability  and  property  damage   insurance;
(d) insurance  against  (other  than  losses  or damage  to  property  owned by
Borrower  which  is self  insured)  losses  customarily  insured  against  as a
result  of  damage  by fire,  lightning,  hail,  tornado,  explosion  and other
similar risk; and  (e) comprehensive  automobile liability insurance.  All loss
payable  clauses or provisions  in all policies of insurance  maintained by any
Credit  Party  pursuant to this  Section 8.6  shall be endorsed in favor of and
made  payable to  Administrative  Agent for the  ratable  benefit of Banks,  as
their   interests   may  appear.   Administrative   Agent  shall,   during  the
continuance  of an Event of Default,  have the right,  for the ratable  benefit
of Banks, to collect,  and Borrower hereby assigns to Administrative  Agent for
the  ratable  benefit of Banks (and  hereby  agrees to cause each other  Credit
Party to  assign),  any and all monies that may become  payable  under any such
policies  of  insurance  by reason of  damage,  loss or  destruction  of any of
property  which stands as security  for the  Obligations  or any part  thereof,
and  Administrative  Agent may,  during the continuance of an Event of Default,
at its  election,  either  apply for the  ratable  benefit  of Banks all or any
part of the sums so collected  toward  payment of the  Obligations,  whether or
not  such   Obligations   are  then  due  and   payable,   in  such  manner  as
Administrative Agent may elect or release same to the applicable Credit Party.

Section 8.7.....Payment  of Taxes and  Claims.  Borrower  will,  and will cause
each other  Credit  Party to, pay (a) all  Taxes  imposed upon it or any of its
assets or with respect to any of its  franchises,  business,  income or profits
before any material penalty or interest  accrues thereon,  and (b) all material
claims (including,  without limitation,  claims for labor, services,  materials
and  supplies)  for sums which have  become  due and  payable  and which by Law
have or might  become a Lien  (other than a  Permitted  Encumbrance)  on any of
its  assets;  provided,  however,  no  payment  of  Taxes  or  claims  shall be
required if (i) the  amount,  applicability  or validity  thereof is  currently
being  contested in good faith by  appropriate  action  promptly  initiated and
diligently  conducted  in  accordance  with  good  business  practices  and  no
material  part  of the  property  or  assets  of  Borrower,  and no part of the
assets of any  Subsidiary of Borrower  which would be material to Borrower,  is
subject to any pending levy or  execution,  (ii) Borrower,  and any  Subsidiary
of  Borrower,  as and to the extent  required in  accordance  with GAAP,  shall
have set aside on their books reserves  (segregated  to the extent  required by
GAAP) deemed by them to be adequate with respect  thereto,  and  (iii) Borrower
has   notified   Administrative   Agent  of  such   circumstances,   in  detail
satisfactory to Administrative Agent.

Section 8.8.....Compliance  with Laws and  Documents.  Borrower  will, and will
cause  each other  Credit  Party to,  comply  with all Laws,  their  respective
certificates (or articles) of  incorporation,  bylaws,  regulations and similar
organizational  documents  and all  Material  Agreements  to which  any  Credit
Party is a party,  if a violation,  alone or when  combined with all other such
violations, could reasonably be expected to have a Material Adverse Effect.

Section 8.9.....Operation of Properties and Equipment.

(a)   Borrower  will,  and will  cause each other  Credit  Party to,  maintain,
develop and operate its Mineral  Interests  in a good and  workmanlike  manner,
and  observe  and  comply  with all of the terms  and  provisions,  express  or
implied,  of all oil and gas leases relating to such Mineral  Interests so long
as  such  Mineral   Interests  are  capable  of  producing   Hydrocarbons   and
accompanying  elements  in paying  quantities,  except  where  such  failure to
maintain,   develop,  operate,  observe  or  comply  could  not  reasonably  be
expected to have a Material Adverse Effect.

(b)   Borrower  will,  and will cause each other Credit Party to, comply in all
respects  with all contracts  and  agreements  applicable to or relating to its
Mineral  Interest or the production and sale of Hydrocarbons  and  accompanying

<PAGE>

elements  therefrom,  except  to the  extent a failure  to so comply  could not
reasonably be expected to have a Material Adverse Effect.

(c)   Borrower  will,  and will cause each other  Credit Party to, at all times
maintain,  preserve and keep all operating  equipment  used with respect to its
Mineral Interests in proper repair,  working order and condition,  and make all
necessary  or  appropriate  repairs,  renewals,  replacements,   additions  and
improvements  thereto so that the efficiency of such operating  equipment shall
at all times be properly  preserved and  maintained,  except where such failure
to comply could not reasonably be expected to have a Material  Adverse  Effect;
provided,  further  that, no item of operating  equipment  need be so repaired,
renewed,  replaced,  added to or  improved,  if  Borrower  shall in good  faith
determine  that such action is not  necessary  or desirable  for the  continued
efficient and profitable operation of the business of such Credit Party.

Section 8.10....Environmental  Law  Compliance.  Except to the extent a failure
to comply could not reasonably be expected to have a Material  Adverse  Effect,
Borrower  will,  and will cause each other  Credit  Party to,  comply  with all
Applicable   Environmental  Laws,   including,   without  limitation,   (a) all
licensing,  permitting,  notification  and similar  requirements  of Applicable
Environmental  Laws,  and (b) all  provisions of all  Applicable  Environmental
Laws  regarding  storage,  discharge,  release,  transportation,  treatment and
disposal of  Hazardous  Substances.  Borrower  will,  and will cause each other
Credit Party to,  promptly pay and discharge when due all legal debts,  claims,
liabilities  and  obligations  with  respect  to any  clean-up  or  remediation
measures necessary to comply with Applicable Environmental Laws.

Section 8.11....ERISA Reporting Requirements.  Borrower shall furnish, or cause
to be furnished, to Administrative Agent:

(a)   promptly and in any event  (i) within  thirty (30) days after Borrower or
any  ERISA  Affiliate  receives  notice  from  any  regulatory  agency  of  the
commencement of an audit,  investigation or similar  proceeding with respect to
a Plan, and  (ii) within  ten (10) days after  Borrower or any ERISA  Affiliate
contacts the Internal  Revenue  Service for the purpose of  participation  in a
closing  agreement or any voluntary  resolution  program with respect to a Plan
which could  reasonably be expected to have a Material  Adverse Effect or knows
or has reason to know that any event with  respect to any Plan of  Borrower  or
any ERISA  Affiliate has occurred  that is  reasonably  believed by Borrower to
potentially have a Material  Adverse Effect,  a written notice  describing such
event and  describing  what  action is being  taken or is  proposed to be taken
with  respect  thereto,  together  with a copy of any notice of such event that
is given to the PBGC;

(b)   promptly  and in any event  within  thirty (30) days after the receipt by
Borrower  of a  request  therefor  by a Bank,  copies of any  annual  and other
report  (including  Schedule  B  thereto)  with  respect  to a  Plan  filed  by
Borrower or any ERISA  Affiliate  with the United  States  Department of Labor,
the Internal Revenue Service or the PBGC;

(c)   notification  within  thirty (30) days of the  effective  date thereof of
any  material  increases  in the  benefits,  or material  change in the funding
method,  of any existing Plan which is not a multiemployer  plan (as defined in
section  4001(a)(3) of ERISA),  or the establishment of any material new Plans,
or the  commencement  of  contributions  to any Plan to which  Borrower  or any
ERISA Affiliate was not previously contributing; and

(d)   promptly after receipt of written notice of commencement thereof,  notice
of all (i) claims  made by participants  or  beneficiaries  with respect to any
Plan,   and   (ii) actions,   suits  and   proceedings   before  any  court  or
governmental    department,    commission,    board,    bureau,    agency    or
instrumentality,   domestic  or  foreign,   affecting  Borrower  or  any  ERISA
Affiliate with respect to any Plan,  except those which,  in the aggregate,  if
adversely  determined  could not  reasonably  be  expected  to have a  Material
Adverse Effect.

Section 8.12....Additional  Documents.  Borrower  will,  and  will  cause  each
other Credit  Party to, cure  promptly any defects in the creation and issuance
of each Note,  and the execution  and delivery of this  Agreement and the other
Loan  Papers and, at  Borrower's  expense,  Borrower  shall  promptly  and duly
execute  and  deliver  to each  Bank,  and cause  each  other  Credit  Party to
promptly and duly execute and deliver to each Bank,  upon  reasonable  request,
all  such  other  and  further   documents,   agreements  and   instruments  in
compliance  with or  accomplishment  of the  covenants  and  agreements  of the
Credit  Parties  in  this  Agreement  and  the  other  Loan  Papers  as  may be
reasonably necessary or appropriate in connection therewith.

<PAGE>

Section 8.13....Environmental    Review.     Borrower    shall    deliver    to
Administrative  Agent  prior  to the  completion  by any  Credit  Party  of any
material  acquisition  of Mineral  Interests or related  assets,  other than an
acquisition  of  additional  interests  in Mineral  Interests in which a Credit
Party previously held an interest,  any report or reports  (including,  without
limitation,  any Phase I  environmental  reports)  obtained  by Borrower in the
course of such  acquisition  setting  forth the  results  of any  environmental
review  of  such  Mineral  Interests  and  related  assets.  Additionally,   if
requested by  Administrative  Agent or Required  Banks in writing in connection
with any such  material  acquisition,  and not  otherwise  obtained by Borrower
and  delivered  to  Administrative  Agent  in  accordance  with  the  foregoing
provisions  of this  Section 8.13,  Borrower  shall  deliver to  Administrative
Agent,  within  forty-five  (45) days of  Administrative  Agent's  or  Required
Banks'  written  request,  a report or  reports  related  to any such  material
acquisition   which  shall  be  in  form,   scope  and  detail   acceptable  to
Administrative  Agent  from  environmental   engineering  firms  acceptable  to
Administrative  Agent,  and which  shall set  forth  the  results  of a Phase I
environmental  review of the Mineral  Interests and related  assets the subject
of such material  acquisition.  All of the reports  delivered to Administrative
Agent  pursuant to this  Section 8.13  shall not reflect the existence of facts
or  circumstances   which  would   constitute  a  material   violation  of  any
Applicable  Environmental  Law or which are  likely  to  result  in a  material
liability to any Credit Party.

Section 8.14....Cash  Management.  Borrower  shall  maintain  the  separate and
independent  operating accounts established  pursuant to Section 6.3(a)  hereof
in a manner acceptable to Administrative Agent in all respects.

Section 8.15....Permitted  Exchange.  Subject to the terms and  conditions  set
forth herein, including,  without limitation,  Section 9.5 hereof, and provided
no Default,  Event of Default or Borrowing  Base  Deficiency  exists,  Borrower
shall be permitted to consummate  one or more  Permitted  Exchanges  during the
term of this Agreement;  provided,  further,  that, the aggregate value (which,
with  respect  to  Mineral  Interests,  shall be the  Recognized  Value of such
Mineral  Interests and shall further be the net value or net  Recognized  Value
realized  or  resulting  from  such  Permitted  Exchange)  of all  assets  sold
pursuant to this  Section 8.15  in any Fiscal Year shall not exceed ten percent
(10%) of the Borrowing Base then in effect.  In the event  Borrower  desires to
consummate  a  Permitted  Exchange,  Borrower  shall (1) notify  Administrative
Agent  thereof in  writing,  which  notice  shall  unambiguously  describe  the
property  Borrower  desires to relinquish (the  "Relinquished  Property"),  (2)
notify   Administrative  Agent  and  Banks  of  the  execution  of  a  purchase
agreement  (a  "Relinquished  Property  PSA")  for the  Relinquished  Property,
which  Relinquished  Property  PSA and the terms  thereof  (including,  without
limitation,  the  purchase  price  for  the  Relinquished  Property)  shall  be
acceptable  to  Administrative  Agent  in its  reasonable  discretion,  and (3)
deliver a fully  executed  copy of such  Relinquished  Property  PSA,  together
with all amendments  thereto,  to  Administrative  Agent. On or before the date
of transfer and conveyance of any Relinquished  Property  pursuant to the terms
and conditions of a  Relinquished  Property PSA (a "Transfer  Date"),  Borrower
shall enter into an Exchange  Agreement  with Qualified  Intermediary  pursuant
to which  provision  shall be made for the  deposit of the  purchase  price for
such  Relinquished  Property  into a  "qualified  escrow  account"  (within the
meaning of Section  1.103(k)-1(g)(3)  of the Regulations)  with, and to be held
by,  Qualified  Intermediary  (such  proceeds  being  referred to herein as the
"Exchange  Funds").  All such Exchange Funds shall be used for the  acquisition
of  the  applicable   Replacement   Property  (as  hereafter  defined)  and  as
otherwise set forth in such Exchange  Agreement.  On or before  forty-five (45)
days  after  the  applicable  Transfer  Date  (an   "Identification   Period"),
Borrower  shall either  (a)(i)  identify  (which  identification  shall be made
pursuant to and in compliance  with the  requirements of the  Regulations)  one
or more  replacement  properties in a written  document  signed by Borrower and
delivered to  Administrative  Agent,  Banks and Qualified  Intermediary,  which
document   shall   unambiguously   describe  the   replacement   property  (the
"Replacement   Property")   and  which  property  shall  be  like-kind  to  the
applicable  Relinquished  Property  in  accordance  with the  rules of  Section
1031(a)  of the Code and  otherwise  acceptable  to  Administrative  Agent  and
Banks in their reasonable discretion,  (ii) notify  Administrative Agent, Banks
and  Qualified  Intermediary  of  the  execution  of a  purchase  agreement  (a
"Replacement  Property PSA") for such Replacement  Property,  which Replacement
Property  PSA  and  the  terms  thereof  (including,  without  limitation,  the
purchase  price  for  such   Replacement   Property)  shall  be  acceptable  to
Administrative  Agent in its reasonable  discretion,  and (iii) deliver a fully
executed copy of such  Replacement  Property PSA to  Administrative  Agent,  or
(b) make  a  prepayment  of  principal  on  the  Revolving  Loan  in an  amount
sufficient to eliminate any Borrowing Base  Deficiency  resulting from the sale
of the applicable  Relinquished  Property.  In the event Borrower has, prior to

<PAGE>

the  expiration  of  the  Identification   Period,   (1)  properly   identified
applicable  Replacement  Property,  (2)  notified  Qualified  Intermediary  and
Administrative  Agent of the  execution of an applicable  Replacement  Property
PSA, and (3)  delivered a copy thereof to  Administrative  Agent in  accordance
with the terms  hereof,  then  Borrower  shall,  on or prior to the date  which
occurs 180 days after the relevant  Transfer  Date (an  "Exchange  Date"),  (A)
notify  Qualified  Intermediary  and  Administrative  Agent in writing that all
conditions to the applicable  Replacement  Property PSA have been satisfied and
that  the  seller  under  such  Replacement  Property  PSA  (the  "Seller")  is
prepared to consummate the sale of such  Replacement  Property to Borrower,  in
which event, after receipt of such written  notification,  Borrower shall cause
Qualified  Intermediary  to release the  applicable  Exchange Funds directly to
the Seller on the  closing  date of such sale,  and  Borrower  shall  cause the
conveyance  and transfer of the  applicable  Replacement  Property to Borrower.
Promptly  following the transfer and conveyance of any Replacement  Property to
Borrower,  Borrower shall comply with the terms of  Section 5.1(b)  hereof.  In
the event  (y)  Borrower  does  not,  prior to any  applicable  Exchange  Date,
consummate the closing of the sale of the applicable  Replacement  Property, or
(z) the applicable  Replacement  Property PSA is otherwise  terminated prior to
any  applicable  Exchange  Date,  then  Borrower  shall,  on the earlier of the
applicable  Exchange  Date  or  the  date  of  termination  of  the  applicable
Replacement  Property  PSA,  make a prepayment  of  principal on the  Revolving
Loan in an  amount  sufficient  to  eliminate  any  Borrowing  Base  Deficiency
resulting   from   the   sale   of  any   applicable   Relinquished   Property.
Notwithstanding  the  foregoing  or  anything  else to the  contrary  contained
herein,  Borrower  shall  comply  in all  respects  with all of the  terms  and
provisions of the applicable Exchange Agreement.

                                  Article IX
                              NEGATIVE COVENANTS
                              ------------------

      Borrower  agrees that, so long as any Bank has any  commitment to lend or
participate  in Letter of  Credit  Exposure  hereunder  or any  amount  payable
under any Note remains unpaid or any Letter of Credit remains outstanding:

Section 9.1.....Incurrence  of Debt.  Borrower  will  not,  nor  will  Borrower
permit any other Credit Party to,  incur,  become or remain liable for any Debt
other  than  (a) the  Obligations,  (b) the  Subordinate  Debt,  and  (c) other
unsecured  Debt in an aggregate  amount  outstanding  at any time not to exceed
$5,000,000.

Section 9.2.....Restricted  Payments.  Except as set forth on Schedule 9.15 and
except for Permitted  Investments,  Borrower will not, nor will Borrower permit
any other Credit  Party to,  directly or  indirectly,  declare or pay, or incur
any  liability  to declare  or pay,  any  Restricted  Payment;  provided,  that
(a) any Subsidiary of Borrower may make Distributions to Borrower,   any Credit
Party may make  Distributions  to any other  Credit  Party that has  provided a
Facility  Guaranty,  and all of the Equity of which  owned by  Borrower  or any
Indirect  Restricted  Subsidiary  has  been  pledged  to  Administrative  Agent
pursuant to a Borrower Pledge  Agreement or a Subsidiary  Pledge  Agreement (as
applicable),  and  (c) so  long as no  Default  or  Borrowing  Base  Deficiency
exists on the date any such  Distribution  is  declared  or paid and no Default
or Event of Default  would  result  therefrom,  in  addition  to  Distributions
permitted under the preceding  clauses (a)  and (b),  Borrower may make (i) the
Permitted   AER   Distribution   on  or  prior  to   December 31,   2002,   and
(ii) Permitted Tax Distributions.

Section 9.3.....Negative  Pledge.  Borrower will not, nor will Borrower  permit
any other  Credit Party to,  create,  assume or suffer to exist any Lien on any
of their respective assets, other than Permitted Encumbrances.

Section 9.4.....Consolidations  and  Mergers.   Borrower  will  not,  nor  will
Borrower  permit any other Credit Party to,  consolidate  or merge with or into
any other  Person;  provided,  that,  so long as no Default or Event of Default
exists or will  result,  Borrower  or any  Restricted  Subsidiary  may merge or
consolidate  with any  other  Person  so long as  Borrower  or such  Restricted
Subsidiary  is  the  surviving   Person  and,  in  the  case  of  a  Restricted
Subsidiary, a wholly owned Subsidiary of Borrower.

Section 9.5.....Asset  Dispositions.  Borrower  will  not,  nor  will  Borrower
permit any other Credit Party to, sell, lease,  transfer,  abandon or otherwise
dispose  of any  asset  other  than  (a) the  sale in the  ordinary  course  of
business  of   Hydrocarbons   produced  from  Borrower's   Mineral   Interests,
(b) provided  no Event of Default or  Borrowing  Base  Deficiency  exists,  the
sale,  lease,  transfer,  abandonment,  exchange or other  disposition of other
assets;  provided,  that,  the aggregate  value  (which,  in the case of assets
consisting  of  Mineral  Interests,  shall  be the  Recognized  Value  of  such
Mineral  Interests and in the case of any  exchange,  shall be the net value or

<PAGE>

net  Recognized  Value  realized or resulting from such exchange) of all assets
sold,  leased,  transferred  or disposed of pursuant to this  clause (b) in any
period between  Scheduled  Redeterminations  shall not exceed five percent (5%)
of the  Borrowing  Base then in effect  (for  purposes of this  clause (b)  the
Closing  Date  will be  deemed to be a  Scheduled  Redetermination);  provided,
further,  that,  no Asset  Disposition  shall  be  permitted  pursuant  to this
clause (b)  unless  all  mandatory   prepayments  required  by  Section 2.6  in
connection  with  such  Asset  Disposition  are made  concurrently  (or at such
other times as provided  herein)  therewith,  and  (c) subject to the terms and
conditions  set  forth  in  this  Agreement,   including,  without  limitation,
Section 8.15,   any  Permitted  Exchange.  In  no  event  will  Borrower  sell,
transfer or dispose of any Equity in any  Subsidiary  nor will any Credit Party
issue or sell any  Equity or any  option,  warrant  or other  right to  acquire
such Equity or security  convertible  into such Equity to any Person other than
the Credit  Party  which is the  direct  parent of such  issuer on the  Closing
Date.

Section 9.6.....Amendments  to  Organizational   Documents;   Other  Material
Agreements.  Borrower  will not,  nor will  Borrower  permit  any other  Credit
Party to, enter into or permit any  modification  or amendment of, or waive any
material  right or  obligation  of any Person  under,  (a) its  certificate  or
articles  of  incorporation,  bylaws,  partnership  agreement,  regulations  or
other  organizational  documents  other  than  amendments,   modifications  and
waivers  which  will not,  individually  or in the  aggregate,  have a Material
Adverse Effect, or (b) the Subordinate Loan Documents.

Section 9.7.....Use of Proceeds.  The proceeds of  Borrowings  will not be used
for  any  purpose  other  than   (a) working   capital,   (b) to   finance  the
acquisition,   exploration  and  development  of  Mineral  Interests,   (c) for
general  corporate  purposes,  and (d) to the  repayment of existing Debt owing
by Borrower.  None of such proceeds  (including,  without limitation,  proceeds
of Letters of Credit issued  hereunder)  will be used,  directly or indirectly,
for the purpose,  whether immediate,  incidental or ultimate,  of purchasing or
carrying  any  Margin  Stock,  and  none  of  such  proceeds  will  be  used in
violation  of  applicable  Law  (including,   without  limitation,  the  Margin
Regulations).  Letters  of  Credit  will  be  issued  hereunder  only  for  the
purpose of securing  bids,  tenders,  bonds,  contracts  and other  obligations
entered into in the ordinary  course of Borrower's  business,  and otherwise to
guaranty  payment and performance in accordance  with the ordinary  practice of
Borrower's  business.  Without  limiting  the  foregoing,  no Letters of Credit
will be issued  hereunder  for the purpose of or providing  credit  enhancement
with  respect to any Debt or equity  security of any Credit  Party or to secure
any Credit Party's  obligations with respect to Hedge  Transactions  other than
Hedge Transactions with a Bank or an Affiliate of such Bank.

Section 9.8.....Investments.  Borrower will not, nor will  Borrower  permit any
other Credit Party to,  directly or indirectly,  make or have  outstanding  any
Investment other than Permitted Investments.

Section 9.9.....Transactions  with  Affiliates.  Borrower  will  not,  nor will
Borrower permit any of its  Subsidiaries  to, engage in any transaction with an
Affiliate  unless such  transaction  is as  favorable to such party as could be
obtained  in an  arm's  length  transaction  with  an  unaffiliated  Person  in
accordance with prevailing industry customs and practices.

Section 9.10....ERISA.  Except in such  instances  where an omission or failure
would  not  have a  Material  Adverse  Effect,  Borrower  will  not,  nor  will
Borrower  permit any other  Credit Party to (a) take any action or fail to take
any action which would  result in a violation of ERISA,  the Code or other Laws
applicable  to the  Plans  maintained  or  contributed  to by it or  any  ERISA
Affiliate,   or  (b) modify  the  term  of,  or  the  funding   obligations  or
contribution  requirements  under any existing  Plan,  establish a new Plan, or
become  obligated or incur any  liability  under a Plan that is not  maintained
or contributed to by Borrower or any ERISA Affiliate as of the Closing Date.

Section 9.11....Hedge  Transactions.  Borrower  will  not,  nor  will  Borrower
permit  any other  Credit  Party to,  enter into any Hedge  Transactions  which
would  cause  the  amount  of  Hydrocarbons  which  are the  subject  of  Hedge
Transactions  in existence at such time to exceed  seventy-five  percent  (75%)
of Borrower's  anticipated  production from Proved Producing  Mineral Interests
during the term of such existing Hedge  Transactions,  which Hedge Transactions
shall not have a tenor of greater than three (3) years.

Section 9.12....Fiscal Year.  Borrower will not, nor will  Borrower  permit any
other Credit Party to, change its Fiscal Year.

<PAGE>

Section 9.13....Change  in  Business.  Borrower  will  not,  nor will  Borrower
permit  any other  Credit  Party  to,  engage in any  business  other  than the
businesses  engaged  in by such  parties  on the date  hereof as  described  in
Section 7.13 hereof.

Section 9.14....Subordinate  Debt.  Borrower  will not make any  payment  on or
with  respect to any  Subordinate  Debt except as  expressly  permitted  by the
terms hereof and by the terms of the Subordinate Note.

Section 9.15....Obligations of Unrestricted  Subsidiaries.  Except as described
on Schedule 9.15  attached hereto,  Borrower will not, nor will Borrower permit
any other Credit  Party to,  incur any  liability,  Debt or  obligation  to any
Unrestricted  Subsidiary  of any  nature,  or have any  liability  (whether  by
operation of law or  otherwise)  for any  liability,  Debt or obligation of any
Unrestricted Subsidiary.

                                   Article X
                              FINANCIAL COVENANTS
                              -------------------

      Borrower  agrees that so long as any Bank has any  commitment  to lend or
participate  in Letter of  Credit  Exposure  hereunder  or any  amount  payable
under any Note remains unpaid or any Letter of Credit remains outstanding:

Section 10.1....Current  Ratio of Borrower.  Borrower will not permit its ratio
of Consolidated  Current Assets to its Consolidated  Current  Liabilities as of
the end of any Fiscal Quarter to be less than 1.0 to 1.0.

Section 10.2....Consolidated  Total Debt to  Annualized  Consolidated  EBITDAX.
As of the  end of any  Fiscal  Quarter,  commencing  with  the  Fiscal  Quarter
ending  December 31, 2002,  Borrower will not permit its ratio of  Consolidated
Total Debt to Annualized Consolidated EBITDAX to be greater than 4.0 to 1.0.

Section 10.3....Consolidated  Senior Debt to Annualized  Consolidated  EBITDAX.
As of the  end of any  Fiscal  Quarter,  commencing  with  the  Fiscal  Quarter
ending  December 31,  2002,  Borrower will not permit its ratio of Consolidated
Senior Debt to Annualized Consolidated EBITDAX to be greater than 3.0 to 1.0.

                                  Article XI
                                   DEFAULTS
                                   --------

Section 11.1....Events  of  Default.  If one or  more of the  following  events
(collectively  "Events of  Default"  and  individually  an "Event of  Default")
shall have occurred and be continuing:

(a)   Borrower shall fail to pay when due any principal on any Note;

(b)   Borrower  shall fail to pay when due accrued  interest on any Note or any
fees or any other amount  payable  hereunder  and such failure  shall  continue
for a period of three (3) days following the due date;

(c)   Borrower  shall  fail to observe or perform  any  covenant  or  agreement
contained in , Article IX or Article X of this Agreement;

(d)   any  Credit  Party  shall fail to observe  or  perform  any  covenant  or
agreement  contained  in this  Agreement  or the other Loan Papers  (other than
those referenced in Section 11.1(a),  Section 11.1(b) and  Section 11.1(c)) and
such  failure  continues  for a period of thirty (30) days after the earlier of
(i) the date any Authorized  Officer of any Credit Party acquires  knowledge of
such  failure,  or  (ii) written  notice of such  failure has been given to any
Credit Party by Administrative Agent or any Bank;

(e)   any representation,  warranty,  certification or statement made or deemed
to have been made by any Credit Party in any certificate,  financial  statement
or other  document  delivered  pursuant to this  Agreement  shall prove to have
been incorrect in any material respect when made;

<PAGE>

(f)   any Credit  Party shall fail to make any payment  when due on any Debt of
such Person in a principal amount equal to or greater than  $1,000,000,  or any
other event or condition shall occur which  (i) results in the  acceleration of
the  maturity  of any such Debt,  or (ii)  entitles  the holder of such Debt to
accelerate the maturity thereof;

(g)   any Credit  Party  shall  commence a voluntary  case or other  proceeding
seeking  liquidation,  reorganization or other relief with respect to itself or
its  debts  under  any  bankruptcy,  insolvency  or  other  similar  Law now or
hereafter  in  effect  or  seeking  the  appointment  of a  trustee,  receiver,
liquidator,  custodian or other similar  official of it or any substantial part
of its property,  or shall consent to any such relief or to the  appointment of
or taking  possession  by any such  official  in an  involuntary  case or other
proceeding  commenced  against it, or shall make a general  assignment  for the
benefit of creditors,  or shall fail  generally to pay its debts as they become
due, or shall take any  corporate,  partnership  or limited  liability  company
action to authorize any of the foregoing;

(h)   an involuntary case or other  proceeding  shall be commenced  against any
Credit Party seeking  liquidation,  reorganization or other relief with respect
to it or its debts under any  bankruptcy,  insolvency  or other similar Law now
or  hereafter  in effect or seeking  the  appointment  of a trustee,  receiver,
liquidator,  custodian or other similar  official of it or any substantial part
of its property,  and such  involuntary  case or other  proceeding shall remain
undismissed  and  unstayed  for a period of sixty  (60)  days;  or an order for
relief shall be entered  against any Credit Party under the federal  bankruptcy
Laws as now or hereafter in effect;

(i)   one (1) or more  final  judgments  or  orders  for the  payment  of money
aggregating  in excess of  $1,000,000  shall be  rendered  against  any  Credit
Party and such judgment or order shall  continue  unsatisfied  and unstayed for
thirty (30) days;

(j)   (i) any event occurs with respect to any Plan or Plans  pursuant to which
any Credit  Party  incurs a liability  due and owing at the time of such event,
without  existing  funding  therefor,  for benefit  payments under such Plan or
Plans in excess of $1,000,000;  or (ii) any Credit Party,  any ERISA Affiliate,
or any other  "party-in-interest"  or "disqualified  person," as such terms are
defined in section  3(14) of ERISA and section  4975(e)(2)  of the Code,  shall
engage in  transactions  which in the aggregate  result in a direct or indirect
liability  to any Credit Party or any ERISA  Affiliate in excess of  $1,000,000
under  section  409 or 502 of ERISA or section  4975 of the Code  which  either
(A) results  in a Lien on any Credit  Party's  assets  which is not a Permitted
Encumbrance,  or  (B) continues  unsatisfied  for a period of thirty  (30) days
after any Authorized  Officer of any Credit Party first  acquires  knowledge of
such liability;

(k)    a Change of Control shall occur;

(l)   this  Agreement  or any other Loan Paper  shall cease to be in full force
and  effect  or  shall  be   declared   null  and  void  or  the   validity  or
enforceability  thereof  shall be contested or  challenged by any Credit Party,
or  any  Credit  Party  shall  deny  that  it  has  any  further  liability  or
obligation  under  any of the  Loan  Papers,  or any Lien  created  by the Loan
Papers  shall for any reason  (other  than the  release  thereof in  accordance
with the Loan  Papers)  cease to be a valid,  first  priority,  perfected  Lien
(subject to Permitted  Encumbrances)  upon any of the Proved Mineral  Interests
purported to be covered  thereby,  except as a result of any action or inaction
of Administrative Agent or Banks;

(m)   a default or event of default shall occur under  (i) any Hedge  Agreement
under which the  liability to Borrower  could  reasonably be expected to exceed
$1,000,000,  or  (ii) any  Subordinate  Loan  Document,  and any  grace  period
applicable  thereto  shall have lapsed  without  cure or waiver of such default
or event of default; or

(n)   Borrower  or AER (or any other  holder  of  Subordinate  Debt)  shall (i)
default in the  observance or  performance  of any obligation to be observed or
performed  by such party  under the  Subordination  Agreement,  (ii) breach any
representation  or warranty made by such party in the  Subordination  Agreement
in any material respect,  or  (iii) repudiate  the  Subordination  Agreement or
assert in writing that the  Subordination  Agreement or any  provision  thereof
is not valid, binding and enforceable against any such party;

<PAGE>

then,   and  in  every  such  event,   Administrative   Agent   shall   without
presentment,  notice or demand  (unless  expressly  provided for herein) of any
kind  (including,  without  limitation,  notice of intention to accelerate  and
acceleration),  all of which are hereby  waived,  (a) if  requested by Required
Banks,  terminate the Commitments and they shall thereupon  terminate,  and (b)
if requested  by Required  Banks,  take such other  actions as may be permitted
by the Loan  Papers  including,  declaring  the Notes  (together  with  accrued
interest  thereon) to be, and the Notes  shall  thereupon  become,  immediately
due and  payable;  provided  that,  in the case of any of the Events of Default
specified  in  Section 11.1(g)  or  Section 11.1(h),  without any notice to any
Credit  Party  or  any  other  act  by  Administrative   Agent  or  Banks,  the
Commitments  shall  thereupon  terminate and the Notes  (together  with accrued
interest thereon) shall become immediately due and payable.

                                  Article XII
                                    AGENTS
                                    ------

Section 12.1....Appointment;  Nature of  Relationship.  Bank One,  NA is hereby
appointed  by  each  of  the  Banks  as  its  contractual   representative  and
Administrative  Agent hereunder and under each other Loan Paper,  and each Bank
irrevocably   authorizes   Administrative  Agent  to  act  as  the  contractual
representative  of such Bank with the  rights and  duties  expressly  set forth
herein  and in the other Loan  Papers.  Administrative  Agent  agrees to act as
such  contractual  representative  and  Administrative  Agent upon the  express
conditions  contained  in  this  Article XII.  Notwithstanding  the  use of the
defined  term  "Administrative  Agent," it is expressly  understood  and agreed
that  Administrative  Agent shall not have any  fiduciary  responsibilities  to
any  Bank by  reason  of this  Agreement  or any  other  Loan  Paper  and  that
Administrative  Agent is merely  acting as the  contractual  representative  of
the Banks with only those duties as are expressly  set forth in this  Agreement
and  the  other  Loan  Papers.  In  its  capacity  as  the  Banks'  contractual
representative,  Administrative  Agent (i) does not hereby assume any fiduciary
duties to any of the  Banks,  (ii) is a  "representative"  of the Banks  within
the  meaning of the term  "secured  party" as defined in the  Illinois  Uniform
Commercial Code, and (iii) is acting as an independent  contractor,  the rights
and  duties  of  which  are  limited  to  those  expressly  set  forth  in this
Agreement  and the  other  Loan  Papers.  Each of the  Banks  hereby  agrees to
assert no claim  against  Administrative  Agent on any theory of liability  for
breach of fiduciary duty, any and all of which claims each Bank hereby waives.

Section 12.2....Powers.  Administrative  Agent shall have and may exercise such
powers under the Loan Papers as are  specifically  delegated to  Administrative
Agent  by  the  terms  of  each  thereof,  together  with  such  powers  as are
reasonably  incidental  thereto.  Administrative  Agent  shall  have no implied
duties  to the  Banks,  or any  obligation  to the  Banks  to take  any  action
thereunder  except any action  specifically  provided  by the Loan Papers to be
taken by Administrative Agent.

Section 12.3....General Immunity.  Neither  Administrative Agent nor any of its
directors,  officers,  agents or  employees  shall be liable to Borrower or any
Bank for any action  taken or omitted  to be taken by it or them  hereunder  or
under any other Loan Paper or in  connection  herewith or  therewith  except to
the extent  such action or inaction  is  determined  in a final  non-appealable
judgment  by a court of  competent  jurisdiction  to have arisen from the gross
negligence or willful misconduct of such Person.

Section 12.4....No   Responsibility   for   Loans,   Recitals,   etc.   Neither
Administrative  Agent nor any of its directors,  officers,  agents or employees
shall be  responsible  for or have  any duty to  ascertain,  inquire  into,  or
verify (a) any  statement,  warranty or representation  made in connection with
any Loan Paper or any Borrowing  hereunder;  (b) the  performance or observance
of any of the  covenants  or  agreements  of any obligor  under any Loan Paper,
including,   without  limitation,  any  agreement  by  an  obligor  to  furnish
information  directly  to each  Bank;  (c) the  satisfaction  of any  condition
specified  in  Article VI,  except  receipt of items  required to be  delivered
solely to  Administrative  Agent;  (d) the  existence or possible  existence of
any   Default  or  Event  of   Default;   (e) the   validity,   enforceability,
effectiveness,  sufficiency  or  genuineness  of any Loan  Paper  or any  other
instrument  or  writing  furnished  in  connection  therewith;  (f) the  value,
sufficiency,  creation,  perfection  or priority of any Lien in any  collateral
security;  or (g) the  financial  condition of Borrower or any guarantor of any
of the Obligations or of any of Borrower's or any such  guarantor's  respective
Subsidiaries.  Administrative  Agent  shall  have no duty  to  disclose  to the
Banks  information  that  is  not  required  to be  furnished  by  Borrower  to
Administrative  Agent at such time,  but is  voluntarily  furnished by Borrower
to  Bank  One  (either  in  its  capacity  as  Administrative  Agent  or in its
individual capacity).

<PAGE>

Section 12.5....Action on  Instructions  of Banks.  Administrative  Agent shall
in all cases be fully  protected  in  acting,  or in  refraining  from  acting,
hereunder  and  under  any  other  Loan  Paper  in   accordance   with  written
instructions  signed  by the  Required  Banks,  and such  instructions  and any
action  taken or failure  to act  pursuant  thereto  shall be binding on all of
the Banks.  The Banks hereby  acknowledge  that  Administrative  Agent shall be
under  no duty to take any  discretionary  action  permitted  to be taken by it
pursuant to the  provisions  of this  Agreement  or any other Loan Paper unless
it shall be  requested  in writing to do so by Required  Banks.  Administrative
Agent  shall be fully  justified  in  failing  or  refusing  to take any action
hereunder  and under any other Loan Paper unless it shall first be  indemnified
to its  satisfaction by the Banks pro rata against any and all liability,  cost
and  expense  that it may incur by reason of taking or  continuing  to take any
such action.

Section 12.6....Employment  of Agents  and  Counsel.  Administrative  Agent may
execute  any of its  duties as  Administrative  Agent  hereunder  and under any
other Loan Paper by or through  employees,  agents, and  attorneys-in-fact  and
shall  not be  answerable  to the  Banks,  except  as to  money  or  securities
received by it or its authorized  agents,  for the default or misconduct of any
such  agents  or  attorneys-in-fact   selected  by  it  with  reasonable  care.
Administrative  Agent  shall be entitled  to advice of counsel  concerning  the
contractual  arrangement  between  Administrative  Agent  and the Banks and all
matters  pertaining to  Administrative  Agent's duties  hereunder and under any
other Loan Paper.

Section 12.7....Reliance on Documents;  Counsel.  Administrative Agent shall be
entitled  to rely  upon any  Note,  notice,  consent,  certificate,  affidavit,
letter,  telegram,  statement,  paper or document  believed by it to be genuine
and correct  and to have been  signed or sent by the proper  Person or Persons,
and,  in respect to legal  matters,  upon the  opinion of counsel  selected  by
Administrative Agent, which counsel may be employees of Administrative Agent.

Section 12.8....Administrative   Agent's   Reimbursement  and  Indemnification.
Banks  agree  to  reimburse  and  indemnify  Administrative  Agent  ratably  in
proportion to their  respective  Commitments  (or, if the Commitments have been
terminated,  in  proportion  to  their  Commitments  immediately  prior to such
termination)   (i) for  any  amounts  not  reimbursed  by  Borrower  for  which
Administrative  Agent is entitled to  reimbursement  by Borrower under the Loan
Papers,  (ii) for  any  other  expenses  incurred  by  Administrative  Agent on
behalf of the Banks, in connection with the preparation,  execution,  delivery,
administration  and  enforcement  of  the  Loan  Papers   (including,   without
limitation,  for any expenses  incurred by  Administrative  Agent in connection
with any dispute  between  Administrative  Agent and any Bank or between two or
more  of  the  Banks)  and  (iii) for  any  liabilities,  obligations,  losses,
damages,   penalties,   actions,   judgments,   suits,   costs,   expenses   or
disbursements  of any kind and  nature  whatsoever  which  may be  imposed  on,
incurred by or asserted  against  Administrative  Agent in any way  relating to
or  arising  out  of the  Loan  Papers  or  any  other  document  delivered  in
connection  therewith  or the  transactions  contemplated  thereby  (including,
without  limitation,  for any such  amounts  incurred  by or  asserted  against
Administrative  Agent in  connection  with any dispute  between  Administrative
Agent and any Bank or between  two or more of the  Banks),  or the  enforcement
of any  of the  terms  of the  Loan  Papers  or of any  such  other  documents;
provided  that no Bank shall be liable for any of the  foregoing  to the extent
any of the  foregoing  is found in a final  non-appealable  judgment by a court
of  competent  jurisdiction  to have  resulted  from the  gross  negligence  or
willful  misconduct  of  Administrative  Agent.  The  obligations  of the Banks
under  this   Section 12.8   shall  survive  payment  of  the  Obligations  and
termination of this Agreement.

Section 12.9....Notice of  Default.  Administrative  Agent  shall not be deemed
to have  knowledge  or  notice of the  occurrence  of any  Default  or Event of
Default  hereunder  unless  Administrative  Agent has received  written  notice
from a Bank or Borrower  referring to this  Agreement  describing  such Default
or Event of Default  and  stating  that such  notice is a "notice of  default".
In the event that Administrative  Agent receives such a notice,  Administrative
Agent shall give prompt notice thereof to the Banks.

Section 12.10...Rights  as a  Bank.  In the  event  Administrative  Agent  is a
Bank,  Administrative  Agent  shall have the same  rights and powers  hereunder
and  under  any  other  Loan  Paper  with  respect  to its  Commitment  and its
Revolving  Loans as any Bank and may  exercise  the same as  though it were not
Administrative  Agent,  and the term "Bank" or "Banks" shall,  at any time when
Administrative  Agent  is a  Bank,  unless  the  context  otherwise  indicates,
include in its  individual  capacity.  Administrative  Agent and its Affiliates
may accept  deposits from,  lend money to, and generally  engage in any kind of
trust,  debt, equity or other  transaction,  in addition to those  contemplated
by  this  Agreement  or any  other  Loan  Paper,  with  Borrower  or any of its
Subsidiaries  in which  Borrower or such  Subsidiary is not  restricted  hereby
from engaging with any other Person.

<PAGE>

Section 12.11...Bank  Credit  Decision.  Each  Bank  acknowledges  that it has,
independently  and  without  reliance  upon  Administrative  Agent,  Sole  Lead
Arranger,  Bookrunner  or any other  Agent or Bank and  based on the  financial
statements  prepared by Borrower and such other  documents and  information  as
it has deemed  appropriate,  made its own credit analysis and decision to enter
into this  Agreement  and the other Loan  Papers.  Each Bank also  acknowledges
that it will,  independently  and without reliance upon  Administrative  Agent,
Sole Lead  Arranger,  Bookrunner  or any other  Agent or Bank and based on such
documents and  information as it shall deem  appropriate at the time,  continue
to make its own  credit  decisions  in taking or not taking  action  under this
Agreement and the other Loan Papers.

Section 12.12...Successor   Administrative  Agent.   Administrative  Agent  may
resign at any time by giving  written  notice  thereof  to Banks and  Borrower,
such   resignation  to  be  effective  upon  the  appointment  of  a  successor
Administrative  Agent  or,  if  no  successor  Administrative  Agent  has  been
appointed,  forty-five (45) days after the retiring  Administrative Agent gives
notice of its  intention  to  resign.  Administrative  Agent may be  removed at
any time with or without  cause by written  notice  received by  Administrative
Agent from Required  Banks,  such removal to be effective on the date specified
by  Required  Banks.  Upon any such  resignation  or  removal,  Required  Banks
shall  have the right to  appoint,  on  behalf of  Borrower  and the  Banks,  a
successor  Administrative  Agent,  which shall be approved  by  Borrower,  such
approval not to be unreasonably  withheld;  provided,  that, Borrower shall not
have the right to approve any successor  Administrative  Agent appointed during
the  continuance  of any Default.  If no successor  Administrative  Agent shall
have been so  appointed  by Required  Banks  within  thirty (30) days after the
resigning  Administrative  Agent's  giving  notice of its  intention to resign,
then the  resigning  Administrative  Agent may  appoint,  on behalf of Borrower
and  Banks,  a  successor  Administrative  Agent  which  shall be  approved  by
Borrower,  such  approval  not to be  unreasonably  withheld;  provided,  that,
Borrower  shall  not have the right to  approve  any  successor  Administrative
Agent  appointed  during the  continuance  of any  Default.  If  Administrative
Agent has resigned or been removed and no  successor  Administrative  Agent has
been  appointed,  Banks may  perform  all the  duties of  Administrative  Agent
hereunder  and Borrower  shall make all payments in respect of the  Obligations
to the  applicable  Bank and for all other  purposes  shall deal  directly with
the Banks.  No successor  Administrative  Agent shall be deemed to be appointed
hereunder   until  such  successor   Administrative   Agent  has  accepted  the
appointment.  Any such  successor  Administrative  Agent shall be a  commercial
bank having capital and retained  earnings of at least  $100,000,000.  Upon the
acceptance  of  any  appointment  as   Administrative   Agent  hereunder  by  a
successor  Administrative  Agent,  such  successor  Administrative  Agent shall
thereupon   succeed  to  and  become  vested  with  all  the  rights,   powers,
privileges and duties of the resigning or removed  Administrative  Agent.  Upon
the  effectiveness of the resignation or removal of  Administrative  Agent, the
resigning or removed  Administrative  Agent shall be discharged from its duties
and obligations  hereunder and under the Loan Papers.  After the  effectiveness
of the  resignation or removal of an  Administrative  Agent,  the provisions of
this   Article XII   shall   continue   in  effect  for  the  benefit  of  such
Administrative  Agent in  respect of any  actions  taken or omitted to be taken
by it while it was  acting  as  Administrative  Agent  hereunder  and under the
other Loan  Papers.  In the event that there is a successor  to  Administrative
Agent by merger,  or  Administrative  Agent assigns its duties and  obligations
to an Affiliate pursuant to this  Section 12.12,  then the term "Prime Rate" as
used in  this  Agreement  shall  mean  the  prime  rate,  base  rate  or  other
analogous rate of the new Administrative Agent.

Section 12.13...Delegation  to  Affiliates.   Borrower  and  Banks  agree  that
Administrative  Agent may delegate  any of its duties  under this  Agreement to
any of its  Affiliates.  Any such  Affiliate (and such  Affiliate's  directors,
officers,  agents and employees)  which performs duties in connection with this
Agreement  shall be  entitled  to the  same  benefits  of the  indemnification,
waiver  and  other  protective  provisions  to  which  Administrative  Agent is
entitled under Article XII and Article XIII.

Section 12.14...Execution  of  Collateral   Documents.   Without  limiting  the
powers and  authority  of  Administrative  Agent  described  herein,  the Banks
hereby  empower and  authorize  Administrative  Agent to execute and deliver to
Borrower on their behalf the Mortgages,  the Borrower  Pledge  Agreements,  the
Subsidiary  Pledge  Agreements  and all related  financing  statements  and any
other financing  statements,  agreements,  documents or instruments as shall be
necessary or appropriate to effect the purposes of the foregoing instruments.

<PAGE>

Section 12.15...Collateral   Releases.   Banks  hereby  empower  and  authorize
Administrative  Agent to execute and  deliver to  Borrower on their  behalf any
agreements,  documents or  instruments  as shall be necessary or appropriate to
effect  any  releases  of  collateral  which  shall be  permitted  by the terms
hereof or of any other Loan Paper or which shall  otherwise  have been approved
by Required  Banks (or, if  required by the terms of  Section 14.5,  all of the
Banks) in writing.

Section 12.16...Agents.   None  of  the  Banks  (if  any)   identified  in,  or
appointed  at any  time  under,  this  Agreement  as a  "Documentation  Agent,"
"Co-Documentation  Agent," "Syndication Agent" and/or a "Co-Syndication  Agent"
shall have any right,  power,  obligation,  liability,  responsibility  or duty
under  this  Agreement  other  than  those  applicable  to all  Banks  as such.
Without  limiting  the  foregoing,  none of any such  Agents  shall  have or be
deemed  to have a  fiduciary  relationship  with any  Bank.  Each  Bank  hereby
makes the same  acknowledgments  with  respect  to any such  Agents as it makes
with respect to Administrative Agent in Section 12.11.

                                 Article XIII
                            CHANGE IN CIRCUMSTANCES
                            -----------------------

Section 13.1....Increased Cost and Reduced Return.

(a)   If, after the date hereof,  the adoption of any applicable  law, rule, or
regulation,  or any change in any applicable  law, rule, or regulation,  or any
change in the  interpretation  or  administration  thereof by any  Governmental
Authority,  central bank, or comparable agency charged with the  interpretation
or  administration  thereof,  or  compliance  by any  Bank  (or its  Applicable
Lending  Office)  with any  request  or  directive  (whether  or not having the
force of law) of any such Governmental  Authority,  central bank, or comparable
agency:

          (i) shall subject such Bank (or its Applicable  Lending Office) to any
     tax, duty, or other charge with respect to any Eurodollar  Loans, its Note,
     or its obligation to make Eurodollar Loans, or change the basis of taxation
     of any  amounts  payable to such Bank (or its  Applicable  Lending  Office)
     under this Agreement or its Note in respect of any Eurodollar  Loans (other
     than  taxes  imposed  on the  overall  net  income  of  such  Bank  or such
     Applicable Lending Office);

          (ii) shall impose,  modify,  or deem  applicable any reserve,  special
     deposit,  assessment,  compulsory loan, or similar  requirement (other than
     the Reserve  Requirement  utilized  in the  determination  of the  Adjusted
     Eurodollar  Rate)  relating to any extensions of credit or other assets of,
     or any deposits with or other  liabilities or commitments of, such Bank (or
     its  Applicable  Lending  Office),  including  the  Commitment of such Bank
     hereunder; or

          (iii) shall impose on such Bank (or its Applicable  Lending Office) or
     on the London interbank market any other condition affecting this Agreement
     or its  Note  or  any of  such  extensions  of  credit  or  liabilities  or
     commitments;

and the result of any of the  foregoing  is to  increase  the cost to such Bank
(or its Applicable Lending Office) of making,  Converting into, Continuing,  or
maintaining  any  Eurodollar  Loans or to reduce any sum received or receivable
by such Bank (or its  Applicable  Lending  Office) under this  Agreement or its
Note with  respect to any  Eurodollar  Loans,  then the  Borrower  shall pay to
such Bank on demand  such  amount or amounts as will  compensate  such Bank for
such increased costs or reductions  incurred or experienced  within one hundred
twenty  (120)  days  of such  demand.  If any  Bank  requests  compensation  by
Borrower under this  Section 13.1(a),  the Borrower may, by notice to such Bank
(with a copy to Administrative  Agent),  suspend the obligation of such Bank to
make or  Continue  Eurodollar  Loans or to Convert all or part of the Base Rate
Loan owing to such Bank into  Eurodollar  Loans,  until the event or  condition
giving  rise  to such  request  ceases  to be in  effect  (in  which  case  the
provisions  of  Section 13.4   shall  be  applicable);   provided,   that  such
suspension   shall  not  affect   the  right  of  such  Bank  to  receive   the
compensation so requested.

(b)   If,  after the date  hereof,  any Bank  shall  have  determined  that the
adoption  of  any  applicable  law,  rule,  or  regulation   regarding  capital
adequacy  or any change  therein  or in the  interpretation  or  administration
thereof by any  Governmental  Authority,  central bank,  or  comparable  agency

<PAGE>

charged with the  interpretation or administration  thereof,  or any request or
directive  regarding  capital adequacy (whether or not having the force of law)
of any such Governmental  Authority,  central bank, or comparable  agency,  has
or would  have the  effect of  reducing  the rate of return on the  capital  of
such Bank or any  corporation  controlling  such Bank as a consequence  of such
Bank's  obligations  hereunder  to a level  below  that which such Bank or such
corporation  could have achieved but for such  adoption,  change,  request,  or
directive  (taking  into  consideration  its  policies  with respect to capital
adequacy),  then,  from time to time upon  demand,  Borrower  shall pay to such
Bank such  additional  amount or amounts as will  compensate such Bank for such
reductions experienced within one hundred twenty (120) days of such demand.

(c)   Each Bank shall promptly notify Borrower and Administrative  Agent of any
event of which it has knowledge,  occurring  after the date hereof,  which will
entitle  such  Bank to  compensation  pursuant  to this  Section 13.1  and will
designate  a  different  Applicable  Lending  Office if such  designation  will
avoid the need for,  or reduce the amount of, such  compensation  and will not,
in the  judgment of such Bank,  be  otherwise  disadvantageous  to it. Any Bank
claiming  compensation  under this  Section 13.1  shall furnish to Borrower and
Administrative  Agent a  statement  setting  forth  the  additional  amount  or
amounts to be paid to it  hereunder  which shall be  conclusive  in the absence
of  manifest  error.  In  determining  such  amount,  such  Bank  may  use  any
reasonable averaging and attribution methods.

Section 13.2....Limitation  on Type of  Loans.  If on or prior to the first day
of any Interest Period for any Eurodollar Loan:

(a)   Administrative   Agent   determines   (which   determination   shall   be
conclusive)  that by reason of  circumstances  affecting  the relevant  market,
adequate and  reasonable  means do not exist for  ascertaining  the  Eurodollar
Rate for such Interest Period; or

(b)   Required Banks determine  (which  determination  shall be conclusive) and
notify  Administrative  Agent  that  the  Adjusted  Eurodollar  Rate  will  not
adequately  and fairly  reflect the cost to Banks of funding  Eurodollar  Loans
for such Interest Period;

then   Administrative   Agent  shall  give  Borrower   prompt  notice   thereof
specifying  the relevant  Type of Revolving  Loans and the relevant  amounts or
periods,  and so long as such  condition  remains  in  effect,  Banks  shall be
under no obligation to make additional  Revolving Loans of such Type,  Continue
Revolving  Loans of such Type, or to Convert  Revolving Loans of any other Type
into Revolving  Loans of such Type, and Borrower  shall,  on the last day(s) of
the then current  Interest  Period(s) for the  outstanding  Revolving  Loans of
the  affected  Type,  either  prepay  such  Revolving  Loans  or  Convert  such
Revolving  Loans into  another Type of Revolving  Loan in  accordance  with the
terms of this Agreement.

Section 13.3....Illegality.   Notwithstanding   any  other  provision  of  this
Agreement,  in  the  event  that  it  becomes  unlawful  for  any  Bank  or its
Applicable  Lending  Office  to  make,  maintain,   or  fund  Eurodollar  Loans
hereunder,  then such Bank shall  promptly  notify  Borrower  thereof  and such
Bank's  obligation  to make or Continue  Eurodollar  Loans and to Convert other
Types of Revolving  Loans into  Eurodollar  Loans shall be suspended until such
time as such Bank may  again  make,  maintain,  and fund  Eurodollar  Loans (in
which case the provisions of Section 13.4 shall be applicable).

Section 13.4....Treatment of Affected  Loans.  If the obligation of any Bank to
make  particular  Eurodollar  Loans  or  to  Continue  Revolving  Loans,  or to
Convert  Revolving  Loans of another Type into Revolving  Loans of a particular
Type  shall be  suspended  pursuant  to  Section 13.1  or  Section 13.3  hereof
(Revolving  Loans of such Type being herein  called  "Affected  Loans" and such
Type being herein  called the  "Affected  Type"),  such Bank's  Affected  Loans
shall be  automatically  Converted  into the Base Rate Loan on the last  day(s)
of the then current  Interest  Period(s) for Affected Loans (or, in the case of
a  Conversion  required by  Section 13.3  hereof,  on such earlier date as such
Bank may specify to Borrower with a copy to  Administrative  Agent) and, unless
and until  such Bank gives  notice as  provided  below  that the  circumstances
specified  in  Section 13.1  or  Section 13.3  hereof  that  gave  rise to such
Conversion no longer exist:

<PAGE>

(a)   to the extent that such  Bank's  Affected  Loans have been so  Converted,
all payments and  prepayments of principal  that would  otherwise be applied to
such Bank's Affected Loans shall be applied instead to the Base Rate Loan; and

(b)   all  Revolving  Loans that would  otherwise  be made or Continued by such
Bank as  Revolving  Loans  of the  Affected  Type  shall  be made or  Continued
instead as part of the Base Rate  Loan,  and all  Revolving  Loans of such Bank
that would  otherwise be Converted  into  Revolving  Loans of the Affected Type
shall be  Converted  instead  into (or shall  remain)  as part of the Base Rate
Loan.

If such Bank gives  notice to Borrower  (with a copy to  Administrative  Agent)
that the  circumstances  specified in Section 13.1 or Section 13.3  hereof that
gave rise to the  Conversion  of such Bank's  Affected  Loans  pursuant to this
Section 13.4  no longer exist (which such Bank agrees to do promptly  upon such
circumstances  ceasing  to  exist)  at a  time  when  Revolving  Loans  of  the
Affected Type made by other Banks are  outstanding,  such Bank's portion of the
Base Rate Loan shall be  automatically  Converted,  on the first  day(s) of the
next  succeeding  Interest  Period(s) for such  outstanding  Revolving Loans of
the  Affected  Type,  to the extent  necessary  so that,  after  giving  effect
thereto,  all  Revolving  Loans held by Banks  holding  Revolving  Loans of the
Affected  Type and by such  Bank are  held pro rata (as to  principal  amounts,
Types and Interest Periods) in accordance with their respective Commitments.

Section 13.5....Compensation.  Upon the  request  of any Bank,  Borrower  shall
pay to such  Bank  such  amount  or  amounts  as  shall be  sufficient  (in the
reasonable  opinion  of such  Bank) to  compensate  it for any loss,  cost,  or
expense (including loss of anticipated profits) incurred by it as a result of:

(a)   any payment,  prepayment,  or  Conversion  of a  Eurodollar  Loan for any
reason  (including,  without  limitation,  the  acceleration  of the  Revolving
Loan)  on a date  other  than  the last  day of the  Interest  Period  for such
Loan; or

(b)   any  failure  by  the  Borrower  for  any  reason   (including,   without
limitation,  the failure of any condition  precedent specified in Article VI to
be  satisfied) to borrow,  Convert,  Continue,  or prepay a Eurodollar  Loan on
the  date  for  such  Borrowing,   Conversion,   Continuation,   or  prepayment
specified in the relevant  Request for  Borrowing,  Notice of  Continuation  or
Conversion,  or  other  notice  of  Borrowing,  prepayment,   Continuation,  or
Conversion under this Agreement.

Section 13.6....Taxes.

(a)   Any and all  payments  by  Borrower  to or for the account of any Bank or
Administrative  Agent  hereunder  or under any other Loan  Paper  shall be made
free and  clear of and  without  deduction  for any and all  present  or future
Taxes, duties, levies, imposts,  deductions,  charges or withholdings,  and all
liabilities  with  respect  thereto,  excluding,  in the case of each  Bank and
Administrative  Agent,  Taxes  imposed  on  its  income,  and  franchise  Taxes
imposed  on  it  (all  such  non-excluded  Taxes,  duties,   levies,   imposts,
deductions,  charges,  withholdings, and liabilities being hereinafter referred
to in  this  Section 13.6  as  "Non-Excluded  Taxes").  If  Borrower  shall  be
required  by Law to deduct  any  Non-Excluded  Taxes  from or in respect of any
sum  payable  under  this  Agreement  or any  other  Loan  Paper to any Bank or
Administrative  Agent,  (i) the sum payable  shall be increased as necessary so
that after making all required deductions  (including  deductions applicable to
additional sums payable under this  Section 13.6)  such Bank or  Administrative
Agent  receives an amount  equal to the sum it would have  received had no such
deductions   been   made,    (ii) Borrower    shall   make   such   deductions,
(iii) Borrower  shall pay the full  amount  deducted to the  relevant  taxation
authority  or  other   authority  in  accordance   with   applicable  Law,  and
(iv) Borrower  shall furnish to Administrative  Agent, at its address set forth
on  Schedule 1.1  hereto,  the  original  or a  certified  copy  of  a  receipt
evidencing payment thereof.

(b)   In addition,  Borrower  agrees to pay any and all present or future stamp
or  documentary  Taxes and any other  excise or  property  Taxes or  charges or
similar  levies which arise from any payment  made under this  Agreement or any
other  Loan Paper or from the  execution  or  delivery  of, or  otherwise  with
respect to, this  Agreement  or any other Loan Paper  (hereinafter  referred to
as "Other Taxes").

<PAGE>

(c)   Borrower agrees to indemnify each Bank and  Administrative  Agent for the
full  amount  of  Non-Excluded  Taxes  and  Other  Taxes  (including,   without
limitation,  any  Non-Excluded  Taxes or Other Taxes imposed or asserted by any
jurisdiction on amounts payable under this  Section 13.6)  paid by such Bank or
Administrative  Agent  (as  the  case  may be)  and  any  liability  (including
penalties, interest, and expenses) arising therefrom or with respect thereto.

(d)   Each Bank organized  under the Laws of a jurisdiction  outside the United
States,  on or  prior  to the  date  of its  execution  and  delivery  of  this
Agreement  in the case of each Bank  listed on  Schedule 1.1  hereto  and on or
prior to the date on which it  becomes a Bank in the case of each  other  Bank,
and from time to time  thereafter  if  requested  in  writing  by  Borrower  or
Administrative  Agent (but only so long as such Bank remains  lawfully  able to
do so), shall provide Borrower and  Administrative  Agent, at the time or times
prescribed  by  applicable  Law,  with such  properly  completed  and  executed
documentation   prescribed  by  applicable  Law  (or  reasonably  requested  by
Borrower)  certifying  that such Bank is entitled  to benefits  under an income
tax  treaty to which the United  States is a party  which  reduces  the rate of
withholding  tax  on  payments  of  interest  or  certifying  that  the  income
receivable  pursuant  to this  Agreement  is  effectively  connected  with  the
conduct of a trade or business in the United States,  and certifying  that such
Bank is  entitled  to an  exemption  from or a reduced  rate of tax on payments
pursuant to this Agreement or any of the other Loan Papers.

(e)   For any  period  with  respect  to which a Bank  has  failed  to  provide
Borrower  and  Administrative  Agent  with the  appropriate  form  pursuant  to
Section 13.6(d)  (unless  such  failure is due to a change in treaty,  law,  or
regulation  occurring  subsequent  to the date on which a form  originally  was
required to be  provided),  such Bank shall not be entitled to  indemnification
under  Section 13.6(a),  Section 13.6(b)  or  Section 13.6(c)  with  respect to
Non-Excluded  Taxes  imposed  by the United  States;  provided,  however,  that
should a Bank,  which is otherwise  exempt from or subject to a reduced rate of
withholding  Tax, become subject to  Non-Excluded  Taxes because of its failure
to deliver a form required  hereunder,  Borrower  shall take such steps as such
Bank  shall   reasonably   request  to  assist   such  Bank  to  recover   such
Non-Excluded Taxes.

(f)   If Borrower is required to pay  additional  amounts to or for the account
of any Bank  pursuant  to this  Section 13.6,  then such Bank will agree to use
reasonable  efforts  to  change  the  jurisdiction  of its  Applicable  Lending
Office so as to  eliminate  or reduce  any such  additional  payment  which may
thereafter  accrue  if  such  change,  in the  judgment  of such  Bank,  is not
otherwise disadvantageous to such Bank.

(g)   Within  thirty  (30) days after the date of any  payment of  Non-Excluded
Taxes,  Borrower  shall  furnish  to  Administrative  Agent the  original  or a
certified copy of a receipt evidencing such payment.

(h)   Without  prejudice  to the  survival of any other  agreement  of Borrower
hereunder,  the  agreements  and  obligations  of  Borrower  contained  in this
Section 13.6  shall survive the  termination of the Commitments and the payment
in full of the Notes.

Section 13.7....Discretion  of Banks as to Manner of  Funding.  Notwithstanding
any provisions of this  Agreement to the contrary,  each Bank shall be entitled
to fund and  maintain its funding of all or any part of its  Commitment  in any
manner it sees fit,  it being  understood,  however,  that for the  purposes of
this Agreement all  determinations  hereunder shall be made as if such Bank had
actually  funded and  maintained  each  Eurodollar  Loan  during  the  Interest
Period for such  Eurodollar  Loan  through the  purchase  of deposits  having a
maturity  corresponding  to the last day of such Interest Period and bearing an
interest rate equal to the Adjusted Eurodollar Rate for such Interest Period.

                                  Article XIV
                                 MISCELLANEOUS
                                 -------------

Section 14.1....Notices.  All  notices,  requests and other  communications  to
any party  hereunder  shall be in writing  (including  bank wire,  telecopy  or
similar  writing) and shall be given, if to  Administrative  Agent or any Bank,
at its address or telecopier  number set forth on Schedule 1.1  hereto,  and if
given  to  Borrower,  at its  address  or  telecopy  number  set  forth  on the
signature  pages hereof (or in either case,  at such other  address or telecopy
number as such party may  hereafter  specify  for the  purpose by notice to the
other  parties  hereto).  Each  such  notice,  request  or other  communication
shall  be  effective   (a) if  given  by  telecopy,   when  such   telecopy  is

<PAGE>

transmitted  to the  telecopy  number  specified in this  Section 14.1  and the
appropriate  answerback is received or receipt is otherwise  confirmed,  (b) if
given by mail,  three (3)  Domestic  Business  Days after  deposit in the mails
with first class postage  prepaid,  addressed as aforesaid,  or (c) if given by
any  other   means,   when   delivered   at  the  address   specified  in  this
Section 14.1;  provided that notices to  Administrative  Agent under Article II
or Article III shall not be effective until received.

Section 14.2....No  Waivers.  No  failure or delay by  Administrative  Agent or
any Bank in  exercising  any right,  power or privilege  hereunder or under any
Note or other  Loan  Paper  shall  operate  as a waiver  thereof  nor shall any
single or partial  exercise  thereof  preclude  any other or  further  exercise
thereof or the  exercise of any other  right,  power or  privilege.  The rights
and remedies  herein  provided  shall be  cumulative  and not  exclusive of any
rights or remedies provided by Law or in any of the other Loan Papers.

Section 14.3....Expenses; Indemnification.

(a)   Borrower  agrees to pay on demand all  reasonable  costs and  expenses of
Administrative  Agent,  Sole Lead Arranger and  Bookrunner  in connection  with
the  syndication,   preparation,   execution,   delivery,   modification,   and
amendment of this  Agreement,  the other Loan Papers,  and the other  documents
to be delivered hereunder,  including,  without limitation, the reasonable fees
and  expenses  of counsel for  Administrative  Agent with  respect  thereto and
with   respect  to  advising   Administrative   Agent  as  to  its  rights  and
responsibilities  under  the Loan  Papers.  Borrower  further  agrees to pay on
demand  all costs and  expenses  of  Administrative  Agent  and  Banks,  if any
(including,  without limitation,  reasonable attorneys' fees and expenses),  in
connection  with  (i) the  enforcement  (whether  through  negotiations,  legal
proceedings,  or  otherwise)  of the Loan Papers and the other  documents to be
delivered   hereunder,   and   (ii) any   forbearance   or   workout,   or  any
modifications  to the Loan Papers,  following an Event of Default.  Each demand
for payment of costs and expenses  shall include a reasonably  detailed list of
such costs and expenses,  and such costs and expenses  payable  hereunder shall
not include the allocated costs of internal counsel of any Agent or Bank.

(b)   BORROWER  AGREES TO INDEMNIFY  AND HOLD HARMLESS EACH AGENT AND EACH BANK
AND  EACH  OF  THEIR  AFFILIATES  AND  THEIR  RESPECTIVE  OFFICERS,  DIRECTORS,
EMPLOYEES,  AGENTS,  AND  ADVISORS  (EACH,  AN  "INDEMNIFIED  PARTY")  FROM AND
AGAINST ANY AND ALL CLAIMS, DAMAGES, LOSSES,  LIABILITIES,  COSTS, AND EXPENSES
(INCLUDING,  WITHOUT  LIMITATION,  REASONABLE  ATTORNEYS'  FEES)  THAT  MAY  BE
INCURRED BY OR  ASSERTED OR AWARDED  AGAINST  ANY  INDEMNIFIED  PARTY,  IN EACH
CASE ARISING OUT OF OR IN CONNECTION  WITH OR BY REASON OF (INCLUDING,  WITHOUT
LIMITATION,  IN CONNECTION WITH ANY  INVESTIGATION,  LITIGATION,  OR PROCEEDING
OR  PREPARATION  OF DEFENSE IN CONNECTION  THEREWITH)  THE LOAN PAPERS,  ANY OF
THE  TRANSACTIONS  CONTEMPLATED  HEREIN OR THE  ACTUAL OR  PROPOSED  USE OF THE
PROCEEDS OF THE REVOLVING  LOAN  (INCLUDING  ANY OF THE FOREGOING  ARISING FROM
THE  NEGLIGENCE  OF THE  INDEMNIFIED  PARTY),  EXCEPT TO THE EXTENT SUCH CLAIM,
DAMAGE, LOSS, LIABILITY,  COST, OR EXPENSE IS FOUND IN A FINAL,  NON-APPEALABLE
JUDGMENT  BY A COURT OF  COMPETENT  JURISDICTION  TO HAVE  RESULTED  FROM  SUCH
INDEMNIFIED  PARTY'S  GROSS  NEGLIGENCE OR WILLFUL  MISCONDUCT.  IN THE CASE OF
AN  INVESTIGATION,  LITIGATION  OR OTHER  PROCEEDING  TO WHICH THE INDEMNITY IN
THIS  SECTION 14.3  APPLIES,  SUCH INDEMNITY SHALL BE EFFECTIVE  WHETHER OR NOT
SUCH  INVESTIGATION,  LITIGATION OR  PROCEEDING  IS BROUGHT BY CREDIT  PARTIES,
ITS DIRECTORS,  SHAREHOLDERS OR CREDITORS OR AN INDEMNIFIED  PARTY OR ANY OTHER
PERSON OR ANY  INDEMNIFIED  PARTY IS  OTHERWISE A PARTY  THERETO AND WHETHER OR
NOT THE  TRANSACTIONS  CONTEMPLATED  HEREBY ARE  CONSUMMATED.  BORROWER  AGREES
NOT TO ASSERT ANY CLAIM AGAINST ANY AGENT,  ANY BANK, ANY OF THEIR  AFFILIATES,
OR ANY OF THEIR RESPECTIVE DIRECTORS,  OFFICERS, EMPLOYEES,  ATTORNEYS, AGENTS,
AND   ADVISERS,   ON  ANY  THEORY  OF   LIABILITY,   FOR   SPECIAL,   INDIRECT,
CONSEQUENTIAL,  OR PUNITIVE  DAMAGES  ARISING OUT OF OR  OTHERWISE  RELATING TO
THE LOAN PAPERS, ANY OF THE TRANSACTIONS  CONTEMPLATED  HEREIN OR THE ACTUAL OR
PROPOSED USE OF THE PROCEEDS OF THE REVOLVING LOAN.

<PAGE>

(c)   Without  prejudice  to the  survival of any other  agreement  of Borrower
hereunder,  the  agreements  and  obligations  of  Borrower  contained  in this
Section 14.3  shall survive the payment in full of the  Revolving  Loan and all
other amounts payable under this Agreement.

Section 14.4....Right of Set-off; Adjustments.

(a)   Upon the occurrence  and during the  continuance of any Event of Default,
each Bank (and each of its  Affiliates)  is hereby  authorized  at any time and
from time to time,  to the  fullest  extent  permitted  by Law,  to set off and
apply any and all  deposits  (general or special,  time or demand,  provisional
or final) at any time held and  other  indebtedness  at any time  owing by such
Bank (or any of its  Affiliates)  to or for the  credit or the  account  of any
Credit Party against any and all of the  Obligations,  irrespective  of whether
such Bank  shall  have made any demand  under  this  Agreement  or Note held by
such  and  although  such  obligations  may  be  unmatured.  Each  Bank  agrees
promptly  to notify  the  affected  Credit  Party  after any such  set-off  and
application  made by such Bank;  provided,  however,  that the  failure to give
such  notice  shall not affect the  validity of such  set-off and  application.
The  rights of each Bank  under  this  Section 14.4  are in  addition  to other
rights and remedies  (including,  without limitation,  other rights of set-off)
that such Bank may have.

(b)   If any Bank (a  "benefitted  Bank") shall at any time receive any payment
of all or part of the  amounts  owing to it, or  interest  thereon,  or receive
any collateral in respect thereof  (whether  voluntarily or  involuntarily,  by
set-off,  or otherwise),  in a greater  proportion  than any such payment to or
collateral  received  by any other  Bank,  if any,  in  respect  of such  other
Bank's amounts owing to it, or interest  thereon,  such  benefitted  Bank shall
purchase  for cash  from  the  other  Banks a  participating  interest  in such
portion of each such other Bank's  amounts  owing to it, or shall  provide such
other  Banks  with  the  benefits  of any  such  collateral,  or  the  proceeds
thereof,  as shall be  necessary  to cause  such  benefitted  Bank to share the
excess  payment or benefits of such  collateral  or proceeds  ratably with each
other  Bank;  provided,  however,  that if all or any  portion  of such  excess
payment or benefits is thereafter  recovered from such  benefitted  Bank,  such
purchase shall be rescinded,  and the purchase price and benefits returned,  to
the extent of such recovery,  but without  interest.  Borrower  agrees that any
Bank so purchasing a  participation  from a Bank pursuant to this  Section 14.4
may, to the fullest  extent  permitted  by Law,  exercise  all of its rights of
payment  (including  the right of set-off)  with respect to such  participation
as fully as if such Person  were the direct  creditor of Borrower in the amount
of such participation.

Section 14.5....Amendments and Waivers.  Any provision of this  Agreement,  the
Notes or any other Loan  Paper may be  amended or waived if, but only if,  such
amendment  or waiver is in  writing  and is signed  by  Borrower  and  Required
Banks  (and,  if the  rights or duties of any Agent are  affected  thereby,  by
such Agent);  provided that no such  amendment or waiver  shall,  unless signed
by  all  Banks,  (a) increase  the  Commitment  of  any  Bank,  (b) reduce  the
principal  of or rate of  interest on any  Revolving  Loan or any fees or other
amounts  payable  hereunder or for  termination of any  Commitment,  (c) change
the percentage of the Total  Commitment,  or the number of Banks which shall be
required  for Banks or any of them to take any action  under this  Section 14.5
or any other  provision  of this  Agreement,  (d) extend  the due date for,  or
forgive  any  principal,   interest,  fees  or  reimbursement  obligations  due
hereunder,  (e) release any material  guarantor or other  material party liable
for all or any part of the  Obligations  or release  any  material  part of the
collateral  for  the  Obligations  or any  part  thereof  other  than  releases
required  pursuant to sales of  collateral  which are  expressly  permitted  by
Section 9.5  hereof,  (f) amend or modify any of the  provisions  of Article IV
hereof or the  definitions  of any terms defined  therein,  or (g) increase any
Borrowing Base above the Borrowing Base then in effect.

Section 14.6....Survival.  All  representations,  warranties and covenants made
by  any  Credit  Party  herein  or  in  any  certificate  or  other  instrument
delivered by it or in its behalf under the Loan Papers shall be  considered  to
have been  relied  upon by Banks and shall  survive  the  delivery  to Banks of
such  Loan  Papers  or the  extension  of  the  Revolving  Loan  (or  any  part
thereof),  regardless of any  investigation  made by or on behalf of Banks. The
indemnity  provided in  Section 14.3(b)  herein shall  survive the repayment of
all  credit  advances  hereunder  and/or the  discharge  or release of any Lien
granted  hereunder or in any other Loan Paper,  contract or  agreement  between
Borrower or any other Credit Party and any Agent or any Bank.

Section 14.7....Limitation on Interest.  Regardless of any provision  contained
in the Loan  Papers,  Banks shall never be  entitled  to receive,  collect,  or
apply,  as interest on the Revolving  Loan, any amount in excess of the Maximum
Lawful Rate,  and in the event any Bank ever  receives,  collects or applies as

<PAGE>

interest  any  such  excess,  such  amount  which  would  be  deemed  excessive
interest  shall  be  deemed a  partial  prepayment  of  principal  and  treated
hereunder as such;  and if the  Revolving  Loan is paid in full,  any remaining
excess shall promptly be paid to Borrower.  In  determining  whether or not the
interest  paid or payable  under any specific  contingency  exceeds the Maximum
Lawful  Rate,   Borrower  and  Banks  shall,  to  the  extent  permitted  under
applicable Law,  (a) characterize any non-principal  payment as an expense, fee
or premium rather than as interest,  (b) exclude  voluntary prepayments and the
effects  thereof and  (c) amortize,  prorate,  allocate  and  spread,  in equal
parts,  the total amount of the  interest  throughout  the entire  contemplated
term of the  Notes,  so that  the  interest  rate is the  Maximum  Lawful  Rate
throughout  the  entire  term  of the  Notes;  provided,  however,  that if the
unpaid  principal  balance  thereof is paid and  performed in full prior to the
end of the full  contemplated  term thereof,  and if the interest  received for
the actual period of existence  thereof exceeds the Maximum Lawful Rate,  Banks
shall  refund to Borrower  the amount of such excess and, in such event,  Banks
shall not be  subject to any  penalties  provided  by any Laws for  contracting
for,  charging,  taking,  reserving  or  receiving  interest  in  excess of the
Maximum Lawful Rate.

Section 14.8....Invalid  Provisions.  If any  provision  of the Loan  Papers is
held to be illegal,  invalid,  or  unenforceable  under  present or future Laws
effective  during the term thereof,  such provision  shall be fully  severable,
the Loan Papers shall be construed  and enforced as if such  illegal,  invalid,
or  unenforceable  provision  had  never  comprised  a part  thereof,  and  the
remaining  provisions  thereof  shall remain in full force and effect and shall
not be affected by the illegal,  invalid, or unenforceable  provision or by its
severance  therefrom.  Furthermore,  in  lieu  of  such  illegal,  invalid,  or
unenforceable  provision  there shall be added  automatically  as a part of the
Loan  Papers a  provision  as similar  in terms to such  illegal,  invalid,  or
unenforceable   provision  as  may  be  possible   and  be  legal,   valid  and
enforceable.

Section 14.9....Waiver of Consumer  Credit  Laws.  Pursuant to  Chapter 346  of
the Texas  Finance  Code,  as amended,  Borrower  agrees that such  Chapter 346
shall not govern or in any manner apply to the Revolving Loan.

Section 14.10...Assignments and Participations.

(a)   Successors  and  Assigns.  The terms and  provisions  of the Loan  Papers
shall be  binding  upon and  inure to the  benefit  of  Borrower  and Banks and
their  respective   successors  and  assigns  permitted  hereby,   except  that
(i) Borrower  shall  not have the  right to assign  its  rights or  obligations
under  the  Loan  Papers  without  the  prior  written  consent  of each  Bank,
(ii) any   assignment   by  any   Bank   must  be  made  in   compliance   with
Section 14.10(c),  and  (iii) any  transfer  by  participation  must be made in
compliance  with  Section 14.10(b).  Any  attempted  assignment  or transfer by
any party not made in compliance with this  Section 14.10(a)  shall be null and
void,   unless  such   attempted   assignment  or  transfer  is  treated  as  a
participation  in  accordance  with  Section 14.10(b).   The  parties  to  this
Agreement  acknowledge that clause (ii) of this  Section 14.10(a)  relates only
to  absolute   assignments   and  this   Section 14.10(a)   does  not  prohibit
assignments  creating  security  interests,   including,   without  limitation,
(x) any  pledge or  assignment  by any Bank of all or any portion of its rights
under  this  Agreement  and any Note to a Federal  Reserve  Bank or (y) in  the
case  of a Bank  which  is a  Fund,  any  pledge  or  assignment  of all or any
portion  of its  rights  under this  Agreement  and any Note to its  trustee in
support of its  obligations  to its trustee;  provided,  however,  that no such
pledge  or  assignment   creating  a  security   interest   shall  release  the
transferor  Bank from its  obligations  hereunder  unless and until the parties
thereto   have    complied   with   the    provisions   of    Section 14.10(c).
Administrative  Agent may treat the  Person  which made any  Revolving  Loan or
which holds any Note as the owner  thereof for all purposes  hereof  unless and
until such Person  complies  with  Section 14.10(c);  provided,  however,  that
Administrative  Agent may in its  discretion  (but  shall not be  required  to)
follow  instructions  from the Person  which made any  Revolving  Loan or which
holds any Note to direct  payments  relating to such  Revolving Loan or Note to
another  Person.  Any assignee of the rights to any Revolving  Loan or any Note
agrees  by  acceptance  of such  assignment  to be bound by all the  terms  and
provisions  of the Loan  Papers.  Any  request,  authority  or  consent  of any
Person,  who at the time of making  such  request or giving such  authority  or
consent  is the owner of the rights to any  Revolving  Loan  (whether  or not a
Note has been issued in evidence  thereof),  shall be conclusive and binding on
any subsequent holder or assignee of the rights to such Revolving Loan.

(b)   Participations.

          (i) Any  Bank  may at any  time  sell to one or more  banks  or  other
     entities  ("Participants")  participating  interests in any Revolving  Loan
     owing to such Bank, any Note held by such Bank, any Commitment of such Bank

<PAGE>

     or any other  interest of such Bank under the Loan Papers.  In the event of
     any such sale by a Bank of participating  interests to a Participant,  such
     Bank's obligations under the Loan Papers shall remain unchanged,  such Bank
     shall  remain  solely  responsible  to the  other  parties  hereto  for the
     performance  of such  obligations,  such Bank shall remain the owner of its
     Revolving Loans and the holder of any Note issued to it in evidence thereof
     for all  purposes  under the Loan Papers,  all amounts  payable by Borrower
     under this Agreement  shall be determined as if such Bank had not sold such
     participating  interests,  and  Borrower  and  Administrative  Agent  shall
     continue to deal solely and directly with such Bank in connection with such
     Bank's rights and obligations under the Loan Papers.

          (ii) Each Bank shall  retain the sole right to  approve,  without  the
     consent of any  Participant,  any amendment,  modification or waiver of any
     provision  of the Loan Papers  other than any  amendment,  modification  or
     waiver  with  respect to any  Revolving  Loan or  Commitment  in which such
     Participant has an interest which would require consent of all of the Banks
     pursuant to the terms of Section 14.5 or of any other Loan Paper.

          (iii) Borrower  agrees that each  Participant  shall be deemed to have
     the  right  of  setoff   provided  in   Section 14.4   in  respect  of  its
     participating  interest in amounts  owing under the Loan Papers to the same
     extent as if the amount of its  participating  interest were owing directly
     to it as a Bank  under the Loan  Papers;  provided,  that  each Bank  shall
     retain the right of setoff  provided in  Section 14.4  with  respect to the
     amount of participating interests sold to each Participant.  Banks agree to
     share with each Participant,  and each Participant, by exercising the right
     of setoff  provided in  Section 14.4,  agrees to share with each Bank,  any
     amount  received  pursuant  to the  exercise  of its right of setoff,  such
     amounts to be shared in accordance with Section 14.4 as if each Participant
     were a Bank.  Borrower  further  agrees  that  each  Participant  shall  be
     entitled to the yield  protection  provisions  contained in Article XIII to
     the same  extent  as if it were a Bank and had  acquired  its  interest  by
     assignment pursuant to Section 14.10(c);  provided,  that (A) a Participant
     shall not be entitled to receive any  greater  payment  under  Article XIII
     than the Bank who sold the participating interest to such Participant would
     have received had it retained such interest for its own account, unless the
     sale of such  interest to such  Participant  is made with the prior written
     consent of Borrower,  and (B) any  Participant not  incorporated  under the
     laws of the United States of America or any State thereof  agrees to comply
     with the  provisions  of  Section 13.6  to the same  extent as if it were a
     Bank.

(c)   Assignments.

          (i) Any  Bank  may at any time  assign  to one or more  banks or other
     entities ("Purchasers") all or any part of its rights and obligations under
     the Loan Papers.  The parties to such assignment  shall execute and deliver
     an Assignment  and Acceptance  Agreement  (herein so called) which shall be
     substantially  in the form of  Exhibit J  or in such  other  form as may be
     agreed to by the parties  thereto.  Each such  assignment with respect to a
     Purchaser which is not a Bank or an Affiliate of a Bank or an Approved Fund
     shall either be in an amount equal to the entire applicable  Commitment and
     Revolving  Loans of the  assigning  Bank or (unless  each of  Borrower  and
     Administrative Agent otherwise consents) be in an aggregate amount not less
     than  $5,000,000.  The  amount  of the  assignment  shall  be  based on the
     Commitment  or  outstanding  Revolving  Loans (if the  Commitment  has been
     terminated)  subject to the  assignment,  determined as of the date of such
     assignment  or as of the  "Effective  Date,"  if the  "Effective  Date"  is
     specified in the Assignment and Acceptance Agreement.

          (ii) The consent of Borrower  shall be required prior to an assignment
     becoming effective unless Purchaser is a Bank, an Affiliate of a Bank or an
     Approved Fund,  provided that the consent of Borrower shall not be required
     if a Default has occurred and is continuing.  The consent of Administrative
     Agent shall be required prior to an assignment  becoming  effective  unless
     the  Purchaser is a Bank, an Affiliate of a Bank or an Approved  Fund.  The
     consent of Letter of Credit Issuer shall be required prior to an assignment
     of a Commitment becoming effective unless Purchaser is a Bank, an Affiliate
     of  a  Bank  or  an  Approved  Fund.   Any  consent   required  under  this
     Section 14.10(c)(ii) shall not be unreasonably withheld or delayed.

          (iii) Upon (A) delivery to  Administrative  Agent of an Assignment and
     Acceptance   Agreement,    together   with   any   consents   required   by
     Section 14.10(c)(i)   and  (ii),  and   (B) payment  of  a  $3,500  fee  to

<PAGE>

     Administrative  Agent for processing  such  assignment  (unless such fee is
     waived by Administrative  Agent), such assignment shall become effective on
     the effective date specified in such  Assignment and Acceptance  Agreement.
     On and after the effective date of such  assignment,  such Purchaser  shall
     for all purposes be a Bank party to this Agreement and any other Loan Paper
     executed  by or on  behalf  of Banks  and  shall  have all the  rights  and
     obligations  of a Bank under the Loan  Papers,  to the same extent as if it
     were an original party thereto,  and the transferor  Bank shall be released
     with  respect  to the  Commitment  and  Revolving  Loans  assigned  to such
     Purchaser  without  any  further  consent or action by  Borrower,  Banks or
     Administrative  Agent.  In the case of an  assignment  covering  all of the
     assigning  Bank's rights and obligations  under this  Agreement,  such Bank
     shall cease to be a Bank hereunder but shall continue to be entitled to the
     benefits of, and subject to, those  provisions  of this  Agreement  and the
     other Loan Papers which survive  payment of the Obligations and termination
     of the applicable agreement. Any assignment or transfer by a Bank of rights
     or  obligations  under  this  Agreement  that  does not  comply  with  this
     Section 14.10(c)  shall be treated for purposes of this Agreement as a sale
     by  such  Bank  of a  participation  in  such  rights  and  obligations  in
     accordance with  Section 14.10(b).  Upon the consummation of any assignment
     to a Purchaser  pursuant to this  Section 14.10(c),  the  transferor  Bank,
     Administrative  Agent and Borrower shall make  appropriate  arrangements so
     that new Notes or, as  appropriate,  replacement  Notes are  issued to such
     transferor Bank and new Notes or, as appropriate,  replacement  Notes,  are
     issued to such  Purchaser,  in each case in  principal  amounts  reflecting
     their respective Commitments, as adjusted pursuant to such assignment.

(iv)  Administrative  Agent,  acting  solely  for this  purpose  as an agent of
      Borrower,  shall  maintain at one of its offices in Chicago,  Illinois or
      Dallas,  Texas  a  copy  of  each  Assignment  and  Acceptance  Agreement
      delivered  to it and a  register  for the  recordation  of the  names and
      addresses of the Banks, and the Commitments of, and principal  amounts of
      the  Revolving  Loans  owing to, each Bank  pursuant to the terms  hereof
      from time to time (the  "Register").  The entries in the  Register  shall
      be  conclusive,  and Borrower,  Administrative  Agent and Banks may treat
      each Person whose name is recorded in the Register  pursuant to the terms
      hereof  as  a  Bank  hereunder  for  all  purposes  of  this   Agreement,
      notwithstanding  notice to the contrary.  The Register shall be available
      for inspection by Borrower and any Bank, at any reasonable  time and from
      time to time upon reasonable prior notice.

(d)   Dissemination of Information.  Borrower  authorizes each Bank to disclose
to any  Participant  or Purchaser or any other Person  acquiring an interest in
the Loan Papers by operation of law (each a  "Transferee")  and any prospective
Transferee  any and all  information in such Bank's  possession  concerning the
creditworthiness   of  Borrower  and  its  Subsidiaries,   including,   without
limitation,  any  information  contained in any  financial  reports;  provided,
that,  each  Transferee  and  prospective  Transferee  agrees  to be  bound  by
Section 14.17 of this Agreement.

(e)   Tax  Treatment.  If any interest in any Loan Paper is  transferred to any
Transferee  which is not  incorporated  under the laws of the United  States or
any  State  thereof,   the  transferor   Bank  shall  cause  such   Transferee,
concurrently  with the  effectiveness  of such  transfer,  to  comply  with the
provisions of Section 13.6(d).

Section 14.11...TEXAS  LAW.  THIS  AGREEMENT,  EACH  NOTE  AND THE  OTHER  LOAN
PAPERS  HAVE BEEN  EXECUTED  AND  DELIVERED  IN THE STATE OF TEXAS AND SHALL BE
CONSTRUED  IN  ACCORDANCE  WITH AND  GOVERNED BY THE LAWS OF THE STATE OF TEXAS
AND THE LAWS OF THE UNITED  STATES OF  AMERICA,  EXCEPT TO THE EXTENT  THAT THE
LAWS  OF ANY  STATE  IN  WHICH  ANY  PROPERTY  INTENDED  AS  SECURITY  FOR  THE
OBLIGATIONS  IS LOCATED  NECESSARILY  GOVERN (A) THE PERFECTION AND PRIORITY OF
THE  LIENS IN FAVOR OF  ADMINISTRATIVE  AGENT AND BANKS  WITH  RESPECT  TO SUCH
PROPERTY,  AND (B) THE EXERCISE OF ANY REMEDIES  (INCLUDING  FORECLOSURE)  WITH
RESPECT TO SUCH PROPERTY.

Section 14.12...Consent to Jurisdiction; Waiver of Immunities.

(a)   Borrower  hereby  irrevocably  submits to the  jurisdiction  of any Texas
State or Federal  court  sitting  in the  Northern  District  of Texas over any
action or  proceeding  arising  out of or  relating  to this  Agreement  or any
other Loan Papers,  and Borrower hereby  irrevocably  agrees that all claims in
respect  of such  action  or  proceeding  may be heard and  determined  in such
Texas  State or Federal  court.  Borrower  irrevocably  consents to the service

<PAGE>

of any and all  process in any such  action or  proceeding  by the  delivery by
Federal Express or other nationally  recognized  overnight  delivery service of
copies  of  such   process  to  such  Person  at  its  address   specified   in
Section 14.1  and to Foley &  Lardner,  777 East Wisconsin  Avenue,  Milwaukee,
Wisconsin  53207,  Attn:  Emory Ireland.  Borrower agrees that a final judgment
on any such action or  proceeding  shall be  conclusive  and may be enforced in
other  jurisdictions  by suit on the judgment or in any other  manner  provided
by Law.

(b)   Nothing in this  Section 14.12  shall  affect any right of Banks to serve
legal  process in any other manner  permitted by Law or affect the right of any
Bank to bring any  action  or  proceeding  against  any  Credit  Party or their
properties in the courts of any other jurisdictions.

(c)   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,  execution or  otherwise)  with  respect to itself or its  property,
such  Person  hereby  irrevocably  waives  such  immunity  in  respect  of  its
obligations under this Agreement and the other Loan Papers.

Section 14.13...Counterparts;  Effectiveness.  This  Agreement may be signed in
any number of counterparts,  each of which shall be an original,  with the same
effect  as  if  the   signatures   thereto   and  hereto  were  upon  the  same
instrument.  Subject  to the  terms  and  conditions  herein  set  forth,  this
Agreement  shall  become  effective  when   Administrative   Agent  shall  have
received  counterparts  hereof  signed by all of the parties  hereto or, in the
case of any  Bank as to which  an  executed  counterpart  shall  not have  been
received,  Administrative  Agent  shall  have  received  telegraphic  or  other
written  confirmation  from such Bank of execution of a  counterpart  hereof by
such Bank.

Section 14.14...No  Third  Party  Beneficiaries.   Except  for  the  provisions
hereof  inuring to the benefit of Agents not a party to this  Agreement,  it is
expressly  intended  that there  shall be no third party  beneficiaries  of the
covenants,  agreements,  representations  or warranties  herein contained other
than third party beneficiaries permitted pursuant to Section 14.10.

Section 14.15...COMPLETE  AGREEMENT.  THIS  AGREEMENT AND THE OTHER LOAN PAPERS
COLLECTIVELY  REPRESENT THE FINAL AGREEMENT BY AND AMONG BANKS,  AGENTS AND THE
CREDIT   PARTIES   AND  MAY  NOT  BE   CONTRADICTED   BY   EVIDENCE  OF  PRIOR,
CONTEMPORANEOUS,  OR  SUBSEQUENT  ORAL  AGREEMENTS  OF BANKS,  AGENTS,  AND THE
CREDIT  PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS  AMONG BANKS,  AGENTS,
AND THE CREDIT PARTIES.

Section 14.16...WAIVER  OF  JURY  TRIAL.  BORROWER,  ADMINISTRATIVE  AGENT  AND
BANKS HEREBY IRREVOCABLY AND  UNCONDITIONALLY  WAIVE TRIAL BY JURY IN ANY LEGAL
ACTION OR  PROCEEDING  RELATING  TO THIS  AGREEMENT  OR ANY OF THE  OTHER  LOAN
PAPERS AND FOR ANY COUNTERCLAIM THEREIN.

Section 14.17...Confidentiality.  Administrative  Agent and each Bank (each,  a
"Lending Party") agrees to keep confidential any information  furnished or made
available  to  it by  Borrower  pursuant  to  this  Agreement  that  is  marked
confidential;  provided,  that nothing  herein shall  prevent any Lending Party
from  disclosing  such  information  (a) to  any  other  Lending  Party  or any
Affiliate of any Lending Party, or any officer,  director,  employee, agent, or
advisor of any Lending  Party or any  Affiliate  of any Lending  Party,  (b) to
any other Person if reasonably  incidental to the  administration of the credit
facility  provided  herein,  (c) as  required by any Law,  rule or  regulation,
(d) upon the order of any court or administrative agency,  (e) upon the request
or demand  of any  regulatory  agency  or  authority,  (f) that  is or  becomes
available to the public or that is or becomes  available  to any Lending  Party
other than as a result of a  disclosure  by any  Lending  Party  prohibited  by
this  Agreement,  (g) in  connection  with any litigation to which such Lending
Party or any of its affiliates  may be a party  relating to the  Obligations or
any Loan Paper,  (h) to the extent  necessary in  connection  with the exercise
of any remedy  under this  Agreement or any other Loan Paper,  and  (i) subject
to provisions  substantially  similar to those contained in this Section 14.17,
to any actual or proposed participant or assignee.

      IN WITNESS  WHEREOF,  the parties hereto have caused this Agreement to be
duly  executed  by their  respective  Authorized  Officers  on the day and year
first above written.


<PAGE>

                          [signature pages to follow]


<PAGE>

                               SIGNATURE PAGE TO
                               CREDIT AGREEMENT
                                 BY AND AMONG
                  WHITING PETROLEUM CORPORATION, AS BORROWER,
                    BANK ONE, NA, AS ADMINISTRATIVE AGENT,
                     THE OTHER AGENTS A PARTY THERETO, AND
                       THE FINANCIAL INSTITUTIONS LISTED
                       ON SCHEDULE 1.1 THERETO, AS BANKS



BORROWER:
---------

WHITING PETROLEUM CORPORATION,
a Delaware corporation

By:     /s/ James J. Volker
        ---------------------------
Name:   James J. Volker
        -----------------------
Title:  CEO
        -----------

Address for Notice:

Mile High Center
1700 Broadway
Suite 2300
Denver, Colorado  80290-2301
Attn:  James J. Volker
Fax No. (303) 390-5594




<PAGE>

                               SIGNATURE PAGE TO
                               CREDIT AGREEMENT
                                 BY AND AMONG
                  WHITING PETROLEUM CORPORATION, AS BORROWER,
                    BANK ONE, NA, AS ADMINISTRATIVE AGENT,
                     THE OTHER AGENTS A PARTY THERETO, AND
                       THE FINANCIAL INSTITUTIONS LISTED
                       ON SCHEDULE 1.1 THERETO, AS BANKS


ADMINISTRATIVE AGENT:
---------------------

BANK ONE, NA,
as Administrative Agent


By:   /s/ J. Scott Fowler
      -------------------------
        J. Scott Fowler,
        Director, Capital Markets




BANK:
-----

BANK ONE, NA


By:   /s/ J. Scott Fowler
      -------------------------------
        J. Scott Fowler,
        Director, Capital Markets



<PAGE>

                              SIGNATURE PAGE TO
                               CREDIT AGREEMENT
                                 BY AND AMONG
                  WHITING PETROLEUM CORPORATION, AS BORROWER,
                    BANK ONE, NA, AS ADMINISTRATIVE AGENT,
                     THE OTHER AGENTS A PARTY THERETO, AND
                       THE FINANCIAL INSTITUTIONS LISTED
                       ON SCHEDULE 1.1 THERETO, AS BANKS




SYNDICATION AGENT:
------------------

WACHOVIA BANK, NATIONAL ASSOCIATION,
as Syndication Agent


By:    /s/ Philip Trinder
       ------------------------
Name:  Philip Trinder
       --------------------
Title: Vice President
       --------------------



BANK:

WACHOVIA BANK, NATIONAL ASSOCIATION


By:    /s/ Philip Trinder
       ------------------------
Name:  Philip Trinder
       --------------------
Title: Vice President
       --------------------



<PAGE>

                              SIGNATURE PAGE TO
                               CREDIT AGREEMENT
                                 BY AND AMONG
                  WHITING PETROLEUM CORPORATION, AS BORROWER,
                    BANK ONE, NA, AS ADMINISTRATIVE AGENT,
                     THE OTHER AGENTS A PARTY THERETO, AND
                       THE FINANCIAL INSTITUTIONS LISTED
                       ON SCHEDULE 1.1 THERETO, AS BANKS

                                 SCHEDULE 1.1
                                 ------------

                            Financial Institutions

<TABLE>
<CAPTION>
======================================== ========================= ===========================
Banks                                       Commitment Amount        Commitment Percentage
---------------------------------------- ------------------------- ---------------------------
<S>                                                <C>                         <C>
Bank One, NA                                   $192,500,000                  55.00%
---------------------------------------- ------------------------- ---------------------------
Wachovia Bank, National Association            $157,500,000                  45.00%
---------------------------------------- ------------------------- ---------------------------
Totals:                                        $350,000,000                 100.00%
======================================== ========================= ===========================

</TABLE>


<TABLE>
<CAPTION>
================================== =============================== =============================== ===============================
Banks                                 Domestic Lending Office        Eurodollar Lending Office           Address for Notice
---------------------------------- ------------------------------- ------------------------------- -------------------------------
<S>                                            <C>                            <C>                             <C>
Bank One, NA                       1717 Main Street                1717 Main Street                1717 Main Street
                                   4th Floor                       4th Floor                       4th Floor
                                   Mail Code TX1-2448              Mail Code TX1-2448              Mail Code TX1-2448
                                   Dallas, Texas 75201             Dallas, Texas 75201             Dallas, Texas 75201
                                   Attn:  J. Scott Fowler          Attn:  J. Scott Fowler          Attn:  J. Scott Fowler
                                   Tel. No. (214) 290-2162         Tel. No. (214) 290-2162         Tel. No. (214) 290-2162
                                   Fax No. (214) 290-2332          Fax No. (214) 290-2332          Fax No. (214) 290-2332
---------------------------------- ------------------------------- ------------------------------- -------------------------------
Wachovia Bank, National            1001 Fannin, Suite 2255         1001 Fannin, Suite 2255         1001 Fannin, Suite 2255
Association                        Houston, Texas  77002           Houston, Texas  77002           Houston, Texas  77002
                                   Attn: Debbie Blank              Attn: Debbie Blank              Attn: Philip Trinder
                                   Tel. No. (713) 346-2727         Tel. No. (713) 346-2727         Tel. No. (713) 346-2707
                                   Fax No. (713) 650-6354          Fax No. (713) 650-6354          Fax No. (713) 650-6354
---------------------------------- ------------------------------- ------------------------------- -------------------------------

</TABLE>


Administrative Agent - Address:
1717 Main Street, 4th Floor
Mail Code TX1-2448
Dallas, Texas 75201
Attn: J. Scott Fowler
Tel. No. (214) 290-2162
Fax No. (214) 290-2332