Execution Copy


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                              AMENDED AND RESTATED
                                CREDIT AGREEMENT


                                   dated as of
                                December 1, 1998

                                      AMONG

                      KINDER MORGAN ENERGY PARTNERS, L.P.,
                                 as the Company


                        KINDER MORGAN OPERATING L.P. "B",
                           as the Subsidiary Borrower


                           THE SUBSIDIARY GUARANTORS,


                            THE LENDERS PARTY HERETO,




                                       and


                           FIRST UNION NATIONAL BANK,
        as the Arranger, the Syndication Agent, the Administrative Agent,
                    the Issuing Bank and the Swingline Lender







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<PAGE>






                               TABLE OF CONTENTS

                                                                            Page
                                                                            ----


PRELIMINARY STATEMENTS.........................................................1


ARTICLE I.     Definitions.....................................................3

   Section  1.01    Defined Terms..............................................3
   Section  1.02    Classification of Loans and Borrowings....................28
   Section  1.03    Accounting Terms; Changes in GAAP.........................28
   Section  1.04    Interpretation............................................28

ARTICLE II.    The Credits....................................................29

   Section  2.01    Commitments...............................................29
   Section  2.02    Loans and Borrowings......................................30
   Section  2.03    Requests for Revolving Borrowings.........................30
   Section  2.04    Swingline Loans...........................................31
   Section  2.05    Telephonic Notices........................................32
   Section  2.06    Letters of Credit.........................................32
   Section  2.07    Funding of Borrowings.....................................37
   Section  2.08    Interest Elections........................................38
   Section  2.09    Termination and Reduction of Commitments..................39
   Section  2.10    Repayment of Loans; Evidence of Debt......................40
   Section  2.11    Prepayment of Loans.......................................41
   Section  2.12    Fees......................................................42
   Section  2.13    Interest..................................................43
   Section  2.14    Alternate Rate of Interest................................44
   Section  2.15    Increased Costs...........................................44
   Section  2.16    Break Funding Payments....................................45
   Section  2.17    Taxes.....................................................46
   Section  2.18    Payments Generally; Pro Rata Treatment; Sharing
                    of Set-offs...............................................47
   Section  2.19    Mitigation Obligations; Replacement of Lenders............48
   Section  2.20    Extensions of Maturity Date and Reduction Dates;
                    Removal of Lenders........................................49

ARTICLE III.   Conditions Precedent...........................................51

   Section  3.01    Conditions Precedent to the Initial Credit Event..........51
   Section  3.02    Conditions Precedent to All Credit Events.................53
   Section  3.03    Conditions Precedent to the Initial Credit Event
                    Made on or After any Increase in Availability.............53
   Section  3.04    Conditions Precedent to Conversions.......................53
   Section  3.05    Delivery of Documents.....................................54


                                      -i-
<PAGE>



ARTICLE IV.    Representations and Warranties.................................54

   Section  4.01    Organization and Qualification............................54
   Section  4.02    Authorization, Validity, Etc..............................54
   Section  4.03    Governmental Consents, Etc................................55
   Section  4.04    Conflicting or Adverse Agreements or Restrictions.........55
   Section  4.05    Properties................................................55
   Section  4.06    Litigation and Environmental Matters......................56
   Section  4.07    Financial Statements......................................56
   Section  4.08    Disclosure................................................56
   Section  4.09    Investment Company Act....................................57
   Section  4.10    Public Utility Holding Company Act........................57
   Section  4.11    ERISA.....................................................57
   Section  4.12    Tax Returns and Payments..................................57
   Section  4.13    Compliance with Laws and Agreements.......................58
   Section  4.14    Purpose of Loans..........................................58
   Section  4.15    No Intent to Hinder, Delay or Defraud.....................58
   Section  4.16    Year 2000.................................................58

ARTICLE V.     Affirmative Covenants..........................................59

   Section  5.01    Financial Statements and Other Information................59
   Section  5.02    Litigation................................................61
   Section  5.03    Existence, Conduct of Business............................61
   Section  5.04    Payment of Obligations....................................62
   Section  5.05    Maintenance of Properties; Insurance......................62
   Section  5.06    Books and Records; Inspection Rights......................62
   Section  5.07    Compliance with Laws......................................62
   Section  5.08    Use of Proceeds and Letters of Credit.....................62
   Section  5.09    Further Assurances........................................62
   Section  5.10    Performance of Obligations................................63
   Section  5.11    Lines of Business.........................................63
   Section  5.12    Intercompany Notes........................................63

ARTICLE VI.    Negative Covenants.............................................63

   Section  6.01    Indebtedness..............................................63
   Section  6.02    Liens.....................................................64
   Section  6.03    Fundamental Changes.......................................65
   Section  6.04    Investments, Loans, Advances, Guarantees and
                    Acquisitions; Hedging Agreements..........................66
   Section  6.05    Restricted Payments.......................................67
   Section  6.06    Transactions with Affiliates..............................67
   Section  6.07    Restrictive Agreements....................................68
   Section  6.08    Sale of Assets............................................68
   Section  6.09    Financial Covenants.......................................68
   Section  6.10    Amendments to Certain Agreements..........................69


                                      -ii-
<PAGE>



ARTICLE VII.   Events of Default..............................................69

   Section  7.01    Events of Default and Remedies............................69
   Section  7.02    Other Remedies............................................71
   Section  7.03    Application of Moneys During Continuation of
                    Event of Default..........................................72

ARTICLE VIII.  The Administrative Agent.......................................72

   Section  8.01    Appointment, Powers and Immunities........................72
   Section  8.02    Reliance by Administrative Agent..........................73
   Section  8.03    Defaults; Events of Default...............................73
   Section  8.04    Rights as a Lender........................................73
   Section  8.05    Indemnification...........................................74
   Section  8.06    Non-Reliance on Agents and other Lenders..................74
   Section  8.07    Action by Administrative Agent............................75
   Section  8.08    Resignation or Removal of Administrative Agent............75
   Section  8.09    Duties of Syndication Agent...............................76

ARTICLE IX.    Company Guaranty...............................................76

   Section  9.01    Company Guaranty..........................................76
   Section  9.02    Continuing Guaranty.......................................76
   Section  9.03    Effect of Debtor Relief Laws..............................79
   Section  9.04    Waiver....................................................80
   Section  9.05    Full Force and Effect.....................................80

ARTICLE X.     Subsidiary Guarantors Guaranty..............................,..80

   Section  10.01   Subsidiary Guarantors Guaranty............................80
   Section  10.02   Continuing Guaranty.......................................81
   Section  10.03   Effect of Debtor Relief Laws..............................84
   Section  10.04   General Limitation on Borrower Guaranteed Obligations.....84
   Section  10.05   Rights of Contribution....................................84
   Section  10.06   Subrogation...............................................85
   Section  10.07   Subordination.............................................85
   Section  10.08   Waiver....................................................86
   Section  10.09   Full Force and Effect.....................................86

ARTICLE XI.    Miscellaneous..................................................87

   Section  11.01   Notices, Etc..............................................87
   Section  11.02   Waivers; Amendments.......................................88
   Section  11.03   Payment of Expenses, Indemnities, etc.....................89
   Section  11.04   Successors and Assigns....................................92
   Section  11.05   Assignments and Participations............................92
   Section  11.06   Survival; Reinstatement...................................94
   Section  11.07   Counterparts; Integration; Effectiveness..................95
   Section  11.08   Severability..............................................95
   Section  11.09   Right of Setoff...........................................95

                                     -iii-
<PAGE>


   Section  11.10   Governing Law; Jurisdiction; Consent to Service
                    of Process................................................95
   Section  11.11   Waiver of Jury Trial......................................97
   Section  11.12   Confidentiality...........................................97
   Section  11.13   Interest Rate Limitation..................................97
   Section  11.14   Retiring Banks; Release...................................98
   Section  11.15   Exculpation Provisions....................................98


SCHEDULES:
----------

Schedule 1.01A  Existing Indebtedness
Schedule 4.01   Existing Subsidiaries
Schedule 4.06   Disclosed Matters
Schedule 6.02   Existing Liens
Schedule 6.07   Existing Restrictions

EXHIBITS:
---------

Exhibit 1.01A -- Form of Administrative Questionnaire
Exhibit 1.01B -- Form of Assignment and Acceptance
Exhibit 1.01C -- Existing Letter of Credit
Exhibit 2.03 --  Form of Borrowing Request
Exhibit 2.06 --  Form of Letter of Credit Request
Exhibit 2.07 --  Form of Notice of Account Designation
Exhibit 2.08 --  Form of Interest Election Request
Exhibit 2.10 --  Form of (Revolving/Swingline) Note
Exhibit 2.11 --  Form of Notice of Prepayment
Exhibit 5.01 --  Form of Compliance Certificate
Exhibit 6.04 --  Form of Subsidiary Guarantor Counterpart


                                      -iv-
<PAGE>






                              AMENDED AND RESTATED
                                CREDIT AGREEMENT


           THIS AMENDED AND RESTATED CREDIT  AGREEMENT,  dated as of December 1,
1998 (this "Agreement") is among:

           (a)       Kinder Morgan Energy  Partners,  L.P., a Delaware  limited
partnership (the "Company");

           (b)       Kinder  Morgan  Operating  L.P.  "B", a  Delaware  limited
partnership (the "Subsidiary Borrower");

           (c) Kinder Morgan Operating L.P. "A", a Delaware limited  partnership
("OLP `A'");  Kinder Morgan Operating L.P. "C", a Delaware  limited  partnership
("OLP `C'");  Kinder Morgan Operating L.P. "D", a Delaware  limited  partnership
("OLP  `D'");  Kinder  Morgan  Natural  Gas  Liquids  Corporation,   a  Delaware
corporation  ("KMNGL");  Kinder  Morgan CO2 LLC, a  Delaware  limited  liability
company  ("KMCO2");  and  Kinder  Morgan  Bulk  Terminals,   Inc.,  a  Louisiana
corporation  ("KMBT", and together with OLP "A", OLP "C", OLP "D", KMNGL, KMCO2,
the Subsidiary Borrower in its capacity as a guarantor pursuant to Article X and
each other Person that becomes a Subsidiary  Guarantor pursuant to Section 6.04,
collectively, the "Subsidiary Guarantors");

           (d)  the  banks  and  other  financial  institutions  listed  on  the
signature  pages  hereof under the caption  "Retiring  Lenders"  (the  "Retiring
Lenders" and together with the Continuing Lenders (defined below)  collectively,
the "Existing Lenders");

           (e)  the  banks  and  other  financial  institutions  listed  on  the
signature pages hereof under the caption "Lenders" (the "Continuing Lenders" and
together with each other Person that becomes a Lender pursuant to Section 11.05,
collectively, the "Lenders"); and

           (f) First  Union  National  Bank,  a  national  banking  association,
individually as a Lender,  as Arranger,  syndication agent for the other Lenders
(in such capacity,  the "Syndication Agent") and as administrative agent for the
Lenders (in such latter  capacity  together  with any other  Person that becomes
Administrative Agent pursuant to Section 8.08, the "Administrative Agent").


                             PRELIMINARY STATEMENTS

           (A) The Company, the Subsidiary Borrower,  the Subsidiary  Guarantors
(other  than KMBT),  the  Existing  Lenders,  The Fuji Bank,  Limited,  New York
Branch, (successor to The Fuji Bank, Limited (Houston Agency) ("Fuji"),  Goldman
Sachs Credit Partners L.P., as the  syndication  agent,  and the  Administrative
Agent are  parties to a credit  agreement  dated as of  February  17,  1998 (the
"Existing  Credit  Agreement"),  which  is  secured  by the  Collateral  defined
therein.


<PAGE>



           (B) Fuji has  assigned  100% of its  Commitment  and the  Obligations
owing  to it to  First  Union  National  Bank,  and by  its  execution  of  this
Agreement,  on the Effective Date Den Norske Bank ASA and The Fuji Bank, Limited
(Houston  Agency) is assigning 100% of its Commitment and the Obligations  owing
to it to First Union National Bank, and Bank One,  Texas,  NA, is assigning 100%
of its Commitment and the Obligations  owing to it to The First National Bank of
Chicago.

           (C)  Pursuant  to the  Existing  Credit  Agreement  (a)  the  Company
borrowed from the Existing  Lenders and advanced to OLP "A" funds  sufficient to
enable  it to (i)  repay in full  the  principal  of and  accrued  interest  and
make-whole  premium on  $110,000,000  of its 8.79% First Mortgage Notes due June
30, 2007 and issued  pursuant to a Note Agreement dated as of July 30, 1992 (the
"OLP `A' First  Mortgage  Notes"),  and (ii) repay in full the  principal of and
accrued interest on all loans and other amounts  outstanding  under that certain
Loan Agreement dated effective May 24, 1995 by and between OLP "A" and Bank One,
Texas,  NA, as amended to February  17, 1998 (the "OLP `A' Loan  Agreement"  and
together  with  the OLP "A"  First  Mortgage  Notes  collectively,  the "OLP `A'
Refinancing");  (b) (i) the  Company  borrowed  from the  Existing  Lenders  and
advanced to the Subsidiary  Borrower  funds  sufficient to enable it to repay in
full the  principal  of and  accrued  interest  on all loans  and other  amounts
outstanding  under that certain Credit  Agreement  dated as of February 14, 1997
among the  Subsidiary  Borrower,  the  lenders  party  thereto  and First  Union
National  Bank,  as agent for such  lenders,  as amended  February 17, 1998 (the
"Subsidiary   Borrower  Credit   Agreement"),   and  (ii)  the  account  party's
reimbursement  obligations  in respect  of that  certain  irrevocable  letter of
credit No.  S113181  issued by First Union National Bank for the benefit of Bank
One, Texas,  NA, as trustee,  for the account of the Subsidiary  Borrower in the
face  amount  of  $24,128,548  and in the  form of  Exhibit  1.01C  hereto  (the
"Existing  Letter of Credit")  became an obligation of the Subsidiary  Borrower,
and was  deemed  to have been  issued,  under the  Existing  Agreement;  (c) the
Company  borrowed  from the Existing  Lenders and advanced to OLP "A" the sum of
$25,000,000  to enable it to  contribute  such amount  together  with its carbon
dioxide  pipeline system located in West Texas (the "Central Basin Pipeline") to
Shell CO2 Company,  Ltd., a Texas limited partnership ("Shell CO2"), in exchange
for  a  20%  limited  partner  interest  in  that  partnership  (the  "Shell  JV
Investment"); (d) the Company borrowed from the Existing Lenders and advanced to
OLP "D" the sum of  approximately  $90,000,000 to (i) enable OLP "D" to purchase
the entire general partner interest in Santa Fe Pacific Pipeline Partners, L.P.,
a Delaware limited partnership ("SFMLP"),  (ii) complete the purchase from SFMLP
of its limited  partner  interest in SFPP, and (iii)  complete the  transactions
contemplated in Section 1.3(a) and (b) of the Purchase Agreement,  including the
contribution to OLP "D" of 100% of the Company's  partnership  interest in SFPP,
L.P., a Delaware limited  partnership  ("SFPP") (which  currently  consists of a
99.5%  general  partner   interest  in  SFPP)   (collectively,   the  "Santa  Fe
Acquisition");  and (e) the Company  obtained working capital to be used for its
other partnership purposes.

           (D) The parties hereto wish to amend and restate the Existing  Credit
Agreement  in  its  entirety,  inter  alia,  to (1)  release  the  Liens  on the
Collateral  created by the Security Documents (as defined in the Existing Credit
Agreement) and (2) add KMBT as a Subsidiary Guarantor.

                                      -2-
<PAGE>



           NOW, THEREFORE, the parties hereto agree as follows:

                                   ARTICLE I.

                                   Definitions
                                   -----------

           SECTION  1.01  Defined  Terms.  As  used  in  this  Agreement,   the
following terms have the meanings specified below:

      "ABR", when used in reference to any Loan or Borrowing,  refers to whether
such Loan, or the Loans  comprising  such Borrowing,  are bearing  interest at a
rate determined by reference to the Alternate Base Rate.

      "Administrative  Agent" has the meaning  specified in the introduction to
this Agreement.

      "Administrative  Questionnaire" means an Administrative  Questionnaire in
the form of Exhibit 1.01A.

      "Affiliate" of any Person shall mean (i) any Person directly or indirectly
controlled by, controlling or under common control with such first Person,  (ii)
any  director  or officer of such first  Person or of any Person  referred to in
clause (i) above and (iii) if any  Person in clause (i) above is an  individual,
any member of the immediate  family  (including  parents,  siblings,  spouse and
children) of such individual and any trust whose  principal  beneficiary is such
individual or one or more members of such immediate family and any Person who is
controlled  by any such member or trust.  For purposes of this  definition,  any
Person which owns directly or indirectly  25% or more of the  securities  having
ordinary voting power for the election of directors or other governing body of a
corporation or 25% or more of the  partnership or other  ownership  interests of
any other Person (other than as a limited  partner of such other Person) will be
deemed to "control" (including,  with its correlative meanings,  "controlled by"
and "under common control with") such corporation or other Person.

      "Agreement"  has  the  meaning  specified  in the  introduction  to  this
Agreement.

      "Alternate  Base Rate"  means,  for any day, a rate per annum equal to the
greater of (a) the Federal Funds  Effective  Rate in effect on such day plus 1/2
of 1% and (b) the Prime Rate in effect for such day. Any change in the Alternate
Base Rate due to a change in the Prime Rate or the Federal Funds  Effective Rate
shall be effective  from and including the effective  date of such change in the
Prime Rate or the Federal Funds Effective Rate, respectively.

      "Anniversary Date" means each of February 1, 1999 and February 1, 2000.

      "Applicable  Margin"  means,  for any day, with respect to any  Eurodollar
Revolving Loan, or with respect to the commitment fees payable hereunder, as the
case may be, the  Applicable  Margin per annum set forth below under the caption
"Eurodollar Spread" or "Commitment Fee Rate", as the case may be:


                                      -3-
<PAGE>


           (a)  during  the  period  from the  Execution  Date to the  Financial
Statement  Delivery Date for the fiscal quarter of the Company  ending  December
31, 1998, the Applicable Margin shall be as follows:

   
                 Eurodollar Spread  Commitment Fee Rate
                 -----------------  -------------------
                       .75%                .25%


           (b) if the Applicable  Margin is to be determined with respect to the
financial statements delivered pursuant to Section 5.01(a) or Section 5.01(b) on
any  Financial  Statement  Delivery  Date for any fiscal  quarter of the Company
ending on or after December 31, 1998, the Applicable Margin shall be as follows:

           (i) if at the end of such fiscal  quarter,  the  Indebtedness to Cash
      Flow Ratio is less than 2.0 to 1.0:

                 Eurodollar Spread  Commitment Fee Rate
                 -----------------  -------------------
                       .75%                .25%
                
           (ii) if at the end of such fiscal quarter,  the  Indebtedness to Cash
      Flow  Ratio is equal to or  greater  than 2.0 to 1.0 but less  than 2.5 to
      1.0:

                
                 Eurodollar Spread  Commitment Fee Rate
                 -----------------  -------------------
                       .875%               .25%
              
           (iii)if at the end of such fiscal quarter,  the  Indebtedness to Cash
      Flow  Ratio is equal to or  greater  than 2.5 to 1.0 but less  than 3.0 to
      1.0:


                 Eurodollar Spread  Commitment Fee Rate
                 -----------------  -------------------
                       1.0%                .25%

           (iv) if at the end of such fiscal quarter,  the  Indebtedness to Cash
      Flow  Ratio is equal to or  greater  than 3.0 to 1.0 but less  than 3.5 to
      1.0:


                 Eurodollar Spread  Commitment Fee Rate
                 -----------------  -------------------
                      1.125%               .375%


                                      -4-
<PAGE>


           (v) if at the end of such fiscal  quarter,  the  Indebtedness to Cash
      Flow Ratio is equal to or greater than 3.5 to 1.0:


   
                 Eurodollar Spread  Commitment Fee Rate
                 -----------------  -------------------
                       1.25%               .375%

           Notwithstanding the foregoing, if on or after the Financial Statement
Delivery Date for the fiscal  quarter of the Company ending on December 31, 1998
any of the financial  statements required pursuant to Section 5.01(a) or Section
5.01(b),  as the  case  may be,  shall  not  have  been  timely  delivered,  the
Applicable Margin shall be determined  pursuant to clause(b)(v)  above until the
date that is five Business Days after the date such statements are delivered.

           Each change in the  Applicable  Margin  shall become  effective  five
Business  Days  after the  Administrative  Agent  receives  notification  of the
financial information forming the basis of such change.

      "Applicable  Percentage" means, with respect to any Lender, the percentage
of the Total Commitment  represented by such Lender's  Commitment.  If the Total
Commitment  has  terminated  or expired,  the  Applicable  Percentages  shall be
determined  based upon the Total  Commitment  most  recently  in effect,  giving
effect to any assignments.

      "Application" has the meaning specified in Section 2.06(c).

      "Assignment  and  Acceptance"  means an assignment and acceptance  entered
into by a Lender and an assignee (with the consent of any party whose consent is
required by Section  11.05),  and accepted by the  Administrative  Agent, in the
form of Exhibit 1.01B or any other form approved by the Administrative Agent.

      "Available Cash" means,  with respect to any fiscal quarter of the Company
(a "Test Quarter"), an amount equal to the algebraic sum of (a) the aggregate of
all cash  distributions  actually  made to and  received by the Company from the
Restricted  Subsidiaries  in respect of their  Capital  Stock during such fiscal
quarter  minus (b) the  aggregate  amount of all cash  disbursements,  including
disbursements for operating  expenses,  payments of principal of and interest on
Indebtedness and taxes (net of amounts received or to be received by the Company
from the Restricted Subsidiaries as reimbursement for such amounts), and capital
expenditures (net of any borrowings to fund such capital expenditures  permitted
pursuant  to this  Agreement),  actually  paid by the  Company  during such Test
Quarter,  plus, in the case of a decrease,  or minus, in the case of an increase
(c) the  amount by  which,  as at the end of such Test  Quarter,  cash  reserves
necessary in the  reasonable  discretion  of the  Company's  management  for the
proper  conduct of the business of the Company and the  Restricted  Subsidiaries
subsequent to such Test Quarter,  decreased or increased from the amount of such
reserves as at the end of the immediately  preceding  fiscal quarter;  provided,
that  "Available  Cash"  for any Test  Quarter  shall  always  exclude,  without
duplication  (i) a reserve equal to at least 50% of the aggregate  amount of all
semiannual or less frequent (or 100% of all more frequent) interest payments on

                                      -5-
<PAGE>


Indebtedness of the Company and/or the Restricted  Subsidiaries  other than SFPP
payable in the fiscal quarter next  succeeding  such Test Quarter  (assuming for
this purpose in respect of Indebtedness  with a variable  interest rate that the
same  bears  interest  at  the  highest  rate  per  annum   applicable  to  such
Indebtedness  during  the  Test  Quarter),   (ii)  a  reserve  with  respect  to
Indebtedness of the Company and/or the Restricted  Subsidiaries  other than SFPP
requiring  annual  amortization  of  principal,  equal to the  product of (A) an
amount equal to 25% of the installment of such principal maturing next after the
end of such Test Quarter  multiplied  by (B) the number of full fiscal  quarters
which will, as of the end of such Test  Quarter,  have elapsed since the date of
the next  preceding  such  payment  (but not more than 75% of the amount of such
installment),  and  (iii) if such Test  Quarter  immediately  precedes  a fiscal
quarter in which a principal  payment is due in respect of  Indebtedness  of the
Company and/or the Restricted  Subsidiaries other than SFPP requiring semiannual
or  more  frequent  amortization  of  principal,  a  reserve  equal  to 50%  (if
amortization  is semiannual) or 100% (if  amortization  is more frequent) of the
installment of such principal maturing next after the end of such Test Quarter.

      "Availability"  means,  at all  times on and after  the  Effective  Date,
$325,000,000.

      "Availability  Period"  means the period from and  including the Effective
Date,  to but  excluding  the  earlier  of the  Maturity  Date  and the  date of
termination of the Commitments.

      "Bankruptcy Code" has the meaning specified in Section 9.01(a).

      "Board" means the Board of Governors of the Federal  Reserve System of the
United States of America.

      "Board of  Directors"  means,  with  respect to any  Person,  the Board of
Directors  of such Person or any  committee  of the Board of  Directors  of such
Person  duly  authorized  to act on  behalf of the  Board of  Directors  of such
Person.

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

      "Bonds"   means  the  Port   Facility   Refunding   Revenue  Bonds  (Enron
Transportation  Services,  L.P. Project) Series 1994 in the aggregate  principal
amount of $23,700,000,  as issued by the  Jackson-Union  Counties  Regional Port
District.

      "Borrower  Guaranteed  Obligations" has the meaning specified in Section 
10.01.

      "Borrowers" means,  collectively,  the Company and the Subsidiary Borrower
and "Borrower" means either one of them.

      "Borrowing" means (a) Revolving Loans of the same Type, made, converted or
continued on the same date and, in the case of Eurodollar  Loans,  as to which a
single Interest Period is in effect, or (b) a Swingline Loan.

                                      -6-
<PAGE>



      "Borrowing Date" means the Business Day upon which any Letter of Credit is
to be issued or any Loan is to be made available to the Company.

      "Borrowing Request" has the meaning specified in Section 2.03.

      "Business  Day" means any day that is not a Saturday,  Sunday or other day
on which commercial  banks in Houston,  Texas, New York, New York, or Charlotte,
North  Carolina are  authorized  or required by law to remain  closed;  provided
that,  when used in connection  with a Eurodollar  Loan, the term "Business Day"
shall also  exclude any day on which  banks are not open for  dealings in dollar
deposits in the London interbank market.

      "Capital Lease  Obligations"  of any Person means the  obligations of such
Person to pay rent or other  amounts  under  any lease of (or other  arrangement
conveying the right to use) real or personal property, or a combination thereof,
which  obligations  are required to be  classified  and accounted for as capital
leases on a balance  sheet of such  Person  under  GAAP,  and the amount of such
obligations  shall be the  capitalized  amount thereof  determined in accordance
with GAAP.

      "Capital  Stock"  means,  with respect to any Person,  any and all shares,
interests,  rights  to  purchase,  warrants,  options,  participations  or other
equivalents (however  designated) of such Person's equity,  including all common
stock and preferred stock, any limited or general  partnership  interest and any
limited liability company membership.

      "Central  Basin  Pipeline" has the meaning  specified in the  Preliminary
Statements.

      "Change in Control"  means  either (a) the failure of Richard D. Kinder or
William Morgan or both such Persons to control,  directly or indirectly,  51% of
the  Voting  Stock and 51% of the  economic  interest  in the  General  Partner,
whether through the ability to exercise voting power by control or otherwise, or
(b) the  General  Partner  shall  cease to be the sole  general  partner  of the
Company.

      "Change  in Law" means (a) the  adoption  of any law,  rule or  regulation
after the date of this Agreement,  (b) any change in any law, rule or regulation
or in the  interpretation or application  thereof by any Governmental  Authority
after the date of this  Agreement or (c) compliance by any Lender or the Issuing
Bank (or, for purposes of Section 2.15(b),  by any lending office of such Lender
or by such  Lender's or the Issuing  Bank's  holding  company,  if any) with any
request,  guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement.

      "Change of Control Event" means the execution of any definitive  agreement
which, when fully performed by the parties thereto,  would result in a Change of
Control.

      "Charges" has the meaning specified in Section 11.13.

                                      -7-
<PAGE>


      "Class",  when  used in  reference  to any Loan or  Borrowing,  refers  to
whether such Loan, or the Loans  comprising such Borrowing,  are Revolving Loans
or Swingline Loans.

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

      "Commitment"  means,  with respect to each Lender,  the commitment of such
Lender to make  Revolving  Loans and to  acquire  participations  in  Letters of
Credit and Swingline Loans  hereunder,  expressed as an amount  representing the
maximum aggregate amount of such Lender's  Revolving Credit Exposure  hereunder,
as such commitment may be (a) reduced from time to time pursuant to Section 2.09
and (b) reduced or increased  from time to time pursuant to assignments by or to
such Lender  pursuant to Section  11.05.  The  initial  amount of each  Lender's
Commitment is set forth on its signature  page hereto,  or in the Assignment and
Acceptance  pursuant to which such Lender shall have assumed its Commitment,  as
applicable.

      "Communications" has the meaning specified in Section 11.01.

      "Company"  has  the  meaning   specified  in  the  introduction  to  this
Agreement.

      "Company Cash Flow" means (without duplication),  for any period, the sum
of

           (a)  OLP "A" EBITDA for such period, plus

           (b) the EBITDA of the Subsidiary Borrower for such period, plus

           (c) the EBITDA of OLP "C" for such period, plus

           (d)  (i)  if,  at the  end  of  such  period,  either  SFPP  is not a
      Subsidiary  Guarantor or the SFPP First Mortgage Notes are  outstanding or
      the  SFPP  Revolving  Credit  Facility  has not  been  repaid  in full and
      terminated, the sum of

                (A) cash distributions actually received by the Company from OLP
           "D" for such period in respect of its Capital Stock, plus

                (B) for any portion of such period prior to the  acquisition  of
           SFPP, distributions actually paid in cash by SFPP,

      but not in excess of an amount equal to the EBITDA of SFPP for such period
      less the sum for such period of (x) all scheduled payments of principal in
      respect of Indebtedness  of SFPP not  refinanced,  including the principal
      component of any such  payments in respect of Capital  Lease  Obligations,
      plus (y)  Interest  Expense of SFPP,  plus (z)  without  duplication,  the
      amount of all Maintenance Capital Expenditures), plus

                (C) if "Company Cash Flow" is being  determined  for purposes of
           the  Indebtedness to Cash Flow Ratio (but not  otherwise),  an amount
           equal  to 200  percent  of  SFPP  Intracompany  Refinancing  Interest
           Expense for such period actually paid in cash, or

                                      -8-
<PAGE>




           (ii) if, at the end of such period,  SFPP is a  Subsidiary  Guarantor
      and no SFPP First  Mortgage Notes are  outstanding  and the SFPP Revolving
      Credit  Facility  has been  repaid in full and  terminated,  the EBITDA of
      SFPP, plus

           (e) the EBITDA of any other Wholly-Owned  Restricted  Subsidiary that
      is a Subsidiary Guarantor, plus

           (f) cash  distributions  actually  received by the  Company  from any
      other  Restricted   Subsidiary  (other  than  a  Wholly-Owned   Restricted
      Subsidiary);

provided,  however,  if during any period the Company acquires any Person or all
or substantially all of the assets of any Person except for purposes of Sections
6.09(b) and (c) only, the EBITDA  attributable to such assets or an amount equal
to the  percentage  ownership  of the Company in such Person times the EBITDA of
such  Person,   for  such  period   determined  on  a  pro  forma  basis  (which
determination,  in each  case,  shall be  subject to  approval  of the  Required
Lenders,  not to be unreasonably  withheld) may be included as Company Cash Flow
for such period, if on the date of such acquisition no Indebtedness  (other than
Indebtedness  permitted  pursuant to Section  6.01) is incurred by reason of and
giving effect to such  acquisition and such Person or the entity  acquiring such
assets, as the case may be, is a Restricted Subsidiary.

      "Company  Guaranty"  means  the  guaranty  of the  Company  contained  in
Article IX.

      "Company Interest Expense" means, for any period

           (a) if at the end of  such  period  SFPP  shall  not be a  Subsidiary
      Guarantor,  or if at the end thereof  either the SFPP First Mortgage Notes
      are outstanding or the SFPP Revolving  Credit Facility has not been repaid
      in full and terminated, the excess of

                (i) all  Interest  Expense  of the  Company  and its  Restricted
           Subsidiaries  actually  paid during such period  (excluding,  without
           duplication (i) Interest Expense so paid by any of the Company or its
           Restricted  Subsidiaries to any such Restricted  Subsidiary or to the
           Company  ("Intracompany  Interest Expense") and (ii) Interest Expense
           in respect of Indebtedness of SFPP) over

                (ii) interest income actually received during such period by the
           Company  and its  Restricted  Subsidiaries  (excluding  all  interest
           income  actually  received  by the  Company or any of its  Restricted
           Subsidiaries  during such period from any such Restricted  Subsidiary
           or from the Company ("Intracompany Interest Income")), and

           (b) if at the end of such period SFPP shall be a Subsidiary Guarantor
      and no SFPP First  Mortgage Notes are  outstanding  and the SFPP Revolving
      Credit Facility has been repaid in full and terminated, the excess of

                                      -9-
<PAGE>


                (i) all  Interest  Expense  of the  Company  and its  Restricted
           Subsidiaries actually paid during such period (excluding Intracompany
           Interest Expense) over

                (ii) interest income actually received during such period by the
           Company or any of its Restricted Subsidiaries (excluding Intracompany
           Interest Income).

      "Consenting Lenders" has the meaning specified in Section 2.20.

      "Continuing  Lenders" has the meaning  specified in the  introduction  to
this Agreement.

      "Credit  Event"  means  the  making  of any Loan or the  issuance  or the
extension of any Letter of Credit.

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

      "Disclosed  Matters"  means the  actions,  suits and  proceedings  and the
environmental matters disclosed in Schedule 4.06.

      "Disqualified  Stock" means any Capital  Stock issued by the Company that,
by its terms (or by the terms of any security  into which it is  convertible  or
for which it is exercisable,  redeemable or exchangeable), or upon the happening
of an event or with the passage of time, matures, or is mandatorily  redeemable,
pursuant to a sinking fund  obligation  or  otherwise,  or is  redeemable at the
option of the holder thereof, in whole or in part, in each case on, or prior to,
the Maturity Date, or which is exchangeable or convertible  into debt securities
of the  Company or any  Restricted  Subsidiary,  except to the extent  that such
exchange or conversion rights cannot be exercised prior to the Maturity Date.

      "Distribution Date" has the meaning specified in Section 7.03.

      "Dollars" or "$" refers to lawful money of the United States of America.

      "EBITDA" means (without  duplication),  with respect to any Person for any
period,  the Net Income of such Person for such period  determined in accordance
with GAAP,  increased (to the extent  deducted in determining  such earnings for
such period) by the sum of (a) all income taxes (including state franchise taxes
based upon  income) of such  Person paid or accrued  according  to GAAP for such
period;   (b)  Interest  Expense  of  such  Person  for  such  period;  and  (c)
depreciation  and  amortization  of such  Person for such period  determined  in
accordance with GAAP.

      "Effective  Date" means the date occurring on or before  December 31, 1998
on which the  conditions  specified in Section 3.01 are  satisfied (or waived in
accordance with Section 11.02).

      "Eligible Assignee" means (a) any Lender; (b) any Affiliate of any Lender;
(c) a commercial bank organized or licensed under the laws of the United States,
or a state thereof,

                                      -10-
<PAGE>


and having  total  assets in excess of  $1,000,000,000;  (d) a  commercial  bank
organized  under the laws of any other country which is a member of the OECD, or
a political  subdivision of any such country,  and having total assets in excess
of $1,000,000,000,  provided that such bank is acting through a branch or agency
located in the country in which it is organized or another country which is also
a  member  of the  OECD;  (e) a  finance  company,  insurance  company  or other
financial  institution  or fund (whether a  corporation,  partnership,  trust or
other entity) that is engaged in making,  purchasing  or otherwise  investing in
commercial  loans in the  ordinary  course of its business and having a combined
capital and surplus or total assets of at least $100,000,000;  and (f) any other
entity approved by the Administrative Agent and the Company.

      "Environmental   Laws"  means  all  laws,   rules,   regulations,   codes,
ordinances,  orders,  decrees,  judgments,   injunctions,   notices  or  binding
agreements  issued,  promulgated or entered into by any Governmental  Authority,
relating in any way to the  environment,  preservation or reclamation of natural
resources,  the  management,  release or  threatened  release  of any  Hazardous
Material or to health and safety matters.

      "Environmental  Liability"  means any  liability,  contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties  or  indemnities),  of the  Company  or  any  Subsidiary  directly  or
indirectly  resulting from or based upon (a) violation of any Environmental Law,
(b)  the  generation,  use,  handling,  transportation,  storage,  treatment  or
disposal of any Hazardous  Materials,  (c) exposure to any Hazardous  Materials,
(d) the release of any  Hazardous  Materials  into the  environment,  or (e) any
contract,  agreement or other consensual arrangement pursuant to which liability
is assumed or imposed with respect to any of the foregoing.

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

      "ERISA   Affiliate"   means  any  trade  or   business   (whether  or  not
incorporated)  that,  together with the Company, is treated as a single employer
under  Section  414(b) or (c) of the Code or, solely for purposes of Section 302
of ERISA and  Section  412 of the Code,  is treated as a single  employer  under
Section 414 of the Code.

      "ERISA Event" means (a) any "reportable event", as defined in Section 4043
of ERISA or the regulations issued thereunder with respect to a Plan (other than
an event for which the 30-day notice period is waived);  (b) the existence  with
respect  to any Plan of an  "accumulated  funding  deficiency"  (as  defined  in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing  pursuant to Section  412(d) of the Code or Section 303(d) of ERISA of an
application  for a waiver of the minimum  funding  standard  with respect to any
Plan;  (d) the  incurrence by the Company or any of its ERISA  Affiliates of any
liability  under Title IV of ERISA with respect to the  termination of any Plan;
(e) the  receipt by the Company or any ERISA  Affiliate  from the PBGC or a plan
administrator  of any notice  relating to an intention to terminate  any Plan or
Plans or to appoint a trustee to administer  any Plan; (f) the incurrence by the
Company or any ERISA  Affiliate of any liability  with respect to the withdrawal
or partial withdrawal from any Plan or Multiemployer Plan; or (g) the receipt by
the  Company  or

                                      -11-
<PAGE>


any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from
the Company or any ERISA  Affiliate of any notice,  concerning the imposition of
Withdrawal  Liability or a  determination  that a  Multiemployer  Plan is, or is
expected to be, insolvent or in  reorganization,  within the meaning of Title IV
of ERISA.

      "Eurodollar",  when used in reference to any Loan or Borrowing,  refers to
whether such Loan, or the Loans comprising such Borrowing,  are bearing interest
at a rate determined by reference to the LIBOR Rate.

      "Event of Default" has the meaning specified in Section 7.01.

      "Excess Funding Obligor" has the meaning specified in Section 10.05.

      "Excess Payment" has the meaning specified in Section 10.05.

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

      "Excluded  Taxes" means,  with respect to the  Administrative  Agent,  any
Lender,  the Issuing Bank or any other recipient of any payment to be made by or
on  account of any  Obligation,  (a) income or  franchise  taxes  imposed on (or
measured  by)  its  net  income  by the  United  States  of  America,  or by the
jurisdiction under the laws of which such recipient is organized or in which its
principal  office  is  located  or,  in the case of any  Lender,  in  which  its
applicable  lending  office is located,  (b) any branch profits taxes imposed by
the  United  States  of  America  or  any  similar  tax  imposed  by  any  other
jurisdiction  in  which  either  Borrower  is  located  and (c) in the case of a
Foreign  Lender  (other  than an  assignee  pursuant to a request by the Company
under Section  2.19(b)),  any withholding tax that is imposed on amounts payable
to such Foreign  Lender at the time such Foreign  Lender becomes a party to this
Agreement or is  attributable to such Foreign  Lender's  failure or inability to
comply with Section  2.17(e),  except to the extent that such  Foreign  Lender's
assignor (if any) was entitled, at the time of assignment, to receive additional
amounts from a Borrower with respect to such withholding tax pursuant to Section
2.17(a).

      "Execution  Date" means the earliest  date upon which all of the following
shall have occurred:  counterparts of this Agreement shall have been executed by
the Loan Parties and each Lender  listed on the  signature  pages hereof and the
Administrative  Agent  shall  have  received  counterparts  hereof  which  taken
together,  bear the  signature  of the Loan  Parties  and  each  Lender  and the
Administrative Agent.

      "Existing Credit  Agreement" has the meaning specified in the Preliminary
Statements.

      "Existing  Lenders" has the meaning specified in the introduction to this
Agreement.

      "Existing Letter of Credit" has the meaning  specified in the Preliminary
Statements.

      "Existing Maturity Date" has the meaning specified in Section 2.20.

      "Existing Reduction Date" has the meaning specified in Section 2.20.

                                      -12-
<PAGE>



      "Federal Funds  Effective Rate" means,  for any day, the weighted  average
(rounded  upwards,  if  necessary,  to the  next  1/100  of 1%) of the  rates on
overnight Federal funds  transactions with members of the Federal Reserve System
arranged by Federal funds brokers,  as published on the next succeeding Business
Day by the  Federal  Reserve  Bank  of New  York,  or,  if  such  rate is not so
published for any day that is a Business Day, the average (rounded  upwards,  if
necessary,  to the  next  1/100 of 1%) of the  quotations  for such day for such
transactions  received  by the  Administrative  Agent from three  Federal  funds
brokers of recognized standing selected by it.

      "Fee Letter" has the meaning specified in Section 2.12(c).

      "Financial  Statement Delivery Date" means the date on which the quarterly
or annual  financial  statements of the Company are to be delivered  pursuant to
Section 5.01(a) or Section 5.01(b), as the case may be.

      "Fixed  Charges"  means,  at the end of any fiscal quarter of the Company,
the sum of (a) all  payments  of  principal  in respect of  Indebtedness  of the
Company  and the  Restricted  Subsidiaries  (other  than  SFPP)  (including  the
principal  component  of any payments in respect of Capital  Lease  Obligations)
payable during the next four consecutive  fiscal quarters after  eliminating all
offsetting   debits  and  credits   between  the  Company  and  such  Restricted
Subsidiaries  and all other items required to be eliminated in the course of the
preparation  of  consolidated  financial  statements  of  the  Company  and  the
Restricted Subsidiaries in accordance with GAAP and (b) Company Interest Expense
for the four consecutive fiscal quarters then ended.

      "Foreign  Lender"  means any Lender that is organized  under the laws of a
jurisdiction  other than that in which either Borrower is located.  For purposes
of this  definition,  the United  States of America,  each state thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.

      "Fuji" has the meaning specified in the Preliminary Statements.

      "GAAP" means generally accepted accounting principles in the United States
of America from time to time, including as set forth in the opinions, statements
and pronouncements of the Accounting  Principles Board of the American Institute
of Certified Public Accountants and the Financing
Accounting Standards Board.

      "General Partner" means Kinder Morgan G.P., Inc., a Delaware corporation.

      "Governmental  Authority"  means the  government  of the United  States of
America, any other nation or any political subdivision thereof, whether state or
local,  and any agency,  authority,  instrumentality,  regulatory  body,  court,
central  bank or  other  entity  exercising  executive,  legislative,  judicial,
taxing,  regulatory  or  administrative  powers or functions of or pertaining to
government.

                                      -13-
<PAGE>


      "Guarantee" of or by any Person (the  "guarantor")  means any  obligation,
contingent or otherwise,  of the guarantor  guaranteeing  or having the economic
effect of guaranteeing  any Indebtedness or other obligation of any other Person
(the  "primary  obligor") in any manner,  whether  directly or  indirectly,  and
including any obligation of the guarantor,  direct or indirect,  (a) to purchase
or pay (or  advance  or  supply  funds  for the  purchase  or  payment  of) such
Indebtedness  or other  obligation or to purchase (or to advance or supply funds
for the purchase of) any  security for the payment  thereof,  (b) to purchase or
lease property,  securities or services for the purpose of assuring the owner of
such  Indebtedness or other obligation of the payment  thereof,  (c) to maintain
working capital,  equity capital or any other financial  statement  condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness  or other  obligation  or (d) as an account party in respect of any
letter of credit or letter of guaranty  issued to support such  Indebtedness  or
obligation; provided, that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business.

      "Hazardous  Materials"  means all explosive or  radioactive  substances or
wastes  and all  hazardous  or toxic  substances,  wastes  or other  pollutants,
including  petroleum or petroleum  distillates,  asbestos or asbestos containing
materials,  polychlorinated  biphenyls,  radon gas, infectious or medical wastes
and all other  substances  or wastes of any  nature  regulated  pursuant  to any
Environmental Law.

      "Hedging Agreement" means any interest rate protection agreement,  foreign
currency  exchange  agreement,  commodity  price  protection  agreement or other
interest or currency exchange rate or commodity price hedging arrangement.

      "Indebtedness"  of  any  Person  means,  without   duplication,   (a)  all
obligations  of such Person for  borrowed  money or with  respect to deposits or
advances of any kind,  (b) all  obligations  of such Person  evidenced by bonds,
debentures,  notes or similar  instruments,  (c) all  obligations of such Person
under conditional sale or other title retention  agreements relating to property
acquired by such Person,  (d) all  obligations  of such Person in respect of the
deferred purchase price of property or services or any other similar  obligation
upon which  interest  charges are  customarily  paid  (excluding  trade accounts
payable  incurred in the ordinary course of business),  (e) all  Indebtedness of
others secured by (or for which the holder of such  Indebtedness has an existing
right,  contingent or otherwise, to be secured by) any Lien on property owned or
acquired by such Person,  whether or not the  Indebtedness  secured  thereby has
been  assumed,  (f) all  Guarantees  by such  Person of  Indebtedness  of others
(provided  that  in the  event  that  any  Indebtedness  of the  Company  or any
Restricted  Subsidiary  shall  be the  subject  of a  Guarantee  by one or  more
Restricted  Subsidiaries  or by the Company,  as the case may be, the  aggregate
amount  of the  outstanding  Indebtedness  of the  Company  and  its  Restricted
Subsidiaries  in respect thereof shall be determined by reference to the primary
Indebtedness so guaranteed,  and without  duplication by reason of the existence
of any such Guarantee),  (g) all Capital Lease  Obligations of such Person,  (h)
all obligations,  contingent or otherwise, of such Person as an account party in
respect of letters of credit and  letters of guaranty  and (i) all  obligations,
contingent or otherwise, of such Person in respect of bankers' acceptances.  The
Indebtedness  of any Person shall include the  Indebtedness  of any other Person
(including  any  partnership  in which such Person is a general  partner) to the
extent such Person is liable  therefor  as a result of

                                      -14-
<PAGE>

such  Person's  ownership  interest in or other  relationship  with such entity,
except to the extent the terms of such Indebtedness  provide that such Person is
not liable therefor.

      "Indebtedness  to Cash Flow Ratio"  means,  at any date,  the ratio of the
then  outstanding  Indebtedness of the Company to Company Cash Flow for the four
full fiscal quarters then most recently ended.

      "Indemnified Taxes" means Taxes other than Excluded Taxes.

      "Information  Memorandum" means the Confidential  Information  Memorandum
dated January 1998 (Kinder  Morgan Energy  Partners  L.P.  $300,000,000  Senior
Secured Credit Facility).

      "Initial Reduction Date" has the meaning specified in Section 2.09(a).

      "Intercompany Notes" has the meaning specified in Section 5.12.

      "Interest Election Request" has the meaning specified in Section 2.08.

      "Interest  Expense"  means (without  duplication),  for any Person for any
period, the aggregate amount of interest, whether expensed or capitalized, paid,
accrued  or  scheduled  to  be  paid  during  such  period  in  respect  of  the
Indebtedness of such Person  including (a) the interest  portion of any deferred
payment  obligation;  (b) the  portion  of any rental  obligation  in respect of
Capital Lease Obligations  allocable to interest expenses;  and (c) any non-cash
interest payments or accruals, all determined in accordance with GAAP.

      "Interest  Payment Date" means (a) with respect to any ABR Loan (including
a Swingline  Loan),  the last  Business  Day of each  January,  April,  July and
October and (b) with respect to any  Eurodollar  Loan,  the last Business Day of
the Interest  Period  applicable  to the  Borrowing of which such Loan is a part
and, in the case of a Eurodollar  Borrowing with an Interest Period of more than
three months'  duration,  each day prior to the last day of such Interest Period
that occurs at intervals of three months'  duration  after the first day of such
Interest Period.

      "Interest  Period"  means with respect to any  Eurodollar  Borrowing,  the
period  commencing on the date of such  Borrowing and ending on the  numerically
corresponding  day in the calendar  month that is one, two,  three or six months
thereafter,  as the Company may elect; provided, that (a) if any Interest Period
would end on a day other than a Business  Day,  such  Interest  Period  shall be
extended  to the next  succeeding  Business  Day  unless  such  next  succeeding
Business Day would fall in the next calendar  month, in which case such Interest
Period shall end on the next preceding  Business Day and (b) any Interest Period
that  commences on the last  Business  Day of a calendar  month (or on a day for
which there is no  numerically  corresponding  day in the last calendar month of
such  Interest  Period)  shall end on the last Business Day of the last calendar
month of such  Interest  Period.  For purposes  hereof,  the date of a Borrowing
initially  shall be the date on which such Borrowing is made and, in the case of
a

                                      -15-
<PAGE>

Revolving Borrowing, thereafter shall be the effective date of the most recent
conversion or continuation of such Borrowing.

      "Intracompany   Interest   Expense"  has  the  meaning  specified  in  the
definition of "Company Interest Expense" in this Section 1.01.

      "Intracompany Interest Income" has the meaning specified in the definition
of "Company Interest Expense" in this Section 1.01.

      "Issuing  Bank" means First Union  National  Bank,  in its capacity as the
issuer of Letters of Credit  hereunder,  and its  successors in such capacity as
provided in Section 2.06(j).

      "KMBT" has the meaning specified in the introduction to this Agreement.

      "KMNGL"  has  the  meaning   specified  in  the   introduction   to  this
Agreement.

      "KMCO2" has the meaning specified in the introduction to this Agreement.

      "LC  Disbursement"  means a payment made by the Issuing Bank pursuant to a
Letter of Credit.

      "LC Exposure"  means,  at any time,  the sum of (a) the aggregate  undrawn
amount of all outstanding  Letters of Credit at such time plus (b) the aggregate
amount of all LC Disbursements that have not yet been reimbursed by or on behalf
of the  applicable  Borrower at such time.  The LC Exposure of any Lender at any
time shall be its Applicable Percentage of the total LC Exposure at such time.

      "Lender" has the meaning specified in the introduction to this Agreement.

      "Lenders" has the meaning specified in the introduction to this Agreement.
Unless the context otherwise requires, the term "Lenders" includes the Swingline
Lender.

      "Letter of Credit"  means the  Existing  Letter of Credit or any letter of
credit issued pursuant to this Agreement.

      "Letter of Credit Request" has the meaning specified in Section 2.06.

      "LIBOR"  shall mean the rate of  interest  determined  on the basis of the
rate for deposits in dollars in an amount  substantially  equal to the amount of
the  applicable  Loan  for a  period  equal to the  applicable  Interest  Period
commencing  on the  first day of such  Interest  Period  appearing  on Dow Jones
Market Service (formerly  Telerate) Page 3750 as of 11:00 a.m. (London time) two
Business Days prior to the first day of the applicable  Interest Period.  In the
event that such rate does not appear on  Telerate  Page 3750,  "LIBOR"  shall be
determined  by the  Administrative  Agent  to be the  rate  per  annum  at which
deposits  in  dollars  are  offered  by  leading  reference  banks in the London
interbank  market to First Union at  approximately  11:00 a.m. (London time)

                                      -16-
<PAGE>

two Business Days prior to the first day of the applicable Interest Period for a
period equal to such Interest Period and in an amount substantially equal to the
amount of the applicable Loan.

      "LIBOR  Rate" shall mean,  with respect to any LIBOR Loan for any Interest
Period for such Loan, a rate per annum (rounded  upwards,  if necessary,  to the
nearest 1/100 of 1%) determined by the  Administrative  Agent to be equal to the
quotient of (i) LIBOR for such Loan for such Interest  Period  divided by (ii) 1
minus the Reserve Requirement for such Loan for such Interest Period.

      "Lien" means, with respect to any asset, (a) any mortgage,  deed of trust,
lien, pledge, hypothecation,  encumbrance, charge or security interest in, on or
of such asset and (b) the interest of a vendor or a lessor under any conditional
sale  agreement,  capital lease or title  retention  agreement (or any financing
lease having  substantially  the same economic  effect as any of the  foregoing)
relating to such asset.

      "Loan Documents" mean, collectively, this Agreement (including the Company
Guaranty  and the  Subsidiary  Guarantors  Guaranty),  the  Notes,  if any,  the
Intercompany  Notes, the Applications,  the Fee Letter and all other instruments
and  documents  from time to time  executed  and  delivered by any Loan Party in
connection herewith and therewith; provided, however, for purposes of Article IX
and Article X, Loan Documents shall not include the Intercompany Notes.

      "Loan Party" means the Company,  the Subsidiary Borrower or any Subsidiary
Guarantor and "Loan Parties" means the Company,  the Subsidiary Borrower and the
Subsidiary Guarantors.

      "Loans"  means  advances  made by the Lenders to the Company  pursuant to
this Agreement.

      "Maintenance Capital Expenditures" means cash capital expenditures made to
maintain,  up to the level  thereof  that  existed on the  Execution  Date,  the
throughput,   deliverable  capacity,   terminaling  capacity,  or  fractionation
capacity  (assuming  normal  operating   conditions,   including  down-time  and
maintenance) of the assets of the Company and the Restricted Subsidiaries, taken
as a whole,  as such assets existed on the Execution Date and shall,  therefore,
not include cash capital  expenditures  made in respect of capital additions and
improvements. Where cash capital expenditures are made in part to effectuate the
capacity maintenance level referred to in the immediately preceding sentence and
in part for other purposes,  the General Partner's good faith allocation thereof
between  the part used to  maintain  such  capacity  level and the part used for
other purposes shall be conclusive.

      "Make-Whole  Premium" means the make-whole  premium paid by OLP "A" on its
8.79% First Mortgage Notes due June 30, 2007.

      "Material  Adverse  Effect" means,  relative to any occurrence of whatever
nature  (including any adverse  determination in any litigation,  arbitration or
governmental  investigation  or proceeding) and after taking into account actual
insurance   coverage  and  effective

                                      -17-
<PAGE>

indemnification  with respect to such occurrence,  (a) a material adverse effect
on the  financial  condition,  business  or  operations  of the  Company and the
Restricted  Subsidiaries taken as a whole, (b) the impairment of (i) the ability
of the Loan  Parties to  collectively  perform  the  payment  or other  material
obligations  hereunder or under the other Loan  Documents or (ii) the ability of
the  Administrative  Agent or the  Lenders  to  realize  the  material  benefits
intended to be provided by the Loan Parties under the Loan  Documents or (c) the
subjection of any of the Administrative Agent, the Issuing Bank or any Lender to
any civil or criminal liability.

      "Maturity  Date" means the earlier of (a)  February 1, 2005,  as such date
may be  extended  pursuant  to Section  2.20,  and (b) the  acceleration  of the
Obligations pursuant to Section 7.01.

      "Maximum Rate" has the meaning specified in Section 11.13.

      "Mont Belvieu" means Mont Belvieu Associates,  a Texas general partnership
of which each of KMNGL and  Enterprise  Products Co. owns a 50% general  partner
interest and in which KMNGL has assigned 99% of its profits interest to OLP "A".

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

      "Multiemployer  Plan" means a  multiemployer  plan as defined in Section 
4001(a)(3) of ERISA.

      "Net Income"  means for any Person for any period,  the net income or (net
loss)  of such  Person  for  such  period  (taken  as a  cumulative  whole),  as
determined  in  accordance  with GAAP,  provided  that there shall be  excluded,
without  duplication,  from such net income (to the  extent  otherwise  included
therein):

           (a) net  extraordinary  gains and losses  (other than, in the case of
      losses,  losses  resulting from charges against net income to establish or
      increase reserves for potential environmental liabilities and reserves for
      exposure of such Person under rate cases);

           (b) net gains or losses in respect of  dispositions  of assets  other
      than in the ordinary course of business; and

           (c) any gains or losses  attributable  to write-ups or write-downs of
      assets; and

           (d) proceeds of any key man insurance,  or any insurance on property,
      plant or equipment.

      "New Subsidiary" has the meaning specified in Section 6.04.

      "Nominee" has the meaning specified in Section 2.20.

      "Non-Consenting Lenders" has the meaning specified in Section 2.20.

      "Note" has the meaning specified in Section 2.10.

                                      -18-
<PAGE>



      "Notice of Account  Designation"  has the meaning  specified  in Section 
2.07.

      "Notice of Default" has the meaning specified in Section 7.01.

      "Notice of Extension" has the meaning specified in Section 2.20.

      "Notice of Prepayment" has the meaning specified in Section 2.11.

      "Obligations" means collectively:

           (a)  the  payment  of  all  indebtedness  and  liabilities  by,  and
performance of all other obligations of, the Company in respect of the Loans;

           (b) all obligations of the Company and the Subsidiary Borrower under,
with respect to, and  relating to the Letters of Credit  whether  contingent  or
matured;

           (c) all  obligations  of the  Company  or any  Restricted  Subsidiary
(other than SFPP) owing to any Lender under any Hedging Agreement;

           (d) the  payment of all other  indebtedness  and  liabilities  by and
performance of all other obligations of, the Company and the Subsidiary Borrower
to the  Administrative  Agent,  the  Issuing  Bank and the Lenders  under,  with
respect to, and arising in connection with, the Loan Documents,  and the payment
of all indebtedness  and liabilities of the Company and the Subsidiary  Borrower
to the  Administrative  Agent, the Issuing Bank and the Lenders for fees, costs,
indemnification and expenses (including reasonable attorneys' fees and expenses)
under the Loan Documents;

           (e) the  reimbursement  of all sums  advanced  and costs and expenses
incurred by the  Administrative  Agent under any Loan Document (whether directly
or  indirectly)  in connection  with the  Obligations or any part thereof or any
renewal, extension or change of or substitution for the Obligations or, any part
thereof,  whether such advances, costs and expenses were made or incurred at the
request of any Loan Party or the Administrative Agent; and

           (f)  all  renewals,   extensions,   amendments  and  changes  of,  or
substitutions or replacements  for, all or any part of the items described under
clauses (a) through (e) above.

      "OECD" means the  Organization  for Economic  Cooperation and Development
(or any successor).

      "OLP  `A'"  has  the  meaning  specified  in  the  introduction  to  this
Agreement.

      "OLP `A' EBITDA" means (without  duplication),  for any period, the sum of
(a) the EBITDA of OLP " A" for such period (not including,  however,  the EBITDA
of any  Person in which  OLP "A" owned  Capital  Stock at any time  during  such
period),  plus (b) the aggregate of all  distributions  actually received by OLP
"A" in respect  of such  period  from any Person in which OLP "A" owned  Capital
Stock during all or any portion of such period;  provided

                                      -19-
<PAGE>

however,  that (y) the  EBITDA  of OLP "A" will be  calculated  for such  period
without regard to the Make-Whole Premium and (z) notwithstanding anything to the
contrary  contained  in this  definition,  the EBITDA of OLP "A" for each of the
four quarters most recently ended preceding March 5, 1998 shall be computed on a
pro forma basis which  assumes that the EBITDA from  ownership  and operation of
the Central Basin Pipeline for each such quarter was $3,625,000 (i.e., an amount
equal to the quarterly priority  distribution to be received by KMCO2 during the
first 16 quarters ending after March 5, 1998).

      "OLP  `A'  First  Mortgage  Notes"  has  the  meaning  specified  in  the
Preliminary Statements.

      "OLP `A' Loan  Agreement"  has the meaning  specified in the  Preliminary
Statements.

      "OLP  `A'  Refinancing"  has the  meaning  specified  in the  Preliminary
Statements.

      "OLP  `B'  Refinancing"  has the  meaning  specified  in the  Preliminary
Statements.

      "OLP  `C'"  has  the  meaning  specified  in  the  introduction  to  this
Agreement.

      "OLP  `D'"  has  the  meaning  specified  in  the  introduction  to  this
Agreement.

      "Other  Taxes"  means any and all present or future  stamp or  documentary
taxes or any other excise or property  taxes,  charges or similar levies arising
from any payment made hereunder or from the  execution,  delivery or enforcement
of, or otherwise with respect to, this Agreement.

      "Participant" has the meaning specified in Section 11.05(e).

      "PBGC"  means the Pension  Benefit  Guaranty  Corporation  referred to and
defined in ERISA and any successor entity performing similar functions.

      "Permitted Encumbrances" means:

          (a) Liens  imposed by law for  taxes that are not yet due or are being
contested in compliance with Section 5.04;

          (b) carriers', warehousemen's,  mechanics', materialmen's, repairmen's
and other like Liens imposed by law,  arising in the ordinary course of business
and securing  obligations that are not overdue by more than 30 days or are being
contested in compliance with Section 5.04;

          (c) pledges and deposits  made in the ordinary  course of business  in
compliance with workers'  compensation,  unemployment insurance and other social
security laws or regulations;


                                      -20-
<PAGE>


          (d)  deposits  to secure  the  performance  of bids, trade  contracts,
leases,  statutory obligations,  surety and appeal bonds,  performance bonds and
other  obligations  of a like  nature,  in each case in the  ordinary  course of
business;

          (e) easements,  zoning   restrictions,   rights-of-way   and   similar
encumbrances  on real property  imposed by law or arising in the ordinary course
of business that do not secure any monetary  obligations  and do not  materially
detract from the value of the affected  property or interfere  with the ordinary
conduct of business of the Company or any Subsidiary;

          (f)  judgment  and  attachment  Liens  not giving  rise to an Event of
Default or Liens created by or existing from any litigation or legal  proceeding
that are currently  being  contested in good faith by  appropriate  proceedings,
promptly  instituted and diligently  conducted,  and for which adequate reserves
have been made to the extent required by GAAP;

          (g) any  interest  or title  of a  lessor  in property  subject to any
Capitalized  Lease  Obligation  or  operating  lease  which,  in each  case,  is
permitted under this Agreement; and

          (h)  Liens in favor of  collecting  or  payor banks  having a right of
setoff, revocation, refund or chargeback with respect to money or instruments of
the Company or any  Restricted  Subsidiary  on deposit with or in  possession of
such bank;

provided  that the term  "Permitted  Encumbrances"  shall not  include  any Lien
securing Indebtedness.

      "Permitted Investments" means:

           (a)  direct  obligations  of, or  obligations  the  principal  of and
interest  on which are  unconditionally  guaranteed  by,  the  United  States of
America (or by any agency thereof to the extent such  obligations  are backed by
the full  faith  and  credit of the  United  States  of  America),  in each case
maturing within one year from the date of acquisition thereof;

           (b)  investments  in commercial  paper issued by a Person that is not
the Company or an  Affiliate  of the Company  maturing  within 270 days from the
date of  acquisition  thereof  and  having,  at such  date  of  acquisition,  an
investment grade rating from S&P or from Moody's;

           (c) investments in certificates of deposit,  banker's acceptances and
time  deposits  maturing  within 180 days from the date of  acquisition  thereof
issued or guaranteed by or placed with, and money market deposit accounts issued
or offered by, any domestic  office of any commercial  bank organized  under the
laws of the United  States of America or any state  thereof which has a combined
capital and surplus and undivided profits of not less than $500,000,000;

           (d) fully  collateralized  repurchase  agreements  with a term of not
more than 30 days for securities  described in clause (a) above and entered into
with a financial  institution  satisfying  the criteria  described in clause (c)
above; and


                                      -21-
<PAGE>


           (e) investments in demand deposit  accounts with any Lender or with a
financial institution satisfying the criteria described in clause (c) above.

      "Person" means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership,  Governmental Authority
or other entity.

      "Plan" means any employee pension benefit plan (other than a Multiemployer
Plan) subject to the  provisions of Title IV of ERISA or Section 412 of the Code
or  Section  302 of ERISA,  and in  respect  of which the  Company  or any ERISA
Affiliate  is (or, if such plan were  terminated,  would under  Section  4069 of
ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA.

      "Pledged Bonds" has the meaning specified in Section 2.06.

      "Prime Rate" shall mean the rate of interest  from time to time  announced
publicly  by the  Administrative  Agent at the  Principal  Office  as its  prime
commercial  lending  rate.  Such  rate is set by the  Administrative  Agent as a
general  reference  rate of  interest,  taking into  account such factors as the
Administrative Agent may deem appropriate,  it being understood that many of the
Administrative  Agent's commercial or other loans are priced in relation to such
rate, that it is not necessarily the lowest or best rate actually charged to any
customer and that the Administrative  Agent may make various commercial or other
loans at rates of interest having no relationship to such rate.

      "Principal  Office" shall mean the principal office of the  Administrative
Agent,  presently located at 301 South College Street, TW-10,  Charlotte,  North
Carolina  28288-0608 or such other location as designated by the  Administrative
Agent from time to time.

      "Pro Rata Share" has the meaning specified in Section 10.05.

      "Purchase  Agreement"  shall mean the Purchase  Agreement  dated as of the
18th day of October, 1997, by and among the Company, the General Partner, SFMLP,
Santa Fe Pacific  Pipelines,  Inc., a Delaware  corporation,  and SFP Pipelines,
Inc.,  a Delaware  corporation,  and SFP  Pipeline  Holdings,  Inc.,  a Delaware
corporation, as amended.

      "Qualified  Stock"  means any Capital  Stock issued by the Company that is
not Disqualified Stock.

      "Reduction Date" has the meaning specified in Section 2.09(a).

      "Refinancing  Indebtedness"  means any  Indebtedness of the Company or any
Restricted  Subsidiary  issued in exchange for, or the net proceeds of which are
applied  entirely to  substantially  concurrently  repay,  refinance,  refund or
replace,  Indebtedness of the Company or any Restricted  Subsidiary (a) existing
on the Execution  Date and listed on Schedule  1.01A or (b) which would exist on
the Execution Date  (assuming that all unfunded  commitments to advance any such
Indebtedness  are fully funded) (the "Refinanced  Indebtedness"),  to the extent
such Refinancing Indebtedness:

                                      -22-
<PAGE>




           (a) is issued  in a  principal  amount  (or if such  Indebtedness  is
issued at an original issue discount,  is issued at an original issue price) not
exceeding the outstanding principal amount (or, if such Refinanced  Indebtedness
was issued at an original issue discount,  not exceeding the outstanding accrued
principal amount) of such Refinanced Indebtedness; and

           (b) if the Refinanced Indebtedness is Indebtedness of the Company and
ranks by contract,  by its terms or otherwise  junior in right of payment to the
Obligations,  (A) is unsecured and does not have a final scheduled  maturity and
is not subject to any principal  payments,  including payments upon mandatory or
optional  redemption,  prior  to the  dates  of  analogous  payments  under  the
Refinanced  Indebtedness,  and (B) has  subordination  provisions  effective  to
subordinate  such  Indebtedness  to the  Obligations at least to the extent that
such Refinanced Indebtedness is subordinated to the Obligations; and

           (c) if the Refinanced  Indebtedness  is  Indebtedness  of the Company
which is pari passu in right of payment with the Obligations, (A) is either pari
passu or is  subordinated in right of payment to the  Obligations,  (B) does not
have a final  scheduled  maturity and is not subject to any principal  payments,
including  payments upon  mandatory or optional  redemption,  prior to the final
scheduled maturity date of the Refinanced Indebtedness, and (C) if pari passu is
not secured by a Lien on any property or assets of the Company or any Restricted
Subsidiary  in addition to Liens  securing  the  Refinanced  Indebtedness  or if
subordinated, is unsecured.

      "Register" has the meaning specified in Section 11.05.

      "Regulation A" means  Regulation A of the Board,  as the same is from time
to time in effect,  and all official rulings and  interpretations  thereunder or
thereof.

      "Regulation D" means  Regulation D of the Board,  as the same is from time
to time in effect,  and all official rulings and  interpretations  thereunder or
thereof.

      "Regulation T" means  Regulation T of the Board,  as the same is from time
to time in effect,  and all official rulings and  interpretations  thereunder or
thereof.

      "Regulation U" means  Regulation U of the Board,  as the same is from time
to time in effect,  and all official rulings and  interpretations  thereunder or
thereof.

      "Regulation X" means  Regulation X of the Board,  as the same is from time
to time in effect,  and all official rulings and  interpretations  thereunder or
thereof.

      "Related  Parties"  means,  with  respect to any  specified  Person,  such
Person's Affiliates and the respective directors,  officers,  employees,  agents
and advisors of such Person and such Person's Affiliates.

      "Relevant Anniversary Date" has the meaning specified in Section 2.20.

                                      -23-
<PAGE>


      "Required  Lenders" means, at any time,  Lenders having  Revolving  Credit
Exposures  and  unused  Commitments  representing  66_% of the sum of the  total
Revolving Credit Exposures and unused Commitments at such time.

      "Requirement of Law" shall mean any law, statute, code, ordinance,  order,
determination,   rule,  regulation,  judgment,  decree,  injunction,  franchise,
permit,  certificate,  license,  authorization or other directive or requirement
(whether or not having the force of law),  including  Environmental Laws, energy
regulations and  occupational,  safety and health standards or controls,  of any
Governmental Authority.

      "Reserve  Requirement" means, for any day as applied to a Eurodollar Loan,
the  aggregate  (without  duplication)  of the  rates  (expressed  as a  decimal
fraction)  of  reserve  requirements  in  effect on such day  (including  basic,
supplemental, marginal and emergency reserves under any regulations of the Board
or other  Governmental  Authority  having  jurisdiction  with  respect  thereto)
dealing with reserve requirements prescribed for eurocurrency funding (currently
referred to as  "Eurocurrency  Liabilities"  in  Regulation  D)  maintained by a
member bank of the Federal Reserve System.  Eurodollar  Loans shall be deemed to
constitute   Eurocurrency   Liabilities  and  to  be  subject  to  such  reserve
requirements  without benefit of or credit for proration,  exceptions or offsets
which may be available from time to time to any Lender under Regulation D.

      "Responsible Officer" of any Loan Party means the Chairman, Vice Chairman,
President,  Chief Financial Officer or Chief Accounting Officer of (a) as to any
Loan Party that is a limited  partnership,  the General  Partner of such Person,
(b) as to any Loan  Party  that is a limited  liability  company,  the  managing
member of such Person, and (c) as to any Loan Party that is a corporation,  such
Person.

      "Restricted Payment" means any distribution  (whether in cash,  securities
or other property) with respect to any partnership  interest in the Company,  or
any payment  (whether in cash,  securities  or other  property),  including  any
deposit,  on  account  of the  purchase,  redemption,  retirement,  acquisition,
cancellation  or termination of any such  partnership  interest or any option or
other right to acquire any such partnership  interest;  provided,  however, that
distributions  with respect to the partnership  interests in the Company that do
not exceed,  with respect to any fiscal  quarter of the  Company,  the amount of
Available Cash for such quarter shall not constitute Restricted Payments so long
as in each case, both before and after the making of such distribution, no Event
of Default or Default  shall have  occurred  and be  continuing;  and  provided,
further,  that any partnership  interest  split,  partnership  interest  reverse
split, dividend of Company partnership interests or similar transaction will not
constitute a Restricted Payment.

      "Restricted  Subsidiary" means any Subsidiary of the Company other than an
Unrestricted  Subsidiary.  The Board of Directors of the general  partner of the
Company, by a Board Resolution,  may designate any Unrestricted Subsidiary to be
a  Restricted  Subsidiary;  provided,  that (a) before and after  giving  effect
thereto no Default or Event of Default  shall have  occurred and be  continuing,
(b) the Company and the Restricted Subsidiaries shall be in compliance, on a pro
forma  basis,  after  giving  effect  to such  designation,  with the  covenants
contained  in Article  VI,  recomputed  as at the last day of the most  recently
ended fiscal quarter of

                                      -24-
<PAGE>

the Company and the Restricted  Subsidiaries as if such designation had occurred
on the first day of each relevant period for testing such compliance and (c) the
Company  shall have  delivered  to the  Administrative  Agent and the  Lenders a
certificate of a Responsible Officer to such effect,  together with all relevant
financial  information  and  calculations  demonstrating  such  compliance.  For
purposes of this  definition  and of Article VI, a newly  designated or acquired
Restricted  Subsidiary  shall be deemed to have  incurred or made on the date of
its designation or acquisition, as the case may be, all such Indebtedness, Liens
and  investments  then  outstanding  as would be reflected on its balance sheet,
prepared in accordance with GAAP, as at such date.

      "Retiring  Lenders" has the meaning specified in the introduction to this
Agreement.

      "Revolving Borrowing" means a Borrowing comprised of Revolving Loans.

      "Revolving Credit Exposure" means, with respect to any Lender at any time,
the sum of the outstanding principal amount of such Lender's Revolving Loans and
its LC Exposure and Swingline Exposure at such time.

      "Revolving Loan" means a Loan made pursuant to Section 2.03.

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

      "Santa Fe  Acquisition"  has the  meaning  specified  in the  Preliminary
Statements.

      "SFMLP" has the meaning specified in the Preliminary Statements.

      "SFPP" has the meaning specified in the Preliminary Statements.

      "SFPP First  Mortgage  Notes" means those  certain  First  Mortgage  Notes
issued by SFPP (under its prior name  Southern  Pacific Pipe Lines  Partnership,
L.P.) pursuant to a Note  Agreement  dated December 8, 1988 between SFPP and the
purchasers  named therein,  which on the Execution  Date are  outstanding in the
aggregate principal amount of $279,500,000.

      "SFPP  Intracompany  Refinancing   Indebtedness"  means  SFPP  Refinancing
Indebtedness  owing  to  the  Company  in  respect  of  loan  proceeds  borrowed
substantially concurrently by the Company from a third party lender and reloaned
by it to the Company.

      "SFPP  Intracompany  Refinancing  Interest Expense" means, for any period,
Interest  Expense  of SFPP for  such  period  in  respect  of SFPP  Intracompany
Refinancing Indebtedness.

      "SFPP  Refinancing  Indebtedness"  means  Indebtedness  of SFPP  issued in
exchange   for,  or  the  net  proceeds  of  which  are  applied   substantially
concurrently  to repay,  refinance,  refund or replace,  the SFPP First Mortgage
Notes or the SFPP Revolving Credit Facility,  or both, which Indebtedness would,
if the SFPP First Mortgage Notes or the SFPP Revolving Credit  Facility,  as the
case may be, constituted  "Refinanced  Indebtedness" (as said term is defined in
the definition of "Refinancing  Indebtedness" in this Section 1.01),  constitute
Refinancing Indebtedness in respect thereof.

                                      -25-
<PAGE>


      "SFPP Revolving  Credit  Facility" means that certain Amended and Restated
Credit  Agreement  dated as of August 11,  1997 among SFPP,  the  lenders  party
thereto, Bank of America National Trust and Savings Association, as agent, Chase
Bank of Texas,  National  Association  (formerly  Texas  Commerce  Bank National
Association), as syndication agent, Bank of Montreal, as documentation agent and
BancAmerica Securities,  Inc., as arranger,  providing for revolving loans to be
made to SFPP in an aggregate principal amount not exceeding  $175,000,000 at any
time outstanding.

      "Shell" means Shell  Western E & P Inc.,  Shell Cortez  Pipeline  Company,
Shell Land & Energy Company and their Affiliates.

      "Shell CO2" has the meaning specified in the Preliminary Statements.

      "Shell  JV  Investment"  has the  meaning  specified  in the  Preliminary
Statements.

      "Subsidiary" means, with respect to any Person (the "parent") at any date,
any corporation,  limited liability company,  partnership,  association or other
entity the accounts of which would be  consolidated  with those of the parent in
the parent's consolidated financial statements if such financial statements were
prepared  in  accordance  with  GAAP as of  such  date,  as  well  as any  other
corporation, limited liability company, partnership, association or other entity
(a) of which securities or other ownership interests  representing more than 50%
of the equity or more than 50% of the ordinary voting power or, in the case of a
partnership,  more than 50% of the general partnership interests are, as of such
date,  owned,  controlled  or held,  or (b) that is, as of such date,  otherwise
controlled,  by the parent or one or more  subsidiaries  of the parent or by the
parent and one or more subsidiaries of the parent.  Unless the context otherwise
clearly  requires,  references  in  this  Agreement  to a  "Subsidiary"  or  the
"Subsidiaries" refer to a Subsidiary or the Subsidiaries of the Company.

      "Subsidiary  Borrower" has the meaning  specified in the  introduction to
this Agreement.

      "Subsidiary  Borrower Credit  Agreement" has the meaning specified in the
Preliminary Statements.

      "Subsidiary  Borrower  Guaranteed  Obligations" has the meaning specified
in Section 9.01.

      "Subsidiary   Guarantor   Counterpart"  has  the  meaning   specified  in
Section 6.04.

      "Subsidiary  Guarantors" has the meaning specified in the introduction to
this Agreement.

      "Subsidiary   Guarantors   Guaranty"  means  the  guaranty  contained  in
Article X.

      "Swingline Exposure" means, at any time, the aggregate principal amount of
all Swingline  Loans  outstanding  at such time.  The Swingline  Exposure of any
Lender at any time shall be its  Applicable  Percentage  of the total  Swingline
Exposure at such time.

                                      -26-
<PAGE>



      "Swingline  Lender"  means First Union  National  Bank, in its capacity as
lender of Swingline Loans hereunder.

      "Swingline Loan" means a Loan made pursuant to Section 2.04.

      "Syndication  Agent" has the meaning  specified  in the  introduction  to
this Agreement.

      "Taxes"  means any and all  present  or  future  taxes,  levies,  imposts,
duties,  deductions,   charges  or  withholdings  imposed  by  any  Governmental
Authority.

      "Total  Commitment"  means  the sum of the  Commitments  of the  Lenders,
which on the Execution Date is $325,000,000.

      "Transactions"  means the execution,  delivery and performance by the Loan
Parties of this Agreement and the other Loan Documents,  the borrowing of Loans,
the use of the  proceeds  thereof  and the  Existing  Letter of  Credit  and the
issuance of the other Letters of Credit hereunder.

      "Trustee"  means Bank One,  Texas,  NA, as the beneficiary of the Existing
Letter of Credit and any successor beneficiary.

      "Type", when used in reference to any Loan or Borrowing, refers to whether
the rate of interest on such Loan, or on the Loans comprising such Borrowing, is
determined by reference to the LIBOR Rate or the Alternate Base Rate.
      "United States" and "U.S."each means United States of America.

      "Unrestricted  Subsidiary"  means (a) any  Subsidiary  of an  Unrestricted
Subsidiary or (b) any  Subsidiary  of the Company or of a Restricted  Subsidiary
that is designated as an  Unrestricted  Subsidiary by a Board  Resolution of the
general  partner  of the  Company in  accordance  with the  requirements  of the
following sentence with the consent of the Required Lenders (which consent shall
not  be  unreasonably  withheld).   The  Company  may  hereafter  designate  any
Subsidiary  of  the  Company  or of a  Restricted  Subsidiary  (other  than  the
Subsidiary  Borrower,  a  Subsidiary  Guarantor  or SFPP) to be an  Unrestricted
Subsidiary  by a Board  Resolution  of the general  partner of the  Company,  as
evidenced by written notice thereof delivered to the Administrative Agent, if at
the time of and after giving effect to such designation, (i) no Default or Event
of Default shall have occurred and be continuing,  (ii) such Subsidiary does not
own or hold any Capital Stock of, or any Lien on any property of, the Company or
any  Restricted  Subsidiary and (iii) such  Subsidiary  does not own or hold any
Indebtedness  of the  Company  or any  Restricted  Subsidiary  that would not be
permitted  pursuant  to  Section  6.01  as if  incurred  on  the  date  of  such
designation.   As  of  the  date  hereof,   the  Company  has  no   Unrestricted
Subsidiaries.

      "Voting Stock" means, with respect to any Person,  securities of any class
or classes of Capital Stock in such Person entitling holders thereof (whether at
all times or only so long as no senior class of stock has voting power by reason
of any contingency) to vote in the election of

                                      -27-
<PAGE>


members of the Board of Directors or other  governing body of such Person or its
managing member or its general partner (or its managing general partner if there
is more than one general partner).

      "Wholly-Owned  Restricted  Subsidiary"  means a Restricted  Subsidiary  of
which all issued and outstanding  Capital Stock  (excluding (a) in the case of a
corporation,  directors'  qualifying  shares,  (b)  in  the  case  of a  limited
partnership,  a 1.5% general  partner  interest and (c) in the case of a limited
liability  company,  a 1.5% member  interest) is directly or indirectly owned by
the Company.

      "Withdrawal Liability" means liability to a Multiemployer Plan as a result
of a complete or partial withdrawal from such Multiemployer  Plan, as such terms
are defined in Part I of Subtitle E of Title IV of ERISA.

           SECTION 1.02 Classification of Loans and Borrowings.  For purposes of
this  Agreement,  Loans may be  classified  and  referred to by Class  (e.g.,  a
"Revolving  Loan") or by Type (e.g.,  a "Eurodollar  Loan") or by Class and Type
(e.g., a "Eurodollar  Revolving  Loan").  Borrowings  also may be classified and
referred  to by Class  (e.g.,  a  "Revolving  Borrowing")  or by Type  (e.g.,  a
"Eurodollar  Borrowing")  or by Class and Type (e.g.,  a  "Eurodollar  Revolving
Borrowing").

           SECTION 1.03  Accounting  Terms;  Changes in GAAP. All accounting and
financial terms used herein and not otherwise  defined herein and the compliance
with each covenant  contained herein which relates to financial matters shall be
determined in accordance with GAAP applied by the Company on a consistent basis,
except to the extent that a deviation  therefrom  is  expressly  stated.  Should
there be a change in GAAP from that in effect on the Execution  Date,  such that
the  defined  terms  set forth in  Section  1.01 or the  covenants  set forth in
Article VI would then be  calculated  in a  different  manner or with  different
components or would render the same not  meaningful  criteria for evaluating the
matters contemplated to be evidenced by such covenants,  (a) the Company and the
Required Lenders agree,  within the 60-day period following any such change,  to
negotiate in good faith and enter into an  amendment to this  Agreement in order
to conform  the defined  terms set forth in Section  1.01 or the  covenants  set
forth in Article VI, or both,  in such  respects as shall  reasonably  be deemed
necessary  by the  Required  Lenders so that the  criteria  for  evaluating  the
matters  contemplated  to be evidenced by such covenants are  substantially  the
same criteria as were  effective  prior to any such change in GAAP,  and (b) the
Company  shall be deemed to be in  compliance  with such  covenants  during  the
60-day period following any such change,  or until the earlier date of execution
of such  amendment,  if and to the extent  that the  Company  would have been in
compliance therewith under GAAP as in effect immediately prior to such change.

           SECTION  1.04  Interpretation.   (a) In  this  Agreement,  unless  a
clear contrary intention appears:


                                      -28-
<PAGE>


          (i)  the singular number includes the plural number and vice versa;

          (ii) reference to any gender includes each other gender;

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

          (iv)  reference to any Person  includes such Person's  successors  and
     assigns  but,  if  applicable,  only if such  successors  and  assigns  are
     permitted  by this  Agreement,  and  reference  to a Person in a particular
     capacity  excludes  such  Person in any  other  capacity  or  individually;
     provided  that  nothing in this clause (iv) is  intended to  authorize  any
     assignment not otherwise permitted by this Agreement;

          (v)  except as expressly  provided to the contrary  herein,  reference
     to any agreement,  document or instrument  (including this Agreement) means
     such agreement, document or instrument as amended, supplemented or modified
     and in effect from time to time in  accordance  with the terms thereof and,
     if  applicable,  the terms hereof,  and reference to any Note or other note
     includes any note issued  pursuant  hereto in extension or renewal  thereof
     and in substitution or replacement therefor;

          (vi) unless the context indicates otherwise, reference to any Article,
     Section,  Schedule or Exhibit means such Article or Section  hereof or such
     Schedule or Exhibit hereto;

          (vii) the word "including" (and with  correlative  meaning  "include")
     means  including,  without  limiting  the  generality  of  any  description
     preceding such term;

          (viii) with respect to the determination of any period of time, except
     as  expressly  provided to the  contrary,  the word "from"  means "from and
     including" and the word "to" means "to but excluding";

          (ix)  reference to any law, rule or regulation  means such as amended,
     modified,  codified or reenacted,  in whole or in part,  and in effect from
     time to time; and

          (x) the words  "asset" and  "property"  shall be construed to have the
     same meaning and effect and refer to any and all  tangible  and  intangible
     assets and properties.


                                  ARTICLE II.

                                  The Credits
                                  -----------

           SECTION 2.01  Commitments.  Subject to the terms and  conditions  set
forth  herein,  each Lender agrees to make  Revolving  Loans to the Company from
time to time during the  Availability  Period in an aggregate  principal  amount
that will not result in (a) such Lender's  Revolving  Credit Exposure  exceeding
such Lender's Commitment or (b) the sum of the

                                      -29-
<PAGE>


total  Revolving  Credit  Exposures  exceeding  the  Availability.   Within  the
foregoing  limits and subject to the terms and conditions set forth herein,  the
Company may borrow, prepay and reborrow Revolving Loans.

           SECTION 2.02 Loans and  Borrowings.  (a) Each Revolving Loan shall be
made as part of a Borrowing  consisting  of Revolving  Loans made by the Lenders
ratably in  accordance  with their  respective  Commitments.  The failure of any
Lender to make any Loan  required  to be made by it shall not  relieve any other
Lender of its obligations hereunder.

           (b)  Subject to  Section  2.14,  each  Revolving  Borrowing  shall be
comprised  entirely of ABR Loans or Eurodollar  Loans as the Company may request
in accordance herewith. Each Swingline Loan shall be an ABR Loan. Each Lender at
its  option may make any  Eurodollar  Loan by causing  any  domestic  or foreign
branch or Affiliate of such Lender to make such Loan; provided that any exercise
of such option shall not affect the obligation of the Company to repay such Loan
in accordance with the terms of this Agreement.

           (c) At the  commencement  of each Interest  Period for any Eurodollar
Revolving  Borrowing,  such Borrowing shall be in an aggregate amount that is an
integral  multiple of $1,000,000 and not less than $3,000,000.  At the time that
each ABR Revolving  Borrowing is made,  such Borrowing  shall be in an aggregate
amount that is an integral  multiple of $500,000  and not less than  $1,000,000;
provided that an ABR Revolving  Borrowing may be in an aggregate  amount that is
equal to the entire unused  balance of the Total  Commitment or that is required
to finance the  reimbursement  of an LC  Disbursement as contemplated by Section
2.06(f).  Each Swingline Loan shall be in an amount that is an integral multiple
of $100,000  and not less than  $500,000.  Borrowings  of more than one Type and
Class may be outstanding at the same time;  provided that there shall not at any
time be more than a total of six Eurodollar Revolving Borrowings outstanding.

           (d)  Notwithstanding  any  other  provision  of this  Agreement,  the
Company  shall not be entitled to request,  or to elect to convert or  continue,
any Borrowing if the Interest  Period  requested with respect  thereto would end
after the Maturity Date.

           SECTION  2.03  Requests  for  Revolving  Borrowings.   To  request  a
Revolving  Borrowing,  the Company shall notify the Administrative Agent of such
request by telephone (a) in the case of a Eurodollar  Borrowing,  not later than
10:00 a.m., Charlotte,  North Carolina time, three Business Days before the date
of the proposed Borrowing (provided, however, no such request may be given prior
to the third  Business Day after the  Effective  Date) and (b) in the case of an
ABR Borrowing, not later than 10:00 a.m., Charlotte, North Carolina time, on the
date of the proposed Borrowing.  Each such telephonic Borrowing Request shall be
irrevocable and shall be confirmed  promptly by hand delivery or telecopy to the
Administrative Agent of a written Borrowing Request in a form of Exhibit 2.03 (a
"Borrowing Request") and signed by the Company. Each such telephonic and written
Borrowing  Request shall specify the following  information  in compliance  with
Section 2.02:


                                      -30-
<PAGE>


           (i)  the aggregate amount of the requested Borrowing;

           (ii) the date of such Borrowing, which shall be a Business Day;

           (iii)whether  such  Borrowing  is  to  be  an  ABR  Borrowing  or  a
      Eurodollar Borrowing;

           (iv) in the case of a  Eurodollar  Borrowing,  the  initial  Interest
      Period to be applicable  thereto,  which shall be a period contemplated by
      the definition of the term "Interest Period"; and

           (v) the location and number of the  Company's  account to which funds
      are to be disbursed,  which shall comply with the  requirements of Section
      2.07.

If no election as to the Type of  Revolving  Borrowing  is  specified,  then the
requested Revolving  Borrowing shall be an ABR Borrowing.  If no Interest Period
is specified with respect to any requested Eurodollar Revolving Borrowing,  then
the Company shall be deemed to have  selected an Interest  Period of one month's
duration.  Promptly  following receipt of a Borrowing Request in accordance with
this  Section  2.03,  the  Administrative  Agent shall advise each Lender of the
details  thereof and of the amount of such  Lender's  Loan to be made as part of
the requested Borrowing.

           SECTION 2.04 Swingline  Loans. (a Subject to the terms and conditions
set forth herein,  the Swingline  Lender agrees to make  Swingline  Loans to the
Company  from time to time  during  the  Availability  Period,  in an  aggregate
principal  amount  at any  time  outstanding  that  will not  result  in (i) the
aggregate principal amount of outstanding  Swingline Loans exceeding  $5,000,000
or (ii) the sum of the total Revolving Credit Exposures  exceeding the lesser of
the Total  Commitment and the  Availability;  provided that the Swingline Lender
shall not be required  to make a  Swingline  Loan to  refinance  an  outstanding
Swingline  Loan.  Within  the  foregoing  limits  and  subject  to the terms and
conditions  set forth  herein,  the  Company  may  borrow,  prepay and  reborrow
Swingline Loans.

           (b) To  request a  Swingline  Loan,  the  Company  shall  notify  the
Administrative Agent of such request by telephone  (confirmed by telecopy),  not
later than 12:00 noon, Charlotte,  North Carolina time, on the day of a proposed
Swingline  Loan.  Each such notice shall be  irrevocable  and shall  specify the
requested  date  (which  shall be a Business  Day) and  amount of the  requested
Swingline  Loan.  The  Administrative  Agent (if not the Swingline  Lender) will
promptly  advise  the  Swingline  Lender of any such  notice  received  from the
Company. So long as the Swingline Lender and the Administrative  Agent are First
Union  National  Bank,  the  Swingline  Lender  shall make each  Swingline  Loan
available  to the  Company  by means of a credit to the  deposit  account of the
Company  with the  Swingline  Lender  identified  in the most  recent  Notice of
Account  Designation  by 3:00  p.m.,  Charlotte,  North  Carolina  time,  on the
requested date of such Swingline Loan.

           (c)  The  Swingline  Lender  may  by  written  notice  given  to  the
Administrative Agent not later than 12:00 noon, Charlotte,  North Carolina time,
on any  Business  Day  require  the  Lenders to acquire  participations  on such
Business Day in all or a portion of the Swingline Loans


                                      -31-
<PAGE>


outstanding.  Such notice shall specify the aggregate  amount of Swingline Loans
in which Lenders will  participate.  Promptly  upon receipt of such notice,  the
Administrative Agent will give notice thereof to each Lender, specifying in such
notice such Lender's Applicable Percentage of such Swingline Loan or Loans. Each
Lender hereby absolutely and  unconditionally  agrees, upon receipt of notice as
provided  above,  to pay to the  Administrative  Agent,  for the  account of the
Swingline Lender, such Lender's Applicable  Percentage of such Swingline Loan or
Loans.  Each  Lender  acknowledges  and agrees  that its  obligation  to acquire
participations  in Swingline  Loans  pursuant to this  paragraph is absolute and
unconditional  and  shall  not  be  affected  by  any  circumstance  whatsoever,
including the  occurrence  and  continuance  of a Default or Event of Default or
reduction or  termination  of the Total  Commitment,  and that each such payment
shall  be  made  without  any  offset,   abatement,   withholding  or  reduction
whatsoever. Each Lender shall comply with its obligation under this paragraph by
wire transfer of immediately  available funds, in the same manner as provided in
Section  2.07 with  respect to Loans made by such Lender (and Section 2.07 shall
apply,  mutatis mutandis,  to the payment  obligations of the Lenders),  and the
Administrative  Agent shall promptly pay to the Swingline  Lender the amounts so
received by it from the  Lenders.  The  Administrative  Agent  shall  notify the
Company of any  participations  in any Swingline Loan acquired  pursuant to this
paragraph,  and  thereafter  payments in respect of such Swingline Loan shall be
made to the  Administrative  Agent and not to the Swingline Lender.  Any amounts
received by the  Swingline  Lender from the Company (or other party on behalf of
the  Company)  in respect of a  Swingline  Loan after  receipt by the  Swingline
Lender of the  proceeds of a sale of  participations  therein  shall be promptly
remitted  to  the  Administrative  Agent;  any  such  amounts  received  by  the
Administrative  Agent shall be promptly remitted by the Administrative  Agent to
the Lenders that shall have made their  payments  pursuant to this paragraph and
to the  Swingline  Lender,  as their  interests  may  appear.  The  purchase  of
participations  in a Swingline Loan pursuant to this paragraph shall not relieve
the Company or any other Loan Party of any default in the payment thereof.

           SECTION  2.05  Telephonic  Notices.  Without in any way  limiting the
obligation  of the  Company or any other  Loan  Party to confirm in writing  any
telephonic  notice it is entitled to give under this Agreement or any other Loan
Document, the Administrative Agent may act without liability upon the basis of a
telephonic notice believed in good faith by the Administrative  Agent to be from
the Company or such Loan Party prior to receipt of written confirmation. In each
such case, each Loan Party hereby waives the right to dispute the Administrative
Agent's record of the terms of such telephonic notice.

           SECTION 2.06 Letters of Credit.  (a) Existing  Letter of Credit.  The
parties  hereto  acknowledge  that on and after the Effective  Date the Existing
Letter of Credit shall be a Letter of Credit  issued by the Issuing Bank for the
account of the Subsidiary  Borrower  pursuant to this Agreement.  The Subsidiary
Borrower hereby pledges, assigns, transfers and delivers to the Issuing Bank all
its right,  title and interest to all Bonds purchased with funds drawn under the
Existing  Letter of Credit  (the  "Pledged  Bonds"),  and  hereby  grants to the
Issuing  Bank a first lien on, and security  interest in, its rights,  title and
interest in and to the Pledged  Bonds,  the  interest  thereon and all  proceeds
thereof or  substitutions  therefor,  as collateral  security for the prompt and
complete  payment  when due of the  amounts  payable in respect of the  Existing
Letter of Credit.  During such time as any Bonds are Pledged Bonds,  the Issuing
Bank shall be entitled  to exercise  all of the rights of a holder of Bonds with
respect to voting,  consenting  and directing

                                      -32-
<PAGE>

the  Trustee  as if the  Issuing  Bank  were the  owner of such  Bonds,  and the
Subsidiary  Borrower  hereby  grants and  assigns to the  Issuing  Bank all such
rights.

           (b) General.  Subject to the terms and  conditions  set forth herein,
the Company may request the issuance of Letters of Credit for its own account or
for its own account and that of any Restricted Subsidiary,  in a form reasonably
acceptable  to the  Administrative  Agent and the Issuing  Bank, at any time and
from  time  to  time  during  the  Availability  Period.  In  the  event  of any
inconsistency  between the terms and  conditions of this Agreement and the terms
and  conditions  of any  Application  (as  defined in Section  2.06(c)) or other
agreement  submitted by the Company to, or entered into by the Company with, the
Issuing Bank relating to any Letter of Credit,  the terms and conditions of this
Agreement shall control.

           (c)  Notice  of  Issuance,  Amendment,  Renewal,  Extension;  Certain
Conditions.  To request the  issuance  of a Letter of Credit (or the  amendment,
renewal or extension of an outstanding Letter of Credit), the Company shall hand
deliver or telecopy (or transmit by electronic  communication,  if  arrangements
for doing so have been approved by the Issuing Bank) to the Issuing Bank and the
Administrative  Agent  (not less  than  five  Business  Days in  advance  of the
requested date of issuance, amendment, renewal or extension) a notice (a "Letter
of  Credit  Request")  requesting  the  issuance  of  a  Letter  of  Credit,  or
identifying the Letter of Credit to be amended, renewed or extended, the date of
issuance,  amendment,  renewal or  extension,  the date on which such  Letter of
Credit is to expire (which shall comply with this Section  2.06(c)),  the amount
of such Letter of Credit,  the name and address of the  beneficiary  thereof and
such other information as shall be necessary to prepare,  amend, renew or extend
such Letter of Credit.  If requested by the Issuing Bank, the Company also shall
submit a letter of credit  application on the Issuing  Bank's  standard form (an
"Application")  in connection with any request for a Letter of Credit.  A Letter
of Credit  shall be  issued,  amended,  renewed  or  extended  only if (and upon
issuance,  amendment,  renewal or extension of each Letter of Credit the Company
shall be deemed to represent  and warrant  that),  after  giving  effect to such
issuance,  amendment,  renewal or extension (i) the LC Exposure shall not exceed
$75,000,000 and (ii) the sum of the total Revolving  Credit  Exposures shall not
exceed the lesser of the Total Commitment and the Availability.

           (d) Expiration  Date.  Each Letter of Credit (other than the Existing
Letter of  Credit)  shall  expire at or prior to the  close of  business  on the
earlier of (i) the date one year after the date of the  issuance  of such Letter
of Credit (or, in the case of any renewal or extension  thereof,  one year after
such renewal or extension) and (ii) the date that is five Business Days prior to
the Maturity Date.

           (e)  Participations.  On  the  Effective  Date  with  respect  to the
Existing Letter of Credit and by the issuance of each other Letter of Credit (or
an amendment to a Letter of Credit  increasing  the amount  thereof) and without
any further  action on the part of the Issuing Bank or the Lenders,  the Issuing
Bank hereby  grants to each Lender,  and each Lender  hereby  acquires  from the
Issuing  Bank, a  participation  in such Letter of Credit equal to such Lender's
Applicable  Percentage of the aggregate  amount available to be drawn under such
Letter of Credit.  In  consideration  and in furtherance of the foregoing,  each
Lender hereby absolutely and unconditionally agrees to pay to the Administrative
Agent, for the account of the Issuing Bank,


                                      -33-
<PAGE>


such Lender's Applicable  Percentage of each LC Disbursement made by the Issuing
Bank and not  reimbursed  by the  Company on the date due as provided in Section
2.06(f), or of any reimbursement  payment required to be refunded to the Company
for any reason.  Each Lender  acknowledges  and agrees  that its  obligation  to
acquire  participations  pursuant  to this  paragraph  in  respect of Letters of
Credit  is  absolute  and  unconditional  and  shall  not  be  affected  by  any
circumstance  whatsoever,  including any amendment,  renewal or extension of any
Letter of Credit or the occurrence  and  continuance of a Default or an Event of
Default or  reduction  or  termination  of the  Commitments,  and that each such
payment shall be made without any offset,  abatement,  withholding  or reduction
whatsoever.

          (i) Reimbursement. If the Issuing Bank shall make any LC  Disbursement
in respect of a Letter of Credit,  the Borrower for whose account such Letter of
Credit  was  issued  shall  reimburse  such LC  Disbursement  by  paying  to the
Administrative  Agent an amount  equal to such LC  Disbursement  not later  than
12:00  noon,  Charlotte,   North  Carolina  time,  on  the  date  that  such  LC
Disbursement  is made,  if such Borrower  shall have received  notice of such LC
Disbursement prior to 10:00 a.m., Charlotte,  North Carolina time, on such date,
or, if such notice has not been received by such Borrower  prior to such time on
such date,  then not later than 12:00 noon,  Charlotte,  North Carolina time, on
(i) the Business Day that such Borrower  receives such notice, if such notice is
received  prior to 10:00 a.m.,  Charlotte,  North  Carolina  time, on the day of
receipt,  or (ii) the  Business  Day  immediately  following  the day that  such
Borrower receives such notice, if such notice is not received prior to such time
on the day of receipt; provided that if such Borrower fails to make such payment
when due, then, upon demand by the Issuing Bank sent to the Administrative Agent
and each Lender before 10:00 a.m.,  Charlotte,  North Carolina time, each Lender
shall  pursuant  to  Section  2.07  on  the  same  day  make  available  to  the
Administrative  Agent for delivery to the Issuing  Bank,  immediately  available
funds in an amount equal to such Lender's Applicable Percentage of the amount of
such  payment by the  Issuing  Bank,  and the  funding of such  amount  shall be
treated  as the  funding  of an ABR  Loan  by  such  Lender  to  such  Borrower.
Notwithstanding  anything  herein or in any other Loan Document to the contrary,
the funding  obligations of the Lenders set forth in this Section  2.06(f) shall
be binding  regardless  of whether or not a Default or an Event of Default shall
exist or the other  conditions  precedent  in Article III are  satisfied at such
time.  If and to the extent any Lender  fails to effect any  payment due from it
under this Section  2.06(f) to the  Administrative  Agent,  then interest  shall
accrue on the  obligation of such Lender to make such payment from the date such
payment  became  due to the date such  obligation  is paid in full at a rate per
annum equal to the Federal Funds  Effective  Rate.  The failure of any Lender to
pay its  Applicable  Percentage  of any payment under any Letter of Credit shall
not  relieve  any  other  Lender  of  its  obligation  hereunder  to  pay to the
Administrative  Agent its Applicable  Percentage of any payment under any Letter
of Credit on the date  required,  as  specified  above,  but no Lender  shall be
responsible  for the  failure of any other  Lender to pay to the  Administrative
Agent such other Lender's Applicable Percentage of any such payment.

           (g) Obligations  Absolute.  The Company's obligation to reimburse (or
in the  case  of the  Existing  Letter  of  Credit,  the  Subsidiary  Borrower's
obligation to reimburse) LC  Disbursements as provided in Section 2.06(f) shall,
to the extent permitted by law, be absolute,  unconditional and irrevocable, and
shall be performed strictly in accordance with the terms of this Agreement under
any and all circumstances whatsoever and irrespective of:


                                      -34-
<PAGE>


          (i) any lack of  validity or  enforceability  of any Letter of Credit,
     this Agreement or any other Loan Document,  or any term or provision herein
     or therein;

          (ii) any  amendment or waiver of or any consent to departure  from all
     or any of the  provisions  of any Letter of Credit,  this  Agreement or any
     other Loan Document;

          (iii) the existence of any claim, setoff,  defense or other right that
     either  Borrower,  any other Loan Party or other  Affiliate  thereof or any
     other Person may at any time have against the beneficiary  under any Letter
     of Credit, the Issuing Bank, the Administrative  Agent or any Lender or any
     other  Person,  whether  in  connection  with this  Agreement  or any other
     related or unrelated agreement or transaction;

          (iv) any draft or other  document  presented  under a Letter of Credit
     proving to be forged, fraudulent or invalid in any respect or any statement
     therein being untrue or inaccurate in any respect;

          (v)  payment  by the  Issuing  Bank  under a Letter of Credit  against
     presentation  of a draft or other  document  that does not comply  with the
     terms of such Letter of Credit; and

          (vi)  any  other  act or  omission  to act or delay of any kind of the
     Issuing Bank, the Lenders,  the Administrative Agent or any other Person or
     any other event or circumstance  whatsoever,  whether or not similar to any
     of the foregoing,  that might, but for the provisions of this Section 2.06,
     constitute a legal or equitable  discharge of any Loan Party's  obligations
     hereunder.

Neither the  Administrative  Agent, the Lenders nor the Issuing Bank, nor any of
their Related Parties,  shall have any liability or  responsibility by reason of
or in  connection  with the  issuance or transfer of any Letter of Credit or any
payment  or  failure  to  make  any  payment  thereunder,  including  any of the
circumstances specified in clauses (i) through (vi) above, as well as any error,
omission,  interruption, loss or delay in transmission or delivery of any draft,
notice  or other  communication  under  or  relating  to any  Letter  of  Credit
(including  any document  required to make a drawing  thereunder),  any error in
interpretation of technical terms or any consequence  arising from causes beyond
the  control of the  Issuing  Bank;  provided  that the  foregoing  shall not be
construed  to excuse the Issuing  Bank from  liability to the Borrower for whose
account such Letter of Credit was issued to the extent of any direct damages (as
opposed to consequential  damages,  claims in respect of which are hereby waived
by each  Borrower to the extent  permitted by  applicable  law) suffered by such
Borrower  that are caused by the Issuing  Bank's  failure to exercise the agreed
standard of care (as set forth below) in  determining  whether  drafts and other
documents presented under a Letter of Credit comply with the terms thereof.  The
parties  hereto  expressly  agree that the Issuing Bank shall have exercised the
agreed standard of care in the absence of gross negligence,  willful  misconduct
or  unlawful  conduct on the part of the  Issuing  Bank.  Without  limiting  the
generality of the foregoing,  it is understood  that the Issuing Bank may accept
documents  that appear on their face to be in  substantial  compliance  with the
terms of a Letter of Credit,  without  responsibility for further investigation,
regardless of any notice or  information  to the contrary,  and may make payment
upon  presentation  of documents  that appear on their face to be in substantial
compliance with the terms of such Letter of Credit; provided

                                      -35-
<PAGE>


that the Issuing Bank shall have the right, in its sole  discretion,  to decline
to accept such  documents and to make such payment if such  documents are not in
strict compliance with the terms of such Letter of Credit.

           (h)  Disbursement  Procedures.   The  Issuing  Bank  shall,  promptly
following its receipt thereof,  examine all documents  purporting to represent a
demand for payment  under a Letter of Credit.  The Issuing  Bank shall  promptly
notify the  Administrative  Agent and the Borrower for whose account such Letter
of Credit was issued by  telephone  (confirmed  by  telecopy) of such demand for
payment and whether  the Issuing  Bank has made or will make an LC  Disbursement
thereunder;  provided  that any  failure to give or delay in giving  such notice
shall not relieve  either  Borrower of its  obligation  to reimburse the Issuing
Bank and the Lenders with respect to any such LC Disbursement.

           (i)  Interim  Interest.  If  the  Issuing  Bank  shall  make  any  LC
Disbursement,  then,  unless the Company (or, in the case of the Existing Letter
of Credit, the Subsidiary Borrower) shall reimburse such LC Disbursement in full
on the date specified in Section  2.06(f),  the unpaid amount thereof shall bear
interest,  for each day from the date such LC  Disbursement  is made to the date
that the  Company  (or,  in the  case of the  Existing  Letter  of  Credit,  the
Subsidiary  Borrower)  reimburses such LC Disbursement  (or all Lenders make the
payments to the Administrative Agent contemplated by Section 2.06(f) and treated
pursuant to said Section as constituting the funding of ABR Loans),  at the rate
per annum then applicable to ABR Revolving Loans.

          (j)  Replacement of the Issuing Bank. The Issuing Bank may be replaced
at any time by written agreement among the Borrowers,  the Administrative Agent,
the replaced  Issuing Bank and the successor  Issuing Bank.  The  Administrative
Agent shall notify the Lenders of any such  replacement  of the Issuing Bank. At
the time any such replacement  shall become  effective,  the Borrowers shall pay
all unpaid fees accrued for the account of the replaced Issuing Bank pursuant to
Section 2.12(b). From and after the effective date of any such replacement,  (i)
the  successor  Issuing  Bank shall have all the rights and  obligations  of the
Issuing Bank under this Agreement with respect to Letters of Credit to be issued
thereafter and (ii) references herein to the term "Issuing Bank" shall be deemed
to refer to such successor or to any previous Issuing Bank, or to such successor
and all  previous  Issuing  Banks,  as the  context  shall  require.  After  the
replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain
a party hereto and shall  continue to have all the rights and  obligations of an
Issuing Bank under this Agreement with respect to Letters of Credit issued by it
prior to such replacement, but shall not be required to issue additional Letters
of Credit.

          (k) Cash Collateralization.  If (i) any Event of Default  shall  occur
and be continuing, on the Business Day that the Company receives notice from the
Administrative  Agent or the Required  Lenders (or, if the maturity of the Loans
has been accelerated, Lenders with LC Exposure representing greater than 66_% of
the total LC Exposure) demanding the deposit of cash collateral pursuant to this
paragraph or (ii) a Change in Control shall occur,  the Company shall deposit in
an account  with the  Administrative  Agent,  in the name of the  Administrative
Agent and for the  benefit  of the  Lenders,  an amount in cash  equal to the LC
Exposure as of such date plus any accrued and unpaid interest thereon;  provided
that the

                                      -36-
<PAGE>

obligation to deposit such cash collateral shall become  effective  immediately,
and such deposit shall become  immediately  due and payable,  without  demand or
notice of any kind,  upon the occurrence of any Event of Default with respect to
any Loan Party  described  in clause (g) or (h) of Section  7.01.  Such  deposit
shall be held by the  Administrative  Agent as  collateral  for the  payment and
performance of the  obligations of the Loan Parties under this Agreement and the
other Loan Documents. The Administrative Agent shall have exclusive dominion and
control,  including the exclusive right of withdrawal,  over such account. Other
than any interest earned on the investment of such deposits,  which  investments
shall be made at the option and sole discretion of the Administrative  Agent and
at the  Company's  risk and  expense,  such  deposits  shall not bear  interest.
Interest  or profits,  if any,  on such  investments  shall  accumulate  in such
account.  Moneys in such account shall be applied by the Administrative Agent to
reimburse  the  Issuing  Bank  for LC  Disbursements  for  which it has not been
reimbursed and, to the extent not so applied, shall be held for the satisfaction
of the  reimbursement  obligations  of the Borrowers for the LC Exposure at such
time or, if the maturity of the Loans has been  accelerated  (but subject to the
consent of Lenders with LC Exposure  representing greater than 66_% of the total
LC Exposure),  be applied to satisfy other obligations of the Loan Parties under
this  Agreement  and the other Loan  Documents.  If the  Company is  required to
provide an amount of cash collateral  hereunder as a result of the occurrence of
an Event of Default,  such amount (to the extent not applied as aforesaid) shall
be  returned  to the  Company  within  three  Business  Days after all Events of
Default have been cured or waived.

           SECTION 2.07 Funding of  Borrowings.  (a) Each Lender shall make each
Loan to be made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds by 2:00 p.m., Charlotte, North Carolina time, to the
account of the  Administrative  Agent most  recently  designated  by it for such
purpose by notice to the Lenders; provided that Swingline Loans shall be made as
provided  in  Section  2.04.  Not later than 2:00 p.m.  (Charlotte  time) on the
proposed  borrowing date, each Lender will make available to the  Administrative
Agent,  for the  account of the  Borrower,  at the office of the  Administrative
Agent in funds immediately  available to the Administrative Agent, such Lender's
Commitment  Percentage  of the  Loans  to be made on such  borrowing  date.  The
Company hereby irrevocably  authorizes the Administrative  Agent to disburse the
proceeds  of  each  borrowing   requested  pursuant  to  this  Section  2.07  in
immediately  available funds by crediting or wiring such proceeds to the deposit
account  of the  Company  identified  in  the  most  recent  Notice  of  Account
Designation  substantially  in the form of  Exhibit  2.07  hereto (a  "Notice of
Account  Designation")  delivered by the Company to the Administrative  Agent or
may be otherwise agreed upon by the Borrower and the  Administrative  Agent from
time  to  time;   provided  that  ABR  Revolving   Loans  made  to  finance  the
reimbursement  of an LC  Disbursement  as provided  in Sections  2.06(e) and (f)
shall be remitted by the Administrative Agent to the Issuing Bank.

           (b) Unless the Administrative Agent shall have received notice from a
Lender  prior to the  proposed  date of any  Borrowing  (or prior to 12:00 noon,
Charlotte,  North  Carolina  time, on such date in the case of an ABR Borrowing)
that such  Lender  will not make  available  to the  Administrative  Agent  such
Lender's share of such Borrowing,  the Administrative Agent may assume that such
Lender has made such share  available  on such date in  accordance  with Section
2.07(a) and may, in reliance upon such assumption, make available to the Company
a  corresponding  amount.  In such  event,  if a Lender has not in fact made its
share of the applicable


                                      -37-
<PAGE>


Borrowing available to the Administrative  Agent, then the applicable Lender and
the Company  severally  agree to pay to the  Administrative  Agent  forthwith on
demand such  corresponding  amount with interest thereon,  for each day from the
date such amount is made  available to the Company to the date of payment to the
Administrative  Agent,  at (i) in the case of such  Lender,  the  Federal  Funds
Effective Rate or (ii) in the case of the Company,  the interest rate applicable
to ABR Loans. If such Lender pays such amount to the Administrative  Agent, then
such amount shall constitute such Lender's Loan included in such Borrowing.

           SECTION  2.08  Interest  Elections.   (a)  Each  Revolving  Borrowing
initially  shall be of the Type  specified in the applicable  Borrowing  Request
and,  in the case of a  Eurodollar  Revolving  Borrowing,  shall have an initial
Interest Period as specified in such Borrowing Request.  Thereafter, the Company
may elect to convert  such  Borrowing  to a different  Type or to continue  such
Borrowing  and,  in the case of a  Eurodollar  Revolving  Borrowing,  may  elect
Interest Periods therefor, all as provided in this Section 2.08. The Company may
elect  different  options  with  respect to  different  portions of the affected
Borrowing,  in which case each such portion shall be allocated ratably among the
Lenders holding the Loans  comprising such Borrowing,  and the Loans  comprising
each such portion  shall be considered a separate  Borrowing.  This Section 2.08
shall  not  apply  to  Swingline  Borrowings,  which  may  not be  converted  or
continued.

           (b) To make an election  pursuant to this Section  2.08,  the Company
shall notify the Administrative  Agent of such election by telephone by the time
that a Borrowing  Request  would be required  under  Section 2.03 if the Company
were  requesting a Revolving  Borrowing of the Type resulting from such election
to be made on the effective date of such election. Each such telephonic Interest
Election  Request shall be irrevocable  and shall be confirmed  promptly by hand
delivery or telecopy to the Administrative  Agent of a written Interest Election
Request in the form of Exhibit 2.08 (an "Interest Election Request").

           (c) Each  telephonic  and written  Interest  Election  Request  shall
specify the following information in compliance with Section 2.02:

          (i) the Borrowing to which such Interest Election Request applies and,
     if different  options are being elected with respect to different  portions
     thereof,  the portions thereof to be allocated to each resulting  Borrowing
     (in which case the  information  to be specified  pursuant to clauses (iii)
     and (iv) below shall be specified for each resulting Borrowing);

          (ii) the effective date of the election made pursuant to such Interest
     Election Request, which shall be a Business Day;

          (iii) whether the  resulting  Borrowing is to be an ABR Borrowing or a
     Eurodollar Borrowing; and

          (iv)  if  the  resulting  Borrowing  is a  Eurodollar  Borrowing,  the
     Interest  Period  to be  applicable  thereto  after  giving  effect to such
     election,  which shall be a period  contemplated  by the  definition of the
     term "Interest Period".

                                      -38-
<PAGE>

If any such Interest  Election Request requests a Eurodollar  Borrowing but does
not  specify  an  Interest  Period,  then the  Company  shall be  deemed to have
selected an Interest Period of one month's duration.

           (d) Promptly  following receipt of an Interest Election Request,  the
Administrative Agent shall advise each Lender of the details thereof and of such
Lender's portion of each resulting Borrowing.

           (e) If the  Company  fails  to  deliver  a timely  Interest  Election
Request with respect to a Eurodollar Revolving Borrowing prior to the end of the
Interest Period  applicable  thereto,  then,  unless such Borrowing is repaid as
provided  herein,  at the end of such Interest  Period such  Borrowing  shall be
converted to an ABR Borrowing. Notwithstanding any contrary provision hereof, if
and so long as an Event of Default is continuing  (i) no  outstanding  Revolving
Borrowing  may be converted to or continued as a Eurodollar  Borrowing  and (ii)
unless repaid, each Eurodollar  Revolving Borrowing shall be converted to an ABR
Borrowing at the end of the Interest Period applicable thereto.

           SECTION 2.09  Termination  and Reduction of  Commitments.  (a) Unless
previously terminated,  on May 1, 2000 (as such date may be extended pursuant to
Section 2.20, the "Initial  Reduction Date") and on each of the other dates (the
Initial  Reduction  Date and each such  other  date,  as such  other date may be
extended  pursuant to Section 2.20,  being a "Reduction  Date") specified below,
the Total  Commitment shall reduce by an amount equal to the Total Commitment in
effect on the Initial  Reduction  Date  multiplied by the  percentage  set forth
opposite such dates below:

                        Dates                    Percentage
                        -----                    ----------

           May 1 and August 1, 2000                 4.00%
           November 1, 2000 and February 1, 2001    4.25%
           May 1 and August 1, 2001                 4.50%
           November 1, 2001 and February 1, 2002    4.75%
           May 1 and August 1, 2002                 5.00%
           November 1, 2002 and February 1, 2003    5.00%
           May 1 and August 1, 2003                 5.25%
           November 1, 2003 and February 1, 2004    5.50%
           May 1 and August 1, 2004                 5.75%
           November 1, 2004 and February 1, 2005    6.00%

Notwithstanding  the  foregoing,   unless  previously   terminated,   the  Total
Commitment shall terminate on the Maturity Date.

           (b) The  Company  may at any  time  terminate,  or from  time to time
reduce,  the  Total  Commitment,  in whole or in  part;  provided  that (i) each
partial  reduction  of the Total  Commitment  shall be in an  amount  that is an
integral  multiple  of  $1,000,000  and not less  than  $5,000,000  and (ii) the
Company shall not terminate or reduce the Commitments if, after giving effect to
any concurrent  prepayment of the Loans in accordance with Section 2.11, the sum
of the


                                      -39-
<PAGE>


Revolving  Credit  Exposures would exceed the lesser of the Total Commitment and
the  Availability.  Each  reduction  of the Total  Commitment  pursuant  to this
Section  2.09(b) made after the Initial  Reduction  Date shall reduce the amount
that must be reduced  on each  subsequent  Reduction  Date in the order in which
each such reduction is to occur.

           (c) The Company shall notify the Administrative Agent of any election
to terminate or reduce the Total Commitment under Section 2.09(b) at least three
Business  Days prior to the  effective  date of such  termination  or reduction,
specifying  such election and the effective  date  thereof.  Promptly  following
receipt of any notice, the Administrative  Agent shall advise the Lenders of the
contents thereof.  Each notice delivered by the Company pursuant to this Section
2.09 shall be  irrevocable;  provided that a notice of  termination of the Total
Commitment  delivered  by the Company may state that such notice is  conditioned
upon the effectiveness of other credit facilities, in which case such notice may
be revoked by the Company (by notice to the Administrative  Agent on or prior to
the  specified  effective  date)  if  such  condition  is  not  satisfied.   Any
termination  or  reduction  of the Total  Commitment  shall be  permanent.  Each
reduction of the Total  Commitment  shall be made  ratably  among the Lenders in
accordance with their respective Commitments.

           SECTION 2.10  Repayment of Loans;  Evidence of Debt.  (a) The Company
hereby  unconditionally  promises to pay (i) to the Administrative Agent for the
account of each Lender the then unpaid  principal  amount of each Revolving Loan
on the Maturity Date and (ii) to the Swingline  Lender the then unpaid principal
amount of each Swingline Loan on demand thereof or by the Swingline  Lender.  In
addition,  if after giving  effect to the  reduction of the Total  Commitment on
each Reduction  Date, the Revolving  Credit  Exposure  exceeds the lesser of the
Total   Commitment  and  the   Availability,   the  Company  shall  pay  to  the
Administrative  Agent for the  account  of each  Lender an  aggregate  principal
amount of Revolving Loans  sufficient to cause the Revolving Credit Exposure not
to exceed the lesser of the Total  Commitment  and the  Availability;  provided,
however, if the repayment of the outstanding  Revolving Loans does not cause the
Revolving  Credit  Exposure  to be equal to or less than the lesser of the Total
Commitment  and the  Availability,  the Company shall deposit in an account with
the  Administrative  Agent in the name of the  Administrative  Agent and for the
benefit of the  Lender,  an amount in cash equal to the excess of the  Revolving
Credit Exposure over the Total  Commitment,  which cash deposit shall be held by
the Administrative  Agent for the payment of the obligations of the Loan Parties
under this  Agreement and the other Loan  Documents.  The  Administrative  Agent
shall have  exclusive  dominion and control,  including the  exclusive  right of
withdrawal,  over such account other than any interest  earned on the investment
of  such  deposit,  which  investments  shall  be made at the  option  and  sole
discretion of the  Administrative  Agent and at the Company's  risk and expense.
Interest  or profits,  if any,  on such  investments  shall  accumulate  in such
account.  Moneys in such account shall be applied by the Administrative Agent to
reimburse  the  Issuing  Bank  for LC  Disbursements  for  which it has not been
reimbursed and, to the extent not so applied, shall be held for the satisfaction
of the  reimbursement  obligations  of the Borrowers for the LC Exposure at such
time, or if the maturity of the Loans has been  accelerated  (but subject to the
consent of the Lenders  with LC Exposure  representing  greater than 66_% of the
total LC Exposure),  be applied to satisfy other obligations of the Loan Parties
under  this  Agreement  and the  other  Loan  Documents.  At any  time  when the
Revolving Credit Exposure does not exceed the lesser of the Total Commitment and
the Availability and so

                                      -40-
<PAGE>

long as no Default or Event of Default shall then exist, upon the request of the
Company  the amount of such  deposit  (to the extent not  applied as  aforesaid)
shall be returned to the Company  within three  Business  Days after  receipt of
such request.

           (b) On the date that a Change in Control  occurs,  the Company  shall
repay the  outstanding  principal  amount  of the  Loans  and all other  amounts
outstanding  hereunder and under the other Loan  Documents and shall comply with
the provisions of Section 2.06(k);  provided,  however, if the Change in Control
is a result of the death or disability of Richard D. Kinder or William V. Morgan
or both, the Company shall make such repayment and comply with the provisions of
Section  2.06(k)  on the date that is 180 days  after  such  Change  in  Control
occurs, unless such date is not a Business Day in which event such repayment and
compliance shall be due on the next Business Day occurring after such date.

           (c) Each Lender shall maintain in accordance  with its usual practice
an account or accounts evidencing the indebtedness of the Company to such Lender
resulting from each Loan made by such Lender, including the amounts of principal
and interest payable and paid to such Lender from time to time hereunder.

           (d) The  Administrative  Agent  shall  maintain  accounts in which it
shall  record  (i) the  amount of each Loan made  hereunder,  the Class and Type
thereof  and the  Interest  Period  applicable  thereto,  (ii) the amount of any
principal  or interest  due and  payable or to become due and  payable  from the
Company to each Lender hereunder and (iii) the amount of any sum received by the
Administrative  Agent hereunder for the account of the Lenders and each Lender's
share thereof.

           (e) The entries made in the accounts  maintained  pursuant to Section
2.10(c) or (d) shall be prima facie evidence of the existence and amounts of the
obligations  recorded  therein;  provided  that the failure of any Lender or the
Administrative  Agent to maintain such accounts or any error or conflict therein
shall not in any manner affect the  obligation of the Company to repay the Loans
in accordance with the terms of this Agreement.

           (f) Any Lender may request  that Loans made by it be  evidenced  by a
promissory note. In such event,  the Company shall prepare,  execute and deliver
to such Lender a promissory  note payable to the order of such Lender and in the
form attached as Exhibit 2.10 (each a "Note").  Thereafter,  the Loans evidenced
by such promissory note and interest thereon shall at all times (including after
assignment  pursuant to Section 11.05) be represented by one or more  promissory
notes in such form payable to the order of the payee named therein.

           SECTION  2.11  Prepayment  of Loans.  (a) The Company  shall have the
right at any time and from time to time to prepay any  Borrowing  in whole or in
part, subject to prior notice in accordance with Section 2.11(b).

           (b) The Company  shall notify the  Administrative  Agent (and, in the
case of  prepayment  of a Swingline  Loan,  the  Swingline  Lender) by telephone
(confirmed  by telecopy in the form of Exhibit 2.11 (a "Notice of  Prepayment"))
of any  prepayment  hereunder  (i) in the  case of  prepayment  of a  Eurodollar
Revolving Borrowing, not later than 11:00 a.m., Charlotte,  North Carolina time,
three  Business  Days  before  the  date  of  prepayment,  (ii)  in the  case of
prepayment


                                      -41-
<PAGE>


of an ABR  Revolving  Borrowing,  not later than 11:00  a.m.,  Charlotte,  North
Carolina time, on the date of prepayment or (iii) in the case of prepayment of a
Swingline  Loan, not later than 11:00 a.m.,  Charlotte,  North Carolina time, on
the date of prepayment.  Each such notice shall be irrevocable and shall specify
the prepayment  date, Type and the principal amount of each Borrowing or portion
thereof to be prepaid;  provided  that,  if a notice of  prepayment  is given in
connection  with a  conditional  notice of  termination  of the  Commitments  as
contemplated  by Section 2.09,  then such notice of prepayment may be revoked if
such notice of  termination  is revoked in accordance  with Section  2.09.  Each
partial  prepayment  shall be in an aggregate amount not less than, and shall be
an integral  multiple of, the amounts shown below with respect to the applicable
Type of Loan or Borrowing:


               Type of             Integral         Minimum
           Loan/Borrowing         Multiple of   Aggregate Amount
           --------------         -----------   ----------------

      Eurodollar Revolving       $  1,000,000     $ 3,000,000
      Borrowing

      ABR Revolving Borrowing         500,000       1,000,000

      Swingline Loan                  100,000         500,000

Promptly following receipt of any such notice relating to a Revolving Borrowing,
the  Administrative  Agent shall advise the Lenders of the contents thereof.  If
the Company fails to designate  the Type of  Borrowings  to be prepaid,  partial
prepayments  shall be applied first to the outstanding ABR Borrowings  until all
such outstanding principal of ABR Borrowings are repaid in full, and then to the
outstanding principal amount of Eurodollar  Borrowings.  Each partial prepayment
of any Revolving  Borrowing shall be in an amount that would be permitted in the
case of an advance of a  Revolving  Borrowing  of the same Type as  provided  in
Section 2.02. Each prepayment of a Revolving  Borrowing shall be applied ratably
to the Loans included in the prepaid Borrowing. Prepayments shall be accompanied
by accrued interest to the extent required by Section 2.13.

           SECTION   2.12  Fees.   (a)  The   Company   agrees  to  pay  to  the
Administrative  Agent for the account of each  Lender a  commitment  fee,  which
shall  accrue  at the  Applicable  Margin  on the  daily  amount  of the  unused
Commitment  of such Lender during the period from and including the date of this
Agreement to but excluding the date on which such Commitment terminates. Accrued
commitment fees shall be payable in arrears on the last Business Day of January,
April,  July and  October of each year and on the date on which the  Commitments
terminate, commencing on the first such date to occur after the date hereof. All
commitment  fees shall be  computed on the basis of a year of 360 days and shall
be payable for the actual  number of days elapsed  (including  the first day but
excluding the last day).

           (b) The Company agrees to pay (i) to the Administrative Agent for the
account of each Lender a participation fee with respect to its participations in
Letters  of  Credit,  which  shall  accrue  at a rate  per  annum  equal  to the
Applicable  Margin  applicable to interest on Eurodollar  Revolving Loans on the
average daily amount of such Lender's LC Exposure (excluding any portion thereof
attributable  to  unreimbursed  LC  Disbursements)  during the  period  from and
including  the  Effective  Date to but  excluding the later of the date on which
such


                                      -42-
<PAGE>


Lender's Commitment  terminates and the date on which such Lender ceases to have
any LC Exposure, and (ii) to the Issuing Bank a fronting fee, which shall accrue
at the rate of .125% per annum on the  average  daily  amount of the LC Exposure
(excluding any portion thereof  attributable  to unreimbursed LC  Disbursements)
during the period from and  including  the  Effective  Date to but excluding the
later of the date of termination of the  Commitments and the date on which there
ceases to be any LC Exposure,  as well as the Issuing Bank's  standard fees with
respect to the issuance, amendment, renewal or extension of any Letter of Credit
or  processing  of  drawings  thereunder.  Accrued  participation  fees shall be
payable in arrears on the last Business Day of January,  April, July and October
of each year,  commencing  on the first such date to occur  after the  Effective
Date;  provided  that all such fees  shall be  payable  on the date on which the
Commitments  terminate  and any such fees  accruing  after the date on which the
Commitments  terminate shall be payable on demand. Any other fees payable to the
Issuing Bank pursuant to this  paragraph  shall be payable  within 10 days after
demand.  All participation fees and fronting fees shall be computed on the basis
of a year of 360 days and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day).

           (c) The Company agrees to pay to the  Administrative  Agent,  for its
own  account,  fees  payable in the amounts and at the times  specified  in that
letter agreement dated November 30, 1998 among the Company,  the  Administrative
Agent and First Union Capital  Markets (as from time to time  amended,  the "Fee
Letter").

           (d) All fees  payable  hereunder  shall be paid on the dates due,  in
immediately  available  funds,  to the  Administrative  Agent (or to the Issuing
Bank,  in the  case of fees  payable  to it) for  distribution,  in the  case of
commitment fees and  participation  fees, to the Lenders.  Except as required by
law, fees paid shall not be refundable under any circumstances.

           SECTION 2.13 Interest.  (a) The Loans  comprising  each ABR Borrowing
(including each Swingline Loan) shall bear interest at a rate per annum equal to
the Alternate Base Rate.

           (b)  The  Loans  comprising  each  Eurodollar  Borrowing  shall  bear
interest  at a rate per annum  equal to LIBOR  Rate for the  Interest  Period in
effect for such Borrowing plus the Applicable Margin.

           (c) Notwithstanding the foregoing, if any principal of or interest on
any Loan or any fee or other amount payable by the Company hereunder is not paid
when due,  whether at stated  maturity,  upon  acceleration  or otherwise,  such
overdue amount shall bear interest,  after as well as before judgment, at a rate
per annum equal to (i) in the case of overdue principal of any Loan, 2% plus the
rate otherwise  applicable to such Loan as provided above or (ii) in the case of
any other amount, 2% plus the Alternate Base Rate.

           (d) Accrued interest on each Loan shall be payable in arrears on each
Interest Payment Date for such Loan; provided that (i) interest accrued pursuant
to  Section  2.13(c)  shall  be  payable  on  demand,  (ii) in the  event of any
repayment or prepayment of any Loan (other than a prepayment of an ABR Revolving
Loan  prior to the end of the  Availability  Period),  accrued  interest  on the
principal  amount  repaid  or  prepaid  shall  be  payable  on the  date of such
repayment or prepayment,  (iii) in the event of any conversion of any Eurodollar
Revolving Loan prior to the


                                      -43-
<PAGE>


end of the current Interest Period therefor, accrued interest on such Loan shall
be  payable  on the  effective  date of such  conversion  and (iv)  all  accrued
interest shall be payable upon termination of the Total Commitment.

           (e) All interest  hereunder  shall be computed on the basis of a year
of 360 days,  except that interest  computed by reference to the Alternate  Base
Rate at times when the  Alternate  Base Rate is based on the Prime Rate shall be
computed on the basis of a year of 365 days (or 366 days in a leap year), and in
each case shall be payable for the actual number of days elapsed  (including the
first day but excluding the last day).  The  applicable  Alternate  Base Rate or
LIBOR  Rate  shall  be  determined  by  the   Administrative   Agent,  and  such
determination shall be conclusive absent manifest error.

           SECTION  2.14  Alternate   Rate  of   Interest.   If  prior  to  the
commencement of any Interest Period for a Eurodollar Borrowing:

           (a) the Administrative Agent determines (which determination shall be
conclusive  absent  manifest  error) that adequate and  reasonable  means do not
exist for ascertaining the LIBOR Rate for such Interest Period; or

           (b) the Administrative  Agent is advised by the Required Lenders that
the LIBOR Rate for such Interest  Period will not  adequately and fairly reflect
the cost to such Lenders of making or  maintaining  their Loans included in such
Borrowing for such Interest Period;

then the  Administrative  Agent shall give notice thereof to the Company and the
Lenders by  telephone  or telecopy as promptly as  practicable  thereafter  and,
until the  Administrative  Agent  notifies  the Company and the Lenders that the
circumstances  giving  rise to such  notice no longer  exist,  (i) any  Interest
Election Request that requests the conversion of any Revolving  Borrowing to, or
continuation  of any  Revolving  Borrowing as, a Eurodollar  Borrowing  shall be
ineffective and (ii) if any Borrowing  Request  requests a Eurodollar  Revolving
Borrowing, such Borrowing shall be made as an ABR Borrowing.

           SECTION  2.15  Increased Costs.  (a) If any Change in Law shall:

           (i) impose, modify or deem applicable any reserve, special deposit or
      similar  requirement  against assets of,  deposits with or for the account
      of, or credit extended by, any Lender (except any such reserve requirement
      reflected in the LIBOR Rate) or the Issuing Bank; or

           (ii) impose on any Lender or the Issuing Bank or the London interbank
      market any other  condition  affecting this Agreement or Eurodollar  Loans
      made by such Lender or any Letter of Credit or participation therein;

and the result of any of the  foregoing  shall be to  increase  the cost to such
Lender of making or  maintaining  any  Eurodollar  Loan (or of  maintaining  its
obligation  to make any such Loan) or to increase the cost to such Lender or the
Issuing Bank of participating in, issuing or maintaining any Letter of Credit or
to reduce the amount of any sum received or receivable by such Lender or

                                      -44-
<PAGE>


the Issuing Bank hereunder (whether of principal,  interest or otherwise),  then
the Company  will pay to such Lender or the  Issuing  Bank,  as the case may be,
such additional  amount or amounts as will compensate such Lender or the Issuing
Bank,  as the case may be,  for such  additional  costs  incurred  or  reduction
suffered.

           (b) If any Lender or the Issuing Bank  determines  that any Change in
Law regarding capital  requirements has or would have the effect of reducing the
rate of return on such Lender's or the Issuing  Bank's capital or on the capital
of such Lender's or the Issuing Bank's holding company, if any, as a consequence
of this Agreement or the Loans made by, or  participations  in Letters of Credit
held by, such Lender,  or the Letters of Credit issued by the Issuing Bank, to a
level below that which such Lender or the Issuing  Bank or such  Lender's or the
Issuing  Bank's  holding  company could have achieved but for such Change in Law
(taking into  consideration such Lender's or the Issuing Bank's policies and the
policies of such Lender's or the Issuing Bank's holding  company with respect to
capital adequacy), then from time to time the Company will pay to such Lender or
the Issuing Bank, as the case may be, such additional  amount or amounts as will
compensate  such  Lender or the  Issuing  Bank or such  Lender's  or the Issuing
Bank's holding company for any such reduction suffered.

           (c) A  certificate  of a Lender or the Issuing Bank setting forth the
amount or amounts necessary to compensate such Lender or the Issuing Bank or its
holding  company,  as the case may be, as specified  in paragraph  (a) or (b) of
this  Section  2.15 shall be  delivered  to the Company and shall be  conclusive
absent manifest error. The Company shall pay such Lender or the Issuing Bank, as
the case may be, the amount shown as due on any such certificate  within 10 days
after receipt thereof.

           (d) Failure or delay on the part of any Lender or the Issuing Bank to
demand compensation  pursuant to this Section 2.15 shall not constitute a waiver
of such  Lender's  or the  Issuing  Bank's  right to demand  such  compensation;
provided  that the Company  shall not be required to  compensate a Lender or the
Issuing Bank pursuant to this Section 2.15 for any increased costs or reductions
incurred  more than six months prior to the date that such Lender or the Issuing
Bank, as the case may be,  notifies the Company of the Change in Law giving rise
to such increased costs or reductions and of such Lender's or the Issuing Bank's
intention to claim compensation  therefor;  provided further that, if the Change
in Law giving rise to such increased  costs or reductions is  retroactive,  then
the six-month  period  referred to above shall be extended to include the period
of retroactive effect thereof.

           SECTION 2.16 Break Funding Payments.  In the event of (a) the payment
of any  principal  of any  Eurodollar  Loan  other  than on the  last  day of an
Interest  Period  applicable  thereto  (including  as a  result  of an  Event of
Default),  (b) the conversion of any Eurodollar  Loan other than on the last day
of the Interest Period applicable thereto,  (c) the failure to borrow,  convert,
continue or prepay any Eurodollar Loan, or the failure to convert an ABR Loan to
a Eurodollar Loan, on the date specified in any notice delivered pursuant hereto
(regardless  of whether such notice is permitted to be revocable  under  Section
2.09  and is  revoked  in  accordance  herewith)  or (d) the  assignment  of any
Eurodollar  Loan other than on the last day of the  Interest  Period  applicable
thereto as a result of a request by the Company  pursuant to Section 2.19, then,
in any such event,  the Company shall  compensate each Lender for the loss,

                                      -45-
<PAGE>


cost and expense  attributable to such event. In the case of a Eurodollar  Loan,
the loss to any Lender attributable to any such event shall be deemed to include
an amount  determined  by such Lender to be equal to the excess,  if any, of (i)
the amount of  interest  that such Lender  would pay for a deposit  equal to the
principal  amount of such  Loan for the  period  from the date of such  payment,
conversion,  failure or assignment to the last day of the then current  Interest
Period  for such  Loan (or,  in the case of a  failure  to  borrow,  convert  or
continue, the duration of the Interest Period that would have resulted from such
borrowing,  conversion  or  continuation)  if the interest  rate payable on such
deposit  were equal to the LIBOR Rate for such  Interest  Period,  over (ii) the
amount of interest that such Lender would earn on such principal amount for such
period if such Lender were to invest  such  principal  amount for such period at
the  interest  rate that would be bid by such  Lender (or an  affiliate  of such
Lender) for dollar  deposits  from other banks in the  Eurodollar  market at the
commencement  of such period.  A  certificate  of any Lender  setting  forth any
amount or amounts  that such  Lender is  entitled  to receive  pursuant  to this
Section 2.16 shall be delivered  to the Company and shall be  conclusive  absent
manifest error. The Company shall pay such Lender the amount shown as due on any
such certificate within 10 days after receipt thereof.

           SECTION 2.17 Taxes.  (a) Any and all payments by or an account of any
obligation  of  either  Borrower  hereunder  shall be made free and clear of and
without  deduction for any  Indemnified  Taxes or Other Taxes;  provided that if
either Borrower shall be required to deduct any Indemnified Taxes or Other Taxes
from such payments,  then (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  2.17) the  Administrative  Agent,
Lender or Issuing  Bank (as the case may be) receives an amount equal to the sum
it would have  received had no such  deductions  been made,  (ii) such  Borrower
shall make such  deductions  and (iii) such  Borrower  shall pay the full amount
deducted to the relevant  Governmental  Authority in accordance  with applicable
law.

           (b) In  addition,  such  Borrower  shall pay any  Other  Taxes to the
relevant Governmental Authority in accordance with applicable law.

           (c) The Company shall indemnify the Administrative Agent, each Lender
and the Issuing Bank, within 10 days after written demand therefor, for the full
amount of any Indemnified  Taxes or Other Taxes (including  Indemnified Taxes or
Other Taxes imposed or asserted on or attributable to amounts payable under this
Section 2.17(c)) paid by the  Administrative  Agent,  such Lender or the Issuing
Bank, as the case may be, and any penalties,  interest and  reasonable  expenses
arising therefrom or with respect thereto, whether or not such Indemnified Taxes
or Other Taxes were  correctly  or legally  imposed or asserted by the  relevant
Governmental  Authority.  A  certificate  as to the  amount of such  payment  or
liability  delivered to the Company by a Lender or the Issuing  Bank,  or by the
Administrative  Agent on its own behalf or on behalf of a Lender or the  Issuing
Bank, shall be conclusive absent manifest error.

           (d) As soon as practicable  after any payment of Indemnified Taxes or
Other  Taxes by the  Company to a  Governmental  Authority,  the  Company  shall
deliver  to the  Administrative  Agent the  original  or a  certified  copy of a
receipt issued by such Governmental


                                      -46-
<PAGE>


Authority  evidencing such payment,  a copy of the return reporting such payment
or other evidence of such payment reasonably  satisfactory to the Administrative
Agent.

           (e) Any  Foreign  Lender that is  entitled  to an  exemption  from or
reduction  of  withholding  tax under the law of the  jurisdiction  in which the
Borrowers are located, or any treaty to which such jurisdiction is a party, with
respect to payments  under this  Agreement  shall deliver to the Company (with a
copy to the Administrative Agent), at the time or times prescribed by applicable
law or reasonably requested by the Company, such properly completed and executed
documentation  prescribed by  applicable  law as will permit such payments to be
made without withholding or at a reduced rate.

           SECTION  2.18  Payments  Generally;  Pro Rata  Treatment;  Sharing of
Set-offs . (a) The Company shall make or, in the case of the Existing  Letter of
Credit, the Subsidiary  Borrower shall make, each payment required to be made by
such Borrower hereunder (whether of principal,  interest,  fees or reimbursement
of LC Disbursements, or under Section 2.15, 2.16 or 2.17, or otherwise) prior to
12:00 noon, Charlotte, North Carolina time, on the date when due, in immediately
available  funds,  without set-off or  counterclaim.  Any amounts received after
such time on any date may, in the  discretion of the  Administrative  Agent,  be
deemed to have been received on the next succeeding Business Day for purposes of
calculating   interest  thereon.   All  such  payments  shall  be  made  to  the
Administrative  Agent  at its  Principal  Office,  except  payments  to be  made
directly to the Issuing Bank or Swingline  Lender as expressly  provided  herein
and except that payments  pursuant to Sections 2.15,  2.16, 2.17 and 11.03 shall
be made directly to the Persons entitled thereto. The Administrative Agent shall
distribute any such payments  received by it for the account of any other Person
to the appropriate  recipient promptly following receipt thereof. If any payment
hereunder shall be due on a day that is not a Business Day, the date for payment
shall be extended to the next  succeeding  Business Day, and, in the case of any
payment accruing  interest,  interest thereon shall be payable for the period of
such extension. All payments hereunder shall be made in dollars.

           (b) If at any time  insufficient  funds are received by and available
to the Administrative Agent to pay fully all amounts of principal,  unreimbursed
LC  Disbursements,  interest  and fees then due  hereunder,  such funds shall be
applied (i) first,  to pay interest and fees then due  hereunder,  ratably among
the parties entitled thereto in accordance with the amounts of interest and fees
then due to such parties,  and (ii) second, to pay principal and unreimbursed LC
Disbursements then due hereunder,  ratably among the parties entitled thereto in
accordance with the amounts of principal and unreimbursed LC Disbursements  then
due to such parties.

           (c) If any  Lender  shall,  by  exercising  any right of  set-off  or
counterclaim  or  otherwise,  obtain  payment in respect of any  principal of or
interest on any of its Revolving Loans or  participations in LC Disbursements or
Swingline  Loans  resulting  in  such  Lender  receiving  payment  of a  greater
proportion of the aggregate amount of its Revolving Loans and  participations in
LC  Disbursements  and  Swingline  Loans and accrued  interest  thereon than the
proportion  received by any other Lender, then the Lender receiving such greater
proportion  shall  purchase  (for  cash at  face  value)  participations  in the
Revolving Loans and  participations  in LC Disbursements  and Swingline Loans of
other  Lenders to the extent  necessary so that the benefit of all such payments
shall be shared by the Lenders ratably in accordance with the aggregate


                                      -47-
<PAGE>


amount of principal of and accrued interest on their respective  Revolving Loans
and participations in LC Disbursements and Swingline Loans; provided that (i) if
any such  participations  are  purchased  and all or any  portion of the payment
giving rise thereto is recovered, such participations shall be rescinded and the
purchase price restored to the extent of such recovery,  without  interest,  and
(ii) the  provisions  of this  paragraph  shall not be construed to apply to any
payment made by any Loan Party  pursuant to and in  accordance  with the express
terms of this Agreement or any payment obtained by a Lender as consideration for
the  assignment  of  or  sale  of  a  participation  in  any  of  its  Loans  or
participations in LC Disbursements to any assignee or participant, other than to
a Loan Party or any subsidiary or Affiliate  thereof (as to which the provisions
of this  paragraph  shall apply).  Each Loan Party consents to the foregoing and
agrees,  to the extent it may  effectively do so under  applicable law, that any
Lender  acquiring a  participation  pursuant to the foregoing  arrangements  may
exercise against such Loan Party rights of set-off and counterclaim with respect
to such  participation  as fully as if such Lender were a direct creditor of the
Company in the amount of such participation.

           (d) Unless the  Administrative  Agent shall have received notice from
the Company prior to the date on which any payment is due to the  Administrative
Agent for the  account of the  Lenders or the Issuing  Bank  hereunder  that the
Company  will not make (or in the case of the  Existing  Letter of  Credit,  the
Subsidiary  Borrower will not make) such payment,  the Administrative  Agent may
assume  that the  applicable  Borrower  has made  such  payment  on such date in
accordance herewith and may, in reliance upon such assumption, distribute to the
Lenders or the Issuing  Bank, as the case may be, the amount due. In such event,
if the applicable  Borrower has not in fact made such payment,  then each of the
Lenders or the Issuing  Bank, as the case may be,  severally  agrees to repay to
the  Administrative  Agent forthwith on demand the amount so distributed to such
Lender or Issuing Bank with  interest  thereon,  for each day from and including
the date such amount is  distributed  to it to but excluding the date of payment
to the Administrative Agent, at the Federal Funds Effective Rate.

           (e) If any Lender shall fail to make any payment  required to be made
by it  pursuant  to  Section  2.04(c),  2.06(e),  2.07(b) or  2.18(d),  then the
Administrative  Agent  may,  in its  discretion  (notwithstanding  any  contrary
provision hereof),  apply any amounts thereafter  received by the Administrative
Agent for the account of such Lender to satisfy such Lender's  obligations under
such Sections until all such unsatisfied obligations are fully paid.

           SECTION 2.19 Mitigation  Obligations;  Replacement of Lenders. (a) If
any Lender  requests  compensation  under Section 2.15, or if either Borrower is
required  to pay  any  additional  amount  to  any  Lender  or any  Governmental
Authority  for the  account of any Lender  pursuant to Section  2.17,  then such
Lender shall use reasonable  efforts to designate a different lending office for
funding or booking its Loans  hereunder or to assign its rights and  obligations
hereunder to another of its offices, branches or affiliates, if, in the judgment
of such Lender,  such  designation or assignment  (i) would  eliminate or reduce
amounts  payable  pursuant to Section  2.15 or 2.17,  as the case may be, in the
future  and (ii)  would not  subject  such  Lender to any  unreimbursed  cost or
expense and would not otherwise be  disadvantageous  to such Lender. The Company
hereby agrees to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment.


                                      -48-
<PAGE>


           (b) If any Lender  requests  compensation  under  Section 2.15, or if
either  Borrower is required to pay any  additional  amount to any Lender or any
Governmental  Authority for the account of any Lender  pursuant to Section 2.17,
or if any Lender  defaults in its obligation to fund Loans  hereunder,  then the
Company may, at its sole expense and effort,  upon notice to such Lender and the
Administrative  Agent,  require  such  Lender to assign  and  delegate,  without
recourse  (in  accordance  with and  subject to the  restrictions  contained  in
Section 11.05),  all its interests,  rights and obligations under this Agreement
to an assignee that shall assume such obligations (which assignee may be another
Lender,  if a Lender  accepts such  assignment);  provided  that (i) the Company
shall have received the prior written consent of the Administrative  Agent (and,
if a Commitment is being assigned, the Issuing Bank and Swingline Lender), which
consent shall not unreasonably be withheld, (ii) such Lender shall have received
payment  of an  amount  equal to the  outstanding  principal  of its  Loans  and
participations  in  LC  Disbursements  and  Swingline  Loans,  accrued  interest
thereon,  accrued fees and all other amounts  payable to it hereunder,  from the
assignee (to the extent of such  outstanding  principal and accrued interest and
fees) or the Company (in the case of all other amounts) and (iii) in the case of
any such assignment  resulting from a claim for compensation  under Section 2.15
or payments  required to be made pursuant to Section 2.17,  such assignment will
result in a reduction in such  compensation  or payments.  A Lender shall not be
required to make any such  assignment and  delegation  if, prior  thereto,  as a
result of a waiver by such Lender or otherwise,  the circumstances entitling the
Company to require such assignment and delegation cease to apply.

           SECTION 2.20 Extensions of Maturity Date and Reduction Dates; Removal
of Lenders.  (a) The Company may, by written notice to the Administrative  Agent
(a "Notice of Extension")  given not less than 60 nor more than 90 days prior to
each Anniversary  Date,  advise the Lenders that it requests an extension of the
then  effective  Maturity  Date (the  "Existing  Maturity  Date")  and each then
effective  Reduction Date (an "Existing  Reduction Date") by 12 calendar months,
effective on the relevant  Anniversary Date (the "Relevant  Anniversary  Date").
The  Administrative  Agent will promptly,  and in any event within five Business
Days of the  receipt of such  Notice of  Extension,  notify  the  Lenders of the
contents of each such Notice of Extension.

           (b) Each  Notice  of  Extension  shall  (i) be  irrevocable  and (ii)
constitute  a  representation  by the Loan Parties that (A) neither any Event of
Default  nor  any  Default  has   occurred  and  is   continuing   and  (B)  the
representations and warranties  contained in Article IV are correct on and as of
the Relevant Anniversary Date, as though made on and as of such date.

           (c) In the event a Notice of Extension is given to the Administrative
Agent as provided in Section  2.20(a) and the  Administrative  Agent  notifies a
Lender of the contents thereof, such Lender shall on or before the 30th day next
preceding the then Relevant  Anniversary Date advise the Administrative Agent in
writing whether or not such Lender consents to the extension  requested  thereby
and if any Lender fails so to advise the Administrative Agent, such Lender shall
be deemed to have not  consented to such  extension.  If Lenders  holding 80% or
more of the Total  Commitment  so consent  (the  "Consenting  Lenders")  to such
extension  and any and all Lenders who have not consented  (the  "Non-Consenting
Lenders") are replaced,  the Maturity Date and each Reduction Date for the Notes
held by, and the  Commitments  of, the  Consenting  Lenders and the Nominees (as
defined below) shall be


                                      -49-
<PAGE>


automatically  extended 12 calendar  months past the Existing  Maturity Date and
each  corresponding   Existing   Reduction  Date,   effective  on  the  Relevant
Anniversary Date. The  Administrative  Agent shall promptly notify the Borrowers
and all of the Lenders of each written  notice of consent given pursuant to this
Section 2.20(c).

           (d) In the event the  Consenting  Lenders  hold less than 100% of the
Total Commitment,  the Consenting  Lenders, or any of them, shall have the right
(but not the  obligation)  to assume all or any  portion  of the  Non-Consenting
Lenders'   Commitments   by  giving  written  notice  to  the  Company  and  the
Administrative  Agent of their  election to do so on or before the 20th day next
preceding the Relevant  Anniversary  Date, which notice shall be irrevocable and
shall  constitute an undertaking  to (i) assume,  as of the close of business on
the Relevant  Anniversary  Date,  all or such portion of the  Commitments of the
Non-Consenting  Lenders, as the case may be, as may be specified in such written
notice, and (ii) purchase (without recourse) from the Non-Consenting Lenders, at
the close of business on the Relevant  Anniversary  Date,  the Revolving  Credit
Exposure  outstanding on the Relevant  Anniversary  Date that corresponds to the
portion of the  Commitments  to be so assumed at a price equal to the sum of (x)
the unpaid  principal  amount of all Loans so purchased,  plus (y) the aggregate
amount,  if any,  previously  funded by the transferor or any  participations so
purchased,  plus (z) all accrued and unpaid interest  thereon.  Such Commitments
and Revolving Credit Exposure,  or portion thereof,  to be assumed and purchased
by Consenting Lenders shall be allocated among those Consenting Lenders who have
so  elected  to  assume  the  same pro rata in  accordance  with the  respective
Commitments  of such  Consenting  Lenders as of the  Relevant  Anniversary  Date
(provided,  however, in no event shall a Consenting Lender be required to assume
and  purchase  an amount or  portion of the  Commitments  and  Revolving  Credit
Exposure  of the  Non-Consenting  Lenders  in excess of the  amount  which  such
Consenting  Lender  agreed to assume and  purchase  pursuant to the  immediately
preceding  sentence)  or on such other  basis as such  Consenting  Lender  shall
agree. The Administrative  Agent shall promptly notify the Company and the other
Consenting  Lenders in the event it receives any notice from a Consenting Lender
pursuant to this Section 2.20(d).

           (e) In the  event  that the  Consenting  Lenders  shall  not elect as
provided in Section  2.20(d) to assume and  purchase  all of the  Non-Consenting
Lenders'  Commitments and Revolving Credit Exposure,  the Company may designate,
by written notice to the  Administrative  Agent and the Consenting Lenders given
on or before the tenth day next preceding the Relevant  Anniversary Date, one or
more Eligible Assignees not a party to this Agreement (individually, a "Nominee"
and  collectively,  the  "Nominees")  to  assume  all  or  any  portion  of  the
Non-Consenting  Lenders' Commitments not to be assumed by the Consenting Lenders
and to purchase (without recourse) from the Non-Consenting Lenders all Revolving
Credit Exposure outstanding at the close of business on the Relevant Anniversary
Date that  corresponds to the portion of the Commitments so to be assumed at the
price  specified in Section  2.20(d).  Each  assumption  and purchase under this
Section  2.20(e)  shall be effective as of the close of business on the Relevant
Anniversary  Date when each of the following  conditions has been satisfied in a
manner satisfactory to the Administrative Agent:

           (i) each  Nominee and the  Non-Consenting  Lenders  have  executed an
      Assignment and Acceptance  pursuant to which such Nominee shall (A) assume
      in writing


                                      -50-
<PAGE>


      its share of the  obligations  of the  Non-Consenting  Lenders  hereunder,
      including its share of the Commitments of the  Non-Consenting  Lenders and
      (B) agree to be bound as a Lender by the terms of this Agreement; and

           (ii)  each  Nominee  shall  have   completed  and  delivered  to  the
      Administrative Agent an Administrative Questionnaire.

           (f) In the  event  that the  Consenting  Lenders  shall  not elect as
provided  in  Section  2.20(d)  to  assume  all of the  Non-Consenting  Lenders'
Commitments  and the Company shall not have  effectively  designated one or more
Nominees to assume the Commitments of and purchase the Revolving Credit Exposure
of the Non-Consenting Lenders as contemplated by Section 2.20(e), there shall be
no extension of the Existing Maturity Date nor any Existing Reduction Date.


                                 ARTICLE III.

                             Conditions Precedent
                             --------------------

           SECTION 3.01  Conditions  Precedent to the Initial Credit Event.  The
obligation  of each Lender to make its initial Loan or the Issuing Bank to issue
the initial Letter of Credit under the Existing Credit  Agreement as amended and
restated hereby is subject to the following conditions:

           (a) The Administrative Agent shall have received the following,  each
dated the initial  Borrowing  Date,  except for the Loan Documents  described in
clauses (i) through (v) below which shall be dated the Execution Date:

           (i)  this Agreement executed by each party hereto;

           (ii) if requested by any Lender,  a Note  executed by the Company and
      payable to the order of such Lender;

           (iii)a certificate of an officer and of the secretary or an assistant
      secretary of each Loan Party or its general partner or managing member, as
      applicable,  certifying,  inter alia, (A) true and complete copies of each
      of the certificate or articles of incorporation,  partnership agreement or
      articles of organization, as the case may be, as amended and in effect, of
      such Loan Party and of its general partner or managing member, if any, the
      bylaws,  as amended and in effect,  of such Loan Party and the resolutions
      adopted  by the  Board of  Directors  of such  Loan  Party or its  general
      partner or managing  member (1)  authorizing  the execution,  delivery and
      performance  by such  Loan  Party of this  Agreement  and the  other  Loan
      Documents  to  which  it is or  will be a party  and,  in the  case of the
      Company,  the Borrowings to be made and the Letters of Credit to be issued
      hereunder,  (2) approving the forms of the Loan Documents to which it is a
      party and which will be  delivered  at or prior to the  initial  Borrowing
      Date and (3)  authorizing  officers  of such  Loan  Party  or its  general
      partner or managing  member to execute and deliver the Loan  Documents  to
      which such Loan Party is or will be a party


                                      -51-
<PAGE>


      and any related  documents,  including any agreement  contemplated by this
      Agreement,  (B) the incumbency and specimen  signatures of the officers of
      such Loan Party or its general  partner or managing  member  executing any
      documents  on  its  behalf  and  (C)  (1)  that  the  representations  and
      warranties  made by such Loan  Party in each Loan  Document  to which such
      Loan  Party is a party  and  which  will be  delivered  at or prior to the
      initial Borrowing Date are true and correct in all material respects,  (2)
      the absence of any  proceedings for the dissolution or liquidation of such
      Person  and (3) the  absence  of the  occurrence  and  continuance  of any
      Default or Event of Default;

           (iv) letters from CT Corporation  System,  Inc. in form and substance
      satisfactory to the  Administrative  Agent evidencing the obligation of CT
      Corporation  System, Inc. to accept service of process in the State of New
      York on behalf of each Loan Party that is not authorized to do business as
      a foreign corporation in the State of New York;

          (v) a favorable,  signed opinion addressed to the Administrative Agent
     and the Lenders from each of (A) Morrison & Hecker  L.L.P.,  counsel to the
     Loan Parties,  given upon the express instruction of the Loan Parties,  and
     (B) Correro Fishman Haygood Phelps  Walmsley & Casteix,  special  Louisiana
     counsel  to  KMBT,  given  upon  the  express  instruction  of KMBT and the
     Company; and

          (vi) certificates of appropriate public officials as to the existence,
     good standing and  qualification  to do business as a foreign  corporation,
     partnership or limited liability company, as applicable, of each Loan Party
     in each  jurisdiction  in which  the  ownership  of its  properties  or the
     conduct of its business  requires such  qualification and where the failure
     so to qualify would, individually or collectively,  have a Material Adverse
     Effect.

           (b) The Administrative  Agent shall be reasonably  satisfied that all
required consents and approvals of any applicable Governmental Authority and any
other Person in connection  with the  transactions  contemplated by this Section
3.01 shall have been obtained and remain in effect  (except where the failure to
obtain  such  approvals  would  not have a  Material  Adverse  Effect),  and all
applicable  waiting  periods  shall have  expired (or been  waived)  without any
action being taken by any Governmental Authority.

           (c) All agreements relating to, and the organizational  structure of,
the Loan  Parties,  and all  organic  documents  of the Loan  Parties,  shall be
reasonably satisfactory to the Administrative Agent and the Syndication Agent.

           (d) The Company  shall have paid to First Union  Capital  Markets and
First  Union  National  Bank all fees and  expenses  pursuant  to the Fee Letter
agreed upon by such parties to be paid on or prior to the Execution Date.

           (e) The Company shall have paid to Andrews & Kurth L.L.P. pursuant to
Section 11.03 all reasonable fees and  disbursements  invoiced to the Company on
or prior to the Execution Date.


                                      -52-
<PAGE>


           SECTION 3.02 Conditions  Precedent to All Credit Events.  Except with
respect to  Revolving  Credit  Loans  made by the  Lenders  pursuant  to Section
2.06(f),  the  obligation  of the Lenders to make any Loan or to issue or extend
any Letter of Credit under the Existing Credit Agreement as amended and restated
hereby  (including  any Loan  made or Letter  of  Credit  issued on the  initial
Borrowing Date) is subject to the further conditions  precedent that on the date
of such Credit Event:

           (a) The  conditions  precedent  set forth in Section  3.01 shall have
theretofore been satisfied;

           (b) The representations and warranties set forth in Article IV and in
the other Loan Documents  shall be true and correct in all material  respects as
of, and as if such  representations and warranties were made on, the date of the
proposed   Loan  or  Letter  of  Credit,   as  the  case  may  be  (unless  such
representation  and warranty expressly relates to an earlier date), and the Loan
Parties shall be deemed to have  certified to the  Administrative  Agent and the
Lenders that such  representations  and  warranties  are true and correct in all
material respects by the Company's delivery of a Borrowing Request;

           (c) The Company shall have  complied  with the  provisions of Section
2.03 or Section 2.04, as the case may be;

           (d) No  Default  or Event  of  Default  shall  have  occurred  and be
continuing or would result from such Credit Event; and

           (e) The Administrative Agent and the Lenders shall have received such
other approvals,  opinions or documents as the Agent or the Required Lenders may
reasonably request.

The  acceptance  of the  benefits  of  each  Credit  Event  shall  constitute  a
representation  and warranty by the Loan Parties to each of the Lenders that all
of the conditions specified in this Section 3.02 above exist as of that time.

           SECTION 3.03 Conditions Precedent to the Initial Credit Event Made on
or After any Increase in Availability. The obligation of the Lenders to make the
initial Loan or the Issuing  Bank to issue the initial  Letter of Credit upon or
after any increase in Availability is subject to the further conditions that the
Administrative  Agent shall have received a certificate of a Responsible Officer
of the Company  certifying (a) the amount of such increase in Availability and a
description  of  the  event   resulting  in  such  increase  and  (b)  that  the
representations  and  warranties  contained  in  Article  IV  (unless  any  such
representation  and warranty  expressly relates to an earlier date) are true and
correct  in all  material  respects  as of, and as if such  representations  and
warranties were made on, the date of such initial Loan or such initial Letter of
Credit,  as the case may be,  after  giving  effect on a pro forma  basis to the
event  resulting  in such  increase  and the use on such date of the proceeds of
such Loan or of such Letter of Credit.

           SECTION 3.04 Conditions  Precedent to Conversions.  The obligation of
the  Lenders  to  convert  or  continue  any  existing  Borrowing  as or  into a
Eurodollar  Borrowing is subject to the condition  precedent that on the date of
such  conversion  or  continuation  no Default  or Event of  Default  shall have
occurred and be continuing  or would result from the making of

                                      -53-
<PAGE>


such  conversion.  The  acceptance  of the benefits of each such  conversion  or
continuation  shall constitute a representation and warranty by the Loan Parties
to each of the Lenders that no Default or Event of Default  shall have  occurred
and be  continuing  or  would  result  from the  making  of such  conversion  or
continuation.

           SECTION  3.05  Delivery  of  Documents.  All of the  Loan  Documents,
certificates,  legal opinions and other documents and papers referred to in this
Article   III,   unless   otherwise   specified,   shall  be  delivered  to  the
Administrative  Agent for the account of each of the Lenders and, except for any
Notes, in sufficient counterparts or copies for each of the Lenders and shall be
satisfactory in form and substance to the Lenders.

                                  ARTICLE IV.

                        Representations and Warranties
                        ------------------------------

           In order to induce the  Lenders to enter into this  Agreement  and to
make the Loans  provided  for  herein and to induce  the  Issuing  Bank to issue
Letters  of Credit  and the other  Lenders  to  participate  therein  and in the
Existing  Letter of Credit,  each Loan Party makes for  itself,  and the Company
makes for itself and the other Loan Parties,  on or as of the Effective Date and
the  occurrence  of  each  Credit  Event,  the  following   representations  and
warranties to the Administrative Agent and the Lenders:

           SECTION 4.01 Organization and Qualification.  The Company and each of
the  Restricted  Subsidiaries  (a)  is a  corporation,  partnership  or  limited
liability  company  duly  organized  or  formed,  validly  existing  and in good
standing  under  the laws of the  state of its  incorporation,  organization  or
formation,  (b) has all  requisite  corporate,  partnership,  limited  liability
company or other power to own its  property  and to carry on its business as now
conducted  and (c) is duly  qualified to do business and is in good  standing in
every  jurisdiction in which the failure to be so qualified would,  individually
or together  with all such other  failures  of the  Company  and the  Restricted
Subsidiaries,  have a Material  Adverse  Effect.  As of the Execution  Date, the
Persons and other entities named in Schedule 4.01 are all of the Subsidiaries of
the Company, and such Schedule 4.01 (x) accurately reflects (i) the direct owner
of the Capital  Stock of each such  Subsidiary  and (ii) the  percentage  of the
issued and outstanding  Capital Stock of each such Subsidiary  owned by any Loan
Party, (y) accurately identifies such Subsidiaries and (z) accurately sets forth
the jurisdictions of their respective incorporation,  organization or formation,
as the case may be, and  jurisdictions  in which they are  qualified  as foreign
corporations, foreign partnerships, foreign limited liability companies or other
foreign entities to do business.

           SECTION 4.02  Authorization,  Validity,  Etc. Each Loan Party has all
requisite corporate,  partnership,  limited liability company or other power and
authority to execute,  deliver and perform its  obligations  hereunder and under
the other Loan Documents to which it is a party and, in the case of the Company,
to make the  Borrowings  and in the case of each Borrower to obtain the issuance
of Letters of Credit hereunder,  and all such action has been duly authorized by
all  necessary  corporate,  partnership,  limited  liability  company  or  other
proceedings  on its part.  This Agreement and the other Loan Documents have been
duly and validly executed and delivered by or on behalf of each Loan Party party
thereto and constitute

                                      -54-
<PAGE>


valid and legally binding agreements of such Loan Party enforceable against such
Loan Party in accordance with the respective terms thereof, except (a) as may be
limited  by  bankruptcy,  insolvency,  reorganization,   moratorium,  fraudulent
transfer,  fraudulent  conveyance or other similar laws relating to or affecting
the enforcement of creditors'  rights  generally,  and by general  principles of
equity (including principles of good faith, reasonableness, materiality and fair
dealing)  which may,  among other  things,  limit the right to obtain  equitable
remedies  (regardless of whether considered in a proceeding in equity or at law)
and (b) as to the enforceability of provisions for indemnification for violation
of applicable securities laws, limitations thereon arising as a matter of law or
public policy.

           SECTION 4.03 Governmental Consents,  Etc. No authorization,  consent,
approval,  license or exemption of or  registration,  declaration or filing with
any Governmental  Authority,  is necessary for the valid execution,  delivery or
performance  by any  Loan  Party of any  Loan  Document  to which it is a party,
except those that have been obtained and such matters relating to performance as
would  ordinarily be done in the ordinary course of business after the Execution
Date.

           SECTION  4.04  Conflicting  or Adverse  Agreements  or  Restrictions.
Neither  the Company nor any of the  Restricted  Subsidiaries  is a party to any
contract or agreement or subject to any  restriction  that would  reasonably  be
expected to have a Material Adverse Effect. Neither the execution,  delivery and
performance by any Loan Party of the Loan Documents to which it is a party,  nor
compliance with the terms and provisions  thereof,  nor the extensions of credit
contemplated  by the Loan  Documents,  (a) will breach or violate any applicable
Requirement  of Law, (b) will result in any breach or  violation  of, any of the
terms, covenants, conditions or provisions of, or constitute a default under, or
result in the creation or imposition of (or the  obligation to create or impose)
any Lien upon any of its  property  or  assets  (other  than  Liens  created  or
contemplated  by  this  Agreement)  pursuant  to the  terms  of  any  indenture,
mortgage, deed of trust, agreement or other instrument to which it or any of its
Subsidiaries  is  party or by which  any  property  or asset of it or any of its
Subsidiaries is bound or to which it is subject, except for breaches, violations
and  defaults  under  clauses (a) and (b) that neither  individually  nor in the
aggregate  for all Loan  Parties  could  reasonably  be  expected to result in a
Material  Adverse  Effect  or (c) will  violate  any  provision  of the  organic
documents of any Loan Party.

           SECTION 4.05 Properties. (a) Each of the Company and the Subsidiaries
has good title to, or valid  leasehold or other  interests  in, all its real and
personal  property  material to its business,  except for minor defects in title
that do not  materially  interfere  with its ability to conduct its  business as
currently conducted or to utilize such properties for their intended purposes.

           (b) Each of the Company and the Restricted  Subsidiaries  owns, or is
licensed to use,  all  trademarks,  trade names,  copyrights,  patents and other
intellectual  property  material  to its  business,  and the use  thereof by the
Company and the Restricted Subsidiaries does not infringe upon the rights of any
other Person,  except for any such infringements that, neither  individually nor
in the  aggregate  for the Company and such  Subsidiaries,  could  reasonably be
expected to result in a Material Adverse Effect.


                                      -55-
<PAGE>


           SECTION 4.06 Litigation and Environmental  Matters.  (a) There are no
actions,  suits or  proceedings  by or before  any  arbitrator  or  Governmental
Authority  pending  against  or, to the  knowledge  of the  Company,  threatened
against or  affecting  the  Company or any of its  Subsidiaries  (i) as to which
there is a  reasonable  possibility  of an adverse  determination  and that,  if
adversely  determined,  could  reasonably  be expected,  individually  or in the
aggregate for the Company and such Subsidiaries, to result in a Material Adverse
Effect (other than the Disclosed Matters) or (ii) that involve this Agreement or
the Transactions.

           (b) Except for the  Disclosed  Matters and except with respect to any
other  matters  that,  individually  or in the aggregate for the Company and the
Subsidiaries,  could not reasonably be expected to result in a Material  Adverse
Effect, neither the Company nor any of the Subsidiaries (i) has failed to comply
with any  Environmental  Law or to obtain,  maintain  or comply with any permit,
license or other approval required under any Environmental  Law, (ii) has become
subject to any Environmental  Liability,  (iii) has received notice of any claim
with respect to any  Environmental  Liability or (iv) knows of any basis for any
Environmental Liability.

           (c) Since the Execution Date,  there has been no change in the status
of the Disclosed  Matters that,  individually or in the aggregate,  has resulted
in, or materially increased the likelihood of, a Material Adverse Effect.

           SECTION  4.07  Financial   Statements.   (a)  The   consolidated  and
consolidating balance sheets of the Company and its consolidated Subsidiaries as
at December 31, 1997 and the related  consolidated and consolidating  statements
of income,  partners',  shareholders'  or  members'  equity and cash flow of the
Company  and its  consolidated  Subsidiaries  for the fiscal  year ended on said
date, with (in the case of such consolidated  financial  statements) the opinion
thereon of Price Waterhouse  L.L.P.  (currently known as  PricewaterhouseCoopers
LLP)  heretofore  furnished to the Lenders and the  unaudited  consolidated  and
consolidating balance sheets of the Company and its consolidated Subsidiaries as
at  September  30,  1998  and  their  related   consolidated  and  consolidating
statements of income, partners',  shareholders' or members' equity and cash flow
of the Company and its consolidated  Subsidiaries for the six-month period ended
on such date heretofore  furnished to the Lenders,  are complete and correct and
fairly  present  the  consolidated  financial  condition  of the Company and its
consolidated  Subsidiaries as at said dates and the results of their  operations
for the  fiscal  year  and the  six-month  period  ended on said  dates,  all in
accordance with GAAP, as applied on a consistent basis (subject,  in the case of
the interim  financial  statements,  to the absence of  footnotes  and to normal
year-end and audit adjustments).

           (b) Since  December  31,  1997,  there has been no  material  adverse
change in the business, assets, operations or condition, financial or otherwise,
of the Company and the Restricted Subsidiaries, taken as a whole.

           SECTION 4.08 Disclosure. The Company has disclosed to the Lenders all
agreements,  instruments and corporate or other  restrictions to which it or any
of the Restricted  Subsidiaries  is subject,  and all other matters known to it,
that,  individually  or in the aggregate for the Company and such  Subsidiaries,
could reasonably be expected to result in a Material

                                      -56-
<PAGE>


Adverse Effect. None of the reports, financial statements, certificates or other
information furnished by or on behalf of the Company to the Administrative Agent
or any  Lender  in  connection  with  the  syndication  or  negotiation  of this
Agreement  or  delivered   hereunder  (as  modified  or  supplemented  by  other
information so furnished) contains any material misstatement of fact or omits to
state any material fact necessary to make the statements  therein,  in the light
of the circumstances  under which they were made, not misleading;  provided that
(i) with respect to projected financial information, the Company represents only
that such information was prepared in good faith based upon assumptions believed
to be reasonable at the time and (ii) with respect to information respecting the
Santa Fe Acquisition and the Shell JV Investment,  such information was provided
to the Company by SFMLP and Shell  respectively  and  therefore the Company only
represents that to its knowledge such information is correct and complete.

           SECTION 4.09 Investment  Company Act.  Neither the Company nor any of
its Subsidiaries  is, or is regulated as, an "investment  company," as such term
is defined in the Investment Company Act of 1940, as amended.

           SECTION 4.10 Public Utility Holding Company Act.  Neither the Company
nor any of its  Subsidiaries  is a non-exempt  "holding  company,"or  subject to
regulation as such, or an  "affiliate"  of a "holding  company" or a "subsidiary
company" of a "holding company,"within the meaning of the Public Utility Holding
Company Act of 1935, as amended.

           SECTION  4.11  ERISA.  No ERISA Event has  occurred or is  reasonably
expected to occur that, when taken together with all other such ERISA Events for
which liability is reasonably expected to occur, could reasonably be expected to
result in a  Material  Adverse  Effect.  The  present  value of all  accumulated
benefit  obligations under each Plan (based on the assumptions used for purposes
of Statement of Financial  Accounting  Standards No. 87) did not, as of the date
of the most recent financial statements reflecting such amounts,  exceed by more
than  $5,000,000  the fair  market  value of the  assets of such  Plan,  and the
present value of all accumulated  benefit  obligations of all underfunded  Plans
(based on the assumptions used for purposes of Statement of Financial Accounting
Standards  No.  87)  did  not,  as of the  date  of the  most  recent  financial
statements  reflecting  such amounts,  exceed by more than  $5,000,000  the fair
market value of the assets of all such underfunded Plans.

           SECTION  4.12 Tax  Returns  and  Payments.  (a) The  Company  and its
Subsidiaries  have caused to be filed all  federal  income tax returns and other
material  tax  returns,  statements  and reports (or  obtained  extensions  with
respect  thereto)  which are  required to be filed and have paid or deposited or
made  adequate  provision in  accordance  with GAAP for the payment of all taxes
(including estimated taxes shown on such returns,  statements and reports) which
are shown to be due  pursuant to such  returns,  except where the failure to pay
such taxes  (individually or in the aggregate for the Company and the Restricted
Subsidiaries)  would not have a Material Adverse Effect.  No material income tax
liability of the Company or the Restricted Subsidiaries has been asserted by the
Internal  Revenue  Service  of  the  United  States  or any  other  Governmental
Authority for any taxes in excess of those already paid,  except for taxes which
are being  contested  in good  faith by  appropriate  proceedings  and for which
adequate  reserves in accordance with GAAP have been created on the books of the
Company and the Restricted Subsidiaries.

                                      -57-
<PAGE>



           (b) The federal  income tax  liabilities,  if any, of the Company and
its Subsidiaries  (and of all Persons who are partners of the Company) have been
finally determined by the Internal Revenue Service and satisfied for all taxable
years through the fiscal year ending in 1994.

           SECTION 4.13 Compliance with Laws and Agreements. Each of the Company
and the Restricted  Subsidiaries is in compliance with all laws, regulations and
orders of any  Governmental  Authority  applicable to it or its property and all
indentures,  agreements and other  instruments  binding upon it or its property,
except  where the failure to do so,  individually  or in the  aggregate  for the
Company and the  Restricted  Subsidiaries,  could not  reasonably be expected to
result in a Material Adverse Effect. No Default or Event of Default has occurred
and is continuing.

           SECTION 4.14 Purpose of Loans.  (a) All proceeds of the Loans will be
used for the purposes set forth in Section  5.08.  All Letters of Credit  (other
than the Existing  Letter of Credit)  have been or will be issued in  connection
with the working capital requirements of the Company or a Restricted Subsidiary.

           (b) None of the  proceeds  of the loans  under any portion of the OLP
"A" Refinancing,  the Subsidiary Borrower Credit Agreement,  the Existing Letter
of Credit,  the Existing Credit Agreement or this Agreement were or will be used
directly or indirectly  for the purpose of buying or carrying any "margin stock"
within the meaning of  Regulation U (herein  called  "margin  stock") or for the
purpose of reducing or retiring any  indebtedness  (including  the  indebtedness
repaid with the proceeds of the loans made under the agreements constituting the
OLP "A"  Refinancing  or the Subsidiary  Borrower  Credit  Agreement)  which was
originally  incurred to buy or carry a margin  stock,  or for any other  purpose
which might constitute this transaction a "purpose" credit within the meaning of
Regulation  T, U or X. Neither any Loan Party nor any agent acting on its behalf
has taken or will take any action which might cause this  Agreement or any other
Loan Document to violate  Regulation T, Regulation U, Regulation X, or any other
regulation  of the Board or to  violate  the  Securities  Exchange  Act of 1934.
Margin stock does not  constitute  more than 25% of the assets of the Company or
any Loan Party and the Company  does not intend or foresee  that it will ever do
so.

           SECTION 4.15 No Intent to Hinder,  Delay or Defraud.  Each Subsidiary
Guarantor has entered into this Agreement,  including the Subsidiary  Guarantors
Guaranty  and the other  Loan  Documents,  with no intent  to  hinder,  delay or
defraud any Person to whom such Subsidiary Guarantor was or becomes, on or after
the  Execution  Date,  indebted,  within  the  meaning  of  Section  548  of the
Bankruptcy Code or any similar provision of state law.

           SECTION 4.16 Year 2000. The Company will use reasonable  best efforts
to ensure that any reprogramming  required to permit the proper functioning,  in
and following the year 2000, of (a) the computer  systems of the Company and the
Restricted  Subsidiaries  and (b)  equipment  of the Company and the  Restricted
Subsidiaries  containing embedded microchips and the testing of all such systems
and equipment, as reprogrammed, will be completed by December 31, 1999. The cost
to the Company and the Restricted Subsidiaries of such reprogramming and,

                                      -58-
<PAGE>


to the knowledge of the Company, of the reasonably  foreseeable  consequences of
year  2000 to the  Company  and the  Restricted  Subsidiaries,  taken as a whole
(including,  without  limitation,  reprogramming  errors)  will not result in an
Event of Default or a Material Adverse Effect.


                                  ARTICLE V.

                             Affirmative Covenants
                             ---------------------

           Until  the  Commitments  have  expired  or  been  terminated  and the
principal of and interest on each Loan and all fees payable hereunder shall have
been paid in full and all Letters of Credit shall have expired or terminated and
all LC  Disbursements  shall have been  reimbursed,  the Company  covenants  and
agrees with the Lenders that:

           SECTION 5.01 Financial Statements and Other Information.  The Company
will furnish to the  Administrative  Agent, in each case with sufficient  copies
for each Lender:

           (a) As soon as  available  and in any event within 120 days after the
end of each fiscal year of the Company: (i) the audited consolidated  statements
of income,  partners' equity, changes in financial position and cash flow of the
Company for such fiscal year, and the related  consolidated balance sheet of the
Company  as at the  end of such  fiscal  year,  setting  forth  in each  case in
comparative form the figures for (or in the case of the balance sheet, as of the
end  of) the  previous  fiscal  year,  accompanied  by the  related  opinion  of
independent public accountants of recognized national standing acceptable to the
Administrative  Agent,  which  opinion  shall  (x)  state  that  said  financial
statements of the Company fairly present the  consolidated  financial  condition
and results of  operations of the Company as at the end of, and for, such fiscal
year and that such financial  statements  have been prepared in accordance  with
GAAP  except for such  changes  in such  principles  with which the  independent
public  accountants shall have concurred,  and (y) not contain a "going concern"
or  other  adverse  qualification  or  exception  unacceptable  to the  Required
Lenders;  and (ii) a certificate of such accountants stating that, in making the
examination necessary for their opinion,  they obtained no knowledge,  except as
specifically stated, of any Event of Default or Default, and stating whether any
change in GAAP or in the application  thereof has occurred since the date of the
audited  financial  statements  referred to in Section  4.07(b) and, if any such
change  has  occurred,  specifying  the effect of such  change on the  financial
statements accompanying such certificate.

           (b)(i) As soon as available and in any event within 60 days after the
end of each of the first three fiscal  quarterly  periods of each fiscal year of
the Company,  unaudited  consolidated  statements of income,  partners'  equity,
changes in  financial  position and cash flow of the Company for such period and
for the period from the  beginning of the  respective  fiscal year to the end of
such period, and the related unaudited  consolidated balance sheet as at the end
of such period,  setting forth in each case in comparative  form the figures for
(or in the case of balance sheets, as of the end of) the  corresponding  periods
in the previous  fiscal year,  accompanied  by the  certificate of a Responsible
Officer of the  Company,  which  certificate  shall  state  that said  financial
statements  fairly present the consolidated  financial  condition and results

                                      -59-
<PAGE>


of operations of the Company in accordance with GAAP, as at the end of, and for,
such period  (subject to the absence of  footnotes  and changes  resulting  from
normal year-end audit adjustments).

           (ii) As soon as  available  and in any event within 60 days after the
end of each of the first three fiscal quarterly periods of each fiscal year, and
within 120 days after the end of each  fiscal  year of OLP "A",  the  Subsidiary
Borrower,  OLP "C",  OLP "D" and each other  Restricted  Subsidiary  the Capital
Stock  of  which  is  owned  directly  by the  Company,  unaudited  consolidated
statements of income,  partners',  shareholders' or members' equity, as the case
may be,  changes  in  financial  position  and cash flow of such  Person and its
Subsidiaries  for such  period  and for the  period  from the  beginning  of the
respective  fiscal year to the end of such  period,  and the  related  unaudited
consolidated  balance sheet as at the end of such period,  setting forth in each
case in comparative  form the figures for (or in the case of balance sheets,  as
of  the  end  of)  the  corresponding  periods  in  the  previous  fiscal  year,
accompanied by the  certificate of a Responsible  Officer of such Person,  which
certificate  shall  state that said  financial  statements  fairly  present  the
consolidated and consolidating  financial condition and results of operations of
such  Person in  accordance  with GAAP,  as at the end of, and for,  such period
(subject to the absence of footnotes and changes  resulting from normal year-end
audit adjustments).

           (c) Promptly  upon receipt  thereof,  and in the form  received,  all
audited  and  unaudited  financial  statements  (whether  quarterly  or  annual)
received  by any Loan Party from any Person  (other  than an  individual)  whose
income is  accounted  for  through  any of the  Persons  referenced  in  Section
5.01(b)(ii) and whose EBITDA or distributions, as the case may be, exceed 15% of
the Company Cash Flow.

           (d) Prompt written notice of the following:

           (i)  the  occurrence of any Default or Event of Default or Change of
      Control Event;

           (ii) the  occurrence of any ERISA Event that,  alone or together with
      any other ERISA Events that have occurred, could reasonably be expected to
      result in liability of the Company and the Restricted  Subsidiaries  in an
      aggregate amount exceeding $5,000,000; and

           (iii)any other  development  that results in, or could  reasonably be
      expected to result in, a Material Adverse Effect.

Each  notice  delivered  under  this  Section  5.01  shall be  accompanied  by a
statement of a  Responsible  Officer  setting  forth the details of the event or
development  requiring  such notice and any action taken or proposed to be taken
with respect thereto.

           (e)  Promptly  upon receipt  thereof,  a copy of each other report or
letter  submitted to the Company by independent  accountants in connection  with
any annual,  interim or special  audit made by them of the books of the Company,
and a copy of any  response by the

                                      -60-
<PAGE>


Company,  or the Board of  Directors of the general  partner of the Company,  to
such letter or report.

           (f) Promptly upon its becoming available,  each financial  statement,
report, notice or proxy statement sent by the Company to stockholders  generally
and each regular or periodic report and any registration statement or prospectus
filed by the Company with any securities exchange or the Securities and Exchange
Commission or any successor agency.

           (g) Promptly after the furnishing  thereof,  copies of any statement,
report or notice furnished to any Person pursuant to the terms of any indenture,
loan or credit or other  similar  agreement,  other than this  Agreement and not
otherwise required to be furnished to the  Administrative  Agent pursuant to any
other provision of this Section 5.01.

           (h) From time to time such other information  regarding the business,
affairs or  financial  condition  of the  Company or any  Restricted  Subsidiary
(including any Plan or Multiemployer  Plan and any reports or other  information
required to be filed under ERISA) as the Required Lenders or the  Administrative
Agent may reasonably request.

The Company will furnish to the  Administrative  Agent, at the time it furnishes
each set of  financial  statements  pursuant to  paragraph  (a) or (b) above,  a
certificate  substantially in the form of Exhibit 5.01 executed by a Responsible
Officer of the Company (i)  certifying  as to the matters set forth  therein and
stating that no Event of Default or Default has occurred and is continuing  (or,
if any Event of Default or Default has  occurred and is  continuing,  describing
the same in reasonable  detail),  (ii) setting  forth in  reasonable  detail the
computations  necessary to determine  whether the Company is in compliance  with
Sections  6.09(a),  (b) and (c) and the computations  necessary to determine the
ratio referred to in the definition of "Applicable  Margin" as of the end of the
respective fiscal quarter or fiscal year, and (iii) a statement, with respect to
each Intercompany Note, of (A) the actual outstanding  principal amount thereof,
and the amount of any accrued and unpaid interest thereon,  as at the end of the
respective  quarter or fiscal year,  as the case may be, and (B) the highest and
lowest principal  amount thereof at any time outstanding  during such quarter or
fiscal year and the periods  during such quarter or fiscal year during which the
principal of such Intercompany Note was outstanding in each such amount.

           SECTION  5.02  Litigation.  The Company  shall  promptly  give to the
Administrative  Agent  notice of all legal or arbitral  proceedings,  and of all
proceedings  before any  Governmental  Authority  affecting  the  Company or any
Restricted Subsidiary,  except proceedings which, if adversely determined, would
not have a Material Adverse Effect. The Company will, and will cause each of the
Restricted  Subsidiaries  to,  promptly notify the  Administrative  Agent of any
claim,  judgment,  Lien or other encumbrance affecting any property or assets of
the Company or any such Subsidiary if the value of the claim, judgment, Lien, or
other encumbrance affecting such property or assets shall exceed $5,000,000.

           SECTION 5.03  Existence,  Conduct of Business.  The Company will, and
will cause each of the  Restricted  Subsidiaries  to, do or cause to be done all
things necessary to preserve,  renew and keep in full force and effect its legal
existence and the rights, licenses,  permits, privileges and franchises material
to the conduct of its business;  provided that the

                                      -61-
<PAGE>


foregoing  shall  not  prohibit  any  merger,   consolidation,   liquidation  or
dissolution permitted under Section 6.03.

           SECTION 5.04 Payment of Obligations. The Company will, and will cause
each of the  Subsidiaries  to, pay its  obligations,  including tax liabilities,
that,  if not paid,  could result in a Material  Adverse  Effect before the same
shall become  delinquent or in default,  except where (a) the validity or amount
thereof is being  contested in good faith by  appropriate  proceedings,  (b) the
Company or such  Subsidiary  has set aside on its books  adequate  reserves with
respect  thereto in  accordance  with GAAP and (c) the  failure to make  payment
pending such contest  could not  reasonably  be expected to result in a Material
Adverse Effect.

           SECTION 5.05 Maintenance of Properties;  Insurance. The Company will,
and will cause each of the Restricted Subsidiaries to, (a) keep and maintain all
property  material to the  conduct of its  business  in good  working  order and
condition,  ordinary wear and tear excepted, and (b) maintain,  with financially
sound and reputable insurance  companies,  insurance in such amounts and against
such risks as are  customarily  maintained  by companies  engaged in the same or
similar businesses operating in the same or similar locations.

           SECTION 5.06 Books and Records;  Inspection Rights. The Company will,
and will cause each of the  Restricted  Subsidiaries  to, keep  proper  books of
record and  account in which  full,  true and  correct  entries  are made of all
dealings  and  transactions  in relation to its  business  and  activities.  The
Company will, and will cause each of the Restricted  Subsidiaries to, permit any
representatives  designated  by the  Administrative  Agent or any  Lender,  upon
reasonable  prior notice,  to visit and inspect its  properties,  to examine and
make extracts from its books and records,  and to discuss its affairs,  finances
and  condition  with  its  officers  and  independent  accountants,  all at such
reasonable times and as often as reasonably requested.

           SECTION 5.07  Compliance  with Laws. The Company will, and will cause
each of the  Subsidiaries  to, comply with all Requirements of Law applicable to
it or its property,  except where the failure to do so,  individually  or in the
aggregate,  could not  reasonably  be expected  to result in a Material  Adverse
Effect.

           SECTION 5.08 Use of Proceeds  and Letters of Credit.  The proceeds of
the Loans will be used only for working capital and other partnership  purposes.
No part of the proceeds of any Loan has been or will be used,  whether  directly
or  indirectly,  for  any  purpose  that  entails  a  violation  of  any  of the
Regulations  of the  Board,  including  Regulations  T, U and X. The  Letters of
Credit  (including the Existing Letter of Credit) that have been and that are to
be issued under this Agreement  shall as provided in Section  2.06(c) be subject
to an aggregate limit of $75,000,000.

           SECTION 5.09 Further Assurances.  The Company will cure promptly,  or
cause  another  Loan Party to cure  promptly,  any defects in the  creation  and
issuance of any Notes and the  execution  and  delivery of this  Agreement.  The
Company  at its  expense  will  promptly  execute  and  deliver,  or  cause  the
appropriate other Loan Party to execute and deliver, to the Administrative Agent
upon request all such other documents, agreements and instruments to

                                      -62-
<PAGE>


comply with or accomplish  the  covenants and  agreements of the Loan Parties in
this  Agreement and the other Loan  Documents to which each such Loan Party is a
Party.

           SECTION 5.10  Performance  of  Obligations.  The Company will pay the
Loans according to the reading,  tenor and effect thereof;  and the Company will
do and  perform or cause each other Loan Party to do and  perform  every act and
discharge all of the Obligations to be performed and discharged by it under this
Agreement, at the time or times and in the manner specified.

           SECTION 5.11 Lines of Business. The Company will, and will cause each
Restricted  Subsidiary to, be and remain engaged in only those lines of business
in which the  Company  and such  Subsidiaries  are  engaged  on the date of this
Agreement,  any additional lines of business reasonably related thereto,  and no
others.

           SECTION  5.12  Intercompany   Notes.  The  Company  will  cause  each
Subsidiary  Guarantor to execute a promissory note in favor of the Company in an
original principal amount equal to the lesser of (i) the Commitment and (ii) the
actual amount from time to time  outstanding of  Indebtedness of such Subsidiary
to the Company (being the sum of the amounts specified pursuant to clause (i) of
the next  sentence),  and dated the Execution Date in the case of the Subsidiary
Guarantors  party to this  Agreement  on such  date and in the case of any other
Subsidiary  Guarantor,  the date  such  Person  becomes a  Subsidiary  Guarantor
pursuant to Section 6.03 (collectively,  the "Intercompany  Notes"). The Company
will  maintain  accounts in which it shall record (i) the amount of the proceeds
of each  Loan,  and  each  other  amount,  from  time to time  advanced  to such
Subsidiary  Guarantor  and the  amount of each  payment  made by the  Company to
reimburse  the Issuing  Bank for any drawing  made under any Letter of Credit on
which such  Subsidiary  Guarantor is an account  party;  (ii) the interest  rate
applicable  to such  advance or payment;  and (iii) each payment of principal or
interest made by such Subsidiary Guarantor.

                                  ARTICLE VI.

                              Negative Covenants
                              ------------------

           Until the Commitments have expired or terminated and the principal of
and interest on each Loan and all fees payable  hereunder have been paid in full
and all Letters of Credit have expired or  terminated  and all LC  Disbursements
shall have been  reimbursed,  the Company  covenants and agrees with the Lenders
that:

           SECTION 6.01 Indebtedness.  The Company will not, and will not permit
any  Restricted  Subsidiary  to,  create,  incur,  assume or permit to exist any
Indebtedness (including any obligation of the Company or a Restricted Subsidiary
in respect of  Indebtedness  of an  Unrestricted  Subsidiary,  whether by way of
guaranty or other direct or indirect support or assurance  against loss provided
to the holder of such Indebtedness) except:

           (a)  Indebtedness created hereunder;


                                      -63-
<PAGE>


           (b)  Refinancing Indebtedness;

           (c)  Indebtedness  in respect of the SFPP  First  Mortgage  Notes and
Indebtedness  under  the  SFPP  Revolving  Credit  Facility  not  in  excess  of
$380,000,000  aggregate  principal  amount for all such  Indebtedness at any one
time  outstanding;  provided  that neither the Company nor any other  Restricted
Subsidiary shall be liable for any such Indebtedness except for any Indebtedness
for  which OLP "D" may be  liable  solely  as a result of its being the  general
partner of SFPP.

           (d)  Indebtedness of the Company to any Restricted  Subsidiary and of
any  Restricted  Subsidiary to the Company or any other  Restricted  Subsidiary,
provided that (i) any such  borrowing  Restricted  Subsidiary  (other than SFPP)
shall be a Subsidiary  Guarantor,  (ii) if such borrowing Restricted  Subsidiary
shall be SFPP, unless at the time it incurs such Indebtedness it is a Subsidiary
Guarantor  and no SFPP  First  Mortgage  Notes  are  outstanding  and  the  SFPP
Revolving  Credit  Facility  has  been  repaid  in  full  and  terminated,  such
Indebtedness  of SFPP  shall  consist  solely of SFPP  Intracompany  Refinancing
Indebtedness,   and  (iii)  any  such  lending   Restricted   Subsidiary   shall
subordinate,  on terms (including terms as to maturity,  required  amortization,
and  limitations  on  voluntary  prepayments)  reasonably  satisfactory  to  the
Required  Lenders,  its right to repayment of the Indebtedness of the Company or
the  borrowing  Restricted  Subsidiary,  as the  case  may be,  owing  to it and
otherwise  permitted  by this  Section  6.01(d) to the rights of the  Lenders to
repayment  of all  Obligations  of the  Company  or  such  borrowing  Restricted
Subsidiary,  as the case may be, from time to time outstanding and owing to them
under this Agreement;

           (e) Indebtedness of the Company or a Restricted Subsidiary (including
any Indebtedness in respect of Guarantees contemplated by Section 6.04(e)) in an
aggregate  principal amount for the Company and all Restricted  Subsidiaries not
in excess of $75,000,000 at any one time outstanding;

           (f) additional  Indebtedness  of the Company (which may be guaranteed
by one or more  Restricted  Subsidiaries),  provided that no required  principal
payment  (whether at stated  maturity,  or by virtue of scheduled  amortization,
required  prepayment or redemption) shall be due in respect thereof prior to the
final maturity of the Indebtedness outstanding hereunder; and

           (g) Indebtedness evidenced by the Bonds.

           SECTION  6.02 Liens.  The Company  will not,  and will not permit any
Restricted  Subsidiary to, create,  incur, assume or permit to exist any Lien on
any property or asset now owned or  hereafter  acquired by it, or assign or sell
any income or revenues (including  accounts  receivable) or rights in respect of
any thereof, except:

           (a)  Permitted Encumbrances;

           (b)  any  Lien  on  any  property  or  asset  of the  Company  or any
Restricted  Subsidiary  existing  on the date  hereof and set forth in  Schedule
6.02;  provided  that (i) such Lien  shall not extend to any other  property  or
asset of the  Company or such  Subsidiary  and (ii) such Lien shall  secure only
those obligations which it secures on the date hereof and Refinancing


                                      -64-
<PAGE>


Indebtedness  thereof  other  than such  Refinancing  Indebtedness  owed to the
Company or any Restricted Subsidiary;

           (c) Liens on  properties  or assets of SFPP  securing  the SFPP First
Mortgage Notes and the SFPP  Revolving  Credit  Facility,  and Liens on the same
properties  or assets that  secure the SFPP First  Mortgage  Notes,  or the SFPP
Revolving  Credit  Facility,  as the case may be (and that do not  extend to any
other  assets),   securing  SFPP  Refinancing   Indebtedness  (other  than  SFPP
Intracompany Refinancing Indebtedness);

           (d)  any  Lien  existing  on  any  property  or  asset  prior  to the
acquisition  thereof by the Company or any Restricted  Subsidiary or existing on
any property or asset of any Person that becomes a Restricted  Subsidiary  after
the date hereof prior to the time such Person  becomes a Restricted  Subsidiary;
provided that (i) such Lien is not created in  contemplation of or in connection
with such  acquisition or such Person becoming a Restricted  Subsidiary , as the
case may be,  (ii) such Lien shall not apply to any other  property or assets of
the  Company or any  Restricted  Subsidiary,  (iii) such Lien shall  secure only
those  obligations  which it secures on the date of such acquisition or the date
such Person becomes a Restricted Subsidiary,  as the case may be, and (iv) after
giving  effect  to  such  acquisition  or  such  Person  becoming  a  Restricted
Subsidiary,  the Indebtedness secured by such Lien would be permitted by Section
6.01(e), and extensions,  renewals and replacements thereof that do not increase
the outstanding principal amount thereof; and

           (e)  Liens  on fixed  or  capital  assets  acquired,  constructed  or
improved by the Company or any  Restricted  Subsidiary;  provided  that (i) such
security interests secure Indebtedness  permitted by clause (e) of Section 6.01,
(ii) such security  interests and the Indebtedness  secured thereby are incurred
prior to or within 90 days  after such  acquisition  or the  completion  of such
construction or  improvement,  (iii) the  Indebtedness  secured thereby does not
exceed 80% of the cost of  acquiring,  constructing  or improving  such fixed or
capital  assets and (iv) such  security  interests  shall not apply to any other
property or assets of the Company or any Restricted Subsidiary.

           SECTION 6.03 Fundamental  Changes. The Company will not, and will not
permit any Restricted  Subsidiary  to, merge into or consolidate  with any other
Person,  or permit  any other  Person to merge into or  consolidate  with it, or
sell, transfer, lease or otherwise dispose of (in one transaction or in a series
of  transactions)  all  (or  substantially   all)  of  its  assets,  or  all  or
substantially  all  of the  stock  of or  other  equity  interest  in any of its
Restricted Subsidiaries (in each case, whether now owned or hereafter acquired),
or liquidate or dissolve,  except that,  if at the time thereof and  immediately
after giving  effect  thereto no Event of Default or Default shall have occurred
and be continuing  (a) any Person may merge into the Company in a transaction in
which the  Company is the  surviving  entity,  (b) any Person may merge into any
Restricted  Subsidiary  in a  transaction  in which  the  surviving  entity is a
Wholly-Owned  Restricted  Subsidiary,  (c) any  Restricted  Subsidiary may sell,
transfer,  lease or  otherwise  dispose  of its  assets to the  Company  or to a
Wholly-Owned Restricted Subsidiary (other than SFPP), (d) KMNGL may dissolve and
liquidate  into  OLP  "A",  and  (e) any  Restricted  Subsidiary  (other  than a
Subsidiary  Guarantor)  may  liquidate or dissolve if the Company  determines in
good faith that such  liquidation or dissolution is in the best interests of the
Company  and  is  not  materially

                                      -65-
<PAGE>


disadvantageous to the Lenders and such liquidation or dissolution complies with
this Section 6.03.

           SECTION   6.04   Investments,   Loans,   Advances,   Guarantees   and
Acquisitions;  Hedging Agreements. The Company will not, and will not permit any
of its Restricted Subsidiaries to, purchase, hold or acquire (including pursuant
to any merger with any Person that was not a Wholly-Owned  Restricted Subsidiary
prior to such  merger) any Capital  Stock,  evidences of  indebtedness  or other
securities  (including any option,  warrant or other right to acquire any of the
foregoing)  of, make or permit to exist any loans or advances to,  Guarantee any
obligations  of, or make or (in the case of  investments in Shell CO2) commit to
make,  or permit to exist any  investment  or any other  interest  in, any other
Person,  or purchase or  otherwise  acquire (in one  transaction  or a series of
transactions)  any assets of any other  Person  constituting  a  business  unit,
except:

           (a)  the Company  Guaranty and the  Subsidiary  Guarantors  Guaranty
and Permitted Investments;

           (b)  investments,  existing on the Execution Date, by the Company and
the  Restricted   Subsidiaries   in  the  Capital  Stock  of  their   respective
Subsidiaries;

           (c)  investments in, loans to and Guarantees of Indebtedness or other
obligations  of any  Person  (other  than SFPP  until such time as no SFPP First
Mortgage Notes are outstanding  and the SFPP Revolving  Credit Facility has been
repaid in full and terminated)  that is a Restricted  Subsidiary both before and
immediately  after the making of such  investment or loan, or the giving of such
Guarantee  and,  in the  case of the  Company,  investments  in or loans to SFPP
consisting of SFPP Intracompany Refinancing Indebtedness;

           (d)  investments  in the  Capital  Stock  of  any  other  Person,  if
immediately after and giving effect to the making of such investment:

           (i) no Event  of  Default  or  Default  shall  have  occurred  and be
      continuing or would result therefrom;

           (ii)  any   acquired  or   newly-formed   corporation,   partnership,
      association  or other  business  entity  (a "New  Subsidiary")  shall be a
      Wholly-Owned  Restricted  Subsidiary whose Capital Stock is owned directly
      by the Company or one or more Wholly-Owned  Restricted Subsidiaries (other
      than SFPP), and such New Subsidiary  shall become a Restricted  Subsidiary
      and be engaged  primarily  in one or more lines of business  permitted  by
      Section 5.11, and shall have executed a Subsidiary  Guarantor  Counterpart
      in the form of Exhibit 6.03 (a "Subsidiary Guarantor Counterpart");

           (iii)the  Company  and  the  Restricted   Subsidiaries  shall  be  in
      compliance,  on a pro forma basis, after giving effect to such acquisition
      or formation, with the covenants contained in Article VI, recomputed as at
      the last day of the most recently  ended fiscal quarter of the Company and
      the Restricted  Subsidiaries  as if such  acquisition  had occurred on the
      first day of each relevant  period for testing such  compliance,  and, the
      Company shall have delivered to the Administrative Agent, the Issuing Bank
      and the


                                      -66-
<PAGE>


      Lenders a certificate  of a Responsible  Officer to such effect,  together
      with all relevant  financial  information of such New Subsidiary or assets
      and calculations demonstrating such compliance;

           (iv) any New  Subsidiary  shall  not be liable  for any  Indebtedness
      (except for Indebtedness permitted by Section 6.01);

           (v) the Required Lenders shall have given their prior written consent
      (which   consent  shall  not  be   unreasonably   withheld,   taking  into
      consideration   the  merits  of  the  acquisition)  in  the  case  of  any
      acquisition   made,   directly  or   indirectly,   with  the  proceeds  of
      Indebtedness   incurred  by  the   Company  or  one  or  more   Restricted
      Subsidiaries in excess of $150,000,000; and

           (vi) the  Administrative  Agent shall have received (A) such opinions
      of counsel to such New Subsidiary as the Administrative Agent, the Issuing
      Bank and the Lenders may reasonably  request as to the organization,  good
      standing and enforceability of this Agreement and the Subsidiary Guarantor
      Counterpart  and such  other  matters  as the  Administrative  Agent,  the
      Issuing  Bank and the  Lenders may  reasonably  require and (B) such other
      agreements,   certificates,   approvals,   reports,   consents,   waivers,
      estoppels,  subordination  agreements,  filings and other documentation as
      the Administrative Agent and the Required Lenders may reasonably request;.

provided,  however,  that notwithstanding the foregoing,  the Company will cause
SFPP at such time as no  default  under  any of its  Indebtedness  would  result
therefrom to execute a Subsidiary  Guarantor  Counterpart and comply with clause
(vi) above; and

           (e) (i)  investments,  loans and (to the extent  permitted by Section
6.01(e))  Guarantees,  and (ii) mandatory  contributions  to Shell CO2 under the
partnership  agreement  of Shell  CO2,  in an  aggregate  amount at any one time
outstanding for all such  investments,  loans,  Guarantees and contributions not
exceeding $75,000,000.

Notwithstanding  the foregoing  provisions of this Section 6.04, the Company may
at any time or from  time to time make  investments,  loans  and  Guarantees  in
amounts that, in the  aggregate,  when made, do not exceed the net proceeds of a
substantially  concurrent  sale  of the  Company's  Qualified  Stock,  provided,
however,  that after giving effect to such  investment,  loan or guarantee,  the
Company and the Restricted Subsidiaries shall be in compliance with the terms of
this Agreement (other than the preceding  provisions of this Section 6.04 as the
same would relate to the investment, loan or Guarantee in question).

           SECTION 6.05 Restricted Payments.  The Company will not, and will not
permit any of the Restricted  Subsidiaries  to, declare or make, or agree to pay
or make, directly or indirectly, any Restricted Payment.

           SECTION 6.06 Transactions with Affiliates.  The Company will not, and
will not permit any of the Restricted  Subsidiaries to, sell, lease or otherwise
transfer any property or assets to, or purchase,  lease or otherwise acquire any
property or assets from, or otherwise engage in any other transactions with, any
of its  Affiliates,  except (a) in the ordinary course of

                                      -67-
<PAGE>


business at prices and on terms and conditions not less favorable to the Company
or such  Subsidiary  than  could  be  obtained  on an  arm's-length  basis  from
unrelated  third  parties,  (b)  transactions  between or among the  Company and
Guarantors  not  involving  any  other  Affiliate,  (c) any  Restricted  Payment
permitted  by  Section  6.05 and (d) loans and  advances  by the  Company to the
General Partner to enable the General Partner to pay general and  administrative
costs and expenses  pursuant to the partnership  agreement of the Company and in
accordance with past practices.

           SECTION 6.07 Restrictive  Agreements.  The Company will not, and will
not permit any of the Restricted Subsidiaries to, directly or indirectly,  enter
into,  incur or  permit  to  exist  any  agreement  or  other  arrangement  that
prohibits,  restricts or imposes any condition  upon the ability of (a) any such
Subsidiary to pay dividends or other distributions with respect to any shares of
its  Capital  Stock or to make or repay  loans or advances to the Company or any
other such  Subsidiary or to Guarantee  Indebtedness of the Company or any other
such  Subsidiary  or (b) the  Company or any such  Subsidiary  to grant Liens to
secure the Obligations  (except for any agreement or arrangement with respect to
the assets subject to the Liens permitted by Section 6.02(d) and Section 6.02(e)
and except for  Indebtedness  issued by the Company pursuant to an indenture for
senior debt  securities  or  pursuant  to an  indenture  for  subordinated  debt
securities,  each substantially in the form filed as an exhibit to the Company's
Registration  Statement on Form S-3,  (Registration  No.  333-66931)  originally
filed with the Securities  and Exchange  Commission on November 6, 1998, as from
time to time  amended,  so long as it  shall  permit  the  Liens to  secure  the
Obligations,  or any of them, contemplated by this Agreement as in effect on the
Effective Date); provided that the foregoing shall not apply to (i) restrictions
and conditions imposed by law or by this Agreement,  (ii) customary restrictions
and  conditions  contained  in  agreements  relating to the sale of a Subsidiary
pending such sale,  provided such  restrictions and conditions apply only to the
Subsidiary  that is to be sold and such sale is  permitted  hereunder,  or (iii)
restrictions and conditions  existing on the date hereof  identified on Schedule
6.07 (but shall  apply to any  extension  or  renewal  of, or any  amendment  or
modification expanding the scope of, any such restriction or condition) and (iv)
restrictions  and  conditions  contained in the agreement  pursuant to which the
SFPP First Mortgage Notes were issued and in the SFPP Revolving Credit Facility.

           SECTION  6.08 Sale of  Assets.  The  Company  will not,  and will not
permit any of the Restricted  Subsidiaries to, sell, lease or otherwise  dispose
of any of its  properties or assets (other than sales of product in the ordinary
course  of  business)  if,  at the  time of the  proposed  sale,  lease or other
disposition,  and giving effect  thereto,  the  aggregate  fair market value (as
determined in good faith by the Board of the Company's  general  partner) of all
properties  and assets of the Company and its Restricted  Subsidiaries  so sold,
leased or otherwise disposed of during the then current fiscal year would exceed
$10,000,000.

           SECTION  6.09  Financial  Covenants.  The Company  will observe each
of the following requirements:

           (a) Ratio of  Indebtedness  to Cash Flow. The Company will not at any
time permit the Indebtedness to Cash Flow Ratio to exceed 3.75 to 1.0.


                                      -68-
<PAGE>


           (b) Ratio of Cash Flow to Interest  Expense.  The Company will not at
any time permit the ratio of Company Cash Flow for the four full fiscal quarters
then most recently ended to Company  Interest  Expense for such four full fiscal
quarters to be less than 3.50 to 1.0.

           (c) Ratio of Cash Flow to Fixed Charges. The Company will not, at the
end of any fiscal  quarter,  permit the ratio of Company  Cash Flow for the four
full  fiscal  quarters  then ended to Fixed  Charges  at the end of such  fiscal
quarter to be less than 1.25 to 1.0.

           SECTION 6.10 Amendments to Certain  Agreements.  The Company will not
and will not  permit any  Restricted  Subsidiary  (including  SFPP) to amend its
partnership  agreement or operating  agreement or in the case of SFPP,  the SFPP
Revolving Credit  Facility,  the SFPP First Mortgage Notes or the Note Agreement
pursuant to which such First  Mortgage  Notes were issued,  in each case, in any
manner that could be adverse to the Lenders.

                                 ARTICLE VII.

                               Events of Default
                               -----------------

           SECTION 7.01 Events of Default and Remedies.  If any of the following
events ("Events of Default") shall occur and be continuing:

           (a) any  installment  of principal  of any Loan or any  reimbursement
obligation in respect of any LC  Disbursement  shall not be paid when and as the
same shall become due and payable,  whether at the due date thereof or at a date
fixed for prepayment thereof or otherwise;

           (b) any  interest on any Loan or any fee or any other  amount  (other
than an amount  referred to in clause (a) of this  Article)  payable  under this
Agreement  or any other Loan  Document  shall not be paid,  when and as the same
shall become due and payable,  and such failure shall continue  unremedied for a
period of three days;

           (c) any  representation  or warranty made or, for purposes of Article
III,  deemed made by or on behalf of any Loan Party herein,  at the direction of
any Loan  Party  or by any  Loan  Party in any  other  Loan  Document  or in any
document,  certificate or financial  statement delivered in connection with this
Agreement or any other Loan Document  shall prove to have been  incorrect in any
material respect when made or deemed made or reaffirmed, as the case may be;

           (d) any Loan Party  shall fail to  observe or perform  any  covenant,
condition or agreement contained in Section 5.01(d)(iii),  5.03 (with respect to
such Loan Party's existence) or 5.08 or in Article VI;

           (e) any Loan Party  shall fail to perform or observe  any other term,
covenant or agreement contained in this Agreement (other than those specified in
Section 7.01(a),  Section 7.01(b) or Section 7.01(d)) or any other Loan Document
to which it is a party and, in any event,  such failure shall remain  unremedied
for 30 calendar  days after the earlier of (i)  written  notice of such  failure
shall have been given to the Company by the  Administrative  Agent or any Lender
or, (ii) an officer of any Loan Party becomes aware of such failure;


                                      -69-
<PAGE>


           (f) other  than as  specified  in  Section  7.01(a)  or (b),  (i) the
Company or any Restricted  Subsidiary  fails to make (whether as primary obligor
or as  guarantor or other  surety) any payment of  principal  of, or interest or
premium,  if any, on any item or items of Indebtedness  (other than as specified
in  Section  7.01(a),  Section  7.01(b)  or  Article IX or Article X) beyond any
period of grace provided with respect thereto (not to exceed 30 days);  provided
that the aggregate  outstanding principal amount of all Indebtedness as to which
such a payment  default  shall  occur and be  continuing  is equal to or exceeds
$2,000,000,  or (ii) the  Company  or any  Restricted  Subsidiary  fails to duly
observe,  perform or comply  with any  agreement  with any Person or any term or
condition of any  instrument,  if such failure,  either  individually  or in the
aggregate, shall have caused or shall have the ability to cause the acceleration
of the payment of  Indebtedness  with an aggregate face amount which is equal to
or exceeds  $2,000,000;  provided  that this Section  7.01(f) shall not apply to
secured  Indebtedness  that  becomes  due as a result of the  voluntary  sale or
transfer of the property or assets securing such Indebtedness;

           (g) an involuntary case shall be commenced or an involuntary petition
shall be filed  seeking  (i)  liquidation,  reorganization  or other  relief  in
respect  of the  Company or any  Restricted  Subsidiary  or its  debts,  or of a
substantial part of its assets, under any Federal,  state or foreign bankruptcy,
insolvency,  receivership  or similar law now or hereafter in effect or (ii) the
appointment  of a receiver,  trustee,  custodian,  sequestrator,  conservator or
similar  official  for  the  Company  or  any  Restricted  Subsidiary  or  for a
substantial  part of its  assets,  and,  in any such case,  such  proceeding  or
petition shall continue  undismissed for 60 days or an order or decree approving
or ordering any of the foregoing shall be entered;

           (h) the Company,  or any Restricted  Subsidiary shall (i) voluntarily
commence any proceeding or file any petition  seeking  liquidation,  winding-up,
reorganization or other relief under any Federal,  state or foreign  bankruptcy,
insolvency, receivership or similar law now or hereafter in effect, (ii) consent
to the institution  of, or fail to contest in a timely and  appropriate  manner,
any  proceeding  or petition  described in Section  7.01(g),  (iii) apply for or
consent to the  appointment  of a receiver,  trustee,  custodian,  sequestrator,
conservator or similar official for the Company or any Restricted  Subsidiary or
for a substantial part of its assets, (iv) file an answer admitting the material
allegations  of a petition filed against it in any such  proceeding,  (v) make a
general  assignment for the benefit of creditors or (vi) take any action for the
purpose of effecting any of the foregoing;

           (i) the Company or any  Restricted  Subsidiary  shall become  unable,
admit in writing or fail generally to pay its debts as they become due;

           (j) the General  Partner fails to make (whether as primary  obligator
or as  guarantor or other  surety) any payment of  principal  of, or interest or
premium, if any, on any item or items of Indebtedness beyond any period of grace
provided  with  respect  thereto  (not to  exceed 30  days);  provided  that the
aggregate outstanding principal amount of all such Indebtedness as to which such
a  payment  default  shall  occur  and be  continuing  is  equal  to or  exceeds
$5,000,000;

           (k) one or more  judgments  for the payment of money in an  aggregate
amount in excess of  $5,000,000  shall be  rendered  against  the  Company,  any
Restricted  Subsidiary  or any  combination  thereof  and the same shall  remain
undischarged for a period of 30 consecutive days


                                      -70-
<PAGE>


during which execution shall not be effectively  stayed,  or any action shall be
legally  taken by a judgment  creditor  to attach or levy upon any assets of the
Company or any Restricted Subsidiary to enforce any such judgment;

          (l) an ERISA  Event shall have  occurred  that,  in the opinion of the
Required  Lenders,  when taken  together  with all other ERISA  Events that have
occurred, could reasonably be expected to result in liability of the Company and
the Restricted  Subsidiaries in an aggregate  amount exceeding (i) $5,000,000 in
any year or (ii) $10,000,000 for all periods;

          (m) either  Borrower or any other Person  shall  petition or apply for
or obtain any order restricting  payment by the Issuing Bank under any Letter of
Credit or extending  the Issuing  Bank's  liability  under such Letter of Credit
beyond the expiration date stated therein or otherwise  agreed to by the Issuing
Bank;

then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing,  the  Administrative  Agent, may, and upon the written
request of the Required Lenders shall, by written notice  (including notice sent
by  telecopy)  to the  Company (a "Notice  of  Default")  take any or all of the
following actions,  without prejudice to the rights of the Administrative Agent,
any  Lender or other  holder of any of the  Obligations  to  enforce  its claims
against  any Loan Party  (provided  that,  if an Event of Default  specified  in
Section  7.01(g) or Section  7.01(h)  shall occur with respect to the Company or
any Restricted Subsidiary,  the result of which would occur upon the giving of a
Notice of Default as specified in clauses (i),  (ii) and (v) below,  shall occur
automatically  without  the giving of any Notice of  Default):  (i)  declare the
Total  Commitment  terminated,  whereupon the  Commitments  of the Lenders shall
forthwith terminate  immediately and any accrued commitment fees shall forthwith
become due and payable  without any other  notice of any kind;  (ii) declare the
principal of and any accrued interest in respect of all Loans, and all the other
Obligations owing hereunder and under the other Loan Documents, to be, whereupon
the same shall become,  forthwith due and payable without  presentment,  demand,
notice of demand or of  dishonor  and  nonpayment,  protest,  notice of protest,
notice of intent to  accelerate,  declaration or notice of  acceleration  or any
other  notice of any kind,  all of which are hereby  waived by each Loan  Party;
(iii) exercise any rights or remedies under the Loan  Documents;  (iv) terminate
any  Letter  of Credit  which may be  terminated  in  accordance  with its terms
(whether by the giving of written notice to the  beneficiary or otherwise);  and
(v) direct the Company to comply,  and the Company  agrees that upon  receipt of
such notice (or upon the occurrence of an Event of Default  specified in Section
7.01(g) or Section  7.01(h))  it will  comply,  with the  provisions  of Section
2.06(k).

           SECTION  7.02  Other  Remedies.  Upon the  occurrence  and during the
continuance of any Event of Default,  the  Administrative  Agent,  acting at the
request of the Required Lenders,  may proceed to protect and enforce its rights,
either by suit in equity or by action at law or both,  whether for the  specific
performance  of any covenant or agreement  contained in this Agreement or in any
other  Loan  Document  or in aid of the  exercise  of any power  granted in this
Agreement or in any other Loan  Document;  or may proceed to enforce the payment
of all amounts owing to the Administrative  Agent and the Lenders under the Loan
Documents  and interest  thereon in the manner set forth  herein or therein;  it
being  intended  that no remedy  conferred  herein  or in any of the other  Loan
Documents  is to be  exclusive  of any

                                      -71-
<PAGE>


other remedy,  and each and every remedy  contained  herein or in any other Loan
Document  shall be  cumulative  and shall be in addition  to every other  remedy
given hereunder and under the other Loan Documents now or hereafter  existing at
law or in equity or by statute or otherwise.

           SECTION 7.03  Application of Moneys During  Continuation  of Event of
Default . (a) So long as an Event of Default of which the  Administrative  Agent
shall have given notice to the Lenders shall  continue,  all moneys  received by
the  Administrative  Agent from any Loan Party under the Loan  Documents  shall,
except as otherwise required by law, be distributed by the Administrative  Agent
on the dates selected by the Administrative Agent (individually, a "Distribution
Date" and collectively, the "Distribution Dates") as follows:

      first,   to  payment   of  the   unreimbursed   expenses   for  which  the
      Administrative Agent or any Lender is to be reimbursed pursuant to Section
      11.03 and unpaid fees owing to the  Administrative  Agent  pursuant to the
      Fee Letter;

      second,  to the  ratable  payment of accrued  but unpaid  interest on the
      Obligations;

      third, to the ratable payment of unpaid principal of the Obligations;

      fourth,  to the ratable  payment of all other amounts payable by the Loan
      Parties hereunder;

      fifth,  to the  ratable  payment  of all  other  Obligations,  until  all
      Obligations shall have been paid in full; and

      finally, to payment to the Loan Parties, or their respective successors or
      assigns,  or as a court  of  competent  jurisdiction  may  direct,  of any
      surplus then remaining from such proceeds.

           (b) The term  "unpaid"  as used in this  Section  7.03 shall mean all
Obligations  outstanding as of a Distribution Date (including any amounts unpaid
under  clause  (v) of the last  sentence  of  Section  7.01)  as to which  prior
distributions  have not been made, after giving effect to any adjustments  which
are made pursuant to Section 11.09 of which the Administrative  Agent shall have
been notified.

                                 ARTICLE VIII.

                           The Administrative Agent
                           ------------------------

           SECTION 8.01 Appointment,  Powers and Immunities.  Each Lender hereby
irrevocably appoints and authorizes the Administrative Agent to act as its agent
hereunder  and  under  the  other  Loan   Documents  with  such  powers  as  are
specifically  delegated  to the  Administrative  Agent  by  the  terms  of  this
Agreement and such other Loan Documents,  together with such other powers as are
reasonably  incidental thereto.  The Administrative Agent (which term as used in
this  sentence and in Section 8.05 and the first  sentence of Section 8.06 shall
include  reference to its Affiliates and its  Affiliates'  officers,  directors,
employees,

                                      -72-
<PAGE>


attorneys,  accountants,  experts  and  agents):  (a)  shall  have no  duties or
responsibilities  except those  expressly set forth in the Loan  Documents,  and
shall not by reason of the Loan  Documents  be a trustee  or  fiduciary  for any
Lender;  (b) makes no  representation or warranty to any Lender and shall not be
responsible  to the Lenders for any  recitals,  statements,  representations  or
warranties contained in this Agreement,  or in any certificate or other document
referred  to or  provided  for  in,  or  received  by any of  them  under,  this
Agreement, or for the value, validity,  effectiveness,  genuineness,  execution,
legality,  enforceability or sufficiency of this Agreement,  other Loan Document
or any other  document  referred to or provided for herein or therein or for any
failure by any Loan Party or any other  Person  (other  than the  Administrative
Agent) to perform any of its  obligations  hereunder  or  thereunder  or for the
existence  or value of, or the  perfection  or  priority  of any Lien upon,  any
collateral  security or the  financial or other  condition  of the Company,  the
Subsidiaries  or any other obligor or guarantor;  (c) except pursuant to Section
8.07 shall not be required to initiate or conduct any  litigation  or collection
proceedings hereunder;  and (d) shall not be responsible for any action taken or
omitted to be taken by it  hereunder or under any other  document or  instrument
referred to or provided for herein or in connection  herewith  including its own
ordinary negligence, except for its own gross negligence,  willful misconduct or
unlawful  conduct.  The  Administrative  Agent may employ  agents,  accountants,
attorneys  and  experts  and  shall not be  responsible  for the  negligence  or
misconduct of any such agents, accountants,  attorneys or experts selected by it
in good faith or any action  taken or omitted to be taken in good faith by it in
accordance  with the advice of such agents,  accountants,  attorneys or experts.
The  Administrative  Agent may deem and treat the payee named in any Note as the
holder thereof for all purposes  hereof unless and until a written notice of the
assignment or transfer  thereof  permitted  hereunder shall have been filed with
the Administrative  Agent. The Administrative Agent is authorized to release any
cash collateral  that is permitted to be released  pursuant to the terms of this
Agreement.

           SECTION 8.02 Reliance by  Administrative  Agent.  The  Administrative
Agent  shall  be  entitled  to rely  upon  any  certification,  notice  or other
communication (including any thereof by telephone,  telex, telecopier,  telegram
or cable)  believed  by it to be genuine  and correct and to have been signed or
sent by or on behalf  of the  proper  Person or  Persons,  and upon  advice  and
statements of legal counsel,  independent accountants and other experts selected
by the Administrative Agent in good faith.

           SECTION 8.03 Defaults;  Events of Default.  The Administrative  Agent
shall not be deemed to have knowledge of the occurrence of a Default or an Event
of Default  (other than the  non-payment of principal of or interest on Loans or
of fees or failure to  reimburse  LC  Disbursements)  unless the  Administrative
Agent has received notice from a Lender or a Borrower specifying such Default or
Event of Default and stating  that such notice is a "Notice of  Default."In  the
event that the Administrative  Agent receives such a notice of the occurrence of
a Default or Event of Default, the Administrative Agent shall give prompt notice
thereof to the Lenders.  In the event of a payment  Default or Event of Default,
the  Administrative  Agent  shall give each  Lender  prompt  notice of each such
payment Default or Event of Default.

           SECTION 8.04 Rights as a Lender.  With respect to its Commitments and
the Loans made by it and its issuance,  or its participation in the issuance, of
each Letter of Credit,  First Union  National Bank (and any successor  acting as
Administrative  Agent) in its

                                      -73-
<PAGE>


capacity as a Lender  hereunder shall have the same rights and powers  hereunder
as any other  Lender and may  exercise  the same as though it were not acting as
the Administrative  Agent, and the term "Lender" or "Lenders" shall,  unless the
context otherwise indicates,  include the Administrative Agent in its individual
capacity.  First Union National Bank (and any successor acting as Administrative
Agent) and its Affiliates may (without having to account therefor to any Lender)
accept deposits from, lend money to and generally engage in any kind of banking,
trust or other business with any Loan Party (and any of its Affiliates) as if it
were not acting as the  Administrative  Agent. First Union National Bank and its
Affiliates may accept fees and other consideration from the Company or any other
Loan Party for services in connection  with this Agreement or otherwise  without
having to account for the same to the Lenders.

           SECTION 8.05  INDEMNIFICATION.  THE LENDERS  AGREE TO  INDEMNIFY  THE
ADMINISTRATIVE  AGENT AND THE SYNDICATION AGENT RATABLY IN ACCORDANCE WITH THEIR
APPLICABLE  PERCENTAGES FOR THE INDEMNITY  MATTERS AS DESCRIBED IN SECTION 11.03
TO THE EXTENT NOT  INDEMNIFIED OR REIMBURSED BY THE COMPANY UNDER SECTION 11.03,
BUT WITHOUT LIMITING THE OBLIGATIONS OF THE COMPANY UNDER SAID SECTION 11.03 AND
FOR ANY AND ALL OTHER  LIABILITIES,  OBLIGATIONS,  LOSSES,  DAMAGES,  PENALTIES,
ACTIONS,  JUDGMENTS,  SUITS,  COSTS,  EXPENSES OR  DISBURSEMENTS OF ANY KIND AND
NATURE  WHATSOEVER  WHICH MAY BE IMPOSED ON, INCURRED BY OR ASSERTED AGAINST THE
ADMINISTRATIVE  AGENT OR THE SYNDICATION AGENT IN ANY WAY RELATING TO OR ARISING
OUT OF:  (A) THIS  AGREEMENT  OR ANY  OTHER  LOAN  DOCUMENT  CONTEMPLATED  BY OR
REFERRED  TO HEREIN OR THE  TRANSACTIONS  CONTEMPLATED  HEREBY,  BUT  EXCLUDING,
UNLESS A DEFAULT OR AN EVENT OF DEFAULT HAS OCCURRED AND IS  CONTINUING,  NORMAL
ADMINISTRATIVE  COSTS AND  EXPENSES  INCIDENT TO THE  PERFORMANCE  OF ITS AGENCY
DUTIES,  IF ANY,  HEREUNDER OR (B) THE  ENFORCEMENT  OF ANY OF THE TERMS OF THIS
AGREEMENT  OR OF ANY OTHER LOAN  DOCUMENT;  WHETHER OR NOT ANY OF THE  FOREGOING
SPECIFIED IN THIS SECTION 8.05 ARISES FROM THE SOLE OR CONCURRENT  NEGLIGENCE OF
THE ADMINISTRATIVE  AGENT OR THE SYNDICATION AGENT, AS THE CASE MAY BE; PROVIDED
THAT NO LENDER SHALL BE LIABLE FOR ANY OF THE FOREGOING TO THE EXTENT THEY ARISE
FROM THE  GROSS  NEGLIGENCE,  WILLFUL  MISCONDUCT  OR  UNLAWFUL  CONDUCT  OF THE
ADMINISTRATIVE AGENT.

           SECTION 8.06  Non-Reliance  on Agents and other Lenders.  Each Lender
acknowledges and agrees that it has,  independently  and without reliance on the
Administrative  Agent, the Syndication  Agent or any other Lender,  and based on
such documents and information as it has deemed appropriate, made its own credit
analysis of the Company and the Subsidiaries and its decision to enter into this
Agreement,  and  that it  will,  independently  and  without  reliance  upon the
Administrative  Agent, the Syndication  Agent or any other Lender,  and based on
such  documents  and  information  as it shall  deem  appropriate  at the  time,
continue to make its own analysis and  decisions in taking or not taking  action
under this Agreement. Neither the Administrative Agent nor the Syndication Agent
shall be required to keep itself informed as

                                      -74-
<PAGE>


to the performance or observance by any Loan Party of this Agreement,  the other
Loan  Documents or any other  document  referred to or provided for herein or to
inspect the properties or books of any Loan Party.  Except for notices,  reports
and other  documents and information  expressly  required to be furnished to the
Lenders by the Administrative Agent hereunder,  neither the Administrative Agent
nor the Syndication  Agent shall have any duty or  responsibility to provide any
Lender with any credit or other  information  concerning the affairs,  financial
condition  or  business of any Loan Party (or any of its  Affiliates)  which may
come into the possession of the  Administrative  Agent, the Syndication Agent or
any of its respective Affiliates.  In this regard, each Lender acknowledges that
Andrews & Kurth L.L.P.  is acting in this  transaction as special counsel to the
Administrative  Agent and the  Syndication  Agent only. Each Lender will consult
with its own legal  counsel to the extent that it deems  necessary in connection
with this Agreement and other Loan Documents and the matters contemplated herein
and therein.

           SECTION  8.07 Action by  Administrative  Agent.  Except for action or
other matters  expressly  required of the  Administrative  Agent hereunder,  the
Administrative  Agent  shall in all  cases  be fully  justified  in  failing  or
refusing to act hereunder unless it shall (a) receive written  instructions from
the  Required  Lenders (or all of the Lenders as  expressly  required by Section
11.02)  specifying  the  action  to be  taken,  and  (b) be  indemnified  to its
satisfaction by the Lenders against any and all liability and expenses which may
be incurred by it by reason of taking or continuing to take any such action. The
instructions  of the  Required  Lenders  (or  all of the  Lenders  as  expressly
required  by  Section  11.02) and any  action  taken or failure to act  pursuant
thereto by the Administrative Agent shall be binding on all of the Lenders. If a
Default or Event of Default has occurred and is continuing,  the  Administrative
Agent shall take such action with respect to such Default or Event of Default as
shall be directed by the Required  Lenders (or all of the Lenders as required by
Section 11.02) in the written instructions (with indemnities)  described in this
Section 8.07;  provided that,  unless and until the  Administrative  Agent shall
have received such directions,  the  Administrative  Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such  Default  or Event of Default  as it shall  deem  advisable  in the best
interests of the Lenders. In no event,  however,  shall the Administrative Agent
be  required  to take any  action  which  exposes  the  Administrative  Agent to
personal liability or which is contrary to this Agreement or applicable law.

           SECTION 8.08 Resignation or Removal of Administrative  Agent. Subject
to the  appointment  and  acceptance  of a  successor  Administrative  Agent  as
provided below, the Administrative Agent may resign at any time by giving notice
thereof to the  Lenders and the  Company,  and the  Administrative  Agent may be
removed at any time with or without cause by the Required Lenders. Upon any such
resignation or removal,  the Required  Lenders shall have the right to appoint a
successor  Administrative Agent. If no successor Administrative Agent shall have
been  so  appointed  by the  Required  Lenders  and  shall  have  accepted  such
appointment  within thirty (30) days after the retiring  Administrative  Agent's
giving of notice of resignation or the Required Lenders' removal of the retiring
Administrative  Agent, then the retiring  Administrative Agent may, on behalf of
the Lenders,  appoint a successor  Administrative  Agent. Upon the acceptance of
such appointment  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 retiring Administrative Agent, and
the  retiring

                                      -75-
<PAGE>


Administrative  Agent  shall be  discharged  from  its  duties  and  obligations
hereunder.  After any retiring  Administrative  Agent's  resignation  or removal
hereunder  as  Administrative  Agent,  the  provisions  of this Article VIII and
Section 11.03 shall continue in effect for its benefit in respect of any actions
taken or  omitted  to be taken by it while it was  acting as the  Administrative
Agent.

           SECTION  8.09  Duties  of  Syndication  Agent.   Notwithstanding  the
indemnity  of the  Syndication  Agent  contained  in Section 8.05 and in Section
11.03,  the  Syndication  Agent  shall  not have  any  duty,  responsibility  or
liability in such capacity with respect to the  administration or enforcement of
this Agreement or any other Loan Document.

                                  ARTICLE IX.

                               Company Guaranty
                               ----------------

           SECTION 9.01 Company Guaranty.  (a) In consideration of, and in order
to induce the Administrative  Agent and the Lenders to enter into this Agreement
and to induce the Lenders to make the Loans and the Issuing Bank to maintain the
Existing  Letter of Credit  and to issue new  Letters of Credit  hereunder,  the
Company  hereby  absolutely,  unconditionally  and  irrevocably  guarantees  the
punctual  payment  and  performance  when due,  whether at stated  maturity,  by
acceleration  or otherwise,  of the  Obligations of the Subsidiary  Borrower (as
such), and all covenants of the Subsidiary  Borrower (as such), now or hereafter
existing  under  this  Agreement  and the  other  Loan  Documents  to which  the
Subsidiary  Borrower is a party,  whether  for  principal,  interest  (including
interest  accruing  or  becoming  owing  both  prior  to and  subsequent  to the
commencement  of any  proceeding  against  or  with  respect  to the  Subsidiary
Borrower  under any  chapter of Title 11 of the United  States  Code,  as now or
hereafter in effect,  or any successor thereto (the "Bankruptcy  Code")),  fees,
commissions,  expenses  (including  reasonable  attorneys' fees and expenses) or
otherwise  (all such  obligations  being  the  "Subsidiary  Borrower  Guaranteed
Obligations"),  it being understood,  for the avoidance of doubt, that such term
shall not include any Obligations of the Person that is the Subsidiary  Borrower
in any other capacity,  e.g., as a Subsidiary  Guarantor.  The Company agrees to
pay any and all expenses incurred by each Lender and the Administrative Agent in
enforcing this Company Guaranty against the Company.

           (b) This Company Guaranty is an absolute, unconditional,  present and
continuing  guaranty  of  payment  and  not of  collectibility  and is in no way
conditioned  upon any  attempt to collect  from the  Subsidiary  Borrower or any
other Loan Party or any other action, occurrence or circumstance whatsoever.

           SECTION 9.02 Continuing Guaranty. (a) The Company guarantees that the
Subsidiary Borrower  Guaranteed  Obligations will be paid strictly in accordance
with the terms of this  Agreement  and the other  Loan  Documents.  The  Company
agrees that, to the maximum extent  permitted by applicable  law, the Subsidiary
Borrower  Guaranteed  Obligations  and Loan  Documents  to which the  Subsidiary
Borrower  is a party may be extended or  renewed,  and  indebtedness  thereunder
repaid and  reborrowed in whole or in part,  without  notice to or assent by the
Company,   and  that  it  will   remain   bound  upon  this   Company   Guaranty
notwithstanding  any  extension,  renewal or other  alteration of any Subsidiary
Borrower

                                      -76-
<PAGE>


Guaranteed Obligations or such Loan Documents,  or any repayment and reborrowing
of Loans. To the maximum extent permitted by applicable law, except as otherwise
expressly  provided in this  Agreement  or any other Loan  Document to which the
Company is a party,  the obligations of the Company under this Company  Guaranty
shall be  absolute,  unconditional  and  irrevocable,  and  shall  be  performed
strictly in accordance with the terms hereof under any circumstances whatsoever,
including:

          (i) any modification,  amendment,  supplement,  renewal, extension for
     any period, increase,  decrease,  alteration or rearrangement of all or any
     part  of  the  Subsidiary  Borrower  Guaranteed  Obligations,  or  of  this
     Agreement or any other Loan Document  executed in connection  herewith,  or
     any contract or understanding among the Company,  the Subsidiary  Borrower,
     any Subsidiary  Guarantor,  the Administrative Agent and/or the Lenders, or
     any  other  Person,   pertaining  to  the  Subsidiary  Borrower  Guaranteed
     Obligations;

          (ii) any adjustment,  indulgence, forbearance or compromise that might
     be  granted  or given  by the  Lenders  to the  Company  or any  Subsidiary
     Guarantor or any other Person liable on the Subsidiary  Borrower Guaranteed
     Obligations;

          (iii)   the   insolvency,   bankruptcy,    arrangement,    adjustment,
     composition,  liquidation,  disability, dissolution or lack of power of the
     Company,  the Subsidiary  Borrower,  any Subsidiary  Guarantor or any other
     Person at any time liable for the payment of all or part of the  Subsidiary
     Borrower  Guaranteed  Obligations;  or any dissolution of the Company,  the
     Subsidiary  Borrower,  or any Subsidiary  Guarantor,  or any sale, lease or
     transfer  of  any  or all of the  assets  of the  Company,  the  Subsidiary
     Borrower, or any Subsidiary  Guarantor,  or any changes in the shareholders
     of the Company, the Subsidiary Borrower,  or any Subsidiary  Guarantor;  or
     any  reorganization  of  the  Company,  the  Subsidiary  Borrower,  or  any
     Subsidiary Guarantor;

          (iv) the invalidity, illegality or unenforceability of all or any part
     of the  Subsidiary  Borrower  Guaranteed  Obligations,  or any  document or
     agreement  executed in connection with the Subsidiary  Borrower  Guaranteed
     Obligations,  for any reason  whatsoever,  including  the fact that (A) the
     Subsidiary Borrower Guaranteed  Obligations,  or any part thereof,  exceeds
     the  amount  permitted  by  law,  (B) the act of  creating  the  Subsidiary
     Borrower Guaranteed Obligations or any part thereof is ultra vires, (C) the
     officers or  representatives  executing the documents or otherwise creating
     the Subsidiary  Borrower  Guaranteed  Obligations  acted in excess of their
     authority,  (D) the Subsidiary Borrower Guaranteed  Obligations or any part
     thereof  violate  applicable  usury laws,  (E) the Company,  the Subsidiary
     Borrower or any Subsidiary Guarantor has valid defenses, claims and offsets
     (whether at law or in equity,  by agreement or by statute) which render the
     Subsidiary   Borrower   Guaranteed    Obligations   wholly   or   partially
     uncollectible from the Company,  the Subsidiary Borrower or such Subsidiary
     Guarantor,  (F) the creation,  performance  or repayment of the  Subsidiary
     Borrower Guaranteed Obligations (or execution,  delivery and performance of
     any document or instrument  representing  part of the  Subsidiary  Borrower
     Guaranteed  Obligations  or  executed  in  connection  with the  Subsidiary
     Borrower Guaranteed Obligations, or given to secure the repayment of the


                                      -77-
<PAGE>


      Subsidiary  Borrower  Guaranteed  Obligations) is illegal,  uncollectible,
      legally impossible or unenforceable, or (G) this Agreement, any other Loan
      Document, or any other document or instrument pertaining to the Subsidiary
      Borrower Guaranteed  Obligations has been forged or otherwise is irregular
      or not genuine or authentic;

          (v) any full or partial  release of the liability of the Company,  the
     Subsidiary Borrower or any Subsidiary  Guarantor on the Subsidiary Borrower
     Guaranteed  Obligations  or any part  thereof,  or any other  Person now or
     hereafter liable, whether directly or indirectly,  jointly,  severally,  or
     jointly and severally, to pay, perform,  guarantee or assure the payment of
     the Subsidiary  Borrower  Guaranteed  Obligations  or any part thereof;  it
     being  recognized,  acknowledged and agreed by the Company that the Company
     may be required to pay the Subsidiary  Borrower  Guaranteed  Obligations in
     full without assistance or support of any other Person, and the Company has
     not  been  induced  to  enter  into  this   Guaranty  on  the  basis  of  a
     contemplation,  belief,  understanding  or agreement  that any other Person
     will be liable to perform the Subsidiary Borrower  Guaranteed  Obligations,
     or that the  Administrative  Agent or any  Lender  will  look to any  other
     Person to perform the Subsidiary Borrower Guaranteed Obligations;

          (vi) the taking or  accepting  of any other  security,  collateral  or
     guaranty,  or  other  assurance  of  payment,  for  all or any  part of the
     Subsidiary Borrower Guaranteed Obligations;

          (vii) any release, surrender, exchange, subordination,  deterioration,
     waste, loss or impairment of any collateral,  property or security,  at any
     time existing in connection  with, or assuring or securing  payment of, all
     or any part of the Subsidiary Borrower Guaranteed Obligations;

          (viii)the  failure of the  Administrative  Agent,  the  Lenders or any
     other Person to exercise  diligence or reasonable care in the preservation,
     protection,  enforcement, sale or other handling or treatment of all or any
     part of such collateral, property or security;

          (ix) the fact that any  collateral,  security or Lien  contemplated or
     intended to be given,  created or granted as security for the  repayment of
     the  Subsidiary  Borrower  Guaranteed  Obligations  shall  not be  properly
     perfected or created,  or shall prove to be unenforceable or subordinate to
     any other Lien;  it being  recognized  and agreed by the  Company  that the
     Company is not entering  into this  Company  Guaranty in reliance on, or in
     contemplation   of  the   benefits   of,  the   validity,   enforceability,
     collectibility  or  value  of any  of the  collateral  for  the  Subsidiary
     Borrower Guaranteed Obligations;

          (x) any  payment  by the  Subsidiary  Borrower  or the  Company to the
     Administrative Agent or any Lender is held to constitute a preference under
     bankruptcy laws, or for any other reason either the Administrative Agent or
     any Lender is  required  to refund  such  payment or pay such amount to the
     Subsidiary Borrower or any other Person; or

          (xi) any other  action  taken or omitted  to be taken with  respect to
     this Agreement, any other Loan Document, the Subsidiary Borrower Guaranteed
     Obligations,

                                      -78-
<PAGE>


      or any security  and  collateral  therefor,  whether or not such action or
      omission  prejudices  the Company or  increases  the  likelihood  that the
      Company  will  be  required  to pay  the  Subsidiary  Borrower  Guaranteed
      Obligations pursuant to the terms hereof;

it being the  unambiguous  and  unequivocal  intention  of the Company  that the
Company shall be obligated to pay the Subsidiary Borrower Guaranteed Obligations
when due,  notwithstanding  any  occurrence,  circumstance,  event,  action,  or
omission whatsoever, whether contemplated or uncontemplated,  and whether or not
otherwise  or  particularly  described  herein,  except  for the full and  final
payment and satisfaction of the Subsidiary Borrower Guaranteed Obligations after
the  termination  of the  Commitments  of all  Lenders  and  the  expiration  or
termination of the Existing Letter of Credit.

           (b) The Company further agrees that, to the fullest extent  permitted
by law,  as  between  the  Company,  on the one hand,  and the  Lenders  and the
Administrative  Agent,  on the other hand,  (i) the  maturity of the  Subsidiary
Borrower  Guaranteed  Obligations  may be accelerated as provided in Article VII
for the purposes of this Company Guaranty,  notwithstanding any stay, injunction
or other  prohibition  preventing such  acceleration of the Subsidiary  Borrower
Guaranteed  Obligations,  and  (ii)  in the  event  of any  acceleration  of the
Subsidiary  Borrower  Guaranteed  Obligations  as provided in Article  VII,  the
Subsidiary  Borrower  Guaranteed  Obligations  (whether or not due and  payable)
shall  forthwith  become due and  payable by the Company for the purpose of this
Company Guaranty.

           SECTION 9.03 Effect of Debtor  Relief Laws.  If after  receipt of any
payment of all or any part of the Subsidiary  Borrower  Guaranteed  Obligations,
the  Administrative  Agent,  the  Issuing  Bank or any  Lender is for any reason
compelled to surrender or voluntarily surrenders, such payment to any Person (a)
because such payment is or may be avoided, invalidated, declared fraudulent, set
aside, determined to be void or voidable as a preference, fraudulent conveyance,
fraudulent transfer,  impermissible set-off or a diversion of trust funds or (b)
for any other reason,  including (i) any judgment,  decree or order of any court
or administrative  body having  jurisdiction over the Administrative  Agent, the
Issuing  Bank,  any  Lender or any of their  respective  properties  or (ii) any
settlement or compromise of any such claim effected by the Administrative Agent,
the Issuing Bank or any Lender with any such claimant  (including the Subsidiary
Borrower),  then the Subsidiary Borrower Guaranteed  Obligations or part thereof
intended to be satisfied  shall be  reinstated  and  continue,  and this Company
Guaranty shall continue in full force as if such payment have not been received,
notwithstanding  any revocation  thereof or the  cancellation  of any instrument
evidencing any of the Subsidiary Borrower  Guaranteed  Obligations or otherwise;
and the Company  shall be liable to pay the  Administrative  Agent,  the Issuing
Bank and the Lenders,  and hereby do indemnify  the  Administrative  Agent,  the
Issuing  Bank and the  Lenders  and hold them  harmless  for the  amount of such
payment  so  surrendered  and  all  reasonable  expenses  (including  reasonable
attorneys' fees, court costs and expenses  attributable thereto) incurred by the
Administrative Agent, the Issuing Bank or any Lender in the defense of any claim
made  against it that any payment  received  by the  Administrative  Agent,  the
Issuing Bank or any Lender in respect of all or part of the Subsidiary  Borrower
Guaranteed  Obligations  must be  surrendered.  The provisions of this paragraph
shall survive the termination of this Company Guaranty, and any satisfaction and


                                      -79-
<PAGE>


discharge of the  Subsidiary  Borrower by virtue of any payment,  court order or
any Federal or state law.

           SECTION 9.04 Waiver. The Company hereby waives promptness, diligence,
notice of acceptance  and any other notice with respect to any of the Subsidiary
Borrower   Guaranteed   Obligations   and  this  Company   Guaranty  and  waives
presentment,  demand  for  payment,  notice of intent to  accelerate,  notice of
dishonor or nonpayment and any requirement that the Administrative  Agent or any
Lender  institute  suit,  collection  proceedings  or take any  other  action to
collect  the  Subsidiary   Borrower   Guaranteed   Obligations,   including  any
requirement  that the  Administrative  Agent or any Lender  exhaust any right or
take any action  against  the  Subsidiary  Borrower  or any other  Person or any
collateral (it being the intention of the Administrative  Agent, the Lenders and
the Company that this Company Guaranty is to be a guaranty of payment and not of
collection).  It shall  not be  necessary  for the  Administrative  Agent or any
Lender, in order to enforce any payment by the Company  hereunder,  to institute
suit or exhaust its rights and remedies  against the  Subsidiary  Borrower,  any
Subsidiary  Guarantor or any other  Person,  including  others liable to pay any
Subsidiary Borrower Guaranteed Obligations, or to enforce its rights against any
security ever given to secure  payment  thereof.  The Company  hereby  expressly
waives to the maximum extent permitted by applicable law each and every right to
which it may be  entitled by virtue of the  suretyship  laws of the State of New
York or any other state in which it may be located, including any and all rights
it may have pursuant to Rule 31, Texas Rules of Civil Procedure,  Section 17.001
of the Texas  Civil  Practice  and  Remedies  Code and  Chapter  34 of the Texas
Business and Commerce Code.

           SECTION  9.05 Full  Force and  Effect.  This  Company  Guaranty  is a
continuing  guaranty  and shall remain in full force and effect until all of the
Subsidiary  Borrower  Guaranteed  Obligations under this Agreement and the other
Loan Documents to which the Subsidiary Borrower is a party and all other amounts
payable  under  this  Company  Guaranty  have  been  paid  in  full  (after  the
termination of the  Commitments of the Lenders and the termination or expiration
of the Existing Letter of Credit).  All rights,  remedies and powers provided in
this  Company  Guaranty  may be  exercised,  and all waivers  contained  in this
Company  Guaranty  may be  enforced,  only to the extent  that the  exercise  or
enforcement  thereof does not violate any provisions of applicable law which may
not be waived.

                                  ARTICLE X.

                        Subsidiary Guarantors Guaranty
                        ------------------------------

           SECTION 10.01 Subsidiary  Guarantors  Guaranty.  (a) In consideration
of, and in order to induce  the  Administrative  Agent and the  Lenders to enter
into this  Agreement and to induce the Lenders to make the Loans and the Issuing
Bank to  maintain  the  Existing  Letter of Credit  and to issue new  Letters of
Credit hereunder,  each Subsidiary Guarantor hereby absolutely,  unconditionally
and  irrevocably,  jointly and  severally  guarantees  the punctual  payment and
performance when due, whether at stated maturity,  by acceleration or otherwise,
of the  Obligations of the Borrowers (as such),  and all other  obligations  and
covenants  of the  Borrowers  (as such),  now or hereafter  existing  under this
Agreement and the other Loan

                                      -80-
<PAGE>


Documents to which either Borrower is a party,  whether for principal,  interest
(including  interest  accruing or becoming owing both prior to and subsequent to
the  commencement  of any  proceeding  against or with respect to such  Borrower
under the Bankruptcy Code,  commitment fees,  commissions,  expenses  (including
reasonable  attorneys'  fees and expenses) or otherwise,  subject however to the
limitation set forth in Section 10.04 (all such obligations  being the "Borrower
Guaranteed Obligations",  it being understood,  for the avoidance of doubt, that
such term shall not include any  Obligations of either  Borrower in any capacity
other than as a Borrower  hereunder,  e.g., as the maker of the Company Guaranty
or this Subsidiary Borrower Guaranty).  Moreover,  the term "Borrower Guaranteed
Obligations"  shall  not,  as to the  Person  that is the  Subsidiary  Borrower,
include its own obligations,  either as such or as a Subsidiary Guarantor.  Each
Subsidiary  Guarantor agrees to pay any and all expenses incurred by each Lender
and the Administrative  Agent in enforcing this Subsidiary  Guarantors  Guaranty
against such Subsidiary Guarantor.

           (b) Each Subsidiary  Guarantor agrees that the amount of the Borrower
Guaranteed  Obligations  may at any time and from time to time exceed the amount
of the maximum  liability of such Subsidiary  Guarantor in respect thereof under
this Subsidiary  Guarantors  Guaranty (by reason of the limitations set forth in
Section  10.04)  without  impairing  this  Subsidiary   Guarantors  Guaranty  or
affecting  the rights and remedies of the  Administrative  Agent and the Lenders
hereunder.

           (c)   This   Subsidiary   Guarantors   Guaranty   is   an   absolute,
unconditional,   present  and   continuing   guaranty  of  payment  and  not  of
collectibility and is in no way conditioned upon any attempt to collect from the
Company,  any other Loan Party or any other action,  occurrence or  circumstance
whatsoever.

           SECTION 10.02  Continuing  Guaranty.  (a) Each  Subsidiary  Guarantor
guarantees  that the Borrower  Guaranteed  Obligations  will be paid strictly in
accordance with the terms of this Agreement and the other Loan  Documents.  Each
Subsidiary  Guarantor agrees that, to the maximum extent permitted by applicable
law, the Borrower Guaranteed  Obligations and the Loan Documents may be extended
or renewed,  and Loans repaid and reborrowed in whole or in part, without notice
to or assent by such  Subsidiary  Guarantor,  and that it will remain bound upon
this Subsidiary  Guarantors Guaranty  notwithstanding any extension,  renewal or
other  alteration  of any of the  Borrower  Guaranteed  Obligations  or the Loan
Documents,  or any repayment and  reborrowing  of Loans.  To the maximum  extent
permitted by  applicable  law,  except as otherwise  expressly  provided in this
Agreement  or any other Loan  Document to which such  Subsidiary  Guarantor is a
party,  the  obligations  of each  Subsidiary  Guarantor  under this  Subsidiary
Guarantors Guaranty shall be absolute,  unconditional and irrevocable, and shall
be  performed   strictly  in   accordance   with  the  terms  hereof  under  any
circumstances whatsoever, including:

           (i) any modification,  amendment,  supplement, renewal, extension for
      any period, increase, decrease,  alteration or rearrangement of all or any
      part of the Borrower Guaranteed Obligations or this Agreement or any other
      Loan  Document  executed  in  connection  herewith,  or  any  contract  or
      understanding among either Borrower, any


                                      -81-
<PAGE>


      Subsidiary Guarantor,  the Administrative Agent and/or the Lenders, or any
      other Person, pertaining to the Borrower Guaranteed Obligations;

           (ii) any adjustment, indulgence, forbearance or compromise that might
      be granted or given by the Lenders to either  Borrower  or any  Subsidiary
      Guarantor  or  any  other  Person   liable  on  the  Borrower   Guaranteed
      Obligations;

           (iii)the    insolvency,    bankruptcy,    arrangement,    adjustment,
      composition,  liquidation,  disability,  dissolution  or lack of  power of
      either Borrower,  any Subsidiary Guarantor or any other Person at any time
      liable  for  the  payment  of  all or  part  of  the  Borrower  Guaranteed
      Obligations;  or any  dissolution  of either  Borrower  or any  Subsidiary
      Guarantor,  or any sale,  lease or transfer of any or all of the assets of
      either Borrower or any Subsidiary Guarantor, or any changes in the holders
      of the  equity in either  Borrower  or any  Subsidiary  Guarantor;  or any
      reorganization of either Borrower or any Subsidiary Guarantor;

           (iv) the  invalidity,  illegality or  unenforceability  of all or any
      part of the Borrower Guaranteed Obligations,  or any document or agreement
      executed in connection with the Borrower Guaranteed  Obligations,  for any
      reason  whatsoever,  including  the fact that (A) the Borrower  Guaranteed
      Obligations, or any part thereof, exceeds the amount permitted by law, (B)
      the act of  creating  the  Borrower  Guaranteed  Obligations  or any  part
      thereof is ultra vires, (C) the officers or representatives  executing the
      documents or otherwise creating the Borrower Guaranteed  Obligations acted
      in excess of their authority,  (D) the Borrower Guaranteed  Obligations or
      any part thereof violate applicable usury laws, (E) either Borrower or any
      Subsidiary  Guarantor has valid defenses,  claims and offsets  (whether at
      law or in equity,  by agreement  or by statute)  which render the Borrower
      Guaranteed  Obligations  wholly or  partially  uncollectible  from  either
      Borrower or such Subsidiary  Guarantor,  (F) the creation,  performance or
      repayment of the Borrower Guaranteed  Obligations (or execution,  delivery
      and  performance  of any document or instrument  representing  part of the
      Borrower  Guaranteed  Obligations  or  executed  in  connection  with  the
      Borrower Guaranteed  Obligations,  or given to secure the repayment of the
      Borrower  Guaranteed  Obligations)  is  illegal,  uncollectible,   legally
      impossible  or  unenforceable,  or (G)  this  Agreement,  any  other  Loan
      Document,  or any other document or instrument  pertaining to the Borrower
      Guaranteed  Obligations  has been forged or  otherwise is irregular or not
      genuine or authentic;

           (v) any full or partial  release of the liability of either  Borrower
      or any Subsidiary Guarantor on the Borrower Guaranteed  Obligations or any
      part  thereof,  or any  other  Person  now or  hereafter  liable,  whether
      directly or indirectly,  jointly,  severally, or jointly and severally, to
      pay, perform,  guarantee or assure the payment of the Borrower  Guaranteed
      Obligations or any part thereof;  it being  recognized,  acknowledged  and
      agreed by each Subsidiary  Guarantor that such Subsidiary Guarantor may be
      required  to pay the  Borrower  Guaranteed  Obligations  in  full  without
      assistance or support of any other Person,  and such Subsidiary  Guarantor
      has not been  induced  to  enter  into  this  Guaranty  on the  basis of a
      contemplation,  belief,  understanding  or agreement that any other Person
      will be liable to perform the Borrower Guaranteed Obligations, or that the


                                      -82-
<PAGE>


      Administrative  Agent or any  Lender  will  look to any  other  Person to
      perform the Borrower Guaranteed Obligations;

           (vi) the taking or accepting of any security, collateral or guaranty,
      or  other  assurance  of  payment,  for all or any  part  of the  Borrower
      Guaranteed Obligations;

           (vii)any release, surrender, exchange, subordination,  deterioration,
      waste, loss or impairment of any collateral,  property or security, at any
      time  hereafter  existing  in  connection  with,  or  assuring or securing
      payment of, all or any part of the Borrower Guaranteed Obligations;

           (viii) the failure of the  Administrative  Agent,  the Lenders or any
      other Person to exercise diligence or reasonable care in the preservation,
      protection,  enforcement or other handling or treatment of all or any part
      of such collateral, property or security;

           (ix) the fact that any collateral,  security or Lien  contemplated or
      intended to be given,  created or granted as security for the repayment of
      any of the Borrower Guaranteed Obligations shall not be properly perfected
      or created, or shall prove to be unenforceable or subordinate to any other
      Lien; it being  recognized  and agreed by each  Subsidiary  Guarantor that
      such Subsidiary Guarantor is not entering into this Subsidiary  Guarantors
      Guaranty in  reliance  on, or in  contemplation  of the  benefits  of, the
      validity, enforceability, collectibility or value of any of the collateral
      for the Borrower Guaranteed Obligations;

           (x) any payment by the  Company or any  Subsidiary  Guarantor  to the
      Administrative  Agent or any  Lender is held to  constitute  a  preference
      under bankruptcy laws, or for any reason either the  Administrative  Agent
      or any Lender is required to refund such payment or pay such amount to the
      Company or any other Person; or

           (xi) any other  action  taken or omitted to be taken with  respect to
      this  Agreement,   any  other  Loan  Document,   the  Borrower  Guaranteed
      Obligations,  or any security and collateral therefor, whether or not such
      action or omission  prejudices any  Subsidiary  Guarantor or increases the
      likelihood  that any  Subsidiary  Guarantor  will be  required  to pay the
      Borrower Guaranteed Obligations pursuant to the terms hereof;

it being the unambiguous and unequivocal  intention of each Subsidiary Guarantor
that such Subsidiary Guarantor shall be obligated to pay the Borrower Guaranteed
Obligations  when due,  notwithstanding  any  occurrence,  circumstance,  event,
action, or omission  whatsoever,  whether  contemplated or  uncontemplated,  and
whether or not otherwise or particularly  described herein,  except for the full
and final payment and satisfaction of the Borrower Guaranteed  Obligations after
the  termination  of the  Commitments  of all  Lenders  and  the  expiration  or
termination of all Letters of Credit.

           (b) Each  Subsidiary  Guarantor  further agrees that, as between such
Subsidiary  Guarantor,  on the one hand, and the Lenders and the  Administrative
Agent,  on  the  other  hand,  (i)  the  maturity  of  the  Borrower  Guaranteed
Obligations  may be  accelerated  as provided in Article VII for the purposes of
this Subsidiary Guarantors Guaranty, notwithstanding any stay,


                                      -83-
<PAGE>


injunction or other  prohibition  preventing  such  acceleration of the Borrower
Guaranteed  Obligations,  and  (ii)  in the  event  of any  acceleration  of the
Obligations  as provided in Article  VII, the  Borrower  Guaranteed  Obligations
(whether or not due and payable) shall forthwith  become due and payable by each
Subsidiary Guarantor for the purpose of this Subsidiary Guarantors Guaranty.

           SECTION  10.03 Effect of Debtor  Relief Laws. If after receipt of any
payment  of  all  or  any  part  of the  Borrower  Guaranteed  Obligations,  the
Administrative Agent, the Issuing Bank or any Lender is for any reason compelled
to surrender or voluntarily  surrenders,  such payment to any Person (a) because
such payment is or may be avoided, invalidated,  declared fraudulent, set aside,
determined  to be void  or  voidable  as a  preference,  fraudulent  conveyance,
fraudulent transfer,  impermissible set-off or a diversion of trust funds or (b)
for any other reason,  including (i) any judgment,  decree or order of any court
or administrative  body having  jurisdiction over the Administrative  Agent, the
Issuing  Bank,  any  Lender or any of their  respective  properties  or (ii) any
settlement or compromise of any such claim effected by the Administrative Agent,
the Issuing Bank or any Lender with any such claimant  (including  the Company),
then  the  Borrower  Guaranteed  Obligations  or  part  thereof  intended  to be
satisfied  shall be reinstated  and  continue,  and this  Subsidiary  Guarantors
Guaranty  shall continue in full force as if such payment had not been received,
notwithstanding  any revocation  thereof or the  cancellation of any Note or any
other  instrument  evidencing  any of the  Borrower  Guaranteed  Obligations  or
otherwise; and the Subsidiary Guarantors, jointly and severally, shall be liable
to pay the Administrative Agent, the Issuing Bank and the Lenders, and hereby do
indemnify the  Administrative  Agent,  the Issuing Bank and the Lenders and hold
them harmless for the amount of such payment so  surrendered  and all reasonable
expenses  (including  reasonable  attorneys'  fees,  court  costs  and  expenses
attributable  thereto) incurred by the Administrative Agent, the Issuing Bank or
any Lender in the defense of any claim made against it that any payment received
by the Administrative Agent, the Issuing Bank or any Lender in respect of all or
part of the Borrower Guaranteed Obligations must be surrendered.  The provisions
of this paragraph shall survive the  termination of this  Subsidiary  Guarantors
Guaranty,  and any  satisfaction  and  discharge of the Company by virtue of any
payment, court order or any Federal or state law.

           SECTION 10.04 General Limitation on Borrower Guaranteed  Obligations.
In any action or proceeding  involving any state  corporate law, or any state or
Federal bankruptcy, insolvency, reorganization or other law affecting the rights
of creditors  generally,  if the  obligations of any Subsidiary  Guarantor under
Section  10.01 would  otherwise,  taking into account the  provisions of Section
10.05,  be  held  or  determined  to  be  void,  invalid  or  unenforceable,  or
subordinated to the claims of any other  creditors,  on account of the amount of
its liability  under Section 10.01,  then,  notwithstanding  any other provision
hereof to the contrary,  the amount of such liability shall, without any further
action by such Subsidiary Guarantor, any Lender, the Administrative Agent or any
other Person, be automatically limited and reduced to the highest amount that is
valid and enforceable  and not  subordinated to the claims of other creditors as
determined in such action or proceeding.

           SECTION  10.05  Rights of  Contribution.  The  Subsidiary  Guarantors
hereby agree,  as between  themselves,  that if any Subsidiary  Guarantor  shall
become an Excess Funding

                                      -84-
<PAGE>


Obligor (as defined below) by reason of the payment by such Subsidiary Guarantor
of any of the Borrower Guaranteed  Obligations,  each other Subsidiary Guarantor
shall,  on  demand of such  Excess  Funding  Obligor  (but  subject  to the next
sentence), pay to such Excess Funding Obligor an amount equal to such Subsidiary
Guarantor's Pro Rata Share (as defined below and  determined,  for this purpose,
without  reference  to the  properties,  debts and  liabilities  of such  Excess
Funding  Obligor) of the Excess  Payment  (as defined  below) in respect of such
Borrower Guaranteed Obligations.

           For  purposes of this Section  10.05,  (i) "Excess  Funding  Obligor"
shall  mean,  in  respect  of any  of the  Borrower  Guaranteed  Obligations,  a
Subsidiary  Guarantor that has paid an amount in excess of its Pro Rata Share of
such  Borrower  Guaranteed  Obligations,  (ii) "Excess  Payment"  shall mean, in
respect of any of the  Borrower  Guaranteed  Obligations,  the amount paid by an
Excess  Funding  Obligor  in  excess  of its Pro  Rata  Share  of such  Borrower
Guaranteed Obligations and (iii) "Pro Rata Share" shall mean, for any Subsidiary
Guarantor,  the ratio (expressed as a percentage) of (x) the amount by which the
aggregate fair saleable value of all properties of such Subsidiary  Guarantor on
the date of this Agreement  exceeds the amount of all the debts and  liabilities
of such Subsidiary Guarantor (including contingent,  subordinated, unmatured and
unliquidated   liabilities,   but  excluding  the  obligations  that  have  been
guaranteed by such  Subsidiary  Guarantor in Section 10.01) to (y) the amount by
which the aggregate  fair saleable  value of all assets of the Borrowers and all
the Subsidiary  Guarantors  exceeds the amount of all the debts and  liabilities
(including contingent, subordinated, unmatured and unliquidated liabilities, but
excluding  the  obligations  of the  Borrowers  and  the  Subsidiary  Guarantors
hereunder)  of the Borrowers and all the  Subsidiary  Guarantors,  all as of the
Execution Date.

           SECTION 10.06  Subrogation.  Notwithstanding  any payment or payments
made by any Subsidiary Guarantor hereunder, or any set-off or application by the
Administrative  Agent or any Lender of any security or of any credits or claims,
no Subsidiary Guarantor will assert or exercise any rights of the Administrative
Agent or any Lender or of such Subsidiary  Guarantor  against either Borrower to
recover  the amount of any  payment  made by such  Subsidiary  Guarantor  to the
Administrative  Agent or any Lender  hereunder  by way of any  claim,  remedy or
subrogation, reimbursement,  exoneration, contribution, indemnity, participation
or otherwise arising by contract, by statute, under common law or otherwise, and
such  Subsidiary  Guarantor shall not have any right of recourse to or any claim
against  assets or  property  of  either  Borrower,  until  all of the  Borrower
Guaranteed Obligations are paid in full after the termination of the Commitments
of all Lenders and the expiration or  termination  of all Letters of Credit.  If
any  amount  shall  nevertheless  be paid to a  Subsidiary  Guarantor  by either
Borrower  or  another  Subsidiary  Guarantor  prior  to  payment  in full of the
Borrower  Guaranteed  Obligations,  such  amount  shall be held in trust for the
benefit of the Administrative  Agent and the Lenders and shall forthwith be paid
to  the  Administrative  Agent  to be  credited  and  applied  to  the  Borrower
Guaranteed  Obligations,  whether  matured or unmatured.  The provisions of this
paragraph shall survive the termination of this Subsidiary  Guarantors Guaranty,
and any  satisfaction and discharge of either Borrower by virtue of any payment,
court order or any Federal or state law.

           SECTION 10.07 Subordination.  If any Subsidiary Guarantor becomes the
holder of any  indebtedness  payable by either  Borrower  or another  Subsidiary
Guarantor,  each

                                     -85-
<PAGE>


Subsidiary  Guarantor hereby subordinates all indebtedness owing to it from such
Borrower or such other Subsidiary Guarantor to all indebtedness of such Borrower
or such other Subsidiary  Guarantor to the Administrative Agent and the Lenders,
and agrees  that  during the  continuance  of any Default or Event of Default it
shall not  accept  any  payment  on the same until the first to occur of (a) the
date such  Default or Event of Default no longer  exists and (b) payment in full
of the Borrower Guaranteed Obligations of the Borrowers under this Agreement and
the other Loan Documents after the termination of the Commitments of the Lenders
and the  termination  or  expiration of the Letters of Credit and all other Loan
Documents,  and,  while any  Default  or Event of  Default  exists,  shall in no
circumstance  whatsoever attempt to set-off or reduce any obligations  hereunder
because of such  indebtedness.  If any amount  shall  nevertheless  be paid to a
Subsidiary Guarantor by either Borrower or another Subsidiary Guarantor prior to
payment in full of the Borrower Guaranteed Obligations and, while any Default or
Event of Default  exists,  such amount shall be held in trust for the benefit of
the  Administrative  Agent and the  Lenders and shall  forthwith  be paid to the
Administrative  Agent to be  credited  and  applied to the  Borrower  Guaranteed
Obligations, whether matured or unmatured.

           SECTION  10.08  Waiver.  Each  Subsidiary   Guarantor  hereby  waives
promptness, diligence, notice of acceptance and any other notice with respect to
any of the  Borrower  Guaranteed  Obligations  and  this  Subsidiary  Guarantors
Guaranty  and  waives  presentment,  demand  for  payment,  notice  of intent to
accelerate,  notice of  dishonor  or  nonpayment  and any  requirement  that the
Administrative  Agent or any Lender  institute suit,  collection  proceedings or
take any other action to collect the Borrower Guaranteed Obligations,  including
any requirement  that the  Administrative  Agent or any Lender protect,  secure,
perfect or insure any Lien against any property  subject  thereto or exhaust any
right  or take any  action  against  the  Company  or any  other  Person  or any
collateral (it being the intention of the Administrative  Agent, the Lenders and
each Subsidiary  Guarantor that this Subsidiary  Guarantors  Guaranty is to be a
guaranty of payment and not of  collection).  It shall not be necessary  for the
Administrative  Agent or any  Lender,  in order to  enforce  any  payment by any
Subsidiary  Guarantor  hereunder,  to  institute  suit or exhaust its rights and
remedies  against either Borrower,  any other Subsidiary  Guarantor or any other
Person,  including others liable to pay any Borrower Guaranteed Obligations,  or
to enforce its rights against any security ever given to secure payment thereof.
Each  Subsidiary  Guarantor  hereby  expressly  waives  to  the  maximum  extent
permitted by applicable  law each and every right to which it may be entitled by
virtue of the  suretyship  laws of the  State of New York or any other  state in
which it may be located,  including  any and all rights it may have  pursuant to
Rule 31,  Texas  Rules of Civil  Procedure,  Section  17.001 of the Texas  Civil
Practice  and  Remedies  Code and Chapter 34 of the Texas  Business and Commerce
Code.  Each  Subsidiary   Guarantor  hereby  waives  marshaling  of  assets  and
liabilities,   notice  by  the  Administrative   Agent  or  any  Lender  of  any
indebtedness  or liability to which such Lender applies or may apply any amounts
received by such Lender, and of the creation, advancement,  increase, existence,
extension,  renewal,  rearrangement  or modification of the Borrower  Guaranteed
Obligations. Each Subsidiary Guarantor expressly waives, to the extent permitted
by  applicable  law, the benefit of any and all laws  providing for exemption of
property from execution or for valuation and appraisal upon foreclosure.

           SECTION  10.09  Full Force and  Effect.  This  Subsidiary  Guarantors
Guaranty  is a  continuing  guaranty  and shall  remain in full force and effect
until all of the

                                      -86-
<PAGE>


Borrower  Guaranteed  Obligations  under  this  Agreement  and  the  other  Loan
Documents  and all  other  amounts  payable  under  this  Subsidiary  Guarantors
Guaranty have been paid in full (after the termination of the Commitments of the
Lenders and the termination or expiration of the Letters of Credit). All rights,
remedies  and powers  provided in this  Subsidiary  Guarantors  Guaranty  may be
exercised,  and all waivers contained in this Subsidiary Guarantors Guaranty may
be enforced,  only to the extent that the exercise or  enforcement  thereof does
not violate any provisions of applicable law which may not be waived.

                                  ARTICLE XI.

                                 Miscellaneous
                                 -------------

           SECTION 11.01 Notices,  Etc. The  Administrative  Agent,  the Issuing
Bank,  any Lender or the  holder of any of the  Obligations,  giving  consent or
notice or making any request of any Loan Party  provided  for  hereunder,  shall
notify each Lender (in the case of the  Administrative  Agent and/or the Issuing
Bank) and the  Administrative  Agent (in the case of a Lender)  thereof.  In the
event  that the  holder  of any Note or any of the  Obligations  (including  any
Lender) shall transfer such Note or Obligations, it shall promptly so advise the
Administrative  Agent which shall be  entitled  to assume  conclusively  that no
transfer  of any  Note or any of the  Obligations  has been  made by any  holder
(including  any  Lender)  unless  and until the  Administrative  Agent  receives
written  notice to the  contrary.  Except  with  respect  to  notices  and other
communications  expressly  permitted  to be given  by  telephone,  all  notices,
consents,  requests,  approvals,  demands and other communications (collectively
"Communications")  provided for herein shall be in writing (including  facsimile
Communications) and mailed, telecopied or delivered:

           (a)  if to the Company,  to it at 1301 McKinney Street,  Suite 3450,
Houston,  Texas  77010,  Attention of David G.  Dehaemers,  Jr.  (Telecopy  No.
(713) 844-9570);

           (b)  if to any other Loan Party, to it in care of the Company;

           (c) if to the  Administrative  Agent,  to it at _ First Union Capital
Markets, 1001 Fannin Street, Suite 2255, Houston, Texas 77002, Attention of
Paul Riddle (Telecopy No. 713-650-6354);

           (d) if to the Issuing Bank,  to it at _ First Union Capital  Markets,
1001 Fannin Street, Suite 2255, Houston, Texas 77002, Attention of
Paul Riddle (Telecopy No. 713-650-6354);

           (e)  if to the  Swingline  Lender,  to it at _  First  Union  Capital
Markets, 1001 Fannin Street, Suite 2255, Houston, Texas 77002, Attention of Paul
Riddle (Telecopy No. 713-650-6354); and

           (f) If to any other Lender,  as specified on the  signature  page for
such Lender  hereto or, in the case of any Person who becomes a Lender after the
date hereof,  as specified on the  Assignment  and  Acceptance  executed by such
Person or in the Administrative Questionnaire


                                      -87-
<PAGE>


delivered by such Person or, in the case of any party hereto, such other address
or  telecopy  number as such party may  hereafter  specify  for such  purpose by
notice to the other parties.

           All Communications  shall, when mailed,  telecopied or delivered,  be
effective when mailed by certified mail,  return receipt  requested to any party
at its address specified above, on the signature page hereof or on the signature
page of such  Assignment  and  Acceptance  (or other address  designated by such
party in a  Communication  to the other  parties  hereto),  or telecopied to any
party to the telecopy number set forth above, on the signature page hereof or on
the signature page of such  Assignment and Acceptance (or other telecopy  number
designated by such party in a  Communication  to the other parties  hereto),  or
delivered  personally  to any  party  at its  address  specified  above,  on the
signature page hereof or on the signature page of such Assignment and Acceptance
(or other  address  designated  by such  party in a  Communication  to the other
parties hereto); provided,  however,  Communications to the Administrative Agent
pursuant to Article II or Article VIII shall not be effective  until received by
the Administrative  Agent and  Communications to the  Administrative  Agent, the
Issuing  Bank or the  Swingline  Lender  pursuant  to Article II shall be at the
Principal Office.

           SECTION  11.02  Waivers;  Amendments.  (a) No failure or delay by the
Administrative  Agent,  the  Issuing  Bank or any Lender in  exercising,  and no
course of dealing with respect to, any right or power hereunder shall operate as
a waiver thereof,  nor shall any single or partial exercise of any such right or
power, or any abandonment or  discontinuance of steps to enforce such a right or
power,  preclude  any other or further  exercise  thereof or the exercise of any
other right or power. No notice to or demand on any Loan Party in any case shall
entitle  such Loan Party to any other or further  notice or demand in similar or
other circumstances.  No waiver of any provision of this Agreement or consent to
any departure therefrom shall in any event be effective unless the same shall be
permitted  by  Section  11.02(b),  and then  such  waiver  or  consent  shall be
effective  only in the  specific  instance  and for the purpose for which given.
Without  limiting  the  generality  of the  foregoing,  the  making of a Loan or
issuance of a Letter of Credit shall not be construed as a waiver of any Default
or Event of Default,  regardless of whether the Administrative Agent, any Lender
or the  Issuing  Bank may have had notice or  knowledge  of such  Default at the
time.

           (b) No  provision  of  this  Agreement  or any  other  Loan  Document
provision may be waived,  amended or modified except pursuant to an agreement or
agreements in writing entered into by the Loan Parties and the Required  Lenders
or by the Loan  Parties  and the  Administrative  Agent with the  consent of the
Required  Lenders;  provided  that no such  agreement  shall  (i)  increase  the
Commitment of any Lender without the written consent of such Lender, (ii) reduce
the  principal  amount  of any Loan or LC  Disbursement  or  reduce  the rate of
interest  thereon,  or reduce any fees  payable  hereunder,  without the written
consent of each Lender  affected  thereby,  (iii) postpone the scheduled date of
payment of the principal amount of any Loan or LC Disbursement,  or any interest
thereon, or any fees payable hereunder, or reduce the amount of, waive or excuse
any  such  payment,  or  postpone  the  scheduled  date  of  expiration  of  any
Commitment,  without the written consent of each Lender affected  thereby,  (iv)
change Section  2.18(b) or (c) in a manner that would alter the pro rata sharing
of payments required thereby, without the written consent of each Lender, or (v)
release the Company or any Subsidiary Guarantor from their respective guarantees
contained in Article IX or Article X,


                                      -88-
<PAGE>


change any of the  provisions  of this Section  11.02(b),  Section  11.05 or the
definition of "Required  Lenders" or any other provision  hereof  specifying the
number or  percentage of Lenders  required to waive,  amend or modify any rights
hereunder or make any determination or grant any consent hereunder,  without the
written  consent of each Lender (it being  understood  that, with the consent of
Required Lenders, additional extensions of credit pursuant to this Agreement may
be included in the determination of "Required  Lenders" and provisions  relating
to the pro rata  sharing  of  payments  on  substantially  the same basis as the
Revolving Loans and Commitments  are included on the Execution  Date);  provided
further  that no such  agreement  shall amend,  modify or  otherwise  affect the
rights or duties  of the  Administrative  Agent or the  Issuing  Bank  hereunder
without the prior  written  consent of the  Administrative  Agent or the Issuing
Bank, as the case may be.

           SECTION  11.03 Payment of  Expenses,  Indemnities,  etc. The Company
agrees:

           (a)  whether  or  not  the  transactions   hereby   contemplated  are
consummated,  pay all  reasonable  expenses of the  Administrative  Agent in the
administration  (both before and after the execution hereof and including advice
of  counsel as to the  rights  and  duties of the  Administrative  Agent and the
Lenders  with  respect  thereto)  of, and in  connection  with the  negotiation,
syndication, investigation, preparation, execution and delivery of, recording or
filing of,  preservation  of rights  under,  enforcement  of,  and  refinancing,
renegotiation or restructuring of, the Loan Documents and any amendment,  waiver
or consent relating thereto (including,  without limitation,  travel, photocopy,
mailing,  courier,  telephone and other similar  expenses of the  Administrative
Agent,  the cost of environmental  audits,  surveys and appraisals at reasonable
intervals,  the reasonable fees and  disbursements  of counsel and other outside
consultants for the Administrative Agent and, in the case of enforcement of this
Agreement and the other Loan Documents, the reasonable fees and disbursements of
counsel,  including  the  allocated  costs of  inside  counsel,  for each of the
Administrative  Agent and the  Issuing  Bank,  and each  Lender);  and  promptly
reimburse  the  Administrative  Agent  for all  amounts  expended,  advanced  or
incurred by the Administrative Agent or the Lenders to satisfy any obligation of
any Loan Party under this Agreement.

           (b) TO INDEMNIFY THE ADMINISTRATIVE AGENT, THE SYNDICATION AGENT, THE
ISSUING  BANK AND EACH  LENDER  AND EACH OF THEIR  AFFILIATES  AND EACH OF THEIR
OFFICERS, DIRECTORS, EMPLOYEES, REPRESENTATIVES,  AGENTS, ATTORNEYS, ACCOUNTANTS
AND EXPERTS ("INDEMNIFIED PARTIES") FROM, HOLD EACH OF THEM HARMLESS AGAINST AND
PROMPTLY UPON DEMAND PAY OR REIMBURSE  EACH OF THEM FOR, THE  INDEMNITY  MATTERS
WHICH MAY BE INCURRED BY OR ASSERTED  AGAINST OR INVOLVE ANY OF THEM (WHETHER OR
NOT ANY OF THEM IS DESIGNATED A PARTY THERETO) AS A RESULT OF, ARISING OUT OF OR
IN ANY WAY RELATED TO (I) ANY ACTUAL OR PROPOSED  USE BY EITHER  BORROWER OF THE
PROCEEDS  OF ANY OF THE  LOANS OR ANY  LETTER  OF  CREDIT,  (II) THE  EXECUTION,
DELIVERY AND  PERFORMANCE  OF THE LOAN  DOCUMENTS,  (III) THE  OPERATIONS OF THE
BUSINESS OF THE COMPANY AND THE RESTRICTED SUBSIDIARIES, (IV) THE FAILURE OF THE
COMPANY


                                      -89-
<PAGE>


OR ANY RESTRICTED SUBSIDIARY TO COMPLY WITH THE TERMS OF THIS AGREEMENT, OR WITH
ANY REQUIREMENT OF LAW, (V) ANY INACCURACY OF ANY  REPRESENTATION  OR ANY BREACH
OF ANY WARRANTY OF ANY LOAN PARTY SET FORTH IN ANY OF THE LOAN  DOCUMENTS,  (VI)
THE ISSUANCE, EXECUTION AND DELIVERY OR TRANSFER OF OR PAYMENT OR FAILURE TO PAY
UNDER ANY LETTER OF CREDIT,  (VII) THE PAYMENT OF A DRAWING  UNDER ANY LETTER OF
CREDIT  NOTWITHSTANDING  THE  NON-COMPLIANCE,  NON-DELIVERY  OR  OTHER  IMPROPER
PRESENTATION OF THE MANUALLY  EXECUTED DRAFT(S) AND  CERTIFICATION(S)  OR (VIII)
ANY OTHER  ASPECT  OF THE LOAN  DOCUMENTS,  INCLUDING  THE  REASONABLE  FEES AND
DISBURSEMENTS  OF COUNSEL AND ALL OTHER  EXPENSES  INCURRED IN  CONNECTION  WITH
INVESTIGATING,   DEFENDING  OR  PREPARING  TO  DEFEND  ANY  SUCH  ACTION,  SUIT,
PROCEEDING (INCLUDING ANY INVESTIGATIONS,  LITIGATION OR INQUIRIES) OR CLAIM AND
INCLUDING ALL INDEMNITY MATTERS ARISING BY REASON OF THE ORDINARY  NEGLIGENCE OF
ANY  INDEMNIFIED  PARTY,  BUT EXCLUDING ALL INDEMNITY  MATTERS ARISING SOLELY BY
REASON OF CLAIMS BETWEEN THE LENDERS OR ANY LENDER AND THE ADMINISTRATIVE  AGENT
OR THE SYNDICATION AGENT OR A LENDER'S  SHAREHOLDERS  AGAINST THE ADMINISTRATIVE
AGENT OR LENDER OR BY REASON OF THE  GROSS  NEGLIGENCE,  WILLFUL  MISCONDUCT  OR
UNLAWFUL CONDUCT ON THE PART OF THE INDEMNIFIED PARTY SEEKING INDEMNIFICATION.

           (c) TO INDEMNIFY AND HOLD HARMLESS FROM TIME TO TIME THE  INDEMNIFIED
PARTIES  FROM AND AGAINST ANY AND ALL LOSSES,  CLAIMS,  COST  RECOVERY  ACTIONS,
ADMINISTRATIVE ORDERS OR PROCEEDINGS,  DAMAGES AND LIABILITIES TO WHICH ANY SUCH
PERSON MAY BECOME  SUBJECT (I) UNDER ANY  ENVIRONMENTAL  LAW  APPLICABLE  TO THE
COMPANY OR ANY  SUBSIDIARY OR ANY OF THEIR  PROPERTIES OR ASSETS,  INCLUDING THE
TREATMENT  OR DISPOSAL OF HAZARDOUS  SUBSTANCES  ON ANY OF THEIR  PROPERTIES  OR
ASSETS,  (II) AS A RESULT OF THE BREACH OR  NON-COMPLIANCE BY THE COMPANY OR ANY
SUBSIDIARY  WITH  ANY  ENVIRONMENTAL  LAW  APPLICABLE  TO  THE  COMPANY  OR  ANY
SUBSIDIARY,  (III) DUE TO PAST OWNERSHIP BY THE COMPANY OR ANY SUBSIDIARY OF ANY
OF THEIR  PROPERTIES  OR ASSETS OR PAST  ACTIVITY ON ANY OF THEIR  PROPERTIES OR
ASSETS WHICH,  THOUGH LAWFUL AND FULLY  PERMISSIBLE AT THE TIME, COULD RESULT IN
PRESENT  LIABILITY,  (IV) THE  PRESENCE,  USE,  RELEASE,  STORAGE,  TREATMENT OR
DISPOSAL  OF  HAZARDOUS  SUBSTANCES  ON OR AT  ANY OF THE  PROPERTIES  OWNED  OR
OPERATED BY THE  BORROWER  OR ANY  SUBSIDIARY,  OR (V) ANY OTHER  ENVIRONMENTAL,
HEALTH OR SAFETY  CONDITION IN  CONNECTION  WITH THE LOAN  DOCUMENTS,  PROVIDED,
HOWEVER,  THAT NO INDEMNITY  SHALL BE AFFORDED  UNDER THIS  SECTION  11.03(c) IN
RESPECT OF ANY  PROPERTY OR ASSET FOR ANY  OCCURRENCE  ARISING  FROM THE ACTS OR
OMISSIONS  OF THE  ADMINISTRATIVE  AGENT OR ANY LENDER  DURING THE PERIOD  AFTER
WHICH SUCH PERSON,  ITS SUCCESSORS OR ASSIGNS SHALL HAVE OBTAINED  POSSESSION OF
SUCH


                                      -90-
<PAGE>


PROPERTY OR ASSET  (WHETHER BY FORECLOSURE  OR DEED IN LIEU OF  FORECLOSURE,  AS
MORTGAGEE IN POSSESSION OR OTHERWISE).

           (d) No  Indemnified  Party may  settle  any  claim to be  indemnified
without  the consent of the  indemnitor,  such  consent  not to be  unreasonably
withheld;  provided,  that the indemnitor may not reasonably withhold consent to
any settlement that an Indemnified  Party  proposes,  if the indemnitor does not
have the financial  ability to pay all its obligations  outstanding and asserted
against the  indemnitor  at that time,  including the maximum  potential  claims
against the Indemnified Party to be indemnified pursuant to this Section 11.03.

           (e) In the case of any indemnification  hereunder, the Administrative
Agent or Lender,  as  appropriate  shall give  notice to the Company of any such
claim or demand being made against the  Indemnified  Party and the Company shall
have the  non-exclusive  right to join in the defense  against any such claim or
demand;  provided that if the Company provides a defense,  the Indemnified Party
shall  bear its own cost of  defense  unless  there is a  conflict  between  the
Company and such Indemnified Party.

           (f) THE FOREGOING INDEMNITIES SHALL EXTEND TO THE INDEMNIFIED PARTIES
NOTWITHSTANDING  THE SOLE OR  CONCURRENT  NEGLIGENCE  OF EVERY KIND OR CHARACTER
WHATSOEVER,  WHETHER  ACTIVE  OR  PASSIVE,  WHETHER  AN  AFFIRMATIVE  ACT  OR AN
OMISSION,   INCLUDING,   ALL  TYPES  OF  NEGLIGENT  CONDUCT  IDENTIFIED  IN  THE
RESTATEMENT  (SECOND) OF TORTS OF ONE OR MORE OF THE  INDEMNIFIED  PARTIES OR BY
REASON  OF  STRICT  LIABILITY  IMPOSED  WITHOUT  FAULT ON ANY ONE OR MORE OF THE
INDEMNIFIED  PARTIES.  TO THE EXTENT THAT AN INDEMNIFIED  PARTY IS FOUND TO HAVE
COMMITTED  AN ACT OF GROSS  NEGLIGENCE  OR  WILLFUL  MISCONDUCT  OR  ENGAGED  IN
UNLAWFUL CONDUCT, THIS CONTRACTUAL  OBLIGATION OF INDEMNIFICATION SHALL CONTINUE
BUT  SHALL  ONLY  EXTEND  TO THE  PORTION  OF THE  CLAIM  THAT IS DEEMED TO HAVE
OCCURRED BY REASON OF EVENTS OTHER THAN THE GROSS NEGLIGENCE, WILLFUL MISCONDUCT
OR UNLAWFUL CONDUCT OF THE INDEMNIFIED PARTY.

           (g) The Company's  obligations under this Section 11.03 shall survive
any termination of this  Agreement,  the payment of the Loans and the expiration
of the Letters of Credit and shall continue thereafter in full force and effect,
for a period of six years.

           (h) To the extent that the Company  fails to pay any amount  required
to be paid by it to the  Administrative  Agent or the  Issuing  Bank  under this
Section 11.03, each Lender severally agrees to pay to the  Administrative  Agent
or the Issuing  Bank, as the case may be, such  Lender's  Applicable  Percentage
(determined as of the time that the applicable unreimbursed expense or indemnity
payment is sought) of such unpaid amount; provided that the unreimbursed expense
or indemnified loss, claim,  damage,  liability or related expense,  as the case
may be, was  incurred by or asserted  against  the  Administrative  Agent or the
Issuing Bank in its capacity as such.


                                      -91-
<PAGE>


           (i) The Company  shall pay any amounts due under this  Section  11.03
within  thirty  (30) days of the  receipt by the Company of notice of the amount
due.

           SECTION  11.04  Successors  and  Assigns.   The  provisions  of  this
Agreement  shall be binding upon and inure to the benefit of the parties  hereto
and their respective  successors and assigns permitted  hereby.  Nothing in this
Agreement,  expressed  or implied,  shall be construed to confer upon any Person
(other  than  the  parties  hereto,  their  respective  successors  and  assigns
permitted hereby and, to the extent expressly  contemplated  hereby, the Related
Parties of each of the  Administrative  Agent, the Issuing Bank and the Lenders)
any  legal or  equitable  right,  remedy  or claim  under or by  reason  of this
Agreement.

           SECTION  11.05 Assignments and Participations.

           (a) No Loan Party may assign its rights or  obligations  hereunder or
under the Notes or any Letter of Credit  without the prior consent of all of the
Lenders and the Administrative Agent.

           (b) Any Lender may assign to one or more  assignees  all or a portion
of its rights and obligations  under this Agreement  (including all or a portion
of its  Commitment  and the Loans at the time  owing to it);  provided  that (i)
except in the case of an assignment to a Lender or an Affiliate of a Lender, any
other Eligible Assignee,  each of the Company and the Administrative Agent (and,
in the case of an assignment of all or a portion of a Commitment or any Lender's
obligations  in respect of its LC Exposure or  Swingline  Exposure,  the Issuing
Bank and the  Swingline  Lender) must give their prior  written  consent to such
assignment  (which consent shall not be unreasonably  withheld),  (ii) except in
the  case of an  assignment  to a  Lender  or an  Affiliate  of a  Lender  or an
assignment of the entire remaining amount of the assigning Lender's  Commitment,
the  amount of the  Commitment  of the  assigning  Lender  subject  to each such
assignment (determined as of the date the Assignment and Acceptance with respect
to such assignment is delivered to the  Administrative  Agent) shall not be less
than  $10,000,000  unless  each  of the  Company  and the  Administrative  Agent
otherwise consent,  (iii) each partial assignment shall be made as an assignment
of a  proportionate  part of all the assigning  Lender's  rights and obligations
under this  Agreement,  (iv) the parties to each  assignment  shall  execute and
deliver to the Administrative Agent an Assignment and Acceptance,  together with
a processing and recordation  fee of $3,500 for each such  assignment  (provided
that the processing and  recordation  fee for each assignment made by any Lender
party to this  Agreement  on the  Execution  Date shall be $2,000),  and (v) the
assignee, if it shall not be a Lender, shall deliver to the Administrative Agent
an  Administrative  Questionnaire;  provided  further  that any  consent  of the
Company otherwise  required under this Section 11.05(b) shall not be required if
an Event of Default under Section 7.01(g) or Section 7.01(h) has occurred and is
continuing. Upon acceptance and recording pursuant to Section 11.05(d), from and
after the  effective  date  specified in each  Assignment  and  Acceptance,  the
assignee  thereunder  shall be a party hereto and, to the extent of the interest
assigned by such Assignment and Acceptance, have the rights and obligations of a
Lender under this Agreement,  and the assigning Lender  thereunder shall, to the
extent of the interest  assigned by such Assignment and Acceptance,  be released
from its obligations under this Agreement (and, in the case of an Assignment and
Acceptance  covering all of the assigning  Lender's rights and obligations under
this Agreement, such Lender shall


                                      -92-
<PAGE>


cease to be a party hereto but shall  continue to be entitled to the benefits of
Sections 2.15, 2.16, 2.17 and 11.03).  Any assignment or transfer by a Lender of
rights or  obligations  under  this  Agreement  that does not  comply  with this
paragraph  shall be treated  for  purposes of this  Agreement  as a sale by such
Lender of a  participation  in such rights and  obligations  in accordance  with
Section 11.05(e).

           (c) The Administrative  Agent, acting for this purpose as an agent of
the Loan  Parties,  shall  maintain  at one of its offices in  Charlotte,  North
Carolina a copy of each Assignment and Acceptance delivered to it and a register
for  the  recordation  of the  names  and  addresses  of the  Lenders,  and  the
Commitment of, and principal amount of the Loans and LC Disbursements  owing to,
each Lender pursuant to the terms hereof from time to time (the "Register"). The
entries  in  the  Register  shall  be  conclusive,  and  each  Loan  Party,  the
Administrative  Agent,  the  Issuing  Bank and the Lenders may treat each Person
whose name is recorded in the Register  pursuant to the terms hereof as a Lender
hereunder  for all  purposes of this  Agreement,  notwithstanding  notice to the
contrary.  The Register shall be available for inspection by any Loan Party, the
Issuing Bank and any Lender,  at any reasonable  time and from time to time upon
reasonable prior notice.

           (d) Upon its receipt of a duly  completed  Assignment  and Acceptance
executed  by an  assigning  Lender and an  assignee,  the  assignee's  completed
Administrative  Questionnaire  (unless the  assignee  shall  already be a Lender
hereunder),  the processing and recordation fee referred to in Section  11.05(b)
and any written consent to such  assignment  required by Section  11.05(b),  the
Administrative  Agent shall accept such Assignment and Acceptance and record the
information  contained therein in the Register. No assignment shall be effective
for purposes of this  Agreement  unless it has been  recorded in the Register as
provided in this paragraph.

           (e) Any  Lender  may,  without  the  consent of any Loan  Party,  the
Administrative  Agent or the Issuing Bank,  sell  participations  to one or more
banks or other entities (a  "Participant")  in all or a portion of such Lender's
rights and obligations  under this Agreement  (including all or a portion of its
Commitment  and the  Loans  owing  to  it);  provided  that  (i)  such  Lender's
obligations under this Agreement shall remain unchanged,  (ii) such Lender shall
remain solely  responsible  to the other parties  hereto for the  performance of
such obligations and (iii) the Company,  the  Administrative  Agent, the Issuing
Bank and the other Lenders shall  continue to deal solely and directly with such
Lender in  connection  with such  Lender's  rights  and  obligations  under this
Agreement.  Any agreement or instrument  pursuant to which a Lender sells such a
participation  shall  provide  that such Lender  shall  retain the sole right to
enforce this Agreement and to approve any amendment,  modification  or waiver of
any provision of this Agreement;  provided that such agreement or instrument may
provide that such Lender will not, without the consent of the Participant, agree
to any  amendment,  modification  or waiver  described  in the first  proviso to
Section  11.02(b) that affects such  Participant.  Subject to Section  11.05(f),
each Loan Party agrees that each  Participant  shall be entitled to the benefits
of  Sections  2.15,  2.16 and 2.17 to the same extent as if it were a Lender and
had acquired its interest by  assignment  pursuant to Section  11.05(b),  and be
indemnified  under  Section  11.03 as if it were a  Lender.  In  addition,  each
agreement   creating  any  participation   must  include  an  agreement  by  the
Participant to be bound by the provisions of Section 11.12.


                                      -93-
<PAGE>


           (f) A  Participant  shall not be  entitled  to  receive  any  greater
payment  under Section 2.15 or 2.17 than the  applicable  Lender would have been
entitled to receive with respect to the participation  sold to such Participant,
unless  the  sale of the  participation  to such  Participant  is made  with the
Company's prior written consent. A Participant that would be a Foreign Lender if
it were a Lender  shall not be entitled to the  benefits of Section  2.17 unless
the Company is notified of the  participation  sold to such Participant and such
Participant  agrees,  for the benefit of the  Company,  to comply  with  Section
2.17(e) as though it were a Lender.

           (g) The Lenders may furnish any  information  concerning the Borrower
in the possession of the Lenders from time to time to assignees and Participants
(including prospective assignees and participants);  provided that, such Persons
agree to be bound by the provisions of Section 11.12 hereof.

           (h)  Notwithstanding  anything in this Section 11.05 to the contrary,
any Lender may assign and pledge its Notes to any  Federal  Reserve  Bank or the
United States Treasury as collateral  security  pursuant to Regulation A and any
operating  circular  issued by such Federal  Reserve  System and/or such Federal
Reserve  Bank.  No such  assignment  and/or  pledge shall  release the assigning
and/or pledging Lender from its obligations hereunder.

           (i)  Notwithstanding  any other  provisions of this Section 11.05, no
transfer or  assignment  of the  interests or  obligations  of any Lender or any
grant of participations therein shall be permitted if such transfer,  assignment
or grant would require a Borrower to file a registration  statement with the SEC
or to qualify the Loans under the "Blue Sky" laws of any state.

           SECTION 11.06 Survival; Reinstatement. (a) All covenants, agreements,
representations   and  warranties   made  by  the  Company  herein  and  in  the
certificates  or other  instruments  delivered in connection with or pursuant to
this Agreement shall be considered to have been relied upon by the other parties
hereto and shall survive the  execution  and delivery of this  Agreement and the
making of any Loans and  issuance  of any Letters of Credit,  regardless  of any
investigation made by any such other party or on its behalf and  notwithstanding
that the  Administrative  Agent,  the  Issuing  Bank or any  Lender may have had
notice  or   knowledge   of  any  Default  or  Event  of  Default  or  incorrect
representation  or warranty at the time any credit is  extended  hereunder,  and
shall  continue  in full  force and  effect as long as the  principal  of or any
accrued  interest on any Loan or any fee or any other amount  payable under this
Agreement is outstanding  and unpaid or any Letter of Credit is outstanding  and
so long as the  Commitments  have not expired or  terminated.  The provisions of
Sections 2.15, 2.16, 2.17 and 11.03 and Article VIII shall survive and remain in
full  force  and  effect  regardless  of the  consummation  of the  transactions
contemplated  hereby,  the repayment of the Loans, the expiration or termination
of the  Letters  of  Credit  and  the  Commitments  or the  termination  of this
Agreement or any provision hereof.

           (b)  To  the  extent  that  any  payments  on  the   Obligations  are
subsequently invalidated,  declared to be fraudulent or preferential,  set aside
or required to be repaid to a trustee,  debtor in possession,  receiver or other
Person under any bankruptcy  law,  common law or equitable  cause,  then to such
extent,  the  Obligations so satisfied  shall be revived and continue as if such
payment or proceeds had not been received.


                                      -94-
<PAGE>


           SECTION  11.07   Counterparts;   Integration;   Effectiveness.   This
Agreement may be executed in  counterparts  (and by different  parties hereto on
different counterparts),  each of which shall constitute an original, but all of
which when taken together shall  constitute a single  contract.  This Agreement,
the other Loan Documents and the Fee Letter constitute the entire contract among
the parties  hereto  relating to the subject matter hereof and supersede any and
all previous  agreements and  understandings,  oral or written,  relating to the
subject matter hereof (including the Information Memorandum). Except as provided
in Section 3.01, this Agreement  shall become  effective when it shall have been
executed by the  Administrative  Agent and when the  Administrative  Agent shall
have  received  counterparts  hereof  which,  when  taken  together,   bear  the
signatures of each of the other parties hereto,  and thereafter shall be binding
upon and  inure to the  benefit  of the  parties  hereto  and  their  respective
successors and assigns.  Delivery of an executed counterpart of a signature page
of this  Agreement  by  telecopy  shall be  effective  as delivery of a manually
executed counterpart of this Agreement.

           SECTION 11.08  Severability.  Any provision of this Agreement held to
be invalid,  illegal or  unenforceable  in any  jurisdiction  shall,  as to such
jurisdiction,  be  ineffective to the extent of such  invalidity,  illegality or
unenforceability without affecting the validity,  legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a  particular  jurisdiction  shall not  invalidate  such  provision in any other
jurisdiction.

           SECTION  11.09  Right of Setoff.  If an Event of  Default  shall have
occurred and be  continuing,  each Lender 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 Lender to or
for the  credit or the  account  of any Loan  Party  against  any of and all the
Obligations  now or hereafter  existing  under this Agreement and the other Loan
Documents held by such Lender,  irrespective of whether or not such Lender shall
have made any demand under this Agreement and although such  Obligations  may be
unmatured. The rights of each Lender under this Section 11.09 are in addition to
other rights and remedies  (including  other rights of setoff) which such Lender
may have.

           SECTION  11.10 Governing Law;  Jurisdiction;  Consent to Service of 
Process.

           (a) This Agreement and the other Loan Documents shall be construed in
accordance with and governed by the law of the State of New York.

           (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT AND
THE OTHER LOAN  DOCUMENTS  MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK
OR OF THE UNITED STATES FOR THE SOUTHERN  DISTRICT OF NEW YORK AND, BY EXECUTION
AND DELIVERY OF THIS  AGREEMENT,  EACH OF THE PARTIES HERETO HEREBY  IRREVOCABLY
ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY  AND ASSETS,  UNCONDITIONALLY,
THE NON-EXCLUSIVE  JURISDICTION OF THE AFORESAID COURTS WITH RESPECT TO ANY SUCH
ACTION OR PROCEEDING.  EACH LOAN PARTY HEREBY IRREVOCABLY  DESIGNATES,  APPOINTS
AND


                                      -95-
<PAGE>


EMPOWERS CT CORPORATION  SYSTEM,  INC.,  WITH OFFICES ON THE DATE HEREOF AT 1633
BROADWAY,  NEW YORK,  NEW YORK 10019,  AS ITS  DESIGNEE,  APPOINTEE AND AGENT TO
RECEIVE,  ACCEPT AND  ACKNOWLEDGE  FOR AND ON ITS BEHALF,  AND IN RESPECT OF ITS
PROPERTY,  SERVICE OF ANY AND ALL LEGAL PROCESS,  SUMMONS, NOTICES AND DOCUMENTS
WHICH MAY BE SERVED IN ANY SUCH  ACTION OR  PROCEEDING.  IF FOR ANY REASON  SUCH
DESIGNEE,  APPOINTEE AND AGENT SHALL CEASE TO BE AVAILABLE TO ACT AS SUCH,  EACH
SUCH LOAN PARTY AGREES TO DESIGNATE A NEW  DESIGNEE,  APPOINTEE AND AGENT IN NEW
YORK, NEW YORK ON THE TERMS AND FOR THE PURPOSES OF THIS PROVISION  SATISFACTORY
TO THE ADMINISTRATIVE AGENT. EACH LOAN PARTY FURTHER IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR
PROCEEDING BY THE MAILING OF COPIES  THEREOF BY  REGISTERED  OR CERTIFIED  MAIL,
POSTAGE PREPAID, TO IT AT ITS ADDRESS PROVIDED IN SECTION 11.01, SUCH SERVICE TO
BECOME EFFECTIVE THIRTY DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE
RIGHT OF THE  ADMINISTRATIVE  AGENT OR ANY LENDER TO SERVE  PROCESS IN ANY OTHER
MANNER  PERMITTED BY LAW OR TO COMMENCE LEGAL  PROCEEDINGS OR OTHERWISE  PROCEED
AGAINST ANY LOAN PARTY IN ANY OTHER JURISDICTION.

           (c) EACH OF THE LOAN PARTIES HEREBY  IRREVOCABLY WAIVES ANY OBJECTION
WHICH  IT MAY  NOW OR  HEREAFTER  HAVE  TO THE  LAYING  OF  VENUE  OF ANY OF THE
AFORESAID  ACTIONS OR  PROCEEDINGS  ARISING  OUT OF OR IN  CONNECTION  WITH THIS
AGREEMENT  BROUGHT  IN THE  COURTS  REFERRED  TO IN CLAUSE  (b) ABOVE AND HEREBY
FURTHER  IRREVOCABLY  WAIVES, TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW,
AND  AGREES  NOT TO PLEAD OR CLAIM IN ANY SUCH  COURT  THAT ANY SUCH  ACTION  OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

           (d) EACH PARTY HERETO HEREBY (I) IRREVOCABLY  WAIVES,  TO THE MAXIMUM
EXTENT  PERMITTED  BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH
LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES
OTHER THAN,  OR IN ADDITION TO, ACTUAL  DAMAGES;  (II)  CERTIFIES  THAT NO PARTY
HERETO  NOR ANY  REPRESENTATIVE  OR AGENT OR  COUNSEL  FOR ANY PARTY  HERETO HAS
REPRESENTED,  EXPRESSLY OR  OTHERWISE,  OR IMPLIED THAT SUCH PARTY WOULD NOT, IN
THE EVENT OF  LITIGATION,  SEEK TO  ENFORCE  THE  FOREGOING  WAIVERS,  AND (III)
ACKNOWLEDGES  THAT IT HAS BEEN  INDUCED  TO ENTER  INTO THIS  AGREEMENT  AND THE
TRANSACTIONS  CONTEMPLATED HEREBY AND THEREBY BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION 11.10.


                                      -96-
<PAGE>


           SECTION 11.11 WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST  EXTENT  PERMITTED BY APPLICABLE  LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING  DIRECTLY OR INDIRECTLY  ARISING OUT OF OR
RELATING TO THIS  AGREEMENT OR THE  TRANSACTIONS  CONTEMPLATED  HEREBY  (WHETHER
BASED ON CONTRACT,  TORT OR ANY OTHER  THEORY).  EACH PARTY HERETO (A) CERTIFIES
THAT NO  REPRESENTATIVE,  AGENT OR ATTORNEY OF ANY OTHER PARTY HAS  REPRESENTED,
EXPRESSLY  OR  OTHERWISE,  THAT SUCH  OTHER  PARTY  WOULD  NOT,  IN THE EVENT OF
LITIGATION,  SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)  ACKNOWLEDGES  THAT IT
AND THE OTHER PARTIES  HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 11.11.

           SECTION 11.12 Confidentiality.  Each of the Administrative Agent, the
Issuing  Bank and the Lenders  agrees to  maintain  the  confidentiality  of the
Information (as defined below),  except that Information may be disclosed (a) to
its Affiliates,  directors,  officers and employees and to its agents, including
accountants,  legal  counsel and other  advisors  who have been  informed of the
confidential nature of the information provided,  (b) to the extent requested by
any  regulatory  authority,  including  the  National  Association  of Insurance
Commissioners or any similar  organization,  or any nationally recognized rating
agency  that  requires  access  to  information  about  a  Lender's   investment
portfolio,  (c) to the extent a Lender  reasonably  believes  it is  required by
applicable laws or regulations or by any subpoena or similar legal process,  (d)
to any other party to this Agreement, (e) in connection with the exercise of any
remedies hereunder or any suit, action or proceeding  relating to this Agreement
or any other Loan Document or the enforcement of rights hereunder or thereunder,
(f)  subject to an  understanding  with such Person that such Person will comply
with  this  Section  11.12,  to  any  assignee  of or  Participant  in,  or  any
prospective  assignee  of or  Participant  in, any of its rights or  obligations
under this  Agreement,  (g) with the consent of the Company or (h) to the extent
such  Information  (i) becomes  publicly  available  other than as a result of a
breach of this  Section  11.12 or (ii) becomes  available to the  Administrative
Agent, the Issuing Bank or any Lender from a source other than a Loan Party. For
the purposes of this Section 11.12, "Information" means all information received
from any Loan Party  relating to any Loan Party or its business,  other than any
such  information  that is  known  to a  Lender,  publicly  known  or  otherwise
available to the Administrative Agent, the Issuing Bank or any Lender other than
through disclosure (a) by a Loan Party, or (b) from a source actually known to a
Lender to be bound by a confidentiality  agreement or other legal or contractual
obligation of confidentiality  with respect to such information;  provided that,
in the case of  information  received from any Loan Party after the date hereof,
such information is clearly  identified at the time of delivery as confidential.
Any Person required to maintain the  confidentiality  of Information as provided
in this Section 11.12 shall be  considered to have complied with its  obligation
to do so if such Person  maintains the  confidentiality  of such  Information in
accordance  with  procedures  adopted  in good  faith  to  protect  confidential
information of third parties delivered to a lender.

           SECTION 11.13  Interest  Rate  Limitation.  Notwithstanding  anything
herein to the contrary, if at any time the interest rate applicable to any Loan,
together with all fees,



                                     -97-
<PAGE>


charges  and other  amounts  which are  treated as  interest  on such Loan under
applicable law  (collectively  the  "Charges"),  shall exceed the maximum lawful
rate (the "Maximum Rate") which may be contracted for, charged,  taken, received
or reserved by the Lender holding such Loan in accordance  with  applicable law,
the rate of interest  payable in respect of such Loan  hereunder,  together with
all Charges  payable in respect  thereof,  shall be limited to the Maximum  Rate
and, to the extent lawful, the interest and Charges that would have been payable
in respect of such Loan but were not  payable  as a result of the  operation  of
this Section  11.13 shall be cumulated  and the interest and Charges  payable to
such Lender in respect of other  Loans or periods  shall be  increased  (but not
above the Maximum Rate  therefor)  until such  cumulated  amount,  together with
interest  thereon at the Federal Funds  Effective Rate to the date of repayment,
shall have been received by such Lender.

           SECTION  11.14 RETIRING BANKS;  RELEASE.  (A) Each of the parties to
the Existing Agreement is either a Continuing Bank or a Retiring Bank.

           (b) Each Retiring  Bank is executing  this  Agreement  solely for the
purpose of consenting to the amendment and  restatement  of the Existing  Credit
Agreement and to the release of the  Collateral (as defined  therein).  Upon the
effectiveness  of this Agreement,  no Retiring Bank shall have any commitment or
obligation to the Borrowers  under the Existing  Credit  Agreement and, upon the
repayment of all Obligations  due to the Retiring Banks,  the Loan Parties shall
have no obligation to any Retiring Bank under the Existing  Credit  Agreement or
this Agreement.

           (c) The Lenders and the  Administrative  Agent  acknowledge and agree
upon the  Effective  Date  (i) the Lien on the  Collateral  (as  defined  in the
Existing Credit  Agreement)  will be  automatically  released,  (ii) each of the
Company,  the Subsidiary Borrower and each Subsidiary  Guarantor that is a party
to a Security  Document  (as  defined in the  Existing  Credit  Agreement)  will
automatically  be  released  and  discharged  from any and all  obligations  and
liabilities  under the Security  Documents and (iii) the Security  Documents (as
defined in the  Existing  Credit  Agreement)  shall  cease to be of any force or
effect.  The  Administrative  Agent is hereby authorized to deliver,  and on the
Effective Date the Administrative  Agent shall deliver, to the Company all stock
certificates and other collateral (as defined in the Existing Credit  Agreement)
in its possession.

           SECTION  11.15  EXCULPATION  PROVISIONS.  EACH OF THE PARTIES  HERETO
SPECIFICALLY AGREES THAT IT HAS A DUTY TO READ THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS  AND AGREES THAT IT IS CHARGED WITH NOTICE AND  KNOWLEDGE OF THE TERMS
OF THIS  AGREEMENT AND THE OTHER LOAN  DOCUMENTS;  THAT IT HAS IN FACT READ THIS
AGREEMENT AND IS FULLY  INFORMED AND HAS FULL NOTICE AND KNOWLEDGE OF THE TERMS,
CONDITIONS AND EFFECTS OF THIS AGREEMENT AND THE OTHER LOAN  DOCUMENTS;  THAT IT
HAS BEEN REPRESENTED BY INDEPENDENT  LEGAL COUNSEL OF ITS CHOICE  THROUGHOUT THE
NEGOTIATIONS  PRECEDING  ITS  EXECUTION  OF THIS  AGREEMENT  AND THE OTHER  LOAN
DOCUMENTS;  AND HAS RECEIVED  THE ADVICE OF ITS  ATTORNEY IN ENTERING  INTO THIS
AGREEMENT AND THE



                                     -98-
<PAGE>


OTHER LOAN  DOCUMENTS;  AND THAT IT RECOGNIZES THAT CERTAIN OF THE TERMS OF THIS
AGREEMENT  AND THE  OTHER  LOAN  DOCUMENTS  RESULT  IN ONE  PARTY  ASSUMING  THE
LIABILITY  INHERENT IN SOME ASPECTS OF THE  TRANSACTION  AND RELIEVING THE OTHER
PARTY OF ITS  RESPONSIBILITY  FOR SUCH  LIABILITY.  EACH PARTY HERETO AGREES AND
COVENANTS  THAT IT WILL  NOT  CONTEST  THE  VALIDITY  OR  ENFORCEABILITY  OF ANY
EXCULPATORY  PROVISION  OF THIS  AGREEMENT  ON THE  BASIS  THAT THE PARTY HAD NO
NOTICE  OR   KNOWLEDGE  OF  SUCH   PROVISION  OR  THAT  THE   PROVISION  IS  NOT
"CONSPICUOUS."




                                      -99-

<PAGE>


           The parties  hereto have caused this Agreement to be duly executed as
of the date and year first above written.

                               KINDER MORGAN ENERGY PARTNERS, L.P.,
                               as the Company

                                    By:   Kinder Morgan G.P., Inc.,
                                          its General Partner


                                          By:  /s/ David G. Dehaemers
                                               --------------------------
                                          Name:  David G. Dehaemers
                                          Title: Chief Financial Officer

                                  Address for Notices:

                                  1301 McKinney Street
                                  Suite 3450
                                  Houston, Texas 77010

                                  Telecopier No.:   (713) 844-9570
                                  Telephone No.:    (713) 844-9500
                                  Attention:        David G. Dehaemers, Jr.

                                  Chief Executive Office and Principal Place
                                  of Business:

                                  1301 McKinney Street
                                  Suite 3450
                                  Houston, Texas 77010


<PAGE>


                               KINDER MORGAN OPERATING L.P. "B",
                               as the Subsidiary Borrower and as a Subsidiary
                               Guarantor

                                  By:   Kinder Morgan G.P., Inc.,
                                        its General Partner


                                        By:  /s/ David G. Dehaemers
                                             --------------------------
                                        Name:  David G. Dehaemers
                                        Title: Chief Financial Officer


                               Address for Notices:

                               1301 McKinney Street
                               Suite 3450
                               Houston, Texas  77010

                               Telecopier No.:  (713) 844-9570
                               Telephone No.:   (713) 844-9500
                               Attention: David G. Dehaemers, Jr.

                               Chief Executive Office and Principal Place
                                    of Business:

                               1301 McKinney Street
                               Suite 3450
                               Houston, Texas  77010


<PAGE>


                              KINDER MORGAN OPERATING L.P. "A",
                              as a Subsidiary Guarantor

                                    By:   Kinder Morgan G.P., Inc.,
                                          its General Partner


                                          By:  /s/ David G. Dehaemers
                                               --------------------------
                                          Name:  David G. Dehaemers
                                          Title: Chief Financial Officer


                               Address for Notices:

                               1301 McKinney Street
                               Suite 3450
                               Houston, Texas  77010

                               Telecopier No.:  (713) 844-9570
                               Telephone No.:   (713) 844-9500
                               Attention: David G. Dehaemers, Jr.

                               Chief Executive Office and Principal Place
                               of Business:

                               1301 McKinney Street
                               Suite 3450
                               Houston, Texas  77010


<PAGE>


                               KINDER MORGAN OPERATING L.P. "C",
                               as a Subsidiary Guarantor

                                    By:   Kinder Morgan G.P., Inc.,
                                          its General Partner


                                          By:  /s/ David G. Dehaemers
                                               --------------------------
                                          Name:  David G. Dehaemers
                                          Title: Chief Financial Officer


                               Address for Notices:

                               1301 McKinney Street
                               Suite 3450
                               Houston, Texas  77010

                               Telecopier No.:  (713) 844-9570
                               Telephone No.:   (713) 844-9500
                               Attention: David G. Dehaemers, Jr.

                               Chief Executive Office and Principal Place
                               of Business:

                               1301 McKinney Street
                               Suite 3450
                               Houston, Texas  77010


<PAGE>


                               KINDER MORGAN OPERATING L.P. "D",
                               as a Subsidiary Guarantor

                                    By:   Kinder Morgan G.P., Inc.,
                                          its General Partner


                                          By:  /s/ David G. Dehaemers
                                               --------------------------
                                          Name:  David G. Dehaemers
                                          Title: Chief Financial Officer

                               Address for Notices:

                               1301 McKinney Street
                               Suite 3450
                               Houston, Texas  77010

                               Telecopier No.: (713) 844-9570
                               Telephone No.:  (713) 844-9500
                               Attention: David G. Dehaemers, Jr.

                               Chief Executive Office and Principal Place
                               of Business:

                               1301 McKinney Street
                               Suite 3450
                               Houston, Texas  77010


<PAGE>


                               KINDER MORGAN NATURALGAS LIQUIDS CORPORATION,
                               as a Subsidiary Guarantor

                                          By:  /s/ David G. Dehaemers
                                               --------------------------
                                               Name:  David G. Dehaemers
                                               Title: Chief Financial Officer

                               Address for Notices:

                               1301 McKinney Street
                               Suite 3450
                               Houston, Texas  77010

                               Telecopier No.:  (713) 844-9570
                               Telephone No.:   (713) 844-9500
                               Attention: David G. Dehaemers, Jr.

                               Chief Executive Office and Principal Place
                               of Business:

                               1301 McKinney Street
                               Suite 3450
                               Houston, Texas  77010


<PAGE>


                               KINDER MORGAN BULK TERMINALS, INC.,
                               as a Subsidiary Guarantor

                                     By:  /s/ David G. Dehaemers
                                          --------------------------
                                          Name:  David G. Dehaemers
                                          Title: Chief Financial Officer

                               Address for Notices:

                               1301 McKinney Street
                               Suite 3450
                               Houston, Texas  77010

                               Telecopier No.:  (713) 844-9570
                               Telephone No.:   (713) 844-9500
                               Attention: David G. Dehaemers, Jr.

                               Chief Executive Office and Principal Place
                               of Business:

                               1301 McKinney Street
                               Suite 3450
                               Houston, Texas  77010


<PAGE>


                               KINDER MORGAN CO2, LLC,
                               as a Subsidiary Guarantor

                                    By:   Kinder Morgan Operating L.P. "A",
                                          its Sole Member

                                      By: Kinder Morgan G.P., Inc.,
                                          its General Partner


                                          By:  /s/ David G. Dehaemers
                                               --------------------------
                                          Name:  David G. Dehaemers
                                          Title: Chief Financial Officer

                               Address for Notices:

                               1301 McKinney Street
                               Suite 3450
                               Houston, Texas  77010

                               Telecopier No.: (713) 844-9570
                               Telephone No.: (713) 844-9500
                               Attention: David G. Dehaemers, Jr.

                               Chief Executive Office and Principal Place
                               of Business:

                               1301 McKinney Street
                               Suite 3450
                               Houston, Texas  77010


<PAGE>


                               CONTINUING LENDER:

Revolving Loan Commitment:       FIRST UNION NATIONAL BANK, as the Arranger,
$47,000,000.00                   the Syndication Agent, Administrative Agent,
                                 the Issuing Bank, the Swingline Lender and as a
                                 Lender



                                  By:  /s/ Paul N. Riddle
                                       --------------------------
                                  Name:  Paul N. Riddle
                                  Title: Senior Vice President


                                 Address for Notices:

                                 First Union National Bank
                                 301 South College Street, TW-10
                                 Charlotte, North Carolina 28288-0608

                                 Telecopier No.:  (704) 383-0288
                                 Telephone No.:   (704) 383-0281
                                 Attention:   Syndication Agency Services


                                 With copy to:

                                 First Union Capital Markets Corp.
                                 1001 Fannin, Suite 2255
                                 Houston, Texas 77002

                                 Telecopier No.: (713) 650-6354
                                 Telephone No.: (713) 650-3716
                                 Attention: Paul N. Riddle


<PAGE>


                               CONTINUING LENDER:

Revolving Loan Commitment:       GOLDMAN SACHS CREDIT PARTNERS, L.P.
$8,000,000.00


                                  By:  /s/ Stephen B. King
                                       --------------------------
                                  Name:  Stephen B. King
                                  Title: Authorized Signatory


                                  Address for Notices:

                                  Goldman Sachs & Co.
                                  85 Broad Street, 15th Floor
                                  New York, New York 10004

                                  Telecopier No.:  (212) 357-0932
                                  Telephone No.:   (212) 902-8123
                                  Attention: Stephen B. King


<PAGE>


                               CONTINUING LENDER:

Revolving Loan Commitment:        BANK OF AMERICA NATIONAL TRUST
$10,000,000.00                    AND SAVINGS ASSOCIATION



                                  By:  /s/ Michael J. Dillon
                                       --------------------------
                                  Name:  Michael J. Dillon
                                  Title: Managing Director


                                  Address for Notices:

                                  Bank of America NT&SA
                                  1850 Gateway Blvd.
                                  Concord, California   94520

                                  Telecopier No.: (510) 603-7243
                                  Telephone No.: (510) 675-7148
                                  Attention: Laurie Warner

                                  With copy to:

                                  Pamela K. Rodgers
                                  Bank of America NT&SA
                                  333 Clay Street, Suite 4550
                                  Houston, Texas 77002

                                  Telecopier No.: (713) 651-4808
                                  Telephone No.:  (713) 651-4880



<PAGE>


                               CONTINUING LENDER:

Revolving Loan Commitment:       BANK OF MONTREAL
$12,500,000.00


                                 By:  /s/ J.B. Whitmore
                                      --------------------------
                                 Name:  J.B. Whitmore
                                 Title: Director


                                 Address for Notices:
  
                                 Bank of Montreal
                                 700 Louisiana Street
                                 Suite 4400
                                 Houston, Texas   77002

                                 Telecopier No.:  (713) 223-4007
                                 Telephone No.:   (713) 546-9750
                                 Attention: Cahal B. Carmody, Director


<PAGE>


                               CONTINUING LENDER:

Revolving Loan Commitment:       BANK OF SCOTLAND
$20,000,000.00


                                 By:  /s/ Annie Chin Tat
                                      --------------------------
                                 Name:  Annie Chin Tat
                                 Title: Senior Vice President


                                 Address for Notices:

                                 Bank of Scotland
                                 565 Fifth Avenue
                                 New York, New York   10017

                                 Telecopier No.: (212) 557-9460
                                 Telephone No.: (212) 450-0871
                                 Attention: Annie Chin Tat


                                 With copy to:

                                 Bank of Scotland
                                 1750 Two Allen Center
                                 1200 Smith Street
                                 Houston, Texas   77002-4312
                                 Telecopier No.: (713) 651-9714
                                 Telephone No.:  (713) 651-1870
                                 Attention: Janna Blanter



<PAGE>


                               CONTINUING LENDER:

Revolving Loan Commitment:       PARIBAS
$12,500,000.00


                                 By:  /s/ Marian Livingston
                                      --------------------------
                                 Name:  Marian Livingston
                                 Title: Vice President



                                 By:  /s/ Michael H. Fiuzat
                                      --------------------------
                                 Name:  Michael H. Fiuzat
                                 Title: Vice President


                                 Address for Notices:

                                 Paribas
                                 1200 Smith Street, Suite 3100
                                 Houston, Texas 77002

                                 Telecopier No.:  (713) 659-6915
                                 Telephone No.:   (713) 659-4811
                                 Attention: Marian Livingston



<PAGE>


                               CONTINUING LENDER:

Revolving Loan Commitment:       BARCLAYS BANK PLC
$22,000,000.00


                                 By:  /s/ J. Onischuk
                                      --------------------------
                                 Name:  J. Onischuk
                                 Title: Associate Director


                                 Address for Notices:

                                 Barclays Bank PLC
                                 222 Broadway
                                 New York, New York   10038

                                 Telecopier No.:  (212) 412-7585
                                 Telephone No.:   (212) 412-7584
                                 Attention: J. Onischuk



<PAGE>


                               CONTINUING LENDER:

Revolving Loan Commitment:       CIBC INC.
$10,000,000.00


                                 By:  /s/ Michael A.G. Corkum
                                      --------------------------
                                 Name:  Michael A.G. Corkum
                                 Title: Authorized Signarory


                                 Address for Notices:

                                 CIBC, Inc.
                                 Two Paces West, Suite 1200
                                 Two Paces Ferry Road
                                 Atlanta, Georgia   30339

                                 Telecopier No.:  (770) 319-4950
                                 Telephone No.:   (770) 319-4821
                                 Attention: Kanthryn S. McGovern



<PAGE>


                               CONTINUING LENDER:

Revolving Loan Commitment:       COMMERZBANK AG, ATLANTA AGENCY
$10,000,000.00


                                 By:  /s/ W. David Suttles
                                      --------------------------
                                 Name:  W. David Suttles
                                 Title: Vice President



                                 By:  /s/ S.R. Viswanathan
                                      --------------------------
                                 Name:  Subash R. Viswanathan
                                 Title: Vice President


                                 Address for Notices:

                                 Commerzbank AG, Atlanta Agency
                                 Prominade 2, Suite 3500
                                 1230 Peachtree Street, NE
                                 Atlanta, Georgia 30309

                                 Telecopier No.: (404) 888-6539
                                 Telephone No.: (404) 888-6524
                                 Attention: David Suttles, Vice President


                                 With a copy to:

                                 Dempsey L. Gable, Senior Vice President
                                 Commerzbank AG, New York Branch
                                 2 World Financial Center
                                 New York, New York   10281-1050

                                 Telecopier No.: (212) 266-07530
                                 Telephone No.:  (212) 266-7560



<PAGE>


                               CONTINUING LENDER:

Revolving Loan Commitment:        CREDIT LYONNAIS NEW YORK BRANCH
$10,000,000.00



                                  By:  /s/ Philippe Soustra
                                       --------------------------
                                  Name:  Philippe Soustra
                                  Title: Senior Vice President


                                  Address for Notices:

                                  Credit Lyonnais Houston Representative Office
                                  1000 Louisiana, Suite 5360
                                  Houston, Texas 77002

                                  Telecopier No.: (713) 751-0307
                                  Telephone No.:  (713) 753-8723
                                  Attention: Bernadette Archie





<PAGE>


                          CONTINUING LENDER:

Revolving Loan Commitment:        THE FIRST NATIONAL BANK OF CHICAGO
$39,000,000.00


                                  By:  /s/ Dixon P. Schultz
                                       --------------------------
                                  Name:  Dixon P. Schultz
                                  Title: First Vice President


                                  Address for Notices:

                                  The First National Bank of Chicago
                                  One First National Plaza
                                  Suite 0634, I-10
                                  Chicago, Illinois   60670

                                  Telecopier No.: (312) 732-4840
                                  Telephone No.: (312) 732-3659
                                  Attention: John Beirne





<PAGE>


                               CONTINUING LENDER:

Revolving Loan Commitment:        NATIONSBANK, N.A., as successor by merger to
$22,000,000.00                    NationsBank of Texas, N.A.



                                  By:  /s/ Michael J. Dillon
                                       --------------------------
                                  Name:  Michael J. Dillon
                                  Title: Managing Director


                                  Address for Notices:

                                  NationsBank N.A.
                                  700 Louisiana
                                  Houston, Texas   77002

                                  Telecopier No.: (713) 247-6568
                                  Telephone No.: (713) 247-6952
                                  Attention: Paul A. Squires



<PAGE>


                               CONTINUING LENDER:

Revolving Loan Commitment:        THE PRUDENTIAL INSURANCE COMPANY
$50,000,000.00                    OF AMERICA


                                  By:  /s/ Steven D. Arnold
                                       --------------------------
                                  Name:  Steven D. Arnold
                                  Title: Vice President




                                  Address for Notices:

                                  The Prudential Insurance Company of America
                                  c/o Prudential Capital Group
                                  Four Gateway Center
                                  100 Mulberry Street
                                  Newark, New Jersey   07102-4869

                                  Telecopier No.: (973) 802-9425
                                  Telephone No.: (973) 802-3141
                                  Attention: Trade Management Manager


                                  With copy to:

                                  The Prudential Insurance Company of America
                                  c/o Prudential Capital Group
                                  2200 Ross Avenue, Suite 4200 East
                                  Dallas, Texas   75201
                                  Attention: Managing Director



<PAGE>


                               CONTINUING LENDER:

Revolving Loan Commitment:        SOCIETE GENERALE
$22,000,000.00


                                  By: /s/ Richard A. Gould
                                      ----------------------------------
                                  Name:   Richard A. Gould
                                  Title:  Director


                                  Address for Notices:

                                  Societe Generale
                                  2001 Ross Avenue, Suite 4800
                                  Dallas, Texas 75201

                                  Telecopier No.: (214) 979-0171
                                  Telephone No.: (214) 979-2769
                                  Attention: Lia Guerra


                                  With copy to:

                                  Societe Generale
                                  1111 Bagby, Suite 2020
                                  Houston, Texas   77002

                                  Telecopier No.: (713) 650-0824
                                  Telephone No.:  (713) 759-6324
                                  Attention: Richard Gould



<PAGE>


                          CONTINUING LENDER:

Revolving Loan Commitment:        PNC BANK, NATIONAL ASSOCIATION
$10,000,000.00


                                  By:  /s/ John R. Way
                                       --------------------------
                                  Name:  John R. Way
                                  Title: Assistant Vice President


                                  Address for Notices:

                                  249  5th Avenue
                                  Pittsburgh, Pennsylvania   15222

                                  Telecopier No.: (412) 762-2571
                                  Telephone No.:  (412) 762-5290
                                  Attention: John R. Way


                                  With a copy to:

                                  Tina Lanuka
                                  Two PNC Plaza, Third Floor
                                  Old Liberty Avenue
                                  Pittsburgh, Pennsylvania   15222

                                  Telecopier: (412) 768-4586
                                  Telephone:  (412) 768-5876



<PAGE>


                               CONTINUING LENDER:

Revolving Loan Commitment:        UNION BANK OF CALIFORNIA
$10,000,000.00


                                  By:  /s/ Gary Shekerjian
                                       --------------------------
                                  Name:  Gary Shekerjian
                                  Title: Assistant Vice President


                                  Address for Notices:

                                  Union Bank of California, N.A.
                                  Energy Department
                                  500 North Akard St., Suite 4200
                                  Dallas, Texas 75201

                                  Attention: Gary E. Shekerjian




<PAGE>


                               CONTINUING LENDER:

Revolving Loan Commitment:        WELLS FARGO BANK (TEXAS), NA
$10,000,000.00


                                  By:  /s/ J. Alan Alexander
                                       --------------------------
                                  Name:  J. Alan Alexander
                                  Title: Vice President


                                  Address for Notices:
     
                                  Wells Fargo Bank (Texas), NA
                                  Energy Department
                                  1000 Louisiana, Third Floor
                                  Houston, Texas 77002

                                  Telecopier No.: (713) 739-1087
                                  Telephone No.:  (713) 319-1368
                                  Attention: J. Alan Alexander


                                  With copy to:

                                  Oscar Enriquez
                                  201 Third Street, 8th Floor
                                  San Francisco, California 94103

                                  Telecopier No.: (415) 979-0675
                                  Telephone No.:  (415) 477-5425


<PAGE>


                               RETIRING LENDERS:

                                  BANK ONE, TEXAS, NA
                


                                  By:  /s/ Damien G. Meiburger
                                       --------------------------
                                  Name:  Damien G. Meiburger
                                  Title: Senior Vice President




<PAGE>


                               RETIRING BANK:

                                  DEN NORSKE BANK ASA
                     


                                  By:  /s/ Charles E. Hall
                                       --------------------------
                                  Name:  Charles E. Hall
                                  Title: Senior Vice President



                                  By:  /s/ Byron L. Cooley
                                       --------------------------
                                  Name:  Byron L. Cooley
                                  Title: Senior Vice President